<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
F O R M 10-K
(Mark One)
|X| ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the Fiscal Year Ended December 31, 1998
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT of 1934
For the Transition Period From __________ to __________
Commission File No. 0-22616
NTL INCORPORATED
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(Exact name of registrant as specified in its charter)
Delaware 52-1822078
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
110 East 59th Street, New York, New York 10022
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(Address of principal executive offices) (Zip Code)
(212) 906-8440
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(Registrant's telephone number, including area code)
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Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.01 per share
--------------------------------------
(Title of Class)
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes |X| No |_|
Indicate by check mark whether disclosure by delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.|_|
The aggregate market value of the Registrant's voting stock held by
non-affiliates at March 23, 1999, valued in all cases in accordance with the
NASDAQ/NMS closing sale price for the Registrant's Common Stock was
approximately $5,504,096,000
Number of shares of Common Stock outstanding as at March 23, 1999: 73,303,103
DOCUMENTS INCORPORATED BY REFERENCE
-----------------------------------
Document Part of 10-K in which
Incorporated
Definitive proxy statement for the 1999 Annual Part III
Meeting of the Stockholders of NTL Incorporated:
* * * * * *
This Annual Report on Form 10-K for the year ended December 31, 1998, at the
time of filing with the Securities and Exchange Commission, modifies and
supersedes all prior documents filed pursuant to Section 13, 14 and 15(d) of the
Securities Exchange Act of 1934 for purposes of any offers or sales of any
securities after the date of such filing pursuant to any Registration Statement
or Prospectus filed pursuant to the Securities Act of 1933 which incorporates by
reference this Annual Report.
"Safe Harbor" Statement under the Private Securities Litigation
Reform Act of 1995:
Certain statements contained herein constitute "forward-looking
statements" as that term is defined under the Private Securities Litigation
Reform Act of 1995. When used in this Form 10-K, the words, "believe,"
"anticipate," "should," "intend," "plan," "will," "expects," "estimates,"
"projects," "positioned," "strategy," and similar expressions identify such
forward-looking statements. Such forward-looking statements involve known and
unknown risks, uncertainties and other factors that may cause the actual
results, performance or achievements of the Registrant, or industry results, to
be materially different from those contemplated or projected, forecast,
estimated or budgeted in or expressed or implied by such forward-looking
statements. Such factors include, among others: general economic and business
conditions, industry trends, the Registrant's ability to continue to design
network routes, install facilities, obtain and maintain any required government
licenses or
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approvals and finance construction and development, all in a timely manner, at
reasonable costs and on satisfactory terms and conditions, as well as
assumptions about customer acceptance, churn rates, overall market penetration
and competition from providers of alternative services, and availability, terms
and deployment of capital.
<PAGE> 4
TABLE OF CONTENTS
Page
----
PART I
Item 1. Business.............................................................1
Item 2. Properties..........................................................52
Item 3. Legal Proceedings...................................................53
Item 4. Submission of Matters to a Vote of Security Holders.................53
PART II ....................................................................54
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters...........................................................54
Item 6. Selected Financial Data.............................................55
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations.......................57
Item 7a. Quantitative and Qualitative Disclosure about Market Risk...........69
Item 8. Financial Statements and Supplementary Data.........................72
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.................................72
PART III ....................................................................73
Items 10, 11, 12, and 13......................................................73
PART IV ....................................................................73
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-k....73
Exhibit Index.................................................................74
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PART I
ITEM 1. BUSINESS.
INTRODUCTION
NTL Incorporated, formerly International CableTel Incorporated ("NTL" or
the "Company") was incorporated in April 1993 under the laws of the State of
Delaware.
NTL is a leading communications company in the United Kingdom (the "UK"),
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, Internet services and satellite
and radio communications services; and (iii) Broadcasting Services, including
digital and analog television and radio broadcast transmission services.
NTL provides its broad range of services over local, national and
international network infrastructure. The Company operates: (i) advanced local
broadband networks serving entire communities throughout NTL's regional
franchise areas; (ii) the UK's first synchronous digital hierarchy ("SDH")
backbone telecommunications network, as well as satellite earth stations and
radio communications facilities from NTL's tower sites across the UK; and (iii)
a broadcast transmission network which provides national, regional and local
analog and digital transmission services to customers throughout the UK.
Management's objective is to exploit the convergence of the
telecommunications, entertainment and information services industries to become
a premier new era communications company in the UK, which will offer these
services to residential, business and wholesale customers on a national scale.
Management believes that the Company will be able to deliver its strategy, based
on NTL's entrepreneurial approach, innovative marketing and technical
excellence.
In March 1997, the Company changed its name from International CableTel
Incorporated to NTL Incorporated to reflect the integration of the services
provided by the Company following its acquisition of NTL Group Limited in 1996,
and to capitalize on NTL Group Limited's 40-year history in the UK as a provider
of reliable communications services.
In this Report on Form 10-K, references to "pounds sterling," "(pound),"
"pence" or "p" are to the lawful currency of the UK and references to "U.S.
dollars," "dollars," "$" or "(cent)" are to the lawful currency of the United
States. Solely for the convenience of the reader, this Form 10-K contains
translations of certain pound sterling amounts into U.S. dollars and certain
U.S. dollar amounts into pounds sterling. These translations should not be
construed as representations that the pound sterling amounts actually represent
such U.S. dollar amounts or vice versa or could have been or could be or will be
converted into U.S. dollars or pounds sterling, as the case may be, at the rate
indicated or at any other rate. Unless otherwise indicated, the translations of
pounds sterling into U.S. dollars and U.S. dollars into pounds sterling have
been made at $1.6595 per (pound)1.00, the noon buying rate in the City of New
York for cable transfers in pounds sterling as certified for customs purposes by
the
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Federal Reserve Bank of New York (the "Noon Buying Rate") on December 31, 1998.
On March 23, 1999, the Noon Buying Rate was $1.6372 per (pound)1.00.
Principal Businesses
Local Telecoms and Television Services
The Company is the second largest operator of local broadband
communications systems in the UK as measured by the number of customers, 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, CATV
and Internet access services to customers connected to its networks. These
services are provided over local broadband fiber networks which have both
coaxial and copper connections to the home. Based on operating results and
experience gained by management in the United States telecommunications market,
the Company has developed innovative marketing strategies which have increased
customer penetration rates, customer retention and operating profitability.
The industry in which the Company participates has demonstrated strong
growth over the last several years. Since January 1, 1992, the industry has
connected approximately 4.1 million telephone lines. Since January 1, 1994, the
industry has more than doubled its market share of multi-channel homes to 45%.
The following tables illustrates these statistics:
UK TELEPHONY CABLE INDUSTRY STATISTICS
<TABLE>
<CAPTION>
Telephone Lines
-------------------------------------------------------------------------------
Residential
Total Residential Telephone Line
Telephone Lines Telephone Lines Homes Passed Penetration
--------------- --------------- ------------ -----------
<S> <C> <C> <C> <C>
January 1, 1999 4,070,866 3,567,786 11,904,341 30%
January 1, 1998 3,442,196 3,038,809 10,693,809 28%
January 1, 1997 2,278,113 2,039,081 8,351,310 24%
January 1, 1996 1,419,819 1,287,248 6,042,296 21%
January 1, 1995 717,566 649,350 4,116,971 16%
January 1, 1994 314,381 279,728 2,786,202 10%
January 1, 1993 106,989 92,715 1,954,829 5%
January 1, 1992 21,225 N/A 1,343,557 --
</TABLE>
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<TABLE>
<CAPTION>
Multi-Channel Homes
-----------------------------------------------------------------
Broadband Total
Cable Multi-Channel Broadband Cable
Subscribers DTH Homes Homes As a % of Total
<S> <C> <C> <C> <C>
January 1, 1999 2,826,010 3,458,000 6,284,010 45%
January 1, 1998 2,373,548 3,583,000 5,956,548 40%
January 1, 1997 1,872,962 3,446,000 5,318,962 35%
January 1, 1996 1,326,842 3,170,000 4,496,842 30%
January 1, 1995 908,018 2,818,000 3,726,018 24%
January 1, 1994 611,423 2,438,000 3,049,423 20%
</TABLE>
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Source: ITC; BSkyB
As of December 31, 1998, NTL (not including recent acquisitions) had
471,000 residential customers, approximately 92% of which subscribed to both
telephone and television services. At the end of 1998, NTL (not including recent
acquisitions) had a total of 905,100 RGUs resulting in 44.2% customer
penetration, 42.3% telephone penetration, 42.7% cable penetration and 85% RGU
penetration of homes marketed. As of December 31, 1998, including the
acquisition of the operations of ComTel Limited and Telecential Communications
(collectively, "ComTel") and the amalgamation with Comcast UK Cable Partners
Limited (but excluding Cable London Plc) ("Partners") and pro forma for the
acquisition of Diamond Cable Communications Plc ("Diamond Cable"), the Company
had approximately 1.2 million residential customers and over 1.9 million RGUs,
resulting in 38.5% customer penetration, 36.3% telephone penetration, 28.9%
cable penetration and 63.6% RGU penetration of homes marketed. By comparison,
based on published statistics of the Independent Television Commission ("ITC"),
as of January 1, 1999, UK cable penetration averaged approximately 30.0% for
telephone and approximately 23.7% for cable television. As of January 1, 1999,
the UK telephony cable industry had connected approximately 4.1 million
telephone lines and approximately 2.8 million broadband cable customers.
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The following table illustrates operating statistics for the Company's
newly constructed network:
<TABLE>
<CAPTION>
PRO
FORMA
NTL
Combined
NTL ONLY(*) (5)
------------------------------------------------------------------------------------
December 31,
------------------------------------------------------------------------------------
1998 1997 1996 1995 1998
------------- ------------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Homes passed (1) 1,247,200 1,007,000 779,100 463,000 3,495,000
Homes marketed (Telephone) 1,064,600 810,000 467,300 176,200 2,907,200
Homes marketed (Cable) 1,064,600 810,000 467,300 176,200 3,046,800
Homes marketed (as % of
homes passed 85% 80% 60% 38% 87%
Total customers (2) 471,000 321,300 168,200 57,700 1,172,300
Dual 434,000 287,200 133,800 44,630 764,700
Telephone-only 16,100 15,300 15,950 6,620 291,200
CATV-only 20,800 18,800 18,450 6,450 116,400
Total RGUs (3) 905,100 608,500 302,000 102,300 1,937,000
Customer penetration 44.2% 39.7% 36.0% 32.8% 38.5%
RGU penetration (4) 85.0% 75.1% 64.6% 58.1% 63.6%
Telephone penetration 42.3% 37.3% 32.0% 29.0% 36.3%
CATV penetration 42.7% 37.8% 32.6% 29.1% 28.9%
Annualized churn 10% 11% 10% NM NA
</TABLE>
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(*) Excludes all recent acquisitions.
(1) "Homes passed" is the expression in common usage in the cable industry
as the measurement of the size of a cabled area, meaning the total number
of residential premises which have the potential to be connected to the
Company's network.
(2) As of December 31, 1998, the Company also provided service to
approximately 19,400 customers connected to acquired cable systems over
which it does not offer a full range of services. The Company also has
approximately 195,000 Internet customers.
(3) An RGU (revenue generating unit) is one telephone account or one CATV
account; a dual customer generates two RGUs.
(4) RGU penetration is the number of RGUs per 100 homes marketed.
(5) Includes Partners, ComTel and Diamond Cable. Excludes 50% ownership of
Cable London.
NA Not available.
NM Not meaningful due to the limited customer base and recent commencement
of services.
The Company believes that much of its success during this period has been
due to its marketing strategies and the introduction of innovative residential
services packages which bundle telephone and a small selection of CATV channels
within a single product offering. The Company also gives customers the
opportunity to purchase additional channel packages and premium channels, as
well as additional telephone lines and Internet access services. 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. As of the end of
1998, the Company had an
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annualized churn rate of less than 10%, a rate which is significantly lower than
the published churn rates of the other UK telephone/cable operators.
Local Broadband Network Construction
The Company is installing a full-service network capable of providing a
high speed, high capacity, two-way voice, data and video communications pathway
to the customer. This approach allows the Company to pursue four revenue streams
(residential telephony, residential cable television, business
telecommunications services and Internet access services) on its network without
a significant increase in fixed investment.
Including recent acquisitions, NTL's local franchise areas cover
approximately 5 million homes, spanning a broad geographic area across England,
Scotland, Wales and Northern Ireland. As of December 31, 1998, including recent
acquisitions, the Company's integrated full-service network (including recent
acquisitions) had been constructed past approximately 3.5 million homes (or
approximately 70%) 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 estimates that, including recent
acquisitions, its local franchise networks cover approximately 7,000 route miles
of fiber backbone network, with approximately 400,000 fiber miles, and an
estimated 75,000,000 route miles of coaxial/copper connections.
The Company's licenses require it to roll out its network past a specified
number of premises (or homes) each year. The total requirement for all the
Company's licenses, including the recent acquisitions, is to pass approximately
4.7 million homes, which is less than the actual total of homes available to the
Company should it wish to construct its network past them. The Company believes
it will be able to satisfy its milestones, but there can be no assurance that
such milestones will be met or that any application to modify those milestones
would be accepted. If the Company is unable to meet the construction milestones
required by any of its licenses and is unable to obtain modifications to the
milestones, the relevant license or licenses could be revoked.
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National Telecoms Services
The Company offers national business telecoms, national and international
carrier telecoms services, radio communications, satellite services and national
Internet 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
independent national telecoms networks in the UK. The Company estimates that the
NTL national network currently covers approximately 3,500 route miles and
140,000 fiber miles throughout England, Scotland and Wales. During 1998, the
Company extended the network and to include the first resilient fiber connection
between Northern Ireland, the Republic of Ireland and England, and, through its
acquisition of Eastern Group Telecoms ("EGT"), expanded the network to reach
international landing sites in southeast England.
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The Company intends to compete in the major segments of the UK telecoms
market. According to published Office of Telecommunications ("OFTEL")
statistics, the total annual telecoms market in the UK in 1997/98 was estimated
at approximately (pound)24 billion. Of the total telecoms market, the Company
estimates that approximately (pound)8 billion represents national business
telecoms, (pound)2 billion represents carrier services and (pound)1 billion
represents international carrier telecom services. The NTL national network has
significantly expanded the Company's telecoms opportunities from the business
within its franchise areas to the much greater UK national market.
Combining Local and National Networks
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 UK 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.
The integration of its voice and data platforms creates strategic
advantages for the Company's Internet business. A key issue facing telecom
operators such as BT is how to transition high volume, lower unit value Internet
traffic from the traditional voice networks, as early as possible onto the more
cost-effective packet-based IP infrastructures. By routing Internet traffic at
the edge of our network, via the transit layer, NTL is able to achieve this, and
therefore optimizing its investment in switching infrastructure.
The Company has made significant progress connecting its local switches to
the NTL national network. Nearly all of the Company's local switches are
connected either directly or via access hubs to the national network. In 1999,
the Company will continue the development and connectivity of its networks,
including the introduction of four additional local switches, a further
international switch and a new national transit switching layer. The transit
switching layer is expected to be comprised of 9 switches, which will be sited
in major cities across the UK. It will act as a common interconnect gateway for
voice and Internet traffic between NTL and other operators, and during 1999 will
have connections to over 80% of the trunk network of British Telecommunications
plc ("BT") for least cost routing. The Company has already begun carrying a
portion of its own long distance voice and data traffic on the network. This
will grow significantly during 1999 with the implementation of the transit
network.
National Business Telecoms
In the business market, NTL emphasizes its regional focus and describes
itself as a "nationally competitive but locally accountable" service provider,
whose business purpose is to "enable businesses to become more efficient and
effective".
In addition to its national efforts, NTL continues to focus regionally upon
education, healthcare, local government, and media and information technology
companies. The NTL communications solution is attractive to these customers
because of its reliable, high bandwidth solutions and because of the Company's
ability to
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bundle several services together at attractive prices. The Company's program for
education has not only provided value-added technology services to universities,
but also has accelerated the connection of local secondary and primary schools
to the Internet.
The Company bases its approach to the large and medium-sized businesses on
or close to its network, by grouping its products and services into five groups.
The first includes NTL's simple "Access" services. These services connect
the customer to the Company for inbound and outbound voice and data calls. These
access services include traditional analogue Business Exchange Lines ("BELs")
and Digital Business Exchange Lines ("DELs"). DEL services include Basis Rate
Access ("BRA"), also known as "ISDN2", and Primary Rate Access ("PRA"), also
known as "ISDN30". PRA services deliver DASS2 or Q931 signaling. These and other
direct and indirect access services are priced competitively and offered in
competition with a number of other direct and indirect suppliers.
The other four groups of services and products are described as "Managed
Voice", "Managed Data", "Internet" and "Enhanced Services".
The Managed Voice service is best illustrated by the Company's Central
Exchange "Centrex" service which presents the customer with business exchange
lines configured as a "virtual PABX", complete with call-handling facilities
normally associated with a traditional PABX (or PBX). The success of this
product is best demonstrated in the East Midlands where eight of the 11 local
government organizations use NTL Centrex as their main business service,
including the Nottingham City Council with more than 3,500 lines.
Managed Data services include fixed point-to-point private circuits at
speeds from 64Kbit/s, through multiples of that speed (i.e. "n x 64Kbit/s",
2Mbit/s or "Fibrelink2") and multiples of 2Mbit/s, including a 10Mbit/s Local
Area Network Extension services ("LANLink") and individually tailored 100Mbit/s
and 155Mbit/s Services. Other services in this family include the provision of
intersite data services with a particular transmission protocol, for example
Internet Protocol ("TCP/IP"), Frame Relay and Asynchronous Transfer Mode
("ATM"). An example of these services would be the provision of a 155Mbit/s ATM
network to a group of 16 university and hospital sites in South Wales.
The Internet group of products and services ranges from "Dialup" customers
to private circuits at speeds of 64Kbit/s and above. The Company expects to
launch a range of new services and branded hardware products in the second and
third quarters of 1999, which should include both entry level and advanced
"firewalls", and a self-provisioning web-hosting service. The Company owns and
provides all the support for VirginNet and provides service to BusinessNet and
more than 20 other Internet Service Providers.
"Enhanced Services" describes a range of Voice, Data and Vision services.
The Company has created business solutions from enhanced telephony using
Computer Telephony Integration and Interactive Voice Response solutions for Call
Center operators (in configurations similar to the Company's own customer call
centers). Other enhanced services are Closed Circuit Television and
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Surveillance Systems ("CCTV"), like the installations at the Royal Yacht
Britannia, Bristol Prison and many town and city centers across the UK.
To date, the Company has been successful in obtaining telecoms contracts
from businesses located within its franchise areas. As of December 31, 1998, the
Company (excluding recent acquisitions) had over 13,100 business customers and
approximately 50,800 business telephony lines installed, which represented
nearly 100% increase over year end 1997 for both customers and lines. Including
the recent acquisitions of Partners (excluding the 50%-owned Cable London
franchise), ComTel and Diamond Cable, the Company had approximately 128,400
business telephony lines installed.
Capitalizing on the extended reach of its national network, the Company is
competing for a share of the business telecoms market on a national basis.
Management believes that it can build on the strengths gained in its local
franchise areas to approach targeted business users located in other areas of
the UK, initially focusing on users with multiple business locations. NTL
launched its national business telecoms service in November 1997 and its
strategy is to target medium and large businesses, beginning with those located
near the major urban areas currently served by the NTL national network.
NTL has a variety of methods to connect the "last mile" to the customers'
premise from the national network. First, as a certified national public
telecommunications operator ("PTO"), NTL can readily obtain the permits to
construct telecoms networks, and can therefore simply build out its network to
reach customers. Although this is clearly the most costly, the expense can be
justified in the case of large customers or when a significant level of traffic
is obtained from several customers. Second, NTL has already been successful in
utilizing its significant tower infrastructure to efficiently connect to
customers using microwave radio links. As a result of its long history in
broadcasting and other communications businesses, NTL owns or has direct access
to over 1,300 tower sites in attractive locations all across the UK. Microwave
radio represents an efficient and reliable method for connecting customer
locations to the national network. Third, NTL can lease circuits on the local
networks of other service providers to connect to the customers premises.
Although this may reduce the operating margin on a particular account, it
requires no capital expense, it can often be installed relatively quickly, and
the circuit can be replaced at a later date if a more profitable connection
method can be justified.
In addition, the Company has been awarded a license to operate radio fixed
access services at 10 GHz throughout the UK. The Company is currently undergoing
test trials of the service in preparation for operational trials with major
business customers. If the test trials are successful, and if the Company
determines to seek and deploy the additional capital resources to pursue this
opportunity and the networks are developed, the 10 GHz license would further
facilitate the development of the Company's local access reach to large
businesses.
As a complement to its national business telecoms effort, the Company's
Vision Services group offers CCTV and remote monitoring services. Current
customers include shopping centers, hospitals, railways and prisons. Management
believes that CCTV services offer the potential to
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<PAGE> 14
increase network traffic, broaden the Company's product base, enhance
relationships with customers and reinforce the NTL image as a leading
communications company.
Carrier Services and International
NTL competes in the growing market for bandwidth, voice and leased line
services in the national and international wholesale telecommunications market.
The Company provides digital leased lines from 2Mbits/sec to STM-16 on both a
national and international basis. This capacity is used for voice, data, video
and audio traffic to major regions of the UK, US and Europe. Customers include
fixed line and mobile telecommunications operators, cable operators, Internet
service providers, and various information technology and facilities management
companies.
NTL has considerably expanded its 'carriers' customer base over the last
year through leveraging its own international, national and local
infrastructure. Relationships with a number of major national and international
operators have been established, notably:
COLT where NTL has won 'preferred supplier' status for the distribution of
COLT's traffic outside the London area. This covers bandwidths from 2Mb/s
to STM-1.
ENERGIS for which NTL provides high speed managed services to enable the
operator to more effectively address its 'off-net' customer base.
Global One, as part of this international operators' roll-out, NTL is
providing managed services between London and Dublin over the recently
completed and NTL-owned 'Sirius' sub-sea cable.
Additionally, NTL has continued to grow its business within the Mobile
Operators market sector. During 1998, both Vodafone and Orange considerably
increased their requirements for inter- switch capacity, and as of December
1998, NTL supplied Orange with the majority of its inter-switch capacity.
NTL has recently acquired EGT, thus gaining significant fiber assets
connecting the east and south coast major submarine cable landing sites to
London. This acquisition, in conjunction with the NTL fiber infrastructure to
the South West, has enabled NTL to expand geographically providing international
cable owners with connectivity to the main telecommunications hub sites in the
UK. NTL has correspondingly developed its broadband product portfolio to
specifically address the large bandwidth 'backhaul' services required by this
customer base.
The Company's international facilities license allows it to supply
international services to other carriers in conjunction with achieving internal
cost savings. NTL has entered into long-term agreements to purchase
international telecoms capacity on new transatlantic fiber optic cables
connecting the Netherlands, Germany, the UK and the United States. NTL recently
completed the 'Sirius' extension of its UK SDH network to Ireland via two
submarine cables and the installation of a duct route between Dublin and
Belfast. This cable system is the first independent cable system to Ireland and
has been reported to be the largest submarine cable system in the world with 48
fibers.
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NTL is also expanding its product portfolio to include virtual private
networks, managed data networks, ATM, Frame Relay and multi-media services. NTL
recently gained international connectivity to Scandinavia, France and Italy. The
Company has extensive satellite coverage from three UK teleports providing
voice, bandwidth, data and media services to most of the world.
Radio Communications
The Company's Radio Communications group ("RadioComms") offers a full
range of services, including the operation of radio networks and the provision
of support and maintenance services to customers with "Mission Critical" radio
communications needs.
This Division serves an estimated 70% of the radio installation and
maintenance market for Public Safety Services within England and Wales and
includes associated customers such as HM Prison Service and HM Coast Guard.
These customers provide a steady source of revenues for NTL, and have also
proven to be very effective references for other NTL services and products.
NTL's track record for reliability and responsive customer care is also clearly
demonstrated through these customers.
RadioComms is involved in mobile communications maintenance, support and
facilities management. This enables RadioComms to offer customers the optimum
solution to their requirements, from equipment specific component
repair/replacement, to full turnkey site and equipment maintenance.
The Company intends to secure further customers and contracts, expanding
from facilities and maintenance activities into complete outsource arrangements.
The Company has positioned itself to effectively compete in the major growth
sector in the radio communications market over the next five years, from both
public and private mobile operators. Several large contracts of this type are
under bid process this year, with contract awards expected in 1999. Long-term
contracts (typically greater than five years) of this nature, if awarded to the
Company, are expected to substantially increase the revenue profile of
RadioComms and help maintain the revenue stability of the Company overall. There
can be no assurances that such contracts will be awarded to the Company.
The UK market in radio communications continues to grow strongly. The
Company also has concentrated on growing its owned and managed portfolio of
radio sites and generating revenue through the provision of site sharing
facilities to mobile communication operators. During 1998, the UK site sharing
businesses of Simoco and EGT were acquired and further portfolio growth was
achieved through site management deals with three additional fire brigades.
NTL Internet
NTL Internet provides residential, wholesale and business Internet access
and support services, consulting and systems integration services, and Intranet
design and implementation. In 1995, the Company launched its Internet access
service as a national service throughout the UK. This service provides access to
the World Wide Web to customers in and outside its Regional Areas. NTL
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Internet provides Internet service on a wholesale basis to other Internet
service providers as well as on a retail basis.
NTL Internet has become one of the fastest growing Internet carriers in
the UK. The Company currently services more than 200,000 Internet users,
primarily through its wholesale relationships with Virgin.Net, Which? Online and
others.
In 1996, the Company established the Virgin.Net joint venture with Virgin
Communications Limited ("Virgin"), which began offering service in November 1996
under the name Virgin.Net. The joint venture is owned 49% by a subsidiary of the
Company and 51% by Virgin and is intended to offer Internet access and
interactive services to UK consumers and small office/home users. In addition,
Virgin.Net has contracted NTL Internet to provide the dial-up national network
and back office structure necessary for access to Virgin.Net and the Internet.
As with the Company's local telephony business, management believes that
access to the national telecoms network will have strategic benefits for NTL
Internet and the Company's Internet services businesses. Management expects
utilization of the Company's national telecoms network to reduce operating
costs, increase flexibility and national reach and improve the overall marketing
and product opportunities of NTL Internet.
National Consumer Services
National Consumer Services ("NCS") is NTL's first retail offering to the
UK consumer outside its franchise areas. NCS will carry the consumer's telephony
traffic via Indirect Access for voice and Internet calls. The bundle of services
will provide Internet access via the PC or through NCS's TV-Internet set top box
which enables full Internet access without the need to purchase a PC. It is
estimated that of the 26.5 million UK homes, over 18 million homes have neither
a PC nor Internet service. Through this service, NTL will also offer a per
minute national call tariff of 3p/day, 2p/evening and 1p during the weekend.
Digital and Interactive Services
The Digital Services division includes NTL Interactive, which is
developing a range of interactive services for television and other platforms,
the Digital Technology group, which is involved in the deployment of NTL's
digital cable, and the Digital Media Centre, a digital TV and interactive
content playout center.
NTL Interactive is responsible for the aggregation of a range of types of
interactive content into a seamless service which can be deployed on NTL's
interactive television services, such as TV- Internet and digital cable. The
division has partnered with Internet, CD-ROM, and TV content owners, among
others, to deliver a wide ranging interactive service, including Education, Home
Shopping and Banking, Travel, Entertainment, Games, News, Sport and Local
content areas. NTL Interactive has positioned itself to be able to gain
distribution for its services on other platforms, both inside and outside of
NTL. The Digital Technology group provides a resource pool of technological
expertise to be applied to individual projects, such as NTL's digital cable
project, and investigation
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and trialing of next generation technologies which could be used to deliver
NTL's services. The Digital Media Centre is set up to manage the playout of
NTL's digital television services, including digital cable, NTL's interactive
services, and other digital television channels, such as British Eurosport.
The digital and interactive division is also responsible for managing NTL's
investments in SDN and Digital One division. NTL has a 33% stake in SDN, the
operator of a national Digital Terrestrial television license, which will
commence broadcasting commercial services in 1999. In addition, NTL has a 33%
stake in Digital One, the operator of the exclusive national commercial Digital
Radio license, which will also commence services at the end of 1999.
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 40 years. This group designs,
installs, operates and maintains new transmitter networks and has a spectrum
planning service to plan the coverage of television and radio networks. It
operates a national infrastructure in the UK of over 1,300 owned and shared
transmission sites which deliver broadcast signals for ITV, Channel 4, S4C,
Channel 5, Teletext and many of the UK's independent local, regional and
national radio broadcasters. In addition to transmission services, the Broadcast
Services division markets value added services to its existing television
customers including additional monitoring services, reserve system services and
contribution/distribution services.
NTL has been involved in broadcast television since the 1950s when it
designed and built the television transmission system for the UK's first
independent commercial television network. The Broadcast Services group provides
the Company with a stable contracted revenue stream from a variety of customers
through long-term contracts generally with eight to ten-year terms. The
projected total value of the Company's currently contracted revenues for
national telecoms and broadcast services from January 1, 1999 through December
31, 2007 is more than $2 billion.
The foregoing projection of the expected approximate revenues receivable
pursuant to existing contracts, which includes Channel 3, Channel 4 and S4C
transmission contracts, is based on various factors and was derived utilizing
several assumptions. Important assumptions and other important factors that
could cause actual revenues to differ include, among other things, general
economic conditions, the regulatory regime prevailing from time to time,
adherence to the construction, service and other obligations of such contracts,
absence of labor or weather difficulties, absence of defaults, particularly
payment defaults, by the counter-parties to such contracts or the termination or
non-renewal of such contracts. The Company assumes no obligation to update this
projection to reflect actual revenues received by the Company, changes in
assumptions or changes in other factors affecting the information presented. The
contracts with the ITV companies and Channel 4 terminate on December 31, 2012,
or at the time of analogue switch-off, whichever occurs first. If analogue
switch-off occurs later than December 31, 2012, the contract can be extended on
a daily basis. The contract with S4C presently terminates on December 31, 2002.
Although historically the ITV companies have renewed their contract, there can
be no assurance that they will
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do so upon expiration of the current contract, that they will not seek to obtain
more favorable terms or that they would not seek to obtain from third parties
all or a portion of the transmission services currently provided by the Company.
The loss of this contract could have a material adverse effect on the business
of the Company.
Television Broadcasting
The Company currently provides broadcast transmission services for three
of the five national television channels in the UK. Channel 3, Channel 4/S4C and
Channel 5 are all currently broadcast from NTL's network of over 1,300 owned and
shared transmission sites.
In November 1998, NTL made broadcasting history with the launch of the
first ever digital terrestrial television network. Two of the four recipients of
the Digital Terrestrial Television ("DTT") multiplexes, Digital 3 & 4 and SDN,
selected the Company as the supplier of transmission services. The Company has
contracted to provide a complete, end-to-end service, including studio
compression, transmission and full systems integration. The Company has
successfully completed on time the first phase of the build program from
play-out centers to transmission. Both of the two new networks were available
for services as required in November 1998 and will undergo further expansion in
1999.
Radio Broadcasting
The Broadcast Services division also offers a range of services to local
and national radio broadcasting licensees in the UK including: target service
area planning; site location, installation and construction; and equipment
selection, procurement, operation, monitoring and maintenance. This division
offers total broadcast contract services ("TBCs"), where it designs, builds,
owns and maintains the operator's transmission facilities, and facility
management contract services ("FMCs"), where it maintains customer-owned
equipment and administers the operation of the transmission service. It
maintains over 70 TBCs and 60 FMCs.
In 1998, NTL was successful in winning 8 year transmission contracts for
both of the new regional radio licences advertised in the year, and successfully
entered the new small market radio sector, winning a total of eight contracts.
NTL also successfully negotiated long term contract extensions, for terms up to
10 years, with two of its major radio customers.
In digital radio, the Company believes it is positioned to be a major
supplier of transmission and distribution services. In 1998, NTL signed a
transmission contract worth (pound)50m over 12 years with Digital One, the
successful licence winner for the only national commercial multiplex. The
Company is also well positioned to win transmission contracts for the 26 local
Digital Radio multiplex licences which will be rolled out in 1999 and 2000.
NTL International
NTL International, formerly known as Nexus, provides broadcasting systems
design, and specializes in services associated with the design and construction
of radio and television studio
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centers and technical facilities. These services include installation,
commissioning, equipment procurement, training and consultancy for projects
ranging from production and post production studio facilities to full turnkey
systems involving transmitter network planning and installation.
Management believes that the Company is uniquely placed to capitalize on
the two major trends that will shape global broadcasting in the coming years;
privatization and digitalization. In 1998, there has been focus on creating
partnerships with major broadcasters to design, build and operate complex
digital broadcast systems. NTL's strategy is to transfer our success in UK to
other countries (see also "Recent Developments").
Business Strategies
Management's objective is to exploit the convergence of the
telecommunications, entertainment and information services industries to become
a premier new era communications company in the UK, which will offer these
services to residential, business and wholesale customers on a national scale.
Management believes that NTL will be able to deliver its strategy based on its
entrepreneurial approach, innovative marketing, state-of-the-art network and
technical excellence. The Company is currently employing several strategies to
achieve its objectives:
Installing Flexible Integrated Full-service Networks. This strategy allows
the Company to pursue four revenue streams--residential cable television,
residential telephony, business telecommunications services and Internet access
services--without significant incremental cost in fixed investment. The
integrated full-service networks provide a high-speed, high-capacity, two-way
communications pathway to the consumer that is capable of delivering new
services which may emerge from the convergence of telecommunications,
information and entertainment. Such embedded flexibility allows NTL to adapt its
national network to offer Frame Relay and Asynchronous Transfer Mode ("ATM")
services.
Focusing on Target Market Segments. The Company believes that tailoring
its services to the needs of its customers will increase the penetration of
these services. Examples of tailored services include the development of local
television programming and advertising and of private telecommunications
networks geared to "captive" local organizations such as governmental and
educational institutions. NTL has a track record of differentiating itself by
providing flexible and customized solutions to meet its customers' individual
requirements.
Maximizing Network Capacity Utilization. The fixed cost structure of
building communications networks allows the Company to gain significant
operating leverage from incremental services provided over its networks. In its
local franchises areas, the Company's strategy is to maximize gross profit
contribution per home passed, rather than revenue per customer, by increasing
overall penetration of the number of services provided over its network.
Examples of this strategy are the development of bundled product offerings that
encourage subscriptions to multiple services, multiple television pricing plans
that appeal to differing and distinct market segments and price points, and more
"a la carte" and transaction-oriented services which increase network
utilization. This strategy resulted in the design and launch of the Choices
marketing packages, which increased the Company's overall penetration rates as
well as its percentage of dual subscribers.
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The Company's strategy in national telecoms is to continue to expand both
the geographical reach and breadth of services provided, so as to increase the
potential market of national business and wholesale customers. In its national
business telecoms, management is seeking to increase network utilization by
identifying cross-selling opportunities within NTL's existing customer base
through new services that capitalize upon the convergence of telecoms,
entertainment and information services.
Providing Superior Customer Service. The Company believes customer service
and attentiveness to the needs of customers are critical to the continued growth
of its residential and business services and places great significance on
consistently servicing customer requirements. The Company operates multiple
customer call centers, including three large centers in Luton, South Wales and
Central Scotland, as well as multiple call centers throughout the regions of the
recently acquired businesses (see "Recent Developments"). Calls are answered 24
hours a day, 365 days a year. The customer call centers currently employ
approximately 500 people, who are specially trained to deal with customers'
inquiries and needs with respect to the Company's various products and services.
Each customer representative attends a four week in-house specialized training
program, which is focused on increasing a representative's knowledge of NTL's
corporate culture and products and providing the individual with specific sales
skills as well as a better understanding of the level of service expected to be
provided to potential and existing customers on an ongoing basis. Finally, as
NTL recognizes the importance of the installation in the customer's satisfaction
with the services, management has focused on monitoring installers' performance
closely to ensure compliance with strict quality standards and scheduling
installations to suit customers' requirements.
Developing Advanced Management Information Systems. NTL believes that
advanced management information systems are critical to effectively, efficiently
and accurately serving its customers. The Company uses proprietary software to
handle its subscriber management functions from one central location. The system
uses Windows-based software and can handle both business and residential
customers as well as telephony and CATV on a single platform. It is capable of
managing the Company's tariff and discounting structures, and will also allow
for the introduction of new telephony and CATV services, such as 0800 numbers.
Additionally, the system provides the functionality to support the customer
representatives inquiry handling and contributes to NTL's high level of customer
service. For example, customer representatives have on-line access to customers'
billing, payment and subscription histories.
Gaining Cost Efficiencies. The Company gains cost efficiencies by
centralizing certain services provided to the franchise areas in the Company's
head office in Farnborough. Examples include network planning, marketing,
information systems and legal affairs. Alternatively, those cost centers which
are critical to penetration, customer service, and retention are located as
close to the customer as possible. Examples include construction management,
sales, customer service, and network maintenance, which are all located in each
of the Regional Areas.
Marketing Strategies
The Company increases its customer base and improves market penetration
for its services by implementing separate marketing strategies tailored to its
residential and business customers. The
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Company believes that separately marketing to residential and business customers
based on the specific benefits they receive from the Company's services is the
most effective means of maximizing the Company's customer base.
Residential Marketing
The Company markets its local telecoms and television service under the
NTL/CableTel name and promotes its image as an integral part of the emerging
information super-highway. This marketing strategy includes the following
concepts in the Company's advertising, literature and other materials:
o positioning NTL as a local telephone company;
o introducing alternative telephone service, multi-channel television
and Internet access as the first of an expanding array of services
which will be carried on the network in the future;
o emphasizing that the Company is bringing "more choice" in television
viewing, "better value" in telephone service and "state of the art"
communications technology in providing access to the Internet;
o demonstrating the Company's commitment to quality, value and service
in its offerings as evidenced by its Code of Practice approved by
OFTEL;
o building interest, awareness, and credibility for the Company's
services.
The Company employs an extensive direct marketing and selling approach to
gain customers. The Company begins to build a relationship with our communities
before construction commences in a given area by closely coordinating its
upcoming activities with local government authorities and community groups and
eliciting feedback on ways to minimize disruptions and inconvenience.
Information packages and construction notices are delivered to the neighborhood
prior to construction. The Company's consumer affairs advisors personally visit
affected neighborhoods and households in order to meet the special needs of the
residents. All written and telephonic inquiries from residents are input by name
into a lead-tracking database, so that when areas are released to marketing, the
Company's sales personnel have complete customer profiles of the residents in
their selling area.
The Company initiates its marketing in an area by direct mail, which is
followed by a personal appointment with a Company sales advisor. In some
regions, the sales visit is also preceded by the hand delivery to every
household of a videotape which describes NTL and its services. All information
regarding both current and future sales opportunities is entered into the
database, and current sales information is updated in the Company's
provisioning, billing and subscriber management system. Unsold household data is
maintained for future telemarketing, direct mail, and re-marketing by the sales
force.
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As an additional service, the Company launched pay-per-view services to
its customers in March 1998. The Company has entered into a joint venture with
TeleWest, General Cable and Diamond Cable for the provision of a cable-only
movie, sport and event pay-per-view television service called Front Row. The
joint venture comprises approximately 60% of the UK cable television industry
and represents the alternative to BSkyB's dominant position in movie and sports
rights for pay television. The pay-per-view service will be available to other
cable operators subject to agreeing terms of carriage. Front Row has signed
content output contracts with major Hollywood studios, including Warner
Brothers, Sony Pictures Entertainment (Columbia/Tristar) and the Walt Disney
Company (Walt Disney Studios, Miramax, Hollywood Pictures and Touchstone).
Additionally, as part of NTL's focus in ensuring and maximizing customer
retention, the Company usually charges an installation fee (currently
(pound)49.99 including VAT), which is often discounted. It also adopts a one
year service agreement and encourages direct debit payment as the "standard".
The installation fee and one year contract provide qualifying mechanisms to
ensure that the customer understands and recognizes the value of the services,
while the encouragement of direct debit payment helps to avoid non-payment or
non-payment related cancellations.
Bundled Product Offerings. The Company's product and pricing strategies
emphasize choice, value, and quality and are designed to encourage subscription
to multiple services and maximize long-term customer retention. With its
integrated dual service network, the Company has the opportunity to offer
bundled telephony, Internet and CATV services.
Following the success of a trial in certain of the Company's franchises,
in November 1996, the Company announced the introduction of a new promotional
pricing and packaging structure called "Choices" for its telephony and CATV
service. The Choices packaging structure is still in place today and has been
extremely successful for the Company. The First Choice entry package offers the
customer the Company's telephone service, plus a choice of either (i) a limited
selection of television channels which includes all of the terrestrial channels,
several popular CATV channels and one NTL exclusive local TV channel, (ii)
Internet access service or (iii) a second telephone line. The current price for
First Choice is (pound)8.87, which is approximately the same as BT's current
line rental charge. This means that NTL's customers can receive their telephone
line plus cable television, Internet access or a second telephone line for the
price of the monthly telephone line rental alone from BT. Customers can add
either or both of the two other choices for (pound)5 each.
The customer is also encouraged to choose from several genre-based tiers
of mini packages called Choice Collections and the Popular Collection, each of
which includes a number of additional cable channels. The Premium Choices
packages enable the customer to select from several premium channels each of
which can be purchased for an additional charge.
The Company believes that this type of bundled and flexible service
package is responsive to the desires and tastes of its customers. The packages
also give the customer the opportunity to trade up or down rather than churn.
NTL seeks to gain incremental revenues by pulling customers through to higher
tier packages. The promotional offer of Sample Choice serves as a shop window
for other incremental services. In addition, the Company encourages subscription
to multiple services by offering a "two for one" discount on installation
charges.
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Value for Money. The Company also emphasizes the "value" of its
residential telephone service. By bundling its telephone service with a choice
of additional services for the price of BT's telephone line rental, the Company
believes that it offers its customers greater value for their money.
In addition to these savings incentives, using the national telecoms
network gives the Company greater pricing flexibility and therefore enables the
Company to design and offer new telephony service packages to its customers. By
integrating its national telecoms network with its local networks, the Company
is able to bypass a portion of the wholesale long distance fees charged by BT
and other carriers for carrying calls to and from the Company's local telephone
networks. This increased flexibility positions the Company to introduce more
volume-oriented and/or geographically based calling plans designed to give the
customer even greater choice and value. Management believes that increased
ability to design attractive marketing plans and to better package services
versus its competitors should have a positive effect on the Company's
penetration rates.
Internet Access and Other Interactive Services. As part of the Company's
multiple services product strategy, NTL Internet offers retail Internet access
at speeds of up to 56.6 Kbits/sec. Particular emphasis is being placed on
jargon-free customer service and support. The Company is testing the provision
of Internet access at substantially higher speed through either Ethernet access
(10 Mbits/sec.), cable modems (4 Mbits/sec.) or ISDN access (128 Kbits/sec.).
Business Marketing
In the business market, NTL is recognized as having the third largest
national telecommunications network in the UK. The Company is leveraging this in
two ways; firstly through a dedicated team of national account managers dealing
with the largest national accounts including many of the other services
carriers, and also through the regional sales and marketing structure.
NTL's sales strategy within its regional bases employs a mixture of
telephone sales and marketing for the single line businesses and a direct and
consultative sales approach for the larger businesses.
NTL is market-driven and has analyzed the market and segmented it into
eight communities of interest - for example, health, education, information
technology - and treats its smaller towns as a unique community of interest. The
sales and marketing teams are structured to support this approach.
NTL offers a choice of voice, data, vision and Internet services as
described under 'Business Telecommunications'.
Carriers Marketing
The liberalization of the Telecoms market in the UK has seen a number of
alternative national and regional operators emerge. NTL has and expects to
continue to successfully serve this
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marketplace through its strategy of providing high quality and competitively
priced services. Additionally, NTL continues to leverage its specialized ability
to provide tailored solutions necessary to serve this demanding market.
The rapid expansion in voice traffic is expected to continue and NTL has
entered into interconnect agreements with national and international operators
to both reduce the costs of carriage and termination of NTL originated traffic
and for the termination of other carriers' traffic.
The expected growth in the number of international operators building and
operating submarine cable systems has and continues to materialize with many of
these cables transiting the UK. NTL has considerably increased its physical
connectivity to UK international cable landing stations and products have been
successfully developed to address the needs of these international cable
operators for backhaul services between the cable landing sites and the major UK
international nodes such as Telehouse, London.
NTL believes the UK market for wholesale data services is significant and
growing rapidly due to the fast growth in IP, Internet and other data traffic.
Utilizing the state of the art NTL ATM network, the Company has developed Frame
Relay and ATM wholesale products to address this increasing demand for high
speed data connectivity. Additionally, leveraging NTL's core data network, local
loop infrastructure and connectivity to the main international UK nodes will
allow the Company to address the needs of international operators for the
termination/origination of UK bound/generated data traffic.
The NTL Networks
Local Broadband Networks
The Company believes that its advanced network design is sufficiently
flexible to permit it to deliver a wide variety of existing entertainment,
telecommunications and information services and will enable it to offer
anticipated new services in the future without incurring significant additional
construction costs to adapt its existing underground network. The Company
estimates that, including recent acquisitions, its local franchise networks
cover approximately 7,000 route miles of fiber backbone network, with
approximately 400,000 fiber miles, and an estimated 75,000,000 route miles of
coaxial/copper connections.
Network Design and Functionality. The Company is installing its
cable/telephone and telecommunications network using established
state-of-the-art technology, deploying fiber optics directly to business
concentrations and residential nodes typically averaging 600 telephone lines or
500 homes respectively, and installing spare duct and transmission capacity in
excess of anticipated needs. In this manner, the Company achieves the cost
efficiencies and rapid deployment that using standardized equipment entails,
while retaining the flexibility to expand and adapt its network over time with
little or no additional underground or construction investment.
The design and construction of a new network varies depending upon factors
including the number of route miles to be installed, density of homes and
businesses, type of surface, and the
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architecture of the network backbone. Each system has been designed with at
least one head-end and at least one telephone switching office. Each system's
head-end and telephone switching office is directly connected to each node by
fiber optic cable. Each node is then connected to a subscriber's premises.
Construction of each system has been planned on a neighborhood-by-neighborhood
basis to allow revenue generating operations to commence in a neighborhood as
construction of the portion of the system serving such neighborhood is
completed.
Fiber Optics. The evolution of fiber optic technology over the past
decade, including increases in the capacity of laser transmitters and decreases
in the price of optical receivers, has enabled the economic deployment of fiber
optic cable much closer to the customer than in traditional coaxial cable CATV
and twisted copper pair telephone networks, thereby improving the quality and
capacity of the CATV and telephone service. The main advantages of deploying
fiber in place of both coaxial cable or copper wire are its smaller size,
greater capacity, freedom from electrical interference, and significant
reduction of the requirement for periodic maintenance. The Company is deploying
fiber to nodes which are normally less than several hundred meters from the
furthest home.
Network Architecture. The Company's cable network is being built with four
2-way channels having an initial capacity of 750 MHz, which is sufficient to
carry over 60 analog channels of television. With digital compression of the
television signal, many more channels can be transmitted. The system is
upgradeable to 1 GHz. Generally, a maximum of one amplifier is required between
the head-end optical receivers and a home. Traditional cable systems often
employ "cascades" of more than 5 amplifiers which degrade signal quality and
increase the chances of system failure.
NTL's local telecommunications network uses a SDH redundant-ring based
architecture, which improves the Company's ability to flexibly deploy capacity
and further enhances system resilience. Telephone signals are carried from the
node to the home over traditional copper pair, over a shorter distance than in
traditional telephone networks, which improves signal quality and allows higher
bandwidth services to be more easily deployed. To connect its residential
customers, the Company uses a "dual drop" consisting of "Siamese" coaxial cable,
capable of transmitting 1 GHz of bandwidth, and two copper twisted pairs capable
of providing two telephone connections. Large business customers are connected
to the telephone network directly through fiber optic cable or microwave.
National Telecoms Network
The Company's national network was designed specifically for the high
volume telecommunications market in the UK and it incorporates many customer
sites directly into the backbone network. Expertise in designing and installing
this network was gained through nearly 40 years of managing its television
transmission network. The Company estimates that the NTL national network covers
approximately 3,500 route miles and 140,000 fiber miles across 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. In addition, in
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December 1998, the Company acquired EGT. This acquisition expanded NTL's network
to cover southeast England.
The national network is a fully redundant, SDH digital fiber network. The
major fiber routes are complemented with microwave radio connections which
increase the capacity and reach of the network. SDH is an advanced technology
which is being increasingly adopted by the telecoms industry for the high speed
transmission of voice, data and video. The Company believes that SDH technology
improves network reliability and performance and provides greater flexibility
than conventional transmission architecture. Provision speeds are also generally
higher with SDH because it is remotely driven by software. In addition, network
availability, reliability, management, and routing are also superior to
conventional transmission architecture because signals are automatically
re-routed to the best path available if another is degraded. Management believes
that NTL has a competitive advantage over other carriers such as BT and C&WC
because SDH technology has been built in its networks from the start, thus
avoiding integration problems with older technology.
The NTL national network has been designed with significant existing
capacity as well as the ability to efficiently increase capacity in the future.
The fiber optic backbone network consists of fiber optic cable which generally
contains 24 pairs (48 fibers), each pair providing 16 x 155Mbits/sec (STM-16).
NTL has also provided for spare fiber optic pairs as well as duct space. For
example, the trunk route specification provides for two large ducts, each with
capacity for 4 sub-ducts, only one of such sub-ducts is currently used.
Therefore, the network capacity can be increased by a further seven times with
minimal incremental capital cost.
The national network supports voice, data, video, Internet and broadcast
services. It provides the backbone for local franchises, carrying national and
international destined traffic across the country. All local franchises and main
broadcast sites are directly linked into the national network.
NTL's local and national networks are not only physically but also
operationally integrated. In 1997, the Company created a Network Operations and
Management directorate, responsible for the central monitoring, operations and
management of both the local and national networks. From one location, NTL
operators are able to remotely monitor the networks, identify faults and contact
local field operators for repair (if necessary) and maximize network capacity
utilization by accessing information about both the local and national networks
simultaneously.
During 1998, NTL implemented an umbrella management system to enable
multiple platforms and equipments from different suppliers to be managed under a
single system. This will allow NTL to exploit the synergies between new local
franchises and its national network more rapidly.
National Broadcast Transmission Network
The Company's television transmission network consists of over 1,300 owned
and shared transmission sites, with towers ranging from fifteen feet to nearly
twelve hundred feet in height. The division's transmission tower at Emley Moor
in Yorkshire is the UK's tallest free-standing structure
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at over 1,000 feet. These towers are complemented by other transmission sites
and relay stations situated throughout the UK.
In addition to the transmission sites owned by this division, this
division also shares sites formerly held by the BBC (now held by Castle
Transmission), allowing it to complete its nationwide coverage. In all, the
Company maintains over 2,000 transmitters, currently monitored from our national
control center at Emley Moor and maintained by a field force strategically
positioned in 54 locations across the UK.
The transmitters of the Broadcast Services division range in size from a 2
watt repeater which serves a small village to 500 kilowatt main stations that
cover large metropolitan areas. All of the transmitters which are analog can be
divided into two categories, solid state circuitry and klystron tube. The
klystron tube transmitters have been manufactured by Pye and Marconi, while the
solid state units were manufactured by Harris, NEC, Thomson and CML, all
reputable manufacturers of transmission equipment. Klystron tube-type television
transmitters have a useful life of 20 to 25 years, while the solid state
transmitters can last well beyond this time frame. Solid state transmitters
require less maintenance than klystron transmitters.
In addition, this division has built and currently operates and maintains
radio transmission facilities for a number of independent local radio operators.
These facilities share components of the Company's television transmission
network infrastructure.
Recent Developments
Holding Company Structure
On or about April 1, 1999, NTL will form a holding company under the
Delaware General Corporation Law which will be the new publicly traded company
of the NTL group of companies. Each share of NTL will be converted into a share
in the new holding company which will continue to trade on NASDAQ and EASDAQ.
NTL will become a wholly-owned subsidiary of the new holding company. Through
other subsidiaries, the new holding company will pursue opportunities outside
the United Kingdom and the Republic of Ireland; the first such investment will
be the acquisition of NTN described under "Australian National Transmission
Network" below.
Australian National Transmission Network
In March 1999, the Commonwealth of Australia accepted NTL Australia's bid
to own and operate the Australian National Transmission Network ("NTN").
Under the terms of the acquisition agreement, NTL Australia, which will be
an indirect wholly-owned subsidiary of the new holding company described above,
will purchase all of the shares of National Transmission Company (the entity
which will hold all of the NTN assets) for an aggregate purchase price of
approximately $650 million Australian ($407 million U.S.). The closing is
expected to occur early in the second quarter of 1999.
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NTN operates from over 560 tower sites and provides exclusive television
and radio transmission services to Australia's only national TV and radio
broadcasters, ABC and SBS. In addition, NTN serves regional and community TV and
radio broadcasters, and provides equipment hosting services to telecom operators
and emergency service communications provides on its towers. NTN's customers
include Telstra, WIN Television, Prime Television, Vodafone and Air Services
Australia. NTN holds long term contractual relationships with the majority of
its customers.
Broadcast and Tower-related Opportunities
NTL's board of directors has approved the pursuit of alternative corporate
financial strategies with regard to its broadcasting and tower-related
opportunities. These strategies are intended to provide the division with more
flexibility to pursue future opportunities and to illuminate the value of those
assets, while leaving the cash flow from its UK operations within NTL.
Diamond Acquisition
On March 8, 1999, the Company acquired all of the shares of Diamond Cable
Communications Plc ("Diamond Cable") pursuant to an acquisition agreement with
the shareholders of Diamond for an aggregate of approximately 13 million shares
of Company Common Stock. In connection with the acquisition of Diamond Cable,
Diamond Cable expects to make a Change of Control Offer pursuant to the terms of
the indentures governing Diamond Cable's indebtedness. The Company has entered
into a bridge facility to finance the redemption of Diamond Cable bonds
tendered, if any, which is subject to certain funding conditions.
Strategic Partnership with Microsoft
On January 25, 1999, Microsoft Corporation ("Microsoft") and the Company
agreed to jointly develop new broadband services for delivery to customers in
the UK and Ireland. In addition, on January 28, 1999, Microsoft purchased $500
million in 5 1/4% Preferred Stock of the Company. Such 5 1/4% Preferred Stock is
convertible into the Company's Common Stock at a conversion price of $100 per
share, is redeemable in 10 years for cash or Company Common Stock and may be
redeemed by the Company on the earlier of 7 years or the date on which the
Company's Common Stock has traded above $120 for 25 consecutive days.
Microsoft and the Company 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, on January 28, 1999, Microsoft received 1.2 million five-year warrants
to purchase the Company's Common Stock at an exercise price of $84 per share.
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EGT Acquisition
On December 22, 1998, the Company acquired EGT (formerly Eastern Group
Telecoms Limited) from Eastern Group Plc for (pound)60 million in cash and
(pound)31 million in 9.9% Preferred Stock, Series B of the Company. This
Preferred Stock has a pay-in-kind coupon of 9.9%, will mature in 2008 and is
redeemable within 18 months from issuance for, at the Company's option, cash or
Company Common Stock.
EGT is headquartered in Ipswich, England, and is comprised of two business
divisions. The telecoms division utilizes a 1,800 km fiber-optic 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 the Company, acquired 9,000,000 shares, or 6.3%, of Newcastle
United PLC ("Newcastle United") from Cameron Hall Developments Limited ("CHD"),
the majority shareholder of Newcastle United, for approximately (pound)10
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
by BSkyB. The irrevocable commitment given by CHD is binding until 12 weeks
following the publication of such report, subject to extension in certain
circumstances.
Partners Acquisition
On October 29, 1998, pursuant to an agreement and plan of amalgamation
with Comcast UK Cable Partners Limited ("Partners"), a wholly-owned subsidiary
of the Company amalgamated (the "Amalgamation") with Partners. Shareholders of
Partners received 0.3745 shares of the Company's Common Stock for each common
share of Partners, an aggregate of approximately 18,764,000 shares of the
Company's Common Stock.
Partners was formed to develop, construct, manage and operate businesses
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
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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" and, together with the Birmingham Cable Equity
Interest, the "Equity Interests"), Cambridge Holding Company Limited in which
Partners currently owns a 100% interest, and two companies holding the
franchises for Darlington and Teesside, England (collectively, "Teesside"), in
which Partners currently owns a 100% interest.
As a result of the execution of the Amalgamation, 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 Equity
Interests. Pursuant to an Agreement in Respect of the Rights of First Refusal
Relating to Birmingham Cable and Cable London, dated August 14, 1998 (the
"TeleWest Agreement"), between the Company, Partners, TeleWest and TeleWest
Communications Holdings Limited, the Birmingham Cable Equity Interest was sold
to TeleWest immediately prior to the consummation of the Amalgamation for
approximately (pound)130 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 of 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, NTL will either sell the
Cable London Equity Interest to TeleWest or purchase TeleWest's 50% ownership
interest in Cable London.
ComTel Acquisition
On June 16, 1998, the Company entered into an acquisition agreement (the
"ComTel Agreement") with Vision Networks III B.V., a wholly-owned subsidiary of
Royal PTT Nederland NV (KPN), for the acquisition of ComTel. ComTel operates
telephony/cable networks in the UK, and its franchises cover approximately 1.1
million homes and are located in the Midlands and South East England regions,
covering areas including Oxford, Swindon, Coventry and Stratford.
Pursuant to the ComTel Agreement, the Company acquired ComTel for a total
of (pound)550 million in two stages. In the first stage, which was completed on
June 16, 1998, the Company acquired certain of the ComTel properties for
(pound)275 million in cash. In the second stage, which was completed on
September 22, 1998, the Company acquired the remaining ComTel properties for
(pound)200 million in cash and (pound)75 million in the Company's 9.9% Preferred
Stock, Series A. This Preferred Stock has a pay-in-kind coupon of 9.9%, will
mature in 2008 and is redeemable within 15 months from the date of issuance for
Company Common Stock valued at market, new Company convertible preferred
securities or cash.
Competition
The Company faces significant competition from established and new
competitors in the areas of residential telephony, business telecommunications
services, Internet and cable television. The Company believes that competition
will intensify in each of these business areas, particularly business
telecommunications and Internet.
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Residential Telephony. The Company competes primarily with BT in providing
telephone services to residential customers. BT, formerly the only major
national PTO in the UK, occupies an established market position and manages
fully built networks and resources substantially greater than those of the
Company. According to OFTEL, at March 31, 1998, BT serviced nearly 87% of UK
residential telephone exchange line customers. The Company's growth in
telecommunications services, therefore, depends upon its ability to convince
BT's customers to switch to the Company's telecommunications services. The
Company believes that value for money is currently one of the most important
factors influencing the decision of UK customers to switch from BT to a cable
telecommunications service. BT has, however, introduced price reductions in
certain categories of calls and, due to regulatory price controls, BT will be
making further reductions in its telecommunications prices. Accordingly,
although the Company intends to remain competitive, in the future it may be
unable to offer residential telephone services at rates lower than those offered
by BT. In such case, the Company may not achieve desired penetration rates and
may experience a decline in total revenues. There can be no assurance that any
such decline in revenues or penetration rates will not adversely affect the
Company. In addition to BT, other telecommunications competitors could prevent
the Company from increasing its share of the residential telecommunications
market. In particular, BT is under a regulatory obligation to introduce carrier
pre-selection CCPS) on its network, which it expects to do in the second half of
2000. CPS may increase the appeal of indirect access operators, whose discounted
call charges may undercut the Company's.
The Company also competes with mobile networks. This technology may grow
to become a competitive threat to the Company's networks, particularly if call
charges are reduced further on the mobile networks. The Company's Radio
Communications group may enable the Company to benefit from the growth in this
technology. There can be no assurance, however, that the Company will be able to
compete successfully with BT or such other telecommunications operators.
The Company believes that it has a competitive advantage in the
residential market because it offers integrated telephone, CATV,
telecommunications services (including interactive and on-line services) and
multi-product packages designed to encourage customers to subscribe to multiple
services. However, there can be no assurance that this competitive advantage
will continue. Indeed, BT and all other operators will 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 Limited ("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
Open (formerly British Interactive Broadcasting). If Open's bid to enter the
interactive digital services market passes review by the competition directorate
of the European Commission, the Company believes that the resulting combination
would provide significant competition.
Business Telecommunications. BT is also the Company's principal competitor
in providing business telecommunications services. In addition, the Company
competes with C&WC, Energis
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Communications Limited, Scottish Telecom in Scotland and with other companies
that have been granted telecommunications licenses such as MCI-WorldCom and
Colt. In the future, the Company may compete with additional entrants to the
business telecommunications market. Competition is based on price, range and
quality of services, and the Company expects price competition to intensify if
existing and other new market entrants compete aggressively. Most of these
competitors have substantial resources and there can be no assurance that these
or other competitors will not expand their businesses in the Company's existing
markets or that the Company will be able to continue to compete successfully
with such competitors in the business telecommunications market.
CATV. The Company's CATV systems compete with direct reception
over-the-air broadcast television, direct-to-home ("DTH") satellite services and
satellite master antenna systems. In addition, pay television and pay-per-view
services offered by the Company compete to varying degrees with other
communications and entertainment media, including home video, cinema exhibition
of feature films, live theater and newly emerging multimedia services. The
Company expects that, in the future, it may face competition from programming
provided by video-on-demand services, including those that may be provided by
PTOs with national licenses (i.e., national PTOs). In addition, there will be
general licensing to provide CATV services, including in the Company's franchise
areas, from January 1, 2001. Should any additional operators, including BT and
Mercury (which merged with three cable operators that hold such licenses--NYNEX
CableComms, Bell Cablemedia plc and Videotron Holdings plc--to form C&WC) choose
to construct or adopt networks to provide CATV in these areas, it could have a
material adverse effect on the Company.
On September 29, 1993, the ITC issued a statement pursuant to which it
took the position (shared by OFTEL and DTI) that BT and the other national PTOs
may provide video-on-demand services under their existing licenses. No assurance
can be given that video-on-demand will not provide substantial competition to
the Company within its markets in the future.
The Broadcasting Act 1996 provides for the regulation of digital
terrestrial television ("DTT") that will initially provide an additional 18 or
more new terrestrial channels serving between 60% and 90% of the UK's
population. Some of the channels are reserved for digital simultaneous
broadcasting by the existing terrestrial broadcasters. The majority of the DTT
capacity for pay TV services was licensed to Ondigital, which launched its
services in the fourth quarter of 1998. The introduction of DTT, as well as
digital satellite television, will provide both additional programming sources
as well as increased competition for the Company and its subsidiaries. There can
be no assurance that satisfactory (or any) terms of carriage will be obtained by
the Company for digital satellite programs or channels.
The full extent to which existing or future competitors using existing or
developing media will compete with cable television systems may not be known for
several years. There can be no assurance, however, that existing, proposed or as
yet undeveloped technologies will not become dominant in the future and render
cable television systems less profitable or even obsolete.
Broadcast Services. In February 1997, the UK Government sold the BBC's
Home Service and World Service transmission businesses to a consortium led by
Castle Tower Corporation. There can be no assurance that the Company will not
encounter significant competition from this
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consortium for a range of transmission services, such as for local radio
stations. However, the Company's current contracts with the ITV contractors and
Channel 4/S4C for the provision of transmission services have successfully been
extended through to the shut-down of analogue TV broadcasting.
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REGULATION
Certain Regulatory Matters
General
Cable television and cable telephone service industries in the UK are
governed by legislation under the Telecommunications Act, the Broadcasting Act
1990, which replaced the CBA, and the Broadcasting Act 1996. The operator of a
cable television and cable telephone franchise in the UK covering more than
1,000 homes requires the following two principal licenses for each franchise
area:
(a) a telecommunications license, granted under the
Telecommunications Act by the Secretary of State and supervised by the DTI
and OFTEL, which authorizes the installation and operation of the
telecommunications network used to provide cable television and cable
telephone services, and
(b) a cable television license, which authorizes the provision of
broadcasting services within a defined geographical area and which may be
either:
(i) a Prescribed Diffusion Service License ("PDSL"), granted
under the CBA prior to 1991, which allows an operator to provide
cable television and other entertainment services by means of a
cable network, or
(ii) an LDL granted since January 1, 1991 under the
Broadcasting Act 1990, which allows an operator to deliver
television and other programming services by means of a licensed
telecommunications network including a cable network.
Each type of license described above contains various conditions, and in
the event of the breach of such conditions, the Director General or the ITC, as
appropriate, could issue an enforcement order and ultimately commence
proceedings to require compliance or to revoke such licenses.
Under the Broadcasting Act 1990, cable operators may elect to replace
certain PDSLs with LDLs with similar terms.
The regulatory environment in the UK has generally encouraged the
development of the cable telecommunications and the cable television industry
by, among other things, licensing only one operator for each cable franchise
area and restricting the national PTOs from using existing telecommunications
networks to carry broadcast entertainment.
On April 23, 1998, the Department of Trade and Industry announced the UK
government's intention to progressively end this policy, allowing any operator
to seek a license to compete in the provision of broadcast entertainment in
those areas outside current cable franchises. From January 1, 2001, competition
within current cable franchises will also be permitted.
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Cable Television
The Broadcasting Act 1990
The Broadcasting Act 1990 established the ITC to license and regulate
commercial television services (terrestrial and satellite) and the Radio
Authority to regulate radio services. The ITC's functions are, among other
things, to grant licenses for television broadcasting activities and to regulate
the commercial television sector by issuing codes on programming, advertising
and sponsorship, monitoring programming content and enforcing compliance with
the Broadcasting Act and cable television license conditions. The ITC has the
power to vary cable television licenses and impose fines and revoke such
licenses in the event of a breach of the license conditions. The ITC also
enforces ownership restrictions on those who hold or may hold an interest in
licenses issued under the Broadcasting Act. See "-- Cable Television Licenses --
Ownership Restrictions".
Cable Television Licenses
General. As of December 31 , 1998, cable television licenses had been
granted for over 160 franchise areas in the UK While the ITC had previously
indicated that it will grant only one cable television license for each
geographical area, on April 23, 1998, the Department of Trade and Industry
announced the UK government's intention to progressively end the policy of
granting only one cable television license for a franchise area. As a result,
any operator can seek a license to compete in the provision of broadcast
entertainment in those areas outside current cable franchises. From January 1,
2001, competition within current cable franchises will also be permitted. The
ITC also has indicated that certain areas, for which cable television licenses
have yet to be awarded, may be advertised at the request of applicants. In the
past, such licenses (LDLs) were awarded after competitive bids. However, it is
now the government's policy to grant licenses in new areas to all suitable
applicants. Before awarding an LDL, the ITC must be satisfied as to certain
matters, including the technical specification of the proposed system; that the
applicant has sufficient funding to run the franchise; and that the applicant is
a fit and proper person to be awarded a license.
Cable operators may carry UK licensed broadcast services, foreign
satellite programs or text in their services. Cable television licenses also
require cable operators to ensure that advertising and foreign satellite
programs carried by them as part of their services conform to the restrictions
set forth in the codes on advertising, sponsorship and programming issued by the
ITC. Cable television licenses also impose an obligation on licensees to provide
any information which the ITC may require for purposes of exercising its
statutory functions.
Term, Renewal and Revocation of Cable Television Licenses. NTL holds 39
PDSLs and 13 LDLs, all for 15-year terms.
An application may be made to the ITC to extend a PDSL for up to an
additional eight years if the cable operator holds a 23-year telecommunications
license. Fees would continue to be payable on the same basis as for the
unextended PDSLs and no PQRs or cash bids would be payable during this 8-year
term. If NTL elects to extend the PDSLs, NTL will upon expiration of such PDSLs
as so extended, be required to apply for a new LDL under the competitive bid
procedures described
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above. If NTL elects not to extend a PDSL, NTL may apply to the ITC (no earlier
than five years prior to the expiration of the PDSL) for a replacement 15-year
LDL, with respect to which it must agree with the ITC on the amount of the cash
bid and PQR payments that will be payable over the term of the LDL (based on
what would have been offered if the franchise had been offered for competitive
bids).
NTL's PDSLs will currently all expire at varying dates from 2000. NTL has
not yet applied to extend any of its PDSLs, nor has it applied for any
replacement LDLs under the procedure outlined above, but will do so at the
appropriate time.
The ITC may refuse an application for renewal, but only on limited
grounds, including that the ITC proposes to grant a license in an area different
from that described under the existing license or that the applicant is not
providing services through the whole of its franchise area.
The ITC may, after consultation with the DTI and the Director General,
revoke a cable television license if an operator fails to comply with its
conditions or with any direction of the ITC, and the ITC considers revocation to
be in the public interest. The ITC must be notified of changes in control of the
licensee, of changes in directors and of certain other changes in shareholdings
in the licensee. If there is any change in either the nature or characteristics
of an operator that is a corporate entity, or any change in persons controlling
or having an interest in it, the ITC can revoke the license if, as a result, it
would not have awarded the license had the new ownership or control existed at
the time the application for the license originally was considered. The ITC can
also revoke any cable television license in order to enforce restrictions on
ownership contained in the Broadcasting Act 1990 as amended by the Broadcasting
Act 1996 (see below) and can impose fines and shorten the license period of
LDLs.
NTL also holds a number of licenses to provide local television program
services under the Broadcasting Act 1990. All of these licenses are for a period
of 10 years.
Ownership Restrictions. The ITC has a general duty to ensure that cable
television licenses are held by "fit and proper" persons and may exercise
control over who may hold a license where financial assistance is provided to,
or influence is exercised over, a license holder which may produce results which
it considers adverse to the public interest. The Broadcasting Act 1990 also
contains specific restrictions on the types of entities which may hold cable
television licenses or significant interests therein. Cable television licenses
may not be held by a local authority, an advertising agency, a religious or
political body (or one of its officers) or any entity controlled by them.
Ownership restrictions also apply to ownership of different licensed services
(including local delivery services, television, satellite and radio services and
newspapers), or associates of entities operating such services. See "-- Media
Ownership". While PDSLs in most respects continue to be regulated under the
Broadcasting Act 1990 and the Broadcasting Act 1996 as if the CBA remained in
force, the ownership restrictions for PDSLs and LDLs are substantially similar.
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There is currently no statutory restriction on the number of cable
television licenses which may be held by any person. However, in October 1998,
the ITC indicated that where a merger would lead to a concentration of ownership
of connected homes exceeding 25% of all pay-TV homes, the ITC would consider
possible competition concerns and would consult the OFT.
Cable Telecommunications
The Telecommunications Act
The Telecommunications Act provides a licensing and regulatory framework
for telecommunications activities in the UK and established OFTEL under the
Director General as an independent regulatory authority. Telecommunications
policy is overseen by the DTI. The DTI on behalf of the Secretary of State also
has primary licensing authority under the Telecommunications Act, although it
may delegate that authority to the Director General. The functions of the
Director General are, among other things, to monitor and enforce compliance with
telecommunications license conditions, establish and administer standards for
telecommunications equipment and contractors, and investigate complaints and
exercise certain functions concurrently with other regulators to promote or
ensure competition in telecommunications markets. The Director General may
modify telecommunications licenses either with the agreement of the licensee
following a statutory period of public consultation or following a report by the
MMC. The Director General is also empowered to issue enforcement orders
requiring compliance with telecommunication license conditions which have been
breached (see below).
Telecommunications Licenses
The Company holds individual franchise telecommunications licenses. A
telecommunications license authorizes a cable operator to install and operate
the physical network used to provide cable television and cable
telecommunications services. It also authorizes the operator to connect its
system to other television and telecommunications systems, including those
operated by the PTOs, the terrestrial broadcasting authorities and satellite
broadcasting systems. Although individual franchise telecommunications licenses
granted to a cable operator are for a particular area, they are not exclusive
and, as a result, a cable telephone operator is subject to competition with
respect to the provision of telephone services from national PTOs such as BT and
CWC and other telephone service providers in its franchise area. There are more
than 200 telecommunication licensed operators in the UK. See "Competition --
Business Telecommunications" and " -- Competition -- Residential Telephony".
Following the Duopoly Review, the Government has granted a telecommunications
license to any applicant provided the applicant has satisfied certain
requirements, including with respect to financial viability and, in some cases,
service commitments. See "-- Duopoly Review".
A cable operator's telecommunications license contains conditions
regulating the manner in which the licensee operates its telecommunications
system, provides telecommunications services, connects its systems to others and
generally operates its business. A cable operator's telecommunications license
also contains a number of detailed provisions relating to the technical aspects
of the licensed system (e.g., numbering, metering and the use of standard
technical
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interfaces) and the manner in which the licensee conducts its business (e.g.,
publication of certain prices, terms and conditions). In addition, a cable
operator's telecommunications license contains prohibitions on undue preference
and discrimination in providing service. The cable operator's telecommunications
license also requires the licensee to provide any information which the Director
General may require for the purposes of carrying out his statutory functions.
Failure to comply with an enforcement order in respect of a breach of a
telecommunications license condition might give rise to revocation, an
injunction by the Director General or to a third party's right to damages. In
September 1997 OFTEL completed its review of the PTO licenses held by cable
operators to convert them to the standard "slimline" format of non-dominant PTOs
which Mercury's modified license now follows to a large extent. Modifications to
these cable operators licenses have now been issued and have come into effect.
This has resulted in the deletion of a number of conditions in the Group's
individual franchise telecommunications licenses, for example, those relating to
the pre-notification of prices and the prohibition on unfair cross-subsidies
although such conduct may fall within the fair trading condition. See below.
The telecommunications licenses of BT and CWC now contain a condition,
referred to as the fair trading condition, which prohibits any abuse of their
dominant position and any agreement or concerted practice between the licensee
and other entities restricting or distorting competition in the
telecommunications market. This condition has been incorporated into new
telecommunications licenses issued since December 31, 1996 including the
Company's telecommunications licenses.
The fees payable for the telecommunications license consist of an initial
fee payable on the grant of the license and annual fees thereafter. The annual
fees are based on a proportion of the costs of the Director General in
exercising his functions under the Telecommunications Act and in certain cases a
proportion of costs of the MMC incurred in relation to license modification
references under the Telecommunications Act.
A telecommunications license is not transferable. However, certain changes
in ownership of an entity holding a license are allowed, subject to compliance
with a notification requirement.
Network Construction and Service Obligations
Where a cable operator holds a PDSL or an LDL replacing a PDSL (see " --
Certain Regulatory Matters -- General"), the milestones are contained in the
corresponding telecommunications license and are reviewable by OFTEL.
Where, on the other hand, a cable operator holds a new LDL which is not a
conversion from a PDSL, the milestones are contained in the LDL and are
reviewable by the ITC.
Each of the Company's individual franchise telecommunications licenses
prescribes milestones which require the Company to construct its network to pass
a specified number of premises within prescribed time periods. The milestones
may be varied by the Director General if he considers that the variation would
enable the licensee to meet the final milestone more easily. The final
milestones can be modified only following a public consultation period and with
the approval of the Director General. If the milestones prescribed by a
telecommunications license are not met,
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the Director General may take enforcement action which, if not complied with,
could result in the revocation of such license. Similarly, the LDLs which the
Group has acquired contain build milestones which may be varied by the ITC. The
Company understands that all milestones from now on will be contained in LDLs.
The Company also understands that the ITC will have jurisdiction to enforce
these milestones. To date, the ITC has not published any guidelines on
enforcement of milestones.
Where a cable network has been installed, a licensee must provide a cable
television service to anyone who reasonably requests it. A cable operator is not
required to provide telephony services, but where it does so, and achieves a 25%
or more share of the relevant market for such services (as determined by the
Director General) within its licensed area, the licensee may, at the direction
of the Director General, be required to ensure that telephone services are
available to anyone in the licensed area who reasonably requests them. The
Company has not received any such direction from the Director General.
Under a telecommunications license, the cable operator is subject to and
has the benefit of the Telecommunications Code promulgated under the
Telecommunications Act. The Telecommunications Code provides certain rights and
obligations with respect to installing and maintaining equipment such as ducts,
cables and cabinets on public or private land (including the installation of
equipment on public highways). The activities of cable operators under the
Telecommunications Code are also subject to planning legislation.
Cable operators have the benefit of, and must comply with, the Street
Works Act, which provides them with the same rights and responsibilities with
respect to construction on public highways as other public utilities. The Street
Works Act standardizes fees for inspections of construction works by local
governmental authorities and standardizes specifications for reinstatement of
property following excavation. As a result, construction delays previously
experienced by cable operators because of separate and often lengthy
negotiations with local governmental entities have been reduced.
Cable operators are required to post bonds for local authorities in
respect of their obligation to ensure reinstatement of roads and streets in the
event the operators become insolvent, cease to carry on business or have their
telecommunications license terminated. In order to install equipment on private
property cable operators must obtain legal permission from occupiers, property
owners and others.
Term, Renewal and Revocation of Telecommunications Licenses
To date, telecommunications licenses have generally been granted for
periods of 15 or 23 years. All of the Company's individual franchise
telecommunications licenses are valid for an initial period of 23 years,
commencing on the date specified by the Secretary of State (which, in practice,
is the date on which the cable system first becomes operative).
Upon expiration, a telecommunications license cannot be extended and
application must be made for a new license.
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A telecommunications license may be revoked if the licensee fails to pay
the license fees when due, fails to comply with an enforcement order, upon the
occurrence of certain insolvency-related events or if the cable television
license relating to the licensee's system is revoked. A telecommunications
license may also be revoked if, among other things, the licensee fails to give
the required notification to the DTI of changes in shareholdings and changes in
control and agreements affecting control of the licensee, or if the DTI
concludes that any such change would be against the interests of national
security or the UK Government's international relations.
Licensing Directive implementation
On 31 December 1998, the UK Government implemented the EC Licensing
Directive (97/13/EC). The Directive requires that all UK licenses conform to a
number of key conditions and criteria set out in the Directive. All new licenses
would conform to these criteria and the Government announced its intention to
amend all existing licenses by the end of 1998 to ensure that they too were in
conformity with the Directive.
In September 1998, the Government issued a consultation document setting
out how it proposed to effect these changes to existing licenses. Broadly,
existing license conditions would be amended or supplemented to reflect the
precise wording and conditions of the Licensing Directive, the Interconnection
Directive, and the Revised Voice Telephony Directive. The Government stated that
it did not expect these changes to lead to material changes to the operating
circumstances of existing licensees. The final date for completing this process
of amendment was subsequently put back to the end of June 1999, and at the time
of writing, the Government's specific proposals for regulations are awaited.
Duopoly Review
In 1991, the UK Government concluded in its Duopoly Review that the
termination of the duopoly policy (which permitted only BT and CWC to operate
local, national or international fixed-link networks in the UK to provide public
telephone services) might increase competition and benefit consumers in the UK
telecommunications market. As a result, the UK Government revised its policy and
determined that application for licenses would be considered from any person
seeking to operate new telecommunications networks over fixed links within the
UK. Such licenses normally would be granted subject to the general statutory
duties of the DTI and the Director General to ensure the provision of
telecommunications services, to satisfy all reasonable demands for them and the
ability of a person providing the services to finance their operations.
The Duopoly Review also recommended specific amendments to license
conditions that are particularly important to cable operators. Until the Duopoly
Review, for a cable operator to provide telephone services it had to enter an
agreement with BT or CWC with respect to the terms and conditions (including
price) under which the operator would provide telephone services, obtain a
determination from the Director General that services could be provided and
operate its network as agent for either BT or CWC. Since the Duopoly Review,
cable operators have been permitted to provide all forms of wired
telecommunications services in their own right, including the ability to
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switch their own traffic. The Duopoly Review also recommended changes to and
further study of arrangements relating to interconnection, number portability
and equal access (discussed below).
As a result of the Duopoly Review, the Group applied for and received
modified telecommunications licenses to enable the Group to provide wired
telecommunications services in its own right.
Interconnect Arrangements
The ability of cable operators to provide viable voice and other
telecommunications services is dependent on their ability to interconnect
cost-effectively with other PTO's telecommunications networks in order to
complete calls that originate from a customer on their cable network but that
terminate off their network or that originate from a customer off their cable
network and terminate on their network. Since the Duopoly Review, cable
operators with contiguous franchises have been able to connect their networks
without regard to whether they are under common ownership without using the
services of BT or CWC.
The Telecommunications (Interconnection) Regulations came into force on
December 31, 1997. These implement the Interconnection Directive (Directive
97/33/EC), which will extend, to a certain extent, the categories of operator in
the UK who will have the right to request interconnection and a reciprocal
obligation to provide it. These rights and obligations may extend to certain
operators who operate under class licenses. It is not currently possible to
predict accurately which categories of operator/service provider will fall
within the criteria set out in these regulations and therefore to which
operators interconnection rights and obligations will be extended. Operators
wishing to benefit from such interconnection rights and obligations will be
required to apply to OFTEL which will assess whether the relevant criteria have
been met.
PTOs are required under their telecommunications licenses to enter into
interconnection agreements with other PTOs such as NTL (if requested to do so by
such a PTO), and NTL has interconnection agreements with BT, CWC, Energis,
Global One and ACC. The BT agreements may be terminated by either party upon two
years' notice, the CWC agreement may be terminated by either party upon two
years' notice, the Energis Agreements may be terminated by either party on six
months' notice and the Global One agreement may be terminated by either party
upon one month's notice after an initial term of one year. If NTL is unable to
negotiate acceptable pricing terms with BT, CWC, Energis or Global One in
connection with any continuation or extension of these agreements or scheduled
reviews of these agreements, NTL may request that the Director General determine
such terms. In 1995 a House of Lords decision established that it is possible
for a regulated company to challenge in the UK courts a determination by the
Director General of terms of interconnection agreements. The Director General
also has the power to make determinations in respect of certain obligations of
any party under an interconnection agreement.
Until October 1, 1997 OFTEL determined standard interconnect charges. The
first interim charge determination covered the period from April 1, 1995 to
March 31, 1996. Interim charges were based on BT's forecast financial statements
(on a fully allocated costs basis). OFTEL has now assessed final charges based
on BT's final financial statements for that period. As a result of these
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revised charges, NTL will receive outgoing interconnect charge rebates, and must
pay incoming termination rebates for periods from April 1, 1995. At the end of
1996, OFTEL completed another consultation process and published interim charges
for the period from April 1, 1996 to March 31, 1997. OFTEL has issued its
determination of final charges for this period. OFTEL has now determined interim
charges for the period from April 1, 1997 to September 30, 1997, and is
expecting to publish final charges for that period in the near future.
As from October 1, 1997 the twice yearly determination by OFTEL of BT's
network charges has been replaced by a system of network price controls and the
cost base for interconnection charges has been changed from fully allocated
costs to long run incremental costs. After a lengthy consultation period begun
in December 1995, in July 1997 OFTEL issued its final proposals which have been
accepted by BT and the necessary modifications have been incorporated into BT's
license. The new system provides for the application of price controls depending
on the level of competitiveness of the service. Services which are not
competitive are divided into baskets, each basket being subject to a charge cap
of RPI minus X. The July 1997 document determined the value of X for each basket
at 8%. Charges for those services which are expected to become competitive
during the next price control period, i.e., from August 1997 until the middle of
2001, will not be included in the network baskets, but will be governed by
safeguard caps of RPI plus 0%. Charges for those services which were expected to
become competitive before August 1997 or which are determined by the Director
General to be competitive during the control period, will be free of network
controls. The July 1997 document also sets out the starting charges for the
services in the network baskets which are based on BT's long run incremental
costs. The new system which commenced from October 1, 1997 will run for four
years.
In November 1997 OFTEL published non-legally binding guidelines on the
structure and operation of the new network charge control arrangements and on
OFTEL's approach to complaints about charges and other interconnect terms and
conditions. In respect of complaints that BT's charges are unreasonable, OFTEL
will first test whether the charge falls between a cost floor and ceiling
determined by BT using a methodology prescribed by OFTEL and designed to
indicate whether the charge may be anti-competitive. Floors and ceilings for all
non-competitive services will be published each year by BT as part of their long
run incremental costs financial statements.
Number Translation Services
In March 1999, OFTEL issued a statement on the interconnect and retail
pricing regime for 'Number Translation Services' - freephone, national rate and
local rate numbers, the latter of which are used in the UK by many operators to
connect dial-up Internet services.
The OFTEL document stated that its existing formula for dividing the
revenue generated by such calls between the originating network and the
terminating network - which some operators had argued allocated too much revenue
to the terminating network - would remain in place until the next retail price
control review in 2001. OFTEL would, however, be exploring ways in which greater
competition in this market could be encouraged through the creation of
additional retail price points for NTS services. The Company believes that the
effect on the Company of OFTEL's decision is
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likely to be neutral given that its origination of Internet call traffic is now
being balanced by substantial Internet termination revenues.
Price Regulation
Although to date the Company has for the most part been able to price its
cable telephone call charges below those of BT, there can be no assurance that
it will be able to continue to do so in the future. BT currently is subject to
controls over the prices it may charge customers, including a requirement that
the overall basket of charges may not be changed by more than an amount equal to
the percentage change in the RPI less X (and BT may, as a result, have to
decrease prices). In particular, BT may not increase charges for certain
services by more than the amount of the percentage change in the RPI.
OFTEL's latest proposals for control of BT's retail prices have been
incorporated in BT's license. The retail price controls will continue until 2001
and are stated to be the last such controls. The controls will only be put in
place where consumer protection is required, that is, for low to medium-spending
residential customers and small businesses. The current price cap is RPI minus
4.5% on the narrower basket of services described above. Safeguard caps of RPI
plus 0% have been imposed on certain services. OFTEL has indicated that this is
likely to be the last retail price control imposed on BT. See " -- Competition
- -- Residential Telephony".
BT has limited opportunity for differential pricing to the same class of
customer because it is subject to prohibitions on undue preference and undue
discrimination across the UK. Following the Duopoly Review, BT's
telecommunications license was modified to permit it to offer discounts to high
volume users, subject to several conditions. However, BT may not offer
discounted services in local markets without offering the discounts nationally
if such discounts result in undue discrimination or unfair cross-subsidy.
The telephone service prices charged by the Group currently are not
regulated by the Director General, although they are subject to the fair trading
condition.
Indirect and Equal Access ("Carrier Pre-Selection")
Indirect access is access to a customer through another operator whereas
equal access means preselection by the customer of the indirect access operator
or dialing parity, where the number of digits dialed for calls over the first
(access) network is the same as for calls over the second (indirect) network. In
July 1996, OFTEL released a statement setting out its policy on indirect and
equal access, dealing with the continued provision by BT of indirect access to
CWC and other operators, the possible extension of the obligation imposed on BT
to include equal access, and the possible extension of an indirect access
obligation to CWC and other "non-dominant" operators.
OFTEL concluded in its statement that indirect access will remain an
important route for many customers who are not yet able to take advantage of
competition in direct connections to receive the benefits of competitive
provision of telecommunication services and that, given BT's continuing dominant
position in the direct access network, BT should continue to be obligated to
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provide indirect access to other operators. However, OFTEL also concluded that
this obligation on BT should not extend to providing equal access to other
operators. OFTEL, having commissioned a cost benefit analysis, concluded that,
rather than a cost benefit, there would be a significant net cost in
implementing equal access. Further, OFTEL concluded that "non-dominant"
operators (such as CWC and the cable operators) should not be required to give
indirect access to other operators. Although all PTO licenses include a
condition regarding the provision of indirect access, it is subject to a number
of tests including the need to ensure that the requirements of fair competition
are satisfied and that indirect access, in all the circumstances, is reasonably
required. OFTEL considered that these tests were not satisfied. However, OFTEL
stated that it considers the "well established" operator threshold of 25% of
customer connections in a relevant market to be a useful guide in determining
whether a "non-dominant" operator should, in the future, be required to grant
indirect access to other operators. OFTEL stated that this threshold would not
automatically mean that the operator would be required to grant indirect access,
but that OFTEL would investigate the issue further in respect of that operator
and market conditions generally once that threshold was reached. On December 1,
1997 the EC Council of Telecommunications Ministers reached political agreement
on a draft directive to amend the Interconnection Directive (Directive 97/33/EC)
with regard to number portability and carrier pre-selection. This will require
member states (except those which have been granted a derogation under the Full
Competition Directive (Dir 96/19/EC)) to introduce carrier pre-selection by
January 1, 2000, for operators with significant market power. Member states may
request a deferment of this obligation if they can show that it would impose "an
excessive burden on certain organizations or classes of organization". The UK
Government has sought a short deferment until the end of 2000.
Number Portability
Telephone subscribers changing their telephone service to a cable operator
have historically had to change their telephone numbers. As a result certain
customers have been reluctant to switch carriers because they would lose their
existing telephone numbers. In response to this, NTL has provided its business
customers with the opportunity to use the Company's telephone service for their
outgoing telephone calls, which generally carry higher revenues than incoming
calls, and for their specialized telecommunications needs, while retaining their
existing service provider (and their existing telephone number) for incoming
telephone calls.
In January 1994, the Director General announced that OFTEL was working on
directives to require BT to introduce number portability for the cable operators
who had provided OFTEL with the necessary information as to where and when they
could provide portability to BT. The Director General's statement indicated that
number portability may be introduced in the geographic areas where it is
technically feasible in the foreseeable future. BT rejected a framework proposed
by OFTEL for determining the charges payable for number portability in the event
of a dispute between BT and other operators. In April 1995, the Director General
referred the matter to the MMC to establish whether the failure of BT to reach
agreements with other operators on the commercial terms and conditions for
number portability was against the public interest, and if so, whether the
adverse effects could be remedied or prevented by modifications to the
conditions of BT's telecommunications license. On December 14, 1995, the
Director General announced the MMC's conclusions, including that the absence of
number portability operated against the public interest,
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that the absence of number portability was an obstacle to operators' (including
cable operators) ability to win customers from BT, that the introduction of
number portability will strengthen competition, and that BT's telecommunications
license should be modified (following a statutory consultation period) to enable
the allocation of BT's costs incurred in this regard between BT and other
operators (including cable operators), with BT bearing the greater share. The
MMC also noted that there is general agreement in the industry that reciprocity
should continue to be an essential element in the introduction of number
portability, and that the arrangements to be made for allocating portability
costs need to take account of the fact that BT will not always be the exporting
operator. BT's telecommunications license has been modified accordingly.
On April 9, 1997, OFTEL issued a statement which set out OFTEL's proposals
to modify the license conditions of CWC and other fixed operators including
cable operators to ensure that they too provide number portability for all users
of fixed phones including portability of specially tariffed services such as
toll-free (0800), premium rate and national rate services.
Appropriate license modifications were made on December 17, 1997. These
take full account of the MMC report and are based on the current license
condition in BT's PTO license. They also apply the MMC's principles on the
charges which operators can make to each other for providing portability. In
particular, the following principles are applied:
(i) the licensee would be required to provide portability on request
from another qualifying licensee;
(ii) the principle of reciprocity would apply;
(iii) each licensee would be required to pay the initial costs of
modifying its network;
(iv) each licensee would be able to pass on to the other licensee
concerned the costs of enabling individual customers to port their
numbers;
(v) the exporting licensee would not directly charge the importing
licensee for any additional conveyance costs associated with routing a
call to a ported number; and
(vi) if requested, the Director General would determine the
reasonableness of the terms and conditions upon which portability was
offered.
These license modifications came into effect on December 17, 1997. The
deadline for all PTO's, including the Company, to introduce geographic number
portability is January 1, 2000.
Restrictions on National PTOs
The Duopoly Review maintained restrictions upon BT and other national PTOs
from conveying or providing entertainment services (such as the cable television
services currently provided by NTL) over their national telecommunications
networks. The new Labour government started reviewing the restrictions upon the
conveyance and provision by BT and CWC of broadcast
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entertainment ahead of the schedule set by the former Conservative government,
which did not intend to review the restrictions on conveyance and on provision
until 2001 although the government was prepared to reconsider the conveying
aspect after March 1998 on the advice of the Director General of
Telecommunications. In November 1997 the Labour government stated that it
expects to publish proposals in the near future. See " -- Certain Regulatory
Matters -- General". The Duopoly Review policy did not prevent the national PTOs
from providing cable television services of the kind currently provided by the
Company, but it did require that such services be provided through separate
systems by separate subsidiaries of the national PTOs under separate licenses
similar to those held by the Company. The ITC's historical policy of granting
one cable television license for each geographic area ensured that no national
PTO subsidiaries compete with the Company in the provision of cable television
services in the same area. On April 23, 1998, the Department of Trade and
Industry announced the UK government's intention to progressively end this
policy, allowing any operator to seek a license to compete in the provision of
broadcast entertainment in those areas outside current cable franchises. From
January 1, 2001, competition within current cable franchises will also be
permitted. Since April 1, 1994, cable television services may be provided
locally by the national PTOs without requiring separate subsidiaries, although
all other licensing requirements, including the need for the national PTO to
obtain an LDL to provide cable services within each locality, will remain
applicable to both national PTOs and to other cable operators such as the
Company. In November 1994, the DTI stated that if national PTOs (including BT
and CWC) successfully bid for a new cable television license, the DTI would be
prepared to issue a telecommunications license to enable any such national PTO
to convey entertainment services over its own systems within the relevant
franchise area.
Following a consultative document issued in March 1996, the UK Government
announced on June 6, 1996, that it was ending the duopoly between BT and CWC as
international carriers from the UK. A license holder may now provide
international services from the UK on telecommunications facilities owned and
controlled by the company providing the service, and will be able to offer
services on any route it chooses. A large number of international facilities
licenses have been granted.
Access to higher bandwidth services
In January 1999, OFTEL issued a consultation document on the arrangements
for access to so-called 'higher bandwidth' services, including fast Internet
access and video on demand. The document envisaged a number of possible
arrangements whereby such services could be provided over the BT network, both
by BT itself and by third party service providers. The document sought views on
whether there was substantial unmet demand for these services, whether this
demand could be met by other means, and, if not, what form of regulatory
intervention might be appropriate to mandate the development of such services
over the BT network. OFTEL emphasized that any such intervention would need to
be consistent with OFTEL's wider policy of encouraging the development of
alternative infrastructure. At the time of writing, it is not known what
conclusions OFTEL has drawn from the responses to the consultation.
Digital Broadcasting
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The Broadcasting Act 1996 introduced provisions for the licensing of
digital terrestrial broadcasting and introduced a "must carry" requirement on
cable companies where both program provider and cable operator use digital
technology to ensure the universal availability of designated public service
channels. Must carry obligations concerning public service channels already
apply to holders of PDSLs.
The Broadcasting Act 1996 distinguishes between "multiplex" providers, the
providers of the frequency ranges on which the television channels will be
carried, and the digital program service providers, who provide the programs to
be broadcast on the multiplexes. Each must be licensed by the ITC. Licensed
digital multiplex providers will be required to contract with licensed digital
program providers to carry their services on the multiplexes on a fair and
non-discriminatory basis.
Initially six multiplexes are available for digital terrestrial
television. Each of the existing terrestrial broadcasters have reserved capacity
on these multiplexes, being offered half a multiplex for each existing channel.
This means that the BBC has full control of one multiplex, Channel 3 and Channel
4 have joint control of a multiplex and Channel 5 and S4C each have half of a
third multiplex. Existing terrestrial broadcasters have obligations to simulcast
their existing analog channels and will be able to use their remaining multiplex
capacity to provide new free-to-air or pay services. Following a competitive
tender, the ITC announced in June 1997 that the remaining three multiplexes
would be awarded to British Digital Broadcasting (BDB), a joint venture between
Carlton Communications and Granada Group. BSkyB was also originally a member of
the joint venture but because of competition concerns the ITC required it to
divest itself of the shareholding which was transferred equally to Carlton and
Granada. BSkyB however will remain a major supplier of programming to BDB. The
joint venture arrangements are currently being investigated by the EC
competition authorities. The licenses were formally granted by the ITC on
December 19, 1997 following conclusion of the ITC's own discussions with the EC
competition authorities regarding their concerns. The licenses contain
conditions which are intended to address, among other things, concerns over
program service contracts with BSkyB. The conditions include the limitation of
program supply agreements to five years, a requirement for the licensee to
support open technical standards on integrated TV sets and conditions to ensure
that BDB is not prevented from competing with BSkyB.
Future Developments
Conditional Access
Pay television broadcasters need to use conditional access systems to
ensure that only subscribers receive their services. Conditional access systems
provide two main types of services: encryption services and customer management
services. The EC Advanced Television Standards Directive (Directive 95/47/EC)
requires, amongst other things, that conditional access services for digital
television services should be available to broadcasters on a fair, reasonable
and non-discriminatory basis. This Directive was implemented in the UK by the
Advanced Television Services Regulations which came into force on January 7,
1997. In addition to the requirement that conditional access services must be
offered on a fair, reasonable and non-discriminatory basis, the Regulations
provide that broadcasters may obtain information on the conditional access
system prior
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to its being put on the market. Further, the Regulations provide that
conditional access operators are required to cooperate with cable operators so
that cable operators are able to receive and rebroadcast television services
using their own conditional access system without incurring unnecessary or
unreasonable expense.
The Regulations also modify the Telecommunications Act 1984 to provide for
conditional access systems which make available conditional access services
including encryption, subscriber management or subscriber authorization services
to be treated as telecommunications systems. Each such system must be licensed
and the UK Secretary of State granted a Class License to authorize the running
of these conditional access systems which came into force also on January 7,
1997 and runs until July 31, 2001 unless previously revoked. The license
contains similar provisions to those in the Regulations set out above and, in
addition, includes the fair trading condition.
Under the Class License, the Director General can order a licensee to make
available its intellectual property rights if the licensee is using them to
prevent or obstruct products from being made available. The Director General can
also designate an interface between the licensed system and a broadcaster's
conditional access or other transmission system as an "essential interface" and
thereafter the licensee must comply with any relevant standard specified by a
broadcaster which includes applicable European standards or other standards
specified by the Director General.
Following public consultation, OFTEL published guidelines on the
regulation of conditional access services for digital television. The guidelines
set out how OFTEL would propose to deal with anti-competitive behavior in
relation to the provision of conditional access services. The guidelines are not
legally binding and are expected to be reviewed where market developments so
require.
In July 1997 the DTI and OFTEL issued a joint consultation proposing the
extension of the current conditional access regime for digital television
broadcasts to digital non-television broadcasts and non-broadcast services in
the light of the convergence of the technologies and markets in broadcasting and
telecommunications. The services to be covered include non-broadcast interactive
services such as home-shopping and non-broadcast information services.
Conditional access systems for analog services are not included.
In addition, in October 1997, OFTEL issued a consultative document
relating to guidance on the pricing of conditional access systems to ensure that
they are offered on a fair, reasonable and non-discriminatory basis. The aim is
to ensure that prices are reasonable and that comparable broadcasters receive
comparable treatment by not being subject to differential pricing. OFTEL
proposes to group together providers of subscription services and to assess
whether they are comparable by reference to number of subscribers and number of
different services (or combination of services) offered to subscribers.
BSkyB has entered into a joint venture, BIB, with BT, Midland Bank and
Matsushita (one of the manufacturers of decoders for accessing digital
television channels) to create and operate a platform for the provision of
digital interactive television services to UK viewers. The interactive services
which it hopes to offer include home banking, home shopping and Internet access
via TV screens. BIB intends to subsidize the costs of the manufacture and
installation of the decoders
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needed to access the services. The joint venture arrangements have been approved
by the EC competition authorities, but subject to strict conditions.
Media Ownership
The Broadcasting Act 1996 amends the media ownership rules contained in
the Broadcasting Act 1990. It relaxes the earlier rules limiting ownership
between terrestrial television, satellite and cable broadcasters, except for
those broadcasters which are already more than 20% owned by a newspaper with
more than 20% national newspaper circulation. Qualifying terrestrial
broadcasters are now allowed to have controlling interests in cable and
satellite companies, provided their total interests do not exceed 15% of the
total television market (defined by audience share including public service
broadcasters) and qualifying cable companies will be able to control terrestrial
television companies, subject to the 15% total television market limit and
certain restrictions on the number of terrestrial licenses held. Newspaper
groups with less than 20% national newspaper circulation are now able to control
television broadcasters constituting up to 15% of the total television market,
subject to a limit on the number of terrestrial licenses held, unless the ITC
decides that such control would be against the public interest. Newspaper
companies, the license holders of Channel 3 and Channel 5 and satellite and
cable broadcasters, are to have the ability to control any number of digital
terrestrial television licenses, in addition to any analogue licenses.
BSM Services
In August 1995 OFTEL issued a consultative document which addressed the
potential development of broadband switched mass-market ("BSM") services in the
UK and related regulatory issues. BSM services involve the delivery of
video-quality images over a switched system, at prices intended to encourage the
development of a mass market. The consultative document suggested that dominant
operators (potentially including cable operators) should be required to provide,
on transparent and non-discriminatory terms, broadband conveyance (including
switching) as a network business to service providers which could have direct
commercial relationships with individual customers. Requirements for accounting
separation and the possible need for some form of price control were also
considered. OFTEL suggested that BT is likely, at an early stage, to be
considered a dominant operator, possibly when it starts to roll out BSM services
aimed at covering a significant portion of the UK, either nationally or in a
specific regional market. OFTEL suggested that such regulation should only be
applied to the cable sector when it becomes dominant, either nationally or in a
specific regional market, and is able to compete on equal terms with BT and any
other BSM services distributor. In the meantime the document recognized the
importance of encouraging continuing local investment in the cable industry's
infrastructure. The document also raised the question whether license
obligations on cable operators to provide cable television services where their
systems have been installed should not apply to BSM services (other than the
broadcast entertainment services for which they have exclusive cable
distribution rights in their franchise areas) until they become dominant in
their relevant markets. The stated purpose of the consultative document was to
raise issues in order to stimulate debate to assist in the development of the
kind of regulatory regime that will best promote the new services. The August
1995 consultative document was followed by a consultative document in February
1996 and by a statement by the Director
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General in June 1996, both of which were concerned with promoting competition in
the current market for services such as on-line information, electronic data
interchange and voice messaging.
Accounting Separation
The EC Interconnection Directive (mentioned above) requires that operators
who have special or exclusive rights for the provision of services in sectors
other than telecommunications in the same or another member state must keep
separate accounts of their telecommunications activities if their turnover from
the provision of public telecommunications networks or publicly available
telecommunications services is more than 50 million ecus. This requirement has
been implemented in the UK by the Telecommunications (Interconnection)
Regulations. See "-- Cable Telecommunications -- Interconnect Arrangements".
The DTI and OFTEL take the view that cable operators have special or
exclusive rights for the provision of entertainment services over their cable
systems and therefore fall within this obligation. Several cable operators,
including the Company have challenged this interpretation because they are
subject to competition in their franchise areas from DTH satellite service
operators and will in the near future be subject to competition from digital
terrestrial television.
The implementing regulations do not set out detailed guidelines for the
accounting separation requirements, but it appears that the Company's individual
franchises do not cross the revenue threshold necessary for these conditions to
become operative.
Separation of Cable and Telecommunications Operations
The EC Commission is of the view that accounting separation provided for
under the existing Cable TV Directive (95/51/EC) is not sufficient to ensure
competition and is proposing an amending directive under its powers in Article
90 of the EC Treaty, relating to the structural separation of operators' cable
television and telecommunications activities. The draft directive was adopted by
the United States Securities and Exchange Commission (the "Commission") on
December 16, 1997 and will be subject to a two month period of consultation
commencing on the date the draft text is published in the Official Journal. At
the end of the consultation period the Commission can then formally adopt the
directive with or without taking into account comments of third parties, the
European Parliament or the European Council received during that period. The
amending directive should enter into force twenty days after its publication. As
it is still in draft form, any impact of the amending directive on UK cable
operators cannot yet be predicted. However, it would appear that the requirement
for legal separation of the provision of public telecommunications and cable TV
networks will apply to dominant telecommunications operators which also have
special/exclusive rights in respect of the provision of cable TV networks and
(if the operator is not state-controlled) in respect of the use of relevant
radio frequencies. In a footnote in a relevant Communication, the Commission
specifically described the situation in the UK where BT, CWC and Kingston
Communications can operate cable TV networks, if they obtain a franchise, but
the networks have to be run separately from the main telecommunications
activities of those entities. In addition, the Commission takes the view that
full divestment could still be required in specific cases. In its current
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form, the directive would not appear to require any structural separation by the
Company given the nature and extent of its current authorized activities.
Competition Bill
The UK Government enacted a new Competition Act (the "Competition Act")
which grants concurrent powers to the industry specific regulators and the
Director General of Fair Trading for the enforcement of prohibitions modeled on
Article 85 and 86 of the European Community Treaty. The Competition Act
introduces a prohibition on the abuse of a dominant position and on
anti-competitive agreements, and introduces third party rights, stronger
investigative powers, interim measures and effective enforcement powers.
Under the Competition Act, the Director General of Telecommunications is
able, but not required, to exercise concurrent powers with the Director General
of Fair Trading in relation to "commercial activities connected with
telecommunications". The Competition Act enables third parties to bring
enforcement actions directly against telecommunications operators who are in
breach of the prohibitions and seek damages, rather than have to wait for the
Director General of Telecommunications to make an enforcement order.
Broadcast and National Telecoms Services
A significant proportion of the Company's total revenues is attributable
to the provisions of television and radio transmission and distribution services
and the provision of telecommunications services. In the UK, the provision of
such services is governed by the Telecommunications Act and The Wireless
Telegraphy Act 1949 (the "Wireless Telegraphy Act"). Set forth below is a brief
summary of the principal licenses of the Company's National Telecoms and
Broadcast Services divisions granted pursuant to these Acts.
Telecommunications Act Licenses
The Company holds five licenses under the Telecommunications Act (in
addition to Telecommunications Act licenses for its cable franchises).
License to run telecommunications systems for the provision of television
and radio transmission services (the "Transmission License"). The Transmission
License enables the Company to run telecommunications systems for the provision
of television and radio transmission services. It permits NTL to carry out its
core business of providing transmission services to television and radio
broadcasters. The Transmission License was granted on December 20, 1990 for a
period of 25 years from January 1, 1991. It is subject to revocation thereafter
on 10 years' notice in writing. No notice may be given before the end of the
fifteenth year.
The Company's Transmission License contains conditions and other
provisions which, among other things: (i) require the Company to provide
specified telecommunications services to specified persons on request; (ii)
specify certain criteria to be met by the Company in providing those services;
(iii) require the connection of the Company's telecommunications systems with
those
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of certain other transmission operators and the transmission over those systems
by such operators of messages for general reception; (iv) require the Company to
publish its charges and terms and conditions of business and not to show undue
preference to or exercise undue discrimination against particular persons in the
provision of certain telecommunications services; (v) requires the Company to
hold Wireless Telegraphy Act licenses in respect of each item of wireless
telegraphy comprised in its system; (vi) impose on the Company an obligation to
share its transmission sites with other transmission operators; (vii) restrict
the prices which the Company is allowed to charge for the provision of certain
services. (see "--Price Cap Review" below); (viii) prohibit the Company from
cross-subsidizing the unregulated side of its business, and (ix) impose a
requirement for separate accounts to be produced in relation to both the
regulated and unregulated parts of the Company's business. However, the Company
is not obliged to do anything "not reasonably practicable."
The Secretary of State may revoke the Transmission License in the
circumstances described under "Telecommunications Licenses--Term, Renewal and
Revocation of Licenses" above.
License to run telecommunications systems for the provision of outside
broadcasting services by means of satellite systems (the "OBS License"). The OBS
License, which permits the Company to run telecommunications systems for the
provision of outside broadcasting services by means of satellite systems,
enables the Company to operate satellite up-links from outside broadcast sites
(sites which are not permanently equipped or adapted for television or radio
broadcasting). The OBS License was granted on February 6, 1991 for a period of
25 years from February 7, 1991, thereafter revocable on 10 years' notice in
writing. No notice may be given before the end of the fifteenth year. The OBS
License contains conditions similar to those in the Transmission License. The
OBS License specifies the circumstances in which it may be revoked by the
Secretary of State which include on revocation of the Transmission License.
License to run telecommunications systems ("Telecoms License"). The
Telecoms License enables the Company to convey messages (including voice and
data) between points on NTL's telecommunications networks. The Telecoms License
also contains conditions and revocation provisions similar to those in the
Transmission License. The Telecoms License was granted on December 30, 1992 for
a period of 10 years from December 30, 1992. Thereafter it is revocable on 5
years' written notice. No notice may be given before the end of the fifth year.
License to run telecommunications systems ("PTO License"). The PTO License
permits the Company to run telecommunications systems of every description
within the UK and to provide telecommunications services both authorizations are
subject to certain exceptions. The Company's PTO License was granted on February
14, 1996 for a period of 25 years from that date. Thereafter, it is revocable on
10 years' written notice. No notice may be given before the end of the fifteenth
year. The Company's PTO License also includes a condition obliging it, subject
to certain exceptions, to enter into an agreement to connect its system to the
system of any operator which requires it to do so, provided that operator has
been granted a license authorizing it to connect its system to the Company's
system. The PTO License details the exceptions and conditions subject to which
the Telecommunications Code will apply to the Company. The Telecommunications
Code confers certain important rights on PTO's in relation to network
construction, buildings and land.
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International Facilities License. The international facilities license
permits the Company to provide direct international facilities based services,
without being required to do so via BT or Mercury. The license will enable the
Company to take advantage of the expanding volumes of international
telecommunication traffic, especially data services such as the Internet, and
substantially reduce the Company's international call conveyance costs. In this
connection, the Company has been awarded telecommunications licenses in the
Republic of Ireland and in the United States
Wireless Telegraphy Act Licenses
The Company holds a number of Wireless Telegraphy Act licenses of which
the most important are the following:
License for the Transmission of Broadcasting Services. This license was
granted on January 1, 1991 and permits the licensee to operate wireless
telegraphy stations at those sites set out in a schedule to the License. In
respect of each station, site and mast heights, power, polarization and
frequency to be used are specified.
Microwave Fixed Link License. This license permits the licensee to
establish and use fixed stations for sending and receiving wireless telegraphy
at those sites as detailed in the schedule to the license.
Private Mobile Radio License. This license permits the licensee to
establish sending and receiving stations for wireless telegraphy (both base
stations and mobile stations) and to use these stations for the purpose of
sending and receiving spoken messages concerning the business of the licensee.
Earth Station Licenses. The Company holds a number of earth station
licenses. These licenses permit the licensee to establish earth stations at
specified locations in the UK for the purpose of providing wireless telegraphy
up-links between the earth station and specified geo-stationary satellites.
Each of the four types of license referred to above continue in force from
year to year unless revoked by the Secretary of State or unless any of the
license fees are unpaid by the licensee in which case the relevant license
expires.
Licenses for the Transmission of Broadcasting Services (special status).
The Company provides transmission services for a large number of radio stations
pursuant to its License for the Transmission of Broadcasting Services dated
January 1, 1991 (see above). In respect of two radio stations, Classic FM and
Virgin Radio, NTL has been issued licenses which are specific for those radio
stations. This has been done for the sake of administrative convenience because,
in both cases, the license fees are paid direct to the Radio Communications
Agency by the radio station concerned.
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Radio Fixed Access License. A Radio Fixed Access License has been granted
for services provided at 10 GHz. This license allows the Company to provide
short-range radio-links between business customers and its network.
Conditions in the Company's Wireless Telegraphy Act Licenses. The
Company's Wireless Telegraphy Act licenses contain conditions relating to
revocation of the Licenses and notifications to the Secretary of State. In
general, the Secretary of State may revoke a Wireless Telegraphy Act license at
any time. There are no notification requirements in respect of a change of
control. The license for the transmission of broadcasting services contain
provisions which enable the Secretary of State to revoke the license if, among
other things, (i) the licensee is, in the opinion of the Secretary of State, not
a fit and proper body to hold such a license; (ii) it appears to him requisite
or expedient to do so for purposes connected with the EU or any other
international organization or obligation or co-operation; (iii) the licensee
ceases to hold any contracts for the broadcasting of television or sound
broadcasting services or (iv) the licensee's license granted under the
Telecommunications Act is for any reason revoked.
On June 18, 1998, the new Wireless Telegraphy Act came into force. This
allows the UK's Radiocommunications Agency for the first time to charge more for
spectrum than the costs they incur in allocating it. The Agency has set out its
detailed proposals on how the first wave of 'spectrum pricing' will be applied.
This envisages increases in the price which the Group pays for microwave fixed
links from July 1999. The Group considers that the increases will not impact
significantly on the business.
The Agency has indicated that the spectrum pricing approach could be
applied in the future (possibly from July 2000 onwards) to other spectrum uses.
It has indicated, however, that spectrum pricing is unlikely to broadcast
spectrum.
Price Cap Review
The Company's regulated business may be divided into two categories: Price
Regulated Business and Applicable Rate Business. Price Regulated Business
comprises those telecommunication services which the Company is obliged to
provide pursuant to its Transmission License and in respect of which price
controls are imposed. The Company's Applicable Rate Business comprises those
telecommunications services which the Company is obliged to provide but which do
not fall within the definition of Price Regulated Business. Charges for
Applicable Rate Business are agreed between the Company and the relevant
customer. If despite all reasonable efforts agreement cannot be reached between
the Company and a significant proportion of its customers in respect of any
particular telecommunications service, the charge will be determined by the
Director General.
In respect of any services provided by the Company which are not Price
Regulated Business or Applicable Rate Business, the prices charged by the
Company are wholly unregulated, except for the overriding duty not to engage in
any pricing policy which constitutes undue preference or undue discrimination
against any person or class of person in respect of telecommunications services.
The
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Company's unregulated income would include, for example, charges for site
rentals to PCN operators.
The Company's Price Regulated Business is, essentially, the television
transmission service provided to the ITV (Channel 3) companies and Channel 4/S4C
including the operation and maintenance of transmission equipment and the
provision to third party transmission operators of the accommodation, masts and
antennae necessary for the operation of broadcast transmission services.
On December 24, 1996, the Director General issued the formal modification
to the Company's Telecommunications Act Licenses to effect the price controls
which are to apply to the Company for the period from January 1, 1997 to
December 31, 2002. The Price Cap Review had two purposes: (1) to establish a new
"P0" (the Company's allowable revenues for the first year of the next control
period, 1997, in respect of the Company's Maximum Price Regulated Business) and
(2) to establish a new "X" (the percentage by which such revenues must, after
allowing for consumer price inflation, be reduced each year thereafter). The
Director General's review concluded that, on present assumptions, the new P0 is
(pound)53.15 million and the new X is 4.0%.
In addition to price control, the Price Cap Review raised a number of
other issues which will impact upon the Company's Price Regulated Business in
the future. In particular, the Director General suggested that it would be
desirable for the Company to "unbundle" the prices for operational services and
required site rentals which it charges to each broadcaster (such as Channel 3
and Channel 4/S4C) in the form of a transmission fee in order to expose those
elements of the service which are potentially competitive and allow broadcasters
to choose an alternative supplier if they wish. OFTEL has proposed to review
whether the Company should publish a ratecard with a menu of prices for
unbundled services in 2002 when the Company's regulated business is next due for
full review. At present, the system for calculating the proportion of Channel
3's total transmission fee which is charged to each individual franchisee is
based on net advertising revenues ("NAR") accruing to each franchisee, rather
than the costs of actually providing the transmission service to each of the
franchisees.
OFTEL proposed that the Company should continue to charge Channel 3 as a
group a single price for each component of its transmission service, albeit that
each component would be separately distinguished. This arrangement would
continue unless and until NAR arrangements no longer applied. This decision
could only be taken after agreement with the Department of Culture, Media and
Sport and consultation with other interested bodies.
European Union Legislation
The Company's business is further regulated by the EU under various
European Commission Directives. In addition, EU law, in particular Directive
94/46, regulates the provision of satellite services within the EU. In addition,
possible future EU legislation (Green Paper on Convergence) the Company may be
subject to additional controls as a result of dealing both with broadcasting and
telephony services on a single network.
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GENERAL
Research and Development
The Company's research and development activities involve the analysis of
technological developments affecting its cable television, telephone and
telecommunications business, the evaluation of existing services and sales and
marketing techniques and the development of new services and techniques.
Patents, Copyrights and Licenses
The Company does not have any material patents or copyrights nor does it
believe that patents play a material role in its business. The Company is
substantially dependent on the licenses and franchises granted by the
legislative agencies which regulate their respective businesses. The loss of any
one or more of the licenses and franchises of the Company could have a material
adverse effect on the Company's business and financial condition. There are no
material intellectual property licenses used by the Company the loss of which
would have such an effect.
Customers
Except for the Company's broadcast services business, no material part of
the Company's business is dependent upon a single customer or a few customers,
the loss of any one or more of which would have a materially adverse effect on
the Company. The broadcast services business is, however, substantially
dependent on the revenues it receives pursuant to its contracts with the ITV
companies and Channel 4/S4C the loss of one or more of which may have a material
adverse effect on the Company.
Employees
At December 31, 1998, the Company and its subsidiaries had approximately
9,135 employees. Approximately 190 employees are represented by the
Broadcasting, Entertainment, Cinematographic and Theatre Union which has entered
into a collective bargaining agreement with NTLIH. No other employees of the
Company are represented by any labor organization. The Company believes that its
relationship with its employees is good.
ITEM 2. PROPERTIES.
Properties
The Company's subsidiaries own, lease or occupy under license 29 business
unit and regional head-offices throughout the UK, with its corporate head-office
being in Farnborough and 11 retail shops. In addition, the Company's
subsidiaries own or lease approximately 135 switching centers/head-ends and
operational hub-sites together with warehouses and other non-operational
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properties, as well as various cable television, telephone and
telecommunications equipment used in each of its regional systems.
The Company also owns, leases or occupies under license approximately 770
properties, of which approximately 700 are used as transmitter sites. In
addition, the Company also is the lessee or licensee of approximately 600
transmitter sites which are owned by Castle Transmission and shared between the
two organizations pursuant to a site sharing agreement.
The Company maintains offices under lease for its corporate staff in New
York City.
The Company believes that its facilities are presently adequate for their
current use. The Company intends to continue to expand its systems in accordance
with the requirements of its network build schedules and acquire new sites as
part of the ongoing expansion of its transmission networks.
ITEM 3. LEGAL PROCEEDINGS.
Legal Proceedings
A civils main build contractor employed by Diamond, E. H. O'Neill Limited
("O'Neill"), has commenced legal proceedings against Diamond, claiming
approximately (pound)7.1 million in respect of estimated anticipated lost
profits on future work pursuant to an alleged oral agreement. Diamond denies the
existence of any such agreement and intends to defend the proceedings in full.
In addition, the Company is involved in, or has been involved in, certain
disputes and litigation arising in the ordinary course of its business,
including claims involving contractual disputes and claims for damages to
property and personal injury resulting from the construction of the Company's
networks and the maintenance and servicing of the Company's transmission masts,
none of which are expected to have a material adverse effect on the Company's
financial position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
At a special meeting held on October 29, 1998, the Company's stockholders
were asked to consider proposals (1) to approve the issuance of shares of
Company Common Stock pursuant to the Amalgamation Agreement and (2) to amend the
Restated Certificate of Incorporation of the Company to increase the maximum
number of authorized shares of the Company's Common Stock from 100,000,000 to
400,000,000 shares and to increase the maximum number of authorized shares of
the Company's Preferred Stock from 2,500,000 to 10,000,000 shares. With respect
to the first proposal, 30,522,721 votes were cast for, 35,646 against and there
were 21,186 abstentions and broker non-votes. With respect to the second
proposal, 26,366,230 votes were cast for, 4,191,521 against and 21,802 were
abstentions and broker non-votes.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
The Company's Common Stock is traded on the Nasdaq Stock Market's National
Market under the symbol "NTLI" and on EASDAQ under the symbol "NTLI.ED". From
October 14, 1993 through March 26, 1997, the Common Stock traded on Nasdaq Stock
Market's National Market under the symbol "ICTL". The following table sets
forth, for the periods indicated, the high and low last sale prices as reported
on Nasdaq Stock Market's National Market.
<TABLE>
<CAPTION>
Last Sale Price
High Low
---------------------------
<S> <C> <C>
1997
First Quarter $26.75 $18.25
Second Quarter 27.00 19.25
Third Quarter 27.63 20.75
Fourth Quarter 29.13 25.25
1998
First Quarter 45.75 26.75
Second Quarter 54.00 35.75
Third Quarter 65.00 35.50
Fourth Quarter 59.50 32.00
1999
First Quarter (through 83.13 53.75
March 29, 1999)
</TABLE>
On March 29, 1999, the closing sale price for the Company's Common Stock,
as reported on the Nasdaq Stock Market's National Market was $81.44. As of March
29, 1999, there were approximately 583 record holders of the Common Stock. This
figure does not reflect beneficial ownership of shares held in nominee name.
The Company has never paid cash dividends on its Common Stock. Pursuant to
the indentures governing the Company's Senior Notes and the Certificates of
Designation governing the Company's Preferred Stock, certain provisions
currently materially limit the Company's ability to pay dividends on the
Company's equity securities. In addition, there are legal and contractual
restrictions on the ability of the Company's subsidiaries to transfer funds to
the Company in the form of cash dividends, loans or advances. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Liquidity and Capital Resources". The Company does not currently intend to pay
cash dividends in the foreseeable future on shares of its capital stock. The
Company anticipates that for the foreseeable future any cash flow generated from
subsidiaries'
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operations will be used to develop and expand the Company's business and for
debt service. Any future determination as to the payment of dividends will be at
the discretion of the Company's Board of Directors and will depend upon the
Company's operating results, financial condition and capital requirements,
indenture and other contractual restrictions, general business conditions and
such other factors as the Company's Board of Directors deems relevant. There can
be no assurance that the Company will pay dividends at any time in the future.
ITEM 6. SELECTED FINANCIAL DATA.
The following table sets forth certain financial data for the years ended
December 31, 1998, 1997, 1996, 1995 and 1994. This information should be read in
conjunction with the consolidated financial statements and notes thereto
appearing elsewhere in this Form 10-K.
<TABLE>
<CAPTION>
(In thousands, except per share data)
Year ended December 31,
--------------------------------------------------------------
1998 1997 1996 1995 1994
--------------------------------------------------------------
(1) (2)
<S> <C> <C> <C> <C> <C>
Income statement data:
Operating revenues $ 747,015 $ 491,755 $ 228,343 $ 33,741 $ 13,745
(Loss) before extraordinary item (503,927) (328,557) (254,454) (90,785) (29,573)
Net (loss) (534,616) (333,057) (254,454) (90,785) (29,573)
Basic and diluted net (loss) per common share:
(Loss) before extraordinary item (3) (12.69) (10.60) (8.20) (3.01) (.98)
Net (loss) per common share (3) (13.43) (10.74) (8.20) (3.01) (.98)
Weighted average number of common
shares used in the computation of basic
and diluted net loss per common share (3) 41,202 32,117 31,041 30,190 30,175
<CAPTION>
As of December 31,
--------------------------------------------------------------
1998 1997 1996 1995 1994
--------------------------------------------------------------
(1) (2)
<S> <C> <C> <C> <C> <C>
Working capital (deficiency) $ 600,549 $ (52,344) $ 242,102 $ 76,128 $ 251,544
Fixed assets, net 3,854,430 1,756,985 1,459,528 639,674 191,725
Total assets 6,194,097 2,421,639 2,454,611 1,010,669 664,366
Long-term debt 5,043,803 2,015,057 1,732,168 513,026 143,488
Senior Redeemable Exchangeable
Preferred Stock 124,127 108,534 -- -- --
Shareholders' equity (deficiency) 355,154 (61,668) 328,114 339,257 436,534
</TABLE>
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(1) In June and September 1998, the Company purchased ComTel for an aggregate
purchase price of $969 million, including intangibles aggregating $224
million. In October 1998, the Company purchased Partners for an aggregate
purchase price of $600.4 million, including intangibles of $129.8 million.
In December 1998, the Company purchased EGT for an aggregate purchase
price of $151 million, including intangibles of $45 million. The net
assets and results of operations of ComTel, Partners and EGT are included
in the consolidated financial statements from their respective dates of
acquisition.
(2) In May 1996, the Company purchased NTL Group Limited for an aggregate
purchase price of approximately $439,000,000, including goodwill of
approximately $263,000,000. The net assets and results of operations of
NTL Group Limited are included in the consolidated financial statements
from the date of the acquisition.
(3) After giving retroactive effect to the four-for-three stock split by way
of stock dividend paid in August 1995.
The Company did not declare or pay any cash dividends during the years
indicated.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
RESULTS OF OPERATIONS
As a result of the completion of the acquisitions of ComTel Limited and
Telecential Communications (collectively, "ComTel"), Comcast UK Cable Partners
Limited ("NTL Bermuda") and Eastern Group Telecoms ("EGT") in 1998, the Company
consolidated the results of operations of these businesses from the date of
acquisition. The results of these businesses are not included in the 1997
results.
Years Ended December 31, 1998 and 1997
NTL's revenues increased from 1997 to 1998 by approximately 52% to
$747,015,000. This $255,240,000 increase in revenues was accompanied by only a
$70,490,000 increase in operating expenses, representing a 73% incremental
margin.
Local telecommunications and television revenues increased to $355,589,000
from $166,951,000 primarily as a result of customer growth that increased the
Company's current revenue stream. The 1998 revenue includes $52,772,000 and
$21,441,000 from ComTel and NTL Bermuda, respectively. The Company expects its
customer base to continue to increase which will drive further revenue growth as
the Company completes the construction of its dual service network past the
remaining homes in its franchise areas.
National and international telecommunications revenues increased to
$248,895,000 from $185,194,000 primarily as a result of increases in business
telecommunications revenues, Internet services revenues and carrier services
revenues. Business telecommunications and Internet services revenues increased
primarily as a result of customer growth. The Company expects its business
telecommunications and Internet services customer bases to continue to increase
which will drive further revenue growth. The Company is expanding its sales and
marketing effort to business customers and for Internet services in its
completed network. Carrier services revenues increased due to growth in
satellite services and telephone services provided by the Company's wholesale
operation to broadcasters and telephone companies, respectively. Revenue growth
in carrier services is primarily dependent upon the Company's ability to
continue to attract new customers and expand services to existing customers.
Recent new contracts should contribute to revenue growth in the near term.
Broadcast transmission and other revenues increased to $140,156,000 from
$130,799,000 primarily due to increases in broadcast television and FM radio
customers and accounts, which exceeded price cap reductions in the Company's
regulated services. Broadcast television revenues are expected to increase in
the future as digital television broadcasting commences.
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Other telecommunications revenues decreased to $2,375,000 from $8,831,000
primarily due to the sales of the assets of the Company's wholly-owned
subsidiary, OCOM Corporation, to AirTouch Communications, Inc. and to Cellular
Communications of Puerto Rico, Inc. during 1998.
Operating expenses increased to $372,134,000 from $301,644,000 primarily
as a result of increases in interconnection costs and programming costs due to
customer growth. The 1998 expenses include $26,745,000 and $8,453,000 related to
ComTel and NTL Bermuda, respectively.
Selling, general and administrative expenses increased to $299,494,000
from $169,133,000 as a result of increases in telecommunications and CATV sales
and marketing costs and increases in additional personnel and overhead to
service the increasing customer base. The 1998 expense includes $31,212,000 and
$9,502,000 related to ComTel and NTL Bermuda, respectively.
Franchise fees increased to $25,036,000 from $23,587,000 primarily as a
result of the inflation adjustment to the Northern Ireland license payment.
Corporate expenses decreased to $17,048,000 from $18,324,000 primarily due
to the sale of OCOM's assets in 1998. Certain OCOM personnel were included in
corporate expenses in 1997.
Nonrecurring charges of $20,642,000 in 1997 were comprised of
restructuring costs of $15,629,000 and deferred costs written-off of $5,013,000.
The deferred costs written off arose in connection with the Company's
unsuccessful bid for 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 consolidated the
Customer Operations departments that serve three franchise areas in England
(excluding the ComTel and NTL Bermuda franchises) into one department and
consolidated certain operations and management groups within the Broadcast
Services division, as well as certain other consolidations or cessation of
activities. This charge consisted of employee severance and related benefit
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. The consolidations have been completed, the lease
exit costs are for leases that extend over a number of years and the contract
cancellations have been completed. As of December 31, 1998, $9,172,000 of the
provision has been used, including $5,558,000 for severance and related costs,
$1,450,000 for lease exit costs and $2,164,000 for penalties associated with the
cancellation of contractual obligations. As of December 31, 1998, 177 employees
had been terminated. The $4,194,000 reversed in 1998 from changes in estimates
of costs to be incurred includes $1,168,000 for severance and related costs,
$2,826,000 for lease exit costs and $200,000 for penalties associated with the
cancellation of contractual obligations. This reversal was necessary because
employees whose positions were eliminated chose to remain with the Company in
other positions rather than leave the Company and receive severance pay; and the
real estate markets in which the Company sublet space improved increasing the
sublet rentals and shortening the period of time required to find subtenants.
The remaining restructuring reserve of $2,263,000 is for lease costs
net of sublease revenue.
Depreciation and amortization expense increased to $266,112,000 from
$150,509,000
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primarily due to an increase in depreciation of telecommunications and CATV
equipment. The 1998 expense includes $31,091,000 and $14,702,000 from ComTel and
NTL Bermuda, respectively, including amortization of acquisition related
intangibles.
Interest expense increased to $328,815,000 from $202,570,000 due to the
issuance of additional debt in 1998 and the increase in the accretion of
original issue discount on the deferred coupon notes. Interest of $118,273,000
and $78,817,000 was paid in the years ended December 31, 1998 and 1997,
respectively.
Other gains of $21,497,000 in 1997 include a gain on sale of fixed assets
of $11,497,000 and a $10,000,000 payment from LeGroupe Videotron Ltee pursuant
to the settlement of a lawsuit.
Foreign currency transaction gains increased to $4,152,000 from $574,000
due to favorable changes in the exchange rate subsequent to the issuance in
March 1998 of new debt denominated in British pounds sterling.
The Company recorded an extraordinary loss from the early extinguishment
of debt of $30,689,000 in 1998 as a result of the redemption of the 10-7/8%
Notes and the repayment of the bank loan. In connection with the repayment of
debt, a subsidiary recorded an extraordinary loss of $4,500,000 in 1997 from the
write-off of unamortized deferred financing costs.
Years Ended December 31, 1997 and 1996
Local telecommunications and television revenues increased to $166,951,000
from $89,209,000 as a result of customer growth that increased the Company's
current revenue stream.
National and international telecommunications revenues increased to
$185,194,000 from $45,430,000 as a result of the acquisition of NTL Group
Limited in May 1996, plus the new site acquisition, installation, design and
construction projects and additional site sharing revenue in 1997.
Broadcast transmission and other revenues increased to $130,799,000 from
$83,618,000 as a result of the acquisition of NTL Group Limited in May 1996,
plus the revenues from NTL Group Limited's ten-year contract to broadcast
Channel 5 in the United Kingdom which commenced in 1997.
Operating expenses increased to $301,644,000 from $144,315,000. NTL Group
Limited operating expenses in the year ended December 31, 1997 and in the period
from May 9, 1996, the date of acquisition, to December 31, 1996 were
$185,995,000 and $71,871,000, respectively. The remainder of the increase was
primarily the result of increases in programming and interconnection costs.
Selling, general and administrative expenses increased to $169,133,000
from $114,992,000. NTL Group Limited selling, general and administrative
expenses in the year ended December 31,
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<PAGE> 64
1997 and in the period from May 9, 1996, the date of acquisition, to December
31, 1996 were $18,799,000 and $9,384,000, respectively. The remainder of the
increase was the result of increases in telecommunications and CATV sales and
marketing costs and in additional personnel and overhead to service the
increasing customer base.
Franchise fees of $23,587,000 and $13,117,000 in 1997 and 1996,
respectively, are for the Northern Ireland license. Franchise fee expense was
incurred upon the start of operations in Northern Ireland in June 1996.
Corporate expenses increased to $18,324,000 from $14,899,000 primarily due
to an increase in personnel and related costs. The 1997 and 1996 amounts include
$1,852,000 and $2,906,000, respectively, of non-cash expense related to
non-compete agreements.
Nonrecurring charges of $20,642,000 in 1997 include restructuring costs of
$15,629,000 and deferred costs written-off of $5,013,000. Restructuring costs
include costs of employee severance and related costs, lease exit costs and
penalties associated with the cancellation of contractual obligations. The
deferred costs of $5,013,000 written-off arose in connection with the Company's
unsuccessful bid for DTT multiplex licenses.
Depreciation and amortization expense increased to $150,509,000 from
$98,653,000. The increase was primarily due to an increase in depreciation of
telecommunications and CATV equipment. Depreciation and amortization expense of
NTL Group Limited and amortization of goodwill as a result of the acquisition
was $37,724,000 and $20,339,000 in the year ended December 31, 1997 and in the
period from May 9, 1996, the date of acquisition, to December 31, 1996,
respectively.
Interest expense increased to $202,570,000 from $137,032,000 due to the
issuance of the 10% Senior Notes in February 1997, the issuance of the 7%
Convertible Subordinated Notes in June 1996 and the increase in accretion of the
original issue discount on the deferred coupon notes. Interest of $78,817,000
and $37,889,000 was paid in the years ended December 31, 1997 and 1996,
respectively.
Other gains of $21,497,000 in 1997 include a gain on sale of fixed assets
of $11,497,000 and a $10,000,000 payment from LeGroupe Videotron Ltee pursuant
to the settlement of a lawsuit.
In connection with the repayment of debt, a subsidiary of NTL Group
Limited recorded an extraordinary loss in 1997 of $4,500,000 from the write-off
of unamortized deferred financing costs.
LIQUIDITY AND CAPITAL RESOURCES
The Company will continue to require significant amounts of capital to
finance construction of its local and national networks, for connection of
telephone, telecommunications and CATV customers to the networks, for other
capital expenditures and for debt service. The Company
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<PAGE> 65
estimates that these requirements will aggregate approximately $1.6 billion in
1999. This amount includes the requirements of ComTel, NTL Bermuda and EGT
acquired in 1998, as well as the requirements of Diamond Cable Communications
plc ("Diamond") which was acquired in March 1999. The Company intends to fund
these requirements from cash, cash equivalents and marketable securities on hand
of $1.8 billion as of December 31, 1998 (including Diamond's cash and cash
equivalents as of December 31, 1998 and the cash received from Microsoft Corp.
in January 1999 (see below), and funds internally generated by the operations of
the Company's subsidiaries. The Company's commitments for equipment and services
at December 31, 1998 of approximately $264 million are included in the
anticipated requirements.
In January 1999, the Company sold $500 million of 5.25% convertible
preferred stock to Microsoft Corp. The preferred stock is convertible into the
Company's common stock at a conversion price of $100 per share. Dividends are
payable quarterly, at the Company's option, in cash, shares of common stock or
additional shares of convertible preferred stock. The Company also issued a
warrant to Microsoft Corp. to purchase 1.2 million shares at an exercise price
of $84 per share which expires in January 2004.
The Company is highly leveraged. The accreted value at December 31, 1998
of the Company's consolidated long-term indebtedness, including the Redeemable
Preferred Stock, and adjusted for the Diamond acquisition and the Microsoft
transaction is approximately $6.4 billion, representing approximately 82% of
total capitalization. The following table summarizes the terms of those notes
and Redeemable Preferred Stock issued by the Company.
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<PAGE> 66
<TABLE>
<CAPTION>
10-3/4%
11-1/2% 12-3/4% Senior 9-3/4% 12-3/8%
Series B Senior Series A Senior Sterling Senior Senior
Deferred Coupon Deferred Coupon Deferred Coupon Deferred Coupon Deferred Coupon Notes
Notes Notes Notes Notes
Denomination $ $ (pound) $ $
<S> <C> <C> <C> <C> <C>
Net Proceeds
(in 000's) 582,000 145,125 170,584 778,340 241,967
Issue Date January 30, 1996 April 20, 1995 March 13, 1998 March 13, 1998 November 6, 1998
Issue Price (1) 57.155% 53.995% 58.62% 61.724% 55.505%
Aggregate Principal
Amount at
Maturity
(in 000's) 1,050,000 277,803 300,000 1,300,000 450,000
Maturity Date February 1, 2006 April 15, 2005 April 1, 2008 April 1, 2008 October 1, 2008
Yield or Interest
Rate (2) 11-1/2% 12-3/4% 10-3/4% 9-3/4% 12-3/8%
Interest or Dividend February 1 and April 15 and April 1 and April 1 and April 1 and
Payment August 1 October 15 October 1 October 1 October 1
Dates from 8-1-01 from 10-15-00 from 10-1-2003 from 10-1-2003 from 4-1-2004
Earliest Optional
Redemption
Date (4) February 1, 2001 April 15, 2000 April 1, 2003 April 1, 2003 October 1, 2003
Redemption 105.75 (2001) to 103.64 (2000) to 105.375 (2003) to 104.875 (2003) to 106.188 (2003) to 100
Price (%)(5) 100 (2003) 100 (2002) 100 (2006) 100 (2006) (2006)
Conversion
Price (6) N/A N/A N/A N/A N/A
Senior/
Subordinated Senior Senior Senior Senior Senior
(Table continues on the following page)
</TABLE>
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<PAGE> 67
<TABLE>
<CAPTION>
7% 7%
11-1/2% Convertible Convertible 9-1/2% 10% Redeemable
Senior Subordinated Subordinated Senior Sterling Series B Preferred
Notes Notes Notes Notes Senior Notes Stock
Denomination $ $ $ (pound) $ $
<S> <C> <C> <C> <C> <C> <C>
Net Proceeds
(in 000's) 607,031 583,500 267,437 121,161 389,000 96,625
Issue Date Nov 2, 1998 Dec 16, 1998 June 12, 1996 March 13, 1998 February 14, 1997 February 14, 1997
Issue Price (1) 100% 100% 100% 99.670% 100% 100%
Aggregate Principal
Amount at
Maturity
(in 000's) 625,000 600,000 275,000 125,000 400,000 100,000
Maturity Date October 1, 2008 Dec 15, 2008 June 15, 2008 April 1, 2008 February 15, 2007 February 15, 2009
Yield or Interest
Rate (2) 11-1/2% 7% 7% 9-1/2% 10% 13%
Interest or Dividend April l and June 15 and June 15 and April 1 and February 15 and May 15, August 15,
Payment October 1 from December 15 December 15 October 1 August 15 November 15 and
Dates 4-1-99 from 6-15-99 from 12-15-96 from 10-1-98 from 8-15-97 February 15
from 5-15-97 (3)
Earliest Optional
Redemption
Date (4) October 1, 2003 Dec 15, 2001 June 15, 1999 April 1, 2003 February 15, 2002 February 15, 2002
Redemption 105.75 (2003) to 104.4 (2001) to 104.9 (1999) to 104.75 (2003) to 105 (2002) to 106.5 (2002) to
Price (%) (5) 100 (2006) 100 (2006) 100 (2006) 100 (2006) 100 (2005) 100 (2005)
Conversion
Price (6) N/A 61.25 37.875 N/A N/A N/A
Senior/
Subordinated Senior Subordinated Subordinated Senior Senior N/A
</TABLE>
(1) Percent of aggregate principal amount at maturity (or aggregate
liquidation preference in the case of the Redeemable Preferred Stock).
(2) Percent per annum.
(3) Dividend payments on the Redeemable Preferred Stock are payable in cash or
additional shares of Redeemable Preferred Stock, at the Company's option.
From May 15, 2004, dividend payments are payable in cash.
(4) This is the first date when redeemable at the Company's option. The
Redeemable Preferred Stock is mandatorily redeemable for cash on February
15, 2009.
(5) Expressed as a percentage of principal amount or liquidation preference,
as applicable, plus, in each case, accrued and unpaid interest or
dividends thereon to the applicable redemption date.
(6) This is the conversion price per share of the Company's common stock,
adjusted for the four-for-three stock split in August 1995 and subject to
further adjustments in certain events.
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<PAGE> 68
In addition to the notes issued by the Company summarized above, NTL
Bermuda and Diamond have issued the following notes. NTL Bermuda has $517.3
million principal at maturity Discount Debentures which are due on November 15,
2007. Interest accretes at 11.2% per annum compounded semi-annually until
November 15, 2000, after which date interest will be paid in cash beginning on
May 15, 2001. NTL Bermuda also has a (pound)8,456,000 note payable to Comcast
U.K. Holdings, Inc. that incurs interest at 9% per annum, compounded
semi-annually. The note plus accrued interest is due in September 1999. Accrued
interest was (pound)3,854,000 as of December 31, 1998.
Diamond was acquired in March 1999 when the Company issued an aggregate of
approximately 13 million shares in exchange for each ordinary share and deferred
share of Diamond at a ratio of approximately .85 shares of the Company's common
stock for four Diamond ordinary shares or one deferred share. Diamond had the
following notes outstanding as of December 31, 1998:
(i) 13 1/4% Senior Discount Notes due September 30, 2004, principal amount at
maturity of $285 million, interest payable semi-annually beginning on
March 31, 2000, redeemable at Diamond's option after September 30, 1999,
(ii) 11 3/4% Senior Discount Notes due December 15, 2005, principal amount at
maturity of $531 million, interest payable semi-annually beginning on June
15, 2001, redeemable at Diamond's option on or after December 15, 2000,
(iii) 10 3/4% Senior Discount Notes due February 15, 2007, principal amount at
maturity of $421 million, interest payable semi-annually beginning on
August 15, 2002,
(iv) 10% Senior Notes due February 1, 2008, issued by Diamond Holdings plc, a
wholly-owned subsidiary of Diamond, principal amount of (pound)135 million
($224 million), interest payable semi-annually as of August 1, 1998,
(v) 9 1/8% Senior Notes due February 1, 2008, issued by Diamond Holdings plc,
principal amount of $110 million, interest payable semi-annually as of
August 1, 1998, and
(vi) mortgage of (pound)2.5 million ($3.7) million to fund the construction
of an office building, repayable over 20 years as of July 31, 1995,
interest at LIBOR plus 1 1/2%.
The Company intends to commence an offer to repurchase its outstanding
notes at 101% of their accreted value or principal amount on or about April 1,
1999 pursuant to the "change of control" provisions of the indentures. The offer
will expire 30 days thereafter. NTL has entered into a bridge facility to
finance the redemption of Diamond bonds tendered, if any, which is subject to
certain funding conditions.
The Company has other significant commitments or potential commitments in
addition to those described above. These are as follows:
(i) Pursuant to the terms of the Northern Ireland LDL, a subsidiary of the
Company is required to make annual cash payments to the ITC for 15 years
in the amount of approximately (pound)14.4 million (subject to adjustment
for inflation) in addition to the percentages of qualifying revenue
payments of 0% for the first ten years and 2% for the last five years of
the LDL.
(ii) Pursuant to an agreement with TeleWest Communications plc relating to NTL
Bermuda's and TeleWest's respective 50% ownership interests in Cable
London PLC, between April 29 and
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<PAGE> 69
July 29, 1999, NTL Bermuda can notify TeleWest of the price at which it is
willing to sell its 50% ownership in Cable London to TeleWest. Following
such notification, TeleWest at its option is required at that price to
either purchase NTL Bermuda's 50% interest or sell its 50% interest to NTL
Bermuda. If NTL Bermuda fails to give notice to TeleWest by July 29, 1999,
it will be deemed to have delivered an offer notice for (pound)100
million ($166 million).
(iii) In December 1998, a wholly-owned subsidiary of the Company acquired 9
million shares, representing 6.3% of the issued share capital, of
Newcastle United PLC (the Newcastle United football club) for cash of
approximately $17 million. In conjunction with the sale of shares, the
seller entered into an irrevocable commitment to the Company that if the
Company makes an offer for all of the issued share capital of Newcastle
United, it will accept that offer in respect of the remaining balance of
its shares representing 50.8% of the issued share capital at a price of
111.7 pence per share in cash, or at the Company's option, in a zero
coupon note aggregating approximately $135 million.
(iv) In March 1999, the Commonwealth of Australia accepted the Company's bid to
own and operate the Australian National Transmission Network ("NTN"). NTN
operates from over 560 tower sites and provides exclusive television and
radio transmission services to Australia's only national TV and radio
broadcasters, serves regional and community TV and radio broadcasters, and
provides equipment hosting services to telecom operators and emergency
service communications providers on its towers. A subsidiary of the
Company will purchase the company that will hold the NTN assets for an
aggregate purchase price of approximately $407 million.
The development, construction and operations of the Company's combined
telecommunications networks will require substantial capital. In addition, the
Company will require significant amounts of capital to finance the other capital
expenditures and other obligations of its subsidiaries. The Company intends to
fund a portion of these requirements from cash and securities on hand and cash
from operations. However, under certain circumstances, additional funding will
be necessary to meet these requirements. There can be no assurance that: (i)
actual construction costs will not exceed the amounts estimated or that
additional funding substantially in excess of the amounts estimated will not be
required, (ii) additional financing will be obtained or will be available on
acceptable terms, (iii) conditions precedent to advances under future credit
facilities will be satisfied when funds are required, (iv) the Company and its
subsidiaries will be able to generate sufficient cash from operations to meet
capital requirements, debt service and other obligations when required, (v) the
Company will be able to access such cash flow or (vi) the Company will not incur
losses from its exposure to exchange rate fluctuations or be adversely affected
by interest rate fluctuations.
Management does not anticipate that the Company and its subsidiaries will
generate sufficient cash flow from operations to repay at maturity the entire
principal amount of the outstanding indebtedness of the Company and its
subsidiaries. Accordingly, the Company may be required to consider a number of
measures, including: (i) refinancing all or a portion of such indebtedness, (ii)
seeking modifications to the terms of such indebtedness, (iii) seeking
additional debt financing, which may be subject to obtaining necessary lender
consents, (iv) seeking additional equity financing, or (v)
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<PAGE> 70
a combination of the foregoing.
The Company's operations are conducted through its direct and indirect
wholly-owned subsidiaries. As a holding company, the Company holds no
significant assets other than its investments in and advances to its
subsidiaries. The Company is therefore dependent upon the receipt of sufficient
funds from its subsidiaries to meet its own obligations. Accordingly, the
Company's ability to make scheduled interest and principal payments when due to
holders of indebtedness of the Company and the Company's ability to pay cash
dividends to its stockholders is dependent upon the receipt of sufficient funds
from its subsidiaries.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Cash used in operating activities was $18,943,000 and $17,271,000 in the
years ended December 31, 1998 and 1997, respectively. The change is primarily
due to an increase in the operating loss and changes in operating assets and
liabilities.
Purchases of fixed assets were $772,144,000 in 1998 and $503,656,000 in
1997 as a result of the continuing fixed asset purchases and construction in
1998.
Proceeds from borrowings, net of financing costs, of $3,525,588,000 in
1998 is comprised of the proceeds from the various notes issued during the year
plus proceeds from borrowings under the bank loan. Principal payments of
$845,018,000 represent the repayment of borrowings under the bank loan. Cash
placed in escrow of $217,622,000 was used to redeem the Company's 10-7/8% Senior
Deferred Coupon Notes which was completed in October 1998.
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<PAGE> 71
Year 2000
The Company has a comprehensive Year 2000 project designed to identify and
assess the risks associated with its information systems, products, operations
and infrastructure, suppliers, and customers that are not Year 2000 compliant,
and to develop, implement and test remediation and contingency plans to mitigate
these risks. The project comprises four phases: (1) identification of risks, (2)
assessment of risks, (3) development of remediation and contingency plans and
(4) implementation and testing.
The Company has completed its compilation of equipment and systems that
might be affected by Year 2000 noncompliance. An impact and risk assessment is
underway on all items to determine whether items are business critical, high
priority or low priority. This assessment will include all information systems
("IS") and non-IS equipment with embedded technology such as air conditioning,
generators and power supplies. All business critical and high priority items
have been identified. The Company's billing, provisioning and customer service
systems are being reviewed and modified for Year 2000 readiness. Although this
was expected to be completed by the end of 1998, it is now expected to be
completed in March 1999. Integration testing of the complete system will begin
in the second quarter of 1999 and is expected to require three months. Testing
of other business critical and high priority items is in various stages with
some areas 100% complete. The target for the completion of this testing is the
end of June 1999, although a small portion of such testing is scheduled to
extend into the third quarter of 1999. Where appropriate, remedial work has been
minimized by bringing forward planned system revisions and retiring old
equipment. The Company is also communicating with its suppliers with respect to
the high priority and business critical items. A central database has been
established to insure all issues are resolved. This communication is virtually
complete. A Millennium Operations Plan is being created that details the key
resources needed for problems that may arise over the Year 2000 weekend. All
Business Continuity Plans are being reviewed and are being revised to account
for special circumstances related to the Year 2000. These plans are expected to
be finalized in the third quarter of 1999.
The Company expects to incur $13 million primarily in labor costs to
compile inventories, assess risks, prioritize remediation projects, communicate
with suppliers, maintain the supplier communications database, test remediations
and implement remediations. The Company incurred approximately $3.2 million of
this amount in 1998. The expected cost includes enhancements and upgrades that
are part of the normal upgrades and system revisions.
The Company currently believes that the most reasonably likely worst case
scenario with respect to the Year 2000 is the failure of public electricity
supplies during the millennium period. A number of critical sites have permanent
automatic standby generators and uninterruptible power supplies. Where critical
sites do not have permanent standby power, the Company intends to deploy its
mobile generators. In addition, other telephone operators have suggested that
the telephone network may overload due to excessive traffic. The Company is
reviewing its "cold start" scenarios and alternative interconnection routes in
the event of interruptions in the service of other telephone companies. The
Company expects the UK Telecoms Regulator to require evidence of contingency
plans from all the major operators and the results will be shared through the
Inter-Operator Forum. Either or both of the above mentioned scenarios could have
a material
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<PAGE> 72
adverse effect on operations, although it is not possible at this time to
quantify the amount of revenues and gross profit that might be lost, or the
costs that could be incurred.
As the Year 2000 project continues, the Company may discover additional
problems, may not be able to develop, implement or test remediation or
contingency plans, or may find that the costs of these activities exceed current
expectations. In many cases, the Company is relying on assurances from suppliers
that new and upgraded information systems and other products will be Year 2000
ready. The Company plans to test such third-party products, but cannot be sure
that its tests will be adequate or that, if problems are identified, they will
be addressed by the supplier in a timely and satisfactory way.
Because the Company uses a variety of information systems and has
additional systems embedded in its operations and infrastructure, the Company
cannot be sure that all of its systems will work together in a Year 2000-ready
fashion. Furthermore, the Company cannot be sure that it will not suffer
business interruptions, either because of its own Year 2000 problems or those of
third-parties upon whom the Company is reliant for services. The Company is
continuing to evaluate its Year 2000-related risks and corrective actions.
However, the risks associated with the Year 2000 problem are pervasive and
complex; they can be difficult to identify and address, and can result in
material adverse consequences to the Company. Even if the Company, in a timely
manner, completes all of its assessments, identifies and tests remediation plans
believed to be adequate, and develops contingency plans believed to be adequate,
some problems may not be identified or corrected in time to prevent material
adverse consequences to the Company.
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
Certain statements contained herein constitute "forward-looking
statements" as that term is defined under the Private Securities Litigation
Reform Act of 1995. When used herein, the words, "believe," "anticipate,"
"should," "intend," "plan," "will," "expects," "estimates," "projects,"
"positioned," "strategy," and similar expressions identify such forward-looking
statements. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause the actual results, performance
or achievements of the Company, or industry results, to be materially different
from those contemplated, projected, forecasted, estimated or budgeted, whether
expressed or implied, by such forward-looking statements. Such factors include
the following: general economic and business conditions in the United Kingdom,
the Company's ability to continue to design networks, install facilities, obtain
and maintain any required governmental licenses or approvals and finance
construction and development, all in a timely manner at reasonable costs and on
satisfactory terms and conditions, as well as assumptions about customer
acceptance, churn rates, overall market penetration and competition from
providers of alternative services, the impact of new business opportunities
requiring significant up-front investment, Year 2000 readiness, and
availability, terms and deployment of capital.
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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.
Market Risk
The Company is exposed to various market risks, including changes in
foreign currency exchange rates and interest rates. Market risk is the potential
loss arising from adverse changes in market rates and prices, such as foreign
currency exchange and interest rates. The Company does not enter into
derivatives or other financial instruments for trading or speculative purposes.
The Company enters into financial instruments to manage and reduce the impact of
changes in foreign currency exchange rates, primarily US dollar/UK Pound
Sterling. The counterparties are major financial institutions. The Company does
not enter into derivatives or financial instruments to manage or reduce the
impact of changes in interest rates.
Foreign Exchange Contracts
To the extent that the Company obtains financing in United States dollars
and incurs costs in the construction and operation of its networks in the United
Kingdom in British pounds sterling, it will encounter currency exchange rate
risks. At December 31, 1998, the Company had approximately $195 million in
pounds sterling cash and cash equivalents to reduce this risk. In addition, the
Company's pounds sterling denominated Notes issued in March 1998 will also
reduce this risk. Furthermore, the Company's revenues are generated primarily in
British pounds sterling while its interest and principal obligations with
respect to most of the Company's existing indebtedness are payable in U.S.
dollars. The Company has entered into an option agreement to hedge some of the
risk of exchange rate fluctuations related to interest and principal payments on
U.S. dollar denominated debt and for parent company expenses up to an annual
limit of approximately $13 million. The Company may purchase U.S. dollars at a
fixed rate of (pound)1 to $1.40 on specified dates through June 2001 for
specified amounts of U.S. dollars. The dates and U.S. dollar amounts correspond
to the Company's interest and principal payment dates and amounts for its U.S.
dollar denominated debt and anticipated amounts of parent company expenses. In
addition, NTL Bermuda has option agreements of (pound)250 million notional
amount to purchase U.S. dollars at a fixed rate of (pound)1 to $1.35 in November
2000. This option provides a hedge against an adverse change in exchange rates
when interest payments commence on NTL Bermuda's U.S. dollar denominated
Discount Debentures.
The estimated fair value of foreign currency contracts represents the
amount required to enter into offsetting contracts with similar remaining
maturities based on quoted market prices. At December 31, 1998, the difference
between the fair value of the outstanding contracts and the contract amounts was
immaterial.
Interest Rates
The fair market value of long-term fixed interest rate debt is subject to
interest rate risk. Generally, the fair market value of fixed interest rate debt
will increase as interest rates fall and decrease as interest rates rise. Fair
values were determined from quoted market prices.
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<PAGE> 74
Interest Rate Sensitivity
Principal Amount by Expected Maturity
Average Interest Rate
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Fair
Value
(dollars in thousands) 1999 2000 2001 2002 2003 Thereafter Total 12/31/98
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Long-term Debt, including
Current Portion
12.75% Series A Senior
Deferred Coupon Notes due
2005
Fixed Rate - - - - - $277,804 $277,804 $252,801
Average Interest Rate 12.75%
11.50% Series B Senior
Deferred Coupon Notes due
2006
Fixed Rate - - - - - $1,050,000 $1,050,000 $882,000
Average Interest Rate 11.50%
7% Covertible Subordinated
Notes due 2008 (1996 issue)
Fixed Rate - - - - - $275,000 $275,000 $411,125
Average Interest Rate 7%
7% Convertible Subordinated
Notes due 2008 (1998 issue)
Fixed Rate - - - - - $600,000 $600,000 $656,340
Average Interest Rate 7%
10% Series B Senior Notes
due 2007
Fixed Rate - - - - - $400,000 $400,000 $408,000
Average Interest Rate 10%
9.75% Senior Deferred
Coupon Notes due 2008
Fixed Rate - - - - - $1,300,000 $1,300,000 $835,250
Average Interest Rate 9.75%
11.5% Senior Notes due 2008
Fixed Rate - - - - - $625,000 $625,000 $681,250
Average Interest Rate 11.5%
12.375% Senior Deferred
Coupon Notes due 2008
Fixed Rate - - - - - $450,000 $450,000 $274,500
Average Interest Rate 12.375%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
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Interest Rate Sensitivity
Principal Amount by Expected Maturity
Average Interest Rate and Average Forward Foreign Exchange Rate
(USD/British Sterling)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Fair
Value
(pounds in thousands) 1999 2000 2001 2002 2003 Thereafter Total 12/31/98
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Long-term Debt (including
Current Portion)
Denominated in Foreign
Currency
9.5% Senior Notes (Sterling)
due 2008
Fixed Rate - - - - - (pound)125,000 (pound)125,000 (pound)116,250
Average Interest Rate
Average Forward 9.5%
Exchange Rate 1.6506
10.75% Senior Deferred
Coupon Notes (Sterling) due
2008
Fixed Rate - - - - - (pound)300,000 (pound)300,000 (pound)177,000
Average Interest Rate
Average Forward 10.75%
Exchange Rate 1.6506
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Interest Rate Sensitivity
Principal Amount by Expected Maturity
Average Interest Rate and Average Forward Foreign Exchange Rate
(USD/British Sterling)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Fair
Value
(dollars in thousands) 1999 2000 2001 2002 2003 Thereafter Total 12/31/98
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Long-term Debt, including
Current Portion
11.20% Senior Discount
Debentures due 2007
Fixed Rate - - - - - $517,300 $517,300 $437,119
Average Interest Rate
Average Forward Exchange 11.20%
Rate 1.6506
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The consolidated financial statements of the Company are filed under this
Item commencing on page F-1 of this Report.
The following is a summary of the quarterly results of operations for the
years ended December 31, 1998 and 1997.
<TABLE>
<CAPTION>
(In thousands, except per share data)
1998
Three Months Ended
---------------------------------------------------
March 31 June 30 September 30 December 31
---------------------------------------------------
<S> <C> <C> <C> <C>
Revenues $ 147,792 $ 154,314 $ 182,484 $ 262,425
Operating loss (41,962) (40,665) (55,640) (90,348)
(93,672) (104,302) (133,892) (172,061)
Loss before extraordinary item
(93,672) (104,302) (138,131) (198,511)
Net loss
Basic and diluted loss per common share (3.02) (2.80) (3.34) (3.29)
before extraordinary item
Basic and diluted net loss per common
share (3.02) (2.80) (3.44) (3.79)
<CAPTION>
1997
Three Months Ended
---------------------------------------------------
March 31 June 30 September 30 December 31
---------------------------------------------------
<S> <C> <C> <C> <C>
Revenues $ 106,817 $ 114,822 $ 126,734 $ 143,402
Operating loss (45,231) (51,772) (54,438) (40,623)
Loss before extraordinary item (85,761) (87,674) (83,357) (71,765)
Net loss (85,761) (87,674) (83,357) (76,265)
Basic and diluted loss per common share
before extraordinary item (2.73) (2.84) (2.70) (2.34)
Basic and diluted net loss per common
share (2.73) (2.84) (2.70) (2.48)
</TABLE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
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<PAGE> 77
PART III
ITEMS 10, 11, 12, and 13.
The information required by PART III (Items 10, 11, 12 and 13) is
incorporated by reference from the Company's definitive proxy statement
involving the election of directors which the Company expects to file, pursuant
to Regulation 14A, within 120 days following the end of its fiscal year.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) (1) Financial Statements - See list of Financial Statements on
page F-1.
(2) Financial statement schedules - see list of Financial
Statement Schedules on page F-1.
(3) Exhibits - See Exhibit Index on page 74.
(b) During the fourth quarter of 1998, the Company filed Current
Reports on Form 8-K dated October 5, 1998, October 27, 1998, October 29, 1998,
December 16, 1998, December 21, 1998 and December 22, 1998 (reporting matters
under Item 5 - Other Events). No financial statements were filed with this
report.
(c) Exhibits - The response to this portion of Item 14 is submitted
as a separate section of this report.
(d) Financial Statement Schedules - See list of Financial Statement
Schedules on page F-1.
73
<PAGE> 78
EXHIBIT INDEX
Exhibit No.
- -----------
2.1 Amended and Restated Agreement of Reorganization and Plan of
Merger, dated as of May 28, 1993, among the Company, OCOM and
CableTel Merger Inc. (Incorporated by reference to Exhibit 2,
Registration File No. 33-63570)
2.2 Deed of Irrevocable undertaking dated March 28, 1996 by and
among Addroute Limited, certain shareholders in the NTL Group
Limited, NTL Group Limited and the Company (Incorporated by
reference to the Company's Registration Statement on Form S-4,
File No. 333-1010)
2.3 Form of Offer Document dated March 28, 1996 of Addroute Limited
for NTL Group Limited (Incorporated by reference to the
Company's Registration Statement on Form S-4, File No. 333-1010)
2.4 Deed of Adjustment dated March 28, 1996 by and among Addroute
Limited and Mercury Asset Management plc. (Incorporated by
reference to the Company's Registration Statement on Form S-4,
File No. 333-1010)
2.5 Share Exchange Agreement, dated as of August 30, 1996, by and
among the Company, B/G Co., Booth American Company, Columbia
Management, Inc. and Robert T. Goad (Incorporated by reference
to the Company's Registration Statement on Form S-3, File No.
333-16751)
2.6 Share Purchase Agreement, dated October 7, 1996, by and among
the Company, South Wales Electricity plc and Swalec Telco
Investment Limited (Incorporated by reference to the Company's
Registration Statement on Form S-3, File No. 333- 16751)
2.7 Agreement and Plan of Amalgamation, dated as of February 4,
1998, as amended, among the Company, NTL (Bermuda) Limited, and
Comcast UK Cable Partners Limited (Incorporated by reference to
the Company's Registration Statement on Form S-4, File No.
333-64727)
2.8 Amendment No. 1 to Agreement and Plan of Amalgamation, dated as
of May 28, 1998, among the Company, NTL (Bermuda) Limited and
Comcast UK Cable Partners Limited (Incorporated by reference to
the Company's Registration Statement on Form S-4, File No.
333-64727)
2.9 Agreement for the Sale and Purchase of the Vision Networks UK
Group, dated June 16, 1998, by and between Vision Networks III
B.V., ComTel UK Finance B.V., Vision Networks (UK) I Limited,
Telecential Communications (Canada) Ltd., Vision Networks (UK)
II Limited, Telecential Communications (UK) Limited, Vision
Networks (UK) Holding B.V., NTL Group Limited and the Company
(Incorporated by reference to the Company's Form 8-K, filed with
the Commission on October 5, 1998)
74
<PAGE> 79
2.10 Supplemental Agreement, dated September 22, 1998, to a Sale and
Purchase Agreement, dated June 16, 1998, entered into between
inter alia Vision Networks III B.V., ComTel UK Finance B.V. and
NTL Group Limited in respect of the sale and purchase of Vision
Networks UK Group (Incorporated by reference to the Company's
Form 8-K, filed with the Commission on October 5, 1998)
2.11 Share Exchange Agreement, dated as of June 16, 1998, as amended,
among the Company and the shareholders of Diamond Cable
Communications Plc (Incorporated by reference to the Company's
Proxy Statement, dated January 29, 1999)
2.12 Amendment No. 1 to Share Exchange Agreement, dated as of
December 21, 1998, among the Company and the shareholders of
Diamond Cable Communications plc (Incorporated by reference to
the Company's Form 8-K, filed with the Commission on December
23, 1998)
3.1 Restated Certificate of Incorporation of the Company
3.1(a) Certificate of Ownership and Merger, dated as of March 26, 1997
(Incorporated by reference to Company's Form 8-K, dated and
filed with the Commission on March 26, 1997)
3.2 Rights Agreement entered into by the Company and Continental
Stock Transfer & Trust Company (Incorporated by Reference to
Exhibit 4.2, Registration No. 33- 63570)
3.3 Restated By-Laws (Incorporated by reference to Exhibit 3.2,
Registration No. 33- 63570)
4.1 Specimen of Common Stock Certificate (Incorporated by reference
to Exhibit 4.1, Registration File No. 33-63570)
4.2 Warrant Agreement, dated February 14, 1996 between the Company
and Chemical Bank as Warrant Agent (Incorporated by reference to
the Company's Registration Statement on Form S-4, File No.
333-00118)
4.3 Form of Warrant to Purchase Common Stock (included in Exhibit
4.2)
4.4 Indenture, dated as of October 1, 1993, by and between the
Company and Chemical Bank with respect to the 10% Senior Notes
(Incorporated by reference to Exhibit 4.1, Registration File No.
33-63572)
4.5 Indenture, dated as of April 20, 1995, by and between the
Company and Chemical Bank as Trustee, with respect to the 12
3/4% Senior Notes (Incorporated by reference from the Company's
Registration Statement on Form S-4, File No. 33-92794)
4.6 Indenture, dated as of January 30, 1996, by and between the
Company and Chemical Bank as Trustee, with respect to the 11
1/2% Senior Notes (Incorporated by reference from the Company's
Registration Statement on Form S-4, File No. 333-00118)
75
<PAGE> 80
4.7 First Supplemental Indenture, dated as of January 22, 1996, by
and among the Company and Chemical Bank, as Trustee, with
respect to the 12 3/4% Senior Notes (Incorporated by reference
from the Company's Registration Statement on Form S-4, File No.
333-00118)
4.8 First Supplemental Indenture, dated as of January 23, 1996, by
and among the Company and Chemical Bank, as Trustee, with
respect to the 10% Notes (Incorporated by reference from the
Company's Registration Statement on Form S-4, File No.
333-00118)
4.9 Indenture, dated as of February 12, 1997, by and between the
Company and The Chase Manhattan Bank, as Trustee, with respect
to the 10% Senior Notes (Incorporated by reference from the
Company's 1996 Form 10-K)
4.10 Indenture, dated as of March 13, 1998, by and between the
Company and The Chase Manhattan Bank, as Trustee, with respect
to the 9 1/2% Senior Notes (Incorporated by reference from the
Company's 1997 Form 10-K)
4.11 Indenture, dated as of March 13, 1998, by and between the
Company and The Chase Manhattan Bank, as Trustee, with respect
to the 9 3/4% Senior Deferred Coupon Notes (Incorporated by
reference from the Company's 1997 Form 10-K)
4.12 Indenture, dated as of March 13, 1998, by and between the
Company and The Chase Manhattan Bank, as Trustee, with respect
to the 10 3/4% Senior Deferred Coupon Notes (Incorporated by
reference from the Company's 1997 Form 10-K)
4.13 Indenture, dated as of November 2, 1998, by and among the
Company and The Chase Manhattan Bank, as Trustee, with respect
to the 11 1/2% Senior Notes due 2008
4.14 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% Senior Notes due 2008
4.15 Indenture, dated as of November 6, 1998, by and among the
Company and The Chase Manhattan Bank, as Trustee, with respect
to the 12 3/8% Senior Deferred Coupon Notes due 2008
4.16 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% Senior Deferred Coupon Notes due 2008
4.17 Indenture, dated as of December 16, 1998, by and among the
Company and The Chase Manhattan Bank, as Trustee, with respect
to the 7% Convertible Subordinated Notes due 2008
76
<PAGE> 81
4.18 Registration Rights Agreement, dated as of December 16, 1998 by
and among the Company and Donaldson, Lufkin & Jenrette
Securities Corporation, Morgan Stanley & Co. Incorporated,
Goldman, Sachs & Co., Chase Securities Inc., Salomon Smith
Barney Inc, BT Alex. Brown Incorporated and Warburg Dillon Read
LLC with respect to the 7% Convertible Subordinated Notes due
2008
4.19 Certificate of Designation, dated February 12, 1997, with
respect to the 13% Redeemable Preferred Stock (Incorporated by
reference from the Company's 1996 Form 10-K)
4.20 Certificate of Designation, dated October 7, 1996, in respect of
the Company's Series A Preferred Stock (Incorporated by
reference to the Company's Current Report on Form 8-K, filed on
October 9, 1996)
4.21 Registration Rights Agreement, dated February 12, 1997, by and
among the Company and Donaldson, Lufkin & Jenrette Securities
Corporation, Chase Securities, Inc. and Merrill Lynch, Pierce,
Fenner & Smith Incorporated with respect to the 10% Senior Notes
(Incorporated by reference from the Company's 1996 Form 10-K)
4.22 Registration Rights Agreement, dated February 12, 1997, by and
among the Company and Donaldson, Lufkin & Jenrette Securities
Corporation, Chase Securities, Inc. and Merrill Lynch, Pierce,
Fenner & Smith Incorporated with respect to the 13% Senior Notes
(Incorporated by reference from the Company's 1996 Form 10-K)
4.23 Registration Rights Agreement, dated as of March 13, 1998, by
and among the Company and Donaldson, Lufkin & Jenrette
International, Morgan Stanley & Co. International Limited, BT
Alex. Brown International, Chase Securities Inc. and Salomon
Brothers International Limited with respect to the 9 1/2% Senior
Notes (Incorporated by reference from the Company's 1997 Form
10-K)
4.24 Registration Rights Agreement, dated as of March 13, 1998, by
and among the Company and Donaldson, Lufkin & Jenrette
Securities Corporation, Morgan Stanley & Co. Incorporated, BT
Alex. Brown Incorporated, Chase Securities Inc. and Salomon
Brothers Inc. with respect to the 9 3/4% Senior Deferred Coupon
Notes (Incorporated by reference from the Company's 1997 Form
10-K)
4.25 Registration Rights Agreement, dated as of March 13, 1998, by
and among the Company and Donaldson, Lufkin & Jenrette
International, Morgan Stanley & Co. International Limited, BT
Alex. Brown International, Chase Securities Inc. and Salomon
Brothers International Limited with respect to the 10 3/4%
Senior Deferred Coupon Notes (Incorporated by reference from the
Company's 1997 Form 10-K)
4.26 Form of Preferred Stock (Incorporated by reference from the
Company's 1996 Form 10-K)
4.27 Indenture, dated as of June 12, 1996, by and between the Company
and Chemical Bank, as Trustee, with respect to the 7%
Convertible Notes (Incorporated by
77
<PAGE> 82
reference from the Company's Registration Statement on Form S-3,
File No. 333- 07879)
4.28 Registration Rights Agreement, dated June 12, 1996, by and among
the Company and Donaldson, Lufkin & Jenrette Securities
Corporation and Salomon Brothers Inc, with respect to the 7%
Convertible Notes (Incorporated by reference from the Company's
Registration Statement on Form S-3, File No. 33-07879)
4.29 Indenture, dated as of April 20, 1995, by and among the Company
and Chemical Bank, as Trustee, with respect to the 7 1/4%
Convertible Notes (Incorporated by reference from the Company's
Registration Statement on Form S-3, File No. 333- 92792)
4.30 Registration Agreement, dated April 12, 1995, by and among the
Company and Salomon Brothers Inc, Donaldson, Lufkin & Jenrette
Securities Corporation and Goldman Sachs & Co., with respect to
the 7 1/4% Convertible Notes (Incorporated by reference from the
Company's Registration Statement on Form S-3, File No. 333-
92792)
4.31 Rights Agreement entered into by the Company and Continental
Stock Transfer & Trust Company (Incorporated by reference to
Exhibit 4.2, Registration No. 33- 63570)
10.1 Compensation Plan and Agreements, as amended and restated
effective June 3, 1997 (Incorporated by reference from the
Company's 1997 Form 10-K)
10.2 Rules of the NTL Sharesave Plan, adopted by the Company on
October 28, 1997
10.3 Form of Director and Officer Indemnity Agreement (together
with a schedule of executed Indemnity Agreements)
(Incorporated by reference from the Company's Registration
Statement on Form S-4, File No. 33-92794)
10.4 1998 Non-Qualified Stock Option Plan, as Amended and Restated
October 1998
10.5 Bridge Loan Agreement, dated as of March 17, 1999, among the
Company, the Lenders named therein and Goldman Sachs Credit
Partners L.P.
10.6 Agreement, dated August 14, 1998, among TeleWest Communications
PLC, TeleWest Communications Holdings Limited, NTL (Bermuda)
Limited, and the Company (Incorporated by reference to the
Company's Current Report on Form 8-K, dated August 18, 1998)
11 Statement re: computation of per share earnings
21 Subsidiaries of the Registrant
23.1 Consent of Ernst & Young LLP
27.1 Financial Data Schedule, for the year ended December 31, 1998
78
<PAGE> 83
99.1 Prescribed Diffusion Service License, dated July 21, 1987,
issued to British Cable Services Limited (now held by CableTel
Surrey and Hampshire Limited) for the area of West Surrey and
East Hampshire, England (Incorporated by reference to the
Company's Form 8-K, filed with the Commission on March 19, 1996)
99.2 Prescribed Diffusion Service License, dated December 3, 1990,
issued to Clyde Cablevision (renamed CableTel Glasgow) for the
area of Inverclyde, Scotland (Incorporated by reference to the
Company's Form 8-K, filed with the Commission on March 19, 1996)
99.3 Prescribed Diffusion Service License, dated December 3, 1990,
issued to Clyde Cablevision (renamed CableTel Glasgow) for the
area of Bearsden and Milngavie, Scotland (Incorporated by
reference to the Company's Form 8-K, filed with the Commission
on March 19, 1996)
99.4 Prescribed Diffusion Service License, dated December 3, 1990,
issued to Clyde Cablevision (renamed CableTel Glasgow) for the
area of Paisley and Renfrew, Scotland (Incorporated by reference
to the Company's Form 8-K, filed with the Commission on March
19, 1996)
99.5 Prescribed Diffusion Service License, dated July 10, 1984,
issued to Clyde Cablevision (renamed CableTel Glasgow) for the
area of North Glasgow and Clydebank, Strathclyde, Scotland
(Incorporated by reference to the Company's Form 8-K, filed with
the Commission on March 19, 1996)
99.6 Prescribed Diffusion Service License, dated December 3, 1990,
issued to Clyde Cablevision (renamed CableTel Glasgow) for the
area of Greater Glasgow, Scotland (Incorporated by reference to
the Company's Form 8-K, filed with the Commission on March 19,
1996)
99.7 Prescribed Diffusion Service License, dated December 3, 1990,
issued to Newport Cablevision Limited (renamed CableTel Newport)
for the area of Newport, Wales (Incorporated by reference to the
Company's Form 8-K, filed with the Commission on March 19, 1996)
99.8 Prescribed Diffusion Service License, dated December 3, 1990,
issued to Cable and Satellite Television Holdings Ltd (renamed
CableTel West Glamorgan Limited) for the area of West Glamorgan,
Wales (Incorporated by reference to the Company's Form 8-K,
filed with the Commission on March 19, 1996)
99.9 Prescribed Diffusion Service License, dated December 3, 1990,
issued to British Cable Services Limited for the area of Cardiff
and Penarth, Wales (now held by CableTel Cardiff Limited)
(Incorporated by reference to the Company's Form 8-K, filed with
the Commission on March 19, 1996)
99.10 Prescribed Diffusion Service License, dated December 3, 1990,
issued to Kirklees Cable (renamed CableTel Kirklees) for the
area of Huddersfield and Dewsbury, West Yorkshire, England
(Incorporated by reference to the Company's Form 8-K, filed with
the Commission on March 19, 1996)
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<PAGE> 84
99.11 Prescribed Diffusion Service License, dated December 3, 1990,
issued to CableVision Communications Company of Hertfordshire
Ltd (renamed CableTel Hertfordshire Limited) for the area of
Broxbourne and East Hertfordshire, England (Incorporated by
reference to the Company's Form 8-K, filed with the Commission
on March 19, 1996)
99.12 Prescribed Diffusion Service License, dated December 3, 1990,
issued to CableVision Communications Company Ltd (renamed
CableTel Central Hertfordshire Limited) for the area of Central
Hertfordshire, England (Incorporated by reference to the
Company's Form 8-K, filed with the Commission on March 19, 1996)
99.13 Prescribed Diffusion Service License, dated March 26, 1990,
issued to CableVision Bedfordshire Limited (renamed CableTel
Bedfordshire Ltd.) for the area of Luton and South Bedfordshire
(Incorporated by reference to the Company's Form 8-K, filed with
the Commission on March 19, 1996)
99.14 Prescribed Diffusion Service License, dated December 3, 1990,
issued to CableVision North Bedfordshire Ltd (renamed CableTel
North Bedfordshire Ltd.) for the area of North Bedfordshire,
England (Incorporated by reference to the Company's Form 8-K,
filed with the Commission on March 19, 1996)
99.15 Local Delivery Service License, dated October 2, 1995, issued to
CableTel Northern Ireland Limited for Northern Ireland
(Incorporated by reference to the Company's Form 8-K, filed with
the Commission on March 19, 1996)
99.16 Local Delivery Service License, dated December 6, 1995, issued
to CableTel South Wales Limited for Glamorgan and Gwent, Wales
(Incorporated by reference to the Company's Form 8-K, filed with
the Commission on March 19, 1996)
99.17 Local Delivery Service License, dated March 15, 1991, issued to
Maxwell Cable TV Limited for Camarthen, Wales (now held by Metro
South Wales Limited) (Incorporated by reference to the Company's
Form 8-K, filed with the Commission on March 19, 1996)
99.18 Local Delivery Service License, dated March 15, 1991, issued to
Maxwell Cable TV Limited for Milford Haven, Wales (now held by
Metro South Wales Limited) (Incorporated by reference to the
Company's Form 8-K, filed with the Commission on March 19, 1996)
99.19 Local Delivery Service License, dated March 15, 1991, issued to
Maxwell Cable TV Limited for Cwmgors (Amman Valley), West
Glamorgan, Wales (Incorporated by reference to the Company's
Form 8-K, filed with the Commission on March 19, 1996)
99.20 Local Delivery Service License, dated March 15, 1991, issued to
Maxwell Cable TV Limited for Ammanford, West Glamorgan, Wales
(Incorporated by reference to the Company's Form 8-K, filed with
the Commission on March 19, 1996)
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<PAGE> 85
99.21 Local Delivery Service License, dated March 15, 1991, issued to
Maxwell Cable TV Limited for Brecon, Gwent, Wales (Incorporated
by reference to the Company's Form 8-K, filed with the
Commission on March 19, 1996)
99.22 Local Delivery Service License, dated March 15, 1991, issued to
Maxwell Cable TV Limited for Haverfordwest, Preseli, Wales
(Incorporated by reference to the Company's Form 8-K, filed with
the Commission on March 19, 1996)
99.23 Local Delivery Service License, dated March 15, 1991, issued to
Maxwell Cable TV Limited for Neyland, Preseli, Wales (now held
by Metro South Wales Limited) (Incorporated by reference to the
Company's Form 8-K, filed with the Commission on March 19, 1996)
99.24 License, dated January 11, 1991, issued to Cablevision
Communications the Company of Hertfordshire Ltd (renamed
CableTel Hertfordshire Limited) for the Hertford, Cheshunt and
Ware (Lea Valley) cable franchise, England (Incorporated by
reference to the Company's Form 8-K, filed with the Commission
on March 19, 1996)
99.25 License, dated December 8, 1990, issued to Cablevision
Communications the Company Limited for Central Hertfordshire
(renamed CableTel Central Hertfordshire Limited), England
(Incorporated by reference to the Company's Form 8-K, filed with
the Commission on March 19, 1996)
99.26 License, dated August 23, 1989, issued to Cablevision
Bedfordshire Limited for Bedford and surrounding areas, England
(Incorporated by reference to the Company's Form 8-K, filed with
the Commission on March 19, 1996)
99.27 License, dated January 9, 1991, issued to Cablevision North
Bedfordshire Ltd for North Bedfordshire, England (Incorporated
by reference to the Company's Form 8-K, filed with the
Commission on March 19, 1996)
99.28 License, dated January 29, 1991, issued to Clyde Cablevision
(renamed CableTel Glasgow) for the Inverclyde Cable Franchise,
Scotland (Incorporated by reference to the Company's Form 8-K,
filed with the Commission on March 19, 1996)
99.29 License, dated January 29, 1991, issued to Clyde Cablevision
(renamed CableTel Glasgow) for the Bearsden and Milngavie Cable
Franchise, Scotland (Incorporated by reference to the Company's
Form 8-K, filed with the Commission on March 19, 1996)
99.30 License, dated January 29, 1991, issued to Clyde Cablevision
(renamed CableTel Glasgow) for the Paisley and Renfrew Cable
Franchise, Scotland (Incorporated by reference to the Company's
Form 8-K, filed with the Commission on March 19, 1996)
99.31 License, dated June 7, 1985, issued to Clyde Cablevision Ltd
(renamed CableTel Glasgow) for North West Glasgow and Clydebank,
Scotland (Incorporated by
81
<PAGE> 86
reference to the Company's Form 8-K, filed with the Commission
on March 19, 1996)
99.32 License, dated January 29, 1991, issued to Clyde Cablevision
(renamed CableTel Glasgow) for the Greater Glasgow cable
franchise, Scotland (Incorporated by reference to the Company's
Form 8-K, filed with the Commission on March 19, 1996)
99.33 License, dated October 13, 1993, issued to Insight
Communications Cardiff Limited (renamed CableTel Cardiff
Limited) for Cardiff, Wales (Incorporated by reference to the
Company's Form 8-K, filed with the Commission on March 19, 1996)
99.34 License, dated January 22, 1991, issued to Newport Cablevision
Limited (renamed CableTel Newport), for Newport Cable franchise
Wales (Incorporated by reference to the Company's Form 8-K,
filed with the Commission on March 19, 1996)
99.35 License, dated May 18, 1990, issued to Cable and Satellite
Television Holdings Limited (renamed CableTel West Glamorgan
Limited) for West Glamorgan, Wales (Incorporated by reference to
the Company's Form 8-K, filed with the Commission on March 19,
1996)
99.36 License, dated December 20, 1990, issued to Kirklees Cable
(renamed CableTel Kirklees) for the Huddersfield and Dewsbury
cable franchise, England (Incorporated by reference to the
Company's Form 8-K, filed with the Commission on March 19, 1996)
99.37 License, dated October 13, 1993, issued to Insight
Communications Guildford Limited (renamed CableTel Surrey and
Hampshire Limited) for the West Surrey/East Hampshire
(Guildford) Cable Franchise, England (Incorporated by reference
to the Company's Form 8-K, filed with the Commission on March
19, 1996)
99.38 License, dated January 20, 1995, issued to CableTel Bedfordshire
Ltd. for the area of South Bedfordshire, England (Incorporated
by reference to the Company's Form 8-K, filed with the
Commission on March 19, 1996)
99.39 License, dated January 20, 1995, issued to CableTel North
Bedfordshire Ltd. for the area of Bedford, England (Incorporated
by reference to the Company's Form 8-K, filed with the
Commission on March 19, 1996)
99.40 License, dated January 20, 1992, issued to Cable and Satellite
Television Holdings Limited (renamed CableTel West Glamorgan
Limited) for the area of Swansea, Neath and Port Talbot, Wales
(Incorporated by reference to the Company's Form 8-K, filed with
the Commission on March 19, 1996)
99.41 License, dated January 20, 1995, issued to Cabletel
Hertfordshire Ltd. for the area of Hertford, Cheshunt and Ware
(Lea Valley), England (Incorporated by reference to the
Company's Form 8-K, filed with the Commission on March 19, 1996)
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<PAGE> 87
99.42 License, dated January 20, 1995, issued to Cabletel Central
Hertfordshire Ltd. for the area of Central Hertfordshire,
England (Incorporated by reference to the Company's Form 8-K,
filed with the Commission on March 19, 1996)
99.43 License, dated July 21, 1995, issued to CableTel Kirklees
(Incorporated by reference to the Company's Form 8-K, filed with
the Commission on March 19, 1996)
99.44 License, dated June 8, 1995, issued to CableTel Bedfordshire
Ltd. (Incorporated by reference to the Company's Form 8-K, filed
with the Commission on March 19, 1996)
99.45 License, dated October 27, 1995, issued to Metro South Wales
Limited for the area of Neyland, Wales (Incorporated by
reference to the Company's Form 8-K, filed with the Commission
on March 19, 1996)
99.46 License, dated October 27, 1995, issued to Metro South Wales
Limited for the area of Cwmgors, Wales (Incorporated by
reference to the Company's Form 8-K, filed with the Commission
on March 19, 1996)
99.47 License, dated October 27, 1995, issued to Metro South Wales
Limited for the area of Ammanford, Wales (Incorporated by
reference to the Company's Form 8-K, filed with the Commission
on March 19, 1996)
99.48 License, dated October 27, 1995, issued to Metro South Wales
Limited for the area of Carmarthen, Wales (Incorporated by
reference to the Company's Form 8-K, filed with the Commission
on March 19, 1996)
99.49 License, dated October 27, 1995, issued to Metro South Wales
Limited for the area of Haverfordwest, Wales (Incorporated by
reference to the Company's Form 8-K, filed with the Commission
on March 19, 1996)
99.50 License, dated October 27, 1995, issued to Metro South Wales
Limited for the area of Pembroke Dock, Wales (Incorporated by
reference to the Company's Form 8-K, filed with the Commission
on March 19, 1996)
99.51 License, dated October 27, 1995, issued to Metro South Wales
Limited for the area of Milford Haven, Wales (Incorporated by
reference to the Company's Form 8-K, filed with the Commission
on March 19, 1996)
99.52 License, dated October 27, 1995, issued to CableTel South Wales
Limited for the area of Glamorgan and Gwent, Wales (Incorporated
by reference to the Company's Form 8-K, filed with the
Commission on March 19, 1996)
99.53 License, dated January 26, 1996, issued to Cabletel South Wales
Limited, for part of the Glamorgan area (Incorporated by
reference to the Company's Form 8-K, filed with the Commission
on March 19, 1996)
83
<PAGE> 88
98.54 License, dated November 3, 1997, issued to NTL (UK) Group, Inc.
for the Provision of Radio Fixed Access Operator Services
(Incorporated by reference to the Company's 1997 Form 10-K)
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
Dated: March 31, 1999
NTL INCORPORATED
By: /s/ J. Barclay Knapp
- -------------------------------------
J. Barclay Knapp
President, Chief Executive Officer
and Chief Financial Officer
(Principal Executive and Principal
Financial Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant in the capacities and on the date indicated.
Signature Title Date
/s/ J. Barclay Knapp President, Chief March 31, 1999
- ------------------------ Executive Officer and
J. Barclay Knapp Chief Financial Officer
(Principal Executive
and Principal Financial
Officer)
/s/ George S. Blumenthal Chairman of the Board March 31, 1999
- ------------------------ and Treasurer
George S. Blumenthal
/s/ Gregg Gorelick Vice President- March 31, 1999
- ------------------------ Controller (Principal
Gregg Gorelick Accounting Officer)
84
<PAGE> 89
/s/ Sidney R. Knafel Director March 31, 1999
- ------------------------
R. Knafel
/s/ Ted H. McCourtney Director March 31, 1999
- ------------------------
Ted H. McCourtney
/s/ Del Mintz Director March 31, 1999
- ------------------------
Del Mintz
/s/ Alan J. Patricof Director March 31, 1999
- ------------------------
Alan J. Patricof
/s/ Warren Potash Director March 31, 1999
- ------------------------
Warren Potash
/s/ Michael S. Willner Director March 31, 1999
- ------------------------
Michael S. Willner
/s/ Robert T. Goad Director March 31, 1999
- ------------------------
Robert T. Goad
85
<PAGE> 90
Form 10-K--Item 14(a)(1) and (2)
NTL Incorporated and Subsidiaries
Index of Consolidated Financial Statements
and Financial Statement Schedules
The following consolidated financial statements of NTL Incorporated and
Subsidiaries are included in Item 8:
<TABLE>
<S> <C>
Report of Independent Auditors ....................................................... F-2
Consolidated Balance Sheets - December 31, 1998 and 1997 ............................. F-3
Consolidated Statements of Operations -
Years ended December 31, 1998, 1997 and 1996 ...................................... F-5
Consolidated Statement of Shareholders' Equity (Deficiency) -
Years ended December 31, 1998, 1997 and 1996 ...................................... F-6
Consolidated Statements of Cash Flows -
Years ended December 31, 1998, 1997 and 1996 ...................................... F-8
Notes to Consolidated Financial Statements .......................................... F-10
The following consolidated financial statement schedules of NTL Incorporated and
Subsidiaries are included in Item 14(d):
Schedule I - Condensed Financial Information of Registrant .......................... F-41
Schedule II - Valuation and Qualifying Accounts ..................................... F-48
</TABLE>
All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable and, therefore have been omitted.
F-1
<PAGE> 91
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, 1998 and 1997, 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, 1998. Our audits also
included the financial statement schedules listed in the Index at Item 14(a).
These financial statements and schedules are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of NTL
Incorporated and Subsidiaries at December 31, 1998 and 1997, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1998, in conformity with generally
accepted accounting principles. Also, in our opinion, the related financial
statement schedules, when considered in relation to the basic financial
statements taken as a whole, present fairly in all material respects the
information set forth therein.
ERNST & YOUNG LLP
New York, New York
March 26, 1999
F-2
<PAGE> 92
NTL Incorporated and Subsidiaries
Consolidated Balance Sheets
<TABLE>
<CAPTION>
December 31
1998 1997
-----------------------------------------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 736,265,000 $ 98,902,000
Marketable securities 260,631,000 4,998,000
Accounts receivable--trade, less allowance for doubtful
accounts of $38,475,000 (1998) and $8,056,000 (1997) 152,356,000 66,022,000
Other 55,248,000 67,232,000
-----------------------------------------------
Total current assets 1,204,500,000 237,154,000
Fixed assets, net 3,854,430,000 1,756,985,000
Intangible assets, net 725,028,000 364,479,000
Investment in Cable London PLC, net of accumulated
amortization of $3,093,000 229,093,000 -
Other assets, net of accumulated amortization
of $56,264,000 (1998) and $25,889,000 (1997) 181,046,000 63,021,000
-----------------------------------------------
Total assets $6,194,097,000 $2,421,639,000
===============================================
</TABLE>
F-3
<PAGE> 93
NTL Incorporated and Subsidiaries
Consolidated Balance Sheets (continued)
<TABLE>
<CAPTION>
December 31
1998 1997
------------------------------------------------
<S> <C> <C>
Liabilities and shareholders' equity (deficiency)
Current liabilities:
Accounts payable $ 167,079,000 $ 45,475,000
Accrued expenses and other 221,070,000 163,158,000
Accrued construction costs 88,033,000 26,930,000
Interest payable 34,258,000 18,875,000
Deferred revenue 69,820,000 35,060,000
Current portion of long-term debt 23,691,000 -
------------------------------------------------
Total current liabilities 603,951,000 289,498,000
Long-term debt 5,043,803,000 2,015,057,000
Commitments and contingent liabilities
Deferred income taxes 67,062,000 70,218,000
Senior redeemable exchangeable preferred stock - $.01 par value,
plus accreted dividends; liquidation preference $125,000,000;
less unamortized discount of $3,133,000 (1998) and $3,444,000
(1997); issued and outstanding 125,000 (1998) and
110,000 (1997) shares 124,127,000 108,534,000
Shareholders' equity (deficiency):
Series preferred stock--$.01 par value; authorized 10,000,000 shares:
Series A - liquidation preference $128,760,000; issued
and outstanding 125,000 (1998) and none (1997) 2,000 -
shares;
Series B - liquidation preference $52,517,000; issued
and outstanding 52,000 (1998) and none (1997) shares; - -
Series A - issued and outstanding none (1998) and 780
(1997) shares - -
Common stock--$.01 par value; authorized 400,000,000
shares; issued and outstanding 60,249,000 (1998) and
32,210,000 (1997) shares 602,000 322,000
Additional paid-in capital 1,501,561,000 538,054,000
Accumulated other comprehensive income 104,657,000 117,008,000
(Deficit) (1,251,668,000) (717,052,000)
------------------------------------------------
355,154,000 (61,668,000)
------------------------------------------------
Total liabilities and shareholders' equity (deficiency) $6,194,097,000 $2,421,639,000
================================================
</TABLE>
See accompanying notes.
F-4
<PAGE> 94
NTL Incorporated and Subsidiaries
Consolidated Statements of Operations
<TABLE>
<CAPTION>
Year ended December 31
1998 1997 1996
-------------------------------------------------------------
<S> <C> <C> <C>
Revenues
Local telecommunications and television $355,589,000 $ 166,951,000 $ 89,209,000
National and international telecommunications 248,895,000 185,194,000 45,430,000
Broadcast transmission and other 140,156,000 130,799,000 83,618,000
Other telecommunications 2,375,000 8,831,000 10,086,000
-------------------------------------------------------------
747,015,000 491,775,000 228,343,000
Costs and expenses
Operating expenses 372,134,000 301,644,000 144,315,000
Selling, general and administrative expenses 299,494,000 169,133,000 114,992,000
Franchise fees 25,036,000 23,587,000 13,117,000
Corporate expenses 17,048,000 18,324,000 14,899,000
Nonrecurring charges (4,194,000) 20,642,000 -
Depreciation and amortization 266,112,000 150,509,000 98,653,000
-------------------------------------------------------------
975,630,000 683,839,000 385,976,000
-------------------------------------------------------------
Operating (loss) (228,615,000) (192,064,000) (157,633,000)
Other income (expense)
Interest and other income 46,024,000 28,415,000 33,634,000
Interest expense (328,815,000) (202,570,000) (137,032,000)
Other gains - 21,497,000 -
Foreign currency transaction gains 4,152,000 574,000 2,408,000
-------------------------------------------------------------
(Loss) before income taxes, minority interests
and extraordinary item (507,254,000) (344,148,000) (258,623,000)
Income tax benefit (provision) 3,327,000 15,591,000 (7,653,000)
-------------------------------------------------------------
(Loss) before minority interests and extraordinary
item (503,927,000) (328,557,000) (266,276,000)
Minority interests - - 11,822,000
-------------------------------------------------------------
(Loss) before extraordinary item (503,927,000) (328,557,000) (254,454,000)
Loss from early extinguishment of debt (30,689,000) (4,500,000) -
-------------------------------------------------------------
Net (loss) $ (534,616,000) $(333,057,000) $(254,454,000)
=============================================================
Basic and diluted net (loss) per common share:
(Loss) before extraordinary item $(12.69) $(10.60) $(8.20)
Extraordinary item (.74) (.14) -
-------------------------------------------------------------
Net (loss) per common share $(13.43) $(10.74) $(8.20)
=============================================================
</TABLE>
See accompanying notes.
F-5
<PAGE> 95
NTL Incorporated and Subsidiaries
Consolidated Statement of Shareholders' Equity (Deficiency)
<TABLE>
<CAPTION>
Series A Series A Series B
Preferred Preferred Preferred Common Stock--
Stock Stock Stock $.01 Par Value
Shares Par Shares Par Shares Par Shares Par
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1995 30,202,000 $302,000
Exercise of stock options 396,000 4,000
Exercise of warrants 53,000 1,000
Issuance of warrants in connection
with consent solicitations
Shares issued for acquisitions 780 $ - 1,415,000 14,000
Comprehensive income:
Net loss for the year ended
December 31, 1996
Currency translation adjustment
Total
------------------------------------------------------------------------------------------
Balance, December 31, 1996 780 - 32,066,000 321,000
Exercise of stock options 119,000 1,000
Exercise of warrants 25,000
Accreted dividends on senior
redeemable exchangeable
preferred stock
Accretion of discount on senior
redeemable exchangeable
preferred stock
Comprehensive income:
Net loss for the year ended
December 31, 1997
Currency translation adjustment
Total
------------------------------------------------------------------------------------------
Balance, December 31, 1997 780 - 32,210,000 322,000
Exercise of stock options 298,000 3,000
Exercise of warrants 70,000
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 $2,000 52,000 -
Common stock issued for acquisition 18,763,000 187,000
Issuance of warrants in connection
with consent solicitations
Comprehensive income:
Net loss for the year ended
December 31, 1998
Currency translation adjustment
Total
------------------------------------------------------------------------------------------
Balance, December 31, 1998 - $ - 125,000 $2,000 52,000 $ - 60,249,000 $602,000
==========================================================================================
</TABLE>
See accompanying notes.
F-6
<PAGE> 96
NTL Incorporated and Subsidiaries
Consolidated Statement of Shareholders' Equity (Deficiency) (continued)
<TABLE>
<CAPTION>
Accumulated
Additional Other
Paid-In Comprehensive Comprehensive
Capital loss Income (Deficit)
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance, December 31, 1995 $ 462,223,000 $6,273,000 $(129,541,000)
Exercise of stock options 1,362,000
Exercise of warrants 298,000
Issuance of warrants in connection
with consent solicitations 1,641,000
Shares issued for acquisitions 83,123,000
Comprehensive income:
Net loss for the year ended
December 31, 1996 $(254,454,000) (254,454,000)
Currency translation adjustment 156,868,000 156,868,000
---------------------
Total $ (97,586,000)
-------------------------------------------------------------------------------------
Balance, December 31, 1996 548,647,000 163,141,000 (383,995,000)
Exercise of stock options 1,532,000
Exercise of warrants 138,000
Accreted dividends on senior
redeemable exchangeable
preferred stock (11,978,000)
Accretion of discount on senior
redeemable exchangeable
preferred stock (285,000)
Comprehensive income:
Net loss for the year ended
December 31, 1997 $(333,057,000) (333,057,000)
Currency translation adjustment (46,133,000) (46,133,000)
---------------------
Total $(379,190,000)
-------------------------------------------------------------------------------------
Balance, December 31, 1997 538,054,000 117,008,000 (717,052,000)
Exercise of stock options 6,331,000
Exercise of warrants 508,000
Accreted dividends on preferred stock (18,761,000)
Accretion of discount on preferred
stock (311,000)
Conversion of 7-1/4% Convertible
Subordinated Notes 186,942,000
Conversion of Series Preferred Stock (20,000)
Preferred stock issued for acquisition 178,493,000
Common stock issued for acquisition 600,245,000
Issuance of warrants in connection
with consent solicitations 10,080,000
Comprehensive income:
Net loss for the year ended
December 31, 1998 $(534,616,000) (534,616,000)
Currency translation adjustment (12,351,000) (12,351,000)
---------------------
Total $(546,967,000)
-------------------------------------------------------------------------------------
Balance, December 31, 1998 $1,501,561,000 $104,657,000 $(1,251,668,000)
=====================================================================================
</TABLE>
See accompanying notes.
F-7
<PAGE> 97
NTL Incorporated and Subsidiaries
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Year ended December 31
1998 1997 1996
-------------------------------------------------------------
<S> <C> <C> <C>
Operating activities
Net loss $ (534,616,000) $ (333,057,000) $ (254,454,000)
Adjustment to reconcile net loss to net cash
(used in) operating activities:
Depreciation and amortization 266,112,000 150,509,000 98,653,000
Loss from early extinguishment of debt 30,689,000 4,500,000 -
Amortization of non competition agreements 1,389,000 1,852,000 2,906,000
Provision for losses on accounts receivable 27,282,000 6,891,000 2,597,000
Minority interests - - (11,822,000)
Deferred income taxes (3,327,000) (16,852,000) 5,063,000
Amortization of original issue discount 232,691,000 122,639,000 104,264,000
Other (30,916,000) (8,148,000) 8,578,000
Changes in operating assets and liabilities,
net of effect from business acquisitions:
Accounts receivable (70,364,000) (30,430,000) 10,050,000
Other current assets 22,631,000 (6,563,000) (20,316,000)
Other assets 6,000 2,303,000 (24,000)
Accounts payable (2,564,000) (4,615,000) (2,869,000)
Accrued expenses and other 15,272,000 74,706,000 35,691,000
Deferred revenue 26,772,000 18,994,000 278,000
-------------------------------------------------------------
Net cash (used in) operating activities (18,943,000) (17,271,000) (21,405,000)
Investing activities
Purchase of fixed assets (772,144,000) (503,656,000) (505,664,000)
Payment of deferred purchase price - (57,330,000) -
Increase in other assets (35,595,000) (4,322,000) (6,013,000)
Acquisitions of subsidiaries and minority interests,
net of cash acquired (746,817,000) - (332,693,000)
Proceeds from sales of assets 1,312,000 - -
Purchase of marketable securities (540,639,000) (145,939,000) -
Proceeds from sales of marketable securities 291,276,000 142,596,000 -
-------------------------------------------------------------
Net cash (used in) investing activities (1,802,607,000) (568,651,000) (844,370,000)
</TABLE>
F-8
<PAGE> 98
NTL Incorporated and Subsidiaries
Consolidated Statements of Cash Flows (continued)
<TABLE>
<CAPTION>
Year ended December 31
1998 1997 1996
-------------------------------------------------------------
<S> <C> <C> <C>
Financing activities
Proceeds from borrowings and sale of preferred stock,
net of financing costs $ 3,525,588,000 $ 490,302,000 $1,146,190,000
Principal payments (845,018,000) (242,424,000) (95,283,000)
Cash placed in escrow (217,622,000) - -
Cash released from escrow - - 1,600,000
Proceeds from borrowings from minority partner - - 31,232,000
Consent solicitation payments (11,333,000) - -
Proceeds from exercise of stock options and warrants 6,842,000 1,671,000 1,665,000
-------------------------------------------------------------
Net cash provided by financing activities 2,458,457,000 249,549,000 1,085,404,000
Effect of exchange rate changes on cash 456,000 (10,609,000) 50,972,000
-------------------------------------------------------------
Increase (decrease) in cash and cash equivalents 637,363,000 (346,982,000) 270,601,000
Cash and cash equivalents at beginning of year 98,902,000 445,884,000 175,283,000
-------------------------------------------------------------
Cash and cash equivalents at end of year $ 736,265,000 $ 98,902,000 $ 445,884,000
=============================================================
Supplemental disclosure of cash flow information
Cash paid during the period for interest exclusive of
amounts capitalized $ 90,513,000 $ 72,047,000 $ 27,595,000
Income taxes paid 336,000 1,107,000 367,000
Supplemental schedule of noncash financing activities
Accretion of dividends and discount on preferred stock $ 19,072,000 $ 12,263,000 $ -
Conversion of Convertible Notes, net of unamortized
deferred financing costs of $ 4,738,000 187,012,000 - -
Preferred stock issued for acquisitions 178,495,000 - -
Common stock issued for acquisitions 600,432,000 - 34,137,000
Warrants issued in connection with consent
solicitations 10,080,000 - 1,641,000
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-9
<PAGE> 99
NTL Incorporated and Subsidiaries
Notes to Consolidated Financial Statements
1. Business
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. 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 as a
component of accumulated other comprehensive income.
Cash Equivalents
Cash equivalents are short-term highly liquid investments purchased with a
maturity of three months or less. Cash equivalents were $651,242,000 and
$55,894,000 at December 31, 1998 and 1997, respectively, which consisted
primarily of corporate commercial paper. At December 31, 1998 and 1997,
$120,734,000 and none, respectively, of the cash equivalents were denominated in
British pounds sterling.
F-10
<PAGE> 100
NTL Incorporated and Subsidiaries
Notes to Consolidated Financial Statements (continued)
2. Significant Accounting Policies (continued)
Marketable Securities
Marketable securities are classified as available-for-sale, which are carried at
fair value. Unrealized holding gains and losses on securities, net of tax, are
carried as a component of accumulated other comprehensive income. 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 are 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, 1998 consisted principally of corporate
commercial paper. Marketable securities at December 31, 1997 consisted of
federal agency notes. During the years ended December 31, 1998, 1997 and 1996,
there were no realized gains or losses on sales of securities. All of the
marketable securities as of December 31, 1998 and 1997 had a contractual
maturity of less than one year.
Fixed Assets
Fixed assets are stated at cost, which includes amounts capitalized for labor
and overhead expended in connection with the design and installation of
operating equipment. Depreciation is computed by the straight-line method over
the estimated useful lives of the assets. Estimated useful lives are as follows:
operating equipment - 5 to 40 years and other equipment - 3 to 40 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.
Investments
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 periodocially 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 difference
between the Company's recorded investment and its proportionate interest in the
book value of the investees' net assets are being amortized on a straight-line
basis over 10 years.
F-11
<PAGE> 101
NTL Incorporated and Subsidiaries
Notes to Consolidated Financial Statements (continued)
2. Significant Accounting Policies (continued)
Intangible Assets
Intangible assets include goodwill, license acquisition costs and customer
lists. 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 of 15 or 30 years.
License acquisition costs represent the portion of purchase price allocated to
the licenses acquired in business combinations. License acquisition costs are
amortized on a straight-line basis over the remaining lives of the licenses at
acquisition, which vary from approximately two years to 23 years. Customer lists
represent the portion of the purchase price allocated to the value of the
customer base. Customer lists are amortized on a straight-line basis over 5
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.
Deferred Financing Costs
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 1998, 1997 and 1996, interest of $27,760,000, $6,770,000 and $10,294,000,
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."
F-12
<PAGE> 102
NTL Incorporated and Subsidiaries
Notes to Consolidated Financial Statements (continued)
2. Significant Accounting Policies (continued)
Advertising Expense
The Company charges the cost of advertising to expense as incurred. Advertising
costs were $33,951,000, $31,003,000 and $22,727,000 in 1998, 1997 and 1996,
respectively.
Net (Loss) Per Share
The Company reports its basic and diluted net (loss) per share in accordance
with Financial Accounting Standards Board ("FASB") SFAS No. 128, "Earnings Per
Share".
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 1998
presentation.
3. Recent Accounting Pronouncements
In 1998, the Company adopted the following Statements of Financial Accounting
Standards:
o SFAS 130, "Reporting Comprehensive Income", which requires the components
of comprehensive income to be disclosed in the financial statements.
o SFAS 131, "Disclosures about Segments of an Enterprise and Related
Information", which requires disclosures of certain information about the
Company's operating segments on a basis consistent with the way in which
the Company is managed and operated.
o SFAS 132, "Employer's Disclosures about Pensions and Other Postretirement
Benefits", which revises disclosures about pensions and other
postretirement benefits and requires presentation of information about
such plans in a standardized format.
Adoption of these new standards required that the Company make certain new
disclosures in the consolidated financial statements or in the notes to the
consolidated financial statements.
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which is required to be adopted by the
Company effective January 1, 2000. The Company is currently evaluating the
impact the adoption of SFAS No. 133 will have on its earnings and financial
position.
F-13
<PAGE> 103
NTL Incorporated and Subsidiaries
Notes to Consolidated Financial Statements (continued)
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.
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.
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.
5. Fixed Assets
Fixed assets consist of:
<TABLE>
<CAPTION>
December 31
1998 1997
-------------------------------------------
<S> <C> <C>
Operating equipment $3,528,973,000 $1,612,440,000
Other equipment 376,518,000 225,514,000
Construction-in-progress 369,923,000 134,795,000
-------------------------------------------
4,275,414,000 1,972,749,000
Accumulated depreciation (420,984,000) (215,764,000)
-------------------------------------------
$3,854,430,000 $1,756,985,000
===========================================
</TABLE>
F-14
<PAGE> 104
NTL Incorporated and Subsidiaries
Notes to Consolidated Financial Statements (continued)
6. Intangible Assets
Intangible assets consist of:
<TABLE>
<CAPTION>
December 31
1998 1997
--------------------------------------------
<S> <C> <C>
License acquisition costs, net of accumulated
amortization of $69,202,000 (1998) and $46,620,000
(1997) $153,007,000 $123,116,000
Goodwill, net of accumulated amortization of
$32,358,000 (1998) and $13,449,000 (1997) 514,529,000 241,363,000
Customer lists, net of accumulated amortization of
$3,375,000 57,492,000 -
--------------------------------------------
$725,028,000 $364,479,000
============================================
</TABLE>
The Company made the following acquisitions in 1998:
(i) The Company acquired ComTel Limited and Telecential Communications
(collectively, "ComTel") for a total of (pound)550 million comprised of
(pound)475 million in cash and 125,000 shares of 9.9% Non-voting
Mandatorily Redeemable Preferred Stock, Series A in two stages
completed in June and September 1998. The Company financed the cash
portion of the transaction through a bank loan, completed through an
amendment to the Company's then existing bank facility with The Chase
Manhattan Bank. The preferred stock was valued at (pound)75 million,
based on an appraisal as of the date of issuance. ComTel is a provider
of cable television and telecommunications services in England.
(ii) In October 1998, a wholly-owned subsidiary of the Company, NTL
(Bermuda) Limited ("NTL Bermuda") acquired all of the outstanding
common stock of Comcast UK Cable Partners Limited ("Partners") in
exchange for 18,763,000 shares of the Company's common stock. The
Company's common stock was valued at $600,432,000, the fair value on
the date prior to the announcement. Partners provides cable television
and telecommunications services in England.
(iii) In December 1998, the Company acquired Eastern Group Telecoms ("EGT")
for (pound)60 million in cash and 52,000 shares of 9.9% Non-voting
Mandatorily Redeemable Preferred Stock, Series B. The preferred stock
was valued at $52,217,000, based on an appraisal as of the date of
issuance. EGT's telecoms division has a fibre-optic network across
portions of England, and its radio sites division serves mobile phone
operators in portions of England.
These acquisitions have been accounted for as purchases, and accordingly, the
net assets and results of operations of the acquired businesses have been
included in the consolidated financial statements from the dates of acquisition.
The aggregate purchase price of $1.7 billion, which includes the related
acquisition costs and the return of cash acquired in the ComTel transaction of
(pound)31 million, exceeded the fair value of the net tangible assets acquired
by $591 million, which has been allocated as follows: $185.6 million to the
investment in Cable London PLC, $52.4 million to license acquisition costs,
$60.9 million to customer lists and $292.1 million to goodwill.
F-15
<PAGE> 105
NTL Incorporated and Subsidiaries
Notes to Consolidated Financial Statements (continued)
6. Intangible Assets (continued)
The pro forma unaudited consolidated results of operations for the years ended
December 31, 1998 and 1997 assuming consummation of the above mentioned
transactions as of January 1, 1997 is as follows:
<TABLE>
<CAPTION>
December 31
1998 1997
--------------------------------------------
<S> <C> <C>
Total revenue $966,694,000 $667,534,000
(Loss) before extraordinary item (627,249,000) (618,510,000)
Net loss (657,938,000) (623,010,000)
Basic and diluted net loss per share:
(Loss) before extraordinary item (11.54) (12.64)
Net (loss) (12.08) (12.73)
</TABLE>
In 1996, the Company acquired (i) the remaining 40% interest it did not already
own in CableTel Newport, which owns and operates cable television and
telecommunications franchises in South Wales, (ii) the remaining 30% interest it
did not already own in English Cable Enterprises, Inc., which owns and operates
cable television and telecommunications franchises in the northern suburbs of
London and (iii) all of the outstanding shares of NTL Group Limited, which
provides television and radio transmission services and a range of other
services in the broadcasting and telecommunications industries. The NTL Group
Limited acquisition was accounted for as a purchase, and accordingly, the net
assets and results of operations of NTL Group Limited was included in the
consolidated financial statements from the date of acquisition. The aggregate
purchase price for these acquisitions including the costs incurred was $526
million, consisting of 780 shares of Series A Preferred Stock, 1,415,000 shares
of common stock and cash of (pound)256.1 million (of which (pound)35 million was
paid in 1997). The 780 shares of Series A Preferred Stock were valued at $49
million, based on an appraisal as of the date of issuance. The 1,415,000 shares
of common stock were valued at $34 million, based on the market price on the
date of issuance. The aggregate purchase price exceeded the aggregate fair value
of the net tangible assets acquired by $273 million, which was allocated $10
million to license acquisition costs and $263 million to goodwill.
7. Investment in Cable London PLC
NTL Bermuda has a 50% ownership interest in Cable London PLC ("Cable London").
Cable London operates integrated cable television and telecommunications systems
in the London metropolitan area. Included in the investment in Cable London as
of December 31, 1998 are loans to Cable London of (pound)28.5 million ($47.3
million) and accrued interest of (pound)8.6 million ($14.3 million). The loans
accrue interest at a rate of 2% above the published base lending rate of
Barclays Bank PLC (8.25% effective rate as of December 31, 1998) and are
subordinate to Cable London's revolving bank credit facility. Of these loans,
(pound)21.0 million ($34.8 million) are convertible into ordinary shares of
Cable London at a conversion price of (pound)2.00 ($3.32) per share.
F-16
<PAGE> 106
NTL Incorporated and Subsidiaries
Notes to Consolidated Financial Statements (continued)
7. Investment in Cable London PLC (continued)
In August 1998, Partners and Telewest Communications plc ("Telewest') entered
into an agreement to rationalize their joint ownership of Cable London pursuant
to an agreed procedure (the "Shoot-out"). Between April 29 and July 29, 1999,
NTL Bermuda 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 NTL
Bermuda's 50% ownership interest in Cable London or sell its 50% ownership
interest in Cable London to NTL Bermuda. If NTL Bermuda fails to give notice to
Telewest by July 29, 1999, it will be deemed to have delivered an offer notice
for (pound)100 million ($166 million).
8. Diamond Acquisition
The Company acquired Diamond Cable Communications plc ("Diamond") in March 1999.
The Company issued an aggregate of approximately 13 million shares in exchange
for each ordinary share and deferred share of Diamond at a ratio of .85 shares
of the Company's common stock for four Diamond ordinary shares or one deferred
share. Diamond had five different notes outstanding at December 31, 1998 for an
aggregate principal amount at maturity of $1.6 billion. Diamond intends to
commence an offer to repurchase its outstanding notes at 101% of their accreted
value or principal amount on or about April 1, 1999 pursuant to the "change of
control" provisions of the indentures. The offer will expire 30 days thereafter.
The Company has entered into a bridge facility to finance the redemption of
Diamond bonds tendered, if any, which is subject to certain funding conditions.
F-17
<PAGE> 107
NTL Incorporated and Subsidiaries
Notes to Consolidated Financial Statements (continued)
9. Long-Term Debt
Long-term debt consists of:
<TABLE>
<CAPTION>
December 31
1998 1997
----------------------------------------------
<S> <C> <C>
10-7/8% Senior Deferred Coupon Notes
("10-7/8% Notes") (a) $ - $ 194,959,000
12-3/4% Series A Senior Deferred Coupon Notes
("12-3/4% Notes") (b) 236,935,000 209,387,000
11-1/2% Series B Senior Deferred Coupon Notes
("11-1/2% Series B Notes") (c) 831,976,000 743,961,000
10% Series B Senior Notes ("10% Notes") (d) 400,000,000 400,000,000
9-1/2% Senior Sterling Notes, less unamortized discount of
$639,000 ("Sterling Senior Notes") (e) 206,800,000 -
10-3/4% Senior Deferred Coupon Sterling Notes ("Sterling
Deferred Coupon Notes") (f) 317,511,000 -
9-3/4% Senior Deferred Coupon Notes ("9-3/4% Notes") (g) 865,880,000 -
11-1/2% Senior Notes ("11-1/2% Notes") (h) 625,000,000 -
12-3/8% Senior Deferred Coupon Notes
("12-3/8 Notes") (i) 254,718,000 -
7-1/4% Convertible Subordinated Notes
("7-1/4 Convertible Notes") (j) - 191,750,000
7% Convertible Subordinated Notes
("7% Convertible Notes") (k) 275,000,000 275,000,000
7% Convertible Subordinated Notes
("New Convertible Notes") (l) 600,000,000 -
11.2% Senior Discount Debentures ("11.2% Debentures") (m) 421,835,000 -
Other (n) 31,839,000 -
----------------------------------------------
5,067,494,000 2,015,057,000
Less current portion 23,691,000 -
----------------------------------------------
$5,043,803,000 $2,015,057,000
==============================================
</TABLE>
F-18
<PAGE> 108
NTL Incorporated and Subsidiaries
Notes to Consolidated Financial Statements (continued)
9. Long-Term Debt (continued)
(a) In October 1998, the Company redeemed the 10-7/8% Notes with an accreted
value of $211 million for cash of $218 million. The Company recorded an
extraordinary loss from the early extinguishment of the 10-7/8% Notes of
approximately $12.1 million in 1998, which includes $4.8 million of
unamortized deferred financing costs. In October 1993, the Company issued
$212,000,000 aggregate principal amount of 10-7/8% Notes due 2003 at a
price to the public of 58.873% or $124,811,000. During 1998, 1997 and
1996, the Company recognized $15,344,000, $19,591,000 and $17,620,000,
respectively, of the original issue discount as interest expense.
(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 1998, 1997 and 1996,
the Company recognized $27,548,000, $24,344,000 and $21,515,000,
respectively, of original issue discount as interest expense. 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.
(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% Series B Notes were issued at a price 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% Series B 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 1998, 1997 and
1996, the Company recognized $88,015,000, $78,704,000 and $65,129,000 of
original issue discount as interest expense. The 11-1/2% Series B 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.
(d) In February 1997, the Company issued $400,000,000 aggregate principal
amount of 10% Series B 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 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.
F-19
<PAGE> 109
NTL Incorporated and Subsidiaries
Notes to Consolidated Financial Statements (continued)
9. Long-Term Debt (continued)
(e) In March 1998, the Company issued (pound)125,000,000 aggregate principal
amount of 9-1/2% Senior Notes due 2008. The Sterling Senior Notes were
issued at 99.67% or (pound)124.6 million. The aggregate of the discounts,
commisions and other fees incurred of $5,981,000 is included in deferred
financing costs. The Sterling Senior Notes accrue interest at 9-1/2% per
annum, payable semiannually, which commenced on October 1, 1998. The
Sterling Senior 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.
(f) In March 1998, the Company issued(pound)300,000,000 aggregate principal
amount at maturity of 10-3/4% Senior Deferred Coupon Sterling Notes due
2008. The Sterling Deferred Coupon Notes were issued at 58.62% or
(pound)175.9 million. The aggregate of the discounts, commissions and
other fees incurred of $9,181,000 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 (pound)300,000,000 by April 1, 2003. Interest on the Sterling
Deferred Coupon Notes will thereafter accrue at 10-3/4% per annum payable
semiannually beginning on October 1, 2003. In 1998, the Company recognized
$25,697,000 of the original issued discount as interest expense. The
Sterling Deferred Coupon 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 105-3/8% that declines annually to 100% in 2006, together with
accrued and unpaid interest to the date of redemption.
(g) In March 1998, the Company issued $1.3 billion aggregate principal amount
at maturity of 9-3/4% Senior Deferred Coupon Notes due 2008. The 9-3/4%
Notes were issued at 61.724% or $802.4 million. The aggregate of the
discounts, commissions and other fees incurred of $24,931,000 is included
in deferred financing costs. The original issue discount of the 9-3/4%
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
the 9-3/4% Notes will thereafter accrue at 9-3/4% per annum payable
semiannually beginning on October 1, 2003. In 1998, the Company recognized
$63,468,000 of the original issued discount as interest expense. The
Sterling Deferred Coupon 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 105-3/8% that declines annually to 100% in 2006, together with
accrued and unpaid interest to the date of redemption.
(h) In November 1998, the Company issued $625,000,000 aggregate principal
amount of 11-1/2% Senior Notes due 2008. The aggregate of the discounts,
commissions and other fees incurred of $18,253,000 is included in deferred
financing costs. 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.
F-20
<PAGE> 110
NTL Incorporated and Subsidiaries
Notes to Consolidated Financial Statements (continued)
9. Long-Term Debt (continued)
(i) In November 1998, the Company issued $450,000,000 aggregate principal
amount at maturity of 12-3/8% Senior Deferred Coupon Notes due 2008. The
12-3/8% Notes were issued at 55.505% or $249,773,000. The aggregate of the
discounts, commissions and other fees incurred of $8,040,000 is included
in deferred financing costs. 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. In 1998, the Company recognized $4,945,000 of
the original issue discount as interest expense. 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.
(j) In April and May 1995, the Company issued $191,750,000 principal amount of
7-1/4% Convertible Subordinated Notes due 2005. In March 1998, the Company
called for redemption all of the 7-1/4% Convertible Notes. The redemption
date was April 20, 1998, at a redemption price of 105.08% of the principal
amount plus accrued and unpaid interest through the date of redemption. The
7-1/4% Convertible Notes were convertible into common stock at a conversion
price of $27.56 per share. In April 1998, all of the 7-1/4% Convertible
Notes were converted into approximately 6,958,000 shares of the Company's
common stock.
(k) 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.
F-21
<PAGE> 111
NTL Incorporated and Subsidiaries
Notes to Consolidated Financial Statements (continued)
9. Long-Term Debt (continued)
(l) In December 1998, the Company issued $600,000,000 aggregate principal
amount of 7% Convertible Subordinated Notes due 2008. Interest is payable
semiannually on June 15 and December 15 of each year, commencing June 15,
1999. The New Convertible Notes mature on December 15, 2008. The New
Convertible Notes are unsecured obligations convertible into shares of
common stock prior to maturity at a conversion price of $61.25 per share,
subject to adjustment. There are approximately 9,796,000 shares of common
stock reserved for issuance upon conversion of the New Convertible Notes.
The New Convertible Notes are redeemable, in whole or in part, at the
option of the Company, at any time on or after December 15, 2001, at a
redemption price of 104.375% that declines annually to 100% in 2006, in
each case together with accrued and unpaid interest to the redemption
date. The Company incurred $16,729,000 in fees and expenses in connection
with the issuance of the New Convertible Notes which is included in
deferred financing costs.
(m) NTL Bermuda has assumed the obligations of Partners' $517.3 million
principal amount at maturity, 11.2% Debentures. Interest accretes on the
11.2% Debentures at 11.2% 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. In
1998, the Company recognized $7,674,000 of the original issue discount as
interest expense.
(n) Other includes notes payable by NTL Bermuda to Comcast U.K. Holdings, Inc.
(an affiliate of a shareholder of the Company) of $20,428,000 and other
obligations of subsidiaries of NTL Bermuda of $11,411,000. The notes
payable accrue interest at 9% and are due in September 1999.
The indentures governing the notes issued by the Company and the 11.2%
Debentures contain 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.
In connection with the ComTel acquisition, the Company borrowed an aggregate of
(pound)475 million under its credit facility from The Chase Manhattan Bank. In
November 1998, the Company received net proceeds of $849 million from the
issuance of the 11-1/2% Notes and the 12-3/8% Notes, a substantial portion of
which was used to repay the $799 million outstanding under the bank loan. The
Company recorded an extraordinary loss from the early extinguishment of the bank
loan of $18,579,000 in 1998.
F-22
<PAGE> 112
NTL Incorporated and Subsidiaries
Notes to Consolidated Financial Statements (continued)
9. Long-Term Debt (continued)
The Company required consents from the holders of some of its notes to modify
certain indenture provisions in order to proceed with the Partners acquisition.
In October 1998, the Company paid $11,333,000 in consent payments and issued
warrants to purchase 766,000 shares of common stock in lieu of additional
consent payments of $10,080,000. 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 in lieu of additional consent
payments of $1,641,000.
The 11.2% Debentures restrict the payment of cash dividends and loans from NTL
Bermuda to the Company. At December 31, 1998, restricted net assets of NTL
Bermuda were approximately $587 million.
Long-term debt repayments are due as follows:
<TABLE>
Year ended December 31:
<S> <C>
1999 $ 23,691,000
2000 1,539,000
2001 1,261,000
2002 1,090,000
2003 999,000
Thereafter 5,038,914,000
--------------
$5,067,494,000
==============
</TABLE>
10. 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, 1998, the
Company has accrued $27,260,000 for dividends and has issued approximately
25,000 shares for $25,225,000 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
F-23
<PAGE> 113
NTL Incorporated and Subsidiaries
Notes to Consolidated Financial Statements (continued)
10. Redeemable Preferred Stock (continued)
Redeemable Preferred Stock is subject to mandatory redemption on February 15,
2009. On any scheduled dividend payment date, the Company may, at its option,
exchange all of the shares of Redeemable Preferred Stock then outstanding for
the Company's 13% Subordinated Exchange Debentures due 2009 (the "Subordinated
Debentures").
The Subordinated Debentures, if issued, will bear interest at a rate of 13% per
annum, payable semiannually in arrears on February 15 and August 15 of each year
commencing with the first such date to occur after the date of exchange.
Interest accruing on or prior to February 15, 2004 may, at the option of the
Company, be paid in cash, by the issuance of additional Subordinated Debentures
or in any combination of the foregoing. The Subordinated Debentures will be
redeemable, at the Company's option, in whole or in part, on or after February
15, 2002 at a redemption price of 106.5% that declines annually to 100% in 2005,
in each case together with accrued and unpaid interest to the redemption date.
11. 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 arose in connection with 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. 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, 1998, $9,172,000 of
the provision has been used, including $5,558,000 for severance and related
costs, $1,450,000 for lease exit costs and $2,164,000 for penalties associated
with the cancellation of contractual obligations. As of December 31, 1998, 177
employees had been terminated. The $4,194,000 reversed in 1998 from changes in
estimates of costs to be incurred includes $1,168,000 for severance and related
costs, $2,826,000 for lease exit costs and $200,000 for penalties associated
with the cancellation of contractual obligations. This reversal was necessary
because employees whose positions were eliminated chose to remain with the
Company in other positions rather than leave the Company and receive severence
pay; and the real estate markets in which the Company sublet space improved
increasing the sublet rentals and shortening the period of time required to find
sub tenants. The remaining restructuring reserve of $2,263,000 is for lease
costs net of sublease revenue.
12. 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-24
<PAGE> 114
NTL Incorporated and Subsidiaries
Notes to Consolidated Financial Statements (continued)
13. Income Taxes
The provision (benefit) for income taxes consists of the following:
<TABLE>
<CAPTION>
Year ended December 31
1998 1997 1996
---------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal $ - $ - $ -
State and local - 1,261,000 344,000
Foreign - - 2,246,000
---------------------------------------------------------
Total current - 1,261,000 2,590,000
---------------------------------------------------------
Deferred:
Federal - - -
State and local - - -
Foreign (3,327,000) (16,852,000) 5,063,000
---------------------------------------------------------
Total deferred (3,327,000) (16,852,000) 5,063,000
---------------------------------------------------------
$(3,327,000) $(15,591,000) $ 7,653,000
=========================================================
</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
1998 1997
-------------------------------------------
<S> <C> <C>
Deferred tax liabilities:
Fixed assets $ 68,766,000 $ 68,380,000
Other 6,598,000 4,894,000
-------------------------------------------
Total deferred tax liabilities 75,364,000 73,274,000
Deferred tax assets:
Net operating losses 244,394,000 107,208,000
Net deferred interest expense 113,993,000 94,689,000
Depreciation and amortization 107,378,000 16,935,000
Other 19,975,000 18,164,000
-------------------------------------------
Total deferred tax assets 485,740,000 236,996,000
Valuation allowance for deferred tax assets (477,438,000) (233,940,000)
-------------------------------------------
Net deferred tax assets 8,302,000 3,056,000
-------------------------------------------
Net deferred tax liabilities $67,062,000 $ 70,218,000
===========================================
</TABLE>
F-25
<PAGE> 115
NTL Incorporated and Subsidiaries
Notes to Consolidated Financial Statements (continued)
13. Income Taxes (continued)
At December 31, 1998, the Company had net operating loss carryforwards of
approximately $280,000,000 for U.S. federal income tax purposes that expire in
varying amounts commencing in 2009. The Company also has United Kingdom net
operating loss carryforwards of approximately $470,000,000 which have no
expiration date. Pursuant to United Kingdom law, these losses are only available
to offset income of the separate entity that generated the loss.
The Company is currently undergoing a U.S. federal income tax audit. The
Internal Revenue Service has issued notices of proposed adjustment. The Company
does not expect that the audit adjustments, if any, will have a material adverse
effect on its financial position, results of operations or cash flows.
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
1998 1997 1996
--------------------------------------------------------------
<S> <C> <C> <C>
Provision (benefit) at federal statutory
rate (35%) $(188,309,000) $(120,452,000) $(90,518,000)
Add (deduct):
State and local income tax, net of
federal benefit - 820,000 224,000
Foreign losses with no benefit 83,500,000 59,804,000 44,610,000
Amortization of goodwill and license
acquisition costs 4,366,000 3,925,000 4,031,000
U.S. losses with no benefit 97,116,000 40,312,000 49,184,000
Other - - 122,000
--------------------------------------------------------------
$(3,327,000) $(15,591,000) $7,653,000
==============================================================
</TABLE>
14. 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 Company's debt are based on the quoted
market prices.
Redeemable Preferred Stock: The fair value is based on the quoted market
price.
F-26
<PAGE> 116
NTL Incorporated and Subsidiaries
Notes to Consolidated Financial Statements (continued)
14. Fair Value of Financial Instruments (continued)
The carrying amounts and fair values of the Company's financial instruments are
as follows:
<TABLE>
<CAPTION>
December 31, 1998 December 31, 1997
------------------------------------- -------------------------------------
Carrying Carrying
Amount Fair Value Amount Fair Value
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 736,265,000 $ 736,265,000 $ 98,902,000 $ 98,902,000
Long-term debt:
10-7/8% Notes - - 194,959,000 199,810,000
12-3/4% Notes 236,935,000 252,801,000 209,387,000 230,577,000
11-1/2% Series B Notes 831,976,000 882,000,000 743,961,000 819,000,000
10% Notes 400,000,000 408,000,000 400,000,000 422,000,000
Sterling Senior Notes 206,800,000 192,917,000 - -
Sterling Deferred
Coupon Notes 317,511,000 293,732,000 - -
9-3/4% Notes 865,880,000 835,250,000 - -
11-1/2% Notes 625,000,000 681,250,000 - -
12-3/8% Notes 254,718,000 274,500,000 - -
7-1/4% Convertible Notes - - 191,750,000 212,843,000
7% Convertible Notes 275,000,000 411,125,000 275,000,000 264,688,000
New Convertible Notes 600,000,000 656,340,000 - -
11.2% Debentures 421,835,000 437,119,000 - -
Redeemable Preferred
Stock 124,127,000 124,127,000 108,534,000 121,846,000
</TABLE>
15. Related Party Transactions
On July 25, 1990, Cellular Communications, Inc. ("CCI") and AirTouch
Communications, Inc. ("AirTouch") entered into a Merger and Joint Venture
Agreement, as amended as of December 14, 1990. In connection with this
agreement, on July 31, 1991, CCI distributed to its shareholders the stock of
the Company.
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
year ended December 31, 1996, CCI charged $1,194,000 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 Cellular
Communications of Puerto Rico, Inc. (formerly CoreComm Incorporated) ("CCPR").
In 1996, the Company charged CCII and CCPR $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 CCPR business by the common
officers and employees of the Company, CCII and CCPR. These charges reduced
corporate expenses in 1996.
F-27
<PAGE> 117
NTL Incorporated and Subsidiaries
Notes to Consolidated Financial Statements (continued)
15. Related Party Transactions (continued)
In January 1997, the Company, CCPR and CCII agreed to a change in the Company's
fee for the provision of services. In 1997, the Company charged CCPR and CCII
$1,492,000 and $871,000, respectively, for direct costs where identifiable and a
fixed percentage of its corporate overhead. In 1998, the Company charged CCPR,
CCII and CoreComm Limited (which was formed in 1998 and has certain common
officers and directors with the Company) $1,148,000, $982,000 and $313,000,
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, 1998 and 1997, the Company had receivables of none and
$69,000 from CCII, $588,000 and $71,000 from CCPR and $1,038,000 and none from
CoreComm Limited, respectively.
F-28
<PAGE> 118
NTL Incorporated and Subsidiaries
Notes to Consolidated Financial Statements (continued)
16. 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
1998 1997 1996
--------------------------------------------------------------
<S> <C> <C> <C>
Numerator:
Loss before extraordinary item $(503,927,000) $(328,557,000) $(254,454,000)
Preferred stock dividend (18,761,000) (11,978,000) -
--------------------------------------------------------------
(522,688,000) (340,535,000) (254,454,000)
Extraordinary item (30,689,000) (4,500,000) -
--------------------------------------------------------------
Loss available to common
shareholders $(553,377,000) $(345,035,000) $(254,454,000)
--------------------------------------------------------------
Denominator for basic net loss
per common share 41,202,000 32,117,000 31,041,000
Effect of dilutive securities - - -
--------------------------------------------------------------
Denominator for diluted net loss
per common share 41,202,000 32,117,000 31,041,000
--------------------------------------------------------------
Basic and diluted net loss per common share:
Loss before extraordinary item $(12.69) $(10.60) $(8.20)
Extraordinary item (.74) (.14) -
--------------------------------------------------------------
Net loss $(13.43) $(10.74) $(8.20)
==============================================================
</TABLE>
Stock options, warrants and convertible securities are excluded from the
calculation of net loss per common share as their effect would be antidilutive.
17. Shareholders' Equity (Deficiency)
Series Preferred Stock
In September 1998, the Company issued 125,000 shares of 9.9% Non-voting
Mandatorily Redeemable Preferred Stock, Series A (the "Series A Preferred
Stock") in connection with the ComTel acquisition. Each share of Series A
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. As of December 31, 1998, accrued and
unpaid dividends were $3,480,000. On December 22, 1999, all outstanding shares
of the Series A Preferred
F-29
<PAGE> 119
NTL Incorporated and Subsidiaries
Notes to Consolidated Financial Statements (continued)
17. Shareholders' Equity (Deficiency) (continued)
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.
In December 1998, the Company issued 52,000 shares of 9.9% Non-voting
Mandatorily Redeemable Preferred Stock, Series B (the "Series B Preferred
Stock") in connection with the EGT acquisition. Each share of Series B 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, or through a combination of the foregoing. The Series B
Preferred Stock may be redeemed, at the Company's option, any time at a price
equal to $1,000 per share, together with accrued and unpaid dividends to the
redemption date. On July 1, 2000 all outstanding shares of Series B 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, or
through a combination of the foregoing.
As of December 31, 1998, the Series A Preferred Stock and the Series B Preferred
Stock would have been redeemable into an aggregate of 3,140,000 shares of the
Company's common stock.
In October 1996, 780 shares of Non-Voting Convertible Preferred Stock, Series A
("Convertible Preferred Stock") were issued in connection with the CableTel
Newport acquisition. In May 1998, the 780 outstanding shares of Convertible
Preferred Stock were converted into 1,950,000 shares of Common Stock.
Warrants
The Company has the following warrants outstanding as of December 31, 1998: (i)
warrants to purchase an aggregate of 756,000 shares of common stock at $5.57 per
share issued in 1993 that expire in 2000 (899,000 were originally issued), (ii)
warrants to purchase an aggregate of 158,000 shares of common stock at $23.78
per share issued in 1996 that expire in 2006 (164,000 were originally issued)
and (iii) warrants to purchase an aggregate of 766,000 shares of common stock at
$43.39 per share issued in 1998 that expire in 2008 (766,000 were originally
issued).
F-30
<PAGE> 120
NTL Incorporated and Subsidiaries
Notes to Consolidated Financial Statements (continued)
17. Shareholders' Equity (Deficiency) (continued)
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. The Rights are protected by customary
antidilution provisions.
There are 2,500,000 authorized shares of Series Preferred Stock of which
1,000,000 shares are designated Rights Preferred Stock.
Stock Options
There are 2,164,000 shares of common stock reserved for issuance under the OCOM
Corporation (a wholly-owned subsidiary of the Company) 1991 Stock Option Plan.
The plan provides that incentive stock options ("ISOs") be granted at the fair
market value of OCOM's common stock on the date of grant, and nonqualified stock
options ("NQSOs") be granted at not less than 85% of the fair market value of
OCOM's common stock on the date of grant. Options are exercisable as to 20% of
the shares subject thereto on the date of grant and become exercisable as to an
additional 20% of the shares subject thereto on each January 1 thereafter, while
the optionee remains an employee of the Company. Options will expire ten years
after the date of the grant.
There are 6,653,000 shares of common stock reserved for issuance under the NTL
Incorporated 1993 Stock Option Plan. The exercise price of an ISO may not be
less than 100% of the fair market value of the Company's common stock on the
date of grant, and the exercise price of a NQSO may not be less than 85% of the
fair market value of the Company's common stock on the date of grant. Options
are exercisable as to 20% of the shares subject thereto on the date of grant and
become exercisable as to an additional 20% of the shares subject thereto on each
January 1 thereafter, while the optionee remains an employee of the Company.
Options will expire ten years after the date of the grant.
F-31
<PAGE> 121
NTL Incorporated and Subsidiaries
Notes to Consolidated Financial Statements (continued)
17. Shareholders' Equity (Deficiency) (continued)
Stock Options (continued)
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.
There are 15,000,000 shares of common stock reserved for issuance under the 1998
Non-Qualified Stock Option Plan. The exercise price of a NQSO shall be
determined by the Compensation and Option Committee. 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.
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 1998, 1997 and 1996: risk-free interest rates of 5.02%, 5.89%
and 6.56%, respectively, dividend yield of 0%, volatility factor of the expected
market price of the Company's common stock of .331, .276 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
F-32
<PAGE> 122
NTL Incorporated and Subsidiaries
Notes to Consolidated Financial Statements (continued)
17. Shareholders' Equity (Deficiency) (continued)
Stock Options (continued)
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
1998 1997 1996
-------------------- ------------------- -------------------
<S> <C> <C> <C>
Pro forma net (loss) $(580,747,000) $(343,850,000) $(261,245,000)
Basic and diluted pro forma net (loss) per share $(14.55) $(11.08) $(8.42)
</TABLE>
A summary of the Company's stock option activity and related information for the
years ended December 31 follows:
<TABLE>
<CAPTION>
1998 1997 1996
--------------------------------------------------------------------------------------------------
Number of Weighted-Average Number of Weighted-Average Number of Weighted-Average
Options Exercise Price Options Exercise Price Options Exercise Price
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding-beginning of
year 8,157,000 $15.98 6,738,000 $ 14.10 5,934,000 $11.04
Granted 8,864,000 37.59 1,571,000 23.97 1,390,000 25.94
Exercised (298,000) 21.24 (119,000) 12.85 (396,000) 3.44
Forfeited (275,000) 46.47 (33,000) 23.78 (190,000) 27.39
---------------- --------------- ---------------
Outstanding-end of year 16,448,000 $27.02 8,157,000 $15.98 6,738,000 $14.10
================ =============== ===============
Exercisable at end of year 7,046,000 $16.55 5,663,000 $12.39 4,258,000 $10.71
================ =============== ===============
</TABLE>
Weighted-average fair value of options, calculated using the Black-Scholes
option pricing model, granted during 1998, 1997 and 1996 is $20.54, $12.74 and
$13.98, respectively.
F-33
<PAGE> 123
NTL Incorporated and Subsidiaries
Notes to Consolidated Financial Statements (continued)
17. Shareholders' Equity (Deficiency) (continued)
The following table summarizes the status of the stock options outstanding and
exercisable at December 31, 1998:
<TABLE>
<CAPTION>
Stock Options Outstanding Stock Options Exercisable
- ---------------------------------------------------------------------------------------------------------------------
Range of Exercise Number of Weighted-Remaining Weighted-Average Weighted-Average
Prices Options Contractual Life Exercise Price Number of Options Exercise Price
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$0.18 to $0.56 77,000 2.6 Years $0.245 77,000 $0.245
$0.70 to $1.12 150,000 2.6 Years $0.745 150,000 $0.745
$1.53 to $2.69 355,000 2.5 Years $2.157 355,000 $2.157
$3.00 to $4.50 47,000 3.5 Years $3.230 47,000 $3.230
$8.00 to $14.70 3,289,000 4.4 Years $8.833 3,289,000 $8.833
$15.00 to $22.88 1,390,000 6.4 Years $21.704 1,087,000 $21.671
$23.00 to $33.25 2,676,000 8.0 Years $25.581 1,399,000 $26.088
$36.50 to $45.00 8,192,000 9.2 Years $36.912 591,000 $40.485
$46.00 to $55.69 272,000 9.9 Years $49.014 51,000 $49.202
- ---------------------------------------------------------------------------------------------------------------------
Total 16,448,000 7,046,000
=====================================================================================================================
</TABLE>
As of December 31,1998, the Company has 38,325,000 shares of its common stock
reserved for issuance upon the exercise of warrants and stock options and the
conversion of debt and preferred stock.
F-34
<PAGE> 124
NTL Incorporated and Subsidiaries
Notes to Consolidated Financial Statements (continued)
18. 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.
<TABLE>
<CAPTION>
Year Ended December 31
1998 1997
----------------------------------------------
(In thousands)
<S> <C> <C>
Change in benefit obligation
Benefit obligation at beginning of year $202,645 $157,002
Service cost 13,365 10,693
Interest cost 14,684 12,765
Actuarial losses/(gains) (14,640) 26,732
Foreign currency exchange rate changes 2,363 -
Benefits paid (4,968) (4,547)
----------------------------------------------
Benefit obligation at end of year $213,449 $202,645
==============================================
Change in plan assets
Fair value of plan assets at beginning of year $193,607 $158,965
Actual return on plan assets 24,144 30,852
Foreign currency exchange rate changes 2,257 -
Company contributions 10,233 8,905
Benefits paid (4,968) (4,547)
Other - (568)
----------------------------------------------
Fair value of plan assets at end of year $225,273 $193,607
==============================================
Funded status of the plan (underfunded) $ 11,824 $(9,038)
Unrecognized net actuarial losses/(gains) (23,060) (1,057)
Unrecognized transition obligation 9,306 10,118
----------------------------------------------
Prepaid/(accrued)benefit cost $ (1,930) $ 23
==============================================
Actuarial assumptions:
Weighted average discount rate 5.75% 7.25%
Weighted average rate of compensation increase 5.50% 8.00%
Expected long-term rate of return on plan assets 8.00% 9.00%
</TABLE>
F-35
<PAGE> 125
NTL Incorporated and Subsidiaries
Notes to Consolidated Financial Statements (continued)
18. Employee Benefit Plans (continued)
The components of net pension costs are as follows:
<TABLE>
<CAPTION>
Year Ended December 31
1998 1997 1996
-----------------------------------------------------------------------
<S> <C> <C> <C>
Service cost $ 13,365,000 $ 10,693,000 $ 7,997,000
Interest cost 14,684,000 12,765,000 11,679,000
Actual return on plan assets (24,144,000) (30,852,000) (16,103,000)
Net amortization and deferral 8,282,000 17,327,000 4,241,000
-----------------------------------------------------------------------
$ 12,187,000 $ 9,933,000 $ 7,814,000
=======================================================================
</TABLE>
19. Leases
Leases for buildings, office space and equipment extend through 2031. Total
rental expense for the years ended December 31, 1998, 1997 and 1996 under
operating leases was $29,356,000, $20,674,000 and $14,886,000, respectively.
Future minimum lease payments under noncancellable operating leases as of
December 31, 1998 are as follows:
<TABLE>
<CAPTION>
Operating
Leases
-----------------------
<S> <C>
Year ended December 31:
1999 $ 33,730,000
2000 35,499,000
2001 36,658,000
2002 33,231,000
2003 22,048,000
Thereafter 287,797,000
-----------------------
$448,963,000
=======================
</TABLE>
F-36
<PAGE> 126
NTL Incorporated and Subsidiaries
Notes to Consolidated Financial Statements (continued)
20. Commitments and Contingent Liabilities
As of December 31, 1998, the Company was committed to pay approximately
$264,000,000 for equipment and services.
The Company has various licenses for its cable television, telephone and
telecommunications business, and for its transmission and distribution services.
The Company's license fees in 1998 were $5,924,000.
Pursuant to the terms of the Company's local delivery operator license ("LDL")
for Northern Ireland, a subsidiary of the Company is required to make annual
cash payments to the ITC for 15 years in the amount of approximately (pound)15.4
million (subject to adjustment for inflation). This is in addition to the
percentages of qualifying revenue payments of 0% for the first ten years and 2%
for the last five years of the LDL.
In December 1998, a wholly-owned subsidiary of the Company acquired 9 million
shares, representing 6.3% of the issued share capital, of Newcastle United PLC
(the Newcastle United football club) for cash of approximately $17 million. In
conjunction with the sale of shares, the seller entered into an irrevocable
commitment to the Company that if the Company makes an offer for all of the
issued share capital of Newcastle United, it will accept that offer in respect
of the remaining balance of its shares. The seller would sell Newcastle United
shares representing 50.8% of the issued share capital at a price of 111.7 pence
per share in cash, or at the Company's option, in a zero coupon note.
The Company is involved in, or has been involved in, certain disputes and
litigation arising in the ordinary course of its business. None of these matters
are expected to have a material adverse effect on the Company's financial
position, results of operations or cash flows.
21. Industry Segments
The Company has four reportable segments: Local Telecoms and Television,
National Telecoms, Broadcast and Corporate and Other. The Local Telecoms and
Television segment delivers residential telephony and cable television services
in regional franchise areas in the United Kingdom. The National Telecoms segment
includes the Company's national business telecoms, national and international
carrier telecoms, radio communications, satellite services and national Internet
services business units. The Broadcast segment provides television and radio
broadcasters with broadcast transmission services from owned and shared tower
sites throughout the United Kingdom. Corporate and other includes the Company's
shared services departments in the United Kingdom and OCOM, a subsidiary that
operated long distance and microwave transmission businesses in the United
States until June 1998.
F-37
<PAGE> 127
NTL Incorporated and Subsidiaries
Notes to Consolidated Financial Statements (continued)
21. Industry Segments (continued)
The accounting policies of the segments are the same as those described in the
Summary of Significant Accounting Policies. The Company's management evaluates
segment performance based on various financial and non-financial measurements.
The results of operations data utlized in financial measurements are revenues
and EBITDA, which is revenues less operating and selling, general and
administrative expenses. Certain selling, general and administrative expenses
are allocated to segments based on revenues. Segment assets include only those
assets that are specific to the segment. Management does not allocate shared
services departments and jointly used assets for purposes of measuring segment
performance.
The reportable segments are strategic business units that offer different
services. They are managed separately because each business requires different
technology and marketing strategies.
<TABLE>
<CAPTION>
Local
Telecoms Corporate
and National and
Broadcast Television Telecoms Other Total
---------------------------------------------------------------------------------
(In thousands)
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1998
Revenues $140,156 $ 355,589 $248,895 $ 2,375 $ 747,015
Depreciation and amortization 29,974 143,479 29,476 63,183 266,112
EBITDA (1) 91,687 67,587 35,848 (119,735) 75,387
Expenditures for long-lived assets 88,476 413,917 297,745 67,141 867,279
Total assets 289,068 3,100,492 761,097 2,043,440 6,194,097
Year ended December 31, 1997
Revenues $130,799 $ 166,951 $185,194 $ 8,831 $ 491,775
Depreciation and amortization 13,584 78,730 9,666 48,529 150,509
EBITDA (1) 73,636 18,693 13,522 (84,853) 20,998
Expenditures for long-lived assets 36,142 304,656 105,076 20,519 466,393
Total assets 230,920 1,323,808 220,318 646,593 2,421,639
Year ended December 31, 1996
Revenues $ 83,618 $ 89,209 $ 45,430 $ 10,086 $ 228,343
Depreciation and amortization 6,752 51,014 3,704 37,183 98,653
EBITDA (1) 49,684 (52,215) 10,800 (39,233) (30,964)
Expenditures for long-lived assets 29,195 505,345 29,224 24,311 588,075
Total assets 220,077 1,184,156 98,912 951,466 2,454,611
</TABLE>
(1) Represents earnings before interest, taxes, depreciation and amortization,
corporate expenses, franchise fees, nonrecurring charges, other gains,
minority interest and extraordinary items.
F-38
<PAGE> 128
NTL Incorporated and Subsidiaries
Notes to Consolidated Financial Statements (continued)
21. Industry Segments (continued)
The reconciliation of segment combined EBITDA to loss before income taxes,
minority interest and extraordinary item is as follows:
<TABLE>
<CAPTION>
Year ended December 31
1998 1997 1996
--------------------------------------------------------
(In thousands)
<S> <C> <C> <C>
Segment Combined EBITDA $ 75,387 $ 20,998 $ (30,964)
(Add) Deduct:
Franchise fees 25,036 23,587 13,117
Corporate expenses 17,048 18,324 14,899
Nonrecurring charges (4,194) 20,642 -
Depreciation and amortization 266,112 150,509 98,653
Interest and other income (46,024) (49,912) (33,634)
Interest expense 328,815 202,570 137,032
Foreign currency transaction gains (4,152) (574) (2,408)
--------------------------------------------------------
582,641 365,146 227,659
--------------------------------------------------------
Loss before income taxes, minority
interest and extraordinary item $(507,254) $(344,148) $(258,623)
========================================================
</TABLE>
22. Geographic Information
<TABLE>
<CAPTION>
United States United Kingdom
-----------------------------------------------
(In thousands)
<S> <C> <C>
1998
Revenues $ 2,375 $ 744,640
Long-lived assets 137,223 4,852,374
1997
Revenues 8,831 482,944
Long-lived assets 55,173 2,129,312
1996
Revenues 10,086 218,257
Long-lived assets 56,881 1,856,689
</TABLE>
F-39
<PAGE> 129
NTL Incorporated and Subsidiaries
Notes to Consolidated Financial Statements (continued)
23. Subsequent Events
In January 1999, the Company received $500 million in cash from Microsoft Corp.
in exchange for 500,000 shares of the Company's 5.25% Convertible Preferred
Stock, Series A and warrants to purchase 1,200,000 shares of the Company's
common stock at an exercise price of $84 per share. The preferred stock is
convertible into common stock at a conversion price of $100 per share. The
preferred stock is redeemable 10 years from the date of issuance in cash or
shares of common stock. The preferred stock may be redeemed by the Company on
the earlier of seven years or the date on which the Company's common stock has
traded above $120 per share for 25 consecutive trading days. Dividends are
payable at the Company's option in cash, common stock or additional shares of
preferred stock. The warrants expire in 2004.
In March 1999, the Commonwealth of Australia accepted the Company's bid to own
and operate the Australian National Transmission Network ("NTN"). NTN operates
from over 560 tower sites and provides exclusive television and radio
transmission services to Australia's only national TV and radio broadcasters,
serves regional and community TV and radio broadcasters, and provides equipment
hosting services to telecom operators and emergency service communications
providers on its towers. A subsidiary of the Company will purchase the company
that will hold the NTN assets for an aggregate purchase price of approximately
$407 million.
F-40
<PAGE> 130
NTL Incorporated
Schedule I--Condensed Financial Information of Registrant
Condensed Balance Sheets
<TABLE>
<CAPTION>
December 31
1998 1997
----------------------------------------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 514,865,000 $ 46,421,000
Marketable securities 260,631,000 4,998,000
Other 13,070,000 8,804,000
----------------------------------------------
Total current assets 788,566,000 60,223,000
Office improvements and equipment, net of accumulated
depreciation of $890,000 (1998) and $555,000 (1997) 1,198,000 1,551,000
Investments in and loans to subsidiaries 4,211,862,000 1,970,114,000
Deferred financing costs, net of accumulated amortization of
$17,486,000 (1998) and $13,141,000 (1997) 136,025,000 50,771,000
Other assets, net of accumulated amortization
of $13,192,000 (1998) and $11,803,000 (1997) 161,000 1,540,000
----------------------------------------------
Total assets $5,137,812,000 $2,084,199,000
==============================================
Liabilities and shareholders' equity (deficiency)
Current liabilities $ 44,711,000 $ 22,276,000
Long-term debt 4,613,820,000 2,015,057,000
Senior redeemable exchangeable preferred stock 124,127,000 108,534,000
Shareholders' (deficiency):
Series preferred stock 2,000 -
Common stock 602,000 322,000
Additional paid-in capital 1,501,561,000 538,054,000
Accumulated other comprehensive income 104,657,000 117,008,000
(Deficit) (1,251,668,000) (717,052,000)
----------------------------------------------
355,154,000 (61,668,000)
----------------------------------------------
Total liabilities and shareholders' equity (deficiency) $5,137,812,000 $2,084,199,000
==============================================
</TABLE>
See accompanying notes.
F-41
<PAGE> 131
NTL Incorporated
Schedule I--Condensed Financial Information of Registrant (continued)
Condensed Statements of Operations
<TABLE>
<CAPTION>
Year ended December 31
1998 1997 1996
-----------------------------------------------------------------
<S> <C> <C> <C>
Costs and expenses
Corporate expenses $ 14,718,000 $ 12,811,000 $ 14,144,000
Depreciation and amortization 10,576,000 6,655,000 4,954,000
-----------------------------------------------------------------
Operating (loss) (25,294,000) (19,466,000) (19,098,000)
Other income (expense)
Interest and other income 128,457,000 4,490,000 5,017,000
Interest expense (317,677,000) (191,124,000) (128,755,000)
Other gain - 10,000,000 -
Foreign currency transaction gains (losses) 3,673,000 (2,221,000) 1,376,000
-----------------------------------------------------------------
(Loss) before income taxes, extraordinary item
and equity in net (loss) of subsidiaries (210,841,000) (198,321,000) (141,460,000)
Income tax (provision) - (1,083,000) (193,000)
-----------------------------------------------------------------
(Loss) before extraordinary item and equity in net
(loss) of subsidiaries (210,841,000) (199,404,000) (141,653,000)
Loss from early extinguishment of debt (12,110,000) - -
-----------------------------------------------------------------
(Loss) before equity in net (loss) of subsidiaries (222,951,000) (199,404,000) (141,653,000)
Equity in net (loss) of subsidiaries (311,665,000) (133,653,000) (112,801,000)
-----------------------------------------------------------------
Net (loss) $ (534,616,000) $ (333,057,000) $(254,454,000)
=================================================================
</TABLE>
See accompanying notes.
F-42
<PAGE> 132
NTL Incorporated
Schedule I--Condensed Financial Information of Registrant (continued)
Condensed Statements of Cash Flows
<TABLE>
<CAPTION>
Year ended December 31
1998 1997 1996
-------------------------------------------------------------
<S> <C> <C> <C>
Net cash (used in) operating activities $ (291,427,000) $ (55,467,000) $ (28,152,000)
Investing activities
Purchase of office improvements and equipment (96,000) (156,000) (1,891,000)
Purchase of marketable securities (540,639,000) (145,939,000) -
Proceeds from sales of marketable securities 291,276,000 142,596,000 -
Increase in investments in and loans to subsidiaries (1,466,334,000) (482,179,000) (798,784,000)
-------------------------------------------------------------
Net cash (used in) investing activities (1,715,793,000) (485,678,000) (800,675,000)
Financing activities
Proceeds from borrowings and sale of preferred stock,
net of financing costs 2,697,777,000 484,340,000 842,820,000
Proceeds from exercise of stock options and warrants 6,842,000 1,671,000 1,665,000
Consent solicitation payments (11,333,000) - -
Cash placed in escrow (217,622,000) - -
-------------------------------------------------------------
Net cash provided by financing activities 2,475,664,000 486,011,000 844,485,000
-------------------------------------------------------------
Increase (decrease) in cash and cash equivalents 468,444,000 (55,134,000) 15,658,000
Cash and cash equivalents at beginning of year 46,421,000 101,555,000 85,897,000
-------------------------------------------------------------
Cash and cash equivalents at end of year $ 514,865,000 $ 46,421,000 $101,555,000
=============================================================
Supplemental disclosure of cash flow information
Cash paid during the period for interest $77,295,000 $53,485,000 $ 23,687,000
Income taxes paid - - 193,000
Supplemental schedule of noncash financing activities
Accretion of dividends and discount on preferred stock $19,072,000 $12,263,000 $ -
Conversion of convertible Notes, net of unamortized
deferred financing costs of $4,738,000 187,012,000 - -
Warrants issued in connection with consent
solicitations 10,080,000 - 1,641,000
Preferred stock issued for acquisitions 178,495,000
Common stock issued for acquisition 600,432,000 - 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-43
<PAGE> 133
NTL Incorporated
Schedule I-Condensed Financial Information of Registrant
Notes to Condensed Financial Statements (continued)
1. Basis of Presentation
In the NTL Incorporated (the "Company") condensed financial statements, the
Company's investment in subsidiaries is stated at cost plus equity in the
undistributed earnings of the subsidiaries since the date of acquisition. The
Company's share of net loss of its unconsolidated subsidiaries is included in
consolidated net loss using the equity method of accounting. The condensed
financial statements should be read in conjunction with the Company's
consolidated financial statements.
2. Long-Term Debt
Long-term debt consists of:
<TABLE>
<CAPTION>
December 31
1998 1997
----------------------------------------------
<S> <C> <C>
10-7/8% Senior Deferred Coupon Notes
("10-7/8% Notes") (a) $ - $ 194,959,000
12-3/4% Series A Senior Deferred Coupon Notes
("12-3/4% Notes") (b) 236,935,000 209,387,000
11-1/2% Series B Senior Deferred Coupon Notes
("11-1/2% Notes") (c) 831,976,000 743,961,000
10% Series B Senior Notes ("10% Notes") (d) 400,000,000 400,000,000
9-1/2% Senior Sterling Notes, less unamortized discount of
$639,000 ("Sterling Senior Notes") (e) 206,800,000 -
10-3/4% Senior Deferred Coupon Sterling Notes ("Sterling
Deferred Coupon Notes") (e) 317,511,000 -
9-3/4% Senior Deferred Coupon Notes ("9-3/4% Notes") (e) 865,880,000 -
11-1/2% Senior Notes ("11-1/2% Notes") (f) 625,000,000 -
12-3/8% Senior Deferred Coupon Notes
("12-3/8 Notes") (f) 254,718,000 -
7-1/4% Convertible Subordinated Notes
("7-1/4 Convertible Notes") (g) - 191,750,000
7% Convertible Subordinated Notes
("7% Convertible Notes") (h) 275,000,000 275,000,000
7% Convertible Subordinated Notes
("New Convertible Notes")(i) 600,000,000 -
----------------------------------------------
$4,613,820,000 $2,015,057,000
==============================================
</TABLE>
F-44
<PAGE> 134
NTL Incorporated
Schedule I-Condensed Financial Information of Registrant
Notes to Condensed Financial Statements (continued)
2. Long-Term Debt (continued)
(a) In October 1998, the Company redeemed the 10-7/8% Notes with an accreted
value of $211 million for cash of $218 million. The Company recorded an
extraordinary loss from the early extinguishment of the 10-7/8% Notes of
approximately $12.1 million in 1998.
(b) In April 1995, the Company issued $277,803,500 aggregate principal amount
of 12-3/4% Senior Deferred Coupon Notes due 2005. The 12-3/4% Notes were
issued at a price to the public of 53.995% or $150,000,000.
(c) In January 1996, the Company issued $1,050,000,000 aggregate principal
amount of 11-1/2% Series B Senior Deferred Coupon Notes due 2006. The
11-1/2% Notes were issued at a price of 57.155% of the aggregate principal
amount at maturity or $600,127,500.
(d) In February 1997, the Company issued $400,000,000 aggregate principal
amount of 10% Series B Senior Notes due 2007. Interest in payable
semiannually.
(e) In March 1998, the Company issued (pound)125,000,000 aggregate principal
amount of 9-1/2% Senior Notes due 2008 (the "Sterling Senior Notes"),
(pound)300,000,000 aggregate principal amount of 10-3/4% Senior Deferred
Coupon Notes due 2008 (the "Sterling Deferred Coupon Notes") and
$1,300,000,000 aggregate principal amount of 9-3/4% Senior Deferred Coupon
Notes due 2008 (the "9-3/4% Notes"). The Sterling Senior Notes, Sterling
Deferred Coupon Notes and the 9-3/4% Notes were issued at 99.67% or
(pound)124,588,000, 58.62% or (pound)175,860,000 and 61.724% or
$802,412,000, respectively. The Sterling Senior Notes pay interest
semiannually.
(f) 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. Interest on the 11-1/2% Notes is payable
semiannually.
F-45
<PAGE> 135
NTL Incorporated
Schedule I-Condensed Financial Information of Registrant
Notes to Condensed Financial Statements (continued)
2. Long-Term Debt (continued)
(g) In March 1998, the Company called for redemption all of the 7-1/4%
Convertible Subordinated Notes. The redemption date was April 20, 1998, at
a redemption price of 105.08% of the principal amount plus accrued and
unpaid interest through the date of redemption. The 7-1/4% Convertible
Notes were convertible into common stock at a conversion price of $27.56
per share. In April 1998, all of the 7-1/4% Convertible Notes were
converted into approximately 6,958,000 shares of the Company's common
stock.
(h) 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.
(i) In December 1998, the Company issued $600,000,000 aggregate principal
amount of 7% Convertible Subordinated Notes due 2008. Interest is payable
semiannually on June 15 and December 15 of each year, commencing June 15,
1999. The New Convertible Notes are convertible into shares of common
stock prior to maturity at a conversion price of $61.25 per share, subject
to adjustment.
3. Redeemable Preferred Stock
In February 1997, the Company issued $100,000,000 of its 13% Senior Redeemable
Exchangeable Preferred Stock (the "Redeemable Preferred Stock"). 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, 1998, the Company has accrued $27,260,000 for dividends and has
issued approximately 25,000 shares for $25,225,000 of such accrued dividends.
The Redeemable Preferred Stock is subject to mandatory redemption on February
15, 2009. On any scheduled dividend payment date, the Company may, at its
option, exchange all of the shares of Redeemable Preferred Stock then
outstanding for the Company's 13% Subordinated Exchange Debentures due 2009.
4. Leases
Leases for office space extend through 2004. Total rental expense for the years
ended December 31, 1998, 1997 and 1996 under operating leases was $573,000,
$503,000 and $220,000, respectively.
F-46
<PAGE> 136
NTL Incorporated
Schedule I-Condensed Financial Information of Registrant
Notes to Condensed Financial Statements (continued)
Future minimum lease payments under noncancellable operating leases as of
December 31, 1998 are as follows:
<TABLE>
<CAPTION>
<S> <C>
Year ended December 31:
1999 $724,000
2000 922,000
2001 922,000
2002 982,000
2003 982,000
Thereafter 655,000
-----------------------
$5,187,000
=======================
</TABLE>
5. Other Gain
In October 1997, following the U.S. District Court's decision to dismiss the
Company's complaint against LeGroupe Videotron Ltee and its subsidiary, the
Company entered into a Settlement Agreement dismissing the Company's complaint
in exchange for a payment of $10,000,000.
6. Other
No cash dividends were paid to the registrant by subsidiaries in any of the last
three years.
F-47
<PAGE> 137
NTL Incorporated and Subsidiaries
Schedule II--Valuation and Qualifying Accounts
<TABLE>
<CAPTION>
Col. A Col. B Col. C Col. D Col. E
- -----------------------------------------------------------------------------------------------------------------------
Additions
(2)
(1) Charged to
Balance at Charged to Other Balance
Beginning of Costs and Accounts-- Deductions at End
Description Period Expenses Describe Describe of Period
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1998
Allowance for doubtful accounts $8,056,000 $27,282,000 $ - $3,137,000 (a) $38,475,000
==================================================================================
Year ended December 31, 1997
Allowance for doubtful accounts $3,870,000 $ 6,891,000 $ - $(2,705,000) (b) $8,056,000
==================================================================================
Year ended December 31, 1996:
Allowance for doubtful accounts $767,000 $ 2,597,000 $ - $506,000 (c) $3,870,000
==================================================================================
</TABLE>
(a) Uncolletible accounts written-off, net of recoveries of $9,158,000, offset
by $12,214,000 allowance for doubtful accounts as of acquisition dates of
purchased subsidiaries and $81,000 foreign currency translation
adjustments.
(b) Uncollectible accounts written-off, net of recoveries of $2,604,000 and
$101,000 foreign currency translation adjustments.
(c) Uncollectible accounts written-off, net of recoveries of $645,000, offset
by $804,000 allowance for doubtful accounts as of acquisition date of
purchased subsidiary and $347,000 foreign currency translation
adjustments.
F-48
<PAGE> 138
<PAGE> 1
RESTATED CERTIFICATE OF INCORPORATION
OF
NTL INCORPORATED
The undersigned, Richard J. Lubasch, certifies that he is the Senior
Vice President, General Counsel and Secretary of NTL Incorporated, a corporation
organized and existing under the laws of the State of Delaware (the
"Corporation"), and does hereby further certify as follows:
(1) The name of the Corporation is NTL Incorporated.
(2) The name under which the Corporation was originally incorporated
was "CCI/Insight CableTel, Inc.," and the original Certificate of Incorporation
was filed with the Secretary of State of the State of Delaware on April 2, 1993.
(3) This Restated Certificate of Incorporation was duly adopted in
accordance with the provisions of Section 245 of the General Corporation Law of
the State of Delaware (the "GCL").
(4) This Restated Certificate of Incorporation only restates and
integrates and does not further amend the provisions of the Corporation's
Certificate of Incorporation as heretofore amended, restated or supplemented,
and there is no discrepancy between those provisions and the provisions of this
Restated Certificate of Incorporation.
(5) The text of the Restated Certificate of Incorporation of the
Corporation is restated to read in its entirety as follows:
FIRST: The name of the Corporation is NTL Incorporated (hereinafter the
"Corporation").
SECOND: The address of the registered office of the Corporation in the State of
Delaware is 9 Loockerman Street, City of Dover 19901, County of Kent. The name
of its registered agent at that address is National Registered Agents, Inc.
THIRD: The purpose of the Corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
the State of Delaware as set forth in Title 8 of the Delaware Code (the "GCL").
FOURTH: A. Authorized Capital. The total number of shares of stock which the
Corporation shall have the authority to issue is 410,000,000 shares, consisting
of 400,000,000 shares of common stock, par value $0.01 per share (the "Common
Stock"), and 10,000,000 shares of preferred stock, par value $0.01 per share
(the "Preferred Stock").
B. Designation of Series. Shares of the Preferred Stock of the Corporation
may be issued from time to time in one or more classes or series, each of which
class or series shall have such distinctive designation or title as shall be
fixed by the Board of Directors of the Corporation (the "Board of Directors")
prior to the issuance of any shares thereof. Each such class or series of
Preferred Stock shall have such voting powers, full or limited, or no voting
powers, and such preferences and relative, participating, optional or other
special rights and such qualifications, limitations or restrictions thereof, as
shall be stated in such resolution or resolutions providing for the issue of
such class or series of Preferred Stock as may be adopted from time to time by
the Board of Directors prior to the issuance of any shares thereof pursuant to
the authority hereby expressly vested in it, all in accordance with the laws of
the State of Delaware.
C. Series A Junior Participating Preferred Stock.
Section 1. Designation and Amount. The shares of this series shall
be designated as "Series A Junior Participating Preferred Stock" and the number
of shares constituting such series shall be 1,000,000.
Section 2. Dividends and Distributions.
(1) Subject to the prior and superior rights of the holders of any
shares of any series of Preferred Stock ranking prior and superior to the shares
of Series A Junior Participating Preferred Stock with respect to dividends, the
holders of shares of Series A Junior Participating Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors out of
funds legally available for the purpose, quarterly dividends payable in cash on
the fifteenth day of March, June, September and December in each year (each such
date being referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the first issuance
of a share or fraction of a share of Series A Junior Participating Preferred
Stock, in an amount per share (rounded to the nearest cent) equal to the greater
of (a) $.01 or (b) subject to the provision for adjustment hereinafter set
forth, 100 times the aggregate per share amount of all cash dividends, and 100
times the aggregate per share amount (payable in kind) of all non-cash dividends
or other distributions other than a dividend payable in shares of Common Stock
or a subdivision of the outstanding shares of Common Stock (by reclassification
or otherwise), declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date, or, with respect to the first Quarterly
Dividend Payment Date, since the first issuance of any share or fraction of a
share of Series A Junior Participating Preferred Stock. In the event the
Corporation shall at any time after September 1, 1993 (the "Rights Declaration
Date") (i) declare any dividend on Common Stock payable in shares of Common
Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such
case, the amount to which holders of shares of Series A Junior Participating
Preferred Stock were entitled immediately prior to such event under clause (b)
of the preceding sentence shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
(2) The Corporation shall declare a dividend or distribution on the
Series A Junior Participating Preferred Stock as provided in paragraph (A) above
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided that, in the
event no dividend or distribution shall have been declared on the Common Stock
during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $.01 per share on the
Series A Junior Participating Preferred Stock shall nevertheless be payable on
such subsequent Quarterly Dividend Payment Date.
(3) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Junior Participating Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares of Series
A Junior Participating Preferred Stock, unless the date of issue of such shares
is prior to the record date for the first Quarterly Dividend Payment Date, in
which case dividends on such shares shall begin to accrue from the date of issue
of such shares, or unless the date of issue is a Quarterly Dividend Payment Date
or is a date after the record date for the determination of holders of shares of
Series A Junior Participating Preferred Stock entitled to receive a quarterly
dividend and before such Quarterly Dividend Payment Date, in either of which
events such dividends shall begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the shares of Series A Junior Participating
Preferred Stock in an amount less than the total amount of such dividends at the
time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders of shares of
Series A Junior Participating Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date shall be no more
than 30 days prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A Junior
Participating Preferred Stock shall have the following voting rights:
(1) Subject to the provisions for adjustment hereinafter set forth,
each share of Series A Junior Participating Preferred Stock shall entitle the
holder thereof to 100 votes on all matters submitted to a vote of the
stockholders of the Corporation. In the event the Corporation shall at any time
after the Rights Declaration Date (i) declare any dividend on Common Stock
payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock,
or (iii) combine the outstanding Common Stock into a smaller number of shares,
then in each such case the number of votes per share to which holders of shares
of Series A Junior Participating Preferred Stock were entitled immediately prior
to such event shall be adjusted by multiplying such number by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such
event.
(2) Except as otherwise provided herein or by law, the holders of
shares of Series A Junior Participating Preferred Stock and the holders of
shares of Common Stock shall vote together as one class on all matters submitted
to a vote of stockholders of the Corporation.
(3) (i) If at any time dividends on any Series A Junior Participating
Preferred Stock shall be in arrears in an amount equal to six (6) quarterly
dividends thereon, the occurrence of such contingency shall mark the beginning
of a period (herein called a "default period") which shall extend until such
time when all accrued and unpaid dividends for all previous quarterly dividend
periods and for the current quarterly dividend period on all shares of Series A
Junior Participating Preferred Stock then outstanding shall have been declared
and paid or set apart for payment. During each default period, all holders of
Preferred Stock (including holders of the Series A Junior Participating
Preferred Stock) with dividends in arrears in an amount equal to six (6)
quarterly dividends thereon, voting as a class, irrespective of series, shall
have the right to elect two (2) Directors.
(1) During any default period, such voting right of the holders of
Series A Junior Participating Preferred Stock may be exercised initially at a
special meeting called pursuant to subparagraph (iii) of this Section 3(C) or at
any annual meeting of stockholders, and thereafter at annual meetings of
stockholders, provided that neither such voting right nor the right of the
holders of any other series of Preferred Stock, if any, to increase, in certain
cases, the authorized number of Directors shall be exercised unless the holders
of ten percent (10%) in number of shares of Preferred Stock outstanding shall be
present in person or by proxy. The absence of a quorum of the holders of Common
Stock shall not affect the exercise by the holders of Preferred Stock of such
voting right. At any meeting at which the holders of Preferred Stock shall
exercise such voting right initially during an existing default period, they
shall have the right, voting as a class, to elect Directors to fill such
vacancies, if any, in the Board of Directors as may then exist up to two (2)
Directors or, if such right is exercised at an annual meeting, to elect two (2)
Directors. If the number which may be so elected at any special meeting does not
amount to the required number, the holders of the Preferred Stock shall have the
right to make such increase in the number of Directors as shall be necessary to
permit the election by them of the required number. After the holders of the
Preferred Stock shall have exercised their right to elect Directors in any
default period and during the continuance of such period, the number of
Directors shall not be increased or decreased except by vote of the holders of
Preferred Stock as herein provided or pursuant to the rights of any equity
securities ranking senior to or pari passu with the Series A Junior
Participating Preferred Stock.
(2) Unless the holders of Preferred Stock shall, during an existing
default period, have previously exercised their right to elect Directors, the
Board of Directors may order, or any stockholder or stockholders owning in the
aggregate not less than ten percent (10%) of the total number of shares of
Preferred Stock outstanding, irrespective of series, may request, the calling of
special meeting of the holders of Preferred Stock, which meeting shall thereupon
be called by the President, a Vice-President or the Secretary of the
Corporation. Notice of such meeting and of any annual meeting at which holders
of Preferred Stock are entitled to vote pursuant to this paragraph (C) (iii)
shall be given to each holder of record of Preferred Stock by mailing a copy of
such notice to him at his last address as the same appears on the books of the
Corporation. Such meeting shall be called for a time not earlier than 20 days
and not later than 60 days after such order or request or in default of the
calling of such meeting within 60 days after such order or request, such meeting
may be called on similar notice by any stockholder or stockholders owning in the
aggregate not less than ten percent (10%) of the total number of shares of
Preferred Stock outstanding. Notwithstanding the provisions of this paragraph
(C) (iii), no such special meeting shall be called during the period within 60
days immediately preceding the date fixed for the next annual meeting of the
stockholders.
(3) In any default period, the holders of Common Stock, and other
classes of stock of the Corporation if applicable, shall continue to be entitled
to elect the whole number of Directors until the holders of Preferred Stock
shall have exercised their right to elect two (2) Directors voting as a class,
after the exercise of which right (x) the Directors so elected by the holders of
Preferred Stock shall continue in office until their successors shall have been
elected by such holders or until the expiration of the default period, and (y)
any vacancy in the Board of Directors may (except as provided in paragraph
(C)(ii) of this Section 3) be filled by vote of a majority of the remaining
Directors theretofore elected by the holders of the class of stock which elected
the Director whose office shall have become vacant. References in this paragraph
(C) to Directors elected by the holders of a particular class of stock shall
include Directors elected by such Directors to fill vacancies as provided in
clause (y) of the foregoing sentence.
(4) Immediately upon the expiration of a default period, (x) the right
of the holders of Preferred Stock as a class to elect Directors shall cease, (y)
the term of any Directors elected by the holders of Preferred Stock as a class
shall terminate, and (z) the number of Directors shall be such number as may be
provided for in the certificate of incorporation or by-laws irrespective of any
increase made pursuant to the provisions of paragraph (C)(ii) of this Section 3
(such number being subject, however, to change thereafter in any manner provided
by law or in the certificate of incorporation or bylaws). Any vacancies in the
Board of Directors effected by the provisions of clauses (y) and (z) in the
preceding sentence may be filled by a majority of the remaining Directors.
(4) Except as set forth herein, holders of Series A Junior
Participating Preferred Stock shall have no special voting rights and their
consent shall not be required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for
taking any corporate action.
<PAGE> 2
Section 4. Certain Restrictions.
(1) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Junior Participating Preferred Stock as provided in
Section 2 are in arrears, thereafter and until all accrued and unpaid dividends
and distributions, whether or not declared, on shares of Series A Junior
Participating Preferred Stock outstanding shall have been paid in full, the
Corporation shall not
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire for
consideration any shares of stock ranking junior (either as to dividends
or upon liquidation, dissolution or winding up) to the Series A Junior
Participating Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series
A Junior Participating Preferred Stock, except dividends paid ratably on
the Series A Junior Participating Preferred Stock and all such parity
stock on which dividends are payable or in arrears in proportion to the
total amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series
A Junior Participating Preferred Stock, provided that the Corporation may
at any time redeem, purchase or otherwise acquire shares of any such
parity stock in exchange for shares of any stock of the Corporation
ranking junior (either as to dividends or upon dissolution, liquidation or
winding up) to the Series A Junior Participating Preferred Stock;
(iv) purchase or otherwise acquire for consideration any
shares of Series A Junior Participating Preferred Stock, or any shares of
stock ranking on a parity with the Series A Junior Participating Preferred
Stock, except in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all holders of
such shares upon such terms as the Board of Directors, after consideration
of the respective annual dividend rates and other relative rights and
preferences of the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the respective
series or classes.
(2) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Junior
Participating Preferred Stock purchased or otherwise acquired by the Corporation
in any manner whatsoever shall be retired and cancelled promptly after the
acquisition thereof. All such shares shall upon their cancellation become
authorized but unissued shares of Preferred Stock and may be reissued as part of
a new series of Preferred Stock to be created by resolution or resolutions of
the Board of Directors, subject to the conditions and restrictions on issuance
set forth herein.
Section 6. Liquidation, Dissolution or Winding Up.
(1) Upon any liquidation (voluntary or otherwise), dissolution or
winding up of the Corporation, no distribution shall be made to the holders of
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Junior Participating Preferred Stock
unless, prior thereto, the holders of shares of Series A Junior Participating
Preferred Stock shall have received $1 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment (the "Series A Liquidation Preference"). Following
the payment of the full amount of the Series A Liquidation Preference, no
additional distributions shall be made to the holders of shares of Series A
Junior Participating Preferred Stock unless, prior thereto, the holders of
shares of Common Stock shall have received an amount per share (the "Common
Adjustment") equal to the quotient obtained by dividing (i) the Series A
Liquidation Preference by (ii) 100 (as appropriately adjusted as set forth in
subparagraph C below to reflect such event as stock splits, stock dividends and
recapitalizations with respect to the Common Stock) (such number in clause (ii),
the "Adjustment Number"). Following the payment of the full amount of the Series
A Liquidation Preference and the Common Adjustment in respect of all outstanding
shares of Series A Junior Participating Preferred Stock and Common Stock,
respectively, holders of Series A Junior Participating Preferred Stock and
holders of shares of Common Stock shall receive their ratable and proportionate
share of the remaining assets to be distributed in the ratio of the Adjustment
Number to 1 with respect to such Preferred Stock and Common Stock, on a per
share basis, respectively.
(2) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series A Liquidation Preference and
the liquidation preferences of all other series of preferred stock, if any,
which rank on a parity with the Series A Junior Participating Preferred Stock,
then such remaining assets shall be distributed ratably to the holders of such
parity shares in proportion to their respective liquidation preferences. In the
event, however, that there are not sufficient assets available to permit payment
in full of the Common Adjustment, then such remaining assets shall be
distributed ratably to the holders of Common Stock.
(3) In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the Adjustment Number in effect immediately prior to such event shall be
adjusted by multiplying such Adjustment Number by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash/or any other property, then in any such case the shares of
Series A Junior Participating Preferred Stock shall at the same time be
similarly exchanged or changed in an amount per share (subject to the provision
for adjustment hereinafter set forth) equal to 100 times the aggregate amount of
stock, securities, cash and/or any other property (payable in kind) as the case
may be, into which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the amount set forth in the preceding sentence with respect to the exchange or
change of shares of Series A Junior Participating Preferred Stock shall be
adjusted by multiplying such amount by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. No Redemption. The shares of
Series A Junior Participating Preferred Stock shall not be
redeemable.
Section 9. Ranking. The Series A Junior Participating Preferred
Stock shall rank junior to all other series of the Corporation's Preferred Stock
as to the payment of dividends and the distribution of assets, unless the terms
of any such series shall provide otherwise.
Section 10. Amendment. The Restated Certificate of Incorporation of
the Corporation shall not be further amended in any manner which would
materially alter or change the powers, preferences or special rights of the
Series A Junior Participating Preferred Stock so as to affect them adversely
without the affirmative vote of the holders of a majority or more of the
outstanding shares of Series A Junior Participating Preferred Stock, voting
separately as a class.
Section 11. Fractional Shares. Series A Junior Participating
Preferred Stock may be issued in fractions of a share which shall entitle the
holder, in proportion to such holder's fractional shares, to exercise voting
rights, receive dividends, participate in distributions and to have the benefit
of all other rights of holders of Series A Junior Participating Preferred Stock.
D. 13% Senior Redeemable Exchangeable Preferred Stock and 13% Series B
Senior Redeemable Exchangeable Preferred Stock. The powers, preferences and
relative, participating, optional and other special rights, and the
qualifications, limitations and restrictions, of the shares of preferred stock
consisting of the series designated the "13% Senior Redeemable Exchangeable
Preferred Stock" and the series designated the "13% Series B Senior Redeemable
Exchangeable Preferred Stock" are as set forth in this Article FOURTH and in
Exhibit A to this Restated Certificate of Incorporation.
E. 9.90% Non-voting Mandatorily Redeemable Preferred Stock, Series A. The
powers, preferences and relative, participating, optional and other special
rights, and the qualifications, limitations and restrictions, of the shares of
preferred stock designated the "9.90% Non-voting Mandatorily Redeemable
Preferred Stock, Series A" are as set forth in this Article FOURTH and in
Exhibit B to this Restated Certificate of Incorporation.
F. 9.90% Non-voting Mandatorily Redeemable Preferred Stock, Series B. The
powers, preferences and relative, participating, optional and other special
rights, and the qualifications, limitations and restrictions, of the shares of
preferred stock designated the "9.90% Non-voting Mandatorily Redeemable
Preferred Stock, Series B" are as set forth in this Article FOURTH and in
Exhibit C to this Restated Certificate of Incorporation.
G. 5 1/4 Convertible Preferred Stock, Series A. The powers, preferences
and relative, participating, optional and other special rights, and the
qualifications, limitations and restrictions, of the shares of preferred stock
designated the "5 1/4% Convertible Preferred Stock, Series A" are as set forth
in this Article FOURTH and in Exhibit D to this Restated Certificate of
Incorporation.
H. 5 1/4% Convertible Preferred Stock, Series B. The powers, preferences
and relative, participating, optional and other special rights, and the
qualifications, limitations and restrictions, of the shares of preferred stock
designated to the "5 1/4% Convertible Preferred Stock, Series B" are as set
forth in this Article FOURTH and in Exhibit E to this Restated Certificate of
Incorporation.
FIFTH: The business and affairs of the Corporation shall be managed by or under
the direction of the Board of Directors. The number of directors of the
Corporation shall be as from time to time fixed by, or in the manner provided
in, the By-laws of the Corporation. The directors shall be divided into three
classes, designated Class I, Class II and Class III. Each class shall consist,
as nearly as may be possible, of one-third of the total number of directors
constituting the entire Board of Directors. The term of the initial Class I
directors shall terminate on the date of the 1994 annual meeting of
stockholders; the term of the initial Class II directors shall terminate on the
date of the 1995 annual meeting of stockholders and the term of the initial
Class III directors shall terminate on the date of the 1996 annual meeting of
stockholders. At each annual meeting of stockholders beginning in 1994,
successors to the class of directors whose term expires at that annual meeting
shall be elected for a three-year term. If the number of directors is changed,
any increase or decrease shall be apportioned among the classes so as to
maintain the number of directors in each class as nearly equal as possible, and
any additional directors of any class elected to fill a vacancy resulting from
an increase in such class shall hold office for a term that shall coincide with
the remaining term of that class, but in no case will a decrease in the number
of directors shorten the term of any incumbent director. A director shall hold
office until the annual meeting for the year in which his term expires and until
his successor shall be elected and shall qualify, subject, however, to prior
death, resignation, retirement, disqualification or removal from office. Any
vacancy on the Board of Directors, howsoever resulting, may be filled by a
majority of the directors then in office, even if less than a quorum, or by a
sole remaining director. Any director elected to fill a vacancy shall hold
office for a term that shall coincide with the term of the class to which such
director shall have been elected.
Notwithstanding the foregoing, whenever the holders of any one or
more classes or series of Preferred Stock issued by the Corporation shall have
the right, voting separately by class or series, to elect directors at an annual
or special meeting of stockholders, the election, term of office, filling of
vacancies and other features of such directorships shall be governed by the
terms of this Certificate of Incorporation or the resolution or resolutions
adopted by the Board of Directors pursuant to Article FOURTH applicable thereto,
and such directors so elected shall not be divided into classes pursuant to this
Article FIFTH unless expressly provided by such terms.
SIXTH: Subject to the rights, if any, of the holders of shares of Preferred
Stock then outstanding, any or all of the directors of the Corporation may be
removed from office at any time, but only for cause and only by the affirmative
vote of the holders of two-thirds (66 2/3%) of the outstanding shares of the
Corporation then entitled to vote generally in the election of directors,
considered for purposes of this Article SIXTH as one class.
SEVENTH: Any action required or permitted to be taken at any annual or special
meeting of stockholders may be taken only upon the vote of the stockholders at
an annual or special meeting duly noticed and called, as provided in the By-laws
of the Corporation, and may not be taken by a written consent of the
stockholders pursuant to the GCL.
EIGHTH: Special meetings of the stockholders of the Corporation for any purpose
or purposes may be called at any time by the Board of Directors, the Chairman of
the Board of Directors or the President. Special meetings of the stockholders of
the Corporation may not be called by any other person or persons.
NINTH:
A. In addition to any affirmative vote required by law or this Certificate
of Incorporation or the By-laws of the Corporation, and except as otherwise
expressly provided in Section B of this Article NINTH, a Business Combination
(as hereinafter defined) with, or proposed by or on behalf of, any Interested
Stockholder (as hereinafter defined) or any Affiliate or Associate (as
hereinafter defined) of any Interested Stockholder or any person who thereafter
would be an Affiliate or Associate of such Interested Stockholder shall require
the affirmative vote of not less than sixty-six and two-thirds percent (66-2/3%)
of the votes entitled to be cast by the holders of all the then outstanding
shares of Voting Stock (as hereinafter defined), voting together as a single
class, excluding Voting Stock beneficially owned by any Interested Stockholder
or any Affiliate or Associate of such Interested Stockholder. Such affirmative
vote shall be required notwithstanding the fact that no vote may be required, or
that a lesser percentage or separate class vote may be specified, by law or in
any agreement with any national securities exchange or otherwise.
B. The provisions of Section A of this Article NINTH shall not be
applicable to any particular Business Combination, and such Business Combination
shall require only such affirmative vote, if any, as is required by law or any
other provision of this Certificate of Incorporation or the By-laws of the
Corporation, if all of the conditions specified in either of the following
Paragraphs 1 or 2 are met:
1. The Business Combination shall have been approved by a majority
of the Continuing Directors (as hereinafter defined).
2. All of the following conditions shall have been met:
a. the aggregate amount of the cash and the Fair Market Value (as
hereinafter defined) as of the date of the consummation of the Business
Combination of consideration other than cash to be received per share by holders
of Common Stock in such Business Combination shall be at least equal to the
highest amount determined under clauses (i) and (ii) below:
(i) (if applicable) the highest per share price
(including any brokerage commissions, transfer taxes and soliciting
dealers' fees) paid by or on behalf of the Interested Stockholder for any
share of Common Stock in connection with the acquisition by the Interested
Stockholder of beneficial ownership of shares of Common Stock acquired by
it (x) within the two-year period immediately prior to the first public
announcement of the proposed Business Combination (the "Announcement
Date") or (y) in the transaction in which it became an Interested
Stockholder, whichever is higher, in either case as adjusted for any
subsequent stock split, stock dividend, subdivision or reclassification
with respect to the Common Stock; and
(ii) the Fair Market Value per share of Common Stock on
the Announcement Date or on the date on which the Interested Stockholder
became an Interested Stockholder (the "Determination Date"), whichever is
higher, as adjusted for any subsequent stock split, stock dividend,
subdivision or reclassification with respect to the Common Stock.
b. The aggregate amount of the cash and the Fair Market Value as of
the date of the consummation of the Business Combination, of consideration other
than cash to be received per share by holders of shares of any class or series
of outstanding Capital Stock (as hereinafter defined), other than Common Stock,
shall be at least equal to the highest amount determined under clauses (i), (ii)
and (iii) below:
(i) (if applicable) the highest per share price
(including any brokerage commissions, transfer taxes and soliciting
dealers' fees) paid by or on behalf of the Interested Stockholder for any
share of such class or series of Capital Stock in connection with the
acquisition by the Interested Stockholder of beneficial ownership of
shares of such class or series of Capital Stock (x) within the two-year
period immediately prior to the Announcement Date or (y) in the
transaction in which it became an Interested Stockholder, whichever is
higher, in either case as adjusted for any subsequent stock split, stock
dividend, subdivision or reclassification with respect to such class or
series of Capital Stock;
(ii) the Fair Market Value per share of such class or
series of Capital Stock on the Announcement Date or on the Determination
Date, whichever is higher, as adjusted for any subsequent stock split,
stock dividend, subdivision or reclassification with respect to such class
or series of Capital Stock; and
(iii) (if applicable) the highest preferential amount
per share to which the holders of shares of such class or series of
Capital Stock would be entitled in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the affairs of the
Corporation regardless of whether the Business Combination to be
consummated constitutes such an event.
The provisions of this Paragraph 2 shall be required to be met with respect to
every class or series of outstanding Capital Stock, whether or not the
Interested Stockholder has previously acquired beneficial ownership of any
shares of a particular class or series of Capital Stock.
c. The consideration to be received by holders of a particular class
or series of outstanding Capital Stock shall be in cash or in the same form as
previously has been paid by or on behalf of the Interested Stockholder in
connection with its direct or indirect acquisition of beneficial ownership of
shares of such class or series of Capital Stock. If the consideration so paid
for shares of any class or series of Capital Stock varied as to form, the form
of consideration for such class or series of Capital Stock shall be either cash
or the form used to acquire beneficial ownership of the largest number of shares
of such class or series of Capital Stock previously acquired by the Interested
Stockholder.
d. After the Determination Date and prior to the consummation of
such Business Combination: (i) except as approved by a majority of the
Continuing Directors, there shall have been no failure to declare and pay at the
regular date therefor any full quarterly dividends (whether or not cumulative)
payable in accordance with the terms of any outstanding Capital Stock; (ii)
there shall have been no reduction in the annual rate of dividends paid on the
Common Stock (except as necessary to reflect any stock split, stock dividend or
subdivision of the Common Stock), except as approved by a majority of the
Continuing Directors; (iii) there shall have been an increase in the annual rate
of dividends paid on the Common Stock as necessary to reflect any
reclassification (including any reverse stock split), recapitalization,
reorganization or any similar transaction that has the effect of reducing the
number of outstanding shares of Common Stock, unless the failure so to increase
such annual rate is approved by a majority of the Continuing Directors; and (iv)
such Interested Stockholder shall not have become the beneficial owner of any
additional shares of Capital Stock except as part of the transaction that result
in such Interested Stockholder becoming an Interested Stockholder and except in
a transaction that, after giving effect thereto, would not result in any
increase in the Interested Stockholder's percentage beneficial ownership of any
class or series of Capital Stock.
e. A proxy or information statement describing the proposed Business
Combination and complying with the requirements of the Securities Exchange Act
of 1934, as amended, and the rules and regulations thereunder (the "Act") (or
any subsequent provisions replacing such Act, rules or regulations) shall be
mailed to all stockholders of the Corporation at least 30 days prior to the
consummation of such Business Combination (whether or not such proxy or
information statement is required to be mailed pursuant to such Act or
subsequent provisions). The proxy or information statement shall contain on the
first page thereof, in a prominent place, any statement as to the advisability
(or inadvisability) of the Business Combination that the Continuing Directors,
or any of them, may choose to make and, if deemed advisable by a majority of the
Continuing Directors, an opinion of an investment banking firm selected by a
majority of the Continuing Directors as to the fairness (or unfairness) of the
terms of the Business Combination from a financial point of view to the holders
of the outstanding shares of Capital Stock other than the Interested Stockholder
and its Affiliates or Associates, such investment banking firm to be paid a
reasonable fee for its services by the Corporation.
f. Such Interested Stockholder shall not have made any major change
in the Corporation's business or equity capital structure without the approval
of a majority of the Continuing Directors.
C. The following definitions shall apply with respect to this Article
NINTH:
1. The term "Business Combination" shall mean:
a. any merger or consolidation of the Corporation or any Subsidiary
(as hereinafter defined) with (i) any Interested Stockholder or (ii) any other
company (whether or not itself an Interested Stockholder) which is or after such
merger or consolidation would be an Affiliate or Associate of an Interested
Stockholder; or
b. any sale, lease, exchange, mortgage, pledge, transfer or other
disposition or security arrangement, investment, loan, advance, guarantee,
agreement to purchase, agreement to pay, extension of credit, joint venture
participation or other arrangement (in one transaction or a series of
transactions) with or for the benefit of any Interested Stockholder or any
Affiliate or Associate of any Interested Stockholder involving any assets,
securities or commitments of the Corporation, any Subsidiary or any Interested
Stockholder or any Affiliate or Associate of any Interested Stockholder (except
for any arrangement, whether as employee, consultant or otherwise, other than as
a director, pursuant to which any Interested Stockholder or any Affiliate or
Associate thereof shall, directly or indirectly, have any control over or
responsibility for the management of any aspect of the business or affairs of
the Corporation, with respect to which arrangements the value tests set forth
below shall not apply), together with all other such arrangements (including all
contemplated future events), has an aggregate Fair Market Value and/or involves
aggregate commitments of $5,000,000 or more or constitutes more than 5 percent
of the book value of the total assets (in the case of transactions involving
assets or commitments other than capital stock) or 5 percent of the
stockholders' equity (in the case of transactions in capital stock) of the
entity in question (the "Substantial Part"), as reflected in the most recent
fiscal year-end consolidated balance sheet of such entity existing at the time
the stockholders of the Corporation would be required to approve or authorize
the Business Combination involving the assets, securities and/or commitments
constituting any Substantial Part; or
c. the adoption of any plan or proposal for the
liquidation or dissolution of the Corporation or for any
amendment to the Corporation's By-laws; or
d. any reclassification of securities (including any reverse stock
split), or recapitalization of the Corporation, or any merger or consolidation
of the Corporation with any of its Subsidiaries or any other transaction
(whether or not with or into or otherwise involving an Interested Stockholder)
that has the effect, directly or indirectly, of increasing the proportionate
share of any class or series of Capital Stock, or any securities convertible
into Capital Stock or into equity securities of any Subsidiary, that is
beneficially owned by any Interested Stockholder or any Affiliate or Associate
of any Interested Stockholder; or
e. any agreement, contract or other arrangement providing for any
one or more of the actions specified in the foregoing clauses (a) to (d).
2. The term "Capital Stock" shall mean all capital stock of the
Corporation authorized to be issued from time to time under Article FOURTH of
this Certificate of Incorporation, and the term "Voting Stock" shall mean all
Capital Stock which by its terms may be voted on all matters submitted to
stockholders of the Corporation generally.
3. The term "person" shall mean any individual, firm, company or
other entity and shall include any group comprised of any person and any other
person with whom such person or any Affiliate or Associate of such person has
any agreement, arrangement or understanding, directly or indirectly, for the
purpose of acquiring, holding, voting or disposing of Capital Stock.
4. The term "Interested Stockholder" shall mean any person (other
than the Corporation or any Subsidiary and other than any profit-sharing,
employee stock ownership or other employee benefit plan of the Corporation or
any Subsidiary or any trustee of or fiduciary with respect to any such plan when
acting in such capacity who (a) is or has announced or publicly disclosed a plan
or intention to become the beneficial owner of Voting Stock representing fifteen
percent (15%) or more of the votes entitled to be cast by the holders of all
then outstanding shares of Voting Stock; or (b) is an Affiliate or Associate of
the Corporation and at any time within the two-year period immediately prior to
the date in question was the beneficial owner of Voting Stock representing
fifteen percent (15%) or more of the votes entitled to be cast by the holders of
all then outstanding shares of Voting Stock.
5. A person shall be a "beneficial owner" of any Voting Stock: (a)
which such person or any of its Affiliates or Associates beneficially owns,
directly or indirectly; (b) which such person or any of its Affiliates or
Associates has, directly or indirectly, (i) the right to acquire (whether such
right is exercisable immediately or subject only to the passage of time),
pursuant to any agreement, arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or options, or otherwise, or (ii)
the right to vote pursuant to any agreement, arrangement or understanding; or
(c) which is beneficially owned, directly or indirectly, by any other person
with which such person or any of its Affiliates or Associates has any agreement,
arrangement or understanding for the purpose of acquiring, holding, voting or
disposing of any shares of Capital Stock. For the purposes of determining
whether a person is an Interested Stockholder pursuant to Paragraph 4 of this
Section C, the number of shares of Capital Stock deemed to be outstanding shall
include shares deemed beneficially owned by such person through applications of
this Paragraph 5 of Section C, but shall not include any other shares of Capital
Stock that may be issuable pursuant to an agreement, arrangement or
understanding, or upon exercise of conversion rights, warrants or options, or
otherwise.
6. The terms "Affiliate" or "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Act, as in effect on April 2, 1993 (the term "registrant"
in said Rule 12b-2 meaning in this case the Corporation).
7. "Subsidiary" means any company of which a majority of any class
of equity security is beneficially owned by the Corporation; provided, however,
that for the purposes of the definition of Interested Stockholder set forth in
Paragraph 4 of this Section C, the term "Subsidiary" shall mean only a company
of which a majority of each class of equity security is beneficially owned by
the Corporation.
8. The term "Continuing Director" means any member of the Board of
Directors of the Corporation, while such person is a member of the Board of
Directors, who is not an Affiliate or Associate or representative of the
Interested Stockholder and was a member of the Board of Directors prior to the
time that the Interested Stockholder became an Interested Stockholder, and any
successor of a Continuing Director while such successor is a member of the Board
of Directors, who is not an Affiliate or Associate or representative of the
Interested Stockholder and is recommended or elected to succeed the Continuing
Director by a majority of Continuing Directors.
9. The term "Fair Market Value" means: (a) in the case of cash, the
amount of such cash; (b) in the case of stock, the highest closing sale price
during the 30-day period immediately preceding the date in question of a share
of such stock on the Composite Tape for New York Stock Exchange-Listed Stocks,
or, if such stock is not quoted on the Composite Tape, on the New York Stock
Exchange, or, if such stock is not listed on such Exchange, on the principal
United States securities exchange registered under the Act on which such stock
is listed or, if such stock is not listed on any such exchange, the highest
closing bid quotation with respect to a share of such stock during the 30-day
period preceding the date in question on the National Association of Securities
Dealers, Inc. Automated Quotations System, in the pink sheets of the National
Quotation Bureau or any similar system then in use, or if no such quotations are
available, the fair market value on the date in question of a share of such
stock as determined by a majority of the Continuing Directors in good faith; and
(c) in the case of property other than cash or stock, the fair market value of
such property on the date in question as determined in good faith by a majority
of the Continuing Directors.
10. In the event of any Business Combination in which the
Corporation survives, the phrase "consideration other than cash to be received"
as used in Paragraphs 2.a. and 2.b. of Section B of this Article NINTH shall
include the shares of Common Stock and/or the shares of any other class or
series of Capital Stock retained by the holders of such shares.
D. A majority of the Continuing Directors shall have the power and duty to
determine for the purpose of this Article NINTH, on the basis of information
known to them after reasonable inquiry, all questions arising under this Article
NINTH, including, without limitation, (a) whether a person is an Interested
Stockholder, (b) the number of shares of Capital Stock or other securities
beneficially owned by any person, (c) whether a person is an Affiliate or
Associate of another, (d) whether a Proposed Action (as hereinafter defined) is
with, or proposed by, or on behalf of an Interested Stockholder or an Affiliate
or Associate of an Interested Stockholder, (e) whether the assets that are the
subject of any Business Combination have, or the consideration to be received
for the issuance or transfer of securities by the Corporation or any Subsidiary
in any Business Combination has, an aggregate Fair Market Value of $5,000,000 or
more, and (f) whether the assets or securities that are the subject of any
Business Combination constitute a Substantial Part. Any such determination made
in good faith shall be binding and conclusive on all parties. The good faith
determination of a majority of the Continuing Directors on such matters shall be
conclusive and binding for all purposes of this Article NINTH.
E0 Nothing contained in this Article NINTH shall be construed to relieve
any Interested Stockholder from any fiduciary obligation imposed by law.
F0 The fact that any Business Combination complies with the provisions of
Section B of this Article NINTH shall not be construed to impose any fiduciary
duty, obligation or responsibility on the Board of Directors, or any member
thereof, to approve such Business Combination or recommend its adoption or
approval to the stockholders of the Corporation, nor shall such compliance
limit, prohibit or otherwise restrict in any manner the Board of Directors, or
any member thereof, with respect to evaluations of or actions and responses
taken with respect to such Business Combination.
G0 For the purposes of this Article NINTH, a Business Combination or any
proposal to amend, repeal or adopt any provision of this Certificate of
Incorporation inconsistent with this Article NINTH (collectively, "Proposed
Action") is presumed to have been proposed by, or on behalf of, an Interested
Stockholder or an Affiliate or Associate of an Interested Stockholder or a
person who thereafter would become such if (1) after the Interested Stockholder
became such, the Proposed Action is proposed following the election of any
director of the Corporation who with respect to such Interested Stockholder,
would not qualify to serve as a Continuing Director or (2) such Interested
Stockholder, Affiliate, Associate or person votes for or consents to the
adoption of any such Proposed Action, unless as to such Interested Stockholder,
Affiliate, Associate or person a majority of the Continuing Directors makes a
good faith determination that such Proposed Action is not proposed by or on
behalf of such Interested Stockholder, Affiliate, Associate or person, based on
information known to them after reasonable inquiry.
H0 Notwithstanding any other provisions of this Certificate of
Incorporation or the By-laws of the Corporation (and notwithstanding the fact
that a lesser percentage or separate class vote may be specified by law, this
Certificate of Incorporation or the By-laws of the Corporation), any proposal to
amend, repeal or adopt any provision of this Certificate of Incorporation
inconsistent with this Article NINTH which is proposed by or on behalf of an
Interested Stockholder or an Affiliate or Associate of an Interested Stockholder
shall require the affirmative vote of the holders of not less than sixty-six and
two-thirds percent (66-2/3%) of the votes entitled to be cast by the holders of
all the then outstanding shares of Voting Stock, voting together as a single
class, excluding Voting Stock beneficially owned by such Interested Stockholder;
provided, however, that this Section H shall not apply to, and such sixty-six
and two-thirds percent (66-2/3%) vote shall not be required for, any amendment,
repeal or adoption unanimously recommended by the Board of Directors if all of
such directors are persons who would be eligible to serve as Continuing
Directors within the meaning of Section C, Paragraph 8 of this Article NINTH.
TENTH: No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for any breach of fiduciary
duty by such a director as a director. Notwithstanding the foregoing sentence, a
director shall be liable to the extent provided by applicable law (i) for any
breach of the director's duty of loyalty to the Corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the
GCL or (iv) for any transaction from which the director derived an improper
personal benefit. No amendment to or repeal to this Article TENTH shall apply to
or have any effect on the liability or alleged liability of any director of the
Corporation for or with respect to any acts or omissions of such director
occurring prior to such amendment or repeal.
ELEVENTH: In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to adopt, repeal, alter,
amend or rescind the By-laws of the Corporation. In addition, the By-laws of the
Corporation may be adopted, repealed, altered, amended, or rescinded by the
affirmative vote of sixty-six and two-thirds percent (66-2/3%) of the
outstanding stock of the Corporation entitled to vote thereon.
TWELFTH: Notwithstanding anything contained in this Certificate of Incorporation
to the contrary, the affirmative vote of the holders of at least sixty-six and
two-thirds percent (66-2/3%) of the Voting Stock, voting together as a single
class, shall be required to amend, repeal or adopt any provision inconsistent
with Articles FIFTH, SEVENTH, EIGHTH, NINTH, TENTH, and ELEVENTH of this
Certificate of Incorporation.
THIRTEENTH: The Corporation reserves the right to repeal, alter, amend, or
rescind any provision contained in this Restated Certificate of Incorporation,
in the manner now or hereafter prescribed by statute, and all rights conferred
on stockholders herein are granted subject to this reservation.
IN WITNESS WHEREOF, NTL Incorporated has caused this Restated
Certificate of Incorporation to be signed by Richard J. Lubasch, its Senior Vice
President, General Counsel and Secretary, this 29th day of March, 1999.
___
NTL INCORPORATED
/S/ Richard J. Lubasch
By:___________________________________
Richard J. Lubasch
Senior Vice President, General
Counsel and Secretary
<PAGE> 3
Exhibit A
13% SENIOR REDEEMABLE EXCHANGEABLE PREFERRED STOCK
AND
13% SERIES B SENIOR REDEEMABLE EXCHANGEABLE
PREFERRED STOCK
a) Designation. There is hereby created out of the authorized and
unissued shares of preferred stock of the Corporation a class of preferred stock
consisting of two series, one designated as the "13% Senior Redeemable
Exchangeable Preferred Stock" (the "Series A Preferred") and the other
designated as the "13% Series B Senior Redeemable Exchangeable Preferred Stock"
(the "Series B Pre ferred"). The number of shares constituting such class shall
be 100,000 plus up to 150,000 shares issued in lieu of cash dividends, and are
referred to as the "Preferred Stock." The liquidation preference of the
Preferred Stock shall be $1,000.00 per share.
b) Rank. The Preferred Stock shall, with respect to dividends and
distributions upon liquidation, winding-up and dissolution of the Corporation,
rank (i) senior to (a) all classes of Common Stock, (b) the Junior Preferred
Stock, (c) the 5% Preferred Stock and (d) each other class of Capital Stock or
series of preferred stock issued by the Corporation after the Issue Date the
terms of which specifically provide that such class or series will rank junior
to the Preferred Stock as to dividend distributions and distributions upon
liquidation, winding-up and dissolution of the Corporation or junior to or on a
parity with any class of common stock of the Corporation or which do not specify
their rank (the securities described in this clause (i), collectively, "Junior
Securities"); (ii) on a parity with each class of Capital Stock or series of
preferred stock issued by the Corporation after the Issue Date the terms of
which specifically provide that such class or series will rank on a parity with
the Preferred Stock as to dividend distributions and distributions upon
liquidation, winding-up and dissolution of the Corporation (the securities
described in this clause (ii), collectively, "Parity Securities"); and (iii)
junior to each other class of Capital Stock or other series of preferred stock
issued by the Corporation after the Issue Date the terms of which specifically
provide that such series will rank senior to the Preferred Stock as to dividend
distributions and distributions upon liquidation, winding-up and dissolution of
the Corporation (the securities described in this clause (iii), collectively,
"Senior Securities").
c) Dividends.
d) Beginning on the Issue Date, the Holders of the outstanding
shares of Preferred Stock shall be entitled to receive, when, as and if declared
by the Board of Directors, out of funds legally available therefor, dividends on
the Preferred Stock at a rate equal to 13% per annum ($130 per share). Dividends
will accrue from
<PAGE> 4
the Issue Date and will be payable quarterly in arrears on February 15, May 15,
August 15 and November 15 of each year (each, a "Dividend Payment Date"),
commencing on 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 Corporation, be paid (i) in cash, (ii) by the
issuance of such number of additional fully paid and nonassessable shares
(including fractional shares) of Preferred Stock equal to the amount of such
dividends then payable divided by $1,000 or (iii) in any combination of the
foregoing. Each dividend shall be payable to the Holders of record as they
appear on the stock books of the Corporation on such record date as may be fixed
by the Board of Directors, which record date will not be less than 10 nor more
than 60 days prior to the applicable Dividend Payment Date. Dividends shall
cease to accrue in respect of the Preferred Stock on the Exchange Date or on the
date of their earlier redemption or repurchase by the Corporation, unless the
Corporation shall have failed to issue the appropriate aggregate principal
amount of Subordinated Debentures in respect of the Preferred Stock on such
Exchange Date or shall have failed to pay the relevant redemption or repurchase
price on the date fixed for redemption or repurchase. All dividends paid with
respect to shares of the Preferred Stock shall be paid pro rata to the Holders
entitled thereto.
e) No full dividends may be declared or paid or funds set
apart for the payment of dividends on any Parity Securities for any period
unless all accrued dividends have been or contemporaneously are declared and
paid in full or declared and, if payable in cash, a sum in cash is set apart
sufficient for such payment on the Preferred Stock. If all accrued dividends
have not been so paid, the Preferred Stock shall share dividends pro rata with
the Parity Securities based upon the relative liquidation preferences of the
outstanding shares of the Preferred Stock and such Parity Securities. No
dividends may be declared or paid, nor may funds be set aside for such payment,
on Junior Securities, except dividends on Junior Securities which are paid in
additional Junior Securities (other than Disqualified Capital Stock), and no
Parity Securities or Junior Securities may be repurchased, redeemed or otherwise
retired, nor may funds be set apart for such payment, if all accrued dividends
have not been paid (or deemed to have been paid) on the Preferred Stock.
f) In the event that (a) the Exchange Offer Registration State
ment is not filed with the Commission on or prior to the 75th day following the
Issue Date, (b) the Exchange Offer Registration Statement is not declared
effective prior to the 120th day following the Issue Date, (c) the Registered
Exchange Offer is not consummated on or prior to the 160th day following the
Issue Date or (d) if the Corporation is obligated to file the Shelf Registration
Statement under the Registration Rights Agreement and the Shelf Registration
Statement is not declared effective on or prior to 160 days after the Issue Date
(in each of cases (b), (c) and (d), as such period may be extended in accordance
with the proviso of Section 2(a) of the Registration Rights Agreement) (each
such event referred to in clauses (a) through (d) above, a "Registration
Default"), dividends will accrue on the Preferred Stock (in addition to the
stated dividends on the Preferred Stock) from and including the next day
following each of (i) such 75-day period in the case of clause (a) above, (ii)
such 120-day period in the case of clause (b) above, (iii) such 160-day period
in the case of clause (c) above and (iv) such 160-day period in the case of
clause (d) above (in each of cases (b), (c) and (d) as such period is extended,
if applicable, in the manner aforesaid) (each such period referred to in clauses
(i) through (iv) above, an "Accrual Period"), at a rate per annum equal to 0.50%
of the liquidation preference of the Preferred Stock (determined daily). The
amount of such additional dividends (the "Special Dividends") will increase by
an additional 0.50% per annum with respect to each subsequent applicable Accrual
Period until all Registration Defaults have been cured, up to a maximum of
Special Dividends of 1.50% per annum of the liquidation preference (determined
daily). In each case, such additional dividends (the "Special Dividends") will
be payable quarterly in arrears each May 15, August 15, November 15 and February
15, commencing May 15, 1997, to Holders of record on the immediately preceding
May 1, August 1, November 1 and February 1, respectively.
In the event that a Shelf Registration Statement is declared effective
pursuant to the Registration Rights Agreement, if the Corporation fails to keep
the Shelf Registration Statement continuously effective for the period required
by the Registration Rights Agreement, then from such time as the Shelf
Registration is no longer effective until the earliest of (i) the date that the
Shelf Registration Statement is again deemed effective, (ii) the date that is
the third anniversary of the Issue Date or (iii) the date as of which all of the
Transfer Restricted Securities are sold pursuant to the Shelf Registration
Statement, Special Dividends shall accrue at a rate per annum equal to 0.50% of
the liquidation preference of the Preferred Stock (1.00% thereof if the Shelf
Registration Statement is no longer effective for 30 days or more) and shall be
payable quarterly in arrears each May 15, August 15, November 15 and February
15, commencing May 15, 1997, to Holders of record on the immediately preceding
May 1, August 1, November 1 and February 1, respectively.
g) Nothing herein contained shall in any way or under any
circumstances be construed or deemed to require the Board of Directors to
declare, or the Corporation to pay or set apart for payment, any dividends on
shares of the Preferred Stock at any time. In the event that the Corporation
fails to pay dividends, the sole remedy available to Holders will be the
election of directors as set forth in paragraph (f)(ii).
h) Accrued dividends may be declared and paid at any time,
without reference to any regular Dividend Payment Date, to Holders of record,
not more than sixty (60) days prior to payment thereof, as may be fixed by the
Board of Directors of the Corporation.
i) Dividends payable on the Preferred Stock for any period
less than a year shall be computed on the basis of a 360-day year of twelve
30-day months and the actual number of days elapsed in the period for which such
dividends are payable.
j) References in this Resolution to "dividends" include
Special Dividends unless the context requires otherwise.
k) Liquidation Preference.
l) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation, the Holders of
shares of Preferred Stock then outstanding shall be entitled to be paid out of
the assets of the Corporation available for distribution to its stockholders, an
amount in cash equal to the liquidation preference for each share outstanding,
plus an amount in cash equal to accrued and unpaid dividends thereon, if any, to
the date fixed for liquidation, dissolution or winding up (including an amount
in cash equal to a prorated dividend for the period from the last Dividend
Payment Date to the date fixed for liquidation, dissolution or winding up),
before any distribution shall be made or any assets distributed to the holders
of any of the Junior Securities including, without limitation, any Common Stock.
Except as provided in the preceding sentence, Holders shall not be entitled to
any distribution in the event of any liquidation, dissolution or winding up of
the affairs of the Corporation. If the assets of the Corporation are not
sufficient to pay in full the liquidation payments payable to the holders of
outstanding shares of the Preferred Stock and all Parity Securities, then the
holders of all such shares shall share equally and ratably in such distribution
of assets of the Corporation in proportion to the full liquidation preference to
which each is entitled. After payment in full of the liquidation preference to
which Holders are entitled, such Holders will not be entitled to any further
participation in any distribution of assets of the Corporation.
m) For the purposes of this paragraph (d), neither the sale,
conveyance, exchange or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all of the property or assets of the
Corporation nor the consolidation or merger of the Corporation with or into one
or more entities shall be deemed to be a liquidation, dissolution or winding up
of the affairs of the Corporation.
n) Redemption.
o) Optional Redemption. () The Corporation may, at the option
of the Board of Directors, redeem in whole at any time or in part from time to
time, in the manner provided for in paragraph (e)(iii) hereof, any or all of the
shares of Preferred Stock, at the redemption prices (expressed as percentages of
the liquidation preference thereof) set forth below plus all accrued and unpaid
dividends (including an amount in cash equal to a prorated dividend for the
period from the Dividend Payment Date immediately prior to the Redemption Date
to the Redemption Date) (the "Optional Redemption Price") if redeemed during the
12-month period beginning February 15 of each of the years set forth below:
2002 106.500%
- ---------------------------------------------------------
- ---------------------------------------------------------
2003 104.333%
- ---------------------------------------------------------
- ---------------------------------------------------------
2004 102.167%
- ---------------------------------------------------------
- ---------------------------------------------------------
2005 and thereafter 100.000%
p) Upon a Change of Control Call Event, the Corporation will have
the option to redeem all (but not less than all) of the outstanding shares of
Preferred Stock at a redemption price (the "Change of Control Call Price") equal
to 100% of the liquidation preference thereof, plus the Applicable Premium, plus
accrued and unpaid dividends to the date of repurchase; provided, however, no
such redemption shall be consummated except contemporaneously with or after the
merger, consolidation or business combination referred to in the definition of
Change of Control Call Event. Notwithstanding anything to the contrary in
paragraph (e)(iii), notice of any such redemption pursuant to this paragraph
must be given no later than 90 days following the date upon which the Change of
Control Call Event occurred (or no later than 10 days after the date on which a
notice of a Change of Control Offer must be mailed pursuant to paragraph (h) if
the events giving rise to the Change of Control Call Event also give rise to a
Change of Control Triggering Event), and the purchase date must be within 30
days of the date of notice.
q) In the event of a redemption pursuant to paragraph (e)(i)(A) or
(B) hereof of only a portion of the then outstanding shares of the Preferred
Stock, the Corporation shall effect such redemption on a pro rata basis
according to the number of shares held by each Holder of the Preferred Stock,
except that the Corporation may redeem such shares held by Holders of fewer than
10 shares (or all shares held by Holders who would hold less than 10 shares as a
result of such redemption), as may be determined by the Corporation. No partial
redemption of the Preferred Stock may be authorized or made unless prior thereto
all accrued dividends thereon shall have been paid in cash or declared and a sum
set apart for such payment.
r) Mandatory Redemption. On February 15, 2009, the Corpora
tion shall redeem, to the extent of funds legally available therefor, in the
manner provided for in paragraph (e)(iii) hereof, all of the shares of the
Preferred Stock then outstanding at a redemption price equal to 100% of the
liquidation preference per share, plus an amount in cash equal to all accrued
and unpaid dividends per share (including an amount equal to a prorated dividend
for the period from the Dividend Payment Date immediately prior to the
Redemption Date to the Redemption Date) (the "Mandatory Redemption Price").
s) Procedures for Redemption. () At least fifteen (15) days
and not more than sixty (60) days prior to the date fixed for any redemption of
the Preferred Stock, written notice (the "Redemption Notice") shall be given by
first class mail, postage prepaid, to each Holder of record on the record date
fixed for such redemption of the Preferred Stock at such Holder's address as it
appears on the stock books of the Corporation; provided, however, that no
failure to give such notice nor any deficiency therein shall affect the validity
of the procedure for the redemption of any shares of Preferred Stock to be
redeemed except as to the Holder or Holders to whom the Corporation has failed
to give said notice or to whom such notice was defective. If any Preferred Stock
is to be redeemed in part only, the Redemption Notice that relates to such
Preferred Stock will state the number of shares thereof to be redeemed. Shares
of Preferred Stock that have been issued and reacquired in any manner, including
shares purchased or redeemed or exchanged, will (upon compliance with any
applicable provisions of Delaware law) have the status of authorized but
unissued shares of preferred stock of the Corporation undesignated as to series
and may, with any and all other authorized but unissued shares of preferred
stock of the Corporation, be designated or redesignated and issued or reissued,
as the case may be, as part of any series of preferred stock of the Corporation,
except that such shares may not be reissued or sold as shares of the Preferred
Stock (other than in payment of dividends on the Preferred Stock). The
Redemption Notice shall state:
t) whether the redemption is pursuant to
paragraph (e)(i)(A), (e)(i)(B) or (e)(ii) hereof;
u) the Optional Redemption Price, the Change of Control Call Price or the
Mandatory Redemption Price, as the case may be;
v) whether all or less than all the outstanding shares of the Preferred Stock
are to be redeemed and the total number of shares of the Preferred Stock being
redeemed;
w) the date fixed for redemption;
x) that the Holder is to surrender to the Corporation, in the manner, at the
place or places and at the price designated, such Holder's certificate or
certificates representing the shares of Preferred Stock to be redeemed; and
y) that dividends on the shares of the Preferred Stock to be redeemed shall
cease to accrue on such Redemption Date unless the Corporation defaults in the
payment of the Optional Redemption Price, the Change of Control Call Price or
the Mandatory Redemption Price, as the case may be.
z) Each Holder of shares of Preferred Stock shall surrender the
certifi cate or certificates representing such shares to the Corporation, duly
endorsed (or otherwise in proper form for transfer, as determined by the
Corporation), in the manner and at the place designated in the Redemption
Notice, and on the Redemption Date the full Optional Redemption Price, the
Change of Control Call Price or the Mandatory Redemption Price, as the case may
be, for such shares shall be payable in cash to the Person whose name appears on
such certificate or certificates as the owner thereof, and each surrendered
certificate shall be canceled and retired. In the event that less than all of
the shares represented by any such certificate are redeemed, a new certificate
shall be issued representing the unredeemed shares.
aa) On the Redemption Date, unless the Corporation defaults in the
payment in full of the applicable redemption price, dividends on the Preferred
Stock called for redemption shall cease to accrue, and all rights of the Holders
of redeemed shares shall terminate with respect thereto, other than the right to
receive the Optional Redemption Price, the Change of Control Call Price or the
Mandatory Redemption Price, as the case may be, without interest; provided,
however, that if a notice of redemption shall have been given as provided in
paragraph (iii)(A) above and the funds necessary for redemption (including an
amount in respect of all dividends that will accrue to the Redemption Date)
shall have been irrevocably deposited in trust for the equal and ratable benefit
for the Holders of the shares to be redeemed, then, at the close of business on
the day on which such funds are segregated and set aside, the Holders of the
shares to be redeemed shall cease to be stockholders of the Corporation and
shall be entitled only to receive the Optional Redemption Price, the Change of
Control Call Price or the Mandatory Redemption Price, as the case may be,
without interest.
ab) Voting Rights.
ac) The Holders of Preferred Stock, except as otherwise
required under Delaware law or as set forth in this paragraph (f), shall not be
entitled or permitted to vote on any matter required or permitted to be voted
upon by the stockholders of the Corporation.
ad) If (a) dividends on the Preferred Stock are in arrears and
unpaid (after February 15, 2004, in cash) for six quarterly periods (whether or
not consecutive), (b) the Corporation fails to effect a redemption of the
Preferred Stock when required by, and in accordance with, paragraph (e)(ii) or
(c) the Corporation fails to make an offer to purchase all of the outstanding
shares of Preferred Stock following a Change of Control Triggering Event, if
such offer to purchase is required by paragraph (h), or fails to purchase all of
the shares of Preferred Stock validly tendered pursuant thereto (each such event
described in clauses (a) through (c) above being referred to herein as a "Voting
Rights Triggering Event"), then the number of directors constituting the Board
of Directors of the Corporation will be increased by two and the holders of the
majority of the then outstanding shares of Preferred Stock, voting separately as
a class, will be entitled to elect the two additional directors. Such voting
rights will continue until such time as, in the case of a default under clause
(a), all accrued dividends on the Preferred Stock are paid in full and, in all
other cases, any failure, breach or default referred to in clause (b) or (c) is
remedied, at which time the term of any directors elected pursuant to the
provisions of this paragraph shall immediately terminate. Any vacancy occurring
in the office of a director elected by the Holders may be filled by the
remaining director elected by such holders unless and until such vacancy shall
be filled by such holders. Regardless of the number of Voting Rights Triggering
Events, in no event shall the Holders have the right to elect and have serve
more than two members of the Board of Directors of the Corporation at any one
time.
At any time after voting power to elect directors shall have become
vested and be continuing in the Holders of shares of the Preferred Stock
pursuant to this paragraph (f)(ii), or if vacancies shall exist in the offices
of directors elected by the Holders of shares of the Preferred Stock, a proper
officer of the Corporation may, and upon the written request of the Holders of
record of at least 10% of the shares of Preferred Stock then outstanding
addressed to the Secretary of the Corporation shall, call a special meeting of
the Holders of Preferred Stock, for the purpose of electing the directors which
such Holders are entitled to elect. If such meeting shall not be called by the
proper officer of the Corporation within 20 days after personal service of said
written request upon the Secretary of the Corporation, or within 20 days after
mailing the same within the United States by certified mail, addressed to the
Secretary of the Corporation at its principal executive offices, then the
Holders of record of at least 20% of the outstanding shares of the Preferred
Stock may designate in writing one of their number to call such meeting at the
expense of the Corporation, and such meeting may be called by the Person so
designated upon the notice required for the annual meetings of stockholders of
the Corporation and shall be held at the place for holding the annual meetings
of stockholders or such other place in the United States as shall be designated
in such notice. Notwithstanding the foregoing, no such special meeting shall be
called if any such request is received less than 30 days before the date fixed
for the next ensuing annual or special meeting of stockholders of the
Corporation. Any Holder of shares of the Preferred Stock so designated shall
have, and the Corporation shall provide, access to the lists of Holders of
shares of the Preferred Stock for purposes of calling a meeting pursuant to the
provisions of this paragraph (f)(ii).
ae) The Corporation shall not, without the affirmative vote or
consent of Holders of a majority of the shares of Preferred Stock then
outstanding, voting or consenting, as the case may be, separately as one class,
given in person or by proxy, either in writing or by resolution adopted at an
annual or special meeting, (x) create, authorize or issue any class of Senior
Securities or Parity Securities or (y) amend the Certificate of Designation so
as to affect adversely the specified rights, preferences, privileges or voting
rights of holders of Preferred Stock or authorize the issuance of any additional
shares of Preferred Stock (other than in payment of dividends on the Preferred
Stock); provided, however, that the Corporation may, without the approval of any
Holders, issue or have outstanding shares of Parity Securities (other than
Disqualified Capital Stock) issued from time to time in exchange for, or all of
the proceeds of which are used to redeem or repurchase, any or all of the shares
of Preferred Stock. The Holders of a majority of the outstanding shares of
Preferred Stock, voting or consenting, as the case may be, separately as one
class, may waive compliance with any provision of the Certificate of
Designation. Except as set forth in this paragraph (f)(iii), neither (a) the
creation, authorization or issuance of any shares of Junior Securities, Parity
Securities or Senior Securities, including the designation of a series thereof
within the existing class of Preferred Stock, nor (b) the increase or decrease
in the amount of authorized capital stock of any class, including any preferred
stock, shall require the consent of any Holders or shall be deemed to affect
adversely the rights, preferences, privileges or voting rights of shares of
Preferred Stock.
<PAGE> 5
af) Without the affirmative vote or consent of Holders of a
majority of the issued and outstanding shares of Preferred Stock, voting or
consenting, as the case may be, as one class, given in person or by proxy,
either in writing or by resolution adopted at an annual or special meeting, the
Corporation shall not, in a single transaction or series of related
transactions, consolidate or merge with or into, or sell, assign, transfer,
lease, convey or otherwise dispose of all or substantially all of its assets to,
another Person or adopt a plan of liquidation unless: (A) either (1) the
Corporation is the surviving or continuing Person or (2) the Person (if other
than the Corporation) formed by such consolidation or into which the Corporation
is merged or the Person that acquires by conveyance, transfer or lease the
properties and assets of the Corporation as an entirety or substantially as an
entirety or in the case of a plan of liquidation, the Person to which assets of
the Corporation have been transferred, shall be a corporation, partnership or
trust organized and existing under the laws of the United States or any State
thereof or the District of Columbia; (B) the Preferred Stock shall be converted
into or exchanged for and shall become shares of such successor, transferee or
resulting Person, having in respect of such successor, transferee or resulting
Person the same powers, preferences and relative, participating, optional or
other special rights and the qualifications, limitations or restrictions thereon
that the Preferred Stock had immediately prior to such transaction, and (C) the
Corporation has delivered to the transfer agent for the Preferred Stock prior to
the consummation of the proposed transaction an Officers' Certificate and an
Opinion of Counsel, each stating that such consolidation, merger or transfer
complies with the terms hereof and that all conditions precedent herein relating
to such transaction have been satisfied. For purposes of the foregoing, the
transfer (by lease, assignment, sale or otherwise, in a single transaction or
series of related transactions) of all or substantially all of the properties or
assets of one or more subsidiaries of the Corporation, the Capital Stock of
which constitutes all or substantially all of the properties and assets of the
Corporation shall be deemed to be the transfer of all or substantially all of
the properties and assets of the Corporation.
ag) On or prior to the Exchange Date, the Corporation shall
not amend or modify the form of Indenture (except as expressly provided therein
in respects of amendments without the consent of holders of Subordinated
Debentures) without the affirmative vote or consent of Holders of at least a
majority of the shares of Preferred Stock then outstanding, voting or
consenting, as the case may be, as one class, given in person or by proxy,
either in writing or by resolution adopted at an annual or special meeting.
ah) In any case in which the Holders shall be entitled to vote
as described herein or pursuant to Delaware law, each Holder shall be entitled
to one vote for each share of Preferred Stock held by such Holder.
ai) Exchange.
aj) Requirements. On any Dividend Payment Date, the Corpora
tion may, at its option, exchange the Preferred Stock, in whole but not in part,
for the Subordinated Debentures; provided, however, that any such exchange may
only be made if on or prior to the date of such exchange (i) the Corporation has
paid all accrued dividends on the Preferred Stock (including the dividends
payable on the Exchange Date) and there shall be no contractual impediment to
such exchange; (ii) there shall be funds legally available sufficient therefor;
(iii) the Indenture has been qualified under the Trust Indenture Act of 1939, as
amended, if required at the time of such exchange for public indentures; and
(iv) the Corporation shall have delivered an Officers' Certificate and an
Opinion of Counsel to the effect that all conditions to be satisfied prior to
such exchange have been satisfied. Holders of Preferred Stock so exchanged will
be entitled to receive $1.00 in principal amount of Subordinated Debentures for
each $1.00 of liquidation preference of Preferred Stock held by such holder at
the time of exchange. In connection with any such exchange, dividends on shares
of Preferred Stock exchanged which have accrued on or prior to February 15, 2004
which have not been paid as of the Exchange Date shall be paid, at the
Corporation's option, in cash, in additional Subordinated Debentures in an
equivalent principal amount of such accrued and unpaid dividends or in a
combination of the foregoing. Dividends on any shares of Preferred Stock
accruing after February 15, 2004 which have not been paid as of the Exchange
Date must be paid in cash on the Exchange Date. On the Exchange Date, all
dividends on the Preferred Stock will cease to accrue. Subordinated Debentures
issued in exchange for Preferred Stock will be issued in principal amounts of
$1,000 and integral multiples thereof to the extent possible, and will also be
issued in principal amounts of less than $1,000 so that each holder of Preferred
Stock will receive certificates representing the entire amount of Subordinated
Debentures to which its shares of Preferred Stock entitle it; provided, however,
that the Corporation may, at its option, pay cash in lieu of issuing a
Subordinated Debenture in a principal amount less than $1,000.
<PAGE> 6
ak) Procedures. The Corporation shall send by first-class
mail, postage prepaid, to each Holder of record on the record date fixed for
such exchange of Preferred Stock, at such Holder's address as the same appears
on the stock books of the Corporation, written notice (the "Exchange Notice") of
its intention to ex change the Preferred Stock for Subordinated Debentures at
least 30 and not more than 60 days prior to the Exchange Date; provided,
however, that no failure to give such notice nor any deficiency therein shall
affect the validity of the procedure for the exchange of any shares of Preferred
Stock to be exchanged except as to the Holder or Holders to whom the Corporation
has failed to give said notice or to whom such notice was defective. Each
Exchange Notice must state (i) the Exchange Date, (ii) the place or places where
certificates for shares of Preferred Stock are to be surrendered for exchange
into Subordinated Debentures, (iii) that dividends on the shares of Preferred
Stock to be exchanged will cease to accrue on the Exchange Date whether or not
certificates for shares of Preferred Stock are surrendered for exchange on such
Exchange Date unless the Corporation shall default in the delivery of
Subordinated Debentures and (iv) that interest on the Subordinated Debentures
shall accrue from the Exchange Date whether or not certificates for shares of
Preferred Stock are surrendered for exchange on such Exchange Date.
al) On or before the Exchange Date, each Holder shall surrender the
certificate or certificates representing such shares of Preferred Stock, in the
manner and at the place designated in the Exchange Notice. The Corporation shall
cause the Subordinated Debentures to be executed on the Exchange Date and, upon
surrender in accordance with the Exchange Notice of the certificates for any
shares of Preferred Stock so exchanged, duly endorsed (or otherwise in proper
form for transfer, as determined by the Corporation), such shares shall be
exchanged by the Corporation for Subordinated Debentures. The Series A Preferred
shall be exchanged for Series A Debentures and the Series B Preferred shall be
exchanged for Series B Debentures. The Corporation shall pay interest on the
Subordinated Debentures at the rate and on the dates specified therein from the
Exchange Date.
am) If notice has been mailed as aforesaid, and if before the
Exchange Date specified in such notice (1) the Indenture shall have been duly
executed and delivered by the Corporation and the trustee thereunder and (2) all
Subordinated Debentures necessary for such exchange shall have been duly
executed by the Corporation and delivered to the trustee under the Indenture
with irrevocable instructions to authenticate the Subordinated Debentures
necessary for such exchange, then the rights of the Holders of Preferred Stock
so exchanged as stockholders of the Corporation shall cease (except the right to
receive Subordinated Debentures, an amount in cash equal to the amount of
accrued and unpaid dividends to the Exchange Date and, if the Corporation so
elects, cash in lieu of any Subordinated Debenture with a principal amount not
an integral multiple of $1,000), and the Person or Persons entitled to receive
the Subordinated Debentures issuable upon exchange shall be treated for all
purposes as the registered holder or holders of such Subordinated Debentures as
of the Exchange Date.
an) No Exchange in Certain Cases. Notwithstanding the forego
ing provisions of this paragraph (g), the Corporation shall not be entitled to
exchange the Preferred Stock for Subordinated Debentures if such exchange, or
any term or provision of the Indenture or the Subordinated Debentures, or the
performance of the Corporation's obligations under the Indenture or the
Subordinated Debentures, shall violate any applicable law or if, at the time of
such exchange, the Corporation is insolvent or if it would be rendered insolvent
by such exchange.
ao) Change of Control Put.
ap) In the event of a Change of Control Triggering Event, the
Corporation shall notify each Holder in writing of such occurrence and shall
make an offer to purchase (the "Change of Control Offer") such Holder's shares
of Preferred Stock at a purchase price in cash equal to 101% of the liquidation
preference thereof plus accrued and unpaid dividends per share (including an
amount in cash equal to a prorated dividend for the period from the Dividend
Payment Date immediately prior to the Change of Control Payment Date to the
Change of Control Payment Date (as defined herein)).
aq) Not later than 90 days following the date upon which the
Change of Control Triggering Event occurred, the Corporation shall send, by
first class mail, postage prepaid, a notice to each Holder of Preferred Stock at
such Holder's last registered address with a copy to the Registrar, which notice
shall govern the terms of the Change of Control Offer. The notice to the Holders
shall contain all instructions and materials necessary to enable such Holders to
tender Preferred Stock pursuant to the Change of Control Offer. Such notice
shall state:
ar) that a Change of Control has occurred, that the Change of Control Offer is
being made pursuant to this paragraph (h) and that all Preferred Stock validly
tendered and not withdrawn will be accepted for payment;
as) the purchase price (including the amount of accumulated and unpaid
dividends, if any) and the purchase date (which shall be no earlier than 30 days
nor later than 60 days from the date such notice if mailed, other than as may be
required by law) (the "Change of Control Payment Date"); provided, however, that
there shall be no right of any Holder to require the Corporation to purchase
such Holder's shares of Preferred Stock until the earlier of the date on which
all of the Deferred Coupon Notes have been repaid or have matured;
at) that any shares of Preferred Stock not
tendered will continue to accrue dividends;
au) that, unless the Corporation defaults in making payment therefor, any share
of Preferred Stock accepted for payment pursuant to the Change of Control Offer
shall cease to accrue dividends after the Change of Control Payment Date;
av) that Holders electing to have any shares of Preferred Stock purchased
pursuant to a Change of Control Offer will be required to surrender the
certificate or certificates representing such shares, properly endorsed for
transfer together with such customary documents as the Corporation and the
transfer agent may reasonably require, in the manner and at the place specified
in the notice prior to the close of business on the Business Day prior to the
Change of Control Payment Date;
aw) that Holders will be entitled to withdraw their election if the Corporation
receives, not later than five Business Days prior to the Change of Control
Payment Date, a telegram, telex, facsimile transmission or letter setting forth
the name of the Holder, the number of shares of Preferred Stock the Holder
delivered for purchase and a statement that such Holder is withdrawing his
election to have such shares of Preferred Stock purchased;
ax) that Holders whose shares of Preferred Stock are purchased only in part will
be issued a new certificate representing the unpurchased shares of Preferred
Stock; and
ay) the circumstances and relevant facts
regarding such Change of Control Triggering Event.
az) Each Change of Control Offer shall remain open for at
least 20 Business Days or such longer period as may be required by law. The
Corporation shall comply with Rules 13e-4 and 14e-4 and 14e-1 under the Exchange
Act and other provisions of state and federal securities laws and regulations,
to the extent such laws and regulations are applicable to the repurchase of the
Preferred Stock in connection with a Change of Control Offer.
ba) On the Change of Control Payment Date the Corporation
shall (A) accept for payment the shares of Preferred Stock validly tendered
pursuant to the Change of Control Offer, (B) pay to the Holders of shares so
accepted the purchase price therefor in cash and (C) cancel and retire each
surrendered certificate. Unless the Corporation defaults in the payment for the
shares of Preferred Stock tendered pursuant to the Change of Control Offer,
dividends will cease to accrue with respect to the shares of Preferred Stock
tendered and all rights of Holders of such tendered shares will terminate,
except for the right to receive payment therefor, on the Change of Control
Payment Date.
bb) Notwithstanding the foregoing, prior to the mailing of the
notice of a Change of Control Offer referred to above, the Corporation shall (i)
within 60 days following a Change of Control Triggering Event, either (a) repay
in full all indebtedness for borrowed money of the Corporation, and terminate
all commitments, under the Potential Credit Facilities, in each case, to the
extent required upon a change of control pursuant to the terms thereof (or offer
to repay in full all such indebtedness and terminate all such commitments and
repay all such indebtedness owed to each lender which has accepted such offer
and terminate all such commitments of each such lender), or (b) obtain the
requisite consents under the Potential Credit Facilities to permit the
repurchase of the Preferred Stock as provided above and (ii) within 90 days
following a Change of Control Triggering Event, purchase all Senior Notes (or
permitted refinancings thereof) which it is required to purchase by reason of
such change of control pursuant to the provisions of the indenture therefor. The
Corporation shall first comply with the covenant described in the immediately
preceding sentence before it shall be required to repurchase Preferred Stock
pursuant to the provisions described above.
bc) Conversion or Exchange. The Holders of shares of Preferred Stock
shall not have any rights hereunder to convert such shares into or exchange such
shares for shares of any other class or classes or of any other series of any
class or classes of Capital Stock of the Corporation.
bd) Preemptive Rights. No shares of Preferred Stock shall have any
rights of preemption whatsoever as to any securities of the Corporation, or any
warrants, rights or options issued or granted with respect thereto, regardless
of how such securities or such warrants, rights or options may be designated,
issued or granted.
be) Reissuance of Preferred Stock. Shares of Preferred Stock that
have been issued and reacquired in any manner, including shares purchased or
redeemed or exchanged, shall (upon compliance with any applicable provisions of
the laws of Delaware) have the status of authorized and unissued shares of
Preferred Stock
undesignated as to series and may be redesignated and reissued as part of any
series of Preferred Stock, provided that any issuance of such shares as
Preferred Stock must be in compliance with the terms hereof.
bf) Business Day. If any payment, redemption, purchase or exchange
shall be required by the terms hereof to be made on a day that is not a Business
Day, such payment, redemption, purchase or exchange shall be made on the
immediately succeeding Business Day.
bg) Reports. Whether or not required by the rules and regulations of
the Commission, so long as any Preferred Stock is outstanding, the Corporation
will file with the Commission and furnish to the Holders of Preferred Stock 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 in the
event the Corporation becomes a corporation organized under the laws of England
and Wales), 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 Corporation's certified independent accountants,
in each case, as required by the rules and regulations of the Commission as in
effect on the Issue Date.
bh) Definitions. As used in this Certificate of Designation, the
following terms shall have the following meanings (with terms defined in the
singular having comparable meanings when used in the plural and vice versa),
unless the context otherwise requires:
"Accrual Period" shall have the meaning ascribed to it
in paragraph (c)(iii).
"Applicable Premium" means, with respect to any share of Preferred Stock,
the greater of (x) 1.0% of the liquidation preference thereof and (y) the
excess, if any, of (a) the present value of dividends accruing until and
including February 15, 2002 (assuming payment thereof in cash on the applicable
Dividend Payment Date) and the liquidation preference and any applicable
optional redemption premium therefor payable on such date for such share (in
each case assuming payment thereof on February 15, 2002), computed using a
discount rate equal to the Treasury Rate plus 100 basis points over (b) the sum
of the liquidation preference of such share plus accrued and unpaid dividends to
the redemption date.
"Board of Directors" shall have the meaning ascribed to it in the first
paragraph of this Resolution.
"Board Resolution" means a copy of a resolution certified pursuant to an
Officers' Certificate to have been duly adopted by the Board of Directors of the
Corporation and to be in full force and effect, and delivered to the Holders.
"Business Day" means any day except a Saturday, a Sunday, or any day on
which banking institutions in New York, New York are required or authorized by
law or other governmental action to be closed.
"Capital Stock" means any and all shares, interests, participations or
other equivalents (however designated) of capital stock of the Corporation.
"Certificate of Incorporation" shall have the meaning ascribed to it in
the first paragraph of this Resolution.
"Change of Control" means (i) the sale, lease or transfer of all or
substantially all of the assets of the Corporation 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 Corporation of a plan of
liquidation or dissolution of the Corporation, (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 Corporation 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 Corporation 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 Corporation'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 Corporation 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 Corporation's Board of Directors then in office.
"Change of Control Call Event" means the entering by the Corpora tion into
a binding agreement providing for a merger, consolidation or business
combination of the Corporation with another corporation, association or other
entity, which agreement provides that upon consummation thereof that the holders
of the Common Stock will own less than 80% of the voting and economic power of
the entity, if any, in which holders of the Common Stock will hold equity
interests immediately following consummation of any such transaction.
"Change of Control Call Price" shall have the meaning ascribed to it in
paragraph (e)(ii)(B).
"Change of Control Offer" shall have the meaning
ascribed to it in paragraph (h)(i).
"Change of Control Payment Date" shall have the meaning ascribed to it in
paragraph (h)(ii)(B).
"Change of Control Triggering Event" means the occurrence of both a Change
of Control and a Ratings Decline.
"Commission" means the Securities and Exchange
Commission.
"Common Stock" means any and all shares, interests or other participations
in, and other equivalents (however designated and whether voting or non-voting)
of, the Corporation's common stock, whether outstanding on the Issue Date or
issued after the Issue Date, and includes, without limitation, all series and
classes of such common stock.
"Corporation" shall have the meaning ascribed to it in the first para
graph of this Resolution.
"Deferred Coupon Notes" means (i) the Corporation's 10_%
Senior Deferred Coupon Notes Due 2003, (ii) the Corporation's 12 3/4% Senior
Deferred Coupon Notes Due 2005 and (iii) the Corporation's 11 1/2% Senior
Deferred Coupon Notes Due 2006.
"Disqualified Capital 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 February
15, 2009.
"Dividend Payment Date" shall have the meaning ascribed
to it in paragraph (c)(i).
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
"Exchange Date" means the date of issuance of the Subordinated Debentures
in accordance with paragraph (g) hereof.
"Exchange Notice" shall have the meaning ascribed to it
in paragraph (g)(ii) hereof.
"Exchange Offer Registration Statement" shall have the meaning ascribed to
it in the Registration Rights Agreement.
"5% Preferred Stock" means the 5% Non-voting Convertible Pre ferred Stock,
Series A, of the Corporation.
"GAAP" means generally accepted accounting principles as in effect in the
United States from time to time.
"Holder" means a holder of shares of Preferred Stock as reflected in the
stock books of the Corporation.
"Indenture" means the indenture governing the Subordinated Deben tures to
be entered into between the Corporation and The Chase Manhattan Bank, as
trustee, on the Exchange Date, substantially in the form on file with the
secretary of the Corporation, which form is available to each Holder without
charge upon request.
"Investment Grade" means BBB- or higher by S&P or Baa3 or higher by
Moody's. In the event that the Corporation shall be permitted to select any
other Rating Agency, the equivalent of such ratings of S&P and Moody's used by
such other Rating Agency shall be used.
<PAGE> 7
"Issue Date" means February 12, 1997, the date of original issuance of the
Preferred Stock.
"Junior Preferred Stock" means the 1,000,000 shares of Series A Junior
Participating Preferred Stock designated and reserved for issuance in the
Corporation's Certificate of
Incorporation.
"Junior Securities" shall have the meaning ascribed to
it in paragraph (b) hereof.
"Mandatory Redemption Price" shall have the meaning ascribed to it in
paragraph (e)(ii) hereof.
"Moody's" means Moody's Investors Service, Inc. and its
successors.
"Officers' Certificate" means a certificate signed by two officers or by
an officer and either an Assistant Treasurer or an Assistant Secretary of the
Corporation which certificate shall include a statement that, in the opinion of
such signers all conditions precedent to be performed by the Corporation prior
to the taking of any proposed action have been taken. In addition, such
certificate shall include (i) a statement that the signatories have read the
relevant covenant or condition, (ii) a brief statement of the nature and scope
of such examination or investigation upon which the statements are based, (iii)
a statement that, in the opinion of such signatories, they have made such
examination or investigation as is reasonably necessary to express an informed
opinion and (iv) a statement as to whether or not, in the opinion of the
signatories, such relevant conditions or covenants have been complied with.
"Opinion of Counsel" means an opinion of counsel that, in such counsel's
opinion, all conditions precedent to be performed by the Corporation prior to
the taking of any proposed action have been taken. Such opinion shall also
include the statements called for in the second sentence under the definition of
"Officers' Certificate."
"Optional Redemption Price" shall have the meaning ascribed to it in
paragraph (e)(i)(A) hereof.
<PAGE> 8
"Parity Securities" shall have the meaning ascribed to
it in paragraph (b) hereof.
"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.
"Person" means an individual, partnership, corporation, unincorpo rated
organization, trust or joint venture, or a governmental agency or political
subdivision thereof.
"Potential Credit Facilities" has the meaning ascribed to such term in
Corporation's Offering Memorandum dated February 7, 1997 relating to the
offering of the Senior Notes and the Preferred Stock.
"Preferred Stock" shall have the meaning ascribed to it
in paragraph (a) hereof.
"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 Securities publicly available, a
nationally recognized securities rating agency or agencies, as the case may be,
selected by the Corporation, 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 follow ing
categories: BB, B, CCC, CC, C and D (or equivalent successor categories), (ii)
with respect to Moody's, and 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 Securities 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 Corporation 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 Corporation or any person to effect
a Change of Control (which period shall be extended so long as the rating of any
of the Corporation'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 Corporation's debt securities are rated by both of the Rating Agencies on
the Rating Date as Investment Grade, the rating of such debt securities by
either of the Rating Agencies shall be below Investment Grade, (b) in the event
that any of the Corporation'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 debt securities by both of the Rating Agencies shall be below Investment
Grade, or (c) in the event any of the Corporation's debt securities are rated
below Investment Grade by both of the Rating Agencies on the Rating Date, the
rating of such debt securities by either Rating Agency shall be decreased by one
or more gradations (including gradations within Rating Categories as well as
between Rating Categories).
"Redemption Date," with respect to any shares of Preferred Stock, means
the date on which such shares of Preferred Stock are redeemed by the
Corporation.
"Redemption Notice" shall have the meaning ascribed to it in para graph
(e)(iii) hereof.
"Registered Exchange Offer" shall have the meaning ascribed to such term
in the Registration Rights Agreement.
"Registrar" means Continental Stock Transfer & Trust
Company, as transfer agent and Registrar for the Preferred
Stock.
"Registration Defaults" shall have the meaning ascribed
to it in paragraph (c)(iii).
"Registration Rights Agreement" means the Registration Rights Agreement
relating to the Preferred Stock and the Subordinated Debentures dated as of
February 12, 1997 between the Corporation and Donaldson, Lufkin & Jenrette
Securities Corporation, Chase Securities Inc. and Merrill Lynch, Pierce, Fenner
& Smith Incorporated, a copy of which is available to each Holder without charge
upon request from the secretary of the Corporation.
"S&P" means Standard & Poor's Ratings Group and its
successors.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Senior Notes" means the 10% Senior Notes Due 2007 of the Corpo ration.
"Senior Securities" shall have the meaning ascribed to
it in paragraph (b) hereof.
"Series A Debentures" means the 13% Subordinated Exchange Debentures Due
2009 issuable under the Indenture.
"Series B Debentures" means the 13% Series B Subordinated Ex change
Debentures Due 2009 issuable under the Indenture.
"Series A Preferred" shall have the meaning ascribed to it in para graph
(a) hereof.
"Series B Preferred" shall have the meaning ascribed to it in para graph
(a) hereof.
<PAGE> 9
"Shelf Registration Statement" shall have the meaning ascribed to such
term in the Registration Rights Agreement.
"Special Dividends" shall have the meaning ascribed to
it in para graph (c)(iii).
"Subordinated Debentures" means the Series A Debentures
and the Series B Debentures.
"Transfer Agent" means Continental Stock Transfer &
Trust Com pany, as Transfer Agent for the Preferred Stock.
"Transfer Restricted Securities" shall have the meaning ascribed to it in
the Registration Rights Agreement.
"Treasury Rate" means the yield to maturity at the time of computa tion of
United States Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release H.15 (519)
which has become publicly available at least two business days prior to the date
fixed for redemption of the Preferred Stock (or, if such Statistical Release is
no longer published, any publicly available source of similar data)) most nearly
equal to the then remaining period to the date scheduled for the mandatory
redemption of the Preferred Stock; provided, however, that if such period is not
equal to the constant maturity of a United States Treasury security for which a
weekly average yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the weekly
average yields of United States Treasury securities for which such yields are
given, except that if the period to the date scheduled for the mandatory
redemption of the Preferred Stock is less than one year, the weekly average
yield on actually traded United States Treasury securities adjusted to a
constant maturity of one year shall be used.
"Voting Rights Triggering Event" shall have the meaning ascribed to it in
paragraph (f)(i) hereof.
0228255.01-New YorkS5A
<PAGE> 10
<PAGE> 11
Exhibit B
9.90% NON-VOTING MANDATORILY REDEEMABLE
PREFERRED STOCK, SERIES A
(1) Designation; Number of Shares. The designation of the series of
Preferred Stock, par value $.01 per share, of the Company created hereby shall
be "9.90% Non-voting Mandatorily Redeemable Preferred Stock, Series A"
(including, in the case of any reclassification, recapitalization, or other
change to such Preferred Stock or, in the case of a consolidation or merger of
the Company with or into another Person affecting such Preferred Stock, such
capital stock to which a holder of such Preferred Stock shall be entitled upon
the occurrence of such event, the "Mandatorily Redeemable Preferred Stock"). The
authorized number of shares of Mandatorily Redeemable Preferred Stock shall be
125,280, which number may from time to time be increased or decreased (but not
below the number then outstanding). Each share of Mandatorily Redeemable
Preferred Stock shall have a stated value of $1,000 (the "Stated Value").
Any shares of Mandatorily Redeemable Preferred Stock redeemed or
otherwise acquired by the Company shall be retired and shall resume the status
of authorized and unissued shares of Preferred Stock, without designation as to
series, until such shares are once more designated as part of a particular
series of Preferred Stock by the Board of Directors.
(2) Certain Definitions. Unless the context otherwise requires, the
terms defined in this paragraph (2) shall have, for all purposes of this
Certificate of Designations, the meanings herein specified:
"Applicable Price" shall mean the aggregate of (A) in the event of a
Reorganization in which the holders of Common Stock receive cash, the amount of
such cash receivable by the holder of one share of Common Stock (as such share
is in effect immediately prior to the consummation of such Reorganization); and
(B) in the event of a Reorganization in which the holders of Common Stock
receive securities or other property which are traded on an established market
(within the meaning of Treasury Regulation 1.1273-2(f)(1) of the Internal
Revenue Code of 1986, as in effect on September 30, 1990), the average (or if
there be more than one security or item of property the sum of the averages) of
the daily Trading Prices of such securities and/or property receivable by the
holder of one share of Common Stock (as such share is in effect immediately
prior to such consummation) for the period of ten consecutive Trading Days
ending on the Trading Day immediately preceding date of occurrence of the
Reorganization, appropriately adjusted to take into account any stock dividend
on such security or property, or any subdivision, split, combination,
reclassification of such security or property that occurs or the "ex" date for
which occurs on or prior to such date.
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"Average Market Price" on any Determination Date, shall mean the
average of the daily Closing Prices for the period of 10 consecutive Trading
Days, ending on the Trading Day immediately preceding such Determination Date,
appropriately adjusted to take into account any stock dividend on the Common
Stock or any subdivision, split, combination or reclassification of the Common
Stock that occurs, or the date on which "ex-dividend" trading commences, during
the period following the first Trading Day in such ten-Trading Day period to and
including the Determination Date.
"Board" shall mean the Board of Directors of the Company, and,
unless the context indicates otherwise, shall also mean, to the extent permitted
by law, any committee thereof authorized, with respect to any particular matter,
to exercise the power of the Board of Directors of the Company with respect to
such matter.
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which banking institutions in New York, New York and London, England are
authorized to close or not obligated by law or executive order to open.
"Closing Price" shall mean, on any day:
(i) the average between the high and low reported sale price of a
share of Common Stock on and as reported by the Nasdaq Stock Market's National
Market on such day;
(ii) if the primary trading market for the Common Stock on such day
is not the Nasdaq Stock Market's National Market, then the closing sale price
regular way on such day, or, in case no such sale takes place on such day, the
average of the reported closing bid and asked prices regular way on such day, in
either case as reported by the Nasdaq System, the National Quotations Bureau,
Inc. or a compara ble service;
(iii) if the Closing Price on such day is not available pursuant to
one of the methods specified above, then the average of the bid and asked prices
for the Common Stock on such day as furnished by any New York Stock Exchange
member firm selected from time to time by the Board for that purpose; or
(iv) if the Closing Price on such day is not available pursuant to
the method specified in (iii) above, the determination of Closing Price shall be
deter mined in good faith by the Board exercising its reasonable discretion.
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<PAGE> 13
"Common Stock" shall mean the shares of common stock, par value
$0.01 per share, of the Company, which term shall include, where appropriate, in
the case of any reclassification, recapitalization or other change in the Common
Stock, or in the case of a consolidation or merger of the Company with or into
another Person affecting the Common Stock, such capital stock to which a holder
of Com mon Stock shall be entitled upon the occurrence of such event.
"Common Stock Dividend Amount" shall have the meaning set forth in
paragraph (3) (c).
"Convertible Preferred Stock" shall mean the series of Preferred
Stock of the Company having the terms set forth in the draft of Convertible
Preferred Stock terms attached hereto, as completed pursuant to paragraph (5)
hereof.
"Convertible Preferred Stock Issue Price" shall have the meaning set
forth in paragraph (3)(d) and shall be computed pursuant to paragraph (5).
"Convertible Securities" shall mean evidences of indebtedness or
shares of stock which are, at the option of the holder hereof, convertible into
or exchangeable for shares of Common Stock.
"Current Market Price" on the Determination Date for any issuance of
Options or Convertible Securities or any distribution in respect of which the
Current Market Price is being calculated, shall mean the average of the daily
Closing Prices of the Common Stock for the period of 10 consecutive Trading Days
ending on the last full Trading Day before such Determination Date.
"Determination Date" shall mean: (i) in the case of a dividend
payment, the record date for such dividend payment, (ii) in the case of a
redemption payment, the date of the notice of the Redemption Date and (iii) in
the case of a Reorganization, the date the Reorganization occurs.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time, or any successor statute, and the rules and
regulations promulgated thereunder.
"Fixed Price", on any Determination Date with respect to the Convert
ible Preferred Stock, shall have the meaning assigned to such term in the
Certificate
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<PAGE> 14
of Designations relating to, and setting forth the terms of, the Convertible
Preferred Stock.
"Issue Date" shall mean September 22, 1998.
"JPPF" shall mean the Series A Junior Participating Preferred Stock
of the Company issuable upon exercise of the Rights pursuant to the Rights Agree
ment.
"Junior Stock" shall mean:
(i) each class or series of common stock of the Company, including,
without limitation, the Common Stock;
(ii) the JPPF issuable upon exercise of the Rights;
(iii) any other class or series of capital stock of the Company
hereafter created, other than (a) any class or series of Parity Stock (except to
the extent provided under clause (iv) hereof) and (b) any class or series of
Senior Stock, and
(iv) any class or series of Senior Stock or Parity Stock to the
extent that it ranks junior to the Mandatorily Redeemable Preferred Stock as to
dividend rights, rights of redemption or rights on liquidation, as the case may
be. For pur poses of clause (iii) above, a class or series of Senior Stock or
Parity Stock shall rank junior to the Mandatorily Redeemable Preferred Stock as
to dividend rights, rights of redemption or rights on liquidation if the holders
of shares of Mandatorily Redeem able Preferred Stock shall be entitled to
dividend payments, payments on redemption or payments of amounts distributable
upon dissolution, liquidation or winding up of the Company, as the case may be,
in preference or priority to the holders of shares of such class or series of
Senior Stock or Parity Stock.
"Liquidating Payment" shall mean an amount equal to the Liquidation
Preference of a share of Mandatorily Redeemable Preferred Stock or, if less, the
amount payable in respect of one share of Mandatorily Redeemable Preferred Stock
pursuant to paragraph (8)(a) upon the voluntary or involuntary liquidation,
dissolu tion or winding up of the affairs of the Company.
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<PAGE> 15
"Liquidating Payment Date" shall mean the date on which the Company
makes the aggregate Liquidating Payment to all holders of outstanding shares of
Mandatorily Redeemable Preferred Stock.
"Liquidation Preference" measured per share of the Mandatorily
Redeemable Preferred Stock, shall mean an amount equal to (a) the Stated Value
per share of Mandatorily Redeemable Preferred Stock, plus (b) for purposes of
determin ing the amount payable pursuant to paragraph (8) only, an amount equal
to all dividends accrued but unpaid on such share, whether or not such unpaid
dividends have been declared or there are funds of the Company legally available
for the payment of dividends, to the Liquidating Payment Date.
"Mandatorily Redeemable Preferred Stock" shall have the meaning set
forth in paragraph (1).
"Mandatory Redemption Price" shall have the meaning set forth in
paragraph (4)(b).
"Option" shall mean any right, option or warrant entitling the
holder thereof to subscribe for, purchase, or otherwise acquire Common Stock in
the Company (other than the Rights).
"Parity Stock" shall mean the Mandatorily Redeemable Preferred Stock
and any class or series of capital stock, whether now existing or hereafter
created, of the Company to the extent ranking on a parity basis with the
Mandatorily Redeemable Preferred Stock as to dividend rights, rights of
redemption or rights on liquidation. Capital stock of any class or series,
whether now or existing or hereafter created, shall rank on a parity as to
dividend, rights of redemption or rights on liquidation with the Mandatorily
Redeemable Preferred Stock, whether or not the dividend rates, dividend payment
dates, redemption or liquidation prices per share or sinking fund or mandatory
redemption provision, if any, are different from those of the Mandatorily
Redeemable Preferred Stock, if the holders of shares of such class or series
shall be entitled to dividend payments, payments on redemption of payments of
amounts distributable upon dissolution, liquidation or winding up of the Com
pany, as the case may be, in proportion to their respective accumulated and
accrued and unpaid dividends, redemption prices or liquidation prices,
respectively, without preference or priority, one over the other, as between the
holders of shares of such class or series and the holders of Mandatorily
Redeemable Preferred Stock. No class or series of capital stock that ranks
junior to the Mandatorily Redeemable Preferred Stock as to rights on liquidation
shall rank or be deemed to rank on a parity basis
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<PAGE> 16
with the Mandatorily Redeemable Preferred Stock as to dividend rights or rights
of redemption.
"Payment Record Date" shall have the meaning set forth in paragraph
(13).
"Person" shall mean any individual corporation, partnership, joint
venture, association, joint stock company, limited liability company, trust,
unincor porated organization, government or agency or political subdivision
thereof, or other entity, whether acting in an individual, fiduciary or other
capacity.
"Preferred Stock Dividend Amount" shall have the meaning set forth
in paragraph (3)(d).
"Redemption Agent" shall have the meaning set forth under paragraph
(4)(h).
"Redemption Date" as to any share of Mandatorily Redeemable
Preferred Stock, shall mean the date on which such share is redeemed by the Com
pany pursuant to paragraph (4).
"Redemption Notice" shall have the meaning set forth in paragraph
(4)(e).
"Redemption Price" shall have the meaning set forth in paragraph
(4)(a).
"Reorganization" shall mean any of the following events:
(i) any consolidation or merger of the Company with another entity
(other than a merger or consolidation in which the Company is the surviving or
continuing corporation and in which the Common Stock outstanding immediately
prior to the merger or consolidation remains unchanged),
(ii) the sale or other transfer of all or substantially all of its
assets to another entity.
(iii) any reorganization or reclassification of the Common Stock or
other equity securities of the Company, and
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<PAGE> 17
(iv) any statutory exchange of any shares of capital stock of the
Company with another corporation (other than a merger or consolidation in which
the Company is the surviving or continuing corporation and in which the Common
Stock outstanding immediately prior to the merger or consolidation remains un
changed).
"Reorganization Unit" means the kind or amount of securities, cash
or other property receivable upon consummation of a Reorganization in
substitution of or in exchange for a share of Common Stock as such share is in
effect immediately prior to such consummation (provided that if the kind or
amount of securities, cash or other property receivable upon consummation of
such Reorganization is not the same with respect to each such share, then the
kind and amount of securities, cash or other property which shall be deemed
receivable upon consummation of such Reorganization with respect to each such
share for purposes hereof shall be the kind and amount so receivable per share
by a plurality of such shares).
"Rights" means the rights issuable pursuant to the Rights Agreement.
"Rights Agreement" means the rights agreement, dated as of October
13, 1993, between the Company and Continental Transfer and Trust Company, as
rights agent.
"Securities Act" shall mean the Securities Act of 1933, as amended
from time to time, or any successor statute, and the rules and regulations
promul gated thereunder.
"Senior Stock" shall mean any class or series of capital stock of
the Company hereafter created to the extent ranking prior to the Mandatorily
Redeem able Preferred Stock as to dividend rights, rights of redemption or
rights on liquida tion. Capital stock of any class or series shall rank prior to
the Mandatorily Redeem able Preferred Stock as to dividend rights, rights of
redemption or rights on liquida tion if the holders of shares of such class or
series shall be entitled to dividend payments, payments on redemption or
payments of amounts distributable upon dissolution, liquidation or winding up of
the Company, as the case may be, in preference or priority to the holders of
shares of Mandatorily Redeemable Preferred Stock. No class or series of capital
stock than ranks on a parity basis with or junior to the Mandatorily Redeemable
Preferred Stock as to rights on liquidation shall rank or be deemed to rank
prior to the Mandatorily Redeemable Preferred Stock as to dividend rights or
rights of redemption, notwithstanding that the dividend rate, dividend payment
dates, sinking fund provisions, if any, or mandatory redemption
B-7
<PAGE> 18
provisions thereof are different from those of the Mandatorily Redeemable
Preferred Stock.
"Stated Value" shall have the meaning set forth in paragraph (1).
"Trading Day" shall mean a day on which the Nasdaq Stock Market's
National Market or, if different, the principal exchange on which the Common
Stock is quoted or traded is each open for the transaction of business.
"Trading Price" of a security or property for any day means the
closing sale price regular way on such day, or, in case no such sale takes place
on such day, the average of the reported closing bid and asked prices of such
security or property on such day on the applicable established market on which
such security or property is traded.
(3) DIVIDENDS.
(a) Payment. The holders of outstanding shares of Mandatorily
Redeemable Preferred Stock shall be entitled to receive, when, as and if
declared by the Board out of funds legally available therefor (without prejudice
to paragraph (3)(b)), cumulative dividends, in preference to dividends on any
Junior Stock, at the rate per annum of 9.90% of the Stated Value per share,
rounded to the nearest cent. Such dividends shall accrue from the Issue Date and
shall be payable on the date the Mandatorily Redeemable Preferred Stock is
redeemed pursuant to paragraph (4).
Dividends on the outstanding shares of Mandatorily Redeemable
Preferred Stock will accrue on a daily basis (without interest or compounding)
whether or not there are funds legally available for the payment of such
dividends and whether or not such dividends are declared. Dividends will cease
to accrue in respect of shares of Mandatorily Redeemable Preferred Stock on the
date of their redemption. No interest, or sum of money in lieu of interest,
shall be payable in respect of any accrued dividend payment.
(b) Declaration and Manner of Payment of Dividends. Any divi dends
may be paid, in the sole discretion of the Board: (i) in cash out of funds
legally available therefor; (ii) through the delivery of shares of Common Stock;
(iii) through the delivery of shares of Convertible Preferred Stock, or (iv)
through any combination of the foregoing forms of consideration elected by the
Board in its sole discretion. If any dividend declared by the Board is to be
paid, in whole or in part, through the delivery of shares of Common Stock or
Convertible Preferred Stock,
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<PAGE> 19
each holder of Mandatorily Redeemable Preferred Stock shall receive the same
proportion of cash and/or shares of Common Stock or Convertible Preferred Stock
(except for cash paid in lieu of fractional shares) delivered in payment of such
dividend to other holders of shares of Mandatorily Redeemable Preferred Stock.
(c) Payment of Dividends by Delivery of Common Stock. If the Company
elects to pay any dividend payment, in whole or in part, by delivery of shares
of Common Stock, the amount of such dividend payment to be paid per share of
Mandatorily Redeemable Preferred Stock in shares of Common Stock (the "Common
Stock Dividend Amount") shall be paid through the delivery to the holders of
record for such shares of Mandatorily Redeemable Preferred Stock on the record
date for such dividend payment (which shall be not more than 10 days prior to
the payment date) of a number of shares of Common Stock determined by dividing
the Common Stock Dividend Amount by the Average Market Price. No fractional
shares of Common Stock shall be delivered to a holder of shares of Mandatorily
Redeemable Preferred Stock, but the Company shall instead pay a cash adjustment
determined as provided in paragraph (9).
(d) Payment of Dividends by Delivery of Convertible Preferred Stock.
Subject to compliance with paragraph (5), if the Company elects to pay any
dividend payment, in whole or in part, by delivery of shares of Convertible
Preferred Stock, the amount of such dividend payment to be paid per share of
Mandatorily Redeemable Preferred Stock in shares of Convertible Preferred Stock
(the "Preferred Stock Dividend Amount") shall be paid through the delivery to
the holders of record for such shares of Mandatorily Redeemable Preferred Stock
on the record date for such dividend payment (which shall be not more than 10
days prior to the payment date) of a number of shares of Convertible Preferred
Stock determined by dividing the Preferred Stock Dividend Amount by the issue
price of the Convertible Preferred Stock as determined in accordance with
paragraph (5) (the "Convertible Preferred Stock Issue Price"). No fractional
shares of Convertible Preferred Stock shall be delivered to a holder of shares
of Mandatorily Redeemable Preferred Stock, but the Company shall instead pay a
cash adjustment determined as provided in paragraph (9).
(e) Prohibitions on Cash Dividends. Notwithstanding anything
contained in this Certificate to the contrary, but without effect on the accrual
thereof, no cash dividends on shares of Mandatorily Redeemable Preferred Stock
shall be declared by the Board or paid or set apart for payment by the Company
at such time as the terms and provisions of any agreement of the Company,
including, without limitation, any agreement, contract, indenture, bond, note,
debenture, guarantee or
B-9
<PAGE> 20
other instrument relating to or evidencing its indebtedness, prohibits such
declara tion, payment or setting apart for payment or provides that such
declaration, payment or setting apart for payment would constitute a breach
thereof or a default thereun der; provided, however, that nothing contained in
this paragraph (e) shall alter, limit or restrict the Company's obligation to
declare and pay accrued dividends, to the extent permitted by applicable law,
through the delivery of shares of Common Stock or shares of Convertible
Preferred Stock pursuant to paragraph (3)(b), whether permitted by any such
agreement or not.
(f) Pro Rata. All dividends paid with respect to the shares of
Mandatorily Redeemable Preferred Stock shall be paid pro rata (as nearby as may
be practicable) to the shareholders entitled thereto.
(g) Priority. Payment of dividends to the holders of shares of
Mandatorily Redeemable Preferred Stock shall be subject to the prior preferences
and other rights of any Senior Stock and to the provisions of paragraph (7).
(4) REDEMPTION.
(a) Optional Redemption. At any time during the period beginning on
the Issue Date until the Redemption Date, the Company shall have the right to
redeem the outstanding shares of Mandatorily Redeemable Preferred Stock at a
price equal to $1,000 per share, together with an amount equal to all dividends
accrued but unpaid thereon to the date fixed for redemption (the "Redemption
Price").
(b) Mandatory Redemption. All outstanding shares of Mandatorily
Redeemable Preferred Stock shall be mandatorily redeemed by the Company out of
funds legally available therefor on the date that is the tenth anniversary of
Issue Date at a redemption price equal to $1,000 per share, plus an amount equal
to all accrued and unpaid dividends per share (the "Mandatory Redemption
Price").
(c) Early Mandatory Redemption. If the Company has not exercised its
right to optionally redeem the Mandatorily Redeemable Preferred Stock by
December 22, 1999, all outstanding shares of Mandatorily Redeemable Preferred
Stock shall be mandatorily redeemed at the Mandatory Redemption Price.
(d) Company's Right to Elect Manner of Payment of Redemption Price
or Mandatory Redemption Price. The Company may effect the redemption of shares
of Mandatorily Redeemable Preferred Stock at the Redemption Price or the
Mandatory Redemption Price, in the sole discretion of the Board: (i) in cash out
of
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<PAGE> 21
funds legally available therefor, (ii) in exchange for and through the delivery
of shares of Common Stock, (iii) subject to compliance with paragraph (5), in
exchange for and through delivery of shares of Convertible Preferred Stock or
(iv) through any combination of the foregoing forms of consideration elected by
the Board in its sole discretion.
(e) Notice of Redemption. In the event of an offer by the Company to
redeem any shares of Mandatorily Redeemable Preferred Stock pursuant to
paragraph (4)(a) or a redemption of the Mandatorily Redeemable Preferred Stock
pursuant to paragraph (4)(b) or (4)(c), the Company shall provide notice of such
offer to redeem or such redemption to holders of record of Mandatorily
Redeemable Preferred Stock to be redeemed not less than 30 days (not less than
10 days if the Redemption Price or Mandatory Redemption Price is payable in cash
or Common Stock) nor more than 60 days prior to the Redemption Date. Such notice
(a "Re demption Notice") shall, subject to paragraph (4)(h)(z), be provided in
accordance with paragraph (14); provided, however, that neither failure to give
such notice nor any defect therein shall affect the validity of the proceedings
for the redemption of any shares of Mandatorily Redeemable Preferred Stock to be
redeemed.
In addition to any information required by law, the Redemption
Notice shall state, as appropriate, the following (and may contain such other
informa tion as the Company deems advisable):
(A) whether the redemption is pursuant to paragraph (4)(a), (4)(b)
or (4)(c);
(B) the Redemption Date;
(C) the number of shares of Mandatorily Redeemable Preferred Stock
to be redeemed and, if less than all the shares held by such
holder are to be redeemed, the number of shares to be redeemed
from such holder;
(D) the Redemption Price or Mandatory Redemption Price and the
form or forms of consideration that the Company has elected to
pay and/or deliver upon such redemption and, if more than one
form of consideration has been elected by the Company, the
designated portions of the Redemption Price or Mandatory
Redemption Price to be paid in each form of consideration so
elected;
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<PAGE> 22
(E) if the Company has elected to exchange and deliver shares of
Common Stock in payment of the Redemption Price (or a
designated portion thereof), the Company's computation of the
number of shares of Common Stock exchangeable and deliver able
as provided in paragraph (4)(f);
(F) if the Company has elected to exchange and deliver shares of
Convertible Preferred Stock in payment of the Redemption Price
(or a designated portion thereof), a statement of the
Convertible Preferred Stock Issue Price computed pursuant to
paragraph (5);
(G) the place or places in the United States or England and Wales
where certificates for Mandatorily Redeemable Preferred Stock
to be redeemed are to be surrendered for redemption; and
(H) that dividends on the shares of Mandatorily Redeemable
Preferred Stock to be redeemed shall cease to accrue on the
Redemption Date (unless the Company defaults in making payment
of the Redemption Price).
(f) Redemption by Delivery of Common Stock. If the Company elects to
pay, in whole or in part, the Redemption Price in respect of shares of
Mandatorily Redeemable Preferred Stock in exchange for and through the delivery
of shares of Common Stock, then the Company shall deliver to each holder of
shares of Mandatorily Redeemable Preferred Stock to be redeemed on the
Redemption Date a number of shares of Common Stock equal to the aggregate
Redemption Price (or designated portion thereof) of such shares of Mandatorily
Redeemable Preferred Stock divided by the Average Market Price. No fractional
shares of Common Stock shall be delivered to a holder of shares of Mandatorily
Redeemable Preferred Stock in payment of the Redemption Price, but the Company
shall instead pay a cash adjustment determined as provided in paragraph (9).
(g) Redemption by Delivery of Convertible Preferred Stock. If the
Company elects to pay, in whole or in part, the Redemption Price in respect of
shares of Mandatorily Redeemable Preferred Stock in exchange for and through the
delivery of shares of Convertible Preferred Stock, then the Company shall
deliver to each holder of shares of Mandatorily Redeemable Preferred Stock to be
redeemed on the Redemption Date a number of shares of Convertible Preferred
Stock equal to the
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<PAGE> 23
aggregate Redemption Price (or designated portion thereof) of such shares of
Mandatorily Redeemable Preferred Stock divided by the Convertible Preferred
Stock Issue Price. No fractional shares of Convertible Preferred Stock shall be
delivered to a holder of shares of Mandatorily Redeemable Preferred Stock in
payment of the Redemption Price, but the Company shall instead pay a cash
adjustment as deter mined in paragraph (9).
(h) Deposit of Funds and/or Shares. If on or before the Redemption
Date: (x) the Company shall have deposited with any bank or trust company
organized under the laws of the United States of America or any state thereof
having capital, undivided profits and surplus aggregating at least $250 million
(the "Re demption Agent"), cash (including cash for any adjustment in lieu of
delivering fractional shares) and/or shares of Common Stock or Convertible
Preferred Stock, as applicable, sufficient to pay in full the aggregate
Redemption Price (calculated through the Redemption Date) for such shares of
Mandatorily Redeemable Preferred Stock on such Redemption Date, (y) such cash
and/or shares of Common Stock or Convertible Preferred Stock, as applicable, are
readily available to, but only to, the holders of Mandatorily Redeemable
Preferred Stock in satisfaction of the obligations of the Company with respect
to the payment of the Redemption Price and (z) the Company shall prior to the
Redemption Date have so notified each record holder of Mandatorily Redeemable
Preferred Stock, which notice shall be given to each holder of Mandatorily
Redeemable Preferred Stock by courier and shall identify the Redemption Agent,
its address and telephone and telecopier numbers and the contact person(s) at
the Redemption Agent responsible for administration of the deposit then,
effective as of the close of business on such Redemption Date (and
notwithstanding that any certificate therefor shall not have been surrendered
for cancellation): (i) such shares of Mandatorily Redeemable Preferred Stock
shall no longer be deemed outstanding but any shares of Common Stock or
Convertible Preferred Stock so deposited in accordance with this paragraph (h)
for which such Mandatorily Redeem able Preferred Stock was redeemed shall be
deemed to be outstanding; (ii) the holders thereof shall cease to be holders of
Mandatorily Redeemable Preferred Stock but shall be shown on the records of the
Company as holders of the Common Stock or Convertible Preferred Stock so
deposited in accordance with this paragraph (h) in redemption of such
Mandatorily Redeemable Preferred Stock; (iii) dividends with respect to the
shares so called for redemption shall cease to accrue on the Redemp tion Date
but, subject to paragraph (4)(f), such holders shall be entitled to any
dividends which shall thereafter accrue on, and shall be entitled to exercise
all other rights associated with, any shares of Common Stock or Convertible
Preferred Stock so deposited in accordance with this paragraph (h) in redemption
of such Mandatorily Redeemable Preferred Stock; and (iv) all rights whatsoever
with respect
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to the shares so called for redemption shall forthwith cease and terminate
(except the right of such holders, upon the surrender of certificates evidencing
the shares of Mandatorily Redeemable Preferred Stock so redeemed, to receive the
cash and/or Common Stock or Convertible Preferred Stock, as applicable, payable
or deliverable in payment of the Redemption Price therefor, and the applicable
cash adjustment, if any, in lieu of fractional shares, without interest). Any
cash and/or shares of Com mon Stock or Convertible Preferred Stock so deposited
or set apart which shall remain unclaimed at the end of one year after the
Redemption Date shall be returned or released to the Company, after which time
the holders of shares of Mandatorily Redeemable Preferred Stock called for
redemption on such Redemption Date that remain outstanding after such one-year
period shall look only to the Company for the payment of the Redemption Price
for such shares, without interest.
A deposit made in compliance with the immediately preceding sentence
shall, except to the extent released or returned to the Company, be deemed to
constitute full payment for the shares of Mandatorily Redeemable Preferred Stock
to be redeemed. Any interest accrued on funds so deposited shall be paid by the
Redemption Agent to the Company from time to time.
(i) Surrender of Certificates; Status. Each holder of shares of
Mandatorily Redeemable Preferred Stock to be redeemed shall not be entitled to
receive payment of the Redemption Price for such shares until such holder shall
surrender the certificates evidencing such shares duly endorsed by, or
accompanied by, an instrument of transfer (in form reasonably satisfactory to
the Company) duly executed by, the holder or such holder's duly authorized
attorney-in-fact or, if the shares issuable upon redemption are to be issued in
the same name as the name in which such share of the Mandatorily Redeemable
Preferred Stock is registered, in blank to the Redemption Agent (or to the
Company if there is no Redemption Agent) at the place designated in the
Redemption Notice for such redemption and shall thereupon be entitled to receive
the consideration for such shares specified in the Redemption Notice in an
aggregate amount equal to the Redemption Price for such shares. Holders of
shares of Mandatorily Redeemable Preferred Stock that are redeemed on the
Redemption Date shall not be entitled to receive dividends declared and paid on
any shares of Common Stock or Convertible Preferred Stock exchange able and
deliverable in payment of the Redemption Price (or designated portion thereof)
for such shares of Mandatorily Redeemable Preferred Stock, and such shares of
Common Stock or Convertible Preferred Stock shall not be entitled to vote, until
such shares of Common Stock or Convertible Preferred Stock are delivered upon
the surrender of the certificates representing such shares of Mandatorily
Redeemable Preferred Stock. Upon such surrender, such holders shall be entitled
to receive such
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dividends declared and paid subsequent to such Redemption Date and prior to the
delivery.
(j) Priority. The right of the Company to redeem shares of
Mandatorily Redeemable Preferred Stock pursuant to this paragraph (4) shall be
subject to the prior preferences and other rights of any Senior Stock and to the
provisions of paragraph (7).
(5) DETERMINATION OF CONVERTIBLE PREFERRED
STOCK ISSUE PRICE.
(a) If the Company elects to deliver Convertible Preferred Stock in
payment of the Redemption Price or Mandatory Redemption Price, it must elect (by
notice to the holders of the Mandatorily Redeemable Preferred Stock), at its
discre tion, either to:
(i) deliver to the holder a letter from an independent investment
bank (the "Independent Investment Banker") to the holder to the effect that the
bank believes on the terms and conditions set out in the letter that the
Convertible Pre ferred Stock, when issued, can be distributed at not less than
the Redemption Price of the Mandatorily Redeemable Preferred Stock to be
redeemed by the delivery of such Convertible Preferred Stock (without giving
effect to commissions); such letter shall be based on (A) the marketing efforts
that the management of the Company is committed to make (with dates, schedules,
locations and team being specified), (B) the documentation which the Company has
committed to make available (such documentation to be specified) and (C) the
gross spread as reasonably determined by the holder of the Mandatorily
Redeemable Preferred Stock in accordance with normal market practice; or
(ii) deliver to the holder a "bought" sale relating to the sale of
the Convertible Preferred Stock which will entitle the holder to receive an
amount equal to not less than the Redemption Price of the Mandatorily Redeemable
Preferred Stock to be redeemed by the delivery of the Convertible Preferred
Stock.
(b) A notice pursuant to paragraph (a)(i) must be sent at least one
month prior to the proposed issue date of the Convertible Preferred Stock. A
notice pursuant to clause (a)(ii) must be sent at least one week prior to the
proposed issue date of the Convertible Preferred Stock.
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(c) If the Company elects paragraph (a)(i), it must procure (a) that
its management team will be available for a period of not less than 3 Business
Days to make presentations to potential institutional and other purchasers of
the Convertible Preferred Stock, such presentations to take place within 3 weeks
of the dates speci fied in the letter from the independent investment bank, and
(b) that the documenta tion which it committed to make available pursuant to
paragraph (a)(i)(B) is avail able.
(d) If the Company elects paragraph (a)(i), the Convertible
Preferred Stock Issue Price will be the higher of the Redemption Price of the
Mandatorily Redeemable Preferred Stock and the price at which the Convertible
Preferred Stock can be placed with institutional investors at the end of the
marketing period for such Convertible Preferred Stock (such price to be
evidenced by a "bring-down" letter from the Independent Investment Banker), and
the principal amount of Convertible Preferred Stock shall be reduced
accordingly. The holders will (in case of a distribu tion under paragraph
(a)(i)) pay for the gross spread or discount. All other related costs of the
distribution will be paid by the Company.
(e) If the Company elects clause (a)(ii), the Convertible Preferred
Stock Issue Price shall be at the discretion of the Company. If the Company
elects clause (a)(ii), the Company may also establish the Fixed Price so that it
may be the higher of US$60 per share and 30% above the Average Market Price at
the time of setting of the Fixed Price.
(6) REORGANIZATIONS.
(a) (i) Reorganizations. If there is to occur any Reorganization,
and there is determinable for the entirety of each Reorganization Unit to be
issued in connection with such Reorganization on an Applicable Price, then as a
condition precedent to such Reorganization proper provision shall be made such
that each share of Mandatorily Redeemable Preferred Stock, or each share of
mandatorily redeem able preferred stock of the Company or its successor by
merger or consolidation issuable to each holder of Mandatorily Redeemable
Preferred Stock in exchange or substitution therefor (provided, however, that
such share of mandatorily redeemable preferred stock has the same Stated Value,
subject to the proviso in paragraph (6)(a)(ii), and substantially the same
rights, benefits and privileges as a share of Mandatorily Redeemable Preferred
Stock), shall be redeemable upon and from and after the occurrence of such
Reorganization into, in lieu of Convertible Preferred Stock as provided herein
(and without prejudice to the right of the Company or its
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<PAGE> 27
successor to redeem convertible preferred stock for cash in accordance
herewith), a convertible preferred stock of the successor entity convertible
into Reorganization Units determined by dividing the Stated Value of such share
by the Fixed Price of such successor entity on the date which is 15 months after
the Issue Date.
If there is to occur any Reorganization, and any Reorganization Unit to be
issued in connection with such Reorganization does not have in whole or in part
a determina ble Applicable Price, then prior to the occurrence of such
Reorganization and on a basis such that the holders of Mandatorily Redeemable
Preferred Stock shall be holders of Common Stock for all purposes of such
Reorganization, the Company will redeem all Mandatorily Redeemable Preferred
Stock in accordance herewith. The Company shall not effect any Reorganization
unless prior to or simultaneously with the consummation thereof, the successor
entity resulting from such consolidation or merger or the entity purchasing such
assets or compelling such exchange, as the case may be, shall make provisions in
its certificate or articles of incorporation or other constituent document to
establish such right. The provisions of this paragraph (6)(a)(i) shall similarly
apply to successive Reorganizations.
(ii) Holding Company. Notwithstanding anything herein to the
contrary, if the Company is reorganized such that the Common Stock is exchanged
for the common stock of a new entity ("Holdco") whose common stock is traded on
NASDAQ or another recognized securities exchange, then the Company, by notice to
the holders of the Mandatorily Redeemable Preferred Stock but without any
required consent on their part, may cause the exchange of this Mandatorily
Redeemable Preferred Stock for mandatorily redeemable preferred stock of Holdco
having the same terms and conditions as set forth herein, provided that where
Holdco is not a Delaware company or where the Holdco share structure is not
identical to that of the Company, the rights attaching to the mandatorily
redeemable preferred stock of Holdco may be adjusted so as to comply with the
local law of the country of incorpo ration of Holdco or the new share structure
of Holdco subject to such rights effec tively giving the same economic rights as
the Mandatorily Redeemable Preferred Stock (ignoring for these purposes any
resultant change in the tax treatment for the holders of such stock).
(iii) Other Adjustments. In the event that, as a result of an
adjustment made pursuant to paragraph (6)(a), the holder of any Mandatorily
Redeemable Preferred Stock thereafter surrendered for redemption shall become
entitled to receive any shares of capital stock of the Company other than shares
of its Convert ible Preferred Stock, thereafter the number of such shares
issuable upon redemption of such security shall be subject to adjustment from
time to time in a manner and on
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terms as nearly equivalent as practicable to the provisions with respect to the
Convertible Preferred Stock contained in paragraph (5).
(b) Notices of Corporate Action. If:
(i) the Company or the Board shall approve any Reorganization to
which the Company is a party and for which approval of any stockholders of the
Company is required; or
(ii) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, in each case, the Company shall cause to be given to the holders of shares
of the Mandatorily Redeemable Preferred Stock in accordance with paragraph (14),
as promptly as possible, but at least 10 days prior to the applicable date
hereinafter specified, a notice stating the date on which the event giving rise
to an adjustment of the type described in paragraph (6)(a), such a
Reorganization, dissolution, liquidation or winding up may occur, as the case
may be, is expected to become effective or occur, and, if earlier, the date as
of which it is expected that holders of Common Stock of record shall be entitled
to exchange their shares of Common Stock for stock of the Company, securities,
cash or other property deliverable upon such Reorganiza tion, dissolution,
liquidation or winding up. Failure to give or receive such notice or any defect
therein shall not affect the legality or validity of the action or transactions
described in sub-paragraphs (i) or (ii) above.
(c) Listing of Common Stock. The Company will list the shares of
Common Stock required to be delivered as payment of dividends or upon redemption
or conversion of shares of the Mandatorily Redeemable Preferred Stock, prior to
delivery, upon each national securities exchange, the Nasdaq Stock Market's Na
tional Market or any similar system of automated dissemination of securities
prices, if any, upon which the Common Stock is listed at the time of delivery.
(d) Provision of Information. So long as any shares of Mandatorily
Redeemable Preferred Stock remain outstanding, the Company undertakes to provide
without charge to each record holder of such shares copies of each: (i) annual
report of the Company on Form 10-K filed pursuant to Section 13(a) of the
Exchange Act concurrently with such filing; (ii) quarterly reports of the
Company on Form 10-Q and current report of the Company on Form 8-K filed
pursuant to Section 13(a) or 15(d) or the Exchange Act concurrently with such
filing; (iii) definitive proxy or information statement, form of proxy or other
material of the Company filed pursu ant to Section 14(a) of the Exchange Act
concurrently with such filing; and (iv) notice, press release and other
information delivered to holders of Common Stock generally concurrently with
such delivery.
(7) LIMITATIONS ON DIVIDENDS AND REDEMPTIONS IN RESPECT OF COMPANY
STOCK.
(a) Limitations on Junior Stock Dividends. As long as any shares of
Mandatorily Redeemable Preferred Stock are outstanding, no dividends shall be
paid or declared in cash on Junior Stock, nor shall any other distributions be
made on any Junior Stock, unless: (i) full dividends on all Parity Stock have
been paid, or declared and set aside for payment, for all dividend periods
terminating on or prior to the date of such Junior Stock dividend or
distribution payment, to the extent such dividends are cumulative; (ii) the
Company has paid or set aside all amounts, if any, then or therefore required to
be paid or set aside for all purchase, retirement, and sinking funds, if any,
for any Parity Stock; and (iii) the Company is not in default on any of its
obligations to redeem any Parity Stock.
(b) Limitations on Purchase of Junior Stock. As long as any shares
of Mandatorily Redeemable Preferred Stock are outstanding, no shares of any
Junior Stock may be purchased, redeemed, or otherwise acquired by the Company or
any of its Subsidiaries (except in connection with a reclassification of any
Junior Stock through the issuance of other Junior Stock and/or Convertible
Securities for shares of Junior Stock and cash in lieu of fractional shares in
connection therewith or the purchase, redemption or other acquisition of any
Junior Stock from any wholly-owned subsidiary), nor may any funds be set aside
or made available for any sinking fund for the purchase, redemption or other
acquisition of any Junior Stock, unless: (i) full dividends on all Parity Stock
have been paid, or declared and set aside for payment, for all dividend periods
terminating on or prior to the date of such pur chase, redemption or
acquisition, to the extent such dividends are cumulative; (ii) the Company has
paid or set aside all amounts, if any, then or theretofore required to be paid
or set aside for all purchases retirement, and sinking funds, if any, for any
Parity Stock; and (iii) the Company is not in default on any, of its obligations
to redeem any Parity Stock.
(c) Junior Stock Dividends Otherwise Permitted. Subject to the
provisions of paragraphs (7)(a) and 8(b), dividends or distributions (payable in
cash, property or securities) may be declared and paid on the shares of any
Junior Stock from time to time and any Junior Stock may be purchased, redeemed
or otherwise acquired by the Company or any of its subsidiaries from time to
time. In the event of
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the declaration and payment of any such dividends or distributions, the holders
of such Junior Stock will be entitled, to the exclusion of holders of shares of
Convert ible Preferred Stock, to share therein according to their respective
interests.
(d) Limitations on Parity Stock Dividends and Redemptions. As long
as any share of Mandatorily Redeemable Preferred Stock is outstanding, dividends
or other distributions may not be declared or paid on any Parity Stock, and the
Com pany may not purchase, redeem or otherwise acquire any Parity Stock (except
(x) from any wholly owned subsidiaries of the Company or (y) in connection with
a mandatory conversion or exchange of such Parity Stock or a conversion or
exchange of such Parity Stock at the option of the holder for securities other
than Parity Stock or Senior Stock and cash in lieu of fractional shares in
connection therewith) unless either:
(a)(i) full dividends on all Parity Stock have been paid, or
declared and set aside for payment, for all dividend periods terminating
on or prior to the date of such Parity Stock dividend, distribution,
purchase, re demption or other acquisition payment, to the extent such
dividends are cumulative;
(ii)the Company has paid or set aside all amounts, if any, then
or theretofore required to be paid or act aside for all purchase,
retirement, and sinking funds, if any, for any, Parity Stock; and
(iii)the Company is not in default on any of its obligations to
redeem any Parity Stock, or
(b) with respect to the payment of dividends only, any such
dividends are declared and paid pro rata so that the amounts of any
dividends declared and paid per share on shares of Mandatorily Redeemable
Preferred Stock and each other share of such Parity Stock will in all
cases bear to each other the same ratio that accrued and unpaid dividends
(including any accumulation with respect to unpaid dividends for prior
dividend periods, if such dividends are cumulative) per share on shares of
Mandatorily Redeemable Preferred Stock and such other share of Parity
Stock bear to each other.
(e) Certain Permitted Dividends and Redemptions. Nothing contained
in this paragraph (7) shall prevent: (i) the payment of dividends or the making
of distributions on any Junior Stock solely in shares of Junior Stock and/or
Convertible Securities for shares of Junior Stock (together with a cash
adjustment for
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fractional shares, if any) or the redemption, purchase or other acquisition of
Junior Stock solely in exchange for (together with a cash adjustment for
fractional shares, if any), or through the application of the proceeds from the
sale of, shares of Junior Stock and/or Convertible Securities for shares of
Junior Stock; (ii) the payment of dividends or the making of distributions on
any class or series of Parity Stock solely in (together with a cash adjustment
for fractional shares, if any) shares of Junior Stock and/or Convertible
Securities for shares of Junior Stock or the redemption, exchange, purchase or
other acquisition of say class or series of Parity Stock solely in exchange for
(together with a cash adjustment for fractional shares, if any), or through the
application of the proceeds from the sale of shares of Junior Stock and/or
Convertible Securities for shares of Junior Stock or (iii) the conversion or
exchange of Mandatorily Redeemable Preferred Stock into shares of Common Stock
(together with a cash adjustment for fractional shares, if any) and other
securities, assets or property, if any pursuant to the provisions of paragraphs
(4), (5) or (6).
(f) Waiver. The provisions of paragraphs (7)(a), (b) and (d) are for
the sole benefit of the holders of Mandatorily Redeemable Preferred Stock and
any other class or series of Parity Stock having the terms described therein and
accord ingly, at any time when (i) there are no shares of any such other class
or series of Parity Stock outstanding or if the holders of each such other class
or series of Parity Stock have, by such vote or consent of the holders thereof
as may be provided for in the instrument creating or evidencing such class or
series, waived in whole or in part the benefit of such provisions (either
generally or in the specific instance), and (ii) the holders of shares of
Mandatorily Redeemable Preferred Stock shall have waived (as provided in
paragraph (15)) in whole or in part the benefit of such provision (either
generally or in the specific instance), then the provisions of paragraphs
(7)(a), (b) and (d) shall not (to the extent waived, in the case of any partial
waiver) restrict the payment of dividends or the making of distributions on, or
the redemption, purchase or other acquisition of any shares of, Mandatorily
Redeemable Preferred Stock, any other class or series of Parity Steel or any
Junior Stock.
(8) LIQUIDATION RIGHTS.
(a) Payment of Liquidation Preference. If there is any liquidation,
dissolution, or winding up of the Company, whether voluntary or involuntary,
then the holders of shares of Mandatorily Redeemable Preferred Stock then
outstanding, after payment, or provision for payment of the debts and other
liabilities of the Company and the payment or provision for payment of any
distribution on any shares of Senior Stock, and before any distribution to the
holders of Junior Stock, shall be entitled to be paid out of the assets of the
Company available for distribution
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<PAGE> 31
to its stockholders an amount per share of Mandatorily Redeemable Preferred
Stock in cash equal to the Liquidation Preference. If the assets of the Company
available for distribution to the holders of the shares of Mandatorily
Redeemable Preferred Stock upon any dissolution, liquidation or winding up of
the Company shall be insufficient to pay in full the Liquidation Preference
payable to the holders of outstanding shares of Mandatorily Redeemable Preferred
Stock and the liquidation preference payable to all other shares of Parity Stock
(as set forth in the instrument or instruments creating such Parity Stock), then
the holders of shares of Mandatorily Redeemable Preferred Stock and of all other
shares of Parity Stock shall share ratably in such distribution of assets in
proportion to the amount which would be payable on such distribution if the
amounts to which the holders of outstanding shares of Mandatorily Redeemable
Preferred Stock and the holders of outstanding shares of such other Parity Stock
were paid in full. Except as provided in this paragraph (8)(a), holders of
Mandatorily Redeemable Preferred Stock shall not be entitled to any distribution
in the event of the liquidation, dissolution or winding up of the affairs of the
Company.
(b) Certain Events Not Deemed Liquidation, Etc. For the purposes of
this paragraph (8) a Reorganization shall not be deemed to be a voluntary of
involuntary liquidation, dissolution or winding up of the Company.
(9) NO FRACTIONAL SHARES. No fractional shares of Common Stock or
Convertible Preferred Stock or scrip shall be issued in connection with the
delivery of shares of Common Stock or Convertible Preferred Stock in payment, in
whole or in part, of any dividend, Redemption Price or Liquidating Payment.
Whether or not a fractional share would be delivered to a holder of Mandatorily
Redeemable Preferred Stock shall be based upon, in the case of the payment, in
whole or in part, of dividends, a Redemption Price of a Liquidating Payment
pursuant to paragraphs (3), (4) or (8) , respectively, on the total number of
shares of Mandatorily Redeemable Preferred Stock at the time held by such holder
and the total number of shares of Common Stock or Convertible Preferred Stock,
otherwise deliverable in respect thereof. Instead of the issuance of a fraction
of a share of Common Stock or Convertible Preferred Stock or scrip, the Company
shall pay instead an amount in cash (rounded to the nearest whole cent) equal
to, in the case of Common Stock, the same fraction of the Closing Price of a
share of preceding the Determination Date and, in the case of Convertible
Preferred Stock, equal to the same fraction of the Convertible Preferred Stock
Issue Price.
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<PAGE> 32
(10) PAYMENT OF TAXES. The Company shall pay any and all
documentary, stamp or similar transfer taxes payable in respect of the delivery
of shares of Common Stock or Convertible Preferred Stock, pursuant to paragraphs
(3), (4), (5), or (8), as applicable; provided, however, the Company shall not
be required to pay any such tax that may be payable because any such shares are
issued in a name other than the name of the holder of such Mandatorily
Redeemable Preferred Stock.
(11) NO PREEMPTIVE RIGHTS. The holders of shares of Mandatorily
Redeemable Preferred Stock shall have no preemptive rights, including preemptive
rights with respect to any shares of capital stock or other securities of the
Company convertible into or carrying rights or options to purchase any such
shares.
(12) VOTING RIGHTS. (a) The holders of shares of Mandatorily
Redeemable Preferred Stock shall have no Voting rights, except as otherwise
required by law and except as set forth in this paragraph (12). When and if the
holders of Mandatorily Redeemable Preferred Stock are entitled to vote by law or
pursuant to this paragraph (12), each holder will be entitled to one vote per
share.
(b) Certain Changes to Charter. For as long as any shares of
Mandatorily Redeemable Preferred Stock remain outstanding, the affirmative vote
of the holders of at least a majority of such outstanding shares (voting
separately as a class) given in Person or by proxy at an annual meeting or a
special meeting called for such purpose, shall be necessary (i) before the
Company may amend any of the provisions of this Certificate of Designations or
the Restated Certificate of Incorpora tion of the Company which would alter or
change the powers, preferences or special rights of the holders of the shares of
Mandatorily Redeemable Preferred Stock then outstanding so as to affect them
adversely; provided, however, that:
(x) any such amendment that would authorize, create or increase the
authorized amount of any additional shares of Junior Stock or shares
of any other class or series of Parity Stock (whether or not already
authorized); and
(y) any such amendment that would increase the number of authorized
shares of Preferred Stock of the Company (but not the number of
authorized shares of Mandatorily Redeemable Preferred Stock) or that
would decrease (but not below the number of shares, then
outstanding) the number of authorized shares of Preferred Stock
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<PAGE> 33
(but not the number of authorized shares of Mandatorily Redeemable
Preferred Stock);
shall be deemed not to adversely affect such powers preferences or rights and
shall not be subject to approval by the holders of shares of Mandatorily
Redeemable Preferred Stock; and (ii) before the Company may reclassify the
outstanding shares of Mandatorily Redeemable Preferred Stock into another class
or series of capital stock of the Company; provided further, however, that no
consent described in clause (i) of this paragraph of the holders of the shares
of Mandatorily Redeemable Pre ferred Stock shall be required if, at or prior to
the time when such amendment is to take effect, provision is made for the
redemption of all shares of Mandatorily Redeemable Preferred Stock at the time
outstanding.
(c) Creation of Senior Stock. No consent or vote of the holders of
the shares of Mandatorily Redeemable Preferred Stock shall be necessary before
the Company or the Board may authorize, create or issue any class or series of
Senior Stock.
(d) No Other Vote. Except as otherwise set forth in this paragraph
(12) or as required by law, the holders of Mandatorily Redeemable Preferred
Stock shall not have any relative, participating, optional or other special
voting rights and powers and the consent or vote of such holders shall not be
required for the taking of any corporate action by the Company or the Board. The
provisions of this paragraph (12) are in lieu of, and not in addition to, any
voting rights specified in the Restated Certificate of Incorporation as
applicable to a series of Preferred Stock.
(13) PAYMENTS. Payment of cash amounts due in respect of the
Mandatorily Redeemable Preferred Stock will be paid to the holders of shares of
Mandatorily Redeemable Preferred Stock (or, in the case of joint holders, the
first-named) as appearing in the stock register of the Company for the
Mandatorily Redeemable Preferred Stock as at opening of business (New York time)
on the date specified in this Certificate for the purpose of determining the
holders of Mandatorily Redeemable Preferred Stock entitled to such payments or,
if no such date is speci fied, the fifteenth Business Day before the due date
for such payment (the "Payment Record Date").
Payments of cash amounts due in respect of the Mandatorily Re
deemable Preferred Stock will be made by a check in U.S. dollars drawn on a bank
in New York and mailed to the address (as recorded is the stock register of the
Com pany for the Mandatorily Redeemable Preferred Stock) of the holder thereof
(or, in
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<PAGE> 34
the case of joint holders, the first-named) not later than the relevant date for
payment unless, prior to the relevant Payment Record Date, the Company has
received from the holder thereof (or, in the case of joint holders, the
first-named) written instruc tions for payment to be made by wire transfer to a
specified designated account. If the due date for payment of any cash amount in
respect of the Mandatorily Redeem able Preferred Stock is not a Business Day,
then the holder thereof will not be entitled to payment thereof until the next
following day which is a Business Day and, if such payment is to be made by
transfer to a designated account rather than by check, a day on which commercial
banks and foreign exchange markets settle, payments in U.S. dollars in the place
where the relevant designated account is located.
(14) NOTICES. Any notice or communication by a holder of Mandatorily
Redeemable Preferred Stock to the Company is duly given if in writing and
delivered in person or mailed by first-class mail to the Company at its address
as set forth in its then most recently filed Form 10-K or 10-Q as the case may
be.
Any notice or communications to a holder of Mandatorily Redeem able
Preferred Stock shall be mailed by first-class mail to his address shown on the
stock register of the Company for the Mandatorily Redeemable Preferred Stock or,
if there are more than 20 holders of record of the Mandatorily Redeemable
Preferred Stock and the Company in its sole discretion so elects, in a leading
daily newspaper having general circulation in New York (which is expected to be
the Wall Street Journal) or England and Wales (which is expected to be The
Financial Times). Failure to mail a notice or communication to one holder or any
defect in it shall not affect its sufficiency with respect to other holders.
If a notice or communication is given in the manner provided in this
paragraph (14) within the time prescribed by this Certificate, it shall be
conclusively presumed to have been duly given, whether or not the person
entitled to such notice receives it.
(15) WAIVER. Any provision of this Certificate of Designations
which, for the benefit of the holders of Mandatorily Redeemable Preferred Stock,
prohibits, limits or restricts actions by the Company may be waived in whole or
in part, or the application of all or any part of such provision in any
particular circum stance or generally may be waived, in each case with the
consent of the holders of at least a majority of the number of shares of
Mandatorily Redeemable Preferred Stock then outstanding, either in writing or by
vote at a meeting called for such purpose at
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which the holders of Mandatorily Redeemable Preferred Stock shall vote as a
separate class.
(16) REGISTRATION AND NO TRANSFER. The Company will maintain at its
principal executive office a register in which the Company will provide for the
registration of shares of Mandatorily Redeemable Preferred Stock. The shares of
Mandatorily Redeemable Preferred Stock are not transferrable, and any
certificate representing shares of Mandatorily Redeemable Preferred Stock will
be so legended.
(17) EXCLUSION OF OTHER RIGHTS. Except as may otherwise be required
by law, the shares of Mandatorily Redeemable Preferred Stock shall not have any
designations, preferences, limitations or relative rights other than those
specifically set forth in this Certificate of Designations.
(18) SEVERABILITY OF PROVISIONS. Whenever possible, each provision
of this Certificate of Designations shall be interpreted in a manner as to be
effective and valid under applicable law, but if any provision hereof is held to
be prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating or otherwise adversely affecting the remaining provisions hereof.
If a court of competent jurisdic tion should determine that a provision hereof
would be valid or enforceable if a period of time were extended or shortened or
a particular percentage were increased or decreased, then such court may make
such change as shall be necessary to render the provision in question effective
and valid under applicable law.
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Draft of Convertible Preferred Stock
CERTIFICATE OF DESIGNATIONS
OF
PREFERRED STOCK
OF
NTL INCORPORATED
-----------------
PURSUANT TO SECTION 151(G) OF THE
GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
-----------------
The undersigned, Senior Vice President, General Counsel and
Secretary of NTL Incorporated, a Delaware corporation (the "Company"), HEREBY
CERTIFIES that the Board of Directors, in accordance with Article IV, Section B
of the Company's Restated Certificate of Incorporation and Section 151(g) of the
Delaware General Corporation Law (the "DGCL"), has authorized the creation of
the series of Preferred Stock hereafter provided for and has established the
dividend, redemption, conversion and voting rights thereof and has adopted the
following resolution, creating the following new series of the Company's
Preferred Stock:
"BE IT RESOLVED, that pursuant to authority expressly granted to the
Board of Directors by the provisions of Article IV, Section B of the Restated
Certificate of Incorporation of the Company and Section 151(g) of the DGCL,
there is hereby created and authorized the issuance of a new series of the
Company's Preferred Stock, par value $.01 per share ("Preferred Stock"), with
the following powers, designations, dividend rights, voting powers, rights on
liquidation, conver sion rights, redemption rights and other preferences and
relative, participating, optional or other special rights and with the
qualifications, limitations or restrictions
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<PAGE> 37
on the shares of such series (in addition to the powers, designations,
preferences and relative, participating, optional or other special rights and
the qualifications, limita tions or restrictions thereof set forth in the
Restated Certificate of Incorporation that are applicable to each series of
Preferred Stock) hereinafter set forth:
(19) Designation; Number of Shares. The designation of the series of
Preferred Stock, par value $.01 per share, of the Company created hereby shall
be " % Non-voting Convertible Preferred Stock, Series A" (including, in the case
of any reclassification, recapitalization, or other change to such Preferred
Stock or, in the case of a consolidation or merger of the Company with or into
another Person affecting such Preferred Stock, such capital stock to which a
holder of such Preferred Stock shall be entitled upon the occurrence of such
event, the "Convertible Preferred Stock"). The authorized number of shares of
Convertible Preferred Stock shall be
, which number may from time to time be increased or decreased (but not
below the number then outstanding). Each share of Convertible Preferred Stock
shall have a stated value of $ (the "Stated Value").
Any shares of Convertible Preferred Stock redeemed or otherwise
acquired by the Company shall be retired and shall resume the status of
authorized and unissued shares of Preferred Stock, without designation as to
series, until such shares are once more designated as part of a particular
series of Preferred Stock by the Board of Directors.
(20) Certain Definitions. Unless the context otherwise requires, the
terms defined in this paragraph (2) shall have, for all purposes of this
Certificate of Designations, the meanings herein specified:
"Applicable Price" shall mean the aggregate of (A) in the event of a
Reorganization in which the holders of Common Stock receive cash, the amount of
such cash receivable by the holder of one share of Common Stock (as such share
is in effect immediately prior to the consummation of such Reorganization); and
(B) in the event of a Reorganization in which the holders of Common Stock
receive securities or other property which are traded on an established market
(within the meaning of Treasury Regulation 1.1273-2(f)(1) of the Internal
Revenue Code of 1986, as in effect on September 30, 1990), the average (or if
there be more than one security or item of property the sum of the averages) of
the daily Trading Prices of such securities and/or property receivable by the
holder of one share of Common Stock (as such share is in effect immediately
prior to such consummation) for the period of ten consecutive Trading Days
ending on the Trading Day immediately preceding the Conversion Date, date of
occurrence of the Reorganization, appropri ately adjusted to take into account
any stock dividend on such security or property, or any subdivision, split,
combination, reclassification of such security or property that occurs or the
"ex" date for which occurs on or prior to such date.
"Average Market Price" on any Determination Date, shall mean the
average of the daily Closing Prices for the period of 10 consecutive Trading
Days, ending on the Trading Day immediately preceding such Determination Date,
appropriately adjusted to take into account any stock dividend on the Common
Stock or any subdivision, split, combination or reclassification of the Common
Stock that occurs, or the Ex-Dividend Date for which occurs, during the period
following the first Trading Day in such ten-Trading Day period to and including
the Determination Date.
"Board" shall mean the Board of Directors of the Company, and,
unless the context indicates otherwise, shall also mean, to the extent permitted
by law, any committee thereof authorized, with respect to any particular matter,
to exercise the power of the Board of Directors of the Company with respect to
such matter.
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which banking institutions in New York, New York and London, England are
authorized to close or not obligated by law or executive order to open.
"Closing Price" shall mean, on any day:
(i) the average between the high and low reported sale price of a
share of Common Stock on and as reported by the Nasdaq Stock Market's National
Market on such day;
(ii) if the primary trading market for the Common Stock on such day
is not the Nasdaq Stock Market's National Market, then the closing sale price
regular way on such day, or, in case no such sale takes place on such day, the
average of the reported closing bid and asked prices regular way on such day, in
either case as reported by the Nasdaq System, the National Quotations Bureau,
Inc. or a compara ble service;
(iii) if the Closing Price on such day is not available pursuant to
one of the methods specified above, then the average of the bid and asked prices
for the Common Stock on such day as furnished by any New York Stock Exchange
member firm selected from time to time by the Board for that purpose; or
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<PAGE> 38
(iv) if the Closing Price on such day is not available pursuant to
the method specified in (iii) above, the determination of Closing Price shall be
deter mined in good faith by the Board exercising its reasonable discretion.
"Common Stock" shall mean the shares of common stock, par value
$0.01 per share, of the Company, which term shall include, where appropriate, in
the case of any reclassification, recapitalization or other change in the Common
Stock, or in the case of a consolidation or merger of the Company with or into
another Person affecting the Common Stock, such capital stock to which a holder
of Com mon Stock shall be entitled upon the occurrence of such event.
"Common Stock Dividend Amount" shall have the meaning set forth in
paragraph (3) (c).
"Computation Date" shall mean the earlier of (a) the date on which
the Company shall enter into a firm contract or commitment for the issuance of
Options or Convertible Securities or (b) the date of actual issuance of such
Options or Convertible Securities.
"Conversion Date" shall have the meaning set forth in paragraph
(5)(c).
"Convertible Preferred Stock" shall have the meaning set forth in
paragraph (1).
"Convertible Securities" shall mean evidences of indebtedness or
shares of stock which are, at the option of the holder hereof, convertible into
or exchangeable for shares of Common Stock.
"Current Market Price" on the Determination Date for any issuance of
Options or Convertible Securities or any distribution in respect of which the
Current Market Price is being calculated, shall mean the average of the daily
Closing Prices of the Common Stock for the shortest of:
(i) the period of 10 consecutive Trading Days ending on the last
full Trading Day before such Determination Date,
(ii) the period commencing on the date next succeeding the first
public announcement of the issuance of Options or Convertible Securities or the
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<PAGE> 39
distribution in respect of which the Current Market Price is being calculated
and ending on the last full Trading Day before such Determination Date, and
(iii) the period, if any, commencing on the date next succeeding the
Ex-Dividend Date with respect to the relevant issuance of Options or Convertible
Securities or the relevant distribution for which an adjustment is required by
the provisions of paragraphs (6)(a)(ii) or (iii), and ending on the last full
Trading Day before such Determination Date.
If multiple events occur which require adjustment pursuant to
paragraph (6)(a), the adjustment required by each such event shall be given
effect in the order of occurrence but without duplication.
"Denominator" shall mean the Fixed Price on the applicable Determi
nation Date.
"Determination Date" shall mean: (i) in the case of a dividend
payment, the date of notice of the Record Date, (ii) in the case of a redemption
payment, the Redemption Date, (iii) in the case of a conversion, the date of
notice of the Conversion Date, (iv) in the case of a Reorganization, the date
the Reorganization occurs and (v) in the case of any issuance of Options or
Convertible Securities or any distribution to which paragraphs (6)(a)(ii) or
(iii) respectively apply, the earlier of (a) the record date for the
determination of stockholders entitled to receive the Options, Convertible
Securities, or the distribution to which such paragraphs apply and (b) the
Ex-Dividend Date for such Options, Convertible Securities or distribution.
"Dividend Non-Payment" shall have the meaning set forth in para
graph (12)(b).
"Dividend Payment Date" shall have the meaning set forth in para
graph (3)(a).
"Dividend Period" for any dividend payable on a Dividend Payment
Date shall mean the period beginning on the immediately preceding Dividend
Payment Date (or on the Issue Date in the case of the first Dividend Period) and
ending on the day preceding such later Dividend Payment Date.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time, or any successor statute, and the rules and
regulations promulgated thereunder.
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<PAGE> 40
"Ex-Dividend Date" shall mean the date on which "ex-dividend"
trading commences for a dividend, an issuance of Options or Convertible
Securities or a distribution to which paragraph (6)(a) applies in the Nasdaq
Stock Market's National Market or on the principal exchange on which the Common
Stock is then quoted or traded.
"Fixed Price", on any Determination Date, shall mean $ ,* subject to
adjustment as prescribed in paragraph (6)(a).
"Issue Date" shall mean the date on which the Convertible Preferred
Stock is issued as payment of dividends or upon redemption of shares of the
Mandatorily Redeemable Preferred Stock, as set forth in the Certificate of
Designa tions relating to such Mandatorily Redeemable Preferred Stock.
"JPPF" shall mean the Series A Junior Participating Preferred Stock
of the Company issuable upon exercise of the Rights pursuant to the Rights Agree
ment.
"Junior Stock" shall mean:
(i) each class or series of common stock of the Company, including,
without limitation, the Common Stock;
(ii) the JPPF issuable upon exercise of the Rights;
(iii) any other class or series of capital stock of the Company
hereafter created, other than (a) any class or series of Parity Stock (except to
the extent provided under clause (iv) hereof) and (b) any class or series of
Senior Stock, and
(iv) any class or series of Senior Stock or Parity Stock to the
extent that it ranks junior to the Convertible Preferred Stock as to dividend
rights, rights of redemption or rights on liquidation, as the case may be. For
purposes of clause (iii) above, a class or series of Senior Stock or Parity
Stock shall rank junior to the Convertible Preferred Stock as to dividend
rights, rights of redemption or rights on liquidation if the holders of shares
of Convertible Preferred Stock shall be entitled to dividend payments, payments
on redemption or payments of amounts distributable
- --------
* 25% above Average Market Price on Issue Date, subject to adjustment
pursuant to paragraph (5)(e) of the 9.90% Preferred Stock.
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<PAGE> 41
upon dissolution, liquidation or winding up of the Company, as the case may be,
in preference or priority to the holders of shares of such class or series of
Senior Stock or Parity Stock.
"Liquidating Payment" shall mean an amount equal to the Liquidation
Preference of a share of Convertible Preferred Stock or, if less, the amount
payable in respect of one share of Convertible Preferred Stock pursuant to
paragraph (9)(a) upon the voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Company.
"Liquidating Payment Date" shall mean the date on which the Company
makes the aggregate Liquidating Payment to all holders of outstanding shares of
Convertible Preferred Stock.
"Liquidation Preference" measured per share of the Convertible
Preferred Stock, shall mean an amount equal to (a) the Stated Value per share of
Convertible Preferred Stock, plus (b) for purposes of determining the amount
payable pursuant to paragraph (8) only, an amount equal to all dividends accrued
but unpaid on such share, whether or not such unpaid dividends have been
declared or there are funds of the Company legally available for the payment of
dividends, to the Liquidating Payment Date.
"Mandatory Redemption Price" shall have the meaning set forth in
paragraph (4)(b).
"Option" shall mean any right, option or warrant entitling the
holder thereof to subscribe for, purchase, or otherwise acquire Common Stock in
the Company (other than the Rights).
"Parity Stock" shall mean the Convertible Preferred Stock and any
class or series of capital stock, whether now existing or hereafter created, of
the Company to the extent ranking on a parity basis with the Convertible
Preferred Stock as to dividend rights, rights of redemption or rights on
liquidation. Capital stock of any class or series, whether now or existing or
hereafter created, shall rank on a parity as to dividend, rights of redemption
or rights on liquidation with the Convert ible Preferred Stock, whether or not
the dividend rates, dividend payment dates, redemption or liquidation prices per
share or sinking fund or mandatory redemption provision, if any, are different
from those of the Convertible Preferred Stock, if the holders of shares of such
class or series shall be entitled to dividend payments, payments on redemption
of payments of amounts distributable upon dissolution,
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<PAGE> 42
liquidation or winding up of the Company, as the case may be, in proportion to
their respective accumulated and accrued and unpaid dividends, redemption prices
or liquidation prices, respectively, without preference or priority, one over
the other, as between the holders of shares of such class or series and the
holders of Convertible Preferred Stock. No class or series of capital stock that
ranks junior to the Convert ible Preferred Stock as to rights on liquidation
shall rank or be deemed to rank on a parity basis with the Convertible Preferred
Stock as to dividend rights or rights of redemption.
"Payment Record Date" shall have the meaning set forth in paragraph
(13).
"Person" shall mean any individual corporation, partnership, joint
venture, association, joint stock company, limited liability company, trust,
unincor porated organization, government or agency or political subdivision
thereof, or other entity, whether acting in an individual, fiduciary or other
capacity.
"Preferred Stock Director" shall have the meaning set forth in
paragraph (12)(b).
"Preferred Stock Dividend Amount" shall have the meaning set forth
in paragraph (3)(d).
"Record Date" for the dividends payable on the Dividend Payment Date
shall mean the date (not exceeding 45 days preceding the Dividend Payment Date)
fixed by the Board as the record date for the Dividend Payment Date.
"Redemption Agent" shall have the meaning set forth under paragraph
(4)(f).
"Redemption Date" as to any share of Convertible Preferred Stock,
shall mean the date fixed by the Board for the redemption of such share pursuant
to paragraph (4).
"Redemption Notice" shall have the meaning set forth in paragraph
(4)(c).
"Redemption Price" shall have the meaning set forth in paragraph
(4)(a).
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<PAGE> 43
"Reorganization" shall mean any of the following events:
(i) any consolidation or merger of the Company with another entity
(other than a merger or consolidation in which the Company is the surviving or
continuing corporation and in which the Common Stock outstanding immediately
prior to the merger or consolidation remains unchanged),
(ii) the sale or other transfer of all or substantially all of its
assets to another entity.
(iii) any reorganization or reclassification of the Common Stock or
other equity securities of the Company (other than a transaction to which
paragraph (6)(a)(i) applies), and
(iv) any statutory exchange of any shares of capital stock of the
Company with another corporation (other than a merger or consolidation in which
the Company is the surviving or continuing corporation and in which the Common
Stock outstanding immediately prior to the merger or consolidation remains un
changed).
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of , 1998, between the Company and Vision Net works III
B.V., as the same may be amended, supplemented or otherwise modified.
"Reorganization Unit" means the kind or amount of securities, cash
or other property receivable upon consummation of a Reorganization in
substitution of or in exchange for a share of Common Stock as such share is in
effect immediately prior to such consummation (provided that if the kind or
amount of securities, cash or other property receivable upon consummation of
such Reorganization is not the same with respect to each such share, then the
kind and amount of securities, cash or other property which shall be deemed
receivable upon consummation of such Reorganization with respect to each such
share for purposes hereof shall be the kind and amount so receivable per share
by a plurality of such shares).
"Rights" means the rights issuable pursuant to the Rights Agreement.
"Rights Agreement" means the rights agreement, dated as of October
13, 1993, between the Company and Continental Transfer and Trust Company, as
rights agent.
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<PAGE> 44
"Securities Act" shall mean the Securities Act of 1933, as amended
from time to time, or any successor statute, and the rules and regulations
promul gated thereunder.
"Senior Stock" shall mean any class or series of capital stock of
the Company hereafter created to the extent ranking prior to the Convertible
Preferred Stock as to dividend rights, rights of redemption or rights on
liquidation. Capital stock of any class or series shall rank prior to the
Convertible Preferred Stock as to dividend rights, rights of redemption or
rights on liquidation if the holders of shares of such class or series shall be
entitled to dividend payments, payments on redemp tion or payments of amounts
distributable upon dissolution, liquidation or winding up of the Company, as the
case may be, in preference or priority to the holders of shares of Convertible
Preferred Stock. No class or series of capital stock than ranks on a parity
basis with or junior to the Convertible Preferred Stock as to rights on
liquidation shall rank or be deemed to rank prior to the Convertible Preferred
Stock as to dividend rights or rights of redemption, notwithstanding that the
dividend rate, dividend payment dates, sinking fund provisions, if any, or
mandatory redemption provisions thereof are different from those of the
Convertible Preferred Stock.
"Stated Value" shall have the meaning set forth in paragraph (1).
"Trading Day" shall mean a day on which the Nasdaq Stock Market's
National Market or, if different, the principal exchange on which the Common
Stock is quoted or traded is each open for the transaction of business.
"Trading Price" of a security or property for any day means the
closing sale price regular way on such day, or, in case no such sale takes place
on such day, the average of the reported closing bid and asked prices of such
security or property on such day on the applicable established market on which
such security or property is traded.
(21) DIVIDENDS.
(a) Payment. The holders of outstanding shares of Convertible
Preferred Stock shall be entitled to receive, when, as and if declared by the
Board out of funds legally available therefor (without prejudice to paragraph
(3)(b)), cumula tive dividends, in preference to dividends on any Junior Stock,
at the rate per annum of % of the Stated Value per share, rounded to the nearest
cent. Such dividends shall accrue from the Issue Date and shall be payable
semi-annually in arrears, in whole or in part, on [ ] and [ ] of each year
(each, a "Dividend Payment
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<PAGE> 45
Date") commencing on the second anniversary of the Issue Date; provided,
however, that with respect to any Dividend Period during which a redemption or
conversion occurs, the Board shall declare accrued dividends to, and pay such
dividends on, the related Redemption Date or Conversion Date, respectively, in
which case such dividends shall be payable on such Redemption Date or Conversion
Date, respec tively, to the holders of the shares of Convertible Preferred Stock
as of a special record date (not to exceed 45 days preceding the payment date)
for such dividend payment. Each dividend on the shares of Convertible Preferred
Stock shall be payable to holders of record as they appear on the stock register
of the Company on the Record Date or, as the case may be, the special record
date for such dividend and, for purposes of calculating the accrual of
dividends, dividends will accrue to, but not including, the date fixed for
payment.
Dividends on the outstanding shares of Convertible Preferred Stock
will accrue on a daily basis (without interest or compounding) whether or not
there are funds legally available for the payment of such dividends and whether
or not such dividends are declared. Dividends will cease to accrue in respect of
shares of Convertible Preferred Stock on the date of their redemption or
conversion. No interest, or sum of money in lieu of interest, shall be payable
in respect of any accrued dividend payment.
(b) Declaration and Manner of Payment of Dividends. The Board shall
declare and cause to be paid accrued but unpaid dividends on the Convertible
Preferred Stock at the rates, times and one for the forms described herein to
the maximum extent that the Company has funds legally available therefor;
provided, however, that without prejudice to the accrual thereof, such dividends
need not be declared or paid in cash to the extent the payment thereof is
prohibited by the terms and provision of any agreement of the Company referred
to in paragraph (3)(e). Any dividends may be paid, in the sole discretion of the
Board: (i) in cash out of funds legally available therefor; (ii) through the
delivery of shares of Common Stock; (iii) through the delivery of additional
shares of Convertible Preferred Stock; or (iv) through any combination of the
foregoing forms of consideration elected by the Board in its sole discretion;
provided, however, that if the Board shall fail to declare and cause to be paid
an accrued dividend payment in cash on any Dividend Payment Date (whether or not
there are unrestricted funds legally available for the payment of such dividends
in cash), then the Board shall declare and cause to be paid accrued dividends,
whether or not cumulated, through the delivery of shares of Common Stock or
additional shares of Convertible Preferred Stock to the extent permitted by
applicable law, regardless of the terms and provisions of any agreement of the
Company of the type referred to in paragraph (3)(e) including any agreement
relating
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<PAGE> 46
to any indebtedness of the Company. If any dividend declared by the Board is to
be paid, in whole or in part, through the delivery of shares of Common Stock or
additional shares of Convertible Preferred Stock, each holder of Convertible Pre
ferred Stock shall receive the same proportion of cash and/or shares of Common
Stock and/or additional shares of Convertible Preferred Stock (except for cash
paid in lieu of fractional shares) delivered in payment of such dividend to
other holders of shares of Convertible Preferred Stock.
(c) Payment of Dividends by Delivery of Common Stock. If the Company
elects to pay any dividend payment, in whole or in part, by delivery of shares
of Common Stock, the amount of such dividend payment to be paid per share of
Convertible Preferred Stock in shares of Common Stock (the "Common Stock
Dividend Amount") shall be paid through the delivery to the holders of record
for such shares of Convertible Preferred Stock on the Record Date for such
dividend payment of a number of shares of Common Stock determined by dividing
the Common Stock Dividend Amount by the Average Market Price. No fractional
shares of Common Stock shall be delivered to a holder of shares of Convertible
Preferred Stock, but the Company shall instead pay a cash adjustment determined
as provided in paragraph (9).
(d) Payment of Dividends by Delivery of Additional Convertible
Preferred Stock. If the Company elects to pay any dividend payment, in whole or
in part, by delivery of additional shares of Convertible Preferred Stock, the
amount of such dividend payment to be paid per share of Convertible Preferred
Stock in additional shares of Convertible Preferred Stock (the "Preferred Stock
Dividend Amount") shall be paid through the delivery to the holders of record of
such shares of Convertible Preferred Stock on the Record Date for such dividend
payment of a number of shares of Convertible Preferred Stock determined (i) if
on such date the Fixed Price is higher than the Average Market Price, then by
dividing (A) the product of multiplying the Fixed Price by the Preferred Stock
Dividend Amount by (B) the product of multiplying the Average Market Price of
the Common Stock by the Stated Value, or (ii) if on such date the Fixed Price is
lower than the Average Market Price, then by dividing the Preferred Stock
Dividend Amount by the Stated Value. No fractional shares of Convertible
Preferred Stock shall be delivered to a holder of shares of Convertible
Preferred Stock, but the Company shall instead pay a cash adjustment determined
in accordance with paragraph (9).
(e) Prohibitions on Cash Dividends. Notwithstanding anything
contained in this Certificate to the contrary, but without effect on the accrual
thereof, no cash dividends on shares of Convertible Preferred Stock shall be
declared by the
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<PAGE> 47
Board or paid or set apart for payment by the Company at such time as the terms
and provisions of any agreement of the Company, including, without limitation,
any agreement, contract, indenture, bond, note, debenture, guarantee or other
instrument relating to or evidencing its indebtedness, prohibits such
declaration, payment or setting apart for payment or provides that such
declaration, payment or setting apart for payment would constitute a breach
thereof or a default thereunder; provided, however, that nothing contained in
this paragraph (e) shall alter, limit or restrict the Company's obligation to
declare and pay accrued dividends, to the extent permitted by applicable law,
through the delivery of shares of Common Stock or additional shares of
Convertible Preferred Stock pursuant to the proviso contained in the second
sentence of paragraph (3)(b), whether permitted by any such agreement or not.
(f) Pro Rata. All dividends paid with respect to the shares of Con
vertible Preferred Stock shall be paid pro rata (as nearby as may be
practicable) to the shareholders entitled thereto.
(g) Credit. Any dividend payment made on the shares of Convertible
Preferred Stock shall first be credited against the earliest accrued but unpaid
dividend due with respect to the shares of Convertible Preferred Stock.
(h) Priority. Payment of dividends to the holders of shares of
Convertible Preferred Stock shall be subject to the prior preferences and other
rights of any Senior Stock and to the provisions of paragraph (7).
(22) REDEMPTION.
(a) Optional Redemption. At any time during the period beginning on
the third anniversary of the Issue Date until the Redemption Date, the Company
shall have the right to redeem the outstanding shares of Convertible Preferred
Stock at a price equal to $1,000 per share, together with an amount equal to all
dividends accrued but unpaid thereon to the date fixed for redemption (the
"Redemption Price").
The Company shall not be required to register a transfer of (i) any
shares of Convertible Preferred Stock for a period of 5 Business Days next
preceding any selection of shares of Convertible Preferred Stock to be redeemed
or (ii) any shares of Convertible Preferred Stock called for redemption.
(b) Mandatory Redemption. All outstanding shares of Convertible
Preferred Stock shall be mandatorily redeemed by the Company out of funds
legally
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<PAGE> 48
available therefor on the date that is the tenth anniversary of Issue Date at a
redemp tion price equal to $1,000 per share, plus an amount equal to all accrued
and unpaid dividends per share (the "Mandatory Redemption Price").
(c) Company's Right to Elect Manner of Payment of Redemption Price.
The Company may effect the redemption of shares of Convertible Preferred Stock
at the Redemption Price or the Mandatory Redemption Price, in the sole
discretion of the Board: (i) in cash out of funds legally available therefor,
(ii) in exchange for and through the delivery of shares of Common Stock or (iii)
through any combination of the foregoing forms of consideration elected by the
Board in its sole discretion.
(d) Notice of Redemption. The Company shall provide notice of any
redemption of shares of Convertible Preferred Stock to holders of record of
Convert ible Preferred Stock to be called for redemption not less than 30 days
nor more than 60 days prior to the Redemption Date. Such notice (a "Redemption
Notice") shall, subject to paragraph (4)(e)(z), be provided in accordance with
paragraph (14); provided, however, that neither failure to give such notice nor
any defect therein shall affect the validity of the proceedings for the
redemption of any shares of Convertible Preferred Stock to be redeemed.
In addition to any information required by law, the Redemption
Notice shall state, as appropriate, the following (and may contain such other
informa tion as the Company deems advisable):
(A) the Redemption Date;
(B) the number of shares of Convertible Preferred Stock to be
redeemed and, if less than all the shares held by such holder
are to be redeemed, the number of shares to be redeemed from
such holder;
(C) the then applicable Redemption Price and the form or forms of
consideration that the Company has elected to pay and/or
deliver upon such redemption and, if more than one form of
consideration has been elected by the Company, the desig nated
portions of the Redemption Price to be paid in each form of
consideration so elected;
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<PAGE> 49
(D) if the Company has elected to exchange and deliver shares of
Common Stock in payment of the Redemption Price (or a
designated portion thereof), the Company's computation of the
number of shares of Common Stock exchangeable and deliver able
as provided in paragraph (4)(e) below;
(E) the place or places in the United States or England and Wales
where certificates for Convertible Preferred Stock to be re
deemed are to be surrendered for redemption; and
(F) that dividends on the shares of Convertible Preferred Stock to
be redeemed shall cease to accrue on the Redemption Date
(unless the Company defaults in making payment of the Re
demption Price).
(e) Redemption by Delivery of Common Stock. If the Company elects to
pay, in whole or in part, the Redemption Price in respect of shares of
Convertible Preferred Stock in exchange for and through the delivery of shares
of Common Stock, then the Company shall deliver to each holder of shares of
Convert ible Preferred Stock to be redeemed on the Redemption Date a number of
shares of Common Stock equal to the aggregate Redemption Price or Mandatory
Redemption Price (or designated portion thereof) of such shares of Convertible
Preferred Stock divided by the Average Market Price. No fractional shares of
Common Stock shall be delivered to a holder of shares of Convertible Preferred
Stock in payment of the Redemption Price or Mandatory Redemption Price, but the
Company shall instead pay a cash adjustment determined as provided in paragraph
(9).
(f) Deposit of Funds and/or Shares. If on or before the Redemption
Date: (x) the Company shall have deposited with any bank or trust company
organized under the laws of the United States of America or any state thereof
having capital, undivided profits and surplus aggregating at least $250 million
(the "Re demption Agent"), cash (including cash for any adjustment in lieu of
delivering fractional shares) and/or shares of Common Stock, as applicable,
sufficient to pay in full the aggregate Redemption Price or Mandatory Redemption
Price (calculated through the Redemption Date) for such shares of Convertible
Preferred Stock on such Redemption Date, (y) such cash and/or shares of Common
Stock are readily available to, but only to, the holders of Convertible
Preferred Stock in satisfaction of the obligations of the Company with respect
to the payment of the Redemption Price or the Mandatory Redemption Price and (z)
the Company shall prior to the Redemp tion Date have so notified each record
holder of Convertible Preferred Stock, which
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notice shall be given to each holder of Convertible Preferred Stock by courier
and shall identify the Redemption Agent, its address and telephone and
telecopier numbers and the contact person(s) at the Redemption Agent responsible
for adminis tration of the deposit then, effective as of the close of business
on such Redemption Date (and notwithstanding that any certificate therefor shall
not have been surren dered for cancellation): (i) such shares of Convertible
Preferred Stock shall no longer be deemed outstanding but any shares of Common
Stock so deposited in accordance with this paragraph (e) for which such
Convertible Preferred Stock was redeemed shall be deemed to be outstanding; (ii)
the holders thereof shall cease to be holders of Convertible Preferred Stock but
shall be shown on the records of the Company as holders of the Common Stock so
deposited in accordance with this paragraph (e) in redemption of such
Convertible Preferred Stock; (iii) dividends with respect to the shares so
called for redemption shall cease to accrue on the Redemp tion Date but, subject
to paragraph (4)(f), such holders shall be entitled to any dividends which shall
thereafter accrue on, and shall be entitled to exercise all other rights
associated with, any shares of Common Stock so deposited in accordance with this
paragraph (e) in redemption of such Convertible Preferred Stock; and (iv) all
rights whatsoever with respect to the shares so called for redemption shall
forthwith cease and terminate (except the right of such holders, upon the
surrender of certifi cates evidencing the shares of Convertible Preferred Stock
so redeemed, to receive the cash and/or Common Stock, as applicable, payable or
deliverable in payment of the Redemption Price therefor, and the applicable cash
adjustment, if any, in lieu of fractional shares, without interest). Any cash
and/or shares of Common Stock so deposited or set apart which shall remain
unclaimed at the end of one year after the Redemption Date shall be returned or
released to the Company, after which time the holders of shares of Convertible
Preferred Stock called for redemption on such Redemption Date that remain
outstanding after such one-year period shall look only to the Company for the
payment of the Redemption Price for such shares, without interest.
A deposit made in compliance with the immediately preceding sentence
shall, except to the extent released or returned to the Company, be deemed to
constitute full payment for the shares of Convertible Preferred Stock to be
redeemed. Any interest accrued on funds so deposited shall be paid by the Redemp
tion Agent to the Company from time to time. If any shares of Convertible
Preferred Stock called for redemption on such Redemption Date are converted, in
accordance with paragraph (5), between the date such cash and/or shares of
Common Stock are so deposited with the Redemption Agent and the close of
Business on the Redemp tion Date, then the cash (including cash for any
adjustment in lieu of delivering fractional shares) and/or shares of Common
Stock, as applicable, so deposited for the
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redemption of such shares so covered shall be promptly thereafter returned by
the Redemption Agent to the Company.
(g) Surrender of Certificates; Status. Each holder of shares of
Convertible Preferred Stock to be redeemed shall not be entitled to receive
payment of the Redemption Price for such shares until such holder shall
surrender the certifi cates evidencing such shares duly endorsed by, or
accompanied by, an instrument of transfer (in form reasonably satisfactory to
the Company) duly executed by, the holder or such holder's duly authorized
attorney-in-fact or, if the shares issuable upon redemption are to be issued in
the same name as the name in which such share of the Convertible Preferred Stock
is registered, in blank to the Redemption Agent (or to the Company if there is
no Redemption Agent) at the place designated in the Re demption Notice for such
redemption and shall thereupon be entitled to receive the consideration for such
shares specified in the Redemption Notice in an aggregate amount equal to the
Redemption Price for such shares. Holders of shares of Convert ible Preferred
Stock that are redeemed on the Redemption Date shall not be entitled to receive
dividends declared and paid on any shares of Common Stock exchange able and
deliverable in payment of the Redemption Price (or designated portion thereof)
for such shares of Convertible Preferred Stock, and such shares of Common Stock
shall not be entitled to vote, until such shares of Common Stock are delivered
upon the surrender of the certificates representing such shares of Convertible
Preferred Stock. Upon such surrender, such holders shall be entitled to receive
such dividends declared and paid subsequent to such Redemption Date and prior to
the delivery.
(h) If any shares of Convertible Preferred Stock have been surren
dered for conversion into Common Stock pursuant to paragraph (5), then (i) the
Company shall not be obligated to redeem such shares and (ii) shares of Common
Stock and any funds which shall have been deposited for the payment of the Re
demption Price for such surrendered shares of Convertible Preferred Stock shall
be returned to the Company immediately after such conversion (subject to
declared dividends payable to holders of shares of Convertible Preferred Stock
on the record date for such dividends being so payable, to the extent set forth
in paragraph (5) hereof, regardless of whether such shares are converted
subsequent to such record date and prior to the related Dividend Payment Date).
(i) Priority. The right of the Company to redeem shares of Convert
ible Preferred Stock pursuant to this paragraph (4) shall be subject to the
prior preferences and other rights of any Senior Stock and to the provisions of
paragraph (7).
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(23) CONVERSION.
(a) Optional Conversion. A holder of one or more shares of the
Convertible Preferred Stock shall have the right, exercisable at any time and
from time to time after the Issue Date until the Redemption Date with respect to
the affected shares, at such holder's option, to convert any or all shares of
the Convert ible Preferred Stock into such number of shares of Common Stock as
is equal to the aggregate Stated Value of the shares of Convertible Preferred
Stock surrendered for conversion divided by the Denominator. In the case of
shares of Convertible Preferred Stock called for redemption, conversion rights
will expire at 5:00 p.m. New York City time on the Business Day prior to the
applicable Redemption Date and if not exercised prior to such time, such
conversion right will be lost, unless the Company defaults in making the payment
due upon redemption. Holders of record of shares of the Convertible Preferred
Stock at the close of business on a record date fixed for the payment of a
dividend on such shares shall be entitled to receive the dividend
notwithstanding the conversion of the shares prior to the dividend payment date.
In addition to the right to receive accrued dividends not in arrears as provided
for in paragraph (3)(a), if there is an arrearage of dividends in respect of any
of the shares of Convertible Preferred Stock surrendered for conversion, upon
such conver sion, the Company shall pay to the holder of the Convertible
Preferred Stock so surrendered such arrearage: (i) in cash out of funds legally
available therefor; (ii) through the delivery of shares of Common Stock; or
(iii) through any combination of the foregoing elected by the Board in its sole
discretion, in each case, subject to, and in accordance with, the provisions of
paragraph (3). If the Company elects, or is required by the proviso contained in
paragraph (3)(b), to pay any dividend arrearage on the Convertible Preferred
Stock, in whole or in part, in shares of Common Stock, each holder of the
Convertible Preferred Stock entitled to such dividend payment shall be issued
that number of shares of Common Stock equal to the aggregate amount of such
dividend arrearage to be paid through the delivery of shares of Common Stock
divided by the Average Market Price as of the Conversion Date (with a cash
payment in lieu of the issuance of fractional shares determined in accordance
with paragraph (9)). Except as provided above and in paragraph (3)(a), the
Company shall make no other payment of or allowance for unpaid dividends,
whether or not in arrears, on such Convertible Preferred Stock or for previously
declared dividends or distributions on the shares of Common Stock issued upon
such conversion. Each share surrendered for conversion shall, unless the shares
issuable on conversion are to be issued in the same name as the name in which
such share of the Convertible Preferred Stock is registered, be duly endorsed
by, or be accompa nied by an instrument of transfer (in form reasonably
satisfactory to the Company), duly executed by the holder or such holder's duly
authorized attorney-in-fact.
(b) Conversion Procedure. To exercise the conversion right, the
holder of each share of the Convertible Preferred Stock to be converted shall
surren der the certificate representing such share, duly endorsed or assigned to
the Company or in blank, at any office of any transfer agent for the Convertible
Preferred Stock in New York, New York previously appointed by the Company and
identified in a notice given to the holders of Convertible Preferred Stock in
accordance with paragraph (14), or, if no such transfer agent has been so
appointed and identified, at the office of the Company and (whether or not a
transfer agent has been so appointed and identified) shall give not less than 60
days prior notice to the Company in accordance with paragraph (14) that such
holder elects to convert the shares repre sented by such certificate or a
portion thereof. Such notice shall also state the name or names (with
address(es) in which the certificate or certificates for the shares of Common
Stock which shall be issuable upon such conversion shall be issued, and shall be
accompanied by funds in an amount sufficient to pay any transfer or similar tax
required by the provisions of paragraph (10). Each share surrendered for conver
sion shall, unless the shares issuable on conversion are to be issued in the
same name as the name in which such share of the Convertible Preferred Stock is
registered, be duly endorsed by, or be accompanied by an instrument of transfer
(in form reason ably satisfactory to the Company), duly executed by the holder
or such holder's duly authorized attorney-in-fact.
(c) Issuance of Common Stock. As promptly as practicable after the
surrender of certificates for shares of the Convertible Preferred Stock for
conversion, the giving of the notice and the delivery of the funds, if any,
referred to in paragraph (5)(b) above, the Company shall issue and shall deliver
to such holder, or on such holder's written order: (i) a certificate or
certificates for the number of whole shares of Common Stock issuable upon the
conversion of such shares of Convertible Preferred Stock in accordance with the
provisions of this paragraph (5); (ii) a check or cash in respect of any
fractional interest in respect of a share of Common Stock arising upon such
conversion, as provided in paragraph (9) below; and (iii) in respect of any part
of any share of Convertible Preferred Stock that is surrendered for conversion
in part, a new certificate for a share of Convertible Preferred Stock having a
Stated Value (rounded to the nearest whole cent) equal to the part of the share
surrendered that was not converted into shares of Common Stock. Each conversion
with respect to any shares of the Convertible Preferred Stock shall be deemed to
have been effected (irrespective of whether the Company shall have delivered
certificates representing the Common Stock) on the date on which the
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certificates for shares of the Convertible Preferred Stock shall have been
surrendered (accompanied by the funds, if any, required by paragraph (10)
below), such notice shall have been given and such instruments of transfer, if
any, shall have been delivered to the Company or the transfer agent as
aforesaid, and the person or persons entitled to receive the Common Stock
issuable upon such conversion shall be deemed for all purposes to be the record
holder or holders of such Common Stock upon that date at that time (the
"Conversion Date").
(d) No Fractional Shares of Common Stock. No fractional shares of
Common Stock or scrip representing fractional shares shall be issued upon conver
sion of Shares of the Convertible Preferred Stock. If more than one share of the
Convertible Preferred Stock shall be surrendered for conversion at one time by
the same holder, the number of full shares of Common Stock issuable upon
conversion thereof shall be computed on the basis of the aggregate number of
shares of the Convertible Preferred Stock so surrendered. Instead of any
fractional share of Common Stock otherwise issuable upon conversion of any
shares of the Convertible Preferred Stock, the Company shall pay a cash amount
determined in accordance with paragraph (9) below in respect of such fraction.
(e) Reservation of Shares of Common Stock. The Company shall reserve
out of its authorized but unissued Common Stock or its Common Stock held in
treasury sufficient shares of Common Stock to permit the conversion of all of
the outstanding shares of the Convertible Preferred Stock. The Company shall at
no time permit the authorized but unissued amount of its Common Stock to be
insuffi cient to permit the conversion of all shares of the Convertible
Preferred Stock at the time outstanding. All shares of Common Stock delivered
upon conversion of the shares of the Convertible Preferred Stock will, upon
delivery, be duly authorized and validly issued, fully paid and nonassessable,
free from any adverse claims and preemptive rights with respect thereto.
(6) ADJUSTMENTS.
(a) Common Stock Dividends, Splits, Subdivisions and Combina tions.
The Fixed Price shall be subject to adjustment from time to time as follows:
(i) If, after the Issue Date, the Company shall (A) pay a dividend
or make a distribution on its outstanding Common Stock in shares of its Common
Stock, (B) split or subdivide its outstanding Common Stock into a greater number
of shares or (C) combine its outstanding Common Stock into a smaller number of
shares, then, in each case, the Fixed Price in effect immediately prior to such
action
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shall be adjusted concurrently with the occurrence of such event and without any
action on the part of the Company or any holder of Convertible Preferred Stock
to that price determined by multiplying the Fixed Price in effect immediately
prior to such event by a fraction:
(1) the numerator of which shall be the total number of shares of
Common Stock outstanding immediately prior to such time, and
(2) the denominator of which shall be the total number of shares
of Common Stock outstanding immediately after such time.
An adjustment made pursuant to this paragraph (i) shall become effective immedi
ately after the record date, in the case of a dividend or distribution (except
as provided in paragraph (6)(e) below), and shall become effective immediately
after the effective date in the case of a subdivision, split or combination.
(ii) If, after the Issue Date, the Company issues Options or Convert
ible Securities to substantially all holders of Common Stock entitling them (for
a period commencing no earlier than the record date for the determination of
holders of Common Stock entitled to receive such Options or Convertible
Securities and expiring not more than within 45 days after such record date) to
subscribe for, purchase, otherwise acquire or convert into shares of Common
Stock at a price per share less than the Current Market Price per share of such
shares of Common Stock on such record date, then the Fixed Price in effect
immediately prior to the Computa tion Date shall be adjusted on the Computation
Date (without any action on the part of the Company or any holder of Convertible
Preferred Stock) so that the same shall equal the price determined by
multiplying the Fixed Price in effect immediately prior the such Computation
Price by a fraction:
(1) the numerator of which shall be the number of shares of Com
mon Stock outstanding immediately prior to the Computation
Date plus the number of shares of Common Stock which the
aggregate offering price of the total number of shares of Com
mon Stock issuable pursuant to such Options or pursuant to the
terms of such Convertible Securities would purchase at the
then Current Market Price on such Computation Date, and
(2) the denominator of which shall be the number of shares of
Common Stock outstanding on such Computation Date plus
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the maximum number of additional shares of Common Stock
issuable pursuant to all such Options or necessary to effect
the conversion or exchange of all such Convertible Securities.
To the extent of the expiration unexercised of the right of conversion or
exchange of any Convertible Securities, or to the extent of the expiration,
unexercised, of any Options, or upon any increase in the minimum consideration
receivable by the Company for the issuance of additional shares of Common Stock
pursuant to such Convertible Securities or Options, in either case previously
adjusted as aforesaid, then the number of shares of Common Stock deemed to be
issued and outstanding by reason of the fact that they were issuable upon
conversion or exchange of any such Convertible Securities or upon exercise of
any such Options shall no longer be computed as set forth above, and the Fixed
Price shall forthwith be readjusted and thereafter be the price which it would
have been (but reflecting any other adjustments in the Fixed Price made pursuant
to the provisions of this paragraph (6)(a) after the Issue Date) had the
adjustment of the Fixed Price made upon the issuance or sale of such Convertible
Securities or the issuance of such Options not been made or made upon the basis
of such increased minimum consideration, as the case may be. Such adjustment
shall be made successively wherever any such Options or Convertible Securities
are issued at a price below the Current Market Price therefor as in effect on
the date of issuance. In determining whether any Options or Convertible Securi
ties entitle the holders to subscribe for or purchase shares of Common Stock at
less than the Current Market Price therefor, and in determining the aggregate
offering price of shares of Common Stock, there shall be taken into account any
consideration received by the Company for such Options or Convertible
Securities, the value of such consideration, if other than cash, to be
determined in good faith by the Board. Notwithstanding the foregoing, if the
Options or Convertible Securities are exercis able, convertible or exchangeable
only upon the occurrence of certain triggering events or the arrival of a
specified date, then the Fixed Price will not be adjusted until such triggering
events or specified dates occur.
(iii) If, after the Issue Date, the Company shall distribute, by way
of dividend or otherwise, to all holders of Common Stock shares of any class of
stock other than Common Stock, evidences of indebtedness or other assets (other
than cash dividends out of current or retained earnings), or shall distribute to
substantially all holders of Common Stock, Options (other than those referred to
in paragraph (6)(a)(ii) above, then, in each such case, the Fixed Price shall be
adjusted on the record date (without any action on the part of the Company or
any holder of Convert ible Preferred Stock) so that the same shall equal the
price determined by multiplying
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the Fixed Price in effect immediately prior to the date of such distribution by
a fraction:
(1) the numerator of which shall be the Current Market Price of
the Common Stock on the record date mentioned below less the
then fair market value (as reasonably determined in good faith
by the Board) of the portion of the assets so distributed or
of such subscription Options applicable to one share of Com
mon Stock, and
(2) the denominator of which shall be such Current Market Price of
the Common Stock. Such adjustment shall become effec tive
immediately after the record date for the determination of the
holders of Common Stock entitled to receive such distribu
tion.
In addition to the foregoing, if, upon the occurrence of the Distribution
Date (as defined in the Rights Agreement), the Company shall distribute the
Rights: (x) the record holders of Convertible Preferred Stock on the
Distribution Date (as so defined) shall be deemed to have been holders of Common
Stock issued on or after the Merger (as defined in the Rights Agreement) and
prior to the Distribution Date (as so defined) for purposes of the Rights
Agreement; and (y) the Company shall make lawful and proper provisions so that
each such record holder shall receive, in addition to the shares of Common Stock
which may then be issuable upon conver sion pursuant to the provisions of this
Certificate, the same number of Rights to which a holder of the number of shares
of Common Stock into which the shares of Convertible Preferred Stock held by
such record holder was convertible immediately prior to the Distribution Date
(as so defined) would have been entitled on such Distribution Date pursuant to
the Rights Agreement if all the shares of Convertible Preferred Stock held by
such record holder had been converted pursuant to the provisions of paragraph
(5)(a).
(iv) Without prejudice to paragraph (7)(a) of this Certificate, if
after the Issue Date, the Company shall, by dividend or otherwise, at any time
distribute to all holders of its Common Stock cash (including any distributions
of cash out of current or retained earnings of the Company but excluding any
cash that is distrib uted as part of a distribution requiring an adjustment
pursuant to paragraph (iii) of this paragraph) in an aggregate amount that,
together with the aggregate amount of any other distributions to all holders of
its Common Stock made in cash within the 12 months preceding the date fixed for
determining the stockholders entitled to such
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distribution (the "Distribution Record Date") and in respect of which no
adjustment pursuant to paragraph (iii) of this paragraph (6) or this paragraph
(iv) has made, exceeds 10% of the product of (A) the Current Market Price per
share of the Com mon stock on the Distribution Record Date times (B) the number
of shares of Common Stock outstanding on the Distribution Record Date (excluding
shares held in the treasury of the Company), the Fixed Price shall be reduced on
the Distribution Record Date (without any action on the part of the Company or
any holder of Convertible Preferred Stock) so that the same shall equal the
price determined by multiplying such Fixed Price in effect immediately prior to
the effectiveness of the Fixed Price reduction contemplated by this paragraph
(iv) by a fraction:
(1) the numerator of which shall be the Current Market Price per
share of the Common Stock on the Distribution Record Date less
the amount of such cash and other consideration so dis
tributed applicable to one share (based on the pro rata
portion of the aggregate amount of such cash and other
consideration, divided by the shares of Common Stock
outstanding on the Distribution Record Date) of Common Stock;
and
(2) the denominator of which shall be such Current Market Price
per share of the Common Stock on the Distribution Record Date,
such reduction to become effective immediately prior to the
opening of business on the day following the Distribution
Record Date.
Such adjustment shall become effective immediately after the record date for the
determination of stockholders entitled to receive such distribution, except as
pro vided in paragraph (6)(e) below. Such adjustment shall be made successively
whenever any such dividend or distribution shall be made.
(v) All calculations under this paragraph (6)(a) shall be made to
the nearest cent or nearest 1/1000th of a share of Common Stock.
(vi) Notwithstanding anything to the contrary set forth in this
paragraph (6), no adjustment shall be made to the Fixed Price (A) upon the
issuance or distribution of Options or Convertible Securities (or upon the
exercise of such Options or the conversion of such Convertible Securities)
pursuant to any stock option, restricted stock or other incentive or benefit
plan or stock ownership or purchase plan for the benefit of employees, directors
or officers of the Company and its subsidiaries or any dividend reinvestment
plan of the Company in effect or
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adopted on or before the Issue Date or approved by the stockholders or
compensation committee of the Company after the Issue Date or (B) upon the
deemed issuance of Common Stock (provided, that such issuance does not involve
an actual issuance of Common Stock) by reason of adjustments required pursuant
to anti-dilution provi sions applicable to securities of the Company as in
effect on the Issue Date.
(vii) The Company shall also be entitled to make such deductions, in
addition to those required by paragraph (6)(a)(i), (ii) and (iii), to the Fixed
Price as it considers to be advisable in order to avoid or diminish any tax to
holders of Common Stock, Options or Convertible Securities resulting from any
stock dividends, subdivi sions of shares, distributions of Options or
Convertible Securities (or any transac tions which would be treated as any of
the foregoing transactions pursuant to Section 305 of the Internal Revenue Code
of 1986, as amended) made by the Company. In addition, the Company from time to
time may decrease the Fixed Price by any amount for any period of time if the
period is at least 20 days and if the decrease is irrevocable during the period.
Whenever the Fixed Price is so decreased, the Company shall give holders of
record of shares of Convertible Preferred Stock a notice of the decrease in
accordance with paragraph (14) at least 15 days before the date the decreased
Fixed Price takes effect, and such notice shall state the decreased Fixed Price
and the period it will be in effect. A voluntary adjustment of the Fixed Price
shall not change or adjust the Fixed Price otherwise in effect for purposes of
this paragraph (6).
(viii) If, at any time as a result of an adjustment made pursuant to
paragraph (6)(a)(i), (ii) or (iii), the holder of any share of the Convertible
Preferred Stock thereafter surrendered for conversion or redemption shall become
entitled to receive any securities of the Company other than shares of the
Common Stock, thereafter the number of such other securities so receivable upon
conversion of any share of the Convertible Preferred Stock shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Common Stock contained in
paragraphs (6)(a)(i) through (6)(a)(vii) above, and the other provisions of this
paragraph (6)(a)(viii) with respect to the Common Stock shall apply on like
terms to any such other shares.
(b) (i) Reorganizations. If there is to occur any Reorganization,
and there is determinable for the entirety of each Reorganization Unit to be
issued in connection with such Reorganization on an Applicable Price, then as a
condition precedent to such Reorganization proper provision shall be made such
that each share of Convertible Preferred Stock, or each share of convertible
preferred stock of the Company or its successor by merger or consolidation
issuable to each holder of
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Convertible Preferred Stock in exchange or substitution therefor (provided that
such share of convertible preferred stock has the same Stated Value and, subject
to the proviso in paragraph (6)(b)(ii), substantially the same rights, benefits
and privileges as a share of Convertible Preferred Stock), shall be convertible
or redeemable upon and from and after the occurrence of such Reorganization
into, in lieu of Common Stock as provided herein (and without prejudice to the
right of the Company or its successor to redeem convertible preferred stock for
cash in accordance herewith), a number of Reorganization Units determined by
dividing the Stated Value of such share by the higher of (x) the Fixed Price on
the Conversion Date and (y) the Applicable Price of a Reorganization Unit on the
Conversion Date.
If there is to occur any Reorganization, and any Reorganization Unit to be
issued in connection with such Reorganization does not have in whole or in part
a determina ble Applicable Price, then prior to the occurrence of such
Reorganization and on a basis such that the holders of Convertible Preferred
Stock shall be holders of Common Stock for all purposes of such Reorganization,
the Company will redeem all Convertible Preferred Stock in accordance herewith.
The Company shall not effect any Reorganization unless prior to or
simultaneously with the consummation thereof, the successor entity resulting
from such consolidation or merger or the entity purchasing such assets or
compelling such exchange, as the case may be, shall make provisions in its
certificate or articles of incorporation or other constituent document to
establish such right. The provisions of this paragraph (6)(b) shall similarly
apply to successive Reorganizations.
(ii) Holding Company. Notwithstanding anything herein to the
contrary, if the Company is reorganized such that the Common Stock is exchanged
for the common stock of a new entity ("Holdco") whose common stock is traded on
NASDAQ or another recognized securities exchange, then the Company, by notice to
the holders of the Convertible Preferred Stock but without any required consent
on their part, may cause the exchange of this Convertible Preferred Stock for
convertible preferred stock of Holdco having the same terms and conditions as
set forth herein, provided that where Holdco is not a Delaware company or where
the Holdco share structure is not identical to that of the Company, the rights
attaching to the mandatorily redeemable preferred stock of Holdco may be
adjusted so as to comply with the local law of the country of incorporation of
Holdco or the new share structure of Holdco subject to such rights effectively
giving the same economic rights as the Mandatorily Redeemable Preferred Stock
(ignoring for these purposes any resultant change in the tax treatment for the
holders of such stock).
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(iii) Other Adjustments. In the event that, as a result of an
adjustment made pursuant to paragraphs (6)(a) or (b), the holder of any
Convertible Preferred Stock thereafter surrendered for conversion or redemption
shall become entitled to receive any shares of capital stock of the Company
other than shares of its Common Stock, thereafter the number of such shares
issuable upon conversion or redemption of such security shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to Common Stock contained in such
paragraphs this Article V.
(c) Notices of Corporate Action. If:
(i) the Company shall take any action which would require an
adjustment of the Fixed Price pursuant to paragraph (6)(a); or
(ii) the Company or the Board shall approve any Reorganization to
which the Company is a party and for which approval of any Stockholders of the
Company is required; or
(iii) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, in each case, the Company shall cause to be filed with the transfer agent
for the Convertible Preferred Stock, if any, and shall cause to be given to the
holders of shares of the Convertible Preferred Stock in accordance with
paragraph (15), as promptly as possible, but at least 10 days prior to the
applicable date hereinafter specified, a notice stating (A) the date on which a
record is to be taken for the purposes of such dividend or distribution, or, if
a record is not to be taken, the date as of which the holders of Common Stock of
record to be entitled to such dividend or distribution are to be determined or
(B) the date on which the event giving rise to an adjustment of the type
described in paragraph (6)(a), such a Reorganization, dissolu tion, liquidation
or winding up may occur, as the case may be, is expected to become effective or
occur, and, if earlier, the date as of which it is expected that holders of
Common Stock of record shall be entitled to exchange their shares of Common
Stock for stock of the Company, securities, cash or other property deliverable
upon such Reorganization, dissolution, liquidation or winding up. Failure to
give or receive such notice or any defect therein shall not affect the legality
or validity of the action or transactions described in sub-paragraphs (i)
through (iii) above.
(d) Notice of Adjustments. Whenever any adjustment is required by
the terms of paragraph (6)(a), the Company shall promptly cause a notice of such
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adjustment and a computation thereof to be mailed to each registered holder of
shares of the Convertible Preferred Stock.
(e) Deferral of Issuance and Payment. In any case in which para
graph (6) shall require an adjustment be made immediately following a record
date, the Company may elect to defer (but only 5 Business Days following the
mailing of the notice referred to in paragraph (6)(d)) issuing to the holder of
any shares of the Convertible Preferred Stock converted after such record date
the additional shares of Common Stock and other capital stock of the Company
issuable upon such conver sion over and above the Common Stock and other capital
stock of the Company issuable upon such conversion only on the basis of the
conversion rate prior to adjustment; provided, however, that in lieu of the
shares the issuance of which is so deferred, the Company shall issue or cause
its transfer agent to issue due bills or other appropriate evidence of the right
to receive such shares and (ii) paying to such holder any amount in cash in lieu
of any fraction pursuant to paragraphs (5)(d) and (9) hereof.
(f) Listing of Common Stock. The Company will list the shares of
Common Stock required to be delivered as any dividend payment or as payment upon
redemption or conversion of shares of the Convertible Preferred Stock, prior to
delivery, upon each national securities exchange, the Nasdaq Stock Market's Na
tional Market or any similar system of automated dissemination of securities
prices, if any, upon which the Common Stock is listed at the time of delivery.
(g) Provision of Information. So long as any shares of Convertible
Preferred Stock remain outstanding, the Company undertakes to provide without
charge to each record holder of such shares copies of each: (i) annual report of
the Company on Form 10-K filed pursuant to Section 13(a) of the Exchange Act
concurrently with such filing; (ii) quarterly reports of the Company on Form
10-Q and current report of the Company on Form 8-K filed pursuant to Section
13(a) or 15(d) or the Exchange Act concurrently with such filing; (iii)
definitive proxy or information statement, form of proxy or other material of
the Company filed pursu ant to Section 14(a) of the Exchange Act concurrently
with such filing; and (iv) notice, press release and other information delivered
to holders of Common Stock generally concurrently with such delivery.
(7) LIMITATIONS ON DIVIDENDS AND REDEMPTIONS IN
RESPECT OF COMPANY STOCK.
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(a) Limitations on Junior Stock Dividends. As long as any shares
Convertible Preferred Stock are outstanding, no dividends shall be paid or
declared in cash on Junior Stock, nor shall any other distributions be made on
any Junior Stock, unless: (i) full dividends on all Parity Stock have been paid,
or declared and set aside for payment, for all dividend periods terminating on
or prior to the date of such Junior Stock dividend or distribution payment, to
the extent such dividends are cumulative and have fallen due; (ii) the Company
has paid or set aside all amounts, if any, then or therefore required to be paid
or set aside for all purchase, retirement, and sinking funds, if any, for any
Parity Stock; and (iii) the Company is not in default on any of its obligations
to redeem any Parity Stock.
(b) Limitations on Purchase of Junior Stock. As long as any shares
of Convertible Preferred Stock are outstanding, no shares of any Junior Stock
may be purchased, redeemed, or otherwise acquired by the Company or any of its
Subsidiar ies (except in connection with a reclassification of any Junior Stock
through the issuance of other Junior Stock and/or Convertible Securities for
shares of Junior Stock and cash in lieu of fractional shares in connection
therewith or the purchase, redemption or other acquisition of any Junior Stock
from any wholly-owned subsid iary), nor may any funds be set aside or made
available for any sinking fund for the purchase, redemption or other acquisition
of any Junior Stock, unless: (i) full dividends on all Parity Stock have been
paid, or declared and set aside for payment, for all dividend periods
terminating on or prior to the date of such purchase, redemp tion or
acquisition, to the extent such dividends are cumulative and have fallen due;
(ii) the Company has paid or set aside all amounts, if any, then or theretofore
required to be paid or set aside for all purchases retirement, and sinking
funds, if any, for any Parity Stock; and (iii) the Company is not in default on
any of its obligations to redeem any Parity Stock.
(c) Junior Stock Dividends Otherwise Permitted. Subject to the
provisions of paragraphs (7)(a) and 8(b), dividends or distributions (payable in
cash, property or securities) may be declared and paid on the shares of any
Junior Stock from time to time and any Junior Stock may be purchased, redeemed
or otherwise acquired by the Company or any of its subsidiaries from time to
time. In the event of the declaration and payment of any such dividends or
distributions, the holders of such Junior Stock will be entitled, to the
exclusion of holders of shares of Convert ible Preferred Stock, to share therein
according to their respective interests.
(d) Limitations on Parity Stock Dividends and Redemptions. As long
as any shares of Convertible Preferred Stock are outstanding, dividends or other
distributions may not be declared or paid on any Parity Stock, and the Company
may
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not purchase, redeem or otherwise acquire any Parity Stock (except (x) from any
wholly owned subsidiaries of the Company or (y) in connection with a mandatory
conversion or exchange of such Parity Stock or a conversion or exchange of such
Parity Stock at the option of the holder for securities other than Parity Stock
or Senior Stock and cash in lieu of fractional shares in connection therewith)
unless either:
(a)(i) full dividends on all Parity Stock have been paid, or
declared and set aside for payment, for all dividend periods terminating
on or prior to the date of such Parity Stock dividend, distribution,
purchase, re demption or other acquisition payment, to the extent such
dividends are cumulative and have fallen due;
(ii)the Company has paid or set aside all amounts, if any, then
or theretofore required to be paid or act aside for all purchase,
retirement, and sinking funds, if any, for any, Parity Stock; and
(iii)the Company is not in default on any of its obligations to
redeem any Parity Stock, or
(b) with respect to the payment of dividends only, any such
dividends are declared and paid pro rata so that the amounts of any
dividends declared and paid per share on shares of Convertible Preferred
Stock and each other share of such Parity Stock will in all cases bear to
each other the same ratio that accrued and unpaid dividends (including any
accumulation with respect to unpaid dividends for prior dividend periods,
if such dividends are cumula tive) per share on shares of Convertible
Preferred Stock and such other share of Parity Stock bear to each other.
(e) Certain Permitted Dividends and Redemptions. Nothing contained
in this paragraph (7) shall prevent: (i) the payment of dividends or the making
of distributions on any Junior Stock solely in shares of Junior Stock and/or
Convertible Securities for shares of Junior Stock (together with a cash
adjustment for fractional shares, if any) or the redemption, purchase or other
acquisition of Junior Stock solely in exchange for (together with a cash
adjustment for fractional shares, if any), or through the application of the
proceeds from the sale of, shares of Junior Stock and/or Convertible Securities
for shares of Junior Stock; (ii) the payment of dividends or the making of
distributions on any class or series of Parity Stock solely in (together with a
cash adjustment for fractional shares, if any) shares of Junior Stock and/or
Convertible Securities for shares of Junior Stock or the redemption,
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exchange, purchase or other acquisition of say class or series of Parity Stock
solely in exchange for (together with a cash adjustment for fractional shares,
if any), or through the application of the proceeds from the sale of shares of
Junior Stock and/or Convertible Securities for shares of Junior Stock or (iii)
the conversion or exchange of Convertible Preferred Stock into shares of Common
Stock (together with a cash adjustment for fractional shares, if any) and other
securities, assets or property, if any pursuant to the provisions of paragraphs
(4), (5) or (6).
(f) Waiver. The provisions of paragraphs (7)(a), (b) and (d) are for
the sole benefit of the holders of Convertible Preferred Stock and any other
class or series of Parity Stock having the terms described therein and
accordingly, at any time when (i) there are no shares of any such other class or
series of Parity Stock outstand ing or if the holders of each such other class
or series of Parity Stock have, by such vote or consent of the holders thereof
as may be provided for in the instrument creating or evidencing such class or
series, waived in whole or in part the benefit of such provisions (either
generally or in the specific instance), and (ii) the holders of shares of
Convertible Preferred Stock shall have waived (as provided in paragraph (15)) in
whole or in part the benefit of such provision (either generally or in the
specific instance), then the provisions of paragraphs (7)(a), (b) and (d) shall
not (to the extent waived, in the case of any partial waiver) restrict the
payment of dividends or the making of distributions on, or the redemption,
purchase or other acquisition of any shares of, Convertible Preferred Stock, any
other class or series of Parity Steel or any Junior Stock.
(8) LIQUIDATION RIGHTS.
(a) Payment of Liquidation Preference. If there is any liquidation,
dissolution, or winding up of the Company, whether voluntary or involuntary,
then the holders of shares of Convertible Preferred Stock then outstanding,
after payment, or provision for payment of the debts and other liabilities of
the Company and the payment or provision for payment of any distribution on any
shares of Senior Stock, and before any distribution to the holders of Junior
Stock, shall be entitled to be paid out of the assets of the Company available
for distribution to its stockholders an amount per share of Convertible
Preferred Stock in cash equal to the Liquidation Preference. If the assets of
the Company available for distribution to the holders of the shares of
Convertible Preferred Stock upon any dissolution, liquidation or winding up of
the Company shall be insufficient to pay in full the Liquidation Preference
payable to the holders of outstanding shares of Convertible Preferred Stock and
the liquidation preference payable to all other shares of Parity Stock (as set
forth in the instrument or instruments creating such Parity Stock), then the
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holders of shares of Convertible Preferred Stock and of all other shares of
Parity Stock shall share ratably in such distribution of assets in proportion to
the amount which would be payable on such distribution if the amounts to which
the holders of outstanding shares of Convertible Preferred Stock and the holders
of outstanding shares of such other Parity Stock were paid in full. Except as
provided in this paragraph (9)(a) holders is of Convertible Preferred Stock
shall not be entitled to any distribution in the event of the liquidation,
dissolution or winding up of the affairs of the Company.
(b) Certain Events Not Deemed Liquidation, Etc. For the purposes of
this paragraph (8) a Reorganization shall not be deemed to be a voluntary of
involuntary liquidation, dissolution or winding up of the Company.
(9) NO FRACTIONAL SHARES. No fractional shares of Common Stock or
Convertible Preferred Stock or scrip shall be issued in connection with the
delivery of shares of Common Stock or Convertible Preferred Stock upon
conversion of shares of Convertible Preferred Stock or in payment, in whole or
in part, of any dividend, Redemption Price or Liquidating Payment. Whether or
not a fractional share would be delivered to a holder of Convertible Preferred
Stock shall be based upon, in the case of the payment, in whole or in part, of
dividends, a Redemption Price of a Liquidating Payment pursuant to paragraphs
(3), (4) or (8) , respectively, and, in the case of conversion pursuant to
paragraph (5), through the delivery of shares of Common Stock or Convertible
Preferred Stock, on the total number of shares of Convertible Preferred Stock at
the time held by such holder and the total number of shares of Common Stock or
Convertible Preferred Stock, otherwise deliverable in respect thereof. Instead
of the issuance of a fraction of a share of Common Stock or Convertible
Preferred Stock or scrip, the Company shall pay instead an amount in cash
(rounded to the nearest whole cent) equal to, in the case of Common Stock, the
same fraction of the Closing Price of a share of preceding the Determination
Date.
(10) PAYMENT OF TAXES.
The Company shall pay any and all documentary, stamp or similar
transfer taxes payable in respect of the delivery of shares of Common Stock and
Convertible Preferred Stock, pursuant to paragraphs (3), (4), (5), or (8), as
applica ble; provided, however, the Company shall not be required to pay any
such tax that may be payable because any such shares are issued in a name other
than the name of the holder of such Convertible Preferred Stock.
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(11) NO PREEMPTIVE RIGHTS. The holders of shares of Convert ible
Preferred Stock shall have no preemptive rights, including preemptive rights
with respect to any shares of capital stock or other securities of the Company
convertible into or carrying rights or options to purchase any such shares.
(12) VOTING RIGHTS. (a) The holders of shares of Convertible
Preferred Stock shall have no Voting rights, except as otherwise required by law
and except as set forth in this paragraph (12). When and if the holders of
Convertible Preferred Stock are entitled to vote by law or pursuant to this
paragraph (12), each holder will be entitled to one vote per share.
(b) Dividend Non-Payment. In the event that the Company shall have
failed to pay dividends on the Convertible Preferred Stock for three semi-annual
periods (whether or not consecutive) (such failure, a "Dividend Non-Pay ment"),
the number of directors constituting the Board, without further action, shall be
increased by two and the holders of the majority of the then outstanding shares
of Convertible Preferred Stock shall have the right, voting separately as a
class, to elect such two additional members of the Board, at any annual meeting
of stockholders of the Company or by written consent pursuant to Section 228 of
the DGCL, in each case, who shall continue to serve so long as such dividends on
the Convertible Preferred Stock have not been paid. If and when all such accrued
and unpaid dividends on the Convertible Preferred Stock have been paid or
declared and set apart for payment, the holders of shares of Convertible
Preferred Stock shall be divested of the special voting rights provided for by
this paragraph (12), subject to revesting in the event of every subsequent
Dividend Non-Payment. Upon termina tion of such special voting rights, the term
of office of each director elected pursuant to this paragraph (12) by the
holders of shares of Convertible Preferred Stock (a "Preferred Stock Director")
shall terminate immediately and the number of directors constituting the Board
shall, without further action, be reduced by two, subject always to the increase
of the number of directors pursuant to this paragraph (12) in the case of the
future right of the holders of Convertible Preferred Stock to elect Preferred
Stock Directors. Any Preferred Stock Director may be removed by, and shall not
be removed otherwise than by, the vote of the holders of record of a majority of
the outstanding shares of the Convertible Preferred Stock entitled to vote
thereon present at a meeting called for such purpose at which a quorum is
present or by written consent pursuant to Section 228 of the DGCL. So long as a
Dividend Non-Payment shall continue, any vacancy in the office of a Preferred
Stock Director may be filled by vote of the holders of record of a majority of
the outstanding shares of Convertible Preferred Stock entitled to vote thereon
present at a meeting called for such purpose at which a quorum is present or by
written consent pursuant to Section
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228 of the DGCL. As long as a Dividend Non-Payment shall continue, holders of
shares of Convertible Preferred Stock shall not, as such stockholders, be
entitled to vote on the election or removal of directors other than Preferred
Stock Directors, but shall not be divested of any other voting rights provided
to such stockholders by law or this Certificate of Designations with respect to
any other matter to be acted upon by the stockholders of the Company.
At any meeting held for the purpose of electing directors at which
the holders of outstanding shares of Convertible Preferred Stock shall have the
right to elect directors as provided in this paragraph (12), the presence, in
person or by proxy, of the holders of at least a majority of the then
outstanding shares of Convertible Preferred Stock on which like voting rights
have been conferred and are exercisable shall be required and be sufficient to
constitute a quorum of such class for the election of directors by such class.
At any such meeting or adjournment thereof (i) the absence of a quorum of the
holders of the Convertible Preferred Stock present in person or by proxy shall
not prevent the election of directors other than those to be elected by the
holders of the Convertible Preferred Stock, and the absence of a quorum or
quorums of the holders of any class or classes of any stock or other securities
of the Company other than the Convertible Preferred Stock shall not prevent the
election of directors to be elected by the holders of the Convertible Preferred
Stock and (ii) in the absence of a quorum of the holders of any class of stock
entitled to vote for the election of directors, a majority of the holders
present in person or by proxy of such class shall have the power to adjourn the
meeting for the election of directors which the holders of such class are
entitled to elect, from time to time, without notice (except as required by law)
other than announcement at the meeting, until a quorum shall be present.
(c) Certain Changes to Charter. For as long as any shares of Con
vertible Preferred Stock remain outstanding, the affirmative vote of the holders
of at least a majority of such outstanding shares (voting separately as a class)
given in Person or by proxy at an annual meeting or a special meeting called for
such pur pose, shall be necessary (i) before the Company may amend any of the
provisions of this Certificate of Designations or the Restated Certificate of
Incorporation of the Company which would alter or change the powers, preferences
or special rights of the holders of the shares of Convertible Preferred Stock
then outstanding so as to affect them adversely; provided, however, that:
(x) any such amendment that would authorize, create or increase the
authorized amount of any additional shares of Junior Stock or
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shares of any other class or series of Parity Stock (whether or not
already authorized); and
(y) any such amendment that would increase the number of authorized
shares of Preferred Stock of the Company (but not the number of
authorized shares of Convertible Preferred Stock) or that would
decrease (but not below the number of shares, then outstand ing) the
number of authorized shares of Preferred Stock (but not the number
of authorized shares of Convertible Preferred Stock);
shall be deemed not to adversely affect such powers preferences or rights and
shall not be subject to approval by the holders of shares of Convertible
Preferred Stock; and (ii) before the Company may reclassify the outstanding
shares of Convertible Preferred Stock into another class or series of capital
stock of the Company; provided further, however, that no consent described in
clause (i) of this paragraph of the holders of the shares of Convertible
Preferred Stock shall be required if, at or prior to the time when such
amendment is to take effect, provision is made for the redemp tion of all shares
of Convertible Preferred Stock at the time outstanding.
(d) Creation of Senior Stock. No consent or vote of the holders of
the shares of Convertible Preferred Stock shall be necessary before the Company
or the Board may authorize, create or issue any class or series of Senior Stock.
(e) No Other Vote. Except as otherwise set forth in this paragraph
(12) or as required by law, the holders of Convertible Preferred Stock shall not
have any relative, participating, optional or other special voting rights and
powers and the consent or vote of such holders shall not be required for the
taking of any corporate action by the Company or the Board. The provisions of
this paragraph (12) are in lieu of, and not in addition to, any voting rights
specified in the Restated Certificate of Incorporation as applicable to a series
of Preferred Stock.
(13) PAYMENTS.
Payment of cash amounts due in respect of the Convertible Preferred
Stock will be paid to the holders of shares of Convertible Preferred Stock (or,
in the case of joint holders, the first-named) as appearing in the stock
register of the Company for the Convertible Preferred Stock as at opening of
business (New York time) on the date specified in this Certificate for the
purpose of determining the holders of Convertible Preferred Stock entitled to
such payments or, it no such date
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is specified, the fifteenth Business Day before the due date for such payment
(the "Payment Record Date").
Payments of cash amounts due in respect of the Convertible
Preferred Stock will be made by a check in U.S. dollars drawn on a bank in New
York and mailed to the address (as recorded is the stock register of the Company
for the Convertible Preferred Stock) of the holder thereof (or, in the case of
joint holders, the first-named) not later than the relevant date for payment
unless, prior to the relevant Payment Record Date, the Company has received from
the holder thereof (or, in the case of joint holders, the first-named) written
instructions for payment to be made by wire transfer to a specified designated
account. If the due date for payment of any cash amount in respect of the
Convertible Preferred Stock is not a Business Day, then the holder thereof will
not be entitled to payment thereof until the next following day which is a
Business Day and, if such payment is to be made by transfer to a desig nated
account rather than by check, a day on which commercial banks and foreign
exchange markets settle, payments in U.S. dollars in the place where the
relevant designated account is located.
(14) NOTICES.
Any notice or communication by a holder of Convertible Preferred
Stock to the Company is duly given if in writing and delivered in person or
mailed by first-class mail to the Company at its address as set forth in its
then most recently filed Form 10-K or 10-Q as the case may be.
Any notice or communications to a holder of Convertible Preferred
Stock shall be mailed by first-class mail to his address shown on the stock
register of the Company for the Convertible Preferred Stock or, if there are
more than 20 holders of record of the Convertible Preferred Stock and the
Company in its sole discretion so elects, in a leading daily newspaper having
general circulation in New York (which is expected to be the Wall Street
Journal) or England and Wales (which is expected to be The Financial Times).
Failure to mail a notice or communication to one holder or any defect in it
shall not affect its sufficiency with respect to other holders.
If a notice or communication is given in the manner provided in this
paragraph (14) within the time prescribed by this Certificate, it shall be
conclusively presumed to have been duly given, whether or not the person
entitled to such notice receives it.
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(15) WAIVER.
Any provision of this Certificate of Designations which, for the
benefit of the holders of Convertible Preferred Stock, prohibits, limits or
restricts actions by the Company may be waived in whole or in part, or the
application of all or any part of such provision in any particular circumstance
or generally may be waived, in each case with the consent of the holders of at
least a majority of the number of shares of Convertible Preferred Stock then
outstanding, either in writing or by vote at a meeting called for such purpose
at which the holders of Convertible Preferred Stock shall vote as a separate
class.
(16) REGISTRATION, TRANSFER AND EXCHANGES. (a) The
Company will keep with , the registrar and transfer agent, a register in which
the Company will provide for the registration and transfer of shares of
Convertible Preferred Stock. Any holder of shares of Convertible Preferred Stock
may, at its option, in person or by duly authorized attorney, surrender the
certificate representing the same for exchange at (duly endorsed or accompanied,
if so required by the Company, by a written instrument of transfer duly executed
by such holder or his or her duly authorized attorney), and, within a reasonable
time thereafter and without expense (other than transfer taxes, if any), receive
in exchange therefor one or more duly executed certificate or certificates dated
as of the date to which dividends have been paid on the shares of Convertible
Preferred Stock so surrendered, or if no dividend has yet been so paid, then
dated the date hereof, and registered in such name or names, all as may be
designated by such holder, for the same aggregate number of shares of
Convertible Preferred Stock as represented by the certificate or certificates so
surrendered. The Company covenants and agrees to take and cause to be taken all
action reasonably necessary to effect such registrations, transfers and
exchanges. Each share of Convertible Preferred Stock issued in exchange for any
share shall carry the same rights to unpaid dividends and redemption payments
which were carried by the share so exchanged, so that neither gain nor loss of
any such right shall result from any such transfer or exchange.
(b) The Company and any agent of the Company may treat the person in
whose name any share of Convertible Preferred Stock is registered as the owner
of such share for the purpose of receiving payment of dividends, and amounts
payable on redemption and liquidation in respect of such share and for all other
purposes.
(c) The holders of Convertible Preferred Stock are entitled to
certain rights under the Registration Rights Agreement. The certificates
representing shares
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of Convertible Preferred Stock will bear a legend indicating that they have been
issued in a transaction exempt from the Securities Act and may only be
transferred in accordance therewith or pursuant to an exemption therefrom.
(17) EXCLUSION OF OTHER RIGHTS.
Except as may otherwise be required by law, the shares of
Convertible Preferred Stock shall not have any designations, preferences,
limitations or relative rights other than those specifically set forth in this
Certificate of Designations other than the rights set forth in the Registration
Rights Agreement, the terms of which are incorporated herein by reference.
(18) SEVERABILITY OF PROVISIONS. Whenever possible, each provision
of this Certificate of Designations shall be interpreted in a manner as to be
effective and valid under applicable law, but if any provision hereof is held to
be prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating or otherwise adversely affecting the remaining provisions hereof.
If a court of competent jurisdic tion should determine that a provision hereof
would be valid or enforceable if a period of time were extended or shortened or
a particular percentage were increased or decreased, then such court may make
such change as shall be necessary to render the provision in question effective
and valid under applicable law.
0229901.02-New YorkS5A
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<PAGE> 73
Exhibit C
9.9% NON-VOTING MANDATORILY REDEEMABLE
PREFERRED STOCK, SERIES B
(1) Designation; Number of Shares. The designation of the series of
Preferred Stock, par value $.01 per share, of the Company created hereby shall
be "9.90% Non-voting Mandatorily Redeemable Preferred Stock, Series B"
(including, in the case of any reclassification, recapitalization, or other
change to such Preferred Stock or, in the case of a consolidation or merger of
the Company with or into another Person affecting such Preferred Stock, such
capital stock to which a holder of such Preferred Stock shall be entitled upon
the occurrence of such event, the "Mandatorily Redeemable Preferred Stock"). The
authorized number of shares of Mandatorily Redeemable Preferred Stock shall be
52,217, which number may from time to time be increased or decreased (but not
below the number then outstanding). Each share of Mandatorily Redeemable
Preferred Stock shall have a stated value of $1,000 (the "Stated Value").
Any shares of Mandatorily Redeemable Preferred Stock redeemed or
otherwise acquired by the Company shall be retired and shall resume the status
of authorized and unissued shares of Preferred Stock, without designation as to
series, until such shares are once more designated as part of a particular
series of Preferred Stock by the Board of Directors.
(2) Certain Definitions. Unless the context otherwise requires, the
terms defined in this paragraph (2) shall have, for all purposes of this
Certificate of Designations, the meanings herein specified:
"Adjustment Date" shall have the meaning set forth in paragraph
(4)(k).
"Affiliate" of any Person shall mean another Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first person, where "control" shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management policies of a person, whether through the ownership
of voting securities, by contract, as trustee or executor, or otherwise.
"Applicable Price" shall mean the aggregate of (A) in the event of a
Reorganization in which the holders of Common Stock receive cash, the amount of
such cash receivable by the holder of one share of Common Stock (as such share
is in effect immediately prior to the consummation of such Reorganization); and
(B) in the event of a Reorganization in which the holders of Common Stock
receive securities or other property which are traded on an established market
(within the
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meaning of Treasury Regulation 1.1273-2(f)(1) of the Internal Revenue Code of
1986, as in effect on September 30, 1990), the average (or if there be more than
one security or item of property the sum of the averages) of the daily Trading
Prices of such securities and/or property receivable by the holder of one share
of Common Stock (as such share is in effect immediately prior to such
consummation) for the period of ten consecutive Trading Days ending on the
Trading Day immediately preceding date of occurrence of the Reorganization,
appropriately adjusted to take into account any stock dividend on such security
or property, or any subdivision, split, combination, reclassification of such
security or property that occurs or the "ex" date for which occurs on or prior
to such date.
"Average Market Price" on any Determination Date or Adjustment Date,
as applicable, shall mean the average of the daily Closing Prices for the period
of 10 consecutive Trading Days, ending on the Trading Day immediately preceding
such Determination Date or Adjustment Date, as applicable, appropriately
adjusted to take into account any stock dividend on the Common Stock or any
subdivision, split, combination or reclassification of the Common Stock that
occurs, or the date on which "ex-dividend" trading commences, during the period
following the first Trading Day in such ten-Trading Day period to and including
the Determination Date or Adjustment Date, as applicable.
"Board" shall mean the Board of Directors of the Company, and,
unless the context indicates otherwise, shall also mean, to the extent permitted
by law, any committee thereof authorized, with respect to any particular matter,
to exercise the power of the Board of Directors of the Company with respect to
such matter.
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which banking institutions in New York, New York and London, England are
authorized to close or not obligated by law or executive order to open.
"Closing Price" shall mean, on any day:
(i) the average between the high and low reported sale price of a
share of Common Stock on and as reported by the Nasdaq Stock Market's National
Market on such day;
(ii) if the primary trading market for the Common Stock on such day
is not the Nasdaq Stock Market's National Market, then the closing sale price
regular
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way on such day, or, in case no such sale takes place on such day, the average
of the reported closing bid and asked prices regular way on such day, in either
case as reported by the Nasdaq System, the National Quotations Bureau, Inc. or a
compara ble service;
(iii) if the Closing Price on such day is not available pursuant to
one of the methods specified above, then the average of the bid and asked prices
for the Common Stock on such day as furnished by any New York Stock Exchange
member firm selected from time to time by the Board for that purpose; or
(iv) if the Closing Price on such day is not available pursuant to
the method specified in (iii) above, the determination of Closing Price shall be
deter mined in good faith by the Board exercising its reasonable discretion.
"Commission" shall have the meaning set forth in paragraph (4)(k).
"Common Stock" shall mean the shares of common stock, par value
$0.01 per share, of the Company, which term shall include, where appropriate, in
the case of any reclassification, recapitalization or other change in the Common
Stock, or in the case of a consolidation or merger of the Company with or into
another Person affecting the Common Stock, such capital stock to which a holder
of Com mon Stock shall be entitled upon the occurrence of such event.
"Common Stock Dividend Amount" shall have the meaning set forth in
paragraph (3) (c).
"Convertible Securities" shall mean securities, including evidences
of indebtedness or shares of stock, which are, at the option of the holder
thereof, convertible into or exchangeable, directly or indirectly, for shares of
Common Stock.
"Determination Date" shall mean: (i) in the case of a dividend
payment, the record date for such dividend payment, (ii) in the case of a
redemption payment pursuant to paragraph (4)(a), the Redemption Date, (iii) in
the case of a redemption payment pursuant to paragraph (4)(b), the tenth
anniversary of the Issue Date, (iv) in the case of a redemption payment pursuant
to paragraph (4)(d), the Adjustment Date, and (v) in the case of a
Reorganization, the date the Reorganization occurs.
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"Effectiveness Date" shall have the meaning set forth in paragraph
(4)(k).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time, or any successor statute, and the rules and
regulations promulgated thereunder.
"Extended Sale Date" shall have the meaning set forth in paragraph
(4)(k).
"Fixed Price", on any Determination Date with respect to any Other
Equity Security, shall have the meaning assigned to such term in the certificate
of designations relating to, and setting forth the terms of, such Other Equity
Security.
"Full Consideration Amount" shall have the meaning set forth in
paragraph (4)(k).
"Issue Date" shall mean December 21, 1998.
"JPPF" shall mean the Series A Junior Participating Preferred Stock
of the Company issuable upon exercise of the Rights pursuant to the Rights Agree
ment.
"Junior Stock" shall mean:
(i) each class or series of common stock of the Company, including,
without limitation, the Common Stock;
(ii) the JPPF issuable upon exercise of the Rights;
(iii) any other class or series of capital stock of the Company
hereafter created, other than (a) any class or series of Parity Stock (except to
the extent provided under clause (iv) hereof) and (b) any class or series of
Senior Stock, and
(iv) any class or series of Senior Stock or Parity Stock to the
extent that it ranks junior to the Mandatorily Redeemable Preferred Stock as to
dividend rights, rights of redemption or rights on liquidation, as the case may
be. For pur poses of clause (iii) above, a class or series of Senior Stock or
Parity Stock shall rank
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junior to the Mandatorily Redeemable Preferred Stock as to dividend rights,
rights of redemption or rights on liquidation if the holders of shares of
Mandatorily Redeem able Preferred Stock shall be entitled to dividend payments,
payments on redemption or payments of amounts distributable upon dissolution,
liquidation or winding up of the Company, as the case may be, in preference or
priority to the holders of shares of such class or series of Senior Stock or
Parity Stock.
"Liquidating Payment" shall mean an amount equal to the Liquidation
Preference of a share of Mandatorily Redeemable Preferred Stock or, if less, the
amount payable in respect of one share of Mandatorily Redeemable Preferred Stock
pursuant to paragraph (7)(a) upon the voluntary or involuntary liquidation,
dissolu tion or winding up of the affairs of the Company.
"Liquidating Payment Date" shall mean the date on which the Company
makes the aggregate Liquidating Payment to all holders of outstanding shares of
Mandatorily Redeemable Preferred Stock.
"Liquidation Preference" measured per share of the Mandatorily
Redeemable Preferred Stock, shall mean an amount equal to (a) the Stated Value
per share of Mandatorily Redeemable Preferred Stock, plus (b) for purposes of
determin ing the amount payable pursuant to paragraph (7) only, an amount equal
to all dividends accrued but unpaid on such share, whether or not such unpaid
dividends have been declared or there are funds of the Company legally available
for the payment of dividends, to the Liquidating Payment Date.
"Mandatorily Redeemable Preferred Stock" shall have the meaning set
forth in paragraph (1).
"Mandatory Redemption Price" shall have the meaning set forth in
paragraph (4)(b).
"Option" shall mean any right, option or warrant entitling the
holder thereof to subscribe for, purchase, or otherwise acquire Convertible
Securities or Common Stock in the Company (other than the Rights).
"Other Equity Security" shall mean any equity security of the Com
pany, other than Common Stock, issued by the Company to provide funds for the
payment in cash of the Redemption Price or Mandatory Redemption Price in
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accordance herewith, with the rights to be determined in the sole discretion of
the Company.
"Parity Stock" shall mean the Mandatorily Redeemable Preferred Stock
and any class or series of capital stock, whether now existing or hereafter
created, of the Company to the extent ranking on a parity basis with the
Mandatorily Redeemable Preferred Stock as to dividend rights, rights of
redemption or rights on liquidation. Capital stock of any class or series,
whether now or existing or hereafter created, shall rank on a parity as to
dividend, rights of redemption or rights on liquidation with the Mandatorily
Redeemable Preferred Stock, whether or not the dividend rates, dividend payment
dates, redemption or liquidation prices per share or sinking fund or mandatory
redemption provision, if any, are different from those of the Mandatorily
Redeemable Preferred Stock, if the holders of shares of such class or series
shall be entitled to dividend payments, payments on redemption or payments of
amounts distributable upon dissolution, liquidation or winding up of the Com
pany, as the case may be, in proportion to their respective accumulated and
accrued and unpaid dividends, redemption prices or liquidation prices,
respectively, without preference or priority, one over the other, as between the
holders of shares of such class or series and the holders of Mandatorily
Redeemable Preferred Stock. No class or series of capital stock that ranks
junior to the Mandatorily Redeemable Preferred Stock as to rights on liquidation
shall rank or be deemed to rank on a parity basis with the Mandatorily
Redeemable Preferred Stock as to dividend rights or rights of redemption.
"Payment Record Date" shall have the meaning set forth in paragraph
(12).
"Permitted Cost" shall mean underwriting costs, brokerage fees and
related costs and expenses not exceeding 3% for Common Stock or 5% for any Other
Equity Security of either the applicable amount of the Redemption Price or
Mandatorily Redemption Price (in the event that any Other Equity Security is
issued in order to provide cash for the redemption), or of gross proceeds (in
any other case).
"Person" shall mean any individual corporation, partnership, joint
venture, association, joint stock company, limited liability company, trust,
unincor porated organization, government or agency or political subdivision
thereof, or other entity, whether acting in an individual, fiduciary or other
capacity.
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"Redemption Agent" shall have the meaning set forth under paragraph
(4)(h).
"Redemption Date" as to any share of Mandatorily Redeemable
Preferred Stock, shall mean the date on which such share is redeemed by the Com
pany pursuant to paragraph (4).
"Redemption Notice" shall have the meaning set forth in paragraph
(4)(f).
"Redemption Price" shall have the meaning set forth in paragraph
(4)(a).
"Registration Statement" shall have the meaning set forth in
paragraph (4)(k).
"Reorganization" shall mean any of the following events:
(i) any consolidation or merger of the Company with another entity
(other than a merger or consolidation in which the Company is the surviving or
continuing corporation and in which the Common Stock outstanding immediately
prior to the merger or consolidation remains unchanged),
(ii) the sale or other transfer of all or substantially all of its
assets to another entity,
(iii) any reorganization or reclassification of the Common Stock or
other equity securities of the Company, and
(iv) any statutory exchange of any shares of capital stock of the
Company for shares of capital stock of another corporation (other than a merger
or consolidation in which the Company is the surviving or continuing corporation
and in which the Common Stock outstanding immediately prior to the merger or
consoli dation remains unchanged).
"Reorganization Unit" means the kind or amount of securities, cash
or other property receivable upon consummation of a Reorganization in
substitution of or in exchange for a share of Common Stock as such share is in
effect immediately
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prior to such consummation (provided that if the kind or amount of securities,
cash or other property receivable upon consummation of such Reorganization is
not the same with respect to each such share, then the kind and amount of
securities, cash or other property which shall be deemed receivable upon
consummation of such Reorganization with respect to each such share for purposes
hereof shall be the kind and amount so receivable per share by a plurality of
such shares).
"Rights" means the rights issuable pursuant to the Rights Agreement.
"Rights Agreement" means the rights agreement, dated as of October
13, 1993, between the Company and Continental Transfer and Trust Company, as
rights agent.
"Securities Act" shall mean the Securities Act of 1933, as amended
from time to time, or any successor statute, and the rules and regulations
promul gated thereunder.
"Senior Stock" shall mean any class or series of capital stock of
the Company hereafter created to the extent ranking prior to the Mandatorily
Redeem able Preferred Stock as to dividend rights, rights of redemption or
rights on liquida tion. Capital stock of any class or series shall rank prior to
the Mandatorily Redeem able Preferred Stock as to dividend rights, rights of
redemption or rights on liquida tion if the holders of shares of such class or
series shall be entitled to dividend payments, payments on redemption or
payments of amounts distributable upon dissolution, liquidation or winding up of
the Company, as the case may be, in preference or priority to the holders of
shares of Mandatorily Redeemable Preferred Stock. No class or series of capital
stock that ranks on a parity basis with or junior to the Mandatorily Redeemable
Preferred Stock as to rights on liquidation shall rank or be deemed to rank
prior to the Mandatorily Redeemable Preferred Stock as to dividend rights or
rights of redemption, notwithstanding that the dividend rate, dividend payment
dates, sinking fund provisions, if any, or mandatory redemption provisions
thereof are different from those of the Mandatorily Redeemable Preferred Stock.
"Stated Value" shall have the meaning set forth in paragraph (1).
"Trading Day" shall mean a day on which the Nasdaq Stock Market's
National Market or, if different, the principal exchange on which the Common
Stock is quoted or traded is each open for the transaction of business.
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"Trading Price" of a security or property for any day means the
closing sale price regular way on such day, or, in case no such sale takes place
on such day, the average of the reported closing bid and asked prices of such
security or property on such day on the applicable established market on which
such security or property is traded.
(3) DIVIDENDS.
(a) Payment. The holders of outstanding shares of Mandatorily
Redeemable Preferred Stock shall be entitled to receive, when, as and if
declared by the Board out of funds legally available therefor (without prejudice
to paragraph (3)(b)), dividends, in preference to dividends on any Junior Stock,
at the rate per annum of 9.90% of the Stated Value per share, rounded to the
nearest cent. Such dividends shall accrue from the Issue Date and shall be
payable on the date the Mandatorily Redeemable Preferred Stock is redeemed
pursuant to paragraph (4).
Dividends on the outstanding shares of Mandatorily Redeemable
Preferred Stock will accrue on a daily basis (without interest or compounding)
whether or not there are funds legally available for the payment of such
dividends and whether or not such dividends are declared. Dividends will cease
to accrue in respect of shares of Mandatorily Redeemable Preferred Stock on the
date of their redemption. No interest, or sum of money in lieu of interest,
shall be payable in respect of any accrued dividend payment.
(b) Declaration and Manner of Payment of Dividends. Any divi dends
may be paid, in the sole discretion of the Board: (i) in cash out of funds
legally available therefor; (ii) through the delivery of shares of Common Stock;
or (iii) through any combination of the foregoing forms of consideration elected
by the Board in its sole discretion. If any dividend declared by the Board is to
be paid, in whole or in part, through the delivery of shares of Common Stock,
each holder of Mandatorily Redeemable Preferred Stock shall receive the same
proportion of cash and/or shares of Common Stock (except for cash paid in lieu
of fractional shares) delivered in payment of such dividend to other holders of
shares of Mandatorily Redeemable Preferred Stock.
(c) Payment of Dividends by Delivery of Common Stock. If the Company
elects to pay any dividend payment, in whole or in part, by delivery of shares
of Common Stock, the amount of such dividend payment to be paid per share of
Mandatorily Redeemable Preferred Stock in shares of Common Stock (the
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"Common Stock Dividend Amount") shall be paid through the delivery to the
holders of record for such shares of Mandatorily Redeemable Preferred Stock on
the record date for such dividend payment (which shall be not more than 10 days
prior to the payment date) of a number of shares of Common Stock determined by
dividing the Common Stock Dividend Amount by the Average Market Price. No
fractional shares of Common Stock shall be delivered to a holder of shares of
Mandatorily Redeemable Preferred Stock, but the Company shall instead pay a cash
adjustment determined as provided in paragraph (8). Common Stock so payable
shall receive the benefit of customary resale registration rights.
(d) Prohibitions on Cash Dividends. Notwithstanding anything
contained in this Certificate to the contrary, but without effect on the accrual
thereof, no cash dividends on shares of Mandatorily Redeemable Preferred Stock
shall be declared by the Board or paid or set apart for payment by the Company
at such time as the terms and provisions of any agreement of the Company,
including, without limitation, any agreement, contract, indenture, bond, note,
debenture, guarantee or other instrument relating to or evidencing its
indebtedness, prohibits such declara tion, payment or setting apart for payment
or provides that such declaration, payment or setting apart for payment would
constitute a breach thereof or a default thereun der; provided, however, that
nothing contained in this paragraph (d) shall alter, limit or restrict the
Company's obligation to declare and pay accrued dividends, to the extent
permitted by applicable law, through the delivery of shares of Common Stock,
whether permitted by any such agreement or not.
(e) Pro Rata. All dividends paid with respect to the shares of
Mandatorily Redeemable Preferred Stock shall be paid pro rata (as nearly as may
be practicable) to the shareholders entitled thereto.
(f) Priority. Payment of dividends to the holders of shares of
Mandatorily Redeemable Preferred Stock shall be subject to the prior preferences
and other rights of any Senior Stock and to the provisions of paragraph (6).
(4) REDEMPTION.
(a) Optional Redemption. At any time during the period beginning on
the Issue Date until the Redemption Date, the Company shall have the right to
redeem the outstanding shares of Mandatorily Redeemable Preferred Stock at a
price equal to $1,000 per share, together with an amount equal to all dividends
accrued but unpaid thereon to the Redemption Date (the "Redemption Price").
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(b) Mandatory Redemption. All outstanding shares of Mandatorily
Redeemable Preferred Stock shall be mandatorily redeemed by the Company out of
funds legally available therefor on the date that is the tenth anniversary of
the Issue Date at a redemption price equal to $1,000 per share, plus an amount
equal to all accrued and unpaid dividends per share to the Redemption Date (the
"Mandatory Redemption Price").
(c) Event of Reorganization. All outstanding shares of Mandatorily
Redeemable Preferred Stock shall be mandatorily redeemed by the Company at the
Mandatory Redemption Price in the event of a Reorganization, other than a Reorga
nization as set forth in paragraph (5)(a) or any other transaction undertaken
for the bona fide purpose of causing the Common Stock of the Company to be
convertible into or exchangeable for, immediately or over time, equity
securities of a public limited company incorporated in England and/or Wales for
the purpose of listing on the London Stock Exchange.
(d) Early Mandatory Redemption. If by June 15, 2000, the Company has
neither exercised its right to optionally redeem the Mandatorily Redeemable
Preferred Stock pursuant to paragraph (4)(a) nor redeemed the Mandatorily Redeem
able Preferred Stock pursuant to paragraph (4)(c), all outstanding shares of
Mandatorily Redeemable Preferred Stock shall be mandatorily redeemed by the
Company at the Mandatory Redemption Price, less any Permitted Cost. The
Redemption Date for such redemption shall be July 1, 2000.
(e) Company's Right to Elect Manner of Payment of Redemption Price
or Mandatory Redemption Price. The Company may effect the redemption of shares
of Mandatorily Redeemable Preferred Stock at the Redemption Price or the
Mandatory Redemption Price, in the sole discretion of the Board: (i) in cash out
of funds legally available therefor, (ii) subject to compliance with paragraph
(g), in exchange for and through the delivery of shares of Common Stock, or
(iii) through any combination of the foregoing forms of consideration elected by
the Board in its sole discretion.
(f) Notice of Redemption. In the event of an offer by the Company to
redeem any shares of Mandatorily Redeemable Preferred Stock pursuant to para
graph (4)(a) or a redemption of the Mandatorily Redeemable Preferred Stock
pursuant to paragraph (4)(b), (4)(c) or (4)(d), the Company shall provide notice
of such offer to redeem or such redemption to holders of record of Mandatorily
Re deemable Preferred Stock to be redeemed not less than 30 days (not less than
10 days if the Redemption Price or Mandatory Redemption Price is payable in cash
or Common Stock) nor more than 60 days prior to the Redemption Date. Such notice
(a "Redemption Notice") shall, subject to paragraph (4)(h)(z), be provided in
accor dance with paragraph (13); provided, however, that neither failure to give
such notice nor any defect therein shall affect the validity of the proceedings
for the redemption of any shares of Mandatorily Redeemable Preferred Stock to be
redeemed.
In addition to any information required by law, the Redemption
Notice shall state, as appropriate, the following (and may contain such other
informa tion as the Company deems advisable):
(A) whether the redemption is pursuant to paragraph (4)(a),
(4)(b), (4)(c) or (4)(d);
(B) the Redemption Date;
(C) the number of shares of Mandatorily Redeemable Preferred Stock
to be redeemed and, if less than all the shares held by such
holder are to be redeemed, the number of shares to be redeemed
from such holder;
(D) the Redemption Price or Mandatory Redemption Price and the
form or forms of consideration that the Company has elected to
pay and/or deliver upon such redemption and, if more than one
form of consideration has been elected by the Company, the
designated portions of the Redemption Price or Mandatory
Redemption Price to be paid in each form of consideration so
elected;
(E) the place or places in the United States or England and Wales
where certificates for Mandatorily Redeemable Preferred Stock
to be redeemed are to be surrendered for redemption; and
(F) that dividends on the shares of Mandatorily Redeemable
Preferred Stock to be redeemed shall cease to accrue on the
Redemption Date (unless the Company defaults in making payment
of the Redemption Price).
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(g) Redemption by Delivery of Common Stock. If the Company elects to
pay, in whole or in part, the Redemption Price in respect of shares of
Mandatorily Redeemable Preferred Stock in exchange for and through the delivery
of shares of Common Stock, then the Company shall deliver to each holder of
shares of Mandatorily Redeemable Preferred Stock to be redeemed on the
Redemption Date a number of shares of Common Stock equal to the aggregate
Redemption Price (or designated portion thereof) of such shares of Mandatorily
Redeemable Preferred Stock divided by the Average Market Price. No fractional
shares of Common Stock shall be delivered to a holder of shares of Mandatorily
Redeemable Preferred Stock in payment of the Redemption Price, but the Company
shall instead pay a cash adjustment determined as provided in paragraph (8).
(h) Deposit of Funds and/or Shares. If on or before the Redemption
Date: (x) the Company shall have deposited with any bank or trust company
organized under the laws of the United States of America or any state thereof
having capital, undivided profits and surplus aggregating at least $250 million
(the "Re demption Agent"), cash (including cash for any adjustment in lieu of
delivering fractional shares) and/or shares of Common Stock sufficient to pay in
full the aggregate Redemption Price (calculated through the Redemption Date) for
such shares of Mandatorily Redeemable Preferred Stock on such Redemption Date,
(y) such cash and/or shares of Common Stock are readily available to, but only
to, the holders of Mandatorily Redeemable Preferred Stock in satisfaction of the
obligations of the Company with respect to the payment of the Redemption Price
and (z) the Company shall prior to the Redemption Date have so notified each
record holder of Mandatorily Redeemable Preferred Stock, which notice shall be
given to each holder of Mandatorily Redeemable Preferred Stock by courier and
shall identify the Redemption Agent, its address and telephone and telecopier
numbers and the contact person(s) at the Redemption Agent responsible for
administration of the deposit then, effective as of the close of business on
such Redemption Date (and notwithstanding that any certificate therefor shall
not have been surrendered for cancellation): (i) such shares of Mandatorily
Redeemable Preferred Stock shall no longer be deemed outstanding but any shares
of Common Stock so deposited in accordance with this paragraph (h) for which
such Mandatorily Redeemable Preferred Stock was re deemed shall be deemed to be
outstanding; (ii) the holders thereof shall cease to be holders of Mandatorily
Redeemable Preferred Stock but shall be shown on the records of the Company as
holders of the Common Stock so deposited in accordance with this paragraph (h)
in redemption of such Mandatorily Redeemable Preferred Stock; (iii) dividends
with respect to the shares so called for redemption shall cease to accrue on the
Redemption Date but, subject to paragraph (4)(g), such holders shall
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be entitled to any dividends which shall thereafter accrue on, and shall be
entitled to exercise all other rights associated with, any shares of Common
Stock so deposited in accordance with this paragraph (h) in redemption of such
Mandatorily Redeem able Preferred Stock; and (iv) all rights whatsoever with
respect to the shares so called for redemption shall forthwith cease and
terminate (except the right of such holders, upon the surrender of certificates
evidencing the shares of Mandatorily Redeemable Preferred Stock so redeemed, to
receive the cash and/or Common Stock payable or deliverable in payment of the
Redemption Price therefor, and the applica ble cash adjustment, if any, in lieu
of fractional shares, without interest). Any cash and/or shares of Common Stock
so deposited or set apart which shall remain unclaimed at the end of one year
after the Redemption Date shall be returned or released to the Company, after
which time the holders of shares of Mandatorily Redeemable Preferred Stock
called for redemption on such Redemption Date that remain outstanding after such
one-year period shall look only to the Company for the payment of the Redemption
Price for such shares, without interest.
Subject to compliance with paragraph (4)(k), a deposit made in
compliance with the immediately preceding sentence shall, except to the extent
released or returned to the Company, be deemed to constitute full payment for
the shares of Mandatorily Redeemable Preferred Stock to be redeemed. Any
interest accrued on funds so deposited shall be paid by the Redemption Agent to
the Com pany from time to time.
(i) Surrender of Certificates; Status. Each holder of shares of
Mandatorily Redeemable Preferred Stock to be redeemed shall not be entitled to
receive payment of the Redemption Price or Mandatory Redemption Price for such
shares until such holder shall surrender the certificates evidencing such shares
duly endorsed by, or accompanied by, an instrument of transfer (in form
reasonably satisfactory to the Company) duly executed by, the holder or such
holder's duly authorized attorney-in-fact or, if the shares issuable upon
redemption are to be issued in the same name as the name in which such share of
the Mandatorily Redeemable Preferred Stock is registered, in blank to the
Redemption Agent (or to the Company if there is no Redemption Agent) at the
place designated in the Redemption Notice for such redemption and shall
thereupon be entitled to receive the consideration for such shares specified in
the Redemption Notice in an aggregate amount equal to the Redemption Price or
Mandatory Redemption Price for such shares. Holders of shares of Mandatorily
Redeemable Preferred Stock that are redeemed on the Re demption Date shall not
be entitled to receive dividends declared and paid on any shares of Common Stock
exchangeable and deliverable in payment of the Redemp tion Price or Mandatory
Redemption Price (or designated portion thereof) for such shares of Mandatorily
Redeemable Preferred Stock, and such shares of Common Stock shall not be
entitled to vote, until such shares of Common Stock are delivered upon the
surrender of the certificates representing such shares of Mandatorily Redeemable
Preferred Stock. Upon such surrender, such holders shall be entitled to receive
such dividends declared and paid subsequent to such Redemption Date and prior to
the delivery.
(j) Priority. The right of the Company to redeem shares of
Mandatorily Redeemable Preferred Stock pursuant to this paragraph (4) shall be
subject to the prior preferences and other rights of any Senior Stock and to the
provisions of paragraph (7).
(k) Full Consideration Amount. If the Company elects to exchange and
deliver shares of Common Stock in payment of the Mandatory Redemption Price (or
a designated portion thereof) pursuant to paragraph (e), the Company shall be
obligated to file (on or prior to April 1, 2000) and cause to be declared
effective by the Securities and Exchange Commission (the "Commission") a resale
"shelf" registration statement (the "Registration Statement"), or such other
successor form of registration statement that may be adopted by the Commission
from time to time, on behalf of the holders of such Common Stock. The Company
may deliver shares of Common Stock having a value (equal to the Average Market
Price as of April 1, 2000) to the holders. When the Registration Statement is
declared effective (the "Effectiveness Date"), the holders shall sell at the
time (but no later than the later to occur of June 15, 2000 and ten Business
Days after the Effectiveness Date (the "Extended Sale Date")) and in a bona fide
manner designated by the Company (but shall not sell or transfer in any other
manner until after June 15, 2000 (if the Effec tiveness Date has not theretofore
occurred) and prior to the Effectiveness Date), the shares of Common Stock
received in redemption of the Mandatorily Redeemable Preferred Stock and the
holders shall be required to cooperate fully (including by executing customarily
required documentation) in such process and the holders shall retain the
proceeds of such sale. On or prior to the later to occur of July 1, 2000 and two
Business Days after the Extended Sale Date (either, the "Adjustment Date"), the
Company shall deliver to such holders, on a pro rata per share basis,
consideration (payable as set forth in paragraph (l)) equal to (a) (pound)31
million, together with accrued and unpaid dividends, calculated to the date of
such delivery, as if the Mandatorily Redeemable Preferred Stock had remained
outstanding until the Adjustment Date (the "Full Consideration Amount"), minus
the aggregate of (b) (i) in the event that any such holders have previously sold
all or a portion of their shares of Common
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Stock pursuant to such Registration Statement or otherwise by such date, the
aggregate amount of proceeds from any such sale (without deduction of any custom
ary underwriting costs, brokerage fees and other related costs and expenses not
exceeding the Permitted Cost), plus (ii) in the event that any such holders
still retain (by agreement of the holders and the Company) all or a portion of
their shares of Common Stock on such date, the amount which is equal to the
current market value of such shares of Common Stock, as determined using the
Average Market Price, as of the Adjustment Date, plus (iii) the aggregate amount
of any cash previously delivered in payment of the Redemption Price; provided,
however, that (i) in no event shall any payment be made pursuant to this
paragraph if the amount deter mined pursuant to subparagraph (b) above exceeds
the Full Consideration Amount and (ii) if for any reason (other than agreement
of the holders and the Company) shares of Common Stock are not sold by the
Adjustment Date, the Full Consider ation Amount shall be adjusted to and
calculated as of the date the shares are actually sold.
(l) Payments with Respect to Full Consideration Amount. Any payment
required to be made by the Company pursuant to the preceding paragraph may be
paid, in the sole discretion of the Company, (i) in cash out of funds legally
available therefor, (ii) in exchange for and through the delivery of shares of
Common Stock, valued as of the Adjustment Date, or (iii) through any combination
of the foregoing forms of consideration elected by Company in its sole
discretion. Com mon Stock so payable shall be valued at the Average Market Price
as of the Adjust ment Date and shall promptly receive the benefit of customary
resale registration rights.
(m) Other Equity Security. If the Company elects to sell any Other
Equity Security at any time prior to June 15, 2000 in order to fund the
redemption of the Mandatorily Redeemable Preferred Stock and/or Common Stock
issued in redemption thereof, the holders will deliver such securities to the
Company in exchange for the proceeds of the sale of such Other Equity Security
(less any Permitted Cost).
(5) REORGANIZATIONS.
(a) Holding Company. Notwithstanding anything herein to the
contrary, if the Company is reorganized such that the Common Stock is exchanged
for the common stock of a new entity ("Holdco") whose common stock is traded on
NASDAQ or another recognized securities exchange, then the Company, by notice to
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the holders of the Mandatorily Redeemable Preferred Stock but without any
required consent on their part, may cause the exchange of this Mandatorily
Redeemable Preferred Stock for mandatorily redeemable preferred stock of Holdco
having the same terms and conditions as set forth herein, provided that where
Holdco is not solely incorporated as a Delaware company or where the Holdco
share structure is not identical to that of the Company, the rights attaching to
the mandatorily redeem able preferred stock of Holdco may be adjusted so as to
comply with the local law of the country of incorporation of Holdco or the new
share structure of Holdco subject to such rights effectively giving the same
economic rights as the Mandatorily Redeemable Preferred Stock (ignoring for
these purposes any resultant change in the tax treatment for the holders of such
stock).
(b) Notices of Corporate Action. If:
(i) the Company or the Board shall approve any Reorganization to
which the Company is a party and for which approval of any stockholders of the
Company is required; or
(ii) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, in each case, the Company shall cause to be given to the holders of shares
of the Mandatorily Redeemable Preferred Stock in accordance with paragraph (13),
as promptly as possible, but at least 10 days prior to the applicable date
hereinafter specified, a notice stating the date on which the event giving rise
to an adjustment of the type described in paragraph (6)(a), such a
Reorganization, dissolution, liquidation or winding up may occur, as the case
may be, is expected to become effective or occur, and, if earlier, the date as
of which it is expected that holders of Common Stock of record shall be entitled
to exchange their shares of Common Stock for stock of the Company, securities,
cash or other property deliverable upon such Reorganiza tion, dissolution,
liquidation or winding up. Failure to give or receive such notice or any defect
therein shall not affect the legality or validity of the action or transactions
described in sub-paragraphs (i) or (ii) above.
(c) Listing of Common Stock. The Company will list the shares of
Common Stock required to be delivered as payment of dividends or upon redemption
or conversion of shares of the Mandatorily Redeemable Preferred Stock, prior to
delivery, upon each national securities exchange, the Nasdaq Stock Market's Na
tional Market or any similar system of automated dissemination of securities
prices, if any, upon which the Common Stock is listed at the time of delivery.
(d) Provision of Information. So long as any shares of Mandatorily
Redeemable Preferred Stock remain outstanding, the Company undertakes to provide
without charge to each record holder of such shares copies of each: (i) annual
report of the Company on Form 10-K filed pursuant to Section 13(a) of the
Exchange Act concurrently with such filing; (ii) quarterly reports of the
Company on Form 10-Q and current report of the Company on Form 8-K filed
pursuant to Section 13(a) or 15(d) or the Exchange Act concurrently with such
filing; (iii) definitive proxy or information statement, form of proxy or other
material of the Company filed pursu ant to Section 14(a) of the Exchange Act
concurrently with such filing; and (iv) notice, press release and other
information delivered to holders of Common Stock generally concurrently with
such delivery.
(6) LIMITATIONS ON DIVIDENDS AND REDEMPTIONS IN RESPECT OF COMPANY
STOCK.
(a) Limitations on Junior Stock Dividends. As long as any shares of
Mandatorily Redeemable Preferred Stock are outstanding, no dividends shall be
paid or declared in cash on Junior Stock, nor shall any other distributions be
made on any Junior Stock.
(b) Limitations on Purchase of Junior Stock. As long as any shares
of Mandatorily Redeemable Preferred Stock are outstanding, no shares of any
Junior Stock may be purchased, redeemed, or otherwise acquired by the Company or
any of its subsidiaries (except in connection with a reclassification of any
Junior Stock through the issuance of other Junior Stock and/or Convertible
Securities for shares of Junior Stock and cash in lieu of fractional shares in
connection therewith, or the purchase, redemption or other acquisition of any
Junior Stock from any wholly-owned subsidiary), nor may any funds be set aside
or made available for any sinking fund for the purchase, redemption or other
acquisition of any Junior Stock.
(c) Limitations on Parity Stock Dividends and Redemptions. As long
as any share of Mandatorily Redeemable Preferred Stock is outstanding, dividends
or other distributions may not be declared or paid on any Parity Stock, and the
Com pany may not purchase, redeem or otherwise acquire any Parity Stock (other
than any outstanding shares of 9.90% Non-Voting Mandatorily Redeemable Preferred
Stock, Series A, issued pursuant to the Certificate of Designations of the
Company, dated
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September 21, 1998, or outstanding shares of 13% Series B Senior Redeemable
Exchangeable Preferred Stock, issued pursuant to the Certificate of Designations
of the Company, dated February 12, 1997) (except (x) from any wholly-owned
subsid iaries of the Company or (y) in connection with a mandatory conversion or
exchange of such Parity Stock or a conversion or exchange of such Parity Stock
at the option of the holder for securities other than Parity Stock or Senior
Stock and cash in lieu of fractional shares in connection therewith), unless
with respect to the payment of dividends only, any such dividends are declared
and paid pro rata so that the amounts of any dividends declared and paid per
share on shares of Mandatorily Redeemable Preferred Stock and each other share
of such Parity Stock will in all cases bear to each other the same ratio that
accrued and unpaid dividends (including any accumu lation with respect to unpaid
dividends for prior dividend periods, if such dividends are cumulative) per
share on shares of Mandatorily Redeemable Preferred Stock and such other share
of Parity Stock bear to each other.
(d) Certain Permitted Dividends and Redemptions. Nothing contained
in this paragraph (6) shall prevent: (i) the payment of dividends or the making
of distributions on any Junior Stock solely in shares of Junior Stock and/or
Convertible Securities for shares of Junior Stock (together with a cash
adjustment for fractional shares, if any) or the redemption, purchase or other
acquisition of Junior Stock solely in exchange for (together with a cash
adjustment for fractional shares, if any), or through the application of the
proceeds from the sale of, shares of Junior Stock and/or Convertible Securities
for shares of Junior Stock; (ii) the payment of dividends or the making of
distributions on any class or series of Parity Stock solely in (together with a
cash adjustment for fractional shares, if any) shares of Junior Stock and/or
Convertible Securities for shares of Junior Stock or the redemption, exchange,
purchase or other acquisition of any class or series of Parity Stock solely in
exchange for (together with a cash adjustment for fractional shares, if any), or
through the application of the proceeds from the sale of shares of Junior Stock
and/or Convertible Securities for shares of Junior Stock or (iii) the conversion
or exchange of Mandatorily Redeemable Preferred Stock into or for shares of
Common Stock (together with a cash adjustment for fractional shares, if any) and
other securities, assets or property, if any pursuant to the provisions of
paragraphs (3), (4) or (5).
(f) Waiver. The provisions of paragraphs (6)(a), (b) and (d) are for
the sole benefit of the holders of Mandatorily Redeemable Preferred Stock and
any other class or series of Parity Stock having the terms described therein and
accord ingly, at any time when (i) there are no shares of any such other class
or series of Parity Stock outstanding or if the holders of each such other class
or series of Parity
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Stock have, by such vote or consent of the holders thereof as may be provided
for in the instrument creating or evidencing such class or series, waived in
whole or in part the benefit of such provisions (either generally or in the
specific instance), and (ii) the holders of shares of Mandatorily Redeemable
Preferred Stock shall have waived (as provided in paragraph (14)) in whole or in
part the benefit of such provision (either generally or in the specific
instance), then the provisions of paragraphs (6)(a), (b) and (d) shall not (to
the extent waived, in the case of any partial waiver) restrict the payment of
dividends or the making of distributions on, or the redemption, purchase or
other acquisition of any shares of, Mandatorily Redeemable Preferred Stock, any
other class or series of Parity Stock or any Junior Stock.
(7) LIQUIDATION RIGHTS.
(a) Payment of Liquidation Preference. If there is any liquidation,
dissolution, or winding up of the Company, whether voluntary or involuntary,
then the holders of shares of Mandatorily Redeemable Preferred Stock then
outstanding, after payment, or provision for payment of the debts and other
liabilities of the Company and the payment or provision for payment of any
distribution on any shares of Senior Stock, and before any distribution to the
holders of Junior Stock, shall be entitled to be paid out of the assets of the
Company available for distribution to its stockholders an amount per share of
Mandatorily Redeemable Preferred Stock in cash equal to the Liquidation
Preference. If the assets of the Company available for distribution to the
holders of the shares of Mandatorily Redeemable Preferred Stock upon any
dissolution, liquidation or winding up of the Company shall be insufficient to
pay in full the Liquidation Preference payable to the holders of outstanding
shares of Mandatorily Redeemable Preferred Stock and the liquidation preference
payable to all other shares of Parity Stock (as set forth in the instrument or
instruments creating such Parity Stock), then the holders of shares of
Mandatorily Redeemable Preferred Stock and of all other shares of Parity Stock
shall share ratably in such distribution of assets in proportion to the amount
which would be payable on such distribution if the amounts to which the holders
of outstanding shares of Mandatorily Redeemable Preferred Stock and the holders
of outstanding shares of such other Parity Stock were paid in full. Except as
provided in this paragraph (7)(a), holders of Mandatorily Redeemable Preferred
Stock shall not be entitled to any distribution in the event of the liquidation,
dissolution or winding up of the affairs of the Company.
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(b) Certain Events Not Deemed Liquidation, Etc. For the purposes of
this paragraph (7) a Reorganization shall not be deemed to be a voluntary of
involuntary liquidation, dissolution or winding up of the Company.
(8) NO FRACTIONAL SHARES. No fractional shares of Common Stock or
scrip shall be issued in connection with the delivery of shares of Common Stock
in payment, in whole or in part, of any dividend, Redemption Price or Liqui
dating Payment. Whether or not a fractional share would be delivered to a holder
of Mandatorily Redeemable Preferred Stock shall be based upon, in the case of
the payment, in whole or in part, of dividends, a Redemption Price or a
Liquidating Payment pursuant to paragraphs (3), (4) or (7) , respectively, on
the total number of shares of Mandatorily Redeemable Preferred Stock at the time
held by such holder and the total number of shares of Common Stock, otherwise
deliverable in respect thereof. Instead of the issuance of a fraction of a share
of Common Stock or scrip, the Company shall pay instead an amount in cash
(rounded to the nearest whole cent) equal to, in the case of Common Stock, the
same fraction of the Closing Price of a share of preceding the Determination
Date.
(9) PAYMENT OF TAXES. The Company shall pay any and all documentary,
stamp or similar transfer taxes payable in respect of the delivery of shares of
Common Stock, pursuant to paragraphs (3), (4) or (7), as applicable; provided,
however, the Company shall not be required to pay any such tax that may be
payable because any such shares are issued in a name other than the name of the
holder of such Mandatorily Redeemable Preferred Stock.
(10) NO PREEMPTIVE RIGHTS. The holders of shares of Mandatorily
Redeemable Preferred Stock shall have no preemptive rights, including preemptive
rights with respect to any shares of capital stock or other securities of the
Company convertible into or carrying rights or options to purchase any such
shares.
(11) VOTING RIGHTS. (a) The holders of shares of Mandatorily
Redeemable Preferred Stock shall have no Voting rights, except as otherwise
required by law and except as set forth in this paragraph (11). When and if the
holders of Mandatorily Redeemable Preferred Stock are entitled to vote by law or
pursuant to this paragraph (11), each holder will be entitled to one vote per
share.
(b) Certain Changes to Charter. For as long as any shares of
Mandatorily Redeemable Preferred Stock remain outstanding, the affirmative vote
of the holders of at least a majority of such outstanding shares (voting
separately as a
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class) given in Person or by proxy at an annual meeting or a special meeting
called for such purpose, shall be necessary (i) before the Company may amend any
of the provisions of this Certificate of Designations or the Restated
Certificate of Incorpora tion of the Company which would alter or change the
powers, preferences or special rights of the holders of the shares of
Mandatorily Redeemable Preferred Stock then outstanding so as to affect them
adversely; provided, however, that:
(x) any such amendment that would authorize, create or increase the
authorized amount of any additional shares of Junior Stock or shares
of any other class or series of Parity Stock (whether or not already
authorized); and
(y) any such amendment that would increase the number of authorized
shares of Preferred Stock of the Company (but not the number of
authorized shares of Mandatorily Redeemable Preferred Stock) or that
would decrease (but not below the number of shares, then
outstanding) the number of authorized shares of Preferred Stock (but
not the number of authorized shares of Mandatorily Redeemable
Preferred Stock);
shall be deemed not to adversely affect such powers preferences or rights and
shall not be subject to approval by the holders of shares of Mandatorily
Redeemable Preferred Stock; and (ii) before the Company may reclassify the
outstanding shares of Mandatorily Redeemable Preferred Stock into another class
or series of capital stock of the Company; provided further, however, that no
consent described in clause (i) of this paragraph of the holders of the shares
of Mandatorily Redeemable Pre ferred Stock shall be required if, at or prior to
the time when such amendment is to take effect, provision is made for the
redemption of all shares of Mandatorily Redeemable Preferred Stock at the time
outstanding.
(c) Creation of Senior Stock. No consent or vote of the holders of
the shares of Mandatorily Redeemable Preferred Stock shall be necessary before
the Company or the Board may authorize, create or issue any class or series of
Senior Stock.
(d) No Other Vote. Except as otherwise set forth in this paragraph
(11) or as required by law, the holders of Mandatorily Redeemable Preferred
Stock shall not have any relative, participating, optional or other special
voting rights and powers and the consent or vote of such holders shall not be
required for the taking of
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any corporate action by the Company or the Board. The provisions of this
paragraph (11) are in lieu of, and not in addition to, any voting rights
specified in the Restated Certificate of Incorporation as applicable to a series
of Preferred Stock.
(12) PAYMENTS. Payment of cash amounts due in respect of the
Mandatorily Redeemable Preferred Stock will be paid to the holders of shares of
Mandatorily Redeemable Preferred Stock (or, in the case of joint holders, the
first-named) as appearing in the stock register of the Company for the
Mandatorily Redeemable Preferred Stock as at opening of business (New York time)
on the date specified in this Certificate for the purpose of determining the
holders of Mandatorily Redeemable Preferred Stock entitled to such payments or,
if no such date is speci fied, the fifteenth Business Day before the due date
for such payment (the "Payment Record Date").
Payments of cash amounts due in respect of the Mandatorily Re
deemable Preferred Stock will be made by a check in U.S. dollars drawn on a bank
in New York and mailed to the address (as recorded in the stock register of the
Com pany for the Mandatorily Redeemable Preferred Stock) of the holder thereof
(or, in the case of joint holders, the first-named) not later than the relevant
date for payment unless, prior to the relevant Payment Record Date, the Company
has received from the holder thereof (or, in the case of joint holders, the
first-named) written instruc tions for payment to be made by wire transfer to a
specified designated account. If the due date for payment of any cash amount in
respect of the Mandatorily Redeem able Preferred Stock is not a Business Day,
then the holder thereof will not be entitled to payment thereof until the next
following day which is a Business Day and, if such payment is to be made by
transfer to a designated account rather than by check, a day on which commercial
banks and foreign exchange markets settle, payments in U.S. dollars in the place
where the relevant designated account is located.
(13) NOTICES. Any notice or communication by a holder of Mandatorily
Redeemable Preferred Stock to the Company is duly given if in writing and
delivered in person or mailed by first-class mail to the Company at its address
as set forth in its then most recently filed Form 10-K or 10-Q as the case may
be.
Any notice or communications to a holder of Mandatorily Redeem able
Preferred Stock shall be mailed by first-class mail to his address shown on the
stock register of the Company for the Mandatorily Redeemable Preferred Stock or,
if there are more than 200 holders of record of the Mandatorily Redeemable
Preferred
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Stock and the Company in its sole discretion so elects, in a leading daily
newspaper having general circulation in New York (which is expected to be the
Wall Street Journal) or England and Wales (which is expected to be The Financial
Times). Failure to mail a notice or communication to one holder or any defect in
it shall not affect its sufficiency with respect to other holders.
If a notice or communication is given in the manner provided in this
paragraph (13) within the time prescribed by this Certificate, it shall be
conclusively presumed to have been duly given, whether or not the person
entitled to such notice receives it.
(14) WAIVER. Any provision of this Certificate of Designations
which, for the benefit of the holders of Mandatorily Redeemable Preferred Stock,
prohibits, limits or restricts actions by the Company may be waived in whole or
in part, or the application of all or any part of such provision in any
particular circum stance or generally may be waived, in each case with the
consent of the holders of at least a majority of the number of shares of
Mandatorily Redeemable Preferred Stock then outstanding, either in writing or by
vote at a meeting called for such purpose at which the holders of Mandatorily
Redeemable Preferred Stock shall vote as a separate class.
(15) REGISTRATION AND NO TRANSFER. The Company will maintain at its
principal executive office a register in which the Company will provide for the
registration of shares of Mandatorily Redeemable Preferred Stock. The shares of
Mandatorily Redeemable Preferred Stock are not transferrable, except to any
Affiliate of any holder thereof, provided, that such shares shall be reconveyed
to any such holder who transfers to an Affiliate in the event that such
Affiliate ceases to be an Affiliate of such transferring holder, and any
certificate representing shares of Mandatorily Redeemable Preferred Stock will
be so legended.
(16) EXCLUSION OF OTHER RIGHTS. Except as may otherwise be required
by law, the shares of Mandatorily Redeemable Preferred Stock shall not have any
designations, preferences, limitations or relative rights other than those
specifically set forth in this Certificate of Designations.
(17) SEVERABILITY OF PROVISIONS. Whenever possible, each provision
of this Certificate of Designations shall be interpreted in a manner as to be
effective and valid under applicable law, but if any provision hereof is held to
be prohibited by or invalid under applicable law, such provision shall be
ineffective
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only to the extent of such prohibition or invalidity, without invalidating or
otherwise adversely affecting the remaining provisions hereof. If a court of
competent jurisdic tion should determine that a provision hereof would be valid
or enforceable if a period of time were extended or shortened or a particular
percentage were increased or decreased, then such court may make such change as
shall be necessary to render the provision in question effective and valid under
applicable law.
0234756.02-New YorkS5A
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<PAGE> 96
Exhibit D
5-1/4% CONVERTIBLE PREFERRED STOCK, SERIES A
(1) Number and Designation. 500,000 shares of the Preferred Stock of
the Corporation shall be designated as 5-1/4% Convertible Preferred Stock,
Series A (the "5-1/4% Preferred Stock") and no other shares of Preferred Stock
shall be designated as 5-1/4% Preferred Stock.
(2) Definitions. For purposes of the 5-1/4% Preferred Stock, the following terms
shall have the meanings indicated:
"Board of Directors" shall mean the board of directors of the
Corporation or the Executive Committee, if any, of such board of directors or
any other committee duly authorized by such board of directors to perform any of
its responsibilities with respect to the 5-1/4% Preferred Stock.
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which state or federally chartered banking institutions in New York, New
York are not required to be open.
"Common Stock" shall mean the Corporation's Common Stock, par value
$.01 per share.
"Constituent Person" shall have the meaning set forth
in paragraph (8)(e) hereof.
"Conversion Rate" shall have the meaning set forth in
paragraph (8)(a) hereof.
"Current Market Price" of publicly traded shares of Common Stock or
any other class of capital stock or other security of the Corporation or any
other issuer for any day shall mean (i) if the security is then listed or
admitted to trading on a national securities exchange in the United States, the
last reported sale price, regular way, for the security as reported in the
consolidated transaction or other reporting system for securities listed or
traded on such exchange, or (ii) if the security is quoted on the Nasdaq
National Market, the last reported sale price, regular way, for the security as
reported on such list, or (iii) if the security is not so admitted for trading
on any national securities exchange or the Nasdaq National Market, the average
of the last reported closing bid and asked prices reported by the Nasdaq as
furnished by any member in good standing of the National Association of
Securities Dealers, Inc., selected from time to time by the Company for that
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purpose or as quoted by the National Quotation Bureau Incorporated. In the event
that no such quotation is available for such day, the Current Market Price shall
be the average of the quotations for the last five Trading Days for which a
quotation is available within the last 30 Trading Days prior to such day. In the
event that five such quotations are not available within such 30-Trading Day
period, the Board of Directors shall be entitled to determine the Current Market
Price on the basis of such quotations as it reasonably considers appropriate.
"Determination Date" shall have the meaning set forth
in paragraph (8)(d) hereof.
"Dividend Payment Date" shall mean September 30, December 30, March
30 and June 30 of each year, commencing on March 30, 1999; provided, however,
that if any Dividend Payment Date falls on any day other than a Business Day,
the dividend payment due on such Dividend Payment Date shall be paid on the
Business Day immediately following such Dividend Payment Date.
"Dividend Periods" shall mean quarterly dividend periods commencing
on September 30, December 30, March 30 and June 30 of each year and ending on
and including the day preceding the first day of the next succeeding Dividend
Period (other than the initial Dividend Period which shall commence on the Issue
Date and end on and include March 30, 1999).
"Fair Market Value" shall mean the average of the daily Current
Market Prices of a share of Common Stock for the 25 Trading Days immediately
prior to the date for which such value is to be computed.
"5-1/4% Preferred Stock" shall have the meaning set forth in
paragraph (1) hereof.
"Issue Date" shall mean the first date on which shares of 5-1/4%
Preferred Stock are issued.
"Junior Securities" shall have the meaning set forth
in paragraph (3) hereof.
"Junior Securities Distribution" shall have the meaning set forth in
paragraph (4)(e) hereof.
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"Mandatory Redemption Date" shall have the meaning set forth in
paragraph (6)(c) hereof.
"Mandatory Redemption Obligation" shall have the meaning set forth
in paragraph (6)(d) hereof.
"Nasdaq" means the National Association of Securities
Dealers, Inc. Automated Quotations System.
"non-electing share" shall have the meaning set forth
in paragraph (8)(e) hereof.
"NYSE" means the New York Stock Exchange.
"outstanding", when used with reference to shares of stock, shall
mean issued shares, excluding shares held by the Corporation or a subsidiary.
"Parity Securities" shall have the meaning set forth
in paragraph (3) hereof.
"Person" shall mean any individual, a corporation, a partnership, an
association, a joint-stock company, a limited liability company, a trust, any
unincorporated organization, or a government or political subdivision thereof.
"Preferred Stock" shall have the meaning set forth in
the first resolution above.
"Preferred Shares" has the meaning set forth in
paragraph (9)(b).
"Relevant Compounding Factor" shall mean, with respect to each share
of 5-1/4% Preferred Stock, upon initial issuance 1.00, and shall on each
Dividend Payment Date be increased to equal the product of the Relevant
Compounding Factor in effect immediately prior to such Dividend Payment Date
and 1.013125.
"Securities" shall have the meaning set forth in
paragraph (8)(d) hereof.
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"Senior Securities" shall have the meaning set forth
in paragraph (3) hereof.
"set apart for payment" shall be deemed to include, without any
action other than the following, the recording by the Corporation in its
accounting ledgers of any accounting or bookkeeping entry which indicates,
pursuant to a declaration of dividends or other distribution by the Board of
Directors, the allocation of funds to be so paid on any series or class of
capital stock of the Corporation; provided, however, that if any funds for any
class or series of Junior Securities or any class or series of Parity Securities
are placed in a separate account of the Corporation or delivered to a
disbursing, paying or other similar agent, then "set apart for payment" with
respect to the 5-1/4% Preferred Stock shall mean placing such funds in a
separate account or delivering such funds to a disbursing, paying or other
similar agent.
"Trading Day" shall mean any day on which the securities in question
are traded on the NYSE, or if such securities are not listed or admitted for
trading on the NYSE, on the principal national securities exchange on which such
securities are listed or admitted, or if not listed or admitted for trading on
any national securities exchange, on the Nasdaq National Market, or if such
securities are not quoted thereon, in the applicable securities market in which
the securities are traded.
"Transaction" shall have the meaning set forth in
paragraph (8)(e) hereof.
(3) Rank. Any class or series of stock of the Corporation shall be deemed to
rank: (1) prior to the 5-1/4% Preferred Stock, either as to the payment
of dividends or as to distribution of assets upon liquidation, dissolution
or winding up, or both, if the holders of such class or series shall be
entitled by the terms thereof to the receipt of dividends and of amounts
distributable upon liquidation, dissolution or winding up, in preference
or priority to the holders of 5-1/4% Preferred Stock ("Senior
Securities");
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<PAGE> 100
(2) on a parity with the 5-1/4% Preferred Stock, either as to the payment of
dividends or as to distribution of assets upon liquidation, dissolution or
winding up, or both, whether or not the dividend rates, dividend payment
dates or redemption or liquidation prices per share thereof be different
from those of the 5-1/4% Preferred Stock, if the holders of the 5-1/4%
Preferred Stock and of such class of stock or series shall be entitled
by the terms thereof to the receipt of dividends or of amounts
distributable upon liquidation, dissolution or winding up, or both,
in proportion to their respective amounts of accrued and unpaid dividends
per share or liquidation preferences, without preference or priority
one over the other and such class of stock or series is not a class of
Senior Securities (Parity Securities); and
(3) junior to the 5-1/4% Preferred Stock, either as to the payment of
dividends or as to the distribution of assets upon liquidation,
dissolution or winding up, or both, if such stock or series shall be
Common Stock or if the holders of the 5-1/4% Preferred Stock shall be
entitled to receipt of dividends, and of amounts distributable upon
liquidation, dissolution or winding up, in preference or priority to the
holders of shares of such stock or series ("Junior Securities").
The 13% Series B Senior Redeemable Exchangeable Preferred Stock (the "13%
Preferred") is a Senior Security. Each of the 9.9% Non-Voting Mandatory
Redeemable Preferred Stock, Series A ("Series A Preferred"), and 9.9%
Non-Voting Mandatory Redeemable Preferred Stock, Series B ("Series B
Preferred"), is a Junior Security. One or more classes of Additional
Preferred (as defined below) shall be Parity Securities provided, however,
that there shall be no issue of other Parity Securities except as approved
by the holders of the 5-1/4% Preferred Stock pursuant to paragraph 9(d).
The respective definitions of Senior Securities, Junior Securities and
Parity Securities shall also include any rights or options exercisable for
or convertible into any of the Senior Securities, Junior Securities and
Parity Securities, as the case may be. The 5-1/4% Preferred Stock shall be
subject to the creation of Junior Securities, Parity Securities and Senior
Securities as set forth herein.
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(4) Dividends. (a) Subject to paragraph (8)(b)(ii), the holders of shares of
5-1/4% Preferred Stock shall be entitled to receive, when, as and if declared by
the Board of Directors, out of funds legally available for the payment of
dividends, dividends at the quarterly rate of $13.125 per share (assuming a
$1,000.00 face amount) payable in cash, shares of Common Stock equal to $13.125
per share of 5-1/4% Preferred Stock (having a value equal to the Current Market
Price as of the record date for such Dividend Payment Date) or additional shares
of Preferred Stock of a class to be designated by the Board of Directors having
terms substantially identical to the 5-1/4% Preferred Stock except that: (i) the
Conversion Rate (as set forth in Section 8(a)) shall be the product of the
Conversion Rate (as then in effect) and the Relevant Compounding Factor and (ii)
the number of the shares of such Preferred Stock payable as a dividend on any
Dividend Payment Date shall increase for each Dividend Payment Date from the
first Dividend Payment Date by the Relevant Compounding Factor (such classes of
Preferred Stock singularly and collectively, the "Additional Preferred"). Such
dividends shall be payable in arrears quarterly on each Dividend Payment Date.
Dividends on the 5-1/4% Preferred Stock shall be cumulative from the Issue Date
(except that dividends on Additional Shares shall accrue from the date such
Additional Shares are issued or would have been issued in accordance with this
Certificate of Designation if such dividends had been declared), whether or not
in any Dividend Period or Periods there shall be funds of the Corporation
legally available for the payment of such dividends. Each such dividend shall be
payable to the holders of record of shares of the 5-1/4% Preferred Stock, as
they appear on the stock records of the Corporation at the close of business on
the record date for such dividend. Upon the declaration of any such dividend,
the Board of Directors shall fix as such record date on the fifth Business Day
preceding the relevant Dividend Payment Date and shall give notice on or prior
to the record date of the form of payment of such dividend. Accrued and unpaid
dividends for any past Dividend Payment Date may be declared and paid at any
time, without reference to any Dividend Payment Date, to holders of record on
such record date, not more than 45 days nor less than five Business Days
preceding the payment date thereof, as may be fixed by the Board of Directors.
(1) For the purpose of determining the number of Additional Preferred to be
issued pursuant to paragraph (4)(a), each such Additional Preferred shall
be valued at $1,000.00. Holders of such Additional Preferred shall be
entitled to receive dividends payable at the rates specified in paragraph
(4)(a).
(1)
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(2) The dividends payable for the initial Dividend Period, or any other period
shorter than a full Dividend Period, on the 5-1/4% Preferred Stock shall
accrue daily and be computed on the basis of a 360-day year and the actual
number of days in such period. Holders of shares of 5-1/4% Preferred Stock
shall not be entitled to any dividends, whether payable in cash, property
or stock, in excess of cumulative dividends, as herein provided, on the
5-1/4% Preferred Stock except as otherwise provided herein. No interest,
or sum of money in lieu of interest, shall be payable in respect of any
dividend payment or payments on the 5-1/4% Preferred Stock that may be in
arrears except as otherwise provided herein.
(3) So long as any shares of the 5-1/4% Preferred Stock are outstanding, no
dividends, except as described in the next succeeding sentence, shall be
declared or paid or set apart for payment on Parity Securities, for any
period, nor shall any Parity Securities be redeemed, purchased or
otherwise acquired for any consideration (or any moneys be paid to or made
available for a sinking fund for the redemption of any such Parity
Securities) by the Corporation (except for conversion into or exchange
into other Parity Securities) unless, in each case, (i) full cumulative
dividends on all outstanding shares of the 5-1/4% Preferred Stock for all
Dividend Periods terminating on or prior to the date of such redemption,
repurchase or other acquisition shall have been paid or set apart for
payment, (ii) sufficient funds shall have been paid or set apart for the
payment of the dividend for the current Dividend Period with respect to
the 5-1/4% Preferred Stock and (iii) the Corporation is not in default
with respect to any redemption of shares of 5-1/4% Preferred Stock by the
Corporation pursuant to paragraph (6) below. When dividends are not fully
paid in Common Stock or Additional Preferred or are not paid in full in
cash or a sum sufficient for such payment is not set apart, as aforesaid,
all dividends declared upon shares of the 5-1/4% Preferred Stock and all
dividends declared upon Parity Securities shall be declared ratably in
proportion to the respective amounts of dividends accumulated and unpaid
on the 5-1/4% Preferred Stock and accumulated and unpaid on such Parity
Securities.
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(4) So long as any shares of the 5-1/4% Preferred Stock are outstanding, no
dividends (other than (i) any rights issued pursuant to a shareholder
rights plan as provided in paragraph 11 and (ii) dividends or
distributions paid in shares of, or options, warrants or rights to
subscribe for or purchase shares of, Junior Securities) shall be declared
or paid or set apart for payment or other distribution declared or made
upon Junior Securities, nor shall any Junior Securities be redeemed,
purchased or otherwise acquired (other than a redemption, purchase or
other acquisition of shares of Common Stock made for purposes of an
employee incentive or benefit plan of the Corporation or any subsidiary)
(all such dividends, distributions, redemptions or purchases being
hereinafter referred to as "Junior Securities Distributions") for any
consideration (or any moneys be paid to or made available for a sinking
fund for the redemption of any shares of any such stock) by the
Corporation, directly or indirectly (except by conversion into or exchange
for Junior Securities, including pursuant to paragraph 4(c) of the Series
A Preferred and paragraph 4(d) of the Series B Preferred), unless in each
case (i) the full cumulative dividends on all outstanding shares of the
5-1/4% Preferred Stock and any other Parity Securities shall have been
paid or set apart for payment for all past Dividend Periods with respect
to the 5-1/4% Preferred Stock and all past dividend periods with respect
to such Parity Securities and (ii) sufficient funds shall have been paid
or set apart for the payment of the dividend for the current Dividend
Period with respect to the 5-1/4% Preferred Stock and the current dividend
period with respect to such Parity Securities.
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(5) Liquidation Preference. (a) In the event of any liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, before any
payment or distribution of the assets of the Corporation (whether capital or
surplus) shall be made to or set apart for the holders of Junior Securities, the
holders of the shares of 5-1/4% Preferred Stock shall be entitled to receive
$1,000.00 per share of 5-1/4% Preferred Stock plus an amount equal to all
dividends (whether or not earned or declared) accrued and unpaid thereon to the
date of final distribution to such holders; but such holders shall not be
entitled to any further payment. If, upon any liquidation, dissolution or
winding up of the Corporation, the assets of the Corporation, or proceeds
thereof, distributable among the holders of the shares of 5-1/4% Preferred Stock
shall be insufficient to pay in full the preferential amount aforesaid and
liquidating payments on any Parity Securities, then such assets, or the proceeds
thereof, shall be distributed among the holders of shares of 5-1/4% Preferred
Stock and any such other Parity Securities ratably in accordance with the
respective amounts that would be payable on such shares of 5-1/4% Preferred
Stock and any such other stock if all amounts payable thereon were paid in full.
For the purposes of this paragraph (5), (i) a consolidation or merger of the
Corporation with one or more corporations, or (ii) a sale or transfer of all or
substantially all of the Corporation's assets, shall not be deemed to be a
liquidation, dissolution or winding up, voluntary or involuntary, of the
Corporation.
(1) Subject to the rights of the holders of any Parity Securities,
upon any liquidation, dissolution or winding up of the Corporation, after
payment shall have been made in full to the holders of the 5-1/4% Preferred
Stock, as provided in this paragraph (5), any other series or class or
classes of Junior Securities shall, subject to the respective terms and
provisions (if any) applying thereto, be entitled to receive any and all
assets remaining to be paid or distributed, and the holders of the 5-1/4%
Preferred Stock shall not be entitled to share therein.
(6) Redemption. (a) On and after the earlier to occur of (i) the seventh
anniversary of the Issue Date or (ii) the date on which the Current Market Price
of the Common Stock shall have exceeded $120.00 for twenty-five (25) consecutive
Trading Days, to the extent the Corporation shall have funds legally available
for such payment, the Corporation may redeem at its option shares of 5-1/4%
Preferred Stock, in whole or from time to time in part, payable at the option of
the Corporation in (A) cash, at a redemption price of $1,000.00 per share, or
(B) in shares of Common Stock, at a redemption price of $1,025.00 per share in
the case of a redemption permitted by clause (i) or $1,000.00 per share in the
case of a redemption permitted by clause (ii), or (C) in a combination of cash
and Common Stock at a redemption price based on the respective combination of
consideration, together in each case with accrued and unpaid dividends thereon,
whether or not declared, to, but excluding, the date fixed for redemption,
without interest. For purposes of determining the number of shares of the Common
Stock to be issued pursuant to this paragraph (6)(a), the price per share of
Common Stock valued at the Fair Market Value.
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(1) On and after January 28, 2009, each holder of shares of 5-1/4% Preferred
Stock shall have the right to require the Corporation, to the extent the
Corporation shall have funds legally available therefor, to redeem such
holder's shares of 5-1/4% Preferred Stock in whole or from time to time in
part at a redemption price of $1,000.00 per share, payable at the option of
the Corporation in cash, shares of Common Stock or a combination thereof,
together with accrued and unpaid dividends thereon to, but excluding, the
date fixed for redemption, without interest. For purposes of determining
the number of shares of the Common Stock to be issued pursuant to this
paragraph (6)(b), the price per share of Common Stock shall equal the Fair
Market Value. Any holder of shares of 5-1/4% Preferred Stock who elects to
exercise its rights pursuant to this paragraph (6)(b) shall deliver to the
Corporation a written notice of election not less than 20 days prior to
January 28, 2009, as the case may be, which notice shall set forth the name
of the Holder, the number of shares of 5-1/4% Preferred Stock to be
redeemed and a statement that the election to exercise a redemption right
is being made thereby; and shall deliver to the Corporation on or before
the date of redemption certificates evidencing the shares of 5-1/4%
Preferred Stock to be redeemed, duly endorsed for transfer to the
Corporation.
(2) If the Corporation shall not have redeemed all outstanding shares of
5-1/4% Preferred Stock pursuant to paragraphs (6)(a) and (6)(b), on the
twentieth anniversary of the Issue Date (the "Mandatory Redemption Date"),
to the extent the Corporation shall have funds legally available for such
payment, the Corporation shall redeem all outstanding shares of 5-1/4%
Preferred Stock, at a redemption price of $1,000.00 per share, payable at
the option of the Corporation in cash, shares of Common Stock or a
combination thereof, together with accrued and unpaid dividends thereon to,
but excluding, the Mandatory Redemption Date, without interest. For
purposes of determining the number of shares of the Common Stock to be
issued pursuant to this paragraph (6)(c), the price per share of Common
Stock shall be valued at the Fair Market Value.
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(3) If the Corporation is unable or shall fail to discharge its obligation to
redeem all outstanding shares of 5-1/4% Preferred Stock pursuant to
paragraph (6)(c) (the "Mandatory Redemption Obligation"), the Mandatory
Redemption Obligation shall be discharged as soon as the Corporation is
able to discharge such Mandatory Redemption Obligation. If and so long as
any Mandatory Redemption Obligation with respect to the 5-1/4% Preferred
Stock shall not be fully discharged, the Corporation shall not (i)
directly or indirectly, redeem, purchase, or otherwise acquire any Parity
Security or discharge any mandatory or optional redemption, sinking fund
or other similar obligation in respect of any Parity Securities (except in
connection with a redemption, sinking fund or other similar obligation to
be satisfied pro rata with the 5-1/4% Preferred Stock) or (ii) declare or
make any Junior Securities Distribution (other than dividends or
distributions paid in shares of, or options, warrants or rights to
subscribe for or purchase shares of, Junior Securities), or, directly or
indirectly, discharge any mandatory or optional redemption, sinking fund
or other similar obligation in respect of the Junior Securities.
(4) Upon any redemption of 5-1/4% Preferred Stock, the Corporation shall pay
the redemption price and any accrued and unpaid dividends in arrears to,
but excluding, the applicable redemption date.
(5) For purposes of paragraph (6)(a) only, unless full cumulative dividends
(whether or not declared) on all outstanding shares of 5-1/4% Preferred
Stock and any Parity Securities shall have been paid or contemporaneously
are declared and paid or set apart for payment for all Dividend Periods
terminating on or prior to the applicable redemption date, none of the
shares of 5-1/4% Preferred Stock shall be redeemed, and no sum shall be
set aside for such redemption, unless shares of 5-1/4% Preferred Stock are
redeemed pro rata.
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(7) Procedure for Redemption. (a) If the Corporation shall redeem shares of
5-1/4% Preferred Stock pursuant to paragraph 6(a), notice of such redemption
shall be given by certified mail, return receipt requested, postage prepaid,
mailed not less than 30 days nor more than 60 days prior to the redemption date,
to each holder of record of the shares to be redeemed at such holder's address
as the same appears on the stock register of the Corporation and confirmed by
facsimile transmission to each holder of record if the Corporation has been
furnished with such facsimile address by the holder(s); provided that neither
the failure to give such notice nor confirmation nor any defect therein or in
the mailing thereof, to any particular holder, shall affect the sufficiency of
the notice or the validity of the proceedings for redemption with respect to the
other holders. Any notice that was mailed in the manner herein provided shall be
conclusively presumed to have been duly given on the date mailed whether or not
the holder receives the notice. Each such notice shall state: (i) the redemption
date; (ii) the number of shares of 5-1/4% Preferred Stock to be redeemed and, if
fewer than all the shares held by such holder are to be redeemed, the number of
shares to be redeemed from such holder; (iii) the amount payable, whether in
Common Stock or cash and if the payment is in Common Stock an explanation of the
determination of the amount to be paid; (iv) the place or places where
certificates for such shares are to be surrendered for payment of the redemption
price; and (v) that dividends on the shares to be redeemed will cease to accrue
on such redemption date, except as otherwise provided herein.
(1) If notice has been mailed as aforesaid, from and after the redemption date
(unless default shall be made by the Corporation in providing for the
payment of the redemption price of the shares called for redemption and
dividends accrued and unpaid thereon, if any), (i) except as otherwise
provided herein, dividends on the shares of 5-1/4% Preferred Stock so
called for redemption shall cease to accrue, (ii) said shares shall no
longer be deemed to be outstanding, and (iii) all rights of the holders
thereof as holders of the 5-1/4% Preferred Stock shall cease (except the
right to receive from the Corporation the redemption price without
interest thereon, upon surrender and endorsement of their certificates if
so required, and to receive any dividends payable thereon).
(2) Upon surrender in accordance with notice given pursuant to this paragraph
(7) of the certificates for any shares so redeemed (properly endorsed or
assigned for transfer, if the Board of Directors of the Corporation shall
so require and the notice shall so state), such shares shall be redeemed
by the Corporation at the redemption price aforesaid, plus any dividends
payable thereon. If fewer than all the outstanding shares of 5-1/4%
Preferred Stock are to be redeemed, the number of shares to be redeemed
shall be determined by the Board of Directors and the shares to be
redeemed shall be selected pro rata (with any fractional shares being
rounded to the nearest whole share). In case fewer than all the shares
represented by any such certificate are redeemed, a new certificate shall
be issued representing the unredeemed shares without cost to the holder
thereof.
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(8) Conversion. (a) Subject to and upon compliance with the provisions of this
paragraph (8), a holder of shares of 5-1/4% Preferred Stock shall have the
right, at any time and from time to time, at such holder's option, to convert
any or all outstanding shares of 5-1/4% Preferred Stock held by such holder, but
not fractions of shares, into fully paid and non-assessable shares of Common
Stock by surrendering such shares to be converted, such surrender to be made in
the manner provided in paragraph (8)(b) hereof. The number of shares of Common
Stock deliverable upon conversion of each share of 5-1/4% Preferred Stock shall
be equal to $1,000.00 divided by 10.00 (as adjusted as provided herein, the
"Conversion Rate"); provided that the aggregate number of shares of Common Stock
deliverable upon conversion of the 5-1/4% Preferred Stock (together with the
conversion of any Additional Preferred) shall not be greater than 7,590,994
subject to adjustment as provided herein. The Conversion Rate is subject to
adjustment from time to time pursuant to paragraph (8)(d) hereof. The right to
convert shares called for redemption pursuant to paragraph (7) shall terminate
at the close of business on the date immediately preceding the date fixed for
such redemption unless the Corporation shall default in making payment of the
amount payable upon such redemption. Upon conversion of any share of 5-1/4%
Preferred Stock the holder thereof shall continue to be entitled to receive from
the Corporation any accrued but unpaid dividends thereon.
(1) (i) In order to exercise the conversion privilege, the holder of each
share of 5-1/4% Preferred Stock to be converted shall surrender the
certificate representing such share, duly endorsed or assigned to the
Corporation or in blank, at the office of the Corporation, or to any
transfer agent of the Corporation previously designated by the Corporation
to the holders of the 5-1/4% Preferred Stock for such purposes, with a
written notice of election to convert completed and signed, specifying the
number of shares to be converted. Such notice shall state that the holder
has satisfied any legal or regulatory requirement for conversion,
including compliance with the Hart-Scott-Rodino Antitrust Improvements Act
of 1976. Such notice shall also state the name or names (with address and
social security or other taxpayer identification number) in which the
certificate or certificates for Common Stock are to be issued. Unless the
shares issuable on conversion are to be issued in the same name as the
name in which such share of 5-1/4% Preferred Stock is registered, each
share surrendered for conversion shall be accompanied by instruments of
transfer, in form satisfactory to the Corporation, duly executed by the
holder or the holder's duly authorized attorney and an amount sufficient
to pay any transfer or similar tax (or evidence reasonably satisfactory to
the Corporation demonstrating that such taxes have been paid). All
certificates representing shares of 5-1/4% Preferred Stock surrendered for
conversion shall be canceled by the Corporation or the transfer agent. (1)
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(1) Holders of shares of 5-1/4% Preferred Stock at the close of business on a
dividend payment record date shall not be entitled to receive the dividend
payable on such shares on the corresponding Dividend Payment Date if such
holder shall have surrendered for conversion such shares at any time
following the preceding Dividend Payment Date and prior to such Dividend
Payment Date.
(2) As promptly as practicable after the surrender by a holder of the
certificates for shares of 5-1/4% Preferred Stock as aforesaid, the
Corporation shall issue and shall deliver to such holder, or on the
holder's written order, a certificate or certificates (which certificate
or certificates shall have the legend set forth in paragraph 10(c)) for
the whole number of duly authorized, validly issued, fully paid and
non-assessable shares of Common Stock issuable upon the conversion of such
shares in accordance with the provisions of this paragraph (8), and any
fractional interest in respect of a share of Common Stock arising on such
conversion shall be settled as provided in paragraph (8)(c). Upon
conversion of only a portion of the shares of 5-1/4% Preferred Stock
represented by any certificate, a new certificate shall be issued
representing the unconverted portion of the certificate so surrendered
without cost to the holder thereof. Upon the surrender of certificates
representing shares of 5-1/4% Preferred Stock to be converted, such shares
shall no longer be deemed to be outstanding and all rights of a holder
with respect to such shares surrendered for conversion shall immediately
terminate except the right to receive the Common Stock and other amounts
payable pursuant to this paragraph (8).
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(3) Each conversion shall be deemed to have been effected immediately prior
to the close of business on the date on which the certificates for shares
of 5-1/4% Preferred Stock shall have been surrendered and such notice
received by the Corporation as aforesaid, and the Person or Persons in
whose name or names any certificate or certificates for shares of Common
Stock shall be issuable upon such conversion shall be deemed to have
become the holder or holders of record of the shares of Common Stock
represented thereby at such time on such date and such conversion shall be
into a number of shares of Common Stock equal to the product of the number
of shares of 5-1/4% Preferred Stock surrendered times the Conversion Rate
in effect at such time on such date, unless the stock transfer books of
the Corporation shall be closed on that date, in which event such Person
or Persons shall be deemed to have become such holder or holders of record
at the close of business on the next succeeding day on which such stock
transfer books are open, but such conversion shall be based upon the
Conversion Rate in effect on the date upon which such shares shall have
been surrendered and such notice received by the Corporation.
(2) No fractional shares or scrip representing fractions of shares of Common
Stock shall be issued upon conversion of the 5-1/4% Preferred Stock.
Instead of any fractional interest in a share of Common Stock that would
otherwise be deliverable upon the conversion of a share of 5-1/4%
Preferred Stock, the Corporation shall pay to the holder of such share an
amount in cash based upon the Current Market Price of Common Stock on the
Trading Day immediately preceding the date of conversion. If more than one
share shall be surrendered for conversion at one time by the same holder,
the number of full shares of Common Stock issuable upon conversion thereof
shall be computed on the basis of the aggregate number of shares of 5-1/4%
Preferred Stock surrendered for conversion by such holder.
(3) The Conversion Rate shall be adjusted from time to time as follows:
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(1) If the Corporation shall after the Issue Date (A) declare a dividend or
make a distribution on its Common Stock in shares of its Common Stock, (B)
subdivide its outstanding Common Stock into a greater number of shares or
(C) combine its outstanding Common Stock into a smaller number of shares,
the Conversion Rate in effect on the record date for such dividend or
distribution, or the effective date of such subdivision or combination, as
the case may be, shall be proportionately adjusted so that the holder of
any share of 5-1/4% Preferred Stock thereafter surrendered for conversion
shall be entitled to receive the number and kind of shares of Common Stock
that such holder would have owned or have been entitled to receive after
the happening of any of the events described above had such share been
converted immediately prior to the record date in the case of a dividend
or distribution or the effective date in the case of a subdivision or
combination. An adjustment made pursuant to this subparagraph (i) shall
become effective immediately after the opening of business on the Business
Day next following the record date (except as provided in paragraph
(8)(h)) in the case of a dividend or distribution and shall become
effective immediately after the opening of business on the Business Day
next following the effective date in the case of a subdivision,
combination or reclassification. Adjustments in accordance with this
paragraph (8)(d)(i) shall be made whenever any event listed above shall
occur.
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(2) If the Corporation shall after the Issue Date fix a record date for the
issuance of rights or warrants (in each case, other than any rights issued
pursuant to a shareholder rights plan) to all holders of Common Stock
entitling them (for a period expiring within 45 days after such record
date) to subscribe for or purchase Common Stock (or securities convertible
into Common Stock) at a price per share (or, in the case of a right or
warrant to purchase securities convertible into Common Stock, having an
effective exercise price per share of Common Stock, computed on the basis
of the maximum number of shares of Common Stock issuable upon conversion
of such convertible securities, plus the amount of additional
consideration payable, if any, to receive one share of Common Stock upon
conversion of such securities) less than the Fair Market Value per share
of Common Stock on the date on which such issuance was declared or
otherwise announced by the Corporation (the "Determination Date"), then
the Conversion Rate in effect at the opening of business on the Business
Day next following such record date shall be adjusted so that the holder
of each share of 5-1/4% Preferred Stock shall be entitled to receive, upon
the conversion thereof, the number of shares of Common Stock determined by
multiplying (I) the Conversion Rate in effect immediately prior to such
record date by (II) a fraction, the numerator of which shall be the sum of
(A) the number of shares of Common Stock outstanding on the close of
business on the Determination Date and (B) the number of additional shares
of Common Stock offered for subscription or purchase pursuant to such
rights or warrants (or in the case of a right or warrant to purchase
securities convertible into Common Stock, the aggregate number of
additional shares of Common Stock into which the convertible securities so
offered are initially convertible), and the denominator of which shall be
the sum of (A) the number of shares of Common Stock outstanding on the
close of business on the Determination Date and (B) the number of shares
that the aggregate proceeds to the Corporation from the exercise of such
rights or warrants for Common Stock would purchase at such Fair Market
Value on such date (or, in the case of a right or warrant to purchase
securities convertible into Common Stock, the number of shares of Common
Stock obtained by dividing the aggregate exercise price of such rights or
warrants for the maximum number of shares of Common Stock issuable upon
conversion of such convertible securities, plus the aggregate amount of
additional consideration payable, if any, to convert such securities into
Common Stock, by such Fair Market Value). Such adjustment shall become
effective immediately after the opening of business on the Business Day
next following such record date (except as provided in paragraph (8)(h)).
Such adjustment shall be made successively whenever such a record date is
fixed. In the event that after fixing a record date such rights or
warrants are not so issued, the Conversion Rate shall be readjusted to the
Conversion Rate which would then be in effect if such record date had not
been fixed. In determining whether any rights or warrants entitle the
holders of Common Stock to subscribe for or purchase shares of Common
Stock at less than such Fair Market Value, there shall be taken into
account any consideration received by the Corporation upon issuance and
upon exercise of such rights or warrants, the value of such consideration,
if other than cash, to be determined by the Board of Directors in good
faith. In case any rights or warrants referred to in this subparagraph
(ii) shall expire unexercised after the same shall have been distributed
or issued by the Corporation (or, in the case of rights or warrants to
purchase securities convertible into Common Stock once exercised, the
conversion right of such securities shall expire), the Conversion Rate
shall be readjusted at the time of such expiration to the Conversion Rate
that would have been in effect if no adjustment had been made on account
of the distribution or issuance of such expired rights or warrants.
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(3) If the Corporation shall fix a record date for the making of a
distribution to all holders of its Common Stock of evidences of its
indebtedness, shares of its capital stock or assets (excluding regular
cash dividends or distributions declared in the ordinary course by the
Board of Directors and dividends payable in Common Stock for which an
adjustment is made pursuant to paragraph (8)(d)(i)) or rights or warrants
(in each case, other than any rights issued pursuant to a shareholder
rights plan) to subscribe for or purchase any of its securities (excluding
those rights and warrants issued to all holders of Common Stock entitling
them for a period expiring within 45 days after the record date referred
to in subparagraph (ii) above to subscribe for or purchase Common Stock or
securities convertible into shares of Common Stock, which rights and
warrants are referred to in and treated under subparagraph (ii) above)
(any of the foregoing being hereinafter in this subparagraph (iii) called
the "Securities"), then in each such case the Conversion Rate shall be
adjusted so that the holder of each share of 5-1/4% Preferred Stock shall
be entitled to receive, upon the conversion thereof, the number of shares
of Common Stock determined by multiplying (I) the Conversion Rate in
effect immediately prior to the close of business on such record date by
(II) a fraction, the numerator of which shall be the Fair Market Value per
share of the Common Stock on such record date, and the denominator of
which shall be the Fair Market Value per share of the Common Stock on such
record date less the then-fair market value (as determined by the Board of
Directors in good faith, whose determination shall be conclusive) of the
portion of the assets, shares of its capital stock or evidences of
indebtedness so distributed or of such rights or warrants applicable to
one share of Common Stock. Such adjustment shall be made successively
whenever such a record date is fixed; and in the event that after fixing a
record date such distribution is not so made, the Conversion Rate shall be
readjusted to the Conversion Rate which would then be in effect if such
record date had not been fixed. Such adjustment shall become effective
immediately at the opening of business on the Business Day next following
(except as provided in paragraph (8)(h)) the record date for the
determination of shareholders entitled to receive such distribution. For
the purposes of this subparagraph (iii), the distribution of a Security,
which is distributed not only to the holders of the Common Stock on the
date fixed for the determination of shareholders entitled to such
distribution of such Security, but also is distributed with each share of
Common Stock delivered to a Person converting a share of 5-1/4% Preferred
Stock after such determination date, shall not require an adjustment of
the Conversion Rate pursuant to this subparagraph (iii); provided that on
the date, if any, on which a Person converting a share of 5-1/4% Preferred
Stock would no longer be entitled to receive such Security with a share of
Common Stock (other than as a result of the termination of all such
Securities), a distribution of such Securities shall be deemed to have
occurred and the Conversion Rate shall be adjusted as provided in this
subparagraph (iii) (and such day shall be deemed to be "the date fixed for
the determination of shareholders entitled to receive such distribution"
and "the record date" within the meaning of the three preceding
sentences). If any rights or warrants referred to in this subparagraph
(iii) shall expire unexercised after the same shall have been distributed
or issued by the Corporation, the Conversion Rate shall be readjusted at
the time of such expiration to the Conversion Rate that would have been in
effect if no adjustment had been made on account of the distribution or
issuance of such expired rights or warrants.
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(4) In case the Corporation shall, by dividend or otherwise, distribute to
all holders of its Common Stock cash in an amount per share that, together
with the aggregate of the per share amounts of any other cash
distributions to all holders of its Common Stock made within the 12 months
preceding the date of payment of such distribution and in respect of which
no adjustment pursuant to this paragraph (iv) has been made exceeds 5.0%
of the Fair Market Value immediately prior to the date of declaration of
such dividend or distribution (excluding any dividend or distribution in
connection with the liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, and any cash that is
distributed upon a merger, consolidation or other transaction for which an
adjustment pursuant to paragraph 8(e) is made), then, in such case, the
Conversion Rate shall be adjusted so that the same shall equal the rate
determined by multiplying the Conversion Rate in effect immediately prior
to the close of business on the Record Date for the cash dividend or
distribution by a fraction the numerator of which shall be the Current
Market Price of a share of the Common Stock on the Record Date and the
denominator shall be such Current Market Price less the per share amount
of cash so distributed during the 12-month period applicable to one share
of Common Stock, such adjustment to be effective immediately prior to the
opening of business on the Business Day following the Record Date;
provided, however, that in the event the denominator of the foregoing
fraction is zero or negative, in lieu of the foregoing adjustment,
adequate provision shall be made so that each holder of 5-1/4% Preferred
Stock shall have the right to receive upon conversion, in addition to the
shares of Common Stock to which the holder is entitled, the amount of cash
such holder would have received had such holder converted each share of
5-1/4% Preferred Stock at the beginning of the 12-month period. In the
event that such dividend or distribution is not so paid or made, the
Conversion Rate shall again be adjusted to be the Conversion Rate which
would then be in effect if such dividend or distribution had not been
declared. Notwithstanding the foregoing, if any adjustment is required to
be made as set forth in this paragraph (8)(d)(iv), the calculation of any
such adjustment shall include the amount of the quarterly cash dividends
paid during the 12-month reference period only to the extent such
dividends exceed the regular quarterly cash dividends paid during the 12
months preceding the 12-month reference period. For purposes of this
paragraph (8)(d)(iv), "Record Date" shall mean, with respect to any
dividend or distribution in which the holders of Common Stock have the
right to receive cash, the date fixed for determination of shareholders
entitled to receive such cash.
In the event that at any time cash distributions to holders of Common
Stock are not paid equally on all series of Common Stock, the provisions
of this paragraph 8(d)(iv) will apply to any cash dividend or cash
distribution on any series of Common Stock otherwise meeting the
requirements of this paragraph, and shall be deemed amended to the extent
necessary so that any adjustment required will be made on the basis of the
cash dividend or cash distribution made on any such series.
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(5) In case of the consummation of a tender or exchange offer (other than an
odd-lot tender offer) made by the Corporation or any subsidiary of the
Corporation for all or any portion of the outstanding shares of Common
Stock to the extent that the cash and fair market value (as determined in
good faith by the Board of Directors of the Corporation, whose
determination shall be conclusive and shall be described in a resolution
of such Board) of any other consideration included in such payment per
share of Common Stock at the last time (the "Expiration Time") tenders or
exchanges may be made pursuant to such tender or exchange offer (as
amended) exceed by more than 5.0%, with any smaller excess being
disregarded in computing the adjustment to the Conversion Rate provided in
this paragraph (8)(d)(v), the first reported sale price per share of
Common Stock on the Trading Day next succeeding the Expiration Time, then
the Conversion Rate shall be adjusted so that the same shall equal the
rate determined by multiplying the Conversion Rate in effect immediately
prior to the Expiration Time by a fraction the numerator of which shall be
the sum of (x) the fair market value (determined as aforesaid) of the
aggregate consideration payable to shareholders based on the acceptance
(up to any maximum specified in the terms of the tender or exchange offer)
of all shares validly tendered or exchanged and not withdrawn as of the
Expiration Time (the shares deemed so accepted, up to any such maximum,
being referred to as the "Purchased Shares") and (y) the product of the
number of shares of Common Stock outstanding (less any Purchased Shares)
on the Expiration Time and the first reported sale price of the Common
Stock on the Trading Day next succeeding the Expiration Time, and the
denominator of which shall be the number of shares of Common Stock
outstanding (including any tendered or exchanged shares) on the Expiration
Time multiplied by the first reported sale price of the Common Stock on
the Trading Day next succeeding the Expiration Time, such adjustment to
become effective immediately prior to the opening of business on the day
following the Expiration Time.
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(6) No adjustment in the Conversion Rate shall be required unless such
adjustment would require a cumulative increase or decrease of at least 1%
in the Conversion Rate; provided, however, that any adjustments that by
reason of this subparagraph (vi) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment until
made; and provided, further, that any adjustment shall be required and
made in accordance with the provisions of this paragraph (8) (other than
this subparagraph (vi)) not later than such time as may be required in
order to preserve the tax-free nature of a distribution for United States
income tax purposes to the holders of shares of 5-1/4% Preferred Stock or
Common Stock. Notwithstanding any other provisions of this paragraph (8),
the Corporation shall not be required to make any adjustment of the
Conversion Rate for the issuance of any shares of Common Stock pursuant to
any plan providing for the reinvestment of dividends or interest payable
on securities of the Corporation and the investment of additional optional
amounts in shares of Common Stock under such plan. All calculations under
this paragraph (8) shall be made to the nearest dollar or to the nearest
1/1,000 of a share, as the case may be. Anything in this paragraph (8)(d)
to the contrary notwithstanding, the Corporation shall be entitled, to the
extent permitted by law, to make such adjustments in the Conversion Rate,
in addition to those required by this paragraph (8)(d), as it in its
discretion shall determine to be advisable in order that any stock
dividends, subdivision of shares, reclassification or combination of
shares, distribution of rights or warrants to purchase stock or
securities, or a distribution of other assets (other than cash dividends)
hereafter made by the Corporation to its shareholders shall not be
taxable.
(7) In the event that, at any time as a result of shares of any other class of
capital stock becoming issuable in exchange or substitution for or in lieu
of shares of Common Stock or as a result of an adjustment made pursuant to
the provisions of this paragraph (8)(d), the holder of 5-1/4% Preferred
Stock upon subsequent conversion shall become entitled to receive any
shares of capital stock of the Corporation other than Common Stock, the
number of such other shares so receivable upon conversion of any shares of
5-1/4% Preferred Stock shall thereafter be subject to adjustment from time
to time in a manner and on terms as nearly equivalent as practicable to
the provisions contained herein.
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(4) (i) If the Corporation shall be a party to any transaction (including,
without limitation, a merger, consolidation, sale of all or substantially
all of the Corporation's assets or recapitalization of the Common Stock
and excluding any transaction as to which paragraph (8)(d)(i) applies)
(each of the foregoing being referred to herein as a "Transaction"), in
each case as a result of which shares of Common Stock shall be converted
into the right to receive stock, securities or other property (including
cash or any combination thereof), there shall be no adjustment to the
Conversion Rate but each share of 5-1/4% Preferred Stock which is not
converted into the right to receive stock, securities or other property in
connection with such Transaction shall thereafter be convertible into the
kind and amount of shares of stock, securities and other property
(including cash or any combination thereof) receivable upon the
consummation of such Transaction by a holder of that number of shares or
fraction thereof of Common Stock into which one share of 5-1/4% Preferred
Stock was convertible immediately prior to such Transaction, assuming such
holder of Common Stock (i) is not a Person with which the Corporation
consolidated or into which the Corporation merged or which merged into the
Corporation or to which such sale or transfer was made, as the case may be
("Constituent Person"), or an affiliate of a Constituent Person and (ii)
failed to exercise his rights of election, if any, as to the kind or
amount of stock, securities and other property (including cash) receivable
upon such Transaction (provided that if the kind or amount of stock,
securities and other property (including cash) receivable upon such
Transaction is not the same for each share of Common Stock of the
Corporation held immediately prior to such Transaction by other than a
Constituent Person or an affiliate thereof and in respect of which such
rights of election shall not have been exercised ("non-electing share"),
then for the purpose of this paragraph (8)(e) the kind and amount of
stock, securities and other property (including cash) receivable upon such
Transaction by each non-electing share shall be deemed to be the kind and
amount so receivable per share by a plurality of the non-electing shares).
The provisions of this paragraph (8)(e) shall similarly apply to
successive Transactions.
(1) Notwithstanding anything herein to the contrary, if the Company is
reorganized such that the Common Stock is exchanged for the common stock
of a new entity ("Holdco") whose common stock is traded on NASDAQ or
another recognized securities exchange, then the Company, by notice to the
holders of the 5-1/4% Preferred Stock but without any required consent on
their part, may cause the exchange of this 5-1/4% Preferred Stock for
preferred stock of Holdco having the same terms and conditions as set
forth herein, provided that where Holdco is not solely incorporated as a
Delaware company or where the Holdco share structure is not identical to
that of the Company, the rights attaching to the preferred stock of Holdco
may be adjusted so as to comply with the local law of the country of
incorporation of Holdco or the new share structure of Holdco subject to
such rights effectively giving the same economic rights as the 5-1/4%
Preferred Stock (ignoring for these purposes any resultant change in the
tax treatment for the holders of such stock).
(5) If:
(1) the Corporation shall declare a dividend (or any other
distribution) on the Common Stock; or
(2) the Corporation shall authorize the granting to the holders of the Common
Stock of rights or warrants to subscribe for or purchase any shares of any
class or any other rights or warrants; or
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(3) there shall be any subdivision, combination or reclassification of the
Common Stock or any consolidation or merger to which the Corporation is a
party and for which approval of any shareholders of the Corporation is
required, or the sale or transfer of all or substantially all of the
assets of the Corporation as an entirety; or
(4) there shall occur the voluntary or involuntary liquidation, dissolution or
winding up of the Corporation;
then the Corporation shall cause to be filed with any transfer agent designated
by the Corporation pursuant to paragraph (8)(b) and shall cause to be
mailed to the holders of shares of the 5-1/4% Preferred Stock at their
addresses as shown on the stock records of the Corporation, as promptly as
possible, but at least ten days prior to the applicable date hereinafter
specified, a notice stating (A) the date on which a record is to be taken
for the purpose of such dividend (or such other distribution) or rights or
warrants, or, if a record is not to be taken, the date as of which the
holders of Common Stock of record to be entitled to such dividend,
distribution or rights or warrants are to be determined or (B) the date on
which such subdivision, combination, reclassification, consolidation,
merger, sale, transfer, liquidation, dissolution or winding up or other
action is expected to become effective, and the date as of which it is
expected that holders of Common Stock of record shall be entitled to
exchange their shares of Common Stock for securities or other property, if
any, deliverable upon such subdivision, combination, reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution or winding
up. Failure to give or receive such notice or any defect therein shall not
affect the legality or validity of any distribution, right, warrant,
subdivision, combination, reclassification, consolidation, merger, sale,
transfer, liquidation, dissolution, winding up or other action, or the
vote upon any of the foregoing.
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(6) Whenever the Conversion Rate is adjusted as herein provided, the
Corporation shall prepare an officer's certificate with respect to such
adjustment of the Conversion Rate setting forth the adjusted Conversion
Rate and the effective date of such adjustment and shall mail a copy of
such officer's certificate to the holder of each share of 5-1/4% Preferred
Stock at such holder's last address as shown on the stock records of the
Corporation. If the Corporation shall have designated a transfer agent
pursuant to paragraph (8)(b), it shall also promptly file with such
transfer agent an officer's certificate setting forth the Conversion Rate
after such adjustment and setting forth a brief statement of the facts
requiring such adjustment which certificate shall be conclusive evidence
of the correctness of such adjustment.
(7) In any case in which paragraph (8)(d) provides that an adjustment shall
become effective on the day next following a record date for an event, the
Corporation may defer until the occurrence of such event (i) issuing to
the holder of any share of 5-1/4% Preferred Stock converted after such
record date and before the occurrence of such event the additional shares
of Common Stock issuable upon such conversion by reason of the adjustment
required by such event over and above the Common Stock issuable upon such
conversion before giving effect to such adjustment and (ii) paying to such
holder any amount in cash in lieu of any fraction pursuant to paragraph
(8)(c).
(8) For purposes of this paragraph (8), the number of shares of Common Stock
at any time outstanding shall not include any shares of Common Stock then
owned or held by or for the account of the Corporation. The Corporation
shall not pay a dividend or make any distribution on shares of Common
Stock held in the treasury of the Corporation.
(9) There shall be no adjustment of the Conversion Rate in case of the
issuance of any stock of the Corporation in a reorganization, acquisition
or other similar transaction except as specifically set forth in this
paragraph (8). If any single action would require adjustment of the
Conversion Rate pursuant to more than one subparagraph of this paragraph
(8), only one adjustment shall be made and such adjustment shall be the
amount of adjustment that has the highest absolute value.
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(10) If the Corporation shall take any action affecting the Common Stock,
other than action described in this paragraph (8), that in the opinion of
the Board of Directors materially adversely affects the conversion rights
of the holders of the shares of 5-1/4% Preferred Stock, the Conversion
Rate may be adjusted, to the extent permitted by law, in such manner, if
any, and at such time, as the Board of Directors may determine to be
equitable in the circumstances; provided that the provisions of this
paragraph (8)(k) shall not affect any rights the holders of 5-1/4%
Preferred Stock may have at law or in equity.
(11) (i) The Corporation covenants that it will at all times reserve and keep
available, free from preemptive rights, out of the aggregate of its
authorized but unissued shares of Common Stock or its issued shares of
Common Stock held in its treasury, or both, for the purpose of effecting
conversion of the 5-1/4% Preferred Stock, the full number of shares of
Common Stock deliverable upon the conversion of all outstanding shares of
5-1/4% Preferred Stock not theretofore converted. For purposes of this
paragraph (8)(1) the number of shares of Common Stock that shall be
deliverable upon the conversion of all outstanding shares of 5-1/4%
Preferred Stock shall be computed as if at the time of computation all
such outstanding shares were held by a single holder.
(1) The Corporation covenants that any shares of Common Stock issued upon
conversion of the 5-1/4% Preferred Stock shall be duly authorized, validly
issued, fully paid and non-assessable. Before taking any action that would
cause an adjustment increasing the Conversion Rate such that the quotient
of $1,000.00 and the Conversion Rate (which initially shall be $100.00)
would be reduced below the then-par value of the shares of Common Stock
deliverable upon conversion of the 5-1/4% Preferred Stock, the Corporation
will take any corporate action that, in the opinion of its counsel, may be
necessary in order that the Corporation may validly and legally issue
fully paid and non-assessable shares of Common Stock based upon such
adjusted Conversion Rate.
(2) Prior to the delivery of any securities that the Corporation shall be
obligated to deliver upon conversion of the 5-1/4% Preferred Stock, the
Corporation shall comply with all applicable federal and state laws and
regulations which require action to be taken by the Corporation.
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(12) The Corporation will pay any and all documentary stamp or similar issue or
transfer taxes payable in respect of the issue or delivery of shares of
Common Stock or other securities or property on conversion of the 5-1/4%
Preferred Stock pursuant hereto; provided, however, that the Corporation
shall not be required to pay any tax that may be payable in respect of any
transfer involved in the issue or delivery of shares of Common Stock or
other securities or property in a name other than that of the holder of
the 5-1/4% Preferred Stock to be converted and no such issue or delivery
shall be made unless and until the Person requesting such issue or
delivery has paid to the Corporation the amount of any such tax or
established, to the satisfaction of the Corporation, that such tax has
been paid.
(9) Voting Rights. (a) The holders of record of shares of 5-1/4% Preferred Stock
shall not be entitled to any voting rights except as hereinafter provided in
paragraph (b) or as otherwise provided by law.
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(1) If and whenever six quarterly dividends (whether or not consecutive)
payable on the 5-1/4% Preferred Stock have not been paid in full or if the
Corporation shall have failed to discharge its Mandatory Redemption
Obligation, the number of directors then constituting the Board of
Directors shall be increased by two and the holders of shares of 5-1/4%
Preferred Stock, together with the holders of shares of every other series
of preferred stock (including, without limitation, Additional Preferred)
upon which like rights to vote for the election of two additional
directors have been conferred and are exercisable (resulting from either
the failure to pay dividends or the failure to redeem) (any such other
series is referred to as the "Preferred Shares"), voting as a single class
regardless of series, shall be entitled to elect the two additional
directors to serve on the Board of Directors at any annual meeting of
stockholders or special meeting held in place thereof, or at a special
meeting of the holders of the 5-1/4% Preferred Stock and the Preferred
Shares called as hereinafter provided. Whenever all arrears in dividends
on the 5-1/4% Preferred Stock and the Preferred Shares then outstanding
shall have been paid and dividends thereon for the current quarterly
dividend period shall have been paid or declared and set apart for
payment, or the Corporation shall have fulfilled its Mandatory Redemption
Obligation and any redemption obligation in respect of the Preferred
Shares, as the case may be, then the right of the holders of the 5-1/4%
Preferred Stock and the Preferred Shares to elect such additional two
directors shall cease (but subject always to the same provisions for the
vesting of such voting rights in the case of any similar future arrearages
in six quarterly dividends or failure to fulfill any Mandatory Redemption
Obligation), and the terms of office of all persons elected as directors
by the holders of the 5-1/4% Preferred Stock and the Preferred Shares
shall forthwith terminate and the number of the Board of Directors shall
be reduced accordingly. At any time after such voting power shall have
been so vested in the holders of shares of 5-1/4% Preferred Stock and the
Preferred Shares, the secretary of the Corporation may, and upon the
written request of any holder of 5-1/4% Preferred Stock (addressed to the
secretary at the principal office of the Corporation) shall, call a
special meeting of the holders of the 5-1/4% Preferred Stock and of the
Preferred Shares for the election of the two directors to be elected by
them as herein provided, such call to be made by notice similar to that
provided in the Bylaws of the Corporation for a special meeting of the
stockholders or as required by law. If any such special meeting required
to be called as above provided shall not be called by the secretary within
20 days after receipt of any such request, then any holder of shares of
5-1/4% Preferred Stock may call such meeting, upon the notice above
provided, and for that purpose shall have access to the stock books of the
Corporation. The directors elected at any such special meeting shall hold
office until the next annual meeting of the stockholders or special
meeting held in lieu thereof if such office shall not have previously
terminated as above provided. If any vacancy shall occur among the
directors elected by the holders of the 5-1/4% Preferred Stock and the
Preferred Shares, a successor shall be elected by the Board of Directors,
upon the nomination of the then-remaining director elected by the holders
of the 5-1/4% Preferred Stock and the Preferred Shares or the successor of
such remaining director, to serve until the next annual meeting of the
stockholders or special meeting held in place thereof if such office shall
not have previously terminated as provided above.
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(2) Without the written consent of the holders of at least 66-2/3% in
liquidation preference of the outstanding shares of 5-1/4% Preferred Stock
or the vote of holders of at least 66-2/3% in liquidation preference of
the outstanding shares of 5-1/4% Preferred Stock at a meeting of the
holders of 5-1/4% Preferred Stock called for such purpose, the Corporation
will not amend, alter or repeal any provision of the Certificate of
Incorporation (by merger or otherwise) so as to adversely affect the
preferences, rights or powers of the 5-1/4% Preferred Stock; provided that
any such amendment that changes the dividend payable on, the conversion
rate with respect to, or the liquidation preference of the 5-1/4%
Preferred Stock shall require the affirmative vote at a meeting of holders
of 5-1/4% Preferred Stock called for such purpose or written consent of
the holder of each share of 5-1/4% Preferred Stock.
(3) Without the written consent of the holders of at least 66-2/3% in
liquidation preference of the outstanding shares of 5-1/4% Preferred Stock
or the vote of holders of at least 66-2/3% in liquidation preference of the
outstanding shares of 5-1/4% Preferred Stock at a meeting of such holders
called for such purpose, the Corporation will not issue any additional
5-1/4% Preferred Stock or create, authorize or issue any Parity Securities
or Senior Securities or increase the authorized amount of any such other
class or series; provided that paragraph 9(d) shall not limit the right of
the Corporation to (i) issue Additional Preferred as dividends pursuant to
paragraph 4 or (ii) to issue Parity Securities or Senior Securities in
order to refinance, redeem or refund the 13% Preferred, provided that the
maximum accrual value (i.e., the sum of stated value and maximum amount
payable in kind over the term from issuance to first date of mandatory
redemption or redemption at the option of the holder) of such Parity
Securities may not exceed the maximum accrual value of the 13% Preferred.
(4) In exercising the voting rights set forth in this paragraph 9, each share
of 5-1/4% Preferred Stock shall have one vote per share, except that when
any other series of preferred stock shall have the right to vote with the
5-1/4% Preferred Stock as a single class on any matter, then the 5-1/4%
Preferred Stock and such other series shall have with respect to such
matters one vote per $1,000 of stated liquidation preference. Except as
otherwise required by applicable law or as set forth herein, the shares of
5-1/4% Preferred Stock shall not have any relative, participating,
optional or other special voting rights and powers and the consent of the
holders thereof shall not be required for the taking of any corporate
action.
(10) General Provisions. (a) The headings of the paragraphs, subparagraphs,
clauses and subclauses of this Statement of Designations are for convenience of
reference only and shall not define, limit or affect any of the provisions
hereof.
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(1) If the Corporation shall have failed to declare or pay dividends as
required pursuant to paragraph (4) hereof or shall have failed to
discharge any obligation to redeem shares of 5-1/4% Preferred Stock
pursuant to paragraph (6) hereof, the holders of shares of 5-1/4%
Preferred Stock shall be entitled to receive, in addition to all other
amounts required to be paid hereunder, when, as and if declared by the
Board of Directors, out of funds legally available for the payment of
dividends, cash dividends on the aggregate dividends which the Corporation
shall have failed to declare or pay or the redemption price, together with
accrued and unpaid dividends thereon, as the case may be, at a rate of 2%
per quarter, compounded quarterly, for the period during which the failure
to pay dividends or failure to discharge an obligation to redeem shares of
5-1/4% Preferred Stock shall continue.
(2) The shares of 5-1/4% Preferred Stock shall bear the following
legend:
THE SHARES OF PREFERRED STOCK REPRESENTED BY THIS
CERTIFICATE MAY NOT BE TRANSFERRED OTHER THAN TO AN
AFFILIATE OF THE HOLDER.
The shares of Common Stock issuable upon conversion of the 5-1/4%
Preferred Stock shall bear the following legend:
THE SHARES OF COMMON STOCK, PAR VALUE $.01, OF THE COMPANY (THE "COMMON
STOCK") REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED OR SOLD IN THE
UNITED STATES ABSENT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT") AND ANY APPLICABLE STATE SECURITIES LAWS OR AN
APPLICABLE EXEMPTION FROM REGISTRATION REQUIREMENTS. THE SHARES
REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED PRIOR TO JANUARY
28, 2001 (OTHER THAN TO AN AFFILIATE OF THE HOLDER) AND THEREAFTER MAY
ONLY BE SOLD IN BROKERS TRANSACTIONS (AS DEFINED IN RULE 144 UNDER THE
ACT) OR TO PERSONS WHO, GIVING EFFECT TO THE SALE OF THE SHARES
REPRESENTED HEREBY, WILL NOT BE THE BENEFICIAL OWNER OF 5% OR MORE OF THE
COMMON STOCK.
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(11) Shareholder Rights Plan. The shares of 5-1/4% Preferred Stock shall be
entitled to the benefits of a number of rights issuable under the Rights
Agreement, dated as of October 13, 1993, between the Company and Continental
Stock Transfer & Trust Company or any successor plan of similar purpose and
effect ("Rights") equal to the number of shares of Common Stock then issuable
upon conversion of the 5-1/4% Preferred Stock at the prevailing Conversion Rate.
Any shares of Common Stock deliverable upon conversion of a share of 5-1/4%
Preferred Stock or upon payment of a dividend shall be accomplished by a Right.
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Exhibit E
5-1/4% CONVERTIBLE PREFERRED STOCK, SERIES B
(1) Number and Designation. 4,447.92 shares of the Preferred
Stock of the Corporation shall be designated as 5-1/4% Convertible Preferred
Stock, Series B (the "5-1/4% Preferred Stock") and no other shares of Preferred
Stock shall be designated as 5-1/4% Preferred Stock.
(2) Definitions. For purposes of the 5-1/4% Preferred
Stock, the following terms shall have the meanings indicated:
"Board of Directors" shall mean the board of directors of the
Corporation or the Executive Committee, if any, of such board of directors or
any other committee duly authorized by such board of directors to perform any of
its responsibilities with respect to the 5-1/4% Preferred Stock.
"Business Day" shall mean any day other than a Saturday,
Sunday or a day on which state or federally chartered banking institutions in
New York, New York are not required to be open.
"Common Stock" shall mean the Corporation's Common Stock, par
value $.01 per share.
"Constituent Person" shall have the meaning set forth in
paragraph (8)(e) hereof.
"Conversion Rate" shall have the meaning set forth in
paragraph (8)(a) hereof.
"Current Market Price" of publicly traded shares of Common
Stock or any other class of capital stock or other security of the Corporation
or any other issuer for any day shall mean (i) if the security is then listed or
admitted to trading on a national securities exchange in the United States, the
last reported sale price, regular way, for the security as reported in the
consolidated transaction or other reporting system for securities listed or
traded on such exchange, or (ii) if the security is quoted on the Nasdaq
National Market, the last reported sale price, regular way, for the security as
reported on such list, or (iii) if the security is not so admitted for trading
on any national securities exchange or the Nasdaq National Market, the average
of the last reported closing bid and asked prices reported by the Nasdaq as
furnished by any member in good standing of the National Association of
Securities Dealers, Inc., selected from time to time by the Company for that
purpose or as
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quoted by the National Quotation Bureau Incorporated. In the event that no such
quotation is available for such day, the Current Market Price shall be the
average of the quotations for the last five Trading Days for which a quotation
is available within the last 30 Trading Days prior to such day. In the event
that five such quotations are not available within such 30-Trading Day period,
the Board of Directors shall be entitled to determine the Current Market Price
on the basis of such quotations as it reasonably considers appropriate.
"Determination Date" shall have the meaning set forth in
paragraph (8)(d) hereof.
"Dividend Payment Date" shall mean September 30, December 30,
March 30 and June 30 of each year, commencing on June 30, 1999; provided,
however, that if any Dividend Payment Date falls on any day other than a
Business Day, the dividend payment due on such Dividend Payment Date shall be
paid on the Business Day immediately following such Dividend Payment Date.
"Dividend Periods" shall mean quarterly dividend periods
commencing on September 30, December 30, March 30 and June 30 of each year and
ending on and including the day preceding the first day of the next succeeding
Dividend Period.
"Fair Market Value" shall mean the average of the daily
Current Market Prices of a share of Common Stock for the 25 Trading Days
immediately prior to the date for which such value is to be computed.
"5-1/4% Preferred Stock" shall have the meaning set forth in
paragraph (1) hereof.
"Issue Date" shall mean the first date on which shares of
5-1/4% Preferred Stock are issued.
"Junior Securities" shall have the meaning set forth in
paragraph (3) hereof.
"Junior Securities Distribution" shall have the meaning set
forth in paragraph (4)(e) hereof.
"Mandatory Redemption Date" shall have the meaning set forth
in paragraph (6)(c) hereof.
"Mandatory Redemption Obligation" shall have the meaning set
forth in paragraph (6)(d) hereof.
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"Nasdaq" means the National Association of Securities Dealers,
Inc. Automated Quotations System.
"non-electing share" shall have the meaning set forth in
paragraph (8)(e) hereof.
"NYSE" means the New York Stock Exchange.
"outstanding", when used with reference to shares of stock,
shall mean issued shares, excluding shares held by the Corporation or a
subsidiary.
"Parity Securities" shall have the meaning set forth in
paragraph (3) hereof.
"Person" shall mean any individual, a corporation, a
partnership, an association, a joint-stock company, a limited liability company,
a trust, any unincorporated organization, or a government or political
subdivision thereof.
"Preferred Stock" shall have the meaning set forth in the
first resolution above.
"Preferred Shares" has the meaning set forth in paragraph
(9)(b).
"Relevant Compounding Factor" shall mean, with respect to each
share of 5-1/4% Preferred Stock, upon initial issuance 1.00, and shall on each
Dividend Payment Date be increased to equal the product of the Relevant
Compounding Factor in effect immediately prior to such Dividend Payment Date and
1.013125.
"Securities" shall have the meaning set forth in paragraph
(8)(d) hereof.
"Senior Securities" shall have the meaning set forth in
paragraph (3) hereof.
"set apart for payment" shall be deemed to include, without
any action other than the following, the recording by the Corporation in its
accounting ledgers of any accounting or bookkeeping entry which indicates,
pursuant to a declaration of dividends or other distribution by the Board of
Directors, the allocation of funds to be so paid on any series or class of
capital stock of the Corporation; provided, however, that if any funds for any
class or series of Junior Securities or any class or series of Parity Securities
are placed in a separate account of the Corporation or delivered to a
disbursing, paying or other similar agent, then "set apart for payment"
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with respect to the 5-1/4% Preferred Stock shall mean placing such funds in a
separate account or delivering such funds to a disbursing, paying or other
similar agent.
"Trading Day" shall mean any day on which the securities in
question are traded on the NYSE, or if such securities are not listed or
admitted for trading on the NYSE, on the principal national securities exchange
on which such securities are listed or admitted, or if not listed or admitted
for trading on any national securities exchange, on the Nasdaq National Market,
or if such securities are not quoted thereon, in the applicable securities
market in which the securities are traded.
"Transaction" shall have the meaning set forth in paragraph
(8)(e) hereof.
(3) Rank. Any class or series of stock of the Corporation
shall be deemed to rank:
(1) prior to the 5-1/4% Preferred Stock, either as to the
payment of dividends or as to distribution of assets upon liquidation,
dissolution or winding up, or both, if the holders of such class or
series shall be entitled by the terms thereof to the receipt of
dividends and of amounts distributable upon liquidation, dissolution or
winding up, in preference or priority to the holders of 5-1/4%
Preferred Stock ("Senior Securities");
(2) on a parity with the 5-1/4% Preferred Stock and the
5-1/4% Convertible Preferred Stock, Series A, either as to the payment
of dividends or as to distribution of assets upon liquidation,
dissolution or winding up, or both, whether or not the dividend rates,
dividend payment dates or redemption or liquidation prices per share
thereof be different from those of the 5-1/4% Preferred Stock, if the
holders of the 5-1/4% Preferred Stock and of such class of stock or
series shall be entitled by the terms thereof to the receipt of
dividends or of amounts distributable upon liquidation, dissolution or
winding up, or both, in proportion to their respective amounts of
accrued and unpaid dividends per share or liquidation preferences,
without preference or priority one over the other and such class of
stock or series is not a class of Senior Securities ("Parity
Securities"); and
(3) junior to the 5-1/4% Preferred Stock, either as to the
payment of dividends or as to the distribution of assets upon
liquidation, dissolution or winding up, or both, if such stock or
series shall be Common Stock or if the holders of the 5-1/4% Preferred
Stock shall be entitled to receipt of dividends, and of amounts
distributable upon liquidation, dissolution or winding up, in
preference or priority to the holders of shares of such stock or series
("Junior Securities").
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The 13% Series B Senior Redeemable Exchangeable Preferred Stock (the
"13% Preferred") is a Senior Security. Each of the 9.9% Non-Voting
Mandatory Redeemable Preferred Stock, Series A ("Series A Preferred"),
and 9.9% Non-Voting Mandatory Redeemable Preferred Stock, Series B
("Series B Preferred"), is a Junior Security. One or more classes of
Additional Preferred (as defined below) shall be Parity Securities
provided, however, that there shall be no issue of other Parity
Securities except as approved by the holders of the 5-1/4% Preferred
Stock pursuant to paragraph 9(d).
The respective definitions of Senior Securities, Junior Securities and
Parity Securities shall also include any rights or options exercisable
for or convertible into any of the Senior Securities, Junior Securities
and Parity Securities, as the case may be. The 5-1/4% Preferred Stock
shall be subject to the creation of Junior Securities, Parity
Securities and Senior Securities as set forth herein.
(4) Dividends. (a) Subject to paragraph (8)(b)(ii), the
holders of shares of 5-1/4% Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors, out of
funds legally available for the payment of dividends, dividends at the
quarterly rate of $13.125 per share (assuming a $1,000.00 face amount)
payable in cash, shares of Common Stock equal to $13.125 per share of
5-1/4% Preferred Stock (having a value equal to the Current Market
Price as of the record date for such Dividend Payment Date) or
additional shares of Preferred Stock of a class to be designated by the
Board of Directors having terms substantially identical to the 5-1/4%
Preferred Stock except that: (i) the Conversion Rate (as set forth in
Section 8(a)) shall be the product of the Conversion Rate (as then in
effect) and the Relevant Compounding Factor and (ii) the number of the
shares of such Preferred Stock payable as a dividend on any Dividend
Payment Date shall increase for each Dividend Payment Date from the
first Dividend Payment Date by the Relevant Compounding Factor (such
classes of Preferred Stock singularly and collectively, the "Additional
Preferred"). Such dividends shall be payable in arrears quarterly on
each Dividend Payment Date. Dividends on the 5-1/4% Preferred Stock
shall be cumulative from the Issue Date (except that dividends on
Additional Shares shall accrue from the date such Additional Shares are
issued or would have been issued in accordance with this Certificate of
Designation if such dividends had been declared), whether or not in any
Dividend Period or Periods there shall be funds of the Corporation
legally available for the payment of such dividends. Each such dividend
shall be payable to the holders of record of shares of the 5-1/4%
Preferred Stock, as they appear on the stock records of the Corporation
at the close of business on the record date for such dividend. Upon the
declaration of any such dividend, the Board of Directors shall fix as
such record date on the fifth Business Day preceding the relevant
Dividend Payment Date and shall give notice on or prior to the record
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date of the form of payment of such dividend. Accrued and unpaid dividends for
any past Dividend Payment Date may be declared and paid at any time, without
reference to any Dividend Payment Date, to holders of record on such record
date, not more than 45 days nor less than five Business Days preceding the
payment date thereof, as may be fixed by the Board of Directors.
(1) For the purpose of determining the number of Additional
Preferred to be issued pursuant to paragraph (4)(a), each such
Additional Preferred shall be valued at $1,000.00. Holders of such
Additional Preferred shall be entitled to receive dividends payable at
the rates specified in paragraph (4)(a).
(2) The dividends payable for any period shorter than a
full Dividend Period, on the 5-1/4% Preferred Stock shall accrue daily
and be computed on the basis of a 360-day year and the actual number of
days in such period. Holders of shares of 5-1/4% Preferred Stock shall
not be entitled to any dividends, whether payable in cash, property or
stock, in excess of cumulative dividends, as herein provided, on the
5-1/4% Preferred Stock except as otherwise provided herein. No
interest, or sum of money in lieu of interest, shall be payable in
respect of any dividend payment or payments on the 5-1/4% Preferred
Stock that may be in arrears except as otherwise provided herein.
(3) So long as any shares of the 5-1/4% Preferred Stock are
outstanding, no dividends, except as described in the next succeeding
sentence, shall be declared or paid or set apart for payment on Parity
Securities, for any period, nor shall any Parity Securities be
redeemed, purchased or otherwise acquired for any consideration (or any
moneys be paid to or made available for a sinking fund for the
redemption of any such Parity Securities) by the Corporation (except
for conversion into or exchange into other Parity Securities) unless,
in each case, (i) full cumulative dividends on all outstanding shares
of the 5-1/4% Preferred Stock for all Dividend Periods terminating on
or prior to the date of such redemption, repurchase or other
acquisition shall have been paid or set apart for payment, (ii)
sufficient funds shall have been paid or set apart for the payment of
the dividend for the current Dividend Period with respect to the 5-1/4%
Preferred Stock and (iii) the Corporation is not in default with
respect to any redemption of shares of 5-1/4% Preferred Stock by the
Corporation pursuant to paragraph (6) below. When dividends are not
fully paid in Common Stock or Additional Preferred or are not paid in
full in cash or a sum sufficient for such payment is not set apart, as
aforesaid, all dividends declared upon shares of the 5-1/4% Preferred
Stock and all dividends declared upon Parity Securities shall be
declared ratably in proportion to the respective amounts of dividends
accumulated and unpaid on
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the 5-1/4% Preferred Stock and accumulated and unpaid on such Parity
Securities.
(4) So long as any shares of the 5-1/4% Preferred Stock are
outstanding, no dividends (other than (i) any rights issued pursuant to
a shareholder rights plan as provided in paragraph 11 and (ii)
dividends or distributions paid in shares of, or options, warrants or
rights to subscribe for or purchase shares of, Junior Securities) shall
be declared or paid or set apart for payment or other distribution
declared or made upon Junior Securities, nor shall any Junior
Securities be redeemed, purchased or otherwise acquired (other than a
redemption, purchase or other acquisition of shares of Common Stock
made for purposes of an employee incentive or benefit plan of the
Corporation or any subsidiary) (all such dividends, distributions,
redemptions or purchases being hereinafter referred to as "Junior
Securities Distributions") for any consideration (or any moneys be paid
to or made available for a sinking fund for the redemption of any
shares of any such stock) by the Corporation, directly or indirectly
(except by conversion into or exchange for Junior Securities, including
pursuant to paragraph 4(c) of the Series A Preferred and paragraph 4(d)
of the Series B Preferred), unless in each case (i) the full cumulative
dividends on all outstanding shares of the 5-1/4% Preferred Stock and
any other Parity Securities shall have been paid or set apart for
payment for all past Dividend Periods with respect to the 5-1/4%
Preferred Stock and all past dividend periods with respect to such
Parity Securities and (ii) sufficient funds shall have been paid or set
apart for the payment of the dividend for the current Dividend Period
with respect to the 5-1/4% Preferred Stock and the current dividend
period with respect to such Parity Securities.
(5) Liquidation Preference. (a) In the event of any
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary, before any payment or distribution of the assets of the Corporation
(whether capital or surplus) shall be made to or set apart for the holders of
Junior Securities, the holders of the shares of 5-1/4% Preferred Stock shall be
entitled to receive $1,000.00 per share of 5-1/4% Preferred Stock plus an amount
equal to all dividends (whether or not earned or declared) accrued and unpaid
thereon to the date of final distribution to such holders; but such holders
shall not be entitled to any further payment. If, upon any liquidation,
dissolution or winding up of the Corporation, the assets of the Corporation, or
proceeds thereof, distributable among the holders of the shares of 5-1/4%
Preferred Stock shall be insufficient to pay in full the preferential amount
aforesaid and liquidating payments on any Parity Securities, then such assets,
or the proceeds thereof, shall be distributed among the holders of shares of
5-1/4% Preferred Stock and any such other Parity Securities ratably in
accordance with the respective amounts that would be payable on such shares of
5-1/4% Preferred Stock and any such other stock if all amounts payable thereon
were paid in full. For the purposes of this
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paragraph (5), (i) a consolidation or merger of the Corporation with one or more
corporations, or (ii) a sale or transfer of all or substantially all of the
Corporation's assets, shall not be deemed to be a liquidation, dissolution or
winding up, voluntary or involuntary, of the Corporation.
(1) Subject to the rights of the holders of any Parity
Securities, upon any liquidation, dissolution or winding up of the
Corporation, after payment shall have been made in full to the holders
of the 5-1/4% Preferred Stock, as provided in this paragraph (5), any
other series or class or classes of Junior Securities shall, subject to
the respective terms and provisions (if any) applying thereto, be
entitled to receive any and all assets remaining to be paid or
distributed, and the holders of the 5-1/4% Preferred Stock shall not be
entitled to share therein.
(6) Redemption. (a) On and after the earlier to occur of (i)
January 28, 2006 or (ii) the date on which the Current Market Price of the
Common Stock shall have exceeded $120.00 for twenty-five (25) consecutive
Trading Days, to the extent the Corporation shall have funds legally available
for such payment, the Corporation may redeem at its option shares of 5-1/4%
Preferred Stock, in whole or from time to time in part, payable at the option of
the Corporation in (A) cash, at a redemption price of $1,000.00 per share, or
(B) in shares of Common Stock, at a redemption price of $1,025.00 per share in
the case of a redemption permitted by clause (i) or $1,000.00 per share in the
case of a redemption permitted by clause (ii), or (C) in a combination of cash
and Common Stock at a redemption price based on the respective combination of
consideration, together in each case with accrued and unpaid dividends thereon,
whether or not declared, to, but excluding, the date fixed for redemption,
without interest. For purposes of determining the number of shares of the Common
Stock to be issued pursuant to this paragraph (6)(a), the price per share of
Common Stock valued at the Fair Market Value.
(1) On and after January 28, 2009, each holder of shares of
5-1/4% Preferred Stock shall have the right to require the Corporation,
to the extent the Corporation shall have funds legally available
therefor, to redeem such holder's shares of 5-1/4% Preferred Stock in
whole or from time to time in part at a redemption price of $1,000.00
per share, payable at the option of the Corporation in cash, shares of
Common Stock or a combination thereof, together with accrued and unpaid
dividends thereon to, but excluding, the date fixed for redemption,
without interest. For purposes of determining the number of shares of
the Common Stock to be issued pursuant to this paragraph (6)(b), the
price per share of Common Stock shall equal the Fair Market Value. Any
holder of shares of 5-1/4% Preferred Stock who elects to exercise its
rights pursuant to this paragraph (6)(b) shall deliver to the
Corporation a written notice of election not less than 20 days prior to
January
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28, 2009, as the case may be, which notice shall set forth the name of
the Holder, the number of shares of 5-1/4% Preferred Stock to be
redeemed and a statement that the election to exercise a redemption
right is being made thereby; and shall deliver to the Corporation on or
before the date of redemption certificates evidencing the shares of
5-1/4% Preferred Stock to be redeemed, duly endorsed for transfer to
the Corporation.
(2) If the Corporation shall not have redeemed all
outstanding shares of 5-1/4% Preferred Stock pursuant to paragraphs
(6)(a) and (6)(b), on January 28, 2019 (the "Mandatory Redemption
Date"), to the extent the Corporation shall have funds legally
available for such payment, the Corporation shall redeem all
outstanding shares of 5-1/4% Preferred Stock, at a redemption price of
$1,000.00 per share, payable at the option of the Corporation in cash,
shares of Common Stock or a combination thereof, together with accrued
and unpaid dividends thereon to, but excluding, the Mandatory
Redemption Date, without interest. For purposes of determining the
number of shares of the Common Stock to be issued pursuant to this
paragraph (6)(c), the price per share of Common Stock shall be valued
at the Fair Market Value.
(3) If the Corporation is unable or shall fail to discharge
its obligation to redeem all outstanding shares of 5-1/4% Preferred
Stock pursuant to paragraph (6)(c) (the "Mandatory Redemption
Obligation"), the Mandatory Redemption Obligation shall be discharged
as soon as the Corporation is able to discharge such Mandatory
Redemption Obligation. If and so long as any Mandatory Redemption
Obligation with respect to the 5-1/4% Preferred Stock shall not be
fully discharged, the Corporation shall not (i) directly or indirectly,
redeem, purchase, or otherwise acquire any Parity Security or discharge
any mandatory or optional redemption, sinking fund or other similar
obligation in respect of any Parity Securities (except in connection
with a redemption, sinking fund or other similar obligation to be
satisfied pro rata with the 5-1/4% Preferred Stock) or (ii) declare or
make any Junior Securities Distribution (other than dividends or
distributions paid in shares of, or options, warrants or rights to
subscribe for or purchase shares of, Junior Securities), or, directly
or indirectly, discharge any mandatory or optional redemption, sinking
fund or other similar obligation in respect of the Junior Securities.
(4) Upon any redemption of 5-1/4% Preferred Stock, the
Corporation shall pay the redemption price and any accrued and unpaid
dividends in arrears to, but excluding, the applicable redemption date.
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(5) For purposes of paragraph (6)(a) only, unless full
cumulative dividends (whether or not declared) on all outstanding
shares of 5-1/4% Preferred Stock and any Parity Securities shall have
been paid or contemporaneously are declared and paid or set apart for
payment for all Dividend Periods terminating on or prior to the
applicable redemption date, none of the shares of 5-1/4% Preferred
Stock shall be redeemed, and no sum shall be set aside for such
redemption, unless shares of 5-1/4% Preferred Stock are redeemed pro
rata.
(7) Procedure for Redemption. (a) If the Corporation shall
redeem shares of 5-1/4% Preferred Stock pursuant to paragraph 6(a), notice of
such redemption shall be given by certified mail, return receipt requested,
postage prepaid, mailed not less than 30 days nor more than 60 days prior to the
redemption date, to each holder of record of the shares to be redeemed at such
holder's address as the same appears on the stock register of the Corporation
and confirmed by facsimile transmission to each holder of record if the
Corporation has been furnished with such facsimile address by the holder(s);
provided that neither the failure to give such notice nor confirmation nor any
defect therein or in the mailing thereof, to any particular holder, shall affect
the sufficiency of the notice or the validity of the proceedings for redemption
with respect to the other holders. Any notice that was mailed in the manner
herein provided shall be conclusively presumed to have been duly given on the
date mailed whether or not the holder receives the notice. Each such notice
shall state: (i) the redemption date; (ii) the number of shares of 5-1/4%
Preferred Stock to be redeemed and, if fewer than all the shares held by such
holder are to be redeemed, the number of shares to be redeemed from such holder;
(iii) the amount payable, whether in Common Stock or cash and if the payment is
in Common Stock an explanation of the determination of the amount to be paid;
(iv) the place or places where certificates for such shares are to be
surrendered for payment of the redemption price; and (v) that dividends on the
shares to be redeemed will cease to accrue on such redemption date, except as
otherwise provided herein.
(1) If notice has been mailed as aforesaid, from and after
the redemption date (unless default shall be made by the Corporation in
providing for the payment of the redemption price of the shares called
for redemption and dividends accrued and unpaid thereon, if any), (i)
except as otherwise provided herein, dividends on the shares of 5-1/4%
Preferred Stock so called for redemption shall cease to accrue, (ii)
said shares shall no longer be deemed to be outstanding, and (iii) all
rights of the holders thereof as holders of the 5-1/4% Preferred Stock
shall cease (except the right to receive from the Corporation the
redemption price without interest thereon, upon surrender and
endorsement of their certificates if so required, and to receive any
dividends payable thereon).
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(2) Upon surrender in accordance with notice given pursuant
to this paragraph (7) of the certificates for any shares so redeemed
(properly endorsed or assigned for transfer, if the Board of Directors
of the Corporation shall so require and the notice shall so state),
such shares shall be redeemed by the Corporation at the redemption
price aforesaid, plus any dividends payable thereon. If fewer than all
the outstanding shares of 5-1/4% Preferred Stock are to be redeemed,
the number of shares to be redeemed shall be determined by the Board of
Directors and the shares to be redeemed shall be selected pro rata
(with any fractional shares being rounded to the nearest whole share).
In case fewer than all the shares represented by any such certificate
are redeemed, a new certificate shall be issued representing the
unredeemed shares without cost to the holder thereof.
(8) Conversion. (a) Subject to and upon compliance with the
provisions of this paragraph (8), a holder of shares of 5-1/4% Preferred Stock
shall have the right, at any time and from time to time, at such holder's
option, to convert any or all outstanding shares of 5-1/4% Preferred Stock held
by such holder, but not fractions of shares, into fully paid and non-assessable
shares of Common Stock by surrendering such shares to be converted, such
surrender to be made in the manner provided in paragraph (8)(b) hereof. The
number of shares of Common Stock deliverable upon conversion of each share of
5-1/4% Preferred Stock shall be equal to 101.3125 (as adjusted as provided
herein, the "Conversion Rate"); provided that the aggregate number of shares of
Common Stock deliverable upon conversion of the 5-1/4% Preferred Stock (together
with the conversion of any 5-1/4% Convertible Preferred Stock, Series A or any
additional preferred stock issued as payment for dividends with respect thereto
and any Additional Preferred) shall not be greater than 7,590,994 subject to
adjustment as provided herein. The Conversion Rate is subject to adjustment from
time to time pursuant to paragraph (8)(d) hereof. The right to convert shares
called for redemption pursuant to paragraph (7) shall terminate at the close of
business on the date immediately preceding the date fixed for such redemption
unless the Corporation shall default in making payment of the amount payable
upon such redemption. Upon conversion of any share of 5-1/4% Preferred Stock the
holder thereof shall continue to be entitled to receive from the Corporation any
accrued but unpaid dividends thereon.
(1) (i) In order to exercise the conversion privilege, the
holder of each share of 5-1/4% Preferred Stock to be converted shall
surrender the certificate representing such share, duly endorsed or
assigned to the Corporation or in blank, at the office of the
Corporation, or to any transfer agent of the Corporation previously
designated by the Corporation to the holders of the 5-1/4% Preferred
Stock for such purposes, with a written notice of election to convert
completed and signed, specifying the number of shares to be converted.
Such notice shall state that the holder has satisfied any legal
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or regulatory requirement for conversion, including compliance with the
Hart-Scott-Rodino Antitrust Improvements Act of 1976. Such notice shall
also state the name or names (with address and social security or other
taxpayer identification number) in which the certificate or
certificates for Common Stock are to be issued. Unless the shares
issuable on conversion are to be issued in the same name as the name in
which such share of 5-1/4% Preferred Stock is registered, each share
surrendered for conversion shall be accompanied by instruments of
transfer, in form satisfactory to the Corporation, duly executed by the
holder or the holder's duly authorized attorney and an amount
sufficient to pay any transfer or similar tax (or evidence reasonably
satisfactory to the Corporation demonstrating that such taxes have been
paid). All certificates representing shares of 5-1/4% Preferred Stock
surrendered for conversion shall be canceled by the Corporation or the
transfer agent.
(1) Holders of shares of 5-1/4% Preferred Stock at the
close of business on a dividend payment record date shall not be
entitled to receive the dividend payable on such shares on the
corresponding Dividend Payment Date if such holder shall have
surrendered for conversion such shares at any time following the
preceding Dividend Payment Date and prior to such Dividend Payment
Date.
(2) As promptly as practicable after the surrender by a
holder of the certificates for shares of 5-1/4% Preferred Stock as
aforesaid, the Corporation shall issue and shall deliver to such
holder, or on the holder's written order, a certificate or certificates
(which certificate or certificates shall have the legend set forth in
paragraph 10(c)) for the whole number of duly authorized, validly
issued, fully paid and non-assessable shares of Common Stock issuable
upon the conversion of such shares in accordance with the provisions of
this paragraph (8), and any fractional interest in respect of a share
of Common Stock arising on such conversion shall be settled as provided
in paragraph (8)(c). Upon conversion of only a portion of the shares of
5-1/4% Preferred Stock represented by any certificate, a new
certificate shall be issued representing the unconverted portion of the
certificate so surrendered without cost to the holder thereof. Upon the
surrender of certificates representing shares of 5-1/4% Preferred Stock
to be converted, such shares shall no longer be deemed to be
outstanding and all rights of a holder with respect to such shares
surrendered for conversion shall immediately terminate except the right
to receive the Common Stock and other amounts payable pursuant to this
paragraph (8).
(3) Each conversion shall be deemed to have been effected
immediately prior to the close of business on the date on which the
certificates for
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shares of 5-1/4% Preferred Stock shall have been surrendered and such
notice received by the Corporation as aforesaid, and the Person or
Persons in whose name or names any certificate or certificates for
shares of Common Stock shall be issuable upon such conversion shall be
deemed to have become the holder or holders of record of the shares of
Common Stock represented thereby at such time on such date and such
conversion shall be into a number of shares of Common Stock equal to
the product of the number of shares of 5-1/4% Preferred Stock
surrendered times the Conversion Rate in effect at such time on such
date, unless the stock transfer books of the Corporation shall be
closed on that date, in which event such Person or Persons shall be
deemed to have become such holder or holders of record at the close of
business on the next succeeding day on which such stock transfer books
are open, but such conversion shall be based upon the Conversion Rate
in effect on the date upon which such shares shall have been
surrendered and such notice received by the Corporation.
(2) No fractional shares or scrip representing fractions of
shares of Common Stock shall be issued upon conversion of the 5-1/4%
Preferred Stock. Instead of any fractional interest in a share of
Common Stock that would otherwise be deliverable upon the conversion of
a share of 5-1/4% Preferred Stock, the Corporation shall pay to the
holder of such share an amount in cash based upon the Current Market
Price of Common Stock on the Trading Day immediately preceding the date
of conversion. If more than one share shall be surrendered for
conversion at one time by the same holder, the number of full shares of
Common Stock issuable upon conversion thereof shall be computed on the
basis of the aggregate number of shares of 5-1/4% Preferred Stock
surrendered for conversion by such holder.
(3) The Conversion Rate shall be adjusted from time to time as
follows:
(1) If the Corporation shall after the Issue Date (A)
declare a dividend or make a distribution on its Common Stock in shares
of its Common Stock, (B) subdivide its outstanding Common Stock into a
greater number of shares or (C) combine its outstanding Common Stock
into a smaller number of shares, the Conversion Rate in effect on the
record date for such dividend or distribution, or the effective date of
such subdivision or combination, as the case may be, shall be
proportionately adjusted so that the holder of any share of 5-1/4%
Preferred Stock thereafter surrendered for conversion shall be entitled
to receive the number and kind of shares of Common Stock that such
holder would have owned or have been entitled to receive after the
happening of any of the events described above had such share been
converted immediately prior to the record date in the case of a
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dividend or distribution or the effective date in the case of a
subdivision or combination. An adjustment made pursuant to this
subparagraph (i) shall become effective immediately after the opening
of business on the Business Day next following the record date (except
as provided in paragraph (8)(h)) in the case of a dividend or
distribution and shall become effective immediately after the opening
of business on the Business Day next following the effective date in
the case of a subdivision, combination or reclassification. Adjustments
in accordance with this paragraph (8)(d)(i) shall be made whenever any
event listed above shall occur.
(2) If the Corporation shall after the Issue Date fix a
record date for the issuance of rights or warrants (in each case, other
than any rights issued pursuant to a shareholder rights plan) to all
holders of Common Stock entitling them (for a period expiring within 45
days after such record date) to subscribe for or purchase Common Stock
(or securities convertible into Common Stock) at a price per share (or,
in the case of a right or warrant to purchase securities convertible
into Common Stock, having an effective exercise price per share of
Common Stock, computed on the basis of the maximum number of shares of
Common Stock issuable upon conversion of such convertible securities,
plus the amount of additional consideration payable, if any, to receive
one share of Common Stock upon conversion of such securities) less than
the Fair Market Value per share of Common Stock on the date on which
such issuance was declared or otherwise announced by the Corporation
(the "Determination Date"), then the Conversion Rate in effect at the
opening of business on the Business Day next following such record date
shall be adjusted so that the holder of each share of 5-1/4% Preferred
Stock shall be entitled to receive, upon the conversion thereof, the
number of shares of Common Stock determined by multiplying (I) the
Conversion Rate in effect immediately prior to such record date by (II)
a fraction, the numerator of which shall be the sum of (A) the number
of shares of Common Stock outstanding on the close of business on the
Determination Date and (B) the number of additional shares of Common
Stock offered for subscription or purchase pursuant to such rights or
warrants (or in the case of a right or warrant to purchase securities
convertible into Common Stock, the aggregate number of additional
shares of Common Stock into which the convertible securities so offered
are initially convertible), and the denominator of which shall be the
sum of (A) the number of shares of Common Stock outstanding on the
close of business on the Determination Date and (B) the number of
shares that the aggregate proceeds to the Corporation from the exercise
of such rights or warrants for Common Stock would purchase at such Fair
Market Value on such date (or, in the case of a right or warrant to
purchase securities convertible into Common Stock, the number of shares
of Common Stock obtained by dividing the aggregate
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exercise price of such rights or warrants for the maximum number of
shares of Common Stock issuable upon conversion of such convertible
securities, plus the aggregate amount of additional consideration
payable, if any, to convert such securities into Common Stock, by such
Fair Market Value). Such adjustment shall become effective immediately
after the opening of business on the Business Day next following such
record date (except as provided in paragraph (8)(h)). Such adjustment
shall be made successively whenever such a record date is fixed. In the
event that after fixing a record date such rights or warrants are not
so issued, the Conversion Rate shall be readjusted to the Conversion
Rate which would then be in effect if such record date had not been
fixed. In determining whether any rights or warrants entitle the
holders of Common Stock to subscribe for or purchase shares of Common
Stock at less than such Fair Market Value, there shall be taken into
account any consideration received by the Corporation upon issuance and
upon exercise of such rights or warrants, the value of such
consideration, if other than cash, to be determined by the Board of
Directors in good faith. In case any rights or warrants referred to in
this subparagraph (ii) shall expire unexercised after the same shall
have been distributed or issued by the Corporation (or, in the case of
rights or warrants to purchase securities convertible into Common Stock
once exercised, the conversion right of such securities shall expire),
the Conversion Rate shall be readjusted at the time of such expiration
to the Conversion Rate that would have been in effect if no adjustment
had been made on account of the distribution or issuance of such
expired rights or warrants.
(3) If the Corporation shall fix a record date for the
making of a distribution to all holders of its Common Stock of
evidences of its indebtedness, shares of its capital stock or assets
(excluding regular cash dividends or distributions declared in the
ordinary course by the Board of Directors and dividends payable in
Common Stock for which an adjustment is made pursuant to paragraph
(8)(d)(i)) or rights or warrants (in each case, other than any rights
issued pursuant to a shareholder rights plan) to subscribe for or
purchase any of its securities (excluding those rights and warrants
issued to all holders of Common Stock entitling them for a period
expiring within 45 days after the record date referred to in
subparagraph (ii) above to subscribe for or purchase Common Stock or
securities convertible into shares of Common Stock, which rights and
warrants are referred to in and treated under subparagraph (ii) above)
(any of the foregoing being hereinafter in this subparagraph (iii)
called the "Securities"), then in each such case the Conversion Rate
shall be adjusted so that the holder of each share of 5-1/4% Preferred
Stock shall be entitled to receive, upon the conversion thereof, the
number of shares of Common Stock determined by multiplying (I) the
Conversion Rate in effect immediately prior to the close of business on
such record date by (II) a
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fraction, the numerator of which shall be the Fair Market Value per
share of the Common Stock on such record date, and the denominator of
which shall be the Fair Market Value per share of the Common Stock on
such record date less the then-fair market value (as determined by the
Board of Directors in good faith, whose determination shall be
conclusive) of the portion of the assets, shares of its capital stock
or evidences of indebtedness so distributed or of such rights or
warrants applicable to one share of Common Stock. Such adjustment shall
be made successively whenever such a record date is fixed; and in the
event that after fixing a record date such distribution is not so made,
the Conversion Rate shall be readjusted to the Conversion Rate which
would then be in effect if such record date had not been fixed. Such
adjustment shall become effective immediately at the opening of
business on the Business Day next following (except as provided in
paragraph (8)(h)) the record date for the determination of shareholders
entitled to receive such distribution. For the purposes of this
subparagraph (iii), the distribution of a Security, which is
distributed not only to the holders of the Common Stock on the date
fixed for the determination of shareholders entitled to such
distribution of such Security, but also is distributed with each share
of Common Stock delivered to a Person converting a share of 5-1/4%
Preferred Stock after such determination date, shall not require an
adjustment of the Conversion Rate pursuant to this subparagraph (iii);
provided that on the date, if any, on which a Person converting a share
of 5-1/4% Preferred Stock would no longer be entitled to receive such
Security with a share of Common Stock (other than as a result of the
termination of all such Securities), a distribution of such Securities
shall be deemed to have occurred and the Conversion Rate shall be
adjusted as provided in this subparagraph (iii) (and such day shall be
deemed to be "the date fixed for the determination of shareholders
entitled to receive such distribution" and "the record date" within the
meaning of the three preceding sentences). If any rights or warrants
referred to in this subparagraph (iii) shall expire unexercised after
the same shall have been distributed or issued by the Corporation, the
Conversion Rate shall be readjusted at the time of such expiration to
the Conversion Rate that would have been in effect if no adjustment had
been made on account of the distribution or issuance of such expired
rights or warrants.
(4) In case the Corporation shall, by dividend or
otherwise, distribute to all holders of its Common Stock cash in an
amount per share that, together with the aggregate of the per share
amounts of any other cash distributions to all holders of its Common
Stock made within the 12 months preceding the date of payment of such
distribution and in respect of which no adjustment pursuant to this
paragraph (iv) has been made exceeds 5.0% of the Fair Market Value
immediately prior to the date of declaration of such dividend or
distribution (excluding any dividend or distribution in connection
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with the liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, and any cash that is distributed upon
a merger, consolidation or other transaction for which an adjustment
pursuant to paragraph 8(e) is made), then, in such case, the Conversion
Rate shall be adjusted so that the same shall equal the rate determined
by multiplying the Conversion Rate in effect immediately prior to the
close of business on the Record Date for the cash dividend or
distribution by a fraction the numerator of which shall be the Current
Market Price of a share of the Common Stock on the Record Date and the
denominator shall be such Current Market Price less the per share
amount of cash so distributed during the 12-month period applicable to
one share of Common Stock, such adjustment to be effective immediately
prior to the opening of business on the Business Day following the
Record Date; provided, however, that in the event the denominator of
the foregoing fraction is zero or negative, in lieu of the foregoing
adjustment, adequate provision shall be made so that each holder of
5-1/4% Preferred Stock shall have the right to receive upon conversion,
in addition to the shares of Common Stock to which the holder is
entitled, the amount of cash such holder would have received had such
holder converted each share of 5-1/4% Preferred Stock at the beginning
of the 12-month period. In the event that such dividend or distribution
is not so paid or made, the Conversion Rate shall again be adjusted to
be the Conversion Rate which would then be in effect if such dividend
or distribution had not been declared. Notwithstanding the foregoing,
if any adjustment is required to be made as set forth in this paragraph
(8)(d)(iv), the calculation of any such adjustment shall include the
amount of the quarterly cash dividends paid during the 12-month
reference period only to the extent such dividends exceed the regular
quarterly cash dividends paid during the 12 months preceding the
12-month reference period. For purposes of this paragraph (8)(d)(iv),
"Record Date" shall mean, with respect to any dividend or distribution
in which the holders of Common Stock have the right to receive cash,
the date fixed for determination of shareholders entitled to receive
such cash.
In the event that at any time cash distributions to holders of Common
Stock are not paid equally on all series of Common Stock, the
provisions of this paragraph 8(d)(iv) will apply to any cash dividend
or cash distribution on any series of Common Stock otherwise meeting
the requirements of this paragraph, and shall be deemed amended to the
extent necessary so that any adjustment required will be made on the
basis of the cash dividend or cash distribution made on any such
series.
(5) In case of the consummation of a tender or exchange
offer (other than an odd-lot tender offer) made by the Corporation or
any subsidiary of the Corporation for all or any portion of the
outstanding shares
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of Common Stock to the extent that the cash and fair market value (as
determined in good faith by the Board of Directors of the Corporation,
whose determination shall be conclusive and shall be described in a
resolution of such Board) of any other consideration included in such
payment per share of Common Stock at the last time (the "Expiration
Time") tenders or exchanges may be made pursuant to such tender or
exchange offer (as amended) exceed by more than 5.0%, with any smaller
excess being disregarded in computing the adjustment to the Conversion
Rate provided in this paragraph (8)(d)(v), the first reported sale
price per share of Common Stock on the Trading Day next succeeding the
Expiration Time, then the Conversion Rate shall be adjusted so that the
same shall equal the rate determined by multiplying the Conversion Rate
in effect immediately prior to the Expiration Time by a fraction the
numerator of which shall be the sum of (x) the fair market value
(determined as aforesaid) of the aggregate consideration payable to
shareholders based on the acceptance (up to any maximum specified in
the terms of the tender or exchange offer) of all shares validly
tendered or exchanged and not withdrawn as of the Expiration Time (the
shares deemed so accepted, up to any such maximum, being referred to as
the "Purchased Shares") and (y) the product of the number of shares of
Common Stock outstanding (less any Purchased Shares) on the Expiration
Time and the first reported sale price of the Common Stock on the
Trading Day next succeeding the Expiration Time, and the denominator of
which shall be the number of shares of Common Stock outstanding
(including any tendered or exchanged shares) on the Expiration Time
multiplied by the first reported sale price of the Common Stock on the
Trading Day next succeeding the Expiration Time, such adjustment to
become effective immediately prior to the opening of business on the
day following the Expiration Time.
(6) No adjustment in the Conversion Rate shall be required
unless such adjustment would require a cumulative increase or decrease
of at least 1% in the Conversion Rate; provided, however, that any
adjustments that by reason of this subparagraph (vi) are not required
to be made shall be carried forward and taken into account in any
subsequent adjustment until made; and provided, further, that any
adjustment shall be required and made in accordance with the provisions
of this paragraph (8) (other than this subparagraph (vi)) not later
than such time as may be required in order to preserve the tax-free
nature of a distribution for United States income tax purposes to the
holders of shares of 5-1/4% Preferred Stock or Common Stock.
Notwithstanding any other provisions of this paragraph (8), the
Corporation shall not be required to make any adjustment of the
Conversion Rate for the issuance of any shares of Common Stock pursuant
to any plan providing for the reinvestment of dividends or interest
payable on securities of the Corporation and the investment of
additional optional amounts in shares of Common Stock under
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such plan. All calculations under this paragraph (8) shall be made to
the nearest dollar or to the nearest 1/1,000 of a share, as the case
may be. Anything in this paragraph (8)(d) to the contrary
notwithstanding, the Corporation shall be entitled, to the extent
permitted by law, to make such adjustments in the Conversion Rate, in
addition to those required by this paragraph (8)(d), as it in its
discretion shall determine to be advisable in order that any stock
dividends, subdivision of shares, reclassification or combination of
shares, distribution of rights or warrants to purchase stock or
securities, or a distribution of other assets (other than cash
dividends) hereafter made by the Corporation to its shareholders shall
not be taxable.
(7) In the event that, at any time as a result of shares of
any other class of capital stock becoming issuable in exchange or
substitution for or in lieu of shares of Common Stock or as a result of
an adjustment made pursuant to the provisions of this paragraph (8)(d),
the holder of 5-1/4% Preferred Stock upon subsequent conversion shall
become entitled to receive any shares of capital stock of the
Corporation other than Common Stock, the number of such other shares so
receivable upon conversion of any shares of 5-1/4% Preferred Stock
shall thereafter be subject to adjustment from time to time in a manner
and on terms as nearly equivalent as practicable to the provisions
contained herein.
(4) (i) If the Corporation shall be a party to any
transaction (including, without limitation, a merger, consolidation,
sale of all or substantially all of the Corporation's assets or
recapitalization of the Common Stock and excluding any transaction as
to which paragraph (8)(d)(i) applies) (each of the foregoing being
referred to herein as a "Transaction"), in each case as a result of
which shares of Common Stock shall be converted into the right to
receive stock, securities or other property (including cash or any
combination thereof), there shall be no adjustment to the Conversion
Rate but each share of 5-1/4% Preferred Stock which is not converted
into the right to receive stock, securities or other property in
connection with such Transaction shall thereafter be convertible into
the kind and amount of shares of stock, securities and other property
(including cash or any combination thereof) receivable upon the
consummation of such Transaction by a holder of that number of shares
or fraction thereof of Common Stock into which one share of 5-1/4%
Preferred Stock was convertible immediately prior to such Transaction,
assuming such holder of Common Stock (i) is not a Person with which the
Corporation consolidated or into which the Corporation merged or which
merged into the Corporation or to which such sale or transfer was made,
as the case may be ("Constituent Person"), or an affiliate of a
Constituent Person and (ii) failed to exercise his rights of election,
if any, as to the kind or amount of stock, securities and other
property (including cash)
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receivable upon such Transaction (provided that if the kind or amount
of stock, securities and other property (including cash) receivable
upon such Transaction is not the same for each share of Common Stock of
the Corporation held immediately prior to such Transaction by other
than a Constituent Person or an affiliate thereof and in respect of
which such rights of election shall not have been exercised
("non-electing share"), then for the purpose of this paragraph (8)(e)
the kind and amount of stock, securities and other property (including
cash) receivable upon such Transaction by each non-electing share shall
be deemed to be the kind and amount so receivable per share by a
plurality of the non-electing shares). The provisions of this paragraph
(8)(e) shall similarly apply to successive Transactions.
(1) Notwithstanding anything herein to the contrary, if the
Company is reorganized such that the Common Stock is exchanged for the
common stock of a new entity ("Holdco") whose common stock is traded on
NASDAQ or another recognized securities exchange, then the Company, by
notice to the holders of the 5-1/4% Preferred Stock but without any
required consent on their part, may cause the exchange of this 5-1/4%
Preferred Stock for preferred stock of Holdco having the same terms and
conditions as set forth herein, provided that where Holdco is not
solely incorporated as a Delaware company or where the Holdco share
structure is not identical to that of the Company, the rights attaching
to the preferred stock of Holdco may be adjusted so as to comply with
the local law of the country of incorporation of Holdco or the new
share structure of Holdco subject to such rights effectively giving the
same economic rights as the 5-1/4% Preferred Stock (ignoring for these
purposes any resultant change in the tax treatment for the holders of
such stock).
(5) If:
(1) the Corporation shall declare a dividend (or any other
distribution) on the Common Stock; or
(2) the Corporation shall authorize the granting to the
holders of the Common Stock of rights or warrants to subscribe for or
purchase any shares of any class or any other rights or warrants; or
(3) there shall be any subdivision, combination or
reclassification of the Common Stock or any consolidation or merger to
which the Corporation is a party and for which approval of any
shareholders of the Corporation is required, or the sale or transfer of
all or substantially all of the assets of the Corporation as an
entirety; or
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(4) there shall occur the voluntary or involuntary
liquidation, dissolution or winding up of the Corporation;
then the Corporation shall cause to be filed with any transfer agent
designated by the Corporation pursuant to paragraph (8)(b) and shall
cause to be mailed to the holders of shares of the 5-1/4% Preferred
Stock at their addresses as shown on the stock records of the
Corporation, as promptly as possible, but at least ten days prior to
the applicable date hereinafter specified, a notice stating (A) the
date on which a record is to be taken for the purpose of such dividend
(or such other distribution) or rights or warrants, or, if a record is
not to be taken, the date as of which the holders of Common Stock of
record to be entitled to such dividend, distribution or rights or
warrants are to be determined or (B) the date on which such
subdivision, combination, reclassification, consolidation, merger,
sale, transfer, liquidation, dissolution or winding up or other action
is expected to become effective, and the date as of which it is
expected that holders of Common Stock of record shall be entitled to
exchange their shares of Common Stock for securities or other property,
if any, deliverable upon such subdivision, combination,
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution or winding up. Failure to give or receive such notice or
any defect therein shall not affect the legality or validity of any
distribution, right, warrant, subdivision, combination,
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, winding up or other action, or the vote upon any of the
foregoing.
(6) Whenever the Conversion Rate is adjusted as herein
provided, the Corporation shall prepare an officer's certificate with
respect to such adjustment of the Conversion Rate setting forth the
adjusted Conversion Rate and the effective date of such adjustment and
shall mail a copy of such officer's certificate to the holder of each
share of 5-1/4% Preferred Stock at such holder's last address as shown
on the stock records of the Corporation. If the Corporation shall have
designated a transfer agent pursuant to paragraph (8)(b), it shall also
promptly file with such transfer agent an officer's certificate setting
forth the Conversion Rate after such adjustment and setting forth a
brief statement of the facts requiring such adjustment which
certificate shall be conclusive evidence of the correctness of such
adjustment.
(7) In any case in which paragraph (8)(d) provides that an
adjustment shall become effective on the day next following a record
date for an event, the Corporation may defer until the occurrence of
such event (i) issuing to the holder of any share of 5-1/4% Preferred
Stock converted after such record date and before the occurrence of
such event the additional shares of Common Stock issuable upon such
conversion by reason of the adjustment
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required by such event over and above the Common Stock issuable upon
such conversion before giving effect to such adjustment and (ii) paying
to such holder any amount in cash in lieu of any fraction pursuant to
paragraph (8)(c).
(8) For purposes of this paragraph (8), the number of
shares of Common Stock at any time outstanding shall not include any
shares of Common Stock then owned or held by or for the account of the
Corporation. The Corporation shall not pay a dividend or make any
distribution on shares of Common Stock held in the treasury of the
Corporation.
(9) There shall be no adjustment of the Conversion Rate in
case of the issuance of any stock of the Corporation in a
reorganization, acquisition or other similar transaction except as
specifically set forth in this paragraph (8). If any single action
would require adjustment of the Conversion Rate pursuant to more than
one subparagraph of this paragraph (8), only one adjustment shall be
made and such adjustment shall be the amount of adjustment that has the
highest absolute value.
(10) If the Corporation shall take any action affecting the
Common Stock, other than action described in this paragraph (8), that
in the opinion of the Board of Directors materially adversely affects
the conversion rights of the holders of the shares of 5-1/4% Preferred
Stock, the Conversion Rate may be adjusted, to the extent permitted by
law, in such manner, if any, and at such time, as the Board of
Directors may determine to be equitable in the circumstances; provided
that the provisions of this paragraph (8)(k) shall not affect any
rights the holders of 5-1/4% Preferred Stock may have at law or in
equity.
(11) (i) The Corporation covenants that it will at all
times reserve and keep available, free from preemptive rights, out of
the aggregate of its authorized but unissued shares of Common Stock or
its issued shares of Common Stock held in its treasury, or both, for
the purpose of effecting conversion of the 5-1/4% Preferred Stock, the
full number of shares of Common Stock deliverable upon the conversion
of all outstanding shares of 5-1/4% Preferred Stock not theretofore
converted. For purposes of this paragraph (8)(1) the number of shares
of Common Stock that shall be deliverable upon the conversion of all
outstanding shares of 5-1/4% Preferred Stock shall be computed as if at
the time of computation all such outstanding shares were held by a
single holder.
(1) The Corporation covenants that any shares of Common Stock
issued upon conversion of the 5-1/4% Preferred Stock shall be duly
authorized, validly issued, fully paid and non-assessable. Before
taking any action that
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would cause an adjustment increasing the Conversion Rate such that the
quotient of $1,000.00 and the Conversion Rate (which initially shall be
$100.00) would be reduced below the then-par value of the shares of
Common Stock deliverable upon conversion of the 5-1/4% Preferred Stock,
the Corporation will take any corporate action that, in the opinion of
its counsel, may be necessary in order that the Corporation may validly
and legally issue fully paid and non-assessable shares of Common Stock
based upon such adjusted Conversion Rate.
(2) Prior to the delivery of any securities that the
Corporation shall be obligated to deliver upon conversion of the 5-1/4%
Preferred Stock, the Corporation shall comply with all applicable
federal and state laws and regulations which require action to be taken
by the Corporation.
(12) The Corporation will pay any and all documentary stamp
or similar issue or transfer taxes payable in respect of the issue or
delivery of shares of Common Stock or other securities or property on
conversion of the 5-1/4% Preferred Stock pursuant hereto; provided,
however, that the Corporation shall not be required to pay any tax that
may be payable in respect of any transfer involved in the issue or
delivery of shares of Common Stock or other securities or property in a
name other than that of the holder of the 5-1/4% Preferred Stock to be
converted and no such issue or delivery shall be made unless and until
the Person requesting such issue or delivery has paid to the
Corporation the amount of any such tax or established, to the
satisfaction of the Corporation, that such tax has been paid.
(9) Voting Rights. (a) The holders of record of shares of
5-1/4% Preferred Stock shall not be entitled to any voting rights except as
hereinafter provided in paragraph (b) or as otherwise provided by law.
(1) If and whenever six quarterly dividends (whether or not
consecutive) payable on the 5-1/4% Preferred Stock have not been paid
in full or if the Corporation shall have failed to discharge its
Mandatory Redemption Obligation, the number of directors then
constituting the Board of Directors shall be increased by two and the
holders of shares of 5-1/4% Preferred Stock, together with the holders
of shares of every other series of preferred stock (including, without
limitation, Additional Preferred) upon which like rights to vote for
the election of two additional directors have been conferred and are
exercisable (resulting from either the failure to pay dividends or the
failure to redeem) (any such other series is referred to as the
"Preferred Shares"), voting as a single class regardless of series,
shall be entitled to elect the two additional directors to serve on the
Board of Directors at any annual meeting of stockholders or special
meeting held in place
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thereof, or at a special meeting of the holders of the 5-1/4% Preferred
Stock and the Preferred Shares called as hereinafter provided. Whenever
all arrears in dividends on the 5-1/4% Preferred Stock and the
Preferred Shares then outstanding shall have been paid and dividends
thereon for the current quarterly dividend period shall have been paid
or declared and set apart for payment, or the Corporation shall have
fulfilled its Mandatory Redemption Obligation and any redemption
obligation in respect of the Preferred Shares, as the case may be, then
the right of the holders of the 5-1/4% Preferred Stock and the
Preferred Shares to elect such additional two directors shall cease
(but subject always to the same provisions for the vesting of such
voting rights in the case of any similar future arrearages in six
quarterly dividends or failure to fulfill any Mandatory Redemption
Obligation), and the terms of office of all persons elected as
directors by the holders of the 5-1/4% Preferred Stock and the
Preferred Shares shall forthwith terminate and the number of the Board
of Directors shall be reduced accordingly. At any time after such
voting power shall have been so vested in the holders of shares of
5-1/4% Preferred Stock and the Preferred Shares, the secretary of the
Corporation may, and upon the written request of any holder of 5-1/4%
Preferred Stock (addressed to the secretary at the principal office of
the Corporation) shall, call a special meeting of the holders of the
5-1/4% Preferred Stock and of the Preferred Shares for the election of
the two directors to be elected by them as herein provided, such call
to be made by notice similar to that provided in the Bylaws of the
Corporation for a special meeting of the stockholders or as required by
law. If any such special meeting required to be called as above
provided shall not be called by the secretary within 20 days after
receipt of any such request, then any holder of shares of 5-1/4%
Preferred Stock may call such meeting, upon the notice above provided,
and for that purpose shall have access to the stock books of the
Corporation. The directors elected at any such special meeting shall
hold office until the next annual meeting of the stockholders or
special meeting held in lieu thereof if such office shall not have
previously terminated as above provided. If any vacancy shall occur
among the directors elected by the holders of the 5-1/4% Preferred
Stock and the Preferred Shares, a successor shall be elected by the
Board of Directors, upon the nomination of the then-remaining director
elected by the holders of the 5-1/4% Preferred Stock and the Preferred
Shares or the successor of such remaining director, to serve until the
next annual meeting of the stockholders or special meeting held in
place thereof if such office shall not have previously terminated as
provided above.
(2) Without the written consent of the holders of at least
66-2/3% in liquidation preference of the outstanding shares of 5-1/4%
Preferred Stock or the vote of holders of at least 66-2/3% in
liquidation preference of the outstanding shares of 5-1/4% Preferred
Stock at a meeting of the holders of
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5-1/4% Preferred Stock called for such purpose, the Corporation will
not amend, alter or repeal any provision of the Certificate of
Incorporation (by merger or otherwise) so as to adversely affect the
preferences, rights or powers of the 5-1/4% Preferred Stock; provided
that any such amendment that changes the dividend payable on, the
conversion rate with respect to, or the liquidation preference of the
5-1/4% Preferred Stock shall require the affirmative vote at a meeting
of holders of 5-1/4% Preferred Stock called for such purpose or written
consent of the holder of each share of 5-1/4% Preferred Stock.
(3) Without the written consent of the holders of at least
66 2/3% in liquidation preference of the outstanding shares of 5-1/4%
Preferred Stock or the vote of holders of at least 66 2/3% in
liquidation preference of the outstanding shares of 5-1/4% Preferred
Stock at a meeting of such holders called for such purpose, the
Corporation will not issue any additional 5-1/4% Preferred Stock or
create, authorize or issue any Parity Securities or Senior Securities
or increase the authorized amount of any such other class or series;
provided that paragraph 9(d) shall not limit the right of the
Corporation to (i) issue Additional Preferred as dividends pursuant to
paragraph 4 or (ii) to issue Parity Securities or Senior Securities in
order to refinance, redeem or refund the 13% Preferred, provided that
the maximum accrual value (i.e., the sum of stated value and maximum
amount payable in kind over the term from issuance to first date of
mandatory redemption or redemption at the option of the holder) of such
Parity Securities may not exceed the maximum accrual value of the 13%
Preferred.
(4) In exercising the voting rights set forth in this
paragraph 9, each share of 5-1/4% Preferred Stock shall have one vote
per share, except that when any other series of preferred stock shall
have the right to vote with the 5-1/4% Preferred Stock as a single
class on any matter, then the 5-1/4% Preferred Stock and such other
series shall have with respect to such matters one vote per $1,000 of
stated liquidation preference. Except as otherwise required by
applicable law or as set forth herein, the shares of 5-1/4% Preferred
Stock shall not have any relative, participating, optional or other
special voting rights and powers and the consent of the holders thereof
shall not be required for the taking of any corporate action.
(10) General Provisions. (a) The headings of the paragraphs,
subparagraphs, clauses and subclauses of this Statement of Designations are for
convenience of reference only and shall not define, limit or affect any of the
provisions hereof.
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<PAGE> 151
(1) If the Corporation shall have failed to declare or pay
dividends as required pursuant to paragraph (4) hereof or shall have
failed to discharge any obligation to redeem shares of 5-1/4% Preferred
Stock pursuant to paragraph (6) hereof, the holders of shares of 5-1/4%
Preferred Stock shall be entitled to receive, in addition to all other
amounts required to be paid hereunder, when, as and if declared by the
Board of Directors, out of funds legally available for the payment of
dividends, cash dividends on the aggregate dividends which the
Corporation shall have failed to declare or pay or the redemption
price, together with accrued and unpaid dividends thereon, as the case
may be, at a rate of 2% per quarter, compounded quarterly, for the
period during which the failure to pay dividends or failure to
discharge an obligation to redeem shares of 5-1/4% Preferred Stock
shall continue.
(2) The shares of 5-1/4% Preferred Stock shall bear the
following legend:
THE SHARES OF PREFERRED STOCK REPRESENTED BY THIS CERTIFICATE MAY NOT
BE TRANSFERRED OTHER THAN TO AN AFFILIATE OF THE HOLDER.
The shares of Common Stock issuable upon conversion of the
5-1/4% Preferred Stock shall bear the following legend:
THE SHARES OF COMMON STOCK, PAR VALUE $.01, OF THE COMPANY (THE "COMMON
STOCK") REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED OR SOLD IN
THE UNITED STATES ABSENT REGISTRATION UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT") AND ANY APPLICABLE STATE SECURITIES LAWS OR AN
APPLICABLE EXEMPTION FROM REGISTRATION REQUIREMENTS. THE SHARES
REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED PRIOR TO JANUARY
28, 2001 (OTHER THAN TO AN AFFILIATE OF THE HOLDER) AND THEREAFTER MAY
ONLY BE SOLD IN BROKERS TRANSACTIONS (AS DEFINED IN RULE 144 UNDER THE
ACT) OR TO PERSONS WHO, GIVING EFFECT TO THE SALE OF THE SHARES
REPRESENTED HEREBY, WILL NOT BE THE BENEFICIAL OWNER OF 5% OR MORE OF
THE COMMON STOCK.
(11) Shareholder Rights Plan. The shares of 5-1/4%
Preferred Stock shall be entitled to the benefits of a number of rights
issuable under the Rights Agreement, dated as of October 13, 1993,
between the Company and Continental Stock Transfer & Trust Company or
any successor plan of similar purpose and effect
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<PAGE> 152
("Rights") equal to the number of shares of Common Stock then issuable
upon conversion of the 5-1/4% Preferred Stock at the prevailing
Conversion Rate. Any shares of Common Stock deliverable upon conversion
of a share of 5-1/4% Preferred Stock or upon payment of a dividend
shall be accomplished by a Right.
E-27
<PAGE> 1
Exhibit 4.13
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
ARTICLE I.....................................................................7
Section 1.01. Definitions..................................................7
Section 1.02. Other Definitions...........................................19
Section 1.03. Incorporation by Reference of Trust Indenture Act...........20
Section 1.04. Rules of Construction.......................................20
ARTICLE II. THE NOTES........................................................20
Section 2.01. Form and Dating.............................................21
Section 2.02. Execution and Authentication................................22
Section 2.03. Registrar and Paying Agent..................................23
Section 2.04. Paying Agent to Hold Money in Trust.........................23
Section 2.05. Holder Lists................................................24
Section 2.06. Transfer and Exchange.......................................24
Section 2.07. Replacement Notes...........................................28
Section 2.08. Outstanding Notes...........................................28
Section 2.09. Treasury Notes..............................................28
Section 2.10. Temporary Notes; Global Notes...............................28
Section 2.11. Cancellation................................................29
Section 2.12. Defaulted Interest..........................................29
ARTICLE III. REDEMPTION......................................................30
Section 3.01. Notices to Trustee..........................................30
Section 3.02. Selection of Notes to Be Redeemed...........................30
Section 3.03. Notice of Redemption........................................30
Section 3.04. Effect of Notice of Redemption..............................31
Section 3.05. Deposit of Redemption Price.................................31
Section 3.06. Notes Redeemed in Part......................................31
Section 3.07. Optional Redemption and Optional Tax Redemption.............31
Section 3.08. Mandatory Redemption........................................31
Section 3.09. Asset Sale Offer and Purchase Offer.........................31
ARTICLE IV. COVENANTS........................................................34
Section 4.01. Payment of Notes............................................34
Section 4.02. Reports.....................................................34
Section 4.03. Compliance Certificate......................................35
Section 4.04. Stay, Extension and Usury Laws..............................35
Section 4.05. Corporate Existence.........................................35
Section 4.06. Taxes.......................................................36
Section 4.07. Limitations on Liens........................................36
Section 4.08. Incurrence Of Indebtedness And Issuance Of Preferred Stock..36
Section 4.09. Restricted Payments.........................................38
Section 4.10. Asset Sales.................................................41
Section 4.11. Transactions with Affiliates................................43
Section 4.12. Dividends and Other Payment Restrictions Affecting
Restricted Subsidiaries.....................................44
Section 4.13. Change of Control...........................................45
Section 4.14. Payment of Additional Amounts...............................46
ARTICLE V. SUCCESSORS........................................................46
Section 5.01. Merger, Consolidation or Sale of Assets.....................46
<PAGE> 3
Section 5.02. Successor Corporation Substituted...........................47
ARTICLE VI. DEFAULTS AND REMEDIES............................................47
Section 6.01. Events of Default...........................................47
Section 6.02. Acceleration................................................49
Section 6.03. Other Remedies..............................................50
Section 6.04. Waiver of Past Defaults.....................................50
Section 6.05. Control by majority.........................................50
Section 6.06. Limitation on Suits.........................................50
Section 6.07. Rights of Holders to Receive Payment........................51
Section 6.08. Collection Suit by Trustee..................................51
Section 6.09. Trustee May File Proofs of Claim............................51
Section 6.10. Priorities..................................................51
Section 6.11. Undertaking for Costs.......................................52
ARTICLE VII. TRUSTEE.........................................................52
Section 7.01. Duties of Trustee...........................................52
Section 7.02. Rights of Trustee...........................................52
Section 7.03. Individual Rights of Trustee................................53
Section 7.04. Trustee's Disclaimer........................................53
Section 7.05. Notice of Defaults..........................................53
Section 7.06. Reports by Trustee to Holders...............................53
Section 7.07. Compensation and Indemnity..................................54
Section 7.08. Replacement of Trustee......................................54
Section 7.09. Successor Trustee by Merger, Etc............................55
Section 7.10. Eligibility; Disqualification...............................55
Section 7.11. Preferential Collection of Claims Against Company...........56
ARTICLE VIII. DISCHARGE OF INDENTURE.........................................56
Section 8.01. Termination of Company's Obligations........................56
Section 8.02. Option to Effect Defeasance.................................56
Section 8.03. Application of Trust Money..................................58
Section 8.04. Repayment to Company........................................58
Section 8.05. Reinstatement...............................................58
ARTICLE IX. AMENDMENTS, SUPPLEMENTS AND WAIVERS..............................58
Section 9.01. Without Consent of Holders..................................58
Section 9.02. With Consent of Holders.....................................59
Section 9.03. Compliance with Trust Indenture Act.........................60
Section 9.04. Revocation and Effect of Consents...........................60
Section 9.05. Notation on or Exchange of Notes............................60
Section 9.06. Trustee Protected...........................................60
ARTICLE X. MISCELLANEOUS.....................................................60
Section 10.01. Trust Indenture Act Controls..............................61
Section 10.02. Notices...................................................61
Section 10.03. Communication by Holders with Other Holders...............61
Section 10.04. Certificate and Opinion as to Conditions Precedent........61
Section 10.05. Statements Required in Certificate or Opinion.............62
Section 10.06. Rules by Trustee and Agents...............................62
Section 10.07. Legal Holidays............................................62
Section 10.08. No Recourse Against Others................................62
Section 10.09. Counterparts and Facsimile Signatures.....................62
3
<PAGE> 4
Section 10.10. Variable Provisions.......................................62
Section 10.11. Governing Law.............................................63
Section 10.12. No Adverse Interpretation of Other Agreements.............63
Section 10.13. Successors................................................63
Section 10.14. Severability..............................................63
Section 10.15. Table of Contents, Headings, Etc..........................64
4
<PAGE> 5
CROSS-REFERENCE TABLE*
Trust Indenture Act Section Indenture Section
310 (a)(1) 7.10
(a)(2) 7.10
(a)(3) N.A.
(a)(4) N.A.
(a)(5) 7.10
(b) 7.08,
7.10
(c)
N.A.
311(a) 7.11
(b)
7.11
(c)
N.A.
312 (a) 2.05
(b)
10.03
(c)
10.03
313(a) 7.06
(b)(1) N.A.
(b)(2) 7.06
(c)
7.06
(d)
7.06
314(a) 4.02
4.03,
(b)
N.A.
(c)(1) 10.04
(c)(2) 10.04
(c)(3) N.A.
(d)
N.A.
(e)
N.A.
(f)
N.A.
315
(a) 7.01(b)
(b)
7.05
5
<PAGE> 6
(c)
7.01(a)
(d)
7.01(c)
(e)
6.11
316 (a)(last sentence) 2.09
(a)(1)(A) 6.05
(a)(1)(B) 6.04
(a)(2) N.A.
(b)
6.07
(c)
9.04
317 (a)(1) 6.08
(a)(2) 6.09
(b)
2.04
318 (a) N.A.
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
6
<PAGE> 7
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
-7-
<PAGE> 8
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.
"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
-8-
<PAGE> 9
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
-9-
<PAGE> 10
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 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)
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<PAGE> 11
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)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)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> 12
"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> 13
"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> 14
"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> 15
"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
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<PAGE> 16
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 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
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<PAGE> 17
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 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
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<PAGE> 18
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 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 (ss.)(ss.)
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
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<PAGE> 19
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
"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
</TABLE>
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<PAGE> 20
<TABLE>
<S> <C>
"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;
(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 "(pound)"is to British pounds sterling.
ARTICLE II.
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<PAGE> 21
THE NOTES
Section 2.01. Form And Dating.
(a) General.
The Initial Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto, which is hereby
incorporated by reference and expressly made a part of this Indenture. The
Exchange Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit B hereto, which is hereby incorporated by
reference and expressly made a part of this Indenture. The Notes may have
notations, legends or endorsements required by law, stock exchange rule,
agreements to which the Company is subject, if any, or usage (provided that any
such notation, legend or endorsement is in a form acceptable to the Company).
The Company shall furnish any such legend not contained in Exhibit A or Exhibit
B to the Trustee in writing. Each Note shall be dated the date of its
authentication. The Notes shall be in denominations of $1,000 and integral
multiples thereof. The terms and provisions of the Notes set forth in Exhibit A
and Exhibit B are part of this Indenture and to the extent applicable, the
Company and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby. However,
to the extent any provision of any Note conflicts with the express provisions of
this Indenture, the provisions of this Indenture shall govern and be
controlling.
(b) Global Notes.
The Initial Notes are being offered and sold by the Company pursuant
to the Purchase Agreement.
Initial Notes offered and sold in reliance on Regulation S under the
Securities Act ("Regulation S"), as provided in the Purchase Agreement, shall be
issued initially in the form of one or more permanent Global Notes in
definitive, fully registered form without interest coupons with the Global Notes
Legend and Restricted Notes Legend set forth in Exhibit A hereto (the
"Regulation S Global Note"), which shall be deposited on behalf of the
purchasers of the Initial Notes represented thereby with the Trustee, at its New
York office, as custodian, for the Depositary, and registered in the name of the
Depositary or the nominee of the Depositary for the accounts of designated
agents holding on behalf of the Euroclear System ("Euroclear") or Cedel Bank,
societe anonyme ("Cedel"), duly executed by the Company and authenticated by the
Trustee as hereinafter provided. The aggregate principal amount of the
Regulation S Global Note may from time to time be increased or decreased by
adjustments made on the records of the Trustee and the Depositary or its nominee
as hereinafter provided.
Initial Notes offered and sold to Qualified Institutional Buyers
("QIBs") in reliance on Rule 144A under the Securities Act ("Rule 144A"), as
provided in the Purchase Agreement, shall be issued initially in the form of one
or more permanent Global Notes in definitive, fully registered form 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.
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<PAGE> 22
Upon consummation of the Registered Exchange Offer, the Exchange
Notes may be issued in the form of one or more permanent Global Notes in
definitive, fully registered form without interest coupons with the Global Notes
Legend but not the Restricted Notes Legend set forth in Exhibit A hereto,
registered in the name of the Depositary or a nominee of the Depositary, duly
executed by the Company and authenticated by the Trustee as hereinafter
provided. The aggregate principal amount of such Global Notes may from time to
time be increased or decreased by adjustments made on the records of the Trustee
and the Depositary or its nominee as hereinafter provided.
(c) Book-Entry Provisions.
This Section 2.01(c) shall apply only to the Regulation S Global
Note, the Rule 144A Global Note and the Exchange Notes issued in the form of one
or more permanent Global Notes (collectively, the "Global Notes") deposited with
or on behalf of the Depositary.
The Company shall execute and the Trustee shall, in accordance with
this Section 2.01(c), authenticate and deliver initially one or more Global
Notes that (a) shall be registered in the name of the Depositary for such Global
Note or Global Notes or the nominee of such Depositary and (b) shall be
delivered by the Trustee to such Depositary or pursuant to such Depositary's
instructions or held by the Trustee as custodian for the Depositary.
Members of, or participants in, the Depositary ("Agent Members")
shall have no rights under this Indenture with respect to any Global Note held
on their behalf by the Depositary or by the Trustee as the custodian of the
Depositary or under such Global Note, and the Depositary may be treated by the
Company, the Trustee and any agent of the Company or the Trustee as the absolute
owner of such Global Note for all purposes whatsoever. Notwithstanding the
foregoing, nothing herein shall prevent the Company, the Trustee or any agent of
the Company or the Trustee from giving effect to any written certification,
proxy or other authorization furnished by the Depositary or impair, as between
the Depositary and its Agent Members, the operation of customary practices of
such Depositary governing the exercise of the rights of an owner of a beneficial
interest in any Global Note.
(d) Certificated Notes.
In addition to the provisions of Section 2.10, owners of beneficial
interests in Global Notes may, upon request to the Trustee, receive a
certificated Initial Note, which certificated Initial Note shall bear the
Restricted Notes Legend set forth in Exhibit A hereto ("Restricted Notes").
After a transfer of any Initial Notes during the period of the
effectiveness of a Shelf Registration Statement with respect to the Initial
Notes and pursuant thereto, all requirements for Restricted Notes Legends on
such Initial Note will cease to apply, and a certificated Initial Note without a
Restricted Notes Legend will be available to the Holder of such Initial Notes.
Upon the consummation 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.
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Two Officers shall sign the Notes for the Company by manual or facsimile
signature.
If an Officer whose signature is on a Note no longer holds that office at
the time the Note is authenticated, the Note shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature of
an authorized officer of the Trustee. The signature shall be conclusive evidence
that the Note has been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed by two
Officers, authenticate (1) Initial Notes for original issue up to an aggregate
principal amount stated in paragraph 6 of the Initial Notes and (2) Exchange
Notes for issue only in a Registered Exchange Offer, pursuant to the
Registration Rights Agreement, in exchange for Initial Notes for a like
principal amount. The aggregate principal amount of Notes outstanding at any
time shall not exceed the amount set forth herein, except as provided in Section
2.07.
The Trustee may appoint an authenticating agent acceptable to the Company
to authenticate Notes. An authenticating agent may authenticate Notes whenever
the Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with Holders, the Company or an Affiliate.
Section 2.03. Registrar And Paying Agent.
The Company shall maintain in the Borough of Manhattan, City of New York,
State of New York and, 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
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acts as Paying Agent, it shall segregate and hold in a separate trust fund for
the benefit of the Holders all money held by it as Paying Agent.
Section 2.05. Holder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders. If the Trustee is not the Registrar, the Company shall furnish to the
Trustee on or before each interest payment date and at such other times as the
Trustee may request in writing a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of Holders.
Section 2.06. Transfer And Exchange.
Where Notes are presented to the Registrar or a co-registrar with a
request to register a transfer or to exchange them for an equal principal amount
of Notes of other denominations, the Registrar shall register the transfer or
make the exchange if its requirements for such transactions are met. To permit
registrations of transfers and exchanges, the Company shall issue and the
Trustee shall authenticate Notes at the Registrar's request. No service charge
shall be made for any registration of transfer or exchange (except as otherwise
expressly permitted herein), but the Company may require payment of a sum
sufficient to cover any transfer tax or similar governmental charge payable in
connection therewith (other than any such transfer tax or similar governmental
charge payable upon exchanges pursuant to Sections 2.10, 3.06 or 9.05 hereof).
The Company shall not be required (i) to issue, register the transfer of
or exchange any Note for a period beginning at the opening of business 15 days
before the day of any selection of Notes to be redeemed under Section 3.02
hereof and ending at the close of business on the day of selection, or (ii) to
register the transfer, or exchange, of any Note so selected for redemption in
whole or in part, except the unredeemed portion of any Note being redeemed in
part.
(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
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procedures of the Depositary, exchange or cause the exchange of such
interest for an equivalent beneficial interest in the Regulation S Global
Notes. Upon receipt by the principal Registrar of (1) instructions given
in accordance with the Depositary's procedures from an Agent Member
directing the principal Registrar to credit or cause to be credited a
beneficial interest in the Regulation S Global Note in an amount equal to
the beneficial interest in the Rule 144A Global Note to be exchanged, (2)
a written order given in accordance with the Depositary's procedures
containing information regarding the participant account of the Depositary
and the Euroclear or Cedel account to be credited with such increase and
(3) a certificate in the form of Exhibit C attached hereto given by the
Holder of such beneficial interest, then the principal Registrar shall
instruct the Depositary to reduce or cause to be reduced the principal
amount of the Rule 144A Global Note and to increase or cause to be
increased the principal amount of the Regulation S Global Note by the
aggregate principal amount of the beneficial interest in the Rule 144A
Global Note equal to the beneficial interest in the Regulation S Global
Note to be exchanged or transferred, to credit or cause to be credited to
the account of the Person specified in such instructions a beneficial
Interest in the Regulation S Global Note equal to the reduction in the
principal amount of the Rule 144A Global Note and to debit or cause to be
debited from the account of the Person making such exchange or transfer
the beneficial interest in the Rule 144A Global Note that is being
exchanged or transferred.
(iii) Regulation S Global Note to Rule 144A Global Note. If an owner
of a beneficial interest in the Regulation S Global Note deposited with
the Depositary or with the Trustee as custodian for the Depositary wishes
at any time to transfer its interest in such Regulation S Global Note to a
Person who is required to take delivery thereof in the form of an interest
in the Rule 144A Global Note, such Holder may, subject to the rules and
procedures of Euroclear or Cedel, as the case may be, and the Depositary,
exchange or cause the exchange of such interest for an equivalent
beneficial interest in the Rule 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.
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(iv) Global Note to Restricted Note. If an owner of a beneficial
interest in a Global Note deposited with the Depositary or with the
Trustee as custodian for the Depositary wishes at any time to transfer its
interest in such Global Note to a Person who is required to take delivery
thereof in the form of a Restricted Note, such owner may, subject to the
rules and procedures of Euroclear or Cedel, if applicable, and the
Depositary, cause the exchange of such interest for one or more Restricted
Notes of any authorized denomination or denominations and of the same
aggregate principal amount. Upon receipt by the principal Registrar of (1)
instructions from Euroclear or Cedel, if applicable, and the Depositary
directing the principal Registrar to authenticate and deliver one or more
Restricted Notes of the same aggregate principal amount as the beneficial
interest in the Global Note to be exchanged, such instructions to contain
the name or names of the designated transferee or transferees, the
authorized denomination or denominations of the Restricted Notes to be so
issued and appropriate delivery instructions, (2) a certificate in the
form of Exhibit E attached hereto given by the owner of such beneficial
interest to the effect set forth therein, (3) a certificate in the form of
Exhibit F attached hereto given by the Person acquiring the Restricted
Notes for which such interest is being exchanged, to the effect set forth
therein, and (4) such other certifications, legal opinions or other
information as the Company may reasonably require to confirm that such
transfer is being made pursuant to an exemption from, or in a transaction
not subject to, the registration requirements of the Securities Act, then
Euroclear or Cedel, if applicable, or the principal Registrar, as the case
may be, will instruct the Depositary to reduce or cause to be reduced such
Global Note by the aggregate principal amount of the beneficial interest
therein to be exchanged and to debit or cause to be debited from the
account of the Person making such transfer the beneficial interest in the
Global Note that is being transferred, and concurrently with such
reduction and debit the Company shall execute, and the Trustee shall
authenticate and deliver, one or more Restricted Notes of the same
aggregate principal amount in accordance with the instructions referred to
above.
(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
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execute, and the Trustee shall authenticate and deliver, one or more
Restricted Notes of the same aggregate principal amount, in accordance
with the instructions referred to above.
(vi) Other Exchanges. In the event that a beneficial interest in a
Global Note is exchanged for Notes in definitive registered form pursuant
to Section 2.10, prior to the effectiveness of a Shelf Registration
Statement with respect to such Notes, such Notes may be exchanged only in
accordance with such procedures as are substantially consistent with the
provisions of clauses (ii) through (v) above (including the certification
requirements intended to ensure that such transfers comply with Rule 144A,
Rule 144, Regulation S or any other available exemption from registration,
as the case may be) and such other procedures as may from time to time be
adopted by the Company.
(vii) 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
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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 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.
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(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
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
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interest plus any interest payable on the defaulted interest, in any lawful
manner. It may pay such defaulted interest, plus any such interest payable on
it, to the Persons who are Holders on a subsequent special record date. The
Company shall fix any such record date and payment date, provided that no such
record date shall be less than 10 days prior to the related payment date for
such defaulted interest. At least 15 days before any such record date, the
Company shall mail to Holders a notice that states the special record date, the
related payment date and amount of such interest to be paid.
ARTICLE III.
Redemption
Section 3.01. Notices To Trustee.
If the Company elects to redeem Notes pursuant to the optional redemption
provisions of the Notes and Section 3.07 hereof or pursuant to the Optional Tax
Redemption provision of the Notes (Section 8 of the Initial Notes and Section 7
of the Exchange Notes), it shall notify the Trustee of the redemption date and
the principal amount of Notes to be redeemed, and in connection with an Optional
Tax Redemption as provided in the Notes, such notice shall be accompanied by an
Officers' Certificate to the effect that the conditions to such redemption
contained herein have been complied with. The Company shall give each notice
provided for in this Section 3.01 at least 50 days before the redemption date
(unless a shorter notice period shall be satisfactory to the Trustee).
Section 3.02. Selection Of Notes To Be Redeemed.
If less than all of the Notes are to be redeemed at any time, selection of
Notes shall be made by the Trustee on a pro rata basis or by lot or by method
that complies with the requirements of any exchange on which the Notes are
listed and that the Trustee considers fair and appropriate, provided that no
Notes of $1,000 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;
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(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the
Paying Agent to collect the redemption price plus accrued interest;
(f) that interest on Notes called for redemption ceases to accrue on
and after the redemption date; and
(g) the paragraph of the Notes pursuant to which the Notes called
for redemption are being redeemed.
At the Company's request, the Trustee shall give notice of redemption in
the Company's name and at its expense; provided that the Company shall have
delivered to the Trustee, at least 45 days prior to the redemption date, an
Officers' Certificate requesting that the Trustee give such notice and setting
forth the information to be stated in such notice, as provided in the preceding
paragraph.
Section 3.04. Effect Of Notice Of Redemption.
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption become due and payable on the redemption
date at the price set forth in the Note. A notice of redemption may not be
conditional.
Section 3.05. Deposit Of Redemption Price.
On or before the redemption date, the Company shall deposit with the
Trustee or with the Paying Agent money sufficient to pay the redemption price of
and accrued interest on all Notes to be redeemed on that date. The Trustee or
the Paying Agent shall return to the Company any money not required for that
purpose.
Section 3.06. Notes Redeemed In Part.
Upon surrender of a Note that is redeemed in part, the Company shall issue
and the Trustee shall authenticate for the Holder at the expense of the Company
a new Note equal in principal amount to the unredeemed portion of the Note
surrendered.
Section 3.07. Optional Redemption And Optional Tax Redemption.
The Company may redeem all or any portion of the Notes, upon the terms and
at the redemption prices set forth in each of the Notes. The Company may also
redeem all of the Notes in accordance with the Optional Tax Redemption provision
of the Notes (Section 8 of the Initial Notes and Section 7 of the 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.
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(a) In the event that, pursuant to Sections 4.10 or 4.13 hereof, the
Company shall commence an offer to all Holders of the Notes to purchase
Notes (the "Asset Sale Offer" or "Purchase Offer"), the Company shall
follow the procedures in this Section 3.09.
(b) The Asset Sale Offer or the Purchase Offer, as the case may be,
shall remain open for a period specified by the Company which shall be no
less than 30 calendar days and no more than 40 calendar days following its
commencement (the "Commencement Date") (as determined in accordance with
Section 4.10 or 4.13 hereof, as the case may be), except to the extent
that a longer period is required by applicable law (the "Tender Period").
Upon the expiration of the Tender Period (the "Purchase Date"), the
Company shall purchase the principal amount of Notes required to be
purchased pursuant to Section 4.10 or 4.13 hereof (the "Offer Amount") or,
if less than the Offer Amount has been tendered, all Notes tendered in
response to the Asset Sale Offer or the Purchase Offer, as the case may
be.
(c) If the Purchase Date is on or after an interest payment record
date and on or before the related interest payment date, any accrued
interest shall be paid to the Person in whose name a Note is registered at
the close of business on such record date, and no additional interest will
be payable to Holders who tender Notes pursuant to the Asset Sale Offer or
the Purchase Offer, as the case may be.
(d) The Company shall provide the Trustee with notice of the Asset
Sale Offer or the Purchase Offer, as the case may be, at least 10 days
before the Commencement Date.
(e) On or before the Commencement Date, the Company or the Trustee
(at the expense of the Company) shall send, by first class mail, a notice
to each of the Holders, which shall govern the terms of the Asset Sale
Offer or the Purchase Offer and shall state:
(i) that the Asset Sale Offer or the Purchase Offer is being made
pursuant to this Section 3.09 and, as applicable, Section 4.10 or 4.13
hereof and the length of time the Asset Sale Offer or the Purchase Offer
will remain open;
(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
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Business Day preceding the Purchase Date;
(vi) that Holders will be entitled to withdraw their election if the
Company, depositary or Paying Agent, as the case may be, receives, not
later than the close of business on the second Business Day preceding the
Purchase Date, or such longer period as may be required by law, a letter
or a telegram, telex or facsimile transmission (receipt of which is
confirmed and promptly followed by a letter) setting forth the name of the
Holder, the principal amount of the Note or portion thereof the Holder
delivered for purchase and a statement that such Holder is withdrawing his
election to have the Note or portion thereof purchased;
(vii) that, if the aggregate principal amount of Notes surrendered
by Holders exceeds the Offer Amount (as defined in Section 4.10 hereof),
the Trustee will select the Notes to be purchased pro rata or by a method
that complies with the requirements of any exchange on which the Notes are
listed and that the Trustee considers fair and appropriate with such
adjustments as may be deemed appropriate by the Company so that only Notes
in denominations of $1,000, 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
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general circulation the results of the Asset Sale Offer or the Purchase
Offer on the Purchase Date.
(g) For the purposes of calculating the allocation of available
Excess Proceeds to the Notes and each issue of Other Qualified Notes on a
pro rata basis according to accreted value or principal amount, as the
case may be, the relevant principal amount of the Notes and the relevant
principal amount or the accreted value, as the case may be, of any Other
Qualified Notes denominated in a currency other than United States dollars
will be notionally converted into United States dollars from the currency
such 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
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10-Q and 10-K (or the equivalent thereof under the Exchange Act for foreign
private issuers in the event the Company becomes a corporation organized under
the laws of the United Kingdom, the Netherlands, the Netherlands Antilles,
Bermuda or the Cayman Islands), including a "Management's Discussion and
Analysis of Results of Operations and Financial Condition" and, with respect to
the annual information only, a report thereon by the Company's certified
independent accountants, in each case, in the form required by the rules and
regulations of the SEC as in effect on the Issuance Date. This Section 4.02 will
apply notwithstanding that the Company becomes a corporation organized under the
laws of the United Kingdom, the Netherlands, the Netherlands Antilles, Bermuda
or the Cayman Islands.
Section 4.03. Compliance Certificate.
The Company shall deliver to the Trustee, within 90 days after the end of
each fiscal year of the Company, an Officers' Certificate stating that a review
of the activities of the Company and its subsidiaries during the preceding
fiscal year has been made under the supervision of the signing Officers with a
view to determining whether the Company has kept, observed, performed and
fulfilled its obligations under, and complied with the covenants and conditions
contained in, this Indenture, and further stating, as to each such Officer
signing such certificate, that to the best of his knowledge the Company has
kept, observed, performed and fulfilled each and every covenant, and complied
with the covenants and conditions contained in this Indenture and is not in
default in the performance or observance of any of the terms, provisions and
conditions hereof (or, if a Default or Event of Default shall have occurred,
describing all such Defaults or Events of Default of which he may have
knowledge) and that to the best of his knowledge no event has occurred and
remains in existence by reason of which payments on account of the principal or
of interest, if any, on the Notes are prohibited.
One of the Officers signing such Officers' Certificate shall be either the
Company's principal executive officer, principal financial officer or principal
accounting officer.
The Company will so long as any of the Notes are outstanding, deliver to
the Trustee, forthwith upon becoming aware of any Default or Event of Default an
Officers' Certificate specifying such Default or Event of Default.
Immediately upon the occurrence of any event giving rise to the accrual of
Special Interest (as such term is defined in Exhibit A hereto) or the cessation
of such accrual, the Company shall give the Trustee notice thereof and of the
event giving rise to such accrual or cessation (such notice to be contained in
an Officers' Certificate) and prior to receipt of such Officers' Certificate the
Trustee shall be entitled to assume that no such accrual has commenced or
ceased, as the case may be.
Section 4.04. Stay, Extension And Usury Laws.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not, by resort 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.
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Subject to Article V hereof, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence and the corporate, partnership or other existence of each subsidiary
of the Company in accordance with the respective organizational documents of
each subsidiary and the rights (charter and statutory), licenses and franchises
of the Company and its subsidiaries; provided, however, that the Company shall
not be required to preserve any such right, license or franchise, or the
corporate, partnership or other existence of any subsidiary, if the Board of
Directors shall determine that the preservation thereof is no longer desirable
in the conduct of the business of the Company and its subsidiaries taken as a
whole and that the loss thereof is not adverse in any material respect to the
Holders. The Company shall notify the Trustee in writing of any subsidiary which
qualifies as a Material Subsidiary and is not specified in clause (i) of the
definition thereof.
Section 4.06. Taxes.
The Company shall, and shall cause each of its subsidiaries to, pay prior
to delinquency all taxes, assessments and governmental levies, except as
contested in good faith and by appropriate proceedings.
Section 4.07. Limitations On Liens.
Neither the Company nor any of its Restricted Subsidiaries may, directly
or indirectly create, incur, assume or suffer to exist any Lien on any asset now
owned or hereafter acquired, or any income or profits therefrom or assign or
convey any right to receive income therefrom, except:
(a) Permitted Liens;
(b) Liens securing Indebtedness and related obligations to the
extent such Indebtedness and related obligations are permitted under
Sections 4.08(b)(i), (iii), (iv), (v), (viii), (ix) and (xi) hereof;
(c) Liens on the assets acquired or leased with the proceeds of
Indebtedness permitted to be incurred under Section 4.08 hereof; and
(d) Liens securing Refinancing Indebtedness permitted to be incurred
under Section 4.08 hereof; provided that the Refinancing Indebtedness so
issued and secured by such Lien shall not be secured by any property or
assets of the Company or any of its Restricted Subsidiaries other than the
property or assets subject to the Liens securing such Indebtedness being
refinanced.
Section 4.08. Incurrence Of Indebtedness And Issuance Of Preferred Stock.
(a) The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur, issue,
assume, guaranty or otherwise become directly or indirectly liable with
respect to (collectively, "incur") any Indebtedness (including Acquired
Debt) and the Company shall not issue any Disqualified Stock and shall not
permit any of its Restricted Subsidiaries to 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
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the Company and its Restricted Subsidiaries, on a consolidated basis, upon
redemption of Disqualified Stock to the extent such amount is not included
in the preceding clause (y) shall be less than the product of Annualized
Pro Forma EBITDA for the latest fiscal quarter for which internal
financial statements are available immediately preceding the date on which
such additional Indebtedness is incurred or such Disqualified Stock or
preferred stock is issued multiplied by 7.0, determined on a pro forma
basis (including a pro forma application of the net proceeds therefrom),
as if the additional Indebtedness had been incurred, or the Disqualified
Stock or preferred stock had been issued, as the case may be, at the
beginning of such quarter.
(b) The foregoing limitations in Section 4.08(a) shall not apply to:
(i) the incurrence by the Company or any Restricted Subsidiary of
Indebtedness pursuant to the Credit Facility;
(ii) the issuance by any Restricted Subsidiary of preferred stock
(other than Disqualified Stock) to the Company, any Restricted Subsidiary
of the Company or the holders of Equity Interests in any Restricted
Subsidiary on a pro rata basis to such holders;
(iii) the incurrence of Indebtedness or the issuance of preferred
stock by the Company or any of its Restricted Subsidiaries the proceeds of
which are (or the credit support provided by any such Indebtedness is), in
each case, used to finance the construction, capital expenditure and
working capital needs of a Cable Business (including, without limitation,
payments made pursuant to any License), the acquisition of Cable Assets or
the Capital Stock of a Qualified Subsidiary;
(iv) the incurrence by the Company or any of its Restricted
Subsidiaries of additional Indebtedness in an aggregate principal amount
not to exceed $50 million;
(v) the incurrence by the Company or any Restricted Subsidiary of
any Permitted Acquired Debt;
(vi) the incurrence by the Company or any Subsidiary of Indebtedness
issued in exchange for, or the proceeds of which are used to extend,
refinance, renew, replace, or refund the Notes, 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
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the Subordinated Debentures or the incurrence by the Company of
Indebtedness represented by the Subordinated Debentures upon the exchange
of the Preferred Stock in accordance with the Certificate of Designations
therefor;
(viii) Indebtedness under Exchange Rate Contracts, provided that
such Exchange Rate Contracts are related to payment obligations under
Existing Indebtedness or Indebtedness incurred under Section 4.08(a) or
(b) hereof that are being hedged thereby, and not for speculation and that
the aggregate notional amount under each such Exchange Rate Contract does
not exceed the aggregate payment obligations under such Indebtedness;
(ix) Indebtedness under Interest Rate Agreements, provided that the
obligations under such agreements are related to payment obligations on
Existing Indebtedness or Indebtedness otherwise incurred pursuant to
Section 4.08(a) or (b) hereof, and not for speculation;
(x) the incurrence of Indebtedness between the Company and any
Restricted Subsidiary, between or among Restricted Subsidiaries and
between any Restricted Subsidiary and other holders of Equity Interests of
such Restricted Subsidiary (or other Persons providing funding on their
behalf) on a pro rata basis and on substantially identical principal
financial terms; provided, however, that if any such Restricted Subsidiary
that is the payee of any such Indebtedness ceases to be a Restricted
Subsidiary or transfers such Indebtedness (other than to the Company or a
Restricted Subsidiary of the Company), such events shall be deemed, in
each case, to constitute the incurrence of such Indebtedness by the
Company or by a Restricted Subsidiary, as the case may be, at the time of
such event; and
(xi) Indebtedness of the Company and/or any Restricted Subsidiary in
respect of performance bonds of the Company or any Subsidiary or surety
bonds provided by the Company or any Restricted Subsidiary received in the
ordinary course of business in connection with the construction or
operation of a Cable Business.
(c) Any redesignation of a Non-Restricted Subsidiary as a Restricted
Subsidiary shall be deemed for purposes of this Section 4.08 to be an
incurrence of Indebtedness by the Company and its Restricted Subsidiaries
of the Indebtedness of such Non-Restricted Subsidiary as of the time of
such 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
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dividends or pro rata distributions payable by a Restricted Subsidiary);
(ii) purchase, redeem or otherwise acquire or retire for value any
Equity Interests of the Company (other than any such Equity Interests
owned by the Company or any Wholly Owned Subsidiary of the Company);
(iii) voluntarily purchase, redeem or otherwise acquire or retire
for value any Indebtedness that is subordinated to the Notes; or
(iv) make any Restricted Investment (all such payments and other
actions set forth in clauses (i) through (iv) above being collectively
referred to as "Restricted Payments"), unless, at the time of such
Restricted Payment:
(1) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(2) such Restricted Payment, together with the aggregate of
all other Restricted Payments made by the Company and its Restricted
Subsidiaries after the Issuance Date (including Restricted Payments
permitted by clauses (ii) through (ix) of Section 4.09(b)), is less than
the sum of (x) the difference between Cumulative EBITDA and 1.5 times
Cumulative Interest Expense plus (y) Capital Stock Sale Proceeds plus (z)
cash received by the Company or a Restricted Subsidiary from a
Non-Restricted Subsidiary (other than cash which is or is required to be
repaid or returned to such Non-Restricted Subsidiary); provided, however,
that to the extent that any Restricted Investment that was made after the
date of this Indenture is sold for cash or otherwise liquidated or repaid
for cash, the amount credited pursuant to this clause (z) shall be the
lesser of (A) the cash received with respect to such sale, liquidation or
repayment of such Restricted Investment (less the cost of such sale,
liquidation or repayment, if any) and (B) the initial amount of such
Restricted Investment, in each case as determined in good faith by the
Company's Board of Directors.
(b) The foregoing provisions in Section 4.09(a) shall not prohibit:
(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
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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 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
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(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.
(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
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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.
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
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Subsidiary or (y) issue, sell, lease, transfer, convey or otherwise
dispose of equity securities of any of the Company's Subsidiaries to a
Cable Controlled Subsidiary, in each of cases (x) and (y) so long as (A)
the ratio of Indebtedness to Annualized Pro Forma EBITDA of the Company
after such transaction is equal to or less than the ratio of Indebtedness
to Annualized Pro Forma EBITDA of the Company immediately preceding such
transaction; provided, however, that if the ratio of Indebtedness to
Annualized Pro Forma EBITDA of the Company immediately preceding such
transaction is 6:1 or less, then the ratio of Indebtedness to Annualized
Pro Forma EBITDA of the Company may be 0.5 greater than such ratio
immediately preceding such transaction and (B) either (I) the assets so
contributed consist solely of a license to operate a Cable Business and
the Net Households covered by all of the licenses to operate cable and
telephone systems held by the Company and its Restricted Subsidiaries
immediately after and giving effect to such transaction equals or exceeds
the number of Net Households covered by all of the licenses to operate
cable and telephone systems held by the Company and its Restricted
Subsidiaries immediately prior to such transaction or (II) the assets so
contributed consist solely of Cable Assets and the value of the Capital
Stock received, immediately after and giving effect to such transaction,
as determined by an investment banking firm of recognized standing with
knowledge of the Cable Business, equals or exceeds the value of Cable
Assets exchanged for such Capital Stock; 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
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banking firm of national standing with high yield experience together with
an Officers' Certificate to the effect that such opinion complies with
this clause (ii); provided, however, that notwithstanding the foregoing
provisions, the following shall not be deemed to be Affiliate
Transactions:
(1) any employment agreement entered into by the Company or
any of its Subsidiaries in the ordinary course of business and consistent
with the past practice of the Company or its predecessor or such
Subsidiary;
(2) transactions between or among the Company and/or its
Restricted Subsidiaries;
(3) transactions permitted by the provisions of Section 4.09
hereof;
(4) Liens permitted under Section 4.07 hereof which are
granted by the Company or any of its Subsidiaries to an unrelated Person
for the benefit of the Company or any other Subsidiary of the Company;
(5) any transaction pursuant to an agreement in effect on the
Issuance Date;
(6) the incurrence of Indebtedness by a Restricted Subsidiary
where such Indebtedness is owed to the holders of the Equity Interests of
such Restricted Subsidiary on a pro rata basis and on substantially
identical principal financial terms;
(7) management, operating, service or interconnect agreements
entered into in the ordinary course of business with any Cable Business in
which the Company or any Restricted Subsidiary has an Investment and which
is not a Cable Controlled Subsidiary (and of which no Affiliate of the
Company is an Affiliate other than as a result of such Investment); and
(8) any tax sharing agreement.
Section 4.12. Dividends And Other Payment Restrictions Affecting Restricted
Subsidiaries.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to:
(a) (i) pay dividends or make any other distributions to the Company
or any of its Subsidiaries (A) on its Capital Stock or (B) with respect to
any other interest or participation in, or measured by, its profits, or
(ii) pay any indebtedness owed to the Company or any of its Subsidiaries,
or
(b) make loans or advances to the Company or any of its
Subsidiaries, or
(c) transfer any of its properties or assets to the Company or any
of its Subsidiaries, except for such encumbrances or restrictions existing
under or by reason of:
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(i) Existing Indebtedness as in effect on the Issuance Date;
(ii) this Indenture and the Notes;
(iii) any agreement covering or relating to Indebtedness permitted
to be incurred under Section 4.08(b)(i), (ii), (iii), (iv), (v), (viii) or
(ix) hereof (but only, in the case of Section 4.08(b)(viii) or (ix), to
the extent contemplated by the then-existing Credit Facility), provided
that the provisions of such agreement permit any action referred to in
clause (a) above in aggregate amounts sufficient to enable the payment of
interest and principal and mandatory repurchases pursuant to the terms of
this Indenture and the Notes, but provided further that: (x) any such
agreement may nevertheless encumber, prohibit or restrict any action
referred to in clause (a) above if an event of default under such
agreement has occurred and is continuing or would occur as a result of any
such action; and (y) any such agreement may nevertheless contain (I)
restrictions limiting the payment of dividends or the making of any other
distributions to all or a portion of excess cash-flow (or any similar
formulation thereof) and (II) subordination provisions governing
Indebtedness owed to the Company or any Restricted Subsidiary;
(iv) applicable law;
(v) any instrument governing Indebtedness or Capital Stock of a
Person acquired by the Company or any of its Subsidiaries as in effect at
the time of such acquisition (except to the extent such Indebtedness was
incurred in connection with such acquisition), which encumbrance or
restriction is not applicable to any Person, or the properties or assets
of any Person, other than the Person, or the property or assets of the
Person, so acquired; provided that the EBITDA of such Person is not taken
into account in determining whether such acquisition was permitted by the
terms of this Indenture;
(vi) customary nonassignment provisions in leases entered into in
the ordinary course of business and consistent with past practices;
(vii) provisions of joint venture or stockholder agreements, so long
as such provisions are determined by a resolution of the Board of
Directors to be, at the time of such determination, customary for such
agreements;
(viii) with respect to clause (c) above, purchase money obligations
for property acquired in the ordinary course of business or the provisions
of any agreement with respect to any Asset Sale (or transaction which, but
for its size, would be an Asset Sale), solely with respect to the assets
being sold; or
(ix) permitted Refinancing Indebtedness, provided that the
restrictions contained in the agreements governing such Refinancing
Indebtedness are determined by a resolution of the Board of Directors to
be no more restrictive than those contained in the agreements governing
the Indebtedness being refinanced.
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
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or an integral multiple thereof) of such Holder's Notes pursuant to the
offer described in Section 3.09 hereof (the "Purchase Offer") at a
purchase price equal to 101% of the principal amount thereof plus accrued
and unpaid interest thereon, if any, to the date of purchase (the "Change
of Control Payment").
(b) Within 40 days following any Change of Control Triggering Event,
the Company shall mail to each Holder the notice provided by Section
3.09(e).
Section 4.14. Payment Of Additional Amounts.
At least 10 days prior to the first date on which payment of principal and
any premium or interest on the Notes is to be made, and at least 10 days prior
to any subsequent such date if there has been any change with respect to the
matters set forth in the Officers' Certificate described in this Section 4.14,
the Company shall furnish the Trustee and the Paying Agent, if other than the
Trustee, with an Officers' Certificate instructing the Trustee and the Paying
Agent whether the Company is obligated to pay Additional Amounts (as defined in
Section 3 of the Initial Notes or Section 2 of the Exchange Notes) with respect
to such payment of principal, or of any premium or interest on the Notes. If the
Company 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
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organized or existing under the laws of the United Kingdom, the
Netherlands, the Netherlands Antilles, Bermuda or the Cayman Islands or of
the United States, any state thereof or the District of Columbia;
(b) the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company) or the entity or
Person to which such sale, assignment, transfer, lease, conveyance or
other disposition will have been made assumes all the Obligations
(including the due and punctual payment of Additional Amounts if the
surviving corporation is a corporation organized or existing under the
laws of the United Kingdom, the Netherlands, the Netherlands Antilles,
Bermuda or the Cayman Islands) of the Company, pursuant to a supplemental
indenture in a form reasonably satisfactory to the Trustee, under the
Notes and this Indenture;
(c) immediately after such transaction no Default or Event of
Default exists;
(d) the Company or any entity or Person formed by or surviving any
such consolidation or merger, or to which such sale, assignment, transfer,
lease, conveyance or other disposition will have been made will have a
ratio of Indebtedness to Annualized Pro Forma EBITDA equal to or less than
the ratio of Indebtedness to Annualized Pro Forma EBITDA of the Company
immediately preceding the transaction; provided, however, that if the
ratio of Indebtedness to Annualized Pro Forma EBITDA of the Company
immediately preceding such transaction is 6:1 or less, then the ratio of
Indebtedness to Annualized Pro Forma EBITDA of the Company may be 0.5
greater than such ratio immediately preceding such transaction; and
(e) such transaction would not result in the loss of any material
authorization or Material License of the Company or its Subsidiaries.
Section 5.02. Successor Corporation Substituted.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company in accordance with Section 5.01 hereof, the successor corporation
formed by such consolidation or into or with which the Company is merged or to
which such sale, assignment, transfer, lease, conveyance or other disposition is
made shall succeed to, and be substituted for and may exercise every right and
power of, the Company under this 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;
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(b) the Company defaults in the payment of the principal of any Note
when the same becomes due and payable at maturity, upon redemption or
otherwise;
(c) the Company fails to observe or perform any covenant or
agreement contained in Section 4.08, 4.09, or 4.13 hereof;
(d) the Company fails to observe or perform any other covenant or
agreement contained in this Indenture or the Notes, required by any of
them to be performed and the Default continues for a period of 60 days
after notice from the Trustee to the Company or from the Holders of 25% in
aggregate principal amount of the then outstanding Notes to the Company
and the Trustee stating that such notice is a "Notice of Default";
(e) default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any Restricted
Subsidiary (or the payment of which is guaranteed by the Company or any
Restricted Subsidiary), whether such Indebtedness or guarantee now exists
or is created after the Issuance Date, which default:
(i) is caused by a failure to pay when due principal of or interest
on such Indebtedness within the grace period provided for in such
Indebtedness (which failure continues beyond any applicable grace period)
(a "Payment Default"); or
(ii) results in the acceleration of such Indebtedness prior to its
express maturity
and, in each case, the principal amount of any such Indebtedness, together with
the principal amount of any other such Indebtedness under which there is a
Payment Default or the maturity of which has been so accelerated, aggregates $10
million or more;
(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
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(v) generally is unable to pay its debts as the same become due;
(h) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(i) is for relief against the Company or any Material Subsidiary in
an involuntary case;
(ii) appoints a Custodian of the Company or any Material Subsidiary
or for all or substantially all of its property; or
(iii) orders the liquidation of the Company or any Material
Subsidiary, and the order or decree remains unstayed and in effect for 60
days; and
(i) the revocation of a Material License.
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar Federal,
state or foreign law for the relief of debtors or the protection of creditors.
The term "Custodian" means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.
Section 6.02. Acceleration.
If an Event of Default (other than an Event of Default specified in
clauses (g) and (h) of Section 6.01 hereof) occurs and is continuing, the
Trustee by notice to the Company, or the Holders of at least 25% in principal
amount of the then outstanding Notes by notice to the Company and the Trustee,
may declare all the Notes to be due and payable. Upon such declaration, the
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.
Section 7.02. Rights Of Trustee.
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(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.
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 (ss.) 313(a) if and to the extent required
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by such (ss.) 313(a). The Trustee also shall comply with TIA (ss.) 313(b)(2).
The Trustee shall also transmit by mail all reports as required by TIA (ss.)
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:
(a) the Trustee fails to comply with Section 7.10 hereof, unless the
Trustee's duty to resign is stayed as provided in TIA (ss.) 310(b);
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(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 (ss.) 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 (ss.) 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
(ss.) 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 (ss.) 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% Senior
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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 (ss.) 311(a), excluding any creditor
relationship listed in TIA (ss.) 311(b). A Trustee who has resigned or been
removed shall be subject to TIA (ss.) 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:
(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
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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
(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.
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"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.
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:
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(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
(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.
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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.
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.
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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 (ss.) 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 (ss.)
312(c).
Section 10.04. Certificate And Opinion As To Conditions Precedent.
Upon any request or application by the Company to the Trustee to take any
action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with; and
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(b) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
Section 10.05. Statements Required In Certificate Or Opinion.
Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than pursuant to Section 4.03)
shall include:
(a) a statement that the Person signing such certificate or
rendering such opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, such Person has
made such examination or investigation as is necessary to enable such
Person to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been complied with.
Section 10.06. Rules By Trustee And Agents.
The Trustee may make reasonable rules for action by, or a meeting of,
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
Section 10.07. 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.
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"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.
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
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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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Indenture signature page
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,
General Counsel and
Secretary
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 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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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.
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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
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<PAGE> 69
[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
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Registration Statement, Special Interest shall accrue at a rate per annum equal
to 0.50% of the principal 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,
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<PAGE> 71
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. 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 (ss.)(ss.) 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
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<PAGE> 72
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.
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>
2003 105.570%
2004 103.833%
2005 101.917%
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 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
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<PAGE> 73
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.
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
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<PAGE> 74
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 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
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<PAGE> 75
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
New York, New York 10022
Attention of: Richard J. Lubasch, Esq.
Senior Vice President and General Counsel
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<PAGE> 76
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> 77
__________________________
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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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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[TO BE ATTACHED TO GLOBAL NOTES]
SCHEDULE A
SCHEDULE OF PRINCIPAL AMOUNT
The initial principal amount of this Global Note shall be
$__________________. The following increases or decreases in the principal
amount of this Global Note have been made:
================================================================================
Amount of Amount of Signature of Date of
decrease in increase in Principal authorized exchange
principal principal amount of officer of following such
amount of this amount of this this Global Trustee or decrease or
Global Note Global Note Note Notes Custodian increase
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A-79
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EXHIBIT B
[FORM OF FACE OF EXCHANGE NOTE]
[Global Notes Legend, if applicable]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW
YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S
NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE LIMITED TO
TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE
REFERRED TO ON THE REVERSE HEREOF.
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<PAGE> 82
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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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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(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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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
B-85
<PAGE> 86
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 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 (ss.)(ss.) 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>
Year Percentage
---- ----------
<S> <C>
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
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<PAGE> 87
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 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
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<PAGE> 88
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 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
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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.
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).
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:
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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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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.
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<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.
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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:
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Amount of Amount of Signature of Date of
decrease in increase in Principal authorized exchange
principal principal amount of officer of following such
amount of this amount of this this Global Trustee or decrease or
Global Note Global Note Note Notes Custodian increase
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EXHIBIT C
FORM OF TRANSFER CERTIFICATE FOR TRANSFER
FROM RULE 144A GLOBAL NOTE
TO REGULATION S GLOBAL NOTE
(Transfers pursuant to (ss.) 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
C-95
<PAGE> 96
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-96
<PAGE> 97
EXHIBIT D
FORM OF TRANSFER CERTIFICATE FOR TRANSFER
FROM REGULATION S GLOBAL NOTE
TO RULE 144A GLOBAL NOTE
(Transfers pursuant to (ss.) 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-97
<PAGE> 98
EXHIBIT E
FORM OF TRANSFER CERTIFICATE FOR TRANSFER
FROM GLOBAL NOTE OR RESTRICTED
NOTE TO RESTRICTED NOTE
(Transfers pursuant to (ss.) 2.06(a)(iv)
or (ss.) 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-98
<PAGE> 99
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,
- ----------
* Insert and modify if appropriate
F-99
<PAGE> 100
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 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
F-100
<PAGE> 101
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-101
<PAGE> 102
EXHIBIT G
FORM OF CERTIFICATE FOR TRANSFERS OF
REGULATION S GLOBAL NOTE FOR
RESTRICTED NOTES
(Transfers pursuant to (ss.) 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
G-102
<PAGE> 103
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-103
<PAGE> 1
Exhibit 4.14
================================================================================
$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 supplemented
3
<PAGE> 4
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
A person is deemed to be a holder of Transfer Restricted Securities (each,
a "Holder") whenever
4
<PAGE> 5
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:
(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
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(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 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
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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
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
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<PAGE> 8
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading and (iii) any Prospectus forming part of
any Registration Statement, and any amendment or supplement to such Prospectus,
does not include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements, in the light of the
circumstances under which they were made, not misleading.
(b) (1) The Company shall advise the Initial Purchasers and, in the case
of a Shelf Registration Statement, the Holders of Transfer Restricted Securities
covered thereby, and, if requested by the Initial Purchasers or any such Holder,
confirm such advice in writing when a Registration Statement and any amendment
thereto has been filed with the Commission and when the Registration Statement
or any post-effective amendment thereto has become effective.
(2) The Company shall advise the Initial Purchasers and, in the case
of a Shelf Registration Statement, the Holders of Transfer Restricted Securities
covered thereby, and, in the case of an Exchange Offer Registration Statement,
any Exchanging Dealer which has provided in writing to the Company a telephone
or facsimile number and address for notices, and, if requested by the Initial
Purchasers or any such Holder or Exchanging Dealer, confirm such advice in
writing:
(i) of any request by the Commission for amendments or supplements
to the Registration Statement or the Prospectus included therein or for
additional information;
(ii) of the initiation by the Commission of proceedings relating to
a stop order suspending the effectiveness of the Registration Statement;
(iii) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement;
(iv) of the receipt by the Company of any notification with respect
to the suspension of the qualification of the securities included therein
for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose; and
(v) of the existence of any fact and the happening of any event
(including, without limitation, pending negotiations relating to, or the
consummation of, a transaction or the occurrence of any event which would
require additional disclosure of material non-public information by the
Company in the Shelf Registration Statement as to which the Company has a
bona fide business purpose for preserving confidential or which renders
the Company unable to comply with Commission requirements) that, in the
opinion of the Company, makes untrue any statement of a material fact made
in its Shelf Registration Statement, the Prospectus or any amendment or
supplement thereto or any document incorporated by reference therein or
requires the making of any changes in the Registration Statement or the
Prospectus so that, as of such date, the statements therein are not
misleading and do not omit to state a material fact required to be stated
therein or necessary to make the statements therein (in the case of the
Prospectus, in light of the circumstances under which they were made) not
misleading.
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.
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<PAGE> 9
(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.
(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
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<PAGE> 10
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
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
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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 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,
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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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<PAGE> 13
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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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 been required to pay
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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
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
15
<PAGE> 16
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
(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
16
<PAGE> 17
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.
(f) Headings. The headings in this agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
17
<PAGE> 18
(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.
18
<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,
General Counsel and Secretary
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 4.15
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
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
<PAGE> 3
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
-3-
<PAGE> 4
Section 10.10. Variable Provisions 57
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
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<PAGE> 5
CROSS-REFERENCE TABLE*
Trust Indenture Act Section Indenture Section
310 (a)(1) 7.10
(a)(2) 7.10
(a)(3) N.A.
(a)(4) N.A.
(a)(5) 7.10
(b) 7.08,
7.10
(c) N.A.
311(a) 7.11
(b) 7.11
(c) N.A.
312 (a) 2.05
(b) 10.03
(c) 10.03
313(a) 7.06
(b)(1) N.A.
(b)(2) 7.06
(c) 7.06
(d) 7.06
314(a) 4.02
4.03,
(b) N.A.
(c)(1) 10.04
(c)(2) 10.04
(c)(3) N.A.
(d) N.A.
(e) N.A.
(f) N.A.
315(a) 7.01(b)
(b) 7.05
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<PAGE> 6
(c) 7.01(a)
(d) 7.01(c)
(e) 6.11
316 (a)(last sentence) 2.09
(a)(1)(A) 6.05
(a)(1)(B) 6.04
(a)(2) N.A.
(b) 6.07
(c) 9.04
317 (a)(1) 6.08
(a)(2) 6.09
(b) 2.04
318 (a) N.A.
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
-6-
<PAGE> 7
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.
-7-
<PAGE> 8
"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.
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<PAGE> 9
"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.
"Change of Control" means (i) the sale, lease or transfer of all or
substantially all of the assets of
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<PAGE> 10
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
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<PAGE> 11
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 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) (pounds)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 (pounds)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
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<PAGE> 12
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 Contract or an Interest Rate Agreement,
except any such balance that constitutes an accrued expense or
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<PAGE> 13
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.
"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
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<PAGE> 14
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 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
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<PAGE> 15
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.
"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
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<PAGE> 16
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 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
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<PAGE> 17
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 securities by either of the
Rating Agencies shall be below Investment Grade, (b) in the event that any of
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<PAGE> 18
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.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code ss.ss.
77aaa-77bbbb) as in effect on the date of execution of this Indenture.
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"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.
Defined
Term in Section
- ---- ----------
"Additional Amounts" 4.14
"Affiliate Transaction" 4.11
"Agent Member" 2.01
"Asset Sale Offer" 4.10
"Bankruptcy Law" 6.01
"Cedel" 2.01
"Change of Control Payment" 4.13
"Commencement Date" 3.09
"Custodian" 6.01
"Defeasance" 8.02
"Euroclear" 2.01
"Event of Default" 6.01
"Excess Proceeds" 4.10
"Global Note" 2.01
"incur" 4.08
"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
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"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
Section 1.03. Incorporation By Reference Of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the Notes means the Company or any other obligor on the
Notes.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
Section 1.04. Rules Of Construction.
Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP consistently applied;
(c) references to "GAAP" shall mean GAAP in effect as of the time
when and for the period as to which such accounting principles are to be
applied;
(d) "or" is not exclusive;
(e) words in the singular include the plural, and in the plural
include the singular;
(f) provisions apply to successive events and transactions;
(g) references to sections of or rules under the Securities Act
shall be deemed to
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include substitute, replacement or successor sections or rules adopted by
the SEC from time to time; and
(h) a reference to "$" or U.S. Dollars is to United States dollars
and a reference to "(pounds)" 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.
Initial Notes offered and sold to Qualified Institutional Buyers ("QIBs")
in reliance on Rule 144A under the Securities Act ("Rule 144A"), as provided in
the Purchase Agreement, shall be issued initially in the form of one or more
permanent Global Notes in definitive, fully registered form
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without interest coupons with the Global Notes Legend and Restricted Notes
Legend set forth in Exhibit A hereto ("Rule 144A Global Note"), which shall be
deposited on behalf of the purchasers of the Initial Notes represented thereby
with the Trustee, at its New York office, as custodian for the Depositary, and
registered in the name of the Depositary or a nominee of the Depositary, duly
executed by the Company and authenticated by the Trustee as hereinafter
provided. The aggregate principal amount 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 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
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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.
Section 2.04. Paying Agent To Hold Money In Trust.
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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.
(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
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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 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
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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 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
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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).
(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
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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).
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.
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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.
Section 2.11. Cancellation.
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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.
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:
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(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.
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
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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:
(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;
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(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.
In addition, the notice shall, to the extent permitted by applicable law,
be accompanied by a copy of the information regarding the Company and its
Subsidiaries which is required to be contained in the most recent Quarterly
Report on Form 10-Q or Annual Report on Form 10-K (including any financial
statements or other information required to be included or incorporated by
reference therein) and any Reports on Form 8-K filed since the date of such
Quarterly Report or Annual Report (or would have been required to file if the
Company remained a company incorporated in the United States), as the case may
be, which the Company has filed (or would have been required to file if it
remained a company incorporated in the United States) with the SEC on or prior
to the date of the notice. The notice shall
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contain all instructions and materials necessary to enable such Holders to
tender Notes pursuant to the Asset Sale Offer or the Purchase Offer, as the case
may be.
(f) At least one Business Day prior to the Purchase Date, the
Company shall irrevocably deposit with the Trustee or a Paying Agent in
immediately available funds an amount equal to the Offer Amount to be held
for payment in accordance with the terms of this Section. On the Purchase
Date, the Company shall, to the extent lawful, (i) accept for payment the
Notes or portions thereof tendered pursuant to the Asset Sale Offer or the
Purchase Offer, (ii) deliver or cause the depositary or Paying Agent to
deliver to the Trustee Notes so accepted and (iii) deliver to the Trustee
an Officers' Certificate stating such Notes or portions thereof have been
accepted for payment by the Company in accordance with the terms of this
Section 3.09. The depositary, the Paying Agent or the Company, as the case
may be, shall promptly (but in any case not later than ten (10) calendar
days after the Purchase Date) mail or deliver to each tendering Holder an
amount equal to the purchase price of the Notes tendered by such Holder
and accepted by the Company for purchase, and the Trustee shall promptly
authenticate and mail or deliver to such Holders a new Note equal in
principal amount 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 Noon Buying Rate
on the second Business Day preceding the Purchase Date.
(h) The Asset Sale Offer or the Purchase Offer shall be made by the
Company in compliance with all applicable provisions of the Exchange Act,
and all applicable tender offer rules promulgated thereunder, and shall
include all instructions and materials necessary to enable such Holders to
tender their Notes.
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ARTICLE IV.
Covenants
Section 4.01. Payment Of Notes.
The Company shall pay the principal of, premium, if any, and interest on,
the Notes on the dates and in the manner provided in the Notes. Principal,
premium, if any, and interest shall be considered paid on the date due if the
Paying Agent (other than the Company or an Affiliate of the Company) holds on
that date money designated for and sufficient to pay all principal and interest
then due. To the extent lawful, the Company shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on (i) the
overdue Accreted Value of the Notes, if prior to 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 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
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upon becoming aware of any Default or Event of Default an Officers' Certificate
specifying such Default or Event of Default.
Immediately upon the occurrence of any event giving rise to the accrual of
Special Interest (as such term is defined in Exhibit A hereto) or the cessation
of such accrual, the Company shall give the Trustee notice thereof and of the
event giving rise to such accrual or cessation (such notice to be contained in
an Officers' Certificate) and prior to receipt of such Officers' Certificate the
Trustee shall be entitled to assume that no such accrual has commenced or
ceased, as the case may be.
Section 4.04. Stay, Extension And Usury Laws.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not, by resort to any such law, hinder, delay or
impede the execution of any power herein granted to the Trustee, but will suffer
and permit the execution of every such power as though no such law had been
enacted.
Section 4.05. Corporate Existence.
Subject to Article V hereof, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence and the corporate, partnership or other existence of each subsidiary
of the Company in accordance with the respective organizational documents of
each subsidiary and the rights (charter and statutory), licenses and franchises
of the Company and its subsidiaries; provided, however, that the Company shall
not be required to preserve any such right, license or franchise, or the
corporate, partnership or other existence of any subsidiary, if the Board of
Directors shall determine that the preservation thereof is no longer desirable
in the conduct of the business of the Company and its subsidiaries taken as a
whole and that the loss thereof is not adverse in any material respect to the
Holders. The Company shall notify the Trustee in writing of any subsidiary which
qualifies as a Material Subsidiary and is not specified in clause (i) of the
definition thereof.
Section 4.06. Taxes.
The Company shall, and shall cause each of its subsidiaries to, pay prior
to delinquency all taxes, assessments and governmental levies, except as
contested in good faith and by appropriate proceedings.
Section 4.07. Limitations On Liens.
Neither the Company nor any of its Restricted Subsidiaries may, directly
or indirectly create, incur, assume or suffer to exist any Lien on any asset now
owned or hereafter acquired, or any income or profits therefrom or assign or
convey any right to receive income therefrom, except:
(a) Permitted Liens;
(b) Liens securing Indebtedness and related obligations to the
extent such Indebtedness and related obligations are permitted under
Sections 4.08(b)(i), (iii), (iv), (v), (viii), (ix) and (xi) hereof;
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(c) Liens on the assets acquired or leased with the proceeds of
Indebtedness permitted to be incurred under Section 4.08 hereof; and
(d) Liens securing Refinancing Indebtedness permitted to be incurred
under Section 4.08 hereof; provided that the Refinancing Indebtedness so
issued and secured by such Lien shall not be secured by any property or
assets of the Company or any of its Restricted Subsidiaries other than the
property or assets subject to the Liens securing such Indebtedness being
refinanced.
Section 4.08. Incurrence Of Indebtedness And Issuance Of Preferred Stock.
(a) The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur, issue,
assume, guaranty or otherwise become directly or indirectly liable with
respect to (collectively, "incur") any Indebtedness (including Acquired
Debt) and the Company shall not issue any Disqualified Stock and shall not
permit any of its Restricted Subsidiaries to issue any shares of preferred
stock that is Disqualified Stock; provided, however, that the Company may
incur Indebtedness or issue shares of Disqualified Stock and any of its
Restricted Subsidiaries may issue shares of preferred stock that is
Disqualified Stock if after giving effect to such issuance or incurrence
on a pro forma basis, the sum of (x) Indebtedness of the Company and its
Restricted Subsidiaries, on a consolidated basis, (y) the liquidation
value of outstanding preferred stock of Restricted Subsidiaries and (z)
the aggregate amount payable by the Company and its Restricted
Subsidiaries, on a consolidated basis, upon redemption of Disqualified
Stock to the extent such amount is not included in the preceding clause
(y) shall be less than the product of Annualized Pro Forma EBITDA for the
latest fiscal quarter for which internal financial statements are
available immediately preceding the date on which such additional
Indebtedness is incurred or such Disqualified Stock or preferred stock is
issued multiplied by 7.0, determined on a pro forma basis (including a pro
forma application of the net proceeds therefrom), as if the additional
Indebtedness had been incurred, or the Disqualified Stock or preferred
stock had been issued, as the case may be, at the beginning of such
quarter.
(b) The foregoing limitations in Section 4.08(a) shall not apply to:
(i) the incurrence by the Company or any Restricted Subsidiary of
Indebtedness pursuant to the Credit Facility;
(ii) the issuance by any Restricted Subsidiary of preferred stock
(other than Disqualified Stock) to the Company, any Restricted Subsidiary
of the Company or the holders of Equity Interests in any Restricted
Subsidiary on a pro rata basis to such holders;
(iii) the incurrence of Indebtedness or the issuance of preferred
stock by the Company or any of its Restricted Subsidiaries the proceeds of
which are (or the credit support provided by any such Indebtedness is), in
each case, used to finance the construction, capital expenditure and
working capital needs of a Cable Business (including, without limitation,
payments made pursuant to any License), the acquisition of Cable Assets or
the Capital Stock of a Qualified Subsidiary;
(iv) the incurrence by the Company or any of its Restricted
Subsidiaries of
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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;
(x) the incurrence of Indebtedness between the Company and any
Restricted Subsidiary, between or among Restricted Subsidiaries and
between any Restricted Subsidiary and other holders of Equity Interests of
such Restricted Subsidiary (or other Persons providing funding on their
behalf) on a pro rata basis and on substantially identical principal
financial terms; provided, however, that if any such Restricted Subsidiary
that is the payee of any such Indebtedness ceases to be a Restricted
Subsidiary or transfers such Indebtedness (other than to the Company or a
Restricted Subsidiary of the Company), such events shall be deemed, in
each case, to constitute the incurrence of such Indebtedness by the
Company or by a Restricted Subsidiary, as the case may be, at the time of
such event; and
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(xi) Indebtedness of the Company and/or any Restricted Subsidiary in
respect of performance bonds of the Company or any Subsidiary or surety
bonds provided by the Company or any Restricted Subsidiary received in the
ordinary course of business in connection with the construction or
operation of a Cable Business.
(c) Any redesignation of a Non-Restricted Subsidiary as a Restricted
Subsidiary shall be deemed for purposes of this Section 4.08 to be an
incurrence of Indebtedness by the Company and its Restricted Subsidiaries
of the Indebtedness of such Non-Restricted Subsidiary as of the time of
such redesignation to the extent such Indebtedness does not already
constitute Indebtedness of the Company or one of its Restricted
Subsidiaries.
Section 4.09. Restricted Payments.
(a) The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly:
(i) declare or pay any dividend or make any distribution on account
of the Company's or any of its Restricted Subsidiaries' Equity Interests
(other than (x) dividends or distributions payable in Equity Interests
(other than Disqualified Stock) of the Company or such Restricted
Subsidiary or (y) dividends or distributions payable to the Company or any
Wholly Owned Subsidiary of the Company, or (z) pro rata dividends or pro
rata distributions payable by a Restricted Subsidiary);
(ii) purchase, redeem or otherwise acquire or retire for value any
Equity Interests of the Company (other than any such Equity Interests
owned by the Company or any Wholly Owned Subsidiary of the Company);
(iii) voluntarily purchase, redeem or otherwise acquire or retire
for value any Indebtedness that is subordinated to the Notes; or
(iv) make any Restricted Investment (all such payments and other
actions set forth in clauses (i) through (iv) above being collectively
referred to as "Restricted Payments"), unless, at the time of such
Restricted Payment:
(1) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(2) such Restricted Payment, together with the aggregate of
all other Restricted Payments made by the Company and its Restricted
Subsidiaries after the Issuance Date (including Restricted Payments
permitted by clauses (ii) through (ix) of Section 4.09(b)), is less
than the sum of (x) the difference between Cumulative EBITDA and 1.5
times Cumulative Interest Expense plus (y) Capital Stock Sale
Proceeds plus (z) cash received by the Company or a Restricted
Subsidiary from a Non-Restricted Subsidiary (other than cash which
is or is required to be repaid or returned to such Non-Restricted
Subsidiary); provided, however, that to the extent that any
Restricted Investment that was made after the date of this Indenture
is sold for cash or otherwise liquidated or repaid for cash, the
amount credited pursuant to this clause (z) shall be the lesser of
(A) the cash received with respect to such sale, liquidation or
repayment of such
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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 such Investment for constructing a
Cable Business or the working capital needs of a Cable Business;
(iv) the redemption, purchase, defeasance, acquisition or retirement
of Indebtedness that is subordinated to the Notes (including premium, if
any, and accrued and unpaid interest) made by exchange for, or out of the
proceeds of the substantially concurrent sale (other than to a Restricted
Subsidiary of the Company) of (A) Equity Interests of the Company,
provided that the amount of such proceeds from the sale of such Equity
Interests shall be excluded in each case from Capital Stock Sale Proceeds
for purposes of clause (a)(iv)(2)(y) above or (B) Refinancing Indebtedness
permitted to be incurred under Section 4.08 hereof;
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(v) Investments by the Company or any Restricted Subsidiary in a
Non-Controlled Subsidiary which is or will be a Cable Business in an
amount not to exceed $80 million in the aggregate plus the sum of (x) cash
received by the Company or a Restricted Subsidiary from a Non-Restricted
Subsidiary (other than cash which s or is required to be repaid or
returned to such Non-Restricted Subsidiary) and (y) Capital Stock Sale
Proceeds (excluding the aggregate net sale proceeds to be received upon
conversion of the Convertible Subordinated Notes), provided that the
amount of such proceeds from the sale of such Equity Interests shall be
excluded in each case from the Capital Stock Sale Proceeds for purposes of
clause (a)(iv)(2)(y) above;
(vi) Investments by the Company or any Restricted Subsidiary in
Permitted Non-Controlled Assets;
(vii) the extension by the Company or any Restricted Subsidiary of
trade credit to a Non-Restricted Subsidiary extended on usual and
customary terms in the ordinary course of business, provided that the
aggregate amount of such trade credit shall not exceed $25 million at any
one time;
(viii) the payment of cash dividends on the Preferred Stock accruing
on or after February 15, 2004 or any mandatory redemption or repurchase of
the Preferred Stock, in each case, in accordance with the Certificate of
Designations therefor; and
(ix) the exchange of all of the outstanding shares of Preferred
Stock for Subordinated Debentures in accordance with the Certificate of
Designations for the Preferred Stock.
(c) Any Investment in a Subsidiary (other than the issuance,
transfer or other conveyance of Equity Interests of the Company (or any
Capital Stock Sale Proceeds therefrom)) that is designated by the Board of
Directors as a Non-Restricted Subsidiary shall become a Restricted Payment
made on the date of such designation in the amount of the greater of (x)
the book value of such Subsidiary on the date such Subsidiary becomes a
Non-Restricted Subsidiary and (y) the fair market value of such Subsidiary
on such date as determined (A) in good faith by the Board of Directors of
such Subsidiary if such fair market value is determined to be less than
$25 million and (B) by an investment banking firm of national standing
with high yield underwriting expertise if such fair market value is
determined to be in excess of $25 million.
(d) Not later than the fifth Business Day after making any
Restricted Payment (other than those referred to in sub-clause (vii) of
Section 4.09(b)), the Company shall deliver to the Trustee an Officers'
Certificate stating that such Restricted Payment is permitted and setting
forth the basis upon which the calculations required by this Section 4.09
were computed, which calculations may be based upon the Company's latest
available financial statements.
Section 4.10. Asset Sales.
(a) The Company will not, and will not permit any of its Restricted
Subsidiaries to cause, make or suffer to exist any Asset Sale, unless:
(i) no Default exists or is continuing immediately prior to and
after giving
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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.
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
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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 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).
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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;
(4) Liens permitted under Section 4.07 hereof which are
granted by the Company or any of its Subsidiaries to an unrelated
Person for the benefit of the Company or any other Subsidiary of the
Company;
(5) any transaction pursuant to an agreement in effect on the
Issuance Date;
(6) the incurrence of Indebtedness by a Restricted Subsidiary
where such Indebtedness is owed to the holders of the Equity
Interests of such Restricted Subsidiary on a pro rata basis and on
substantially identical principal financial terms;
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(7) management, operating, service or interconnect agreements
entered into in the ordinary course of business with any Cable
Business in which the Company or any Restricted Subsidiary has an
Investment and which is not a Cable Controlled Subsidiary (and of
which no Affiliate of the Company is an Affiliate other than as a
result of such Investment); and
(8) any tax sharing agreement.
Section 4.12. Dividends And Other Payment Restrictions Affecting Restricted
Subsidiaries.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to:
(a) (i) pay dividends or make any other distributions to the Company
or any of its Subsidiaries (A) on its Capital Stock or (B) with respect to
any other interest or participation in, or measured by, its profits, or
(ii) pay any indebtedness owed to the Company or any of its Subsidiaries,
or
(b) make loans or advances to the Company or any of its
Subsidiaries, or
(c) transfer any of its properties or assets to the Company or any
of its Subsidiaries, except for such encumbrances or restrictions existing
under or by reason of:
(i) Existing Indebtedness as in effect on the Issuance Date;
(ii) this Indenture and the Notes;
(iii) any agreement covering or relating to Indebtedness permitted
to be incurred under Section 4.08(b)(i), (ii), (iii), (iv), (v), (viii) or
(ix) hereof (but only, in the case of Section 4.08(b)(viii) or (ix), to
the extent contemplated by the then-existing Credit Facility), provided
that the provisions of such agreement permit any action referred to in
clause (a) above in aggregate amounts sufficient to enable the payment of
interest and principal and mandatory repurchases pursuant to the terms of
this Indenture and the Notes, but provided further that: (x) any such
agreement may nevertheless encumber, prohibit or restrict any action
referred to in clause (a) above if an event of default under such
agreement has occurred and is continuing or would occur as a result of any
such action; and (y) any such agreement may nevertheless contain (I)
restrictions limiting the payment of dividends or the making of any other
distributions to all or a portion of excess cash-flow (or any similar
formulation thereof) and (II) subordination provisions governing
Indebtedness owed to the Company or any Restricted Subsidiary;
(iv) applicable law;
(v) any instrument governing Indebtedness or Capital Stock of a
Person acquired by the Company or any of its Subsidiaries as in effect at
the time of such acquisition (except to the extent such Indebtedness was
incurred in connection with such 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
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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 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
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pursuant to this Section 4.14.
Whenever in this Indenture there is mentioned, in any context, the payment
of principal (and premium, if any), Offer Amount, interest or any other amount
payable under or with respect to any Note such mention shall be deemed to
include mention of the payment of Additional Amounts provided for in this
Section 4.14 and Section 3 of the Initial Notes (or Section 2 of the Exchange
Notes) to the extent that, in such context, Additional Amounts are, were or
would be payable in respect thereof pursuant to the provisions of this Section
4.14 and Section 3 of the Initial Notes (or Section 2 of the Exchange Notes) and
express mention of the payment of Additional Amounts (if applicable) in any
provisions hereof shall not be construed as excluding Additional Amounts in
those provisions hereof where such express mention is not made (if applicable).
ARTICLE V.
Successors
Section 5.01. Merger, Consolidation Or Sale Of Assets.
The Company may not consolidate or merge with or into (whether or not the
Company is the surviving corporation), or sell, assign, transfer, lease, convey
or otherwise dispose of all or substantially all of its properties or assets in
one or more related transactions to, another corporation, Person or entity
unless:
(a) the Company is the surviving corporation or the entity or the
Person formed by or surviving any such consolidation or merger (if other
than the Company) or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made is a corporation
organized or existing under the laws of the United Kingdom, the
Netherlands, the Netherlands Antilles, Bermuda or the Cayman Islands or of
the United States, any state thereof or the District of Columbia;
(b) the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company) or the entity or
Person to which such sale, assignment, transfer, lease, conveyance or
other disposition will have been made assumes all the Obligations
(including the due and punctual payment of Additional Amounts if the
surviving corporation is a corporation organized or existing under the
laws of the United Kingdom, the Netherlands, the Netherlands Antilles,
Bermuda or the Cayman Islands) of the Company, pursuant to a supplemental
indenture in a form reasonably satisfactory to the Trustee, under the
Notes and this Indenture;
(c) immediately after such transaction no Default or Event of
Default exists;
(d) the Company or any entity or Person formed by or surviving any
such consolidation or merger, or to which such sale, assignment, transfer,
lease, conveyance or other disposition will have been made will have a
ratio of Indebtedness to Annualized Pro Forma EBITDA equal to or less than
the ratio of Indebtedness to Annualized Pro Forma EBITDA of the Company
immediately preceding the transaction; provided, however, that if the
ratio of Indebtedness to Annualized Pro Forma EBITDA of the 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
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(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 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
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maturity
and, in each case, the principal amount of any such Indebtedness, together with
the principal amount of any other such Indebtedness under which there is a
Payment Default or the maturity of which has been so accelerated, aggregates $10
million or more;
(f) a final judgment or final judgments (other than any judgment as
to which a reputable insurance company has accepted full liability) for
the payment of money are entered by a court or courts of competent
jurisdiction against the Company or any Restricted Subsidiary of the
Company which remains undischarged for a period (during which execution
shall not be effectively stayed) of 60 days, provided that the aggregate
of all such judgments exceeds $5 million;
(g) the Company or any Material Subsidiary pursuant to or within the
meaning of any Bankruptcy Law:
(i) commences a voluntary case;
(ii) consents to the entry of an order for relief against it in an
involuntary case in which it is the debtor;
(iii) consents to the appointment of a Custodian of it or for all or
substantially all of its property;
(iv) makes a general assignment for the benefit of its creditors; or
(v) generally is unable to pay its debts as the same become due;
(h) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(i) is for relief against the Company or any Material Subsidiary in
an involuntary case;
(ii) appoints a Custodian of the Company or any Material
Subsidiary or for all or substantially all of its property; or
(iii) orders the liquidation of the Company or any Material
Subsidiary, and the order or decree remains unstayed and in effect for 60
days; and
(i) the revocation of a Material License.
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar Federal,
state or foreign law for the relief of debtors or the protection of creditors.
The term "Custodian" means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.
Section 6.02. Acceleration.
If an Event of Default (other than an Event of Default specified in
clauses (g) and (h) of Section
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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>
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.
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.
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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 the Note, or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of the Holder made pursuant to this
Section.
Section 6.08. Collection Suit By Trustee.
If an Event of Default specified in Section 6.01(a) or (b) occurs and is
continuing, the Trustee may recover judgment in its own name and as trustee of
an express trust against the Company for the whole amount of principal and
interest remaining unpaid on the Notes and interest on overdue principal and
interest and such further amount as shall be sufficient to cover the costs and,
to the extent lawful,
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expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
Section 6.09. Trustee May File Proofs Of Claim.
The Trustee may file such proofs of claim and other papers or documents as
may be necessary or advisable in order to have the claims of the Trustee and the
Holders allowed in any judicial proceedings relative to the Company, its
creditors or its property. Nothing contained herein shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder thereof, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
Section 6.10. Priorities.
If the Trustee collects any money pursuant to this Article, it shall pay
out the money in the following order:
First: to the Trustee for amounts due under Section 7.07 hereof;
Second: to Holders for amounts due and unpaid on the Notes for
principal and interest (and Additional Amounts, if applicable), ratably,
without preference or priority of any kind, according to the amounts due and
payable on the Notes for principal and interest, respectively; and
Third: to the Company.
The Trustee may fix a record date and payment date for any payment to
Holders made pursuant to this Section.
Section 6.11. Undertaking For Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in
principal amount at maturity 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.
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(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.
(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
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<PAGE> 54
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 ss. 313(a) if and to the extent required by such ss.
313(a). The Trustee also shall comply with TIA ss. 313(b)(2). The Trustee
shall also transmit by mail all reports as required by TIA ss. 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,
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<PAGE> 55
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 ss. 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.
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 ss. 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
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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 ss. 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 ss.
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 ss.
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 ss.311(a), excluding any creditor
relationship listed in TIA ss.311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 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
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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 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
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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 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
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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
(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
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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.
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
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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, 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
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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 ss.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
ss. 312(c).
Section 10.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take any
action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(b) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
Section 10.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than pursuant to Section 4.03)
shall include:
(a) a statement that the Person signing such certificate or
rendering such opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
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(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.
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:
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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.
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,
General Counsel and Secretary
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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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%.
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<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.
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:
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
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<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
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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 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
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<PAGE> 71
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 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.
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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 Act of 1939 (15 U.S.
Code ss.ss. 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>
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
A-72
<PAGE> 73
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 (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
A-73
<PAGE> 74
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 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 maturity of the Notes then outstanding
A-74
<PAGE> 75
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).
A-75
<PAGE> 76
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
A-76
<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-77
<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-78
<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-79
<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
Amount of increase in
decrease in principal Principal Signature of Date of
principal amount at amount at authorized exchange
amount at maturity of maturity of officer of following such
maturity of this Global this Global Trustee or decrease or
this Global Note Note Note Notes Custodian increase
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
</TABLE>
-80-
<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-82
<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-83
<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-84
<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
B-85
<PAGE> 85
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;
(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.
B-86
<PAGE> 86
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 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 ss.ss. 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
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<PAGE> 87
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 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).
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<PAGE> 88
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 (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
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<PAGE> 89
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 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
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<PAGE> 90
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).
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> 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.
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<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-93
<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
Amount of increase in
decrease in principal Principal Signature of Date of
principal amount at amount at authorized exchange
amount at maturity of maturity of officer of following such
maturity of this Global this Global Trustee or decrease or
this Global Note Note Note Notes Custodian increase
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
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<PAGE> 94
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
================================================================================
</TABLE>
B-95
<PAGE> 95
EXHIBIT C
FORM OF TRANSFER CERTIFICATE FOR TRANSFER
FROM RULE 144A GLOBAL NOTE
TO REGULATION S GLOBAL NOTE
(Transfers pursuant to ss. 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.
In addition, if the sale is made during a distribution compliance
period and the provisions
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<PAGE> 96
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-97
<PAGE> 97
EXHIBIT D
FORM OF TRANSFER CERTIFICATE FOR TRANSFER
FROM REGULATION S GLOBAL NOTE
TO RULE 144A GLOBAL NOTE
(Transfers pursuant to ss. 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-98
<PAGE> 98
EXHIBIT E
FORM OF TRANSFER CERTIFICATE FOR TRANSFER
FROM GLOBAL NOTE OR RESTRICTED
NOTE TO RESTRICTED NOTE
(Transfers pursuant to ss. 2.06(a)(iv)
or ss. 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-99
<PAGE> 99
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 institutional
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act,
- ----------
* Insert and modify if appropriate
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<PAGE> 100
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 ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH
TRANSFER, FURNISH TO
F-101
<PAGE> 101
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-102
<PAGE> 102
EXHIBIT G
FORM OF CERTIFICATE FOR TRANSFERS OF
REGULATION S GLOBAL NOTE FOR
RESTRICTED NOTES
(Transfers pursuant to ss. 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
G-103
<PAGE> 103
by a U.S. Person principally for the purpose of investing in securities not
registered under the Securities Act (unless it is organized or incorporated, and
owned, by accredited investors within the meaning of Rule 501(a) under the
Securities Act who are not natural Persons, estates or trusts); provided,
however, that the term "U.S. Person" shall not include (A) a branch or agency of
a U.S. Person that is located and operating outside the United States for valid
business purposes as a locally regulated branch or agency engaged in the banking
or insurance business, (B) any employee benefit plan established and
administered in accordance with the law, customary practices and documentation
of a foreign country and (C) the international organizations set forth in
Section 902(o)(7) of Regulation S under the Securities Act and any other similar
international organizations, and their agencies, affiliates and pension plans.
We irrevocably authorize you to produce this certificate or a copy hereof
to any interested party in any administrative or other proceedings with respect
to the matters covered by this certificate.
Very truly yours,
[TRANSFEROR]
By:
-----------------------------
Name:
Title:
Dated: To be completed by the account Holder as, or as agent for, the beneficial
owner(s) of the 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-104
<PAGE> 1
Exhibit 4.16
================================================================================
$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.
3
<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
4
<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;
(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
5
<PAGE> 6
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 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
6
<PAGE> 7
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 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
7
<PAGE> 8
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;
(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
8
<PAGE> 9
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 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
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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.
(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.
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<PAGE> 11
(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;
(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
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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 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
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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 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
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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 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
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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 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).
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<PAGE> 16
(e) The provisions of this Section 8 shall remain in full force and
effect, regardless of any investigation made by or on behalf of any Holder or
the Company or any of the officers, directors or controlling persons referred to
in Section 8 hereof, and will survive the sale by a Holder of Transfer
Restricted Securities or Exchange Notes.
SECTION 9. RULE 144A and RULE 144
The Company agrees with each Holder, for so long as any Transfer
Restricted Securities remain outstanding and during any period in which the
Company (i) is not subject to Section 13 or 15(d) of the Exchange Act, to make
available, upon request of any Holder, to such Holder or beneficial owner of
Transfer Restricted Securities in connection with any sale thereof and any
prospective purchaser of such Transfer Restricted Securities designated by such
Holder or beneficial owner, the information required by Rule 144A(d)(4) under
the Act in order to permit resales of such Transfer Restricted Securities
pursuant to Rule 144A, and (ii) is subject to Section 13 or 15 (d) of the
Exchange Act, to make all filings required thereby in a timely manner in order
to permit resales of such Transfer Restricted Securities pursuant to Rule 144.
SECTION 10. MISCELLANEOUS
(a) No Inconsistent Agreements. The Company has not, as of the date
hereof, entered into, nor shall it, on or after the date hereof, enter into, any
agreement with respect to its securities that is inconsistent with the rights
granted to the Holders herein or otherwise conflicts with the provisions hereof.
(b) Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, qualified, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company has obtained the written consent of the
Holders of at least a majority of the then outstanding aggregate principal
amount of Notes (or, after the consummation of any Registered Exchange Offer in
accordance with Section 3 hereof, of Exchange Notes); provided, however, that
with respect to any matter that directly or indirectly affects the rights of any
Initial Purchaser hereunder, the Company shall obtain the written consent of
each such Initial Purchaser against which such amendment, qualification,
supplement, waiver or consent is to be effective. Notwithstanding the foregoing
(except the foregoing proviso), a waiver or consent to depart from the
provisions hereof, with respect to a matter, which relates exclusively to the
rights of Holders whose securities are being sold pursuant to a Registration
Statement and does not directly or indirectly affect the rights of other
Holders, may be given by the Majority Holders, determined on the basis of Notes
being sold rather than registered under such Registration Statement.
(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
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<PAGE> 17
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.
(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> 18
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,
General Counsel and
Secretary
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> 19
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."
Registration Rights Agreement signature page
<PAGE> 20
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."
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<PAGE> 21
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> 22
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 4.17
NTL INCORPORATED
$600,000,000
7% CONVERTIBLE SUBORDINATED NOTES DUE 2008
INDENTURE
Dated as of December 16, 1998
------------------------
The Chase Manhattan Bank
Trustee
------------------------
<PAGE> 2
TABLE OF CONTENTS
ARTICLE I 1
Section 1.01. Definitions. 1
Section 1.02. Other Definitions. 8
Section 1.03. Incorporation by Reference of Trust Indenture
Act. 9
Section 1.04. Rules of Construction. 9
ARTICLE II. THE NOTES. 9
Section 2.01. Form and Dating. 9
Section 2.02. Execution and Authentication. 11
Section 2.03. Registrar and Paying Agent. 12
Section 2.04. Paying Agent to Hold Money in Trust. 12
Section 2.05. Holder Lists. 12
Section 2.06. Transfer and Exchange. 12
Section 2.07. Replacement Notes. 17
Section 2.08. Outstanding Notes. 17
Section 2.09. Treasury Notes. 18
Section 2.10. Temporary Notes; Global Notes. 18
Section 2.11. Cancellation. 19
Section 2.12. Defaulted Interest. 19
ARTICLE III. REDEMPTION. 19
Section 3.01. Notices to Trustee. 19
Section 3.02. Selection of Notes to Be Redeemed. 19
Section 3.03. Notice of Redemption. 20
Section 3.04. Effect of Notice of Redemption. 20
Section 3.05. Deposit of Redemption Price. 21
Section 3.06. Notes Redeemed in Part. 21
Section 3.07. Optional Redemption and Optional Tax Redemption. 21
Section 3.08. Mandatory Redemption. 21
Section 3.09. Purchase Offer. 21
ARTICLE IV. COVENANTS. 23
Section 4.01. Payment of Notes. 23
Section 4.02. Reports. 23
Section 4.03. Compliance Certificate. 24
Section 4.04. Stay, Extension and Usury Laws. 24
Section 4.05. Corporate Existence. 24
Section 4.06. Taxes. 25
Section 4.07. Change of Control. 25
Section 4.08. Payment of Additional Amounts. 25
ARTICLE V. CONVERSION. 26
Section 5.01. Conversion Privilege. 26
Section 5.02. Conversion Procedure. 26
Section 5.03. Fractional Shares. 27
Section 5.04. Taxes on Conversion. 27
Section 5.05. Company to Provide Stock. 27
Section 5.06. Adjustment of Conversion Price. 27
Section 5.07. No Adjustment. 30
Section 5.08. Other Adjustments. 30
Section 5.09. Adjustments for Tax Purposes. 31
Section 5.10. Notice of Adjustment. 31
<PAGE> 3
Section 5.11. Notice of Certain Transactions. 31
Section 5.12. Effect of Reclassifications, Consolidations,
Mergers or Sales on Conversion Privilege. 32
Section 5.13. Trustee's Disclaimer. 32
ARTICLE VI. SUBORDINATION. 33
Section 6.01. Agreement to Subordinate and Ranking. 33
Section 6.02. No Payment on Notes if Senior Debt in Default. 33
Section 6.03. Distribution on Acceleration of Notes;
Dissolution and Reorganization; Subrogation of Notes. 34
Section 6.04. Reliance by Senior Debt on Subordination
Provisions. 37
Section 6.05. No Waiver of Subordination Provisions. 37
Section 6.06. Trustee's Relation to Senior Debt. 37
Section 6.07. Other Provisions Subject Hereto. 38
ARTICLE VII. SUCCESSORS. 38
Section 7.01. Merger, Consolidation or Sale of Assets. 38
Section 7.02. Successor Corporation Substituted. 39
ARTICLE VIII. DEFAULTS AND REMEDIES. 39
Section 8.01. Events of Default. 39
Section 8.02. Acceleration. 41
Section 8.03. Other Remedies. 42
Section 8.04. Waiver of Past Defaults. 42
Section 8.05. Control by majority. 42
Section 8.06. Limitation on Suits. 42
Section 8.07. Rights of Holders to Receive Payment. 43
Section 8.08. Collection Suit by Trustee. 43
Section 8.09. Trustee May File Proofs of Claim. 43
Section 8.10. Priorities. 43
Section 8.11. Undertaking for Costs. 43
ARTICLE IX. TRUSTEE. 44
Section 9.01. Duties of Trustee. 44
Section 9.02. Rights of Trustee. 44
Section 9.03. Individual Rights of Trustee. 45
Section 9.04. Trustee's Disclaimer. 45
Section 9.05. Notice of Defaults. 45
Section 9.06. Reports by Trustee to Holders. 45
Section 9.07. Compensation and Indemnity. 46
Section 9.08. Replacement of Trustee. 46
Section 9.09. Successor Trustee by Merger, Etc. 47
Section 9.10. Eligibility; Disqualification. 47
Section 9.11. Preferential Collection of Claims Against
Company. 47
ARTICLE X. DISCHARGE OF INDENTURE 48
Section 10.01. Termination of Company's Obligations. 48
Section 10.02. Repayment to Company. 48
ARTICLE XI. AMENDMENTS, SUPPLEMENTS AND WAIVERS. 48
Section 11.01. Without Consent of Holders. 48
Section 11.02. With Consent of Holders. 48
Section 11.03. Compliance with Trust Indenture Act. 49
Section 11.04. Revocation and Effect of Consents. 49
Section 11.05. Notation on or Exchange of Notes. 50
Section 11.06. Trustee Protected. 50
ARTICLE XII. MISCELLANEOUS. 50
3
<PAGE> 4
Section 12.01. Trust Indenture Act Controls. 50
Section 12.02. Notices. 50
Section 12.03. Communication by Holders with Other Holders. 51
Section 12.04. Certificate and Opinion as to Conditions
Precedent. 51
Section 12.05. Statements Required in Certificate or Opinion. 51
Section 12.06. Rules by Trustee and Agents. 52
Section 12.07. Legal Holidays. 52
Section 12.08. No Recourse Against Others. 52
Section 12.09. Counterparts and Facsimile Signatures. 52
Section 12.10. Variable Provisions. 52
Section 12.11. Governing Law. 53
Section 12.12. No Adverse Interpretation of Other Agreements. 53
Section 12.13. Successors. 53
Section 12.14. Severability. 53
Section 12.15. Table of Contents, Headings, Etc. 53
4
<PAGE> 5
CROSS-REFERENCE TABLE*
Trust Indenture Act Section Indenture Section
310 (a)(1) 9.10
(a)(2) 9.10
(a)(3) N.A.
(a)(4) N.A.
(a)(5) 9.10
(b) 9.08,
9.10
(c) N.A.
311(a) 9.11
(b) 9.11
(c) N.A.
312 (a) 2.05
(b) 12.03
(c) 12.03
313(a) 9.06
(b)(1) N.A.
(b)(2) 9.06
(c) 9.06
(d) 9.06
314(a) 4.02
4.03,
12.02
(b) N.A.
(c)(1) 12.04
(c)(2) 12.04
(c)(3) N.A.
(d) N.A.
(e) N.A.
(f) N.A.
315(a) 9.01(b)
(b) 9.05
(c) 9.01(a)
5
<PAGE> 6
(d) 9.01(c)
(e) 8.11
316 (a)(last sentence) 2.09
(a)(1)(A) 8.05
(a)(1)(B) 8.04
(a)(2) N.A.
(b) 8.07
(c) 11.04
317 (a)(1) 8.08
(a)(2) 8.09
(b) 2.04
318 (a) N.A.
N.A. means not applicable.
* This Cross-Reference Table is not part of the Indenture.
6
<PAGE> 7
INDENTURE, dated as of December 16, 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 hereof)
of the Company's 7% Convertible Subordinated Notes due 2008 (the "Notes"):
ARTICLE I.
Section 1.01. Definitions.
"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, Paying Agent or Conversion 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 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 of Directors.
"Board Resolution" means a duly authorized resolution of the Board of
Directors.
"Business Day" means any day that is not a Legal Holiday.
"Capital Stock" means any and all shares, interests, participations,
rights or other equivalents (however designated) of corporate stock, including,
without limitation, partnership interests.
"Change of Control" means (i) the sale, lease or transfer of all or
substantially all of the assets of
7
<PAGE> 8
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.
"Common Stock" means the common stock, par value $0.01 per share, of the
Company as the same exists at the date of the execution of this Indenture or as
such stock may be constituted from time to time.
"Company" means the party named as such above until a successor replaces
it in accordance with Article VII 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
8
<PAGE> 9
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.
"Daily Market Price" means the price of a share of Common Stock on the
relevant date, determined (a) on the basis of the last reported sale price
regular way of the Common Stock as reported on the Nasdaq Stock Market's
National Market (the "NNM"), or if the Common Stock is not then listed on the
NNM, as reported on such national securities exchange upon which the Common
Stock is listed, or (b) if there is no such reported sale on the day in
question, on the basis of the average of the closing bid and asked quotations
regular way as so reported, or (c) if the Common Stock is not listed on the NNM
or on any national securities exchange, on the basis of the average of the high
bid and low asked quotations regular way on the day in question in the
over-the-counter market as reported by the National Association of Securities
Dealers Automated Quotation System, or if not so quoted, as reported by National
Quotation Bureau, Incorporated, or a similar organization.
"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, 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).
"Excess Payment" means the excess of (A) the aggregate of the cash and
value of other consideration paid by the Company or any of its Subsidiaries with
respect to shares acquired in a tender offer or other negotiated transaction
over (B) the market value of each such acquired shares after giving effect to
the completion of a tender offer or other negotiated transaction.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
9
<PAGE> 10
"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 Convertible Notes" means the Company's 7% Convertible
Subordinated Notes due 2008 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.
"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.
"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.
"Indenture" means this Indenture, as amended from time to time.
"Initial Purchasers" means Donaldson, Lufkin & Jenrette Securities
Corporation, Morgan Stanley & Co. Incorporated, Goldman, Sachs & Co., Chase
Securities Inc., Salomon Smith Barney Inc., BT Alex. Brown Incorporated and
Warburg Dillon Read LLC.
"Interest Rate Agreement" means, for any Person, any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement, or other
similar agreement designed to protect the party indicated therein against
fluctuations in interest rates.
"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
10
<PAGE> 11
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.
"Liquidated Damages" has the meaning set forth in Section 2 of the Notes.
"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 Group Limited, CableTel Surrey, 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).
"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).
"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, 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.
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<PAGE> 12
"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.
"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.
"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.
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Pro Forma EBITDA" means for any Person, for any period, the EBITDA of
such Person as determined on a consolidated basis in accordance with GAAP
consistently applied after giving effect to the following: (i) if, during or
after such period, such Person or any of its Subsidiaries shall have made any
Asset Sale, Pro Forma EBITDA of such Person and its Subsidiaries for such period
shall be reduced by an amount equal to the Pro Forma EBITDA (if positive)
directly attributable to the assets which are the subject of such Asset Sale for
the period or increased by an amount equal to the Pro Forma EBITDA (if negative)
directly attributable thereto for such period and (ii) if, during or after such
period, such Person or any of its Subsidiaries completes an acquisition of any
Person or business which immediately after such acquisition is a Subsidiary of
such Person or whose assets are held directly by such Person or a Subsidiary of
such Person, Pro Forma EBITDA shall be computed so as to give pro forma effect
to the acquisition of such Person or business; and provided further that, with
respect to the Company, all of the foregoing references to "Subsidiary" or
"Subsidiaries" shall be deemed to refer only to a "Restricted Subsidiary" or
"Restricted Subsidiaries" of the Company.
"Purchase Agreement" means the Purchase Agreement, dated as of December
10, 1998, among the Company and the Initial Purchasers.
"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.
"Registration Rights Agreement" means the Registration Rights Agreement
relating to the Notes and the underlying Common Stock, dated December 16, 1998,
among the Company and the Initial Purchasers party thereto.
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"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.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Debt" means the principal of, interest on and other amounts due on
(i) Indebtedness of the Company, whether outstanding on the Issuance Date or
thereafter created, incurred, assumed or guaranteed by the Company, for money
borrowed from banks or other financial institutions; (ii) Indebtedness of the
Company, whether outstanding on the Issuance Date or thereafter created,
incurred, assumed or guaranteed by the Company; and (iii) Indebtedness of the
Company under interest rate swaps, caps or similar hedging agreements and
foreign exchange contracts, currency swaps or similar agreements: unless, in the
instrument creating or evidencing or pursuant to which Indebtedness under (i) or
(ii) is outstanding, it is expressly provided that such Indebtedness is not
senior in right of payment to the Notes. Senior Debt includes, with respect to
the obligations described in clauses (i) and (ii) above, interest accruing,
pursuant to the terms of such Senior Debt, on or after the filing of any
petition in bankruptcy or for reorganization relating to the Company, whether or
not post-filing interest is allowed in such proceeding, at the rate specified in
the instrument governing the relevant obligation. Notwithstanding anything to
the contrary in the foregoing, Senior Debt shall not include: (a) Indebtedness
of or amounts owed by the Company for compensation to employees, or for goods or
materials purchased in the ordinary course of business, or for services; (b)
Indebtedness of the Company to a Subsidiary of the Company; or (c) the Existing
Convertible Notes.
"Shelf Registration Statement" shall have the meaning set forth in the
Registration Rights Agreement.
"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 (ss.)(ss.)
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.
"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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Section 1.02. Other Definitions.
<TABLE>
<CAPTION>
Defined
Term in Section
- ---- ----------
<S> <C>
"Accredited Investor Restricted Notes" 2.01
"Additional Amounts" 4.08
"Agent Member" 2.01
"Bankruptcy Law" 8.01
"Cedel" 2.01
"Change of Control Payment" 4.07
"Commencement Date" 3.09
"Conversion Agent" 2.03
"Conversion Date" 5.02
"Conversion Price" 5.06
"Conversion Shares" 5.06
"Custodian" 8.01
"Distribution Date" 5.06
"Distribution Record Date" 5.06
"Euroclear" 2.01
"Event of Default" 8.01
"Global Note" 2.01
"Legal Holiday" 12.08
"Offer Amount" 3.09
"Officer" 12.11
"Paying Agent" 2.03
"Payment Blockage Notice" 6.02
"Payment Blockage Period" 6.02
"Payment Default" 8.01
"Purchase Date" 3.09
"Purchase Offer" 3.09
"QIBs" 2.01
"Regulation S" 2.01
"Regulation S Global Note" 2.01
"Registrar" 2.03
"Restricted Notes" 2.01
"Rights" 5.06
"Rule 144A" 2.01
"Rule 144A Global Note" 2.01
"Tender Period" 3.09
</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
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<PAGE> 15
reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the Notes means the Company or any other obligor on the
Notes.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
Section 1.04. Rules of Construction.
Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP consistently applied;
(c) references to "GAAP" shall mean GAAP in effect as of the time
when and for the period as to which such accounting principles are to be
applied;
(d) "or" is not exclusive;
(e) words in the singular include the plural, and in the plural
include the singular;
(f) provisions apply to successive events and transactions;
(g) references to sections of or rules under the Securities Act
shall be deemed to include substitute, replacement or successor sections
or rules adopted by the SEC from time to time; and
(h) a reference to "$" or U.S. Dollars is to United States dollars.
ARTICLE II.
The Notes
Section 2.01. Form and Dating.
(a) General.
The Notes and the Trustee's certificate of authentication shall be
substantially in the form
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<PAGE> 16
of Exhibit A 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 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 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 Notes are being offered and sold by the Company pursuant to the
Purchase Agreement.
Notes transferred in reliance on Regulation S under the Securities Act
("Regulation S"), as provided in Section 2.06(a)(ii) hereof, shall 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 and Restricted Notes
Legend set forth in Exhibit A hereto (the "Regulation S Global Note"), which
shall be deposited on behalf of the transferee of the 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.
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 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.
(c) Book-Entry Provisions.
This Section 2.01(c) shall apply only to the Regulation S Global Note and
the Rule 144A Global Note 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
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<PAGE> 17
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.
Notes offered and sold to "accredited investors" (as defined in Rule 501
(a) (1), (2), (3), (4) or (7) under the Securities Act), as provided in the
Purchase Agreement, shall be issued initially in the form of one or more
certificated Notes in definitive, fully registered form without interest coupons
with the Restricted Notes Legend set forth in Exhibit A hereto ("Accredited
Investor Restricted Notes"), which shall be registered in the name of such
Accredited Investor or its nominee, duly executed by the Company and
authenticated by the Trustee as hereinafter provided. Such Accredited Investor
Restricted Notes may only be transferred in reliance on Regulation S or to QIBs
in reliance on Rule 144A.
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 Note, which certificated Note shall bear the Restricted Notes
Legend set forth in Exhibit A hereto (together with the Accredited Investor
Restricted Notes, the "Restricted Notes") unless otherwise provided in this
Section 2.01(d) and Section 2.06(b) hereof.
After a transfer of any Notes during the period of the effectiveness of a
Shelf Registration Statement with respect to the Notes and pursuant thereto, all
requirements for Restricted Notes Legends on such Note will cease to apply, and
a certificated Note without a Restricted Notes Legend will be available to the
Holder of such Notes.
Section 2.02. Execution and Authentication.
One Officer 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 an
Officer, authenticate (1) Notes for original issue up to an aggregate principal
amount stated in paragraph 6 of the Notes. The aggregate principal amount of
Notes outstanding at any time may not exceed $600,000,000 except as provided in
Section 2.07.
The Trustee may appoint an authenticating agent acceptable to the Company
to authenticate
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<PAGE> 18
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, (i) offices or agencies where the Notes may be presented for
registration of transfer or for exchange ("Registrar") (ii) offices or agencies
where the Notes may be presented for payment ("Paying Agent") and (iii) offices
or agencies where the Notes may be presented for conversion ("Conversion
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, Paying Agent and Conversion 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, one or more additional paying
agents and one or more additional Conversion Agents in such other locations as
it shall determine. The term "Registrar" includes any co-registrar, the term
"Paying Agent" includes any additional paying agent and the term "Conversion
Agent" includes any additional conversion agent. The Company may change any
Paying Agent, Registrar or Conversion Agent 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, Paying Agent or Conversion Agent, the Trustee shall act as
such. The Company or any of its Affiliates may act as Paying Agent, Registrar or
Conversion Agent.
Section 2.04. Paying Agent to Hold Money in Trust.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal or interest on the Notes, and will notify the Trustee of any default
by the Company in making any such payment. While any such default continues, the
Trustee may require a Paying Agent to pay all money held by it to the Trustee
and to account for any money disbursed by it. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Company or an Affiliate
of the Company) shall have no further liability for the money. If the Company or
an Affiliate of the Company acts as Paying Agent, it shall segregate and hold in
a separate trust fund for the benefit of the Holders all money held by it as
Paying Agent.
Section 2.05. Holder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders. If the Trustee is not the Registrar, the Company shall furnish to the
Trustee on or before each interest payment date and at such other times as the
Trustee may request in writing a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of Holders.
Section 2.06. Transfer and Exchange.
Where Notes are presented to the Registrar or a co-registrar with a
request to register a transfer or to exchange them for an equal principal amount
of Notes of other denominations, the Registrar shall
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<PAGE> 19
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 11.05 hereof).
The Company shall not be required (i) to issue, register the transfer of
or exchange any Note for a period beginning at the opening of business 15 days
before the day of any selection of Notes to be redeemed under Section 3.02
hereof and ending at the close of business on the day of selection, or (ii) to
register the transfer, or exchange, of any Note so selected for redemption in
whole or in part, except the unredeemed portion of any Note being redeemed in
part.
(a) Notwithstanding any provision to the contrary herein, so long as
a Global Note remains outstanding and is held by or on behalf of the
Depositary, transfers of a Global Note, in whole or in part, or of any
beneficial interest therein, shall only be made in accordance with Section
2.01(b) and this Section 2.06(a); provided, however, that beneficial
interests in a Global Note may be transferred to Persons who take delivery
thereof in the form of a beneficial interest in the same Global Note in
accordance with the transfer restrictions set forth in the Restricted
Notes Legend and under the heading "Notice to Investors" in the Company's
Offering Memorandum dated December 10, 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 Note. 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 B attached hereto given by the Holder of such
beneficial interest, then the principal Registrar shall instruct the
Depositary to reduce or cause to be reduced the principal amount of
the Rule 144A Global Note and to increase or cause to be increased
the principal amount of the Regulation S Global Note by the
aggregate principal amount of the beneficial interest in the Rule
144A Global Note equal to the beneficial interest in the Regulation
S Global Note to be exchanged or
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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, (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 C attached hereto given by
the owner of such beneficial interest, then Euroclear or Cedel or
the principal Registrar, as the case may be, will instruct the
Depositary to reduce or cause to be reduced the Regulation S Global
Note and to increase or cause to be increased the principal amount
of the Rule 144A Global Note by the aggregate principal amount of
the beneficial interest in the Regulation S Global Note to be
exchanged or transferred, and the principal Registrar shall instruct
the Depositary, concurrently with such reduction, to credit or cause
to be credited to the account of the Person specified in such
instructions a beneficial interest in the Rule 144A Global Note
equal to the reduction in the principal amount of the Regulation S
Global Note and to debit or cause to be debited from the account of
the Person making such exchange or transfer the beneficial interest
in the Regulation S Global Note that is being exchanged or
transferred.
(iv) Global Note to Restricted Note. If an owner of a
beneficial interest in a Global Note deposited with the Depositary
or with the Trustee as custodian for the Depositary wishes at any
time to transfer its interest in such Global Note to a Person who is
required to take delivery thereof in the form of a Restricted Note,
such owner may, subject to the rules and procedures of Euroclear or
Cedel, if applicable, and the Depositary, cause the exchange of such
interest for one or more Restricted Notes of any authorized
denomination or denominations and of the same aggregate principal
amount. Upon receipt by the principal Registrar of (1) instructions
from Euroclear or Cedel, if applicable, and the Depositary directing
the principal Registrar to authenticate and deliver one or more
Restricted Notes of the same aggregate principal amount as the
beneficial interest in the Global Note to be exchanged, such
instructions to contain the name or names of the designated
transferee or transferees, the authorized denomination or
denominations of the Restricted Notes to be so issued and
appropriate delivery instructions, (2) a certificate in the form of
Exhibit D
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attached hereto given by the owner of such beneficial interest to
the effect set forth therein, (3) a certificate in the form of
Exhibit E 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 D
attached hereto, (4) a certificate in the form of Exhibit E 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) Restricted Note to Rule 144A Note. If an owner of a
Restricted Note registered in the name of such owner wishes at any
time to transfer such Restricted Note to a Person who is required to
take delivery thereof in the form of an interest in the Rule 144A
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<PAGE> 22
Global Note, such Holder may, subject to the rules and procedures of
the Depositary, exchange or cause the exchange of such Restricted
Note for an equivalent beneficial interest in the Rule 144A Global
Note. Upon receipt by the principal Registrar of (1) instructions
from the Company, directing the principal Registrar (A) to credit or
cause to be credited a beneficial interest in the Rule 144A Global
Note equal to the principal amount of the Restricted Note to be
exchanged or transferred and (B) to cancel such Restricted Note to
be exchanged or transferred, (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 C attached hereto given by the owner of such
Restricted Note, then the principal Registrar will instruct the
Trustee to cancel such Restricted Note and will instruct the
Depositary to increase or cause to be increased the principal amount
of the Rule 144A Global Note by the principal amount of the
Restricted Note to be exchanged or transferred, and the principal
Registrar shall instruct the Depositary, concurrently with such
cancellation of the Restricted Note, 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
principal amount of the Restricted Note to be canceled by the
Trustee.
(vii) Restricted Note to Regulation S Global Note. If an owner
of a Restricted Note registered in the name of such owner wishes at
any time to transfer such Restricted 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 Euroclear or Cedel, as the case may be, exchange
or cause the exchange of such Restricted Note for an equivalent
beneficial interest in the Regulation S Global Note. Upon receipt by
the principal Registrar of (1) instructions from the Company,
directing the principal Registrar (A) to credit or cause to be
credited a beneficial interest in the Regulation S Global Note equal
to the principal amount of the Restricted Note to be exchanged or
transferred and (B) to cancel such Restricted Note to be exchanged
or transferred, (2) a written order given in accordance with the
Depositary's procedures containing information regarding the
participant account of the Euroclear or Cedel account to be credited
with such increase and (3) a certificate in the form of Exhibit B
attached hereto given by the Holder of such Restricted Note, then
the principal Registrar will instruct the Trustee to cancel such
Restricted Note and will instruct the Depositary to increase or
cause to be increased the principal amount of the Regulation S
Global Note by the principal amount of the Restricted Note to be
exchanged or transferred, and the principal Registrar shall instruct
the Depositary, concurrently with such cancellation of the
Restricted Note, 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 principal amount of the
Restricted Note to be cancelled by the Trustee.
(viii) Other Exchanges. In the event that a beneficial
interest in a Global Note is exchanged for a certificated Note 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.
(b) Except in connection with a Shelf Registration Statement
contemplated by and in
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accordance with the terms of the Registration Rights Agreement, if Notes
are issued upon the transfer, exchange or replacement of 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 Notes, the 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 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 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.
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Section 2.09. Treasury Notes.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company or an Affiliate of the Company shall be considered as though they are
not outstanding, except that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Notes that the Trustee knows are so owned shall be so disregarded.
Section 2.10. Temporary Notes; Global Notes.
(a) Until definitive Notes are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Notes. Temporary
Notes shall be substantially in the form of definitive Notes but may have
variations that the Company considers appropriate for temporary Notes.
Without unreasonable delay, the Company shall prepare and the Trustee
shall authenticate definitive Notes in exchange for temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits of
this Indenture.
(b) A Global Note deposited with the Depositary or with the Trustee
as custodian for the Depositary pursuant to Section 2.01 shall be
transferred to the beneficial owners thereof in the form of certificated
Notes only in accordance with Section 2.01(d) or if such transfer complies
with Section 2.06 and (i) the Depositary notifies the Company that it is
unwilling or unable to continue as Depositary for such Global Note or if
at any time such Depositary ceases to be a "clearing agency" registered
under the Exchange Act and a successor depositary is not appointed by the
Company within 90 days of such notice, or (ii) an Event of Default has
occurred and is continuing.
(c) Any Global Note that is transferable to the beneficial owners
thereof in the form of certificated Notes pursuant to Section 2.01(d) or
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 Notes of authorized denominations in the form of certificated Notes.
Any portion of a Global Note transferred pursuant to this Section 2.10
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 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.
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The Company at any time may deliver Notes to the Trustee for cancellation.
The Registrar, Paying Agent and Conversion 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, conversion, 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 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.
If any Note selected for partial redemption is converted in part after
such selection, the converted portion of such Note shall be deemed (so far as
may be) to be the portion to be selected for redemption. The Notes (or portions
thereof) so selected shall be deemed duly selected for redemption for all
purposes hereunder, notwithstanding that any such Note is converted in whole or
in part before the mailing of the notice of redemption. Upon any redemption of
less than all the Notes, the Company and the Trustee may
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treat as outstanding any Notes surrendered for conversion during the period 15
days next preceding the mailing of a notice of redemption and need not treat as
outstanding any Note authenticated and delivered during such period in exchange
for the unconverted portion of any Note converted in part during such period.
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, if
any, and Liquidated Damages, if any;
(f) that interest on Notes called for redemption ceases to accrue on
and after the redemption date; and
(g) the paragraph of the Notes pursuant to which the Notes called
for redemption are being redeemed.
Such notice shall also state the current Conversion Price and the date on
which the right to convert such Notes or portions thereof into Common Stock of
the Company will expire.
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
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on that date unless theretofore converted into Common Stock pursuant to the
provisions hereof. 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 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 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. Purchase Offer.
(a) In the event that, pursuant to 4.07 hereof, the Company shall
commence an offer to all Holders of the Notes to purchase Notes (the
"Purchase Offer"), the Company shall follow the procedures in this Section
3.09.
(b) The Purchase Offer 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 4.07 hereof), 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 all of the Notes required
to be purchased pursuant to Section 4.07 hereof (the "Offer Amount").
(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 Purchase Offer.
(d) The Company shall provide the Trustee with notice of the
Purchase Offer 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 Purchase Offer
and shall state:
(i) that the Purchase Offer is being made pursuant to this
Section 3.09 and Section 4.07 hereof and the length of time the
Purchase Offer will remain open;
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(ii) The purchase price (as determined in accordance with
Section 4.07 hereof) and the Purchase Date, and 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 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 Purchase Offer will be required to
surrender the Note, with the form entitled "Option of Holder to
Elect Purchase" on the reverse of the Note completed, to the
Company, a depositary, if appointed by the Company, or a Paying
Agent at the address specified in the notice prior to the close of
business on the third Business Day preceding the Purchase Date;
(vi) that Holders will be entitled to withdraw their election
if the Company, depositary or Paying Agent, as the case may be,
receives, not later than the close of business on the second
Business Day preceding the Purchase Date, or such longer period as
may be required by law, a letter or a telegram, telex or facsimile
transmission (receipt of which is confirmed and promptly followed by
a letter) setting forth the name of the Holder, the principal amount
of the Note or portion thereof the Holder delivered for purchase and
a statement that such Holder is withdrawing his election to have the
Note or portion thereof purchased;
(vii) that 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 3.09. On the
Purchase Date, the Company shall, to the extent lawful, (i) accept for
payment the Notes or portions thereof tendered pursuant to 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
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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 Purchase Offer on the Purchase
Date.
(g) 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, Liquidated
Damages, if any, and interest on, the Notes on the dates and in the manner
provided in the Notes. Principal, premium, if any, Liquidated Damages, 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, premium, if any, Liquidated
Damages, if any, 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
or Liquidated Damages, if any, (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, as 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
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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 Registration Default giving rise to
Liquidated Damages or the cure of any such Registration Default, the Company
shall give the Trustee notice thereof and of the event giving rise to such
Registration Default or the cure of any such Registration Default (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
Registration Default has occurred or been cured, 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 VII 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.
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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. Change of Control.
(a) Upon the occurrence of a Change of Control, 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 Purchase Offer at a purchase price equal to 101% of the
principal amount thereof plus accrued and unpaid interest and Liquidated
Damages thereon, if any, to the date of purchase (the "Change of Control
Payment").
(b) Within 40 days following any Change of Control, the Company
shall mail to each Holder the notice provided by Section 3.09(e).
Section 4.08. Payment of Additional Amounts.
At least 10 days prior to the first date on which payment of principal and
any premium, Liquidated Damages 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 4.08, 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 Notes) with respect to such payment of
principal, or of any premium or interest or Liquidated Damages, if any, 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 4.08.
Whenever in this Indenture or the Notes there is mentioned, in any
context, the payment of principal (and premium, if any), Offer Amount, interest
or any other amount payable, including Liquidated Damages, 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 4.08 and Section 3 of the 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 4.08 and
Section 3 of the 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.
Conversion
Section 5.01. Conversion Privilege.
A Holder of a Note may convert it into fully paid and nonassessable shares
of Common Stock at any time after 90 days following the Issuance Date and prior
to maturity at the Conversion Price then in
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effect, except that, with respect to any Note called for redemption, such
conversion right shall terminate at the close of business on the Business Day
immediately preceding the redemption date (unless the Company shall default in
making the redemption payment when it becomes due, in which case the conversion
right shall terminate on the date such default is cured). The number of shares
of Common Stock issuable upon conversion of a Note is determined by dividing the
principal amount of such Note by the conversion price in effect on the
Conversion Date (the "Conversion Price").
The initial Conversion Price is stated in paragraph 13 of the Notes and is
subject to adjustment as provided in this Article V.
A holder may convert a portion of a Note equal to any integral multiple of
$1,000. Provisions of this Indenture that apply to conversion of all of a Note
also apply to conversion of a portion of it.
Section 5.02. Conversion Procedure.
To convert a Note, a holder must satisfy the requirements in paragraph 13
of the Notes. The date on which the holder satisfies all of those requirements
is the conversion date (the "Conversion Date"). As soon as practicable after the
Conversion Date, the Company shall deliver to the Holder through the Conversion
Agent a certificate for the number of whole shares of Common Stock issuable upon
the conversion and a check for any fractional share determined pursuant to
Section 5.03 hereof. The Person in whose name the certificate is registered
shall become the stockholder of record on the Conversion Date and, as of such
date, such Person's rights as a Holder shall cease; provided, however, that no
surrender of a Note on any date when the stock transfer books of the Company
shall be closed shall be effective to constitute the Person entitled to receive
the shares of Common Stock upon such conversion as the stockholder of record of
such shares of Common Stock on such date, but such surrender shall be effective
to constitute the Person entitled to receive such shares of Common Stock as the
stockholder of record thereof for all purposes at the close of business on the
next succeeding day on which such stock transfer books are open; provided
further, however, that such conversion shall be at the Conversion Price in
effect on the date that such Note shall have been surrendered for conversion, as
if the stock transfer books of the Company had not been closed.
No payment or adjustment will be made for accrued and unpaid interest or
Liquidated Damages, if any, on a converted Note or for dividends or
distributions on shares of Common Stock issued upon conversion of a Note, but if
any holder surrenders a Note for conversion after the close of business on the
record date for the payment of an installment of interest and prior to the
opening of business on the next interest payment date, then, notwithstanding
such conversion, the interest payable on such interest payment date shall be
paid to the holder of such Note on such record date. In such event, such Note,
when surrendered for conversion, need not be accompanied by payment of an amount
equal to the interest payable on such interest payment date on the portion so
converted.
If a holder converts more than one Note at the same time, the number of
whole shares of Common Stock issuable upon the conversion shall be based on the
total principal amount of Notes converted.
Upon surrender of a Note that is converted in part, the Trustee shall
authenticate for the holder a new Note equal in principal amount to the
unconverted portion of the Note surrendered.
Section 5.03. Fractional Shares.
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The Company will not issue fractional shares of Common Stock upon
conversion of a Note. In lieu thereof, the Company will pay an amount in cash
based upon the Daily Market Price of the Common Stock on the trading day prior
to the date of conversion.
Section 5.04. Taxes in Conversion.
The issuance of certificates for shares of Common Stock upon the
conversion of any Note shall be made without charge to the converting Holder for
such certificates or for any tax in respect of the issuance of such
certificates, and such certificates shall be issued in the respective names of,
or in such names as may be directed by, the Holder or Holders of the converted
Note; provided, however, that in the event that certificates for shares of
Common Stock are to be issued in a name other than the name of the holder of the
Note converted, such Note, when surrendered for conversion, shall be accompanied
by an instrument of transfer, in form satisfactory to the Company, duly executed
by the registered holder thereof or his duly authorized attorney; and provided
further, however, that the Company shall not be required to pay any tax which
may be payable in respect of any transfer involved in the issuance and delivery
of any such certificates in a name other than that of the holder of the
converted Note, and the Company shall not be required to issue or deliver such
certificates unless or until the Person or Persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid or is
not applicable.
Section 5.05. Company to Provide Stock.
The Company shall at all times reserve and keep available, free from
preemptive rights, out of its authorized but unissued Common Stock, solely for
the purpose of issuance upon conversion of Notes as herein provided, a
sufficient number of shares of Common Stock to permit the conversion of all
outstanding Notes for shares of Common Stock. All shares of Common Stock which
may be issued upon conversion of the Notes shall be duly authorized, validly
issued, fully paid and nonassessable when so issued. Shares of Common Stock
issuable upon conversion of a Restricted Note shall bear such restrictive
legends as the Company shall provide in accordance with applicable law. If
shares of Common Stock are to be issued upon conversion of a Restricted Note and
they are to be registered in a name other than that of the holder of such
Restricted Note, then the Person in whose name such shares of Common Stock are
to be registered must deliver to the Trustee a certificate satisfactory to the
Company and signed by such Person as to compliance with the restrictions on
transfer contained in such restrictive legends.
Section 5.06. Adjustment of Conversion Price.
The Conversion Price shall be subject to adjustment from time to time as
follows:
(a) In case the Company shall (1) pay a dividend in shares of Common
Stock to holders of Common Stock, (2) make a distribution in shares of
Common Stock to holders of Common Stock, (3) subdivide its outstanding
shares of Common Stock into a greater number of shares of Common Stock or
(4) combine its outstanding shares of Common Stock into a smaller number
of shares of Common Stock, the Conversion Price in effect immediately
prior to such action shall be adjusted so that the holder of any Note
thereafter surrendered for conversion shall be entitled to receive the
number of shares of Common Stock which he would have owned immediately
following such action had such Notes been converted immediately prior
thereto. Any adjustment made pursuant to this subsection (a) shall become
effective immediately after the
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record date in the case of a dividend or distribution and shall become
effective immediately after the effective date in the case of a
subdivision or combination.
(b) In case the Company shall issue rights or warrants to
substantially all holders of Common Stock entitling them (for a period
commencing no earlier than the record date for the determination of
holders of Common Stock entitled to receive such rights or warrants and
expiring not more than 45 days after such record date) to subscribe for or
purchase shares of Common Stock (or securities convertible into Common
Stock) at a price per share less than the current market price (as
determined pursuant to subsection (f) below) of the Common Stock on such
record date, the Conversion Price shall be adjusted so that the same shall
equal the price determined by multiplying the Conversion Price in effect
immediately prior to such record date by a fraction of which the numerator
shall be the number of shares of Common Stock outstanding on such record
date, plus the number of shares of Common Stock which the aggregate
offering price of the offered shares of Common Stock (or the aggregate
conversion price of the convertible securities so offered) would purchase
at such current market price, and of which the denominator shall be the
number of shares of Common Stock outstanding on such record date plus the
number of additional shares of Common Stock offered (or into which the
convertible securities so offered are convertible). Such adjustments shall
become effective immediately after such record date.
(c) In case the Company shall distribute to all holders of Common
Stock shares of any class of stock other than Common Stock, evidences of
indebtedness or other assets (other than cash dividends out of current or
retained earnings), or shall distribute to substantially all holders of
Common Stock rights or warrants to subscribe for securities (other than
those referred to in subsection (b) above), then in each such case the
Conversion Price shall be adjusted so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior
to the date of such distribution by a fraction of which the numerator
shall be the current market price (determined as provided in subsection
(f) below) of the Common Stock on the record date mentioned below less the
then fair market value (as determined by the Board of Directors, whose
determination shall be conclusive evidence of such fair market value and
described in a Board Resolution) of the portion of the assets so
distributed or of such subscription rights or warrants applicable to one
share of Common Stock, and of which the denominator shall be such current
market price of the Common Stock. Such adjustment shall become effective
immediately after the record date for the determination of the holders of
Common Stock entitled to receive such distribution. Notwithstanding the
foregoing, in the event that the Company shall distribute rights or
warrants (other than those referred to in subsection (b) above) ("Rights")
pro rata to holders of Common Stock, the Company may, in lieu of making
any adjustment pursuant to this Section 5.06, make proper provision so
that each holder of a Note who converts such Note (or any portion thereof)
after the record date for such distribution and prior to the expiration or
redemption of the Rights shall be entitled to receive upon such
conversion, in addition to the shares of Common Stock issuable upon such
conversion (the "Conversion Shares"), a number of Rights to be determined
as follows: (i) if such conversion occurs on or prior to the date for the
distribution to the holders of Rights of separate certificates evidencing
such Rights (the "Distribution Date"), the same number of Rights to which
a holder of a number of shares of Common Stock equal to the number of
Conversion Shares is entitled at the time of such conversion in accordance
with the terms and provisions of and applicable to the Rights; and (ii) if
such conversion occurs after the Distribution Date, the same number of
Rights to which a holder of the number of shares of Common Stock into
which the principal amount of the Note so
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converted was convertible immediately prior to the Distribution Date would
have been entitled on the Distribution Date in accordance with the terms
and provisions of and applicable to the Rights.
(d) In case the Company shall, by dividend or otherwise, at any time
distribute to all holders of its Common Stock cash (including any
distributions of cash out of current or retained earnings of the Company
but excluding any cash that is distributed as part of a distribution
requiring a Conversion Price adjustment pursuant to paragraph (c) of this
Section 5.06) in an aggregate amount that, together with the sum of (x)
the aggregate amount of any other distributions to all holders of its
Common Stock made in cash plus (y) all Excess Payments, in each case made
within the 12 months preceding the date fixed for determining the
stockholders entitled to such distribution (the "Distribution Record
Date") and in respect of which no Conversion Price adjustment pursuant to
paragraphs (c) or (e) of this Section 5.06 or this paragraph (d) has been
made, exceeds 10% of the product of the current market price per share
(determined as provided in paragraph (f) of this Section 5.06) of the
Common Stock on the Distribution Record Date times the number of shares of
Common Stock outstanding on the Distribution Record Date (excluding shares
held in the treasury of the Company), the Conversion Price shall be
reduced so that the same shall equal the price determined by multiplying
such Conversion Price in effect immediately prior to the effectiveness of
the Conversion Price reduction contemplated by this paragraph (d) by a
fraction of which the numerator shall be the current market price per
share (determined as provided in paragraph (f) of this Section 5.06) of
the Common Stock on the Distribution Record Date less the amount of such
cash and other consideration (including any Excess Payments) so
distributed applicable to one share (based on the pro rata portion of the
aggregate amount of such cash and other consideration (including any
Excess Payments), divided by the shares of Common Stock outstanding on the
Distribution Record Date) of Common Stock and the denominator shall be
such current market price per share (determined as provided in paragraph
(f) of this Section 5.06) of the Common Stock on the Distribution Record
Date, such reduction to become effective immediately prior to the opening
of business on the day following the Distribution Record Date.
(e) In case a tender offer or other negotiated transaction made by
the Company or any Subsidiary for all or any portion of the Common Stock
shall be consummated, if an Excess Payment is made in respect of such
tender offer or other negotiated transaction and the amount of such Excess
Payment, together with the sum of (x) the aggregate amount of all Excess
Payments plus (y) the aggregate amount of all distributions to all holders
of the Common Stock made in cash (specifically including distributions of
cash out of retained earnings), in each case made within the 12 months
preceding the date of payment of such current negotiated transaction
consideration or expiration of such current tender offer, as the case may
be (the "Purchase Date"), and as to which no adjustment pursuant to
paragraph (c) or paragraph (d) of this Section 5.06 or this paragraph (e)
has been made, exceeds 10% of the product of the current market price per
share (determined as provided in paragraph (f) of this Section 5.06) of
the Common Stock on the Purchase Date times the number of shares of Common
Stock outstanding (including any tendered shares but excluding any shares
held in the treasury of the Company) on the Purchase Date, the Conversion
Price shall be reduced so that the same shall equal the price determined
by multiplying such Conversion Price in effect immediately prior to the
effectiveness of the Conversion Price reduction contemplated by this
paragraph (e) by a fraction of which the numerator shall be the current
market price per share (determined as provided in paragraph (f) of this
Section 5.06) of the Common Stock on the Purchase Date less the amount of
such Excess Payments and such cash distributions, if any, applicable to
one share (based on the pro rata
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portion of the aggregate amount of such Excess Payments and such cash
distributions, divided by the shares of Common Stock outstanding on the
Purchase Date) of Common Stock and the denominator shall be such current
market price per share (determined as provided in paragraph (f) of this
Section 5.06) of the Common Stock on the Purchase Date, such reduction to
become effective immediately prior to the opening of business on the day
following the Purchase Date.
(f) The current market price per share of Common Stock on any date
shall be deemed to be the average of the Daily Market Prices for the
shorter of (i) thirty consecutive business days ending on the last full
trading day on the exchange or market referred to in determining such
Daily Market Prices prior to the time of determination or (ii) the period
commencing on the date next succeeding the first public announcement of
the issuance of such rights or such warrants or such other distribution or
such negotiated transaction through such last full trading day on the
exchange or market referred to in determining such Daily Market Prices
prior to the time of determination.
(g) In any case in which this Section 5.06 shall require that an
adjustment be made immediately following a record date, the Company may
elect to defer (but only until five Business Days following the filing by
the Company with the Trustee of the certificate described in Section 5.10
hereof) issuing to the holder of any Note converted after such record date
the shares of Common Stock and other Capital Stock of the Company issuable
upon such conversion over and above the shares of Common Stock and other
Capital Stock of the Company issuable upon such conversion only on the
basis of the Conversion Price prior to adjustment; and, in lieu of the
shares the issuance of which is so deferred, the Company shall issue or
cause its transfer agents to issue due bills or other appropriate evidence
of the right to receive such shares.
Section 5.07. No Adjustment.
No adjustment in the Conversion Price shall be required until cumulative
adjustments amount to 1% or more of the Conversion Price as last adjusted;
provided, however, that any adjustments which by reason of this Section 5.07 are
not required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Article V shall be made to
the nearest cent or to the nearest one-hundredth of a share, as the case may be.
No adjustment need be made for rights to purchase Common Stock pursuant to a
Company plan for reinvestment of dividends or interest. No adjustment need be
made for a change in the par value or no par value of the Common Stock.
Section 5.08. Other Adjustments.
(a) In the event that, as a result of an adjustment made pursuant to
Section 5.06 hereof, the holder of any Note thereafter surrendered for
conversion shall become entitled to receive any shares of Capital Stock of the
Company other than shares of its Common Stock, thereafter the Conversion Price
of such other shares so receivable upon conversion of any Note shall be subject
to adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to Common Stock contained in this
Article V.
(b) In the event that shares of Common Stock are not delivered after the
expiration of any of the rights or warrants referred to in Section 5.06(b) and
Section 5.06(c) hereof, the Conversion Price shall be readjusted to the
Conversion Price which would otherwise be in effect had the adjustment made upon
the issuance of such rights or warrants been made on the basis of delivery of
only the number of shares of
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Common Stock actually delivered.
Section 5.09. Adjustments for Tax Purposes.
The Company may make such reductions in the Conversion Price, in addition
to those required by Section 5.06 hereof, as it determines to be advisable in
order that any stock dividend, subdivision of shares, distribution or rights to
purchase stock or securities or distribution of securities convertible into or
exchangeable for stock made by the Company to its stockholders will not be
taxable to the recipients thereof.
Section 5.10. Notice of Adjustment.
Whenever the Conversion Price is adjusted, the Company shall promptly mail
to Holders at the addresses appearing on the Registrar's books a notice of the
adjustment and file with the Trustee an Officers' Certificate briefly stating
the facts requiring the adjustment and the manner of computing it. The
certificate shall be conclusive evidence of the correctness of such adjustment.
Section 5.11. Notice of Certain Transactions.
In the event that:
(1) the Company takes any action which would require an adjustment in the
Conversion Price;
(2) the Company takes any action that would require a supplemental
indenture pursuant to Section 5.12; or
(3) there is a dissolution or liquidation of the Company;
a Holder of a Note may wish to convert such Note into shares of Common Stock
prior to the record date for or the effective date of the transaction so that he
may receive the rights, warrants, securities or assets which a holder of shares
of Common Stock on that date may receive. Therefore, the Company shall mail to
Holders at the addresses appearing on the Registrar's books and the Trustee a
notice stating the proposed record or effective date, as the case may be. The
Company shall mail the notice at least 15 days before such date; however,
failure to mail such notice or any defect therein shall not affect the validity
of any transaction referred to in clause (1), (2) or (3) of this Section 5.11.
Section 5.12. Effect of Reclassifications, Consolidations, Mergers or Sales
on Conversion Privilege.
If any of the following shall occur, namely: (i) any reclassification or
change of outstanding shares of Common Stock issuable upon conversion of Notes
(other than a change in par value, or from par value to no par value, or from no
par value to par value, or as a result of a subdivision or combination), (ii)
any consolidation or merger to which the Company is a party other than a merger
in which the Company is the continuing corporation and which does not result in
any reclassification of, or change (other than a change in name, or par value,
or from par value to no par value, or from no par value to par value or as a
result of a subdivision or combination) in, outstanding shares of Common Stock
or (iii) any sale or conveyance of all or substantially all of the property or
business of the Company as an entirety, then the Company, or such successor or
purchasing corporation, as the case may be, shall, as a condition precedent to
such reclassification, change, consolidation, merger, sale or conveyance,
execute and deliver to the Trustee a supplemental indenture in form satisfactory
to the Trustee providing that the
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holder of each Note then outstanding shall have the right to convert such Note
into the kind and amount of shares of stock and other securities and property
(including cash) receivable upon such reclassification, change, consolidation,
merger, sale or conveyance by a holder of the number of shares of Common Stock
deliverable upon conversion of such Note immediately prior to such
reclassification, change, consolidation, merger, sale or conveyance. Such
supplemental indenture shall provide for adjustments of the Conversion Price
which shall be as nearly equivalent as may be practicable to the adjustments of
the Conversion Price provided for in this Article V. The foregoing, however,
shall not in any way affect the right a holder of a Note may otherwise have,
pursuant to clause (ii) of the last sentence of subsection (c) of Section 5.06
hereof, to receive Rights upon conversion of a Note. If, in the case of any such
consolidation, merger, sale or conveyance, the stock or other securities and
property (including cash) receivable thereupon by a holder of Common Stock
includes shares of stock or other securities and property of a corporation other
than the successor or purchasing corporation, as the case may be, in such
consolidation, merger, sale or conveyance, then such supplemental indenture
shall also be executed by such other corporation and shall contain such
additional provisions to protect the interests of the holders of the Notes as
the Board of Directors of the Company shall reasonably consider necessary by
reason of the foregoing. The provision of this Section 5.12 shall similarly
apply to successive consolidations, mergers, sales or conveyances.
In the event the Company shall execute a supplemental indenture pursuant
to this Section 5.12, the Company shall promptly file with the Trustee an
Officers' Certificate briefly stating the reasons therefor, the kind or amount
of shares of stock or securities or property (including cash) receivable by
holders of the Notes upon the conversion of their Notes after any such
reclassification, change, consolidation, merger, sale or conveyance and any
adjustment to be made with respect thereto.
Section 5.13. Trustee's Disclaimer.
The Trustee has no duty to determine when an adjustment under this Article
V should be made, how it should be made or what such adjustment should be, but
may accept as conclusive evidence of the correctness of any such adjustment, and
shall be protected in relying upon the Officers' Certificate with respect
thereto which the Company is obligated to file with the Trustee pursuant to
Section 5.10 hereof. The Trustee makes no representation as to the validity or
value of any securities or assets issued upon conversion of Notes, and the
Trustee shall not be responsible for the Company's failure to comply with any
provisions of this Article V.
The Trustee shall not be under any responsibility to determine the
correctness of any provisions contained in any supplemental indenture executed
pursuant to Section 5.12, but may accept as conclusive evidence of the
correctness thereof, and shall be protected in relying upon, the Officers'
Certificate with respect thereto which the Company is obligated to file with the
Trustee pursuant to Section 5.12 hereof.
ARTICLE VI.
Subordination
Section 6.01. Agreement to Subordinate and Ranking.
The Company, for itself and its successors, and each holder, by his
acceptance of Notes, agree that the payment of the principal of or interest or
Liquidated Damages, if any, on or any other amounts due on the Notes is
subordinated in right of payment, to the extent and in the manner stated in this
Article VI, to the prior payment in full of all existing and future Senior Debt.
The Notes shall rank pari passu
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with, and shall not be senior in right of payment to, the Existing Convertible
Notes or such other Indebtedness of the Company whether outstanding on the date
of this Indenture or hereafter created, incurred, issued or guaranteed by the
Company, where the instrument creating or evidencing such Indebtedness expressly
provides that such Indebtedness ranks pari passu with the Notes and the Existing
Convertible Notes.
Section 6.02. No Payment in Notes if Senior Debt in Default.
Anything in this Indenture to the contrary notwithstanding, no payment on
account of principal of or redemption of, interest or Liquidated Damages, if
any, on or other amounts due on the Notes, and no redemption, purchase, or other
acquisition of the Notes, shall be made by or on behalf of the Company (i)
unless full payment of amounts then due for principal and interest and of all
other amounts then due on all Senior Debt has been made or duly provided for
pursuant to the terms of the instrument governing such Senior Debt, (ii) if, at
the time of such payment, redemption, purchase or other acquisition, or
immediately after giving effect thereto, there shall exist under any Senior
Debt, or any agreement pursuant to which any Senior Debt is issued, any default,
which default shall not have been cured or waived and which default shall have
resulted in the full amount of such Senior Debt being declared due and payable
or (iii) if, at the time of such payment, redemption, purchase or other
acquisition, the Trustee shall have received written notice from any of the
holders of Senior Debt or such holder's representative (a "Payment Blockage
Notice") that there exists under such Senior Debt, or any agreement pursuant to
which such Senior Debt is issued, any default, which default shall not have been
cured or waived, permitting the holders thereof to declare any amounts of such
Senior Debt due and payable, but only for the period (the "Payment Blockage
Period") commencing on the date of receipt of the Payment Blockage Notice and
ending (unless earlier terminated by notice given to the Trustee by the holders
of such Senior Debt) on the earlier of (a) the date on which such event of
default shall have been cured or waived or (b)180 days from the receipt of the
Payment Blockage Notice. Upon termination of the Payment Blockage Period,
payments on account of principal of or interest or Liquidated Damages, if any,
on the Notes (other than, subject to Section 6.03 hereof, amounts due and
payable by reason of the acceleration of the maturity of the Notes) and
redemptions, purchases or other acquisitions may be made by or on behalf of the
Company. Notwithstanding anything herein to the contrary, (a) only one Payment
Blockage Notice may be given during any period of 360 consecutive days with
respect to the same event of default or any other events of default on the same
issue of Senior Debt existing and known to the Person giving such notice at the
time of such notice unless such event of default or such other events of default
have been cured or waived for a period of not less than 90 consecutive days and
(b) no new Payment Blockage Period may be commenced by the holder or holders of
the same issue of Senior Debt or their representative or representatives during
any period of 360 consecutive days unless all events of default which were the
object of the immediately preceding Payment Blockage Notice, and any other event
of default on the same issue of Senior Debt existing and known to the Person
giving such notice at the time of such notice, have been cured or waived.
In the event that, notwithstanding the provisions of this Section 6.02,
payments are made by or on behalf of the Company in contravention of the
provisions of this Section 6.02, such payments shall be held by the Trustee, any
Paying Agent or the holders, as applicable, in trust for the benefit of, and
shall be paid over to and delivered to, the holders of Senior Debt or their
representative or the trustee under the indenture or other agreement (if any),
pursuant to which any instruments evidencing any Senior Debt may have been
issued for application to the payment of all Senior Debt ratably according to
the aggregate amounts remaining unpaid to the extent necessary to pay all Senior
Debt in full in accordance with the terms of such Senior Debt, after giving
effect to any concurrent payment or distribution to or for the
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holders of Senior Debt.
The Company shall give prompt written notice to the Trustee and any Paying
Agent of any default or event of default under any Senior Debt or under any
agreement pursuant to which any Senior Debt may have been issued.
Section 6.03. Distribution in Acceleration of Notes; Dissolution and
Reorganization; Subrogation of Notes.
(a) If the Notes are declared due and payable because of the occurrence of
an Event of Default, the Company or the Trustee shall give prompt written notice
to the holders of all Senior Debt or to the trustee(s) for such Senior Debt of
such acceleration. The Company may not pay the principal of or interest or
Liquidated Damages, if any, on or any other amounts due on the Notes until five
days after such holders or trustee(s) of Senior Debt receive such notice and,
thereafter, the Company may pay the principal of or interest or Liquidated
Damages, if any, on or any other amounts due on the Notes only if the provisions
of this Article VI permit such payment.
(b) Upon (i) any acceleration of the principal amount due on the Notes
because of an Event of Default or (ii) any distribution of assets of the Company
upon any dissolution, winding up, liquidation or reorganization of the Company
(whether in bankruptcy, insolvency or receivership proceedings or upon an
assignment for the benefit of creditors or any other dissolution, winding up,
liquidation or reorganization of the Company):
(1) the holders of all Senior Debt shall first be entitled to
receive payment in full of the principal thereof, the interest thereon and
any other amounts due thereon before the holders are entitled to receive
payment on account of the principal of or interest or Liquidated Damages,
if any, on or any other amounts due on the Notes;
(2) any payment or distribution of assets of the Company of any kind
or character, whether in cash, property or securities (other than
securities of the Company as reorganized or readjusted or securities of
the Company or any other corporation provided for by a plan of
reorganization or readjustment the payment of which is subordinate, at
least to the extent provided in this Article VI with respect to the Notes,
to the payment in full without diminution or modification by such plan of
all Senior Debt), to which the holders or the Trustee would be entitled
except for the provisions of this Article VI, shall be paid by the
liquidating trustee or agent or other Person making such a payment or
distribution, directly to the holders of Senior Debt (or their
representatives(s) or trustee(s) acting on their behalf), ratably
according to the aggregate amounts remaining unpaid on account of the
principal of or interest on and other amounts due on the Senior Debt held
or represented by each, to the extent necessary to make payment in full of
all Senior Debt remaining unpaid, after giving effect to any concurrent
payment or distribution to the holders of such Senior Debt; and
(3) in the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in
cash, property or securities (other than securities of the Company as
reorganized or readjusted, or securities of the Company or any other
corporation provided for by a plan of reorganization or readjustment the
payment of which is subordinate, at least to the extent provided in this
Article VI with respect to the Notes, to the payment in full without
diminution or modification by such plan of Senior Debt), shall be
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received by the Trustee or the holders before all Senior Debt is paid in
full, such payment or distribution shall be held in trust for the benefit
of, and be paid over to upon request by a holder of the Senior Debt, the
holders of the Senior Debt remaining unpaid (or their representatives) or
trustee(s) acting on their behalf, ratably as aforesaid, for application
to the payment of such Senior Debt until all such Senior Debt shall have
been paid in full, after giving effect to any concurrent payment or
distribution to the holders of such Senior Debt.
Subject to the payment in full of all Senior Debt, the holders shall be
subrogated to the rights of the holders of Senior Debt to receive payments or
distributions of cash, property or securities of the Company applicable to the
Senior Debt until the principal of and interest and Liquidated Damages, if any,
on the Notes shall be paid in full and, for purposes of such subrogation, no
such payments or distributions to the holders of Senior Debt of cash, property
or securities which otherwise would have been payable or distributable to
holders shall, as between the Company, its creditors other than the holders of
Senior Debt, and the holders, be deemed to be a payment by the Company to or on
account of the Senior Debt, it being understood that the provisions of this
Article VI are and are intended solely for the purpose of defining the relative
rights of the Holders, on the one hand, and the holders of Senior Debt, on the
other hand.
Nothing contained in this Article VI or elsewhere in this Indenture or in
the Notes is intended to or shall (i) impair, as between the Company and its
creditors other than the holders of Senior Debt, the obligation of the Company,
which is absolute and unconditional, to pay to the holders the principal of and
interest and Liquidated Damages, if any, on the Notes as and when the same shall
become due and payable in accordance with the terms of the Notes or is intended
to or (ii) affect the relative rights of the holders and creditors of the
Company other than holders of Senior Debt or, as between the Company and the
Trustee, the obligations of the Company to the Trustee, or (iii) prevent the
Trustee or the holders from exercising all remedies otherwise permitted by
applicable law upon default under this Indenture, subject to the rights, if any,
under this Article VI of the holders of Senior Debt in respect of cash, property
and securities of the Company received upon the exercise of any such remedy.
Upon distribution of assets of the Company referred to in this Article VI,
the Trustee, subject to the provisions of Section 9.01 hereof, and the holders
shall be entitled to rely upon a certificate of the liquidating trustee or agent
or other Person making any distribution to the Trustee or to the holders for the
purpose of ascertaining the Persons entitled to participate in such
distribution, the holders of the Senior Debt and other indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article VI.
The Trustee, however, shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt. Nothing contained in this Article VI or elsewhere in
this Indenture, or in any of the Notes, shall prevent the good faith application
by the Trustee of any moneys which were deposited with it hereunder, prior to
its receipt of written notice of facts which would prohibit such application,
for the purpose of the payment of or on account of the principal of or interest
or Liquidated Damages, if any, on, the Notes unless, prior to the date on which
such application is made by the Trustee, the Trustee shall be charged with
notice under Section 6.03(d) hereof of the facts which would prohibit the making
of such application.
(c) The provisions of this Article VI shall not be applicable to any cash,
properties or securities received by the Trustee or by any holder when received
as a holder of Senior Debt and nothing in Section 9.11 hereof or elsewhere in
this Indenture shall deprive the Trustee or such holder of any of its rights as
such holder.
(d) The Company shall give prompt written notice to the Trustee of any
fact known to the
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Company which would prohibit the making of any payment of money to or by the
Trustee in respect of the Notes pursuant to the provisions of this Article VI.
The Trustee, subject to the provisions of Section 9.01 hereof, shall be entitled
to assume that no such fact exists unless the Company or any holder of Senior
Debt or any trustee therefor has given such notice to the Trustee.
Notwithstanding the provisions of this Article VI or any other provisions of
this Indenture, the Trustee shall not be charged with knowledge of the existence
of any fact which would prohibit the making of any payment of monies to or by
the Trustee in respect of the Notes pursuant to the provisions in this Article
VI, unless, and until three Business Days after, the Trustee shall have received
written notice thereof from the Company or any holder or holders of Senior Debt
or from any trustee therefor; and, prior to the receipt of any such written
notice, the Trustee, subject to the provisions of Section 9.01 hereof, shall be
entitled in all respects conclusively to assume that no such facts exist;
provided that if on a date not less than three Business Days immediately
preceding the date upon which by the terms hereof any such monies may become
payable for any purpose (including, without limitation, the principal of or
interest or Liquidated Damages, if any, on any Note), the Trustee shall not have
received with respect to such monies the notice provided for in this Section
6.03(d), than anything herein contained to the contrary notwithstanding, the
Trustee shall have full power and authority to receive such monies and to apply
the same to the purpose for which they were received, and shall not be affected
by any notice to the contrary which may be received by it on or after such prior
date.
The Trustee shall be entitled to rely on the delivery to it of a written
notice by a Person representing himself to be a holder of Senior Debt (or a
trustee on behalf of such holder) to establish that such notice has been given
by a holder of Senior Debt (or a trustee on behalf of any such holder or
holders). In the event that the Trustee determines in good faith that further
evidence is required with respect to the right of any Person as a holder of
Senior Debt to participate in any payment or distribution pursuant to this
Article VI, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Debt held by
such Person, the extent to which such Person is entitled to participate in such
payment or distribution and any other facts pertinent to the rights of such
Person under this Article VI, and, if such evidence is not furnished, the
Trustee may defer any payment to such Person pending judicial determination as
to the right of such Person to receive such payment; nor shall the Trustee be
charged with knowledge of the curing or waiving of any default of the character
specified in Section 6.02 hereof or that any event or any condition preventing
any payment in respect of the Notes shall have ceased to exist, unless and until
the Trustee shall have received an Officers' Certificate to such effect.
(e) The provisions of this Section 6.03 applicable to the Trustee shall
also apply to any Paying Agent for the Company.
Section 6.04. Reliance by Senior Debt in Subordination Provisions.
Each holder of any Note by his acceptance thereof acknowledges and agrees
that the foregoing subordination provisions are, and are intended to be, an
inducement and a consideration for each holder of any Senior Debt, whether such
Senior Debt was created or acquired before or after the issuance of the Notes,
to acquire and continue to hold, or to continue to hold, such Senior Debt, and
such holder of Senior Debt shall be deemed conclusively to have relied on such
subordination provisions in acquiring and continuing to hold, or in continuing
to hold, such Senior Debt. Notice of any default in the payment of any Senior
Debt, except as expressly stated in this Article VI, and notice of acceptance of
the provisions hereof are hereby expressly waived. Except as otherwise expressly
provided herein, no waiver, forbearance or release by any holder of Senior Debt
under such Senior Debt or under this
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Article VI shall constitute a release of any of the obligations or liabilities
of the Trustee or holders of the Notes provided in this Article VI.
Section 6.05. No Waiver of Subordination Provisions.
Except as otherwise expressly provided herein, no right of any present or
future holder of any Senior Debt to enforce subordination as herein provided
shall at any time in any way be prejudiced or impaired by any act or failure to
act on the part of the Company or by any act or failure to act, in good faith,
by any such holder, or by any noncompliance by the Company with the terms,
provisions and covenants of this Indenture, regardless of any knowledge thereof
any such holder may have or be otherwise charged with.
Without in any way limiting the generality of the foregoing paragraph, the
holders of Senior Debt may, at any time and from time to time, without the
consent of, or notice to, the Trustee or the holders of the Notes, without
incurring responsibility to the holders of the Notes and without impairing or
releasing the subordination provided in this Article VI or the obligations
hereunder of the holders of the Notes to the holders of Senior Debt, do any one
or more of the following: (i) change the manner, place or terms of payment of,
or renew or alter, Senior Debt, or otherwise amend or supplement in any manner
Senior Debt or any instrument evidencing the same or any agreement under which
Senior Debt is outstanding; (ii) sell, exchange, release or otherwise dispose of
any property pledged, mortgaged or otherwise securing Senior Debt; (iii) release
any Person liable in any manner for the collection of Senior Debt; and (iv)
exercise or refrain from exercising any rights against the Company or any other
Person.
Section 6.06. Trustee's Relation to Senior Debt.
The Trustee in its individual capacity shall be entitled to all the rights
set forth in this Article VI in respect of any Senior Debt at any time held by
it, to the same extent as any holder of Senior Debt, and nothing in Section 9.11
hereof or elsewhere in this Indenture shall deprive the Trustee of any of its
rights as such holder.
With respect to the holders of Senior Debt, the Trustee undertakes to
perform or to observe only such of its covenants and obligation, as are
specifically set forth in this Article VI, and no implied covenants or
obligations with respect to the holders of Senior Debt shall be read into this
Indenture against the Trustee. The Trustee shall not owe any fiduciary duty to
the holders of Senior Debt but shall have only such obligations to such holders
as are expressly set forth in this Article VI.
Each holder of a Note by his acceptance thereof authorizes and directs the
Trustee on his behalf to take such action as may be necessary or appropriate to
effectuate the subordination provided in this Article VI and appoints the
Trustee his attorney-in-fact for any and all such purposes, including, in the
event of any dissolution, winding up or liquidation or reorganization under any
applicable bankruptcy law of the Company (whether in bankruptcy, insolvency or
receivership proceedings or otherwise), the timely filing of a claim for the
unpaid balance of such holder's Notes in the form required in such proceedings
and the causing of such claim to be approved. If the Trustee does not file a
claim or proof of debt in the form required in such proceedings prior to 30 days
before the expiration of the time to file such claims or proofs, then any holder
or holders of Senior Debt or their representative or representatives shall have
the right to demand, sue for, collect, receive and receipt for the payments and
distributions in respect of the Notes which are required to be paid or delivered
to the holders of Senior Debt as provided in this Article VI and to file and
prove all claims therefore and to take all such other action in the name of the
holders or
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otherwise, as such holders of Senior Debt or representative thereof may
determine to be necessary or appropriate for the enforcement of the provisions
of this Article VI.
Section 6.07. Other Provisions Subject Hereto.
Expect as expressly stated in this Article VI, notwithstanding anything
contained in this Indenture to the contrary, all the provisions of this
Indenture and the Notes are subject to the provisions of this Article VI.
However, nothing in this Article VI shall apply to or adversely affect the
claims of, or payment, to, the Trustee pursuant to Section 9.07 hereof.
Notwithstanding the foregoing, the failure to make a payment on account of
principal of or interest or Liquidated Damages, if any, on the Notes by reason
of any provision of this Article VI shall not be construed as preventing the
occurrence of an Event of Default under Section 8.01 hereof.
ARTICLE VII.
Successors
Section 7.01. Merger, Consolidation or Sale of Assets.
The Company may not consolidate or merge with or into (whether or not the
Company is the surviving corporation), or sell, assign, transfer, lease, convey
or otherwise dispose of all or substantially all of its properties or assets in
one or more related transactions to, another corporation, Person or entity
unless:
(a) the Company is the surviving corporation or the entity or the
Person formed by or surviving any such consolidation or merger (if other
than the Company) or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made is a corporation
organized or existing under the laws of the United Kingdom, the
Netherlands, the Netherlands Antilles, Bermuda or the Cayman Islands or of
the United States, any state thereof or the District of Columbia;
(b) the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company) or the entity or
Person to which such sale, assignment, transfer, lease, conveyance or
other disposition will have been made assumes all the Obligations
(including the due and punctual payment of Additional Amounts if the
surviving corporation is a corporation organized or existing under the
laws of the United Kingdom, the Netherlands, the Netherlands Antilles,
Bermuda or the Cayman Islands) of the Company, pursuant to a supplemental
indenture in a form reasonably satisfactory to the Trustee, under the
Notes and this Indenture;
(c) immediately after such transaction no Default or Event of
Default exists;
(d) the Company or any entity or Person formed by or surviving any
such consolidation or merger, or to which such sale, assignment, transfer,
lease, conveyance or other disposition will have been made will have a
ratio of Indebtedness to Annualized Pro Forma EBITDA equal to or less than
the ratio of Indebtedness to Annualized Pro Forma EBITDA of the Company
immediately preceding the transaction; provided, however, that if the
ratio of Indebtedness to Annualized Pro Forma EBITDA of the Company
immediately preceding such transaction is 6:1 or less, then the ratio of
Indebtedness to Annualized Pro Forma EBITDA of the Company may be 0.5
greater than such ratio immediately preceding such transaction; and
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(e) such transaction would not result in the loss of any material
authorization or Material License of the Company or its Subsidiaries.
Section 7.02. 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 7.01 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 VIII.
Defaults and Remedies
Section 8.01. Events of Default.
An "Event of Default" occurs if:
(a) the Company defaults in the payment of interest or Liquidated
Damages, if any, (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 4.07 hereof;
(d) the Company fails to observe or perform any other covenant or
agreement contained in this Indenture or the Notes, required by it 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
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maturity
and, in each case, the principal amount of any such Indebtedness, together with
the principal amount of any other such Indebtedness under which there is a
Payment Default or the maturity of which has been so accelerated, aggregates $10
million or more;
(f) a final judgment or final judgments (other than any judgment as
to which a reputable insurance company has accepted full liability) for
the payment of money are entered by a court or courts of competent
jurisdiction against the Company or any Restricted Subsidiary of the
Company which remains undischarged for a period (during which execution
shall not be effectively stayed) of 60 days, provided that the aggregate
of all such judgments exceeds $5 million;
(g) the Company or any Material Subsidiary pursuant to or within the
meaning of any Bankruptcy Law:
(i) commences a voluntary case;
(ii) consents to the entry of an order for relief against it
in an involuntary case in which it is the debtor;
(iii) consents to the appointment of a Custodian of it or for
all or substantially all of its property;
(iv) makes a general assignment for the benefit of its
creditors; or
(v) generally is unable to pay its debts as the same become
due;
(h) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(i) is for relief against the Company or any Material
Subsidiary in an involuntary case;
(ii) appoints a Custodian of the Company or any Material
Subsidiary or for all or substantially all of its property; or
(iii) orders the liquidation of the Company or any Material
Subsidiary, and the order or decree remains unstayed and in effect
for 60 days; and
(i) the revocation of a Material License.
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar Federal,
state or foreign law for the relief of debtors or the protection of creditors.
The term "Custodian" means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.
Section 8.02. Acceleration.
If an Event of Default (other than an Event of Default specified in
clauses (g) and (h) of Section
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8.01 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
and Liquidated Damages, if any, on, the Notes shall be due and payable
immediately. If an Event of Default specified in clause (g) or (h) of Section
8.01 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 8.01 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 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 December 15, 2001, 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
December 15, 2001, pursuant to Section 7 of the Notes, then the premium payable
for purposes of this paragraph for each of the years beginning on December 15 of
the years (December 16, in the case of the year 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 8.02 hereof but for the provisions of this sentence.
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
1998 107.000%
1999 106.125%
2000 105.250%
</TABLE>
Section 8.03. 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 8.04. 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
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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 8.05. 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 8.06. Limitation in Suits.
A Holder may pursue a remedy with respect to this Indenture or the Notes
only if:
(a) the Holder gives to the Trustee notice of a continuing Event of
Default;
(b) the Holders of at least 25% in principal amount of the then
outstanding Notes make a request to the Trustee to pursue the remedy;
(c) such Holder or Holders offer to the Trustee indemnity
satisfactory to the Trustee against any loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer of indemnity; and
(e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Notes do not give the Trustee a direction
inconsistent with the request.
A Holder may not use this Indenture to prejudice the rights of another
Holder or to obtain a preference or priority over another Holder.
Section 8.07. 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, Liquidated Damages, if any,
and interest on the Note, on or after the respective due dates expressed in the
Note, or to bring suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the consent of the
Holder made pursuant to this Section 8.07.
Section 8.08. Collection Suit by Trustee.
If an Event of Default specified in Section 8.01(a) or (b), hereof 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, Liquidated Damages, if any, and interest remaining unpaid on the
Notes and interest on overdue principal, Liquidated Damages, if any, 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.
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Section 8.09. 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 8.10. 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 9.07 hereof;
Second: to the holders of Senior Debt to the extent required by Article
VI;
Third: to Holders for amounts due and unpaid on the Notes for principal,
Liquidated Damages, if any, 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, Liquidated Damages, if
any, and interest, respectively; and
Fourth: to the Company.
The Trustee may fix a record date and payment date for any payment to
Holders made pursuant to this Section 8.10.
Section 8.11. 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 8.11 does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 8.07 hereof, or a suit by Holders of more than 10% in
principal amount of the then outstanding Notes.
ARTICLE IX.
Trustee
Section 9.01. 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.
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(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 9.01; (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 8.05 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 9.01.
(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 9.02. 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 8.01 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 12.02
hereof from the Company or any Holder.
Section 9.03. Individual Rights of Trustee.
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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 9.10 and 9.11
hereof.
Section 9.04. 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 9.05. 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 9.06. Reports by Trustee to Holders.
Within 60 days after the reporting date stated in Section 12.10, the
Trustee shall mail to Holders a brief report dated as of such reporting date
that complies with TIA (ss.) 313(a) if and to the extent required by such (ss.)
313(a). The Trustee also shall comply with TIA (ss.) 313(b)(2). The Trustee
shall also transmit by mail all reports as required by TIA (ss.) 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 9.07. 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.
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To secure the Company's payment obligations in this Section 9.07, 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 8.01(g) or (h) hereof 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 9.07 shall be payable
by the Company in United States dollars.
Section 9.08. 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 9.08.
The Trustee may resign by so notifying the Company. The Holders of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Company. The Company may remove the
Trustee if:
(a) the Trustee fails to comply with Section 9.10 hereof, unless the
Trustee's duty to resign is stayed as provided in TIA (ss.) 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 9.10 hereof, unless the
Trustee's duty to resign is stayed as provided in TIA (ss.) 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.
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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 9.07 hereof.
Notwithstanding replacement of the Trustee pursuant to this Section 9.08 hereof,
the Company's obligations under Section 9.07 hereof shall continue for the
benefit of the retiring trustee with respect to expenses and liabilities
incurred by it prior to such replacement.
Section 9.09. 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 9.10. Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the requirements
of TIA (ss.) 310(a)(1) and (5). The Trustee shall always have a combined capital
and surplus as stated in Section 12.10 hereof. The Trustee is subject to TIA
(ss.) 310(b). The indenture, dated as of June 12, 1996, between the Company and
The Chase Manhattan Bank (formerly known as Chemical Bank), as trustee, relating
to the Existing Convertible Notes shall be deemed to be specifically described
herein for the purposes of clause (i) of the first proviso contained in TIA
(ss.) 310(b).
Section 9.11. Preferential Collection of Claims Against Company.
The Trustee is subject to TIA (ss.) 311(a), excluding any creditor
relationship listed in TIA (ss.) 311(b). A Trustee who has resigned or been
removed shall be subject to TIA (ss.) 311(a) to the extent indicated therein.
ARTICLE X.
Discharge of Indenture
Section 10.01. Termination of Company's Obligations.
This Indenture shall cease to be of further effect (except that the
Company's obligations under Sections 9.07 and 10.02 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 10.02. 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
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for payment as general creditors unless any applicable abandoned property law
designates another Person.
ARTICLE XI.
Amendments, Supplements and Waivers
Section 11.01. 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 Sections 5.12 and 7.01 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 11.02. With Consent of Holders.
Subject to Section 8.07 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 8.04 and 8.07 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 11.02 may not:
(a) reduce the principal amount of Notes whose Holders must consent
to an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any Note
or alter the provisions of Sections 7 and 8 of the Notes;
(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
or Liquidated Damages, 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 of the Notes and a waiver of the payment
default that resulted from such acceleration);
(e) make any Note payable in money other than that stated in the
Note;
(f) make any change in Section 8.04 or 8.07 hereof;
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<PAGE> 55
(g) waive a redemption payment with respect to any Note;
(h) impair the right to convert the Notes into Common Stock;
(i) modify Article V or VI in a manner adverse to the Holders of
Notes; and
(j) make any change in the foregoing amendment and waiver provisions
of this Article XI.
To secure a consent of the Holders under this Section 11.02, 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 11.02 becomes
effective, the Company shall mail to Holders a notice briefly describing the
amendment or waiver.
Section 11.03. 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 11.04. 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
(j) of Section 11.02 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 11.05. Notation in or Exchange of Notes.
The Trustee may place an appropriate notation about an amendment or waiver
on any Note
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<PAGE> 56
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 11.06. 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 XII.
Miscellaneous
Section 12.01. 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 12.02. 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 12.10 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 12.03. Communication by Holders With Other Holders.
Holders may communicate pursuant to TIA (ss.) 312(b) with other Holders
with respect to their
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rights under this Indenture or the Notes. The Company, the Trustee, the
Registrar and anyone else shall have the protection of TIA (ss.) 312(c).
Section 12.04. Certificate and Opinion as to Conditions 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 12.05. 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 12.06. 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 12.07. 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 or
Liquidated Damages, if any, 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 12.08. No Recourse Against Others.
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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 12.09. 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 12.10. 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 9.06 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 12.11. 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 12.12. No Adverse Interpretation of Other Agreements.
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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 12.13. 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 12.14. 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 12.15. 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,
General Counsel and Secretary
THE CHASE MANHATTAN BANK, as Trustee
By: /s/ Andrew M. Deck
Name: Andrew M. Deck
Title: Vice President
<PAGE> 61
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]
THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED
IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE SECURITY
EVIDENCED HEREBY AND ANY SHARES OF COMMON STOCK ISSUED UPON CONVERSION HEREOF
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE
SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON
THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY
RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE
BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY AND ANY SHARES OF COMMON STOCK
ISSUED UPON CONVERSION HEREOF MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED,
ONLY (1) (a) 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, (b) IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, IF AVAILABLE, (c) OUTSIDE
THE UNITED STATES TO A NON-U.S. PERSON IN A TRANSACTION MEETING THE REQUIREMENTS
OF RULE 904 UNDER THE SECURITIES ACT OR (d) 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), (2) TO THE COMPANY OR (3)
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
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<PAGE> 62
PURCHASER IS REQUIRED TO, NOTIFY ANY SUBSEQUENT PURCHASER FROM IT OF THE
SECURITY EVIDENCED HEREBY OR ANY COMMON STOCK ISSUABLE UPON CONVERSION HEREOF OF
THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE.
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No. ________
$--------
CUSIP No. [ ]/CINS No.
[ ]
7% CONVERTIBLE SUBORDINATED 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 December 15, 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: June 15 and December 15, commencing June 15,
1999
Record Dates: June 1 and December 1
IN WITNESS WHEREOF, NTL Incorporated has caused this Note to be signed
manually or by facsimile by one of its duly authorized officers.
Dated:
NTL INCORPORATED
by:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the 7% Convertible
Subordinated Notes due 2008 described in the
within-mentioned Indenture.
THE CHASE MANHATTAN BANK, as Trustee
By:______________________________________
Authorized Officer
- ----------
* Applicable to Global Notes Only
A-63
<PAGE> 64
[FORM OF REVERSE OF INITIAL NOTE]
NTL INCORPORATED
7% Convertible Subordinated Note due 2008
1. Interest. NTL INCORPORATED, a Delaware corporation (the "Company"), is
the issuer of 7% Convertible Subordinated Notes due 2008 (the "Notes"). The
Notes will accrue interest at a rate of 7% per annum. The Company promises to
pay interest on the Notes in cash semiannually on each June 15 and December 15,
commencing on June 15, 1999, to Holders of record on the immediately preceding
June 1 and December 1, 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 December 16, 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 and Liquidated
Damages, if any, (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. Registration Rights. The holder of this Note is entitled to the
benefits of a Registration Rights Agreement, dated as of December 16, 1998,
among the Company and the Initial Purchasers (the "Registration Rights
Agreement"). Pursuant to the Registration Rights Agreement the Company has
agreed for the benefit of the Holders of the Notes, that (i) it will, at its
cost, within 90 days after the closing of the sale of the Notes (the "Closing"),
file a shelf registration statement (the "Shelf Registration Statement") with
the Securities and Exchange Commission (the "Commission") with respect to
resales of the Notes and the Common Stock issuable upon conversion thereof, (ii)
it will use its best efforts to cause such Shelf Registration Statement to be
declared effective within 180 days after the Closing, and (iii) it will use its
best efforts to keep such Shelf Registration Statement continuously effective
under the Securities Act, subject to certain exceptions specified in the
Registration Rights Agreement until the second anniversary of the date of the
Closing. If (a) the Company fails to file the Shelf Registration Statement
required by the Registration Rights Agreement on or before the date specified
above for such filing, (b) such Shelf Registration Statement is not declared
effective by the Commission on or prior to the date specified above for such
effectiveness, or (c) the Shelf Registration Statement is declared effective but
thereafter ceases to be effective or useable in connection with resales of
Transfer Restricted Securities (as defined in the Registration Rights Agreement)
during the periods specified in the Registration Rights Agreement (each such
event referred to in clauses (a) through (c) above a "Registration Default"),
then the Company will pay liquidated damages to each Holder of Transfer
Restricted Securities, with respect to the first 90-day period immediately
following the occurrence of such Registration Default in an amount equal to $.05
per week per $1,000 principal amount of Notes constituting Transfer Restricted
Securities held by such Holder ("Liquidated Damages"), provided that a Holder of
Transfer Restricted Securities shall not be entitled to the benefit of any
Liquidated Damages unless and until such Holder shall have furnished to the
Company the information required by Section 4(l) of the Registration Rights
Agreement. The amount of Liquidated Damages will increase by an additional $.05
per week per $1,000 principal amount constituting Transfer Restricted Securities
with respect to each subsequent 90-day period until all Registration Defaults
have been cured, up to a maximum amount of Liquidated Damages of $.50 per week
per $1,000 principal amount of Notes constituting Transfer Restricted
Securities. All accrued Liquidated Damages shall be paid by the Company on each
Interest Payment Date for which Liquidated Damages are owed to the holders of
Global Notes by wire transfer of immediately available funds or by federal funds
check and to holders of certificated Notes registered as such as of the
preceding Record Date by mailing checks to their registered
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addresses. Following the cure of all Registration Defaults, the accrual of
Liquidated Damages will cease.
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;
(d) any tax, assessment or other governmental charge which is
collectible otherwise than by withholding from payments of principal
amount, redemption amount, Change
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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,
interest and Liquidated Damages, if any, 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, interest and Liquidated
Damages, if any, by check payable in such money. It may mail an interest or
Liquidated Damages check to a Holder's registered address. If a Holder so
requests, principal, premium, if any, interest and Liquidated Damages, if any,
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, Conversion Agent and Registrar. The Trustee will act as
Paying Agent, Conversion Agent and Registrar in the City of New York, New York.
The Company may change any Paying Agent, Conversion 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
December 16, 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 (ss.)(ss.) 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 $600,000,000 in aggregate principal amount and subordinated
in right of payment to all existing and future Senior Debt of the Company.
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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 December 15, 2001.
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
thereof) set forth below plus accrued and unpaid interest and Liquidated
Damages, if any, thereon to the applicable redemption date, if redeemed during
the twelve-month period beginning on December 15 of the years indicated below:
Year Percentage
---- ----------
2001 104.375%
2002 103.500%
2003 102.625%
2004 101.750%
2005 100.875%
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 and Liquidated Damages, if any, 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 and Liquidated Damages, if any, 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
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<PAGE> 68
(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.
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. If there is a Change of Control, 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 and Liquidated Damages, if any,
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.
12. Subordination. The payment of the principal of, interest on or any
other amounts due on the Notes is subordinated in right of payment to all
existing and future Senior Debt of the Company, as described in the Indenture.
Each Holder, by accepting a Note, agrees to such subordination and authorizes
and directs the Trustee on its behalf to take such action as may be necessary or
appropriate to effectuate the subordination so provided and appoints the Trustee
as its attorney-in-fact for such purpose.
13. Conversion. The holder of any Note has the right, exerciseable at any
time after 90 days following the Issuance Date and prior to the close of
business (New York time) on the date of the Note's
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<PAGE> 69
maturity, to convert the principal amount thereof (or any portion thereof that
is an integral multiple of $1,000) into shares of Common Stock at the initial
Conversion Price of $61.25 per share, subject to adjustment under certain
circumstances as set forth in the Indenture, except that if a Note is called for
redemption, the conversion right will terminate at the close of business on the
Business Day immediately preceding the date fixed for redemption.
To convert a Note, a holder must (1) complete and sign a conversion notice
substantially in the form set forth below, (2) surrender the Note to a
Conversion Agent, (3) furnish appropriate endorsements or transfer documents if
required by the Registrar or Conversion Agent and (4) pay any transfer or
similar tax, if required. Upon conversion, no adjustment or payment will be made
for interest or dividends, but if any holder surrenders a Note for conversion
after the close of business on the record date for the payment of an installment
of interest and prior to the opening of business on the next interest payment
date, then, notwithstanding such conversion, the interest payable on such
interest payment date will be paid to the registered holder of such Note on such
record date. In such event, such Note, when surrendered for conversion, need not
be accompanied by payment of an amount equal to the interest payable on such
interest payment date on the portion so converted. The number of shares issuable
upon conversion of a Note is determined by dividing the principal amount of the
Note converted by the Conversion Price in effect on the Conversion Date. No
fractional shares will be issued upon conversion but a cash adjustment will be
made for any fractional interest.
A Note in respect of which a holder has delivered an "Option of Holder to
Elect Purchase" form appearing below exercising the option of such holder to
require the Company to purchase such Note may be converted only if the notice of
exercise is withdrawn as provided above and in accordance with the terms of the
Indenture. The above description of conversion of the Notes is qualified by
reference to, and is subject in its entirety by, the more complete description
thereof contained in the Indenture.
14. 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.
15. 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.
16. 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.
17. Defaults and Remedies. The Notes shall have the Events of Default set
forth in Section 8.01 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
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<PAGE> 70
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.
18. 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
uncertificated Notes in addition to or in place of certificated Notes, 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.
19. 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.
20. 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.
21. 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.
22. Authentication. The Notes shall not be valid until authenticated by
the manual signature of an authorized officer of the Trustee or an
authenticating agent.
23. 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
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<PAGE> 71
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> 72
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) outside the United States in compliance with Rule 904 under the
Securities Act,
(4) pursuant to the exemption from registration provided by Rule 144
under the Securities Act (if available) or
(5) 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> 73
--------------------------
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> 74
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 or 4.07 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> 75
ELECTION TO CONVERT
To NTL Incorporated
The undersigned owner of this Note hereby irrevocably exercises the
option to convert this Note, or the portion below designated, into Common Stock
of NTL Incorporated in accordance with the terms of the Indenture referred to in
this Note, and directs that the shares issuable and deliverable upon conversion,
together with any check in payment for fractional shares, be issued in the name
of and delivered to the undersigned, unless a different name has been indicated
in the assignment below. If the shares are to be issued in the name of a person
other than the undersigned, the undersigned will pay all transfer taxes payable
with respect thereto.
Any holder of Notes, upon the exercise of its conversion rights in
accordance with the terms of the Indenture and the Note, agrees to be bound by
the terms of the Registration Rights Agreement relating to the Common Stock
issuable upon conversion of the Notes.
Date:
in whole ___
Portions of Note to be converted
($1,000 or integral multiples
thereof): $______________
Signature
Please Print or Typewrite Name and
Address, Including Zip Code, and
Social Security or Other
Identifying Number
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> 76
[TO BE ATTACHED TO GLOBAL NOTES]
SCHEDULE A
SCHEDULE OF PRINCIPAL AMOUNT
The initial principal amount of this Global Note shall be
$__________________. The following increases or decreases in the principal
amount of this Global Note have been made:
- --------------------------------------------------------------------------------
Amount of Amount of Signature of Date of
decrease in increase in Principal authorized exchange
principal principal amount of officer of following such
amount of this amount of this this Global Trustee or decrease or
Global Note Global Note Note Notes Custodian increase
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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<PAGE> 77
EXHIBIT B
FORM OF TRANSFER CERTIFICATE FOR TRANSFER
FROM RULE 144A GLOBAL NOTE OR RESTRICTED NOTE
TO REGULATION S GLOBAL NOTE
(Transfers pursuant to (ss.) 2.06(a)(ii) or 2.06(a)(vii)
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 7% Convertible Subordinated Notes due
2008 (the "Notes")
Reference is hereby made to the Indenture, dated as December 16,
1998 (the "Indenture"), between NTL Incorporated, as Issuer, and The Chase
Manhattan Bank, as Trustee.
This letter relates to $[ ] [check one] (i) aggregate principal
amount of Notes which are held in the form of the Rule 144A Global Note (CUSIP
No. 629407AK3) with the Depositary or (ii) principal amount of Restricted Note
(CUSIP No. 629407AM9) registered, in either case, 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 (i) the transfer
restrictions set forth in the Notes and (ii) 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").
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
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<PAGE> 78
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
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<PAGE> 79
EXHIBIT C
FORM OF TRANSFER CERTIFICATE FOR TRANSFER
FROM REGULATION S GLOBAL NOTE OR RESTRICTED NOTE
TO RULE 144A GLOBAL NOTE
(Transfers pursuant to (ss.) 2.06(a)(iii) or 2.06(a)(vi)
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 7% Convertible Subordinated Notes due
2008 (the "Notes")
Reference is hereby made to the Indenture, dated as of December 16,
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 $[ ] [check one] (i) aggregate principal
amount of Notes which are held in the form of the Regulation S Global Note
(CUSIP No. ____) with the Depositary or (ii) principal amount of Restricted Note
(CUSIP No. 629407AM9) registered, in each case, 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
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<PAGE> 80
EXHIBIT D
FORM OF TRANSFER CERTIFICATE FOR TRANSFER
FROM GLOBAL NOTE OR RESTRICTED
NOTE TO RESTRICTED NOTE
(Transfers pursuant to (ss.) 2.06(a)(iv)
or (ss.) 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 7% Convertible Subordinated Notes due
2008 (the "Notes")
Reference is hereby made to the Indenture, dated as of December 16,
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
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<PAGE> 81
EXHIBIT E
FORM OF ACCREDITED INVESTOR CERTIFICATE
NTL Incorporated
110 East 59th Street
New York, New York 10022
We are delivering this letter in connection with our purchase of $
principal amount of 7% Convertible Subordinated Notes due 2008 (the "Convertible
Notes") of NTL Incorporated, a Delaware corporation (the "Company") issued
pursuant to an indenture, dated December 16, 1998, between the Company and The
Chase Manhattan Bank, as trustee, as described in the Offering Memorandum (the
"Offering Memorandum") relating to such offering.
We hereby confirm that:
(i) we are an "accredited investor" within the meaning of Rule 501
(a) (1), (2), (3), (4) or (7) under the Securities Act of 1933, as amended
(the "Securities Act"), or an entity in which all of the equity owners are
accredited investors within the meaning of Rule 501(a) (1), (2), (3), (4)
or (7), under the Securities Act (an "Accredited Investor");
(ii) (A) any purchase of the Convertible Notes by us will be for our
own account or for the account of one or more other Accredited Investors
or as fiduciary for the account of one or more trusts, each of which is an
"accredited investor" within the meaning of Rule 501 (a) (7) under the
Securities Act and for each of which we exercise sole investment
discretion or (B) we are a "bank," within the meaning of Section 3(a) (2)
of the Securities Act, or a "savings and loan association" or other
institution described in Section 3(a) (5) (A) of the Securities Act that
is acquiring the Convertible Notes as fiduciary for the account of one or
more institutions for which we exercise sole investment discretion;
(iii) in the event that we purchase any of the Convertible Notes, we
will acquire Convertible Notes having a minimum purchase price of not less
than $100,000 for our own account or for any separate account for which we
are acting;
(iv) we have such knowledge and experience in financial and business
matters that we are capable of evaluating the merits and risks of
purchasing the Convertible Notes;
(v) we are not acquiring the Convertible Notes with a view to any
distribution thereof in a transaction that would violate the Securities
Act or the securities laws of any State of the United States or any other
applicable jurisdictions; provided that the disposition of our property
and the property of any accounts for which we are acting as fiduciary
shall remain at all times within our control;
(vi) we have received a copy of the Offering Memorandum and
acknowledge that we have had access to such financial and other
information, and have been afforded the opportunity to ask such questions
of representatives of the Company and receive answers
E-81
<PAGE> 82
thereto, as we deem necessary in connection with our decision to purchase
the Convertible Notes.
We understand that the Convertible Notes are being offered in a
transaction not involving any public offering within the meaning of the
Securities Act, that the Convertible Notes have not been registered under
the Securities Act, and we agree, on our own behalf and on behalf of each
account for which we acquire any Convertible Notes, that the Convertible
Notes may be offered, resold, pledged or otherwise transferred only (i)
inside the United States to a person whom we reasonably believe to be 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, if available, or outside the United States to a non-U.S. person in a
transaction meeting the requirements of Rule 904 under the Securities Act,
or unless the holder thereof is the initial accredited investor, 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 or (iii) pursuant to an effective
registration statement under the Securities Act, and, in each case, in
accordance with any applicable securities laws of any State of the United
States or any other applicable jurisdiction. We understand that the
registrar and transfer agent will not be required to accept for
registration of transfer any Convertible Notes, except upon presentation
of evidence satisfactory to the Company, as applicable, that the foregoing
restrictions on transfer have been complied with. We further understand
that Convertible Notes will be in the form of definitive physical
certificates and that any such certificates will bear a legend reflecting
the substance of this paragraph. We further agree to provide any person
purchasing the Convertible Notes or the Common Stock issuable upon
conversion thereof (other than pursuant to clause (iii) of this paragraph)
from us a notice advising such purchaser that resales of such securities
are restricted as stated therein.
We acknowledge that you, the Company, and others will rely upon our
confirmations, acknowledgments and agreements set forth herein, and we agree to
notify you promptly in writing if any of our representations or warranties
herein ceases to be accurate and complete.
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK.
Dated: .
________________________________________
By: ____________________________________
Its: ____________________________________
Address:________________________________
_________________________________
cc: The Chase Manhattan Bank, as Trustee
450 West 33rd Street
New York, New York 10001
Attn: Corporate Trustee Administration Department
<PAGE> 1
Exhibit 4.18
================================================================================
$600,000,000
7% CONVERTIBLE SUBORDINATED NOTES DUE 2008
REGISTRATION RIGHTS AGREEMENT
Dated as of December 16, 1998
by and among
NTL INCORPORATED
and
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
MORGAN STANLEY & CO. INCORPORATED
GOLDMAN, SACHS & CO.
BT ALEX. BROWN INCORPORATED
CHASE SECURITIES INC.
SALOMON SMITH BARNEY INC.
WARBURG DILLON READ LLC
================================================================================
<PAGE> 2
This Registration Rights Agreement (this "Agreement") is made and entered
into as of December 16, 1998 by and among NTL Incorporated, a Delaware
corporation (the "Company"), and Donaldson, Lufkin & Jenrette Securities
Corporation, Morgan Stanley & Co. Incorporated, Chase Securities, Inc., Goldman,
Sachs & Co., BT Alex. Brown Incorporated, Salomon Smith Barney Inc, and Warburg,
Dillon Read LLC (each an "Initial Purchaser" and collectively, the "Initial
Purchasers"). The Company proposes to issue and sell to the Initial Purchasers
(the "Initial Placement") $600,000,000 principal amount of its 7% Convertible
Subordinated Notes due 2008 (the "Notes"). As an inducement to the Initial
Purchasers to enter into the purchase agreement, dated as of December 10, 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.
"Agreement" menas this Registration Rights Agreement.
"Closing Date" has the meaning set forth in the Purchase Agreement.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the common stock of the Company, par value $0.01 per
share, issuable upon the conversion of the Notes.
"Company" means NTL Incorporated.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission promulgated thereunder.
"Holder" has the meaning set forth in Section 2 hereof.
"Indenture" means the Indenture, dated as of December 16, 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.
<PAGE> 3
"Initial Purchasers" means, collectively, Donaldson, Lufkin & Jenrette
Securities Corporation, Morgan Stanley & Co. Incorporated, Chase Securities,
Inc., Goldman, Sachs & Co., BT Alex. Brown Incorporated, Salomon Smith Barney
Inc., and Warburg, Dillon Read LLC.
"Losses" has the meaning set forth in Section 7(d) hereof.
"Majority Holders" means the Holders of a majority of the aggregate
principal amount of securities registered under a Shelf Registration Statement.
"Notes" has the meaning set forth in the preamble hereto.
"Prospectus" means the prospectus included in any Shelf 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 covered by such Shelf
Registration Statement, and all amendments and supplements to the Prospectus,
including post-effective amendments.
"Shelf Registration" means a registration effected pursuant to Section 3
hereof.
"Shelf Registration Period" has the meaning set forth in Section 3(b)
hereof.
"Shelf Registration Statement" means a "shelf" registration statement of
the Company pursuant to the provisions of Section 3 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 of any notice from the
Company of the existence of any fact or event of the kind described in Section
4(b)(2) hereof and ending on the date of receipt by such Holder of an amended or
supplemented Shelf Registration Statement or Prospectus, as contemplated by
Section 4(h) 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 and the Common Stock
issuable upon conversion thereof until (i) the date on which such Note or the
Common Stock issuable upon conversion thereof has been effectively registered
under the Act and disposed of in accordance with the Shelf Registration
Statement, (ii) the date on which such Note or Common Stock issuable upon
conversion thereof 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 (iii) the date on which such Note is converted into
Common Stock in accordance with the terms and provisions of the Indenture or
otherwise 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.
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<PAGE> 4
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. SHELF REGISTRATION
The Company shall within 90 days of the date of original issuance of the
Notes, file with the Commission and thereafter shall use its best efforts to
cause to be declared effective under the Act on or prior to 180 days (plus any
additional days allowed as a result of a Supplemental 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.
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 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 4(h) hereof, if applicable or (iii)
such action is taken because of any fact or circumstance giving rise to a
Supplement Delay Period.
SECTION 4. REGISTRATION PROCEDURES
In connection with any Shelf Registration Statement, the following
provisions shall apply:
(a) The Company shall ensure that (i) any Shelf 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 Shelf Registration Statement and any
amendment thereto does not, when it becomes effective, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading and
(iii) any Prospectus forming part of any Shelf 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 the Holders of
Transfer Restricted
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<PAGE> 5
Securities named in any Shelf Registration Statement, and, if requested by the
Initial Purchasers or any such Holder, confirm such advice in writing when a
Shelf Registration Statement and any amendment thereto has been filed with the
Commission and when the Shelf Registration Statement or any post-effective
amendment thereto has become effective.
(2) The Company shall advise the Initial Purchasers and the Holders
of Transfer Restricted Securities named in any Shelf Registration Statement,
which have 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, confirm such advice in writing:
(i) of any request by the Commission for amendments or supplements
to the Shelf 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 Shelf Registration
Statement;
(iii) of the issuance by the Commission of any stop order suspending
the effectiveness of the Shelf 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 Shelf 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 Shelf Registration Statement at the
earliest possible time.
(d) The Company shall use its best efforts to furnish to each selling
Holder named in 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 named in any Shelf Registration
Statement and who has provided to the Company
5
<PAGE> 6
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 5(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) Prior to any offering of Transfer Restricted Securities pursuant to
any Shelf 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 Shelf
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.
(g) 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 Shelf 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 Shelf
Registration Statement.
(h) Upon the occurrence of any event contemplated by paragraph (b)(2)(v)
hereof, the Company shall promptly prepare a post-effective amendment to any
Shelf 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.
(i) Not later than the effective date of any such Shelf Registration
Statement hereunder, the Company shall cause to be provided a CUSIP number for
the Notes registered under such Shelf Registration Statement, and provide the
applicable trustee with printed certificates for such Notes in a form eligible
for deposit with The Depository Trust Company.
(j) 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.
(k) The Company shall cause the Indenture to be qualified under the Trust
Indenture Act in a timely manner.
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<PAGE> 7
(l) 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 Shelf 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 the benefit of
any Liquidated Damages (as defined in the Indenture) under the Indenture or be
entitled to use the Prospectus unless and until such Holder shall have furnished
the information required by this Section 4(l) 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.
(m) The Company shall, if requested, promptly incorporate in a Prospectus
supplement or post-effective amendment to a Shelf Registration Statement, such
information as the 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 4(m) 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.
(n) The Company shall enter into such 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 7 (or such other provisions and procedures acceptable
to the Majority Holders), with respect to all parties to be indemnified pursuant
to Section 7 from Holders of Notes to the Company.
(o) The Company shall upon receipt of a reasonable request in writing
therefor:
(i) make reasonably available at reasonable times prior to the
effectiveness of the related Shelf Registration Statement for inspection
by representatives of the Holders of Transfer Restricted Securities to be
registered thereunder and any attorney, accountant or other agent retained
by the Holders, 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 attorney, accountant or other agent in
connection with any such Shelf Registration Statement as is customary for
similar due diligence examinations; provided, however, that the foregoing
inspection and information gathering shall be coordinated 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) 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 Majority Holders),
7
<PAGE> 8
addressed to each selling Holder covering such matters (in form, scope and
substance) as those matters set forth in Section 6(a), (b) and (c) of the
Purchase Agreement;
(iii) 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 Shelf
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
(iv) deliver such documents and certificates as may be reasonably
requested by the Majority Holders, including those to evidence compliance
with Section 4(h).
The foregoing actions set forth in clauses (ii), (iii), (iv) and (v)
of this Section 4(o) shall, if reasonably requested by the Majority
Holder, be performed at (A) the effectiveness of such Shelf Registration
Statement and each post-effective amendment thereto.
(v) The Company may offer securities of the Company other than the
Notes under the Shelf Registration Statement, except where such offer
would conflict with the terms of the Purchase Agreement.
SECTION 5. HOLDERS' AGREEMENTS
Each Holder of Transfer Restricted Securities , by the acquisition of such
Transfer Restricted Securities, agrees:
(a) To furnish the information required to be furnished pursuant to
Section 4(l) 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 pursuant to the
Shelf Registration Statement, and will not deliver any Prospectus forming a part
thereof until receipt of the amended or supplemented Shelf Registration
Statement or Prospectus, as applicable, as contemplated by Section 4(h) hereof,
or until receipt of the Advice. If a Supplement Delay Period should occur, the
Shelf Registration Period 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(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 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
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<PAGE> 9
Transfer Restricted Securities.
(d) Sales of such Transfer Restricted Securities pursuant to a Shelf
Registration Statement shall only be made in the manner set forth in such
currently effective Shelf Registration Statement.
SECTION 6. REGISTRATION EXPENSES
The Company shall bear all expenses incurred in connection with the
performance of its obligations under Sections 3 and 4 hereof and 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 with any Shelf Registration Statement. 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 7. INDEMNIFICATION AND CONTRIBUTION
(a) In connection with Shelf Registration Statement, the Company agrees to
indemnify and hold harmless each Holder of Transfer Restricted Securities
covered thereby (including each Initial Purchaser), 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 Shelf 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 specifically for
inclusion therein and (ii) the Company will not be liable to any indemnified
party under this indemnity agreement with respect to the Shelf 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 Shelf
Registration Statement or Prospectus, which untrue statement or omission was
corrected in an amended or supplemented Shelf 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 Shelf 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.
(b) Each Holder of Transfer Restricted Securities covered by a Shelf
Registration Statement (including each Initial Purchaser) severally agrees to
indemnify and hold harmless (i) the Company, (ii) each of its directors, (iii)
each of its officers who signs such Shelf Registration Statement and (iv) each
person who controls the Company within the meaning of either the Act or the
Exchange Act to the same
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<PAGE> 10
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 Shelf 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 7 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 7, 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 7 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
10
<PAGE> 11
received by such indemnifying party, on the one hand, and such indemnified
party, on the other hand, from the Initial Placement and the Shelf Registration
Statement that resulted in such Losses; provided, however, that in no case shall
any Initial Purchaser or any subsequent Holder of any Note be responsible, in
the aggregate, for any amount in excess of the purchase discount or commission
applicable to such Note, as set forth on the cover page of the Final Offering
Memorandum. 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 (in each case, 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 Shelf 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 registered under the
Act. 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 7, 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 Shelf 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 7 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 7 hereof, and will survive the sale by a Holder of Transfer
Restricted Securities or Exchange Notes.
SECTION 8. 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 9. MISCELLANEOUS
11
<PAGE> 12
(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; 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 Shelf 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 Shelf 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 9(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. The Company hereby agrees to
extend the benefits of this Agreement to any Holder of 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.
12
<PAGE> 13
(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 is required
hereunder, Notes held by the Company or its Affiliates (other than subsequent
Holders of Notes if such subsequent Holders are deemed to be Affiliates solely
by reason of their holdings of such 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.
13
<PAGE> 14
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,
General Counsel and Secretary
Donaldson, Lufkin & Jenrette
Securities Corporation
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Goldman, Sachs & Co.
BT Alex. Brown Incorporated
Salomon Smith Barney Inc
Walburg Dillon Read LLC
By: Donaldson, Lufkin & Jenrette Securities Corporation
By: /s/ Michael J. Connelly
---------------------------
Name: Michael J. Connelly
Title:
14
<PAGE> 1
Exhibit 10.2
NTL INCORPORATED
- --------------------------------------------------------------------------------
RULES OF THE
NTL SHARESAVE PLAN
- --------------------------------------------------------------------------------
Adopted by the Company on 28 October 1997
and approved by the Inland Revenue
under Schedule 9 ICTA 1988
on 16 January 1998 under
reference SRS 2073, with
further amendments adopted by
the Company on 3 February 1998
and approved by the Inland Revenue
on 10 February 1998.
ERNST & YOUNG
7 Rolls House
Rolls Building
Fetter Lane
LONDON, EC4A 1NH
Tel: 071-928-2000
Final Approved Version/10.02.98/SXP.Client.NTL.Rules4
<PAGE> 2
NTL SHARESAVE PLAN
INDEX Clause Number
-------------
DEFINITIONS AND INTERPRETATION 1
Definitions 1.1
Interpretation 1.2
Statutory Provisions 1.3
Clause Headings 1.4
Title 1.5
INVITATIONS TO APPLY FOR OPTIONS 2
Inland Revenue Approval 2.1
Invitations 2.2
Form of Invitation 2.3
Applications for Options 2.4
SCALING DOWN 3
Excess Procedure 3.1
Modification 3.2
GRANT OF OPTIONS 4
Grant 4.1
Grant Date 4.2
Acquisition Price 4.3
OPTION CERTIFICATES 5
Issue 5.1
Content 5.2
RIGHTS TO EXERCISE OPTIONS 6
Exercise Dates 6.1
Specified Age 6.2
Termination of Employment 6.3
Material Interest 6.4
Maximum Exercise 6.5
Lapse of Rights 6.6
EXERCISE OF OPTION 7
Notice 7.1
Allotment 7.2
Share Certificates 7.3
Ranking of Shares 7.4
Partial Exercise 7.5
<PAGE> 3
NTL SHARESAVE PLAN
INDEX Clause Number
-------------
TAKEOVERS AND LIQUIDATIONS 8
General Offers 8.1
Scheme of Reconstruction 8.2
Compulsory Purchase 8.3
Voluntary Winding Up 8.4
Meaning of Control 8.5
Manner of Exercise 8.6
Rights to Exercise 8.7
EXCHANGE OF OPTIONS ON A TAKEOVER 9
Replacement of Options 9.1
Option Certificate 9.2
No Immediate Exercise 9.3
VARIATION OF CAPITAL 10
Adjustment 10.1
Auditors' Confirmation 10.2
Inland Revenue Approval 10.3
Notice of Adjustment 10.4
ADMINISTRATION AND ALTERATION 11
Discretion of the Board 11.1
Board Decisions 11.2
Amendments 11.3
Inland Revenue Consent 11.4
Rights of Option holders 11.5
Notice of Alteration 11.6
Circulars 11.7
Cost 11.8
GENERAL 12
Availability of Shares 12.1
Employment Rights 12.2
Non-Admission 12.3
Consequence of Lapse 12.4
Transfer, Assignment or Charge 12.5
Termination 12.6
Status of Auditors 12.7
Notices 12.8
Law 12.9
<PAGE> 4
NTL Incorporated
NTL SHARESAVE PLAN
Plan Rules approved under Section 185 and Schedule 9
Income and Corporation Taxes Act 1988
1. DEFINITIONS AND INTERPRETATION
1.1 Definitions: In these Rules:-
"Acquisition Price" means the price at which
each Share subject to an
Option may be acquired
on the exercise of that
Option determined
pursuant to sub-clause
4.3;
"Approved Scheme" means a scheme
established by the
Company or by any
Associated Company and
approved by the Board of
Inland Revenue under
Paragraph 1 of Schedule
9;
"Associated Company" bears the meaning
ascribed to it in
Paragraph 23 Schedule 9
by virtue of Section 187
(2) of the Taxes Act;
"the Auditors" means the auditors of
the Company for the time
being;
"the Board" means the board of
directors of the Company
as from time to time
constituted or one or
more persons duly
appointed by such board
of directors and having
such powers as the board
may from time to time
decide;
"Bonus Date" means either
(a) where pursuant to
Clauses 2 and 3
the repayment
under the Savings
Contract is taken
as including the
Maximum Bonus,
the earliest date
on which the
Maximum Bonus is
payable; or
(b) under a three
year Savings
Contract, the
earliest date on
which the Minimum
Bonus is payable
under the Savings
Contract; or
<PAGE> 5
(c) under a five year
Savings Contract,
the earliest date
on which the
Standard Bonus is
payable under the
Savings Contract;
"the Commencement Date" means the date on which
the Company receives
notice that the Plan has
been approved by the
Board of Inland Revenue
under Paragraph 1 of
Schedule 9 Provided That
the Plan has been
approved by the Company
in general meeting;
"the Company" means NTL Incorporated
of 110 East 59th
Street, New York, NY
10022, USA;
"Control" bears the meaning
ascribed to that term by
Section 840 of the
Taxes Act;
"Dealing Day" means any weekday
(excluding Saturday)
which is not a
statutory, public or
bank holiday in either
the United Kingdom or
the United States of
America;
"Grant Date" means in relation to an
Option the date on which
the Option was or is to
be granted;
"Grantor" means the grantor of any
Option pursuant to
Clause 4;
"Invitee" means a person to whom
the Board has issued an
invitation which is
subsisting to apply for
the grant of an Option;
"Market Value" means the market value
of such Share determined
in accordance with the
provisions of Part VIII
of the Taxation of
Chargeable Gains Act
1992 and agreed for the
purposes of the Plan
with the Inland Revenue
Shares Valuation
Division on or before
the day the invitation
to apply for the Option
to acquire such Share
was issued pursuant to
Clause 2;
<PAGE> 6
"Materially Interested Person" means an employee or
director of any one or
more of the
Participating Companies
who at any relevant time
has, or within the
relevant preceding
twelve (12) months has
had, a material interest
(as defined in Section
187(3) of the Taxes Act)
in the Company or in a
company which has
Control of the Company
or which is a member of
a consortium which owns
the Company, if the
Company or any such
company is at any
relevant time a close
company for the purposes
of Paragraph 8 of
Schedule 9;
"Maximum Bonus" means the bonus payable
under a seven (7) year
Savings Contract;
"Maximum Contribution" means Two hundred and
Fifty Pounds
((pound)250) per month
or (subject to
sub-clause 12.3) such
other amount as is, for
the time being, the
maximum Monthly
Contribution permitted
pursuant to Paragraph 24
of Schedule 9;
"Minimum Bonus" means the bonus payable
under a three (3) year
Savings Contract;
"Monthly Contribution" means the monthly
contribution to be paid
by an Option Holder
under his Savings
Contract;
"Option" means an option to
acquire Shares by
purchase or subscription
granted (whether by the
Company or a third
party) pursuant to the
Rules;
"Option Certificate" means a certificate
recording the terms of
grant of an Option in
accordance with the
Rules;
"Option Holder" means any person who
holds an Option or
(where the context
admits) his legal
personal
representative(s);
"Option to Subscribe" means an Option which
confers a right to
subscribe for new Shares
pursuant to this Plan;
<PAGE> 7
"Participating Company" means NTL (UK) Group,
Incorporated and any UK
resident company of
which NTL (UK) Group,
Incorporated has
Control, but excluding
any company which is for
the time being specified
by the Board as not
being a Participating
Company;
"Qualifying Employee" means any person who is
not a Materially
Interested Person and
who:-
(a) is an employee or
full-time
director of any
Participating
Company (and for
the purposes of
this definition a
director will be
regarded as
"full-time" if
his terms of
employment
require him to
devote to the
duties of his
office not less
than twenty five
(25) hours per
week (excluding
meal breaks); and
(b) on the the date
of issue of the
relevant
invitations
pursuant to
Clause 2 had been
such an employee
or director for
at least six (6)
months or such
other period
specified from
time to time by
the Board (which
shall not exceed
a period of five
years ending on
the date of grant
of the Option;
and
(c) is chargeable to
tax in respect of
his office or
employment under
Case I of
Schedule E
and any other employee
or full-time director of
any Participating
Company nominated by the
Board to be a Qualifying
Employee;
"the Rules" means these rules as
from time to time
amended;
"Savings Contract" means a contract under a
certified contractual
savings scheme, within
the meaning of Section
326 of the Taxes Act and
which has been approved
by the Commissioners of
Inland Revenue for the
purposes of Schedule 9;
"Schedule 9" means Schedule 9 to the
Taxes Act;
<PAGE> 8
"the Plan" means this Plan as from
time to time constituted
by the Rules;
"Share" means fully paid
irredeemable Common
Stock of $0.01 per share
in the capital of the
Company which complies
with Paragraphs 10 to 14
of Schedule 9;
"Specified Age" means sixty (60) years
of age;
"Standard Bonus" means the bonus payable
under a five (5) year
Savings Contract;
"Subsidiary" means a subsidiary of
the Company within the
meaning of Section 736
of the Companies Act
1985;
"Subsisting Option" mean an Option or Option
and "Subsisting Option to Subscribe (as the
to Subscribe" case may be) then
capable of being
exercised which has
neither lapsed nor been
exercised;
"Taxes Act" means the Income and
Corporation Taxes Act
1988.
1.2 Interpretation: Where the context so admits the singular includes the
plural and each gender includes each other gender.
1.3 Statutory Provisions: Any reference to a statutory provision is to be
construed as a reference to that provision as for the time being amended
or re-enacted.
1.4 Clause headings shall be ignored in interpretation.
1.5 Title: The Plan shall be entitled and referred to as the "NTL Sharesave
Plan".
2. INVITATIONS TO APPLY FOR OPTIONS
2.1. Inland Revenue Approval: No invitations to apply for Options under the
Plan may be made until this Plan becomes an Approved Scheme.
2.2 Invitations: Subject to sub-clauses 2.1 and 4.3, on such dates as it may
from time to time resolve the Board shall invite every Qualifying Employee
to apply for the grant of Options Provided That before issuing invitations
the Board may on any occasion place a limit on the number of Shares to be
made available on that occasion such number to be published upon issue of
the invitations.
2.3 Form of Invitation: Each invitation shall be in writing and shall:-
<PAGE> 9
(a) state the date on which it is issued;
(b) specify a date not earlier than fourteen (14) days after the date on
which it was issued by which an application must be received and in
default of which it will lapse;
(c) invite the Invitee to apply for an Option;
(d) specify the Acquisition Price at which each Share may be acquired on
the exercise of an Option granted pursuant to the invitation;
(e) specify the maximum Monthly Contribution the Invitee may propose to
save which shall be in multiples of one pound ((pound)1) and shall
not be greater than the lesser of the Maximum Contribution and such
sum (being a multiple of one pound ((pound)1) and not less than five
pounds ((pound)5) as the Board decides shall apply to every
Qualifying Employee in respect of that invitation;
(f) otherwise, be in such form as the Board may from time to time
prescribe.
2.4 Applications for Options:
2.4.1 Time: Within the time allowed in the invitation as the last date for
receipt of the application, each Invitee may apply for the grant of an
Option
2.4.2 Form: Each invitation shall be accompanied by a proposal form for a
Savings Contract and an application form which shall provide for the
Invitee to state:-
(a) his proposed Monthly Contribution (being a multiple of one pound
((pound)1) and not less than five pounds ((pound)5)); and
(b) that his proposed Monthly Contribution when added to any monthly
savings contributions then being made by him under any other Savings
Contracts will not exceed the maximum specified in Paragraph 24 of
Schedule 9; and
(c) whether for the purpose of determining the number of Shares over
which an Option is to be granted the repayment under the Savings
Contract is to be taken as including the Maximum Bonus, the Standard
Bonus, the Minimum Bonus or no bonus; and
(d) that he authorises the Board to enter on the Savings Contract
proposal form such Monthly Contribution not exceeding the maximum
stated on the application form as shall be determined pursuant to
Clause 3.
2.4.3 Shares: Each application shall be deemed to be for an Option over the
largest whole number of Shares which can be bought at the US dollar
Acquisition Price with the expected repayment under the related Savings
Contract at the appropriate Bonus Date following the conversion of the
repayment into US dollars.
<PAGE> 10
2.4.4 Consideration: No amount shall be payable in respect of the grant of an
Option.
3. SCALING DOWN
3.1 Excess Procedure: where the Board in its discretion considers that it is
desirable to limit the number of Shares in respect of which Options are
granted in relation to any invitation Options shall be granted to each
Qualifying Employee in respect of that number of Shares which shall be
determined by reducing the monthly savings contribution chosen by each
applicant under the Savings Contract in such manner as the Board shall, in
its discretion, determine (provided that all Qualifying Employees shall be
treated on a similar basis without regard to differences among Qualifying
Employees in respect of remuneration, length of service or any other
factor); imposing a new maximum Monthly Contribution on all Qualifying
Employees; or replacing the Maximum Bonus with the Standard Bonus or
eliminating the Maximum Standard and/or the Minimum Bonus so as to reduce
the aggregate number of Shares applied for to or as near to as shall be
practicable without exceeding the said limitation.
3.2 Modification: Each application shall be deemed to have been modified or
withdrawn in accordance with the application of sub-clause 3.1 and the
Board shall complete each Savings Contract proposal form to reflect any
resultant reduction in Monthly Contribution.
4. GRANT OF OPTIONS
4.1 Grant: The Board shall grant or procure the grant to each applicant who is
still a Qualifying Employee and is not precluded from participating in
this Plan by Paragraph 8 of Schedule 9 an Option over the number of Shares
for which pursuant to sub-clause 2.4.3 and subject to Clause 3 he shall be
deemed to have applied.
4.2 Grant Date: Any Option to be granted shall be granted as soon as the Board
deems practicable following the date stated on the relevant invitation as
being the date of its expiry Provided That the Grant Date shall not in any
circumstances be more than thirty (30) days after the date on which the
Market Value of the Shares to be subject to the Option was determined.
4.3 Acquisition Price: Subject to Clause 10, the price at which each Share
subject to an Option may be acquired on the exercise of that Option shall
be:-
(a) in the case of an Option to Subscribe, not less than the greater of
the nominal value of such Share and its Market Value on the Dealing
Day immediately preceding the day the Invitation is issued; and
<PAGE> 11
(b) in any other case not less than its Market Value and subject thereto
shall be such sum as the Grantor shall decide and cause to be stated
in that behalf in the relevant Option Certificate.
5. OPTION CERTIFICATES
5.1 Issue: As soon as is practicable after having granted an Option to a
Qualifying Employee, the Grantor shall issue to him a duly executed Option
Certificate in respect of such Option.
5.2 Content: The Option Certificate shall:-
(a) state the Grant Date of the Option;
(b) state the expected number of Shares subject to the Option being such
number of shares as the repayment under the Savings Contract can
acquire following conversion of the repayment into US dollars;
(c) state the Acquisition Price payable for each Share under the Option;
(d) refer the holder to the provisions of sub-clause 12.5; and
(e) subject to these conditions, be in such form as the Board may from
time to time prescribe.
6. RIGHTS TO EXERCISE OPTIONS
6.1 Exercise Dates: Except as otherwise provided in this Plan any Subsisting
Option may be exercised in whole or in part only after the earliest of the
following events:-
(a) the relevant Bonus Date;
(b) the death of the Option Holder;
(c) the Option Holder ceasing to be a director or employee of any
Participating Company by reason of:-
(i) injury or disability (evidenced to the satisfaction of the
Board);
(ii) redundancy within the meaning of the Employment Rights Act
1996; or
(iii) retirement on reaching the Specified Age or any other age at
which he is bound to retire in accordance with the terms of
his contract of employment;
<PAGE> 12
(d) the Option Holder ceasing to be a director or employee of any
Participating Company by reason only that:-
(i) that office or employment is in a company of which the Company
ceases to have Control; or
(ii) that office or employment relates to a business or part of a
business which is transferred to a person other than a
Participating Company;
(e) the relevant Bonus Date where an Option Holder holds an office or
employment in a company which is not a Participating Company but
which is:-
(i) an associated company of the Grantor within the meaning of
Section 416 of the Taxes Act; or
(ii) a company of which the Grantor has Control;
the Option Holder may exercise his Option within six (6) months of such
date.
6.2 Specified Age: If an Option Holder continues to be employed by a
Participating Company after the date on which he reaches the Specified Age
he may excercise any Subsisting Option within six months following that
date
6.3 Termination of Employment: No person shall be treated for the purposes of
this clause as ceasing to be employed by any Participating Company until
he ceases to hold an office or employment in the Company or any Associated
Company or company of which the Company has Control.
6.4 Material Interest: No Option may be exercised by an individual at any time
when he is a Materially Interested Person or by the personal
representative of an individual who at the date of his death was a
Materially Interested Person.
6.5 Maximum Exercise: The number of Shares over which an Option may be
exercised may not exceed the number of Shares which may be purchased with
the sum obtained by way of repayment under the related Savings Contract
excluding the repayment of any Monthly Contribution the due date for
payment of which falls more than one month after the date on which
repayment is made.
6.6 Lapse of Rights: An Option shall lapse and cease to be exercisable on the
earliest of the following events:-
(a) except where the Option Holder has died, on the expiry of six (6)
months following the Bonus Date;
<PAGE> 13
(b) where the Option Holder has died during the six (6) months following
the Bonus Date, on the first anniversary of the Bonus Date;
(c) where the Option Holder has died before the Bonus Date, on the first
anniversary of his death;
(d) unless the Option Holder has died, on the expiry of six (6) months
after the Option has become exercisable by virtue of sub-clause
6.1(c);
(e) on the expiry of six (6) months after the Option has become
exercisable by virtue of sub-clause 6.1(d) to (e) inclusive or
(subject to a release being effected pursuant to sub-clause 9.1) by
virtue of Clause 8;
(f) the Option Holder ceasing to be a director or employee of any
Participating Company in circumstances in which the Option does not
become exercisable;
(g) the date on which a resolution is passed or an order is made by the
Court for the compulsory winding up of the Company;
(h) upon the Option Holder, before the Option has become exercisable:-
(i) giving notice or being deemed to have given notice under the
Savings Contract that he intends to stop paying Monthly
Contributions; or
(ii) making an application for repayment of the related Savings
Contract;
(i) the date on which the Option Holder does or omits to do anything as
a result of which he ceases to be the legal and beneficial owner of
the Option;
(j) the date on which the Option Holder is adjudicated bankrupt.
7. EXERCISE OF OPTION
7.1 Notice: Subject to Clause 6, an Option may be exercised by the Option
Holder or as the case may be his personal representative giving notice to
the Company, the Grantor or such other person as shall be specified in the
notice of exercise in writing of the number of Shares in respect of which
he wishes to exercise the Option accompanied by the appropriate payment
(which shall not exceed the sum obtained by way of repayment under the
related Savings Contract) and the relevant Option Certificate and shall be
effective on the date of its receipt by the Company, the Grantor or such
other person as shall be specified in the notice of exercise. The Notice
exercising the Option shall be given in such form and manner, not
inconsistent with these Rules, as the Board or (as the case may be) the
Grantor may determine. In respect of Options granted otherwise than by the
Company any such
<PAGE> 14
notice (or remittance enclosed therewith) shall be received by the Company
for and on behalf of the Grantor.
7.2 Allotment: Subject to the Rules, within twenty-eight (28) days following
receipt of a notice constituting a valid exercise of an Option and
complying with the provisions of sub-clause 7.1 and the appropriate
remittance the Grantor shall allot issue or transfer or (as the case may
be) cause to be allotted, issued or transferred to the Option holder or
(as the case may be) his personal representatives the Shares the subject
of such notice.
7.3 Share Certificates: As soon as reasonably practicable after such allotment
or transfer of Shares under the Plan, the Company shall issue to such
Option Holder or his personal representatives a definitive share
certificate in respect of the Shares so allotted or transferred.
7.4 Ranking of Shares: Save for any rights determined by reference to a date
preceding the date of allotment or transfer, the Shares so issued or
transferred shall rank pari passu with the other shares of the same class
in issue at the date of allotment or transfer and carry all rights
attaching thereto at that date.
7.5 Partial Exercise: When an Option is exercised only in part it shall lapse
to the extent of the unexercised balance.
8. TAKEOVERS AND LIQUIDATIONS
8.1 General Offers: If any person (either alone or together with any person
acting in concert with him) obtains Control of the Company or having such
Control makes a general offer to acquire all the Shares of the Company
(other than those which are already owned by him and/or any person acting
in concert with him) then, notwithstanding any other provision of the
Rules but subject to sub-clauses 6.4 and 9.1, any Subsisting Option may be
exercised within six (6) months of the time when the person making the
offer has obtained Control of the Company and any condition subject to
which the offer is made has been satisfied.
8.2 Scheme of Reconstruction: If under Section 425 of the Companies Act 1985
the court sanctions a compromise or arrangement between the Company and
its members proposed for the purposes of, or in connection with, a scheme
for the reconstruction of the Company or its amalgamation with any other
company or companies, then:-
(a) each Participant may exercise his Option at any time and from time
to time in the period starting with the date upon which the
compromise or arrangement is sanctioned by the court and ending with
the earlier of the date upon which it becomes effective and the date
which is six months after the date on which it is sanctioned; and
<PAGE> 15
(b) upon the compromise or arrangement becoming effective, all Options
shall, subject to Rule 9, lapse.
8.3 Compulsory Purchase: If any person becomes bound or entitled to acquire
Shares in the Company under Section 428 to 430F of the Companies Act 1985,
any Subsisting Option (subject to sub-clauses 6.4 and 9.1) may be
exercised at any time while that person remains so bound or entitled.
8.4 Voluntary Winding-Up: Subject to sub-clause 6.4 if the Company passes a
resolution for voluntary winding up, any Subsisting Option may be
exercised within six (6) months of the passing of the resolution.
8.5 Meaning of Control and Concert in sub-clause 8.1: For the purposes of
sub-clause 8.1 (and only for such purpose):-
(a) a person shall be deemed to have obtained Control of the Company if
he and others acting in concert with him have together obtained
Control of the Company;
(b) persons acting in concert comprise persons who, pursuant to an
agreement or understanding (whether formal or informal), actively
co-operate, through the acquisition by any of them of shares in the
Company, to obtain or consolidate Control of the Company.
8.6 Manner of Exercise: The exercise of an Option pursuant to the preceding
provisions of this clause shall be subject to the provisions of Clause 7.
8.7 Rights to Exercise: For the avoidance of doubt, an Option may only be
exercised pursuant to this clause on a date on which it remains a
Subsisting Option.
9. EXCHANGE OF OPTIONS ON A TAKEOVER
9.1 Replacement of Options: If any company ("the Acquiring Company") obtains
Control of the Company, or becomes bound or entitled to acquire shares in
the Company within any of the sets of circumstances specified in
Paragraphs 15(1)(a) (b) or (c) of Schedule 9, any Option holder may at any
time within the appropriate period (as defined in Paragraph 15(2) of
Schedule 9) by agreement with the Acquiring Company release his option
("the Old Option") in consideration of the grant to him of an option ("the
New Option") which:-
(a) relates to shares in a different company (whether the Acquiring
Company itself or some other company which on the assumption that
the Acquiring Company were the grantor would be a company falling
within Paragraph 10(b) or (c) of Schedule 9);
<PAGE> 16
(b) is a right to acquire such number of such shares as has on
acquisition of the New Option an aggregate Market Value equal to the
aggregate Market Value of the Shares subject to the Old Option on
its release;
(c) has an acquisition price per Share such that the aggregate price
payable on complete exercise equals the aggregate Acquisition Price
which would have been payable on complete exercise of the Old
Option;
(d) is otherwise equivalent to the Old Option (as defined in Paragraph
15(3) of Schedule 9).
The New Option shall, for all other purposes of this Plan, be treated as
having been acquired at the same time as the Old Option for which it is
released and, following release of the Old Option and the grant of the New
Option, for the purposes of applying Rules 6, 7, 8, 9, 10 and 12 thereto:-
(i) "Company" and "Shares" in relation to the New Option shall be
construed as if references to the Company and to the Shares were
references to the Acquiring Company and to shares in the Acquiring
Company or (as the case may be) to the other company to whose shares
the New Options relate and to the shares in the other company
whether the Acquiring Company itself or some other company falling
within Paragraph 10(b) or 10(c) of Schedule 9 but for the purpose of
"Participating Company" the Company shall continue to be NTL
Incorporated.
(ii) "Board" shall mean the board of directors of that company or a duly
constituted committee thereof.
9.2 Option Certificate: Upon grant of the New Option, a new Option Certificate
shall be issued accordingly and the Third and Fourth Schedules shall be
amended mutatis mutandis;
9.3 No Immediate Exercise: For the avoidance of doubt where in accordance with
sub-clause 9.1 Subsisting Options are released and New Options granted,
the New Options shall not be exercisable in accordance with sub-clauses
8.1 to 8.3 by virtue of the event on which the New Options were granted.
10. VARIATION OF CAPITAL
10.1 Adjustment: Subject as provided in sub-clauses 10.2 and 10.3, in the event
of any capitalisation issue, rights issue, sub-division, consolidation or
reduction of share capital, or any other variation in the share capital of
the Company the Board and (as appropriate) the Grantor may make such
adjustment as shall be fair and reasonable in all the circumstance to:-
(a) the number or nominal value of Shares comprised in any Option;
and/or
<PAGE> 17
(b) the Acquisition Price payable for Shares subject to any Option.
Provided Always That the Acquisition Price payable on subscription for new
Shares shall never be less than the nominal value of the Share to which it
relates, the aggregate amount payable on the exercise of an Option in full
shall not thereby be increased and no adjustment shall cause any of the
conditions of the approval of the Plan under Schedule 9 to be thereby
breached.
10.2 Auditors' Confirmation: Except in the case of a capitalisation issue no
adjustment under sub-clause 10.1 shall take effect without prior
confirmation in writing by the Auditors that the adjustment is in their
opinion fair and reasonable in all the circumstances.
10.3 Inland Revenue Approval: No adjustment under sub-clause 10.1 shall take
effect without prior confirmation in writing by the Board of the Inland
Revenue approving such proposed adjustment.
10.4 Notice of Adjustment: As soon as reasonably practicable after making any
adjustment under sub-clause 10.1 the Board and (as appropriate) the
Grantor shall give notice in writing to every Option Holder thereby
affected specifying the adjustments made insofar as they affect him and
(subject to sub-clauses 10.2 and 10.3) such notice shall be binding upon
the Option Holder in the absence of manifest error Provided That where
pursuant to Paragraphs 10.1(b) or 10.1(c) an adjustment is made to the
terms of an Option prior to the issue of an Option Certificate pursuant to
sub-clause 5.1, the certificate shall set out details of the Option as so
adjusted and shall be deemed to be sufficient notice of the adjustment for
the purpose of this sub-clause.
11. ADMINISTRATION AND ALTERATION
11.1 Discretion of the Board: The Board shall have power from time to time to
make and vary such regulations (not being inconsistent with the Rules) for
the implementation and administration of this Plan.
11.2 Board Decisions: Save in respect matters to be confirmed by the Auditors
in accordance with these Rules, the decision of the Board shall be final
and binding in all matters relating to this Plan, any dispute or
disagreement as to the interpretation of the Plan or of any rule,
regulation or procedure or as to any question of right arising out of or
in respect of the Plan.
11.3 Amendments: Subject to sub-clause 11.4, this Plan may be amended in any
respect by resolution of the Board PROVIDED THAT no amendment shall take
effect which would cause this Plan to cease to be an Approved Scheme.
11.4 Inland Revenue Consent: No amendment to these Rules shall have effect
unless and until approved by the Board of the Inland Revenue.
<PAGE> 18
11.5 Rights of Option Holders: No amendments shall be made to the Plan which
would have the effect of abrogating or prejudicially affecting any of the
subsisting rights of Option Holders except with such consent on their part
as would be required by provisions of the Company's Certificate of
Incorporation if the Shares to be issued on the exercise of the Options
were so issued and constituted a separate class of share capital and if
such provisions applied mutatis mutandis thereto.
11.6 Notice of Alteration: As soon as reasonably practicable after making any
alteration or addition under this clause the Board shall give notice in
writing thereof to any Option Holder who is thereby affected.
11.7 Circulars: The Company shall not be obliged to provide Qualifying
Employees or Option Holders with copies of any notices, circulars or other
documents sent to shareholders of the Company.
11.8 Cost: The cost of establishing and operating the Plan shall be borne by
such of the Participating Companies and in such proportions as the Board
shall determine.
12. GENERAL
12.1 Availability of Shares: The Company shall at all times ensure there are
sufficient Shares available to satisfy the exercise to the full extent
still possible of all Subsisting Options whether by issue of new Shares or
the transfer of exisiting Shares, taking account of any other obligations
of the Company to issue unissued Shares and of the availability of
existing unissued Shares.
12.2 Employment Rights:
12.2.1 Effect of Participation:
This Plan shall not form part of any contract of employment between any
Participating Company and any employee of any such company and the rights
and obligations of any individual under the terms of his office or
employment with the Company or any Participating Company shall not be
affected by his participation in the Plan or any right which he may have
to participate therein.
12.2.2 Effect of Loss of Office:
Participation in the Plan shall be on the express condition that:-
(i) neither it nor cessation of participation shall afford any
individual under the terms of his office or employment with the
Company or any Participating Company any additional or other rights
to compensation or damage; and
<PAGE> 19
(ii) no damages or compensation shall be payable in consequence of the
termination of such office or employment or for any other reason
whatsoever to compensate him for the loss or any right he would
otherwise have had (actual or prospective) under the Plan howsoever
arising but for such termination; and
(iii) by applying for an Option he shall be deemed irrevocably to have
waived any such rights to which he may otherwise have been entitled.
12.3 Non-Admission: No Qualifying Employee shall have any claim against a
Participating Company arising out of his not being admitted to
participation in the Plan if the Qualifying Employee's participation in
the Plan is entirely within the discretion of the Board.
12.4 Consequence of Lapse: No Option Holder shall be entitled to claim
compensation from any Participating Company or the Grantor of any Option
to acquire Shares in respect of any sums paid by him pursuant to the Plan
or of any diminution or extinction of his rights or benefits (actual or
otherwise) under any Option held by him consequent upon the lapse for any
reason of any Option held by him or otherwise in connection with the Plan
and the Company and each Participating Company shall be entirely free to
conduct its affairs as it sees fit without regard to any consequences
under, upon or in relation to the Plan or any Option or Option Holder.
12.5 Transfer, Assignment or Charge: All Options granted to Qualifying
Employees are personal rights which cannot be transferred, assigned or
charged in any circumstances whatsoever save as set out in sub-clause 10.1
and any purported transfer, assignment or charge (save as aforesaid) shall
cause the Option to lapse forthwith.
12.6 Termination: The Board may terminate the Plan at any time but Options
granted prior to such termination shall continue to be valid and
exercisable in accordance with the Rules, which shall continue to apply
thereto.
12.7 Status of Auditors: In any matter in which they are required to act under
the Plan, the Auditors shall act as experts and not as arbitrators and
their determination of the matter referred to them shall be final and
conclusive.
12.8 Notices: Any notice or other communication required to be given pursuant
to the terms of the Plan shall be sent:-
(a) in the case of any Participating Company, by personal delivery or by
first-class post to such company at its registered office and shall
be effective upon receipt;
<PAGE> 20
(b) in any other case, by personal delivery or by delivering or sending
the same by first-class post to the addressee's address last know to
the Company or the address of the place of business from which he
performs the whole or substantially the whole of his duties of his
office or employment (and notice to the personal representatives of
a deceased Option holder shall be effective if given personally or
if left at or sent by first class post addressed to the Option
holder and delivered or sent by post accordingly) and where such
notice or other communication is given by post it shall be deemed to
have been received no later than forty-eight (48) hours after it was
put into the post properly addressed and stamped.
12.9 Law: The Plan and all Options shall be governed by and construed in
accordance with English law.
<PAGE> 1
Exhibit 10.4
NTL INCORPORATED
1998 NON-QUALIFIED STOCK OPTION PLAN
AS AMENDED AND RESTATED OCTOBER 1998
1. Purpose; Construction.
This NTL Incorporated 1998 Stock Option Plan (the "Plan"), is intended to
encourage stock ownership by employees and directors of NTL Incorporated
(the "Corporation") and its divisions and subsidiary and parent
corporations and other affiliates, so that they may acquire or increase
their proprietary interest in the Corporation, and to encourage such
employees and directors to remain in the employ of the Corporation or its
affiliates and to put forth maximum efforts for the success of the
business. Services of directors will be considered employment for purposes
of this Plan.
2. Definitions.
As used in this Plan, the following words and phrases shall have the
meanings indicated:
(a) "AFFILIATE" shall have the meaning set forth in Rule 12b-2 under
Section 12 of the Exchange Act.
(b) "BENEFICIAL OWNER" shall have the meaning set forth in Rule 13d-3
under the Exchange Act, except that a Person shall not be deemed to
be the Beneficial Owner of any securities which are properly filed
on a Form 13-G.
(c) "DISABILITY" shall mean an Optionee's inability to engage in any
substantial gainful activity by reason of any medically determinable
physical or mental impairment that can be expected to result in
death or that has lasted or can be expected to last for a continuous
period of not less than twelve (12) months.
(d) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
(e) "FAIR MARKET VALUE" per share as of a particular date shall mean
(i) if the shares of common stock, par value $.01 per share, of the
Corporation ("Common Stock") are then traded in a stock exchange,
on an over-the-counter market, or otherwise, the average of the
highest and lowest quoted selling prices for the shares of Common
Stock in such market on such date or, if there were no such sales
on the particular date, but there were such sales of Common Stock
on dates within a reasonable period both before and after the
particular date, the weighted average of the means between the
highest and lowest sales on the nearest date before and nearest
date after the particular date, (ii) if the provisions of (i) of
this subsection (e) are inapplicable because actual sales are
<PAGE> 2
not available during a reasonable period beginning before and ending
after the particular date, the average between the bona fide bid and
asked prices on the particular date, or if none, the weighted
average of the means between the bona fide bid and asked prices on
the nearest trading date before and the nearest trading date after
the particular date, if both such nearest dates are within a
reasonable period, (iii) if the provisions of (i) and (ii) of this
subsection (e) are inapplicable because no actual sale prices or
bona fide bid and asked prices are available on a date within a
reasonable period before the particular date, but such prices are
available on a date within a reasonable period after the valuation
date, or vice versa, then the average between the highest and lowest
available sales prices or bid and asked prices, or (iv) if the
Committee believes the value of the Common Stock determined under
(i), (ii) or (iii) of this subsection (e) does not reflect the fair
market value on the particular date, such value as the Committee in
its discretion may determine.
(f) "OPTION" shall mean an option to purchase shares of common stock of
the corporation.
(g) "OPTIONEE" shall mean a person who has been granted an Option under
the Plan.
(h) "PARENT CORPORATION" shall mean any corporation (other than the
Corporation) in an unbroken chain of corporations ending with the
employer corporation if, at the time of granting an Option, each of
the corporations other than the employer corporation owns stock
possessing fifty percent (50%) or more of the total combined voting
power of all classes of stock in one of the other corporations in
such chain.
(i) "PERSON" shall have the meaning given in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d)
thereof, except that such term shall not include (i) the
Corporation or any of its Affiliates, (ii) a trustee or other
fiduciary holding securities under an employee benefit plan of the
Corporation or any of its subsidiaries, (iii) an underwriter
temporarily holding securities pursuant to an offering of such
securities, or (iv) a corporation owned, directly or indirectly, by
the stockholders of the Corporation in substantially the same
proportions as their ownership of stock of the Corporation.
(j) "RULE 16b-3" shall mean Rule 16b-3 promulgated under Section 16 of
the Exchange Act (or any other comparable
2
<PAGE> 3
provisions in effect at the time or times in question).
(k) "SUBSIDIARY CORPORATION" shall mean any corporation (other than the
Corporation) in an unbroken chain of corporations beginning with the
employer corporation if, at the time of granting an Option, each of
the corporations other than the last corporation in the unbroken
chain owns stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other
corporations in such chain.
3. Administration.
The Plan shall be administered by the Compensation and Option Committee of
the Corporation's Board of Directors or such other committee appointed
either by the Board of Directors of the Corporation (the "Board") or by
such Compensation and Option Committee (the "Committee"); provided,
however, to the extent determined necessary to satisfy the requirements
for exemption from Section 16(b) of the Exchange Act with respect to the
acquisition or disposition of securities hereunder, action by the
Committee may be by a subcommittee of a committee of the Board composed
solely of two or more "non-employee directors," within the meaning of Rule
16b-3, appointed by the Board or by the Compensation and Option Committee
of the Board, or by a committee composed solely of two or more
"non-employee directors," within the meaning of Rule 16b-3, as a result of
the refusal of those members who do not qualify as non-employee directors.
Notwithstanding anything in the Plan to the contrary, and to the extent
determined to be necessary to satisfy an exemption under Rule 16b-3 with
respect to a grant hereunder (and, as applicable, with respect to the
disposition to the Corporation of a security hereunder), or as otherwise
determined advisable by the Committee, the terms of such grant and
disposition under the Plan shall be subject to the prior approval of the
Board. Any prior approval of the Board, as provided in the preceding
sentence, shall not otherwise limit or restrict the authority of the
Committee to make grants under the Plan.
The Committee shall have the authority in its discretion, subject to and
not inconsistent with the express provisions of the Plan, to administer
the Plan and to exercise all the powers and authorities either
specifically granted to it under the Plan or necessary or advisable in the
administration of the Plan, including, without limitation, the authority
to grant Options; to determine the purchase price of the shares of Common
Stock covered by each Option (the "Option Price"); to determine the
persons to whom, and the time or times at which, Options shall be granted;
to determine the number of shares to be covered by each Option; to
interpret the Plan; to
3
<PAGE> 4
prescribe, amend and rescind rules and regulations relating to the Plan;
to determine the terms and provisions of the Option Notices (which need
not be identical) entered into in connection with Options granted under
the Plan; and to make all other determinations deemed necessary or
advisable for the administration of the Plan. The Committee may delegate
to one or more of its members or to one or more agents such administrative
duties as it may deem advisable, and the Committee or any person to whom
it has delegated duties as aforesaid may employ one or more persons to
render advice with respect to any responsibility the Committee or such
person may have under the Plan.
The Board shall fill all vacancies, however caused, in the Committee. The
Board may from time to time appoint additional members to the Committee,
and may at any time remove one or more Committee members and substitute
others. One member of the Committee may be selected by the Board as
chairman. The Committee shall hold its meetings at such times and places,
as it shall deem advisable. All determinations of the Committee shall be
made by a majority of its members either present in person or
participating by conference telephone at any meeting or by written
consent. The Committee may appoint a secretary and make such rules and
regulations for the conduct of its business as it shall deem advisable,
and shall keep minutes of its meetings.
No member of the Board or Committee shall be liable for any action taken
or determination made in good faith with respect to the Plan or any Option
granted hereunder.
4. Eligibility.
Options may be granted (i) to employees (including, without limitation,
officers and directors who are employees) and directors (who are not
employees) of the Corporation, its present or future divisions and
Subsidiary Corporations and Parent Corporations and (ii) also to employees
of an affiliated entity of the Corporation (an "Affiliated Entity") which
is designated by the Board to participate in the Plan. In determining the
persons to whom Options shall be granted and the number of shares to be
covered by each Option, the Committee shall take into account the duties
of the respective persons, their present and potential contributions to
the success of the Corporation and such other factors as the Committee
shall deem relevant in connection with accomplishing the purpose of the
Plan.
An Optionee shall be eligible to receive more than one grant of an Option
during the term of the Plan, but only on the terms and subject to the
restrictions hereinafter set forth.
4
<PAGE> 5
5. Stock.
The stock subject to Options hereunder shall be shares of the
Corporation's Common Stock. Such shares may, in whole or in part, be
authorized but unissued shares or shares that shall have been or that may
be reacquired by the Corporation. The aggregate number of shares of Common
Stock as to which Options may be granted from time to time under the Plan
shall not exceed 15,000,000. The limitation established by the preceding
sentence shall be subject to adjustment as provided in Section 8(j)
hereof.
In the event that any outstanding Option under the Plan for any reason
expires or is canceled, surrendered, exchanged or otherwise terminated
without having been exercised in full, the shares of Common Stock
allocable to the unexercised portion of such Option shall (unless the Plan
shall have been terminated) become available for subsequent grants of
Options under the Plan.
6. Automatic Option Grants.
(a) MARCH GRANTS. Each employee of the Corporation, or a Subsidiary
Corporation the ("Employer") who has completed at least one year of
employment on or prior to March 2, 1998 and remains in the
continual employ of Employer shall be granted an Option to
purchased 100 shares of Common Stock (the "March Automatic Grants")
on the first business day in March each year (the "March Grant
Date") beginning in 1998 and continuing through March 2002 provided
however, that an employee otherwise eligible for a grant under this
Section 6(a) will not be granted the March Automatic Grant in any
given year if such employee received a grant pursuant to Section 7
hereof on or during the twelve-month period immediately preceding
the relevant March Grant Date.
(b) ANNIVERSARY GRANTS. Each employee of the Employer who does not
qualify for the March Automatic Grants under Section 6(a) above and
remains in the continual employ of the Employer shall be granted an
Option to purchase 100 shares of Common Stock (The "Anniversary
Automatic Grants", and together with the March Automatic Grants,
the "Automatic Grants") on the first business day in the month
following the month that contains the anniversary date of such
employee's employment (the "Anniversary Grant Date" and, together
with the March Grant Date, the "Grant Date") beginning one year
following the employee's
5
<PAGE> 6
first day of employment and continuing through December 2002
provided however, that an employee otherwise eligible for a grant
under this Section 6(b) will not be granted the Anniversary
Automatic Grant in any given year if such employee received a grant
pursuant to Section 7 hereof on or during the twelve-month period
immediately preceding the relevant Anniversary Grant Date.
Notwithstanding anything herein to the contrary, no Anniversary
Automatic Grants shall be made until such date as the Plan has
received approval from the Inland Revenue of the United Kingdom (the
"Approval"). Once the Approval has been obtained, all grants that
would have been made pursuant to this section 6(b) (the "Delayed
Grants") will be made as soon as practicable following such approval
(the "Delayed Grant Date" and, together with the March Grant Date
and the Anniversary Grant Date, the "Grant Date").
(c) TERMS OF AUTOMATIC GRANTS. In the event that the Optionee's
Employer ceases to be a direct or indirect subsidiary of the
Corporation or in the event of an Acceleration Event (as defined in
Section 8(j)) no further Automatic Grants will be made to such
Optionee pursuant to this Section 6. The Automatic Grants shall be
at the Fair Market Value on the relevant Grant Date and shall
become exercisable as to 20% on the Grant Date and as to 20% on
each anniversary of the Grant Date, until fully exercisable, as
further described in the Option Notice. The Delayed Grants shall
become exercisable as to 20% on the Delayed Grant Date and as to
20% on each anniversary of the date that would have been the
Anniversary Grant Date, until fully exercisable. The Automatic
Grants and the Delayed Grants shall be subject to the terms set out
in this Plan and in the Option Notice reflecting the grant. For
the avoidance of doubt, this Section 6 may be suspended,
terminated, modified or amended at any time by the Board, subject
to Section 11 hereof.
7. Discretionary Option Grants.
The Committee may make discretionary option grants under this Plan. Such
grants will be subject to the terms set forth in the Option Notice and in
the Plan. The Committee shall determine eligibility for option grants
pursuant to this Section 7 in its sole discretion.
6
<PAGE> 7
8. Terms and Conditions of Options.
Each Option granted pursuant to the Plan shall be evidenced by a written
notice (an "Option Notice") from the Corporation to the Optionee, which
Notice shall comply with and be subject to the following terms and
conditions:
(a) NUMBER OF SHARES. Each Option Notice shall state the number of
shares of Common Stock to which the Option relates.
(b) TYPE OF OPTION. Each Option Notice shall specifically identify the
Option as a nonqualified stock option.
(c) OPTION PRICE. Each Option Notice shall state the Option Price, which
shall be determined by the Committee. The Option Price shall be
subject to adjustment as provided in Section 8(i) hereof. An Option
shall be considered to be granted on the date the Committee adopts a
resolution expressly granting such Option.
(d) MEDIUM AND TIME OF PAYMENT. Options may be exercised in whole or in
part at any time during the option period by giving written notice
of exercise to the Corporation specifying the number of shares to be
purchased, accompanied by payment of the purchase price. Payment of
the purchase price shall be made in such manner as the Committee may
provide in the Option Notice, which may include cash (including cash
equivalents, such as by certified or bank check payable to the
Corporation), delivery of unrestricted shares of Common Stock that
have been owned by the Optionee or, as applicable, a permissible
transferee (as provided in Section 8(i)) for at least six months,
any other manner permitted by law as determined by the Committee, or
any combination of the foregoing.
(e) TERM AND EXERCISE OF OPTIONS. Options shall be exercisable over the
exercise period as and at the times and upon the conditions that the
Committee may determine, as reflected in the Option Notice;
provided, however, that the Committee shall have the authority to
accelerate the exercisability of any outstanding Option at such time
and under such circumstances as it, in its sole discretion, deems
appropriate; and further provided, however, that such exercise
period shall not exceed ten (10) years from the date of grant of
such Option. The exercise period shall be subject to earlier
termination as provided in Sections 8(g) and 8(h) hereof. An Option
may be exercised, as to any or all full shares of Common Stock as to
which the Option has become exercisable, by
7
<PAGE> 8
giving written notice of such exercise to the Committee or to such
individual(s) as the Committee may from time to time designate.
(f) Intentionally Left Blank
(g) TERMINATION. Except as provided in this Section 8(g) and in Section
8(h) hereof, an Option may not be exercised by the Optionee to whom
it was granted or by a transferee to whom such Option was
transferred (as provided in Section 8(i)) unless the Optionee is
then in the employ of the Corporation or a division or any
corporation which was, at the time of grant of such Option, a
Subsidiary Corporation or Parent Corporation thereof (or a
corporation or a Parent or Subsidiary Corporation of such
corporation issuing or assuming the Option in a corporate
transaction) or an affiliated entity, and unless the Optionee has
remained continuously so employed since the date of grant of the
Option. In the event that the employment of an Optionee shall
terminate (other than by reason of death, Disability or retirement),
all Options granted to such Optionee or transferred by such Optionee
(as provided in Section 8(i)) that are exercisable at the time of
such termination may, unless earlier terminated in accordance with
their terms, be exercised by the Optionee or by a transferee within
three (3) months after such termination; provided, however, that if
the employment of an Optionee shall terminate for cause, all Options
theretofore granted to such Optionee or transferred by such Optionee
(as provided in Section 8(i)) shall, to the extent not theretofore
exercised, terminate forthwith. Nothing in the Plan or in any Option
granted pursuant hereto shall confer upon an individual any right to
continue in the employ of the Corporation or any of its divisions,
Parent or Subsidiary Corporations or Affiliated entities or
interfere in any way with the right of the Corporation or any such
division, Parent or Subsidiary Corporation or affiliated entity to
terminate such employment.
(h) DEATH, DISABILITY OR RETIREMENT OF OPTIONEE. If an Optionee shall
die while employed by the Corporation or a division thereof or any
corporation which was, at the time of grant of such Option, a
Subsidiary Corporation or Parent Corporation thereof (or a
corporation or a Parent or Subsidiary Corporation of such
corporation issuing or assuming the Option in a corporate
transaction) or an Affiliated Entity, or within three (3) months
after the termination of such Optionee's employment, other than for
cause, or if the Optionee's employment shall terminate by reason of
Disability or retirement (as determined by the
8
<PAGE> 9
Committee in its sole discretion), all Options theretofore granted
to such Optionee or transferred by such Optionee (as provided in
Section 8(i)), to the extent otherwise exercisable at the time of
death or termination of employment, may, unless earlier terminated
in accordance with their terms, be exercised by the Optionee or by
the Optionee's estate or by a person who acquired the right to
exercise such Option by bequest or inheritance or otherwise by
reason of the death or Disability of the Optionee, or by a
transferee (as provided in Section 8(i)), at any time within one
year after the date of death, Disability or retirement of the
Optionee.
(i) NONTRANSFERABILITY OF OPTIONS. Except as provided in this Section
8(i), no Option granted hereunder shall be transferable by the
Optionee to whom granted, other than by will or the laws of descent
and distribution, and the Option may be exercised during the
lifetime of such Optionee only by the Optionee or such Optionee's
guardian or legal representative. To the extent the Option Notice so
provides, and subject to such conditions as the Committee may
prescribe, an Optionee may, upon providing written notice to the
General Counsel of the Corporation, elect to transfer the
Nonqualified Stock Options granted to such Optionee pursuant to such
agreement, without consideration therefor, to members of his or her
"immediate family" (as defined below), to a trust or trusts
maintained solely for the benefit of the Optionee and/or the members
of his or her immediate family, or to a partnership or partnerships
whose only partners are the Optionee and/or the members of his or
her immediate family. Any purported assignment, alienation, pledge,
attachment, sale, transfer, or encumbrance that does not qualify as
a permissible transfer under this Section 8(i) shall be void and
unenforceable against the Plan and the Corporation. For purposes of
this Section 8(i), the term "immediate family" shall mean, with
respect to a particular Optionee, the Optionee's spouse, children or
grandchildren, and such other persons as may be determined by the
Committee. The terms of any such Option and the Plan shall be
binding upon a permissible transferee, and the beneficiaries,
executors, administrators, heirs and successors of the Optionee and,
as applicable, a permissible transferee.
(j) EFFECT OF CERTAIN CHANGES.
(1) If there is any change in the number of shares of Common Stock
through the declaration of stock or cash dividends, or
recapitalization resulting in
9
<PAGE> 10
stock splits, or combinations or exchanges of such shares, or
other corporate transactions affecting the capitalization of
the Corporation, the aggregate number of shares of Common
Stock available for Options, the number of such shares covered
by outstanding Options, and the price per share of such
Options shall be proportionately adjusted by the Committee to
reflect any increase or decrease in the number of issued
shares of Common Stock; provided, however, that any fractional
shares resulting from such adjustment shall be rounded to the
nearest whole share. In the event of any other extraordinary
corporate transaction, including but not limited to
distributions of cash or other property to the Corporation's
shareholders, the Committee may equitably adjust outstanding
Options as it deems appropriate.
(2) In the event of the proposed dissolution or liquidation of the
Corporation, in the event of any corporate separation or
division, including, but not limited to, split-up, split-off
or spin-off, or in the event of a merger or consolidation of
the Corporation with another corporation, the Committee may
provide that the holder of each Option then exercisable shall
have the right to exercise such Option (at its then Option
Price) solely for the kind and amount of shares of stock and
other securities, property, cash or any combination thereof
receivable upon such dissolution, liquidation, or corporate
separation or division, or merger or consolidation by a holder
of the number of shares of Common Stock for which such Option
might have been exercised immediately prior to such
dissolution, liquidation, or corporate separation or division,
or merger or consolidation.
(3) If there is an "Acceleration Event" while unexercised Options
remain outstanding under the Plan then from and after the date
of the Acceleration Event (the "Acceleration Date"), all
Options that have not expired or terminated in accordance with
the Plan or the Option Notice shall be exercisable in full,
whether or not otherwise exercisable. Following the
Acceleration Date, the Committee shall, in the case of a
merger, consolidation or sale or disposition of assets,
promptly make an appropriate adjustment to the number and
class of shares of Common Stock available for Options, and to
the amount and kind of shares or other securities or property
receivable upon
10
<PAGE> 11
exercise of any outstanding Options after the effective date
of such transaction, and the price thereof.
An "Acceleration Event" shall be deemed to have occurred if
the event set forth in any one of the following paragraphs
shall have occurred:
(i) Any Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the
Corporation (not including in the securities
beneficially owned by such Person any securities
acquired directly from the Corporation or its
Affiliates) representing 20% or more of the combined
voting power of the Corporation's then outstanding
securities, excluding any Person who becomes such a
Beneficial Owner in connection with a transaction
described in clause (a) of Paragraph (iii) below; or
(ii) the following individuals cease for any reason to
constitute a majority of the number of directors then
serving: individuals who, on the date hereof,
constitute the Board and any new director (other than a
director whose initial assumption of office is in
connection with an actual or threatened election
contest, including but not limited to a consent
solicitation, relating to the election of directors of
the Corporation) whose appointment or election by the
Board or nomination for election by the Corporation's
stockholders was approved or recommended by a vote of
at least two-thirds (2/3) of the directors then still
in office who either were directors on the date hereof
or whose appointment, election or nomination for
election was previously so approved or recommended; or
(iii) there is consummated a merger or consolidation of the
Corporation or any direct or indirect subsidiary of the
Corporation with any other corporation, other than (a) a
merger or consolidation which would result in the voting
securities of the Corporation outstanding immediately
prior to such merger or consolidation continuing to
represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity
or any parent thereof) at least 60% of the
11
<PAGE> 12
combined voting power of the securities of the
Corporation or such surviving entity or any parent
thereof outstanding immediately after such merger or
consolidation, or (b) a merger or consolidation effected
to implement a recapitalization of the Corporation (or
similar transaction) in which no Person is or becomes
the Beneficial Owner, directly or indirectly, of
securities of the Corporation (not including in the
securities beneficially owned by such Person any
securities acquired directly from the Corporation or its
Affiliates) representing 20% or more of the combined
voting power of the Corporation's then outstanding
securities; or
(iv) the stockholders of the Corporation approve a plan of
complete liquidation or dissolution of the Corporation
or there is consummated an agreement for the sale or
disposition by the Corporation of all or substantially
all of the Corporation's assets, other than a sale or
disposition by the Corporation of all or substantially
all of the Corporation's assets to an entity, at least
60% of the combined voting power of the voting
securities of which are owned by the stockholders of the
Corporation in substantially the same proportions as
their ownership of the Corporation immediately prior to
such sale.
Notwithstanding the foregoing, an "Acceleration Event" shall
not be deemed to have occurred by virtue of the consummation
of any transaction or series of integrated transactions
immediately following which the record holders of the common
stock of the Corporation immediately prior to such transaction
or series of transactions continue to have substantially the
same proportionate ownership in an entity which owns all or
substantially all of the assets of the Corporation immediately
following such transaction or series of transactions.
(4) To the extent that the foregoing adjustments relate to stock
or securities of the Corporation, such adjustments shall be
made by the Committee, whose determination in that respect
shall be final, binding and conclusive.
(k) RIGHTS AS A STOCKHOLDER. An Optionee or a transferee of an Option
shall have no rights as a stockholder with respect to any shares
covered by the Option until the
12
<PAGE> 13
date of the issuance of a stock certificate to him for such shares.
No adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash, securities or other property) or
distribution of other rights for which the record date is prior to
the date such stock certificate is issued, except as provided in
Section 8(j) hereof.
(l) RIGHTS AS AN EMPLOYEE. Nothing in the Plan or in any instrument
executed pursuant to the Plan will confer upon any Optionee any
right to continue in the employ of the Corporation or affect the
right of the Corporation to terminate the employment of any Optionee
at any time with or without cause.
(m) OTHER PROVISIONS. The Option Notices authorized under the Plan shall
contain such other provisions, including, without limitation, the
imposition of restrictions upon the exercise of an Option and the
inclusion of any condition as the Committee shall deem advisable.
9. Agreement by Optionee Regarding Withholding Taxes.
As a condition of exercise, each Optionee agrees that:-
(a) no later than the date of exercise of any Option granted hereunder,
the Optionee will pay to the Corporation or make arrangements
satisfactory to the Committee regarding payment of any federal,
state or local taxes of any kind required by law to be withheld upon
the exercise of such Option including, without limitation, any
income tax payable by deduction in the United Kingdom; and
(b) the Corporation shall, to the extent permitted or required by law,
have the right to deduct federal, state and local and employment
taxes of any kind required by law to be withheld upon the exercise
of such Option including, without limitation, any income tax payable
by deduction in the United Kingdom, from any payment of any kind
otherwise due to the Optionee.
10. Term of Plan.
Options may be granted pursuant to the Plan from time to time within a
period of ten (10) years from the date the Plan is adopted by the Board.
11. Amendment and Termination of the Plan.
The Board at any time and from time to time may suspend, terminate, modify
or amend the Plan. Except as provided in
13
<PAGE> 14
Section 8 hereof, no suspension, termination, modification or amendment of
the Plan may adversely affect any Option previously granted, unless the
written consent of the Optionee or, as applicable, a permissible
transferee (as provided in Section 8(i)) is obtained. No amendment to this
Plan shall become effective to the extent that it applies to Approved
Options (as defined in the addendum hereto)unless it is approved by the UK
Inland Revenue.
12. Interpretation.
The Plan is designed and intended to comply with Rule 16b-3 and all
provisions hereof shall be construed in a manner to so comply.
13. Effect of Headings.
The section and subsection headings contained herein are for convenience
only and shall not affect the construction hereof.
14. Governing Law.
The Plan shall be governed by the laws of the State of Delaware.
15. Effective Date of Plan.
The effective date of the Plan is the date the Plan is adopted by the
Board.
14
<PAGE> 15
ADDITIONAL SECTIONS FOR UK
16. Purpose.
(a) The purpose of these additional sections for UK Participants is to
obtain Approved Share Option Scheme Status for UK Participants under
the Plan as modified by these additional sections ("the Subplan").
These sections are to be read as a continuation of the Plan and only
modify the Plan as it relates to the Stock Options granted under the
Plan to UK Participants. These sections do not apply to or modify
the Plan in respect of any other participants.
(b) The Board has adopted these additional sections in accordance
with Section 11.
17. Definitions.
(a) The following additional capitalized definitions shall have the
respective meanings set forth below:-
"APPROVED OPTION" means a stock option granted under the Subplan to
a UK Participant while the Subplan is approved by the UK Inland
Revenue under the Taxes Act.
"CONTROL" has the meaning given by Section 840 of the Taxes Act.
"LIMIT" means the limit of (pound)30,000 (thirty thousand pounds
sterling) on the aggregate Fair Market Value of all the Common Stock
or shares which a UK Participant may acquire on the exercise in full
of all unexercised Approved Options granted to him under this
Subplan and other share option plans (other than a savings-related
share option plan) adopted by the Company or any associated company
(as defined by s416 of the Taxes Act) and approved by the UK Inland
Revenue under the Taxes Act or such other amount as may from time to
time be specified by paragraph 28(I) of Schedule 9 to the Taxes Act.
"TAXES ACT" means the (UK) Income and Corporation Taxes Act 1988.
"UK PARTICIPANTS" means a full-time director (that is to say is
required to work not less than 25 hours per week (excluding meal
breaks)) or employee of the Company or its Subsidiaries who has been
selected by the Committee to receive an Approved Option under the
Subplan and is
15
<PAGE> 16
not ineligible to participate (that is to say be granted or to
exercise Approved Options) in the Subplan by virtue of paragraph 8
of Schedule 9 to the Taxes Act.
(b) The following definitions in Section 2 shall be modified as set
forth below in relation to Approved Options only and shall be so
construed throughout the Subplan:-
"SUBSIDIARY" means any business entity in which the Corporation owns
directly or indirectly more than fifty per cent (50%) of the total
combined voting power.
"COMMON STOCK" means Common Stock of the Corporation which satisfies
the provisions of paragraphs 10 to 14 inclusive of Schedule 9 to the
Taxes Act.
"FAIR MARKET VALUE" means the market value of Stock determined in
accordance with the provisions of Part VIII of the Taxation of
Chargeable Gains Act 1992 and agreed in advance for the purposes of
the Subplan with the Inland Revenue Shares Valuation Division.
"OPTION" means Approved Options only.
18. Eligibility.
Section 4 of the Plan shall be modified in relation to Approved Options
so that:-
All UK Participants are eligible to participate in the Plan.
19. Terms and Conditions of Options.
(a) Section 8(b) shall be modified in relation to Approved Options to
read:-
"Each Option Notice shall specifically identify the Approved Option
as an "Approved Option"."
(b) Section 8(c) shall be modified in relation to Approved Options to
read:-
"Each Option Notice shall state the Option Price which:-
(1) shall not be less than the nominal value of the Common
Stock; and
(2) subject to Section 8(j) shall not be less than the Fair Market
Value on the date of grant of the Option. An Option shall be
considered to be expressly granted on the date the Committee
adopts a
16
<PAGE> 17
resolution expressly granting such Option."
(c) Section 8(d) shall be modified in relation to Approved Options by
replacing the following words:-
"Payment of the purchase price shall be made ......... as determined
by the Committee, or any combination of the foregoing"
with the following words:-
"Within 30 days of the exercise of an Approved Option the Committee
shall allot or procure the transfer of the shares of Common Stock in
respect of which the Option has been validly exercised."
(d) Section 8(f) shall be modified in relation to Approved Options by
inserting the following:-
"No Approved Options shall be granted to UK Participants in excess
of the Limit."
(e) Section 8(g) shall be deleted in relation to Approved Options and be
replaced with the following:-
"Save as otherwise provided in this Subplan, an Approved Option may
not be exercised by the Optionee unless the Optionee is then in the
employ of the Corporation or a division or any corporation which
was, at the time of grant of such Option, a Subsidiary Corporation,
and the Optionee has remained continuously so employed since the
date of grant of the Option."
(f) Section 8(h) shall be deleted in relation to Approved Options and be
replaced with the following:-
"(1) An Approved Option may be exercised by the personal
representatives of a deceased UK Participant within the period
of one year following the date of his death provided that such
deceased UK Participant is not precluded by Paragraph 8 of
Schedule 9 from exercising such Approved
Option.
(2) If a UK Participant ceases to be a director or employee of the
Corporation or any Subsidiary on account of injury,
ill-health, disability, redundancy or retirement or any other
reason which the Committee reasonably considers justifies the
exercise of the Approved Option, the Approved Option may be
exercised within the period of three months following such
cessation or, at the discretion of
17
<PAGE> 18
the Committee, not later than three months after the first
date following such cessation upon which the Approved Option
could be exercised in circumstances in which section 185(3) of
the Taxes Act would apply."
(g) Section 8(i) shall be deleted in relation to Approved Options and be
replaced with the following:-
"No Option may be transferred, assigned or charged and any purported
transfer assignment or charge shall cease the Option to lapse
forthwith."
(h) Section 8(j)(1) shall be deleted in relation to Approved Options and
be replaced with the following:-
"In the event of any variation of the share capital of the
Corporation by way of capitalization or rights issue, consolidation,
sub-division or reduction of capital or otherwise, the number of
shares of Common Stock subject to any Approved Option and the option
price for each of these shares shall be adjusted in such manner as
the Committee is satisfied is fair and reasonable provided that:-
(1) the aggregate amount payable on the exercise of an Approved
Option in full is not increased;
(2) the option price for a share of Common Stock is not reduced
below its nominal value;
(3) no adjustment shall be made without the prior approval of the
Board of the Inland Revenue; and
(4) following the adjustment the shares of Common Stock continue
to satisfy the conditions specified in Paragraphs 10 to 14
inclusive of Schedule 9."
(i) Section 8(j)(3) shall be modified in relation to Approved Options by
inserting the following:-
"If any company ("the Acquiring Company"):
(1) obtains Control of the Corporation as a result either of
making a general offer to acquire the whole of the issued
share capital of the Corporation which is made on a condition
such that if it is satisfied the person making the offer will
have Control of the Corporation, or making an offer to acquire
all the common stock in the Corporation which is of the same
class as the Common Stock; or
18
<PAGE> 19
(2) obtains Control of the Corporation in pursuance of a
compromise or arrangement sanctioned by the court under
section 425 of the (UK) Companies Act 1985 (or legislation
that the Inland Revenue agrees is the overseas equivalent
thereof); or
(3) becomes bound or entitled to acquire common stock in the
Corporation under sections 428 to 430 of the (UK) Companies
Act 1985 (or legislation that the Inland Revenue agrees is the
overseas equivalent thereof);
any UK participant may at any time within:
(4) the period of six months following the offerer obtaining
Control of the Corporation and the satisfaction of any
condition to which the offer was made pursuant to subsection
(1) above;
(5) the period of six months following the court sanctioning the
compromise or arrangement pursuant to subsection (2) above; or
(6) the period during which the Acquiring Company remains bound or
entitled to acquire the Common Stock pursuant to subsection
(3) above;
by agreement with the Acquiring Company release his old Approved
Option ("the Old Option") in consideration of the grant to him of a
new Approved Option ("the New Option") which:
(7) relates to shares in a different company (whether the
Acquiring Company itself or some other company) which on the
assumption that the Acquiring Company were the grantor of the
Approved Option would be a company falling within Paragraph
10(b) or (c) of Schedule 9;
(8) is a right to acquire such number of shares as on acquisition
of the New Option has an aggregate Fair Market Value equal to
the aggregate Fair Market Value of the shares of Common Stock
subject to the Old Option on its release;
(9) has an acquisition price per share such that the aggregate
price payable on complete exercise equals the aggregate option
price which would have been payable on complete exercise of
the Old Option; and
19
<PAGE> 20
(10) is otherwise equivalent to the Old Option (as defined in
Paragraph 15(3) of Schedule 9).
The New Option shall, for all other purposes of this Plan, be
treated as having been acquired at the same time as the Old Option
and, following release of the Old Option and the grant of the New
Option, for the purposes of applying these rules thereto:
(11) "Corporation" and "shares" in relation to the New Options
shall be construed as if references to the Corporation and to
the shares of Common Stock were references to the Acquiring
Company and to shares in the Acquiring Company or (as the case
may be) to the other company to which the New Options relate
and to the shares in that other company; and
(12) "Committee" shall mean the board of directors of the Acquiring
Company or that other company or any committee designated to
administer the Plan under Section 3.
(j) Section 8(m) shall be modified in relation to Approved Options so
that the word "objective" is inserted before "condition".
20. Administration of Plans and Amendments.
In relation to Approved Options, Section 11 shall be read as if the
following sentence had been added at the end thereof:-
(a) "No amendments to the Subplan or to the Plan insofar as it applies
to Approved Options shall become effective until they are approved
by the UK Inland Revenue.
(b) No Approved Options may be granted unless and until the Subplan is
approved by the UK Inland Revenue."
20
<PAGE> 21
Users/Hochman/General/NTL 1998 Non-Qualified Stock Option Plan
21
<PAGE> 1
Exhibit 10.5
================================================================================
BRIDGE LOAN AGREEMENT
dated as of
March 17, 1999
among
NTL INCORPORATED
as Borrower,
--------------------
THE LENDERS named herein,
--------------------
and
GOLDMAN SACHS CREDIT PARTNERS L.P.,
as Arranger and Administrative Agent
================================================================================
<PAGE> 2
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS.......................................................1
SECTION 1.1. DEFINED TERMS...................................................1
SECTION 1.2. INTERPRETATION.................................................22
ARTICLE II. THE CREDIT FACILITY.............................................22
SECTION 2.1. COMMITMENTS TO MAKE BRIDGE LOANS...............................22
SECTION 2.2. OPTION TO EXCHANGE BRIDGE LOANS FOR EXCHANGE NOTES.............23
SECTION 2.3. INTEREST; DEFAULT INTEREST.....................................24
SECTION 2.4. MANDATORY PREPAYMENT...........................................25
SECTION 2.5. OPTIONAL PREPAYMENT............................................25
SECTION 2.6. BREAKAGE COSTS; INDEMNITY......................................26
SECTION 2.7. EFFECT OF NOTICE OF PREPAYMENT.................................26
SECTION 2.8. PAYMENTS.......................................................26
SECTION 2.9. TAXES..........................................................28
SECTION 2.10. RIGHT OF SET OFF; SHARING OF PAYMENTS, ETC....................31
SECTION 2.11. CERTAIN FEES..................................................32
ARTICLE III. REPRESENTATIONS AND WARRANTIES.................................32
SECTION 3.1. [INTENTIONALLY OMITTED]........................................32
SECTION 3.2. ORGANIZATION; POWERS...........................................32
SECTION 3.3. DUE AUTHORIZATION AND ENFORCEABILITY...........................32
SECTION 3.4. NO CONFLICTS...................................................33
SECTION 3.5. NO VIOLATIONS; MATERIAL CONTRACTS..............................33
SECTION 3.6. CAPITAL STOCK; SUBSIDIARIES....................................33
SECTION 3.7. LIENS..........................................................34
SECTION 3.8. NO VIOLATION OF REGULATIONS OF BOARD OF GOVERNORS OF FEDERAL
RESERVE SYSTEM................................................34
SECTION 3.9. GOVERNMENTAL REGULATIONS.......................................34
SECTION 3.10. FINANCIAL STATEMENTS; NO UNDISCLOSED LIABILITIES..............34
SECTION 3.11. FULL DISCLOSURE...............................................35
SECTION 3.12. PRIVATE OFFERING; RULE 144A MATTERS...........................35
SECTION 3.13. ABSENCE OF PROCEEDINGS........................................36
SECTION 3.14. TAXES.........................................................36
SECTION 3.15. FINANCIAL CONDITION; SOLVENCY.................................36
SECTION 3.16. ABSENCE OF CERTAIN CHANGES....................................36
SECTION 3.17. YEAR 2000 COMPLIANCE..........................................36
SECTION 3.18. PROPERTIES....................................................37
SECTION 3.19. PERMITS; REGISTRATION.........................................37
SECTION 3.20. ERISA.........................................................37
SECTION 3.21. ENVIRONMENTAL MATTERS.........................................38
SECTION 3.22. ACQUIRED BUSINESS.............................................38
ARTICLE IV. COVENANTS.......................................................38
SECTION 4.1. USE OF PROCEEDS................................................38
SECTION 4.2. NOTICE OF DEFAULT AND RELATED MATTERS..........................38
SECTION 4.3. REPORTS........................................................39
SECTION 4.4. COMPLIANCE CERTIFICATE.........................................39
SECTION 4.5. TAXES..........................................................40
SECTION 4.6. STAY, EXTENSION AND USURY LAWS.................................40
SECTION 4.7. RESTRICTED PAYMENTS............................................40
SECTION 4.8. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED
SUBSIDIARIES..................................................43
SECTION 4.9. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK.....44
SECTION 4.10. ASSET SALES...................................................46
SECTION 4.11. TRANSACTIONS WITH AFFILIATES..................................48
SECTION 4.12. LIENS.........................................................49
i
<PAGE> 3
SECTION 4.13. CHANGE OF CONTROL.............................................49
SECTION 4.14. CORPORATE EXISTENCE...........................................50
SECTION 4.15. [INTENTIONALLY OMITTED].......................................50
SECTION 4.16. ADDITIONAL AMOUNTS............................................50
SECTION 4.17. [INTENTIONALLY OMITTED].......................................51
SECTION 4.18. [INTENTIONALLY OMITTED].......................................51
SECTION 4.19. MERGER; SALE OF ALL OR SUBSTANTIALLY ALL ASSETS...............51
SECTION 4.20. INSPECTION RIGHTS.............................................51
SECTION 4.21. SPECIAL RIGHTS................................................52
SECTION 4.22. NOTE GUARANTEES...............................................52
SECTION 4.23. OFFER TO PURCHASE.............................................53
ARTICLE V. CONDITIONS.......................................................53
SECTION 5.1. CORPORATE AND OTHER PROCEEDINGS................................53
SECTION 5.2. [INTENTIONALLY OMITTED]........................................54
SECTION 5.3. ABSENCE OF CERTAIN CHANGES.....................................54
SECTION 5.4. MARKET DISRUPTION..............................................54
SECTION 5.5. FINANCIAL STATEMENTS...........................................55
SECTION 5.6. LITIGATION, ETC................................................55
SECTION 5.7. PAYMENT OF FEES AND EXPENSES...................................55
SECTION 5.8. ESCROW AGREEMENT...............................................55
SECTION 5.9. EXCHANGE NOTES.................................................55
SECTION 5.10. REGISTRATION RIGHTS AGREEMENT.................................55
SECTION 5.11. DELIVERY OF OPINIONS..........................................56
SECTION 5.12. [INTENTIONALLY OMITTED].......................................56
SECTION 5.13. NO BREACH; NO DEFAULT.........................................56
SECTION 5.14. OTHER CONDITIONS..............................................56
SECTION 5.15. REPRESENTATIONS AND WARRANTIES................................56
SECTION 5.16. NO BREACH; NO DEFAULT.........................................56
SECTION 5.17. ABSENCE OF CERTAIN CHANGES....................................57
SECTION 5.18. MARKET DISRUPTION.............................................57
SECTION 5.19. FINANCIAL STATEMENTS..........................................57
SECTION 5.20. LITIGATION, ETC...............................................58
SECTION 5.21. PAYMENT OF FEES AND EXPENSES..................................58
SECTION 5.22. BORROWING NOTICE; BRIDGE NOTES................................58
SECTION 5.23. OFFER TO PURCHASE.............................................58
SECTION 5.24. SOLVENCY......................................................58
SECTION 5.25. ADDITIONAL MATTERS............................................59
ARTICLE VI. TRANSFER OF THE LOANS, THE INSTRUMENTS EVIDENCING SUCH
LOANS AND THE SECURITIES; REPRESENTATIONS OF LENDERS;
PARTICIPATIONS.................................................59
SECTION 6.1. TRANSFER OF THE LOANS, THE INSTRUMENTS EVIDENCING THE LOANS AND
THE SECURITIES................................................59
SECTION 6.2. PERMITTED ASSIGNMENTS..........................................59
SECTION 6.3. PERMITTED PARTICIPANTS; EFFECT.................................60
SECTION 6.4. DISSEMINATION OF INFORMATION...................................60
SECTION 6.5. TAX TREATMENT..................................................61
SECTION 6.6. REPLACEMENT SECURITIES UPON TRANSFER OR EXCHANGE...............61
SECTION 6.7. REGISTER.......................................................61
ARTICLE VII. EVENTS OF DEFAULT..............................................61
SECTION 7.1. EVENTS OF DEFAULT..............................................61
SECTION 7.2. ACCELERATION...................................................63
SECTION 7.3. RIGHTS AND REMEDIES............................................63
SECTION 7.4. WAIVER OF PAST DEFAULTS........................................64
SECTION 7.5. RIGHTS OF LENDERS TO RECEIVE PAYMENT...........................64
ARTICLE VIII. DEBT SECURITIES...............................................64
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<PAGE> 4
SECTION 8.1. DEBT SECURITIES................................................64
ARTICLE IX. TERMINATION.....................................................64
SECTION 9.1. TERMINATION....................................................64
SECTION 9.2. SURVIVAL OF CERTAIN PROVISIONS.................................64
ARTICLE X. INDEMNITY........................................................64
SECTION 10.1. INDEMNIFICATION...............................................64
SECTION 10.2. SETTLEMENT OF CLAIMS..........................................65
SECTION 10.3. APPEARANCE EXPENSES...........................................65
SECTION 10.4. INDEMNITY FOR TAXES, RESERVES AND EXPENSES....................66
SECTION 10.5. SURVIVAL OF INDEMNIFICATION...................................66
SECTION 10.6. LIABILITY NOT EXCLUSIVE; PAYMENTS.............................67
ARTICLE XI. THE ADMINISTRATIVE AGENT; THE ARRANGER..........................67
SECTION 11.1. APPOINTMENT...................................................67
SECTION 11.2. DELEGATION OF DUTIES..........................................67
SECTION 11.3. EXCULPATORY PROVISIONS........................................67
SECTION 11.4. RELIANCE BY THE ADMINISTRATIVE AGENT..........................68
SECTION 11.5. NOTICE OF DEFAULT.............................................68
SECTION 11.6. NON-RELIANCE ON THE ADMINISTRATIVE AGENT AND OTHER LENDERS....68
SECTION 11.7. INDEMNIFICATION...............................................69
SECTION 11.8. ADMINISTRATIVE AGENT, IN ITS INDIVIDUAL CAPACITY..............69
SECTION 11.9. SUCCESSOR ADMINISTRATIVE AGENT................................69
SECTION 11.10. ARRANGER....................................................70
ARTICLE XII. MISCELLANEOUS..................................................70
SECTION 12.1. EXPENSES; DOCUMENTARY TAXES...................................70
SECTION 12.2. NOTICES.......................................................70
SECTION 12.3. CONSENT TO AMENDMENTS AND WAIVERS.............................71
SECTION 12.4. PARTIES.......................................................72
SECTION 12.5. NEW YORK LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.72
SECTION 12.6. REPLACEMENT NOTES.............................................72
SECTION 12.7. [INTENTIONALLY OMITTED].......................................73
SECTION 12.8. MARSHALLING; RECAPTURE........................................73
SECTION 12.9. LIMITATION OF LIABILITY.......................................73
SECTION 12.10. INDEPENDENCE OF COVENANTS....................................73
SECTION 12.11. CURRENCY INDEMNITY...........................................73
SECTION 12.12. WAIVER OF IMMUNITY...........................................73
SECTION 12.13. FREEDOM OF CHOICE............................................74
SECTION 12.14. SUCCESSORS AND ASSIGNS.......................................74
SECTION 12.15. MERGER.......................................................74
SECTION 12.16. SEVERABILITY CLAUSE..........................................74
SECTION 12.17. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO
SURVIVE DELIVERY............................................75
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EXHIBIT A FORM OF ASSIGNMENT AND ACCEPTANCE
EXHIBIT B FORM OF BRIDGE NOTE
EXHIBIT C FORM OF REGISTRATION RIGHTS AGREEMENT
EXHIBIT D FORM OF ESCROW AGREEMENT
EXHIBIT E FORM OF EXCHANGE NOTE INDENTURE
EXHIBIT F-1 FORM OF OPINION OF SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
EXHIBIT F-2 FORM OF OPINION OF IN-HOUSE COUNSEL
EXHIBIT G-1 FORM OF BRIDGE NOTE GUARANTEE
EXHIBIT G-2 FORM OF EXCHANGE NOTE GUARANTEE
EXHIBIT H-1 FORM OF OPINION TO BE DELIVERED IN CONNECTION WITH BRIDGE NOTE
GUARANTEE
EXHIBIT H-2 FORM OF OPINION TO BE DELIVERED IN CONNECTION WITH EXCHANGE NOTE
GUARANTEE
EXHIBIT I FORM OF SOLVENCY CERTIFICATE
SCHEDULES:
SCHEDULE 2.4 PERMITTED ISSUANCES UNDER SECTION 2.4
SCHEDULE 3.6 AUTHORIZED CAPITALIZATION OF THE BORROWER
SCHEDULE 3.10(a) CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENTS OF
INCOME AND CASH FLOWS OF THE BORROWER
SCHEDULE 3.10(b) BALANCE SHEET AND STATEMENTS OF INCOME OF DIAMOND CABLE
COMMUNICATIONS PLC.
SCHEDULE 3.10(c) PRO FORMA CONSOLIDATED BALANCE SHEET AND CONSOLIDATED
STATEMENTS OF INCOME AND CASH FLOWS OF THE BORROWER
SCHEDULE 3.13 ABSENCE OF PROCEEDINGS
SCHEDULE 5.3 ABSENCE OF CERTAIN CHANGES
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<PAGE> 6
THIS BRIDGE LOAN AGREEMENT, dated as of March 17, 1999 (as amended,
restated and/or otherwise modified from time to time, this "Agreement"), is by
and between:
(a) NTL Incorporated, a Delaware corporation (the "Borrower") and
(b) Goldman Sachs Credit Partners L.P., as arranger and
administrative agent (the "Administrative Agent").
The parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.1. Defined Terms. As used in this Agreement, the following
terms shall have the meanings specified below:
"9 1/8% and 10% Diamond Indenture" means the Indenture dated as of
February 6, 1998, between the Acquired Business and The Bank of New York,
relating to the 9 1/8% Diamond Notes and the 10% Diamond Notes.
"10 3/4% Diamond Indenture" means the Indenture dated as of February
27, 1997, between the Acquired Business and The Bank of New York, relating to
the 10 3/4% Diamond Notes.
"11 3/4% Diamond Indenture" means the Indenture dated as of December
15, 1995, between the Acquired Business and The Bank of New York, relating to
the 11 3/4% Diamond Notes.
"13 1/4% Diamond Indenture" means the Indenture dated as of
September 28, 1994, between the Acquired Business and The Bank of New York,
relating to the 13 1/4% Diamond Notes.
"9 1/8% Diamond Notes" means the Acquired Business's 9 1/8% Senior
Notes due February 1, 2008 issued pursuant to the 9 1/8% and 10% Diamond
Indenture.
"10% Diamond Notes" means the Acquired Business's 10% Senior Notes
due February 1, 2008 pursuant to the 9 1/8 and 10% Diamond Indenture.
"10 3/4% Diamond Notes" means the Acquired Business's 10 3/4% Senior
Discount Notes due February 15, 2007 issued pursuant to the 10 3/4% Diamond
Indenture.
"11 3/4% Diamond Notes" means the Acquired Business's 11 3/4% Senior
Discount Notes due December 15, 2005 issued pursuant to the 11 3/4% Diamond
Indenture.
"13 1/4% Diamond Notes" means the Acquired Business's 13 1/4% Senior
Discount Notes due September 13, 2004 issued pursuant to the 13 1/4% Diamond
Indenture.
"9 1/2% Notes" means the Borrower's 9 1/2% Senior Notes due 2008 and
the Borrower's 9 1/2% Series B Senior Notes due 2008.
"9 3/4% Notes" means the Borrower's 9 3/4% Senior Deferred Coupon
Notes due 2008 and the Borrower's 9 3/4% Series B Senior Deferred Coupon Notes
due 2008.
"10% Notes" means the Borrower's 10% Series B Senior Notes due 2007.
<PAGE> 7
"10 3/4% Notes" means the Borrower's 10 3/4% Senior Deferred Coupon
Notes due 2008 and the Borrower's 10 3/4% Series B Senior Deferred Coupon Notes
due 2008.
"11 1/2% Deferred Coupon Notes" means the Borrower's 11 1/2% Series
B Senior Deferred Coupon Notes due 2006.
"11 1/2% Notes" means the Borrower's 11 1/2% Senior Notes due 2008
and the Borrower's 11 1/2% Series B Senior Notes due 2008.
"12 3/4% Notes" means the Borrower's 12 3/4% Series A Senior
Deferred Coupon Notes due 2005.
"123/8% Notes" means the Borrower's 123/8% Senior Deferred Coupon
Notes due 2008.
"7% Convertible Subordinated Notes" means the Borrower's 7%
Convertible Subordinated Notes due 2008 governed by the indenture dated as of
December 16, 1998.
"Acquired Business" means Diamond Cable Communications plc.
"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.
"Acquisition" means the Diamond Cable Acquisition.
"Additional Amounts" has the meaning specified in the Bridge Notes.
"Adjusted Total Assets" means the total amount of assets of the
Borrower 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 Borrower 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 Borrower 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 Borrower and such Cable Controlled
Subsidiaries; and (ii) all goodwill, trade names, trademarks, patents,
unamortized debt discount and expense and other like intangibles of the Borrower
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 Borrower 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
2
<PAGE> 8
shall be calculated less applicable accumulated depreciation, accumulated
amortization and other valuation reserves, and (b) all calculations shall
exclude all intercompany items.
"Administrative Agent" means Goldman Sachs Credit Partners L.P.,
acting as administrative agent pursuant to Article XI or any successor or
replacement Administrative Agent, acting in such capacity.
"Affected Party" means any Lender, any Lender's LIBOR Lending
Office, any beneficial owner of any Lender, and their respective successors and
assigns.
"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. Neither the Lenders nor any of their Affiliates
will be treated as an Affiliate of the Borrower or any of its Subsidiaries for
purposes of this Agreement.
"Agent" means any Registrar or Paying Agent.
"Agreement" has the meaning specified in the preamble to this
Agreement, as the same may be amended or supplemented from time to time.
"Anniversary Date" means first anniversary of Funding Date A, which
shall be the initial Funding Date hereunder.
"Annualized Pro Forma EBITDA" means, with respect to any Person,
such Person's Pro Forma EBITDA for the latest fiscal quarter multiplied by four.
"Arranger" means Goldman Sachs Credit Partners L.P. acting as
arranger in connection with the Bridge Loans.
"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 Borrower shall be
governed by Section 4.13 or 4.19 hereof) or (ii) any issuance, sale, lease,
transfer, conveyance or other disposition of any Equity Interests of any of the
Borrower's Restricted Subsidiaries to any Person; in either case other than (A)
to (w) the Borrower, (x) any Wholly Owned Subsidiary, or (y) any Subsidiary
which is a Subsidiary of the Borrower on the date hereof provided that at the
time of and after giving effect to such issuance, sale, lease, transfer,
conveyance or other disposition to such Subsidiary, the Borrower's ownership
percentage in such Subsidiary is equal to or greater than such percentage on the
date hereof 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.
"Assignment and Acceptance" shall mean an assignment and acceptance
entered into by a Lender and an assignee, and accepted by the Administrative
Agent, in the form of Exhibit A or such other form as shall be approved by the
Administrative Agent.
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<PAGE> 9
"Bankruptcy Law" means Title 11 of the U.S. Code or any similar
federal or state law for the relief of debtors.
"Base Rate" means, for any day, the sum of higher of (i) the Federal
Funds Rate for such day plus 400 basis points and (ii) the Prime Rate for such
day. Any change in the Base Rate due to a change in the Prime Rate or the
Federal Funds Rate shall be effective on the effective date of such change in
the Prime Rate or Federal Funds Rate.
"Base Rate Loan" means a Bridge Loan at any time that the interest
rate thereon is computed with reference to the Base Rate.
"beneficial owner" and "beneficial ownership" each has the meaning
as defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act.
"Board" means the Board of Governors of the Federal Reserve System
of the United States or any successor.
"Board of Directors" means the Board of Directors of the Borrower,
or any authorized committee of the Board of Directors.
"Borrower" has the meaning specified in the preamble to this
Agreement.
"Borrowing Notice" has the meaning specified in Section 2.1(c).
"Bridge Loan" means, collectively, up to $1.35 billion in aggregate
principal amount of Series A Bridge Loans, Series B Bridge Loans and Series C
Bridge Loans made by Lenders to the Borrower.
"Bridge Note" means a promissory note of the Borrower in the form
attached as Exhibit B hereto evidencing the Bridge Loan of any Lender.
"Bridge Note Guarantee" has the meaning specified in Section 4.22.
"Business Day" means each day other than 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,
4
<PAGE> 10
production and/or licensing business or any programming guide or telephone
directory business or content or software related thereto.
"Capital Markets Transaction" has the meaning specified in Section
2.4(a).
"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 Borrower or any Subsidiary of the Borrower from the issue
or sale (other than to a Subsidiary) by the Borrower of any class of its Capital
Stock after October 14, 1993 (including Capital Stock of the Borrower issued
after October 14, 1993 upon conversion of or in exchange for other securities of
the Borrower).
"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 Borrower 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 Borrower of a plan of
liquidation or dissolution of the Borrower, (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 Borrower 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 Borrower 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 Borrower'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 Borrower 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 Borrower's Board of Directors then in office.
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"Change of Control Fee" means a fee equal to 1.00% of the principal
amount of the Bridge Loans prepaid pursuant to the Change of Control Offer.
"Change of Control Offer" has the meaning specified in Section
4.13(a).
"Change of Control Payment" has the meaning specified in Section
4.13(a).
"Change of Control Payment Date" has the meaning specified in
Section 4.13(a).
"Closing Date" means the date on which the conditions set forth in
Article V subsection (A) are satisfied or waived in accordance with Section 12.3
and the parties hereto have executed and delivered this Agreement.
"Code" has the meaning specified in Section 3.20.
"Commitment" means, with respect to any Lender, the amount set forth
opposite such Lender's signature on the signature pages of this Agreement.
"Commitment Letter" means that certain letter agreement, dated as of
March 4, 1999, among the Borrower and Goldman Sachs Credit Partners L.P., as
amended, modified or supplemented from time to time.
"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.
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<PAGE> 12
"Continuing Rate" with respect to each Interest Period from and
after the Anniversary Date, will be determined on the second Business Day
immediately preceding such Interest Period and will be the greatest of the
following (expressed as a percentage per annum):
(i) the LIBOR Rate plus 600 basis points,
(ii) the sum of the yield (expressed as a percentage per annum) then
in effect for United States Treasury Notes with a remaining maturity
closest to 9 years from the Anniversary Date (provided, however, that if
the remaining term of the Bridge Loans is not equal to the constant
maturity of a United States Treasury Note for which a weekly average yield
is given, such yield on United States Treasury Notes shall be obtained by
linear interpolation (calculated to the nearest one-twelfth of a year)
from the weekly average yields of United States Treasury Notes for which
such yields are given) plus 553 basis points, and
(iii) the sum of the Single B Goldman Sachs High Yield Index Rate
then in effect plus 25 basis points.
"Continuing Spread" means zero basis points at all times during the
period commencing on and including the Anniversary Date and ending on the 90th
day thereafter, and increasing by 25 basis points on the 90th day after the
Anniversary Date and by an additional 25 basis points on the last day of each
90-day period thereafter for so long as any Bridge Loans are outstanding.
"Convertible Subordinated Notes" means the Borrower's 7% Convertible
Subordinated Notes issued pursuant to an indenture dated as of June 12, 1996,
between the Borrower 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)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)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 of the indenture, dated November 6, 1998, between the
Borrower and The Chase Manhattan Bank, governing the 123/8% Notes.
"Cumulative EBITDA" means the cumulative EBITDA of the Borrower from
and after the date hereof 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 Borrower from the date hereof to the end of the fiscal quarter
immediately preceding a proposed Restricted Payment, determined on a
consolidated basis in accordance with GAAP.
"Custodian" means any receiver, interim receiver, receiver and
manager, trustee, assignee, liquidator, sequestrator, custodian or similar
official under any Bankruptcy Law.
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<PAGE> 13
"Debt Securities" means debt securities or preferred stock issued by
the Borrower or any of its Affiliates which have either been registered with the
SEC and sold pursuant to a registration statement in a public offering or
privately placed or otherwise sold in an offering exempt from registration with
the SEC to refinance the Bridge Loans, in accordance with the provisions of the
Engagement Letter.
"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.
"Diamond Cable Acquisition" means the acquisition of all of the
issued and outstanding ordinary shares of the Acquired Business pursuant to the
Diamond Cable Acquisition Agreement.
"Diamond Cable Acquisition Agreement" means that certain Share
Exchange Agreement dated as of June 16, 1998, as amended, among the Borrower and
the Shareholders of the Acquired Business, with respect to the purchase of the
issued and outstanding ordinary shares of the Acquired Business.
"Diamond Indentures" means, collectively, the 13 1/4% Diamond
Indenture, the 11 3/4% Diamond Indenture, the 10 3/4% Diamond Indenture and the
9 1/8% and 10% Diamond Indenture.
"Diamond Notes" means, collectively, the 13 1/4% Diamond Notes, the
11 1/4% Diamond Notes, the 10 3/4% Diamond Notes, the 9 1/8% Diamond Notes and
the 10% Diamond Notes.
"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.
"dollars" or "$" shall mean lawful money of the United States of
America.
"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).
"Engagement Letter" means that certain letter agreement, dated as of
March 4, 1999, between the Borrower and Goldman, Sachs & Co. entered into in
connection with the Commitment Letter, as amended, modified or supplemented from
time to time.
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<PAGE> 14
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and any regulation promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with the Borrower or any of its Subsidiaries is
treated as a single employer under Section 414(b) or (c) of the Code, or solely
for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as
a single employer under Section 414 of the Code.
"ERISA Event" means (a) any "reportable event," as defined in
Section 4043 of ERISA or the regulations issued thereunder, with respect to a
Plan except a reportable event for which the requirement of notice to the PBGC
had been waived; (b) the adoption of any amendment to a Plan that would require
the provision of security pursuant to Section 401(a)(29) of the Code or Section
307 of ERISA; (c) the existence with respect to any Plan of an "accumulated
funding deficiency" (as defined in Section 412 of the Code or Section 302 of
ERISA), whether or not waived; (d) the filing pursuant to Section 412(d) of the
Code or Section 303(d) of ERISA of an application for a waiver of the minimum
funding standard with respect to any Plan; (e) the incurrence of any liability
in excess of $1,000,000 under Title IV of ERISA with respect to the termination
of any Plan or the withdrawal or partial withdrawal of the Borrower or any of
its Subsidiaries or any of their ERISA Affiliates from any Plan or Multiemployer
Plan; (f) the receipt by the Borrower or any of its Subsidiaries or any ERISA
Affiliate from the PBGC or a plan administrator of a Multiemployer Plan of any
notice relating to the intention to terminate any Plan or Plans or to appoint a
trustee to administer any Plan; (g) the receipt by the Borrower or any of its
Subsidiaries or any ERISA Affiliate of any notice concerning the imposition of
Withdrawal Liability in excess of $1,000,000 or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA; (h) the occurrence of a "prohibited
transaction" with respect to which the Borrower or any of its Subsidiaries is a
party to the prohibited transaction and is a "disqualified person" (within the
meaning of Section 4975 of the Code) or with respect to which the Borrower or
any of its Subsidiaries could otherwise be liable; and (i) any other event or
condition with respect to a Plan or Multiemployer Plan that could reasonably be
expected to result in liability of the Borrower or any of its Subsidiaries.
"Escrow Agent" means The Chase Manhattan Bank, in its capacity as
escrow agent pursuant to the Escrow Agreement.
"Escrow Agreement" means the escrow agreement among the Borrower,
the Administrative Agent, on behalf of the Lenders, and the Escrow Agent, in the
form attached as Exhibit D.
"Eurocurrency Liabilities" has the meaning assigned to that term in
Regulation D of the Board, as in effect from time to time.
"European Union member" means any country that is or becomes a
member of the European Union or any successor organization thereto.
"Event of Default" means any event specified in Section 7.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Date" has the meaning specified in Section 2.2(a).
"Exchange Note Guarantee" has the meaning specified in Section 4.22.
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<PAGE> 15
"Exchange Note Indenture" means, the indenture relating to the
Exchange Notes, among the Borrower, as issuer, and the Exchange Note Trustee, in
the form attached as Exhibit E, as the same may be amended, modified or
supplemented from time to time.
"Exchange Notes" means the senior unsecured Exchange Notes of the
Borrower, placed into escrow on the Closing Date, to be issued in exchange for
certain Bridge Loans pursuant to Section 2.2, in the form attached as an exhibit
to the Exchange Note Indenture.
"Exchange Note Trustee" means, on any date of determination, the
trustee under the Exchange Note Indenture.
"Exchange Notice" has the meaning specified in Section 2.2(a).
"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 Borrower and its
Subsidiaries in existence on the date hereof, until such amounts are repaid,
including, without limitation, the Existing Notes.
"Existing Notes" means the Old Notes and the Convertible
Subordinated Notes.
"Expiration Date" has the meaning specified in the Diamond
Indentures.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Business Day next succeeding such
day; provided that (a) if such day is not a Business Day, the Federal Funds Rate
for such day shall be such rate on such transactions on the next preceding
Business Day as so published on the next succeeding Business Day and (b) if no
such rate is so published on such next succeeding Business Day, the Federal
Funds Rate for such day shall be the average rate charged to the Administrative
Agent (in its individual capacity) on such day on such transactions as
determined by the Administrative Agent.
"Fee Letter" means that certain Fee Letter, dated as of March 4,
1999, among the Borrower, Goldman Sachs Credit Partners L.P. and Goldman, Sachs
& Co., entered into in connection with the Commitment Letter, as amended,
modified or supplemented from time to time.
"Foreign Lender" means a Lender that is a foreign person for
purposes of the U.S. federal income tax.
"Foreign Participant" means a Participant that is a foreign person
for purposes of the U.S. federal income tax.
"Funding Date" means, collectively, Funding Date A and Funding Date
B.
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<PAGE> 16
"Funding Date A" means the date on which the conditions set forth in
Article V subsection (B) are satisfied or waived in accordance with Section 12.3
and the initial Bridge Loans are made by the Lenders.
"Funding Date B" means the date on which the conditions set forth in
Article V subsection (B) are satisfied or waived in accordance with Section 12.3
and Bridge Loans are made by the Lenders on a date after Funding Date A.
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession, which are in effect on the date of this Agreement
and are applied on a consistent basis.
"Governmental Entity" means any government or political subdivision
or any agency, authority, bureau, central bank, commission, department or
instrumentality thereof, or any court, tribunal, grand jury or arbitrator, in
each case whether foreign or domestic.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America, and the payment for which the
United States pledges its full faith and credit.
"Guarantee" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, letters of
credit and reimbursement agreements in respect thereof), of all or any part of
any Indebtedness.
"Guarantor" means the Parent as guarantor under the Note Guarantees.
"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.
"Indemnified Party" has the meaning specified in Section 10.1.
"Initial Period" means the period beginning on (and including)
Funding Date A to (but not including) the Anniversary Date.
"Initial Spread" means 500 basis points at all times during the
period commencing on and including Funding Date A and ending on the 90th day
thereafter, and increasing by 25 basis points on the 90th day after Funding Date
A and by an additional 25 basis points on the last day of each 90-day period
thereafter for so long as any Bridge Loans are outstanding during the Initial
Period.
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<PAGE> 17
"Interbank Offered Rate" means, for any LIBOR Rate Loan for any
Interest Period therefor, the rate per annum (rounded upwards, if necessary, to
the nearest 1/100th of 1%) appearing on Telerate Page 3750 (or any successor
page) as the London interbank offered rate for deposits in dollars at
approximately 11:00 a.m. (London time) two Business Days prior to the first day
of such Interest Period for a term comparable to such Interest Period. If for
any reason such rate is not available, the term "Interbank Offered Rate" shall
mean, for any LIBOR Rate Loan for any Interest Period therefor, the rate per
annum (rounded upwards, if necessary, to the nearest 1/100th of 1%) appearing on
Reuters Screen LIBO Page as the London interbank offered rate for deposits in
dollars at approximately 11:00 a.m. (London Time) two Business Days prior to the
first day of such Interest Period for a term comparable to such Interest Period;
provided, however, if more than one rate is specified on Reuters Screen LIBO
Page, the applicable rate shall be the arithmetic mean of all such rates.
"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.
"Interest Payment Date" means (i) the last day of each Interest
Period in the case of LIBOR Rate Loans and Base Rate Loans, (ii) the Maturity
Date, and (iii) the date of any prepayment of all or any portion of the
principal of the Loans.
"Interest Period" means, (i) in the case of the first Interest
Period applicable to the Bridge Loans made by the Lenders on Funding Date A, the
period commencing on and including Funding Date A and ending on the numerically
corresponding date in the month thereafter, (ii) in the case of the first
Interest Period applicable to the Bridge Loans made by the Lenders on Funding
Date B, the period commencing on and including Funding Date B and ending on the
date specified in clause (i), and (iii) in the case of each subsequent Interest
Period for all Bridge Loans, the period beginning on the last day of the prior
Interest Period and ending on the numerically corresponding date in the month
thereafter; provided, however, that if any Interest Period would end on a day
other than a Business Day, such Interest Period shall be extended until the next
succeeding Business Day unless the next Business Day would fall in the next
calendar month, in which case such Interest Period shall end on the next
preceding Business Day. Notwithstanding the foregoing, no Interest Period in
respect of the Bridge Loans may extend beyond the Maturity Date and each
Interest Period that would otherwise commence before and end after the Maturity
Date shall end on the Maturity Date.
"Investment Bank" means, Goldman, Sachs & Co.
"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 Borrower 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.
"Legal Holiday" means a Saturday, a Sunday or any other day on which
banking institutions in the City of New York, or at a place of payment are
authorized by law, regulation or executive order to remain closed and, if such
day relates to a payment or prepayment of principal of, or
12
<PAGE> 18
interest on, or an Interest Period for, LIBOR Rate Loans, any day which is also
a day on which dealings in dollar deposits are carried out in the London
interbank markets.
"Lenders" shall mean (a) each financial institution that has
executed a counterpart to this Agreement (other than any such financial
institution that has ceased to be a party hereto pursuant to an Assignment and
Acceptance) and (b) any financial institution that has become a party hereto
pursuant to an Assignment and Acceptance.
"LIBOR Lending Office" means, with respect to any Lender, the
office, if any, of such Lender specified from time to time as its "LIBOR Lending
Office" in a written notice to the Borrower.
"LIBOR Rate" means the interest rate per annum calculated according
to the following formula:
LIBOR Rate = Interbank Offered Rate
----------------------------
1 - LIBOR Reserve Percentage
"LIBOR Rate Loan" means a Bridge Loan at any time the interest rate
thereon is computed with reference to the LIBOR Rate.
"LIBOR Reserve Percentage" means, for any day, that percentage
(expressed as a decimal) which is in effect from time to time under Regulation D
or any successor regulation, as the maximum reserve requirement (including any
basic, supplemental, emergency, special, or marginal reserves) applicable with
respect to Eurocurrency liabilities as that term is defined in Regulation D (or
against any other category of liabilities that includes deposits by reference to
which the interest rate of LIBOR Rate Loans is determined), whether or not any
Administrative Agent or any Lender has any Eurocurrency liabilities subject to
such requirements, without benefits of credits or proration, exceptions or
offsets that may be available from time to time to any Administrative Agent or
any Lender. The LIBOR Rate shall be adjusted automatically on and as of the
effective date of any change in the LIBOR Reserve Percentage.
"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 statutes) of any jurisdiction).
"Liquidated Damages" means all liquidated damages then owing
pursuant to Section 3(c) of the Registration Rights Agreement.
"Loan" means a Bridge Loan.
"Loan Documents" means this Agreement, the Bridge Notes and the
Related Documents.
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<PAGE> 19
"Loan Register" means the register maintained by the Administrative
Agent on behalf of the Borrower pursuant to Section 6.7.
"Majority Lenders" means, at any time, Lenders holding at least a
majority of the then aggregate unpaid principal balance of the Bridge Loans, or,
if no such principal amount is then outstanding, Lenders having at least a
majority of the total Commitments; provided that, for purposes hereof, neither
the Borrower nor any of its Affiliates shall be included in (i) the Lenders
holding such amount of the Loans or having such amount of the Commitments or
(ii) determining the aggregate unpaid principal amount of the Bridge Loans or
the total Commitments.
"Material Adverse Effect" means any circumstance or event that (i)
has, or may be reasonably expected to have, any materially adverse effect upon
the validity or enforceability of this Agreement or any of the Loan Documents,
(ii) is, or may be reasonably expected to be, materially adverse to the
consolidated financial condition, business, operations, assets, liabilities,
management or prospects of the Borrower and its Subsidiaries, taken as a whole,
or (iii) materially impairs the ability of the Borrower to consummate the Bridge
Loans or to perform its Obligations under the Loan Documents.
"Material Contracts" has the meaning specified in Section 3.4.
"Material License" means a License held by the Borrower 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 Borrower 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 Borrower
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).
"Maturity Date" means (i) in the case of the Series A Bridge Loans
and the related Bridge Notes, September 14, 2004; (ii) in the case of the Series
B Bridge Loans and the related Bridge Notes, December 16, 2005; and (iii) in the
case of the Series C Bridge Loans and the related Bridge Notes, February 2,
2008.
"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.
"Multiemployer Plan" means a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"Net Cash Proceeds" means the aggregate cash proceeds received by
the Borrower or any of its Subsidiaries or any parent holding company of the
Borrower (including any cash and cash equivalents and cash payments received by
way of deferred payment of principal pursuant to a note, an installment
receivable or otherwise, but only as and when received) from any Capital Markets
Transaction, 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
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<PAGE> 20
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, plus any cash received in connection with the Monetizing, if
any, of Equity Interests pursuant to Section 4.10(a)(iii)(y).
"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 Borrower.
"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).
"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 Borrower, 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 4.7 hereof), at any previous time,
directly or indirectly from the Borrower 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 Borrower is equal to or
less than the ratio of Indebtedness to Annualized Pro Forma EBITDA of the
Borrower immediately preceding such designation, provided, however, that if the
ratio of Indebtedness to Annualized Pro Forma EBITDA of the Borrower immediately
preceding such designation is 6:1 or less, then the ratio of Indebtedness to
Annualized Pro Forma EBITDA of the Borrower 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 Borrower 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.
"Note Guarantees" means, collectively, the Bridge Note Guarantee and
the Exchange Note Guarantee.
"Obligations" means all now existing and hereafter arising
obligations and liabilities of the Borrower to any and all of the Lenders
arising under or in connection with the Loan Documents, whether absolute or
contingent, and whether for principal, interest, penalties, premium, fees,
indemnifications, reimbursements, damages (including, if applicable, Additional
Amounts and Liquidated Damages), or otherwise and specifically including
post-petition interest (whether or not an allowable claim).
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<PAGE> 21
"Offering Documents" means an offering memorandum or prospectus
together with such other documents, instruments and agreements as the Investment
Bank may request in its sole discretion in connection with the issuance of the
Debt Securities.
"Offer to Purchase" has the meaning specified in the Diamond
Indentures.
"Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operation Officer,
the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary, any Assistant Secretary or any Vice-President of such
Person.
"Officers' Certificate" means a certificate signed on behalf of the
Borrower by two Officers of the Borrower, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Borrower.
"Old Notes" means the 123/8% Notes, 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, the 11 1/2% Notes and the 7% Convertible Subordinated Notes.
"Other Qualified Notes" means any outstanding senior indebtedness of
the Borrower issued pursuant to an indenture having a provision substantially
similar to Section 4.10 of the indenture, dated November 6, 1998, between the
Borrower and The Chase Manhattan Bank, governing the 123/8% Notes (including,
without limitation, the 123/8% Notes, 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 Taxes" has the meaning specified in Section 2.9(b). "Parent"
means any Person that is formed or organized as a holding company for the
Borrower and its Subsidiaries.
"Participants" has the meaning specified in Section 6.3(a).
"Participations" has the meaning specified in Section 6.3.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any of its functions under ERISA.
"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
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<PAGE> 22
or incompetence of a Permitted Holder, his estate, heirs, executor,
administrator, committee or other personal representative or (iv) any
corporation or entity at least 50% of the voting power of all classes of the
voting stock of which is owned by one or more Permitted Holders.
"Permitted Holder" means George S. Blumenthal, J. Barclay Knapp and
their Permitted Designees.
"Permitted Investments" means (a) any Investments in the Borrower or
in a Cable Controlled Property or in a Qualified Subsidiary (including, without
limitation, (i) Guarantees of Indebtedness of the Borrower, 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 Borrower 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 Borrower or any Subsidiary of the Borrower 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 Borrower or a Wholly Owned Subsidiary of the Borrower; and
(e) any issuance, transfer or other conveyance of Equity Interests (other than
Disqualified Stock) in the Borrower (or any Capital Stock Sale Proceeds
therefrom) to a Subsidiary of the Borrower.
"Permitted Liens" means (a) Liens in favor of the Borrower; (b)
Liens on property of a Person existing at the time such Person is merged into or
consolidated with the Borrower or any Subsidiary of the Borrower; 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 Borrower 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 date hereof; (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 Borrower 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 Borrower or any of
its Restricted Subsidiaries in connection with any Asset Sale or any Investment
otherwise permitted under the terms of this Agreement and (y) to the extent
that, after giving pro forma effect to the acquisition thereof by the Borrower
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 Borrower.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
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"Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 307 of ERISA, and in respect of which the Borrower or
any of its Subsidiaries or any ERISA Affiliate is (or, if such plan were
terminated, would under Section 4069 of ERISA be deemed to be) an "employer" as
defined in Section 3(5) of ERISA.
"Preferred Stock" means the 13% Senior Redeemable Exchangeable
Preferred Stock of the Borrower with an original aggregate liquidation
preference of $100,000,000.
"Prepayment Date" has the meaning specified in Section 2.7.
"Prime Rate" means the rate that UBS announces from time to time as
its prime lending rate, as in effect from time to time. The Prime Rate is a
reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer. The Administrative Agent or any other Lender
under this Agreement may make commercial loans or other loans at rates of
interest at, above or below the Prime Rate.
"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 Borrower, all of the foregoing
references to "Subsidiary" or "Subsidiaries" shall be deemed to refer only to a
"Restricted Subsidiary" or "Restricted Subsidiaries" of the Borrower.
"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 Agreement, the indentures governing the Old Notes or any other
instrument governing unsecured indebtedness of the Borrower which is pari passu
with the Bridge Notes) on its ability to pay dividends or make any other
distributions to the Borrower or any of its Subsidiaries.
"Rating Agencies" means (i) S&P and (ii) Moody's.
"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.
"Registration Rights Agreement" means the registration rights
agreement between the Borrower and the Administrative Agent pursuant to which
the Exchange Notes are required to be
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registered for public sale, in the form attached as Exhibit C, as amended,
modified or supplemented from time to time.
"Regulation D" means Regulation D of the Board as the same may be
amended or supplemented from time to time.
"Related Documents" means the Exchange Notes, the Exchange Note
Indenture, the Registration Rights Agreement, the Escrow Agreement, the
Engagement Letter, the Fee Letter and the Note Guarantees.
"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 Borrower's acquiring such Equity Interests, (y)
Permitted Non-Controlled Assets or (z) any combination of the foregoing.
"Request" has the meaning specified in Section 8.1(b).
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Payments" has the meaning specified in Section 4.7.
"Restricted Subsidiary" means any Subsidiary of the Borrower 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.
"SEC" means the Securities and Exchange Commission.
"Securities" means, collectively, the Exchange Notes.
"Securities Act" means the Securities Act of 1933, as amended.
"Series A Bridge Loans" means the Bridge Loans made by the Lenders
to fund the Offer to Purchase the Series A Diamond Notes.
"Series B Bridge Loans" means the Bridge Loans made by the Lenders
to fund the Offer to Purchase the Series B Diamond Notes.
"Series C Bridge Loans" means the Bridge Loans made by the Lenders
to fund the Offer to Purchase the Series C Diamond Notes.
"Series A Diamond Notes" means the 13 1/4% Diamond Notes.
"Series B Diamond Notes" means the 11 3/4% Diamond Notes.
"Series C Diamond Notes" means the 10 3/4% Diamond Notes, the 9 1/8%
Diamond Notes and the 10% Diamond Notes.
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"Single B Goldman Sachs High Yield Index Rate" means the rate
(expressed as a percentage per annum) determined by Goldman, Sachs & Co. to
represent the weighted average of the market yields during the preceding month
on high-yield debt securities issued in minimum issue sizes of $100 million
each.
"Solvency Certificate" means a certificate in the form of Exhibit I
attached hereto.
"Solvent" means, with respect to any Person on a pro forma basis
immediately after the consummation of the transaction that (i) the fair value of
such Person's assets exceeds its stated liabilities, including all contingent
liabilities, (b) the present fair saleable value of such Person's assets exceeds
that amount that will be required to pay its probable liability on its debts as
they become absolute and mature, (c) such Person will not have incurred debts
beyond its ability to pay such debts as they mature, and (d) the then remaining
assets of such Person will not constitute an unreasonably small capital for such
Person's businesses.
"S&P" means Standard & Poor's Ratings Group and its successors.
"Subordinated Debentures" means the debentures exchangeable by the
Borrower 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.
"Taxes" has the meaning specified in Section 2.9(a).
"Transaction Documents" means the Loan Documents and the Diamond
Cable Acquisition Agreement.
"Transactions" means, collectively, the Acquisition, the related
repurchase of the Diamond Notes pursuant to one or more Offers to Purchase made
in accordance with the Diamond Indentures, the related financing transactions
and each of the other transactions contemplated by the Transaction Documents.
"Transferee" has the meaning specified in Section 6.4.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
"UBS" means UBS A.G., Stamford Branch.
"Unfunded Pension Liabilities" means the `amount of unfunded benefit
liabilities' as defined in Section 4001(a)(18) of ERISA.
"Voting Stock" of any Person as of any date means the Capital Stock
of such Person that is at the time entitled to vote in the election of the board
of directors of such Person.
"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
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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.
"West Street" means West Street Fund I, L.L.C., an Affiliate of
Goldman Sachs Credit Partners L.P.
"Wholly Owned Restricted Subsidiary" of any Person means a
Restricted Subsidiary of such Person all of the outstanding Capital Stock or
other ownership interests of which (other than directors' qualifying shares)
shall at the time be owned (i) by such Person, (ii) by one or more Wholly Owned
Restricted Subsidiaries of such Person or (iii) by such Person and one or more
Wholly Owned Restricted Subsidiaries of such Person.
"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 Borrower.
"Withdrawal Liabilities" means liability to a Multiemployer Plan as
a result of a complete or partial withdrawal from such Multiemployer Plan, as
such terms are defined in Part I of Subtitle E of Title IV of ERISA.
"Year 2000 Problem" has the meaning specified in Section 3.17.
Section 1.2. Interpretation. In this Agreement, the singular
includes the plural and the plural includes the singular; words implying any
gender include the other genders; references to any section, exhibit or schedule
are to sections, exhibits or schedules hereto unless otherwise indicated;
references to statutes are to be construed as including all statutory provisions
consolidating, amending or replacing the statute referred to; references to
"writing" include printing, typing, lithography and other means of reproducing
words in a visible form; "including" following a word or phrase shall not be
construed to limit the generality of such word or phrase; and an accounting term
not otherwise defined has the meaning assigned to it in accordance with GAAP.
ARTICLE II.
THE CREDIT FACILITY
Section 2.1. Commitments to Make Bridge Loans.
(a) In reliance upon the representations and warranties of the
Borrower set forth herein and subject to the terms and conditions herein set
forth, each of the Lenders severally agrees to make Bridge Loans to the Borrower
on each Funding Date. The proceeds of each Bridge Loan shall be disbursed by
wire transfer on the applicable Funding Date as provided in written instructions
delivered by the Borrower to each of the Lenders on the Business Day prior to
the applicable Funding Date. Each Bridge Loan will mature on the applicable
Maturity Date.
(b) On Funding Date A, which shall be the initial Funding Date
hereunder, the aggregate principal amount of Bridge Loans that shall be funded
by the Lenders shall be an amount less than or equal to the Commitment. On
Funding Date B, which shall be the second Funding Date hereunder, the aggregate
principal amount of the Bridge Loans that shall be funded by the Lenders shall
be an amount less than or equal to (x) the Commitment, less (y) the aggregate
principal amount of the Bridge Loans made by the Lenders on Funding Date A.
Notwithstanding any other provision herein to the contrary, the Lenders, subject
to the terms and conditions set forth herein, shall be obligated to make
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Bridge Loans to the Borrower during the ten (10) Business Days immediately
succeeding (and including) the Expiration Date.
(c) The Borrower shall have given the Administrative Agent an
irrevocable written notice (a "Borrowing Notice") prior to 10:00 A.M., New York
City time, at least three (3) Business Days prior to the applicable Funding
Date. Upon receipt of a Borrowing Notice, the Administrative Agent shall
promptly notify the Lenders thereof. Each Borrowing Notice shall specify (i) the
aggregate principal amount and the maturity dates of the Diamond Notes that have
been tendered in accordance with the Diamond Indentures and (ii) the aggregate
principal amount of the Series A Bridge Loans, the Series B Bridge Loans and the
Series C Bridge Loans, as the case may be, that the Borrower is requesting the
Lenders to make hereunder. The Series A Bridge Loans shall be used to fund the
repurchase of the Series A Diamond Notes, the Series B Bridge Loans shall be
used to fund the repurchase of the Series B Diamond Notes and the Series C
Bridge Loans shall be used to fund the repurchase of the Series C Diamond Notes.
Section 2.2. Option to Exchange Bridge Loans for Exchange Notes.
(a) On any Business Day on or after the Anniversary Date (if any),
any Lender may elect to exchange all or any portion of its Bridge Loan for one
or more Exchange Notes by giving not less than sixty days' prior irrevocable
written notice (in the form of Annex A to the Escrow Agreement) of such election
to the Borrower, the Administrative Agent and the Exchange Note Trustee, which
written notice may be delivered by such Lender prior to or after the Anniversary
Date, specifying the principal amount of its Bridge Loan to be exchanged (which
shall be at least $1,000,000 and integral multiples of $1,000 in excess
thereof), the maturity dates of the Exchange Notes (which shall correspond to
the Maturity Date of such Bridge Loan) and, subject to Section 6.1, the name of
the proposed registered holder and, subject to the terms of the Exchange Note
Indenture, the amount of each Exchange Note requested, the date on which the
Bridge Loans are to be exchanged (such date to be not less than sixty days from
the date of such notice, the "Exchange Date") (each such notice, an "Exchange
Notice"); provided, that in no event shall the aggregate principal amount of the
Bridge Loans initially exchanged pursuant to this Section 2.2(a) be less than
$25,000,000; provided that, during such sixty day period, such Lender may amend,
modify or supplement the Exchange Notice and such Lender shall promptly deliver
copies of such amendment, modification or supplement to the Borrower, the
Administrative Agent and the Exchange Note Trustee. Any such exchanging Lender
shall deliver its Bridge Notes to the Administrative Agent within ten Business
Days immediately preceding the Exchange Date. Bridge Notes exchanged for
Exchange Notes pursuant to this Section 2.2 shall be deemed repaid and canceled
and in accordance with Section 2(a) of the Escrow Agreement and the Exchange
Notes so issued shall be governed by and construed in accordance with the
provisions of the Exchange Note Indenture.
(b) Not later than the fifth Business Day immediately preceding the
Exchange Date, the Administrative Agent shall deliver to the Escrow Agent the
original Bridge Notes delivered to it by the exchanging Lender, together with
the applicable Exchange Notice, pursuant to Section 2.2(a). The Escrow Agent
shall return each Bridge Note so delivered to it to the Borrower in accordance
with Section 2(a) of the Escrow Agreement and, if applicable, the Borrower shall
issue a replacement Bridge Note to such Lender in an amount equal to the
principal amount of such Lender's Bridge Loan that is not being exchanged. The
Escrow Agent shall deliver the applicable Exchange Note(s) to the Exchange Note
Trustee for authentication and delivery to the holder or holders thereof
specified in the Exchange Notice
(c) Each Exchange Note issued pursuant to this Section 2.2 shall
bear interest at a fixed rate equal to the rate per annum borne by the Bridge
Loan on the date of the Exchange Notice, plus 100 basis points and shall have a
maturity date that corresponds to the Maturity Date of the Bridge Loan
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exchanged for such Exchange Note. Accrued interest on Bridge Loans so exchanged
shall be paid from and including the most recent date to which interest has been
paid on the Bridge Loans so exchanged to (but not including) the Exchange Date
and the Exchange Notes received in such exchange shall bear interest from and
including the applicable Exchange Date.
Section 2.3. Interest; Default Interest.
(a) Interest Rate Applicable to Bridge Loans During the Initial
Period. Subject to Sections 2.3(d), (e) and (f) below, the unpaid principal
balance of all Bridge Loans outstanding at any time during the Initial Period
shall accrue interest at a rate per annum equal to the sum of the LIBOR Rate
plus the Initial Spread, changing on the first day of each Interest Period when
and as the LIBOR Rate and/or the Initial Spread changes. If the Bridge Loans are
Base Rate Loans (pursuant to Section 2.8(b) or (c)), the unpaid principal
balance thereof shall bear interest until paid at a rate per annum equal to the
sum of the Base Rate plus the Initial Spread, changing when and as the Base Rate
and/or the Initial Spread changes.
(b) Interest Rate Applicable to Bridge Loans As Of and Following the
Anniversary Date. Subject to Sections 2.3(d), (e) and (f) below, interest on the
unpaid principal balance of all Bridge Loans outstanding at any time on and
after the Anniversary Date shall accrue interest at a rate per annum equal to
the Continuing Rate plus the Continuing Spread, changing when and as the
Continuing Rate and/or Continuing Spread changes. If the Bridge Loans are Base
Rate Loans (pursuant to Section 2.8(b) or (c)), the unpaid principal balance
thereof shall bear interest until paid at a rate per annum equal to the sum of
the Base Rate plus the Continuing Spread, changing when and as the Base Rate
and/or the Continuing Spread changes.
(c) Basis of Computation of Interest; Payment of Interest. All
interest shall be calculated for actual days elapsed on the basis of a 360-day
year and shall be payable in arrears not later than 12:00 noon (New York City
time) on each Interest Payment Date by wire transfer of immediately available
funds in accordance with Section 2.8.
(d) Default Interest. If the Borrower shall default in the payment
of the principal of or interest on any Bridge Loan or any other Obligation
becoming due hereunder, by acceleration or otherwise, or under any other Loan
Document, the Borrower shall on demand from time to time pay interest, to the
extent permitted by law, on such defaulted amount to but excluding the date of
actual payment (after as well as before judgment) to the extent lawful, at a
rate per annum equal to 200 basis points in excess of the otherwise applicable
interest rate on the Bridge Loans. The Borrower shall pay such default interest
and all interest accruing on any overdue Obligation in cash on demand from time
to time.
(e) Maximum Interest Rate. Notwithstanding anything contained in
Section 2.3(a) or 2.3(b) above, in no event shall the interest rate on the Loans
for any Interest Period exceed an annual rate equal to the lesser of (i) 16% and
(ii) the maximum interest rate permitted by law.
(f) Option to Pay Interest in Kind. Subject to Section 2.3 d), to
the extent that the interest rate on the Bridge Loans for any Interest Period
exceeds a rate equal to 14% per annum, the Borrower shall have the option to pay
to each Lender, pro rata, all or a portion of the interest payable for such
Interest Period in excess of the amount of interest that would have been payable
on such date at an interest rate of 14% per annum, by capitalizing such excess
interest and adding it to the aggregate principal amount of outstanding Bridge
Loans held by such Lender, effective as of the applicable Interest Payment Date.
The Borrower shall give the Administrative Agent an irrevocable notice that it
will
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exercise such right at least three Business Days prior to any Interest Payment
Date as to which such right is to be exercised.
(g) Payment of Interest and Liquidated Damages. Except as otherwise
set forth herein, interest, Liquidated Damages and Additional Amounts on each
Bridge Loan shall be payable in arrears on and to (i) each Interest Payment Date
applicable to that Bridge Loan; (ii) any prepayment of that Bridge Loan, to the
extent accrued on the amount being prepaid; (iii) at maturity, including final
maturity; and (iv) if such Bridge Loan is a Bridge Loan that is exchanged for an
Exchange Note, the date of exchange as specified in the relevant Exchange
Notice. All interest, Liquidated Damages and Additional Amounts payments shall
be made not later than 12:00 noon (New York City time) on the date specified for
payment by wire transfer of immediately available funds in accordance with
Section 2.8.
Section 2.4. Mandatory Prepayment.
(a)Subject to the second succeeding sentence, the Borrower shall
prepay the Bridge Loans ratably in accordance with the aggregate outstanding
principal balances thereof, with the Net Cash Proceeds of: (i) any direct or
indirect public offering or private placement of the Debt Securities, or any
debt or equity securities of the Borrower or the Parent, or any Subsidiary of
the Borrower issued after the Closing Date (other than the securities listed on
Schedule 2.4 hereto), (ii) the incurrence of any other Indebtedness by the
Borrower or the Parent, or any Subsidiary of the Borrower after the Closing Date
and (iii) any Asset Sale by the Borrower or the Parent, or any Subsidiary of the
Borrower after the Closing Date (other than an Asset Sale permitted under
Section 4.10 and subject to the requirements of the indentures of the Borrower
and the Diamond Indentures, in each case, in existence as of the date hereof)
(each of the transactions in the foregoing clauses (i), (ii) and (iii), a
"Capital Markets Transaction"). With respect to any securities the net proceeds
of which are used to redeem the Borrower's 9.9% Preferred Stock, Series A and/or
the Borrower's 9.9% Preferred Stock, Series B (as described on Schedule 2.4
attached hereto), on the date that such securities are issued, the Borrower
shall prepay the Bridge Loans in accordance with this Section 2.4 in an amount
equal to the net proceeds used or to be used to redeem the Borrower's 9.9%
Preferred Stock, Series A and/or the Borrower's 9.9% Preferred Stock, Series B.
The Bridge Loans prepaid by the Borrower in accordance with this Section 2.4
shall be paid in the following order of priority: first, the Series C Bridge
Loans, second, the Series B Bridge Loans, and third, the Series A Bridge Loans.
Subject to Section 2.6 and Section 2.7, the Borrower shall, not later than the
fifth Business Day following any Capital Markets Transaction, apply such Net
Cash Proceeds or excess available cash to prepay the Bridge Loans pursuant to
this Section 2.4, without premium or penalty, by paying to each Lender an amount
equal to 100% of such Lender's pro rata share of the aggregate principal amount
of the Bridge Loans to be prepaid, plus accrued and unpaid interest thereon to
the Prepayment Date.
(b) Subject to and in accordance with Section 4.13, in the event of
any Change of Control, the Borrower shall offer to prepay the Loans pursuant to
Section 4.13.
Section 2.5. Optional Prepayment. Subject to Section 2.6 and Section
2.7 and the next succeeding sentence, the Borrower may prepay the Bridge Loans
at any time without premium or penalty, in whole or in part, on a pro rata
basis, by paying to each applicable Lender an amount equal to 100% of such
Lender's pro rata share of the aggregate principal amount of Bridge Loans to be
prepaid, plus accrued and unpaid interest thereon to the Prepayment Date. The
Bridge Loans prepaid by the Borrower pursuant to this Section 2.5 shall be paid
in the following order of priority, first, the Series C Bridge Loans, second,
the Series B Bridge Loans, and, third, the Series A Bridge Loans.
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Section 2.6. Breakage Costs; Indemnity. The Borrower agrees to
indemnify and hold each Affected Party harmless from and against any loss or
expense which such Affected Party sustains or incurs as a consequence of:
(a) default by the Borrower in making any prepayment after the
Borrower has given a notice thereof in accordance with the provisions of
Section 2.4 or 2.5, as applicable, or
(b) the mandatory or optional prepayment of LIBOR Rate Loans on a
day that is not the last day of an Interest Period.
Such indemnification may include an amount equal to the excess, if any of (i)
such Affected Party's actual loss and expenses incurred (excluding lost profits)
in connection with, or by reason of, any of the foregoing events and (ii) the
excess, if any of (A) the amount of interest that would have accrued on the
principal amount of Bridge Loans not so made or the principal amount of Bridge
Loans so prepaid from the date of such proposed issuance or prepayment in the
case of a failure to make Bridge Loans, to the last day of the Interest Period
that would have commenced on the proposed date of funding, or in the case of any
such prepayment, to the last day of the Interest Period in which such prepayment
occurred, in each case at the applicable rate of interest for such Bridge Loans
provided for herein (excluding, however, the Initial Spread or the Continuing
Spread, as the case may be, included therein, if any) over (B) the amount of
interest (as reasonably determined by such Affected Party) which would have
accrued to such Affected Party on such amount by placing such amount on deposit
for a period comparable to such Interest Period with leading banks in the
interbank LIBOR market. A certificate as to any amounts payable pursuant to this
Section 2.6 submitted to the Borrower by any Affected Party shall be conclusive
in the absence of manifest error. This covenant shall survive the termination of
this Agreement and the payment of the Obligations.
Section 2.7. Effect of Notice of Prepayment. The Borrower shall
notify the Lenders of any prepayment in writing at their addresses shown in the
Loan Register, which notice shall be given at least five Business Days prior to
any date set for prepayment of Loans (each such day, a "Prepayment Date"). Once
such notice is sent or mailed, the Bridge Loans to be prepaid shall become due
and payable on the Prepayment Date set forth in such notice. Such notice may not
be conditional (other than receipt of proceeds in connection with a refinancing
of the Bridge Loans).
Section 2.8. Payments.
(a) Wire Transfer. The principal of fees, premium, if any, interest,
Liquidated Damages, if any, and Additional Amounts, if any, on each Bridge Loan
and all other Obligations arising under the Loan Documents shall be payable by
wire transfer in immediately available funds (in United States dollars) to the
Administrative Agent for the respective accounts of the Lenders set forth below
their signatures on the signature pages of this Agreement or otherwise
designated in the Loan Register from time to time to the Borrower by any Lender
at least three Business Days prior to the due date therefor.
(b) Change in Costs. If prior to the first day of any Interest
Period with respect to a LIBOR Rate Loan, any Lender shall have determined
(which determination shall be conclusive and binding upon the Borrower) that:
(i) by reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the LIBOR Rate for such Interest
Period, or (ii) the LIBOR Rate determined or to be determined for such Interest
Period will not adequately and fairly reflect the cost to such Lender or its
LIBOR Lending Office of maintaining its LIBOR Rate Loan during such Interest
Period, then such Lender shall give facsimile or telephone notice thereof to the
Borrower as soon as practicable thereafter. If such notice is given, the
interest rate on each Bridge Loan of such
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Lender for such Interest Period and for each subsequent Interest Period until
such Lender gives notice to the Borrower otherwise shall equal the sum of the
Base Rate plus the Initial Spread or the Continuing Spread, as the case may be.
(c) Change in Law. Notwithstanding any other provision of this
Agreement, if any Lender shall notify the Borrower that subsequent to the date
hereof the introduction of, or any change in the interpretation of, any law or
regulation makes it unlawful, or any Governmental Entity asserts that it is
unlawful, for such Lender or its LIBOR Lending Office to make or maintain LIBOR
Rate Loans hereunder, (i) the obligation of such Lender to make or maintain
LIBOR Rate Loans shall be suspended until such Lender shall notify the Borrower
that the circumstances causing such suspension no longer exist and (ii) any
LIBOR Rate Loan then outstanding from such Lender shall immediately be converted
into a Base Rate Loan.
(d) Payments on Business Days. If any payment to be made hereunder
or under any Bridge Note shall be due on a day other than a Business Day, such
payment shall be made on the next succeeding Business Day (and such extension of
time shall be included in computing interest in connection with such payment);
provided, however, that if such succeeding Business Day falls in the next
calendar month, such payment shall be made on the next preceding Business Day.
(e) Partial Prepayments and Redemptions. All partial prepayments and
redemptions of the outstanding principal balance of the Bridge Loans shall be
made ratably amongst the applicable Lenders in accordance with their respective
shares of the aggregate outstanding principal balance of the Bridge Loans
eligible for prepayment or redemption; provided, however, that all partial
prepayments and redemptions by the Borrower shall be made in the following order
of priority: first, the Series C Bridge Loans, second, the Series B Bridge
Loans, and third, the Series A Bridge Loans.
(f) No Defense. To the fullest extent permitted by law, the Borrower
shall make all payments hereunder and under the Bridge Notes regardless of any
defense or counterclaim.
(g) Allocation. Any money paid to, received by, or collected by any
Administrative Agent or any Lender pursuant to this Agreement or any other Loan
Document, shall be applied in the following order, at the date or dates fixed by
the Administrative Agent:
First: to any unpaid fees and reimbursement or unpaid expenses of
the Administrative Agent hereunder and under the Fee Letter;
Second: to the payment of all costs, expenses, other fees,
commissions and taxes owing to any Lender hereunder;
Third: to the indefeasible payment of all accrued interest to the
date of such payment or collection and any Liquidated Damages and
Additional Amounts;
Fourth: to the indefeasible payment of the amounts then due and
unpaid under this Agreement, the Bridge Notes or any other Loan Document
for principal, in respect of which or for the benefit of which such money
has been paid or collected, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Bridge Notes for
principal; and
Fifth: the balance, if any, to the Person lawfully entitled thereto.
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Section 2.9. Taxes.
(a) Taxes. Any and all payments by the Borrower hereunder or under
the Bridge Notes, the Exchange Notes or any other Loan Document shall be made,
in accordance with Section 2.8 or the other applicable provision of the
applicable Loan Document, free and clear of and without deduction or withholding
for or on account of any and all present or future taxes, levies, imposts,
deductions, charges, withholdings or additions to tax, interest, penalties and
all other liabilities with respect thereto, excluding (i) income, franchise or
similar taxes imposed or levied on the Administrative Agent or the Lenders as a
result of a present or former connection between the Administrative Agent or the
Lenders and the jurisdiction of the governmental authority imposing such tax or
any political subdivision or taxing authority thereof or therein (other than any
such connection arising solely from such Administrative Agent or such Lenders
having executed, delivered or performed its obligations or received a payment
under, or enforced, this Agreement) and (ii) in the case of any Foreign Lender,
any taxes that are in effect and that would apply to a payment hereunder or
under the Bridge Notes, the Exchange Notes or any other Loan Document made to
such Foreign Lender as of the date such Foreign Lender becomes a party to this
Agreement, or in the case of any other Lender which changes its lending office
with respect to a Bridge Loan or the Exchange Notes to an office outside the
U.S., any taxes that are in effect and would apply to a payment to such Lender
as of the date of the change of the lending office (all such non-excluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If the Borrower shall be required by law to
deduct or withhold any Taxes from, or in respect of, any sum payable hereunder
or under the Bridge Notes, the Exchange Notes or any other Loan Document to the
Administrative Agent or the Lenders or any of their respective Affiliates who
may become a Lender: (i) the sum payable thereunder shall be increased as may be
necessary so that after making all required deductions or withholdings
(including deductions or withholdings applicable to additional sums payable
under this Section 2.9) the Administrative Agent or the Lenders or any of their
respective Affiliates receives an amount equal to the sum it would have received
had no such deductions or withholdings been made; (ii) the Borrower shall make
such deductions or withholdings; and (iii) the Borrower shall pay the full
amount deducted to the relevant tax authority or other authority in accordance
with applicable laws.
(b) Other Taxes. In addition, the Borrower agrees to pay any present
or future stamp, mortgage recording or documentary taxes or any other excise or
property taxes, charges or similar levies which arise from any payment made
hereunder or under a Bridge Note, Exchange Note or other Loan Document or from
the execution, delivery or registration of, or otherwise with respect to, this
Agreement or the other Loan Documents (hereinafter referred to as "Other Taxes")
and hold each Administrative Agent and each Lender harmless from and against any
and all liabilities with respect to or resulting from any delay or omission
(other than to the extent attributable to such Lender) to pay such Other Taxes.
Each Lender represents that, to the best of its knowledge, except for any such
Other Taxes that may be imposed under the federal, state or local laws of the
United States (or any political subdivision thereof), it is not aware of any
such stamp, mortgage recording or documentary taxes or any other excise or
property taxes, charges or similar levies.
(c) Indemnity. The Borrower will indemnify any Administrative Agent
and any Lender for the full amount of Taxes or Other Taxes arising in connection
with payments made under this Agreement or any other Loan Document (including,
without limitation, any Taxes or Other Taxes imposed by any jurisdiction on
amounts payable under this Section 2.9) paid by any Administrative Agent or any
Lender or any of their respective Affiliates and any liability (including
penalties, additions to tax interest and expenses) arising therefrom or with
respect thereto. Payment under this indemnification shall be made within fifteen
days from the date any Administrative Agent or any Lender or any of their
respective Affiliates makes written demand therefor; provided, however, that the
Borrower shall not be obligated to make payment to the Lender or the
Administrative Agent (as the case
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may be) pursuant to this Section 2.9(c) in respect of penalties, interest and
other liabilities attributable to any Taxes or Other Taxes, if (i) written
demand therefor has not been made by such Lender or such Administrative Agent
within 60 days from the date on which such Lender or such Administrative Agent
received written notice of the imposition of Taxes or Other Taxes by the
relevant taxing or governmental authority, but only to the extent such
penalties, interest and other similar liabilities are attributable to such
failure or delay by the Administrative Agent or the Lender in making such
written demand, (ii) such penalties, interest and other liabilities have accrued
after the Borrower had indemnified or paid an additional amount due as of the
date of such payment pursuant to this Section 2.9(c) or (iii) such penalties,
interest and other liabilities are attributable to the gross negligence or
willful misconduct of the Lender or the Administrative Agent or such Affiliates.
After the Lender or the Administrative Agent (as the case may be) receives
written notice of the imposition of the Taxes or Other Taxes which are subject
to this Section 2.9(c), such Lender and the Administrative Agent will act in
good faith to promptly notify the Borrower of its obligations hereunder;
provided, however, that the failure to so act shall not, standing alone, affect
the rights of the Administrative Agent or the Lenders under this Section 2.9(c).
(d) Furnish Evidence to Administrative Agent. The Borrower will make
reasonable efforts to obtain certified copies of tax receipts evidencing the
payment of any Taxes deducted or withheld from each taxing authority imposing
such Taxes. The Borrower will furnish to the Lenders, within 60 days after the
date the payment of any Taxes so deducted or withheld is due pursuant to
applicable law, original or certified copies of tax receipts evidencing such
payment by the Borrower or, if such receipts are not obtainable, other evidence
of such payments by the Borrower reasonably satisfactory to the Lenders.
(e) Survival. Without prejudice to the survival of any other
agreement of the Borrower hereunder, the agreements and obligations of the
Borrower contained in this Section 2.9 shall survive the payment in full of all
amounts due hereunder and under the Bridge Notes.
(f) Mitigation. If the Borrower is required to pay additional
amounts to or for the account of any Lender pursuant to this Section 2.9 as a
result of a change in law or treaty occurring after such Lender first became a
party to this Agreement, then such Lender will, at the request of the Borrower,
change the jurisdiction of its applicable lending office if such change (i) will
eliminate or reduce any such additional payment which may thereafter accrue and
(ii) is, in such Lender's sole, reasonable discretion, determined not to be
materially disadvantageous or cause unreasonable hardship to such Lender,
provided that fees, charges, costs or expenses that are related to such change
shall be borne by the Borrower on behalf of a Lender, and the mere existence of
such expenses, fees or costs shall not be deemed to be materially
disadvantageous or cause undue hardship to the Lender.
Each Lender and each Administrative Agent agrees that it will
(i) take all reasonable actions reasonably requested by the Borrower in writing
that are without risk and material cost to such Lender or such Administrative
Agent and consistent with the internal policies of such Lender and applicable
legal and regulatory restrictions (as the case may be) to maintain all
exemptions, if any, available to it from withholding taxes (whether available by
treaty or existing administrative waiver) and (ii) to the extent reasonable and
without risk and material cost to it, otherwise cooperate with the Borrower to
minimize any amounts payable by the Borrower under this Section 2.9; provided,
however, that in each case, any cost relating to such action or cooperation
requested by the Borrower shall be borne by the Borrower.
(g) Certification. Each Foreign Lender and Foreign Participant shall
deliver to the Borrower and the Administrative Agent, and, if applicable, the
assigning Lender (and, in the case of a Foreign Participant, to the Lender from
which the related participation shall have been purchased) on or
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before the date on which it becomes a party to this Agreement (or, in the case
of a Foreign Participant, on or before the date on which such Participant
purchases the related Participation) either:
(i) two duly completed and signed copies of either Internal Revenue
Service Form 1001 or its successor form or Form 4224 or its successor form
and related applicable forms, as the case may be; or
(ii) in the case of a Foreign Lender that is not a "bank" within the
meaning of Section 881(c)(3)(A) of the Code and that does not comply with
the requirements of clause (A) hereof, (x) a statement to the effect that
such Lender is eligible for a complete exemption from withholding of U.S.
Taxes under Code Section 871(h) or 881(c), and (y) two duly completed and
signed copies of Internal Revenue Service Form W-8 or successor and
related applicable form.
Further, each Foreign Lender or Foreign Participant agrees (x) to deliver
to the Borrower and the Administrative Agent, and, if applicable, the assigning
Lender (and, in the case of a Foreign Participant, to the Lender from which the
related Participation shall have been purchased) two further duly completed and
signed copies of such Forms 1001 or 4224, as the case may be, or successor and
related applicable forms, on or before the date that any such form expires or
becomes obsolete and promptly after the occurrence of any event requiring a
change from the most recent form(s) previously delivered by it in accordance
with applicable U.S. laws and regulations and (y) in the case of a Foreign
Lender that delivers a statement pursuant to Section 2.9(g)(ii) above, to
deliver to the Borrower and the Administrative Agent, and, if applicable, the
assigning Lender, such statement on an annual basis on the anniversary of the
date on which such Foreign Lender became a party to this Agreement and to
deliver promptly to the Borrower and the Administrative Agent, and if
applicable, the assigning Lender, such additional statements and forms as shall
be reasonably requested by the Borrower from time to time unless, in any such
case, any change in law or regulation has occurred subsequent to the date such
Foreign Lender became a party to this Agreement (or in the case of a Foreign
Participant, the date on which such Foreign Participant purchased the related
Participation) which renders all such forms inapplicable or which would prevent
such Lender (or Participant) from properly completing and executing any such
form with respect to it and such Lender promptly notifies the Borrower and the
Administrative Agent (and, in the case of a Foreign Participant, the Lender from
which the related participation shall have been purchased) if it is no longer
able to deliver, or if it is required to withdraw or cancel, any form or
statement previously delivered by it pursuant to this Section 2.9(g).
(h) Failure to Provide Certification. Notwithstanding any provision
of this Agreement, the Borrower shall not be required to pay any Taxes or Other
Taxes pursuant to this Section 2.9 in respect of U.S. federal income taxes if
the obligation to withhold with respect to such Taxes or Other Taxes results
from, or would not have occurred but for, the failure of any Foreign Lender or
Foreign Participant to deliver the forms described in the preceding Section 2.9
in the manner and at the times specified in such paragraphs. A Foreign Lender or
Foreign Participant shall not be required to deliver any form or statement
pursuant to Section 2.9(g) that such Foreign Lender or Foreign Participant is
not legally able to deliver.
Section 2.10. Right of Set Off; Sharing of Payments, Etc.
(a) Right of Set-Off. In addition to any rights now or hereafter
granted under applicable law or otherwise, and not by way of limitation of any
such rights, upon the occurrence and during the continuance of any Event of
Default or if the Borrower becomes insolvent, however evidenced, the Borrower
authorizes each Lender at any time or from time to time, without presentment,
demand, protest or other notice of any kind to the Borrower or to any other
Person, any such notice being hereby expressly waived, to set off and to
appropriate and apply any and all deposits (general or special,
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time or demand, provisional or final, whether or not collected or available) in
any currency and any other indebtedness at any time held by or owing to such
Lender or any of its Affiliates (including, without limitation, by branches and
agencies of such Lender wherever located) to or for the credit or the account of
the Borrower against and on account of the Obligations of the Borrower to such
Lender under this Agreement or under any of the other Loan Documents, including,
without limitation, all interests in or participation in the Obligations
purchased by such Lender, and all other claims of any nature or description
arising out of or in connection with this Agreement or any other Loan Document,
irrespective of whether or not such Lender shall have made any demand hereunder
and although the Obligations, liabilities or claims, or any of them, shall be
contingent or unmatured. A Lender may exercise such rights notwithstanding that
the amounts concerned may be expressed in different currencies and each Lender
is authorized to effect any necessary conversions at a market rate of exchange
selected by it. A Lender exercising its rights under this Section 2.10(a) shall
provide prompt notice to the Borrower following such exercise.
(b) Sharing. If any Lender shall obtain from the Borrower payment of
any principal of or interest on any Bridge Loan owing to it or payment of any
other amount under this Agreement, a Loan Document or any Bridge Note held by it
through the exercise of any right of set-off, banker's lien or counterclaim or
similar right or otherwise (other than from the Administrative Agent as provided
herein) and, as a result of such payment, such Lender shall have received a
greater percentage of the principal of or interest on the Bridge Loans or such
other amounts then due to such Lender by the Borrower than the percentage
received by any other Lenders, it shall promptly purchase from such other
Lenders participation in (or, if and to the extent specified by such Lender,
direct interests in) the Bridge Loans or such other amounts, respectively, owing
to such other Lenders (or any interest due thereon, as the case may be) in such
amounts, and make such other adjustments from time to time as shall be
equitable, to the end that all the Lenders shall share the benefit of such
excess payment (net of any expenses which may be incurred by such Lender in
obtaining or preserving such excess payment) pro rata in accordance with the
unpaid principal of and/or interest on the Bridge Loans or such other amounts,
respectively, owing to each of the Lenders. To such end all the Lenders shall
make appropriate adjustments among themselves (by the resale of participation
sold or otherwise) if such payment is rescinded or must otherwise be restored.
(c) No Requirement. Nothing in this Agreement shall require any
Lender to exercise any such right or shall affect the right of any Lender to
exercise, and retain the benefits of exercising, any such right with respect to
any other indebtedness or obligation of the Borrower. If, under any applicable
bankruptcy, insolvency or other similar law, any Lender receives a secured claim
in lieu of a set-off to which this Section 2.10 applies, such Lender shall, to
the extent practicable, exercise its rights in respect of such secured claim in
a manner consistent with the rights of the Lenders entitled under this Section
2.10 to share in the benefits of any recovery on such secured claim.
Section 2.11. Certain Fees. The Borrower agrees to pay to the
Administrative Agent, for its own account, the fees specified in the Fee Letter
with respect to the Bridge Loans and Exchange Notes, amounts for its expenses
incurred hereunder and all other amounts owing under this Agreement and the
other Loan Documents.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
As of the Closing Date and as of each Funding Date, the Borrower
hereby agrees with, and represents and warrants to, the Lenders that each of the
following representations and warranties is true and will be true after giving
pro forma effect to the Transactions.
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Section 3.1. [Intentionally Omitted]
Section 3.2. Organization; Powers. (i) The Borrower has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of the State of Delaware with power and authority (corporate and other) to
own its properties and conduct its business as now conducted and as proposed to
be conducted, (ii) has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties or conducts any business so
as to require such qualification, except to the extent the failure to be so
qualified could not reasonably be expected to have a Material Adverse Effect;
and (iii) each Subsidiary of the Borrower has been duly incorporated and is
validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, except to the extent the failure to be so
qualified could not reasonably be expected to have a Material Adverse Effect.
The Borrower has all requisite corporate power and authority to execute, deliver
and perform its obligations under each of the Transaction Documents.
Section 3.3. Due Authorization and Enforceability.
(a) Each of the Transaction Documents: (i) has been duly authorized,
executed and delivered by Borrower and (ii) constitutes a valid and binding
obligation of Borrower enforceable against each such Person in accordance with
its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization
and other laws of general applicability relating to or affecting creditors'
rights and to general equity principles.
(b) The Bridge Loans, the Bridge Notes and the Exchange Notes have
been duly authorized by the Borrower. When the Bridge Notes and the Exchange
Notes have been executed and delivered pursuant to the terms of this Agreement
or the Exchange Note Indenture, as applicable, each of the Bridge Loans, the
Bridge Notes and the Exchange Notes will be valid and binding obligations of the
Borrower, enforceable against it in accordance with their terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to general equity
principles.
Section 3.4. No Conflicts.
The execution and delivery of the Transaction Documents, the
consummation of the transactions contemplated hereby or thereby and compliance
with the terms and provisions hereof or thereof 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, Independent Television Commission ("ITC"), the Office
of Telecommunications ("OFTEL") and the Department of Trade and Industry
("DTI"), will not conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, sale/leaseback agreement, loan agreement or other similar
financing agreement or instrument or other agreement or instrument (each, a
"Material Contract") to which the Borrower or any of its Subsidiaries is a party
or by which the Borrower or any of its Subsidiaries is bound or to which any of
the property or assets of the Borrower or any of its Subsidiaries is subject,
nor will such action result in any violation of the provisions of the
Certificate of Incorporation or By-laws (or other governing documents) of the
Borrower or any of its Subsidiaries or any statute or any order, rule or
regulation of any court or governmental agency or body having jurisdiction over
the Borrower or any of its Subsidiaries or any of their properties; and no
consent, approval, authorization, order, registration or qualification of or
with any such court or governmental agency or body is required for the
consummation by the Borrower of the transactions contemplated by this Agreement
and the other Transaction Documents or the issuance and delivery of the Bridge
Notes and Exchange Notes by the Borrower, except such actions as may be
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required under the Registration Rights Agreement after the date hereof in
connection with any transfer of the Exchange Notes (including any laws,
statutes, rules or regulations promulgated by ITC, OFTEL or DTI).
Section 3.5. No Violations; Material Contracts.
Neither the Borrower nor any of its Subsidiaries is in violation of
its Certificate of Incorporation or By-laws or other governing documents or in
default in the performance or observance of any obligation, agreement or
condition contained in any bond, debenture, note or any other evidence of
indebtedness or in any indenture, mortgage, deed of trust, loan agreement, lease
or other agreement or instrument to which it is a party or by which it or any of
its properties may be bound or to which any of their respective properties is
subject or is in violation of any law, statute, rule, regulation, judgment or
court decree applicable to the Borrower or any of its Subsidiaries or any of
their respective properties (including any laws, statutes, rules or regulations
promulgated by ITC, OFTEL and 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 could not reasonably be expected to have a Material Adverse
Effect.
Section 3.6. Capital Stock; Subsidiaries. As of the Closing Date,
the Borrower has an authorized capitalization as set forth on Schedule 3.6 and
all of the issued shares of capital stock of the Borrower have been duly and
validly authorized and issued and are fully paid and non-assessable; and all of
the issued shares of capital stock of each Subsidiary of the Borrower have been
duly and validly authorized and issued, are fully paid and non-assessable and
are owned directly or indirectly by the Borrower, free and clear of all Liens,
except Permitted Liens.
Section 3.7. Liens. There are no Liens on any assets of the Borrower
or any of its Subsidiaries except Permitted Liens.
Section 3.8. No Violation of Regulations of Board of Governors of
Federal Reserve System. None of the transactions contemplated by this Agreement
(including without limitation the use of the proceeds from the Bridge Loans and
Debt Securities) will violate or result in a violation of Section 7 of the
Exchange Act, or any rule or regulation issued pursuant thereto, including,
without limitation, Regulations T, U and X of the Board.
Section 3.9. Governmental Regulations. None of the Borrower or any
of its Subsidiaries is or will be subject to regulation under the Investment
Company Act of 1940, as amended, the Public Utility Holding Company Act of 1935,
as amended, the Federal Power Act, the Interstate Commerce Act or to any other
statute, rule or regulation limiting its ability to incur Indebtedness for
borrowed money.
Section 3.10. Financial Statements; No Undisclosed Liabilities.
(a) The consolidated balance sheet of the Borrower and its
Subsidiaries as of September 30, 1998 that is attached hereto as Schedule
3.10(a) fairly presents the consolidated financial position of the Borrower and
its Subsidiaries as of such date, in accordance with GAAP consistently applied
(except as otherwise specifically indicated therein). The consolidated
statements of income and cash flows of the Borrower and its Subsidiaries that
are attached hereto as Schedule 3.10(a) have been prepared in conformity with
GAAP applied on a consistent basis through all the periods involved (except as
otherwise specifically indicated therein) and fairly present the consolidated
results of operations of each of the Borrower and its Subsidiaries for the
periods indicated.
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(b) The consolidated balance sheet of the Acquired Business and its
Subsidiaries as of September 30, 1998 that is attached hereto as Schedule
3.10(b) fairly presents the consolidated financial position of the Acquired
Business and its Subsidiaries as of such date, in accordance with GAAP
consistently applied (except as otherwise specifically indicated therein).
(c) The pro forma consolidated statements of income included in
Schedule 3.10(c) fairly present the estimated consolidated income of the
Borrower and its Subsidiaries assuming the consummation of the Acquisition as if
it had occurred on the date set forth therein, and the pro forma consolidated
balance sheet of the Borrower included in Schedule 3.10(c) fairly presents the
consolidated financial condition of the Borrower and its Subsidiaries on the
Closing Date (after giving effect to all simultaneous transactions to occur on
such date).
(d) The historical and pro forma financial statements attached
hereto as Schedule 3.10(a), Schedule 3.10(b) and Schedule 3.10(c) comply as to
form with the requirements applicable to such financial statements in, and
constitute all of the financial statements required by, Regulation S-X of the
Securities Act for a Form S-1 registration statement.
(e) Neither the Borrower nor any of its Subsidiaries (prior to
giving effect to the consummation of the Transactions) has any liability
(absolute or contingent) except (i) those shown on the most recent audited
balance sheets described in Section 3.10(a), (ii) those incurred under the
Transaction Documents and (iii) those incurred in the ordinary course of
business since the date of such audited balance sheets.
(f) For purposes of this Section 3.10, all financial statements
required pursuant to Section 5.5 of this Agreement, once approved by the
Lenders, shall be added to Schedule 3.10(a), Schedule 3.10(b), or Schedule
3.10(c), as appropriate, and shall become subject to the Borrower's
representations contained in Sections 3.10(a) through 3.10(e) above.
Section 3.11. Full Disclosure. No information, report, financial
statement or certificate delivered or to be delivered to the Lenders in
connection with the Transactions contains or will contain any untrue statement
of material fact or omitted or omits or will omit to state a material fact
necessary to make such statements not misleading in light of the circumstances
in which such statements were made; provided that to the extent any such
information, report, financial statement, exhibit or schedule was based upon or
constitutes a forecast or projection, the Borrower represents only that it acted
in good faith and utilized reasonable assumptions and due care in the
preparation of such information, report, financial statement, exhibit or
schedule.
Section 3.12. Private Offering; Rule 144A Matters.
(a) Based in part on the accuracy of the representations and
warranties of, and compliance with the covenants and agreements by, the Lenders
in Section 6.1, the making of the Bridge Loans hereunder and the issuance of the
instruments evidencing such Bridge Loans and the Securities are and will be
exempt from the registration and prospectus delivery requirements of the
Securities Act. The Borrower has not issued or sold Bridge Loans or Securities
to anyone other than the Lenders. No securities of the same class (within the
meaning of Rule 144A(d) (3) under the Securities Act) as the Bridge Loans or the
Securities have been issued or sold by the Borrower within the six-month period
immediately prior to the date hereof. The Borrower agrees that neither it, nor
anyone acting on its behalf, will (i) offer the Bridge Loans or the Securities
so as to subject the making, issuance and/or sale of the Bridge Loans or the
Securities to the registration or prospectus delivery requirements of the
Securities Act or (ii) offer any securities that are similar to the Bridge Loans
or the Securities for issuance or sale to, or solicit any offer to acquire any
of the same from, or otherwise approach or
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negotiate with respect to the same with, anyone if the issuance or sale of the
Bridge Loans or the Securities and any such securities would be integrated as a
single offering for the purposes of the Securities Act, including without
limitation, Regulation D thereunder, in such a manner as would require
registration under the Securities Act thereof. Each Bridge Note, and (subject to
the terms of the Exchange Note Indenture and the Escrow Agreement) each of the
Exchange Notes will bear a legend setting forth the restrictions on the
transferability thereof imposed by the Securities Act for so long as such
restrictions apply.
(b) In the case of each offer, sale or issuance of the Bridge Loans
or the Securities no form of general solicitation or general advertising was or
will be used by the Borrower or their representatives, including, but not
limited to, advertisements, articles, notices or other communications published
in any newspaper, magazine or similar medium or broadcast over television or
radio, or any seminar or meeting whose attendees have been invited by any
general solicitation or general advertising.
(c) The Securities will be eligible for resale pursuant to Rule 144A
under the Securities Act. When the Securities are issued and delivered pursuant
to the Loan Documents, they will not be of the same class (within the meaning of
Rule 144A(d) (3) under the Securities Act) as any other security of the Borrower
that is listed on a national securities exchange registered under Section 6 of
the Exchange Act or that is quoted in a United States automated interdealer
quotation system. Neither the issuance of the Exchange Notes nor the execution,
delivery and performance of the Loan Documents (other than the Registration
Rights Agreement) will require the qualification of an indenture under the Trust
Indenture Act.
Section 3.13. Absence of Proceedings. Except with respect to the
matters disclosed in Schedule 3.13, 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 Borrower, threatened, to
which the Borrower or any of its Subsidiaries is a party or of which any of
their respective properties is the subject which, if determined adversely to the
Borrower or any of its Subsidiaries, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect; and, to the best of
the Borrower's knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others.
Section 3.14. Taxes. The Borrower and its Subsidiaries have duly and
timely filed all required tax returns and reports and paid prior to delinquency
all taxes, assessments, and governmental levies except those being contested in
good faith and by appropriate proceedings.
Section 3.15. Financial Condition; Solvency.
(a) The Borrower is, and immediately after giving effect to the
consummation of the Transactions will be, Solvent.
(b) The Borrower does not intend to incur debts beyond its ability
to pay such debts as they mature, taking into account the timing and amounts of
cash to be received by it and the timing and amounts of cash to be payable on or
in respect of its Indebtedness.
Section 3.16. Absence of Certain Changes. There has not been any
event or series of events, adverse condition or change in or affecting the
Borrower that, individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect.
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Section 3.17. Year 2000 Compliance The Borrower has reviewed its
operations and that of its Subsidiaries to evaluate the extent to which the
business or operations of the Borrower or any of its Subsidiaries will be
affected by the Year 2000 Problem. As a result of such review, the Borrower has
no reason to believe, and does not believe, that the Year 2000 Problem will have
a material adverse effect on the general affairs, management, the current or
future consolidated financial position, business prospects, stockholders' equity
or results of operations of the Borrower and its subsidiaries or result in any
material loss or interference with the Borrower's business or operations. The
"Year 2000 Problem" as used herein means any significant risk that computer
hardware or software used in the receipt, transmission, processing,
manipulation, storage, retrieval, retransmission or other utilization of data or
in the operation of mechanical or electrical systems of any kind will not, in
the case of dates or time periods occurring after December 31, 1999, function at
least as effectively as in the case of dates or time periods occurring prior to
January 1, 2000.
Section 3.18. Properties. The Borrower and its Subsidiaries have
good and marketable title in fee simple to all real property and good and
marketable title to all personal property owned by them, in each case free and
clear of all liens, encumbrances and defects (other than Permitted Liens) except
such as do not materially affect the value of such property and do not interfere
with the use made and proposed to be made of such property by the Borrower and
its Subsidiaries; and any real property and buildings held under lease by the
Borrower and its Subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and buildings by the
Borrower and its Subsidiaries.
Section 3.19. Permits; Registration.
(a) The Borrower and each of the Subsidiaries has such permits,
licenses, franchises, certificates of need and other approvals or authorizations
of any governmental or regulatory authority ("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 to the extent that the
failure to have such Permits could not reasonably be expected to have a Material
Adverse Effect. The Borrower and the Significant Subsidiaries have fulfilled and
performed in all material respects, all their respective obligations with
respect to the Permits, and no event has occurred which allows, or after notice
or lapse of time would allow, revocation or termination thereof or results in
any other material impairment of the rights of the holder of any such Permit,
except to the extent that any such revocation or termination could not
reasonably be expected to have a Material Adverse Effect. None of the Permits
contains any restriction that has not previously been satisfied and that is
materially burdensome to the Borrower or any of its subsidiaries. Neither the
Borrower nor any of its Subsidiaries has any reason to believe that any
governmental body or regulatory agency is considering limiting, suspending or
revoking any Permits, except as could not reasonably be expected to have a
Material Adverse Effect.
Section 3.20. ERISA. The Borrower and each of the Subsidiaries are
in compliance in all material respects with all presently applicable provisions
of the Employee Retirement Income Security Act of 1974, as amended, including
the regulations and published interpretations thereunder ("ERISA"); no
"reportable event" (as defined in ERISA) has occurred with respect to any
"pension plan" (as defined in ERISA) for which the Borrower would have any
liability; the Borrower has not incurred and does not expect to incur liability
under (i) Title IV of ERISA with respect to termination of, or withdrawal from,
any "pension plan" or (ii) Sections 412 or 4971 of the Internal Revenue Code of
1986, as amended, including the regulations and published interpretations
thereunder (the "Code"); and each "pension plan" for which the Borrower would
have any liability that is intended to be qualified
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under Section 401(a) of the Code is so qualified in all material respects and
nothing has occurred, whether by action or by failure to act, which would cause
the loss of such qualification.
Section 3.21. Environmental Matters. There has been no storage,
disposal, generation, manufacture, refinement, transportation, handling or
treatment of toxic wastes, medical wastes, hazardous wastes or hazardous
substances by the Borrower or any of its Subsidiaries (or, to the knowledge of
the Borrower, any of their predecessors in interest) at, upon or from any of the
property now or previously owned or leased by the Borrower or any of its
Subsidiaries in violation of any applicable law, ordinance, rule, regulation,
order, judgment, decree or permit or which would require remedial action under
any applicable law, ordinance, rule, regulation, order, judgment, decree or
permit, except for any violation or remedial action which would not have, or
could not reasonably be expected to have, singularly or in the aggregate, a
Material Adverse Effect; there has been no material spill, discharge, leak,
emission, injection, escape, dumping or release of any kind onto such property
or into the environment surrounding such property of any toxic wastes, medical
wastes, solid wastes, hazardous wastes or hazardous substances due to or caused
by the Borrower or any of its Subsidiaries or with respect to which the Borrower
or any of its Subsidiaries has knowledge, except for any such spill, discharge,
leak, emission, injection, escape, dumping or release which could not have or
could not reasonably be expected to have, singularly or in the aggregate, a
Material Adverse Effect; and the terms "hazardous wastes," "toxic wastes,"
"hazardous substances" and "medical wastes" shall have the meanings specified in
any applicable local, state, federal and foreign laws or regulations with
respect to environmental protection.
Section 3.22. Acquired Business. The Borrower has acquired the
Acquired Business and the Acquired Business is a Subsidiary of the Borrower.
ARTICLE IV.
COVENANTS
So long as any Commitment shall remain outstanding or any Obligation
shall remain unpaid, the Borrower covenants and agrees with the Lenders as
follows:
Section 4.1. Use of Proceeds. The proceeds of the Bridge Loans shall
be applied by the Borrower to repay the Diamond Notes tendered by the holders
thereof pursuant to an Offer to Purchase in accordance with the terms of the
Diamond Indentures, which Offer to Purchase relates to the change of control
repurchase obligation due to the Acquisition and/or by the organization of the
Parent. No portion of the proceeds of any Bridge Loan shall be used by the
Borrower or any of its Subsidiaries in any manner that might cause such Bridge
Loan or the application of such proceeds to violate Regulation U, Regulation T
or Regulation X of the Board or any other regulation thereof or to violate the
Exchange Act, in each case as in effect on the date of such Bridge Loan and the
use of proceeds therefrom.
Section 4.2. Notice of Default and Related Matters. The Borrower
shall furnish to the Administrative Agent (with copies for each Lender) written
notice, promptly upon becoming aware of the existence of:
(a) any condition or event that constitutes a Default or an Event of
Default, specifying the nature and period of existence thereof and the
action taken or proposed to be taken with respect thereto;
(b) the filing or commencement of, or any threat or notice of
intention of any Person to file or commence, any action, suit or
proceeding, whether at law or in equity or by or before any Governmental
Entity, against or affecting the Borrower or any of its Subsidiaries or
any of
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their respective Affiliates that could reasonably be expected to result,
individually or in the aggregate, in a Material Adverse Effect; and
(c) any development that, individually or in the aggregate, has
resulted in, or could reasonably be expected to have, a Material Adverse
Effect.
Section 4.3. Reports. Whether or not required by the rules and
regulations of the SEC, so long as any Bridge Notes are outstanding, the
Borrower shall file with the SEC and furnish to the Lenders, 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 Borrower's certified
independent accountants, in each case, in the form required by the rules and
regulations of the SEC as in effect on the date hereof. This Section 4.3 will
apply notwithstanding that the Borrower becomes a corporation organized under
the laws of the United Kingdom, the Netherlands, the Netherlands Antilles,
Bermuda or the Cayman Islands.
Section 4.4. Compliance Certificate.
(a) The Borrower shall deliver to the Administrative Agent (with a
copy for each Lender), within 90 days after the end of each fiscal year of the
Borrower, an Officers' Certificate stating that a review of the activities of
the Borrower 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 Borrower has kept, observed, performed and fulfilled its obligations under,
and complied with the covenants and conditions contained in, this Agreement, and
further stating, as to each such Officer signing such certificate, that to the
best of his or her knowledge the Borrower has kept, observed, performed and
fulfilled each and every covenant, and complied with the covenants and
conditions contained in this Agreement 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 or she may have knowledge) and that to the best of
his or her knowledge no event has occurred and remains in existence by reason of
which payments on account of the principal or of interest, if any, on the Bridge
Notes are prohibited.
(b) One of the Officers signing such Officers' Certificate shall be
either the Borrower's principal executive officer, principal financial officer
or principal accounting officer.
(c) The Borrower shall so long as any of the Bridge Notes are
outstanding, deliver to the Administrative Agent (with a copy for each Lender),
forthwith upon becoming aware of any Default or Event of Default, an Officers'
Certificate specifying such Default or Event of Default.
Section 4.5. Taxes. The Borrower shall pay, 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 4.6. Stay, Extension and Usury Laws. The Borrower covenants
(to the extent that it may lawfully do so) that it shall not at any time insist
upon, plead, or in any manner whatsoever claim or take the benefit or advantage
of, any stay, extension or usury law wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the performance of this
Agreement; and the Borrower (to the extent that it may lawfully do so) hereby
expressly waives all
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benefit or advantage of any such law, and covenants that it shall not, by resort
to any such law, hinder, delay or impede the execution of any power herein
granted to the Lenders, but shall suffer and permit the execution of every such
power as though no such law has been enacted.
Section 4.7. Restricted Payments. (a) The Borrower 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 Borrower'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 Borrower or such Restricted
Subsidiary or (y) dividends or distributions payable to the Borrower or
any Wholly Owned Subsidiary of the Borrower, 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 Borrower (other than any such Equity Interests
owned by the Borrower or any Wholly Owned Subsidiary of the Borrower);
(iii) subject to Section 4.7(e), voluntarily purchase, redeem or
otherwise acquire or retire for value any Indebtedness other than the
Bridge Notes; or
(iv) make any Restricted Investment (all such payments and other
actions set forth in clauses (i) through (iv) above, including those
occurring prior to the date hereof, being collectively referred to as
"Restricted Payments"), unless, subject to Section 4.7(f) hereof, 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) subject to Section 4.7(f), such Restricted Payment,
together with the aggregate of all other Restricted Payments made by the
Borrower and its Restricted Subsidiaries after the date hereof (including
Restricted Payments permitted by clauses (ii) through (ix) of Section
4.7(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 (provided that (A) this clause (y) shall apply only to a
Restricted Payment made by the Borrower to the Parent or constitutes a
Restricted Investment and (B) any Capital Stock Sale Proceeds received
after the Closing Date by the Borrower or any of its Subsidiaries shall be
used to repay Bridge Loans in accordance with Section 2.4 hereof), plus
(z) cash received by the Borrower 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 hereof is sold for cash or otherwise liquidated or repaid for cash,
the amount credited pursuant to this clause (y) 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 Borrower's
Board of Directors.
(b) The foregoing provisions in Section 4.7(a) shall not prohibit:
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(i) the payment of any dividend within 60 days after the date of
declaration thereof, if at said date of declaration such payment would
have complied with the provisions of this Agreement;
(ii) subject to Section 2.4, (x) the redemption, repurchase,
retirement or other acquisition of any Equity Interests of the Borrower 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 Borrower) of
other Equity Interests (other than any Disqualified Stock) of the
Borrower, provided that the Borrower delivers to the Administrative Agent
(with a copy for each Lender):
(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 Borrower or such Subsidiary
from a financial point of view issued by an investment banking firm of
national standing, 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 any 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 Borrower 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 Agreement or the indentures
governing the Other Qualified Notes or any other instrument governing
unsecured indebtedness of the Borrower which is pari passu with the Bridge
Notes) on its ability to pay dividends or make any other distributions to
the Borrower 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) subject to Section 2.4, the redemption, purchase, defeasance,
acquisition or retirement of Indebtedness that is subordinated to the
Bridge 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 Borrower) of
(A) Equity Interests of the Borrower, provided that the amount of such
proceeds from the sale of any 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 4.9 hereof;
(v) Investments by the Borrower 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 Borrower 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 any 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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(vi) Investments by the Borrower or any Restricted Subsidiary in
Permitted Non-Controlled Assets;
(vii) the extension by the Borrower 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 Borrower (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 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
4.7(b)), the Borrower shall deliver to the Administrative Agent (with a copy for
each Lender) an Officers' Certificate stating that such Restricted Payment is
permitted and setting forth the basis upon which the calculations required by
this Section 4.7 were computed, which calculations may be based upon the
Borrower's latest available financial statements.
(e) Notwithstanding any provision in this Section 4.7 or in this
Agreement to the contrary, the Borrower shall not, and shall not permit any of
its Restricted Subsidiaries to, directly or indirectly, voluntarily purchase,
redeem, or otherwise acquire or retire for value any Indebtedness other than the
Bridge Notes.
(f) Notwithstanding any other provision in this Section 4.7 or in
this Agreement to the contrary, the Borrower shall not, and shall not permit any
of its Restricted Subsidiaries to, directly or indirectly, make one or more
Restricted Payments to the Parent that, individually or in the aggregate, exceed
$500 million.
Section 4.8. Dividend and Other Payment Restrictions Affecting
Restricted Subsidiaries. The Borrower 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
Borrower 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 Borrower or any of its Subsidiaries, or
(b) make loans or advances to the Borrower or any of its
Subsidiaries, or
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(c) transfer any of its properties or assets to the Borrower 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 date hereof;
(ii) this Agreement and the Bridge Notes;
(iii) any agreement covering or relating to Indebtedness permitted
to be incurred under Section 4.9.(b)(i), (ii), (iii), (iv), (v), (viii) or
(ix) hereof, (but only, in the case of Section 4.9(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 Agreement and the Bridge 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 Borrower or any Restricted Subsidiary;
(iv) applicable law;
(v) any instrument governing Indebtedness or Capital Stock of a
Person acquired by the Borrower 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 Agreement;
(vi) customary nonassignment provisions in leases entered into in
the ordinary course of business and consistent with past practices;
(vii) provisions of joint venture or stockholder agreements, so long
as such provisions are determined by a resolution of the Board of
Directors to be, at the time of such determination, customary for such
agreements;
(viii) with respect to clause (c) above, purchase money obligations
for property acquired in the ordinary course of business or the provisions
of any agreement with respect to any Asset Sale (or transaction which, but
for its size, would be an Asset Sale), solely with respect to the assets
being sold; or
(ix) permitted Refinancing Indebtedness, provided that the
restrictions contained in the agreements governing such Refinancing
Indebtedness are determined by a resolution of the Board of Directors to
be no more restrictive than those contained in the agreements governing
the Indebtedness being refinanced.
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Section 4.9. Incurrence of Indebtedness and Issuance of Preferred
Stock.
(a) The Borrower 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
Borrower 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 Borrower 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 Borrower 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 Borrower 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 4.9.(a) shall not apply to:
(i) subject to Section 2.4, the incurrence by the Borrower 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 Borrower, any Restricted Subsidiary
of the Borrower or the holders of Equity Interests in any Restricted
Subsidiary on a pro rata basis to such holders;
(iii) subject to Section 2.4, the incurrence of Indebtedness or the
issuance of preferred stock by the Borrower 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) subject to Section 2.4, the incurrence by the Borrower or any
of its Restricted Subsidiaries of additional Indebtedness in an aggregate
principal amount not to exceed $50 million;
(v) the incurrence by the Borrower or any Restricted Subsidiary of
any Permitted Acquired Debt;
(vi) the incurrence by the Borrower or any Subsidiary of
Indebtedness issued in exchange for, or the proceeds of which are used to
extend, refinance, renew, replace, or refund the Bridge Notes, Existing
Indebtedness or Indebtedness referred to in clauses (ii), (iii), (iv) or
(v) above or Indebtedness incurred pursuant to Section 4.9(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
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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 Bridge 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 Borrower
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 4.9.(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 4.9.(a) or (b) hereof, and not for speculation;
(x) the incurrence of Indebtedness between the Borrower 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 Borrower or a
Restricted Subsidiary of the Borrower), such events shall be deemed, in
each case, to constitute the incurrence of such Indebtedness by the
Borrower or by a Restricted Subsidiary, as the case may be, at the time of
such event; and
(xi) Indebtedness of the Borrower and/or any Restricted Subsidiary
in respect of performance bonds of the Borrower or any Subsidiary or
surety bonds provided by the Borrower 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 4.9 to be an incurrence
of Indebtedness by the Borrower 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 Borrower or one of its Restricted Subsidiaries.
Section 4.10. Asset Sales. (a) The Borrower shall not, and shall 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 Borrower (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
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purposes of this Section 4.10 by a resolution of the Board of Directors
set forth in an Officers' Certificate delivered to the Administrative
Agent (with a copy for each Lender)) of the assets sold or otherwise
disposed of; and
(iii) at least 80% of the consideration therefor received by the
Borrower or such Restricted Subsidiary is in the form of (w) cash or 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 Borrower or such
Restricted Subsidiary shall Monetize such Equity Interests by sale to one
or more Persons (other than to the Borrower 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 Borrower's or such Restricted Subsidiary's
most recent balance sheet or in the notes thereto) of the Borrower or any
Restricted Subsidiary (other than liabilities that are by their terms
subordinated to the Bridge Notes) that are assumed by the transferee of
any such assets and (y) any notes or other obligations received by the
Borrower or any such Restricted Subsidiary from such transferee that are
within five Business Days converted by the Borrower 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); provided, however, that the Net Cash Proceeds
thereof are applied in accordance with Section 2.4.
(b) Subject to Section 4.10(d), within 360 days after any Asset
Sale, the Borrower (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.
Subject to Section 4.10(d), pending final application of any such
Net Proceeds, the Borrower may temporarily reduce revolving credit borrowings or
otherwise invest such Net Proceeds in any manner that is not prohibited by this
Agreement or the indentures for the Other Qualified Notes.
(c) Subject to Section 4.10(d), notwithstanding the provisions
of Sections 4.10(a) and (b): the Borrower and its Subsidiaries may:
(i) sell, lease, transfer, convey or otherwise dispose of assets or
property acquired after October 14, 1993, by the Borrower 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 Borrower'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 Borrower
after such transaction is equal to or less than the ratio of Indebtedness
to Annualized Pro Forma EBITDA of the Borrower immediately preceding such
transaction; provided, however, that if the ratio of Indebtedness to
Annualized Pro Forma EBITDA of the Borrower immediately preceding such
transaction is 6:1 or less, then the ratio of Indebtedness to Annualized
Pro Forma EBITDA of the Borrower may be 0.5 greater than such ratio
immediately preceding such transaction and (B)
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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 Borrower 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
Borrower 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 Borrower (or any
Capital Stock Sale Proceeds therefrom) to any Person (including
Non-Restricted Subsidiaries).
(d) Notwithstanding the provisions of this Section 4.10 or any other
provision in this Agreement to the contrary, the Borrower shall cause all Net
Cash Proceeds to be invested or reinvested in Replacement Assets pursuant to
Section 4.10(b)(ii).
Section 4.11. Transactions with Affiliates. The Borrower 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 Borrower or the relevant Subsidiary than those that could have
been obtained in a comparable transaction by the Borrower or such Subsidiary
with an unrelated Person and
(b) the Borrower delivers to the Administrative Agent (with a copy
for each Lender):
(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 Borrower or such Subsidiary from a
financial point of view issued by an investment banking firm of national
standing 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 Borrower or
any of its Subsidiaries in the ordinary course of business and consistent
with the past practice of the Borrower or its predecessor or such
Subsidiary;
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(2) transactions between or among the Borrower and/or its
Restricted Subsidiaries;
(3) transactions permitted by the provisions of Section 4.7
hereof;
(4) Liens permitted under Section 4.12 hereof which are
granted by the Borrower or any of its Subsidiaries to an unrelated Person
for the benefit of the Borrower or any other Subsidiary of the Borrower;
(5) any transaction pursuant to an agreement in effect on the
date hereof;
(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 Borrower or any Restricted Subsidiary has an Investment and
which is not a Cable Controlled Subsidiary (and of which no Affiliate of
the Borrower is an Affiliate other than as a result of such Investment);
and
(8) any tax sharing agreement.
Section 4.12. Liens.
Neither the Borrower 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
4.9(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 4.9 hereof; and
(d) Liens securing Refinancing Indebtedness permitted to be incurred
under Section 4.9 hereof; provided that the Refinancing Indebtedness so issued
and secured by such Lien shall not be secured by any property or assets of the
Borrower or any of its Restricted Subsidiaries other than the property or assets
subject to the Liens securing such Indebtedness being refinanced.
Section 4.13. Change of Control. (a) Upon the occurrence of a Change
of Control, each Lender will have the right to require the Borrower to prepay
all or any part of the principal amount of such Lender's Bridge Loans pursuant
to the offer described below (the "Change of Control Offer" at a prepayment
price in cash equal to the aggregate principal amount thereof plus (i) accrued
and unpaid interest, Liquidated Damages thereon, if any, and Additional Amounts
thereon, if any, to the date of prepayment and (ii) the Change of Control Fee
thereon (collectively, the "Change of Control Payment"). Within 10 days
following any Change of Control, the Borrower will mail a notice to each Lender
describing the transaction or transactions that constituted the Change of
Control and offer to repay the Bridge Loans on the date specified in such
notice, which date shall be no earlier than 30 days
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and no later than 45 days from the date such notice is mailed (the "Change of
Control Payment Date"), pursuant to the procedures set forth below.
(b) Notice of a Change of Control Offer shall be mailed by the
Borrower to the Lenders at their addresses set forth in the Loan Register. The
Change of Control Offer shall remain open from the time of mailing until the
Change of Control Payment Date. The notice shall be accompanied by a copy of the
most recent reports furnished pursuant to Section 4.3 hereof. The notice shall
contain all instructions and materials necessary to enable such Lenders to elect
to be prepaid pursuant to the Change of Control Offer.
(c) On the Change of Control Payment Date, the Borrower shall (i)
repay all Bridge Loans or portions thereof of each Lender that properly elected
repayment thereof pursuant to the Change of Control Offer, (ii) pay the Change
of Control Payment for each such Bridge Loan (or portion thereof) elected to be
repaid and (iii) deliver to each such Lender a new Bridge Note equal in
principal amount (excluding premiums, if any) to the unpurchased portion of the
corresponding Bridge Note surrendered, if any. The Borrower will notify the
remaining Lenders of the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.
Section 4.14. Corporate Existence. Subject to Section 4.19 hereof,
the Borrower shall 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 Borrower in accordance
with the respective organizational documents of each Subsidiary and the rights
(charter and statutory), licenses and franchises of the Borrower and its
Subsidiaries; provided, however, that the Borrower 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 Borrower and its Subsidiaries taken as a whole and that the loss
thereof is not adverse in any material respect to the Lenders. The Borrower
shall notify the Administrative Agent in writing of any Subsidiary which
qualifies as a Material Subsidiary and is not specified in clause (i) of the
definition thereof.
Section 4.15. [Intentionally Omitted]
Section 4.16. Additional Amounts. At least 10 days prior to the
first date on which payment of principal and any premium or interest or
Liquidated Damages on the Bridge 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 4.16,
the Borrower shall furnish the Administrative Agent (with a copy for each
Lender), with an Officers' Certificate instructing the Lenders whether the
Borrower is obligated to pay Additional Amounts (as defined in the Bridge Notes)
with respect to such payment of principal, or of any premium or interest or
Liquidated Damages on the Bridge Notes. If the Borrower 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 Lenders and the Borrower will pay to the Lenders such
Additional Amounts. The Borrower shall indemnify the Administrative Agent and
the Lenders 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 4.16.
Whenever in this Agreement there is mentioned, in any context, the
payment of principal (and premium, if any), interest, Liquidated Damages, if
any, or any other amount payable under or with respect to any Bridge Note such
mention shall be deemed to include mention of the payment of Additional Amounts
provided for in this Section 4.16 and in the Bridge Notes to the extent that, in
such
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context, Additional Amounts are, were or would be payable in respect thereof
pursuant to the provisions of this Section 4.16 and in the Bridge 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).
Section 4.17. [Intentionally Omitted]
Section 4.18. [Intentionally Omitted]
Section 4.19. Merger; Sale of All or Substantially All Assets.
The Borrower may not consolidate or merge with or into (whether or
not the Borrower 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 Borrower is the surviving corporation or the entity or the
Person formed by or surviving any such consolidation or merger (if other than
the Borrower) 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 Borrower) 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 Borrower, pursuant
to a supplemental agreement in a form reasonably satisfactory to the
Administrative Agent, under the Bridge Notes and this Agreement;
(c) immediately after such transaction no Default or Event of
Default exists;
(d) the Borrower 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 Borrower immediately
preceding the transaction; provided, however, that if the ratio of Indebtedness
to Annualized Pro Forma EBITDA of the Borrower immediately preceding such
transaction is 6:1 or less, then the ratio of Indebtedness to Annualized Pro
Forma EBITDA of the Borrower 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 Borrower or its Subsidiaries.
Section 4.20. Inspection Rights.
The Borrower shall, and shall cause each of its Subsidiaries to,
permit the Lenders or any of their respective representatives to visit and
inspect any of its properties, to examine and make abstracts from any of its
books and records and to discuss its businesses, finances and accounts with its
executive officers and, subject to the right of the Borrower's representatives
to participate in any such
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discussion, with their independent public accountants, all upon reasonable
notice and at such reasonable times and as often as may reasonably be desired.
Section 4.21. Special Rights.
(a) For so long as any Bridge Loans or Exchange Notes are held by
West Street, the Borrower shall, and shall cause each of its Subsidiaries to,
promptly provide West Street with such information concerning the businesses,
properties or financial condition of the Borrower and such Subsidiaries as West
Street may from time to time reasonably request. In that connection, the
Borrower shall, and shall cause each of its Subsidiaries to:
(i) keep proper books of record and account in which full, true and
correct entries shall be made of all dealings and transactions in relation
to its business and activities; and
(ii) permit West Street or any of its representatives to consult
with the Borrower and its Subsidiaries with respect to their businesses
and make proposals with respect to such businesses and meet with the
respective executive officers and directors of the Borrower and its
Subsidiaries with respect to such proposals.
(b) For so long as any Bridge Loans or Exchange Notes are held by
West Street, the Borrower shall, and shall cause each of its Subsidiaries to,
upon prior reasonable request, invite West Street or any of its representatives
to attend each regular, special or other meeting of its Board of Directors in a
nonvoting observer capacity and in this respect shall, upon prior reasonable
request, give West Street or such representative copies of all notices, minutes,
consents and other materials that it provides to its directors. West Street or
such representative may participate in any and all discussions of matters
brought to the Board of Directors. The Borrower shall and shall cause each of
its Subsidiaries to allow West Street or any such representative of West Street
to attend such meetings by means of conference call or other communications
equipment utilized by any other person participating in such meetings.
Notwithstanding the foregoing, the Borrower reserves the right to exclude West
Street and its representatives from access to any material or meeting or portion
thereof if the Borrower believes upon advice of counsel that such exclusion is
reasonably necessary to preserve the attorney-client privilege, to protect
highly confidential proprietary information or for other similar valid business
reasons.
(c) In addition to the provisions of Section 12.3, (i) any amendment
to the provisions of this Section 4.21 shall require the consent of West Street
at any time that West Street holds Bridge Loans and/or Notes and (ii) for so
long as West Street holds Bridge Loans and/or Notes having an aggregate
principal amount equal to at least 25% of the aggregate principal amount of
Bridge Loans originally funded by West Street under this Agreement, any
amendment to the provisions of Section 4.7, 4.8, 4.9, 4.10, 4.11, 4.12, 4.13,
4.16, 4.19 and 4.20 shall require the consent of West Street at any time that
West Street holds any Loans or Exchange Notes.
Section 4.22. Note Guarantees.
In the event that the Parent is incorporated or organized with
respect to the Borrower and its Subsidiaries, within five (5) Business Days of
the date of the incorporation or organization of the Parent, the Borrower shall
deliver, or cause to be delivered, (a) to the Administrative Agent (with a copy
for each Lender) (i) a guarantee (the "Bridge Note Guarantee") executed by the
Parent substantially in the form attached hereto as Exhibit G-1, and (ii)
opinions of counsel for the Parent substantially in the form attached hereto as
Exhibit H-1, and (b) to Exchange Note Trustee (i) a guarantee (the "Exchange
Note Guarantee") executed by the Parent substantially in the form attached
hereto as Exhibit G-2, and (ii) opinions of counsel for the Parent substantially
in the form attached hereto as Exhibit H-2, and (c) to
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each of the Administrative Agent (with a copy for each Lender) and the Exchange
Note Trustee, such other certificates and documents (including, but not limited
to, a secretary's certificate, a certification of the organizational document of
the Parent certified by the Secretary of State of the jurisdiction in which the
Parent was incorporated or organized, and a good standing certificate) as the
Administrative Agent and/or the Exchange Note Trustee shall deem to be
reasonably necessary or advisable, which certificates and documents shall be in
form and substance satisfactory to the Administrative Agent and its counsel and
the Exchange Note Trustee and its counsel.
Section 4.23. Offer to Purchase.
On or prior to April 6, 1999, the Borrower shall have caused the
commencement of each Offer to Purchase the Diamond Notes in accordance with the
terms of each Diamond Indenture.
ARTICLE V.
CONDITIONS
A. CONDITIONS TO CLOSING DATE. The obligation of each of the Lenders
to execute and deliver this Agreement is subject to (i) the representations and
warranties of the Borrower in Article III being true, correct and complete in
all respects on and as of the Closing Date to the same extent as though made on
and as of the Closing Date, (ii) on or prior to the Closing Date, the Borrower
having performed and complied with all covenants and conditions to be performed
and observed by it on or prior to the Closing Date and (iii) the prior or
concurrent satisfaction of each of the following conditions in Section 5.1 to
(and including) Section 5.14:
Section 5.1. Corporate and Other Proceedings. On or before the
Closing Date, all corporate and other proceedings taken or to be taken in
connection with the Transactions and all documents incidental thereto shall be
satisfactory in form and substance to the Administrative Agent, and the
Administrative Agent shall have received on behalf of the Lenders the following
items, each of which shall be in form and substance satisfactory to the
Administrative Agent and, unless otherwise noted, dated the Closing Date:
(a) a certified copy of the Borrower's charters, together with a
certificate of status, compliance, good standing or like certificate with
respect to the Borrower issued by the appropriate government officials of the
jurisdiction of its formation and of each jurisdiction in which the Borrower
owns any material assets or carries on any material business, each to be dated a
recent date prior to the Closing Date;
(b) a copy of the Borrower's bylaws, in each case certified as of
the Closing Date by its Secretary or one of its Assistant Secretaries;
(c) resolutions of the Borrower's Boards of Directors approving and
authorizing the execution, delivery and performance of this Agreement, each of
the other Loan Documents and any other documents, instruments and certificates
required to be executed by the Borrower in connection herewith or therewith and
approving and authorizing the execution, delivery and payment of the Bridge
Notes and the Exchange Notes and the consummation of the Transactions, each
certified as of the Closing Date by its Secretary or one of its Assistant
Secretaries as being in full force and effect without modification or amendment;
(d) signature and incumbency certificates of the Borrower's Officers
executing this Agreement, the Bridge Notes, the other Loan Documents and any
other documents executed in connection therewith;
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(e) executed copies of this Agreement;
(f) an Officers' Certificate from the Borrower in form and substance
satisfactory to the Administrative Agent to the effect that (i) the
representations and warranties of the Borrower in Article III are true, correct
and complete in all respects on and as of the Closing Date to the same extent as
though made on and as of that date, (ii) on or prior to the Closing Date, the
Borrower has performed and complied with all covenants and conditions to be
performed and observed by it on or prior to the Closing Date and (iii) all
conditions to the consummation of the Transactions have been satisfied on the
terms set forth in the documentation relating thereto and have not been waived
or amended without the prior written consent of the Administrative Agent;
(g) true and correct copies of the final form of each of: (i) the
Diamond Cable Acquisition Agreement and (ii) each Offer to Purchase the Diamond
Notes, if any; and
(h) true and correct copies of each of the other Transaction
Documents, each of which shall be satisfactory in form and substance to each of
the Lenders.
Section 5.2. [Intentionally Omitted]
Section 5.3. Absence of Certain Changes. Except as set forth on
Schedule 5.3 attached hereto, no change in the capital stock or long-term debt
of the Borrower and its Subsidiaries or any material adverse change, or any
development involving a prospective material adverse change, in or affecting the
general affairs, management, financial position, stockholders' equity, results
of operations or prospects of the Borrower shall have occurred since September
30, 1998 and no material inaccuracy in such financial statements shall exist.
Except as set forth on Schedule 5.3 attached hereto, the Borrower shall have no
material liabilities except those set forth on the balance sheet dated September
30, 1998 and those incurred in the ordinary course of business since such date
in amounts that are consistent with past practice. Except for any downgradings,
announcements or reviews attributable solely to the events set forth on Schedule
5.3 attached hereto, on or after the date of the Commitment Letter (i) no
downgrading shall have occurred in the rating accorded the Borrower's debt
securities by any "nationally recognized statistical rating organization," as
that term is defined by the SEC for purposes of Rule 436(g)(2) under the Act,
and (ii) no such organization shall have publicly announced that it has under
surveillance or review, with possible negative implications, its rating of any
of the Borrower's debt securities.
Section 5.4. Market Disruption. On or after the date of the
Commitment Letter there shall not have occurred any of the following: (i) a
suspension or material limitation in trading in securities generally on the New
York Stock Exchange or on the NASDAQ National Market; (ii) a suspension or
material limitation in trading in the Borrower's securities on the NASDAQ
National Market; (iii) a general moratorium on commercial banking activities
declared by either Federal or New York State authorities; or (iv) the outbreak
or escalation of hostilities involving the United States or the declaration by
the United States of a national emergency or war, if the effect of any such
event specified in this clause (iv) in the judgment of the Lenders makes it
impracticable or inadvisable to sell or place the Debt Securities or to
syndicate the Bridge Loans on the terms and in manner contemplated in the
Commitment Letter and the Engagement Letter; or (v) the occurrence of any
material adverse change in the existing financial, political or economic
conditions in the United States or elsewhere which, in the judgment of the
Lenders, would materially and adversely affect the financial markets or the
markets for bridge loans or high yield debt securities in the United States.
Section 5.5. Financial Statements. Each of the Lenders shall have
received audited financial statements for the three-year period immediately
preceding the Closing Date and any
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appropriate unaudited financial statements for any interim period or periods of
the Borrower and all other recent or probable acquisitions (including pro forma
financial statements), all meeting the requirements of Regulation S-X for Form
S-1 registration statements and all such financial statements shall be
reasonably satisfactory in form and substance to each of the Lenders. Once
approved by the Lenders, all such financial statements shall be added to
Schedule 3.10(a), Schedule 3.10(b), or Schedule 3.10(c), as appropriate, and
shall become subject to the Borrower's representations in Section 3.10. Such
financial statements shall show pro forma consolidated EBITDA of the Borrower
(calculated in accordance with Regulation S-X and including only those
adjustments that the Administrative Agent agrees are appropriate) for the
twelve-month period ended September 30, 1998 and for the latest twelve-month
period for which statements are available.
Section 5.6. Litigation, etc. There shall not exist any action,
suit, investigation, litigation or proceeding pending or threatened in any court
or before any arbitrator or governmental authority that, in the opinion of each
of the Lenders, could have a Material Adverse Effect.
Section 5.7. Payment of Fees and Expenses. All fees and expenses due
to the Lenders, Goldman, Sachs Credit Partners L.P. and Goldman, Sachs & Co. or
the Administrative Agent on or before the Closing Date in connection with the
Bridge Loans, pursuant to the Commitment Letter, the Fee Letter, the Engagement
Letter or otherwise, shall have been paid in full.
Section 5.8. [Intentionally Omitted]
Section 5.9. [Intentionally Omitted]
Section 5.10. Registration Rights Agreement. The Borrower and the
Administrative Agent shall have entered into the Registration Rights Agreement
and a fully executed copy of the Registration Rights Agreement shall have been
delivered to each of the Lenders.
Section 5.11. Delivery of Opinions. The Administrative Agent shall
have received originally executed copies of one or more favorable written
opinions of (i) Skadden, Arps, Slate, Meagher & Flom LLP, special counsel for
the Borrower, in the form of Exhibit F-1 attached hereto, dated the Closing Date
and addressed to the Lenders, (ii) Richard J. Lubasch, Senior Vice President and
General Counsel to the Borrower, in the form of Exhibit F-2 attached hereto,
dated the Closing Date and addressed to the Lenders and (iii) such other
opinions of counsel and such certificates or opinions of accountants, appraisers
or other professionals as the Administrative Agent shall have reasonably
requested.
Section 5.12. [Intentionally Omitted]
Section 5.13. No Breach; No Default. The Borrower shall not be in
breach or violation of any of its obligations under the Engagement Letter, the
Commitment Letter or the Fee Letter and each of the Engagement Letter and the
Fee Letter shall have been executed and delivered by the Borrower and shall be
in full force and effect. In addition, there shall not exist any Default or
Event of Default under, the Bridge Loans, this Agreement or any of the other
Loan Documents, or under any other material Indebtedness of the Borrower or its
subsidiaries.
Section 5.14. Other Conditions. All governmental, shareholder and
third-party approvals and consents necessary or desirable in connection with the
Acquisition, the Offer to Purchase the Diamond Notes and the financing thereof
shall have been received and shall be in full force and effect, and all
applicable waiting periods shall have expired without any action being taken by
any applicable authority.
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B. CONDITIONS TO FUNDING EACH BRIDGE LOAN. The agreement of each
Lender to make any Bridge Loan requested to be made by it on any Funding Date is
subject to the prior or concurrent satisfaction of each of the following
conditions in Section 5.15 to (and including) Section 5.28:
Section 5.15. Representations and Warranties. Each of the
representations and warranties made by the Borrower, or any of its Subsidiaries,
or the Parent, if applicable, in or pursuant to the Loan Documents shall be true
and correct in all material respects on and as of such date immediately prior
to, and after giving effect to the Bridge Loans as if made on and as of such
Funding Date.
Section 5.16. No Breach; No Default. The Borrower shall not be in
breach or violation of any of its obligations under the Engagement Letter, the
Commitment Letter or the Fee Letter. In addition, there shall not exist any
Default or Event of Default under, the Bridge Loans, this Agreement or any of
the other Loan Documents, or under any other material Indebtedness of the
Borrower or its Subsidiaries.
Section 5.17. Absence of Certain Changes. Except as set forth on
Schedule 5.3 attached hereto, no change in the capital stock or long-term debt
of the Borrower and its Subsidiaries or any material adverse change, or any
development involving a prospective material adverse change, in or affecting the
general affairs, management, financial position, stockholders' equity, results
of operations or prospects of the Borrower shall have occurred since September
30, 1998 and no material inaccuracy in such financial statements shall exist.
Except as set forth on Schedule 5.3 attached hereto, the Borrower shall have no
material liabilities except those set forth on the balance sheet dated September
30, 1998 and those incurred in the ordinary course of business since such date
in amounts that are consistent with past practice. Except for any downgrading,
announcements or reviews attributable solely to the events set forth on Schedule
5.3 attached hereto, on or after Closing Date (i) no downgrading shall have
occurred in the rating accorded the Borrower's debt securities by any
"nationally recognized statistical rating organization," as that term is defined
by the SEC for purposes of Rule 436(g)(2) under the Act, and (ii) no such
organization shall have publicly announced that it has under surveillance or
review, with possible negative implications, its rating of any of the Borrower's
debt securities.
Section 5.18. Market Disruption. On or after the Closing Date there
shall not have occurred any of the following: (i) a suspension or material
limitation in trading in securities generally on the New York Stock Exchange or
on the NASDAQ National Market; (ii) a suspension or material limitation in
trading in the Borrower's securities on the NASDAQ National Market; (iii) a
general moratorium on commercial banking activities declared by either Federal
or New York State authorities; or (iv) the outbreak or escalation of hostilities
involving the United States or the declaration by the United States of a
national emergency or war, if the effect of any such event specified in this
clause (iv) in the judgment of the Lenders makes it impracticable or inadvisable
to sell or place the Debt Securities or to syndicate the Bridge Loans on the
terms and in manner contemplated in the Commitment Letter and the Engagement
Letter; or (v) the occurrence of any material adverse change in the existing
financial, political or economic conditions in the United States or elsewhere
which, in the judgment of the Lenders, would materially and adversely affect the
financial markets or the markets for bridge loans or high yield debt securities
in the United States.
Section 5.19. Financial Statements. Each of the Lenders shall have
received audited financial statements for the three-year period immediately
preceding the Closing Date and any appropriate unaudited financial statements
for any interim period or periods of the Borrower and all other recent or
probable acquisitions (including pro forma financial statements), all meeting
the requirements of Regulation S-X for Form S-1 registration statements and all
such financial statements shall be reasonably satisfactory in form and substance
to each of the Lenders. Once approved by the Lenders, all
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such financial statements shall be added to Schedule 3.10(a), Schedule 3.10(b),
or Schedule 3.10(c), as appropriate, and shall become subject to the Borrower's
representations in Section 3.10. Such financial statements shall show pro forma
consolidated EBITDA of the Borrower (calculated in accordance with Regulation
S-X and including only those adjustments that the Administrative Agent agrees
are appropriate) for the twelve-month period ended September 30, 1998 and for
the latest twelve-month period for which statements are available.
Section 5.20. Litigation, etc. There shall not exist any action,
suit, investigation, litigation or proceeding pending or threatened in any court
or before any arbitrator or governmental authority that, in the opinion of each
of the Lenders, could have a Material Adverse Effect.
Section 5.21. Payment of Fees and Expenses. All fees and expenses
due to the Lenders, Goldman, Sachs Credit Partners L.P. and Goldman, Sachs & Co.
or the Administrative Agent on or before the applicable Funding Date in
connection with the Bridge Loans, pursuant to the Commitment Letter, the Fee
Letter, the Engagement Letter or otherwise, shall have been paid in full.
Section 5.22. Borrowing Notice; Bridge Notes. Timely receipt of a
Borrowing Notice. Execution and delivery by the Borrower to the Lenders of the
applicable Bridge Notes.
Section 5.23. Offer to Purchase. The Offers to Purchase the Diamond
Notes shall have been completed in accordance with the Diamond Indentures and
the Expiration Dates shall have occurred.
Section 5.24. Solvency. The Administrative Agent shall have received
originally executed copies of a Solvency Certificate, which shall be signed by
the principal financial officer of the Borrower, stating that, after giving
effect to the consummation of the Transactions, the Borrower and its
Subsidiaries will be Solvent, all in form and substance satisfactory to the
Administrative Agent.
Section 5.25. Exchange Note Indenture. The Borrower and the Exchange
Note Trustee shall have entered into the Exchange Note Indenture in the form
attached hereto as Exhibit E, with such revisions as are reasonably requested by
the Exchange Note Trustee, and a fully executed copy of the Exchange Note
Indenture shall have been delivered to each Lender; provided, however, that such
revisions shall be of a ministerial and/or mechanical nature having the effect
of curing ambiguities, defects or inconsistencies; provided, further, that such
Exchange Note Indenture shall be satisfactory to the Borrower, the
Administrative Agent and the Lenders, in each case, in their sole discretion.
Section 5.26. Exchange Notes. Exchange Notes shall have been issued
by the Borrower and delivered into escrow as contemplated by the Escrow
Agreement.
Section 5.27. Escrow Agreement. The Borrower, the Administrative
Agent and the Escrow Agent shall have entered into the Escrow Agreement in the
form attached hereto as Exhibit D, with such revisions as are reasonably
requested by the Escrow Agent, and a fully executed copy of the Escrow Agreement
shall have been delivered to each Lender; provided, however, that such revisions
shall be of a ministerial and/or mechanical nature having the effect of curing
ambiguities, defects or inconsistencies; provided, further, that such Escrow
Agreement shall be satisfactory to the Borrower, the Administrative Agent and
the Lenders, in each case, in their sole discretion.
Section 5.28. Additional Matters. Each borrowing by the Borrower
hereunder shall constitute a representation and warranty by the Borrower as of
the date of such Bridge Loan that the conditions contained in this Article 5,
subsection B have been satisfied.
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ARTICLE VI.
TRANSFER OF THE LOANS, THE INSTRUMENTS EVIDENCING SUCH LOANS AND THE
SECURITIES; REPRESENTATIONS OF LENDERS; PARTICIPATIONS
Section 6.1. Transfer of the Loans, the instruments evidencing the
Loans and the Securities. Each Lender acknowledges that none of the Loans, the
instruments evidencing such Loans and the Securities have been registered under
the Securities Act and represents and agrees that it is acquiring the Loans, the
instruments evidencing such Loans and the Securities for its own account and
that it will not, directly or indirectly, transfer, sell, assign, pledge or
otherwise dispose of its Loans, the instruments evidencing such Loans or the
Securities (or any interest therein) unless such transfer, sale, assignment,
pledge or other disposition is made (i) pursuant to an effective registration
statement under the Securities Act or (ii) pursuant to an available exemption
from registration under, or in a transaction that is not subject to, the
Securities Act. Each Lender represents, warrants, covenants and agrees to and
with the Borrower that it is either (i) a qualified institutional buyer within
the meaning of Rule 144A under the Securities Act acting for its own account or
the account of one or more other qualified institutional buyers, and is aware
that the Borrower may rely upon the exemption from the provisions of Section 5
of the Securities Act provided by Rule 144A thereunder or (ii) an institutional
"accredited investor" within the meaning of Rule 501(a)(1), (2), (3) or (7)
under the Securities Act. Each of the Lenders acknowledges that the instruments
evidencing the Loans and the Securities will bear a legend restricting the
transfer thereof in accordance with the Securities Act.
Subject to the provisions of the previous paragraph, the Borrower
agrees that, with the consent of the Administrative Agent, each Lender will be
free to sell or transfer all or any part of the Loans, the instruments
evidencing the Loans or the Securities (including, without limitation,
participation interest in the Loans) to any third party and to pledge any or all
of the Securities to any commercial bank or other institutional lender.
Section 6.2. Permitted Assignments. Any Lender may, in the ordinary
course of its business and in accordance with applicable law, at any time assign
to one or more banks or other entities ("Purchasers") all or any part of its
rights and obligations hereunder and under the Loan Documents. Such assignment
shall be made pursuant to an Assignment and Acceptance substantially in the form
of Exhibit A or in such other form as may be agreed to by the parties thereto.
The consent of the Borrower and the Administrative Agent shall be required prior
to an assignment becoming effective with respect to a Purchaser which is not a
Lender, an Affiliate of a Lender (including West Street, in the case of Goldman
Sachs Credit Partners L.P.) or a Federal Reserve Bank; provided, however, that
if a Default has occurred and is continuing, the consent of the Borrower shall
not be required. Such consent shall not be unreasonably withheld or delayed.
Section 6.3. Permitted Participants; Effect. (a) Any Lender may, in
the ordinary course of its business and in accordance with applicable law, at
any time sell to one or more banks or other entities ("Participants")
participating interests in any Loan owing to such Lender, any Bridge Note held
by such Lender, any Commitment of such Lender or any other interest of such
Lender under the Loan Documents; provided that such Lender retain all voting
rights with respect to such participating interests on all matters other than
such matters that require the consent of each Lender under this Agreement. In
the event of any such sale by a Lender of participating interests to a
Participant, such Lender's obligations under the Loan Documents shall remain
unchanged, such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, such Lender shall remain the
owner of its Loans and the holder of any Bridge Note issued to it in evidence
thereof for all purposes under the Loan Documents, all amounts payable by the
Borrower under this Agreement shall be determined as if such Lender had not sold
such participating interests, and the Borrower and the
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Administrative Agent shall continue to deal solely and directly with such Lender
in connection with such Lender's rights and obligations under the Loan
Documents.
(b) Each Lender shall retain the sole right to approve, without the
consent of any Participant, any amendment, modification or waiver of any
provision of the Loan Documents other than any amendment, modification or waiver
with respect to any Loan or Commitment in which such Participant has an interest
which forgives principal, interest or fees or reduces the interest rate or fees
payable with respect to any such Loan or Commitment, extends the Maturity Date,
postpones any date fixed for any regularly scheduled payment of principal of, or
interest or fees on, any such Loan or Commitment or releases any guarantor of
any such Loan or releases all or substantially all of the collateral, if any,
securing any such Loan.
(c) The Borrower agrees that each Participant shall be deemed to
have the right of setoff provided in Section 2.10 in respect of its
participating interest in amounts owing under the Loan Documents to the same
extent as if the amount of its participating interest were owing directly to it
as a Lender under the Loan Documents, provided that each Lender shall retain the
right of setoff provided in Section 2.10 with respect to the amount of
participating interests sold to each Participant. The Lenders agree to share
with each Participant, and each Participant, by exercising the right of setoff
provided in Section 2.10, agrees to share with each Lender, any amount received
pursuant to the exercise of its right of setoff, such amounts to be shared in
accordance with Section 2.10 as if each Participant were a Lender.
Section 6.4. Dissemination of Information. The Borrower authorizes
each Lender to disclose to any Participant or Purchaser or any other Person
acquiring an interest in the Loan Documents by operation of law (each a
"Transferee") and any prospective Transferee any and all information in such
Lender's possession concerning the creditworthiness of the Borrower and its
Subsidiaries; provided, however, that any records, documents or information that
are designated by the Borrower as confidential at the time of delivery of such
records, documents or information shall be kept confidential by each Lender and
each Transferee, unless (i) such records, documents or information are in the
public domain or otherwise publicly available, (ii) disclosure of such records,
documents or information is required by court or administrative order or (iii)
disclosure of such records, documents, properties or information, in the opinion
of counsel to such Lender or Transferee, is otherwise required by law
(including, without limitation, pursuant to the requirements of the Securities
Act).
Section 6.5. Tax Treatment. If any interest in any Loan Document is
transferred to any Transferee which is organized under the laws of any
jurisdiction other than the United States or any State thereof, the transferor
Lender shall cause such Transferee, concurrently with the effectiveness of such
transfer, to comply with the provisions of Section 2.9.
Section 6.6. Replacement Securities Upon Transfer or Exchange. Upon
surrender of any Securities by any Lender in connection with any permitted
transfer or exchange, the Borrower will execute and deliver in exchange therefor
a new Security or Securities of the same aggregate tenor and principal amount,
payable to the order of such Persons and in such denominations as such Lender
may request. The Borrower may require payment by such Lender of a sum sufficient
to cover any stamp tax or governmental charge imposed in respect of any such
transfer.
Section 6.7. Register. The Administrative Agent on behalf of the
Borrower shall maintain a register of the principal amount of the Loans held by
each Lender and any interest due and payable with respect thereto. The
Administrative Agent will allow any Lender to inspect and copy such register at
each Administrative Agent's principal place of business during normal business
hours.
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ARTICLE VII.
EVENTS OF DEFAULT
Section 7.1. Events of Default. An "Event of Default" occurs if:
(a) any representation or warranty made or deemed made by the
Borrower or any of its Subsidiaries or the Guarantor herein or that is contained
in any Transaction Document or in any certificate, document or financial or
other statement furnished by any of them at any time under or in connection with
any Transaction Document shall prove to have been incorrect in any material
respect on or as of the date made or deemed made;
(b) (x) the Borrower defaults in the payment of interest, Liquidated
Damages, if any, and/or Additional Amounts, if any, on any Bridge Note, or
defaults in the payment of any other Obligation under this Agreement or any
other Loan Document, when the same becomes due and payable and the Default
continues for a period of 15 days after the date due and payable or (y) the
Guarantor defaults in the payment of any amounts under any Note Guarantee, when
the same becomes due and payable and the failure to make such payment continues
for a period of 15 days after the date due and payable;
(c) the Borrower defaults in the payment of the principal of any
Bridge Note when the same becomes due and payable at maturity, upon redemption
or otherwise;
(d) the Borrower or any of its Subsidiaries fails to observe or
perform any covenant or agreement contained in Section 2.4, 4.6, 4.7, 4.8, 4.9,
4.10, 4.11, 4.12, 4.13, 4.16, 4.19, 4.22, 4.23 or Article VIII hereof;
(e) the Borrower or any of its Subsidiaries or the Guarantor fails
to observe or perform any other covenant or agreement contained in any of the
Loan Documents, required by any of them to be performed and the failure
continues for a period of 30 days after notice from the Administrative Agent to
the Borrower or from Lenders holding at least 25% in aggregate principal amount
of the then outstanding Bridge Loans to the Borrower and the Administrative
Agent stating that such notice is a "Notice of Default";
(f) 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 Borrower or any Restricted Subsidiary or
the Guarantor (or the payment of which is guaranteed by the Borrower or any
Restricted Subsidiary or the Guarantor) having a principal amount greater than
$10.0 million, whether such Indebtedness or guarantee now exists or is created
after the date hereof, whether or not such default results in the acceleration
of such Indebtedness prior to its express maturity;
(g) 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 Borrower or any Restricted Subsidiary of the Borrower or the
Guarantor 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;
(h) the Borrower or any Material Subsidiary or the Guarantor
pursuant to or within the meaning of any Bankruptcy Law:
(i) commences a voluntary case;
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(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;
(i) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(i) is for relief against the Borrower or any Material
Subsidiary or the Guarantor in an involuntary case;
(ii) appoints a Custodian of the Borrower or any Material
Subsidiary or the Guarantor or for all or substantially all of its
property; or
(iii) orders the liquidation of the Borrower or any Material
Subsidiary or the Guarantor, and the order or decree remains unstayed and
in effect for 60 days;
(j) the revocation of a Material License;
(k) the Borrower or any ERISA Affiliate shall fail to pay when due,
after the expiration of any applicable grace period, any installment payment
with respect to its withdrawal liability under a Multiemployer Plan; (ii) the
Borrower or any ERISA Affiliate shall fail to satisfy its contribution
requirements under Section 412(c)(11) of the Code, whether or not it has sought
a waiver under Section 412(d) of the Code; (iii) in the case of an ERISA Event
involving the withdrawal from a Plan of a "substantial employer" (as defined in
Section 4001(a)(2) of Section 4062(e) of ERISA), the withdrawing employer's
proportionate share of that Plan's Unfunded Pension Liabilities if paid could
reasonably be expected to have a Material Adverse Effect; (iv) in the case of an
ERISA Event not described in clause (iii) or (iv), the Unfunded Pension
Liabilities of the relevant Plan or Plans if paid could reasonably be expected
to have a Material Adverse Effect; (vi) a Plan that is intended to be qualified
under Section 401(a) of the Code shall lose its qualification, and with respect
to such loss of qualification, the Borrower or ERISA Affiliate can reasonably be
expected to be required to pay (for additional taxes, payments to or on behalf
of Plan participants, or otherwise) an amount that if paid could reasonably be
expected to have a Material Adverse Effect; or (vii) the occurrence of any
combination of events listed in clauses (iii) through (vi) that involves a net
increase in aggregate Unfunded Pension Liabilities and unfunded liabilities that
could reasonably be expected to have a Material Adverse Effect; and
(l) the obligations of the Guarantor under any Note Guarantee shall
be held in any judicial proceeding to be unenforceable or invalid or shall cease
for any reason to be in full force and effect or the Guarantor, or any Person
acting on behalf of the Guarantor, shall deny or disaffirm its obligations under
any Note Guarantee.
Section 7.2. Acceleration. If an Event of Default (other than an
Event of Default specified in clauses (h) and (i) of Section 7.1 hereof) occurs
and is continuing, the Administrative Agent by notice to the Borrower, or the
Lenders holding at least 25% in aggregate principal amount of the then
outstanding Bridge Loans by notice to the Borrower and the Administrative Agent,
may declare all the Bridge Notes to be due and payable. Upon such declaration,
the principal of, premium, if any, and
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interest on, the Bridge Notes shall be due and payable immediately. If an Event
of Default specified in clause (h) or (i) of Section 7.1 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 Administrative Agent or any Lender.
Section 7.3. Rights and Remedies. If an Event of Default occurs and
is continuing, the Administrative Agent may pursue any available remedy to
collect the payment of principal or interest on the Bridge Notes or to enforce
the performance of any provision of the Bridge Notes or this Agreement.
The Administrative Agent may maintain a proceeding even if it does
not possess any of the Bridge Notes or does not produce any of them in the
proceeding. A delay or omission by the Administrative Agent 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 7.4. Waiver of Past Defaults. Subject to Section 12.3, the
Majority Lenders by notice to the Administrative Agent 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 interest on any Bridge 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 7.5. Rights of Lenders To Receive Payment. Notwithstanding
anything to the contrary contained in this Agreement, the right of any Lender to
receive payment of principal of, premium, if any, and interest on the Bridge
Loans and Bridge Notes held by such Lender, on or after the respective due dates
expressed in this Agreement or the Bridge Notes, or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of such Lender.
ARTICLE VIII.
DEBT SECURITIES
Section 8.1. Debt Securities. The Borrower shall use its best
efforts to do all things required in the reasonable opinion of the Investment
Bank in connection with the sale of the Debt Securities, including, but not
limited to, those actions specified in the Fee Letter and the Engagement Letter.
ARTICLE IX.
TERMINATION
Section 9.1. Termination. The Lenders, by notice to the Borrower,
may terminate this Agreement at any time after June 30, 1999.
Section 9.2. Survival of Certain Provisions. If this Agreement is
terminated pursuant to this Article IX, such termination shall be without
liability of any party to any other party, except that, whether or not the
transactions contemplated by this Agreement are consummated, (i) the Obligations
of the Borrower to reimburse the Lenders for all of their out-of-pocket expenses
pursuant to Section 12.1 and the Engagement Letter and (ii) the indemnity
provisions contained in Article X shall, in each case, remain operative and in
full force and effect.
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ARTICLE X.
INDEMNITY
Section 10.1. Indemnification. In the event that any of the Lenders
or the Administrative Agent (each, an "Indemnified Party") becomes involved in
any capacity in any action, proceeding or investigation brought by or against
any Person, including stockholders of the Borrower, in connection with or as a
result of either this arrangement or any matter referred to in this Agreement,
the Borrower periodically will reimburse such Indemnified Party for its legal
and other expenses (including the cost of any investigation and preparation)
incurred in connection therewith. The Borrower also will indemnify and hold each
Indemnified Party harmless against any and all losses, claims, damages or
liabilities to any such Person in connection with or as a result of either this
arrangement or any matter referred to in this Agreement, except to the extent
that any such loss, claim, damage or liability results from the gross negligence
or bad faith of such Indemnified Party in performing the services that are the
subject of this Agreement. If for any reason the foregoing indemnification is
unavailable to any Indemnified Party or insufficient to hold it harmless, then
the Borrower shall contribute to the amount paid or payable by such Indemnified
Party as a result of such loss, claim, damage or liability in such proportion as
is appropriate to reflect the relative economic interests of the Borrower and
its stockholders on the one hand and such Indemnified Party on the other hand in
the matters contemplated by this Agreement as well as the relative fault of the
Borrower, on the one hand, and such Indemnified Party, on the other hand, with
respect to such loss, claim, damage or liability and any other relevant
equitable considerations. The reimbursement, indemnity and contribution
obligations of the Borrower under this Section 10.1 shall be in addition to any
liability which the Borrower may otherwise have, shall extend upon the same
terms and conditions to any affiliate of any Indemnified Party and the partners,
directors, agents, employees and controlling persons (if any), as the case may
be, of such Indemnified Party and any such affiliate, and shall be binding upon
and inure to the benefit of any successors, assigns, heirs and personal
representatives of the Borrower, such Indemnified Party, any such affiliate and
any such Person. The Borrower also agrees that neither any Indemnified Party nor
any of such affiliates, partners, directors, agents, employees or controlling
persons shall have any liability to the Borrower, any person asserting claims on
behalf of or in right of the Borrower or any other person in connection with or
as a result of either this arrangement or any matter referred to in this
Agreement except to the extent that any losses, claims, damages, liabilities or
expenses incurred by the Borrower result from the gross negligence or bad faith
of such Indemnified Party in performing the services that are the subject of
this Agreement. Notwithstanding any other provision of this Agreement, no
indemnified person shall be liable for any indirect or consequential damages in
connection with its activities related to the Bridge Loans. Any right to trial
by jury with respect to any action or proceeding arising in connection with or
as a result of either this arrangement or any matter referred to in the Letters
is hereby waived by the parties hereto.
Section 10.2. Settlement of Claims. The Borrower agrees that,
neither it nor any of its Subsidiaries will settle, compromise or consent to the
entry of any judgment in any pending or threatened claim, action or proceeding
in respect of which indemnification or contribution could be sought under
Section 10.1 (whether or not any Indemnified Party is an actual or potential
party to such claim, action or proceeding) without the prior written consent of
the Indemnified Parties, unless such settlement, compromise or consent includes
an unconditional release of each Indemnified Party from all liability arising
out of such claim, action or proceeding, which consent shall not be unreasonably
withheld.
Section 10.3. Appearance Expenses. If an Indemnified Party is
requested or required to appear as a witness in any action brought by or on
behalf of or against the Borrower or any Affiliate thereof in which such
Indemnified Party is not named as a defendant, the Borrower agrees to reimburse
such Indemnified
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Party for all reasonable expenses incurred by it in connection with such
Indemnified Party's appearing and preparing to appear as such a witness,
including, without limitation, the reasonable fees and disbursements of its
legal counsel.
Section 10.4. Indemnity for Taxes, Reserves and Expenses. If, after
the date hereof, the adoption of any law or guideline or any amendment or change
in the administration, interpretation or application of any existing or future
law or guideline by any Governmental Entity charged with the administration,
interpretation or application thereof, or the compliance with any request or
directive of any Governmental Entity (whether or not having the force of law):
(a) subjects any Affected Party to any tax of any kind with respect
to this Agreement or the Bridge Notes or changes the basis of taxation of
payments of amounts due hereunder or thereunder or with respect to this
Agreement or any of the other Loan Documents, (including, without
limitation, any sales, gross receipts, general corporate, personal
property, privilege or license taxes, and including claims, losses and
liabilities arising from any failure to pay or delay in paying any such
tax (unless such failure or delay results solely from such Affected
Party's negligence or willful misconduct), but excluding (i) federal,
state or local taxes based on net income incurred by such Affected Party
arising out of or under this Agreement or any of the other Loan Documents)
and (ii) Taxes, Other Taxes and any taxes, levies, imposts, deductions,
charges or withholding specifically excluded under Section 2.9(a);
(b) imposes, modifies or deems applicable any reserve (including,
without limitation, any reserve imposed by the Board), special deposit or
similar requirement against assets of the Borrower held by, credit to the
Borrower extended by, deposits of the Borrower with or for the account of,
or other acquisition of funds of the Borrower by, any Affected Party;
(c) shall change the amount of capital maintained or requested or
directed to be maintained by an Affected Party; or
(d) imposes upon an Affected Party any other condition or expense
(including, without limitation, (i) loss of margin and (ii) attorneys'
fees and expenses incurred by officers or employees of an Affected Party
(or any successor thereto) and expenses of litigation or preparation
therefor in contesting any of the foregoing) with respect to this
Agreement or any of the other Loan Documents or the purchase, maintenance
or funding of the Loans by an Affected Party,
and the result of any of the foregoing is to increase the cost to, reduce the
income receivable by, reduce the rate of return on capital of, or impose any
expense (including loss of margin) upon, an Affected Party with respect to this
Agreement, any of the other Loan Documents, the obligations hereunder or
thereunder or the funding of the Loans hereunder, the Affected Party may notify
the Borrower of the amount of such increase, reduction, or imposition, and the
Borrower hereby agrees to pay to the Affected Party the amount the Affected
Party deems necessary to compensate the Affected Party for such increase,
reduction or imposition which determination shall be conclusive. Such amounts
shall be due and payable by the Borrower 15 days after such notice is given.
Section 10.5. Survival of Indemnification. The provisions contained
in this Article X shall remain in full force and effect whether or not any of
the transactions contemplated hereby are consummated and notwithstanding the
termination of this Agreement or the payment in full of all Obligations
hereunder.
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Section 10.6. Liability Not Exclusive; Payments. The agreements of
the Borrower in this Article X shall be in addition to any liability that it may
otherwise have. All amounts due under this Article X shall be payable as
incurred upon written demand therefor.
ARTICLE XI.
THE ADMINISTRATIVE AGENT; THE ARRANGER
Section 11.1. Appointment. Each Lender hereby irrevocably designates
and appoints the Administrative Agent to act as an agent of such Lender under
this Agreement and the other Loan Documents, and each such Lender irrevocably
authorizes the Administrative Agent, in such capacity, to take such action on
its behalf under the provisions of this Agreement and the other Loan Documents
and to exercise such powers and perform such duties as are expressly delegated
to the Administrative Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement, the
Administrative Agent shall have no duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with any Lender, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Administrative Agent.
Section 11.2. Delegation of Duties. The Administrative Agent may
execute any of its duties under this Agreement and the other Loan Documents by
or through agents or attorneys-in-fact and shall be entitled to the advice of
counsel concerning all matters pertaining to such duties. The Administrative
Agent shall not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care.
Section 11.3. Exculpatory Provisions. Neither the Administrative
Agent nor any of its officers, directors, employees, agents, attorneys-in-fact
or Affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or any
other Loan Document (except for its own gross negligence or willful misconduct)
or (ii) responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by the Borrower or any of its
Subsidiaries or any officer thereof contained in this Agreement or any other
Loan Document or in any certificate, report, statement, opinion or other
document referred to or provided for in, or received by the Administrative Agent
under or in connection with, this Agreement or any other Loan Document or for
the value, validity, effectiveness, genuineness, enforceability or sufficiency
of this Agreement or any other Loan Document or for any failure of the Borrower
or any of its Subsidiaries to perform its obligations hereunder or thereunder.
The Administrative Agent shall not be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of the Borrower or any
of its Subsidiaries.
Section 11.4. Reliance by the Administrative Agent. The
Administrative Agent shall be entitled to rely, and shall be fully protected in
relying, upon any Bridge Note, writing, resolution, notice, consent,
certificate, affidavit, letter, telecopy, telex or teletype message, statement,
order or other document or conversation believed by it to be genuine and correct
and to have been signed, sent or made by the proper Person or Persons and upon
advice and statements of legal counsel (including, without limitation, counsel
to the Borrower or any of its Subsidiaries), independent accountants and other
experts selected by the Administrative Agent. The Administrative Agent may deem
and treat the payee of the Bridge Note as the owner thereof for all purposes
unless a written notice of assignment, negotiation or transfer thereof shall
have been filed with the Administrative Agent. The Administrative Agent shall be
fully justified in failing or refusing to take any action under this Agreement
or any other Loan Document unless it shall first receive such advice or
concurrence of the Majority Lenders as it deems appropriate or
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it shall first be indemnified to its satisfaction by the Lenders against any and
all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Administrative Agent shall in all cases
be fully protected in acting, or in refraining from acting, under this Agreement
and the other Loan Documents in accordance with a request of the Majority
Lenders, and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Lenders and all future holders of the
Loans.
Section 11.5. Notice of Default. The Administrative Agent shall not
be deemed to have knowledge or notice of the occurrence of any Default or Event
of Default hereunder unless the Administrative Agent has received notice from a
Lender, the Borrower or any of its Subsidiaries referring to this Agreement,
describing such Default or Event of Default and stating that such notice is a
"notice of default." In the event that any of the Administrative Agent receives
such a notice, the Administrative Agent shall give notice thereof to the
Lenders. The Administrative Agent shall take such action with respect to such
Default or Event of Default as shall be reasonably directed by the Majority
Lenders; provided that unless and until the Administrative Agent shall have
received such directions, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable in the best
interests of the Lenders.
Section 11.6. Non-Reliance on the Administrative Agent and Other
Lenders. Each Lender expressly acknowledges that neither the Administrative
Agent nor any of its officers, directors, employees, agents, attorneys-in-fact
or Affiliates has made any representations or warranties to it and that no act
by the Administrative Agent hereafter taken, including any review of the affairs
of the Borrower or any of its Subsidiaries, shall be deemed to constitute any
representation or warranty by the Administrative Agent to any Lender. Each
Lender represents to the Administrative Agent that it has, independently and
without reliance upon the Administrative Agent or any other Lenders, and based
on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
financial and other condition, prospects and credit worthiness of the Borrower
and its Subsidiaries and made its own decision to make its Loans hereunder and
enter into this Agreement. Each Lender confirms that it is a qualified
institutional buyer within the meaning of Rule 144A under the Securities Act.
Each Lender also represents that it will, independently and without reliance
upon the Administrative Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition, prospects and credit
worthiness of the Borrower and its Subsidiaries. Except for notices, reports and
other documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, the Administrative Agent shall have no duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, financial or other condition,
prospects or credit worthiness of the Borrower or any of its Subsidiaries which
may come into the possession of the Administrative Agent or any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates.
Section 11.7. Indemnification. The Lenders agree to indemnify each
of the Administrative Agent in its capacity as such (to the extent not
reimbursed by the Borrower or any of its Subsidiaries and without limiting the
obligation of the Borrower and any of its Subsidiaries to do so), ratably
according to their respective Commitments in effect on the date on which
indemnification is sought, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever which may at any time (include,
without limitation, at any time following the payment of the Loans) be imposed
on, incurred by or asserted against the Administrative Agent in any way relating
to or arising out of, the Commitments,
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this Agreement, any other Loan Document or any documents contemplated by or
referred to herein or therein or the transactions contemplated hereby or thereby
or any action taken or omitted by the Administrative Agent under or in
connection with any of the foregoing, provided that no Lender shall be liable
for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting solely from the gross negligence or willful misconduct of the
Administrative Agent. The agreements in this subsection shall survive the
payment of the Loans and all other Obligations payable hereunder.
Section 11.8. Administrative Agent, in its Individual Capacity. The
Administrative Agent and its Affiliates may make loans to, accept deposits from
and generally engage in any kind of business with the Borrower as though such
Administrative Agent were not acting in such capacities hereunder and under the
other Loan Documents. With respect to the Loans made or renewed by it and the
Bridge Note issued to it such Administrative Agent shall have the same rights
and powers under this Agreement and the other Loan Documents as any Lender and
may exercise the same as though it were not an Administrative Agent, and the
terms "Lender" and "Lenders" shall include the Administrative Agent in its
individual capacity.
Section 11.9. Successor Administrative Agent. The Administrative
Agent may resign as Administrative Agent upon 30 days' notice to the Lenders. If
the Administrative Agent shall resign as Administrative Agent under this
Agreement and the other Loan Documents then the Majority Lenders shall appoint
from among the Lenders a successor agent for the Lenders, which successor agent
(provided that it shall have been approved by the Borrower), shall succeed to
the rights, powers and duties of the Administrative Agent, hereunder. Effective
upon such appointment and approval, the term "Administrative Agent" shall mean
and include such successor agent, and the former Administrative Agent's rights,
powers and duties as Administrative Agent shall be terminated, without any other
or further act or deed on the part of such former Administrative Agent, any of
the parties to this Agreement or any holders of the Loans. After any retiring
Administrative Agent's resignation as Administrative Agent the provisions of
this Article XI shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Administrative Agent under this Agreement and the
other Loan Documents.
Section 11.10. Arranger. Except as expressly set forth herein, the
Arranger, in its capacity as such, shall have no duties or responsibilities, and
shall incur no liabilities, under this Agreement or the other Loan Documents.
ARTICLE XII.
MISCELLANEOUS
Section 12.1. Expenses; Documentary Taxes. The Borrower agrees to
pay (a) all reasonable out-of-pocket expenses (including, without limitation,
expenses incurred in connection with due diligence by the Lenders) associated
with the preparation, execution and delivery, administration, waiver,
enforcement or modification and enforcement of the documentation contemplated
hereby and (b) the reasonable fees and disbursements of Latham & Watkins, legal
counsel to the Lenders, in connection with the transactions contemplated herein,
including in each case those incurred prior to the Closing Date and prior to
each Funding Date. The Borrower hereby agrees to indemnify the Lenders against
any transfer taxes, documentary taxes, assessments or charges made by any
Governmental Entity by reason of the execution and delivery, or the terms, of
this Agreement or any of the other Loan Documents.
Section 12.2. Notices. All notices and other communications
pertaining to this Agreement or any Bridge Note shall be in writing and shall be
delivered (a) in Person (with receipt acknowledged), (b) by facsimile (confirmed
immediately in writing by a copy mailed by registered or certified mail, return
receipt requested, postage prepaid, addressed as hereafter set forth), (c) by
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registered or certified mail, return receipt requested, postage prepaid, or (d)
by overnight courier, addressed as follows:
(i) If to the Administrative Agent, to it at:
Goldman Sachs Credit Partners L.P.
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Attention: Matthew Leavitt
Facsimile No.: (212) 902-3000
with a copy to:
Latham & Watkins
885 Third Avenue, Suite 1000
New York, New York 10022
Attention: Kirk A. Davenport
Facsimile No.: (212) 751-4864
(ii) If to any Lender, to it at its address set forth on the
signature pages hereto:
(iii) If to the Borrower, to it at:
NTL Incorporated
110 East 59th Street
26th Floor
New York, New York 10022
Attention: Richard J. Lubasch
Facsimile No.: (212) 906-8497
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attention: Thomas Kennedy
Facsimile No.: (212) 735-3637
or to such other Person or address as shall be furnished in writing delivered to
the other parties in compliance with this Section 12.2.
Section 12.3. Consent to Amendments and Waivers.
(a) Except as provided in Section 4.21 and 12.3(b), this Agreement
and the Bridge Notes may be amended or supplemented with the consent of the
Borrower and the Majority Lenders and any existing default or compliance with
any provision of this Agreement or the Bridge Notes may be waived with the
consent of the Majority Lenders. Bridge Notes held by the Borrower or any of its
Affiliates will not be deemed to be outstanding for purposes of this Section
12.3.
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(b) Notwithstanding the provisions of Section 12.3(a) and in
addition to the provisions of Section 4.21, without the consent of each Lender
affected thereby, an amendment or waiver may not: (i) reduce the principal
amount of any Loan, (ii) change the fixed maturity of any Loan, (iii) reduce the
rate of or change the time for payment of interest on any Loan, (iv) waive a
Default or Event of Default in the payment of principal of, or premium, fees or
interest, if any, on the Loans or any other amounts payable under any of the
Loan Documents, (v) make any Loan payable in money other than that stated in the
applicable Loan, (vi) make any change in the provisions of this Agreement
relating to the rights of Lenders to receive (A) prepayments on, or (B) payments
of principal of, premium, if any, or fees or interest on, the Loans, (vii) make
any change to the provisions of Article VII that would adversely affect the
rights of any Lender or (viii) make any change in the foregoing amendment and
waiver provisions.
(c) The Borrower shall not and shall not permit any of its
Subsidiaries to, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any Lender for
or as an inducement to any consent, waiver or amendment permitted by Section
12.3(a) unless such consideration is offered to be paid and is paid to all
Lenders that consent, waive or agree to amend in the time frame set forth in the
solicitation documents relating to such consent, waiver or amendment.
Section 12.4. Parties. This Agreement shall inure to the benefit of
and be binding upon the Borrower, the Affected Parties and each of their
respective successors and assigns. Except as expressly in this Agreement,
nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any other Person any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision herein contained. Except
as expressly provided in this Agreement, this Agreement and all conditions and
provisions hereof are intended to be for the sole and exclusive benefit of the
Affected Parties and their respective successors and assigns, and for the
benefit of no other Person.
Section 12.5. New York Law; Submission to Jurisdiction; Waiver of
Jury Trial. THIS AGREEMENT AND THE BRIDGE NOTES SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
CONFLICT OF LAW RULES THEREOF. THE BORROWER AND EACH OF THE LENDERS HEREBY
SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW
YORK CITY (EACH, A "NEW YORK COURT") FOR PURPOSES OF ALL LEGAL PROCEEDINGS
ARISING OUT OF OR RELATING TO THE BRIDGE NOTES, THIS AGREEMENT, ANY OF THE OTHER
LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY. THE BORROWER AND EACH OF
THE LENDERS IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY
SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. THE BORROWER
AND EACH OF THE LENDERS IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THE BRIDGE NOTES, THIS
AGREEMENT, ANY OF THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
Section 12.6. Replacement Notes. If any Bridge Note becomes
mutilated and is surrendered by the applicable Lender to the Borrower, or if any
Lender claims that any of its Bridge Notes has been lost, destroyed or
wrongfully taken, the Borrower shall execute and deliver to such Lender a
replacement Bridge Note, upon the delivery by such Lender of an indemnity to the
Borrower to
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save it and any agent of it harmless in respect of such loss, destruction or
wrongful taking with respect to such Bridge Note.
Section 12.7. [Intentionally omitted]
Section 12.8. Marshalling; Recapture. None of the Administrative
Agent nor any Lender shall be under any obligation to marshall any assets in
favor of the Borrower or any other party or against or in payment of any or all
of the Obligations. To the extent any Lender receives any payment by or on
behalf of the Borrower, which payment or any part thereof is subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to
be repaid to the Borrower or its estate, trustee, receiver, custodian or any
other party under any Bankruptcy Law, state or federal law, common law or
equitable cause, then, to the extent of such payment or repayment, the
obligation or part thereof which has been paid, reduced or satisfied by the
amount so repaid shall be reinstated by the amount so repaid and shall be
included within the liabilities of Borrower to such Lender as of the date such
initial payment, reduction or satisfaction occurred.
Section 12.9. Limitation of Liability. No claim may be made by the
Borrower or any other Person against any Administrative Agent or any Lender or
the Affiliates, directors, officers, employees, attorneys or agents of any of
them for any special, indirect, consequential or punitive damages in respect of
any claim for breach of contract or any theory of liability arising out of or
related to the transactions contemplated by this Agreement or the other Loan
Documents, or any act, omission or event occurring in connection therewith; and
the Borrower hereby waives, releases and agrees not to sue and shall cause each
of its respective Subsidiaries to waive, release or agree not to sue (if
required), upon any claim for any such damages, whether or not accrued and
whether or not known or suspected to exist in its favor.
Section 12.10. Independence of Covenants. All covenants hereunder
shall be given independent effect so that if a particular action or condition is
not permitted by any of such covenants, the fact that it would be permitted by
an exception to, or be otherwise within the limitations of, another covenant
shall not avoid the occurrence of a Default or Event of Default if such action
is taken or condition exists.
Section 12.11. Currency Indemnity. The Borrower acknowledges and
agrees that this is a credit transaction where specification of dollars is of
the essence and dollars shall be the currency of account and payment in all
events. If, pursuant to a judgment or for any other reason, payment shall be
made in another currency and such payment, after prompt conversion to dollars
and transfer to New York City in accordance with normal banking procedures,
falls short of the sum due the Lenders in dollars, the Borrower shall pay the
Lender such shortfall and the Lenders shall have a separate cause of action for
such amount.
Section 12.12. Waiver of Immunity. To the extent that the Borrower
has or hereafter may acquire any immunity from:
(a) the jurisdiction of any court of (i) any jurisdiction in which
the Borrower owns or leases property or assets or (ii) the United States,
the State of New York or any political subdivision thereof; or
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(b) from any legal process (whether through service of notice,
attachment prior to judgment, attachment in aid of execution, execution or
otherwise) with respect to itself or its property and assets, this
Agreement, any Loan Document or actions to enforce judgments in respect of
any thereof,
it hereby irrevocably waives such immunity in respect of its obligations under
the above-referenced document.
Section 12.13. Freedom of Choice. The submission to the jurisdiction
of the courts referred to in this Article XII shall not (and shall not be
construed so as to) limit the right of any Lender to take proceedings against
the Borrower in the courts of any country in which the Borrower has assets or in
any other court of competent jurisdiction nor shall the taking of proceedings in
any one or more jurisdictions preclude the taking of proceedings in any other
jurisdiction (whether concurrently or not) if and to the extent permitted by
applicable law.
Section 12.14. Successors and Assigns. Whenever in this Agreement
any of the parties hereto is referred to, such reference shall be deemed to
include the successors and assigns of such party; and all covenants and
agreements of the Borrower in this Agreement shall bind their respective
successors and assigns. The Borrower may not assign or transfer any of its
rights or obligations hereunder (by operation of law or otherwise) without the
prior written consent of the Majority Lenders. Any assignment by any Lender must
be made in compliance with Article VI hereof.
Section 12.15. Merger. This Agreement constitutes the entire
contract among the parties relating to the subject matter hereof and supersedes
any and all previous agreements among the parties relating to the subject matter
hereof, except for those provisions in the Fee Letter and the Engagement Letter
that are in addition to the provisions contained herein.
Section 12.16. Severability Clause. In case any provision in this
Agreement or any Bridge Note shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby and such
provision shall be ineffective in such jurisdiction only to the extent of such
invalidity, illegality or unenforceability.
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Section 12.17. Representations, Warranties and Agreements To Survive
Delivery. All representations, warranties and agreements contained in or
incorporated into this Agreement, or contained in Officers' Certificates
submitted pursuant hereto, shall remain operative and in full force and effect
until all Obligations under all of the Loan Documents have been repaid in full,
regardless of any investigation made by or on behalf of the Lenders or any
controlling Person of the Lenders, or by or on behalf of the Borrower or any
controlling Person of the Borrower, and shall survive delivery of the Bridge
Notes.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
NTL INCORPORATED
By: /s/ Richard J. Lubasch
---------------------------------
Name: Richard J. Lubasch
Title: Senior Vice President,
General Counsel and
Secretary
GOLDMAN SACHS CREDIT PARTNERS L.P.
as Administrative Agent
By: /s/ Stephen J. McGuinness
-------------------------------
Name: Stephen J. McGuinness
Title: Managing Director
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Lenders:
Commitment Amount:
$1,350,000,000 GOLDMAN SACHS CREDIT PARTNERS L.P.
By: /s/ Stephen J. McGuinness
----------------------------------
(Authorized Signatory)
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Wire Transfer Instructions
Name of Bank: [Insert name of bank]
Address: __________________
ABA#: ___________
For the account of ______________
Account No.: _____________
For further credit to [Insert name of
Lender].
Reference:
Attention: __________________
Telephone: __________________
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EXHIBIT A
FORM OF
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Bridge Loan Agreement, dated as of March
17, 1999 (as amended, supplemented or otherwise modified from time to time, the
"Bridge Loan Agreement"), by and between NTL Incorporated, a Delaware
corporation (the "Borrower"), and Goldman Sachs Credit Partners L.P. (Goldman
Sachs Credit Partners L.P., herein called the "Lenders"), as Administrative
Agent for the Lenders (in such capacity, the "Administrative Agent"). Unless
otherwise defined herein, terms defined in the Bridge Loan Agreement and used
herein shall have the meanings given to them in the Bridge Loan Agreement.
The Assignor identified on Schedule I hereto (the "Assignor") and
the Assignee identified on Schedule I hereto (the "Assignee") agree as follows:
1. The Assignor hereby irrevocably sells and assigns to the Assignee
without recourse to the Assignor, and the Assignee hereby irrevocably purchases
and assumes from the Assignor without recourse to the Assignor, as of the
Effective Date (as defined below), the percentage interest described in Schedule
1 hereto (the "Assigned Interest") in and to the Assignor's rights and
obligations under the Bridge Loan Agreement (the "Assigned Facilities"), in a
principal amount for the Assigned Facilities as set forth on Schedule I hereto.
2. The Assignor (a) makes no representation or warranty and assumes
no responsibility with respect to any statements, warranties or representations
made in or in connection with the Bridge Loan Agreement or with respect to the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Bridge Loan Agreement, any other Loan Document or any other instrument or
document furnished pursuant thereto, other than that the Assignor has not
created any adverse claim upon the interest being assigned by it hereunder and
that such interest is free and clear of any such adverse claim: (b) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrower, any of its Subsidiaries or any other
obligor or the performance or observance by the Borrower, any of its
Subsidiaries or any other obligor of any of their respective obligations under
the Bridge Loan Agreement or any other Loan Document or any other instrument or
document furnished pursuant hereto or thereto; and (c) attaches any Bridge Notes
held by it evidencing the Assigned Facilities and (i) requests that the
Administrative Agent, upon request by the Assignee, exchange the attached Bridge
Notes for a new Bridge Note or Bridge Notes payable to the Assignee and (ii) if
the Assignor has retained any interest in the Assigned Facility, requests that
the Administrative Agent exchange the attached Bridge Notes for a new Bridge
Note or Bridge Notes payable to the Assignor, in each case in amounts which
reflect the assignment being made hereby (and after giving effect to any other
assignments which are effective on the Effective Date).
3. The Assignee (a) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (b) confirms that it
has received a copy of the Bridge Loan Agreement, and all schedules and exhibits
thereto together with copies of the financial information delivered pursuant to
subsection 4.4 thereof and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Acceptance; (c) agrees that it will, independently and without
reliance upon the Assignor, the Administrative Agent or any other Lender and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Bridge Loan Agreement, the other Loan Documents or any other
instrument or document furnished pursuant hereto or thereto; (d) appoints and
authorizes the Administrative Agent to take such action as agent on its behalf
and to exercise such powers and discretion under the Bridge Loan Agreement, the
other Loan Documents or any other instrument or document furnished pursuant
hereto or thereto as are delegated to the Administrative Agent by the terms
thereof, together with such powers as are incidental thereto; (e) agrees
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that it will be bound by the provisions of the Bridge Loan Agreement and will
perform in accordance with its terms all the obligations which by the terms of
the Bridge Loan Agreement are required to be performed by it as a Lender; and
(f) agrees that it shall have no recourse against the Assignor with respect to
any matters relating to the Bridge Loan Agreement, the other Loan Documents or
any other instrument or documents furnished pursuant hereto or thereto.
4. The Assignor hereby assigns to Assignee all of its rights and
obligations under the Fee Letter with respect to the Assigned Interest.
5. The effective date of this Assignment and Acceptance shall be the
Effective Date of Assignment described in Schedule I hereto (the "Effective
Date"). Following the execution of this Assignment and Acceptance, it will be
delivered to the Administrative Agent for acceptance by them and recording by
the Administrative Agent pursuant to Section 6.7 of the Bridge Loan Agreement,
effective as of the Effective Date (which shall not, unless otherwise agreed to
by the Administrative Agent, be earlier than five Business Days after the date
of such acceptance and recording by the Administrative Agent).
6. Upon such acceptance and recording, from and after the Effective
Date, the Administrative Agent shall make all payments in respect of the
Assigned Interest (including payments of principal, interest, fees and other
amounts) to the Assignor for amounts which have accrued to the Effective Date
and to the Assignee for amounts which have accrued subsequent to the Effective
Date. The Assignor and the Assignee shall make all appropriate adjustments in
payments by the Administrative Agent for periods prior to the Effective Date or
with respect to the making of this assignment directly between themselves.
7. From and after the Effective Date, (a) the Assignee shall be a
party to the Bridge Loan Agreement and the Fee Letter and, to the extent
provided in this Assignment and Acceptance, have the rights and obligations of a
Lender thereunder and under the other Loan Documents and shall be bound by the
provisions thereof and (b) the Assignor shall, to the extent provided in this
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Bridge Loan Agreement and the Fee Letter.
8. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment
and Acceptance to be executed as of the date first above written by their
respective duly authorized officers on Schedule I hereto.
2
<PAGE> 79
[Name of Assignee] [Name of Assignor]
By: By:
----------------------------------- ----------------------------------
Name Name:
Title: Title:
Accepted:
GOLDMAN SACHS CREDIT PARTNERS L.P.
as Administrative Agent
By:
------------------------------
(Authorized Signatory)
[NTL INCORPORATED
as Borrower
By:
-------------------------------
Name:
Title:]
3
<PAGE> 80
Exhibit A
Schedule 1
to Assignment and Acceptance
Name of Assignor: ____________________________
Name of Assignee: ____________________________
Effective Date of Assignment: ________________
<TABLE>
<CAPTION>
Credit Facility Principal Commitment
Assigned Amount Assigned Commitment Percentage Assigned1
- -------- --------------- -------------------------------
<S> <C> <C>
$__________________ ______. _________%
</TABLE>
1. Calculate the Commitment Percentage that is assigned to at least 9 decimal
places and show as a percentage of the aggregate commitments of all Lenders
<PAGE> 81
EXHIBIT B
NY_DOCS\328339.4
[THE SECURITY EVIDENCED OR CONSTITUTED HEREBY HAS BEEN ACQUIRED FOR INVESTMENT
AND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS
SECURITY MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS THE
REGISTRATION PROVISIONS OF SAID ACT (OR AN EXEMPTION THEREFROM) HAVE BEEN
COMPLIED WITH.]
No. I-__ New York, New York
$______________ ______________, 199_
SENIOR BRIDGE NOTE
[SERIES A]
[SERIES B]
[SERIES C]
FOR VALUE RECEIVED, the undersigned, NTL Incorporated (the
"Borrower"), promises to pay to the order of _______________________________, or
its registered assigns (the "Holder"), the principal amount of
__________________ Dollars ($_______) and to pay interest from the date hereof
on the unpaid principal amount hereof from time to time outstanding, at the
rates per annum and on the dates specified in that certain Bridge Loan
Agreement, dated as of March 17, 1999, between the Borrower, the Lenders named
therein and Goldman Sachs Credit Partners L.P. (as amended, restated and/or
otherwise modified from time to time, the "Bridge Loan Agreement"). Terms used
herein and not otherwise defined have the meanings assigned to them in the
Bridge Loan Agreement.
The unpaid principal balance of this Bridge Note, together with all
accrued and unpaid interest thereon, shall become due and payable on the
Maturity Date.
The Borrower promises to pay interest on demand, to the extent
permitted by law, on any overdue principal and interest from their due dates at
the rate per annum as specified in Section 2.3 of the Bridge Loan Agreement.
All payments of the principal of and premium and interest on this
Bridge Note shall be made in money of the United States of America that at the
time of payment is legal tender for the payment of public and private debts, by
transfer of immediately available funds into a bank account designated by the
Holder in writing to the Borrower; provided, however, that notwithstanding
anything contained in the Bridge Loan Agreement or any of the Bridge Notes to
the contrary, in no event shall the interest rate hereon for any period of
computation exceed a rate per annum equal to the lesser of 16% and the maximum
interest rate permitted by applicable law.
The Borrower agrees to pay, upon demand, all reasonable
out-of-pocket expenses (including, without limitation, the reasonable fees and
disbursements of legal counsel to the Holder) associated with the waiver,
enforcement or modification of the Bridge Loan Agreement or this Bridge Note.
The Borrower hereby waives diligence, presentment, demand, protest
and notice of any kind whatsoever. The nonexercise by the Holder of any of its
rights hereunder in any particular instance shall not constitute a waiver
thereof in that or any subsequent instance.
This Bridge Note is one of the Bridge Notes referred to in the
Bridge Loan Agreement, which Agreement, among other things, contains provisions
for the acceleration of the maturity hereof upon the happening of certain
events, for optional and mandatory prepayment in full of the principal
<PAGE> 82
hereof prior to maturity and for the amendment or waiver of certain provisions
of the Bridge Loan Agreement, all upon the terms and conditions therein
specified. In the event of any conflict between the provisions of this Bridge
Note and the Bridge Loan Agreement, the provisions of the Bridge Loan Agreement
shall govern.
Additional Amounts. This provision shall apply only in the event
that the Borrower becomes, or a successor to the Borrower 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
Borrower on this Bridge 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 Borrower under this
Bridge Note, the Borrower 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 Bridge Note after such deduction or withholding
shall be not less than the amounts specified in this Bridge Note to which the
Holder of this Bridge Note is entitled; provided, however, that the Borrower
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 Bridge Note
or the receipt of amounts payable in respect of this Bridge 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 Bridge 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 Bridge 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
Bridge Note or, if different, the beneficial owner of the interest payable on
this Bridge Note, with a timely request of the Borrower 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 Bridge Note or withholding from
the proceeds of a sale or exchange of a Bridge 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 Bridge 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 Bridge 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 Bridge Note; (g)
any combination of items (a), (b), (c), (d), (e) and (f) above; nor shall
Additional Amounts be paid with
2
<PAGE> 83
respect to any payment of the principal of, or any interest on, this Bridge 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 Bridge Note. All references to principal amount
or interest on the Bridge Notes in the Bridge Loan Agreement or the Bridge Notes
shall include any Additional Amounts payable to the Borrower pursuant to this
provision.
THIS SECURITY WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT UNDER SECTION 1273 OF THE
INTERNAL REVENUE CODE. YOU MAY CONTACT RICHARD J. LUBASCH, GENERAL COUNSEL AND
SENIOR VICE PRESIDENT OF NTL INCORPORATED, 110 EAST 59TH STREET, NEW YORK, NEW
YORK 10022, TELEPHONE NUMBER: 212-906-8440, WHO WILL PROVIDE YOU WITH ANY
REQUIRED INFORMATION REGARDING THE ORIGINAL ISSUE DISCOUNT.
THIS BRIDGE NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED
BY THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the Borrower has caused this Bridge Note to be
signed in its corporate name by its duly authorized officer and to be dated as
of the day and year first above written.
NTL INCORPORATED
By:
-------------------------------------
Name:
Title:
3
<PAGE> 84
[Back of Bridge Note]
OPTION OF HOLDER TO ELECT PREPAYMENT UPON CHANGE OF CONTROL
If you want to elect to have this Bridge Note prepaid by the
Borrower pursuant to Section 4.13 of the Bridge Loan Agreement check the box
below.
|_| Please prepay the entire amount of this Bridge Note
If you want to elect to have only part of this Bridge Note prepaid
by the Borrower pursuant to Section 4.13 of the Bridge Loan Agreement, state the
amount you elect to have purchased: $_____________.
Date: ________________________
Your Signature:
__________________________________________________
(Sign exactly as your name appears on the face
of this Note)
Tax Identification No. _______________________
Signature Guarantee:
___________________________
<PAGE> 85
EXHIBIT C
================================================================================
REGISTRATION RIGHTS AGREEMENT
between
NTL INCORPORATED
and
GOLDMAN SACHS CREDIT PARTNERS L.P.
Dated as of March 17, 1999
================================================================================
<PAGE> 86
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
entered into as of March 17, 1999, between NTL Incorporated, a Delaware
corporation (the "Borrower"), and Goldman Sachs Credit Partners L.P., as
("Administrative Agent").
RECITALS
This Agreement is made pursuant to the Bridge Loan Agreement, dated
as of the date hereof (the "Bridge Loan Agreement"), among the Borrower, the
Lenders referred to therein (the "Lenders") and the Administrative Agent. In
order to induce the Lenders to enter into the Bridge Loan Agreement, the
Borrower has agreed to provide the registration rights set forth in this
Agreement. The execution of this Agreement is a condition to the funding of any
Bridge Loan.
AGREEMENT
The parties agree as follows:
1. Definitions.
Capitalized terms used herein without definition have the meanings
assigned to them in the Bridge Loan Agreement. As used in this Agreement, the
following capitalized terms shall have the following meanings:
Business Day: Each Monday, Tuesday, Wednesday, Thursday and Friday that is
not a day on which banking institutions in New York are generally authorized or
obligated by law or executive order to close.
Effectiveness Date: See Section 3(a) hereof.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Exchange Notes: As defined in the Bridge Loan Agreement.
Exchange Note Indenture: The Exchange Note Indenture, dated as of March
17, 1999, between the Borrower and The Chase Manhattan Bank, as trustee,
pursuant to which the Exchange Notes are issued, as the same may be amended from
time to time in accordance with the terms thereof.
Exchange Note Indenture Trustee: See Section 5(r) hereof.
Filing Date: See Section 3(a) hereof.
Indemnified Holder: See Section 7(a) hereof.
Interest Payment Date: As defined in the Bridge Loan Agreement.
Interest Period: As defined in the Bridge Loan Agreement.
Liquidated Damages: See Section 3(c) hereof.
Registration Rights Agreement Page 1
<PAGE> 87
Loan: As defined in the Bridge Loan Agreement.
NASD: National Association of Securities Dealers, Inc.
Person: An individual, partnership, limited liability company,
corporation, trust, unincorporated organization, or a government or agency or
political subdivision thereof.
Prospectus: The prospectus included in the Registration Statement, as
amended or supplemented by any prospectus supplement with respect to the terms
of the offering of any portion of the Registrable Securities covered by such
Registration Statement and by all other amendments and supplements to the
prospectus, including post-effective amendments and all material incorporated by
reference in such prospectus.
Recommencement Date: See Section 5 hereof.
Registrable Securities: All Exchange Notes; provided that an Exchange Note
ceases to be a Registrable Security when it is no longer a Transfer Restricted
Security.
Registration Default: See Section 3(c) hereof.
Registration Expenses: See Section 6 hereof.
Registration Statement: Any registration statement of the Borrower which
covers any of the Registrable Securities pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
Registration Statement, including post-effective amendments, all exhibits and
all material incorporated by reference in such Registration Statement.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended.
Shelf Registration: See Section 3(a) hereof.
Suspension Notice: See Section 5 hereof.
TIA: The Trust Indenture Act of 1939, as amended (15 U.S.C. Section
77aaa-77bbbb) as in effect on the date of the Exchange Note Indenture.
Transfer Restricted Securities: The Registrable Securities upon original
issuance thereof, and with respect to any particular such Registrable Security,
until such securities are sold to the public in unrestricted sales.
"underwritten registration" or "underwritten offering": A registration in
which securities of the Borrower are sold to an underwriter for reoffering to
the public.
Registration Rights Agreement Page 2
<PAGE> 88
2. Holders of Registrable Securities.
A Person is deemed to be a holder of Registrable Securities whenever such
Person owns Registrable Securities of record or has provided evidence reasonably
satisfactory to the Borrower that such Person has the right to acquire such
Registrable Securities, whether or not such acquisition has actually been
effected and disregarding any legal restrictions upon the exercise of such
right; provided however that there can only be one holder of any Registrable
Security at any given time.
3. Shelf Registration.
(a) Filing of Shelf Registration. The Borrower shall file a "shelf"
registration statement on any appropriate form pursuant to Rule 415 (or
similar rule that may be adopted by the SEC) under the Securities Act (a
"Shelf Registration") as promptly as practicable and in no event later
than the date that is 300 days after the initial funding of the Bridge
Loans (the "Filing Date") to permit resales of all of the Registrable
Securities. The Borrower agrees to use its best efforts to cause such
Shelf Registration to become effective as promptly as possible after the
filing thereof, but in no event later than 90 days after the Filing Date
(the "Effectiveness Date"). The Borrower shall use its best efforts to
keep any Shelf Registration required by this Section 3(a) continuously
effective, supplemented and amended as required by and subject to the
provisions of Section 5 hereof to the extent necessary to ensure that it
is available for sales of Registrable Securities by the holders thereof
entitled to the benefit of this Section 3(a) and to ensure that it
conforms with the requirements of this Agreement, the Securities Act and
the policies, rules and regulations of the SEC as announced from time to
time until all Registrable Securities covered by the Shelf Registration
have been sold pursuant thereto.
(b) Provision by Holders of Certain Information in Connection with
the Shelf Registration. No holder of Registrable Securities may include
any of its Registrable Securities in any Shelf Registration pursuant to
this Agreement unless and until such holder furnishes to the Borrower in
writing, within 20 days after receipt of a request therefor, the
information specified in Item 507 or 508 of Regulation S-K, as applicable,
of the Securities Act for use in connection with any Shelf Registration or
Prospectus or preliminary Prospectus included therein. No holder of
Registrable Securities shall be entitled to Liquidated Damages pursuant to
Section 3(c) hereof unless and until such holder shall have provided all
such information. Each selling holder of Registrable Securities agrees to
promptly furnish additional information required to be disclosed in order
to make the information previously furnished to the Borrower by such
holder not materially misleading.
(c) Liquidated Damages. If (i) the Registration Statement required
by this Agreement is not filed with the SEC on or prior to the Filing
Date, (ii) the Registration Statement has not been declared effective by
the SEC on or prior to the Effectiveness Date or (iii) the Registration
Statement required by this Agreement is filed and declared effective but
shall thereafter cease to be effective or fail to be usable for its
intended purpose without being succeeded immediately by a post-effective
amendment to the Registration Statement that cures such failure and that
is itself declared effective
Registration Rights Agreement Page 3
<PAGE> 89
immediately (each such event referred to in clauses (i) through (iii), a
"Registration Default"), then the Borrower agrees to pay to each holder of
Registrable Securities and Loans liquidated damages ("Liquidated Damages")
in an amount equal to 25 basis points per annum times the principal amount
of Registrable Securities or Loans, as the case may be, for each week or
portion thereof that the Registration Default continues for the first
90-day period immediately following the occurrence of such Registration
Default (such 90-day period to begin on the date on which the first such
Registration Default occurs). The amount of such Liquidated Damages shall
increase by an additional 25 basis points per annum on the principal
amount of Registrable Securities or Loans, as the case may be, with
respect to each subsequent 90-day period until all Registration Defaults
have been cured, up to a maximum amount of Liquidated Damages of 100 basis
points per annum on the principal amount of Registrable Securities or
Loans, as the case may be; provided that the Borrower shall in no event be
required to pay Liquidated Damages for more than one Registration Default
on any Registrable Securities or Loans, as the case may be, at any given
time. All Liquidated Damages shall be calculated based on the actual
number of days elapsed in a 360 day year and all accrued Liquidated
Damages shall be paid on the applicable Interest Payment Date in
accordance with the Exchange Note Indenture or the Bridge Loan Agreement,
as the case may be, to each holder of Registrable Securities or Loans, as
the case may be, in cash. Notwithstanding anything to the contrary set
forth herein, (1) upon filing the Registration Statement, in the case of
(i) above, (2) upon the effectiveness of the Registration Statement, in
the case of (ii) above or (3) upon the filing of a post-effective
amendment to the Registration Statement or an additional Registration
Statement that causes the Registration Statement to again be declared
effective or made usable in the case of (iii) above, the Liquidated
Damages payable with respect to the Registrable Securities or Loans, as
the case may be, as a result of such clause (i), (ii) or (iii), as
applicable, shall cease.
All obligations of the Borrower set forth in the preceding paragraph
that are outstanding with respect to any Registrable Security or Loan at
the time such security ceases to be a Registrable Security or Loan shall
survive until such time as all such obligations with respect to such
Registrable Securities or Loans have been satisfied in full. Any holder of
Registrable Securities or any Lender may notify the Exchange Note
Indenture Trustee (and any paying agent under the Exchange Note Indenture)
and/or the Administrative Agent under the Bridge Loan Agreement
immediately after the occurrence of each and every event which pursuant to
this Section 3(c) results in the accrual of Liquidated Damages with
respect to such Registrable Securities or Loans, as the case may be.
4. [Intentionally Omitted]
Registration Rights Agreement Page 4
<PAGE> 90
5. Registration Procedures.
In connection with the Borrower's registration obligations set forth in
Section 3 hereof, the Borrower shall use its best efforts to effect such
registration to permit the sale of such Registrable Securities being sold in
accordance with the intended method or methods of distribution thereof (as
indicated in the information furnished to the Borrower pursuant to Section 3(b)
hereof), and pursuant thereto the Borrower shall, as expeditiously as possible
prepare and file with the SEC a Registration Statement or Registration
Statements relating to the Shelf Registration on any appropriate form under the
Securities Act, which form shall be available for the sale of the Registrable
Securities in accordance with the intended method or methods of distribution
thereof within the time periods and otherwise in accordance with the provisions
hereof and shall cooperate and assist in any filings required to be made with
the NASD and in the performance of any due diligence investigation by any
underwriter (including any "qualified independent underwriter") that is required
to be retained in accordance with the rules and regulations of the NASD. In
connection with any Registration Statement and any related Prospectus required
by this Agreement, the Borrower shall:
(a) use all commercially reasonable efforts to keep such
Registration Statement continuously effective and provide all requisite
financial statements for the period specified in Section 3 of this
Agreement, as applicable. Upon the occurrence of any event that would
cause any such Registration Statement or the Prospectus contained therein
(1) to contain a material misstatement or omission or (2) not to be
effective and usable for resale of Registrable Securities during the
period required by this Agreement, the Borrower shall promptly file an
appropriate amendment to such Registration Statement curing such defect,
and, if SEC review is required, use all commercially reasonable efforts to
cause such amendment to be declared effective as soon as practicable;
(b) prepare and file with the SEC such amendments and post-effective
amendments to the applicable Registration Statement as may be necessary to
keep such Registration Statement effective for the applicable period set
forth in Section 3 hereof; cause the Prospectus to be supplemented by any
required Prospectus supplement, and as so supplemented to be filed
pursuant to Rule 424 under the Securities Act, and to comply fully with
Rules 424, 430A and 462, as applicable under the Securities Act in a
timely manner; and comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such Registration
Statement during the applicable period in accordance with the intended
method or methods of distribution by the sellers thereof set forth in such
Registration Statement or supplement to the Prospectus; the Borrower shall
not be deemed to have used its best efforts to keep such Registration
Statement effective during the applicable period if it voluntarily takes
any action that would result in selling holders of the Registrable
Securities covered thereby being unable to sell such Registrable
Securities during that period unless such action is required under
applicable law, provided that the foregoing shall not apply to actions
taken by the Borrower in good faith and for valid business reasons,
including without limitation the acquisition or divestiture of assets, so
long as the Borrower promptly thereafter complies with the requirements of
Section 5(k) hereof, if applicable;
Registration Rights Agreement Page 5
<PAGE> 91
(c) advise the selling holders of Registrable Securities and the
managing underwriters, if any, promptly, and, if requested by any such
Person, confirm such advice in writing, (1) when the Prospectus or any
Prospectus supplement or post-effective amendment has been filed, and,
with respect to any applicable Registration Statement or any
post-effective amendment, when the same has become effective, (2) of any
request by the SEC for amendments to the Registration Statement or for
amendments or supplements to the Prospectus or for additional information
relating thereto, (3) of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement under the
Securities Act or of the suspension by any state securities commission of
the qualification of the Registrable Securities for offering or sale in
any jurisdiction or the initiation of any proceedings for that purpose and
(4) of the existence of any fact or the happening of any event that makes
any statement of a material fact made in the Registration Statement, the
Prospectus, any amendment or supplement thereto or any document
incorporated by reference therein untrue or that requires the making of
any addition to or changes in the Registration Statement in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading or that requires the making of any additions to
or changes in the Prospectus in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
If at any time the SEC shall issue any stop order suspending the
effectiveness of the Registration Statement, or any state securities
commission or other regulatory authority shall issue an order suspending
the qualification or exemption from qualification of the Registrable
Securities under state securities or Blue Sky laws, the Borrower shall use
all commercially reasonable efforts to obtain the withdrawal or lifting of
such order at the earliest possible time;
(d) furnish to each selling holder of Registrable Securities covered
by any Registration Statement or Prospectus in connection with such sale,
and each underwriter, if any, before filing with the SEC, copies of any
Registration Statement or any Prospectus included therein or any
amendments or supplements to any such Registration Statement or Prospectus
(including all documents incorporated by reference after the initial
filing of such Registration Statement), which documents will be subject to
the review and comment of such Persons in connection with such sale, if
any, for a period of at least five Business Days, and the Borrower will
not file any such Registration Statement or Prospectus or any amendment or
supplement to any such Registration Statement or Prospectus (including all
such documents incorporated by reference) to which the selling holders of
the Registrable Securities covered by such Registration Statement in
connection with such sale, or the underwriters, if any, shall reasonably
object within five Business Days after the receipt thereof. A selling
holder of Registrable Securities or underwriter, if any, shall be deemed
to have reasonably objected to such filing if such Registration Statement,
amendment, Prospectus or supplement, as applicable, as proposed to be
filed, contains a material misstatement or omission or fails to comply
with the applicable requirements of the Securities Act;
(e) if requested by the managing underwriter or underwriters in
connection with an underwritten offering or any selling holders of
Registrable Securities in connection with such sale, promptly include in
any Registration Statement or Prospectus pursuant to a supplement or
post-effective amendment, if necessary, such information as
Registration Rights Agreement Page 6
<PAGE> 92
the managing underwriters or such selling holders may reasonably request
to have included therein, including, without limitation, information
relating to the "Plan of Distribution," with respect to the principal
amount of Registrable Securities being sold to such underwriters, the
purchase price being paid therefor by such underwriters and any other
terms of the underwritten (or best efforts underwritten) offering of the
Registrable Securities to be sold in such offering; and make all required
filings of such Prospectus supplement or post-effective amendment as soon
as practicable after the Borrower is notified of the matters to be
included in such Prospectus supplement or post-effective amendment;
(f) furnish to each selling holder of Registrable Securities and
each managing underwriter, if any, without charge, at least one signed
copy of the Registration Statement, as first filed with the SEC, and of
each amendment thereto, all documents incorporated by reference therein
and all exhibits (including exhibits incorporated by reference therein);
(g) deliver to each selling holder of Registrable Securities and the
underwriters, if any, without charge, as many copies of the Prospectus
(including each preliminary prospectus) and any amendment or supplement
thereto as such Persons may reasonably request; the Borrower hereby
consents to the use (in accordance with law) of the Prospectus or any
amendment or supplement thereto by each of the selling holders of
Registrable Securities and the underwriters, if any, in connection with
the offering and the sale of the Registrable Securities covered by the
Prospectus or any amendment or supplement thereto;
(h) prior to any public offering of Registrable Securities,
cooperate with the selling holders of Registrable Securities, the
underwriters, if any, and their respective counsel in connection with the
registration and qualification of such Registrable Securities under the
securities or Blue Sky laws of such jurisdictions as any such seller or
underwriter, if any, may request and do any and all other acts or things
necessary or advisable to enable the disposition in such jurisdictions of
such Registrable Securities covered by the applicable Registration
Statement; provided, however, that the Borrower will not be required to
register or qualify as a foreign corporation where the Borrower is not
then so qualified or to take any action that would subject the Borrower to
the service of process in suits or to taxation, other than as to matters
and transactions relating to the Registration Statement in any
jurisdiction where the Borrower is not then so subject;
(i) in connection with any sale of Registrable Securities that will
result in such securities no longer being Transfer Restricted Securities,
cooperate with the selling holders of Registrable Securities and the
managing underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing such Registrable Securities to be
sold and not bearing any restrictive legends; and to register such
Registrable Securities in such denominations and such names as such
managing underwriters or selling holders may request at least two Business
Days prior to such sale of Registrable Securities;
(j) use all commercially reasonable efforts to cause the disposition
of the Registrable Securities covered by the applicable Registration
Statement to be registered
Registration Rights Agreement Page 7
<PAGE> 93
with or approved by such other governmental agencies or authorities as may
be necessary to enable the seller or sellers thereof or the underwriters,
if any, to consummate the disposition of such Registrable Securities,
subject to the proviso in clause (h) above;
(k) subject to Section 5(a) hereof, if any fact or event
contemplated by Section 5(c)(4) hereof shall exist or have occurred,
prepare a supplement or post-effective amendment to the Registration
Statement or related Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Securities, the Prospectus
will not contain an untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein in the light of
the circumstances under which they were made, not misleading;
(l) if requested by the holders of a majority in aggregate principal
amount of the Registrable Securities or the managing underwriters, if any,
cause all Registrable Securities covered by a Registration Statement to be
listed on each securities exchange on which similar securities issued by
the Borrower are then listed;
(m) cause the Registrable Securities covered by a Registration
Statement to be rated with such rating agencies as the holders of a
majority in aggregate principal amount of the Registrable Securities or
the managing underwriters, if any, may designate;
(n) provide a CUSIP number for all Registrable Securities not later
than the effective date of a Registration Statement covering such
Registrable Securities, and provide the Exchange Note Indenture Trustee
with printed certificates for the Registrable Securities which are in a
form eligible for deposit with The Depository Trust Company;
(o) enter into such agreements (including an underwriting agreement
in customary form) and take all such other actions in connection therewith
in order to expedite or facilitate the disposition of such Registrable
Securities pursuant to the Registration Statement contemplated by this
Agreement and in such connection, whether or not an underwriting agreement
is entered into and whether or not the registration is an underwritten
registration (1) make such representations and warranties in a certificate
signed on behalf of the Borrower by (x) the President and (y) the
principal financial officer of the Borrower, to the holders of such
Registrable Securities and the underwriters, if any, in form, substance
and scope as are customarily made by issuers to underwriters in primary
underwritten offerings; (2) obtain opinions of counsel to the Borrower and
updates thereof (which counsel and opinions (in form, scope and substance)
shall be reasonably satisfactory to the managing underwriters, if any, and
the holders of a majority in principal amount of the Registrable
Securities) addressed to each selling holder and the underwriters, if any,
covering the matters customarily covered in opinions requested in
underwritten offerings and such other matters as may be reasonably
requested by such selling holders and underwriters and in any event
including a statement to the effect that such counsel has participated in
conferences with officers and other representatives of the Borrower,
representatives of the independent public accountants for the Borrower and
have considered the matters required to be stated therein and the
statements contained therein, although such counsel has not independently
verified the
Registration Rights Agreement Page 8
<PAGE> 94
accuracy, completeness or fairness of such statements; and that such
counsel advises that, on the basis of the foregoing no facts came to such
counsel's attention that caused such counsel to believe that the
applicable Registration Statement, at the time such Registration Statement
or any post-effective amendment thereto became effective, contained an
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading, or that the Prospectus contained in such Registration
Statement as of its date contained an untrue statement of a material fact
or omitted 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; without limiting the foregoing, such counsel
may state further that such counsel assumes no responsibility for, and has
not independently verified, the accuracy, completeness or fairness of the
financial statements, notes and schedules and financial data set forth or
referred to in any Registration Statement contemplated by this Agreement
or the related Prospectus; (3) obtain "comfort" letters and updates
thereof from the Borrower's independent certified public accountants
addressed to such selling holders and underwriters, if any, such letters
to be in customary form and covering matters of the type customarily
covered in "comfort" letters to underwriters in connection with primary
underwritten offerings; (4) if an underwriting agreement is entered into,
the same shall set forth in full the indemnification provisions and
procedures of Section 7 hereof with respect to all parties to be
indemnified pursuant to Section 7; and (5) deliver such documents and
certificates as may be requested by the holders of a majority of the
Registrable Securities being sold and the managing underwriters, if any,
to evidence compliance with Section 5(k) hereof and with any customary
conditions contained in the underwriting agreement or other agreement
entered into by the Borrower. The above shall be done at each closing
under such underwriting or similar agreement or as and to the extent
required thereunder. If at any time the representations and warranties of
the Borrower set forth in the certificate contemplated in clause (o)(1)
above cease to be true and correct, the Borrower shall so advise the
underwriters, if any, and each selling holder promptly and, if requested
by such Persons, shall confirm such advice in writing;
(p) make available at reasonable times for inspection by the selling
holders of Registrable Securities and any underwriter participating in any
disposition of such Registrable Securities pursuant to a Shelf
Registration, and any attorney or accountant retained by such selling
holders or underwriters, if any, all financial and other records and
pertinent corporate documents of the Borrower, and cause the Borrower's
officers, directors and employees to supply all information reasonably
requested by any such selling holders, underwriter, attorney or accountant
in connection with such Registration Statement or any post-effective
amendment thereto subsequent to the filing thereof and prior to its
effectiveness;
(q) otherwise use all commercially reasonable efforts to comply with
all applicable rules and regulations of the SEC, and make generally
available to their security holders, with regard to any applicable
Registration Statement, as soon as practicable, a consolidated earnings
statement meeting the requirements of Rule 158 (which need not be audited)
covering a twelve-month period beginning after the effective date of the
Registration Statement (as such term is defined in paragraph (c) of Rule
158 under the Securities Act);
Registration Rights Agreement Page 9
<PAGE> 95
(r) cause the Exchange Note Indenture to be qualified under the TIA,
and provide an indenture trustee for the Registrable Securities (the
"Exchange Note Indenture Trustee") not later than the effective date of
the first Registration Statement required by this Agreement and, and in
connection therewith, cooperate with the Exchange Note Indenture Trustee
and the holders of the Exchange Notes to effect such changes to the
Exchange Note Indenture as may be required for the Exchange Note Indenture
to be so qualified in accordance with the terms of the TIA and execute,
and use their respective best efforts to cause the Exchange Note Indenture
Trustee to execute, all documents as may be required to effect such
changes and all other forms and documents required to be filed with the
SEC to enable the Exchange Note Indenture to be so qualified in a timely
manner;
(s) promptly prior to the filing of any document which is to be
incorporated by reference into the Registration Statement or Prospectus,
provide copies of such document to the selling holders of Registrable
Securities covered by such Registration Statement and to the managing
underwriters, if any, make the Borrower's representatives available for
discussion of such document and other customary due diligence matters, and
include such information in such document prior to the filing thereof as
such selling holders or underwriters, if any, may reasonably request;
(t) make appropriate officers of the Borrower reasonably available
to such holders and the underwriters, if any, for meetings with
prospective purchasers of the Registrable Securities and prepare and
present to potential investors "road show" material in a manner consistent
with other new issuances of high yield debt securities; and
(u) provide promptly to each holder, upon request, each document
filed with the SEC pursuant to the requirements of Section 13 or Section
15(d) of the Exchange Act.
Each holder of Registrable Securities agrees by acceptance of such
Registrable Securities that, upon receipt of any notice referred to in Section
5(a) hereof or any notice from the Borrower of the existence of any fact or
event of the kind described in Section 5(c)(4) hereof (in each case, a
"Suspension Notice"), such holder will forthwith discontinue disposition of
Registrable Securities pursuant to the applicable Registration Statement until
(i) such holder has received copies of the supplemented or amended Prospectus
contemplated by Section 5(k) hereof, or (ii) such holder is advised in writing
by the Borrower that the use of such Prospectus may be resumed, and has received
copies of any additional or supplemental filings that are incorporated by
reference in such Prospectus, (in each case, the "Recommencement Date"). Each
holder receiving a Suspension Notice hereby agrees that it will either (i)
destroy any Prospectuses, other than permanent file copies, then in such
holder's possession that have been replaced by the Borrower with more recently
dated Prospectuses or (ii) deliver to the Borrower (at the Borrower's expense)
all copies, other than permanent file copies, then in such holder's possession
of the Prospectus covering such Registrable Securities that was current at the
time of receipt of the Suspension Notice.
6. Registration Expenses.
Registration Rights Agreement Page 10
<PAGE> 96
(a) All expenses incident to the Borrower's performance of or
compliance with this Agreement will be borne by the Borrower, regardless
of whether a Registration Statement becomes effective, including without
limitation, (i) all registration and filing fees and expenses, fees and
expenses associated with filings required to be made with the NASD
(including, if applicable, the fees and expenses of any "qualified
independent underwriter" and their counsel as may be required by the rules
and regulations of the NASD); (ii) all fees and expenses of compliance
with federal securities and state Blue Sky laws or securities laws
(including fees and disbursements of counsel for the underwriters or
selling holders in connection with Blue Sky qualifications of the
Registrable Securities and determination of their eligibility for
investment under the laws of such jurisdictions as the managing
underwriters or holders of a majority in aggregate principal amount of the
Registrable Securities being sold may designate); (iii) all expenses of
printing (including printing certificates for the Registrable Securities
in a form eligible for deposit with The Depository Trust Company and of
printing Prospectuses), messenger and delivery services and telephone;
(iv) all fees and disbursements of counsel for the Borrower and for the
sellers of the Registrable Securities (subject to the provisions of
Section 6(b) hereof); (v) all fees and disbursements of independent
certified public accountants of the Borrower (including the expenses of
any special audit and "comfort" letters required by or incident to such
performance), and of underwriters (excluding discounts, commissions or
fees of underwriters, selling brokers, dealer managers or similar
securities industry professionals relating to the distribution of the
Registrable Securities or legal expenses of any Person other than the
Borrower and the selling holders); (vi) the cost of securities acts
liability insurance if the Borrower so desires; (vii) all "road show"
travel and other expenses incurred in connection with the marketing and
sale of the Registrable Securities; (viii) all fees and expenses in
connection with the rating of the Registrable Securities by rating
agencies, if any; (ix) all application and filing fees in connection with
listing the Registrable Securities on a national securities exchange or
automated quotation system pursuant to the requirements hereof; and (x)
all fees and expenses of other Persons retained by the Borrower (all such
expenses being herein called "Registration Expenses").
The Borrower will, in any event, bear its own internal expenses
(including, without limitation, all salaries and expenses of their
respective officers and employees performing legal or accounting duties),
the expense of any annual audit and fees and expenses of any Person,
including special experts, retained by the Borrower.
(b) In connection with any Registration Statement required by this
Agreement (including, without limitation, the Shelf Registration), the
Borrower will reimburse the selling holders of Registrable Securities
being registered in such registration for the reasonable fees and
disbursements of not more than one counsel who shall be Latham & Watkins
unless another firm shall be chosen by the selling holders of a majority
in principal amount of Registrable Securities for whose benefit such
Registration Statement is being prepared.
7. Indemnification.
Registration Rights Agreement Page 11
<PAGE> 97
(a) The Borrower agrees to indemnify and hold harmless each holder
of Registrable Securities to be included in such registration and each
person who participates as a placement or sales agent or as an underwriter
in any offering or sale of such Registrable Securities, (any such person
may hereinafter be referred to as an "Indemnified Holder"), against any
losses, claims, damages or liabilities to which such Indemnified Holder
may become subject, under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement,
preliminary prospectus or Prospectus (or any amendment or supplement
thereto), or arise out of or are based upon the omission or alleged
omission to state therein a material fact necessary to make the statements
therein not misleading, and will reimburse each Indemnified Holder for any
legal or other expenses reasonably incurred by such Indemnified Holder in
connection with investigating or defending any such action or claim as
such expenses are incurred; provided, however, that the Borrower shall 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 an untrue statement or alleged
untrue statement or omission or alleged omission made in any Registration
Statement, preliminary prospectus or Prospectus (or any amendment or
supplement thereto), in reliance upon and in conformity with written
information furnished to the Borrower by any Indemnified Holder expressly
for use therein.
(b) Each Indemnified Holder will indemnify and hold harmless the
Borrower against any losses, claims, damages or liabilities to which the
Borrower may become subject, under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement, preliminary prospectus or Prospectus (or any amendment or
supplement thereto), or arise out of or are based upon the omission or
alleged omission to state therein a material fact or necessary to make the
statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in any Registration Statement,
preliminary prospectus or Prospectus (or any amendment or supplement
thereto), in reliance upon and in conformity with written information
furnished to the Borrower by such Indemnified Holder expressly for use
therein; and will reimburse the Borrower for any legal or other expenses
reasonably incurred by the Borrower in connection with investigating or
defending any such action or claim as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under such subsection, notify the
indemnifying party in writing of the commencement thereof; but the
omission so to notify the indemnifying party shall not relieve it from any
liability which it may have to any indemnified party otherwise than under
such subsection. In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with
any other indemnifying party similarly notified, to assume the defense
thereof, with counsel
Registration Rights Agreement Page 12
<PAGE> 98
satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party),
and, after notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof, the indemnifying party
shall not be liable to such indemnified party under such subsection for
any legal expenses of other counsel or any other expenses, in each case
subsequently incurred by such indemnified party, in connection with the
defense thereof other than reasonable costs of investigation. No
indemnifying party shall, without the written consent of the indemnified
party, effect the settlement or compromise of, or consent to the entry of
any judgment with respect to, any pending or threatened action or claim in
respect of which indemnification or contribution may be sought hereunder
(whether or not the indemnified party is an actual or potential party to
such action or claim) unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from all
liability arising out of such action or claim and (ii) does not include a
statement as to, or an admission of, fault, culpability or a failure to
act, by or on behalf of any indemnified party.
(d) If the indemnification provided for in this Section 7 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative benefits received by the Borrower on
the one hand and the Indemnified Holders on the other from the sale of the
Registrable Securities. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law or if
the indemnified party failed to give the notice required under subsection
(c) above, then each indemnifying party shall contribute to such amount
paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the
relative fault of the Borrower on the one hand and the Indemnified Holders
on the other in connection with the statements or omissions which resulted
in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The
relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to
information supplied by the Borrower on the one hand or the Indemnified
Holders on the other and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or
omission. The Borrower and the Indemnified Holders agree that it would not
be just and equitable if contribution pursuant to this subsection (d) were
determined by pro rata allocation (even if the Indemnified Holders were
treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations
referred to above in this subsection (d). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above in this
subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (d), no Indemnified Holder shall be required
to contribute any amount in excess of the amount by which the total amount
received by
Registration Rights Agreement Page 13
<PAGE> 99
such Indemnified Holder with respect to its sale of Registrable Securities
pursuant to a Registration Statement exceeds the sum of the (i) amount
paid by such Indemnified Holder for such Registrable Security and (ii)
amount of any damages which such Indemnified Holder has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. The holders' and any underwriter's
obligations in this subsection (d) to contribute are several in proportion
to the respective principal amount of Registrable Securities registered or
underwritten, as the case may be, by them and not joint.
(e) The obligations of the Borrower under this Section 7 shall be in
addition to any liability which the Borrower may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who
controls any Indemnified Holder within the meaning of the Securities Act;
and the obligations of the Indemnified Holders under this Section 7 shall
be in addition to any liability which the respective Indemnified Holders
may otherwise have and shall extend, upon the same terms and conditions,
to each officer and director of the Borrower and to each person, if any,
who controls the Borrower within the meaning of the Securities Act.
8. Rule 144.
The Borrower covenants for so long as any Registrable Securities remain
outstanding that it will file the reports required to be filed by it under the
Securities Act and the Exchange Act and the rules and regulations adopted by the
SEC thereunder (or, if any of them is not required to file such reports, the
applicable party will, upon the request of any holder of Registrable Securities
make publicly available other information so long as necessary to permit sales
pursuant to Rule 144 under the Securities Act), and it will take such further
action as any holder of Registrable Securities may reasonably request, all to
the extent required from time to time to enable such holder to sell Registrable
Securities without registration under the Securities Act within the limitation
of the exemptions provided by (a) Rule 144 under the Securities Act, as such
Rule may be amended from time to time, or (b) any similar rule or regulation
hereafter adopted by the SEC. Upon the request of any holder of Registrable
Securities, the Borrower will deliver to such holder a written statement as to
whether they have complied with such information and filing requirements.
9. Miscellaneous.
(a) Remedies. Each holder of Registrable Securities and Loans, in
addition to being entitled to exercise all rights provided herein, in the
Exchange Note Indenture or granted by law, including recovery of damages,
in connection with the breach by the Borrower of its obligations to
register the Registrable Securities will be entitled to specific
performance of its rights under this Agreement. The Borrower acknowledges
and agrees that monetary damages (including the Liquidated Damages
contemplated hereby) would not be adequate compensation for any loss
incurred by reason of a breach by any of them of the provisions of this
Agreement and each agrees to waive the defense in any action for specific
performance that a remedy at law would be adequate.
Registration Rights Agreement Page 14
<PAGE> 100
(b) No Inconsistent Agreements. The Borrower will not on or after
the date of this Agreement enter into any agreement with respect to its
securities which is inconsistent with the rights granted to the holders of
Registrable Securities in this Agreement or otherwise conflicts with the
provisions hereof. The Borrower has not previously entered into, any
agreement with respect to its securities granting any registration rights
to any Person, which is inconsistent with the rights granted to the
holders of Registrable Securities in this Agreement or otherwise conflicts
with the provisions hereof. The rights granted to the holders of
Registrable Securities hereunder do not in any way conflict with and are
not inconsistent with the rights granted to the holders of the Borrower's
respective securities under any other agreements.
(c) Amendments and Waivers. The provisions of this Agreement may not
be amended, modified or supplemented, and waivers or consents to
departures from the provisions of this Agreement may not be given unless
(i) in the case of Section 3(c) and this Section 9(c)(i), the Borrower has
obtained the written consent of the holders of all of the outstanding (x)
Registrable Securities and (y) Loans (excluding Registrable Securities
held by the Borrower or one of its affiliates) and (ii) in the case of all
other provisions hereof, the Borrower has obtained the written consent of
holders of majority of the outstanding principal amount of the (x)
Registrable Securities and (y) Loans (excluding Registrable Securities
held by the Borrower or one of its affiliates).
(d) Third Party Beneficiary. The holders of Registrable Securities
shall be third party beneficiaries to the agreements made hereunder
between the Borrower, on the one hand, and the Administrative Agent, on
the other hand, and shall have the right to enforce such agreements
directly to the extent they may deem such enforcement necessary or
advisable to protect its rights or the rights of holders hereunder.
(e) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, facsimile or air courier guaranteeing overnight
delivery:
(i) if to a holder of Registrable Securities, at the most
current address given by such holder to the Borrower in accordance
with the provisions of this Section 9(e), which address initially
is, with respect to the Administrative Agent to them at the address
set forth in the Bridge Loan Agreement, with a copy to Latham &
Watkins, 885 Third Avenue, Suite 1000, New York, New York
10022-4802, Attention: Kirk A. Davenport, Esq.; and
(ii) if to the Borrower, initially to them at the address set
forth in the Bridge Loan Agreement and thereafter at such other
address, notice of which is given in accordance with the provisions
of this Section 9(e), with a copy to Skadden, Arps, Slate, Meagher &
Flom LLP, 919 Third Avenue, New York, New York 10022, Attn.: Thomas
H. Kennedy, Esq.
All such notices and communications shall be deemed to have been
duly given at the time delivered by hand, if personally delivered; five
Business Days after being deposited in the mail, postage prepaid, if
mailed; when receipt acknowledged, if delivered
Registration Rights Agreement Page 15
<PAGE> 101
by facsimile; and on the next Business Day if timely delivered to an air
courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Exchange Note
Indenture Trustee at the address specified in the Exchange Note Indenture.
(f) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties hereto, including without limitation and without the need for an
express assignment, all subsequent holders of Registrable Securities or
Loans; provided, that nothing herein shall be deemed to permit any
assignment, transfer or other disposition of Registrable Securities in
violation of the terms hereof or the Exchange Note Indenture. If any
transferee of any holder shall acquire Registrable Securities in any
manner, whether by operation of law or otherwise, such Registrable
Securities shall be held subject to all of the terms of this Agreement,
and by taking and holding such Registrable Securities such Person shall be
conclusively deemed to have agreed to be bound by and to perform all of
the terms and provisions of this Agreement, including the restrictions on
resale set forth in this Agreement and such Person shall be entitled to
receive the benefits hereof.
(g) 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.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAW RULES
THEREOF. EACH PARTY HERETO HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION
OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK
AND OF ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY FOR PURPOSES OF
ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY HERETO IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT
IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A
COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH PARTY HERETO
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
Registration Rights Agreement Page 16
<PAGE> 102
(j) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any
circumstance, is held invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of any such
provision in such jurisdiction in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
Registration Rights Agreement Page 17
<PAGE> 103
(k) Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement with respect to the subject matter
contained herein and intended to be a complete and exclusive statement of
the agreement and understanding of the parties hereto in respect of the
subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to
herein with respect to the registration rights granted by the Borrower
with respect to the securities sold pursuant to the Bridge Loan Agreement.
This Agreement supersedes all prior agreements and understandings between
the parties with respect to such subject matter.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
NTL INCORPORATED
By:
----------------------------
Name:
Title:
GOLDMAN SACHS CREDIT PARTNERS L.P.,
as Administrative Agent
By:
-------------------------------
(Authorized Signatory)
Registration Rights Agreement Page 18
<PAGE> 104
Exhibit D
================================================================================
ESCROW AGREEMENT
among
NTL INCORPORATED,
as Borrower,
GOLDMAN SACHS CREDIT PARTNERS L.P.
as Administrative Agent
and
The Chase Manhattan Bank,
as Escrow Agent
Dated as of March 17, 1999
================================================================================
<PAGE> 105
THIS ESCROW AGREEMENT (this "Agreement"), dated as of March 17, 1999
(the "Closing Date"), is by and among NTL Incorporated, a Delaware corporation
(the "Borrower"), Goldman Sachs Credit Partners L.P., as the Administrative
Agent under the Bridge Loan Agreement referred to below (the "Administrative
Agent"), and The Chase Manhattan Bank, a New York banking corporation acting by
and through its corporate trust department (in its capacity as escrow agent, the
"Escrow Agent"). Capitalized terms used herein and not otherwise defined have
the meanings assigned to them in the Bridge Loan Agreement referred to below.
RECITALS
WHEREAS, the Administrative Agent, the Borrower, the Arranger and
the Lenders referred to therein have entered into a Bridge Loan Agreement dated
as of March 17, 1999 (as amended, restated or otherwise modified from time to
time, the "Bridge Loan Agreement") providing for certain Bridge Loans to be made
by the Lenders thereunder to the Borrower (the "Bridge Loans"), which Bridge
Loans will be evidenced by certain promissory notes of the Borrower (the "Bridge
Notes");
WHEREAS, the Borrower has agreed to place in escrow various Exchange
Notes due 2004, 2005, and 2008 (the "Exchange Notes") in the form of Exhibit A
to the Indenture dated as of the date hereof (the "Exchange Note Indenture")
duly executed by the Borrower and The Chase Manhattan Bank, as trustee (the
"Exchange Note Indenture Trustee"); and
WHEREAS, it is a condition to the making of Bridge Loans under the
Bridge Loan Agreement that the Exchange Notes be delivered into escrow pursuant
to this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, the parties hereto agree as follows:
1. Deposit of Escrowed Notes by the Borrower.
On the Closing Date, concurrently with the execution and delivery of
this Agreement, the Borrower is delivering to the Escrow Agent 40 undated
Exchange Notes, duly executed by the Borrower, but not authenticated by the
Exchange Note Indenture Trustee, with the payee, date, interest rate, maturity
date and aggregate principal amount in blank (the "Escrowed Notes").
2. Release of Escrowed Notes.
The Escrow Agent shall hold the Escrowed Notes in escrow pursuant to
this Agreement, until authorized hereunder to deliver them as follows:
(a) Release to Holder or its Designees. If, on any Business Day on
or after the Anniversary Date, the Escrow Agent receives one or more
Bridge Notes from the Administrative Agent accompanied by a properly
completed and executed written notice from the Administrative Agent,
executed by the applicable Lender, in the form of Annex A hereto (each, an
"Exchange Notice"), such Bridge Notes and Exchange Notice to be delivered
by the Administrative Agent to the Escrow Agent not less than five
Business Days prior to the Exchange Date, the Escrow Agent shall no later
than on the Exchange Date (as such term is defined in the Exchange
Notice), date, complete and deliver one or more Exchange Notes in
accordance with such Exchange Notice. Upon receipt of written notice from
the Administrative Agent that all cash interest thereon required to be
paid pursuant to this Section 2 (a) and in accordance with the Bridge Loan
Agreement, to the Exchange Date, has been paid, the Escrow
Escrow Agreement Page 1
<PAGE> 106
Agent shall return the Bridge Note(s) so surrendered to the Borrower for
cancellation in accordance with Section 7 of the Exchange Notice. Upon
completing the Exchange Notes in accordance with Section 2 (a)(i) hereof,
the Escrow Agent shall promptly deliver such Exchange Notes to the
Exchange Note Trustee in accordance with Section 5 of the Exchange Notice
for authentication and delivery to the applicable holder thereof on the
Exchange Date. If less than all of the surrendered Bridge Note(s) are to
be exchanged for Exchange Notes, the Borrower shall deliver to the Person
specified in the Exchange Notice on or within three Business Days after
the Exchange Date, a replacement Bridge Note dated the Exchange Date,
equal to the amount of any principal not so exchanged, all as specified in
Section 6 of the Exchange Notice and in accordance with the Bridge Loan
Agreement. Upon delivery of any Exchange Notes pursuant to this clause
(a), the Borrower shall within five Business Days after the Exchange Date
make payment in cash in accordance with Section 2.3(g) of the Bridge Loan
Agreement of all accrued and unpaid interest up to but not including the
date specified in the Exchange Notice as the Exchange Date.
(b) Release to the Borrower. On or within one Business Day after
receipt by the Escrow Agent of a certificate from the Administrative Agent
in the form of Annex B hereto certifying that all Obligations with respect
to the Bridge Loans have been paid in full, the Escrow Agent shall deliver
to the Borrower all Escrowed Notes then remaining in escrow.
3. Certain Additional Agreements. The Borrower and the Administrative
Agent shall, upon request by the Escrow Agent, execute and deliver to the Escrow
Agent such additional written instructions and certificates hereunder as may be
reasonably required by the Escrow Agent to give effect to the provisions of
Sections 1 and 2 hereof.
4. Escrow Agent.
(a) The Escrow Agent shall have no duties or responsibilities,
including, without limitation, a duty to review or interpret the Bridge
Loan Agreement or to determine compliance therewith, except those
expressly set forth herein and no implied covenants or obligations shall
be read into this Agreement against the Escrow Agent. Except for this
Agreement, the Escrow Agent, in its capacity as such, is not a party to,
or bound by, any agreement that may be required under, evidenced by, or
arise out of the Bridge Loan Agreement. The Escrow Agent makes no
representations as to the validity or genuineness of any Exchange Note
held or delivered by it hereunder and shall be entitled to conclusively
assume that any Bridge Note delivered to it hereunder is genuine. The
Escrow Agent also shall have no responsibility for determining whether the
Borrower has complied with its agreement herein to deliver replacement
Bridge Notes.
(b) If the Escrow Agent shall be uncertain as to its duties or
rights hereunder or shall receive instructions from any of the undersigned
with respect to the Escrowed Notes, which, in its opinion, are in conflict
with any of the provisions of this Agreement, it shall be entitled to
refrain from taking any action until it shall be directed otherwise in
writing by the Borrower or the Administrative Agent or by order of a court
of competent jurisdiction. The Escrow Agent may conclusively rely on and
shall be protected in acting upon any notice, request, waiver, consent,
receipt or other document reasonably believed by the Escrow Agent to be
signed by the proper party or parties.
(c) The Escrow Agent shall not be liable for any error or judgment
or for any act done or step taken or omitted by it in good faith or for
any mistake of fact or law, or for anything that it may do or refrain from
doing in connection herewith, except for its own gross negligence
Escrow Agreement Page 2
<PAGE> 107
or willful misconduct, and the Escrow Agent shall have no duties to anyone
except the Borrower or the Administrative Agent and their respective
successors and permitted assigns. In no event shall the Escrow Agent be
liable for special, indirect or consequential loss or damage of any kind
whatsoever (including but not limited to lost profits) even if the Escrow
Agent has been advised of the likelihood of such loss or damage and
regardless of the form of action.
(d) The Escrow Agent may consult legal counsel in the event of any
dispute or question as to the construction of this Agreement, or the
Escrow Agent's duties hereunder, and the Escrow Agent shall incur no
liability and shall be fully protected with respect to any action taken or
omitted in good faith in accordance with the opinion and instructions of
counsel.
(e) In the event of any disagreement between the undersigned or any
of them, and/or any other person, resulting in adverse claims and demands
being made in connection with or for the Escrowed Notes, the Escrow Agent
shall be entitled at its option to refuse to comply with any such claim or
demand, so long as such disagreement shall continue, and in so doing the
Escrow Agent shall not be or become liable for damages or interest to the
undersigned or any of them or to any person named herein or in any Annex
hereto for its failure or refusal to comply with such conflicting or
adverse demands. The Escrow Agent shall be entitled to continue to so
refrain and refuse to so act until all differences shall have been
resolved by agreement and the Escrow Agent shall have been notified
thereof in writing signed by the Borrower and the Administrative Agent. In
the event of such disagreement which continues for 90 days or more, the
Escrow Agent in its discretion may, but shall be under no obligation to,
file a suit in interpleader for the purpose of having the respective
rights of the claimants adjudicated and may deposit with the court all
documents and property held hereunder. The Borrower agrees to pay all
reasonable out-of-pocket costs and expenses incurred by the Escrow Agent
in such action, including reasonable attorney's fees and disbursements.
(f) The Escrow Agent is hereby indemnified by the Borrower from all
losses, costs and expenses of any nature incurred by the Escrow Agent
arising out of or in connection with this Agreement or with the
administration of its duties hereunder, unless such losses, costs or
expenses shall have been caused by the Escrow Agent's willful misconduct
or gross negligence. Such indemnification shall survive termination of
this Agreement until extinguished by any applicable statute of
limitations.
(g) The Escrow Agent does not have any interest in the Escrowed
Notes deposited hereunder but is serving as escrow holder only and having
only possession thereof. This paragraph shall survive notwithstanding any
termination of this Agreement or the resignation of the Escrow Agent.
(h) The Escrow Agent (and any successor Escrow Agent) may at any
time resign as such by giving written notice of its resignation to the
parties hereto at least 30 days prior to the date specified for such
resignation to take effect. Upon the effective date of such resignation,
the Escrowed Notes shall be delivered by it to such successor escrow agent
or as otherwise shall be instructed in writing by the Borrower and the
Administrative Agent; whereupon the Escrow Agent shall be discharged of
and from any and all further obligations arising in connection with this
Agreement. If at that time the Escrow Agent has not received such
instruction, the Escrow Agent's sole responsibility after that time shall
be to safekeep the Escrowed Notes until receipt of a designation of
successor Escrow Agent, or a joint written instruction as to disposition
of the Escrowed Notes by the Borrower and the Administrative Agent or a
final order of a court of competent jurisdiction mandating disposition of
the Escrowed Notes.
Escrow Agreement Page 3
<PAGE> 108
(i) The Escrow Agent hereby accepts its appointment and agrees to
act as escrow agent under the terms and conditions of this Agreement and
acknowledges receipt of the Escrowed Notes. The Borrower agrees to pay to
the Escrow Agent as payment in full for its services hereunder the Escrow
Agent's compensation set forth in Schedule I hereto. The Borrower further
agrees to reimburse the Escrow Agent for all reasonable out-of-pocket
expenses, disbursements and advances incurred or made by the Escrow Agent
in the performance of its duties hereunder (including reasonable fees, and
out-of-pocket expenses and disbursements, of its counsel). The obligations
of the Borrower under this subparagraph shall survive the termination of
this Agreement until extinguished by any applicable statute of
limitations.
5. Notices. Any notices or other communications required or permitted
hereunder shall be effective if in writing and delivered personally or sent by
telecopier, overnight courier, Federal Express, United Parcel Service,
registered or certified mail, postage prepaid, addressed as follows:
If to the Administrative Agent or the Arranger, to:
Goldman Sachs Credit Partners L.P.
c/o Goldman Sachs & Co.
85 Broad Street
New York, New York 10004
Attention: Amy Shapero
Facsimile No.: (212) 902-3000
with a copy to:
Latham & Watkins
885 Third Avenue
New York, New York 10022
Attention: Kirk A. Davenport
Facsimile No.: (212) 751-4864
If to the Borrower, to:
NTL Incorporated
110 East 59th Street
26th Floor
New York, NY 10022
Attention: General Counsel
Facsimile No.: (212) 906-8497
with a copy to:
Skadden, Arps, Slate
Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attention: Thomas H. Kennedy
Facsimile No.: (212) 735-3637
Escrow Agreement Page 4
<PAGE> 109
If to the Escrow Agent, to:
The Chase Manhattan Bank
450 West 33rd Street
New York, NY 10001
Attention: Mr. Andrew Deck, Vice President
Facsimile No.: (212) 946-8159
If to the Exchange Note Indenture Trustee, to:
The Chase Manhattan Bank
450 West 33rd Street
New York, NY 10001
Attention: Mr. Andrew M. Deck, Vice President
Facsimile No.: (212) 946-8161
Unless otherwise specified herein, such notices or other communications shall be
deemed effective (a) on the date delivered, if delivered personally, (b) one
Business Day after being delivered, if delivered by telecopier with confirmation
of good transmission, (c) one Business Day after being sent by overnight
courier, if sent by overnight courier, (d) two Business Days after being sent by
Federal Express or United Parcel Service, if sent by Federal Express or United
Parcel Service, or (e) three Business Days after being sent, if sent by
registered or certified mail. Each of the parties hereto shall be entitled to
specify a different address by giving notice as aforesaid to each of the other
parties hereto.
6. Termination. This Agreement shall automatically terminate upon the
final distribution of the Escrowed Notes in accordance with the terms hereof.
7. Governing Law; Jurisdiction.
7.1. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to conflict of law rules thereof.
7.2. Consent to Jurisdiction. Each of the parties agrees that all
actions, suits or proceedings arising out of or based upon this Agreement or the
subject matter hereof may be brought and maintained in the federal district
court in the Southern District of New York and in any New York state court
sitting in New York City (each, a "New York Court"). Each of the parties hereto
by execution hereof (i) hereby irrevocably submits to the jurisdiction of such
court in New York, New York, for the purpose of any action, suit or proceeding
arising out of or based upon this Agreement or the subject matter hereof and
(ii) hereby waives to the extent not prohibited by applicable law, and agrees
not to assert, by way of motion, as a defense or otherwise, in any such action,
suit or proceeding, any claim that it is not subject personally to the
jurisdiction of one of the above-named courts, that it is immune from
extraterritorial injunctive relief or other injunctive relief, that its property
is exempt or immune from attachment or execution, that any such action, suit or
proceeding brought or maintained in one of the above-named courts should be
dismissed on the grounds of forum non conveniens, should be transferred to any
court other than one of the above-named courts, should be stayed by virtue of
the pendency of any other action, suit or proceeding in any court other than one
of the above-named courts, or that this Agreement or the subject matter hereof
may not be enforced in or by the above-named courts. Each of the parties hereto
hereby consents to service of process in any such suit, action or proceeding in
any manner permitted by the laws of the State of New York, agrees that service
of process by registered or certified mail, return receipt requested, at the
address specified in or pursuant to Section 5 hereof is reasonably calculated to
give actual notice and waives and agrees not to assert by way of motion, as a
Escrow Agreement Page 5
<PAGE> 110
defense or otherwise, in any such action, suit or proceeding any claim that
service of process made in accordance with Section 5 hereof does not constitute
good and sufficient service of process. The provisions of this Section 7.2 shall
not restrict the ability of any party to enforce in any court any judgment
obtained in the federal district court in the Southern District of New York or
any New York Court.
7.3. Waiver of Jury Trial. To the extent not prohibited by any
applicable law that cannot be waived, each of the parties hereto hereby waives,
and covenants that it will not assert (whether as plaintiff, defendant, or
otherwise), any right to trial by jury in any forum in any respect of any issue,
claim, demand, cause of action, action, suit or proceeding arising out of or
based upon this Agreement or the subject matter hereof, in each case whether now
existing or hereafter arising and whether in contract or tort or otherwise. Any
of the parties hereto may file an original counterpart or a copy of this Section
7.3 with any court as written evidence of the consent of each of the parties
hereto to the waiver of his or its right to trial by jury.
7.4. Reliance. Each of the parties hereto acknowledges that it has
been informed by each other party that the provisions of this Section 7
constitute a material inducement upon which such party is relying and will rely
in entering into this Agreement and the transactions contemplated hereby.
8. Miscellaneous.
8.1. Entire Agreement; Waivers. This Agreement constitutes the
entire agreement among the parties hereto pertaining to the subject matter
hereof and supersedes all prior and contemporaneous agreements, understandings,
negotiations and discussions, whether oral or written, of the parties with
respect to such subject matter. No waiver of any provision of this Agreement (a)
shall be deemed to or shall constitute a waiver of any other provision hereof
(whether or not similar), (b) shall constitute a continuing waiver unless
otherwise expressly provided therein or (c) shall be effective unless in writing
and executed by each party against whom it is to be enforced.
8.2. Amendment or Modification, etc. The parties hereto may not
amend or modify this Agreement except in such manner as may be agreed upon by a
written instrument executed by all of the parties hereto and that is consented
to in writing by the Majority Lenders; provided, that the Escrow Agent shall be
entitled to rely conclusively on the Administrative Agent's determination of
Majority Lenders. Any written amendment, modification or waiver executed by all
of the parties hereto shall be binding upon all such parties and their
respective successors and assigns.
8.3. Headings, etc. Section and subsection headings are not to be
considered part of this Agreement, are included solely for convenience, are not
intended to be full or accurate descriptions of the content thereof and shall
not affect the construction hereof. This Agreement shall be deemed to express
the mutual intent of the parties, and no rule of strict construction shall be
applied against any party.
8.4. Severability. In the event that any provision hereof would,
under applicable law, be invalid or unenforceable in any respect, such provision
shall (to the extent permitted by applicable law) be construed by modifying or
limiting it so as to be valid and enforceable to the maximum extent compatible
with, and possible under, applicable law. The provisions hereof are severable,
and in the event any provision hereof should be held invalid or unenforceable in
any respect, it shall not invalidate, render unenforceable or otherwise affect
any other provision hereof.
8.5. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same
Escrow Agreement Page 6
<PAGE> 111
instrument.
8.6. Successors and Assigns. All of the terms and provisions of this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective permitted transferees, successors and assigns (each
of which shall be deemed to be a party hereto for all purposes hereof). Except
as expressly provided herein, this Agreement shall not confer any right or
remedy upon any person other than the parties and their respective transferees,
successors and assigns.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
NTL INCORPORATED,
as Borrower
By:
---------------------------------
Name:
Title:
GOLDMAN SACHS CREDIT PARTNERS L.P.,
as Administrative Agent
By: Goldman, Sachs & Co.
By:
---------------------------------
(Authorized Signatory)
The Chase Manhattan Bank,,
as Escrow Agent
By:
---------------------------
Name:
Title:
Escrow Agreement Page 7
<PAGE> 112
Schedule I to Escrow Agreement
Escrow Agent's Fees
ESCROW AGENT'S FEES
<TABLE>
<S> <C>
Annual Fee $7,500
</TABLE>
Schedule I of the Escrow Agreement Page 1
<PAGE> 113
Annex A to Escrow Agreement
Form of Exchange Notice
GOLDMAN SACHS CREDIT PARTNERS L.P.
C/O GOLDMAN SACHS & CO.
85 BROAD STREET
NEW YORK, NEW YORK 10004
EXCHANGE NOTICE
Date: __________, ____
The Chase Manhattan Bank
450 West 33rd Street
New York, NY 10001
Attention: Mr. Andrew M. Deck, Vice President
Re: NTL Incorporated Escrow Agreement
Ladies and Gentlemen:
Reference is hereby made to the Escrow Agreement dated as of March
17, 1999 (as amended, modified or supplemented from time to time, the "Escrow
Agreement"), by and among NTL Incorporated, a Delaware corporation (the
"Borrower"), Goldman Sachs Credit Partners L.P., as the Administrative Agent
under the Bridge Loan Agreement referred to below (the "Administrative Agent"),
and The Chase Manhattan Bank, a New York banking corporation acting by and
through its corporate trust department (in its capacity as escrow agent, the
"Escrow Agent"). Capitalized terms used herein and not otherwise defined in this
Exchange Notice have the meanings assigned to them in the Escrow Agreement.
1. Surrender of Bridge Note(s). Enclosed herewith [is an/are]
original Bridge Note[s] issued to the order of the Lender specified in Section 4
below in the aggregate principal amount of $_____________ (the "Surrendered
Note(s)").
2. Accrued and Unpaid Interest. The [aggregate] amount of accrued
and unpaid interest on the Surrendered Note(s) as of ________________, ____
[Insert date of exchange of Surrendered Notes for Exchange Notes, 60 days after
the above date] (the "Exchange Date") is $______, all of which is required by
Section 2.3(g) of the Bridge Loan Agreement to be paid in cash.
3. Interest Rate; Maturity Date. The undersigned hereby certifies
that the interest rate on the Surrendered Note(s) on the Exchange Date is equal
to ___% per annum. Pursuant to Section 2.2(c) of the Bridge Loan Agreement, the
Exchange Notes to be issued pursuant to this Exchange Notice will bear interest
at the rate of __% per annum [insert the interest rate then in effect on the
Surrendered Note(s) as of the Exchange Date plus 100 basis points]. Pursuant to
Section 2.2 of the Bridge Loan Agreement, the maturity date of the Exchange
Notes shall be ___________ __ [insert maturity date that corresponds to the
Maturity Date of the Surrendered Note(s)].
Annex A of the Escrow Agreement Page 1
<PAGE> 114
4. Request for Exchange. _____________ [name of Lender] wishes to
exchange [all/$_______] of the Surrendered Note(s) to be exchanged for ____
[number] Exchange Note(s) each dated the Exchange Date, bearing interest from
(and including) the Exchange Date at the rate and having a maturity date as
specified in Section 3 above and made payable to the following payees:
<TABLE>
<CAPTION>
Amount(s) Name(s) of Payee(s) Address(es) of Payee(s)
<S> <C> <C>
$_____________ _______________________ _________________________
$_____________ _______________________ _________________________
</TABLE>
5. Issuance of Exchange Notes; Cancellation of Surrendered Note(s).
No later than the Exchange Date please (a) issue the Exchange Note(s) dated the
Exchange Date, bearing interest at the rate specified in Section 3 above from
and including the Exchange Date, having a maturity date as specified in Section
3 above, in the amount(s) and to the payee(s) set forth in Section 4 above, (b)
deliver such Exchange Note(s) by hand or by overnight courier to the Exchange
Note Indenture Trustee for authentication and delivery to the [respective]
payee(s) identified in Section 4 above at the address(es) specified therein and
(c) upon receipt of written notice from the Administrative Agent that all cash
interest has been paid in accordance with Section 7 below and the terms of the
Bridge Loan Agreement, deliver the Surrendered Note(s) to the Borrower for
cancellation.
6. Issuance of Replacement Term Note. On or within three Business
Days after the Exchange Date, the Borrower shall (a) issue replacement Bridge
Note(s) dated the Exchange Date, bearing interest at the rate then in effect on
the Surrendered Note(s), having a Maturity Date corresponding to the Surrendered
Note(s), in the aggregate amount of $_____, representing $____ of principal on
the Surrendered Note(s) not so exchanged, in the respective amount(s) and to the
payee(s) set forth below and (b) deliver such replacement Bridge Note(s) by hand
or by overnight courier to the [respective] payee(s) identified in this Section
6 at the address(es) specified below:
<TABLE>
<CAPTION>
Amount(s) Name(s) of Payee(s) Address(es) of Payee(s)
<S> <C> <C>
$_____________ _______________________ _________________________
$_____________ _______________________ _________________________
</TABLE>
7. Payment of Accrued and Unpaid Interest. Not later than five
Business Days after the Exchange Date, and in any event prior to the
cancellation of the Surrendered Notes contemplated by Section 5 above, the
Borrower shall make payment in cash in accordance with Section 2.3(g) of the
Bridge Loan Agreement of all accrued and unpaid interest specified in Section 2
above.
8. W-9 Forms. Attached hereto is a completed form W-9 for each of
the above-referenced payees.
Annex A of the Escrow Agreement Page 2
<PAGE> 115
Thank you in advance for your prompt attention to this Exchange
Notice.
Very truly yours,
By:
--------------------------------
Name:
Title:
cc: The Chase Manhattan Bank
in its capacity as Exchange Note
Indenture Trustee
cc: NTL Incorporated, as Borrower
Annex A of the Escrow Agreement Page 3
<PAGE> 116
Annex B to Escrow Agreement
Certificate
GOLDMAN SACHS CREDIT PARTNERS L.P.
C/O GOLDMAN SACHS & CO.
85 BROAD STREET
NEW YORK, NEW YORK 10004
CERTIFICATE
Date: __________
The Chase Manhattan Bank
450 West 33rd Street
New York, NY 10001
Attention: Mr. Andrew Deck, Vice President
Re: NTL Incorporated Escrow Agreement
Ladies and Gentlemen:
Reference is hereby made to the Escrow Agreement dated as of March
17, 1999 (as amended, modified or supplemented from time to time, the "Escrow
Agreement"), by and among NTL Incorporated, a Delaware corporation, Goldman
Sachs Credit Partners L.P., as Administrative Agent under the Bridge Loan
Agreement, and The Chase Manhattan Bank, a New York banking corporation acting
by and through its corporate trust department. Capitalized terms used herein and
not otherwise defined in this Certificate shall have the meanings assigned to
them in the Escrow Agreement.
This Certificate, delivered to you pursuant to Section 2(b) of the
Escrow Agreement, confirms that all Obligations with respect to the Bridge Loans
have been paid in full by the Borrower.
Annex B of the Escrow Agreement Page 1
<PAGE> 117
Thank you in advance for your prompt attention to this Certificate.
Very truly yours,
By:
------------------------------
Name:
Title:
Annex B of the Escrow Agreement Page 2
<PAGE> 118
EXHIBIT E
================================================================================
NTL INCORPORATED
SENIOR EXCHANGE NOTES
DUE 2004, 2005 AND 2008
------------------------
INDENTURE
Dated as of March 17, 1999
------------------------
----------------
The Chase Manhattan Bank
Trustee
----------------
================================================================================
<PAGE> 119
TABLE OF CONTENTS
ARTICLE I......................................................................1
Section 1.01. Definitions..............................................1
Section 1.02. Other Definitions.......................................14
Section 1.03. Incorporation by Reference of Trust Indenture Act.......15
Section 1.04. Rules of Construction...................................15
Section 1.05. Effectiveness of Indenture..............................16
ARTICLE II. THE NOTES.........................................................16
Section 2.01. Form and Dating.........................................16
Section 2.02. Execution and Authentication............................18
Section 2.03. Registrar and Paying Agent..............................18
Section 2.04. Paying Agent to Hold Money in Trust.....................19
Section 2.05. Holder Lists............................................19
Section 2.06. Transfer and Exchange...................................19
Section 2.07. Replacement Notes.......................................23
Section 2.08. Outstanding Notes.......................................23
Section 2.09. Treasury Notes..........................................24
Section 2.10. Temporary Notes; Global Notes...........................24
Section 2.11. Cancellation............................................25
Section 2.12. Defaulted Interest......................................25
ARTICLE III. REDEMPTION.......................................................25
Section 3.01. Notices to Trustee......................................25
Section 3.02. Selection of Notes to Be Redeemed.......................25
Section 3.03. Notice of Redemption....................................26
Section 3.04. Effect of Notice of Redemption..........................26
Section 3.05. Deposit of Redemption Price.............................26
Section 3.06. Notes Redeemed in Part..................................26
Section 3.07. Optional Redemption and Optional Tax Redemption.........27
Section 3.08. Mandatory Redemption....................................27
Section 3.09. Asset Sale Offer and Purchase Offer.....................27
ARTICLE IV. COVENANTS.........................................................30
Section 4.01. Payment of Notes........................................30
Section 4.02. Reports.................................................30
Section 4.03. Compliance Certificate..................................30
Section 4.04. Stay, Extension and Usury Laws..........................31
Section 4.05. Corporate Existence.....................................31
Section 4.06. Taxes...................................................31
Section 4.07. Limitations on Liens....................................32
Section 4.08. Incurrence Of Indebtedness And Issuance Of Preferred
Stock...................................................32
Section 4.09. Restricted Payments.....................................34
Section 4.10. Asset Sales.............................................37
Section 4.11. Transactions with Affiliates............................39
Section 4.12. Dividends and Other Payment Restrictions Affecting
Restricted Subsidiaries.................................40
Section 4.13. Change of Control.......................................41
Section 4.14. Payment of Additional Amounts...........................41
<PAGE> 120
Section 4.15. Exchange Note Guarantee.................................42
Section 4.16. Exchange of Certificated Initial Notes or
Certificated New Notes for Global Notes.................42
ARTICLE V. SUCCESSORS.........................................................42
Section 5.01. Merger, Consolidation or Sale of Assets.................43
Section 5.02. Successor Corporation Substituted.......................43
ARTICLE VI. DEFAULTS AND REMEDIES.............................................44
Section 6.01. Events of Default.......................................44
Section 6.02. Acceleration............................................45
Section 6.03. Other Remedies..........................................46
Section 6.04. Waiver of Past Defaults.................................46
Section 6.05. Control by majority.....................................46
Section 6.06. Limitation on Suits.....................................46
Section 6.07. Rights of Holders to Receive Payment....................47
Section 6.08. Collection Suit by Trustee..............................47
Section 6.09. Trustee May File Proofs of Claim........................47
Section 6.10. Priorities..............................................47
Section 6.11. Undertaking for Costs...................................48
ARTICLE VII. TRUSTEE..........................................................48
Section 7.01. Duties of Trustee.......................................48
Section 7.02. Rights of Trustee.......................................49
Section 7.03. Individual Rights of Trustee............................49
Section 7.04. Trustee's Disclaimer....................................49
Section 7.05. Notice of Defaults......................................49
Section 7.06. Reports by Trustee to Holders...........................50
Section 7.07. Compensation and Indemnity..............................50
Section 7.08. Replacement of Trustee..................................50
Section 7.09. Successor Trustee by Merger, Etc........................51
Section 7.10. Eligibility; Disqualification...........................51
Section 7.11. Preferential Collection of Claims Against Company.......52
ARTICLE VIII. DISCHARGE OF INDENTURE..........................................52
Section 8.01. Termination of Company's Obligations....................52
Section 8.02. Option to Effect Defeasance.............................52
Section 8.03. Application of Trust Money..............................54
Section 8.04. Repayment to Company....................................54
Section 8.05. Reinstatement...........................................54
ARTICLE IX. AMENDMENTS, SUPPLEMENTS AND WAIVERS...............................55
Section 9.01. Without Consent of Holders..............................55
Section 9.02. With Consent of Holders.................................55
Section 9.03. Compliance with Trust Indenture Act.....................56
Section 9.04. Revocation and Effect of Consents.......................56
Section 9.05. Notation on or Exchange of Notes........................57
Section 9.06. Trustee Protected.......................................57
ARTICLE X. MISCELLANEOUS......................................................57
Section 10.01.Trust Indenture Act Controls............................57
Section 10.02.Notices.................................................57
Section 10.03.Communication by Holders with Other Holders.............58
Section 10.04.Certificate and Opinion as to Conditions Precedent......58
ii
<PAGE> 121
Section 10.05.Statements Required in Certificate or Opinion...........58
Section 10.06.Rules by Trustee and Agents.............................58
Section 10.07.Legal Holidays..........................................59
Section 10.08.No Recourse Against Others..............................59
Section 10.09.Counterparts and Facsimile Signatures...................59
Section 10.10.Variable Provisions.....................................59
Section 10.11.Governing Law...........................................60
Section 10.12.No Adverse Interpretation of Other Agreements...........60
Section 10.13.Successors..............................................60
Section 10.14.Severability............................................60
Section 10.15.Table of Contents, Headings, Etc........................60
Exhibit A Form of Face of Initial Note
Exhibit B Form of Face of New Note
Exhibit C Form of Transfer Certificate for Transfer from Rule 144A Global
Note to Regulation S Global Note
Exhibit D Form of Transfer Certificate from Regulation S Global Note to Rule
144A Global Note
Exhibit E Form of Transfer Certificate for Transfer From Global Note on
Restricted Note to Restricted Note
Exhibit F Form of Accredited Investor Transferee Certificate
Exhibit G Form of Certificate for Transfers of Regulation S Global Note for
Restricted Notes
Exhibit H Form of Exchange Note Guarantee
Exhibit I Form of Opinions of Counsel to Parent
iii
<PAGE> 122
CROSS-REFERENCE TABLE*
Trust Indenture Act Section Indenture Section
310 (a)(1)............................................................7.10
(a)(2) ...............................................................7.10
(a)(3)................................................................N.A.
(a)(4)................................................................N.A.
(a)(5)................................................................7.10
(b)...................................................................7.08,
7.10
(c)...................................................................N.A.
311(a)................................................................7.11
(b)...................................................................7.11
(c)...................................................................N.A.
312 (a)...............................................................2.05
(b)...................................................................10.03
(c)...................................................................10.03
313(a)................................................................7.06
(b)(1)................................................................N.A.
(b)(2)................................................................7.06
(c)...................................................................7.06
(d)...................................................................7.06
314(a)................................................................4.02
4.03,
(b)...................................................................N.A.
(c)(1)................................................................10.04
(c)(2)................................................................10.04
(c)(3)................................................................N.A.
(d)...................................................................N.A.
(e)...................................................................N.A.
(f)...................................................................N.A.
315(a)................................................................7.01(b)
(b)...................................................................7.05
(c) ..................................................................7.01(a)
(d)...................................................................7.01(c)
(e)...................................................................6.11
316 (a)(last sentence)................................................2.09
(a)(1)(A).............................................................6.05
(a)(1)(B).............................................................6.04
(a)(2)................................................................N.A.
(b)...................................................................6.07
(c)...................................................................9.04
317 (a)(1)............................................................6.08
(a)(2)................................................................6.09
(b)...................................................................2.04
318 (a)...............................................................N.A.
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
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<PAGE> 123
INDENTURE, dated as of March 17, 1999, 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 Senior Exchange Notes due the Applicable Maturity Date and, if and
when issued in exchange for Initial Notes, the Company's Series B Senior
Exchange Notes due the Applicable Maturity Date:
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.
"123/8% Notes" means the Company's 123/8% Senior Deferred Coupon Notes due
2008.
"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, 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.
"Administrative Agent" means Goldman Sachs Credit Partners L.P. acting in
its capacity as administrative agent under the Bridge Loan Agreement, and its
successors and assigns.
"Affiliate" of any specified Person means any other Person directly
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided, however,
that beneficial ownership of 10% or more of the voting securities of a Person
shall be deemed to be control.
"Agent" means any Registrar or Paying Agent.
"Annualized Pro Forma EBITDA" means, with respect to any Person, such
Person's Pro Forma EBITDA for the latest fiscal quarter multiplied by four.
"Applicable Maturity Date" means, with respect to the Notes, September 14,
2004, December 16, 2005 or February 2, 2008, as specified on each Note.
"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 Loan 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 Loan 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.
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"Bridge Loan Agreement" means the Bridge Loan Agreement dated as of March
__, 1999, among the Company, the Lenders named therein and Goldman Sachs Credit
Partners L.P. as arranger and administrative agent, as amended, modified or
supplemented from time to time.
"Bridge Loans" means, collectively, up to $1.35 billion in aggregate
principal amount of Series A Bridge Loans, Series B Bridge Loans and Series C
Bridge Loans made to the Company pursuant to the terms of the Bridge Loan
Agreement.
"Bridge Notes" means the Bridge Notes representing Indebtedness of the
Company incurred pursuant to the Bridge Loan Agreement.
"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
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<PAGE> 126
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.
"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
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<PAGE> 127
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 and the 7% Convertible Subordinated Notes issued pursuant to
an indenture dated as of December 16, 1998, between the Company and The Chase
Manhattan 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)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)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 Loan 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 Loan 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.
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<PAGE> 128
"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).
"Escrow Agent" means The Chase Manhattan Bank acting in its capacity as
escrow agent under the Escrow Agreement, and its successors and assigns.
"Escrow Agreement" means the Escrow Agreement dated as of the Loan Date,
between the Company, the Administrative Agent and the Escrow Agent, as amended,
modified or supplemented from time to time.
"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 Date" with respect to any Initial Note delivered to the Trustee
by the Escrow Agent, has the meaning set forth in the Exchange Notice delivered
by the Escrow Agent to the Trustee with such Initial Note.
"Exchange Notice" has the meaning specified in the Escrow Agreement.
"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 Loan Date, until such amounts are repaid,
including, without limitation, the Existing Notes.
"Existing Notes" means the Old Notes and the Convertible Subordinated
Notes.
"Funding Date A" means the initial date on which Bridge Loans are made to
the Company pursuant to the terms of the Bridge Loan Agreement, prompt written
notice of which shall be given to the Trustee by the Company.
"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
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<PAGE> 129
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
Loan Date and are applied on a consistent basis.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Holder" means a Person in whose name a Note is registered in the register
referred to in Section 2.03.
"Indebtedness" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of borrowed money or evidenced by
bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or representing the balance
deferred and unpaid of the purchase price of any property (including pursuant to
capital leases and sale-and-leaseback transactions) or representing any hedging
obligations under an Exchange Rate Contract or an Interest Rate Agreement,
except any such balance that constitutes an accrued expense or trade payable, if
and to the extent any of the foregoing indebtedness (other than obligations
under an Exchange Rate Contract or an Interest Rate Agreement) would appear as a
liability upon a balance sheet of such Person prepared in accordance with GAAP,
and also includes, to the extent not otherwise included, the Guarantee of items
which would be included within this definition. The amount of any Indebtedness
outstanding as of any date shall be the accreted value thereof, in the case of
any Indebtedness issued with original issue discount
"Indenture" means this Indenture, as amended from time to time.
"Initial Notes" means the Senior Exchange Notes due the Applicable
Maturity Date of the Company held in escrow pursuant to the Escrow Agreement and
authenticated pursuant to Section 2.02.
"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.
"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.
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<PAGE> 130
"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).
"Liquidated Damages" means all liquidated damages then owing pursuant to
Section 3(c) of the Registration Rights Agreement and Section 2 of the Initial
Notes.
"Loan Date" means March 17, 1999, the date of the Bridge Loan Agreement.
"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(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.
"New Notes" means the Series B Senior Exchange Notes due the Applicable
Maturity Date of the Company issued pursuant to this Indenture in connection
with a resale of Notes in reliance on the Shelf Registration Statement.
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"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" means (i) the Initial Notes and (ii) the New Notes.
"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 123/8% Notes, 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 123/8% Notes, 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).
"Parent" means any Person that is formed or organized as a holding company
for the Company and its Subsidiaries.
"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
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consolidated basis) not exceeding the sum of (x) amount of the gross book value
of property, plant and equipment of the Acquired Person and its Subsidiaries as
set forth on the most recent consolidated balance sheet of the Acquired Person
(which may be unaudited) prior to the date it becomes an Acquired Person and (y)
the aggregate amount of any Cash Equivalents held by such Acquired Person at the
time it becomes an Acquired Person.
"Permitted Currency" means the lawful currency of the United States or a
European Union member.
"Permitted Designee" means (i) a spouse or a child of a Permitted Holder,
(ii) trusts for the benefit of a Permitted Holder or a spouse or child of a
Permitted Holder, (iii) in the event of the death or incompetence of a Permitted
Holder, his estate, heirs, executor, administrator, committee or other personal
representative or (iv) any Person so long as a Permitted Holder owns at least
50% of the voting power of all classes of the voting stock of such Person.
"Permitted Holders" means George S. Blumenthal, J. Barclay Knapp and their
Permitted Designees.
"Permitted Investments" means (a) any Investments in the Company or in a
Cable Controlled Property or in a Qualified Subsidiary (including, without
limitation, (i) Guarantees of Indebtedness of the Company, a Cable Controlled
Subsidiary or a Qualified Subsidiary, (ii) Liens securing such Indebtedness or
Guarantees or (iii) the payment of any balance deferred and unpaid of the
purchase price of any Qualified Subsidiary); (b) any Investments in Cash
Equivalents; (c) Investments by the Company in Indebtedness of a counter-party
to an Exchange Rate Contract for hedging a Permitted Currency exchange risk that
are made, for purposes other than speculation, in connection with such contract
to hedge not more than the aggregate principal amount of the Indebtedness being
hedged (or, in the case of Indebtedness issued with original issue discount,
based on the amounts payable after the amortization of such discount); (d)
Investments by the Company or any Subsidiary of the Company in a Person, if as a
result of such Investment (i) such Person becomes a Cable Controlled Subsidiary
or (ii) such Person is merged, consolidated or amalgamated with or into, or
transfers or conveys substantially all of its assets to, or is liquidated into,
the Company or a Wholly Owned Subsidiary of the Company; and (e) any issuance,
transfer or other conveyance of Equity Interests (other than Disqualified Stock)
in the Company (or any Capital Stock Sale Proceeds therefrom) to a Subsidiary of
the Company.
"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 Loan 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.
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"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.
"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
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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.
"Registration Rights Agreement" means the Registration Rights Agreement
dated as of the Loan Date, between the Company and Goldman Sachs Credit Partners
L.P., as amended, modified or supplemented from time to time.
"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.
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"Shelf Registration Statement" means the Shelf Registration as defined in
the Registration Rights Agreement.
"Specified Premium" means, with respect to each Note, (i) during the
one-year period commencing on the fifth anniversary of Funding Date A, the
Specified Premium shall equal a percentage of the principal amount of such Note
equal to 50% of the fixed interest rate on such Note; and (ii) during each
one-year period commencing on the sixth anniversary of Funding Date A until the
date that is two years prior to the maturity of the applicable Note, the
Specified Premium, referred to in clause (i) shall decline ratably. For example,
if the fixed interest rate on a Note having a maturity of 10 years was equal to
15%, then the Specified Premium would equal (a) 7.5% during the one-year period
commencing on the fifth anniversary of Funding Date A and ending on the day
prior to the sixth anniversary of Funding Date A; (b) 5.0% during the one-year
period commencing on the sixth anniversary of Funding Date A and ending on the
day prior to the seventh anniversary of Funding Date A; (c) 2.5% during the
one-year period commencing on the seventh anniversary of Funding Date A and
ending on the day prior to the eighth anniversary of Funding Date A; (d) 0%
during the one-year period commencing on the eighth anniversary of Funding Date
A and ending on the day prior to the ninth anniversary of Funding Date A; and
(e) 0% during the one-year period commencing on the ninth anniversary of Funding
Date A and ending on the day prior to the tenth anniversary of Funding Date A.
"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 (ss.)(ss.)
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.
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Defined
Term in Section
---- ----------
"Additional Amounts"....................4.14
"Affiliate Transaction".................4.11
"Agent Member"..........................2.01
"Asset Sale Offer"......................4.10
"Bankruptcy Law"........................6.01
"Cedel".................................2.01
"Change of Control Payment".............4.13
"Commencement Date".....................3.09
"Custodian".............................6.01
"Defeasance"............................8.02
"Euroclear".............................2.01
"Event of Default"......................6.01
"Excess Proceeds".......................4.10
"Exchange Note Guarantee"...............4.15
"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
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;
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"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 "(pound)" or pounds sterling is to British pounds
sterling.
SECTION 1.05. EFFECTIVENESS OF INDENTURE.
The provisions of this Indenture as set forth in Article IV, Article V and
Article VI shall not be effective unless and until the Company issues any Notes
hereunder and such Notes are released from escrow by the Escrow Agent.
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 New 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,
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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.
Initial Notes offered and sold in reliance on Regulation S under the
Securities Act ("Regulation S"), 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"), 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.
(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 New 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 or
in accordance with Section 4.16 authenticate and deliver 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
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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.
Notwithstanding any other provisions in this Indenture to the contrary,
the Initial Notes held in escrow by the Escrow Agent pursuant to the Escrow
Agreement shall be certificated and shall bear the Restricted Notes Legend set
forth in Exhibit A hereto, but such Initial Notes shall not bear the Global
Notes Legend. Such Initial Notes shall be Restricted 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 or exchange 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 New Note without a
Restricted Notes Legend will be available to the Holder of such Initial Notes.
SECTION 2.02. EXECUTION AND AUTHENTICATION.
One Officer shall sign the Notes for the Company by manual or facsimile
signature.
If the 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 receipt from the Escrow Agent of a copy of an
Exchange Notice, together with an Initial Note(s) executed by the Company,
authenticate such Initial Note(s), having an Applicable Maturity Date, interest
rate, principal amount and payee as set forth in such Exchange Notice, provided,
that the aggregate principal amount of all Notes issued hereunder may not exceed
the amount stated in paragraph 6 of the Initial Notes. On the Exchange Date, the
Trustee shall deliver such Initial Note(s) to the Holder thereof.
Notwithstanding any other provisions in this Indenture, 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)
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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, interest, Liquidated Damages, if any, or Additional Amounts, if any,
on the Notes, and will notify the Trustee of any default by the Company in
making any such payment. While any such default continues, the Trustee may
require a Paying Agent to pay all money held by it to the Trustee and to account
for any money disbursed by it. The Company at any time may require a Paying
Agent to pay all money held by it to the Trustee. Upon payment over to the
Trustee, the Paying Agent (if other than the Company or an Affiliate of the
Company) shall have no further liability for the money. If the Company or an
Affiliate of the Company acts as Paying Agent, it shall segregate and hold in a
separate trust fund for the benefit of the Holders all money held by it as
Paying Agent.
SECTION 2.05. HOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders. If the Trustee is not the Registrar, the Company shall furnish to the
Trustee on or before each interest payment date and at such other times as the
Trustee may request in writing a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of Holders.
SECTION 2.06. TRANSFER AND EXCHANGE.
Where Notes are presented to the Registrar or a co-registrar with a
request to register a transfer or to exchange them for an equal principal amount
of Notes of other denominations, the Registrar shall register the transfer or
make the exchange if its requirements for such transactions are met. To permit
registrations of transfers and exchanges, the Company shall issue and the
Trustee shall authenticate Notes at the Registrar's request. No service charge
shall be made for any registration of transfer or exchange (except as otherwise
expressly permitted herein), but the Company may require payment of a sum
sufficient to cover any transfer tax or similar governmental charge payable in
connection therewith (other than any such transfer tax or similar governmental
charge payable upon exchanges pursuant to Sections 2.10, 3.06 or 9.05 hereof).
The Company shall not be required (i) to issue, register the transfer of
or exchange any Note for a period beginning at the opening of business 15 days
before the day of any selection of Notes to be redeemed under Section 3.02
hereof and ending at the close of business on the day of selection, or (ii) to
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register the transfer, or exchange, of any Note so selected for redemption in
whole or in part, except the unredeemed portion of any Note being redeemed in
part.
(a) Notwithstanding any provision to the contrary herein, so long as
a Global Note remains outstanding and is held by or on behalf of the
Depositary, transfers of a Global Note, in whole or in part, or of any
beneficial interest therein, shall only be made in accordance with Section
2.01(b) and this Section 2.06(a); provided, however, that beneficial
interests in a Global Note may be transferred to Persons who take delivery
thereof in the form of a beneficial interest in the same Global Note.
(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
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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 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 of the Regulation S Global Note and to debit or cause to be debited
from the account of the Person making such exchange or transfer the
beneficial interest in the Regulation S Global Note that is being
exchanged or transferred.
(iv) Global Note to Restricted Note. If an owner of a beneficial
interest in a Global Note deposited with the Depositary or with the
Trustee as custodian for the Depositary wishes at any time to transfer its
interest in such Global Note to a Person who is required to take delivery
thereof in the form of a Restricted Note, such owner may, subject to the
rules and procedures of Euroclear or Cedel, if applicable, and the
Depositary, cause the exchange of such interest for one or more Restricted
Notes of any authorized denomination or denominations and of the same
aggregate principal amount. Upon receipt by the principal Registrar of (1)
instructions from Euroclear or Cedel, if applicable, and the Depositary
directing the principal Registrar to authenticate and deliver one or more
Restricted Notes of the same aggregate principal amount as the beneficial
interest in the Global Note to be exchanged, such instructions to contain
the name or names of the designated transferee or transferees, the
authorized denomination or denominations of the Restricted Notes to be so
issued and appropriate delivery instructions, (2) a certificate in the
form of Exhibit E attached hereto given by the owner of such beneficial
interest to the effect set forth therein, (3) a certificate in the form of
Exhibit F attached hereto given by the Person acquiring the Restricted
Notes for which such interest is being exchanged, to the effect set forth
therein, and (4) such other certifications, legal opinions or other
information as the Company may reasonably require to confirm that such
transfer is being made pursuant to an exemption from, or in a transaction
not subject to, the registration requirements of the Securities Act, then
Euroclear or Cedel, if applicable, or the principal Registrar, as the case
may be, will instruct the Depositary to reduce or cause to be reduced such
Global Note by the aggregate principal amount of the beneficial interest
therein to be exchanged and to debit or cause to be debited from the
account of the Person making such transfer the beneficial interest in the
Global Note that is being transferred, and concurrently with such
reduction and debit the Company shall execute, and the Trustee shall
authenticate and deliver, one or more Restricted Notes of the same
aggregate principal amount in accordance with the instructions referred to
above.
(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
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of such Restricted Note for one or more Restricted Notes of any authorized
denomination or denominations and of the same aggregate principal amount.
Upon receipt by the principal Registrar of (1) such Restricted Note, duly
endorsed as provided herein, (2) instructions from such Holder directing
the principal Registrar to authenticate and deliver one or more Restricted
Notes of the same aggregate principal amount as the Restricted Note to be
exchanged, such instructions to contain the name or authorized
denomination or denominations of the Restricted Notes to be so issued and
appropriate delivery instructions, (3) a certificate from the Holder of
the Restricted Note to be exchanged in the form of Exhibit E attached
hereto, (4) a certificate in the form of Exhibit F attached hereto given
by the Person acquiring the Restricted Notes for which such interest is
being exchanged, to the effect set forth therein, and (5) such other
certifications, legal opinions or other information as the Company may
reasonably require to confirm that such transfer is being made pursuant to
an exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act, then the Registrar shall cancel or
cause to be canceled such Restricted Note and concurrently therewith, the
Company shall execute, and the Trustee shall authenticate and deliver, one
or more Restricted Notes of the same aggregate principal amount, in
accordance with the instructions referred to above.
(vi) Other Exchanges. In the event that a beneficial interest in a
Global Note is exchanged for Notes in definitive registered form pursuant
to Section 2.10, prior to the effectiveness of a Shelf Registration
Statement with respect to such Notes, such Notes may be exchanged only in
accordance with such procedures as are substantially consistent with the
provisions of clauses (ii) through (v) above (including the certification
requirements intended to ensure that such transfers comply with Rule 144A,
Rule 144, Regulation S or any other available exemption from registration,
as the case may be) and such other procedures as may from time to time be
adopted by the Company.
(vii) 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.
(b) Except in connection with 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
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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. With respect to any transfer or exchange of
any Initial Note during the period of the effectiveness of a Shelf
Registration Statement, the Company shall execute New Notes that do not
have a Restricted Notes Legend and shall deliver such New Notes to the
Trustee for authentication, as applicable.
(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.
(d) In any transfer, exchange or replacement of a Note or a
beneficial interest therein contemplated by this Indenture, the Note
issued in connection with such transfer, exchange or replacement or the
Global Note that is reduced or increased in connection therewith shall
have the same terms as (i) the Note presented or surrendered for transfer,
exchange or replacement or in lieu of which such replacement Note was
issued or (ii) the Global Note the beneficial interest in which is being
transferred or exchanged.
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, such Note ceases to be outstanding and interest on it ceases to accrue.
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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
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 New 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:
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(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 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; 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.
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.
Subject to Section 7 of the Initial Notes and Section 6 of the New Notes,
the Company may redeem all or any portion of the Notes, in whole or in part, at
a redemption price equal to 100% of the principal amount thereof plus the
Specified Premium plus accrued and unpaid interest and Liquidated Damages
thereon, if any, to the applicable redemption date. 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
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Notes and Section 7 of the New 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 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 (i) on or after an interest payment
record date and (ii) 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;
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(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 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 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 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.
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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 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 nationally 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 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, Liquidated
Damages, if any, and interest on, the Notes on the dates and in the manner
provided in the Notes. Principal, premium, if any, Liquidated Damages, 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 of, premium, if any,
Liquidated Damages, if any, 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, Liquidated Damages, if any,
and premium, if any, at the applicable rate borne by the Notes, compounded
semiannually; and (ii) overdue installments of
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interest (without regard to any applicable grace period) at the same rate,
compounded semiannually. The Company shall pay all Liquidated Damages, if any,
in the same manner on the dates and in the amounts set forth in the Registration
Rights Agreement.
The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the rate equal to
1% per annum in excess of the then applicable interest rate on the Notes to the
extent lawful; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace period) at the same
rate to the extent lawful.
SECTION 4.02. 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 Loan Date. This Section 4.02 will apply notwithstanding that the
Company becomes a corporation organized under the laws of the United Kingdom,
the Netherlands, the Netherlands Antilles, Bermuda or the Cayman Islands.
SECTION 4.03. COMPLIANCE CERTIFICATE.
The Company shall deliver to the Trustee, within 90 days after the end of
each fiscal year of the Company, an Officers' Certificate stating that a review
of the activities of the Company and its subsidiaries during the preceding
fiscal year has been made under the supervision of the signing Officers with a
view to determining whether the Company has kept, observed, performed and
fulfilled its obligations under, and complied with the covenants and conditions
contained in, this Indenture, and further stating, as to each such Officer
signing such certificate, that to the best of his knowledge the Company has
kept, observed, performed and fulfilled each and every covenant, and complied
with the covenants and conditions contained in this Indenture and is not in
default in the performance or observance of any of the terms, provisions and
conditions hereof (or, if a Default or Event of Default shall have occurred,
describing all such Defaults or Events of Default of which he may have
knowledge) and that to the best of his knowledge no event has occurred and
remains in existence by reason of which payments on account of the principal,
interest or Liquidated Damages, 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
Liquidated Damages 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
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to receipt of such Officers' Certificate the Trustee shall be entitled to assume
that no such accrual has commenced or ceased, as the case may be.
SECTION 4.04. STAY, EXTENSION AND USURY LAWS.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not, by resort to any such law, hinder, delay or
impede the execution of any power herein granted to the Trustee, but will suffer
and permit the execution of every such power as though no such law had been
enacted.
SECTION 4.05. CORPORATE EXISTENCE.
Subject to Article V hereof, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence and the corporate, partnership or other existence of each subsidiary
of the Company in accordance with the respective organizational documents of
each subsidiary and the rights (charter and statutory), licenses and franchises
of the Company and its subsidiaries; provided, however, that the Company shall
not be required to preserve any such right, license or franchise, or the
corporate, partnership or other existence of any subsidiary, if the Board of
Directors shall determine that the preservation thereof is no longer desirable
in the conduct of the business of the Company and its subsidiaries taken as a
whole and that the loss thereof is not adverse in any material respect to the
Holders. The Company shall notify the Trustee in writing of any subsidiary which
qualifies as a Material Subsidiary and is not specified in clause (i) of the
definition thereof.
SECTION 4.06. TAXES.
The Company shall, and shall cause each of its subsidiaries to, pay prior
to delinquency all taxes, assessments and governmental levies, except as
contested in good faith and by appropriate proceedings.
SECTION 4.07. LIMITATIONS ON LIENS.
Neither the Company nor any of its Restricted Subsidiaries may, directly
or indirectly create, incur, assume or suffer to exist any Lien on any asset now
owned or hereafter acquired, or any income or profits therefrom or assign or
convey any right to receive income therefrom, except:
(a) Permitted Liens;
(b) Liens securing Indebtedness and related obligations to the
extent such Indebtedness and related obligations are permitted under
Sections 4.08(b)(i), (iii), (iv), (v), (viii), (ix) and (xi) hereof;
(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.
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SECTION 4.08. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK.
(a) The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur, issue,
assume, guaranty or otherwise become directly or indirectly liable with
respect to (collectively, "incur") any Indebtedness (including Acquired
Debt) and the Company shall not issue any Disqualified Stock and shall not
permit any of its Restricted Subsidiaries to issue any shares of preferred
stock that is Disqualified Stock; provided, however, that the Company may
incur Indebtedness or issue shares of Disqualified Stock and any of its
Restricted Subsidiaries may issue shares of preferred stock that is
Disqualified Stock if after giving effect to such issuance or incurrence
on a pro forma basis, the sum of (x) Indebtedness of the Company and its
Restricted Subsidiaries, on a consolidated basis, (y) the liquidation
value of outstanding preferred stock of Restricted Subsidiaries and (z)
the aggregate amount payable by the Company and its Restricted
Subsidiaries, on a consolidated basis, upon redemption of Disqualified
Stock to the extent such amount is not included in the preceding clause
(y) shall be less than the product of Annualized Pro Forma EBITDA for the
latest fiscal quarter for which internal financial statements are
available immediately preceding the date on which such additional
Indebtedness is incurred or such Disqualified Stock or preferred stock is
issued multiplied by 7.0, determined on a pro forma basis (including a pro
forma application of the net proceeds therefrom), as if the additional
Indebtedness had been incurred, or the Disqualified Stock or preferred
stock had been issued, as the case may be, at the beginning of such
quarter.
(b) The foregoing limitations in Section 4.08(a) shall not apply to:
(i) the incurrence by the Company or any Restricted Subsidiary of
Indebtedness pursuant to the Credit Facility;
(ii) the issuance by any Restricted Subsidiary of preferred stock
(other than Disqualified Stock) to the Company, any Restricted Subsidiary
of the Company or the holders of Equity Interests in any Restricted
Subsidiary on a pro rata basis to such holders;
(iii) the incurrence of Indebtedness or the issuance of preferred
stock by the Company or any of its Restricted Subsidiaries the proceeds of
which are (or the credit support provided by any such Indebtedness is), in
each case, used to finance the construction, capital expenditure and
working capital needs of a Cable Business (including, without limitation,
payments made pursuant to any License), the acquisition of Cable Assets or
the Capital Stock of a Qualified Subsidiary;
(iv) the incurrence by the Company or any of its Restricted
Subsidiaries of additional Indebtedness in an aggregate principal amount
not to exceed $50 million;
(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
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principal amount of Indebtedness so extended, refinanced, renewed,
replaced or refunded (plus the amount of reasonable expenses incurred in
connection therewith); (2) the Refinancing Indebtedness shall have (A) a
Weighted Average Life to Maturity equal to or greater than the Weighted
Average Life to Maturity of, and (B) a stated maturity no earlier than the
stated maturity of, the Indebtedness being extended, refinanced, renewed,
replaced or refunded; and (3) the Refinancing Indebtedness shall be
subordinated in right of payment to the Notes as and to the extent of the
Indebtedness being extended, refinanced, renewed, replaced or refunded;
(vii) the issuance of the Preferred Stock in lieu of payment of cash
interest on the Subordinated Debentures or the incurrence by the Company
of Indebtedness represented by the Subordinated Debentures upon the
exchange of the Preferred Stock in accordance with the Certificate of
Designations therefor;
(viii) Indebtedness under Exchange Rate Contracts, provided that
such Exchange Rate Contracts are related to payment obligations under
Existing Indebtedness or Indebtedness incurred under Section 4.08(a) or
(b) hereof that are being hedged thereby, and not for speculation and that
the aggregate notional amount under each such Exchange Rate Contract does
not exceed the aggregate payment obligations under such Indebtedness;
(ix) Indebtedness under Interest Rate Agreements, provided that the
obligations under such agreements are related to payment obligations on
Existing Indebtedness or Indebtedness otherwise incurred pursuant to
Section 4.08(a) or (b) hereof, and not for speculation;
(x) the incurrence of Indebtedness between the Company and any
Restricted Subsidiary, between or among Restricted Subsidiaries and
between any Restricted Subsidiary and other holders of Equity Interests of
such Restricted Subsidiary (or other Persons providing funding on their
behalf) on a pro rata basis and on substantially identical principal
financial terms; provided, however, that if any such Restricted Subsidiary
that is the payee of any such Indebtedness ceases to be a Restricted
Subsidiary or transfers such Indebtedness (other than to the Company or a
Restricted Subsidiary of the Company), such events shall be deemed, in
each case, to constitute the incurrence of such Indebtedness by the
Company or by a Restricted Subsidiary, as the case may be, at the time of
such event; and
(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.
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SECTION 4.09. RESTRICTED PAYMENTS.
(a) The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly:
(i) declare or pay any dividend or make any distribution on account
of the Company's or any of its Restricted Subsidiaries' Equity Interests
(other than (x) dividends or distributions payable in Equity Interests
(other than Disqualified Stock) of the Company or such Restricted
Subsidiary or (y) dividends or distributions payable to the Company or any
Wholly Owned Subsidiary of the Company, or (z) pro rata dividends or pro
rata distributions payable by a Restricted Subsidiary);
(ii) purchase, redeem or otherwise acquire or retire for value any
Equity Interests of the Company (other than any such Equity Interests
owned by the Company or any Wholly Owned Subsidiary of the Company);
(iii) voluntarily purchase, redeem or otherwise acquire or retire
for value any Indebtedness that is subordinated to the Notes; or
(iv) make any Restricted Investment (all such payments and other
actions set forth in clauses (i) through (iv) above being collectively
referred to as "Restricted Payments"), unless, at the time of such
Restricted Payment:
(1) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(2) such Restricted Payment, together with the aggregate of
all other Restricted Payments made by the Company and its Restricted
Subsidiaries after the Loan 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
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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 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 was 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
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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.
(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
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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.
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, and Liquidated Damages, 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
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such proceeds or excess proceeds are reinvested in a Replacement Assets
within 360 days after such sale, lease, transfer, conveyance or
disposition;
(ii) (x) swap or exchange assets or property with a Cable Controlled
Subsidiary or (y) issue, sell, lease, transfer, convey or otherwise
dispose of equity securities of any of the Company's Subsidiaries to a
Cable Controlled Subsidiary, in each of cases (x) and (y) so long as (A)
the ratio of Indebtedness to Annualized Pro Forma EBITDA of the Company
after such transaction is equal to or less than the ratio of Indebtedness
to Annualized Pro Forma EBITDA of the Company immediately preceding such
transaction; provided, however, that if the ratio of Indebtedness to
Annualized Pro Forma EBITDA of the Company immediately preceding such
transaction is 6:1 or less, then the ratio of Indebtedness to Annualized
Pro Forma EBITDA of the Company may be 0.5 greater than such ratio
immediately preceding such transaction and (B) either (I) the assets so
contributed consist solely of a license to operate a Cable Business and
the Net Households covered by all of the licenses to operate cable and
telephone systems held by the Company and its Restricted Subsidiaries
immediately after and giving effect to such transaction equals or exceeds
the number of Net Households covered by all of the licenses to operate
cable and telephone systems held by the Company and its Restricted
Subsidiaries immediately prior to such transaction or (II) the assets so
contributed consist solely of Cable Assets and the value of the Capital
Stock received, immediately after and giving effect to such transaction,
as determined by an investment banking firm of recognized standing with
knowledge of the Cable Business, equals or exceeds the value of Cable
Assets exchanged for such Capital Stock; 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
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involving aggregate payments in excess of $25 million, an opinion as to
the fairness to the Company or such Subsidiary from a financial point of
view issued by an investment banking firm of national standing with high
yield experience together with an Officers' Certificate to the effect that
such opinion complies with this clause (ii); provided, however, that
notwithstanding the foregoing provisions, the following shall not be
deemed to be Affiliate Transactions:
(1) any employment agreement entered into by the Company or
any of its Subsidiaries in the ordinary course of business and consistent
with the past practice of the Company or its predecessor or such
Subsidiary;
(2) transactions between or among the Company and/or its
Restricted Subsidiaries;
(3) transactions permitted by the provisions of Section 4.09
hereof;
(4) Liens permitted under Section 4.07 hereof which are
granted by the Company or any of its Subsidiaries to an unrelated Person
for the benefit of the Company or any other Subsidiary of the Company;
(5) any transaction pursuant to an agreement in effect on the
Loan Date;
(6) the incurrence of Indebtedness by a Restricted Subsidiary
where such Indebtedness is owed to the holders of the Equity Interests of
such Restricted Subsidiary on a pro rata basis and on substantially
identical principal financial terms;
(7) management, operating, service or interconnect agreements
entered into in the ordinary course of business with any Cable Business in
which the Company or any Restricted Subsidiary has an Investment and which
is not a Cable Controlled Subsidiary (and of which no Affiliate of the
Company is an Affiliate other than as a result of such Investment); and
(8) any tax sharing agreement.
SECTION 4.12. DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED
SUBSIDIARIES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to:
(a) (i) pay dividends or make any other distributions to the Company
or any of its Subsidiaries (A) on its Capital Stock or (B) with respect to
any other interest or participation in, or measured by, its profits, or
(ii) pay any indebtedness owed to the Company or any of its Subsidiaries,
or
(b) make loans or advances to the Company or any of its
Subsidiaries, or
(c) transfer any of its properties or assets to the Company or any
of its Subsidiaries, except for such encumbrances or restrictions existing
under or by reason of:
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(i) Existing Indebtedness as in effect on the Loan Date;
(ii) this Indenture and the Notes;
(iii) any agreement covering or relating to Indebtedness permitted
to be incurred under Section 4.08(b)(i), (ii), (iii), (iv), (v), (viii) or
(ix) hereof (but only, in the case of Section 4.08(b)(viii) or (ix), to
the extent contemplated by the then-existing Credit Facility), provided
that the provisions of such agreement permit any action referred to in
clause (a) above in aggregate amounts sufficient to enable the payment of
interest and principal and mandatory repurchases pursuant to the terms of
this Indenture and the Notes, but provided further that: (x) any such
agreement may nevertheless encumber, prohibit or restrict any action
referred to in clause (a) above if an event of default under such
agreement has occurred and is continuing or would occur as a result of any
such action; and (y) any such agreement may nevertheless contain (I)
restrictions limiting the payment of dividends or the making of any other
distributions to all or a portion of excess cash-flow (or any similar
formulation thereof) and (II) subordination provisions governing
Indebtedness owed to the Company or any Restricted Subsidiary;
(iv) applicable law;
(v) any instrument governing Indebtedness or Capital Stock of a
Person acquired by the Company or any of its Subsidiaries as in effect at
the time of such acquisition (except to the extent such Indebtedness was
incurred in connection with such acquisition), which encumbrance or
restriction is not applicable to any Person, or the properties or assets
of any Person, other than the Person, or the property or assets of the
Person, so acquired; provided that the EBITDA of such Person is not taken
into account in determining whether such acquisition was permitted by the
terms of this Indenture;
(vi) customary nonassignment provisions in leases entered into in
the ordinary course of business and consistent with past practices;
(vii) provisions of joint venture or stockholder agreements, so long
as such provisions are determined by a resolution of the Board of
Directors to be, at the time of such determination, customary for such
agreements;
(viii) with respect to clause (c) above, purchase money obligations
for property acquired in the ordinary course of business or the provisions
of any agreement with respect to any Asset Sale (or transaction which, but
for its size, would be an Asset Sale), solely with respect to the assets
being sold; or
(ix) permitted Refinancing Indebtedness, provided that the
restrictions contained in the agreements governing such Refinancing
Indebtedness are determined by a resolution of the Board of Directors to
be no more restrictive than those contained in the agreements governing
the Indebtedness being refinanced.
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
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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, and Liquidated Damages, if any, to the date of purchase (the "Change
of Control Payment").
(b) Within 40 days following any Change of Control Triggering Event,
the Company shall mail to each Holder the notice provided by Section
3.09(e).
SECTION 4.14. PAYMENT OF ADDITIONAL AMOUNTS.
At least 10 days prior to the first date on which payment of principal and
any premium, Liquidated Damages, 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 New Notes)
with respect to such payment of principal, or of any premium, Liquidated
Damages, 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, or Liquidated Damages, 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 New 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).
SECTION 4.15. EXCHANGE NOTE GUARANTEE.
In the event that the Parent is incorporated or organized with respect to
the Company and its Subsidiaries, within five (5) Business Days of the date of
the incorporation or organization of the Parent, the Company shall deliver, or
cause to be delivered, to the Trustee (a) a guarantee (the "Exchange Note
Guarantee") executed by the Parent substantially in the form attached hereto as
Exhibit H, and (ii) opinions of counsel for the Parent substantially in the form
attached hereto as Exhibit I, and (c) such other certificates and documents
(including, but not limited to, a secretary's certificate, a certification of
the organizational document of the Parent certified by the Secretary of State of
the jurisdiction in which the Parent was incorporated or organized, and a good
standing certificate) as the Trustee shall deem to be reasonably necessary or
advisable, which certificates and document shall be in form and substance
satisfactory to the Trustee and its counsel.
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SECTION 4.16. EXCHANGE OF CERTIFICATED INITIAL NOTES OR CERTIFICATED NEW NOTES
FOR GLOBAL NOTES.
Upon the request of the Administrative Agent, acting on behalf of the
holders of Bridge Notes and/or Holders of Initial Notes, or any Holder of an
Initial Note or a New Note, the Company shall as soon as is reasonably
practicable (i) enter into any necessary agreements with the Depositary in order
to deposit Global Notes representing Initial Notes and/or New Notes with the
Trustee, as custodian for the Depositary, file a PORTAL Application and obtain
CUSIP and CINS numbers, such Global Notes to be authenticated by the Trustee
upon a written order of the Company signed by two Officers and (ii) execute the
necessary Global Notes and deliver such Global Notes to the Trustee for
authentication. Thereafter, Holders of certificated Initial Notes or
certificated New Notes may exchange such certificated Initial Notes or
certificated New Notes with the Trustee for beneficial interests in the
applicable Global Note. Global Notes representing Initial Notes shall be issued
as Rule 144A Global Notes and/or Regulation S Global Notes, all as specified in
such written order.
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ARTICLE V.
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION OR SALE OF ASSETS.
The Company may not consolidate or merge with or into (whether or not the
Company is the surviving corporation), or sell, assign, transfer, lease, convey
or otherwise dispose of all or substantially all of its properties or assets in
one or more related transactions to, another corporation, Person or entity
unless:
(a) the Company is the surviving corporation or the entity or the
Person formed by or surviving any such consolidation or merger (if other
than the Company) or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made is a corporation
organized or existing under the laws of the United Kingdom, the
Netherlands, the Netherlands Antilles, Bermuda or the Cayman Islands or of
the United States, any state thereof or the District of Columbia;
(b) the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company) or the entity or
Person to which such sale, assignment, transfer, lease, conveyance or
other disposition will have been made assumes all the Obligations
(including the due and punctual payment of Additional Amounts if the
surviving corporation is a corporation organized or existing under the
laws of the United Kingdom, the Netherlands, the Netherlands Antilles,
Bermuda or the Cayman Islands) of the Company, pursuant to a supplemental
indenture in a form reasonably satisfactory to the Trustee, under the
Notes and this Indenture;
(c) immediately after such transaction no Default or Event of
Default exists;
(d) the Company or any entity or Person formed by or surviving any
such consolidation or merger, or to which such sale, assignment, transfer,
lease, conveyance or other disposition will have been made will have a
ratio of Indebtedness to Annualized Pro Forma EBITDA equal to or less than
the ratio of Indebtedness to Annualized Pro Forma EBITDA of the Company
immediately preceding the transaction; provided, however, that if the
ratio of Indebtedness to Annualized Pro Forma EBITDA of the Company
immediately preceding such transaction is 6:1 or less, then the ratio of
Indebtedness to Annualized Pro Forma EBITDA of the Company may be 0.5
greater than such ratio immediately preceding such transaction; and
(e) such transaction would not result in the loss of any material
authorization or Material License of the Company or its Subsidiaries.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company in accordance with Section 5.01 hereof, the successor corporation
formed by such consolidation or into or with which the Company is merged or to
which such sale, assignment, transfer, lease, conveyance or other disposition is
made shall succeed to, and be substituted for and may exercise every right and
power of, the Company under this 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,
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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, and Liquidated Damages, 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 or
premium, if any, on any Note when the same becomes due and payable at
maturity, upon redemption or otherwise;
(c) the Company fails to observe or perform any covenant or
agreement contained in Section 4.08, 4.09, or 4.13 hereof;
(d) the Company fails to observe or perform any other covenant or
agreement contained in this Indenture or the Notes, required by any of
them to be performed and the Default continues for a period of 60 days
after notice from the Trustee to the Company or from the Holders of 25% in
aggregate principal amount of the then outstanding Notes to the Company
and the Trustee stating that such notice is a "Notice of Default";
(e) default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any Restricted
Subsidiary (or the payment of which is guaranteed by the Company or any
Restricted Subsidiary), whether such Indebtedness or guarantee now exists
or is created after the Loan 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;
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(g) the Company or any Material Subsidiary pursuant to or within the
meaning of any Bankruptcy Law:
(i) commences a voluntary case;
(ii) consents to the entry of an order for relief against it in an
involuntary case in which it is the debtor;
(iii) consents to the appointment of a Custodian of it or for all or
substantially all of its property;
(iv) makes a general assignment for the benefit of its creditors; or
(v) generally is unable to pay its debts as the same become due;
(h) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(i) is for relief against the Company or any Material Subsidiary in
an involuntary case;
(ii) appoints a Custodian of the Company or any Material Subsidiary
or for all or substantially all of its property; or
(iii) orders the liquidation of the Company or any Material
Subsidiary, and the order or decree remains unstayed and in effect for 60
days; and
(i) the revocation of a Material License.
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar Federal,
state or foreign law for the relief of debtors or the protection of creditors.
The term "Custodian" means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.
SECTION 6.02. ACCELERATION.
If an Event of Default (other than an Event of Default specified in
clauses (g) and (h) of Section 6.01 hereof) occurs and is continuing, the
Trustee by notice to the Company, or the Holders of at least 25% in principal
amount 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 of, premium, if any, and interest on, and Liquidated
Damages, if any, with respect to, 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
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(Section 6 in the case of the New 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.
SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy to collect the payment of principal, premium, if any,
Liquidated Damages, if any, 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, premium, if any, and Liquidated Damages, if any, or
interest on any Note. When a Default or Event of Default is waived, it is cured
and ceases; but no such waiver shall extend to any subsequent or other Default
or impair any right consequent thereon.
SECTION 6.05. CONTROL BY MAJORITY.
The Holders of a majority in principal amount of the then outstanding
Notes may direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee or exercising any trust or power conferred on
it. However, the Trustee may refuse to follow any direction that conflicts with
law or this Indenture, is unduly prejudicial to the rights of other Holders, or
would involve the Trustee in personal liability.
SECTION 6.06. LIMITATION ON SUITS.
A Holder may pursue a remedy with respect to this Indenture or the Notes
only if:
(a) the Holder gives to the Trustee notice of a continuing Event of
Default;
(b) the Holders of at least 25% in principal amount of the then
outstanding Notes make a request to the Trustee to pursue the remedy;
(c) such Holder or Holders offer to the Trustee indemnity
satisfactory to the Trustee against any loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer of indemnity; and
(e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Notes do not give the Trustee a direction
inconsistent with the request.
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A Holder may not use this Indenture to prejudice the rights of another
Holder or to obtain a preference or priority over another Holder.
SECTION 6.07. RIGHTS OF HOLDERS TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal of, premium, Liquidated
Damages, if any, and interest on the Note, on or after the respective due dates
expressed in the Note, or to bring suit for the enforcement of any such payment
on or after such respective dates, 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 of,
premium, if any, Liquidated Damages, if any, 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,
premium, if any, Liquidated Damages, if any, 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, premium, if
any, Liquidated Damages, if any, 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
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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.
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.
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(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.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS.
Within 60 days after the reporting date stated in Section 10.10, the
Trustee shall mail to Holders a brief report dated as of such reporting date
that complies with TIA (ss.) 313(a) if and to the extent required by such (ss.)
313(a). The Trustee also shall comply with TIA (ss.) 313(b)(2). The Trustee
shall also transmit by mail all reports as required by TIA (ss.) 313(c).
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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:
(a) the Trustee fails to comply with Section 7.10 hereof, unless the
Trustee's duty to resign is stayed as provided in TIA (ss.) 310(b);
(b) the Trustee is adjudged a bankrupt or an insolvent or an order
for relief is entered with respect to the Trustee under any Bankruptcy
Law;
(c) a Custodian or public officer takes charge of the Trustee or its
property; or
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(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of at least 10% in principal amount of the then outstanding Notes may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
If the Trustee fails to comply with Section 7.10 hereof, unless the
Trustee's duty to resign is stayed as provided in TIA (ss.) 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 (ss.) 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
(ss.) 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 (ss.) 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, (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 and (h)
indenture, dated as of November 6, 1998,
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between the Company and The Chase Manhattan Bank, as trustee, relating to the
Company's 123/8% Notes.
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee is subject to TIA (ss.) 311(a), excluding any creditor
relationship listed in TIA (ss.) 311(b). A Trustee who has resigned or been
removed shall be subject to TIA (ss.) 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.
Subject to the first sentence of Section 3.07, 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. Subject to the first sentence of Section 3.07, 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 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, premium, if any,
Liquidated Damages, if any, and interest, if any, on the outstanding Notes
on the stated date for payment
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thereof or on the applicable redemption date, as the case may be, of such
principal or installment of principal of, premium, if any, Liquidated
Damages, 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 Loan 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
(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, premium, if any, Liquidated Damages, if any, or
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interest (including Additional Amounts, if applicable) on the Notes, the U.S.
Government Obligations shall be payable as to principal, premium, if any,
Liquidated Damages, if any, 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, premium, if
any, Liquidated Damages, if any, 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, premium, if any, Liquidated
Damages, if any, 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 any premium or Liquidated Damages on, or principal of any Note following the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the money held by the
Trustee or Paying Agent.
ARTICLE IX.
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. WITHOUT CONSENT OF HOLDERS.
The Company and the Trustee may amend or supplement this Indenture or the
Notes without the consent of any Holder:
(a) to cure any ambiguity, defect or inconsistency;
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(b) to comply with Section 5.01 hereof;
(c) to provide for uncertificated Notes in addition to or in place
of certificated Notes;
(d) to make any change that does not adversely affect the interests
hereunder of any Holder; or
(e) to qualify the Indenture under the TIA or to comply with the
requirements of the SEC in order to maintain the qualification of the
Indenture under the TIA.
SECTION 9.02. WITH CONSENT OF HOLDERS.
Subject to Section 6.07 hereof, the Company and the Trustee may amend or
supplement this Indenture or the Notes with the written consent of the Holders
of at least a majority in principal amount of the then outstanding Notes or, if
no Notes are outstanding, the holders of a majority in aggregate principal
amount of Bridge Notes then outstanding. Subject to Sections 6.04 and 6.07
hereof, the Holders of a majority in principal amount of the Notes then
outstanding or, if no Notes are outstanding, the holders of a majority in
aggregate principal amount of Bridge 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 or,
if no Notes are outstanding, the holders of at least a majority in aggregate
principal amount of Bridge Notes then outstanding, 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 New 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,
premium or Liquidated Damages, 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 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.
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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.
The Trustee may conclusively rely on a written notice from the
Administrative Agent as to the identity of the holders of the Bridge Notes and
the principal amount of such Notes held by each such holder.
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 or, if no Notes are outstanding, a holder of a Bridge
Note, as applicable, is a continuing consent by the Holder of a Note or, if no
Notes are outstanding, a holder of a Bridge Note, as applicable, and every
subsequent Holder of a Note or portion of a Note and, if no Notes are
outstanding, every subsequent holder of a Bridge Note or portion of a Bridge
Note, as applicable, that evidences the same debt as the consenting Holder's
Note or consenting holder's Bridge Note, as applicable, even if notation of the
consent is not made on any Note or any Bridge Note. However, any such Holder or
subsequent Holder may revoke the consent as to his Note or portion of a Note,
and, if no Notes are outstanding, any such holder of a Bridge Note or subsequent
holder of a Bridge Note may revoke the consent as to his Bridge Note or portion
of a Bridge 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, or, if no Notes are
outstanding, the holders of the requisite principal amount of Bridge 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 replacement Notes that reflect the
amendment or waiver.
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Failure to make such notation on a Note or to issue a replacement Note as
aforesaid shall not affect the validity and effect of such amendment or waiver.
SECTION 9.06. TRUSTEE PROTECTED.
The Trustee shall sign all supplemental indentures, except that the
Trustee may, but need not, sign any supplemental indenture that adversely
affects its rights.
ARTICLE X.
MISCELLANEOUS
SECTION 10.01. TRUST INDENTURE ACT CONTROLS.
This Indenture is subject to the provisions of the TIA that are required
to be incorporated into this Indenture (or, prior to the registration of the
Notes pursuant to the Registration Rights Agreement, would be required to be
incorporated into this Indenture if it were qualified under the TIA), and shall,
to the extent applicable, be governed by such provisions. If any provision of
this Indenture limits, qualifies, or conflicts with another provision which is
required (or would be so required) to be incorporated in this Indenture by the
TIA, the incorporated provision shall control.
SECTION 10.02. NOTICES.
Any notice or communication by the Company or the Trustee to the other is
duly given if in writing and delivered in Person or mailed by first class mail
to the other's address stated in Section 10.10 hereof. The Company or the
Trustee by notice to the other may designate additional or different addresses
for subsequent notices or communications.
Any notice or communication to a Holder shall be mailed by first class
mail to his address shown on the register kept by the Registrar. Failure to mail
a notice or communication to a Holder or any defect in it shall not affect its
sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above within
the time prescribed, it is duly given, whether or not the addressee receives it.
If the Company mails a notice or communication to Holders, it shall mail a
copy to the Trustee and each Agent at the same time.
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 (ss.) 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 (ss.)
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 and
releases all such liability. The waiver and release are part of the
consideration for the issue of the Notes.
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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, of the year when the first Note is issued
under this Indenture and is registered in the name of a holder of record and
delivered pursuant to the terms of the Escrow Agreement.
The reporting date for Section 7.06 hereof is March 15 of each year. The
first reporting date is March 15, of the year when the first Note is issued
under this Indenture and is registered in the name of a holder of record and
delivered pursuant to the terms of the Escrow Agreement.
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
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The Trustee's address is:
The Chase Manhattan Bank
450 West 33rd Street
New York, New York 10001
Attention: Capital Markets
Fiduciary Services
SECTION 10.11. GOVERNING LAW.
THE INTERNAL LAWS OF THE STATE OF NEW YORK SHALL GOVERN THIS INDENTURE AND
THE NOTES, WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS THEREOF.
SECTION 10.12. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company or an Affiliate. Any such indenture, loan or debt
agreement may not be used to interpret this Indenture.
SECTION 10.13. SUCCESSORS.
All agreements of the Company in this Indenture and the Notes shall bind
its successor. All agreements of the Trustee in this Indenture shall bind its
successor.
SECTION 10.14. SEVERABILITY
In case any provision in this Indenture or in the Notes shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
SECTION 10.15. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table, and headings of the Articles
and Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part hereof, and shall in no way modify or
restrict any of the terms or provisions hereof.
-59-
<PAGE> 182
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:
----------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, as Trustee
By:
----------------------------------------
Name:
Title:
<PAGE> 183
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 REGISTRATION
PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR
<PAGE> 184
(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 _____________________________. THE ISSUE PRICE OF
THIS NOTE IS $_______________ PER $1000.00 OF INITIAL PRINCIPAL AMOUNT AT
MATURITY. THIS NOTE IS ISSUED WITH $____________ OF ORIGINAL ISSUE DISCOUNT PER
$1000.00 OF INITIAL PRINCIPAL AMOUNT AT MATURITY. THE YIELD TO MATURITY OF THIS
NOTE IS _________%.
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<PAGE> 185
No. ________
$__________
CUSIP No. [ ] /CINS No.
____% SENIOR EXCHANGE NOTE DUE 20___
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 ____________, 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: August 1 and February 1, commencing on the first
date following the issuance and authentication of this Note in exchange for
Bridge Notes.
Record Dates: July 15 and January 15
- ----------
* Applicable to Global Notes Only
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<PAGE> 186
IN WITNESS WHEREOF, NTL Incorporated has caused this Note to be signed
manually or by facsimile by its duly authorized officer.
Dated:____________________________
NTL INCORPORATED
by:_______________________________
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes described in the within-mentioned Indenture.
THE CHASE MANHATTAN BANK, as Trustee
By:______________________________
Authorized Officer
A-4
<PAGE> 187
[FORM OF REVERSE OF INITIAL NOTE]
NTL INCORPORATED
___% Senior Exchange Note due 20__
1. Interest. NTL INCORPORATED, a Delaware corporation (the "Company"), is
the issuer of the Senior Exchange Notes referred to in the title of this Note
and the other Notes contemplated by the Indenture referred to below
(collectively, the "Notes"). The Company promises to pay interest (and
Liquidated Damages, if any) on the Notes in cash semiannually on each August 1
and February 1, commencing on the first date following the issuance and
authentication of this Note in exchange for Bridge Notes, to Holders of record
on the immediately preceding July 15 and January 15, respectively, at the rate
per annum referred to in the title of this Note. Interest on the Notes will
accrue from the most recent date to which interest has been paid on the Notes,
provided that, with respect to the initial payment of interest, interest shall
accrue from the applicable Exchange Date. 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, premium, and Liquidated Damages, if any, at the applicable
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 or
Liquidated Damages, if any, paid on this Note shall be increased to the extent
necessary to pay Additional Amounts as set forth in this Note.
2. Liquidated Damages. The Holder of this Note is entitled to the benefits
of the Registration Rights Agreement relating to the Notes, dated as of March
17, 1999, between the Company and Goldman Sachs Credit Partners, L.P. party
thereto, as amended, modified or supplemented, (the "Registration Rights
Agreement").
If (i) the registration statement (the "Registration Statement") required
by the Registration Rights Agreement is not filed with the SEC on or prior to
the 300th day following Funding Date A (the "Filing Date"), (ii) the
Registration Statement has not been declared effective by the SEC on or prior to
the 90th day immediately succeeding the Filing Date or (iii) the Registration
Statement required by the Registration Rights Agreement is filed and declared
effective but shall thereafter cease to be effective or fail to be usable for
its intended purpose without being succeeded immediately by a post-effective
amendment to the Registration Statement that cures such failure and that is
itself declared effective immediately (each such event referred to in clauses
(i) through (iii), a "Registration Default"), then the Company agrees to pay to
each holder of Notes liquidated damages ("Liquidated Damages") in an amount
equal to 25 basis points per annum times the principal amount of Notes for each
week or portion thereof that the Registration Default continues for the first
90-day period immediately following the occurrence of such Registration Default
(such 90-day period to begin on the date on which the first such Registration
Default occurs). The amount of such Liquidated Damages shall increase by an
additional 25 basis points per annum on the principal amount of Notes with
respect to each subsequent 90-day period until all Registration Defaults have
been cured, up to a maximum amount of Liquidated Damages of 100 basis points per
annum on the principal amount of Notes; provided that the Company shall in no
event be required to pay Liquidated Damages for more than one Registration
Default on any Notes, at any given time. All Liquidated Damages shall be
calculated based on the actual number of days elapsed in a 360 day year and all
accrued Liquidated Damages shall be paid on the applicable Interest Payment Date
in accordance with the Indenture to each holder of Notes as of the applicable
Record Date, in cash. Notwithstanding anything to the contrary set forth herein,
(1) upon filing the Registration Statement, in the case of (i) above, (2) upon
the effectiveness of the Registration Statement, in the case of (ii) above or
(3) upon the filing of a post-effective amendment to the Registration Statement
or an additional Registration Statement that causes the Registration Statement
to again be declared effective or made
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<PAGE> 188
usable in the case of (iii) above, the Liquidated Damages payable with respect
to the Notes as a result of such clause (i), (ii) or (iii), as applicable, shall
cease to accrue.
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;
(d) any tax, assessment or other governmental charge which is
collectible otherwise than by withholding from payments of principal
amount, redemption amount, Change
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<PAGE> 189
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, or Liquidated Damages with respect to, 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,
Liquidated Damages 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 and Liquidated
Damages, if any, 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 and Liquidated Damages, 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 and
Liquidated Damages, 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 and Liquidated Damages, 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
March 17, 1999 (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 (ss.)(ss.) 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 $1,350,000,000 in aggregate principal amount.
7. Optional Redemption. Except as provided in Section 8 hereof, the Notes
are not redeemable at the Company's option prior to the fifth anniversary of
Funding Date A (as defined in the Indenture).
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<PAGE> 190
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 price equal to 100% of the principal amount thereof
plus the Specified Premium plus accrued and unpaid interest thereon, plus the
Liquidated Damages thereon, if any, to the applicable redemption date.
"Specified Premium" means, with respect to each Note, (i) during the one-year
period commencing on the fifth anniversary of Funding Date A, the Specified
Premium shall equal a percentage of the principal amount of such Note equal to
50% of the fixed interest rate on such Note; and (ii) during each one-year
period commencing on the sixth anniversary of Funding Date A until the date that
is two years prior to the maturity of the applicable Note, the Specified Premium
referred to in clause (i) shall decline ratably. For example, if the fixed
interest rate on a Note having a maturity of 10 years was equal to 15%, then the
Specified Premium would equal (a) 7.5% during the one-year period commencing on
the fifth anniversary of Funding Date A and ending on the day prior to the sixth
anniversary of Funding Date A; (b) 5.0% during the one-year period commencing on
the sixth anniversary of Funding Date A and ending on the day prior to the
seventh anniversary of Funding Date A; (c) 2.5% during the one-year period
commencing on the seventh anniversary of Funding Date A and ending on the day
prior to the eighth anniversary of Funding Date A; (d) 0% during the one-year
period commencing on the eighth anniversary of Funding Date A and ending on the
day prior to the ninth anniversary of Funding Date A; and (e) 0% during the
one-year period commencing on the ninth anniversary of Funding Date A and ending
on the day prior to the tenth anniversary of Funding Date A.
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
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<PAGE> 191
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.
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, and
Liquidated Damages, if any, 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, and Liquidated Damages, if any, to the date fixed
for the closing of such
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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 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
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majority in principal amount of the then outstanding Notes or, in either case,
if no Notes are outstanding, the holders of a majority in aggregate principal
amount of Bridge Notes then outstanding. 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).
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<PAGE> 194
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> 195
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> 196
____________________________
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> 197
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> 198
[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 Amount of Signature of Date of
decrease in increase in Principal authorized exchange
principal principal amount of officer of following such
amount of this amount of this this Global Trustee or decrease or
Global Note Global Note Note Notes Custodian increase
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
</TABLE>
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<PAGE> 199
EXHIBIT B
[FORM OF FACE OF NEW 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.
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<PAGE> 200
[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 _____________________________. THE
ISSUE PRICE OF THIS NOTE IS $_______________ PER $1000.00 OF INITIAL PRINCIPAL
AMOUNT AT MATURITY. THIS NOTE IS ISSUED WITH $____________ OF ORIGINAL ISSUE
DISCOUNT PER $1000.00 OF INITIAL PRINCIPAL AMOUNT AT MATURITY. THE YIELD TO
MATURITY OF THIS NOTE IS _________%.
No. ___________ $____________
CUSIP No. [ ]CINS No. [ ]
____% SERIES B SENIOR EXCHANGE NOTE DUE 20__
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 _________,
20___, 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: August 1 and February 1, commencing on the first date
following the issuance and authentication of this Note in exchange for Bridge
Notes.
Record Dates: July 15 and January 15
IN WITNESS WHEREOF, NTL Incorporated has caused this Note to be signed
manually or by facsimile by its duly authorized officer.
Dated: ________________
NTL INCORPORATED,
by:___________________________________
- ----------
**** Applicable to Global Notes only.
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<PAGE> 201
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes described in the within-mentioned Indenture.
THE CHASE MANHATTAN BANK, as Trustee
By: _____________________________________
Authorized Officer
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<PAGE> 202
(FORM OF REVERSE OF NEW NOTE)
NTL INCORPORATED
____% Series B Senior Exchange Note due 20___
1. Interest. NTL INCORPORATED, a Delaware corporation (the "Company"), is
the issuer of the Series B Senior Exchange Notes referred to in the title of
this Note and the other Notes contemplated by the Indenture referred to below
(collectively, the "Notes"). The Company promises to pay interest on the Notes
in cash semiannually on each August 1 and February 1, commencing on the first
date following the issuance and authentication of this Note in exchange for
Bridge Notes to Holders of record on the immediately preceding July 15 and
August 15, respectively, at the rate per annum referred to in the title of this
Note. Interest on the Notes will accrue from the most recent date to which
interest has been paid on the Notes, provided that, with respect to the initial
payment of interest, interest shall accrue from the applicable Exchange Date.
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
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<PAGE> 203
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. 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.
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<PAGE> 204
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
March 17, 1999 (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 (ss.)(ss.) 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 $1,350,000,000 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 the fifth anniversary of
Funding Date A (as defined in the Indenture). 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 price equal to
100% of the principal amount thereof plus the Specified Premium plus accrued and
unpaid interest thereon, if any, to the applicable redemption date. "Specified
Premium" means, with respect to each Note, (i) during the one-year period
commencing on the fifth anniversary of Funding Date A, the Specified Premium
shall equal a percentage of the principal amount of such Note equal to 50% of
the fixed interest rate on such Note; and (ii) during each one-year period
commencing on the sixth anniversary of Funding Date A until the date that is two
years prior to the maturity of the applicable Note, the Specified Premium
referred to in clause (i) shall decline ratably. For example, if the fixed
interest rate on a Note having a maturity of 10 years was equal to 15% then the
Specified Premium would equal (a) 7.5% during the one-year period commencing on
the fifth anniversary of Funding Date A and ending on the day prior to the sixth
anniversary of Funding Date A; (b) 5.0% during the one-year period commencing on
the sixth anniversary of Funding Date A and ending on the day prior to the
seventh anniversary of Funding Date A; (c) 2.5% during the one-year period
commencing on the seventh anniversary of Funding Date A and ending on the day
prior to the eighth anniversary of Funding Date A; (d) 0% during the one-year
period commencing on the eighth anniversary of Funding Date A and ending on the
day prior to the ninth anniversary of Funding Date A; and (e) 0% during the
one-year period commencing on the ninth anniversary of Funding Date A and ending
on the day prior to the tenth anniversary of Funding Date A.
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
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<PAGE> 205
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.
(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
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<PAGE> 206
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 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
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<PAGE> 207
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 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 or, in
either case, if no Notes are outstanding, the holders of a majority in aggregate
principal amount of Bridge Notes then outstanding. 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> 208
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> 209
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> 210
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> 211
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 Amount of Signature of Date of
decrease in increase in Principal authorized exchange
principal principal amount of officer of following such
amount of this amount of this this Global Trustee or decrease or
Global Note Global Note Note Notes Custodian increase
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
</TABLE>
B-13
<PAGE> 212
EXHIBIT C
FORM OF TRANSFER CERTIFICATE FOR TRANSFER
FROM RULE 144A GLOBAL NOTE
TO REGULATION S GLOBAL NOTE
(Transfers pursuant to (ss.) 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 _____% Senior Exchange Notes due 20__ (the
"Notes")
Reference is hereby made to the Indenture, dated as of March 17,
1999 (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 that such
C-1
<PAGE> 213
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> 214
EXHIBIT D
FORM OF TRANSFER CERTIFICATE FOR TRANSFER
FROM REGULATION S GLOBAL NOTE
TO RULE 144A GLOBAL NOTE
(Transfers pursuant to (ss.) 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 ____% Senior Exchange Notes due 20__ (the
"Notes")
Reference is hereby made to the Indenture, dated as of March 17,
1999 (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> 215
EXHIBIT E
FORM OF TRANSFER CERTIFICATE FOR TRANSFER
FROM GLOBAL NOTE OR RESTRICTED
NOTE TO RESTRICTED NOTE
(Transfers pursuant to (ss.) 2.06(a)(iv)
or (ss.) 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 ____% Senior Exchange Notes due 20__ (the
"Notes")
Reference is hereby made to the Indenture, dated as of March 17, 1999 (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> 216
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 _____% Senior Exchange Notes due 20__
(the "Notes")
Reference is hereby made to the Indenture, dated as of March 17, 1999 (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> 217
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 BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT
F-2
<PAGE> 218
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> 219
EXHIBIT G
FORM OF CERTIFICATE FOR TRANSFERS OF
REGULATION S GLOBAL NOTE FOR
RESTRICTED NOTES
(Transfers pursuant to (ss.) 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 _____% Senior Exchange Notes due 20__ (the "Notes")
Reference is hereby made to the Indenture, dated as of March 17, 1999 (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> 220
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> 221
EXHIBIT F-1
[FORM OF OPINION OF SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP]
March 17, 1999
Goldman, Sachs Credit Partners, L.P.
c/o Goldman, Sachs & Co.
85 Broad Street
New York, NY 10004,
as Administrative Agent
The Lenders listed on Schedule I attached hereto
Re: NTL Incorporated
We have acted as special counsel to NTL Incorporated, a Delaware
corporation (the "Borrower"), in connection with the execution and delivery of
that certain Bridge Loan Agreement, dated as of March 17, 1999 (the "Bridge Loan
Agree ment"), among the Borrower, the lenders named therein and Goldman Sachs
Credit Partners L.P., as arranger and administrative agent (the "Administrative
Agent"). This opinion is being delivered to you pursuant to Section 5.11(i) of
the Bridge Loan Agree ment. Capitalized terms used herein and not otherwise
defined herein shall have the same meanings herein as ascribed thereto in the
Bridge Loan Agreement.
In rendering the opinions set forth below, we have examined and
relied on originals or copies, certified or otherwise identified to our
satisfaction, of the following:
(a) the Bridge Loan Agreement;
(b) the Bridge Notes;
(c) the Registration Rights Agreement;
(d) the Escrow Agreement;
<PAGE> 222
Goldman Sachs Credit Partners, L.P.
March 17, 1999
Page 2
(e) the Exchange Note Indenture;
(f) the Exchange Notes;
(g) the Engagement Letter;
(h) the Fee Letter;
(i) the Certificate of Incorporation and By-Laws of the Borrower, as
currently in effect;
(j) certain resolutions of the Board of Directors of the Borrower
relating to the Loan Documents and the transactions contemplated thereby;
(k) a certificate of good standing from the Secretary of State of
the State of Delaware as to the good standing of the Borrower in such
jurisdiction;
(l) certificates and telegrams from public officials in the
jurisdictions listed on Schedule II as to the good standing of the Borrower as a
foreign corporation in each such jurisdiction; and
(m) such other documents as we have deemed necessary or appropriate
as a basis for the opinions set forth below.
The documents referred to in clauses (a) through (h) above are
hereinafter referred to collectively as the "Operative Documents". For purposes
of this opinion (i) the term "Applicable Laws" shall mean the General
Corporation Law of Delaware and those laws, rules and regulations of the State
of New York and of the United States of America (including, without limitation,
Regulations T, U and X of the Board of Gover nors of the Federal Reserve System)
which, in our experience, are normally applicable to transactions of the type
contemplated by the Operative Documents, (ii) the term "Gov ernmental Approval"
means any consent, approval, license, authorization or validation of, or filing,
recording or registration with, any state or federal executive, legislative,
judicial, administrative, or regulatory body which, in our experience, are
normally applicable to transactions of the type contemplated by the Operative
Documents pursuant to Applicable Laws, (iii) the term "Applicable Contract"
shall mean those agreements or
<PAGE> 223
Goldman Sachs Credit Partners, L.P.
March 17, 1999
Page 3
instruments governing the Borrower's material indebtedness and the primary
agreement governing the acquisition of the Acquired Business, each as set forth
on Schedule III hereto and which have been identified to us as such by the
Borrower in the Borrower's Certificate (as hereinafter defined), (iv)
"Governmental Authorities" means any court, regulatory body, administrative
agency, or governmental body of the State of Delaware, the State of New York or
the United States of America having jurisdiction over the Borrower or any of its
subsidiaries under Applicable Laws, and (iv) the term "Applicable Orders" means
those judgments, orders or decrees of any Governmental Authorities specifically
identified to us by the Borrower to be applicable to the Borrower or any of its
subsidiaries, as identified on Schedule IV hereto.
In our examination we have assumed the genuineness of all
signatures, the legal capacity of all natural persons, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified or photostatic copies, and the
authenticity of the originals of such copies. As to any facts material to this
opinion which we did not independently establish or verify, we have relied upon
statements and representations of the Borrower and its officers and other
representatives, and of others. In particular, we have also reviewed, and are
relying upon as to factual matters as a basis for the opinions set forth herein,
a certificate (the "Borrower's Certificate") of the President, Chief Executive
Officer and Chief Financial Officer of the Borrower certifying that, among other
things, the proceeds of the Bridge Loans, the issuance of the Bridge Notes and
the Exchange Notes will be used by the Borrower in accordance with the
applicable provisions of the relevant Applicable Contracts.
We do not express any opinion as to the laws of any jurisdiction
other than (i) the laws of the State of New York, (ii) the General Corporation
Law of the State of Delaware and (iii) the federal laws of the United States of
America to the extent specifically referred to herein.
The opinions set forth below are subject to the following
assumptions and qualifications:
(a) the opinions set forth in paragraph 5 are based in part upon the
matters set forth in the Borrower's Certificate, without our having made any
independent investigation or verification of such matters;
<PAGE> 224
Goldman Sachs Credit Partners, L.P.
March 17, 1999
Page 4
(b) enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and by general principles of equity (regardless of whether enforcement
is sought in equity or at law);
(c) we express no opinion as to the applicability or effect of any
fraudulent transfer or similar law on the opinions expressed below, any
provision of the Operative Documents or any transaction contemplated thereby;
(d) we express no opinion as to any provision of the Operative
Documents that purports to grant participants of the Lenders rights of set-off
against the Borrower or as to whether any affiliate or branch of the
Administrative Agent or any Lender has a right of set-off against the Borrower
pursuant to the Operative Documents;
(e) we express no opinion as to the effect on the opinions expressed
herein of (i) the compliance or noncompliance of the Administrative Agent, any
of the Lenders or any other party (other than the Borrower) to the Operative
Documents with any state, federal or other laws or regulations applicable to
them or (ii) the legal or regulatory status or nature of the business of the
Administrative Agent, any of the Lenders or any such other party;
(f) we have assumed each of the Operative Documents constitutes a
valid and binding obligation of each party to such Operative Document (other
than the Borrower) enforceable against such party (other than the Borrower) in
accordance with its terms; and
(g) we express no opinion as to the enforceability of any rights to
contribution or indemnification which are violative of the public policy
underlying any law, rule or regulation (including, without limitation, any
federal or state securities law, rule or regulation).
In rendering the opinions expressed below, we have assumed, without
any independent investigation or verification of any kind, that:
(a) the execution, delivery and performance by the Borrower of the
Operative Documents and the consummation of the transactions contemplated
thereby do not and will not conflict with, contravene, violate or constitute a
default under (i) any
<PAGE> 225
Goldman Sachs Credit Partners, L.P.
March 17, 1999
Page 5
lease, indenture, instrument or other agreement to which the Borrower or its
property is subject (other than the Applicable Contracts as to which we express
our opinion in paragraph 5 herein), (ii) any rule, law or regulation to which
the Borrower is subject (other than Applicable Laws as to which we express our
opinion in paragraph 5 herein) or (iii) any judicial or administrative order or
decree of any governmental authority (other than Applicable Orders as to which
we express our opinion in paragraph 5 herein); and
(b) no authorization, consent or other approval of, notice to or
filing with any court, governmental authority or regulatory body (other than
Governmental Approvals as to which we express our opinion in paragraph 5 herein)
is required to authorize or is required in connection with the execution,
delivery or performance by the Borrower of the Operative Documents or the
transactions contemplated thereby.
Based upon the foregoing and subject to the assumptions and
qualifica tions set forth herein, we are of the opinion that:
1. The Borrower has been duly incorporated and is validly existing
and is in good standing as a corporation under the laws of the State of
Delaware.
2. Based solely on certificates from the Secretary of State of the
applicable jurisdiction, the Borrower is duly qualified as a foreign corporation
to transact business and is in good standing in each jurisdiction listed in the
Borrower's Certificate attached as Exhibit A hereto.
3. The Borrower has full corporate power and authority to execute,
deliver and perform the Operative Documents.
4. The Borrower has taken all necessary corporate action to
authorize the execution, delivery and performance by it of the Operative
Documents.
5. The execution, delivery and performance of the Operative
Documents by the Borrower, compliance by the Borrower with the terms thereof and
the consummation by the Borrower of the transactions contemplated thereby will
not (i) conflict with the Certificate of Incorporation or By-laws of the
Borrower, (ii) constitute a violation of, or a default under the terms of any
Applicable Contract (except we do not express any opinion as to any covenant,
restriction or provision of any such agreement or instrument with respect to
financial ratios or tests), (iii) result in the creation or imposi-
<PAGE> 226
Goldman Sachs Credit Partners, L.P.
March 17, 1999
Page 6
tion of any Lien upon property or assets of the Borrower pursuant to the terms
of any Applicable Contract, (iv) contravene any provision of any Applicable Laws
or Applicable Orders or (v) require any Governmental Approval, except such as
have been obtained or made on or prior to the date hereof, such as may be
required in connection with the registration under the Securities Act of the
Exchange Notes in accordance with the Registration Rights Agreement.
6. Each of the Operative Documents (other than the Exchange Notes)
has been duly authorized, executed and delivered by the Borrower and constitutes
a valid and binding obligation of the Borrower enforceable against the Borrower
in accordance with its terms, except that the waiver contained in Section 4.6 of
the Bridge Loan Agreement and Section 4.04 of the Exchange Note Indenture may be
unenforceable.
7. The Exchange Notes have been duly authorized, executed and
delivered by the Borrower and, assuming due authentication in accordance with
the terms of the Exchange Indenture by the Exchange Trustee, upon delivery to
the holders of Bridge Loans, in exchange for Bridge Notes, will constitute
legal, valid and binding obligations of the Borrower entitled to the benefits of
the Exchange Note Indenture and enforceable against the Borrower in accordance
with their terms, except that the waiver contained in Section 4.04 of the
Exchange Note Indenture may be unenforceable.
8. No registration of the Bridge Loans, the Bridge Notes or the
Exchange Notes under the Securities Act of 1933, as amended, is required for the
funding of the Bridge Loans and the issuance of the Bridge Notes and the
Exchange Notes, except such as may be required in connection with the
registration under the Securities Act of the Exchange Notes in accordance with
the Registration Rights Agreement, and, in each case, in the manner contemplated
by the Bridge Loan Agreement and the Escrow Agreement, as applicable. We express
no opinion, however, as to when or under what circumstances the Bridge Loans,
the Bridge Notes or the Exchange Notes subsequently may be resold.
9. The Borrower is not and, upon the issuance of the Bridge Notes
and the Exchange Notes and the application of the net proceeds to the Borrower
of such issuance, will not be an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
<PAGE> 227
Goldman Sachs Credit Partners, L.P.
March 17, 1999
Page 7
10. None of the transactions contemplated by the Bridge Loan
Agreement, including, without limitation, the use of the proceeds of the Bridge
Loans provided for in the Loan Documents, will violate or result in a violation
of Section 7 of the Securities Exchange Act of 1934, as amended, any regulations
issued pursuant thereto, or regulations T, U or X of the Board of Governors of
the Federal Reserve System.
This opinion is being furnished only to the addressees named above
in connection with the satisfaction of the condition precedent specified in
Section 5.11 of the Bridge Loan Agreement and is solely for their benefit and is
not to be used or relied upon by any other person or for any other purpose
without our prior written consent, except that any financial institution who
becomes a "Lender" in accordance with Section 6.2 of the Bridge Loan Agreement
(as from time to time amended) may rely on this opinion as if addressed and
delivered to that financial institution on the date hereof.
Very truly yours,
<PAGE> 228
Schedule I
Lenders
Goldman Sachs Credit Partners, L.P.
<PAGE> 229
Schedule II
Foreign Jurisdictions
<TABLE>
<CAPTION>
Name Jurisdiction
- ---- ------------
<S> <C>
NTL Incorporated New Jersey
New York
</TABLE>
<PAGE> 230
Schedule III
Applicable Contracts
1. Indenture, dated as of April 20, 1995 between the Borrower and Chemical Bank,
as Trustee governing the Borrower's 12 3/4% Senior Deferred Coupon Notes Due
2005, as amended by a First Supplemental Indenture, dated as of January 22,
1996, between the Borrower and Chemical Bank, as Trustee, as further amended by
a Second Supplemental Indenture, dated as of October 14, 1998, between the
Borrower and The Chase Manhattan Bank, as Trustee.
2. Indenture, dated as of January 30, 1996, between the Borrower and Chemical
Bank, as Trustee governing the Borrower's 11 1/2% Senior Deferred Coupon Notes
Due 2006 as amended by a First Supplemental Indenture, dated October 14, 1998,
between the Borrower and The Chase Manhattan Bank, as Trustee.
3. Indenture, dated as of June 12, 1996, between the Borrower and Chemical Bank,
as Trustee governing the Borrower's 7% Convertible Subordinated Notes Due 2008.
4. Indenture, dated as of February 12, 1997, between the Borrower and The Chase
Manhattan Bank, as Trustee governing the Borrower's 10% Senior Notes Due 2007,
as amended by a First Supplemental Indenture, dated as of October 14, 1998,
between the Borrower and The Chase Manhattan Bank, as Trustee.
5. Indenture, dated as of March 13, 1998, between the Borrower and The Chase
Manhattan Bank, as Trustee governing the Borrower's 9 1/2% Sterling Senior Notes
Due 2008.
6. Indenture, dated as of March 13, 1998, between the Borrower and The Chase
Manhattan Bank, as Trustee governing the Borrower's 10 3/4% Sterling Senior
Deferred Coupon Notes Due 2008.
7. Indenture, dated as of March 13, 1998, between the Borrower and The Chase
Manhattan Bank, as Trustee governing the Borrower's 9 3/4% Senior Deferred
Coupon Notes Due 2008.
8. Share Exchange Agreement, dated as of June 16, 1998, among the Borrower and
the shareholders of Diamond Cable Communications Plc. signatories thereto.
9. Indenture, dated as of November 2, 1998, between the Borrower and The Chase
Manhattan Bank, as Trustee governing the Borrower's 111/2% Senior Notes due
2008.
<PAGE> 231
10. Indenture, dated as of November 6,1998, between the Borrower and The Chase
Manhattan Bank, as Trustee governing the Borrower's 12 3/8% Senior Deferred
Coupon Notes due 2008.
11. Indenture, dated as of December 16, 1998, between the Borrower and The Chase
Manhattan Bank, as Trustee governing the Borrower's 7% Convertible Subordinated
Notes due 2008.
<PAGE> 232
Schedule IV
Applicable Orders
None.
<PAGE> 233
Exhibit A
NTL INCORPORATED
OFFICER'S CERTIFICATE
The undersigned certifies that he is a duly elected and authorized
officer of NTL Incorporated, a Delaware corporation (the "Borrower"), and that
as such he is authorized to execute this certificate on behalf of the Borrower.
The undersigned acknowledges that pursuant to Section 5.11 of the
Bridge Loan Agreement, Skadden, Arps, Slate, Meagher & Flom LLP ("SASM&F") is
rendering a legal opinion to the Administrative Agent and the Lenders (the
"Opinion"). The undersigned further understands that SASM&F is relying on this
officer's certificate and the statements made herein in rendering the Opinion
and the Lenders are relying on clauses (iv) and (v) of this officer's
certificate being provided in connection with the Opinion and the Loan
Documents. Capitalized terms used herein and not otherwise defined herein shall
have the same meanings herein as ascribed thereto in the Opinion.
With regard to the foregoing, the undersigned further certifies that
on behalf of the Borrower and its subsidiaries:
(i) the undersigned is familiar with the covenants contained in each
of the Applicable Contracts.
(ii) due inquiry has been made of all persons deemed necessary or
appropriate to verify or confirm the statements contained herein.
(iii) all the proceeds of the Bridge Loans, Bridge Notes and
Exchange Notes will be used in accordance with the applicable provisions of each
of the relevant Applicable Contracts; without limiting the generality of the
foregoing, each of the Diamond Notes constitutes Permitted Acquired Debt (as
defined in the Borrower's Applicable Contracts relating to its 9 1/2% Notes, 9
3/4% Notes, 10% Notes, 10 3/4% Notes, 11 1/2% Deferred Coupon Notes, 11 1/2%
Notes, 12 3/4% Notes and 12 3/8% Notes).
(iv) Set forth on Schedule I hereto are all of the agreements or
instru ments governing the Borrower's material indebtedness and the primary
agreement governing the acquisition of the Acquired Business.
(v) Set forth on Schedule II hereto are all of the orders, judgments
and decrees of any governmental authority which are material to the business or
property of the Borrower.
<PAGE> 234
(vi) Set forth on Schedule III hereto are all of the jurisdictions
in which the Borrower is qualified to do business as a foreign corporation.
(vii) The value of all securities owned by the Borrower (excluding
those issued by majority-owned Subsidiaries of the Borrower) does not exceed 10%
of the value of the Borrower's total assets.
(viii)Less than 25 percent of the assets of the Borrower on a
consoli dated basis and on an unconsolidated basis consist of margin stock (as
such term is defined in Regulation U of the Board of Governors of the Federal
Reserve System).
(ix) The Borrower (a) is primarily engaged, directly or through a
wholly-owned subsidiary or subsidiaries, in a business or businesses other than
that of investing, reinvesting, owning, holding or trading in securities and (b)
is not engaged and does not propose to engage in the business of investing,
reinvesting, owning, holding or trading in securities, and does not own or
propose to acquire investment securities having a value exceeding 40 percent of
the value of the Borrower's total assets (exclusive of government securities and
cash items) on an unconsolidated basis.
IN WITNESS WHEREOF, the undersigned has executed this certificate
this th day of March, 1999.
By:_______________________________
Name: J. Barclay Knapp
Title: President, Chief Executive
Officer and Chief
Financial Officer
<PAGE> 235
Schedule I
Applicable Contracts
1. Indenture, dated as of April 20, 1995 between the Borrower and Chemical Bank,
as Trustee governing the Borrower's 12 3/4% Senior Deferred Coupon Notes Due
2005, as amended by a First Supplemental Indenture, dated as of January 22,
1996, between the Borrower and Chemical Bank, as Trustee, as further amended by
a Second Supplemental Indenture, dated as of October 14, 1998, between the
Borrower and The Chase Manhattan Bank, as Trustee.
2. Indenture, dated as of January 30, 1996, between the Borrower and Chemical
Bank, as Trustee governing the Borrower's 11 1/2% Senior Deferred Coupon Notes
Due 2006 as amended by a First Supplemental Indenture, dated October 14, 1998,
between the Borrower and The Chase Manhattan Bank, as Trustee.
3. Indenture, dated as of June 12, 1996, between the Borrower and Chemical Bank,
as Trustee governing the Borrower's 7% Convertible Subordinated Notes Due 2008.
4. Indenture, dated as of February 12, 1997, between the Borrower and The Chase
Manhattan Bank, as Trustee governing the Borrower's 10% Senior Notes Due 2007,
as amended by a First Supplemental Indenture, dated as of October 14, 1998,
between the Borrower and The Chase Manhattan Bank, as Trustee.
5. Indenture, dated as of March 13, 1998, between the Borrower and The Chase
Manhattan Bank, as Trustee governing the Borrower's 9 1/2% Sterling Senior Notes
Due 2008.
6. Indenture, dated as of March 13, 1998, between the Borrower and The Chase
Manhattan Bank, as Trustee governing the Borrower's 10 3/4% Sterling Senior
Deferred Coupon Notes Due 2008.
7. Indenture, dated as of March 13, 1998, between the Borrower and The Chase
Manhattan Bank, as Trustee governing the Borrower's 9 3/4% Senior Deferred
Coupon Notes Due 2008.
8. Share Exchange Agreement, dated as of June 16, 1998, among the Borrower and
the shareholders of Diamond Cable Communications Plc. signatories thereto.
9. Indenture, dated as of November 2, 1998, between the Borrower and The Chase
Manhattan Bank, as Trustee governing the Borrower's 111/2% Senior Notes due
2008.
<PAGE> 236
10.Indenture, dated as of November 6,1998, between the Borrower and The Chase
Manhattan Bank, as Trustee governing the Borrower's 12 3/8% Senior Deferred
Coupon Notes due 2008.
11.Indenture, dated as of December 16, 1998, between the Borrower and The Chase
Manhattan Bank, as Trustee governing the Borrower's 7% Convertible Subordinated
Notes due 2008.
<PAGE> 237
Schedule II
Applicable Orders
None.
<PAGE> 238
Schedule III
Foreign Jurisdictions
<TABLE>
<CAPTION>
Name Jurisdiction
- ---- ------------
<S> <C>
NTL Incorporated New Jersey
New York
</TABLE>
<PAGE> 239
EXHIBIT F-2
[FORM OF GENERAL COUNSEL OPINION]
[March , 1999]
Goldman, Sachs Credit Partners, L.P.
c/o Goldman, Sachs & Co.
85 Broad Street
New York, NY 10004,
as Administrative Agent
The Lenders listed on Schedule I attached hereto
Re: NTL Incorporated
Ladies and Gentleman:
I am the General Counsel to NTL Incorporated, a Delaware corporation
(the "Borrower"), and have so acted in connection with the execution and
delivery of that certain Bridge Loan Agreement, dated as of March __, 1999 (the
"Bridge Loan Agree ment"), among the Borrower and Goldman Sachs Credit Partners
L.P., as arranger and administrative agent (the "Administrative Agent"). This
opinion is being delivered to you pursuant to Section 5.11 of the Bridge Loan
Agreement. Capitalized terms used herein and not otherwise defined herein shall
have the same meanings herein as ascribed thereto in the Bridge Loan Agreement.
In rendering the opinions set forth below, I have examined and
relied on originals or copies, certified or otherwise identified to our
satisfaction, of the following:
(a) the Bridge Loan Agreement;
(b) the Bridge Notes;
(c) the Registration Rights Agreement;
<PAGE> 240
Goldman Sachs Credit Partners, L.P.
March , 1999
Page 2
(d) the Escrow Agreement;
(e) the Exchange Note Indenture;
(f) the Exchange Notes; and
(g) such other documents as I have deemed necessary or appropriate
as a basis for the opinions set forth below.
The documents referred to in clauses (a) through (f) above are
hereinafter referred to collectively as the "Operative Documents".
In my examination I have assumed the genuineness of all signatures,
the legal capacity of all natural persons, the authenticity of all documents
submitted to me as originals, the conformity to original documents of all
documents submitted to me as certified or photostatic copies, and the
authenticity of the originals of such copies. As to any facts material to this
opinion which I did not independently establish or verify, I have relied upon
statements and representations of the Borrower and its officers and other
representatives, and of others.
I do not express any opinion as to the laws of any jurisdiction
other than the laws of the State of New York.
Based upon the foregoing and subject to the assumptions and
qualifica tions set forth herein, I am of the opinion that:
1. Except as set forth on Schedule 3.13 to the Bridge Loan Agree
ment, to my actual knowledge, there are no legal or governmental proceedings
pending or threatened against the Borrower or any of its subsidiaries, or to
which any of their respective properties is subject, that could reasonable be
expected to have a Material Adverse Effect.
2. To my actual knowledge, neither the Borrower nor any Subsidiary
(i) is in default (which default has not been waived) under any agreement,
document or instrument to which it is a party or by which it or any of its
assets is bound or (ii) is in violation of any law, rule, regulation, judgement,
writ, determination, order, decree or
<PAGE> 241
Goldman Sachs Credit Partners, L.P.
March , 1999
Page 3
arbitral award to which the Borrower or any Subsidiary is a party or by which
the Borrower or any Subsidiary or any of their respective properties is bound,
which default or violation, as the case may be, would constitute a Default or
Event of Default under the Bridge Loan Agreement or otherwise could reasonably
be expected to have a Material Adverse Effect.
This opinion is being furnished only to the addressees named above
in connection with the satisfaction of the condition precedent specified in
Section 5.11 of the Bridge Loan Agreement and is solely for their benefit and is
not to be used or relied upon by any other person or for any other purpose
without our prior written consent, except that any financial institution who
becomes a "Lender" in accordance with Section 6.2 of the Bridge Loan Agreement
(as from time to time amended) may rely on this opin ion as if addressed and
delivered to that financial institution on the date hereof.
Very truly yours,
By:______________________________
Richard J. Lubasch
General Counsel
<PAGE> 242
EXHIBIT G-1
FORM OF BRIDGE NOTE GUARANTEE
THIS GUARANTEE (as amended, supplemented, amended and restated or
otherwise modified from time to time, this "Guarantee") is made and entered into
as of ____________, ____, by ________________, a _____________ corporation (the
"Guarantor"), in favor of GOLDMAN SACHS CREDIT PARTNERS, L.P., in its capacity
as administrative agent (in such capacity, the "Administrative Agent"), for the
benefit of the Lenders (as defined below) of the Bridge Notes issued pursuant to
that certain Bridge Loan Agreement, dated as of March 17, 1999 (the "Bridge Loan
Agreement"), among NTL Incorporated, a Delaware corporation (the "Borrower"),
the Lenders party thereto and Goldman Sachs Credit Partners, L.P., as
Administrative Agent. The Administrative Agent and the Lenders are referred to
herein as, the "Guaranteed Parties"). Capitalized terms used herein and not
otherwise defined shall have the meanings given in the Bridge Loan Agreement.
RECITALS
The Guarantor will derive significant direct and indirect benefits
from the issuance of the Bridge Notes pursuant to the Bridge Loan Agreement.
AGREEMENT
NOW THEREFORE, in consideration of the promises and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Guarantor hereby agrees with the Administrative Agent for its
benefit and the ratable benefit of the Guaranteed Parties as follows:
SECTION 1. THE GUARANTEE. The guarantee of the Guarantor hereunder
is as follows:
Section 1.1. Guarantee. Subject to Section 1.2, the Guarantor hereby
unconditionally, absolutely and irrevocably guarantees to the Guaranteed Parties
and their successors, endorsees, transferees and assigns, the prompt payment
(whether at stated maturity, on mandatory prepayment, by acceleration or
otherwise) and performance of all of the Obligations of the Borrower under the
Bridge Loan Agreement and the other Loan Documents (the "Guaranteed
Obligations"). The Guarantor agrees that this Guarantee is a guaranty of payment
and performance and not of collection, and that its obligations under this
Guarantee shall be joint and several with any other Persons which may at any
time or from time to time be or become directly or indirectly financially
responsible to the Guaranteed Parties with respect to the Guaranteed Obligations
and shall be under all circumstances primary, absolute and unconditional,
irrespective of, and unaffected by:
(a) the genuineness, validity, regularity, enforceability or any
future amendment of, or change in, this Guarantee, the Bridge Loan Agreement,
any other Loan
<PAGE> 243
Document or other agreement, document or instrument to which the Borrower is or
are or may become a party;
(b) the absence of any action to enforce this Guarantee, the Bridge
Loan Agreement, any other Loan Document or the waiver or consent by the
Guaranteed Parties with respect to any of the provisions hereof or thereof;
(c) [intentionally omitted]
(d) any bankruptcy, insolvency, reorganization, arrangement,
adjustment, composition, liquidation or the like of the Borrower including, but
not limited to, (i) any Guaranteed Party's election, in any proceeding
instituted under Title 11 of the United States Code (11 U.S.C. ss. 101 et seq.)
or any replacement or supplemental federal statutes dealing with the bankruptcy
of debtors (the "Bankruptcy Code"), of the application of Section 1111(b)(2) or
any successor provision of the Bankruptcy Code, (ii) any borrowing, issuance of
notes or grant of a lien by the Borrower as debtor-in-possession, under Section
364 of the Bankruptcy Code, or (iii) the disallowance of all or any portion of
any Guaranteed Party's claim(s) for repayment of the Guaranteed Obligations
under Section 502 of the Bankruptcy Code;
(e) any merger or consolidation of the Borrower into or with any
other Person, or any sale, lease or transfer of any or all of the assets of the
Borrower to any other Person;
(f) any circumstance which might constitute a defense available to,
or a discharge of the Borrower;
(g) any sale, transfer or other disposition of any stock, limited
liability company interests, partnership interests or other ownership interests
of the Borrower;
(h) absence of any notice to, or knowledge by, the Guarantor of the
existence or occurrence of any of the matters or events set forth in the
foregoing clauses (a) through (g); or
(i) any other fact or circumstance which might otherwise constitute
a defense available to, or a discharge of, a surety or guarantor;
it being agreed by the Guarantor that its obligations under this Guarantee shall
not be discharged until the payment in immediately available funds and
performance, in full, of the Guaranteed Obligations or written release of the
Guarantor by the Guaranteed Parties, whichever shall occur first. The Guarantor
shall be regarded, and shall be in the same position, as principal debtor with
respect to the Guaranteed Obligations and specifically agrees that,
notwithstanding any discharge of the Borrower, any other Person or the operation
of any other provision of the Bankruptcy Code with respect to the Guaranteed
Obligations or any such Persons, the Guarantor shall be fully responsible for
paying all interest which may at any time accrue with respect to the Guaranteed
Obligations or which would accrue but for the operation of any provision of or
doctrine with respect to the Bankruptcy Code and whether or not an allowed
claim. The Guarantor expressly waives all rights it may have now or in the
future under any statute, or at common law, or at law or in equity, or
otherwise, to compel the Guaranteed Parties to proceed in respect of the
Guaranteed Obligations against the Borrower or any other Person before
proceeding against, or as a condition to proceeding against, the Guarantor. The
Guarantor agrees
2
<PAGE> 244
that any notice or directive given at any time to the Guaranteed Parties which
is inconsistent with the waiver in the immediately preceding sentence shall be
null and void and may be ignored by the Guaranteed Parties, and, in addition,
may not be pleaded or introduced as evidence in any litigation relating to this
Guarantee for the reason that such pleading or introduction would be at variance
with the written terms of this Guarantee unless the Administrative Agent has
specifically agreed otherwise in a writing expressly referring to this Section
1.1. It is agreed between the Guarantor and the Guaranteed Parties that the
foregoing waivers are of the essence of the transaction contemplated by the Loan
Documents and that, but for this Guarantee and such waivers, the Guaranteed
Parties would have declined to enter into the Bridge Loan Agreement.
Section 1.2. Maximum Liability. Notwithstanding any provision to the
contrary herein or in any other Loan Document, the maximum liability of the
Guarantor hereunder shall be limited to the maximum aggregate amount as would
not render the Guarantor's obligations hereunder subject to avoidance as a
fraudulent transfer or conveyance under Section 548 of the Bankruptcy Code (as
hereinafter defined) or any applicable provisions of any state or foreign law
having similar effect.
Section 1.3. Demand By The Administrative Agent. In addition to the
terms of the Guarantee set forth in Section 1.1 hereof, and in no manner
imposing any other limitation on such terms, it is expressly understood and
agreed that, if any or all of the then outstanding principal amount of the
Guaranteed Obligations (together with all accrued but unpaid interest thereon,
any prepayment premium, any Liquidated Damages and any Additional Amounts
payable in respect thereof) becomes due and payable, then the obligations of the
Guarantor shall, at the option of the Administrative Agent, without notice or
demand, become due and payable and the Guarantor shall, upon demand in writing
therefor by the Administrative Agent to such Guarantor, pay to the holder or
holders of the Guaranteed Obligations the outstanding Guaranteed Obligations due
and owing to such holder or holders. Payment by the Guarantor shall be made in
dollars to the Administrative Agent for the ratable benefit of the Guaranteed
Parties, in immediately available funds to an account designated by the
Administrative Agent or at the address set forth herein for the giving of notice
to the Administrative Agent or at any other address that may be specified in
writing from time to time by the Administrative Agent.
Section 1.4. Enforcement Of Guarantee. In no event shall the
Administrative Agent or any Guaranteed Party have any obligation (although it is
entitled, at its option) to proceed against the Borrower or any other Person
before seeking satisfaction from the Guarantor, and the Administrative Agent may
proceed, prior or subsequent to, or simultaneously with, the enforcement of the
Guaranteed Parties' rights hereunder, to exercise any right or remedy which it
or they may have.
The obligations of the Guarantor hereunder are independent of the
obligations of any other guarantor of the Guaranteed Obligations of the
Borrower, and a separate action or actions may be brought and prosecuted against
the Guarantor whether or not action is brought against any other guarantor or
the Borrower, and whether or not any other guarantor or the Borrower is joined
in any such action or actions.
Section 1.5. Waivers. In addition to the waivers contained in
Section 1.1 hereof, the Guarantor waives, and agrees that it shall not at any
3
<PAGE> 245
time insist upon, plead or in any manner whatever claim or take the benefit or
advantage of, any appraisal, valuation, stay, extension, marshaling of assets or
redemption or similar laws, or exemption, whether now or at any time hereafter
in force, which may delay, prevent or otherwise affect the performance by the
Guarantor of its obligations under, or the enforcement by the Administrative
Agent or any Guaranteed Party of, this Guarantee. The Guarantor hereby waives
diligence, presentment and demand (whether for nonpayment or protest or of
acceptance, maturity, extension of time, change in nature or form of the
Guaranteed Obligations, acceptance of further security, release of further
security, composition or agreement arrived at as to the amount of, or the terms
of, the Guaranteed Obligations, notice of adverse change in the Borrower's
financial condition or any other fact which might materially increase the risk
to such Guarantor) with respect to any of the Guaranteed Obligations (except as
provided in Section 1.3 above) and waives the benefit of all provisions of law
which are or might be in conflict with the terms of this Guarantee. The
Guarantor hereby waives any requirement on the part of any holder of any Bridge
Note to mitigate the damages resulting from any default under such Bridge Note.
The Guarantor represents, warrants and agrees that, as of the date of this
Guarantee, its obligations under this Guarantee are not subject to any offsets
or defenses against any Guaranteed Party or the Borrower of any kind. The
Guarantor further agrees that its obligations under this Guarantee shall not be
subject to any counterclaims, offsets or defenses against any Guaranteed Party
or the Borrower of any kind which may arise in the future.
Section 1.6. Benefit Of Guarantee. The provisions of this Guarantee
are for the ratable benefit of the Guaranteed Parties and their respective
successors, transferees, endorsees and assigns, and nothing herein contained
shall impair, as between the Borrower and the Guaranteed Parties, the
obligations of the Borrower under the Loan Documents. In the event all or any
part of the Guaranteed Obligations are transferred, endorsed or assigned by the
Guaranteed Parties to any Person or Persons in accordance with the terms of the
Bridge Loan Agreement, any reference to "Guaranteed Parties" herein shall be
deemed to refer equally to such Person or Persons.
Section 1.7. Modification Of Guaranteed Obligations. If the
Guaranteed Parties shall at any time or from time to time, with or without the
consent of, or notice to, the Guarantor:
(a) issue Bridge Notes or extend other credit to the Borrower,
change the time, manner or place of payment of, or any other term of, all or any
portion of, the Guaranteed Obligations, or otherwise waive or consent to any
departure from the terms of any Loan Document;
(b) take any action under or in respect of the Loan Documents in the
exercise of any remedy, power or privilege contained therein or available to it
at law, equity or otherwise, or waive or refrain from exercising any such
remedies, powers or privileges;
(c) amend or modify, in any manner whatsoever, the Loan Documents;
(d) extend or waive the time for and of any Guarantor's, the
Borrower's or any other Person's performance of, or compliance with, any term,
covenant or agreement on its part to be performed or observed under the Loan
Documents, or waive such performance or compliance or consent to a failure of,
or departure from, such performance or compliance;
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(e) [intentionally omitted];
(f) release or limit the liability of anyone who may be liable in
any manner for the payment of any amounts owed by the Guarantor or the Borrower
to the Guaranteed Parties;
(g) modify or terminate the terms of any intercreditor or
subordination agreement pursuant to which claims of other creditors of the
Guarantor or the Borrower are subordinated to the claims of any of the
Guaranteed Parties; and/or
(h) apply any sums by whomever paid or however realized to any
amounts owing by the Guarantor or the Borrower to the Guaranteed Parties in such
manner as the Guaranteed Parties shall determine in their discretion;
then the Guaranteed Parties shall not incur any liability to the Guarantor
pursuant hereto as a result thereof and no such action shall impair or release
the obligations of the Guarantor under this Guarantee.
Section 1.8. Reinstatement. This Guarantee shall remain in full
force and effect and continue to be effective in the event any petition is filed
by or against the Borrower, the Guarantor or any other Person for liquidation or
reorganization, in the event the Borrower, the Guarantor or any other Person
becomes insolvent or makes an assignment for the benefit of creditors or in the
event a receiver or trustee is appointed for all or any significant part of any
of the Borrower's, the Guarantor's or such other Person's assets, and shall
continue to be effective or be reinstated, as the case may be, if at any time
payment and performance of the Guaranteed Obligations, or any part thereof, is,
pursuant to applicable law, rescinded or reduced in amount, or must otherwise be
restored or returned by the Guaranteed Parties, whether as a "voidable
preference", "fraudulent conveyance", or otherwise, all as though such payment
or performance had not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Guaranteed Obligations
shall be reinstated and deemed reduced only by such amount paid and not so
rescinded, reduced, restored or returned.
Section 1.9. Waiver Of Subrogation. THE GUARANTOR HEREBY IRREVOCABLY
WAIVES UNTIL INDEFEASIBLE PAYMENT IN FULL OF THE OBLIGATIONS ALL RIGHTS OF
SUBROGATION (WHETHER CONTRACTUAL, UNDER SECTION 509 OF THE BANKRUPTCY CODE,
UNDER COMMON LAW, OR OTHERWISE) TO THE CLAIMS OF THE GUARANTEED PARTIES AGAINST
THE BORROWER AND ALL CONTRACTUAL, STATUTORY OR COMMON LAW RIGHTS OF
CONTRIBUTION, REIMBURSEMENT, INDEMNIFICATION AND SIMILAR RIGHTS AND "CLAIMS" (AS
SUCH TERM IS DEFINED IN THE BANKRUPTCY CODE) AGAINST BORROWER WHICH ARISE IN
CONNECTION WITH, OR AS A RESULT OF, THIS GUARANTEE.
Section 1.10. Continuing Guarantee; Transfer Of Notes. This
Guarantee is a continuing guaranty and shall (i) remain in full force and effect
until payment in immediately available funds and performance in full of the
Guaranteed Obligations, (ii) be binding upon the Guarantor and its successors
and permitted transferees and assigns, and (iii) inure, together with
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the rights and remedies of the Guaranteed Parties hereunder, to the benefit of
the Guaranteed Parties and their respective permitted successors, transferees,
endorsees and assigns. Without limiting the generality of foregoing clause
(iii), any Guaranteed Party may, except as limited by the express terms of the
Bridge Loan Agreement, assign or otherwise transfer any Bridge Note held by it
to any other Person or entity, and such other Person or entity shall thereupon
become vested with all the benefits in respect thereof granted to such
Guaranteed Party herein or otherwise.
SECTION 2. SUBORDINATION OF OTHER OBLIGATIONS. Any indebtedness of
the Borrower now or hereafter held by or owed to any Guarantor is hereby
subordinated in right of payment to the Guaranteed Obligations, and any such
indebtedness of the Borrower to the Guarantor collected or received by the
Guarantor shall be held in trust for the Administrative Agent on behalf of the
Guaranteed Parties and shall forthwith be paid over to the Administrative Agent
for the benefit of the Guaranteed Parties in the form received (with any
necessary or requested endorsements) to be credited and applied against the
Guaranteed Obligations but without affecting, impairing or limiting in any
manner the liability of the Guarantor under any other provision of this
Guarantee.
SECTION 3. DELIVERIES. In a form satisfactory to the Administrative
Agent, the Guarantor shall deliver to the Administrative Agent, concurrently
with the execution of this Guarantee, the other instruments, certificates and
documents as are required to be delivered by the Guarantor on or before the date
hereof to the Guaranteed Parties under the Bridge Loan Agreement.
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS. As of the date
hereof, the Guarantor hereby represents and warrants to the Guaranteed Parties
that each of the following representations and warranties is true:
Section 4.1. Organization; Powers. The Guarantor has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of the State of _______ with power and authority (corporate and other) to
own its properties and conduct its business as now conducted and as proposed to
be conducted, and has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties or conducts any business so
as to require such qualification, or is subject to no material liability or
disability by reason of the failure to be so qualified in any such jurisdiction.
The Guarantor has all requisite corporate power and authority to execute,
deliver and perform its obligations under this Guarantee.
Section 4.2. Due Authorization and Enforceability. This Guarantee:
(i) has been duly authorized, executed and delivered by the Guarantor and (ii)
constitutes a valid and binding obligation of the Guarantor enforceable against
the Guarantor in accordance with its terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general equity principles.
Section 4.3. No Conflicts. The execution and delivery of this
Guarantee, the consummation of the transactions contemplated hereby and
compliance with the terms and provisions hereof will not require any consent,
approval, authorization or other order of any
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court, regulatory body, administrative agency or other governmental body, will
not conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, sale/leaseback agreement, loan agreement or other similar financing
agreement or instrument or other agreement or instrument to which the Guarantor
is a party or by which the Guarantor is bound or to which any of the property or
assets of the Guarantor is subject, nor will such action result in any violation
of the provisions of the Certificate of Incorporation or By-laws (or other
governing documents) of the Guarantor or any statute or any order, rule or
regulation of any court or governmental agency or body having jurisdiction over
the Guarantor or any of its properties; and no consent, approval, authorization,
order, registration or qualification of or with any such court or governmental
agency or body is required for the consummation by the Guarantor of the
transactions contemplated by this Guarantee.
Section 4.4. No Violations; Material Contracts. The Guarantor is not
in violation of its Certificate of Incorporation or By-laws or other governing
documents or in default in the performance or observance of any obligation,
agreement or condition contained in any bond, debenture, note or any other
evidence of indebtedness or in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is a party or by
which it or any of its properties may be bound or to which any of its properties
is subject or is in violation of any law, statute, rule, regulation, judgment or
court decree applicable to the Guarantor or any of its properties, 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 could not reasonably expected
to have a Material Adverse Effect. "Material Adverse Effect" means any
circumstance or event that (i) has, or may be reasonably expected to have, any
materially adverse effect upon the validity or enforceability of this Guarantee,
(ii) is, or may be reasonably expected to be, materially adverse to the
consolidated financial condition, business, operations, assets, liabilities,
management or prospects of the Guarantor, or (iii) materially impairs the
ability of the Guarantor to perform its Obligations under this Guarantee.
Section 4.5. Absence of Proceedings. 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
Guarantor, threatened, to which the Guarantor is a party or of which any of its
properties is the subject which, if determined adversely to the Guarantor,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect; and, to the best of the Guarantor's knowledge, no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others.
Section 4.6. Mandatory Prepayment.The Guarantor shall prepay, or
cause the Borrower to prepay, the Bridge Loans ratably in accordance with the
aggregate outstanding principal balances thereof, with the Net Cash Proceeds of:
(i) any direct or indirect public offering or private placement of any debt or
equity securities of the Guarantor issued after the Closing Date, (ii) the
incurrence of any other Indebtedness by the Guarantor after the Closing Date and
(iii) any Asset Sale by the Guarantor after the Closing Date (other than an
Asset Sale permitted under Section 4.10 of the Bridge Loan Agreement) (each of
the transactions in the foregoing clauses (i), (ii) and (iii), a "Capital
Markets Transaction"). The Bridge Loans prepaid by the Borrower or the
Guarantor, as applicable, in accordance with Section 2.4 of the Bridge
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Loan Agreement shall be paid in the following order priority: first, the Series
C Bridge Loans, second, the Series B Bridge Loans, and third, the Series A
Bridge Loans.
Subject to Section 2.6 and Section 2.7 of the Bridge Loan Agreement,
the Guarantor shall, not later than the fifth Business Day following any Capital
Markets Transaction, apply, or cause to be applied, such Net Cash Proceeds or
excess available cash to prepay the Bridge Loans pursuant to this Section 4.6
and Section 2.4 of the Bridge Loan Agreement, without premium or penalty, by
paying to each Lender an amount equal to 100% of such Lender's pro rata share of
the aggregate principal amount of the Bridge Loans to be prepaid, plus accrued
and unpaid interest thereon to the Prepayment Date.
SECTION 5. FURTHER ASSURANCES.
The Guarantor agrees, upon the written request of the Administrative
Agent, and at the Guarantor's expense, to execute and deliver to the
Administrative Agent, from time to time, any additional instruments or documents
considered necessary or advisable by the Administrative Agent to cause this
Guarantee to be, become or remain valid and effective in accordance with its
terms.
SECTION 6. PAYMENTS FREE AND CLEAR OF TAXES.
Section 6.1. Payment of Taxes. If at any time the Guarantor is
required to make any deduction or withholding in respect of Taxes from any
payment due under this Guaranty or any other Loan Document for the account of
the Administrative Agent or any Guaranteed Party, the sum due from such
Guarantor in respect of such payment shall, subject to Section 6.2, be increased
to the extent necessary to yield to the Administrative Agent and each Guaranteed
Party on the due date for such payment (free from any liability in respect of
such deduction or withholding) a net sum equal to the sum which it would have
received had no such deduction or withholding been required to be made, and such
Guarantor shall, or shall cause the other Guarantors to, indemnify the
Administrative Agent and each Guaranteed Party against any losses or costs
incurred by any of them by reason of any failure of such Guarantor to make any
such deduction or withholding or by reason of any increased payment not being
made on the due date for such payment. Each Guarantor shall pay the full amount
deducted or withheld to the relevant taxing or other authority in accordance
with applicable Requirements of Law and as promptly as possible thereafter
deliver to the Administrative Agent or the applicable Guaranteed Party the
original or a certified copy of an original official receipt received by the
Guarantor showing payment thereof.
Section 6.2. Other Taxes. The Guarantor agrees to pay Other Taxes
and defend and hold the Administrative Agent and each Guaranteed Party harmless
from and against any and all liabilities with respect to Other Taxes or
resulting from any delay or omission to pay such Other Taxes.
Section 6.3. Indemnification. The Guarantor agrees to indemnify,
defend and hold harmless the Administrative Agent and each Guaranteed Party for
the full amount of Taxes and Other Taxes (including, without limitation, any
Taxes and Other Taxes imposed or asserted (whether or not correctly) by any
jurisdiction on amounts payable under this Section 6) paid by
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the Administrative Agent or such Guaranteed Party (as the case may be) and any
liability (including any penalties, interest and expenses) arising therefrom or
with respect thereto. This indemnification shall be paid within five days after
the Administrative Agent or the applicable Guaranteed Party (as the case may be)
makes demand therefor.
Section 6.4. Survival. Without prejudice to the survival of any
other agreement of the Guarantors hereunder, the agreements and obligations of
the Guarantor contained in this Section 6 shall survive the payment in full of
the Guaranteed Obligations.
Section 6.5. Transferees. The Guarantor agrees that the provisions
of this Section 6 shall inure to the benefit of any transferee of any Bridge
Note.
SECTION 7. RIGHT OF SET-OFF. In addition to and not in limitation of
all rights of offset that any Guaranteed Party or other holder of a Bridge Note
may have under applicable law or under any Loan Document, each Guaranteed Party
or other holder of a Bridge Note shall upon the occurrence and during the
continuation of any Event of Default and whether or not such Guaranteed Party or
such holder has made any demand or such Guarantor's obligations are matured,
have the right to appropriate and apply to the payment of such Guarantor's
obligations hereunder, all deposits (general or special, time or demand,
provisional or final) then or thereafter held by and other indebtedness or
property then or thereafter owing by such Guaranteed Party or other holder to
such Guarantor, whether or not related to this Guarantee or any transaction
hereunder.
SECTION 8. MISCELLANEOUS.
Section 8.1. Amendments. Any amendment or waiver of any provision of
this Guarantee and any consent to any departure by the Guarantor from any
provision of this Guarantee shall be effective only if made or given in
compliance with all of the terms and provisions of Section 12.3 of the Bridge
Loan Agreement.
Section 8.2. Expenses. The Guarantor shall promptly pay to the
Administrative Agent, for the ratable benefit of the Guaranteed Parties, the
amount of any and all reasonable out-of-pocket costs and expenses of the
Guaranteed Parties (both before and after the execution hereof) in connection
with any matters contemplated by or arising out of this Guarantee or any of the
Loan Documents whether (a) costs and expenses of the Administrative Agent and
the Guaranteed Parties to prepare, negotiate or execute (i) any amendment to,
modification of or extension of this Guarantee or any other Loan Document to
which the Guarantor is a party or (ii) any instrument, document or agreement in
connection with any sale or attempted sale of any interest herein to any
assignee or participant, (b) to commence, defend, or intervene in any litigation
or to file a petition, complaint, answer, motion or other pleadings necessary to
protect or enforce the rights of the Guaranteed Parties under this Guarantee or
any other Loan Document, (c) to take any other action in or with respect to any
suit or proceeding (bankruptcy or otherwise) necessary to protect the rights of
the Guaranteed Parties under this Guarantee or any other Loan Document or to
respond to any subpoena, deposition or interrogatory with respect to any
litigation involving any Guarantor, or (d) to attempt to enforce or to enforce
any rights of the Guaranteed Parties to collect any of the Guaranteed
Obligations, including all reasonable fees and expenses of attorneys and
paralegals (including reasonable charges for inside counsel).
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Section 8.3. Headings. The headings in this Guarantee are for
purposes of reference only and shall not otherwise affect the meaning or
construction of any provision of this Guarantee.
Section 8.4. Severability. The provisions of this Guarantee are
severable, and if any clause or provision shall be held invalid or unenforceable
in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect in that jurisdiction only such clause or
provision, or part thereof, and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision of this
Guarantee in any jurisdiction.
Section 8.5. Notices. All notices, approvals, consents or other
communications required or desired to be given hereunder shall be in the form
and manner provided in the Bridge Loan Agreement, and delivered to each of the
parties hereto at their respective addresses set forth below:
If to the Administrative Agent: Goldman Sachs Credit Partners L.P.
c/o Goldman Sachs & Co.
85 Broad Street
New York, NY 10004
Attention: [Amy Shapero]
Telecopy: 902-3000
with a copy to:
Kirk A. Davenport
Latham & Watkins
885 Third Avenue
New York, NY 10022-4802
Telecopy: (212) 751-4864
If to the Guarantor: NTL Incorporated
110 East 59th Street
New York, NY 10022
Attention: Richard Lubasch, Esq.
Telecopy: (212) 906-8497
Section 8.6. Remedies Cumulative. Each right, power and remedy of
the Guaranteed Parties provided in this Guarantee or now or hereafter existing
at law or in equity or by statute or otherwise shall be cumulative and
concurrent and shall be in addition to every other right, power or remedy
provided for in this Guarantee or now or hereafter existing at law or in equity
or by statute or otherwise. The exercise or partial exercise by the Guaranteed
Parties of any one or more of such rights, powers or remedies shall not preclude
the simultaneous or later exercise by the Guaranteed Parties of all such other
rights, powers or remedies, and no failure or delay on the part of any
Guaranteed Party to exercise any such right, power or remedy shall operate as a
waiver thereof.
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Section 8.7. Statute of Limitations. To the full extent permitted by
applicable law, the Guarantor hereby waives the right to plead any statute of
limitations as a defense to performance of its obligations under, or enforcement
of, this Guarantee.
Section 8.8. Final Expression. This Guarantee, together with any
other agreement executed in connection herewith, is intended by the parties as a
final expression of the Guarantee and is intended as a complete and exclusive
statement of the terms and conditions thereof. Acceptance of or acquiescence in
a course of performance rendered under this Guarantee shall not be relevant to
determine the meaning of this Guarantee even though the accepting or acquiescing
party had knowledge of the nature of the performance and opportunity for
objection.
Section 8.9. Financial Status. The Guarantor hereby assumes
responsibility for keeping itself informed of the financial condition of the
Guarantor and the Borrower and any and all endorsers and/or other guarantors of
any instrument or document evidencing all or any part of the Guaranteed
Obligations and of all other circumstances bearing upon the risk of nonpayment
or nonperformance of the Guaranteed Obligations or any part thereof that
diligent inquiry would reveal, and the Guarantor hereby agrees that the
Guaranteed Parties shall have no duty to advise the Guarantor of information
known to the Guaranteed Parties regarding such condition or any such
circumstances. In the event the Guaranteed Parties, in their discretion,
undertake at any time or from time to time to provide any such information to
the undersigned, the Guaranteed Parties shall be under no obligation (i) to
undertake any investigation not a part of their regular business routine, (ii)
to disclose any information which the Guaranteed Parties wish to maintain
confidential, or (iii) to make any other or future disclosures of such
information or any other information to the Guarantor or any other Person.
Section 8.10. Assignability. This Guarantee shall be binding on the
Guarantor and its successors and permitted assigns and transferees and shall
inure to the benefit of the Guaranteed Parties and their respective successors,
transferees, endorsees and assigns. The Guarantor may not assign this Guarantee.
Section 8.11. Non-Waiver. The failure of any Guaranteed Party to
exercise any right or remedy hereunder, or promptly to enforce any such right or
remedy, shall not constitute a waiver thereof, nor give rise to any estoppel
against any Guaranteed Party, nor excuse any Guarantor from its obligations
hereunder.
Section 8.12. Termination. Subject to the provisions of Sections 1.8
and 6.4, this Guarantee shall terminate upon the receipt by each of the
Guaranteed Parties of the payment in immediately available funds and performance
in full of the Guaranteed Obligations and any other amounts which may be owing
hereunder, or the written release of the Guarantor by the Guaranteed Parties,
whichever shall occur first. At the time of such termination, the Guaranteed
Parties, at the request and expense of the Guarantor, will execute and deliver
to the Guarantor a proper instrument or instruments acknowledging the
satisfaction and termination of this Guarantee.
Section 8.13. Counterparts. This Guarantee may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which, when so
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executed and delivered, shall be an original, but all of which shall together
constitute one and the same agreement.
Section 8.14. New York Law; Submission to Jurisdiction; Waiver of
Jury Trial. THIS GUARANTEE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAW RULES
THEREOF. THE GUARANTOR HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY
NEW YORK STATE COURT SITTING IN NEW YORK CITY (EACH, A "NEW YORK COURT") FOR
PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THE BRIDGE
NOTES, THIS GUARANTEE OR ANY OF THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY. THE GUARANTOR IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT
ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. THE GUARANTOR IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THE BRIDGE NOTES, THIS
GUARANTEE OR ANY OF THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
Section 8.15. [Intentionally omitted]
Section 8.16. Limitation Of Liability. No claim may be made by the
Guarantor or any other Person against the Administrative Agent or any Guaranteed
Party or the Affiliates, directors, officers, employees, attorneys or agents of
any of them for any special, indirect, consequential or punitive damages in
respect of any claim for breach of contract or any theory of liability arising
out of or related to the transactions contemplated by this Guarantee or the
other Loan Documents, or any act, omission or event occurring in connection
therewith; and the Guarantor hereby waives, releases and agrees not to sue and
shall cause each of its respective Subsidiaries to waive, release or agree not
to sue (if required), upon any claim for any such damages, whether or not
accrued and whether or not known or suspected to exist in its favor.
Section 8.17. Payments. Notwithstanding any provision to the
contrary herein or in any Loan Document, all payments made under or in
connection with this Guarantee and the other Loan Documents shall be in
immediately available funds and in lawful currency of the United States.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Guarantor has caused this Guarantee to be
duly executed and delivered as of the date first above written.
[GUARANTOR]
By:
---------------------------------
Name:
Title:
<PAGE> 255
EXHIBIT G-2
FORM OF EXCHANGE NOTE GUARANTEE
THIS GUARANTEE (as amended, supplemented, amended and restated or
otherwise modified from time to time, this "Guarantee") is made and entered into
as of ____________, ____, by ________________, a _____________ corporation (the
"Guarantor"), in favor of The Chase Manhattan Bank, in its capacity as trustee
(in such capacity, the "Trustee"), for the benefit of the Holders (as defined in
the Indenture) of the Notes issued pursuant to that certain Indenture, dated as
of March 17, 1999 (as amended, modified or supplemented from time to time, the
"Indenture"), between NTL Incorporated, a Delaware corporation (the "Company")
and the Trustee. The Trustee and the Holders are referred to herein as, the
"Guaranteed Parties"). Capitalized terms used herein and not otherwise defined
shall have the meanings given in the Indenture.
RECITALS
The Guarantor will derive significant direct and indirect benefits
from the issuance of the Notes pursuant to the Indenture.
AGREEMENT
NOW THEREFORE, in consideration of the promises and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Guarantor hereby agrees with the Trustee for its benefit and
the ratable benefit of the Guaranteed Parties as follows:
SECTION 1. THE GUARANTEE. The guarantee of the Guarantor hereunder
is as follows:
Section 1.1. Guarantee. Subject to Section 1.2, the Guarantor hereby
unconditionally, absolutely and irrevocably guarantees to the Guaranteed Parties
and their successors, endorsees, transferees and assigns, the prompt payment
(whether at stated maturity, on mandatory prepayment, by acceleration or
otherwise) and performance of all of the Obligations of the Company under the
Indenture, the Notes and the Registration Rights Agreement (collectively, the
"Guaranteed Obligations"). The Guarantor agrees that this Guarantee is a
guaranty of payment and performance and not of collection, and that its
obligations under this Guarantee shall be joint and several with any other
Persons which may at any time or from time to time be or become directly or
indirectly financially responsible to the Guaranteed Parties with respect to the
Guaranteed Obligations and shall be under all circumstances primary, absolute
and unconditional, irrespective of, and unaffected by:
(a) the genuineness, validity, regularity, enforceability or any
future amendment of, or change in, this Guarantee, the Indenture, the Notes, the
Registration Rights
<PAGE> 256
Agreement or other agreement, document or instrument to which the Company is or
are or may become a party;
(b) the absence of any action to enforce this Guarantee, the
Indenture, the Notes, the Registration Rights Agreement or the waiver or consent
by the Guaranteed Parties with respect to any of the provisions hereof or
thereof;
(c) [intentionally omitted]
(d) any bankruptcy, insolvency, reorganization, arrangement,
adjustment, composition, liquidation or the like of the Company including, but
not limited to, (i) any Guaranteed Party's election, in any proceeding
instituted under Title 11 of the United States Code (11 U.S.C. ss. 101 et seq.)
or any replacement or supplemental federal statutes dealing with the bankruptcy
of debtors (the "Bankruptcy Code"), of the application of Section 1111(b)(2) or
any successor provision of the Bankruptcy Code, (ii) any borrowing, issuance of
notes or grant of a lien by the Company as debtor-in-possession, under Section
364 of the Bankruptcy Code, or (iii) the disallowance of all or any portion of
any Guaranteed Party's claim(s) for repayment of the Guaranteed Obligations
under Section 502 of the Bankruptcy Code;
(e) any merger or consolidation of the Company into or with any
other Person, or any sale, lease or transfer of any or all of the assets of the
Company to any other Person;
(f) any circumstance which might constitute a defense available to,
or a discharge of the Company;
(g) any sale, transfer or other disposition of any stock, limited
liability company interests, partnership interests or other ownership interests
of the Company;
(h) absence of any notice to, or knowledge by, the Guarantor of the
existence or occurrence of any of the matters or events set forth in the
foregoing clauses (a) through (g); or
(i) any other fact or circumstance which might otherwise constitute
a defense available to, or a discharge of, a surety or guarantor;
it being agreed by the Guarantor that its obligations under this Guarantee shall
not be discharged until the payment in immediately available funds and
performance, in full, of the Guaranteed Obligations or written release of the
Guarantor by the Guaranteed Parties, whichever shall occur first. The Guarantor
shall be regarded, and shall be in the same position, as principal debtor with
respect to the Guaranteed Obligations and specifically agrees that,
notwithstanding any discharge of the Company, any other Person or the operation
of any other provision of the Bankruptcy Code with respect to the Guaranteed
Obligations or any such Persons, the Guarantor shall be fully responsible for
paying all interest which may at any time accrue with respect to the Guaranteed
Obligations or which would accrue but for the operation of any provision of or
doctrine with respect to the Bankruptcy Code and whether or not an allowed
claim. The Guarantor expressly waives all rights it may have now or in the
future under any statute, or at common law, or at law or in equity, or
otherwise, to compel the Guaranteed Parties to proceed in respect of the
Guaranteed Obligations against the Company or any other Person before
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proceeding against, or as a condition to proceeding against, the Guarantor. The
Guarantor agrees that any notice or directive given at any time to the
Guaranteed Parties which is inconsistent with the waiver in the immediately
preceding sentence shall be null and void and may be ignored by the Guaranteed
Parties, and, in addition, may not be pleaded or introduced as evidence in any
litigation relating to this Guarantee for the reason that such pleading or
introduction would be at variance with the written terms of this Guarantee
unless the Trustee has specifically agreed otherwise in a writing expressly
referring to this Section 1.1. It is agreed between the Guarantor and the
Guaranteed Parties that the foregoing waivers are of the essence of the
transaction contemplated by the Indenture and that, but for this Guarantee and
such waivers, the Guaranteed Parties would have declined to enter into the
Indenture.
Section 1.2. Maximum Liability. Notwithstanding any provision to the
contrary herein or in the Indenture, the Notes or the Registration Rights
Agreement, the maximum liability of the Guarantor hereunder shall be limited to
the maximum aggregate amount as would not render the Guarantor's obligations
hereunder subject to avoidance as a fraudulent transfer or conveyance under
Section 548 of the Bankruptcy Code (as hereinafter defined) or any applicable
provisions of any state or foreign law having similar effect.
Section 1.3. Demand By The Trustee. In addition to the terms of the
Guarantee set forth in Section 1.1 hereof, and in no manner imposing any other
limitation on such terms, it is expressly understood and agreed that, if any or
all of the then outstanding principal amount of the Guaranteed Obligations
(together with all accrued but unpaid interest thereon, any prepayment premium,
any Liquidated Damages and any Additional Amounts payable in respect thereof)
becomes due and payable, then the obligations of the Guarantor shall, at the
option of the Trustee, without notice or demand, become due and payable and the
Guarantor shall, upon demand in writing therefor by the Trustee to such
Guarantor, pay to the holder or holders of the Guaranteed Obligations the
outstanding Guaranteed Obligations due and owing to such holder or holders.
Payment by the Guarantor shall be made in dollars to the Trustee for the ratable
benefit of the Guaranteed Parties, in immediately available funds to an account
designated by the Trustee or at the address set forth herein for the giving of
notice to the Trustee or at any other address that may be specified in writing
from time to time by the Trustee.
Section 1.4. Enforcement Of Guarantee. In no event shall the Trustee
or any Guaranteed Party have any obligation (although it is entitled, at its
option) to proceed against the Company or any other Person before seeking
satisfaction from the Guarantor, and the Trustee may proceed, prior or
subsequent to, or simultaneously with, the enforcement of the Guaranteed
Parties' rights hereunder, to exercise any right or remedy which it or they may
have.
The obligations of the Guarantor hereunder are independent of the
obligations of any other guarantor of the Guaranteed Obligations of the Company,
and a separate action or actions may be brought and prosecuted against the
Guarantor whether or not action is brought against any other guarantor or the
Company, and whether or not any other guarantor or the Company is joined in any
such action or actions.
Section 1.5. Waivers. In addition to the waivers contained in
Section 1.1 hereof, the Guarantor waives, and agrees that it shall not at any
time insist upon, plead or in any manner whatever claim or take the benefit or
advantage of, any appraisal, valuation, stay,
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extension, marshaling of assets or redemption or similar laws, or exemption,
whether now or at any time hereafter in force, which may delay, prevent or
otherwise affect the performance by the Guarantor of its obligations under, or
the enforcement by the Trustee or any Guaranteed Party of, this Guarantee. The
Guarantor hereby waives diligence, presentment and demand (whether for
nonpayment or protest or of acceptance, maturity, extension of time, change in
nature or form of the Guaranteed Obligations, acceptance of further security,
release of further security, composition or agreement arrived at as to the
amount of, or the terms of, the Guaranteed Obligations, notice of adverse change
in the Company's financial condition or any other fact which might materially
increase the risk to such Guarantor) with respect to any of the Guaranteed
Obligations (except as provided in Section 1.3 above) and waives the benefit of
all provisions of law which are or might be in conflict with the terms of this
Guarantee. The Guarantor hereby waives any requirement on the part of any holder
of any Note to mitigate the damages resulting from any default under such Note.
The Guarantor represents, warrants and agrees that, as of the date of this
Guarantee, its obligations under this Guarantee are not subject to any offsets
or defenses against any Guaranteed Party or the Company of any kind. The
Guarantor further agrees that its obligations under this Guarantee shall not be
subject to any counterclaims, offsets or defenses against any Guaranteed Party
or the Company of any kind which may arise in the future.
Section 1.6. Benefit Of Guarantee. The provisions of this Guarantee
are for the ratable benefit of the Guaranteed Parties and their respective
successors, transferees, endorsees and assigns, and nothing herein contained
shall impair, as between the Company and the Guaranteed Parties, the obligations
of the Company under the Indenture, the Notes or the Registration Rights
Agreement. In the event all or any part of the Guaranteed Obligations are
transferred, endorsed or assigned by the Guaranteed Parties to any Person or
Persons in accordance with the terms of the Indenture, any reference to
"Guaranteed Parties" herein shall be deemed to refer equally to such Person or
Persons.
Section 1.7. Modification Of Guaranteed Obligations. If the
Guaranteed Parties shall at any time or from time to time, with or without the
consent of, or notice to, the Guarantor:
(a) issue Notes or extend other credit to the Company, change the
time, manner or place of payment of, or any other term of, all or any portion
of, the Guaranteed Obligations, or otherwise waive or consent to any departure
from the terms of the Indenture, the Notes or the Registration Rights Agreement;
(b) take any action under or in respect of the Indenture, the Notes
or the Registration Rights Agreement in the exercise of any remedy, power or
privilege contained therein or available to it at law, equity or otherwise, or
waive or refrain from exercising any such remedies, powers or privileges;
(c) amend or modify, in any manner whatsoever, the Indenture, the
Notes or the Registration Rights Agreement;
(d) extend or waive the time for and of any Guarantor's, the
Company's or any other Person's performance of, or compliance with, any term,
covenant or agreement on its part to be performed or observed under the
Indenture, the Notes or the Registration Rights
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Agreement, or waive such performance or compliance or consent to a failure of,
or departure from, such performance or compliance;
(e) [intentionally omitted];
(f) release or limit the liability of anyone who may be liable in
any manner for the payment of any amounts owed by the Guarantor or the Company
to the Guaranteed Parties;
(g) modify or terminate the terms of any intercreditor or
subordination agreement pursuant to which claims of other creditors of the
Guarantor or the Company are subordinated to the claims of any of the Guaranteed
Parties; and/or
(h) apply any sums by whomever paid or however realized to any
amounts owing by the Guarantor or the Company to the Guaranteed Parties in such
manner as the Guaranteed Parties shall determine in their discretion;
then the Guaranteed Parties shall not incur any liability to the Guarantor
pursuant hereto as a result thereof and no such action shall impair or release
the obligations of the Guarantor under this Guarantee.
Section 1.8. Reinstatement. This Guarantee shall remain in full
force and effect and continue to be effective in the event any petition is filed
by or against the Company, the Guarantor or any other Person for liquidation or
reorganization, in the event the Company, the Guarantor or any other Person
becomes insolvent or makes an assignment for the benefit of creditors or in the
event a receiver or trustee is appointed for all or any significant part of any
of the Company's, the Guarantor's or such other Person's assets, and shall
continue to be effective or be reinstated, as the case may be, if at any time
payment and performance of the Guaranteed Obligations, or any part thereof, is,
pursuant to applicable law, rescinded or reduced in amount, or must otherwise be
restored or returned by the Guaranteed Parties, whether as a "voidable
preference", "fraudulent conveyance", or otherwise, all as though such payment
or performance had not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Guaranteed Obligations
shall be reinstated and deemed reduced only by such amount paid and not so
rescinded, reduced, restored or returned.
Section 1.9. Waiver Of Subrogation. THE GUARANTOR HEREBY IRREVOCABLY
WAIVES UNTIL INDEFEASIBLE PAYMENT IN FULL OF THE OBLIGATIONS ALL RIGHTS OF
SUBROGATION (WHETHER CONTRACTUAL, UNDER SECTION 509 OF THE BANKRUPTCY CODE,
UNDER COMMON LAW, OR OTHERWISE) TO THE CLAIMS OF THE GUARANTEED PARTIES AGAINST
THE COMPANY AND ALL CONTRACTUAL, STATUTORY OR COMMON LAW RIGHTS OF CONTRIBUTION,
REIMBURSEMENT, INDEMNIFICATION AND SIMILAR RIGHTS AND "CLAIMS" (AS SUCH TERM IS
DEFINED IN THE BANKRUPTCY CODE) AGAINST THE COMPANY WHICH ARISE IN CONNECTION
WITH, OR AS A RESULT OF, THIS GUARANTEE.
Section 1.10. Continuing Guarantee; Transfer Of Notes. This
Guarantee is a continuing guaranty and shall (i) remain in full force and effect
until payment in immediately
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available funds and performance in full of the Guaranteed Obligations, (ii) be
binding upon the Guarantor and its successors and permitted transferees and
assigns, and (iii) inure, together with the rights and remedies of the
Guaranteed Parties hereunder, to the benefit of the Guaranteed Parties and their
respective permitted successors, transferees, endorsees and assigns. Without
limiting the generality of foregoing clause (iii), any Guaranteed Party may,
except as limited by the express terms of the Indenture, assign or otherwise
transfer any Note held by it to any other Person or entity, and such other
Person or entity shall thereupon become vested with all the benefits in respect
thereof granted to such Guaranteed Party herein or otherwise.
SECTION 2. SUBORDINATION OF OTHER OBLIGATIONS. Any indebtedness of
the Company now or hereafter held by or owed to any Guarantor is hereby
subordinated in right of payment to the Guaranteed Obligations, and any such
indebtedness of the Company to the Guarantor collected or received by the
Guarantor shall be held in trust for the Trustee on behalf of the Guaranteed
Parties and shall forthwith be paid over to the Trustee for the benefit of the
Guaranteed Parties in the form received (with any necessary or requested
endorsements) to be credited and applied against the Guaranteed Obligations but
without affecting, impairing or limiting in any manner the liability of the
Guarantor under any other provision of this Guarantee.
SECTION 3. DELIVERIES. In a form satisfactory to the Trustee, the
Guarantor shall deliver to the Trustee, concurrently with the execution of this
Guarantee, the other instruments, certificates and documents as are required to
be delivered by the Guarantor on or before the date hereof to the Guaranteed
Parties under the Indenture.
SECTION 4. REPRESENTATIONS AND WARRANTIES. As of the date hereof,
the Guarantor hereby represents and warrants to the Guaranteed Parties that each
of the following representations and warranties is true:
Section 4.1. Organization; Powers. The Guarantor has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of the State of _______ with power and authority (corporate and other) to
own its properties and conduct its business as now conducted and as proposed to
be conducted, and has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties or conducts any business so
as to require such qualification, or is subject to no material liability or
disability by reason of the failure to be so qualified in any such jurisdiction.
The Guarantor has all requisite corporate power and authority to execute,
deliver and perform its obligations under this Guarantee.
Section 4.2. Due Authorization and Enforceability. This Guarantee:
(i) has been duly authorized, executed and delivered by the Guarantor and (ii)
constitutes a valid and binding obligation of the Guarantor enforceable against
the Guarantor in accordance with its terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general equity principles.
Section 4.3. No Conflicts. The execution and delivery of this
Guarantee, the consummation of the transactions contemplated hereby and
compliance with the terms and provisions hereof will not require any consent,
approval, authorization or other order of any
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court, regulatory body, administrative agency or other governmental body, will
not conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, sale/leaseback agreement, loan agreement or other similar financing
agreement or instrument or other agreement or instrument to which the Guarantor
is a party or by which the Guarantor is bound or to which any of the property or
assets of the Guarantor is subject, nor will such action result in any violation
of the provisions of the Certificate of Incorporation or By-laws (or other
governing documents) of the Guarantor or any statute or any order, rule or
regulation of any court or governmental agency or body having jurisdiction over
the Guarantor or any of its properties; and no consent, approval, authorization,
order, registration or qualification of or with any such court or governmental
agency or body is required for the consummation by the Guarantor of the
transactions contemplated by this Guarantee.
Section 4.4. No Violations; Material Contracts. The Guarantor is not
in violation of its Certificate of Incorporation or By-laws or other governing
documents or in default in the performance or observance of any obligation,
agreement or condition contained in any bond, debenture, note or any other
evidence of indebtedness or in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is a party or by
which it or any of its properties may be bound or to which any of its properties
is subject or is in violation of any law, statute, rule, regulation, judgment or
court decree applicable to the Guarantor or any of its properties, 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 could not reasonably expected
to have a Material Adverse Effect. "Material Adverse Effect" means any
circumstance or event that (i) has, or may be reasonably expected to have, any
materially adverse effect upon the validity or enforceability of this Guarantee,
(ii) is, or may be reasonably expected to be, materially adverse to the
consolidated financial condition, business, operations, assets, liabilities,
management or prospects of the Guarantor, or (iii) materially impairs the
ability of the Guarantor to perform its Obligations under this Guarantee.
Section 4.5. Absence of Proceedings. 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
Guarantor, threatened, to which the Guarantor is a party or of which any of its
properties is the subject which, if determined adversely to the Guarantor,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect; and, to the best of the Guarantor's knowledge, no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others.
SECTION 5. FURTHER ASSURANCES. The Guarantor agrees, upon the
written request of the Trustee, and at the Guarantor's expense, to execute and
deliver to the Trustee, from time to time, any additional instruments or
documents considered necessary or advisable by the Trustee to cause this
Guarantee to be, become or remain valid and effective in accordance with its
terms.
SECTION 6. PAYMENTS FREE AND CLEAR OF TAXES.
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Section 6.1. Payment of Taxes. All payments required to be made by
the Guarantor hereunder shall be made to the Guaranteed Parties free and clear
of, and without deduction for, any and all present and future Taxes. If the
Guarantor shall be required by law to deduct any Taxes from or in respect of any
sum payable hereunder, (a) the sum payable shall be increased as much as shall
be necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 6) the Guaranteed
Parties shall receive an amount equal to the sum they would have received had no
such deductions been made, (b) the Guarantor shall make such deductions, and (c)
the Guarantor shall pay the full amount deducted to the relevant taxing or other
authority in accordance with applicable law. Within thirty (30) days after the
date of any payment of Taxes, the Guarantor shall furnish to the Trustee the
original or a certified copy of a receipt evidencing payment thereof. The
Guarantor shall indemnify and, within ten (10) days of demand therefor, pay each
Guaranteed Party for the full amount of Taxes (including any Taxes imposed by
any jurisdiction on amounts payable under this Section 6) paid by such
Guaranteed Party and any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto, whether or not such Taxes were
correctly or legally asserted. "Taxes" shall mean taxes, levies, imposts,
deductions, Charges or witholdings, and all liabilities with respect thereto,
excluding taxes imposed on or measured by the net income of a Guaranteed Party
by the jurisdiction under the laws of which such Guaranteed Party is organized
or any political subdivision thereof. "Charges" shall mean all federal, state,
county, city, municipal, local, foreign or other governmental taxes, levies,
assessments, charges, liens, claims or encumbrances upon or relating to (a) the
Notes or (b) the Guaranteed Obligations.
Section 6.2. [Intentionally Omitted]
Section 6.3. [Intentionally Omitted]
Section 6.4. Survival. Without prejudice to the survival of any
other agreement of the Guarantors hereunder, the agreements and obligations of
the Guarantor contained in this Section 6 and Section 8.2 shall survive the
payment in full of the Guaranteed Obligations.
Section 6.5. Transferees. The Guarantor agrees that the provisions
of this Section 6 shall inure to the benefit of any transferee of any Note.
SECTION 7. RIGHT OF SET-OFF. In addition to and not in limitation of
all rights of offset that any Guaranteed Party or other holder of a Note may
have under applicable law or under the Indenture, the Notes or the Registration
Rights Agreement, each Guaranteed Party or other holder of a Note shall upon the
occurrence and during the continuation of any Event of Default and whether or
not such Guaranteed Party or such holder has made any demand or such Guarantor's
obligations are matured, have the right to appropriate and apply to the payment
of such Guarantor's obligations hereunder, all deposits (general or special,
time or demand, provisional or final) then or thereafter held by and other
indebtedness or property then or thereafter owing by such Guaranteed Party or
other holder to such Guarantor, whether or not related to this Guarantee or any
transaction hereunder.
SECTION 8. MISCELLANEOUS.
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Section 8.1. Amendments. Any amendment or waiver of any provision of
this Guarantee and any consent to any departure by the Guarantor from any
provision of this Guarantee shall be effective only if made or given in
compliance with all of the terms and provisions of Article IX of the Indenture.
Section 8.2. Expenses. The Guarantor shall promptly pay to the
Trustee, for the ratable benefit of the Guaranteed Parties, the amount of any
and all reasonable out-of-pocket costs and expenses of the Guaranteed Parties
(both before and after the execution hereof) in connection with any matters
contemplated by or arising out of this Guarantee, the Indenture, the Notes or
the Registration Rights Agreement whether (a) costs and expenses of the Trustee
and the Guaranteed Parties to prepare, negotiate or execute (i) any amendment
to, modification of or extension of this Guarantee, the Indenture, the Notes or
the Registration Rights Agreement to which the Guarantor is a party or (ii) any
instrument, document or agreement in connection with any sale or attempted sale
of any interest herein to any assignee or participant, (b) to commence, defend,
or intervene in any litigation or to file a petition, complaint, answer, motion
or other pleadings necessary to protect or enforce the rights of the Guaranteed
Parties under this Guarantee, the Indenture, the Notes or the Registration
Rights Agreement, (c) to take any other action in or with respect to any suit or
proceeding (bankruptcy or otherwise) necessary to protect the rights of the
Guaranteed Parties under this Guarantee, the Indenture, the Notes or the
Registration Rights Agreement or to respond to any subpoena, deposition or
interrogatory with respect to any litigation involving any Guarantor, or (d) to
attempt to enforce or to enforce any rights of the Guaranteed Parties to collect
any of the Guaranteed Obligations, including all reasonable fees and expenses of
attorneys and paralegals (including reasonable charges for inside counsel).
Section 8.3. Headings. The headings in this Guarantee are for
purposes of reference only and shall not otherwise affect the meaning or
construction of any provision of this Guarantee.
Section 8.4. Severability. The provisions of this Guarantee are
severable, and if any clause or provision shall be held invalid or unenforceable
in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect in that jurisdiction only such clause or
provision, or part thereof, and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision of this
Guarantee in any jurisdiction.
Section 8.5. Notices. All notices, approvals, consents or other
communications required or desired to be given hereunder shall be in the form
and manner provided in the Indenture, and delivered to each of the parties
hereto at their respective addresses set forth below:
If to the Trustee: The Chase Manhattan Bank
450 West 33rd Street
New York, New York 10001
Attention: Capital Markets
Fiduciary Services
Telecopy: 212-946-8161
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If to the Guarantor: [Name of Guarantor]
c/o NTL Incorporated
110 East 59th Street
New York, NY 10022
Attention: Richard Lubasch, Esq.
Telecopy: (212) 906-8497
Section 8.6. Remedies Cumulative. Each right, power and remedy of
the Guaranteed Parties provided in this Guarantee or now or hereafter existing
at law or in equity or by statute or otherwise shall be cumulative and
concurrent and shall be in addition to every other right, power or remedy
provided for in this Guarantee or now or hereafter existing at law or in equity
or by statute or otherwise. The exercise or partial exercise by the Guaranteed
Parties of any one or more of such rights, powers or remedies shall not preclude
the simultaneous or later exercise by the Guaranteed Parties of all such other
rights, powers or remedies, and no failure or delay on the part of any
Guaranteed Party to exercise any such right, power or remedy shall operate as a
waiver thereof.
Section 8.7. Statute of Limitations. To the full extent permitted by
applicable law, the Guarantor hereby waives the right to plead any statute of
limitations as a defense to performance of its obligations under, or enforcement
of, this Guarantee.
Section 8.8. Final Expression. This Guarantee, together with any
other agreement executed in connection herewith, is intended by the parties as a
final expression of the Guarantee and is intended as a complete and exclusive
statement of the terms and conditions thereof. Acceptance of or acquiescence in
a course of performance rendered under this Guarantee shall not be relevant to
determine the meaning of this Guarantee even though the accepting or acquiescing
party had knowledge of the nature of the performance and opportunity for
objection.
Section 8.9. Financial Status. The Guarantor hereby assumes
responsibility for keeping itself informed of the financial condition of the
Guarantor and the Company and any and all endorsers and/or other guarantors of
any instrument or document evidencing all or any part of the Guaranteed
Obligations and of all other circumstances bearing upon the risk of nonpayment
or nonperformance of the Guaranteed Obligations or any part thereof that
diligent inquiry would reveal, and the Guarantor hereby agrees that the
Guaranteed Parties shall have no duty to advise the Guarantor of information
known to the Guaranteed Parties regarding such condition or any such
circumstances. In the event the Guaranteed Parties, in their discretion,
undertake at any time or from time to time to provide any such information to
the undersigned, the Guaranteed Parties shall be under no obligation (i) to
undertake any investigation not a part of their regular business routine, (ii)
to disclose any information which the Guaranteed Parties wish to maintain
confidential, or (iii) to make any other or future disclosures of such
information or any other information to the Guarantor or any other Person.
Section 8.10. Assignability. This Guarantee shall be binding on the
Guarantor and its successors and permitted assigns and transferees and shall
inure to the benefit of the Guaranteed Parties and their respective successors,
transferees, endorsees and assigns. The Guarantor may not assign this Guarantee.
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Section 8.11. Non-Waiver. The failure of any Guaranteed Party to
exercise any right or remedy hereunder, or promptly to enforce any such right or
remedy, shall not constitute a waiver thereof, nor give rise to any estoppel
against any Guaranteed Party, nor excuse any Guarantor from its obligations
hereunder.
Section 8.12. Termination. Subject to the provisions of Sections 1.8
and 6.4, this Guarantee shall terminate upon the receipt by each of the
Guaranteed Parties of the payment in immediately available funds and performance
in full of the Guaranteed Obligations and any other amounts which may be owing
hereunder, or the written release of the Guarantor by the Guaranteed Parties,
whichever shall occur first. At the time of such termination, the Guaranteed
Parties, at the request and expense of the Guarantor, will execute and deliver
to the Guarantor a proper instrument or instruments acknowledging the
satisfaction and termination of this Guarantee.
Section 8.13. Counterparts. This Guarantee may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which, when so executed and delivered, shall be an
original, but all of which shall together constitute one and the same agreement.
Section 8.14. New York Law; Submission to Jurisdiction; Waiver of
Jury Trial. THIS GUARANTEE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAW RULES
THEREOF. THE GUARANTOR HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY
NEW YORK STATE COURT SITTING IN NEW YORK CITY (EACH, A "NEW YORK COURT") FOR
PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS GUARANTEE,
THE INDENTURE, THE NOTES, THE REGISTRATION RIGHTS AGREEMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY. THE GUARANTOR IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT
ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. THE GUARANTOR IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTEE, THE
INDENTURE, THE NOTES, THE REGISTRATION RIGHTS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
Section 8.15. [Intentionally omitted]
Section 8.16. Limitation Of Liability. No claim may be made by the
Guarantor or any other Person against the Trustee or any Guaranteed Party or the
Affiliates, directors, officers, employees, attorneys or agents of any of them
for any special, indirect, consequential or punitive damages in respect of any
claim for breach of contract or any theory of liability arising out of or
related to the transactions contemplated by this Guarantee, the Indenture, the
Notes or the Registration Rights Agreement, or any act, omission or event
occurring in connection
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therewith; and the Guarantor hereby waives, releases and agrees not to sue and
shall cause each of its respective Subsidiaries to waive, release or agree not
to sue (if required), upon any claim for any such damages, whether or not
accrued and whether or not known or suspected to exist in its favor.
Section 8.17. Payments. Notwithstanding any provision to the
contrary herein or in the Indenture, the Notes or the Registration Rights
Agreement, all payments made under or in connection with this Guarantee and the
Indenture, the Notes and the Registration Rights Agreement shall be in
immediately available funds and in lawful currency of the United States.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Guarantor has caused this Guarantee to be
duly executed and delivered as of the date first above written.
[GUARANTOR]
By:
--------------------------------
Name:
Title:
<PAGE> 268
Exhibit H-1/H-2
[FORM OF GENERAL COUNSEL OPINION FOR BRIDGE NOTE GUARANTEE
AND EXCHANGE NOTE GUARANTEE]
[_____ __, ____]
Goldman, Sachs Credit Partners, L.P.
c/o Goldman, Sachs & Co.
85 Broad Street
New York, NY 10004,
as Administrative Agent
The Lenders listed on Schedule I attached hereto
Re: Bridge Note Guarantee and Exchange Note Guarantee
Ladies and Gentleman:
I am the General Counsel to ___________, a [Delaware] corporation
(the "Parent"), and have so acted in connection with the execution and delivery
of that certain Bridge Note Guarantee, dated as of _____ __, ____ (the "Bridge
Note Guarantee"), by the Parent in favor of Goldman Sachs Credit Partners L.P.,
as administrative agent (the "Administrative Agent") and that certain Exchange
Note Guarantee, dated as of _____ __, ____ (the "Exchange Note Guarantee") by
the Parent in favor of The Chase Manhattan Bank, as trustee. This opinion is
being delivered to you pursuant to Section 4.22 of the Bridge Loan Agreement,
dated as of March 17, 1999 (the "Bridge Loan Agreement"), among NTL
Incorporated, the Lenders named therein and the Administra tive Agent.
Capitalized terms used herein and not otherwise defined herein shall have the
same meanings herein as ascribed thereto in the Bridge Loan Agreement.
In rendering the opinions set forth below, I have examined and
relied on originals or copies, certified or otherwise identified to my
satisfaction, of the following:
(a) the Bridge Note Guarantee; and
<PAGE> 269
Goldman Sachs Credit Partners, L.P.
_____ __, ____
Page 2
(b) the Exchange Note Guarantee; and
(c) such other documents as I have deemed necessary or appropriate
as a basis for the opinions set forth below.
The documents referred to in clauses (a) through (b) above are
hereinafter referred to collectively as the "Operative Documents".
In my examination I have assumed the genuineness of all signatures,
the legal capacity of all natural persons, the authenticity of all documents
submitted to me as originals, the conformity to original documents of all
documents submitted to me as certified or photostatic copies, and the
authenticity of the originals of such copies. As to any facts material to this
opinion which I did not independently establish or verify, I have relied upon
statements and representations of the Parent and its officers and other
representatives, and of others.
I do not express any opinion as to the laws of any jurisdiction
other than the laws of the State of New York.
Based upon the foregoing and subject to the assumptions and
qualifica tions set forth herein, I am of the opinion that:
1. [Except as set forth on Schedule II attached hereto,] to my
actual knowledge, there are no legal or governmental proceedings pending or
threatened against the Parent or any of its subsidiaries, or to which any of
their respective properties is subject, that could reasonable be expected to
have a Material Adverse Effect.
2. To my actual knowledge, neither the Parent nor any Subsidiary (i)
is in default (which default has not been waived) under any agreement, document
or instrument to which it is a party or by which it or any of its assets is
bound or (ii) is in violation of any law, rule, regulation, judgement, writ,
determination, order, decree or arbitral award to which the Parent or any
Subsidiary is a party or by which the Parent or any Subsidiary or any of their
respective properties is bound, which default or violation, as the case may be,
would constitute a Default or Event of Default under the Bridge Loan Agreement
or otherwise could reasonably be expected to have a Material Adverse Effect.
<PAGE> 270
Goldman Sachs Credit Partners, L.P.
_____ __, ____
Page 3
This opinion is being furnished only to the addressees named above
in connection with the covenant specified in Section 4.22 of the Bridge Loan
Agreement and is solely for their benefit and is not to be used or relied upon
by any other person or for any other purpose without our prior written consent,
except that any financial institution who becomes a "Lender" in accordance with
Section 6.2 of the Bridge Loan Agreement (as from time to time amended) may rely
on this opinion as if addressed and delivered to that financial institution on
the date hereof.
Very truly yours,
By:__________________________
<PAGE> 271
Exhibit H-1/Exhibit H-2
[FORM OF OPINION OF SKADDEN, ARPS, SLATE,
MEAGHER & FLOM LLP FOR BRIDGE NOTE GUARANTEE
AND EXCHANGE NOTE GUARANTEE]
[___________, ______]
Goldman, Sachs Credit Partners, L.P.
c/o Goldman, Sachs & Co.
85 Broad Street
New York, NY 10004,
as Administrative Agent
The Lenders listed on Schedule I attached hereto
Re: Bridge Note Guarantee and Exchange Note Guarantee
We have acted as special counsel to __________, a [Delaware]
corporation (the "Parent"), in connection with the execution and delivery of
that certain Bridge Note Guarantee, dated as of _______, ___ (the "Bridge Note
Guarantee"), by the Parent in favor of Goldman Sachs Credit Partners L.P. (the
"Administrative Agent") and that certain Exchange Note Guarantee, dated as of
______ __, ___ (the "Exchange Note Guarantee"), by the Parent in favor of The
Chase Manhattan Bank, as trustee (the "Trustee"). This opinion is being
delivered to you pursuant to Section 4.22 of the Bridge Loan Agreement, dated as
of March 17, 1999 (the "Bridge Loan Agreement"), among NTL Incorporated, the
lenders named therein and the Administrative Agent. Capitalized terms used
herein and not otherwise defined herein shall have the same meanings herein as
ascribed thereto in the Bridge Loan Agreement.
In rendering the opinions set forth below, we have examined
and relied on originals or copies, certified or otherwise identified to our
satisfaction, of the following:
<PAGE> 272
Goldman Sachs Credit Partners, L.P.
,
Page 2
(a) the Bridge Note Guarantee;
(b) the Exchange Note Guarantee;
(c) the Certificate of Incorporation and By-Laws of the
Parent, as currently in effect;
(d) certain resolutions of the Board of Directors of the
Parent relating to the Bridge Note Guarantee, the Exchange Note Guarantee and
the transactions contemplated thereby;
(e) a certificate of good standing from the Secretary of State
of the [State of Delaware] as to the good standing of the Parent in such
jurisdiction;
(f) certificates and telegrams from public officials in the
jurisdictions listed on Schedule II as to the good standing of the Parent as a
foreign corporation in each such jurisdiction; and
(g) such other documents as we have deemed necessary or
appropriate as a basis for the opinions set forth below.
The documents referred to in clauses (a) through (b) above are
hereinafter referred to collectively as the "Operative Documents". For purposes
of this opinion (i) the term "Applicable Laws" shall mean the [General
Corporation Law of Delaware] and those laws, rules and regulations of the State
of New York and of the United States of America (including, without limitation,
Regulations T, U and X of the Board of Governors of the Federal Reserve System)
which, in our experience, are normally applicable to transactions of the type
contemplated by the Operative Documents, (ii) the term "Governmental Approval"
means any consent, approval, license, authorization or validation of, or filing,
recording or registration with, any state or federal executive, legislative,
judicial, administrative, or regulatory body which, in our experience, are
normally applicable to transactions of the type contemplated by the Operative
Documents pursuant to Applicable Laws, (iii) the term "Applicable Contract"
shall mean those agreements or instruments governing the Parent's material
indebtedness, each as set forth on Schedule III hereto and which have been
identified to us as such by the Parent in the Parent's Certificate (as
hereinafter defined), (iv) "Governmental Authorities" means any court,
regulatory body, administrative agency, or governmental body of the [State of
Delaware],
<PAGE> 273
Goldman Sachs Credit Partners, L.P.
,
Page 3
the State of New York or the United States of America having jurisdiction over
the Parent or any of its subsidiaries under Applicable Laws, and (iv) the term
"Applicable Orders" means those judgments, orders or decrees of any Governmental
Authorities specifically identified to us by the Parent to be applicable to the
Parent or any of its subsidiaries, as identified on Schedule IV hereto.
In our examination we have assumed the genuineness of all
signatures, the legal capacity of all natural persons, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified or photostatic copies, and the
authenticity of the originals of such copies. As to any facts material to this
opinion which we did not independently establish or verify, we have relied upon
statements and representations of the Parent and its officers and other
representatives, and of others. In particular, we have also reviewed, and are
relying upon as to factual matters as a basis for the opinions set forth herein,
a certificate (the "Parent's Certificate") of an authorized officer of the
Parent certifying that, among other things, the execution, delivery and
performance of Operative Documents will not violate any applicable provisions of
the relevant Applicable Contracts.
We do not express any opinion as to the laws of any
jurisdiction other than (i) the laws of the State of New York, [(ii) the General
Corporation Law of the State of Delaware and] (iii) the federal laws of the
United States of America to the extent specifically referred to herein.
The opinions set forth below are subject to the following
assumptions and qualifications:
(a) the opinions set forth in paragraph 5 are based in part
upon the matters set forth in the Parent's Certificate, without our having made
any independent investigation or verification of such matters;
(b) enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally and by general principles of equity (regardless of
whether enforcement is sought in equity or at law);
<PAGE> 274
Goldman Sachs Credit Partners, L.P.
,
Page 4
(c) we express no opinion as to the applicability or effect of
any fraudulent transfer or similar law on the opinions expressed below, any
provision of the Operative Documents or any transaction contemplated thereby;
(d) we express no opinion as to any provision of the Operative
Documents that purports to grant participants of the Lenders rights of set-off
against the Parent or as to whether any affiliate or branch of the
Administrative Agent or any Lender has a right of set-off against the Parent
pursuant to the Operative Documents;
(e) we express no opinion as to the effect on the opinions
expressed herein of (i) the compliance or noncompliance of the Administrative
Agent, any of the Lenders or any other party (other than the Parent) to the
Operative Documents with any state, federal or other laws or regulations
applicable to them or (ii) the legal or regulatory status or nature of the
business of the Administrative Agent, any of the Lenders or any such other
party; and
(f) we express no opinion as to the enforceability of any
rights to contribution or indemnification which are violative of the public
policy underlying any law, rule or regulation (including, without limitation,
any federal or state securities law, rule or regulation).
In rendering the opinions expressed below, we have assumed,
without any independent investigation or verification of any kind, that:
(a) the execution, delivery and performance by the Parent of
the Operative Documents and the consummation of the transactions contemplated
thereby do not and will not conflict with, contravene, violate or constitute a
default under (i) any lease, indenture, instrument or other agreement to which
the Parent or its property is subject (other than the Applicable Contracts as to
which we express our opinion in paragraph 5 herein), (ii) any rule, law or
regulation to which the Parent is subject (other than Applicable Laws as to
which we express our opinion in paragraph 5 herein) or (iii) any judicial or
administrative order or decree of any governmental authority (other than
Applicable Orders as to which we express our opinion in paragraph 5 herein); and
(b) no authorization, consent or other approval of, notice to
or filing with any court, governmental authority or regulatory body (other than
Governmental Approvals as to which we express our opinion in paragraph 5 herein)
is required to
<PAGE> 275
Goldman Sachs Credit Partners, L.P.
,
Page 5
authorize or is required in connection with the execution, delivery or
performance by the Parent of the Operative Documents or the transactions
contemplated thereby.
Based upon the foregoing and subject to the assumptions and
qualifications set forth herein, we are of the opinion that:
1. The Parent has been [duly incorporated] and is validly
existing and is in good standing as a corporation under the laws of the [State
of Delaware.]
2. Based solely on certificates from the Secretary of State of
the applicable jurisdiction, the Parent is duly qualified as a foreign
corporation to transact business and is in good standing in each jurisdiction
listed in the Parent's Certificate attached as Exhibit A hereto.
3. The Parent has full corporate power and authority to
execute, deliver and perform the Operative Documents.
4. The Parent has taken all necessary corporate action to
authorize the execution, delivery and performance by it of the Operative
Documents.
5. The execution, delivery and performance of the Operative
Documents by the Parent, compliance by the Parent with the terms thereof and the
consummation by the Parent of the transactions contemplated thereby will not (i)
conflict with the Certificate of Incorporation or By-laws of the Parent, (ii)
constitute a violation of, or a default under the terms of any Applicable
Contract (except we do not express any opinion as to any covenant, restriction
or provision of any such agreement or instrument with respect to financial
ratios or tests), (iii) result in the creation or imposition of any Lien upon
property or assets of the Parent pursuant to the terms of any Applicable
Contract, (iv) contravene any provision of any Applicable Laws or Applicable
Orders or (v) require any Governmental Approval, except such as have been
obtained or made on or prior to the date hereof, such as may be required in
connection with the registration under the Securities Act of the Exchange Notes
in accordance with the Registration Rights Agreement.
6. Each of the Operative Documents has been duly authorized,
executed and delivered by the Parent and constitutes a valid and binding
obligation of the Parent enforceable against the Parent in accordance with its
terms.
<PAGE> 276
Goldman Sachs Credit Partners, L.P.
,
Page 6
7. The Parent is not and, upon the execution and delivery of
the Operative Documents will not be an "investment company" within the meaning
of the Investment Company Act of 1940, as amended.
This opinion is being furnished only to the addressees named
above in connection with the covenant specified in Section 4.22 of the Bridge
Loan Agreement and is solely for their benefit and is not to be used or relied
upon by any other person or for any other purpose without our prior written
consent, except that any financial institution who becomes a "Lender" in
accordance with Section 6.2 of the Bridge Loan Agreement (as from time to time
amended) may rely on this opinion as if addressed and delivered to that
financial institution on the date hereof.
Very truly yours,
<PAGE> 277
Schedule I
Lenders
Goldman Sachs Credit Partners, L.P.
<PAGE> 278
Schedule II
Foreign Jurisdictions
Name Jurisdiction
<PAGE> 279
Schedule III
Applicable Contracts
<PAGE> 280
Schedule IV
Applicable Orders
<PAGE> 281
Exhibit A
NTL INCORPORATED
OFFICER'S CERTIFICATE
The undersigned certifies that he is a duly elected and
authorized officer of ______________, a [Delaware] corporation (the "Parent"),
and that as such he is authorized to execute this certificate on behalf of the
Parent.
The undersigned acknowledges that pursuant to Section 4.22 of
the Bridge Loan Agreement, Skadden, Arps, Slate, Meagher & Flom LLP ("SASM&F")
is rendering a legal opinion to the Administrative Agent and the Lenders (the
"Opinion"). The undersigned further understands that SASM&F is relying on this
officer's certificate and the statements made herein in rendering the Opinion
and the Lenders are relying on clauses (iv) and (v) of this officer's
certificate being provided in connection with the Opinion and the Loan
Documents. Capitalized terms used herein and not otherwise defined herein shall
have the same meanings herein as ascribed thereto in the Opinion.
With regard to the foregoing, the undersigned further
certifies that on behalf of the Parent:
(i) the undersigned is familiar with the covenants contained
in each of the Applicable Contracts.
(ii) due inquiry has been made of all persons deemed necessary
or appropriate to verify or confirm the statements contained herein.
(iii) the execution, delivery and performance of the Operative
Documents will not violate any applicable provisions of the relevant Applicable
Contracts
(iv) Set forth on Schedule I hereto are all of the agreements
or instruments governing the Parent's material indebtedness.
(v) Set forth on Schedule II hereto are all of the orders,
judgments and decrees of any governmental authority which are material to the
business or property of the Parent.
(vi) Set forth on Schedule III hereto are all of the
jurisdictions in which the Parent is qualified to do business as a foreign
corporation.
<PAGE> 282
(vii) The value of all securities owned by the Parent
(excluding those issued by majority-owned Subsidiaries of the Parent) does not
exceed 10% of the value of the Parent's total assets.
(viii) Less than 25 percent of the assets of the Parent on a
consolidated basis and on an unconsolidated basis consist of margin stock (as
such term is defined in Regulation U of the Board of Governors of the Federal
Reserve System).
(ix) The Parent (a) is primarily engaged, directly or through
a wholly-owned subsidiary or subsidiaries, in a business or businesses other
than that of investing, reinvesting, owning, holding or trading in securities
and (b) is not engaged and does not propose to engage in the business of
investing, reinvesting, owning, holding or trading in securities, and does not
own or propose to acquire investment securities having a value exceeding 40
percent of the value of the Parent's total assets (exclusive of government
securities and cash items) on an unconsolidated basis.
IN WITNESS WHEREOF, the undersigned has executed this
certificate this __th day of ________, ____.
By:_______________________________
Name:
Title:
<PAGE> 283
Schedule I
Applicable Contracts
<PAGE> 284
Schedule II
Applicable Orders
<PAGE> 285
Schedule III
Foreign Jurisdictions
Name Jurisdiction
<PAGE> 286
EXHIBIT I
SOLVENCY CERTIFICATE
I, the undersigned, the Chief Financial Officer of NTL Incorporated,
a Delaware corporation (the "Company" or the "Borrower"), do hereby certify as
follows:
1. This Certificate is furnished to the Administrative Agent and the
Lenders pursuant to Section 5.24 of the Bridge Loan Agreement dated as of March
17, 1999 (as it may be amended, supplemented or otherwise modified from time to
time, the "Bridge Loan Agreement"), by and among the Company, the Lenders
referred to therein, and Goldman Sachs Credit Partners L.P., as administrative
agent. Capitalized terms used herein and not otherwise defined herein shall have
the meanings ascribed thereto in the Bridge Loan Agreement.
2. For purposes of this Certificate, the terms below shall have the
following definitions:
"Unreasonably Small Capital" relates to the ability of the Borrower
on a consolidated basis after giving effect to the consummation of the
Transactions, to continue as a going concern and not lack sufficient
capital for its present needs and anticipated needs, including, without
limitation, Identified Contingent Liabilities, without substantial
unplanned disposition of assets outside the ordinary course of business,
restructuring of debt, externally forced revisions of its operations, or
similar actions.
"Fair Market Value" means the amount at which the aggregate assets
of an entity would change hands between a willing buyer and a willing
seller, within a commercially reasonable period of time, each having
reasonable knowledge of the relevant facts, neither being under any
compulsion to act, with equity to both.
"Identified Contingent Liabilities" means the maximum reasonably
estimated liabilities of the Borrower on a consolidated basis that may
result from pending litigation, asserted claims and assessments,
guaranties, indemnities, environmental conditions, contract obligations,
uninsured risks, and other contingent liabilities as identified and
explained to me in terms of their nature and estimated dollar magnitude by
management of the Borrower (the "Management"). Based on my reasonable
inquiries and analysis in connection with this certificate, I have no
reason to believe that such identified contingent liabilities are
materially understated and nothing has come to my attention suggesting
that material contingent liabilities have not been identified or
disclosed. I do not give any opinion as to whether such contingent
liabilities meet the criteria for accrual under Statement of Financial
Accounting Standards No. 5.
"Financing" means the indebtedness being incurred, assumed or
guaranteed by the Borrower through the issuance of the Bridge Loans.
"Present Fair Saleable Value" means the aggregate amount that may be
realized from an independent willing buyer if an entity's assets are sold
as an entirety with
Bridge Loan Agreement Solvency Certificate Page 1
<PAGE> 287
reasonable promptness in an arm's-length transaction under present
conditions for the sale of assets as an entirety of the business
comprising such entity.
"Stated Liabilities" means the recorded liabilities of the Borrower
on a consolidated basis pursuant to the unaudited September 30, 1998
balance sheet as prepared by the Borrower. Stated Liabilities excludes
indebtedness under the Financing. Based upon representations made within
the Bridge Loan Agreement by the Borrower and my investigations as
described herein, I have no reason to believe that there has been any such
material adverse change since September 30, 1998 other than those changes
set forth on Schedule 5.3 of the Bridge Loan Agreement.
3. For purposes of this Certificate, I, or officers of the Company
under my direction and supervision, have performed the following procedures as
of and for the periods set forth below.
a. I have reviewed the financial statements (including the pro forma
financial statements) referred to in Section 3.10 of the Bridge Loan
Agreement.
b. I have made inquiries of certain officials of the Company and its
Subsidiaries who have responsibility for financial and accounting
matters regarding (i) the existence and amount of Identified
Contingent Liabilities associated with the business of the Company
and its Subsidiaries and (ii) whether the unaudited pro forma
projected consolidated financial statements referred to in paragraph
(a) above have been constructed based on information and assumptions
that, in the judgment of management, are reasonable.
c. I have knowledge of and have reviewed to my satisfaction the Loan
Documents and the respective Schedules and Exhibits thereto.
d. With respect to Identified Contingent Liabilities, I:
i. inquired of certain officials of the Company and its
Subsidiaries who have responsibility for legal, financial and
accounting matters as to the existence and estimated liability
with respect to all contingent liabilities associated with the
business of the Company and its Subsidiaries; and
ii. confirmed with officers of the Company and its Subsidiaries
that, to the best of such officers' knowledge, (i) all
appropriate items were included in Stated Liabilities or
Identified Contingent Liabilities and that (ii) the amounts
relating thereto were the maximum estimated amount of
liabilities reasonably likely to result therefrom as of the
date hereof
e. I have made inquiries of certain officers of the Company and its
Subsidiaries who have responsibility for financial reporting and
accounting matters regarding whether they were aware of any events
or conditions that, as of the date hereof, would cause the Borrower
(on a consolidated basis), after giving effect to the consummation
of the Transactions to (i) have assets with a Fair Market Value that
is less than the sum of Stated Liabilities, Identified Contingent
Liabilities and the
Bridge Loan Agreement Solvency Certificate Page 2
<PAGE> 288
Financing; (ii) have assets with a Present Fair Saleable Value that
is less than the sum of Stated Liabilities, Identified Contingent
Liabilities and the Financing; (ii) have Unreasonably Small Capital;
or (iv) not be able to pay the respective Stated Liabilities,
Identified Contingent Liabilities, and the Financing as they mature
or otherwise become payable.
4. Based on and subject to the foregoing, I hereby certify on behalf
of the Company that, after giving effect to the consummation of the
Transactions, it is my opinion that:
a. The Fair Market Value of the assets of the Borrower (on a
consolidated basis) exceeds and will exceed its liabilities
(including, without limitation, the Financing, Stated
Liabilities and Identified Contingent Liabilities);
b. The Present Fair Saleable Value of the assets of the Borrower
(on a consolidated basis) exceeds and will exceed its probable
liabilities on its debts (including, without limitation, the
Financing, Stated Liabilities and Identified Contingent
Liabilities) as such debts become absolute and matured;
c. The Borrower (on a consolidated basis) is and will be able to
pay its debts (including, without limitation, the Financing,
Stated Liabilities and Identified Contingent Liabilities) as
such debts mature; and
d. The Borrower (on a consolidated basis) does not and will not
have Unreasonably Small Capital with which to conduct its
present and anticipated business.
I am not an appraiser or a valuation expert and have not obtained or
relied on the services of appraisers or valuation experts in making the above
statements. All such statements regarding Fair Value and Present Saleable Value
are made to the best of my knowledge without having made any investigation or
inquiry, except as specifically provided in Paragraph 3 above. This Certificate
is given solely in my capacity as an officer of the Company and not in my
individual capacity.
Bridge Loan Agreement Solvency Certificate Page 3
<PAGE> 289
IN WITNESS WHEREOF, I have set forth my name below as of the date written.
By:
---------------------------
Name:
Date: _____ __, 1999 Title: Chief Financial Officer
Bridge Loan Agreement Solvency Certificate Signature Page
<PAGE> 1
EXHIBIT 11
NTL INCORPORATED
CALCULATION OF NET (LOSS) PER SHARE
<TABLE>
<CAPTION>
Weighted Average Number of Shares
---------------------------------------------------------------------------
Date Description Total Year Ended Year Ended Year Ended Year Ended
Issued of Issuance Outstanding 31-Dec-98 31-Dec-97 31-Dec-96 31-Dec-95
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
12/31/94 Common Stock 30,180,114 30,180,114 30,180,114 30,180,114 30,180,114
01/01/95 Common Stock 20 20 20 20 20
01/12/95 Common Stock 200 200 200 200 193
02/02/95 Common Stock 2,075 2,075 2,075 2,075 1,887
02/23/95 Common Stock 556 556 556 556 474
04/04/95 Common Stock 1,333 1,333 1,333 1,333 990
06/08/95 Common Stock 2,667 2,667 2,667 2,667 1,505
08/04/95 Common Stock 200 200 200 200 82
08/07/95 Common Stock 417 417 417 417 167
08/21/95 Common Stock 156 156 156 156 56
09/05/95 Common Stock 13,333 13,333 13,333 13,333 4,274
02/13/96 Common Stock 2,223 2,223 2,223 1,956
02/22/96 Common Stock 533 533 533 456
02/28/96 Common Stock 4,919 4,919 4,919 4,126
03/06/96 Common Stock 1,133 1,133 1,133 929
03/12/96 Common Stock 5,925 5,925 5,925 4,759
03/20/96 Common Stock 3,450 3,450 3,450 2,696
03/25/96 Common Stock 75,000 75,000 75,000 57,582
04/11/96 Common Stock 10,419 10,419 10,419 7,515
04/26/96 Common Stock 25,000 25,000 25,000 17,008
05/30/96 Common Stock 1,333 1,333 1,333 783
06/13/96 Common Stock 128,793 128,793 128,793 70,731
06/14/96 Common Stock 132,000 132,000 132,000 72,131
08/29/96 Common Stock 1,415,000 1,415,000 1,415,000 599,249
11/06/96 Common Stock 44 44 44 7
11/25/96 Common Stock 1,112 1,112 1,112 109
12/26/96 Common Stock 5,500 5,500 5,500 75
12/27/96 Common Stock 2,000 2,000 2,000 22
12/31/96 Common Stock 50,667 50,667 50,667 0
01/14/97 Common Stock 1,000 1,000 962
01/17/97 Common Stock 4,489 4,489 4,280
01/21/97 Common Stock 23,332 23,332 20,914
02/06/97 Common Stock 223 223 183
03/26/97 Common Stock 1,500 1,500 1,151
05/30/97 Common Stock 900 900 530
06/20/97 Common Stock 1,001 1,001 532
06/25/97 Common Stock 5,334 5,334 2,762
07/10/97 Common Stock 17,967 17,967 8,565
09/16/97 Common Stock 3,533 3,533 1,026
09/26/97 Common Stock 28,666 28,666 7,540
10/03/97 Common Stock 200 200 49
10/15/97 Common Stock 8,239 8,239 1,738
10/16/97 Common Stock 2,250 2,250 468
12/10/97 Common Stock 556 556 32
12/18/97 Common Stock 719 719 26
12/22/97 Common Stock 2,000 2,000 49
12/26/97 Common Stock 2,000 2,000 27
01/08/98 Common Stock 40,137 39,257
01/12/98 Common Stock 5,400 5,222
01/16/98 Common Stock 3,342 3,196
01/26/98 Common Stock 1,500 1,393
01/28/98 Common Stock 19,333 17,850
01/29/98 Common Stock 300 276
02/03/98 Common Stock 8,000 7,255
02/06/98 Common Stock 1,000 899
02/09/98 Common Stock 7,333 6,529
02/10/98 Common Stock 1,200 1,065
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
Weighted Average Number of Shares
---------------------------------------------------------------------------
Date Description Total Year Ended Year Ended Year Ended Year Ended
Issued of Issuance Outstanding 31-Dec-98 31-Dec-97 31-Dec-96 31-Dec-95
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
02/11/98 Common Stock 3,256 2,881
02/17/98 Common Stock 8,200 7,122
02/25/98 Common Stock 2,800 2,370
03/04/98 Common Stock 200 165
03/06/98 Common Stock 3,800 3,123
03/11/98 Common Stock 9,300 7,516
03/12/98 Common Stock 1,400 1,128
03/13/98 Common Stock 2,600 2,087
03/23/98 Common Stock 7,067 5,480
04/02/98 Common Stock 3,000 2,244
04/06/98 Common Stock 3,800 2,800
04/07/98 Common Stock 6,667 4,895
04/13/98 Common Stock 1,700 1,220
04/20/98 Common Stock 3,700 2,585
04/24/98 Common Stock 6,957,519 4,784,486
04/27/98 Common Stock 1,000 679
05/07/98 Common Stock 1,951,000 1,272,159
05/12/98 Common Stock 800 511
05/18/98 Common Stock 2,000 1,244
05/19/98 Common Stock 4,400 2,724
05/21/98 Common Stock 2,700 1,657
05/26/98 Common Stock 24,167 14,500
05/27/98 Common Stock 3,600 2,150
06/05/98 Common Stock 2,000 1,145
06/08/98 Common Stock 975 550
06/10/98 Common Stock 3,200 1,788
06/25/98 Common Stock 10,000 5,178
06/29/98 Common Stock 400 203
07/02/98 Common Stock 12,583 6,275
07/06/98 Common Stock 1,600 780
07/14/98 Common Stock 4,700 2,189
07/16/98 Common Stock 200 92
07/22/98 Common Stock 800 355
07/23/98 Common Stock 1,100 485
07/29/98 Common Stock 26,800 11,382
08/03/98 Common Stock 30,667 12,603
08/12/98 Common Stock 6,500 2,511
08/20/98 Common Stock 2,200 802
08/26/98 Common Stock 17,067 5,938
09/17/98 Common Stock 7,500 2,158
10/02/98 Common Stock 400 99
10/05/98 Common Stock 11,106 2,647
10/07/98 Common Stock 260 61
10/19/98 Common Stock 2,833 567
10/21/98 Common Stock 4,492 874
10/27/98 Common Stock 8,654,156 1,541,151
10/30/98 Common Stock 35 6
11/09/98 Common Stock 100 14
11/16/98 Common Stock 12,950 1,597
11/17/98 Common Stock 10,096,451 1,217,106
11/19/98 Common Stock 12,760 1,468
11/24/98 Common Stock 6,000 608
11/25/98 Common Stock 77 8
11/30/98 Common Stock 14,000 1,189
12/02/98 Common Stock 411 33
12/07/98 Common Stock 8,110 533
12/08/98 Common Stock 12,033 758
12/11/98 Common Stock 2,000 110
12/15/98 Common Stock 250 11
12/22/98 Common Stock 37 1
12/23/98 Common Stock 95 2
12/24/98 Common Stock 80 2
12/29/98 Common Stock 10,000 55
12/30/98 Common Stock 1,537 4
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Weighted Average Number of Shares
---------------------------------------------------------------------------
Date Description Total Year Ended Year Ended Year Ended Year Ended
Issued of Issuance Outstanding 31-Dec-98 31-Dec-97 31-Dec-96 31-Dec-95
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
12/31/98 Common Stock 8,584 0
---------- ------------- ------------- ------------- ------------
Total 60,249,301 41,202,037 32,116,957 31,041,206 30,189,763
========== ============= ============= ============= ============
Loss before
extraordinary item ($503,927,000) ($328,557,000) ($254,454,000) ($90,785,000)
Preferred stock dividend (18,761,000) (11,978,000) 0 0
------------- ------------- ------------- ------------
(522,688,000) (340,535,000) (254,454,000) (90,785,000)
Loss from early
extinguishment of debt (30,689,000) (4,500,000) 0 0
------------- ------------- ------------- ------------
Loss available to
common shareholders ($553,377,000) ($345,035,000) ($254,454,000) ($90,785,000)
============= ============= ============= ============
Basic and diluted net
(loss) per common share:
(Loss) before extraordinary item ($12.69) ($10.60) ($8.20) ($3.01)
Extraordinary item (0.74) (0.14) 0.00 0.00
============= ============= ============= ============
Net (loss) per common share ($13.43) ($10.74) ($8.20) ($3.01)
============= ============= ============= ============
</TABLE>
<PAGE> 1
Exhibit 21
SUBSIDIARIES OF NTL INCORPORATED
All of the corporations listed below were organized in the United Kingdom.
Andover Cablevision Limited
Anglia Cable Communications Limited
Berkhamsted Properties & Building Contractors Limited
Bracknell Cable TV Limited
Cable Television Limited
Cable Thames Valley Limited
CableTel Cardiff Limited
CableTel Central Hertfordshire Limited
CableTel Glasgow
CableTel Hertfordshire Limited
CableTel Herts and Beds Limited
CableTel Investments Limited
CableTel Kirklees
CableTel Limited
CableTel Newport
CableTel North Bedfordshire Limited
CableTel Northern Ireland Limited
CableTel Scotland Limited
CableTel South Wales Limited
CableTel Surrey and Hampshire Limited
CableTel Telecom Supplies Limited
CableTel (UK) Limited
CableTel West Glamorgan Limited
CableTel West Riding Limited
Cambridge Cable Limited
Cambridge Cable Services Limited
Cambridge Holding Company Limited
CCL Corporate Communication Services Limited
Chiltern Cable Limited
Columbia Management Limited
ComTel Limited
ComTel Cable Services Limited
ComTel Coventry Limited
Credit-Track Debt Recovery Limited
Digital Television Network Limited
DTELS Limited
East Coast Cable Limited
Enablis Limited
Heartland Cablevision (UK) Limited
Heartland Cablevision II (UK) Limited
Herts Cable Limited
<PAGE> 2
Lichfield Cable Communications Limited
Maza Limited
Metro Hertfordshire Limited
Metro South Wales Limited
National Transcommunications LimitNorthampton Cable Television Limited
NTL Communications Limited
NTL Darlington Limited
NTL Digital Limited
NTL Digital Radio Limited
NTL Group Limited
NTL Insurance Limited
NTL Internet Limited
NTL Investment Holdings Limited
NTL Limited
NTL Networks Limited
NTL Systems Limited
NTL Teesside Limited
NTL Telecom Services Limited (formerly Eastern Group Telecoms Ltd)
NTL Trustees Limited
Oxford Cable Limited
Premium TV Limited
Prospectre Limited
Secure Backup Systems Limited
South Yorkshire Cablevision (UK) Limited
Southern East Anglia Cable Limited
Stafford Communications Limited
Swindon Cable Limited
Tamworth Cable Communications Limited
Vision Networks Services UK Limited
Wessex Cable Limited
XL Debt Recovery Agency Limited
All of the corporations listed below were incorporated in Delaware except where
otherwise noted:
Bearsden Nominees, Inc.
CableTel Programming, Inc.
CableTel Ventures Limited
Cellular Paging, Inc.
L.D. Data, Inc.
NTL (UK) Group, Inc.
NTL Digital (US), Inc.
NTL International Services, Inc.
OCOM Corporation
OCOM New York, Inc.
All of the companies listed below were formed in Bermuda except where otherwise
noted:
Comcast UK Cable Partners Limited
Comcast UK Consulting, Inc. (US Virgin Islands company)
2
<PAGE> 3
Comcast UK Programming Limited
Comcast UK Holdings Limited
NTL (Bermuda) Limited
3
<PAGE> 4
All of the corporations listed below were organized in the United Kingdom.
Diamond Cable Acquisitions Limited
Diamond Cable (Bassetlaw) Limited
Diamond Cable (Burton-upon-Trent) Limited
Diamond Cable (Chesterfield) Limited
Diamond Cable Communications plc
Diamond Cable Communications (UK) Limited
Diamond Cable Construction Limited
Diamond Cable CPE Limited
Diamond Cable (Grantham) Limited
Diamond Cable (Grimclee) Limited
Diamond Cable (Hinckley) Limited
Diamond Cable (Leicester) Limited
Diamond Cable (Lincoln) Limited
Diamond Cable (Lincolnshire) Limited
Diamond Cable (Mansfield) Limited
Diamond Cable (Melton Mowbray) Limited
Diamond Cable (Newark-on-Trent) Limited
Diamond Cable (Ravenshead) Limited
Diamond Cable (Vale of Belvoir) Limited
Diamond Holdings plc
Diamond Visual Communications Limited
East Midlands Cable Communications Limited
East Midlands Cable Group Limited
East Midlands Cable Holdings Limited
Jewel Holdings Limited
LCL Cable (Holdings) Limited
LCL Telephones Limited
4
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the (i) Registration Statements
(Forms S-8 No. 33-41527, No. 33-55446, No. 33-55448, No. 33-78848, No. 33-78844,
No. 333-44763, No. 333-44765, No. 333-13007, No. 33-78834, No. 33-95270, No.
333-13015 and No. 333-07879) of NTL Incorporated (the "Company") and (ii)
Registration Statements (Forms S-3 No. 333-00118, No. 33-92792, No. 333-07879,
No. 333-16751, No. 333-72335, No. 333-66855 and No. 333-63615) of the Company
and in the related Prospectuses of our report dated March 26, 1999, with respect
to the consolidated financial statements and schedules of the Company included
in the Annual Report (Form 10-K) for the year ended December 31, 1998.
ERNST & YOUNG LLP
New York, New York
March 26, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-30-1998
<CASH> 736,265,000
<SECURITIES> 260,631,000
<RECEIVABLES> 190,831,000
<ALLOWANCES> (38,475,000)
<INVENTORY> 0
<CURRENT-ASSETS> 55,248,000
<PP&E> 4,363,791,000
<DEPRECIATION> (509,361,000)
<TOTAL-ASSETS> 6,194,097,000
<CURRENT-LIABILITIES> 603,951,000
<BONDS> 5,043,803,000
124,127,000
2,000
<COMMON> 602,000
<OTHER-SE> 354,550,000
<TOTAL-LIABILITY-AND-EQUITY> 6,194,097,000
<SALES> 0
<TOTAL-REVENUES> 747,015,000
<CGS> 0
<TOTAL-COSTS> 372,134,000
<OTHER-EXPENSES> 337,384,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 328,815,000
<INCOME-PRETAX> (507,254,000)
<INCOME-TAX> 3,327,000
<INCOME-CONTINUING> (503,927,000)
<DISCONTINUED> 0
<EXTRAORDINARY> (30,689,000)
<CHANGES> 0
<NET-INCOME> (534,616,000)
<EPS-PRIMARY> (13.43)
<EPS-DILUTED> (13.43)
</TABLE>
