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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
COMMISSION FILE NUMBERS: 0-25638 (NYNEX CABLECOMMS GROUP PLC)
0-25690 (NYNEX CABLECOMMS GROUP INC.)
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NYNEX CABLECOMMS GROUP PLC
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Incorporated under the laws of England and Wales I.R.S. Employer Identification No. 98-0151138
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NYNEX CABLECOMMS GROUP INC.
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Incorporated under the laws of Delaware I.R.S. Employer Identification No. 98-0151139
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THE TOLWORTH TOWER, EWELL ROAD, SURBITON, SURREY KT6 7ED, UNITED KINGDOM
(44)-181-873-2000
(Telephone number)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
American Depository Shares evidenced by American Depository Receipts,
each representing ten Units, each Unit consisting of one Ordinary Share (par
value L0.10 per share)
of NYNEX CableComms Group PLC and one share of Common Stock (par value $0.01 per
share)
of NYNEX CableComms Group Inc.
(Title of Class)
Ordinary Shares (par value L0.10 per share) of NYNEX CableComms Group PLC
(Title of Class)
Common Stock (par value $0.01 per share) of NYNEX CableComms Group Inc.
(Title of Class)
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Indicate by check mark whether the Registrants (1) have 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
Registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrants' 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. [X]
The aggregate market value of the voting stock held by non-affiliates of
the Registrants on January 31, 1997 was approximately $485,096,166.
The number of shares outstanding of each of the Registrants' classes of
common stock, as of January 31, 1997:
925,976,934 Ordinary Shares of NYNEX CableComms Group PLC, L0.10 par value
925, 976,934 shares of Common Stock of NYNEX CableComms Group Inc., $0.01 par
value
(Ordinary Shares and shares of Common Stock are "stapled" and trade together as
Units.)
DOCUMENTS INCORPORATED BY REFERENCE
None
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PART I
ITEM 1. BUSINESS
As used herein, (i) "NYNEX CableComms UK" refers to NYNEX CableComms Group
PLC and "NYNEX CableComms US" refers to NYNEX CableComms Group Inc.; (ii) "NYNEX
CableComms" refers to NYNEX CableComms UK and NYNEX CableComms US, together with
the subsidiaries and partnerships in which they have the entire or a majority
ownership interest; and (iii) the "Operating Companies" refers to those members
of NYNEX CableComms which hold the cable television and telecommunications
licenses for franchises in northern England (the "Northern Operating Companies")
and for franchises in southern England (the "Southern Operating Companies"),
collectively.
Information with respect to the number of homes covered by one or more
franchise areas is based on the most recent published UK census data (1991),
postal address files and NYNEX CableComms' estimates. There can be no assurance
that the number of homes in a franchise area has not increased or decreased
since the 1991 census was conducted. All information with respect to the number
of businesses covered by one or more franchise areas is based on a combination
of sources including Thomsons Directory, Companies House, PAF data and NYNEX
CableComms' estimates. Although believed by NYNEX CableComms to be reliable,
there can be no assurance that such data accurately reflect the actual number of
businesses in a given franchise.
INTRODUCTION
NYNEX CableComms is one of the leading integrated providers of cable
television and telecommunications services in the United Kingdom. NYNEX
CableComms is licensed to provide these services in 16 franchise areas which
cover approximately 2.7 million homes, equivalent to approximately 15% of the
total homes in the United Kingdom for which franchises had been awarded at
December 31, 1996. In addition, the franchise areas cover approximately 153,000
businesses. NYNEX CableComms' cable television and telecommunications licenses
have been granted for fixed terms (15 and 23 years, respectively). NYNEX
CableComms' cable television licenses will expire at various times commencing in
November 2004. Its telecommunications licenses are scheduled to expire at
various times commencing June 2012. NYNEX CableComms has approximately 2.3
million equity homes, making it one of the largest multiple systems operators in
the United Kingdom on the basis of the total number of equity homes in its
franchise areas. NYNEX CableComms has its principal executive office at The
Tolworth Tower, Ewell Road, Surbiton, Surrey, KT6 7ED, United Kingdom.
NYNEX CableComms UK is a public limited company incorporated in February
1995 under the laws of England and Wales, and NYNEX CableComms US is a Delaware
corporation incorporated in February 1995. In June 1995, NYNEX CableComms UK and
NYNEX CableComms US completed an initial public offering of 305 million ordinary
shares of NYNEX CableComms UK (the "NYNEX CableComms UK Ordinary Shares") and
305 million shares of common stock of NYNEX CableComms US (the "NYNEX CableComms
US Shares of Common Stock") issued as stapled units (the "NYNEX CableComms
Units"), each NYNEX CableComms Unit comprised of one NYNEX CableComms UK
Ordinary Share and one NYNEX CableComms US Share of Common Stock. Of the NYNEX
CableComms Units issued pursuant to the offering, 170,222,000 were issued as
NYNEX CableComms Units and 134,778,000 were issued as American Depositary Shares
(the "NYNEX CableComms ADSs"), each NYNEX CableComms ADS representing 10 NYNEX
CableComms Units. The NYNEX CableComms UK Ordinary Shares and the NYNEX
CableComms US Shares of Common Stock may not be traded separately and may only
be traded together as NYNEX CableComms Units on the London Stock Exchange
Limited and as NYNEX CableComms ADSs on the Nasdaq National Market. As of March
4, 1997, NYNEX Corporation ("NYNEX"), through its subsidiaries, owned
approximately 67% of the outstanding NYNEX CableComms Units.
As announced on October 22, 1996, cable and wireless plc, Bell Canada
International Inc. and NYNEX have entered into an agreement (as amended or
restated, the "Transaction Agreement") pursuant to which, subject to the
satisfaction of certain conditions precedent, the parties have agreed to combine
Mercury
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Communications Limited ("Mercury"), Bell Cablemedia plc ("BCM") (as enlarged by
the acquisition of Videotron Holdings plc) and NYNEX CableComms under a new
holding company, Cable & Wireless Communications plc ("CWC"). Pursuant to the
Transaction Agreement, CWC has offered to purchase NYNEX CableComms UK Ordinary
Shares and NYNEX CableComms US Shares of Common Stock (comprised in the NYNEX
CableComms Units, including those represented by NYNEX CableComms ADSs) in
exchange for ordinary shares of CWC.
If the transactions contemplated by the Transaction Agreement are
consummated, among other things, (i) NYNEX has agreed to exchange all of its
NYNEX CableComms Units, and its indirect interests in the Operating Companies,
for ordinary shares of CWC; (ii) NYNEX CableComms will become part of the
combined CWC group and thus will be an affiliate of Mercury, which is currently
a competitor of NYNEX CableComms primarily in the business telecommunications
market; (iii) the interconnection agreements which govern the interconnection
between the telecommunications networks of NYNEX CableComms and Mercury,
discussed under "Products and Services" below, are likely to change; (iv) the
existing credit facilities of NYNEX CableComms, as discussed below under
Management's Discussion and Analysis of Financial Condition and Results of
Operations Financing of NYNEX CableComms", would have to be repaid (absent
waivers of change of control defaults) and are expected to be terminated and
replaced with a CWC credit facility; and (v) the entities identified as the
North limited partner and the South limited partner in the diagram under
"Organization" below will become indirect wholly-owned subsidiaries of CWC,
thereby providing CWC with indirect interests in the Operating Companies held
other than through NYNEX CableComms.
PRODUCTS AND SERVICES
NYNEX CableComms has developed separate marketing, pricing and sales
strategies for its residential and its business markets. While NYNEX CableComms
has approached the residential and business markets separately, there has been
significant coordination with a view to promoting NYNEX CableComms in a
consistent manner and avoiding the duplication of resources where appropriate.
THE RESIDENTIAL MARKET
NYNEX CableComms has based its strategy in respect of the residential
market on its ability to provide, market and sell its cable television and
telecommunications services on an integrated basis in innovative, competitively
priced packages and its ability to retain customers through reliability, quality
customer service and new product development.
Cable Television Services
Cable television services (excluding installation) provided NYNEX
CableComms with 41.3% of its operating revenues in 1996 compared to 45.6% in
1995. Cable television revenue is earned mainly from monthly fees for basic and
premium channels and additional outlets.
NYNEX CableComms currently offers a wide range of television programming,
including satellite, broadcast and video cassette delivered channels, and it
also offers some FM radio stations. Over 45 television channels are offered,
many of which are available 24 hours a day. In accordance with its policy of
regularly reviewing the channels provided, NYNEX CableComms adds and deletes
channels as it considers appropriate. NYNEX CableComms believes that offering a
wide range of conveniently scheduled programming and providing quality customer
service are important factors influencing a customer's decision to subscribe to
and retain cable television services. NYNEX CableComms currently obtains its
cable television programming from satellite television operators, terrestrial
broadcasters and other programming suppliers. NYNEX CableComms regularly engages
in discussions regarding the development of cooperative arrangements with other
cable operators with a view to achieving cost savings and developing programming
and additional services.
As one of the leading providers of cable television services in the United
Kingdom, NYNEX CableComms believes it is generally able to obtain favorable
terms, as compared to smaller operators, in
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purchasing programming. Certain programming, such as that provided by the
British Broadcasting Corporation ("BBC") and other terrestrial broadcasters, is
available to NYNEX CableComms and other cable operators without charge.
British Sky Broadcasting Group plc ("BSkyB") is the leading supplier of
programming to direct-to-home ("DTH") satellite and cable television operators
in the United Kingdom and the exclusive supplier of certain premium programming,
including live English Premier League soccer matches and premium movie channels.
BSkyB's programming is important in attracting and retaining cable television
customers.
In the second quarter of 1995, NYNEX CableComms Limited, an indirect,
wholly-owned subsidiary of NYNEX CableComms UK and NYNEX CableComms US, and each
of the Operating Companies entered into a programming agreement with BSkyB and a
subsidiary of BSkyB (the "BSkyB Agreement") which provides for price incentives
related to, among other things, the overall number of basic customers and the
pay to basic ratio achieved by NYNEX CableComms (for an explanation of the pay
to basic ratio, see "Operating Statistics", below). The BSkyB Agreement also
provides NYNEX CableComms with access to BSkyB's Pay-Per-View services.
Concurrently with its 1996 review of BSkyB's position in the market for the
supply of pay television programming in the United Kingdom and related services
at the wholesale level, the UK Office of Fair Trading (the "OFT") expressed the
view that it considered certain provisions of the BSkyB Agreement to be
significantly anti-competitive under the UK Restrictive Trade Practices Act
1976.
In connection with its July 1996 findings that barriers to entry resulting
from BSkyB's powerful position in the wholesale pay television market raised
concerns that "although BSkyB is not acting anti-competitively, the competitive
process is being impaired", the OFT also acknowledged that amendments to the
BSkyB Agreement proposed by BSkyB and NYNEX CableComms had addressed the
competition concerns of the OFT. BSkyB and NYNEX CableComms are reviewing a
final draft of the agreement, as revised to incorporate such amendments. The
final draft was submitted to the OFT in February 1997 for confirmation that the
OFT's review is complete.
To address the anti-competitive situation, the OFT secured informal
undertakings pursuant to which BSkyB, among other things, agreed to submit a new
wholesale price list and discount structure (the "New Rate Card") to the OFT for
consultation with the cable television industry and for OFT approval. Cable
operators with existing fixed term contracts with BSkyB, such as NYNEX
CableComms, may continue under those contracts until they expire or elect to be
governed by the New Rate Card pricing and discount structure. The OFT submitted
the New Rate Card to NYNEX CableComms and the cable industry in October 1996
and, following consultation with the industry, the New Rate Card was approved by
the OFT in December 1996. NYNEX CableComms has reviewed the New Rate Card and at
present has determined to continue to operate under the BSkyB Agreement, as so
amended. NYNEX CableComms will continue to review its option to operate under
the New Rate Card.
NYNEX CableComms understands that the European Commission
Directorate-General IV Competition has informally considered the compatibility
of the BSkyB Agreement (in the form originally entered into, without giving
effect to the amendments proposed by NYNEX CableComms and BSkyB after
discussions with the OFT) with European Union competition law. NYNEX CableComms
is not aware of any final conclusion on this issue having been reached by the
Directorate-General.
NYNEX CableComms supported two pay-per-view events in 1996, and a third in
February 1997. The purchasing methods for the latter two events took two forms
dial up and impulse. Dial up pay-per-view enables customers to purchase these
services by making a telephone call. Impulse pay-per-view enables the customer
to purchase these services by using a remote control to interact directly with
the set-top box, thereby obviating the need to make a telephone call. This
service was introduced in the fourth quarter of 1996 and is available in all of
NYNEX CableComms' franchises to 91%, in the aggregate, of its cable television
customers. NYNEX CableComms is developing and plans to introduce a pay-per-view
movie service during 1997. Pay-per-view events will also continue to be offered.
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NYNEX CableComms is in the process of considering the introduction of
digital television technology that would significantly increase channel
capacity. Implementation of digital services would require NYNEX CableComms to
make minor network upgrades to its broadband coaxial distribution network, to
upgrade two of its existing headend sites to digital "super" headend sites and
to replace the current set-top boxes in customers' homes. On March 7, 1997,
Telewest Communications plc ("Telewest"), BCM and NYNEX CableComms announced the
selection of NextLevel Broadband Networks Group of General Instrument
Corporation ("General Instrument") as an initial supplier of digital equipment,
with whom Telewest, BCM and NYNEX CableComms will enter into detailed
negotiations relating to the supply of transmission equipment and set-top boxes
to provide an integrated platform for the provision of digital services in cable
homes throughout the UK. Additional manufacturers of set-top boxes to be
supplied to the cable companies are expected to be identified late in 1997.
Telecommunications Services
Residential telecommunications services (excluding installation) provided
NYNEX CableComms with 46.7% of its operating revenues in 1996 compared to 42.8%
in 1995. Residential telecommunications revenue is earned from monthly charges
for calls made by customers and line rentals and from the provision of optional
features.
In common with many telecommunications companies, in addition to telephone
line installation and basic telephone service (which includes line rental, call
usage and monthly itemized billing), NYNEX CableComms offers its residential
telecommunications customers additional services, such as call waiting, caller
return, three way calling, short code dialing, call divert, call barring,
reminder call and number portability. Number portability, which was introduced
by NYNEX CableComms in all of its franchises by August 1996 and which is
expected to be available to virtually all potential customers by mid-1997,
allows customers to retain their existing telephone numbers when changing
telecommunications service providers. NYNEX CableComms also introduced special
tariffs for Internet users in October 1996. Subscribers are offered a discount
on calls to their Internet service providers.
NYNEX CableComms has its own digital switch capability in all its
franchises. Digital switches give NYNEX CableComms greater flexibility to choose
between alternative long distance carriers, to provide additional services and
to permit route diversity in the event of a network transmission failure. In
addition, digital switches enable NYNEX CableComms to switch all intra-franchise
calls between its customers, thereby avoiding the use and the associated costs
of switching provided by British Telecommunications plc ("BT"), Mercury or other
public telecommunications operators ("PTOs") with respect to such calls.
NYNEX CableComms' digital switches interconnect with the networks of BT,
Mercury and other PTOs for national and international calls, and for local calls
where only one party is a NYNEX CableComms customer. As part of NYNEX
CableComms' strategy of increasing the volume of calls switched locally and
minimizing interconnect charges to other PTOs, NYNEX CableComms may enter into
interconnect agreements with other cable operators.
Services being reviewed and developed by NYNEX CableComms include cable
modems, voice messaging service, basic rate ISDN and caller display. A cable
modem trial is being conducted in conjunction with Motorola, Inc. in the
Northern Franchises (as defined below under "Organization"), providing customers
with high speed access to the Internet. NYNEX CableComms plans to extend the
trial to further franchises during 1997.
Dual Product Packages
In November 1996, NYNEX CableComms introduced new dual product cable
television and telephony packages ("Dual Product Packages"). These Dual Product
Packages provide NYNEX CableComms' customers with a new range of cable
television packages integrated with its telephony services. These services are
priced to compete with the prices of similar products offered separately by
BSkyB and BT. They include specialized sports and movie packages as well as a
"Mini View" package and provide the customer with the additional benefit of
dealing with just one communications company. At the end of December 1996, the
total
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number of subscribers for Dual Product Packages was in excess of 28,800.
Subscriptions were taken by both existing and new customers of NYNEX CableComms,
with the main areas of interest being the basic package ("Prime View") and full
service package ("Super View"), which includes both premium movie and sports
programming. Based on past experience, NYNEX CableComms believes that customers
with both cable television and telecommunications services are less likely to
terminate service than those with only cable television service.
Pricing
NYNEX CableComms regularly evaluates its pricing strategy and intends to
remain price competitive in its residential market. NYNEX CableComms believes
competitive pricing has been particularly important initially in the residential
telecommunications market as it has attempted to gain market share.
NYNEX CableComms believes that residential customers generally purchase its
telecommunications services because of anticipated cost savings. Since March
1995, NYNEX CableComms' pricing strategy has been to provide its average
residential customer with savings of 25% on monthly bills for line rental and
call charges combined over BT's standard prices, before discounts and
promotions. NYNEX CableComms believes that this strategy has resulted in
additional revenue resulting from increased residential telecommunications
penetration rates and greater usage. Telecommunications penetration increased to
27.0% at December 31, 1996 from 24.6% at December 31, 1995 and average monthly
revenue per line increased to L19.96 in 1996 from L19.52 in 1995. Prior to March
1995, NYNEX CableComms provided residential customers with average savings of
10% to 15% on their monthly bills for line rental plus call usage combined over
BT's standard prices.
As of February 1, 1997, NYNEX CableComms' charge for the cable
television-only format ranged from L14.99 per month (for the package which does
not include the Sky Premium Channels) to L31.99 per month (for the package which
includes all Sky Premium Channels). Additional adult premium channels are
available to cable television-only customers at a monthly charge of L8.48.
Customers incur an additional administrative charge of L1 if payment is not made
by direct debit. NYNEX CableComms' cable television service includes the supply
and installation of one addressable converter box which provides service to one
television set. As of February 1, 1997, customers incur an additional monthly
charge (inclusive of value added tax ("VAT") of L3.95 for each additional
outlet.
For the basic "Prime View" Dual Product Package, NYNEX CableComms charged
L20.99 per month (inclusive of VAT), as of February 1, 1997. The cable
television component of this package consists of 40 channels, plus either one or
two local programming channels, depending on the franchise area. As of February
1, 1997, NYNEX CableComms' charges (inclusive of VAT) for the Dual Product
Packages ranged from L14.99 per month (for the package which does not include
the Sky Premium Channels) to L36.99 per month (for the package which includes
all Sky Premium Channels). NYNEX CableComms also offers a niche Dual Product
Package ("Asia View") tailored to the Asian community in the Northern franchises
and, in the Surrey and Bromley Franchises in the South. Additional premium
channels are available and additional outlets may be installed for the same
charges as for cable television-only customers. As with cable television-only
customers, customers who purchase Dual Product Packages will also incur an
additional administrative charge of L1 if payment is not made by direct debit.
In order to help build the customer base, the new Dual Product Packages
also have been competitively priced when compared to similar products offered
separately by BT and BSkyB.
THE BUSINESS MARKET
In the business market, NYNEX CableComms provides a variety of
telecommunications services, as well as commercial cable television services and
transmission facilities for closed circuit television services. During 1995 and
1996, NYNEX CableComms increased its business telecommunications marketing
activities, including the introduction of telesales marketing and a new
volume-based rental charge for business customers using central exchange
("CENTREX") services. NYNEX CableComms has based its strategy in respect of the
business market on its ability to provide, market and sell its
telecommunications services at competitive
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prices and its ability to retain its customers through reliability, quality
customer service and new product development.
Business Telecommunications Services
Business telecommunications services (excluding installation) provided
NYNEX CableComms with 8.6% of its operating revenues in 1996 compared to 6.2% in
1995.
In the business market, NYNEX CableComms offers its business customers and
earns revenue from the provision of the same telecommunications services
provided to residential customers and additional services such as CENTREX,
managed fiber networks, private circuits, low speed data services, digital
access signal systems 2 ("DASS 2"), basic rate Integrated Services Digital
Network ("ISDN"), closed circuit television and commercial cable television.
Pricing
NYNEX CableComms regularly evaluates its pricing strategy and intends to
remain price competitive in its business market. In March 1995, NYNEX CableComms
introduced a pricing strategy whereby its business customers enjoy savings, on
average, of 25% over BT's standard call charges, before discounts and
promotions. NYNEX CableComms believes that the immediate reduction in tariffs
resulting from offering these enhanced savings will be more than offset over
time by additional revenue generated from increased take-up of business
telecommunications services and greater usage attributable to this strategy.
Since the introduction of this strategy, there has been an increase in usage.
The average monthly revenue per line increased to L49.39 in 1996 from L46.82 in
1995 and the average number of lines per business customer increased to 4.4 at
December 31, 1996 from 2.8 at December 31, 1995. Prior to March 1995, NYNEX
CableComms provided business customers with monthly savings, on average, of 10%
to 15% on combined prices charged for line rental and call usage, as compared to
the standard prices charged by BT.
INSTALLATION
Combined installation revenue for cable television services and residential
and business telecommunications services provided NYNEX CableComms with 3.4% of
its operating revenues in 1996 compared to 5.4% in 1995.
Installation services for residential cable television customers include
installation of coaxial cable from the NYNEX CableComms' network to the
customer's home, connection of the customer's television to a set-top box and
connection of other customer electronics equipment. Installation services for
residential telecommunications customers include installation of copper wire
from the NYNEX CableComms network to a master socket network termination point
in the customer's home for connection with the customer's own telecommunications
equipment. Installation services for business customers include installation of
copper cable, for small- to medium-sized businesses, or fiber cable, for medium-
to large-sized businesses, to connect business customers to the NYNEX
CableComms' network.
ORGANIZATION
NYNEX CableComms UK and NYNEX CableComms US hold 90% and 10%, respectively,
of the shares in NYNEX U.K. CableComms Holdings, Inc. ("NYNEX UK Holdings"), an
intermediate holding company indirectly holding controlling interests in the
eleven Operating Companies which hold licenses for franchises in northern
England (the "Northern Franchises") and the five Operating Companies holding
licenses for franchises in southern England (the "Southern Franchises").
NORTHERN FRANCHISES
The Northern Franchises cover approximately 1,100 square miles and comprise
11 franchise areas: Blackburn, Bolton, Bury and Rochdale, Chester and
Warrington, Macclesfield, Manchester and Salford, Oldham and Tameside,
Stockport, Stoke-on-Trent, Derby and The Wirral. As of December 31, 1996, the
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Northern Franchises contained approximately 1,769,000 homes and 111,000
businesses. These franchises encompass several large metropolitan areas
including Manchester, one of the largest business communities in the United
Kingdom after London, and the primary commercial center for the north west of
England.
SOUTHERN FRANCHISES
The Southern Franchises cover approximately 590 square miles and comprise
the franchises of Bromley, North and North East Surrey, Solent, Sussex and
Wessex. As of December 31, 1996, the Southern Franchises contained approximately
843,000 homes and 42,000 businesses. The Solent, Sussex and Wessex franchises
are in popular retirement areas that have also attracted many major service
sector businesses. The towns of Bournemouth and Brighton, located in these
franchises, are both popular holiday resorts with a well developed hotel and
leisure infrastructure. Bromley is considered to be a prosperous south London
borough and North and North East Surrey is also an area where individual net
worth is higher than average for the United Kingdom.
OWNERSHIP STRUCTURE
The ownership interests of NYNEX CableComms UK and NYNEX CableComms US in
the Operating Companies are held through various wholly-owned subsidiaries and
partnerships in which NYNEX CableComms UK and NYNEX CableComms US together
exercise management control and hold the majority ownership interest. In the
aggregate, the ownership interests of NYNEX CableComms UK and NYNEX CableComms
US constitute approximately 87% of the economic interests in the Operating
Companies. These ownership interests are shown in the diagram below.
[CHART OMITTED]
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(1) The North limited partner and the South limited partner are affiliates of
NYNEX. NYNEX's interests in these affiliates are held by indirect
wholly-owned subsidiaries of NYNEX. Through its interests in these
affiliates, NYNEX has an interest in the Operating Companies held other than
through NYNEX CableComms UK and NYNEX CableComms US. The North limited
partner
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provides loans to the North Partnership and the Northern Operating Companies
under an existing credit facility. The South limited partner provides loans
to the South Partnership and the Southern Operating Companies under a
separate existing credit facility.
(2) Wholly-owned Delaware subsidiaries of NYNEX UK Holdings constitute the North
General Partners and the South General Partners. The North General Partners
and the South General Partners own the general partner interests in the
partnerships identified as the North Partnership and the South Partnership,
respectively.
(3) NYNEX UK Limited holds preference shares in the Operating Companies through
wholly-owned non-operating limited liability companies incorporated under
the laws of England and Wales. These non-operating companies are not shown
in the diagram.
(4) The North Partnership and the South Partnership are Delaware limited
partnerships which own approximately 99% of the ordinary shares in the
Northern Operating Companies and the Southern Operating Companies,
respectively (except for the Operating Company that holds The Wirral
franchise, in which the North Partnership owns approximately 49% of the
ordinary shares, with the balance held by a North General Partner). The
remaining ordinary shares of the Northern Operating Companies are owned by
the North General Partners and the remaining ordinary shares of the Southern
Operating Companies are owned by the South General Partners and other
subsidiaries of NYNEX UK Holdings. Such holdings of ordinary shares are not
shown in the diagram.
(5) The Northern Operating Companies consist of 11 unlimited companies
incorporated under the laws of England and Wales, each of which holds
licenses for one of the Northern Franchises. The Southern Operating
Companies consist of five unlimited companies incorporated under the laws of
England and Wales, each of which holds licenses for one of the Southern
Franchises.
OPERATING STATISTICS
NYNEX CABLECOMMS
OPERATING STATISTICS
AT AND FOR THE YEAR ENDED DECEMBER 31, 1996
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SOUTHERN NORTHERN TOTAL
FRANCHISES FRANCHISES 1996
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Homes passed(1)........................................... 724,886 887,375 1,612,261
Businesses passed(2)...................................... 34,859 49,016 83,875
Total premises passed..................................... 759,745 936,391 1,696,136
CABLE TELEVISION
Homes passed and marketed(3).............................. 617,741 686,396 1,304,137
Basic customers(4)........................................ 129,133 139,386 268,519
Basic penetration rate(5)................................. 20.9% 20.3% 20.6%
Premium units(6).......................................... 268,022 305,340 573,362
Pay to basic ratio(7)..................................... 207.6% 219.1% 213.5%
Additional outlets(8)..................................... 58,115 40,525 98,640
Additional outlets to basic ratio(9)...................... 45.0% 29.1% 36.7%
Churn rate(10)............................................ 25.3% 34.4% 29.6%
Average monthly revenue per customer (11)................. L23.02 L22.61 L22.83
RESIDENTIAL TELECOMMUNICATIONS
Homes passed and marketed(3).............................. 617,741 673,747 1,291,488
Residential lines connected............................... 172,248 177,012 349,260
Penetration rate(12)...................................... 27.9% 26.3% 27.0%
Churn rate(13)............................................ 13.7% 19.6% 16.4%
Average monthly revenue per line(14)...................... L20.91 L18.86 L19.96
BUSINESS TELECOMMUNICATIONS
Businesses passed and marketed(15)........................ 30,478 30,667 61,145
Business customers(16).................................... 4,994 2,595 7,589
Business lines connected.................................. 19,356 13,931 33,287
Average number of lines per customer...................... 3.9 5.4 4.4
Churn rate(17)............................................ 12.8% 13.4% 13.0%
Average monthly revenue per line(18)...................... L48.08 L51.58 L49.39
</TABLE>
- - ---------------
(footnotes continued on following page)
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<PAGE> 10
(1) Homes passed (the expression in common usage for the measurement of the
size of a cabled area) refers to the total number of homes for which
network construction has been completed for cable television and/or
telecommunications services. A home is deemed "passed" if it can be
connected to the distribution system without further extension of the
transmission lines. A home is one person living alone or a group of people
(who may not be related) living, or staying temporarily, at the same
address with common housekeeping.
(2) Businesses passed refers to the total number of businesses for which
network construction has been completed for cable television and/or
telecommunications services.
(3) Homes passed and marketed refers to the number of homes passed where
marketing has commenced.
(4) Basic customers refers to customers subscribing to NYNEX CableComms' basic
cable television services.
(5) The cable television basic penetration rate represents (i) the total number
of basic cable television customers on the given date, divided by (ii) the
total number of homes passed and marketed for cable television on such
date, expressed as a percentage.
(6) Premium unit refers to the number of premium programming services
(channels) subscribed for on the given date.
(7) The pay to basic ratio represents (i) the total number of cable television
premium units subscribed for on the given date, divided by (ii) the total
number of basic customers on such date, expressed as a percentage.
(8) NYNEX CableComms' basic package provides each customer with an outlet to
connect one television. Additional outlets represents the aggregate number
of additional outlets for additional televisions on the given date.
(9) Additional outlets to basic ratio represents (i) the aggregate number of
additional outlets for television on the given date, divided by (ii) the
total number of basic customers on such date, expressed as a percentage.
(10) Cable television churn rate represents (i) the total number of cable
television customers who terminated basic service or whose service was
terminated by NYNEX CableComms in the preceding twelve month period,
divided by (ii) the average number of basic cable television customers in
such period, expressed as a percentage.
(11) Average monthly revenue per cable television customer excludes installation
revenue and VAT and represents (i) the cable television revenue for the
given period divided by the number of months in such period, divided by
(ii) the average number of basic cable television customers in such period.
(12) Residential telecommunications penetration rate represents (i) the total
number of residential telecommunications lines on the given date, divided
by (ii) the total number of homes passed and marketed for
telecommunications on such date, expressed as a percentage.
(13) Residential telecommunications churn rate represents (i) the total number
of residential telecommunications lines terminated by customers or NYNEX
CableComms in the preceding twelve month period, divided by (ii) the
average number of residential telecommunications lines in such period,
expressed as a percentage.
(14) Average monthly revenue per residential telecommunications line excludes
installation revenue and VAT and represents (i) the total residential
telecommunications revenue for the given period divided by the number of
months in such period, divided by (ii) the average number of residential
telecommunications lines in such period.
(15) Businesses passed and marketed refers to the number of businesses passed
where marketing has commenced.
(16) Business customers refers to businesses to which NYNEX CableComms provides
some or all of their telecommunications requirements.
(17) Business telecommunications churn rate represents (i) the total number of
business telecommunications lines terminated by customers or NYNEX
CableComms in the preceding twelve month period, divided by (ii) the
average number of business telecommunications lines in such period,
expressed as a percentage.
(18) Average monthly revenue per business telecommunications line excludes
installation revenue and VAT and represents (i) the total business
telecommunications revenue for the given period divided by the number of
months in such period, divided by (ii) the average number of business
telecommunications lines in such period.
NYNEX CABLECOMMS
OPERATING STATISTICS
AT AND FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
1996 1995 1994 1993
-------- -------- ------- -------
<S> <C> <C> <C> <C>
Homes passed*....................................... 1,612,261 1,201,471 673,048 358,304
Businesses passed*.................................. 83,875 51,761 24,492 8,703
Total premises passed............................... 1,696,136 1,253,232 697,540 367,007
CABLE TELEVISION
Homes passed and marketed*.......................... 1,304,137 994,917 624,091 333,988
</TABLE>
10
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<TABLE>
<CAPTION>
1996 1995 1994 1993
-------- -------- ------- -------
<S> <C> <C> <C> <C>
Basic customers*.................................... 268,519 197,004 121,968 62,804
Basic penetration rate*............................. 20.6% 19.8% 19.5% 18.8%
Premium units*...................................... 573,362 412,408 190,545 104,836
Pay to basic ratio*................................. 213.5% 209.3% 156.2% 166.9%
Additional outlets*................................. 98,640 71,985 44,931 19,131
Additional outlets to basic ratio*.................. 36.7% 36.5% 36.8% 30.5%
Churn rate*......................................... 29.6% 29.4% 31.1% 33.1%
Average monthly revenue per customer*............... L22.83 L21.59 L19.67 L20.23
RESIDENTIAL TELECOMMUNICATIONS
Homes passed and marketed*.......................... 1,291,488 945,802 501,031 240,726
Residential lines connected......................... 349,260 232,551 98,954 44,518
Penetration rate*................................... 27.0% 24.6% 19.8% 18.5%
Churn rate*......................................... 16.4% 17.5% 15.8% 13.3%
Average monthly revenue per line*................... L19.96 L19.52 L21.81 L19.72
BUSINESS TELECOMMUNICATIONS
Businesses passed and marketed*..................... 61,145 30,450 20,193 8,703
Business customers*................................. 7,589 5,133 3,548 1,292
Business lines connected............................ 33,287 14,260 5,311 1,890
Average number of lines per customer................ 4.4 2.8 1.5 1.5
Churn rate*......................................... 13.0% 11.9% 7.2%(1) n/a
Average monthly revenue per line*................... L49.39 L46.82 L53.45 L55.33
</TABLE>
- - ---------------
* For the definition of these terms, see the notes to the table "Operating
Statistics (Unaudited), at and for the year ended December 31, 1996" above.
(1) Prior to June 30, 1994, separate statistics for business telecommunications
churn rates were not maintained by NYNEX CableComms. The 1994 business
telecommunications churn rate is for the six months ended December 31, 1994.
THE NETWORK
NYNEX CableComms is designing and constructing a broadband (high capacity)
network within its franchise areas which will enable it to deliver a wide range
of cable television and telecommunications services to its customers and which
NYNEX CableComms believes will enable it to deliver more advanced services as
they become available in the future. One of NYNEX CableComms' principal business
strategies has been to design and construct its network at the lowest possible
life cycle cost (that is, the initial construction cost plus ongoing operating
and maintenance costs). NYNEX CableComms began construction of the first of its
franchise areas in September 1991 and has been providing both cable television
and telecommunications services in all of its franchise areas since August 1995.
NYNEX CableComms plans to construct the network to a further 340,958 premises in
1997, which will result in the completion of 71% of its build by the end of the
year, in full compliance with its license requirements.
Each of NYNEX CableComms' telecommunications licenses prescribes build
obligations ("milestones") that require NYNEX CableComms to construct its
network in any franchise area to pass a specified number of premises within
prescribed time periods. NYNEX CableComms, on a limited number of occasions, has
not met individual franchise milestones; however, NYNEX CableComms has on each
occasion sought and received appropriate milestone modifications from the Office
of Telecommunications ("Oftel"). NYNEX CableComms is currently in compliance
with its milestone requirements.
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<PAGE> 12
The following table sets forth NYNEX CableComms' actual annual build and
actual cumulative build for 1991 to 1996, its proposed annual build and its
proposed cumulative build for 1997 to 2000 and its aggregate milestones for the
period 1991 to 2000.
FRANCHISE MILESTONES
<TABLE>
<CAPTION>
NUMBER OF PREMISES (IN THOUSANDS)
--------------------------------------------------------------------------------------
ACTUAL PROPOSED
-------------------------------------------------- --------------------------------
FRANCHISE GROUP 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
- - ---------------------- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NORTHERN FRANCHISES
Annual build.......... -- -- 94 161 360 322 284 305 308 47
Cumulative build...... -- -- 94 255 615 937 1,220 1,525 1,833 1,880
License requirement... 10 43 57 194 553 895 1,208 1,473 1,646 1,679
SOUTHERN FRANCHISES
Annual build.......... 16 93 164 169 196 121 57 35 32 1
Cumulative build...... 16 109 273 450 638 759 817 852 884 885
License requirement... -- 32 186 348 534 715 785 820 820 820
TOTAL
Annual build.......... 16 93 258 330 556 443 341 340 340 48
Cumulative build...... 16 109 367 697 1,253 1,696 2,037 2,377 2,717 2,765
License requirement... 10 75 243 542 1,087 1,610 1,993 2,293 2,466 2,499
</TABLE>
NYNEX CableComms' ability to meet its proposed annual build and proposed
cumulative build for the period 1997 to 2000 is dependent on a number of factors
and assumptions that NYNEX CableComms believes are reasonable under the
circumstances. Such factors include, among others, the continuing availability
of adequate funding, the continuing availability of experienced civil
contractors on reasonable terms, maintaining a satisfactory relationship with
local governments, the results of its operations during this period and the
continuing customer acceptance of cable television and telecommunications
services from cable operators. There can be no assurance that NYNEX CableComms
will, however, be able to meet its annual build or cumulative build targets or
that NYNEX CableComms will not alter such targets in response to changes in the
foregoing factors or other developments, some of which may be outside the
control of NYNEX CableComms. NYNEX CableComms regularly reviews its build
program and may from time to time revise its proposed annual and cumulative
build targets for future years. The actual build for 1996 and the proposed build
for 1997 to 2000 set forth above are lower than previously proposed by NYNEX
CableComms. NYNEX CableComms currently believes that it will exceed the
milestones set forth above, but there can be no assurance that such milestones
will in fact be met. If individual franchise milestones are not met, Oftel may
take enforcement action which if not complied with could result in the
revocation of the applicable telecommunications license by the Department of
Trade and Industry.
CONSTRUCTION COSTS
Construction of an integrated cable television and telecommunications
network is capital intensive, requiring substantial investment for (i) network
costs, such as construction (designing, trenching and laying underground ducts),
plant and network electronics for cable television and telecommunications
services, (ii) customer costs, such as converters, customer electronics and
installation of cable from the network to the customer's home and (iii) other
costs, such as headend equipment, switching equipment, land and buildings,
computers and capitalization of network development costs and labor.
NYNEX CableComms constructs its network so that revenues are generated from
the completed portions of the network while the remaining areas are being built.
NYNEX CableComms generally does not incur the cost of bringing cable from the
curbside duct to the home unless and until a customer elects to subscribe for
service. NYNEX CableComms' construction costs per meter increased from 1992 to
1994 as did its construction costs per home from 1993 to 1994 partly due to
early installation of plant and equipment which benefitted the whole network and
not just those homes which were connected, such as the Manchester
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Fiber Ring (a fiber optic loop which interconnects and services all of the
Northern Franchises), the National Operations Centre (a computerized operations
facility located in the North and North East Surrey franchise which performs
surveillance, analysis, fault detection and correction and provisioning for all
elements of NYNEX CableComms' network throughout the United Kingdom) and
switches for 11 franchises. Switches for the remaining franchises were
constructed and placed into service in 1995. In addition, the rapid growth in
the rate of construction during such period caused NYNEX CableComms to accept
short term contracts at higher costs than previously experienced.
Beginning in 1994, NYNEX CableComms entered into longer term construction
contracts to achieve, among other things, lower construction costs per meter in
ensuing years. A new materials procurement procedure was also implemented to
obtain savings by focusing efforts on high priority product groups.
The following table provides summary information regarding construction
costs for NYNEX CableComms' franchises for the twelve month periods ended
December 31, 1992, 1993, 1994, 1995 and 1996.
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996
--------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Construction Costs
Construction costs per
meter(1).................. L31 L42 L49 L43 L45
Connection costs(2)......... L4,571,000 L8,780,000 L14,935,000 L27,915,997 L27,410,503
Headend facility costs(3)... L7,407,000 L14,199,000 L23,652,000 L31,861,495 L27,418,999
</TABLE>
- - ---------------
(1) Construction costs include design, trenching, ducting, ground
reinstatements, cable activation, labor costs and capitalized overheads.
(2) Connection costs consist of all costs relating to the connection of
customers from the distribution point at the public highway to connection
points within customers' homes but exclude the cost of cable television
equipment within customers' homes (converter boxes) for the given period.
(3) Headend facility costs consist of switching equipment and transmission
equipment as well as cable television equipment and related expenses for the
given period.
CUSTOMER SERVICE
NYNEX CableComms recognizes that providing quality customer service is an
important part of attracting and retaining customers. Residential customer
service is handled primarily by its two customer call centers located in the
Greater Manchester area and Brighton serving both the Northern Franchises and
the Southern Franchises. Business customer service for all NYNEX CableComms
business customers is handled by separate service centers located in Portsmouth
and, for certain larger business accounts, Hersham.
An important element of NYNEX CableComms' customer service is its
Integrated Customer Management System ("ICMS") software package developed by IBM
and licensed to NYNEX CableComms. The ICMS package enables NYNEX CableComms to
manage both telecommunications and cable television services. ICMS has a
customer service-based architecture which allows customers to have all services
with NYNEX CableComms tracked through one customer record and allows the
customer to receive a consolidated bill for all NYNEX CableComms services. The
principal advantage for customer management is that all customer services are
held with the single customer record. For each customer, ICMS can identify and
track field engineer visits to customer premises for installing new equipment,
fixing customer faults and disconnecting customers. In addition, ICMS provides
NYNEX CableComms with the ability to handle billing for more sophisticated cable
television and telecommunications services, such as IPPV and number portability.
Each customer service representative participates in training programs
before handling customer inquiries to ensure familiarity with NYNEX CableComms'
services and policies. In addition, the customer service department is organized
so that residential and business customers can call only one number each and,
using voice response technology, be routed to the person who can best answer
their service, billing and repair questions.
NYNEX CableComms initiates customer service in a franchise area even prior
to construction of the network. NYNEX CableComms' representatives communicate
with prospective residential and business customers in an area targeted for
construction to explain the construction process and the services NYNEX
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CableComms provides. NYNEX CableComms makes representatives available to handle
residents' questions and complaints that arise during construction. Construction
crews take all reasonable steps to minimize the disruption caused during
construction and to appropriately restore the roadway, footpaths and other areas
affected by the construction. NYNEX CableComms makes an effort to contact
customers shortly after initial installation to address any service concerns or
problems.
NYNEX CableComms seeks to provide customers with prompt service and repair.
For its business customers, NYNEX CableComms aims to respond to problems
affecting service within four hours. For residential customers, NYNEX CableComms
recently introduced a customer service guarantee scheme in all of its franchise
areas. The scheme offers residential customers compensation payments where a
claim is made (in the form of credits on their bills) in the event certain
customer service commitments are not met, such as delays in the installation of
telephone and cable television services and the repair of faults, disconnection
in error and failure to maintain appointments.
NYNEX CableComms encourages residential customers to pay bills by direct
debit, which it believes is an easier means of payment for the customer than
writing checks each month. NYNEX CableComms has also introduced alternate
payment mechanisms including the use of payment agents and debit card
facilities. The introduction of the new Dual Product Packages also provides
customers with the convenience of dealing with only one company, and receiving
only one bill, for all cable and telecommunications services.
An important measure of customer satisfaction is the "churn" rate among
customers. "Churn", generally, is the number of customers who terminate service
or whose service is terminated by NYNEX CableComms, expressed as a percentage of
the total number of customers for such service. A customer may terminate service
on thirty days written notice to NYNEX CableComms and may do so without penalty
on or after the end of a twelve month period. NYNEX CableComms may terminate a
customer's service at any time in specified circumstances including where the
customer fails to pay for the service. NYNEX CableComms' churn rates for its
cable television, residential telecommunications and business telecommunications
services were 29.6%, 16.4% and 13.0%, respectively, in 1996, compared with
29.4%, 17.5% and 11.9%, respectively, in 1995. See "Operating Statistics".
COMPETITION AND REGULATORY ISSUES
NYNEX CableComms' cable television and telecommunications services compete
with various other operators using a variety of technologies, including many
companies with substantially greater resources and longer operating histories
than NYNEX CableComms.
RESIDENTIAL COMPETITION
In the residential market NYNEX CableComms competes for customers against
terrestrial broadcast stations, DTH satellite television services, video
cassette rentals and sales and satellite master antenna television ("SMATV")
systems, among others, in its cable television business and against BT and other
public telephone operators ("PTOs") in its telecommunications business. NYNEX
CableComms believes that it has a competitive advantage in both markets as a
result of its ability to provide cable television and telecommunications
services on an integrated basis. Specifically, NYNEX CableComms' ability to
provide both services (i) enables it to offer Dual Product Packages and other
incentives that encourage customers to subscribe to multiple products and
services and (ii) provides two revenue sources through which NYNEX CableComms
can recover the costs of constructing and operating its network. Other factors
affecting competition in the residential market are discussed below.
Cable Television Competition
As a result of the current policy of the Independent Television Commission
("ITC") of granting only one cable television license within any franchise area,
NYNEX CableComms does not compete for customers with other cable operators
within its franchise areas. NYNEX CableComms does however compete with direct
reception of terrestrial broadcasts and DTH satellite and SMATV systems. NYNEX
CableComms may in the future also compete with Video-on-Demand ("VOD")
programming and other entertainment services provided by PTOs. Near
Video-on-Demand ("NVOD") and VOD services, which may be provided
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<PAGE> 15
by NYNEX CableComms in the future, also will compete to varying degrees with
other communications media, including home video and cinema.
- - - Terrestrial Broadcast. Among the most popular channels in the United
Kingdom are the four national channels offered by the three main
terrestrial broadcast networks -- BBC (BBC1 and BBC2), ITV and Channel 4.
NYNEX CableComms believes that terrestrial broadcast television benefits
from its historical position as the leading source of home entertainment in
the United Kingdom. However, the cable and satellite channels are gradually
increasing their share of weekly viewing in households subscribing to
multichannel services. A fifth national channel is being launched in the
first quarter of 1997.
While the four national television channels in the United Kingdom have a
reputation for high quality programming, research indicates that audiences
have a preference for a wider variety of television programming. NYNEX
CableComms believes that as the range and quality of programming on cable
television continues to improve so should the size of its audience. Some
terrestrial broadcasters are already, or may become, contributors to the
cable and satellite programming market as a means of protecting total
market share. Since 1992, the BBC has had an equity stake in and has been
providing programming to UK Gold, a cable and satellite channel. In 1996
both Carlton Communications Plc ("Carlton") and Granada Group plc
("Granada") launched channels into the satellite programming market. In
addition, the BBC, Carlton, and Granada are all planning to provide
programming to digital television service providers, including cable,
satellite and terrestrial television.
NYNEX CableComms believes that its primary competitive advantages over
terrestrial broadcast television are (i) significantly more programming
options, (ii) exclusive programming, (iii) improved television reception in
some areas, (iv) access in the future to interactive entertainment and
information services, (v) the ability in the future to offer more targeted
advertising opportunities and (vi) the opportunity to provide a
multi-channel television service bundled with telephony through innovative
packaging and pricing.
- - - DTH Satellite. Unlike the US market, satellite television is the
established multichannel service distributor in the United Kingdom. NYNEX
CableComms' most significant competitor in providing multichannel service
is BSkyB which offers DTH satellite television services. BSkyB is also the
major supplier of premium programming to the UK cable television industry.
NYNEX CableComms believes that a principal competitive advantage of DTH
satellite television service has been its generally lower monthly service
charges for basic and premium programming services when compared to monthly
charges for cable television services, which are generally inclusive of
equipment rental.
Based on current technology, cable television can offer a range of local,
regional and national channels and can upgrade capacity more easily than
satellite delivery. This capability has enabled NYNEX CableComms to offer
additional channels and advanced services, such as IPPV. Cable operators
can transmit video cassette delivered or compact disc delivered programming
at relatively low cost, allowing a much broader range of niche programming
to be transmitted on their networks. In the near future, digitalization
will allow DTH subscribers to receive additional channels, which are likely
to include additional Pay-Per-View and interactive services, such as home
banking and shopping channels. Development of these channels by DTH
satellite providers will depend on their having digital satellite
transponders and will also require the installation of new satellite
receiver equipment at the customer's home.
Although NYNEX CableComms expects DTH satellite to continue to provide
significant competition in the future, NYNEX CableComms believes that cable
television has a number of competitive advantages over DTH satellite
service, including: (i) the significant initial costs for the purchase of a
dish and related equipment for DTH service compared with the initial costs
for connection of cable television, (ii) the perception that satellite
dishes are unsightly, (iii) the requirement for an unobstructed line of
sight between the satellite and the dish for satellite services which can
be problematic in densely populated areas, (iv) the quality of reception of
cable television as opposed to satellite reception which can be
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<PAGE> 16
affected by weather conditions, (v) the ability of cable viewers to watch
different channels on different television sets in one home if additional
outlets are taken while most satellite viewers cannot watch different
channels on different sets in a home without significant additional
expense, (vi) the ability of cable networks to offer telecommunications
services and in the future to offer interactive and integrated
entertainment, telecommunications and information services in addition to
standard non-interactive television programming, (vii) the general absence
of local programming on DTH satellite services and (viii) installation of
satellite dishes may require compliance with zoning ordinances.
NYNEX CableComms' Dual Product Packages also help it to compete with
competitors providing DTH satellite services alone. BSkyB has sought to
market telecommunications services on behalf of BT, which would have
enabled BSkyB's customers to earn additional discounts on BT's residential
telecommunications volume discount plans. BT terminated this arrangement as
a result of license enforcement action by Oftel.
- - - Video Cassette Rentals and Sales. The principal competitive advantages of
cable television over video cassette rentals and sales are, with respect to
rentals, convenience in the elimination of the need for customers to leave
their homes to collect and return the video cassette. Although video
cassette rentals and sales provide the customer with more flexibility in
selecting specific programming and the timing of delivery of such
programming, this advantage will be reduced by the introduction of IPPV
service and could be further reduced if and when NVOD and VOD services are
introduced.
- - - PTOs. A variety of VOD delivery systems are under development. Currently,
no VOD service is commercially available from any PTO, although BT has
experimented with a copper-based technology and undertook a pilot program
for NVOD service to the homes of a small number of BT employees. However,
NYNEX CableComms believes that existing technology does not permit BT and
other national PTOs to offer a high quality VOD service to a large number
of customers in a cost-effective manner. In addition to offering VOD, BT
may become a significant competitor in the multichannel television market
once it is allowed to broadcast entertainment services. Currently BT is
prevented from providing broadcast entertainment nationally or carrying
these services over its own network until 2001 (and then only if the
Director General of Oftel determines that the change is likely to lead to
more effective competition), although the restriction on carriage is to be
reviewed in 1998. In October 1995, the Labour Party proposed allowing BT
entry to the entertainment market earlier than previously envisaged in
return for BT providing free connection to the Internet to schools,
hospitals and libraries. Although in later statements the Labour Party has
moved away from this position, there can be no assurance that BT will not
be allowed an accelerated entry to the entertainment market, particularly
if there is a change of government. BT is, however, not restricted from
acquiring holders of cable television franchises or from applying in its
own right for cable television licenses covering unfranchised areas,
subject to the above-mentioned restriction on the use of its network. If
the restrictions on broadcast entertainment were lifted, NYNEX CableComms
believes that substantial investment by BT would be necessary before it
could provide broadcast video entertainment over its existing network
unless significant developments are made in digital compression or other
technologies.
- - - SMATV. The low cost of dishes for medium- and high-powered satellites is
encouraging the development of mini cable systems on individual apartment
buildings, known as SMATV systems. Since 1991, any SMATV system covering
1,000 homes or less has not required a cable television license and a cable
television system that covers only one building or two adjacent buildings
is permitted to operate pursuant to an existing telecommunications license.
The current regulatory policy gives cable operators a right of first
refusal to provide a similar or superior service at a reasonable price
before a new SMATV system will be permitted to begin operations. However,
this policy could change at any time. At present, NYNEX CableComms believes
that SMATV systems present only limited competition.
- - - Other Cable Operators. Although cable television operators in the United
Kingdom generally cooperate on a variety of technical, programming and
marketing matters, the operators do compete for the award of new
franchises, the purchase of existing franchises and new sources of capital.
Certain cable television operators competing for new franchises may have
greater financial resources or other advantages over NYNEX CableComms which
may increase their likelihood of obtaining desirable franchises.
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- - - New Technologies. The extent to which new media and technologies compete
with cable television systems in the future cannot be predicted. Such media
or technologies may become dominant in the future and render cable
television systems less profitable or even obsolete. Digital converter
boxes are currently being deployed in the United States. When similar
digital technology is deployed successfully in the United Kingdom, it will
enable NYNEX CableComms, as well as its terrestrial broadcast and digital
DTH satellite competitors, to increase significantly the number of channels
they are able to offer to their customers. On January 31, 1997, two bids,
for the three full Digital Terrestrial Television ("DTT") multiplexes
available, were received by the Independent Television Commission. The
bidders were British Digital Broadcasting ("BDB"), a consortium of BSkyB,
Carlton and Granada, and Digital Television Network, backed by
International CableTel and the US Cable and Communications Group. Along
with the multiplexes already reserved for the BBC and ITV and a further
half multiplex for which S4C, the Welsh broadcaster has applied, it is
expected that approximately 25-30 channels of DTT will be available in the
second half of 1998. An increase in the number of channels offered by
terrestrial broadcast and DTH satellite competitors at competitive costs
could reduce NYNEX CableComms' competitiveness.
Telecommunications Competition
BT, formerly the sole national PTO in the United Kingdom, is a substantial
competitor in the residential telecommunications market with approximately 95%
of the market. BT has an established market presence, fully built networks and
resources substantially greater than those of NYNEX CableComms.
NYNEX CableComms' ability to gain market share from BT depends in large
part on its ability to charge lower prices than BT. Currently BT is not
permitted to charge different amounts for the same service in different local
geographic areas and accordingly is unable to lower prices selectively in
particular geographic areas in response to competition from NYNEX CableComms and
other cable telecommunications operators. While cable telecommunications
operators may at some point be required to provide services within a particular
franchise area on a similarly non-discriminatory basis, they currently have no
obligation to provide such services on the same terms in other franchise areas
within the United Kingdom. Consequently, cable telecommunications operators are
able to set prices in accordance with local market conditions. BT is currently
required to provide voice telecommunications services and certain other services
to every person in the United Kingdom who may reasonably request such services.
Cable telecommunications operators assume similar obligations only if the
Director General of Oftel determines that they have become a "well established
operator" within the relevant market (i.e. part or all of the area within which
the operator provides telecommunications but not cable television services).
NYNEX CableComms is not currently regarded as a "well established operator" for
these purposes. A consultation paper on future arrangements for universal
service was published in February 1997.
NYNEX CableComms believes that residential customers generally purchase its
telecommunications services because of anticipated cost savings. Since March
1995, NYNEX CableComms' pricing strategy has been to provide its average
residential customer with savings of 25% on monthly bills for line rental and
bill charges combined over BT's standard prices, before discounts and
promotions. NYNEX CableComms believes that this strategy has resulted in
additional revenue resulting from increased residential telecommunications
penetration rates and greater usage. Telecommunications penetration increased to
27.0% at December 31, 1996 from 24.6% at December 31, 1995 and average monthly
revenue per line increased to L19.96 in 1996 from L19.52 in 1995. Prior to March
1995, NYNEX CableComms provided residential customers with average savings of
10% to 15% on their monthly bills for line rental plus call usage combined over
BT's standard prices.
BT currently is subject to a retail price regulation in respect of
approximately 65% of its revenues. On October 1, 1996, Oftel modified BT's
license to implement new retail price controls commencing from August 1997 and
introduced a license condition that enables Oftel to address anti-competitive
agreements and abuse of dominant position (the "Fair Trading Condition"). The
new price control will expire on August 1, 2001 and is set at the Retail Price
Index ("RPI") -- 4.5% on the bottom 80% of residential customers as measured by
telecommunications expenditure. Small business customers will be subject to a
cap limiting increases in line rental to RPI (with no percentage adjustment) and
will have access to the same reduction in
17
<PAGE> 18
call prices as residential customers. Oftel has stated that this will be the
last retail price control imposed on BT. In 1996, BT brought proceedings against
Oftel challenging the Fair Trading Condition. The court ruled that Oftel was
acting within its authority. On March 4, 1997, Oftel published guidelines on its
planned method of enforcement of the Fair Trading Condition. Cable
telecommunications operators currently are not subject to such price controls in
respect of any telecommunications services.
Oftel has issued a number of proposals that appear to indicate that it
intends to stimulate an even more competitive telecommunications market within
the United Kingdom. See "Other Regulatory Matters " below.
BT is required by its license to allow other operators (including cable
telecommunications operators) to interconnect with BT's network and the terms of
this interconnection are closely reviewed by Oftel. Oftel is consulting on
proposals for a framework for the regulation of pricing of BT's interconnect
charges planned for implementation on October 1, 1997. BT now offers a published
Standard Interconnection agreement to other operators. In the past, BT has
benefited from certain structural advantages, such as an inability for customers
to retain their existing telephone number when switching from BT. In 1996, Oftel
required BT to offer telephone number portability. NYNEX CableComms introduced
telephone number portability in all of its franchises by August 1996, and
expects to make it available to virtually all potential customers by mid-1997.
An advantage that cable television and telecommunications operators have
with respect to interconnection has been their ability to utilize, at a lower
cost than utilizing BT's network, the networks of other PTOs such as Mercury.
Mercury's long distance and international interconnect rates have historically
been less than those charged by BT enabling NYNEX CableComms to pass the benefit
on to consumers at the retail level. At present, the only way in which a
residential BT customer can choose to route calls over Mercury's network is by
dialing a special access code or by purchasing a telephone with which, by
pressing a special button, it is possible to select the Mercury network in
preference to the BT network. The Director General of Oftel has conducted a
study as to whether the introduction of an "equal access" policy would be
appropriate (whereby all operators of local telecommunications systems would
eventually have to offer access to the trunk systems of BT, Mercury and any
other PTOs without discrimination among those systems). Oftel's policy would
require operators with at least a 25% share of the local telecommunications
market to provide equal access. Oftel's study concluded that the costs of
introducing equal access exceeded any benefits that may arise, and that Oftel
would not be inclined to introduce equal access. However, there can be no
assurance that equal access will not be introduced by the Director General of
Oftel at some stage in the future and will not adversely affect (i) the cable
television and telecommunications operators' ability to market their
telecommunications services or (ii) their margin on usage charges for trunk and
international calls. The European Commission is currently considering the issue
of equal access and it is possible that decisions taken in this forum may have
an impact on the United Kingdom regulatory environment.
Other telecommunications providers could make it more difficult for NYNEX
CableComms to increase its share of the residential telecommunications market.
For example, IONICA L3 Limited ("IONICA"), a provider of telecommunications via
a fixed link radio network, entered the residential telecommunications market in
March 1996 in selected areas (although it does not operate in any NYNEX
CableComms franchise areas). AT&T Communications (UK) Ltd. ("AT&T UK") was
awarded a national PTO license in December 1994 and announced an intention to
enter both the business and residential markets. In addition, the United Kingdom
government has pursued a policy of promoting the development of wireless
telecommunications and has granted operating licenses to a number of operators
that have constructed mobile networks.
NYNEX CableComms competes with mobile networks such as those provided by
Telecom Securicor Cellular Radio Limited (marketed under the name "Cellnet") and
Vodafone Group Plc, and with personal communications networks such as those
provided by C&W and US West (marketed under the name "one2one") and Microtel
Logic Limited (marketed under the name "Orange"). Mobile service could become a
competitive threat to fixed networks, particularly if call charges are reduced
further on the mobile networks. Further advances in wireless technology may also
result in the ability to use high bandwidth to provide interactive services
similar to those proposed by Liberty Communications, which has been issued a
license to convey entertainment services.
18
<PAGE> 19
BUSINESS COMPETITION
NYNEX CableComms competes primarily with BT in providing business
telecommunications services. It also competes with Mercury, Energis
Communications Limited ("Energis") and with other companies that have been
granted telecommunications licenses, such as NorWeb plc, a regional electricity
company in the area covered by the Northern Franchises. In the future, NYNEX
CableComms may compete with additional entrants to the business markets. Both BT
and Mercury are substantial competitors with an established market presence.
Energis has carried out the construction of a national broadband network along
existing power pylons to provide telecommunications services.
In March 1995, NYNEX CableComms introduced a new pricing strategy whereby
its business customers enjoy savings, on average, of 25% over BT's standard call
charges, before discounts and promotions. As with residential
telecommunications, NYNEX CableComms believes that the immediate reduction in
tariffs resulting from offering these enhanced savings will be more than offset
over time by additional revenue generated from increased take-up of business
telecommunications services and greater usage attributable to this strategy.
Since the introduction of this strategy, there has been an increase in usage.
The average monthly revenue per line increased to L49.39 in 1996 from L46.82 in
1995 and the average number of lines per business customer increased to 4.4 at
December 31, 1996 from 2.8 at December 31, 1995. Prior to March 1995, NYNEX
CableComms provided business customers with monthly savings, on average, of 10%
to 15% on combined prices charged for line rental and call usage, as compared to
the standard prices charged by BT.
With respect to quality, NYNEX CableComms believes that the transmission
provided by its advanced fiber network, together with customer service provided
by its National Operations Centre, allow NYNEX CableComms to provide a wide
range of sophisticated and reliable services to its customers. See "Business --
Service" above.
NYNEX CableComms believes that by owning its digital switches it can more
effectively compete by providing its telecommunications services at lower prices
and by offering more services and pricing options to its customers than it could
offer if it utilized third party switches. As in the residential market, NYNEX
CableComms believes that its ability to compete with BT in the business market
has been improved by the addition of telephone number portability in the United
Kingdom.
REGULATORY MATTERS
The operation of cable television and telecommunications services in the UK
is regulated under both the Telecommunications Act 1984 ( the
"Telecommunications Act") and the Broadcasting Act 1990, as amended by the
Broadcasting Act 1996 (the "Broadcasting Act"), which followed the Cable and
Broadcasting Act 1984 (the "Cable and Broadcasting Act"). The operation of cable
television and telecommunications services in UK requires two principal
licenses: (i) a license issued either under the Cable and Broadcasting Act
(prior to 1991) or under the Broadcasting Act (since 1991), which permits the
holder to provide cable television services within a specific franchise area,
and (ii) a telecommunications license issued under the Telecommunications Act,
which allows the holder to install and operate the physical network necessary to
provide cable television and telecommunications services. The ITC is responsible
for granting and enforcing cable television licenses. The DTI is responsible for
granting telecommunications licenses and Oftel is responsible for regulating the
operations of such licenses. In addition, if an operator utilizes microwave
distribution systems as part of its network, such operator is required to hold a
license under the Wireless Telegraphy Acts of 1949-1967.
Each of the 16 Operating Companies holds a cable television license and a
telecommunications license. The Operating Companies' cable television licenses
will expire at various times commencing in November 2004. The telecommunications
licenses held by the Operating Companies are for 23 year periods and are
scheduled to expire at various times commencing June 2012.
OTHER REGULATORY MATTERS
NUMBER PORTABILITY. Number portability allows customers to retain their
telephone number when changing telephone operators. Previously, customers using
NYNEX CableComms' or any other cable operator's telecommunications service had
to change their telephone number. BT's license was modified in
19
<PAGE> 20
July 1996 to incorporate a condition which supports implementation of number
portability and, on January 6, 1997, the Director General of Oftel determined
the charges BT can levy on other operators in order to effect number
portability. In May 1996, NYNEX CableComms became the first company in the
United Kingdom to introduce a commercial number portability service on a trial
basis in the Derby franchise. In August 1996 the service was available in all
NYNEX CableComms' franchise areas and in mid-1997 the service is expected to be
available to virtually all potential customers.
INTERNATIONAL FACILITIES -- LIBERALISATION. On June 6, 1996, following
examination of the responses to the March 1996 consultation document that
proposed the licensing of additional facilities-based operators in the
international call market, the UK Government announced the liberalization of
international facilities on all international routes. Previously, only BT and
Mercury were licensed to own and operate international facilities from the
United Kingdom. On December 19, 1996, 44 new international facilities operator
licences were granted. A further licence was granted in January 1997.
COMPETITION IN TELECOMMUNICATIONS SERVICES. In February 1996, Oftel
introduced a consultation document outlining proposals for the encouragement of
the provision of enhanced services across telecommunications networks. In June
1996, Oftel published proposals, which would allow BT to price its services to
other service providers at standard retail prices less the avoidable costs of
serving such providers and ensure that service providers can compete on an equal
basis with BT's own services provision businesses. Oftel's final statement in
this area was published at the end of February 1997.
OFT DECISION IN BSKYB REVIEW. During the second quarter of 1995, NYNEX
CableComms Limited, an indirect wholly-owned subsidiary of NYNEX CableComms UK
and NYNEX CableComms US, and each of the Operating Companies entered into a
programming agreement with BSkyB and a subsidiary of BSkyB (the "BSkyB
Agreement") which provides for price incentives related to, among other things,
the overall number of basic customers and the pay to basic ratio achieved by
NYNEX CableComms. The BSkyB Agreement also provides NYNEX CableComms with access
to BSkyB's Pay-Per-View services.
Concurrently with its 1996 review of BSkyB's position in the market for the
supply of pay television programming in the United Kingdom and related services
at the wholesale level, the UK Office of Fair Trading (the "OFT") expressed the
view that it considered certain provisions of the BSkyB Agreement to be
significantly anti-competitive under the UK Restrictive Trade Practices Act
1976.
In connection with its July 1996 findings that barriers to entry resulting
from BSkyB's powerful position in the wholesale pay television market raised
concerns that "although BSkyB is not acting anti-competitively, the competitive
process is being impaired", the OFT also acknowledged that amendments to the
BSkyB Agreement proposed by BSkyB and NYNEX CableComms had addressed the
competition concerns of the OFT. BSkyB and NYNEX CableComms are reviewing a
final draft of the agreement, as revised to incorporate such amendments. The
final draft was submitted to the OFT in February 1997 for confirmation that the
OFT's review is complete.
To address the anti-competitive situation, the OFT secured informal
undertakings pursuant to which BSkyB, among other things, agreed to submit a new
wholesale price list and discount structure, the New Rate Card, to the OFT for
consultation with the cable television industry and for OFT approval. Cable
operators with existing fixed term contracts with BSkyB, such as NYNEX
CableComms, may continue under those contracts until they expire or elect to be
governed by the New Rate Card pricing and discount structure. The OFT submitted
the New Rate Card to NYNEX CableComms and the cable industry in October 1996
and, following consultation with the industry, the New Rate Card was approved by
the OFT in December 1996. NYNEX CableComms has reviewed the New Rate Card and at
present has determined to continue to operate under the BSkyB Agreement, as so
amended. NYNEX CableComms will continue to review its option to operate under
the New Rate Card.
NYNEX CableComms understands that the European Commission Directorate
General IV has informally considered the compatibility of the BSkyB Agreement
(in the form originally entered into, without giving effect to the amendments
proposed by NYNEX CableComms and BSkyB after discussions with the OFT) with
European Union competition law. NYNEX CableComms is not aware of any final
conclusion on this issue having been reached by the Directorate General.
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<PAGE> 21
BROADCASTING ACT. On July 25, 1996, the Broadcasting Act 1996, which
amended the Broadcasting Act 1990, introduced a number of changes to UK
broadcasting policy. The primary change was the creation of a framework for the
licensing of digital terrestrial broadcasters (both multiplex service and
digital program services) and modifications to cross-media ownership rules. The
Broadcasting Standards Council and the Broadcasting Complaints Commission were
also merged.
Other changes relevant to NYNEX CableComms' business interests include the
specification of a list of events that cannot be broadcast exclusively by
pay-television operators and specification of the "must carry" requirements for
cable operators in a digital environment.
MODIFICATIONS TO THE UK TELEPHONE NUMBERING SCHEME. In September 1996,
Oftel released a consultation document that proposes a number of changes to the
UK telephone numbering scheme. Oftel's proposals include standardization of the
number ranges used for mobile, part-paid and premium rate services, as well as
arrangements to address the expected exhaustion of number ranges in certain
cities by the year 2000. Oftel's final proposals, addressing the recommendations
in their initial consultation, was published in January 1997.
DIGITAL CONDITIONAL ACCESS. On December 17, 1996, the Department of Trade
and Industry proposed regulations to Parliament to implement the European
Commission Digital Television Directive. A key aspect of the regulations, which
came into effect on January 7, 1997, is the regulation of conditional access
services for digital television. Conditional access services and systems that
limit the reception of pay television programs and other services to those
customers that have paid for the service. The regulations will be enforced by
the Director General of Oftel through the telecommunications licensing regime
and are intended to ensure that all broadcasters have access to conditional
access services on a non-discriminatory basis. Importantly for NYNEX CableComms,
they also ensure that cable operators have the ability to transcontrol the
broadcaster's digital signals, thus enabling the cable operator to manage the
way in which services are presented to their customers.
DIGITAL TERRESTRIAL TELEVISION ("DTT"). Implementing legislation put in
place by the Broadcasting Act 1996, the ITC invited applications for licenses
for the operation of DTT services. By the closing date of January 31, 1997,
multiplex license applications for the three full multiplex licences available
were received from two consortia: British Digital Broadcasting (a consortium of
BSkyB, Carlton Communications Plc and Granada Group Plc with program services
provided by BBC), and Digital Television Network (owned by international
CableTel). An application for further half multiplex available was received from
S4C, the Welsh broadcaster. The ITC is expected to award the licenses in Spring
1997 with the service operational by Spring of 1998.
As the third multichannel delivery platform to enter the UK market (after
cable and satellite) initial market share gain is expected to start slowly. This
should provide NYNEX CableComms sufficient time to continue the construction of
its broadband network and retain its position as the leading multichannel
television provider in its franchise areas.
NYNEX CableComms also expects that the arrival of DTT services will
stimulate the overall market for multichannel TV through increased customer
awareness of the multichannel product. This should have a positive effect on all
service providers including cable operators such as NYNEX CableComms. While DTT
will increase the choice of multichannel providers for some customers, it has
limited geographical coverage and limited channel capacity. Initially, NYNEX
CableComms expects that many DTT customers will take only the "free to air"
services.
RESEARCH AND DEVELOPMENT
NYNEX CableComms' research and development policy involves the analysis of
technological developments affecting its cable television and telecommunications
business. NYNEX CableComms conducts research and development activities
utilizing internal capabilities, resources provided by NYNEX and resources
provided by equipment suppliers. The technical support provided by NYNEX
includes assistance to NYNEX CableComms with respect to specific research and
development projects undertaken. The cost of research and development activities
is not material to NYNEX CableComms' financial position or operating results.
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<PAGE> 22
EMPLOYEES
The number of employees was 2,631 (taking into account that a number of
employees are part time, this is the notional equivalent of 2,557 full time
employees) at December 31, 1996, comprising 638 employees in residential sales,
97 employees in business sales, 47 employees in sales administration, 45
employees in marketing, 1,095 employees in customer operations and support, 72
employees in finance, 73 employees in corporate communications, 430 employees in
network development, 49 employees in information systems, 49 employees in human
resources, 10 employees in legal and regulatory services and 23 employees (and 3
non-executive directors who are not employees) in the president's department.
None of these employees is covered by collective bargaining agreements. The
average number of persons employed by NYNEX CableComms during the years ended
December 31, 1994, 1995 and 1996 was 1,919, 2,854 and 2,546, respectively.
ITEM 2. PROPERTIES
NYNEX CableComms leases or owns various real estate property in its
franchise areas in the United Kingdom used as administrative and sales offices,
operations centers, warehouses and cable television and telecommunications
equipment sites. NYNEX CableComms owns freehold property comprising an aggregate
of approximately 195,000 square feet of buildings and leases an aggregate of
approximately 381,000 square feet of buildings. Expiring leases may be renewed
or replaced by other leases or replaced with freehold interests, as required by
business needs, in the normal course of business.
ITEM 3. LEGAL PROCEEDINGS
NYNEX CableComms has not been involved in any legal proceedings which have
had, or may have, a material adverse effect on NYNEX CableComms' financial
position or operating results, nor are any such proceedings pending or, to the
best of NYNEX CableComms' knowledge, threatened against NYNEX CableComms.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders during the fourth
quarter of 1996.
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<PAGE> 23
PART II
ITEM 5. MARKET FOR REGISTRANTS' COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
QUARTERLY FINANCIAL DATA
As of January 31, 1997 the number of holders of record of ADRs was
approximately 33 and the number of holders of record of NYNEX CableComms Units
was approximately 4,984. The NYNEX CableComms Units are quoted on the London
Stock Exchange. NYNEX CableComms ADSs are quoted on the Nasdaq National Market.
MARKET PRICE DATA
The following table sets forth, for the periods indicated, (i) the reported
high and low middle market quotations for NYNEX CableComms Units based on the
Daily Official List of the London Stock Exchange, and (ii) the reported high and
low sales prices of NYNEX CableComms ADSs on the Nasdaq National Market, derived
from National Association of Securities Dealers, Inc. ("NASD") records.
<TABLE>
<CAPTION>
LONDON STOCK NASDAQ NATIONAL
EXCHANGE MARKET
----------------- -----------------
PENCE PER US DOLLAR PER
NYNEX CABLECOMMS NYNEX CABLECOMMS
UNIT(1) ADS(1)
----------------- -----------------
HIGH LOW HIGH LOW
------ ------ ------ ------
<S> <C> <C> <C> <C>
Calendar 1995
First Quarter....................................... N/A N/A N/A N/A
Second Quarter...................................... 139.00 123.50 22 1/4 19 1/4
Third Quarter....................................... 147.00 116.50 23 18
Fourth Quarter...................................... 143.50 112.00 22 5/8 17 3/8
Calendar 1996
First Quarter....................................... 113.00 85.50 17 13
Second Quarter...................................... 126.00 104.00 19 1/4 15 7/8
Third Quarter....................................... 109.50 87.00 17 1/8 13 1/4
Fourth Quarter...................................... 119.50 87.50 19 5/8 13 7/8
</TABLE>
- - ---------------
(1) NYNEX CableComms Units were listed on the London Stock Exchange on June 14,
1995 and, NYNEX CableComms ADSs became eligible for trading through the
Nasdaq National Market on June 9, 1995.
GEOGRAPHICAL ANALYSIS OF ORDINARY SHAREHOLDERS
As at January 31, 1997, and February 13, 1996 respectively it was estimated
that the NYNEX CableComms Units and NYNEX CableComms ADSs were beneficially held
in the geographic areas shown below:
<TABLE>
<CAPTION>
1997 1996
----- -----
<S> <C> <C>
Geographic areas
US...................................................................... 71.5% 77.0%
UK...................................................................... 28.0% 22.0%
Rest of world........................................................... 0.5% 0.5%
Shareholder analysis
NYNEX Corporation....................................................... 67.0% 67.0%
UK Institutional........................................................ 28.0% 21.0%
US Institutional........................................................ 4.0% 10.0%
UK private.............................................................. 0.5% 1.0%
Other................................................................... 0.5% 1.0%
</TABLE>
The following discussion briefly describes certain UK tax aspects of the
acquisition, ownership and disposition of NYNEX CableComms Units and NYNEX
CableComms Units represented by NYNEX CableComms ADSs by a beneficial owner
thereof who is a citizen or resident of the US, a corporation
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<PAGE> 24
organized under the laws of the US or any person who is otherwise subject to US
federal income tax on a net basis with respect to worldwide income (a "US
Holder"). The discussion of UK tax aspects is based upon current law and UK
Inland Revenue practice, and applicable regulations and rulings, as in effect on
the date hereof. It is also based, in part, on representations of the Depositary
and assumes that each obligation under the Deposit Agreement and any related
agreement will be performed in accordance with its terms.
This summary does not address the UK tax consequences to a US Holder (i)
who is resident (or, in the case of an individual, ordinarily resident) in the
UK for UK tax purposes, (ii) whose holding of NYNEX CableComms Units or NYNEX
CableComms ADSs is effectively connected with a permanent establishment in the
UK through which such US Holder carries on business activities or, in the case
of an individual who performs independent personal services, with a fixed base
situated in the UK, (iii) that is a corporation which is an investment or
holding company, 25% or more of the capital of which is owned, directly or
indirectly, by persons who are not individuals resident in or citizens of the
US, or (iv) that is a corporation which alone or collectively with one or more
associated companies controls, directly or indirectly, 10% or more of NYNEX
CableComms. For purposes of this description, an "Eligible US Holder" means any
US Holder other than a person described in this paragraph.
For purposes of the US/UK double taxation convention relating to income and
capital gains (the "Treaty") as well as the Internal Revenue Code of 1986, as
amended (the "US Internal Revenue Code"), US Holders of NYNEX CableComms ADSs
will be treated as the owners of the NYNEX CableComms UK Ordinary Shares and
NYNEX CableComms US Shares of Common Stock which are paired as NYNEX CableComms
Units represented by the ADSs. Accordingly, except as noted, the UK tax
consequences discussed below apply equally to US Holders of NYNEX CableComms
ADSs and NYNEX CableComms Units.
An Eligible US Holder will generally be entitled under the Treaty to
receive from the UK Inland Revenue, in respect of a cash dividend paid by either
NYNEX CableComms UK or NYNEX CableComms US (together, the "Companies") a payment
(a "Treaty Payment") equal to the amount of the tax credit associated with the
dividend (equal to 25% of the dividend) reduced by 15% of the sum of the
dividend and the tax credit. For example, an Eligible US Holder who receives a
dividend payment of L80 would be entitled to a Treaty Payment of L5 (i.e., the
tax credit of L20 reduced by L15 being 15% of the sum of L80 and L20) resulting
in a total receipt (before applicable US taxes) of L85.
Entitlement to a Treaty Payment will not arise if a dividend is paid as a
foreign income dividend (to which no tax credit attaches). The Companies have no
present intention to pay any dividend as a foreign income dividend.
Whether US Holders who are resident in countries other than the US are
entitled to a tax credit in respect of dividends depends in general upon the
provisions of such conventions or agreements, if any, as may exist between such
countries and the UK.
Under section 812 of the Income and Corporation Taxes Act 1988, the UK
Treasury has power in certain circumstances to deny the payment of Advanced
Corporation Tax refunds under the UK's double tax conventions to a US company if
it or an associated company has a qualifying presence in a country which
operates a unitary system of corporate taxation. These provisions come into
force only if the UK Treasury so determines by statutory instrument. No such
instrument has yet been made.
An Eligible US Holder will not be liable for UK tax on capital gains
realized on the disposal of NYNEX CableComms Units or NYNEX CableComms ADSs
unless such Eligible US Holder carries on a trade, profession or vocation in the
UK through a branch or agency and the NYNEX CableComms Units or NYNEX CableComms
ADSs are or have been used, held or acquired for the purposes of such trade,
profession or vocation or such branch or agency.
The surrender of NYNEX CableComms ADSs in exchange for the deposited NYNEX
CableComms Units represented thereby will not be a taxable event for the
purposes of UK corporation tax or UK capital gains tax. Accordingly, Eligible US
Holders will not recognize any gain or loss for such purposes upon such
surrender.
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<PAGE> 25
An Eligible US Holder will generally recognize gain or loss for US federal
income tax purposes upon disposal of NYNEX CableComms Units or NYNEX CableComms
ADSs, subject to applicable rules and exceptions set forth in the US Internal
Revenue Code.
The surrender of NYNEX CableComms ADSs in exchange for the deposited NYNEX
CableComms Units represented thereby will not be a taxable event for US federal
income tax purposes. Accordingly, no taxable gain or loss will be recognized for
such purposes upon such surrender.
An Eligible US Holder of NYNEX CableComms Units or NYNEX CableComms ADSs
will be exempt from the 31% US backup withholding tax with respect to proceeds
of a sale, exchange or redemption of such NYNEX CableComms Units or NYNEX
CableComms ADSs if such US Holder (i) is a corporation or other exempt recipient
and, if required, demonstrates its status as such, or (ii) provides to a paying
agent or a broker, as the case may be, a US taxpayer identification number and
otherwise complies with any applicable backup withholding requirements.
Neither NYNEX CableComms UK nor NYNEX CableComms US has ever paid a
dividend and neither anticipates paying any dividends in the foreseeable future.
NYNEX CableComms expects to retain any earnings generated from its operations
for use in its business.
ITEM 6. SELECTED COMBINED FINANCIAL DATA
The financial statements of NYNEX CableComms have been prepared on a
combined basis as if NYNEX CableComms UK and NYNEX CableComms US were a single
entity. The following selected financial data as of December 31, 1995 and 1996
and for the years ended December 31, 1994, 1995 and 1996 have been derived from
the Combined Financial Statements of NYNEX CableComms which have been prepared
in accordance with US GAAP and audited by Coopers & Lybrand L.L.P. and which are
included herein on pages F-1 to F-7. The following selected financial data as of
December 31, 1993 and 1994 and for the years ended December 31, 1992 and 1993
have been derived from the audited financial statements of NYNEX CableComms
which are not included herein. The following selected financial data as of
December 31, 1992 has been derived from the unaudited financial statements of
NYNEX CableComms which are not included herein. The selected financial data set
forth below should be read in conjunction with, and are qualified by reference
to, "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Combined Financial Statements of NYNEX CableComms and the
notes thereto included herein on pages F-1 to F-21.
FIVE YEAR FINANCIAL HISTORY
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
L L L L L
(IN THOUSANDS, EXCEPT PER ADS AMOUNTS)
<S> <C> <C> <C> <C> <C>
Operating revenues................... 151,241 85,019 41,015 18,255 3,625
Operating loss....................... (60,049) (79,878) (67,753) (29,015) (10,067)
Net loss............................. (22,845) (439) (49,521) (22,830) (9,759)
Net loss per ADS..................... (0.247) (0.005) -- -- --
Pro forma net loss per ADS(1)........ -- -- (0.535) (0.247) --
Property, plant and equipment, net... 1,098,119 859,024 485,917 209,707 67,699
Total assets......................... 1,248,887 1,001,779 616,439 289,286 79,116
Long-term debt....................... 447,649 125,350 52,000 -- --
Minority interest.................... 76,575 132,121 165,527 -- --
Stockholders' equity................. 601,286 623,466 291,399 222,133 59,594
Cash dividends....................... -- -- -- -- --
</TABLE>
- - ---------------
(1) Pro forma net loss per ADS is unaudited and has been calculated as if the
92,500,000 ADSs issued on June 14, 1995 had been in existence throughout
1994 and 1993.
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<PAGE> 26
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
PROPOSED COMBINATION
Cable and Wireless plc, Bell Canada International Inc. and NYNEX have
entered into a Transaction Agreement pursuant to which, subject to the
satisfaction of certain conditions precedent, the parties have agreed to combine
Mercury Communications Limited, Bell Cablemedia plc (as enlarged by the
acquisition of Videotron Holdings plc), NYNEX CableComms UK and NYNEX CableComms
US under a new holding company, Cable & Wireless Communications plc ("CWC").
Pursuant to the Transaction Agreement, CWC has offered to purchase NYNEX
CableComms UK Ordinary Shares and NYNEX US Shares of Common Stock (comprised in
the NYNEX CableComms Units, including those represented by NYNEX CableComms
ADSs) in exchange for ordinary shares of CWC. If the transactions contemplated
by the Transaction Agreement are consummated, among other things, NYNEX
CableComms will become a part of the combined CWC group, its existing credit
facilities discussed below under "Financing of NYNEX CableComms" would have to
be repaid (absent waivers or change of control defaults) and are expected to be
terminated and replaced with a CWC credit facility, and other changes may occur
in relation to its income taxes, capital resources and liquidity and in its
regulatory position and future prospects. The possibility of these future
changes should be taken into account when reviewing "Income taxes", "Capital
resources and liquidity", "Financing of NYNEX CableComms" and "Cash flows and
liquidity" below.
OVERVIEW
NYNEX CableComms is designing and constructing a broadband (high capacity)
network within its franchise areas which enables it to deliver a wide range of
cable television and telecommunications services to its customers and which
NYNEX CableComms believes will enable it to deliver more advanced services as
they become available in the future. NYNEX CableComms began construction of the
first of its 16 franchises in September 1991 and has been providing both cable
television and telecommunications services in all of its franchises since August
1995.
NYNEX CableComms is constructing its network to exceed license requirements
in order to maximize revenue and, in the longer term, cash flows. NYNEX
CableComms presently anticipates completing 71% of its network construction in
its existing franchises by the end of 1997, with substantial completion
anticipated by the end of 1999; however, NYNEX CableComms regularly reviews its
build program and may from time to time revise its proposed build targets for
future years.
NYNEX CableComms earns revenue in both the residential and business markets
for cable television and telecommunications services. Revenue in the residential
market is generated from the provision of both cable television and
telecommunications services. Cable television revenue is earned mainly from
monthly fees for the basic and premium channels and additional outlets.
Residential telecommunications revenue is earned from monthly charges for calls
made by customers and line rental and from the provision of optional features.
Revenue in the business market is earned almost exclusively from the provision
of telecommunications services, although NYNEX CableComms does provide a
commercial cable television service and facilities for closed circuit television
services. Business telecommunications services generate revenue from the same
telecommunications services provided to residential customers and additional
services such as CENTREX, managed fiber networks, private circuits, DASS 2,
ISDN, closed circuit television and commercial cable television.
NYNEX CableComms' recorded revenues and operating costs since December 31,
1996 have been consistent with its expectations.
RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
In each of the years ended December 31, 1996, 1995 and 1994, NYNEX
CableComms experienced significant increases in its customer base and revenue.
Such increases were mainly attributable to sales and marketing activity and
continuing network construction.
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<PAGE> 27
In 1995 and 1994 NYNEX CableComms experienced significant increases in
operating expenses. In 1996 operating expenses have increased but staff costs
and selling, general and administrative expenses have broadly remained the same
as in 1995, as NYNEX CableComms has realized business efficiencies and
stringently controlled these expenses. Operating revenue increased 78% to L151.2
million for 1996 from L85.0 million for 1995, and increased 107% in 1995 from
L41.0 million for 1994. These increases were attributable primarily to an
increased customer base, marketing activity and continuing construction of the
network. The increase in 1995 over 1994 is also attributable to the introduction
of telecommunications services in certain Northern Franchises beginning in 1995,
where during 1994 only cable television services had been available.
Cable television
Cable television revenue increased 61% to L62.4 million for 1996 from L38.7
million for 1995, and increased 94% in 1995 from L20.0 million for 1994. These
increases were primarily the result of an increase in the number of basic
customers and the average revenue per basic customer. The number of basic
customers increased 36% to 268,519 at December 31, 1996 from 197,004 at December
31, 1995 and increased 62% in 1995 from 121,968 at December 31, 1994. The
average monthly cable television revenue per basic customer increased to L22.83
in 1996 from L21.59 in 1995, and from L19.67 in 1994. The overall increase in
average monthly revenue in 1996 was primarily attributable to an increase in the
pay to basic ratio and the introduction of Pay-Per-View cable television
services. The increase in 1995 was primarily attributable to a L1 per month
increase in the basic programing package which was implemented in late November
1994, together with an increase in the pay to basic ratio.
The number of homes passed and marketed in NYNEX CableComms' operating
franchises increased 31% to 1,304,137 at December 31, 1996 from 994,917 at
December 31, 1995, and increased 59% in 1995 from 624,091 at December 31, 1994.
Penetration rates increased to 20.6% at December 31, 1996 from 19.8% at December
31, 1995, and from 19.5% at December 31, 1994, as a higher proportion of NYNEX
CableComms' potential customers chose to purchase cable television services
during both periods. NYNEX CableComms believes that the increase in penetration
in 1996 was driven by a number of marketing initiatives introduced in 1996, a
restructuring of the sales commission policy and a greater emphasis on retaining
customers. NYNEX CableComms' churn rate increased slightly to 29.6% at December
31, 1996 from 29.4% at December 31, 1995 and decreased from 31.1% at December
31, 1994. The pay to basic ratio increased to 213.5% at December 31, 1996 from
209.3% at December 31, 1995 and from 156.2% at December 31, 1994. The increases
in the pay to basic ratio in 1996 and 1995 were primarily due to the change in
the packaging and pricing structure of the premium channels in June 1995,
designed to encourage customers to purchase premium channels and thereby
enabling NYNEX CableComms to take advantage of improved pricing in the BSkyB
Agreement, which was entered into in the second quarter of 1995, and increased
sales of premium channels since the second quarter of 1995.
Residential telecommunications
Residential telecommunications revenue increased 94% to L70.6 million for
1996 from L36.4 million for 1995, and increased 123% in 1995 from L16.3 million
for 1994. These increases were primarily the result of an increase in the number
of residential telecommunications lines and increased usage. The number of
residential telecommunications lines increased 50% to 349,260 at December 31,
1996 from 232,551 at December 31, 1995, and increased 135% in 1995 from 98,954
at December 31, 1994. The average monthly residential telecommunications revenue
per line increased to L19.96 for 1996 from L19.52 for 1995 and decreased from
L21.81 for 1994. The reduction in telephone tariffs in March 1995 was the basis
of a new pricing strategy of offering savings to the average residential
customer of 25% on monthly bills for line rentals and call charges over BT's
standard call prices combined before discounts and promotions. The increase in
residential telecommunications penetration rate to 27.0% at December 31, 1996
from 24.6% at December 31, 1995, and from 19.8% at December 31, 1994 and the
increased average monthly revenue per line in 1996, despite further tariff
reductions in 1996, support this strategy. NYNEX CableComms has maintained this
pricing strategy with the introduction of additional price reductions in
response to price reductions by BT made during 1996 and 1995. The increase in
average monthly revenue per line in 1996 over 1995 is due primarily to increased
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<PAGE> 28
usage attributable to the pricing strategy. The decrease in average monthly
revenue per line in 1995 over 1994 reflected NYNEX CableComms' adoption of the
new pricing strategy from March 1995. Prior to March 1995, NYNEX CableComms
provided residential customers with monthly savings of 10% to 15% on their
monthly bills for line rental and call usage combined over BT's standard prices.
The increase in the number of residential telecommunications lines reflects
to a large degree the increase in the number of homes passed and marketed for
residential telecommunications services, which increased 37% to 1,291,488 at
December 31, 1996 from 945,802 at December 31, 1995, and increased 89% in 1995
from 501,031 at December 31, 1994. The residential telecommunication churn rate
fell to 16.4% at December 31, 1996 from 17.5% at December 31, 1995, having risen
from 15.8% at December 31, 1994.
Business telecommunications
Business telecommunications revenue increased 147% to L13.1 million for
1996 from L5.3 million for 1995, and increased 121% in 1995 from L2.4 million
for 1994. These increases were primarily attributable to increases in the number
of lines, as well as, in 1996, to increases in the average monthly revenue per
line. The number of business telecommunications lines increased 133% to 33,287
at December 31, 1996 from 14,260 at December 31, 1995, and increased 168% in
1995 from 5,311 at December 31, 1994. The increase in the number of business
telecommunications lines resulted from an increase in the number of businesses
passed and marketed for business telecommunications services, which increased
101% to 61,145 at December 31, 1996, from 30,450 at December 31, 1995 and
increased 51% in 1995 from 20,193 at December 31, 1994. The average monthly
business telecommunications revenue per line increased to L49.39 in 1996 from
L46.82 in 1995, having decreased from L53.45 in 1994 as a result of NYNEX
CableComms' pricing strategy introduced in March 1995, to offer savings to its
business customers on average of 25% compared to BT's standard call charges
before discounts and promotions. As with residential telecommunications, NYNEX
CableComms believed that the immediate reduction in tariffs would be more than
offset over time by additional revenue generated from increased purchase of
business telecommunications services and greater usage attributable to this
strategy. In March 1996, telesales marketing was introduced, together with a new
volume-based rental charge for business customers using CENTREX. These new
marketing initiatives were also designed to encourage greater usage and increase
average monthly revenue per line. The decrease in average monthly
telecommunications revenue per line in 1995 was primarily due to the
introduction of the pricing strategy in March 1995 and the introduction of
CENTREX lines, which had not been marketed during 1994. NYNEX CableComms had
installed 8,458 CENTREX lines at December 31, 1996, as compared to 2,188 CENTREX
lines at December 31, 1995. In 1996, notable sales of business
telecommunications services were completed, including major sales to local
government authorities, and universities and medical centers. Although a higher
proportion of the customer's business generally is won as a result of
undertaking a CENTREX installation, CENTREX lines tend to generate less revenue
per line than single business lines and, therefore, while increasing overall
revenue, have the effect of diluting average monthly telecommunications revenue
per line.
The average number of lines per business customer increased 57% to 4.4 at
December 31, 1996 from 2.8 at December 31, 1995, and increased 87% in 1995 from
1.5 at December 31, 1994, reflecting primarily the increased number of CENTREX
lines. The business telecommunications churn rate increased to 13.0% at December
31, 1996 from 11.9% at December 31, 1995. The churn rate for the second half of
1994 was 7.2%. NYNEX CableComms did not keep statistics for its business
telecommunications churn rate until June 1994.
Installation
NYNEX CableComms' combined installation revenue for cable television and
residential and business telecommunications increased 13% to L5.2 million for
1996 from L4.6 million for 1995, and increased 100% in 1995 from L2.3 million in
1994. This growth in revenue reflects the continuing network construction and
the corresponding increase in its customer base. The rate of growth in
installation revenue from 1994 through 1995 and 1996 broadly reflects the
installation activity levels.
28
<PAGE> 29
OPERATING EXPENSES
Operating expenses increased 28% to L211.3 million in 1996 from L164.9
million in 1995, and increased 52% in 1995 from L108.8 million in 1994 as a
result of the continuing network construction and increase in the customer base.
The components of operating expenses are programming costs, telecommunications
expenses, depreciation and amortization, staff costs and selling, general and
administrative expenses.
Total programming costs as a percentage of cable television revenues were
55% in 1996 compared with 50% for 1995 and 48% for 1994. The increases were a
result of the introduction of new channels and an increase in prices charged by
programming suppliers. In the fourth quarter of 1996, NYNEX CableComms
introduced new packaging and pricing which took into account some of the
programing providers' increased prices. The change in the packaging and pricing
structure of the premium channels in June 1995, designed to encourage customers
to take additional premium channels, resulted in reduced gross profit margins on
premium channels in 1996 and 1995.
Telecommunications expenses principally reflect interconnect charges paid
to national and international carriers for NYNEX CableComms' traffic over their
networks. As a result of the completion of the installation of digital switches
in all its franchises in 1995, NYNEX CableComms has eliminated the need to pay
third parties for switching intra-franchise calls between its customers and has
reduced the cost of switching calls to other telecommunications operators.
Telecommunications expenses for 1996 were stated net of a L2.8 million favorable
adjustment in respect of the settlement of outstanding pricing issues whereby
interconnect charges in previous periods were reduced. Telecommunications
expenses for 1996 were 31% of telecommunications revenues, compared with 39% in
1995 and 42% in 1994. This was achieved despite the introduction of the new
pricing strategy in March 1995.
Depreciation and amortization increased 64% to L54.5 million for 1996 from
L33.2 million for 1995, and increased 74% in 1995 from L19.1 million for 1994.
These increases are primarily related to the increase in the cost of total
property, plant and equipment to L1,213.3 million at December 31, 1996 from
L921.3 million at December 31, 1995 and from L514.8 million at December 31,
1994. Depreciation will continue to rise as the network is built out.
Staff costs, which include salaries, wages, benefits and sales commissions,
decreased to L45.9 million in 1996 from L46.0 million for 1995, and increased
50% in 1995 from L30.6 million for 1994. The number of employees (excluding
subcontract installers) has decreased 11% to 2,557 full time equivalents at
December 31, 1996 from 2,884 at December 31, 1995, and increased 17% in 1995
from 2,456 at December 31, 1994. NYNEX CableComms developed a cost-management
program toward the end of 1995, the purpose of which was to ensure that NYNEX
CableComms has the correct cost base required to support the growth of its
business. The program was implemented at the beginning of 1996. The decrease in
staff costs in 1996 was primarily as a result of a reduction in the number of
employees in accordance with the cost management program. Staff costs in 1995
increased as a result of the growth of NYNEX CableComms' business operations
during 1994.
Selling, general and administrative expenses were L50.1 million for each of
1996 and 1995, having increased from L41.4 million for 1994. Following the cost
management program implemented at the beginning of 1996, NYNEX CableComms has
continued to realize business efficiencies and to stringently control expenses.
As a result, the expenses in 1996 have remained constant with those in 1995
despite a 78% increase in revenue compared to 1995. The increase in 1995 over
1994 reflected the increase of both construction levels and the customer base
over and above that of the comparable periods.
Operating expenses directly attributable to the design, construction and
installation of the network are capitalized within the network and not charged
to income. These capitalized costs were L38.7 million for 1996, L41.6 million
for 1995 and L30.7 million for 1994.
OTHER INCOME (EXPENSE)
Interest income primarily arises from the investment of proceeds of debt
and equity in advance of capital expenditures and operating cash flow
requirements and from balances due from NYNEX and its affiliates.
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<PAGE> 30
Interest income increased 20% to L4.9 million for 1996 from L4.1 million for
1995, and increased 193% in 1995 from L1.4 million for 1994.
In 1996, interest expense increased to L23.2 million, net of L6.0 million
that was capitalized. In 1995, interest expense increased to L16.0 million, net
of L2.8 million that was capitalized, from L0.3 million, net of L0.2 million
that was capitalized, in 1994. Of the increased amounts in 1996 and 1995, L6.5
million was attributable to the amortization of deferred finance costs.
Substantially all of the balance of the increased amounts of interest expense
represents interest paid to the North and South limited partners under their
respective financing arrangements for increased levels of borrowings. See
"Financing of NYNEX CableComms".
Deferred financing costs of L65.0 million were incurred in implementing the
financing arrangements for the Northern Operating Companies and the Southern
Operating Companies, L42.0 million of these costs being incurred in December
1994 and L23.0 million in December 1993. Of these deferred financing costs,
L25.3 million were incurred in entering two forward interest rate swaps to
protect NYNEX CableComms from future fluctuations in interest rates, L18.3
million of these costs being incurred in December 1994 and L7.0 million in
December 1993. See Note G to the combined financial statements of NYNEX
CableComms. Prior to the reorganization of the financing arrangements for the
Southern Operating Companies on March 31, 1995, the L23.0 million of deferred
finance costs in respect of these arrangements were offset against Minority
interest. Interest expense increased in 1995 primarily due to the increased
level of funding during the period from the financing arrangements for the
Northern Operating Companies and the Southern Operating Companies. In addition,
the reorganization of the financing arrangements for the Southern Operating
Companies on March 31, 1995 resulted in the reclassification of L193.6 million
from Minority interest and Capital contributions from NYNEX to Long-term debt.
Minority interest reflects the South limited partner's interest in the
South Partnership and the North limited partner's interest in the North
Partnership. See Note F to the combined financial statements of NYNEX
CableComms. For the purpose of the combined financial statements, each limited
partner's interest is represented by capital contributed, adjusted to reflect
the appropriate amortization of transaction costs and appropriate loss and
profit allocations. The partnership percentages are the basis for allocations of
all items of losses and profits, except in respect of initial losses and
profits. Initial losses up to a maximum cumulative amount of L200.0 million in
the case of the North Partnership and L40.0 million in the case of the South
Partnership will be allocated to the North limited partner and the South limited
partner, respectively. After that, losses will be allocated to NYNEX CableComms
up to the point that NYNEX CableComms' share of cumulative losses reaches 85%.
At that point, any further losses will be allocated 15% to the relevant limited
partner and 85% to NYNEX CableComms. Thereafter, initial profits will be
allocated in proportion to the initial losses previously so allocated to each
relevant partner until such initial losses have been fully offset by profits.
The Minority interest portion of the loss for 1996 was L55.5 million compared
with L72.8 million for 1995 and L(3.8) million in 1994. The decrease in 1996 is
due to both smaller losses and the completion of the initial loss allocation to
the South limited partner occurring in the first quarter of 1996. The increase
in 1995 was due to the increasing level of losses being incurred by NYNEX
CableComms' operations and implementation of the financing arrangements and the
initial loss allocation arrangements described above for the Northern Operating
Companies in December 1994, together with the changes in the financing
arrangements and the initial loss allocation arrangements described above for
the Southern Operating Companies in March 1995.
INCOME TAXES
Prior to June 14, 1995, NYNEX CableComms' US corporations were included in
the NYNEX consolidated federal income tax return and in New York State and New
York City combined income tax filings. While included in the NYNEX tax filings,
NYNEX CableComms' US corporations were allocated payments in accordance with the
effect their losses had on reducing the consolidated group's taxable income. As
a result of the reorganization which occurred immediately prior to the
completion of the initial public offering of NYNEX CableComms UK and NYNEX
CableComms US on June 14, 1995, NYNEX CableComms and its US corporations do not
qualify to be included in the NYNEX consolidated US federal
30
<PAGE> 31
income tax return or in any state or local combined tax returns. As a result,
for tax periods after June 14, 1995 equivalent payments have not been made to
NYNEX CableComms by NYNEX for any further losses generated and NYNEX UK Holdings
and its US subsidiaries have been treated as a consolidated group of
corporations for US tax return purposes. However, neither NYNEX CableComms UK
nor NYNEX CableComms US has been consolidated with NYNEX UK Holdings or its
subsidiaries for US tax purposes. As a result, NYNEX CableComms UK and NYNEX
CableComms US will file their own US federal tax returns separately from NYNEX
UK Holdings.
For the reasons stated above, NYNEX CableComms recorded no net tax benefit
in 1996. The deferred tax benefits arising from the 1996 net loss have been
offset by a valuation allowance because, based primarily upon historical
operating losses, it is considered more likely than not that such benefits will
not be realizable. NYNEX CableComms recorded net tax benefits of L18.6 million
and L20.9 million for 1995 and 1994, respectively. The tax benefit for 1995
included a L12.8 million benefit in respect of the reversal of a deferred tax
liability and a provision of L1.1 million for tax payable on interest earned.
The balance of the tax benefit for 1995 was attributable to the payment due from
NYNEX for the US tax losses which were used to offset taxable income of other
NYNEX companies in the period from January 1 to June 14, 1995.
FOREIGN EXCHANGE
All of NYNEX CableComms' revenue is denominated in pounds sterling.
Although the majority of NYNEX CableComms' operating expenses are incurred in
pounds sterling, NYNEX CableComms purchases certain of its network materials,
equipment and the services of seconded NYNEX employees in US dollars. During
1996, 1995 and 1994, NYNEX CableComms did not experience significant gains or
losses as a result of fluctuations in the exchange rate of currencies. To date,
NYNEX CableComms has not used foreign currency hedging instruments to reduce its
exposure to foreign exchange fluctuations.
CAPITAL RESOURCES AND LIQUIDITY
Significant additional capital expenditures are required to construct the
remaining portions of NYNEX CableComms' network. Under the terms of current
licenses, NYNEX CableComms is required to construct cable television systems
passing an additional 0.8 million premises by the end of 2000, in accordance
with a series of prescribed intermediate milestones for each of its franchises.
NYNEX CableComms currently plans to make capital expenditures of approximately
L300.0 million for each of the three years from January 1, 1997 through to the
substantial completion of the construction of the network in its existing
franchises during 1999. NYNEX CableComms has sufficient financing in place to
fund its capital expenditures through to June 1998; after this period additional
funding will be required. In 1996, capital expenditure was L289.9 million,
compared to L392.4 million in 1995.
FINANCING OF NYNEX CABLECOMMS
Financing arrangements
At December 31, 1996, the Operating Companies and various partnerships
controlled by NYNEX CableComms UK and NYNEX CableComms US were parties to two
financing arrangements, one for the Northern Operating Companies and one for the
Southern Operating Companies.
Under these financing arrangements, which are described in Notes E and F to
the combined financial statements of NYNEX CableComms, an entity related to
NYNEX (the "North limited partner", which is not part of NYNEX CableComms)
provides funding to the North Partnership and to the Northern Operating
Companies (which are part of NYNEX CableComms) with the proceeds of capital
contributions received from members of the North limited partner. These capital
contributions are invested as capital contributions to the North Partnership or
as loans to either the North Partnership or the Northern Operating Companies.
Under an existing credit facility (the "North Credit Facility") the Northern
Operating Companies and the North Partnership, collectively, may, subject to
certain conditions, borrow up to a maximum of L542.5 million from the North
limited partner and an additional L157.5 million to expand the network into
additional franchise areas if such franchises are acquired prior to December 31,
1998.
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Under a broadly similar financing arrangement, another entity related to
NYNEX (the "South limited partner," which is not part of NYNEX CableComms)
provides funding to the South Partnership and to the Southern Operating
Companies (which are part of NYNEX CableComms) with the proceeds of capital
contributions received from members of the South limited partner. These capital
contributions are invested as capital contributions to the South Partnership or
as loans to either the South Partnership or the Southern Operating Companies.
Under an existing credit facility (the "South Credit Facility") the Southern
Operating Companies and the South Partnership, collectively, may, subject to
certain conditions, borrow up to a maximum of L274.0 million from the South
limited partner.
At December 31, 1996, NYNEX CableComms had available L368.8 million of
undrawn credit facilities under the North and South Credit Facilities, which are
available subject to NYNEX CableComms passing a certain number of homes.
NYNEX CableComms has entered into two forward starting interest rate swaps
with NYNEX to reduce potential exposure to interest rate risks inherent in the
financing arrangements for the Northern Operating Companies and Southern
Operating Companies. In addition, NYNEX CableComms has entered into two
agreements with NYNEX to reduce the notional amount of the interest rate swaps
at NYNEX CableComms' option. NYNEX CableComms has only limited involvement with
derivative financial instruments and does not use them for trading purposes. See
Note G to the combined financial statements of NYNEX CableComms.
The businesses and operations of the North and South limited partners are
managed and controlled by wholly-owned subsidiaries of NYNEX and, as such, the
North and South limited partners are included in NYNEX's consolidated financial
statements.
The North limited partner had contributed L131.3 million to the North
Partnership at December 31, 1996 and 1995, and had provided a further L292.9
million and L96.5 million in financing to the Northern Operating Companies under
the North Credit Facility at December 31, 1996 and 1995, respectively. The North
Partnership had not made any borrowings under the North Credit Facility at
December 31, 1996 or 1995.
The South limited partner had contributed L80.4 million to the South
Partnership at December 31, 1996 and 1995 and had provided a further L154.8
million and L28.9 million in financing to the Southern Operating Companies under
the South Credit Facility at December 31, 1996 and 1995, respectively. The South
Partnership had not made any borrowings under the South Credit Facility at
December 31, 1996 or 1995.
NYNEX financing facility
NYNEX has entered into a further credit facility directly with NYNEX
CableComms to make available up to L200.0 million (the "NYNEX Facility") to be
borrowed at NYNEX CableComms' option at an interest rate of three month Sterling
LIBOR plus 4.0%. NYNEX CableComms may make drawings under this facility at any
time after June 1, 1996 and before May 31, 1997. Any amounts borrowed under the
facility are to be repaid in full by May 31, 1998. The entire L200.0 million is
currently available under this facility.
CASH FLOWS AND LIQUIDITY
NYNEX CableComms had net cash used in operating activities of L27.9 million
for 1996, L61.2 million for 1995 and L17.9 million for 1994. The decrease in
1996 is primarily due to a reduction in operating losses before interest, tax,
depreciation and amortization in 1996 compared to 1995. The increase in 1995
reflected increased operating losses before interest, tax, depreciation and
amortization and additional working capital requirements to fund the increasing
customer base compared to 1994.
Net cash used in investing activities was L288.7 for 1996, L392.2 million
for 1995 and L263.5 million for 1994. These included expenditures for
constructing the network and associated capital expenditures of L289.9 million
for 1996, L392.4 million for 1995 and L263.2 million for 1994.
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Net cash provided by financing activities was L322.2 million for 1996,
L421.5 million for 1995 and L293.5 million for 1994. Capital contributions by
NYNEX to NYNEX CableComms ceased on March 31, 1995 when the financing
arrangements for the Southern Operating Companies were reorganized. After this
date all funding by NYNEX has been made through the North and South limited
partners. During 1995 NYNEX made capital contributions of L5.3 million compared
to L118.8 million during 1994. The minority interest joint venture that was in
place prior to March 1995, contributed L174.5 million in 1994, of which L3.1
million was repaid in 1995.
The Northern Operating Companies and Southern Operating Companies together
had additional borrowings of L322.3 million, L245.2 million and L52.0 million
under the North Credit Facility and the South Credit Facility during 1996, 1995
and 1994, respectively. NYNEX CableComms made no repayments of borrowings during
1996. A repayment of borrowings of L360.3 million was made during 1995 in order
to make the most effective use of the proceeds of the initial public offering in
June 1995 (as described below).
There were no capital contributions made by the North and South limited
partners to the North Partnership and South Partnership during 1996. During
1995, the North and South limited partners made capital contributions of L156.6
million to the North Partnership and the South Partnership. In the second
quarter of 1995, NYNEX CableComms issued 305 million NYNEX CableComms Units in
an initial public offering for L380.2 million of net proceeds. The capital
contributions, together with substantially all of the net proceeds of the share
issuance, were contributed to the Northern Operating Companies and Southern
Operating Companies to finance their operations and repay the majority of the
long-term debt made available to them by the North and South limited partners in
1995.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following combined financial statements of the Companies and their
subsidiaries are attached to this Annual Report on Form 10-K following the
signature page:
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Report of management.............................................. F-2
Report of independent accountants................................. F-3
Combined statement of operations.................................. F-4
Combined balance sheets........................................... F-5
Combined statements of changes in stockholders' equity............ F-6
Combined statements of cash flows................................. F-7
Notes to combined financial statements............................ F-8
</TABLE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTS
(A) DIRECTORS
Certain members of senior management of the Companies have the title
"Executive director" which, under the practice of NYNEX CableComms, is generally
equivalent to that of an Executive Officer under US practice and does not
connote a position on the Boards of Directors.
Set forth below is information with respect to those individuals who are
currently Directors and Executive directors of NYNEX CableComms UK and NYNEX
CableComms US or, in respect of the individuals listed after Graham L.
Robertson, who are Executive directors of NYNEX CableComms Limited, an indirect
wholly-owned subsidiary of NYNEX CableComms UK and NYNEX CableComms US.
Substantially all of the management, operations and other business functions of
NYNEX CableComms are carried out by NYNEX CableComms Limited.
<TABLE>
<CAPTION>
POSITION WITH NYNEX CABLECOMMS UK AND NYNEX
CABLECOMMS US AND/OR
NAME AGE NATIONALITY NYNEX CABLECOMMS LIMITED
- - ---------------------------- --- ----------- -----------------------------------------------
<S> <C> <C> <C>
John F. Killian 42 US President and Chief Executive Officer, Director
Nicholas P. Mearing-Smith 47 UK Chief Financial Officer(1), Director
Sir Michael Checkland 60 UK Director
John L. Rennocks 51 UK Director
Sir Bryan Carsberg 58 UK Director
Richard W. Blackburn 54 US Chairman, Director
Robert T. Anderson 50 US Director
Jeffrey A. Bowden 50 US Director
Mel Meskin 52 US Director
Paul H. Repp 40 US Executive director -- Chief Legal and
Regulatory Officer and Company Secretary
Graham L. Robertson 41 UK Executive director -- Treasurer and Controller
and Acting Chief Financial Officer
Colin I. Chadwick 48 UK Executive director -- Information Systems
John N. Doherty 32 US Acting Executive director -- Residential
Marketing and Strategic Development
Carl Grose 40 UK Executive director -- Residential Sales
Edward L. Hatch 52 US Executive director -- Merger Planning
John J. McHale 54 US Executive director -- Business Markets
Allen J.M. Saunders 46 UK Executive director -- Corporate Communications
Michael T. Schieck 49 US Executive director -- Customer Operations
Michael W. Stevenson 50 UK Executive director -- Human Resources
Patrick W. Welsh III 47 US Executive director -- Network Development
</TABLE>
- - ---------------
(1) Mr. Mearing-Smith delegated his duties of Chief Financial Officer effective
January 30, 1997 but remains as a Director.
John F. Killian has been President and Chief Executive Officer since
January 1, 1996 and a Director of the Companies since their incorporation in
February 1995. He was the Chief Operating Officer of the Companies from February
1995 through December 1995. From March 1992 until February 1995, Mr. Killian
served as Vice President -- Massachusetts of New England Telephone and Telegraph
Company ("New England Telephone"), a subsidiary of NYNEX. From January 1991 to
March 1992, he was General Manager of Operations of New England Telephone and
from April 1987 to December 1990 he served as Vice President -- Rhode Island of
New England Telephone. Age 42.
34
<PAGE> 35
Nicholas P. Mearing-Smith has been the Chief Financial Officer and a
Director of the Companies since their incorporation in February 1995. In January
1997, Mr. Mearing-Smith was designated as Finance Director of Cable & Wireless
Communications and delegated his duties as Chief Financial Officer of the
Companies. Since May 1993, he has been Chief Financial Officer and Executive
Director of NYNEX CableComms Limited, a wholly owned subsidiary of the
Companies. From September 1991 until May 1993, he was Executive Group Director
of NYNEX CableComms Limited. From July 1989 to September 1991, Mr. Mearing-Smith
was Chairman of Britannia Cablesystems Limited, a telecommunications company. He
is a Fellow of the Institute of Chartered Accountants in England and Wales, an
Associate Member of the Institute of Taxation and a Member of The Securities
Institute. Age 47.
Sir Michael Checkland has been a Director of the Companies since April
1995. Between February 1993 and April 1995, Sir Michael Checkland pursued
activities associated with a number of senior positions he has held and
continues to hold on educational, artistic and charitable organisations. He
served as Director General of the British Broadcasting Corporation (the "BBC"),
the British state-owned broadcaster, from February 1987 to February 1993. Age
60.
John L. Rennocks has been the deputy Chairman of the Companies since July
1996 and has been a Director of the Companies since April 1995. He has also been
Executive Director Finance of British Steel Plc since July 1996. Previously he
was Executive Director of Finance of PowerGen plc ("PowerGen"), an electricity
supply business, from March 1990 to July 1996. Since 1990, Mr. Rennocks has
served as a Director of the Electricity Supply Industry Pensions Company Limited
which oversees pension fund management for all major UK electric power companies
that are members of the Electricity Pension Scheme. Mr. Rennocks has also served
as a Director of Kleinwort European Privatisation Investment Trust plc since
January 1994, and since April 1995 he has served as a Director of Biocompatibles
International plc, a medical equipment company. Mr. Rennocks is a fellow of the
Institute of Chartered Accountants in England and Wales. Age 51.
Sir Bryan Carsberg has been a Director of the Companies since July 1996. He
has also been Secretary General of the International Accounting Standards
Committee from May 1995 to the present. He previously held public office as
Director General of Telecommunications from 1984 to 1992, when he became
Director General of Fair Trading, a position he held until May 1995; Professor
of Accounting at London School of Economics; Assistant Director of US Financial
Accounting Standards Board; Deputy Chairman of UK Accounting Standards Board.
Presented with Chartered Accountants Founding Society's Centenary Award in
recognition of services to society through his work at Oftel and with the Bleau
Award for work in the field of telecommunications. Age 58.
Richard W. Blackburn has been Chairman and a Director of the Companies
since their incorporation in February 1995. He has been the President and Group
Executive Director of NYNEX Worldwide Services Group, Inc., a subsidiary of
NYNEX ("NYNEX WSG"), since January 1995 and has served as a director of that
company since 1991. In his present position with NYNEX WSG, Mr. Blackburn is
responsible for directing all activities of its operating units, including
TelecomAsia and Gibraltar NYNEX Communications Limited. He is also responsible
for directing the activities of NYNEX Mobile Communications Company and NYNEX
Information Resources Company, and for overseeing NYNEX Network Systems Company,
a subsidiary of NYNEX ("NYNEX Network Systems"), in FLAG, Limited and STET
Hellas, S.A., a wireless network business in Greece. From June 1993 to December
1994, he held the position of Senior Vice President and Chief Operating Officer
of NYNEX WSG. From June 1991 to June 1993, Mr. Blackburn was Senior Vice
President and General Counsel of NYNEX WSG. From October 1981 to May 1991, Mr.
Blackburn was Vice President and General Counsel of New England Telephone. Age
54.
Robert T. Anderson has been a Director of the Companies since their
incorporation in February 1995. Also in February 1995, Mr. Anderson was
appointed to his current position as Vice President, Business Development and
President of NYNEX Network Systems Company. From June 1991 to February 1995, he
was Managing Director of Regulatory Planning for NYNEX Network Systems and was
responsible for all regulatory planning and compliance in New York and
Connecticut. From October 1989 to June 1991, Mr. Anderson was Managing Director,
Regulatory Planning of NYNEX where he oversaw the development
35
<PAGE> 36
of rate filings and the company's business plan. He currently serves as NYNEX's
representative on the New York State Telephone Association Board of Directors.
Age 50.
Jeffrey A. Bowden has been a Director of the Companies since their
incorporation in February 1995. Since September 1994, he has been Vice President
for Strategy and Corporate Assurance of NYNEX. In this capacity, he directs the
development of NYNEX's overall corporate strategy and advises senior management
on mergers and acquisitions and measurement of performance of NYNEX and its
business units. From December 1988 to September 1994, Mr. Bowden was Vice
President and Director of The Boston Consulting Group, Inc., a
telecommunications consulting business where he founded and directed the
telecommunications practice. Age 50.
Mel Meskin has been a Director of the Companies since July 1996. Since June
1996 he has also been Vice President -- Financial Operations and Comptroller of
NYNEX. From January 1995 through May 1996 he was Vice President and Chief
Financial Officer -- NYNEX Telecommunications Group. From February 1994 to
December 1994 he was Vice President -- Finance and Treasurer for New York
Telephone. From May 1992 to January 1994 he was Vice President -- Strategy,
Planning and Support of the NYNEX Worldwide Services Group. From June 1991 to
May 1992 he was Vice President and Comptroller of NYNEX. Prior to June 1991 he
held a variety of senior management positions at NYNEX. He is a member of the
Board of Directors of NYNEX Credit Company, NYNEX Asset Management Company,
Council of Senior Centers and Services of New York City and the Post Graduate
Center for Mental Health. Age 52.
(B) EXECUTIVE DIRECTORS
John F. Killian -- see information provided above.
Nicholas P. Mearing-Smith -- see information provided above.
Paul H. Repp has been Executive director -- Chief Legal and Regulatory
Officer and Company Secretary of the Companies, since January 8, 1996. This
appointment brought responsibility for regulatory affairs and interconnect in
addition to the responsibilities of his previous role as Executive director --
Chief Legal Officer and Company Secretary, which he had held since the
Companies' incorporation in February 1995. Previously, he held the same position
with NYNEX CableComms Limited from June 1993 to February 1995 and has been a
Director of NYNEX CableComms Limited since December 1993. Between May 1988 and
June 1993, Mr. Repp was Vice President, General Counsel and Secretary of NYNEX
Credit Company, the financial services subsidiary of NYNEX.
Graham L. Robertson has been Executive director -- Treasurer and Controller
of the Companies since their incorporation in February 1995. In January 1997,
Mr. Robertson was appointed Acting Chief Financial Officer of the Companies and
continued his duties as Assistant Treasurer -- International for NYNEX, and
Managing Director for NYNEX Trade Finance Company which commenced in November
1996. Since May 1993, he has also served as Executive director -- Treasurer of
NYNEX CableComms Limited. From October 1992 to April 1993, Mr. Robertson was
General Manager of the North and North East Surrey franchise with NYNEX
CableComms Limited. From September 1991 to September 1992 he was director of
Finance and Accounting of NYNEX CableComms Limited. Mr. Robertson was Finance
director and Company Secretary of Britannia Cablesystems from December 1990
until NYNEX CableComms' acquisition of Britannia Cablesystems in September 1991.
Colin I. Chadwick has been Executive director -- Information Systems of
NYNEX CableComms Limited since June 1994. From September 1990 until May 1994,
Mr. Chadwick was a General Manager of the Information Systems Division of Sony
Broadcast and Communications Ltd., a broadcasting and communications business.
John Doherty has been Acting Executive director -- Residential Marketing
and Strategic Development of NYNEX CableComms Limited since January 1997.
Previously, from March 1994 to January 1997, he held the position of Head of
Strategic Development with the responsibilities of developing the Companies'
strategic plan and overall business development. From March 1990 to February
1994, Mr. Doherty served as Associate director -- Corporate Planning for NYNEX.
36
<PAGE> 37
Carl Grose has been Executive director -- Residential Sales for NYNEX
CableComms Limited since January 8, 1996. This appointment brought national
responsibility for direct sales, telesales, retentions and sales administration.
Mr. Grose held the position of Executive director -- Operations (North) from
November 1993 to January 7, 1996. He joined NYNEX CableComms Limited as General
Manager of the Solent franchise in February 1992. From December 1989 until
February 1992, he was Managing Director of National Technical Services with The
Bricom Group, an industrial service business.
Edward L. Hatch has been Executive director -- Merger Planning since
January 1997. He held the position of Executive director -- Network Development,
Residential Marketing and Programming of NYNEX CableComms Limited from January
1996 to December 1996. On joining NYNEX CableComms in July 1994, Mr. Hatch was
Executive director -- Network Development. Prior to joining NYNEX CableComms
Limited in July 1994, Mr. Hatch was Managing Director of Operations of New
England Telephone. From January 1993 to June 1994, he was General Manager of
Labor Relations of New England Telephone. From 1991 to 1992, Mr. Hatch was
General Manager of Operations of New England Telephone. From 1989 to 1991, he
served as Managing Director of Customer Services of New England Telephone.
John J. McHale has been Executive director -- Business Sales of NYNEX
CableComms Limited since January 8, 1996. Previously he held the position of
Executive director -- Business Markets with NYNEX CableComms Limited from
January 1994 to January 1996. From January 1988 to December 1993, Mr. McHale was
Branch Division Manager for NYNEX Systems Marketing, a subsidiary of NYNEX, in
the US.
Allen J.M. Saunders has been Executive director -- Corporate Communications
of NYNEX CableComms Limited since March 1995. From January 1994 to February
1995, Mr. Saunders was director of Corporate Communications and from August 1993
to January 1994 served as Head of Communications of NYNEX CableComms Limited.
From May 1992 to August 1993, he was Associate director -- Quality of NYNEX
CableComms Limited and from September 1991 to May 1992, he was General Manager
of the Wessex franchise with NYNEX CableComms Limited.
Michael T. Schieck was appointed Executive director -- Customer Operations
of NYNEX CableComms Limited effective January 8, 1996. This appointment brought
responsibility for installations, repairs and maintenance, customer service and
collections in addition to the responsibilities of his previous role as
Executive director -- Operations Support of NYNEX CableComms Limited which he
had held since November 1993. From January 1992 to November 1993, Mr. Schieck
was employed by NYNEX and was responsible for development of the network plan
implemented by NYNEX in the US. From January 1991 to January 1992, he was
Managing Director of Engineering of New York Telephone, a subsidiary of NYNEX.
From October 1989 to January 1991, he was General Manager of Suffolk County for
New York Telephone.
Michael W. Stevenson has been Executive director -- Human Resources of
NYNEX CableComms Limited since August 1994. From January 1994 to August 1994,
Mr. Stevenson was Personnel director of NYNEX CableComms Limited. From April
1993 to December 1993, he was General Manager of the South East region of NYNEX
CableComms Limited. Mr. Stevenson joined NYNEX CableComms Limited in September
1992 as General Manager of the Bromley franchise. From January 1988 to April
1992, he was the General Manager of the central and southern regions of RAC
Motoring Services, a motoring services business. Between May 1992 and August
1992 he was acting as a consultant.
Patrick Welsh III has been Executive director -- Network Development since
January 1997. Mr. Welsh joined NYNEX CableComms in May 1994 as Head of Design
and Construction for the Southern franchisees. In August 1995 he became General
Manager -- Integrated Network Planning and in June 1996 assumed responsibility
for delivering integrated technical plans for the telecommunications and cable
television network and for developing and overseeing the company's capital
investment strategy. Prior to joining NYNEX CableComms, he was Director of
Integrated Planning and Capital Investment for the state of New York from
February 1992 to May 1994, with New York Telephone.
37
<PAGE> 38
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Each member of the Boards of Directors and each Executive Director of the
Companies who is subject to Section 16 of the Exchange Act is required to report
to the SEC by a specified date his or her beneficial ownership of or
transactions in the Companies' securities. Reports received by the Companies
indicate that all such members of the Boards of Directors and all such executive
directors have filed all requisite reports with the SEC on a timely basis during
or with respect to 1996.
ITEM 11. EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS
Each of the non-executive independent Directors receives L22,000 annually
plus L1,000 for each meeting attended. The position of Deputy Chairman (if any)
receives an additional L5,000 annually. All Directors are reimbursed for
reasonable expenses incurred in the performance of their duties as Directors.
Directors who are executive Directors of the Companies and NYNEX-appointed
Directors do not receive compensation in connection with their services as
Directors.
The compensation packages of the executive Directors and other senior
executives of the Companies are determined by the Remuneration Committees. The
total fees for all of the Directors of each of the Boards, in their capacity as
Directors (therefore excluding any remuneration payable to executive Directors
for their services pursuant to any service agreement entered into with the
Companies or their subsidiaries), may not exceed L500,000 per annum in respect
of both the NYNEX CableComms UK Board and NYNEX CableComms US Board unless the
relevant shareholders, by a majority vote of such shareholders, authorize a
greater amount. Directors may be paid their reasonable expenses incurred in
attending meetings of the Boards (or Committees thereof) and of the
shareholders.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Remuneration Committees are responsible for reviewing, monitoring and
approving all compensation decisions affecting the Companies' Executive
Officers. The Remuneration Committees endeavor to have the entire remuneration
paid to Executive Officers be consistent with the Companies' interest in
providing market competitive compensation opportunities, reflective of its
pay-for-performance philosophy, and supportive of its short term and long term
business mission. The Remuneration Committees will continue to actively monitor
the effectiveness of the Companies' Executive Officer compensation plans and
assess the appropriateness of executive pay levels to assure prudent use of the
Companies' resources. For the year ending December 31, 1996, the Remuneration
Committees were comprised of Sir Michael Checkland (Chairman), Robert T.
Anderson, Richard W. Blackburn, Sir Bryan Carsberg and John L. Rennocks.
No member of the Remuneration Committees was an officer or employee of the
Companies during the year ended December 31, 1996, or at any prior time. In
addition, there are no transactions, relationships or indebtedness for which
disclosure is required under the rules of the SEC with respect to any member of
the Remuneration Committees.
DESCRIPTION OF EXECUTIVE OFFICER COMPENSATION POLICIES AND EMPLOYEE CONTRACTS
Details of the compensation packages for Executive directors are given
below. Information on the individual positions of the executive Directors and
each non-executive Director is also included. Copies of executive Directors' and
non-executive Directors' employment contracts and agreements, together with
documentation supporting the various plans, are available for inspection by
shareholders at the Companies' registered office.
SALARY AND BENEFITS
Basic salary levels and the provision of benefits which include car, death,
disability, housing, enhanced pension and medical benefits are reviewed by the
Remuneration Committees each year. In conducting the annual review, the
Remuneration Committees may take the advice of independent consultants and
undertake
38
<PAGE> 39
external surveys. Increases in salaries and benefits reflect the performance of
the Companies and, separately, of the individual Executive directors.
ANNUAL AND LONGER-TERM INCENTIVE PLANS
a) Target Setting
Financial targets are agreed annually by the Boards through a systematic
planning and budgeting review process. These targets are reviewed by the
Remuneration Committees to ensure they are appropriate for use as yardsticks in
judging performance of the Companies and the individual.
b) Annual Bonus
Each Executive director of the Companies is eligible to be considered to
receive an annual bonus which is determined by the Remuneration Committees,
depending on performance against company and personal objectives.
SHARE OPTION AND RELATED SCHEMES
Mr. Mearing-Smith is eligible to participate in the Employee Share Option
Plan and the SAYE Plan. He did not, however, participate in the grants under the
Employee Share Option Plan which took place after completion of the initial
public offering (and has not participated in the SAYE plan).
RETIREMENT BENEFITS
Mr. Killian is a member of the NYNEX Management Pension Plan. Benefits for
management employees under this plan are based on a modified career average pay.
Contributions are made, to the extent of permissible deductions under the
provisions of the US Internal Revenue Code, to an irrevocable trust for the sole
benefit of pension plan participants. Mr. Mearing-Smith is entitled to have an
annual pension contribution from NYNEX CableComms Limited, equivalent to 13.5%
of basic salary, paid to a personal pension arrangement nominated by him.
EXECUTIVE DIRECTORS' SERVICE AGREEMENTS AND CHANGE OF CONTROL ARRANGEMENTS
Each of the Executive directors have entered into agreements with the
Companies and with NYNEX CableComms Limited under which the Executive directors
are employed by NYNEX CableComms Limited, such agreements are continuing unless
and until terminated on three months' notice by either party.
Pursuant to their employment agreements, Messrs. Killian and Mearing-Smith
were awarded a right in 1995 (an "Allocation Right") to acquire Units (68,710
and 91,613, respectively, having an aggregate value of $150,000 and $200,000,
respectively), for no payment on the vesting date. In addition Messrs. Killian
and Mearing-Smith were awarded on January 2, 1996 a further Allocation Right to
acquire Units (122,982 and 56,936, respectively, having an aggregate value of
$216,000 and $100,000, respectively), for no payment on the vesting date. As
NYNEX CableComms Limited is not in a position to procure the grant of Units,
NYNEX CableComms UK and NYNEX CableComms US are joined as parties to the
employment agreements.
The Allocation Right and further Allocation Right vested on December 31,
1996. The Units were issued in January 1997.
Prior to joining NYNEX CableComms Limited, Mr. Killian was employed by
various companies within NYNEX. Under the terms of an Assignment Letter, he is
employed by NYNEX WSG, an indirect, wholly-owned subsidiary of NYNEX, for the
purpose only of ensuring that he retains certain benefits under the NYNEX
benefit plans. Mr. Killian's compensation is paid to him by NYNEX WSG and NYNEX
CableComms Limited has agreed, pursuant to a Secondment Agreement, to reimburse
NYNEX WSG in respect of the full cost including the costs of bonuses, foreign
service premium and benefits of paying Mr. Killian. Both Mr. Killian and NYNEX
WSG have agreed that he should perform duties solely for
39
<PAGE> 40
NYNEX CableComms Limited or any of its associated companies during the term of
the Secondment Agreement (in addition to his services as a Director of each of
the Companies).
Effective October 1, 1996, the Assignment Letter was amended to permit Mr.
Killian to participate in the NYNEX 1987 Restricted Stock Award Plan. Mr.
Killian was awarded 3,589 restricted shares of common
stock of NYNEX at the time, plus the right to dividends reinvested in restricted
stock (the "Retention Award").
The Retention Award shall be forfeited to NYNEX if Mr. Killian voluntary
separates from NYNEX without the consent of the Chairman and Chief Executive
Officer of NYNEX or if Mr. Killian is terminated by NYNEX for cause. If Mr.
Killian were to transfer between NYNEX affiliates, such transfer would not be
treated as a termination of employment and the Retention Award would remain as
currently in place. The Retention Award will not be forfeited, however, if Mr.
Killian voluntary separates from service with NYNEX with the consent of the
Chairman and Chief Executive Officer of NYNEX, if the Companies cease to be
affiliates of NYNEX for any reason, or if he is terminated without cause or dies
or becomes disabled. Notwithstanding Mr. Killian's entitlement to keep the
Retention Award, the Retention Award is not transferable at any time prior to
his death or disability.
If Mr. Killian were to have met the requirements discussed above for a
Retention Award, his Retention Award, calculated as of December 31, 1996, would
have been 3,635 restricted shares of common stock of NYNEX.
NYNEX maintains the NYNEX Executive Severance Pay Plan and pursuant thereto
enters into Executive Retention Agreements with certain officers of NYNEX and
its subsidiaries. The purpose of the Severance Pay Plan and the Executive
Retention Agreements is to enable NYNEX and its subsidiaries to remain
competitive in attracting and retaining the best executive talent. The Executive
Retention Agreements provide certain senior employees with certain benefits upon
termination of employment under specified conditions.
Effective October 1, 1996, Mr. Killian, NYNEX CableComms Limited and the
Companies amended his Service Agreement to provide him with a severance amount
(the "Severance Amount") which is substantially equivalent to the amount to
which he would have been entitled had he entered into an Executive Retention
Agreement pursuant to the NYNEX Executive Severance Pay Plan.
Mr. Killian's Severance Amount, which is payable as discussed in the next
paragraph, would equal the sum of (i) the monetary value, calculated as of the
date of termination, of his Retention Award (defined above) and (ii) $225,000
(which represents one year's salary) plus interest accrued based upon the
earnings of the Global Balanced Fund investment option of the NYNEX Savings Plan
for Salaried Employees (and in no event less than $225,000).
Mr. Killian's Severance Amount is payable if (i) he voluntary separates
from employment with NYNEX CableComms Limited with the consent of the
Remuneration Committees, (ii) NYNEX CableComms Limited terminates his employment
upon three months' notice in accordance with his Service Agreement, or (iii) he
dies or becomes disabled. The Severance Amount is not payable if (i) he
voluntary separates from employment with NYNEX CableComms Limited without the
consent of the Remuneration Committees, (ii) NYNEX CableComms Limited terminates
his employment without notice for cause or (iii) within sixty days after leaving
the employment of NYNEX CableComms Limited, he is employed or offered employment
by NYNEX, the Companies, any of their respective 100% or majority-owned
subsidiaries or partnerships, any successor to any of the aforementioned, or any
acquirer of NYNEX CableComms Limited or any of its affiliates. The Severance
Payment may be reduced to the extent the payment would be subject to an excise
tax, as an "excess parachute payment", under Section 4999 of the US Internal
Revenue Code.
If Mr. Killian were to have met the requirements discussed above for a
Severance Amount, his Severance Amount, calculated as of December 31, 1996,
would have been $420,336 in cash.
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<PAGE> 41
NYNEX CABLECOMMS ARRANGEMENTS
In the light of the transactions contemplated by the Transaction Agreement,
the Companies have entered into agreements with certain employees of the
Companies, including each of the Executive directors of the Companies. The
agreements provide for the payment by the Companies of a loyalty bonus (the
"Loyalty Bonus") upon successful completion of the transactions or upon
confirmation that the transactions will not proceed; provided that such payee is
an employee of NYNEX CableComms or a successor company on such date. The Loyalty
Bonus is within the discretion of the President and Chief Executive Officer who,
in consultation with the Chairman, will make a recommendation, subject to review
by the Remuneration Committees, based on the employee's performance and
contribution to the Companies.
In addition, the agreements provide for payment by the Companies of a
severance payment (the "Severance Payment") in the event of a dismissal of the
employee by reason of redundancy (within the meaning of UK employment law) as a
result of completion of the transactions. The Severance Payment is not available
to secondees of NYNEX, including Messrs Repp, Schieck and Hatch.
For Executive directors, the agreements provide for a Loyalty Bonus of up
to 60% of base salary and a Severance Payment of twelve months compensation,
including three months in lieu of notice pay and nine months basic pay. As a
Director of the Companies, Mr. Mearing-Smith's eligibility to receive the
Loyalty Bonus and the Severance Payment was subject to clearance by the Panel on
Takeovers and Mergers, which clearance has been obtained.
Based on their current levels of compensation, the maximum Loyalty Bonuses
for Messrs. Repp, Mearing-Smith, Schieck and Hatch under the agreements
described above would be $95,160, $138,696, $77,940 and $78,240, respectively,
and the Severance Payment for Mr. Mearing-Smith under the agreements described
above would be $251,432.
Other Benefits
Mr. Killian entered into an agreement with NYNEX, effective June 14, 1995,
which provides that he will retain certain benefits under NYNEX's employee
pensions and other benefit plans relating to his respective prior service with
NYNEX.
Executive directors and most other senior employees receive a car or car
allowance and health benefits provided by the Companies. During 1996 Mr. Killian
also received benefits under miscellaneous NYNEX Group benefit plans.
41
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SUMMARY COMPENSATION TABLE
The following table sets forth the compensation awarded to, earned by or
paid to the Chief Executive Officer of the Companies and each of the four other
most highly compensated Executive Officers. Except as noted below, all such
compensation for 1996 was paid by NYNEX CableComms Limited, which provides
substantially all of the management, operations and other business functions.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
-------------------------------- ---------------------------------
OTHER RESTRICTED SECURITIES ALL
ANNUAL STOCK UNDERLYING LTIP OTHER
SALARY BONUS COMPENSATION AWARDS OPTIONS PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) ($) ($) ($) ($)
- - -------------------------------- ---- ------- ------- ------------ ---------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
JOHN F. KILLIAN(1)
President and Chief Executive
Officer....................... 1996 225,000 243,400 157,604(2) 216,000(3) -0- 28,507 (4) 372,599(5)
1995 179,398 68,160 223,389(6) 150,000(7) -0- 24,456 (4) 34,661(8)
PAUL H. REPP(9)
Executive director, Chief
Legal
and Regulatory Officer and
Company Secretary............. 1996 152,600 58,600 255,493(10) -0- 7,690 -0- 62,708(11)
1995 146,600 53,800 214,234(12) -0- -0- -0- 28,740(13)
NICHOLAS MEARING-SMITH(14)
Chief Financial Officer....... 1996 231,161 67,800 3,082(15) 100,000(3) -0- -0- 31,771(16)
1995 183,324 60,644 9,742(17) 200,000(7) -0- -0- 1,298,769(18)
MICHAEL T. SCHIECK(19)
Executive director, Customer
Operations Support............ 1996 121,567 47,500 190,468(20) -0- 1,120 -0- 52,492(21)
1995 115,175 34,600 175,692(22) -0- -0- -0- 22,911(23)
EDWARD L. HATCH(24)
Executive director, Merger
Planning...................... 1996 118,633 48,700 176,821(25) -0- 1,120 -0- 51,442(26)
1995 113,000 37,600 157,263(27) -0- -0- -0- 23,141(28)
</TABLE>
- - ---------------
(1) Mr. Killian was a secondee to the Companies from an affiliate of NYNEX and
consequently received his compensation from such affiliate, which was
reimbursed by NYNEX CableComms Limited.
(2) Mr. Killian's "Other Annual Compensation" for 1996 consists of $95,969 in
respect of housing expenses, $11,790 in respect of automobile expenses,
$6,678 in respect of travel expenses, $37,935 in respect of school fees,
$1,979 in respect of accountancy fees and consultancy, $600 in telephone
allowances and $2,653 in dividend equivalents paid pursuant to the Senior
Management Long Term Incentive Plan of NYNEX.
(3) In 1996, Messrs. Killian and Mearing-Smith were awarded the right to
acquire for no payment on the vesting date 122,982 and 56,936 NYNEX
CableComms Units, respectively, with a value of $216,000 and $100,000,
respectively, from NYNEX CableComms, pursuant to their employment
contracts. These rights vested on December 31, 1996.
(4) Mr. Killian's LTIP payouts were received under NYNEX's Senior Management
and Executive Long Term Incentive Plans.
(5) Mr. Killian's "All Other Compensation" for 1996 consists of $254,090 in
respect of special foreign service payment, $67,965 in respect of foreign
service premiums and other expatriate compensation; contributions by NYNEX
to the NYNEX tax qualified savings plan, the NYNEX non-qualified savings
plan and the NYNEX Executive Retirement Account of $6,503, $5,672 and
$35,450, respectively; and the amount of the dollar benefit for 1996
projected on an actuarial basis which represents the excess of the amount
needed to fund the death benefit under the split-dollar life insurance
policy of $2,919.
(6) Mr. Killian's "Other Annual Compensation" for 1995 consists of $114,675 in
respect of additional income taxes resulting from his secondment to the
Companies, $59,734 in respect of housing expenses, $7,948 in respect of
automobile expenses, $5,489 in respect of travel expenses and $31,539 in
respect of school fees and $4,004 in dividend equivalents paid pursuant to
the Senior Management Long Term Incentive Plan of NYNEX.
(7) In 1995, Messrs. Killian and Mearing-Smith were awarded the right to
acquire for no payment on the vesting date 68,710 and 91,613 NYNEX
CableComms Units, respectively with a value of $150,000 and $200,000,
respectively, following the successful completion of the Combined Offering,
pursuant to their employment contracts. These rights vested on December 31,
1996.
(8) Mr. Killian's "All Other Compensation" for 1995 consists of $22,294 in
respect of foreign service premiums and other expatriate compensation;
contributions by NYNEX to the NYNEX tax qualified saving plan and NYNEX
non-qualified savings plan of $6,355 and $3,920, respectively; and the
amount of the dollar benefit for 1995 projected on an actuarial basis which
represents the excess of the amount needed to fund the death benefit under
the split-dollar life insurance policy of $2,092.
42
<PAGE> 43
(9) Mr. Repp was a secondee to the Companies from an affiliate of NYNEX and
consequently received his compensation from such affiliate, which was
reimbursed by NYNEX CableComms Limited.
(10) Mr. Repp's "Other Annual Compensation" for 1996 consists of $163,904 in
respect of additional income taxes resulting from his secondment to the
Companies, $69,368 in respect of housing expenses, $9,294 in respect of
automobile expenses, $3,101 in respect of travel expenses, $8,726 in
respect of school fees, $500 in respect of accountancy fees and $600 in
telephone allowances.
(11) Mr. Repp's "All Other Compensation" for 1996 consists of $56,135 in respect
of Mr. Repp's foreign service premiums and other expatriate compensation
and $6,573 in contributions by NYNEX to the NYNEX tax qualified savings
plan.
(12) Mr. Repp's "Other Annual Compensation" for 1995 consists of $142,268 in
respect of additional income taxes resulting from his secondment to the
Companies, $62,949 in respect of housing expenses, $8,938 in respect of
automobile expenses and $79 in respect of other miscellaneous benefits.
(13) Mr. Repp's "All Other Compensation" for 1995 consists of $21,990 in respect
of Mr. Repp's foreign service premiums and other expatriate compensation
and $6,750 in contributions by NYNEX to the NYNEX tax qualified savings
plan.
(14) Payments to Mr Mearing-Smith were made in pounds sterling, but are
presented in this table in US dollars based on an exchange rate of $1.7123
to L1.00, the Noon Buying Rate on December 31, 1996.
(15) Mr. Mearing-Smith's "Other Annual Compensation" for 1996 consists of $3,082
in respect of automobile expenses.
(16) Mr. Mearing-Smith's "All Other Compensation" for 1996 consists of $31,207
in respect of pension benefits and $565 in respect of insurance benefit
premiums.
(17) Mr. Mearing-Smith's "Other Annual Compensation" for 1995 consists of $9,742
in respect of automobile expenses.
(18) Mr. Mearing-Smith's "All Other Compensation" for 1995 consists of $24,747
in respect of pension benefits, $716 in respect of insurance benefit
premiums and $683,540 in cash and approximately $589,766 in Units issued to
Mr. Mearing-Smith, under an agreement with respect to the acquisition from
him of interests in certain franchises.
(19) Mr. Schieck was a secondee to the Companies from an affiliate of NYNEX and
consequently received his compensation from such affiliate, which was
reimbursed by NYNEX CableComms Limited.
(20) Mr. Schieck's "Other Annual Compensation" for 1996 consists of $106,790 in
respect of additional income taxes resulting from his secondment to the
Companies, $64,826 of housing expenses, $9,875 in respect of travel
expenses, $8,297 in respect of automobile expenses, $500 in respect of
accountancy fees and $180 telephone allowance.
(21) Mr. Schieck's "All Other Compensation" for 1996 consists of $46,319 in
respect of foreign service premiums and other expatriate compensation and
$6,173 in contributions by NYNEX to the NYNEX tax qualified savings plan.
(22) Mr. Schieck's "Other Annual Compensation" for 1995 consists of $99,622 in
respect of additional income taxes resulting from his secondment to the
Companies, $60,750 of housing expenses, $7,299 in respect of travel
expenses, $8,021 in respect of automobile expenses.
(23) Mr. Schieck's "All Other Compensation" for 1995 consists of $17,276 in
respect of foreign service premiums and other expatriate compensation and
$5,635 in contributions by NYNEX to the NYNEX tax qualified savings plan.
(24) Mr. Hatch was a secondee to the Companies from an affiliate of NYNEX and
consequently received his compensation from such affiliate, which was
reimbursed by NYNEX CableComms Limited.
(25) Mr. Hatch's "Other Annual Compensation" for 1996 consists of $89,367 in
respect of additional income taxes resulting from his secondment to the
Companies, $74,056 of housing expenses, $8,297 in respect of automobile
expenses, $4,001 in respect of travel expenses, $500 in respect of
accountancy fees and $600 telephone allowance.
(26) Mr. Hatch's "All Other Compensation" for 1996 consists of $45,106 in
respect of foreign service premiums and other expatriate compensation and
$6,336 in contributions by NYNEX to the NYNEX Tax Qualified Savings Plan.
(27) Mr. Hatch's "Other Annual Compensation" for 1995 consists of $86,236 in
respect of additional income taxes resulting from his secondment to the
Companies, $58,431 of housing expenses, $8,021 in respect of automobile
expenses, $4,575 in respect of travel expenses.
(28) Mr. Hatch's "All Other Compensation" for 1995 consists of $16,950 in
respect of foreign service premiums and other expatriate compensation and
$6,191 in contributions by NYNEX to the NYNEX Tax Qualified Savings Plan.
43
<PAGE> 44
OPTION GRANTS IN FISCAL YEAR 1996
The following table contains information concerning the grant of options on
shares of Common Stock of NYNEX under the NYNEX 1995 Stock Option Plan and NYNEX
1992 Management Stock Option Plan to the named Executive Officer during 1996.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES % OF TOTAL GRANT DATE
UNDERLYING OPTIONS GRANTED EXERCISE OR PRESENT
OPTIONS GRANTED TO EMPLOYEES BASE PRICE EXPIRATION VALUE
NAME OF INDIVIDUAL (#)(1) IN 1996 ($/SHARE)(2) DATE(3) ($)(3)(4)
- - ------------------------------ --------------- --------------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
John F. Killian............... 0 0 0 0 0
Paul H. Repp.................. 7,690 0.21 50.69 1/11/06 43,600
Edward L. Hatch*.............. 1,120 0.01 50.69 1/11/06 8,254
Michael T. Schieck*........... 1,120 0.01 50.69 1/11/06 8,254
</TABLE>
- - ---------------
* NYNEX 1992 Management Stock Option Plan.
(1) The date of grant for options subject to this footnote is January 11, 1996.
(2) The exercise price of the options is equal to the fair market value of
shares of Common Stock of NYNEX on the date of grant of the options. The
exercise price may be paid in cash or by tendering already owned shares of
Common Stock of NYNEX with a fair market value on the date of exercise
equal to the exercise price. For exercises where shares of Common Stock of
NYNEX have been tendered in payment of the exercise price, a new grant of
options will be made equal to the number of shares tendered. A grant made
under these circumstances will have an exercise price equal to the fair
market value on the date of such exercise and grant.
(3) Options expire ten years from date of grant or, in case of retirement, on
the fifth anniversary date of cessation of employment. Options become
one-third exercisable one year after the date of grant, two-thirds
exercisable two years after the date of grant, and fully exercisable three
years after the date of grant. To the extent not already exercisable, the
options become fully exercisable in the event of a "change of control", as
defined in the NYNEX 1996 Stock Option Plan.
(4) As permitted by SEC rules, the Black-Scholes method of option valuation has
been used to determine grant date present value. The assumptions used in
the Black-Scholes option valuation calculation are: estimated future annual
stock price volatility of 0.153; risk-free rate of return of 5.96%; and
estimated future dividend yield of 4.66%. NYNEX does not advocate or
necessarily agree that the Black-Scholes method or any other method
permitted by the SEC can properly determine the valued of an option.
However, no gain to the optionees is possible without an increase in the
stock price. Thus a zero increase or decrease in stock price, compared to
the exercise price, will not produce any gain for the optionee.
AGGREGATED OPTION EXERCISE IN FISCAL YEAR 1996 AND 1996 FY-END OPTION VALUES
The following table shows information with respect to the named Executive
Officer concerning the exercise of options to purchase shares of Common Stock of
NYNEX during 1996 and unexercised stock options held as of the end of 1996.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT 1996 FISCAL IN-THE-MONEY OPTIONS AT
YEAR-END 1996 FISCAL YEAR-END($)(1)
SHARES ACQUIRED VALUE --------------------------- ---------------------------
NAME OF INDIVIDUAL BY EXERCISE REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - ------------------------- --------------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John F. Killian.......... 2,566 34,704 10,845 1,285 72,445 11,488
Edward L. Hatch.......... 0 0 1,120 1,120 13,300 0
Paul H. Repp............. 0 0 280 7,690 2,870 0
Michael T. Schieck....... 0 0 280 1,120 2,870 0
</TABLE>
- - ---------------
44
<PAGE> 45
(1) Amounts reflect potential gains on outstanding options based upon the
December 31, 1996 average stock price of $48.82.
NYNEX MANAGEMENT PENSION PLAN
NYNEX maintains the NYNEX Management Pension Plan, a non-contributory
pension plan which covers all management employees, including Messrs. Hatch,
Repp and Schieck. The normal retirement age under this plan is 65; however,
retirement before age 65 can be elected under certain conditions.
The following table sets forth the highest estimated annual retirement
benefits payable to persons in the specified compensation and years of service
classifications upon retirement at normal retirement age under the NYNEX
Management Pension Plan:
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
-------------------------------------------------------
REMUNERATION 15 20 25 30 35
- - --------------------------------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
$200,000............................. $36,000 $48,000 $60,000 $72,000 $84,000
300,000............................. 36,000 48,000 60,000 72,000 84,000
400,000............................. 36,000 48,000 60,000 72,000 84,000
500,000............................. 36,000 48,000 60,000 72,000 84,000
600,000............................. 36,000 48,000 60,000 72,000 84,000
700,000............................. 36,000 48,000 60,000 72,000 84,000
800,000............................. 36,000 48,000 60,000 72,000 84,000
</TABLE>
- - ---------------
Note: Benefits shown in this table may be further limited under the US Internal
Revenue Code.
Under the NYNEX Management Pension Plan, annual pensions are computed on a
straight-life annuity basis and are not reduced for Social Security or other
offset amounts except in cases where a joint or survivor annuity is selected.
Participants receive a pension based on an adjusted career income times 1.6%.
The adjusted career income is the average annual compensation from January 1,
1986 to December 31, 1990 times net credited service through December 31, 1990;
plus actual compensation from January 1, 1991 until last day of service.
The US Internal Revenue Code limits the benefits which may be paid from a
tax-qualified retirement plan. As permitted by the Employee Retirement Income
Security Act of 1974, NYNEX has a non-qualified pension plan to provide for the
full payment of the pension when the pension amounts exceed tax-qualified
limits. The pension amounts that exceed tax-qualified limits will be accounted
for by NYNEX as operating expense.
The compensation covered by the NYNEX Management Pension Plan includes
compensation that would fall under the categories of "Salary" and "Bonus" in the
Summary Compensation Table shown above. The years of service of Messrs. Hatch,
Repp and Schieck are 27, 14 and 30, respectively. If Messrs. Hatch, Repp and
Schieck continue in their present positions and retire at the normal retirement
age of 65, the estimated annual pension amounts payable under the NYNEX
Management Pension Plan would be $76,515, $102,446 and $89,364, respectively.
Mr. Killian will receive a benefit under the NYNEX Management Pension Plan
described above except that Mr. Killian will not be eligible to receive any
benefits on average compensation over $150,000. Mr. Killian is not eligible for
the non qualified pension plan described above which provides for pension
amounts exceeding US Internal Revenue Code tax-qualified limits.
Mr. Killian will receive a pension based upon average compensation up to
$150,000 multiplied by 1.6%. Average compensation is determined as five-year
average base pay for the period January 1, 1986 to December 31, 1990, times
years of service on December 31, 1990, plus all future base pay.
45
<PAGE> 46
In 1995, NYNEX terminated its supplemental executive defined benefit
non-qualified pension plan and replaced it with a defined contribution plan
which applies to Mr. Killian only (among the Executive Officers named in the
Summary Compensation Table). The annual company contribution to the defined
contribution plan is determined as 25% of base salary that exceeds $150,000,
plus 25% of bonus. This amount is included in the "All Other Compensation"
column of the Summary Compensation Table.
The compensation covered by the NYNEX Management Pension Plan includes
compensation that would fall under the category of "Salary" in the Summary
Compensation Table. Mr. Killian has 17 years of service. If Mr. Killian
continues in the employment of NYNEX at his present level of compensation and
retires at the normal retirement age of 65, his estimated annual pension amount
payable under the NYNEX Management Pension Plan would be $98,000.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) Security Ownership of Certain Beneficial Owners
The following table sets forth, as of January 31, 1997, certain information
regarding the beneficial ownership (within the meaning of Rule 13d-3(d) (1)
under the Exchange Act) of the Units by the owners of 5% or more of the Units.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL
TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP % OF CLASS
- - ------------------------------ --------------------------------------- ---------- ----------
<S> <C> <C> <C>
NYNEX CableComms Units........ NYNEX Corporation 620,000,000 67.0
1095 Avenue of the Americas,
New York, New York 10036, USA
NYNEX CableComms Units........ Mercury Asset Management 65,295,000 7.1
33 King William Street, EC4R 9AS
</TABLE>
Pursuant to the NYNEX CableComms UK Articles and the NYNEX CableComms US
Certificate, NYNEX has the right to appoint a number of Directors ("NYNEX
Appointees") to each of the Boards of the Companies based on the percentage
voting power of, in the case of NYNEX CableComms UK, all issued NYNEX CableComms
UK Ordinary Shares and, in the case of NYNEX CableComms US, all outstanding
NYNEX CableComms US Shares of Common Stock, directly or indirectly controlled by
NYNEX. In addition, NYNEX has the right to remove and replace the NYNEX
Appointees and such NYNEX Appointees do not stand for election by the
shareholders. NYNEX currently has indirect control of approximately 67% of the
outstanding NYNEX CableComms Units (comprising equal percentages of the issued
NYNEX CableComms UK Ordinary Shares and NYNEX CableComms US Shares of Common
Stock) and therefore, in accordance with the NYNEX CableComms UK Articles and
the NYNEX CableComms US Certificate NYNEX is currently entitled to appoint four
of the nine current Directors of each of the Boards. Control over the
appointment of Directors in effect gives NYNEX, through the vote of such
Directors, a veto power with respect to any actions by the Boards that require
the approval of a two-thirds vote of the Directors. This two-thirds vote
requirement applies to certain important acts of the Boards, such as the
acquisition or disposal of any business outside the ordinary course of business,
the approval of the annual budget, the approval of borrowings above L10 million,
the appointment of any new Director (other than NYNEX Appointees) and the
appointment and removal of certain Executive directors.
NYNEX has the right to vote with the other shareholders in the election of
Directors for each of the remaining seats on each Board. Because NYNEX owns a
majority of the outstanding NYNEX CableComms Units, NYNEX has sufficient voting
power to elect Directors to all of the remaining seats. However, the London
Stock Exchange requires, and the constitutional documents of the Companies
provide, that at all times a majority of the Directors must be independent of
NYNEX ("Independent Directors"). In a relationship agreement with the Companies
(the "NYNEX Relationship Agreement"), NYNEX has, among other things, confirmed
its intention to vote the NYNEX CableComms UK Ordinary Shares and the NYNEX
CableComms US Shares of Common Stock beneficially owned by it in a manner to
ensure, so far as
46
<PAGE> 47
it is able by the exercise of such voting rights, that a majority of each Board
is composed of Independent Directors for London Stock Exchange purposes.
Currently the Boards of the Companies consist of four NYNEX Appointees and
five Independent Directors.
Shareholdings of the Companies' Directors and Executive directors can be
found below.
(b) Security Ownership of Management
Certain members of senior management of the Companies have the title
"Executive director" which under UK practice, is generally equivalent to that of
an executive officer under US practice and does not connote a position on the
Boards of Directors.
THE COMPANIES
The following table sets forth, as of January 31, 1997, beneficial
ownership (as defined in Rule 13d-3(d)(1) under the Exchange Act) of the NYNEX
CableComms Units by each Director, named Executive director and all Directors
and Executive directors (as a group), including NYNEX CableComms Units which
they had the right within 60 days to acquire pursuant to the exercise of options
to purchase NYNEX CableComms Units.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL
TITLE OF CLASS NAME OF BENEFICIAL OWNER OWNERSHIP PERCENT(1)
- - ---------------- ---------------------------------------------------- ---------- ----------
<S> <C> <C> <C>
NYNEX CableComms
Units........... Robert Anderson -- Director -0- -0-
Richard Blackburn -- Director -0- -0-
Jeffrey Bowden -- Director -0- -0-
Sir Bryan Carsberg -- Director -0- -0-
Sir Michael Checkland -- Director -0- -0-
John Killian -- President and Chief Executive 191,692 *
Officer, Director
Nicholas Mearing-Smith -- Chief Financial 418,955 *
Officer(2), Director
Mel Meskin -- Director -0- -0-
John Rennocks -- Director -0- -0-
Edward Hatch -- Executive director -- Merger -0- -0-
Planning
Paul Repp -- Chief Legal and Regulatory Officer and -0- -0-
Company Secretary
Michael Schieck -- Executive director -- Customer -0- -0-
Operations Support
All Directors and Executive directors (as a group) 610,647 *
</TABLE>
- - ---------------
(1) An interest of less than 1% is represented by an asterisk.
(2) Mr. Mearing-Smith delegated his duties as Chief Financial Officer of the
Companies effective January 30, 1997, but remains as a Director.
47
<PAGE> 48
NYNEX
The following table sets forth as of January 31, 1997, for each Director,
each named Executive director and all Directors and Executive directors (as a
group), their beneficial ownership (as defined in Rule 13d-3(d)(1) under the
Exchange Act) shares of Common Stock of NYNEX including shares of Common Stock
of NYNEX which they had the right within 60 days to acquire pursuant to the
exercise of options granted by NYNEX, plus the number of shares of Common Stock
of NYNEX held on January 31, 1997 by the trustee of the NYNEX Corporation
Savings Plan for Salaried Employees ("Savings Plan") for their accounts.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT OF
TITLE OF CLASS NAME OF BENEFICIAL OWNER OWNERSHIP(1)(2) CLASS(3)
- - ---------------- -------------------------------------------------- --------------- ----------
<S> <C> <C> <C>
Common Stock.... Robert Anderson -- Director 52,365 *
Richard Blackburn -- Director 74,887 *
Jeffrey Bowden -- Director 84,078 *
Sir Bryan Carsberg -- Director -0- -0-
Sir Michael Checkland -- Director -0- -0-
John Killian -- President and Chief Executive 18,745 *
Officers, Director
Nicholas Mearing-Smith -- Chief Financial -0- -0-
Officer(4), Director
Mel Meskin -- Director 70,593 *
John Rennocks -- Director -0- -0-
Edward Hatch -- Executive director -- Merger 2,911
Planning
Paul Repp -- Chief Legal and Regulatory Officer 4,139 *
and Company Secretary
Michael Schieck -- Executive director -- Customer 1,615 *
Operations Support
All Directors and Executive directors (as a group) 314,020 *
</TABLE>
- - ---------------
(1) The number of shares held in the Savings Plan included in the numbers shown
above are as follows: Richard Blackburn, 12,348; John Killian, 2,848; Robert
Anderson, 1,178; Jeffrey Bowden, 323; Mel Meskin, 1,192; Paul Repp, 1,205;
Michael Schieck, 735 and Edward Hatch, 975. The number of shares of
restricted stock granted under the NYNEX 1987 Restricted Stock Award Plan
included in the numbers shown above are as follows: Richard Blackburn,
6,571; John Killian, 3,635; Robert Anderson, 3,895; Jeffrey Bowden, 5,866
and Mel Meskin, 5,624. (These shares include dividends that have been
reinvested in additional restricted shares.)
(2) The numbers of shares which the named persons had the right within 60 days
to acquire beneficial ownership pursuant to the exercise of options granted
by NYNEX included in the numbers shown above are as follows: Richard
Blackburn, 47,118; John Killian, 9,597; Robert Anderson, 43,991; Jeffrey
Bowden, 66,157; Mel Meskin, 59,338; Paul Repp, 2,844; Michael Schieck, 840
and Edward Hatch, 1,680. In addition, at the time of the completion of the
proposed merger of NYNEX and Bell Atlantic Corporation ("Bell Atlantic")
(see "Changes in Control" below), while not exercisable within 60 days,
stock options for the following number of shares will become exercisable for
the following persons and for all Executive directors as a group: Richard
Blackburn, 113,519; Robert Anderson, 52,784; Jeffrey Bowden, 115,576; Mel
Meskin, 63,906; Paul Repp, 12,641; Michael Schieck, 560; Edward Hatch, 560
and all Executive directors as a group, 360,906.
(3) An interest of less than 1% is represented by an asterisk.
(4) Mr. Mearing-Smith delegated his duties as Chief Financial Officer of the
Companies effective January 30, 1997, but remains as a Director.
(c) Changes in Control
As announced on October 22, 1996, Cable and Wireless plc, Bell Canada
International Inc. and NYNEX have entered into the Transaction Agreement
pursuant to which, subject to the satisfaction of certain conditions precedent,
the parties have agreed to combine Mercury, BCM (as enlarged by the acquisition
of Videotron Holdings Plc) and NYNEX CableComms under a new holding company,
CWC. Pursuant to the Transaction Agreement, CWC has offered to purchase NYNEX
CableComms UK Ordinary Shares and NYNEX CableComms US Shares of Common Stock
(represented by NYNEX CableComms Units and
48
<PAGE> 49
NYNEX CableComms ADSs) in exchange for ordinary shares of CWC ("the NYNEX
CableComms Offers").
If the transactions contemplated by the Transaction Agreement are
consummated, among other things, (i) NYNEX will exchange all of its NYNEX
CableComms Units, and its indirect interests in the Operating Companies, for
ordinary shares of CWC; (ii) NYNEX CableComms will become part of the combined
CWC group and thus will be an affiliate of Mercury, which is currently a
competitor of NYNEX CableComms primarily in the business telecommunications
market; and (iii) the entities identified as the North limited partner and the
South limited partner in the diagram under "Organization" in Item 1 above will
become indirect wholly-owned subsidiaries of CWC, thereby providing CWC with
indirect interests in the Operating Companies held other than through NYNEX
CableComms. For a more complete discussion of the Transaction Agreement, see
"Business -- Introduction" in Item 1 above.
Options under NYNEX CableComms' Employee Share Option Plan are exercisable
within a limited period in the event of a take-over of NYNEX CableComms UK or
NYNEX CableComms US and will in certain circumstances lapse if not so exercised,
but may, with the agreement of the acquiring company, be exchanged for options
over the acquiring company's shares. The holders of options will, upon the NYNEX
CableComms Offers becoming unconditional, be entitled to exercise their options
and deal with their NYNEX CableComms Units pursuant to the NYNEX Cablecomms
Offers on the same basis as other holders of NYNEX CableComms Units.
NYNEX has entered into an Amended and Restated Agreement and Plan of Merger
dated as of April 21, 1996, as amended as of July 2, 1996, with Bell Atlantic,
pursuant to which a wholly-owned subsidiary of Bell Atlantic will merge with and
into NYNEX and NYNEX will become a wholly-owned subsidiary of Bell Atlantic. In
the merger, each shareholder of NYNEX will receive 0.768 shares of Bell Atlantic
common stock in exchange for one share of NYNEX Common Stock.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Effective on June 14 1995, the Companies and NYNEX CableComms Limited, an
indirect wholly-owned subsidiary of the Companies which provides substantially
all the management, operations and other business functions for the Companies,
entered into a trademark agreement with NYNEX under which the Companies and
NYNEX CableComms Limited are required to pay L4.0 million per annum for 5 years
for use of the "NYNEX" name.
Effective on June 14, 1995, the Companies and NYNEX CableComms Limited
entered into a services and technology sharing agreement with NYNEX pursuant to
which NYNEX provides certain services to the Companies and NYNEX CableComms
Limited. This agreement covers both the scope and method of calculation of the
cost of such services. The level of charges under this agreement is intended to
arrive at arm's length transaction costs. Payments to NYNEX under the services
agreement totalled L5.0 million and L2.6 million for 1996 and 1995,
respectively.
The Companies and NYNEX CableComms Limited also entered into a secondment
agreement dated May 15, 1995 with NYNEX which provides that NYNEX will, subject
to certain conditions, second employees to the Companies and their subsidiaries
upon the request of the Companies. The Companies have agreed to reimburse NYNEX
for all costs NYNEX incurs in respect of any employees so seconded. Currently,
11 of the senior management of NYNEX CableComms Limited are on secondment from
NYNEX, including Messrs. Hatch, Doherty, McHale, Repp, Schieck and Welsh who are
Executive directors of NYNEX CableComms Limited. Mr. Repp is also a Director of
NYNEX CableComms Limited. Under this agreement, NYNEX was reimbursed by the
Companies in the aggregate of L1.6 million and L2.7 million for such secondees
during 1996 and 1995, respectively.
The Companies and Mr. Mearing-Smith (the Chief Financial Officer and
Director of the Companies, who delegated his duties as Chief Financial Officer
as of January 30, 1997) were party to an agreement which terminated Mr.
Mearing-Smith's right of first refusal and right to deferred consideration with
respect to his interest in certain franchises purchased by the Companies in
exchange for consideration which consisted of
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<PAGE> 50
grants of NYNEX CableComms Units and cash approximately equal in value to the
deferred consideration. Under the agreement, Mr. Mearing-Smith received L440,000
in cash in 1995 and 270,406 NYNEX CableComms Units in 1996.
Approximately 67% of the outstanding Units of the Companies is held by a
wholly-owned subsidiary of NYNEX. The Companies, through various wholly-owned
subsidiaries and two partnerships in which they exercise management control and
hold a majority interest, control the exercise of all the voting rights in the
16 companies that hold the licenses in the Companies' franchise areas (the
"Operating Companies"). Other wholly-owned subsidiaries of NYNEX have direct and
indirect equity interests in lenders to the Operating Companies and indirect
equity interests in the Operating Companies separate from NYNEX's interest as a
shareholder of the Companies. This includes indirect equity interests in the two
limited partnerships (the "North Partnership" and the "South Partnership") which
own substantially all of the ordinary shares of the Operating Companies. The
lenders to the Operating Companies hold (in addition to loans to the Operating
Companies) limited partnership interests in the North Partnership and the South
Partnership. Under the partnership agreements the limited partners generally
have a 15% interest in all items of income, gain, loss deduction or credit,
except in respect of initial losses and profits (being specified amounts of
profits or losses calculated in accordance with US tax principles) of the
relevant partnership.
Initial losses up to a maximum cumulative amount of L200.0 million in the
case of the North Partnership and L40.0 million in the case of the South
Partnership will be allocated to the limited partners. After that, losses will
be allocated to the Companies up to the point that their share of the cumulative
losses of the relevant partnership reaches 85%. At that point any further losses
will be allocated 85% to the Companies and 15% to the limited partners. Initial
profits will be allocated between the Companies and the limited partners in
proportion to the cumulative losses allocated to each partner until such losses
have been fully offset by profits. Thereafter, all profits are to be allocated
85% to the Companies and 15% to the limited partners. Initial losses for the
South Partnership reached L40.0 million in the first quarter of 1996. Initial
losses for the North Partnership have not yet reached L200 million.
For the purposes of preparing the combined financial statements, the profit
or loss of the relevant partnership is allocated between the Companies and the
limited partners in accordance with the profit and loss allocations set out in
the relevant partnership agreement.
The limited partners have contributed L211.7 million to the North
Partnership and the South Partnership as of both December 31, 1996 and December
31, 1995. Minority interests of the limited partners in the North Partnership
and South Partnership were L18.8 million and L57.8 million, respectively, at
December 31, 1996 and L76.2 million and L55.9 million, respectively, at December
31, 1995.
The North and South Partnerships are included in the Companies' US GAAP
combined financial statements. The limited partners are entitled to
distributions only if declared and their capital contributions in the North and
South Partnerships, respectively, are reflected in the Companies' US GAAP
combined financial statements under "Minority interest". The revolving loans
from the limited partners to the Northern and Southern Operating Companies are
reflected in the Companies' US GAAP combined financial statements under
"Long-term debt".
The Northern Operating Companies borrowed L292.9 million and L96.5 million
under the revolving credit facilities from the limited partners at December 31,
1996 and 1995, respectively. The Southern Operating Companies borrowed L154.8
million and L28.9 million under the revolving credit facilities from the limited
partners at December 31, 1996 and 1995, respectively. Neither the North
Partnership nor the South Partnership had made any borrowings under the
revolving credit facilities from the limited partners at December 31, 1996 and
1995.
Interest and fees paid to the lenders under the revolving credit facilities
for the years ended December 31, 1996 and December 31, 1995, aggregated L14.6
million and L6.5 million, respectively, for the Northern Operating Companies and
L7.5 million and L8.7 million, respectively, for the Southern Operating
Companies.
The revolving loans are unsecured obligations of the Operating Companies.
However, the Companies have pledged their interests in the North and South
Partnerships as collateral for repayment of the Northern
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<PAGE> 51
Operating Companies' and Southern Operating Companies' revolving loans,
respectively, and significant restrictions exist on the rights of the Operating
Companies to encumber any assets or incur any additional indebtedness.
The Companies have certain rights to purchase the equity interests held by
the limited partners in the North Partnership and South Partnership. The
purchase option provides for the acquisition of these equity interests at a
price equal to fair market value, but in no event less than the unrecovered
investment of the limited partners. Under certain circumstances, following the
occurrence of certain adverse events, the failure to purchase the limited
partner's interest could result in a liquidation of the North Partnership and
South Partnership.
The Operating Companies have entered into two forward sterling interest
rate swaps to reduce potential exposure to interest rate risks inherent in the
financing arrangements for Northern Operating Companies and Southern Operating
Companies. Under the interest rate swaps, the Companies agreed to exchange with
NYNEX, on a quarterly basis, the difference between fixed-rate (9.15% for the
Northern financing arrangement and 7.02% for the Southern financing arrangement)
and floating-rate three month Sterling LIBOR interest amounts calculated by
reference to an agreed notional principal amount. The notional principal amounts
of the swaps are L700.0 million and L273.7 million for swaps entered into on
December 31, 1994 and December 31, 1993, respectively. The net effect of the
interest rate swap is to fix the net cash outflow of the Companies to 9.15% and
7.02% of the appropriate financing arrangement. In order to correspond to the
underlying financing arrangements for the Northern Operating Companies and
Southern Operating Companies, the effective date of the swaps is the first
payment date after the earlier of five years from commencement of the
arrangements or the date all completion requirements are met, and expire by
December 31, 2004 and 2003, respectively.
In addition, the Operating Companies have entered into two agreements with
NYNEX to reduce the notional amount of the interest rate swaps at the Operating
Companies' option. The notional amount may be reduced at any time, and from time
to time, in whole or in part, without any penalty or additional payments. The
effective dates and expiration dates of these options are the same as the swap
transactions. The Operating Companies paid premiums of L18.3 million and L7.0
million in respect of the Northern and Southern financing arrangements,
respectively, which are being amortised over the life of the options.
NYNEX has entered into the credit facility with NYNEX CableComms to make
available up to L200 million (the "NYNEX Facility"). NYNEX CableComms may make
drawings under the NYNEX Facility at any time before May 31, 1998. Amounts
borrowed are to be paid in full by May 31, 1998. The rate of interest applicable
to amounts drawn under the NYNEX Facility is three month sterling LIBOR plus 4%.
NYNEX CableComms paid NYNEX a fee of L375,000 during 1996 for NYNEX commitment
to provide the NYNEX Facility. No drawings have yet been made on the NYNEX
Facility.
NYNEX has entered into an agreement with the Companies whereby it has
agreed to indemnify the Companies for certain US and UK tax liabilities of NYNEX
and its affiliates (including the affiliates that were transferred to the
Companies as part of a reorganization of NYNEX's cable television and
telecommunications operations in the UK effected immediately prior to the
initial public offering) arising from or attributable to periods prior to the
completion of the initial public offering.
Prior to June 14, 1995, NYNEX CableComms' US corporations were included in
the NYNEX consolidated federal income tax return and in New York State and New
York City combined income tax filings. While included in the NYNEX tax filings,
NYNEX CableComms' US corporations were allocated payments in accordance with the
effect their losses had on reducing the consolidated group's taxable income. As
a result of the reorganization which occurred immediately prior to the
completion of the NYNEX CableComms' initial public offering, the Companies and
their US corporations no longer qualify to be included in the NYNEX consolidated
US federal tax return or in any state or local combined tax returns. As such,
any equivalent payments will no longer be made to the Companies by NYNEX for any
future losses generated. For periods after June 14, 1995, NYNEX UK Holdings and
its US subsidiaries will be treated as a consolidated group of corporations for
US tax return purposes. However, neither NYNEX CableComms UK nor NYNEX
CableComms US will be consolidated with NYNEX UK Holdings or its subsidiaries
for US tax
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<PAGE> 52
purposes. As a result, NYNEX CableComms UK and NYNEX CableComms US will file
their own US federal tax returns separately from NYNEX UK Holdings.
On May 15, 1995, the Companies and NYNEX entered into a registration rights
agreement pursuant to which, subject to compliance with London Stock Exchange
requirements and subject to certain other exceptions, NYNEX has the right, at
its own expense, (i) to require the Companies to include all or any portion of
the NYNEX CableComms Units beneficially owned by NYNEX or its affiliates in any
registered offering by any the Companies in the United States (or in any
prospectus for the offering and sale to the public in the United Kingdom) and
(ii) for ten years beginning one year after the initial public offering, to
cause the Companies on up to two separate occasions to file a registration
statement for an offering in the United States and to take such other action to
facilitate an offering and sale in the United Kingdom.
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<PAGE> 53
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(A) DOCUMENTS FILED AS PART OF THIS ANNUAL REPORT ON FORM 10-K
(1) Combined Financial Statements
The following combined financial statements of the Companies and their
subsidiaries are attached to this Annual Report on Form 10-K following the
signature page:
<TABLE>
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PAGE
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<S> <C>
Report of management.............................................. F-2
Report of independent accountants................................. F-3
Combined statement of operations.................................. F-4
Combined balance sheets........................................... F-5
Combined statements of changes in stockholders' equity............ F-6
Combined statements of cash flows................................. F-7
Notes to combined financial statements............................ F-8
</TABLE>
(2) Combined Financial Statement Schedules
Combined financial statement schedules have been omitted because the
required information is contained in the combined financial statements and notes
thereto or because such schedules are not required or applicable.
(3) EXHIBITS.
Exhibits on file with the Securities and Exchange Commission (the "SEC"),
as identified in parentheses below, are incorporated herein by reference as
exhibits hereto.
<TABLE>
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EXHIBIT NUMBER
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<C> <C> <S>
2.1 -- Reorganisation Agreement, dated May 15, 1995, between NYNEX Corporation, NYNEX
Worldwide Services Group, Inc., NYNEX Network Systems Company, NYNEX
CableComms Group PLC, NYNEX CableComms Group Inc. and NYNEX UK CableComms
Holdings, Inc. (incorporated herein by reference to Exhibit 2.1 to the
Companies' Annual Report on Form 10-K for the year ended December 31, 1995).
3.1 -- Memorandum of Association of NYNEX CableComms Group PLC (incorporated herein
by reference to Exhibit 3.1 to Amendment No. 1 to the Registration Statement
on Form S-1 relating to the registration of American Depository Shares, each
representing ten Units, each Unit consisting of One Ordinary Share of NYNEX
CableComms Group PLC and one share of Common Stock of NYNEX CableComms Group
Inc. filed with the SEC on February 27, 1995, (File No. 33-89776) (the "Form
S-1 Registration Statement").
3.2 -- Articles of Association of NYNEX CableComms Group PLC (incorporated herein by
reference to Exhibit 3.2 to Amendment No. 5 to the Form S-1 Registration
Statement).
3.3 -- Restated Certificate of Incorporation of NYNEX CableComms Group Inc.
(incorporated herein by reference to Exhibit 3.3 to Amendment No. 5 to the
Form S-1 Registration Statement).
3.4 -- By-Laws of NYNEX CableComms Group Inc. as amended through May 10, 1995
(incorporated herein by reference to Exhibit 3.4 to Amendment No. 5 to the
Form S-1 Registration Statement).
</TABLE>
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<PAGE> 54
<TABLE>
<CAPTION>
EXHIBIT NUMBER
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<C> <C> <S>
3.5 -- Inter-Company Agreement, dated May 15, 1995, between NYNEX CableComms Group
PLC and NYNEX CableComms Group Inc. (incorporated herein by reference to
Exhibit 3.5 to the Companies' Annual Report on Form 10-K for the year ended
December 31, 1995).
4.1 -- Deposit Agreement, dated as of June 8, 1995, among NYNEX CableComms Group PLC,
NYNEX CableComms Group Inc. and The Bank of New York, as Depository, and
Owners and Beneficial Owners of American Depository Receipts issued
thereunder. (incorporated herein by reference to Exhibit 4.1 to the Companies'
Annual Report on Form 10-K for the year ended December 31, 1995).
4.2 -- Relationship Agreement, dated May 15, 1995, among NYNEX Corporation, NYNEX
CableComms Group PLC and NYNEX CableComms Group Inc. (incorporated herein by
reference to Exhibit 4.2 to the Companies' Annual Report on Form 10-K for the
year ended December 31, 1995).
4.2(a) -- Amendment to the Relationship Agreement, dated June 8, 1995, among NYNEX
Corporation, NYNEX CableComms Group PLC and NYNEX CableComms Group Inc.
(incorporated herein by reference to Exhibit 4.2(a) to the Companies' Annual
Report on Form 10-K for the year ended December 31, 1995).
4.3 -- Registration Rights Agreement, dated as of May 15, 1995, among NYNEX
Corporation, NYNEX CableComms Group PLC and NYNEX CableComms Group Inc.
(incorporated herein by reference to Exhibit 4.3 to the Companies' Annual
Report on Form 10-K for the year ended December 31, 1995).
10.1 -- North CableComms Participation Agreement, dated as of December 19, 1994, by
and among North CableComms L.L.C., NYNEX North CableComms Holdings, Inc.,
NYNEX North CableComms Management, Inc., NYNEX Wirral Company, NYNEX
CableComms Limited, North CableComms L.P. and each of the Companies (as
defined therein) (incorporated herein by reference to Exhibit 10.1 to the Form
S-1 Registration Statement).(1)
10.1(a) -- First Amendment to North CableComms Participation Agreement, dated as of April
14, 1995, by and among North CableComms L.L.C., NYNEX North CableComms
Holdings, Inc., NYNEX North CableComms Management, Inc., NYNEX Wirral Company,
NYNEX CableComms Limited, North CableComms L.P. and each of the Companies (as
defined therein) (incorporated herein by reference to Exhibit 10.1(a) to
Amendment No. 4 to the Form S-1 Registration Statement).
10.2 -- North CableComms L.P. Second Amended and Restated Agreement of Limited
Partnership, dated as of December 19, 1994, by and among, NYNEX North
CableComms Management, Inc., NYNEX North CableComms Holdings, Inc., NYNEX
Wirral Company and North CableComms L.L.C. (incorporated herein by reference
to Exhibit 10.2 to the Form S-1 Registration Statement).
10.3 -- North CableComms L.L.C. Amended and Restated Company Agreement, dated as of
December 19, 1994, by and among North CableComms Management, Inc., North
CableComms Holdings, Inc. and Winston Investors L.L.C. (incorporated herein by
reference to Exhibit 10.3 to the Form S-1 Registration Statement).(1)
10.3(a) -- First Amendment to North CableComms L.L.C. Amended and Restated Company Agree-
ment, dated as of April 14, 1995, by and among North CableComms Management,
Inc., North CableComms Holdings, Inc. and Winston Investors L.L.C.
(incorporated herein by reference to Exhibit 10.3(a) to Amendment No. 4 to the
Form S-1 Registration Statement).(1)
</TABLE>
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(1) Confidential treatment for certain portions of this document has been
granted by the Securities and Exchange Commission.
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<PAGE> 55
<TABLE>
<CAPTION>
EXHIBIT NUMBER
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<C> <C> <S>
10.3(b) -- Second Amendment to North CableComms L.L.C. Amended and Restated Company
Agreement, dated as of November 3, 1995, by and among North CableComms
Holdings, Inc., North CableComms Management, Inc. and Winston Investors L.L.C.
(incorporated herein by reference to Exhibit 10.3(b) to the Companies' Annual
Report on Form 10-K for the year ended December 31, 1995).(1)
10.4 -- Master Agreement, dated as of December 19, 1994, by and among NYNEX
Corporation and NYNEX CableComms Wirral, NYNEX CableComms East Lancashire,
NYNEX CableComms Stockport, NYNEX CableComms Macclesfield, NYNEX CableComms
Greater Manchester, NYNEX CableComms Derby, NYNEX CableComms Bolton, NYNEX
CableComms Bury and Rochdale, NYNEX CableComms Oldham and Tameside, NYNEX
CableComms Cheshire and NYNEX CableComms Staffordshire (incorporated herein by
reference to Exhibit 10.5 to the Form S-1 Registration Statement).
10.5 -- Secondment Agreement, dated May 15, 1995, among NYNEX Corporation, NYNEX
CableComms Group PLC and NYNEX CableComms Group Inc. (incorporated herein by
reference to Exhibit 10.5 to the Companies' Annual Report on Form 10-K for the
year ended December 31, 1995).
10.6 -- Subscription and Shareholders Agreement, dated January 30, 1995, by and among
Videotron Corporation Limited, United Artists Communications (London South)
Limited, Cable London Plc, ELT Acquisition Company Limited, NYNEX CableComms
Limited, The Cable Corporation Limited, London Interconnect Limited,
Independent Cable Sales Limited, London Interconnect PPV Limited and London
Interconnect Network Limited (incorporated herein by reference to Exhibit 10.9
to the Form S-1 Registration Statement).
10.7 -- Participation Agreement, dated as of March 31, 1995, by and among South
CableComms L.L.C., NYNEX South CableComms Holdings, Inc., NYNEX South
CableComms Management, Inc., NYNEX CableComms Limited, South CableComms L.P.
and each of the Companies (as defined therein) (incorporated herein by
reference to Exhibit 10.10 to Amendment No. 2 to the Form S-1 Registration
Statement).(1)
10.8 -- South CableComms L.P. Second Amended and Restated Agreement of Limited
Partnership, dated as of March 31, 1995, among NYNEX South CableComms
Holdings, Inc., Chartwell Investors, L.P. and South CableComms L.L.C.
(incorporated herein by reference to Exhibit 10.11 to Amendment No. 2 to the
Form S-1 Registration Statement).
10.9 -- South CableComms L.L.C. Amended and Restated Company Agreement, dated as of
March 31, 1995, by and among South CableComms Management, Inc., South
CableComms Holdings, Inc. and Chartwell Investors L.P. (incorporated herein by
reference to Exhibit 10.12 to Amendment No. 2 to the Form S-1 Registration
Statement).(1)
10.9(a) -- First Amendment to South CableComms L.L.C. Amended and Restated Company Agree-
ment, dated as of November 3, 1995 by and among South CableComms Management,
Inc., South CableComms Holdings, Inc. and Chartwell Investors L.P.
(incorporated herein by reference to Exhibit 10.9(a) to the Companies' Annual
Report on Form 10-K for the year ended December 31, 1995).(1)
10.10 -- Master Agreement, dated as of March 31, 1995, by and among NYNEX Corporation
and NYNEX CableComms Bromley, NYNEX CableComms Solent, NYNEX CableComms
Surrey, NYNEX CableComms Sussex and NYNEX CableComms Wessex (incorporated
herein by reference to Exhibit 10.13 to Amendment No. 2 to the Form S-1
Registration Statement).
</TABLE>
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(1) Confidential treatment for certain portions of this document has been
granted by the Securities and Exchange Commission.
55
<PAGE> 56
<TABLE>
<CAPTION>
EXHIBIT NUMBER
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<C> <C> <S>
10.11 -- Standard Interconnect Agreement, dated May 13, 1996, between British
Telecommunications plc ("BT") and NYNEX CableComms Derby. (Identical
agreements have been entered into between BT and fifteen other affiliates of
the Registrants.) (Incorporated herein by reference to Exhibit 10.1 to the
Form 10-Q for the period ended June 30, 1996).
10.11(a) -- Letter Agreement on Interconnect Charges dated July 19, 1996 between BT and
NYNEX CableComms Bolton. (Identical agreements have been entered into between
BT and fifteen other affiliates of the Registrants).
10.11(b) -- Letter Agreement on Interconnect Charges dated July 19, 1996 between BT and
NYNEX CableComms Bolton. (Identical agreements have been entered into between
BT and fifteen other affiliates of the Registrants).
10.11(c) -- Letter Agreement on Review of certain aspects of the Interconnect Agreement
dated July 19, 1996 between BT and NYNEX CableComms Bolton. (Identical
agreements have been entered into between BT and fifteen other affiliates of
the Registrants).
10.11(d) -- Letter Agreement on Interconnect Charges dated July 19, 1996 between BT and
NYNEX CableComms Bolton. (Identical agreements have been entered into between
BT and fifteen other affiliates of the Registrants).
10.11(e) -- Transition Agreement dated May 13, 1996, between BT and NYNEX CableComms
Bolton. (Identical agreements have been entered into between BT and fifteen
other affiliates of the Registrants.) (Incorporated herein by reference to
Exhibit 10.1 to the Form 10-Q for the period ended June 30, 1996).
10.11(f) -- Letter Agreement on conveyancing termination rate dated June 13, 1996, between
BT and NYNEX CableComms Bolton. (Identical agreements have been entered into
between BT and fifteen other affiliates of the Registrants).
10.11(g) -- Letter Agreement on Interconnect Charges dated December 19, 1996, between BT,
the Operating Companies and NYNEX CableComms Limited.
10.12 -- Interconnection Agreement, dated November 11, 1996, between Mercury
Communications Limited and NYNEX CableComms Limited.
10.12(a) -- Agreement settling payment for backdated claims relating to Interconnect
Charges ("Interconnect") dated November 11, 1996, between Mercury
Communications Limited and NYNEX CableComms Limited.
10.12(b) -- Agreement dated November 11, 1996 between Mercury Communications Limited and
NYNEX CableComms Limited regarding mobile charges.
10.12(c) -- Amendment to Interconnection Agreement, dated February 11, 1997 between
Mercury Communications Limited and NYNEX CableComms Limited.
10.13 -- Agreement for Systems Integration, dated December 2, 1994, between NYNEX
CableComms Limited and IBM United Kingdom Limited (incorporated herein by
reference to Exhibit 10.16(a) to Amendment No. 1 to the Form S-1 Registration
Statement).
10.14 -- ICMS Software Maintenance Agreement, dated December 2, 1994, between NYNEX
CableComms Limited and IBM United Kingdom Limited (incorporated herein by
reference to Exhibit 10.16(b) to Amendment No. 1 to the Form S-1 Registration
Statement).
10.15 -- Software Charging Agreement, dated December 29, 1995, between IBM United
Kingdom Financial Services Limited and NYNEX CableComms Limited. (incorporated
herein by reference to Exhibit 10.15 to the Companies' Annual Report on Form
10-K for the year ended December 31, 1995).
</TABLE>
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<TABLE>
<CAPTION>
EXHIBIT NUMBER
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<C> <C> <S>
10.17 -- Service Agreement, dated May 15, 1995, among NYNEX CableComms Limited, John F.
Killian, NYNEX CableComms Group PLC and NYNEX CableComms Group Inc. (incor-
porated herein by reference to Exhibit 10.17 to the Companies' Annual Report
on Form 10-K for the year ended December 31, 1995).*
10.17(a) -- Agreement, dated December 7, 1995, between NYNEX CableComms Limited, John F.
Killian, NYNEX CableComms Group PLC and NYNEX CableComms Group Inc. amending
the terms of the Service Agreement between the same parties. (incorporated
herein by reference to Exhibit 10.17(a) to the Companies' Annual Report on
Form 10-K for the year ended December 31, 1995).*
10.17(b) -- Agreement, dated October 1, 1996, between NYNEX CableComms Limited, John F.
Killian, NYNEX CableComms Group PLC and NYNEX CableComms Group Inc. amending
the terms of the Service Agreement between the same parties.*
10.18 -- Service Agreement, dated May 15, 1995, between NYNEX CableComms Limited,
Nicholas P. Mearing-Smith, NYNEX CableComms Group PLC and NYNEX CableComms
Group Inc. (incorporated herein by reference to Exhibit 10.18 to the
Companies' Annual Report on Form 10-K for the year ended December 31, 1995).*
10.20 -- Secondment Agreement, dated May 15, 1995, between NYNEX CableComms Limited and
NYNEX Worldwide Services Group, Inc. with respect to John F. Killian.
(incorporated herein by reference to Exhibit 10.20 to the Companies' Annual
Report on Form 10-K for the year ended December 31, 1995).*
10.20(a) -- First Amendment to Secondment Agreement, dated December 7, 1995, between NYNEX
CableComms Limited and NYNEX Worldwide Services Group, Inc. with respect to
John F. Killian. (incorporated herein by reference to Exhibit 10.20(a) to the
Companies' Annual Report on Form 10-K for the year ended December 31, 1995).*
10.20(b) -- Second Amendment to Secondment Agreement, dated October 1, 1996, between NYNEX
CableComms Limited and NYNEX Worldwide Services Group, Inc. with respect to
John F. Killian.*
10.21 -- Letter of Appointment, dated May 3, 1995, among Richard W. Blackburn, NYNEX
CableComms Group PLC and NYNEX CableComms Group Inc. (Substantially identical
agreements have been entered into for Robert T. Anderson and Jeffrey A.
Bowden). (incorporated herein by reference to Exhibit 10.21 to the Companies'
Annual Report on Form 10-K for the year ended December 31, 1995).*
10.22 -- Letter of Appointment, dated May 3, 1995, among John L. Rennocks, NYNEX
CableComms Group PLC and NYNEX CableComms Group Inc. (incorporated herein by
reference to Exhibit 10.22 to the Companies' Annual Report on Form 10-K for
the year ended December 31, 1995).*
10.22(a) -- Amendment to Letter of Appointment, dated July 11, 1996, among John L.
Rennocks, NYNEX CableComms Group PLC and NYNEX CableComms Group Inc.*
10.23 -- Letter of Appointment, dated May 3, 1995, among Sir Christopher Bland, NYNEX
CableComms Group PLC and NYNEX CableComms Group Inc. (incorporated herein by
reference to Exhibit 10.23 to the Companies' Annual Report on Form 10-K for
the year ended December 31, 1995).*
10.24 -- Letter of Appointment, dated May 3, 1995, among Sir Michael Checkland, NYNEX
CableComms Group PLC and NYNEX CableComms Group Inc. (incorporated herein by
reference to Exhibit 10.24 to the Companies' Annual Report on Form 10-K for
the year ended December 31, 1995).*
</TABLE>
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* Indicates that exhibit is a management contract or compensatory plan or
arrangement.
57
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<TABLE>
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EXHIBIT NUMBER
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<C> <C> <S>
10.25 -- Letter Agreement, dated April 26, 1995, among NYNEX UK Telephone and Cable TV
Holding Company Limited, NYNEX CableComms Group PLC, NYNEX CableComms Group
Inc., Nicholas P. Mearing-Smith and Peter Lynch. (incorporated herein by
reference to Exhibit 10.25 to the Companies' Annual Report on Form 10-K for
the year ended December 31, 1995).
10.26 -- Tax Indemnity Agreement, dated May 15, 1995, among NYNEX Corporation, NYNEX
CableComms Group PLC and NYNEX CableComms Group Inc. (incorporated herein by
reference to Exhibit 10.26 to the Companies' Annual Report on Form 10-K for
the year ended December 31, 1995).
10.27 -- Contract of Employment, dated May 20, 1992, between NYNEX CableComms Limited
and Graham L. Robertson as amended March 21, 1995 (incorporated herein by
reference to Exhibit 10.26 to Amendment No. 3 to the Form S-1 Registration
Statement).*
10.28 -- Contract of Employment, dated March 23, 1994, between NYNEX CableComms Limited
and Colin I. Chadwick (incorporated herein by reference to Exhibit 10.27 to
Amendment No. 3 to the Form S-1 Registration Statement).*
10.29 -- Contract of Employment, dated February 20, 1992, between NYNEX CableComms
Limited and Carl Grose as amended January 26, 1995. (incorporated herein by
reference to Exhibit 10.29 to the Companies' Annual Report on Form 10-K for
the year ended December 31, 1995).*
10.31 -- Contract of Employment dated September 8, 1992 between NYNEX CableComms
Limited and Michael W. Stevenson as amended November 8, 1993 (incorporated
herein by reference to Exhibit 10.33 to Amendment No. 3 to the Form S-1
Registration Statement).*
10.32 -- Cable Programme Partners-1 Limited Partnership Agreement ("CPP-1 Agreement"),
dated October 16, 1992, among TCI Cable Programme Partners, Inc., Comcast UK
Programming Limited, U.S. West Cable Programming Corporation, Southwestern
Bell International Programming Inc., NYNEX Programming Subsidiary Company and
Cable Programme Partners (1) Limited (incorporated herein by reference to
Exhibit 10.34(a) to Amendment No. 3 to the Form S-1 Registration Statement).
10.33 -- Amendment No. 1 to CPP-1 Agreement, dated as of October 16, 1992 and made as
of December 12, 1994, among the parties to the CPP-1 Agreement and CableTel
Programming, Inc. (incorporated herein by reference to Exhibit 10.34(b) to
Amendment No. 4 to the Form S-1 Registration Statement).
10.34 -- Amendment No. 2 to CPP-1 Agreement, dated as of October 16, 1992 and made as
of December 12, 1994, among the parties to the CPP-1 Agreement and CableTel
Programming, Inc. (incorporated herein by reference to Exhibit 10.34(c) to
Amendment No. 4 to the Form S-1 Registration Statement).
10.35 -- Services and Technology Sharing Agreement, dated May 15, 1995, among NYNEX
Corporation, NYNEX CableComms Limited, NYNEX CableComms Group PLC and NYNEX
CableComms Group Inc. (incorporated herein by reference to Exhibit 10.35 to
the Companies' Annual Report on Form 10-K for the year ended December 31,
1995).
10.35(a) -- Amendment to Services and Technology Sharing Agreement, dated June 8, 1995,
among NYNEX Corporation, NYNEX CableComms Limited, NYNEX CableComms Group PLC
and NYNEX CableComms Group Inc. (incorporated herein by reference to Exhibit
10.35(a) to the Companies' Annual Report on Form 10-K for the year ended
December 31, 1995).
</TABLE>
- - ---------------
* Indicates that exhibit is a management contract or compensatory plan or
arrangement.
58
<PAGE> 59
<TABLE>
<CAPTION>
EXHIBIT NUMBER
- - --------------
<C> <C> <S>
10.36 -- Trademark License Agreement, dated May 15, 1995, among NYNEX Corporation,
NYNEX CableComms Limited, NYNEX CableComms Group PLC and NYNEX CableComms
Group Inc. (incorporated herein by reference to Exhibit 10.36 to the
Companies' Annual Report on Form 10-K for the year ended December 31, 1995).
10.37 -- Facility Agreement, dated May 15, 1995, between NYNEX UK CableComms Holdings,
Inc. and NYNEX Corporation. (incorporated herein by reference to Exhibit 10.37
to the Companies' Annual Report on Form 10-K for the year ended December 31,
1995).
10.37(a) -- Supplemental Facility Agreement amending the Facility Agreement dated March ,
1996, between NYNEX UK CableComms Holdings, Inc. and NYNEX Corporation.
10.39 -- Assignment Letter, dated May 3, 1995, among NYNEX Corporation, NYNEX Worldwide
Services Group, Inc. and John F. Killian. (incorporated herein by reference to
Exhibit 10.39 to the Companies' Annual Report on Form 10-K for the year ended
December 31, 1995).*
10.39(a) -- First Amendment to Assignment Letter, dated as of December 7, 1995, among
NYNEX Corporation, NYNEX Worldwide Services Group, Inc. and John F. Killian.
(incorporated herein by reference to Exhibit 10.39 to the Companies' Annual
Report on Form 10-K for the year ended December 31, 1995).*
10.39(b) -- Second Amendment to Assignment Letter, dated October 1, 1996, among NYNEX
Corporation, NYNEX Worldwide Services Group, Inc. and John F. Killian.*
10.44 -- Standard Cable Operators Agreement entered into on April 30, 1995 and signed
on May 4, 1995 among British Sky Broadcasting Limited, British Sky
Broadcasting Group PLC, NYNEX CableComms Limited and NYNEX CableComms Group
PLC and NYNEX CableComms Group Inc. (incorporated herein by reference to
Exhibit 10.40 to Amendment No. 6 to the Form S-1 Registration Statement).(1)
10.44(a) -- Letter Agreement amending Programming dated July 28, 1995 between British Sky
Broadcasting Limited, British Sky Broadcasting Group PLC, NYNEX CableComms
Limited and the Operating Companies.
10.45 -- Letter of Appointment, dated July 11, 1996, among Sir Bryan Carsberg, NYNEX
CableComms Group PLC and NYNEX CableComms Group Inc.*
10.46 -- Letter of Appointment, dated July 11, 1996, among Mel Meskin, NYNEX CableComms
Group PLC and NYNEX CableComms Group Inc.*
10.47 -- Letter of Termination, dated April 16, 1996, among Jeff Henry, NYNEX
CableComms Group PLC and NYNEX CableComms Group Inc.*
10.48 -- Loyalty Bonus and Severance Terms Letter, dated December 13, 1996, among Carl
Grose, NYNEX CableComms Group PLC and NYNEX CableComms Group Inc.*
10.49 -- Form of Loyalty Bonus and Severance Terms Letter, dated December 13, 1996,
among the named Executive director, NYNEX CableComms Group PLC and NYNEX
CableComms Group Inc. (Substantially identical agreements have been entered
into for Colin I. Chadwick, John Doherty, Edward L. Hatch, John J. McHale,
Paul H. Repp, Graham L. Robertson, Allen J.M. Saunders, Michael T. Schieck,
Michael W. Stevenson and Patrick Welsh III).*
10.50 -- Loyalty Bonus and Severance Terms Letter, dated December 13, 1996, among
Nicholas P. Mearing-Smith, NYNEX CableComms Group PLC and NYNEX CableComms
Group Inc.*
</TABLE>
- - ---------------
* Indicates that exhibit is a management contract or compensatory plan or
arrangement.
(1) Confidential treatment for certain portions of this document has been
granted by the Securities and Exchange Commission.
59
<PAGE> 60
<TABLE>
<CAPTION>
EXHIBIT NUMBER
- - --------------
<C> <C> <S>
21 -- Subsidiaries of the Registrants (incorporated herein by reference to Exhibit
21 to Amendment No. 5 to the Form S-1 Registration Statement).
24 -- Powers of Attorney.
27 -- Financial Data Schedule.
</TABLE>
(B) REPORTS ON FORM 8-K
No report on Form 8-K was filed by the Registrants during the fourth
quarter of 1996.
- - ---------------
* Indicates that exhibit is a management contract or compensatory plan or
arrangement.
(1) Confidential treatment for certain portions of this document has been
granted by the Securities and Exchange Commission.
60
<PAGE> 61
SIGNATURES
Pursuant to the requirements of Sections 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrants have duly caused this report to be signed
on their behalf by the undersigned, thereunto duly authorized.
NYNEX CABLECOMMS GROUP PLC
/s/ JOHN F. KILLIAN
------------------------------------
John F. Killian
President and Chief Executive Officer
Date: March 21, 1997
NYNEX CABLECOMMS GROUP INC.
/s/ JOHN F. KILLIAN
------------------------------------
John F. Killian
President and Chief Executive Officer
Date: March 21, 1997
61
<PAGE> 62
SIGNATURES
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 and in the capacities and on the date(s) indicated.
NYNEX CABLECOMMS GROUP PLC
(Registrant)
<TABLE>
<S> <C>
Principal Executive Officer: /s/ JOHN F. KILLIAN
John F. Killian --------------------------------------------
President and Chief Executive
Officer and Director
Principal Financial and Accounting Officer:
/s/ GRAHAM L. ROBERTSON
Graham L. Robertson --------------------------------------------
Acting Chief Financial Officer
Directors:
Robert Anderson*
Richard Blackburn*
Jeffrey Bowden*
Sir Bryan Carsberg* *By /s/ JOHN F. KILLIAN
Sir Michael Checkland* John F. Killian, as attorney-in-fact
John Rennocks*
March 21, 1997
</TABLE>
62
<PAGE> 63
SIGNATURES
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 and in the capacities and on the date(s) indicated.
NYNEX CABLECOMMS GROUP INC.
(Registrant)
<TABLE>
<S> <C>
Principal Executive Officer: /s/ JOHN F. KILLIAN
John F. Killian --------------------------------------------
President and Chief Executive Officer
and Director
Principal Financial and Accounting Officer:
Graham L. Robertson /s/ GRAHAM L. ROBERTSON
--------------------------------------------
Acting Chief Financial Officer
</TABLE>
Directors:
Robert Anderson*
Richard Blackburn*
Jeffrey Bowden*
Sir Bryan Carsberg*
Sir Michael Checkland*
John Rennocks*
*By: /s/ JOHN F. KILLIAN
John F. Killian, as
attorney-in-fact
March 21, 1997
63
<PAGE> 64
ANNUAL REPORT AND FINANCIAL STATEMENTS PREPARED
IN ACCORDANCE WITH UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES ("US GAAP")
<TABLE>
<CAPTION>
PAGE
------
<S> <C>
Report of management.............................................. F-2
Report of independent accountants................................. F-3
Combined statements of operations................................. F-4
Combined balance sheets........................................... F-5
Combined statements of changes in stockholders' equity............ F-6
Combined statements of cash flows................................. F-7
Notes to combined financial statements............................ F-8
</TABLE>
F-1
<PAGE> 65
REPORT OF MANAGEMENT
Management of NYNEX CableComms UK and NYNEX CableComms US (together with
their subsidiaries "NYNEX CableComms") has the responsibility for preparing the
accompanying combined financial statements and for their integrity and
objectivity. The statements were prepared in accordance with United States
generally accepted accounting principles, which require management to make
estimates and assumptions that affect reported amounts. Actual results could
differ from those estimates. In management's opinion, the combined financial
statements are fairly presented. Management also prepared the other information
in this report and is responsible for its accuracy and consistency with the
combined financial statements.
The combined financial statements have been audited by Coopers & Lybrand
L.L.P. ("Coopers & Lybrand"), independent accountants. Management has made
available to Coopers & Lybrand all of NYNEX CableComms' financial records and
related data, as well as the minutes of stockholders' and Directors' meetings.
Furthermore, management believes that all representations made to Coopers &
Lybrand during its audit were valid and appropriate.
Management of NYNEX CableComms has established and maintains an internal
control structure that is designed to provide reasonable assurance as to the
integrity and reliability of the combined financial statements, the protection
of assets from unauthorized use or disposition, and the prevention and detection
of fraudulent financial reporting. The concept of reasonable assurance
recognizes that the cost of the internal control structure should not exceed the
benefits to be derived. The internal control structure provides for appropriate
division of responsibility and is documented by written policies and procedures
that are communicated to employees with significant roles in the financial
reporting process. Management monitors the internal control structure for
compliance, considers recommendations for improvement from both the internal
auditors and Coopers & Lybrand, and updates such policies and procedures as
necessary. Monitoring includes an internal auditing function to independently
assess the effectiveness of the internal controls and recommend possible
improvements thereto. Management believes that the internal control structure of
NYNEX CableComms is adequate to accomplish the objectives discussed herein.
The Audit Committees of the Boards of Directors, which are comprised of
Directors who are not employees, meet periodically with management, the internal
auditors and Coopers & Lybrand to review the manner in which they are performing
their responsibilities and to discuss matters relating to auditing, internal
controls and financial reporting. Both the internal auditors and Coopers &
Lybrand periodically meet privately with the Audit Committees and have access to
the Audit Committees at any time.
Management also recognizes its responsibility for conducting NYNEX
CableComms' activities under the highest standards of personal and corporate
conduct. This responsibility is accomplished by fostering a strong ethical
climate as characterized in the NYNEX Corporation ("NYNEX") Code of Business
Conduct, adopted throughout NYNEX CableComms. The Code of Business Conduct
addresses, among other things, standards of personal conduct, potential
conflicts of interest, compliance with all domestic and foreign laws,
accountability for NYNEX CableComms' property, and the confidentiality of
proprietary information.
JOHN F KILLIAN
President and Chief Executive Officer
F-2
<PAGE> 66
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders and Boards of Directors of NYNEX CableComms Group PLC and
NYNEX CableComms Group Inc.:
We have audited the accompanying combined balance sheets of NYNEX
CableComms Group PLC and NYNEX CableComms Group Inc. and their subsidiaries
("NYNEX CableComms") as of December 31, 1996 and 1995, and the related combined
statements of operations, changes in stockholders' equity and cash flows for
each of the three years in the period ended December 31, 1996 (shown on pages
F-4 through F-21). These combined financial statements are the responsibility of
NYNEX CableComms' management. Our responsibility is to express an opinion on
these combined financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the combined financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the combined
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall combined financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the combined financial position of NYNEX
CableComms as of December 31, 1996 and 1995 and the combined results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1996 in conformity with generally accepted accounting principles in
the United States.
COOPERS & LYBRAND L.L.P.
1301 Avenue of the Americas
New York, New York 10019-6013
March 19, 1997
F-3
<PAGE> 67
COMBINED STATEMENTS OF OPERATIONS
OF NYNEX CABLECOMMS GROUP PLC AND NYNEX CABLECOMMS GROUP INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------------------
NOTE 1996 1995 1994 1996
---- -------- -------- -------- --------
L L L $
[NOTE B]
IN THOUSANDS (EXCEPT PER ADS AMOUNTS)
<S> <C> <C> <C> <C> <C>
Operating revenue:
Cable television.......................... 62,413 38,728 20,002 106,870
Telecommunications -- residential......... 70,597 36,414 16,291 120,883
Telecommunications -- business............ 13,070 5,250 2,395 22,380
Installation.............................. 5,161 4,627 2,327 8,837
-------- -------- -------- --------
Total operating revenue..................... 151,241 85,019 41,015 258,970
-------- -------- -------- --------
Operating expenses:
Programming............................... 34,484 19,302 9,682 59,047
Telecommunications........................ 26,353 16,412 7,941 45,124
Depreciation and amortization............. 54,465 33,153 19,098 93,260
Staff costs............................... 45,888 45,954 30,614 78,574
Selling, general and administrative....... 50,100 50,076 41,433 85,787
-------- -------- -------- --------
Total operating expenses.................... 211,290 164,897 108,768 361,792
-------- -------- -------- --------
Operating loss.............................. (60,049) (79,878) (67,753) (102,822)
-------- -------- -------- --------
Other Income (expense):
Interest income........................... 4,889 4,059 1,355 8,371
Interest expense.......................... (23,229) (16,006) (339) (39,775)
Minority interest......................... F 55,544 72,795 (3,784) 95,108
Other..................................... -- -- 94 --
-------- -------- -------- --------
Total other income (expense)................ 37,204 60,848 (2,674) 63,704
-------- -------- -------- --------
Loss before income taxes.................... (22,845) (19,030) (70,427) (39,118)
Income taxes................................ C -- 18,591 20,906 --
-------- -------- -------- --------
Net loss.................................... (22,845) (439) (49,521) (39,118)
======== ======== ======== ========
Net loss per ADS............................ B (0.247) (0.005) (0.423)
======== ======== ========
ADSs outstanding............................ 92,549 92,500 92,549
======== ======== ========
</TABLE>
See accompanying notes to combined financial statements.
F-4
<PAGE> 68
COMBINED BALANCE SHEETS
OF NYNEX CABLECOMMS GROUP PLC AND NYNEX CABLECOMMS GROUP INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------
1996 1995 1996
NOTE -------- -------- --------
----- L L $
[NOTE B]
IN THOUSANDS (EXCEPT PER SHARE
AMOUNTS)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and temporary cash investments................ 15,430 9,807 26,421
Receivables, net of allowance of L3,536 and L1,492 M
at December 31, 1996 and 1995, respectively..... 53,041 43,551 90,822
Prepaid expenses................................... 3,273 2,653 5,604
-------- -------- --------
Total current assets................................. 71,744 56,011 122,847
Property, plant and equipment, net................... D 1,098,119 859,024 1,880,309
Goodwill, net of accumulated amortization of L2,848
and L2,138 at December 31, 1996 and 1995,
respectively....................................... 25,493 26,203 43,652
Deferred finance costs, net.......................... E 52,148 59,140 89,293
Other assets......................................... 1,383 1,401 2,368
-------- -------- --------
Total assets......................................... 1,248,887 1,001,779 2,138,469
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable................................... 62,990 69,038 107,858
Other current liabilities.......................... M 51,715 46,834 88,551
-------- -------- --------
Total current liabilities............................ 114,705 115,872 196,409
Long-term debt....................................... E 447,649 125,350 766,509
Other long-term liabilities.......................... 8,670 4,970 14,846
Minority interest.................................... F 76,577 132,121 131,123
-------- -------- --------
Total liabilities.................................... 647,601 378,313 1,108,887
-------- -------- --------
Commitments and contingencies G,J,N
STOCKHOLDERS' EQUITY
Ordinary shares -- par value L0.10 per share (1,500
million authorized, 925.5 million issued and
outstanding)....................................... 92,549 92,500 158,472
Shares of common stock -- par value $0.01 per share
(1,500 million authorized, 925.5 million issued and
outstanding)....................................... 5,766 5,763 9,873
Additional paid-in capital........................... 614,152 613,539 1,051,612
Accumulated deficit.................................. (111,181) (88,336) (190,375)
-------- -------- --------
Total stockholders' equity........................... 601,286 623,466 1,029,582
-------- -------- --------
Total liabilities and stockholders' equity........... 1,248,887 1,001,779 2,138,469
======== ======== ========
</TABLE>
See accompanying notes to combined financial statements.
F-5
<PAGE> 69
COMBINED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
OF NYNEX CABLECOMMS GROUP PLC AND NYNEX CABLECOMMS GROUP INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
ORDINARY
SHARES AND ADDITIONAL TOTAL
CAPITAL ACCUMULATED SHARES OF PAID-IN STOCKHOLDERS'
CONTRIBUTIONS DEFICIT COMMON STOCK CAPITAL EQUITY
------------- ----------- ------------ ---------- ------------
L L L L L
IN THOUSANDS
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1993....... 260,509 (38,376) -- -- 222,133
Capital contributions from
NYNEX.......................... 118,787 -- -- -- 118,787
Net loss......................... -- (49,521) -- -- (49,521)
-------- -------- ------ ------- -------
Balance, December 31, 1994....... 379,296 (87,897) -- -- 291,399
Capital contributions from NYNEX
during first quarter 1995...... 5,320 -- -- -- 5,320
Distribution of long-term loans
to NYNEX for subsequent
contribution to South limited
partner........................ (52,991) -- -- -- (52,991)
Issue of ordinary shares......... -- -- 92,500 97,588 190,088
Issue of shares of common
stock.......................... -- -- 5,763 184,326 190,089
Reclassification of NYNEX capital
contribution................... (331,625) -- -- 331,625 --
Net loss......................... -- (439) -- -- (439)
-------- -------- ------ ------- -------
Balance, December 31, 1995....... -- (88,336) 98,263 613,539 623,466
Issue of ordinary shares......... -- -- 49 550 599
Issue of shares of common
stock.......................... -- -- 3 63 66
Net loss......................... -- (22,845) -- -- (22,845)
-------- -------- ------ ------- -------
Balance, December 31, 1996....... -- (111,181) 98,315 614,152 601,286
======== ======== ====== ======= =======
</TABLE>
See accompanying notes to combined financial statements
F-6
<PAGE> 70
COMBINED STATEMENTS OF CASH FLOWS
OF NYNEX CABLECOMMS GROUP PLC AND NYNEX CABLECOMMS GROUP INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------------------
1995 1994 1996
-------- -------- --------
1996 L L $
--------
L
[NOTE B]
IN THOUSANDS
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss........................................ (22,845) (439) (49,521) (39,118)
-------- -------- -------- --------
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization................ 54,465 33,153 19,098 93,260
Amortization of deferred finance costs....... 6,500 6,637 -- 11,130
Provision for bad debts...................... 7,175 2,985 885 12,286
Minority interest............................ (55,544) (72,795) 3,784 (95,108)
Deferred income taxes........................ -- (12,754) 5,818 --
Gain on sale of capital assets............... (771) -- -- (1,320)
Changes in operating assets and liabilities:
Receivables................................ (16,665) (33,909) (7,313) (28,535)
Prepaid expenses........................... (620) (1,340) (135) (1,061)
Accounts payable........................... (2,320) (4,346) 3,214 (3,973)
Other current liabilities.................. 2,740 21,576 6,221 4,691
-------- -------- -------- --------
Total adjustments............................... (5,040) (60,793) 31,572 (8,630)
-------- -------- -------- --------
Net cash used in operating activities............. (27,885) (61,232) (17,949) (47,748)
-------- -------- -------- --------
Cash flows from investing activities:
Capital expenditures............................ (289,915) (392,417) (263,243) (496,421)
Sale of capital assets.......................... 1,199 -- -- 2,053
Loan to NYNEX................................... -- (156,889) -- --
Repayment of loan by NYNEX...................... -- 156,889 -- --
Other investing activities, net................. -- 258 (296) --
-------- -------- -------- --------
Net cash used in investing activities............. (288,716) (392,159) (263,539) (494,368)
-------- -------- -------- --------
Cash flows from financing activities:
Proceeds from borrowings........................ 322,298 245,190 52,000 551,871
Payments made on capital leases................. (1,017) -- -- (1,741)
Change in other long-term liabilities........... 943 544 418 1,614
Repayment of borrowings......................... -- (360,253) -- --
Capital contributions........................... -- 5,320 118,787 --
Activity with minority joint venture partners... -- (3,119) 174,458 --
Funding from minorities......................... -- 156,555 -- --
Deferred transaction and finance costs.......... -- (2,903) (52,179) --
Proceeds of share issue (net of L36 million
costs)....................................... -- 380,177 -- --
-------- -------- -------- --------
Net cash provided by financing activities......... 322,224 421,511 293,484 551,744
-------- -------- -------- --------
Net increase (decrease) in cash and temporary cash
investments..................................... 5,623 (31,880) 11,996 9,628
Cash and temporary cash investments at beginning
of year......................................... 9,807 41,687 29,691 16,793
-------- -------- -------- --------
Cash and temporary cash investments at end of
year............................................ 15,430 9,807 41,687 26,421
======== ======== ======== ========
</TABLE>
See accompanying notes to combined financial statements
F-7
<PAGE> 71
NOTES TO COMBINED FINANCIAL STATEMENTS OF NYNEX CABLECOMMS GROUP PLC
AND NYNEX CABLECOMMS GROUP INC. AND SUBSIDIARIES
A ORGANIZATION AND HISTORY OF NYNEX CABLECOMMS
NYNEX CableComms is a provider of both cable television and
telecommunications services in the United Kingdom.
In February 1995, two indirect wholly owned subsidiaries of NYNEX were
incorporated: NYNEX CableComms UK, a public limited company incorporated under
the laws of England and Wales, and NYNEX CableComms US, a Delaware corporation.
On June 14, 1995 NYNEX CableComms UK and NYNEX CableComms US completed the
Combined Offering in which 305 million ordinary shares of NYNEX CableComms UK
and 305 million shares of common stock of NYNEX CableComms US were issued
together as Units comprising one ordinary share and one share of common stock.
Of the 305 million Units issued, 170,222,000 were issued as Units at a price of
137p per Unit and 134,778,000 Units were issued as ADSs at a price of $21.81 per
ADS, each ADS comprising 10 Units.
Immediately prior to the completion of the Combined Offering, NYNEX
reorganized its shareholdings and partnership interests in the Companies and
partnerships that represented its cable television and telecommunications
business in the United Kingdom (the "Predecessor Businesses"), contributing them
to NYNEX CableComms UK and NYNEX CableComms US. In consideration the Companies
issued Units to a subsidiary of NYNEX, bringing NYNEX's indirect holdings in the
Companies to 620 million Units. NYNEX CableComms UK and NYNEX CableComms US then
contributed the Predecessor Businesses to NYNEX UK Holdings. The shares of NYNEX
UK Holdings are held 90% by NYNEX CableComms UK and 10% by NYNEX CableComms US.
During 1996, a further 485,389 Units were issued for nil consideration to
two former employees of NYNEX CableComms and to Nicholas Mearing-Smith, Chief
Financial Officer, pursuant to agreements entered into at the time of the
Combined Offering.
Cable & Wireless plc, Bell Canada International Inc. and NYNEX have entered
into an agreement (as amended or restated, the "Agreement") pursuant to which,
subject to the satisfaction of certain conditions precedent, the parties have
agreed to combine Mercury Communications Limited, Bell Cablemedia plc (as
enlarged by the acquisition of Videotron Holdings plc) and NYNEX CableComms
under a new holding company, Cable & Wireless Communications plc ("CWC").
Pursuant to the Agreement, CWC has offered to purchase NYNEX CableComms UK
Ordinary Shares and NYNEX CableComms US Shares of Common Stock (including shares
represented by NYNEX CableComms ADSs) in exchange for CWC ordinary shares. If
the transactions contemplated by the Agreement are consummated, among other
things, NYNEX CableComms will become a part of the combined CWC group and its
existing credit facilities would have to be repaid (absent waivers of change of
control defaults) and are expected to be terminated and replaced with a CWC
credit facility.
B SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The combined financial statements have been prepared in accordance with
accounting principles generally accepted in the United States.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Certain reclassifications have been made to the previous years' combined
financial statements in order to conform to the current year's format.
F-8
<PAGE> 72
NOTES TO COMBINED FINANCIAL STATEMENTS OF NYNEX CABLECOMMS GROUP PLC
AND NYNEX CABLECOMMS GROUP INC. AND SUBSIDIARIES -- (CONTINUED)
The combined financial statements are presented in pounds sterling ("L").
Solely for the convenience of the reader, the combined financial statements as
of and for the year ended December 31, 1996 have been presented in US dollars
("$") at the rate of L1.00 = $1.7123, the Noon Buying Rate of the Federal
Reserve Bank of New York on December 31, 1996. The presentation of the US dollar
amounts should not be construed as a representation that the pounds sterling
amounts shown could be so converted into US dollars at the rate indicated or at
any other rate.
Principles of combination
The combined financial statements present the financial position, results
of operations, and cash flows of NYNEX CableComms as if the ownership structure
described above had been in existence throughout the three-year period ended
December 31, 1996.
The historical results of the Predecessor Businesses have been included in
the combined financial statements from the date they were formed or came under
the control of NYNEX. The combined financial statements include the historical
results of each entity. Transactions between entities which are now part of
NYNEX CableComms and all significant intercompany accounts and transactions have
been eliminated in combination. Certain costs incurred by NYNEX prior to the
Combined Offering have been charged to NYNEX CableComms prior to the Combined
Offering on a direct or allocated basis. Such costs are not substantially
different from those which NYNEX CableComms would have incurred on a stand-alone
basis.
Accumulated deficit in the combined balance sheets represents all profits
and losses since inception of the Predecessor Businesses.
Cash and temporary cash investments
Temporary cash investments, which are considered cash equivalents for cash
flow reporting purposes, are liquid investments with maturities of three months
or less and are stated at cost.
Investments
Investments in affiliated companies, representing investments in which
NYNEX CableComms' ownership interest is between 20% and 50%, are accounted for
using the equity method. Investments in which the ownership interest is less
than 20% are accounted for using the cost method and approximate fair value.
Investments are included in Other assets.
Franchise costs
Costs of successful franchise applications are capitalized and amortized
over the life of the franchise license and included in Other assets. Costs of
unsuccessful franchise applications are charged to expense.
Goodwill
Goodwill arising from the acquisition of companies holding the right to
construct and operate cable television and telecommunications networks
represents the excess of cost over the fair value of net assets acquired.
Goodwill is amortized on a straight-line basis over 40 years, the estimated
useful life of the network. Goodwill that is not expected to be recoverable
based on undiscounted cash flow analyses is accounted for as an impairment of
value. No such impairment has occurred.
Property, plant and equipment
Property, plant and equipment is stated at cost. Cost includes materials,
direct labor and overhead expenses directly attributable to the design,
construction and installation of NYNEX CableComms' cable
F-9
<PAGE> 73
NOTES TO COMBINED FINANCIAL STATEMENTS OF NYNEX CABLECOMMS GROUP PLC
AND NYNEX CABLECOMMS GROUP INC. AND SUBSIDIARIES -- (CONTINUED)
television and telecommunications network. Interest on borrowings to finance
network construction is capitalized to the extent that it is incurred during the
construction period.
Depreciation is computed on a straight-line basis over the estimated useful
lives of the assets. After a portion of the network is fully constructed and
released to sales, NYNEX CableComms commences depreciation of that part of the
network, at the earlier of (i) three months after that release, and (ii) when
customer levels reach 10% of total possible customers for that part of the
network.
Deferred finance costs
Costs of financing arrangements are capitalized and amortized over the
periods of the related financing arrangements on a straight-line basis.
Interest rate derivatives
NYNEX CableComms manages certain exposures to interest rate fluctuations
through interest rate swaps and instruments similar to options. Premiums paid
for option-type instruments are capitalized and amortized to interest expense
over the term of the option. Unamortized premiums are included in Deferred
finance costs. Gains and losses related to swaps and options used as hedges are
deferred and recognized in income when the hedged transaction occurs.
Revenue recognition
Cable television charges and telecommunications line rental charges are
billed in advance and recognized when earned. Other telecommunications revenues
are recognized as services are provided. Residential and business installation
revenues are recognized in full upon installation to the extent of direct
selling costs incurred. Revenue from the sale of managed fiber network is
recognized upon completion of that network.
Pre-operating costs
Costs incurred between the time a franchise license is awarded and
connection of the first customer are charged to expense as incurred.
Advertising and promotion costs
Advertising and promotion costs are expensed as incurred, and amounted to
L9.5 million, L7.3 million and L4.6 million for the years ended December 31,
1996, 1995 and 1994, respectively.
Computer software costs
The cost of computer software acquired or developed for internal use is
expensed as incurred. Initial right-to-use fees for switching equipment,
including initial operating system and initial application software costs, are
capitalized and amortized over 5 years. Software updates and maintenance costs
are expensed as incurred.
Income taxes
NYNEX CableComms follows the provisions of Statement of Financial
Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes". SFAS No.
109 requires that deferred tax assets and liabilities be measured based on the
enacted tax rates that will be in effect in the periods in which temporary
differences are expected to reverse.
F-10
<PAGE> 74
NOTES TO COMBINED FINANCIAL STATEMENTS OF NYNEX CABLECOMMS GROUP PLC
AND NYNEX CABLECOMMS GROUP INC. AND SUBSIDIARIES -- (CONTINUED)
Foreign currencies
Transactions denominated in foreign currencies are translated into pounds
sterling using the rate of exchange in effect on the date of the transaction.
Assets and liabilities denominated in foreign currencies are translated using
the rate of exchange in effect on the balance sheet date. Exchange gains or
losses resulting from transactions in foreign currencies are included in results
of operations.
Minority interest
Minority interest represents the interests of third parties in partnerships
in which NYNEX CableComms has a controlling interest.
Minority interest is the net amount of capital contributed to the
partnerships by the minority partners, adjusted by their share of allocated
losses or profits arising since the inception of the partnerships, as calculated
in accordance with the respective partnership agreement.
Prior to the reorganization of the South financing arrangement on March 31,
1995 (see Note E) and the introduction of the limited partner in the South,
Minority interest included the unamortized balance of deferred transaction costs
including interest rate derivative costs.
Long-lived assets
Effective January 1, 1996, NYNEX CableComms adopted SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to be
Disposed of". SFAS No. 121 requires that long-lived assets be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of the asset in question may not be recoverable. Adoption of
SFAS No. 121 did not have a material effect on NYNEX CableComms' results of
operations, cash flows or financial position as NYNEX CableComms' previous
policy was similar, in all material aspects, to SFAS No. 121.
Net loss per ADS
Net loss per ADS is based on the weighted average number of ADSs
outstanding during the period and ADS equivalents outstanding during the period,
computed in accordance with the treasury stock method.
C INCOME TAXES
The components of the income tax benefit (expense) are as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------------------
1995 1994 1996
-------- -------- --------
1996 L L $
--------
L
(IN THOUSANDS)
<S> <C> <C> <C> <C>
US TAXATION
Federal:
Current tax expense............................. -- (505) -- --
Current -- receipt for US tax losses utilized by
NYNEX........................................ -- 6,600 25,539 --
Deferred -- net................................. -- 12,754 (5,818) --
-------- -------- -------- --------
-- 18,849 19,721 --
State and local, net of federal benefit......... -- 385 1,185 --
UK TAXATION
Current tax expense............................. -- (643) -- --
-------- -------- -------- --------
Total............................................. -- 18,591 20,906 --
======== ======== ======== ========
</TABLE>
F-11
<PAGE> 75
NOTES TO COMBINED FINANCIAL STATEMENTS OF NYNEX CABLECOMMS GROUP PLC
AND NYNEX CABLECOMMS GROUP INC. AND SUBSIDIARIES -- (CONTINUED)
The US and UK tax expense in 1995 represents the tax payable on the
interest earned from investing cash received from the proceeds of the issuance
of shares in June 1995.
A reconciliation between the US federal income tax benefit (expense)
computed at the statutory rate of 35% and the effective tax benefit is as
follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
-----------------------------------------
1995 1994 1996
-------- -------- --------
1996 L L $
--------
L
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Federal income tax benefit computed at statutory
rate................................................ 7,995 6,660 24,649 13,690
State and local income taxes (net of federal tax
benefit)............................................ -- 385 1,185 --
Valuation allowance................................... (8,245) 8,120 (3,779) (14,118)
Reversal of deferred tax liability.................... -- 12,754 -- --
Adjustment to federal income tax benefit for foreign
non-consolidated members............................ 477 (8,969) (292) 817
Other................................................. (227) 284 (857) (389)
UK current tax expense................................ -- (643) -- --
-------- -------- -------- --------
Total tax benefit..................................... -- 18,591 20,906 --
======== ======== ======== ========
</TABLE>
The components of deferred tax assets and liabilities are as follows:
<TABLE>
<CAPTION>
1996 1995
---------------------- ----------------------
LIABILITIES ASSETS LIABILITIES
----------- -------- -----------
ASSETS L L L
--------
L
(IN THOUSANDS)
<S> <C> <C> <C> <C>
US deferred tax assets due to:
Pre operating costs................................... 1,340 -- -- --
Depreciation and amortization......................... -- 10,279 -- --
Other................................................. 208 375 -- --
US net operating loss carry forward................... 19,032 -- 1,681 --
-------- ----------- -------- -----------
20,580 10,654 1,681 --
Valuation allowance................................... (9,926) -- (1,681) --
-------- ----------- -------- -----------
10,654 10,654 -- --
-------- ----------- -------- -----------
Net deferred tax liabilities.......................... -- -- -- --
======== ======== ======== ========
</TABLE>
At December 31, 1996 there is also a deferred tax asset in relation to UK
operating losses carried forward of L70.5 million (1995: L70.3 million). A full
valuation allowance has been provided against this amount.
At December 31, 1996, the NYNEX UK Holdings consolidated group has US net
operating losses ("NOLs") available for carry forward of approximately L54.0
million (1995: L7.0 million). These NOLs will start to expire on December 31,
2010 because under US tax law, the NOLs have a fifteen year carry forward
period.
Prior to June 14, 1995 NYNEX CableComms' US corporations were included in
the NYNEX consolidated federal income tax return and in New York State and New
York City combined income tax filings. While included in the NYNEX tax filings,
NYNEX CableComms' US corporations were allocated payments in accordance with the
effect their losses had on reducing the consolidated group's taxable income. As
a result of the reorganization which occurred immediately prior to the
completion of the NYNEX CableComms' initial public offering on June 14, 1995,
NYNEX CableComms and its US corporations do not qualify to be included in the
NYNEX consolidated US federal tax return or in any state or local combined tax
F-12
<PAGE> 76
NOTES TO COMBINED FINANCIAL STATEMENTS OF NYNEX CABLECOMMS GROUP PLC
AND NYNEX CABLECOMMS GROUP INC. AND SUBSIDIARIES -- (CONTINUED)
returns. As a result, for tax periods after June 14, 1995, equivalent payments
have not been made to NYNEX CableComms by NYNEX for any further losses generated
and NYNEX UK Holdings and its US subsidiaries have been treated as a
consolidated group of corporations for US tax return purposes. However, neither
NYNEX CableComms UK nor NYNEX CableComms US have been consolidated with NYNEX UK
Holdings, or its subsidiaries for US tax purposes. As a result, NYNEX CableComms
UK and NYNEX CableComms US will file their own US federal tax returns separately
from NYNEX UK Holdings.
D PROPERTY, PLANT AND EQUIPMENT, NET
The components of property, plant and equipment, net, are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, ESTIMATED
-------------------- USEFUL
1996 1995 LIVES
-------- -------- -----------
L L
(IN THOUSANDS)
<S> <C> <C> <C>
Network.................................................. 661,458 464,337 40 years
Cable.................................................... 95,182 74,295 15-20 years
Electronic equipment..................................... 304,415 211,622 5-10 years
Buildings and leasehold improvements..................... 37,694 35,097 25 years
Other.................................................... 50,789 41,559 4-5 years
-------- --------
Total depreciable property, plant and equipment.......... 1,149,538 826,910
Less: accumulated depreciation........................... (115,154) (62,270)
-------- --------
1,034,384 764,640
Land..................................................... 1,262 1,189
Plant under construction and other....................... 62,473 93,195
-------- --------
Total property, plant and equipment, net................. 1,098,119 859,024
======== ========
</TABLE>
E FINANCING OF NYNEX CABLECOMMS
Financing arrangements
At December 31, 1996, NYNEX CableComms was party to two broadly similar
financing arrangements, one for the Northern Operating Companies and one for the
Southern Operating Companies.
Under the arrangements, two entities related to NYNEX (the "limited
partners") provide credit facilities to the Operating Companies and invest
capital, through limited partnership interests, in partnerships controlled by
NYNEX CableComms. Deferred finance costs of L23.0 million for the Southern
arrangement and L42.0 million for the North arrangement were incurred in
December 1993 and December 1994, respectively.
Credit facilities
The credit facilities are for a maximum of L542.5 million in the case of
the Northern Operating Companies and L274.0 million in the case of the Southern
Operating Companies. An additional L157.5 million is available under the North
financing arrangement to expand the network into additional franchise areas if
such franchises are acquired prior to December 31, 1998.
The facilities are in the form of revolving loans which require interest
only payments. Interest accrues at a fluctuating rate based on Sterling London
InterBank Offered Rate ("LIBOR") plus a margin, which was 1.2% at December 31,
1996 and 1995 for the North financing arrangement and 1.5% at December 31, 1996
and 1995 for the South financing arrangement. The revolving loans are expected
to convert to term loans on
F-13
<PAGE> 77
NOTES TO COMBINED FINANCIAL STATEMENTS OF NYNEX CABLECOMMS GROUP PLC
AND NYNEX CABLECOMMS GROUP INC. AND SUBSIDIARIES -- (CONTINUED)
December 31, 1998, for the South financing arrangement and December 31, 1999 for
the North financing arrangement requiring quarterly repayments of principal
thereafter.
NYNEX CableComms has entered into two forward sterling interest rate swaps
with NYNEX to reduce potential exposure to interest rate risk on floating rate
financing arrangements (See Note G).
Limited partnership interests
In addition to providing credit facilities to the Northern and Southern
Operating Companies, the limited partners also have limited partnership
interests in partnerships (the "North Partnership" and the "South Partnership")
controlled by NYNEX CableComms. Under the partnership agreements the limited
partners generally have a 15% interest in all items of income, gain, loss
deduction or credit. Further details of these interests are set out in Note F.
The North and South Partnerships are included in the combined financial
statements. The limited partners are entitled to distributions if declared and
their capital contributions in the North and South Partnerships are reflected in
Minority interest. The revolving loans from the limited partners to the Northern
and Southern Operating Companies are reflected in Long-term debt.
NYNEX financing facility
NYNEX has entered into a further credit facility directly with NYNEX
CableComms to make available up to L200.0 million (the "NYNEX Facility") to be
borrowed at NYNEX CableComms' option at an interest rate of 3 month Sterling
LIBOR plus 4.0%. NYNEX CableComms may make drawings under this facility at any
time before May 31, 1997. Any amounts borrowed under the facility are to be
repaid in full by May 31, 1998. No drawings have yet been made on this facility.
Guarantees from NYNEX
NYNEX provides guarantees to those parties unrelated to NYNEX who are
members of the limited partners (the "Third Parties") on the performance of its
subsidiaries, and completion guarantees for the first five years of the
agreements that require a specified number of homes to be passed. If the
construction program does not meet certain tests (including, but not limited to,
certain financial ratios and franchise license compliance), the completion
guarantee will necessitate payments to be made to the Third Parties by NYNEX.
NYNEX also provides indemnifications to these entities, among others, in respect
of certain liabilities, including all liability, loss or damage incurred as a
result of any breach of the agreements set forth, and tax indemnifications
relating to events prior to the creation of the North and South Partnerships and
the North and South limited partners.
Covenants and securities
The revolving loans are unsecured obligations of the Operating Companies.
However, NYNEX CableComms has pledged its interests in the North and South
Partnerships as collateral for repayment of the North and South revolving loans,
respectively, and significant restrictions exist on the rights of the Operating
Companies to encumber any assets or incur any additional indebtedness. The North
and South Partnerships hold substantially all of the ordinary share capital of
the Operating Companies.
Purchase option
The Companies have certain rights to purchase the equity interests held by
the limited partners. The purchase option provides for the acquisition of these
equity interests at a price equal to fair market value, but in no event less
than the unrecovered investment of the limited partners. Under certain
circumstances,
F-14
<PAGE> 78
NOTES TO COMBINED FINANCIAL STATEMENTS OF NYNEX CABLECOMMS GROUP PLC
AND NYNEX CABLECOMMS GROUP INC. AND SUBSIDIARIES -- (CONTINUED)
following the occurrence of certain adverse events, the failure to purchase the
limited partner's interest could result in a liquidation of the North and South
Partnerships.
Interest on borrowings
Interest on borrowings to finance network construction is capitalized to
the extent that it is incurred during the construction period. Interest costs
amounted to L29.2 million, L18.8 million and L0.5 million for the years ended
December 31, 1996, 1995 and 1994, respectively, of which L6.0 million, L2.8
million and L0.2 million was capitalized, respectively.
F MINORITY INTEREST
Minority interest reflects the limited partners' interest in the North and
South Partnerships (see Note E).
The limited partners have contributed L211.7 million as of December 31,
1996 and 1995. The Minority interest in the North Partnership and South
Partnership was L18.8 million and L57.8 million at December 31, 1996,
respectively, and L76.2 million and L55.9 million at December 31, 1995,
respectively.
Under the agreements, NYNEX CableComms generally has an 85% interest, and
the limited partners generally have a 15% interest, in items of income, gain,
loss, deduction or credit, except in respect of the initial losses and profits
(being specified amounts of profits or losses calculated in accordance with US
tax principles) of the relevant Partnership. The North and South Partnerships
generally have an 85% interest in the North and South Operating Companies,
respectively.
Initial losses up to a maximum cumulative amount of L200.0 million for the
North Partnership and L40.0 million for the South Partnership will be allocated
to the limited partners. Subsequent losses will be wholly allocated to NYNEX
CableComms until its share of the cumulative losses of the relevant Partnership
is equal to 85% of such cumulative losses. Losses thereafter, if any, will be
allocated 85% to NYNEX CableComms and 15% to the limited partners. Initial
profits will be allocated between NYNEX CableComms and the limited partners in
proportion to the cumulative losses allocated to each partner until such losses
have been fully offset by profits. Thereafter, all profits are to be allocated
85% to NYNEX CableComms and 15% to the limited partners. Initial losses for the
South Partnership reached L40.0 million in the first quarter of 1996. Initial
losses for the North Partnership have not yet reached L200.0 million.
For the purposes of preparing the combined financial statements, the profit
or loss of the relevant Partnership is allocated between NYNEX CableComms and
the limited partners in accordance with the profit and loss allocations set out
in the relevant agreement.
G FINANCIAL INSTRUMENTS
Interest rate derivatives
NYNEX CableComms has only limited involvement with derivative financial
instruments and does not use them for trading purposes. They are used to manage
well-defined interest rate risks.
Off-balance-sheet risk and concentrations of credit risk
NYNEX CableComms has entered into two forward sterling interest rate swaps
with NYNEX to reduce potential exposure to interest rate risks inherent in the
North and South financing arrangements. Under the interest rate swaps, NYNEX
CableComms agreed to exchange with NYNEX, on a quarterly basis, the difference
between fixed-rate (9.15% for the North and 7.02% for the South) and
floatingrate 3 month Sterling LIBOR interest amounts calculated by reference to
an agreed notional principal amount. The notional principal amounts of the swaps
are L700.0 million and L273.7 million for swaps entered into on December 31,
1994 and December 31, 1993, respectively. The net effect of the interest rate
swaps is to fix the
F-15
<PAGE> 79
NOTES TO COMBINED FINANCIAL STATEMENTS OF NYNEX CABLECOMMS GROUP PLC
AND NYNEX CABLECOMMS GROUP INC. AND SUBSIDIARIES -- (CONTINUED)
net cash outflow of NYNEX CableComms with respect to 3 month Sterling LIBOR to
9.15% and 7.02% of the appropriate financing arrangement. In order to correspond
to the underlying financing arrangements for the North and the South, the
effective date of the swaps is the first payment date after January 1, 2000 for
the North and January 1, 1999 for the South. The swaps expire by December 31,
2004 and 2003, respectively.
In addition, NYNEX CableComms has entered into two agreements with NYNEX to
reduce the notional amount of the interest rate swaps at NYNEX CableComms'
option. The notional amount may be reduced at any time, and periodically in
whole or in part, without any penalty or additional payments. The effective
dates and expiration dates of these options are the same as the swap
transactions. NYNEX CableComms paid premiums of L18.3 million and L7.0 million,
in respect of the North and South financing arrangements, respectively, which
are being amortized over the life of the options.
Both the interest rate swaps and the options are marked to market with
gains and losses deferred until the effective date, at which time deferred gains
or losses will be amortized over the remaining term. Gains deferred in respect
of these two instruments were L2.4 million and L2.9 million at December 31,
1996, and 1995 respectively, and losses deferred were L8.8 million and L5.9
million at December 31, 1996 and 1995 respectively.
These transactions primarily involve risk associated with changes in
interest rates, which is mitigated by payment of a fixed rate to the
counterparty, NYNEX. Since this is a related party transaction, the management
of NYNEX CableComms believes that any risk associated with counterparty
non-performance is remote. The remaining risk is limited to situations where the
floating rates become lower than the fixed rates. The settlement of these
transactions is not expected to have a material adverse effect upon NYNEX
CableComms' financial position or results of operations.
Fair value of financial instruments
The following methods and assumptions were used to estimate the fair value
of each type of financial instrument:
Long-term debt. The carrying value of outstanding revolving loans is based
on the net book value and approximates fair value at December 31, 1996 and 1995.
Due to the revolving nature of these loans, along with the variable rate of
interest charged, NYNEX CableComms will repay and reborrow any loans that
diverge from fair value.
Interest rate derivatives. The estimated fair value is based on amounts
NYNEX CableComms would pay or receive to enter into similar instruments, taking
into account current market rates. The estimated fair value of derivatives was
L13.2 million and L19.0 million at December 31, 1996 and 1995, respectively.
H EMPLOYEE BENEFITS
NYNEX CableComms has established a defined contribution pension plan to
which it contributes up to specified percentages of annual compensation for
employees who are members of the plan. Participating employees contribute a
percentage of their annual compensation based on their age and length of
service. Company contributions are based on employee contributions and service
completed in the plan. Employee contributions are fully vested. Employer
contributions become vested after two years of qualifying service in the plan.
Substantially all employees are eligible to participate in the plan.
Administration and investment charges involved in running the plan are paid by
NYNEX CableComms. NYNEX CableComms' contributions and expenses in maintaining
the plan were L362,000, L313,000 and L272,000 for the year ended December 31,
1996, 1995 and 1994, respectively.
NYNEX CableComms does not sponsor a defined benefit pension plan nor does
it provide any significant postemployment or postretirement benefits.
F-16
<PAGE> 80
NOTES TO COMBINED FINANCIAL STATEMENTS OF NYNEX CABLECOMMS GROUP PLC
AND NYNEX CABLECOMMS GROUP INC. AND SUBSIDIARIES -- (CONTINUED)
I STOCK OPTION PLANS
The Companies operate two stock option plans, details of which are set out
below:
Employee Share Option Plan
The Employee Share Option Plan ("ESOP") was adopted in connection with the
Combined Offering to provide share options to employees and executive officers
of NYNEX CableComms. Employees and executive officers are eligible to
participate if they are contracted to work at least 20 hours a week (in the case
of employees) or 25 hours a week (in the case of Directors) and are not expected
to retire within two years of the date on which options are granted.
Options are granted in Units. The option price for each Unit so far granted
is 137p (the listing price on June 14, 1995). The price of any further options
granted will be the average of the middle market quotations as derived from the
Official List of the London Stock Exchange during the three trading days
immediately preceding the date on which options are granted. No option may be
granted to a participant which would, at the date of grant, cause the total of
the aggregate market value of Units comprised in such option to exceed the
greater of four times the amount of the participant's annual remuneration or
L100,000. From April 29, 1996, the aggregate market value of NYNEX CableComms
Units which can be granted under options to a participant is governed by the
limit introduced by the Finance Act 1996. The number of options which can be
granted is currently limited to 23.1 million. Options granted under the plan are
not transferable and generally may only be exercised within three to ten years
after the date of grant, after which it will lapse. The exercise of an option
will be subject to objective performance related conditions as have and may be
determined by the Remuneration Committee which administers the ESOP. Options
granted were 11,644,893 at each of December 31, 1996 and 1995, and options
outstanding were 8,670,440 and 10,791,089 at December 31, 1996 and 1995,
respectively, with the balance having been forfeited.
SAYE Plan
The NYNEX CableComms Savings-Related Share Option Plan (the "SAYE Plan")
was also adopted in connection with the Combined Offering. An eligible employee
who wishes to participate in the SAYE Plan must take out a Save-As-You-Earn
("SAYE") contract with a building society to save a regular sum of between L10
and L250 each month for five years. At the end of the SAYE contract (which can
be a term of five or seven years), the participant is entitled to a bonus
payable by the building society and may use the amount saved and the bonus to
purchase shares at the option price. An option granted under the SAYE plan is
not transferable and generally may only be exercised within the period of six
months commencing at the end of the SAYE contract.
Options are granted in Units. The option price per Unit granted in 1995,
which may not be less than 80% of the market value of such Units, is 111p, being
80% of the price of Units on the date of the Combined Offering. The option price
per Unit granted in 1996 is 85.5p. This option price, as with the price of any
further options granted, may not be less than 80% of the average of the middle
market quotations as derived from the Official List of the London Stock Exchange
during the three days immediately preceding the date invitations to apply for
options are issued. Options granted were 6,195,282 and 2,908,333 at December 31,
1996 and 1995, respectively, and options outstanding were 4,783,631 and
2,834,487 at December 31, 1996 and 1995, respectively, with the balance having
been forfeited.
Accounting for stock based compensation
NYNEX CableComms has adopted the disclosure only provisions of SFAS No. 123
- - -- "Accounting for Stock Based Compensation", as of December 31, 1996. If NYNEX
CableComms had elected to recognize compensation costs for the ESOP and SAYE
plan based on the fair value at the grant dates for awards under the plans,
consistent with the methods prescribed by SFAS No. 123, net loss and loss per
ADS would not have
F-17
<PAGE> 81
NOTES TO COMBINED FINANCIAL STATEMENTS OF NYNEX CABLECOMMS GROUP PLC
AND NYNEX CABLECOMMS GROUP INC. AND SUBSIDIARIES -- (CONTINUED)
been materially affected, as a significant portion of the additional expense
would be allocated to the Minority interest. The effects of applying the
Statement for this period may not be representative of the effects on reported
net loss and net loss per ADS in future years.
J LEASES
NYNEX CableComms leases certain properties and equipment used in its
operations.
a) Capital leases
The following is an analysis of the leased property under capital leases by
major classes:
<TABLE>
<CAPTION>
ASSET BALANCES AT
DECEMBER 31,
-------------------
CLASS OF PROPERTY 1995
- - ----------------------------------------------------------------------- -------
1996 L
-------
L
(IN THOUSANDS)
<S> <C> <C>
Computer related assets................................................ 8,350 1,813
Less: accumulated depreciation......................................... (494) (171)
----- -----
Total computer related assets, net..................................... 7,856 1,642
===== =====
</TABLE>
At December 31, 1996, the future minimum lease payments under capital
leases, together with the present value of the net minimum lease payments, for
the periods shown are as follows:
<TABLE>
<CAPTION>
CAPITAL
--------------
L
(IN THOUSANDS)
<S> <C>
Year ending
1997........................................................................... 3,064
1998........................................................................... 3,025
1999........................................................................... 1,934
2000........................................................................... --
2001........................................................................... --
Thereafter..................................................................... --
-----
Net minimum lease payments..................................................... 8,023
Less amount representing interest.............................................. (671)
-----
Present value of net minimum lease payments.................................... 7,352
=====
</TABLE>
b) Operating leases
The rental costs arising from operating leases are expensed in the year
they are incurred. Rental expense was L5.6 million, L4.8 million, and L3.3
million for the year ended December 31, 1996, 1995 and 1994, respectively.
F-18
<PAGE> 82
NOTES TO COMBINED FINANCIAL STATEMENTS OF NYNEX CABLECOMMS GROUP PLC
AND NYNEX CABLECOMMS GROUP INC. AND SUBSIDIARIES -- (CONTINUED)
At December 31, 1996, the minimum lease commitments under noncancelable
leases with terms of up to 25 years for the periods shown are as follows:
<TABLE>
<CAPTION>
OPERATING
--------------
L
(IN THOUSANDS)
<S> <C>
1997........................................................................... 9,800
1998........................................................................... 11,495
1999........................................................................... 10,658
2000........................................................................... 9,179
2001........................................................................... 3,050
Thereafter 28,456
------
Present value of net minimum lease payments 72,638
======
</TABLE>
Expiring leases are expected to be renewed or replaced by other leases in
the normal course of business.
K RELATED PARTY TRANSACTIONS
Transactions with Affiliates
NYNEX CableComms has entered into a trademark licence agreement dated May
15, 1995 between NYNEX and NYNEX CableComms and NYNEX CableComms Limited, under
which NYNEX CableComms and NYNEX CableComms Limited are required to pay L4.0
million per annum for five years for use of the "NYNEX" name, and services and
secondment agreements dated May 15, 1995 pursuant to which NYNEX and its
subsidiaries provide certain services and secondees at an arm's length cost to
NYNEX CableComms. The agreements cover both the scope and cost of such services.
NYNEX makes certain payments on behalf of NYNEX CableComms, including
purchases of equipment and payments of certain expenses. These payments amounted
to L6.6 million, L5.3 million, and L29.2 million in 1996, 1995 and 1994,
respectively.
Under an agreement dated May 15, 1995 between NYNEX and NYNEX UK CableComms
Holdings Inc. (as amended by a Supplemental Facility Agreement dated March,
1996), NYNEX has also made available to NYNEX CableComms a credit facility of
L200.0 million from 1 June 1996.
Prior to June 14, 1995, NYNEX CableComms received and was charged for
certain corporate governance and ownership services provided by NYNEX and
certain of its subsidiaries. These services included technical expertise and
system development work in the areas of network planning, design and operations,
evaluation of new technologies and architectures for the franchises, accounting
and tax support, technical support, data processing and related services,
material management services, human resources and planning and payroll
administration for individuals who have been seconded to NYNEX CableComms. The
costs of these services were allocated to NYNEX CableComms through intercompany
billings. The management of NYNEX CableComms believes that the allocation
methodologies, as described below, provided a reasonable basis for allocating
costs to NYNEX CableComms, which totaled L2.6 million and L4.3 million for 1995
and 1994, respectively.
In respect of charges prior to June 14, 1995, NYNEX and its subsidiaries
regularly conducted studies to identify on whose behalf functions were being
performed. Directly charged costs which applied exclusively to one subsidiary
were charged only to that subsidiary. Directly attributable costs which applied
to more than one subsidiary were allocated based on usage, specific work plans,
and relative size (composite of employees and assets) of the applicable
subsidiaries. Indirectly attributable and unattributable costs for services
performed on behalf of all subsidiaries were allocated based on the relative
size of the subsidiaries.
F-19
<PAGE> 83
NOTES TO COMBINED FINANCIAL STATEMENTS OF NYNEX CABLECOMMS GROUP PLC
AND NYNEX CABLECOMMS GROUP INC. AND SUBSIDIARIES -- (CONTINUED)
For additional discussion of related party transactions, see Notes E, F and
G.
L SUPPLEMENTAL CASH FLOW INFORMATION
The following information is provided in accordance with SFAS No. 95,
"Statement of Cash Flows":
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------------
1996 1995 1994 1996
------- ------- ------- -------
L L L $
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Interest payments................................. 22,756 15,258 101 38,965
------- ------- ------- -------
Property, plant and equipment acquired by
incurring directly related liabilities.......... 67,577 63,953 51,183 115,712
------- ------- ------- -------
Issuance of ordinary shares and common stock in
relation to deferred compensation............... 665 -- -- 1,139
------- ------- ------- -------
Accrued transaction and finance costs............. -- -- 2,903 --
------- ------- ------- -------
</TABLE>
M ADDITIONAL FINANCIAL INFORMATION
Receivables, net, consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------
1995 1996
------- -------
1996 L $
-------
L
(IN THOUSANDS)
<S> <C> <C> <C>
Accounts receivable......................................... 20,882 10,612 35,756
Value Added Tax receivable.................................. 5,798 12,153 9,928
Amounts due from parent and its subsidiaries................ 8,702 6,808 14,901
Data processing costs repayment............................. 10,000 10,000 17,123
Contractor damages.......................................... 1,087 1,375 1,861
Other....................................................... 6,572 2,603 11,253
------- ------- -------
Total....................................................... 53,041 43,551 90,822
======= ======= =======
</TABLE>
Other current liabilities consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------
1995 1996
------- -------
1996 L $
-------
L
(IN THOUSANDS)
<S> <C> <C> <C>
Amounts owed to parent and its subsidiaries................. 10,160 -- 17,397
Accrued programming costs................................... 5,806 4,920 9,942
Deferred income............................................. 6,783 4,624 11,614
Other....................................................... 28,966 37,290 49,598
------- ------- -------
Total....................................................... 51,715 46,834 88,551
======= ======= =======
</TABLE>
N LITIGATION AND OTHER CONTINGENCIES
Various legal actions and proceedings are pending that may affect NYNEX
CableComms. While counsel for NYNEX CableComms cannot give assurance as to the
outcome of any of these matters, in the opinion of the management of NYNEX
CableComms based upon the advice of counsel for NYNEX CableComms, the
F-20
<PAGE> 84
NOTES TO COMBINED FINANCIAL STATEMENTS OF NYNEX CABLECOMMS GROUP PLC
AND NYNEX CABLECOMMS GROUP INC. AND SUBSIDIARIES -- (CONTINUED)
ultimate resolution of these matters in future periods is not expected to have a
material effect on NYNEX CableComms' financial position, operating results or
cash flows.
O QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
FOR THE QUARTERS ENDED
------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
--------- -------- ------------- ------------
L L L L
(IN THOUSANDS, EXCEPT PER ADS AND MARKET PRICE
AMOUNTS)
<S> <C> <C> <C> <C>
1996
Operating revenues............................. 32,521 35,529 40,818 42,373
Operating loss................................. (19,220) (15,566) (12,085) (13,178)
Net loss....................................... (9,353) (4,133) (5,199) (4,160)
Net loss per ADS............................... (0.101) (0.045) (0.056) (0.045)
Market price:sec.
High......................................... $ 17 $ 19 1/4 $17 1/8 $ 19 5/8
Low.......................................... $ 13 $ 15 7/8 $13 1/4 $ 13 7/8
1995
Operating revenues............................. 16,904 18,364 21,807 27,944
Operating loss................................. (22,081) (25,324) (21,443) (11,030)
Net (loss) profit.............................. (3,618) 3,065 2,252 (2,138)
Net (loss) profit per ADS...................... (0.04) 0.03 0.02 (0.02)
Market price:sec.
High......................................... -- $ 22 $ 23 $ 22 5/8
Low.......................................... -- $ 19 1/4 $ 18 $ 17 3/8
</TABLE>
- - ---------------
sec. Market prices are those published by the Nasdaq National Market and are
based on the middle market quotations derived from Datastream
International.
F-21
<PAGE> 85
EXHIBIT INDEX
<TABLE>
<CAPTION>
PAGE
EXHIBIT NO. DESCRIPTION NUMBER
- - ----------- ----------- ------
<S> <C> <C>
10.11(a) Letter Agreement on Interconnect Charges dated July 19,
1996 between BT and NYNEX CableComms Bolton. (Identical
agreements have been entered into between BT and
fifteen other affiliates of the Registrants).
10.11(b) Letter Agreement on Interconnect Charges dated July 19,
1996 between BT and NYNEX CableComms Bolton. (Identical
agreements have been entered into between BT and fifteen
other affiliates of the Registrants).
10.11(c) Letter Agreement on Review of certain aspects of the
Interconnect Agreement dated July 19, 1996 between BT
and NYNEX CableComms Bolton. (Identical agreements have
been entered into between BT and fifteen other affiliates
of the Registrants).
10.11(d) Letter Agreement on Interconnect Charges dated July 19,
1996 between BT and NYNEX CableComms Bolton. (Identical
agreements have been entered into between BT and fifteen
other affiliates of the Registrants).
10.11(f) Letter Agreement on conveyancing termination rate dated
June 13, 1996, between BT and NYNEX CableComms Bolton.
(Identical agreements have been entered into between
BT and fifteen other affiliates of the Registrants).
10.11(g) Letter Agreement on Interconnect Charges dated December
19, 1996, between BT, the Operating Companies and
NYNEX CableComms Limited.
10.12 Interconnection Agreement, dated November 11, 1996,
between Mercury Communications Limited and NYNEX
CableComms Limited.
10.12(a) Agreement settling payment for backdated claims relating to
Interconnect Charges ("Interconnect") dated November 11, 1996,
between Mercury Communications Limited and NYNEX CableComms
Limited.
10.12(b) Agreement dated November 11, 1996 between Mercury Communications
Limited and NYNEX CableComms Limited regarding mobile charges.
10.12(c) Amendment to Interconnection Agreement, dated February 11, 1997
between Mercury Communications Limited and NYNEX CableComms
Limited.
10.17(b) Agreement, dated October 1, 1996, between NYNEX CableComms
Limited, John F. Killian, NYNEX CableComms Group PLC and NYNEX
CableComms Group Inc. amending the terms of the Service
Agreement between the same parties.
10.20(b) Second Amendment to Secondment Agreement, dated October 1,
1996, between NYNEX CableComms Limited and NYNEX Worldwide
Services Group, Inc. with respect to John F. Killian.*
10.22(a) Amendment to Letter of Appointment, dated July 11, 1996, among
John L. Rennocks, NYNEX CableComms Group PLC and NYNEX
CableComms Group Inc.
10.37(a) Supplemental Facility Agreement amending the Facility
Agreement dated March , 1996, between NYNEX UK
CableComms Holdings, Inc. and NYNEX Corporation.
10.39(b) Second Amendment to Assignment Letter, dated October 1,
1996, among NYNEX Corporation, NYNEX Worldwide Services
Group, Inc. and John F. Killian.*
10.44(a) Letter Agreement amending Programming dated [July/August]
, 1995 between British Sky Broadcasting Limited,
British Sky Broadcasting Group PLC, NYNEX CableComms
Limited and the Operating Companies.
10.45 Letter of Appointment, dated July 11, 1996, among Sir Bryan
Carsberg, NYNEX CableComms Group PLC and NYNEX CableComms Group
Inc.
10.46 Letter of Appointment, dated July 11, 1996, among Mel Meskin,
NYNEX CableComms Group PLC and NYNEX CableComms Group Inc.
10.47 Letter of Termination, dated April 16, 1996, among Jeff Henry,
NYNEX CableComms Group PLC and NYNEX CableComms Group Inc.
10.48 Loyalty Bonus and Severance Terms Letter, dated December 13,
1996, among Carl Grose, NYNEX CableComms Group PLC and NYNEX
CableComms Group Inc.
10.49 Form of Loyalty Bonus and Severance Terms Letter, dated December
13, 1996, among the named Executive director, NYNEX CableComms
Group PLC and NYNEX CableComms Group Inc. (Substantially
identical agreements have been entered into for Colin I.
Chadwick, John Doherty, Edward L. Hatch, John J. McHale, Paul H.
Repp, Graham L. Robertson, Allen J.M. Saunders, Michael T.
Schieck, Michael W. Stevenson and Patrick Welsh III).
10.50 Loyalty and Severance Terms Letter, dated December 13, 1996,
among Nicholas P. Mearing-Smith, NYNEX CableComms Group PLC and
NYNEX CableComms Group Inc.
24 Power of Attorney.
27 Financial Data Schedule.
</TABLE>
<PAGE> 1
[LETTERHEAD]
The General Manager Exhibit 10.11(a)
NYNEX CableComms Bolton
The Tolworth Tower 19 July 1996
Ewell Road
Surbiton
Surrey KT6 7ED
Dear Sir,
INTERCONNECT AGREEMENT BETWEEN NYNEX CABLECOMMS BOLTON
AND BRITISH TELECOMMUNICATIONS PLC DATED
19 DAY OF JULY 1996 ("THE AGREEMENT")
We refer to the Agreement. Words and expressions used in this letter have the
same meaning as in the Agreement.
This letter is an agreement in writing by us pursuant to paragraph 30 of the
Agreement.
Interim Charges are agreed for the services to be provided by the Operator, on
a provisional basis, pursuant to paragraph 13.2 of the Agreement (in addition
to provisions of paragraphs 19 and 20 of the Agreement), listed in:
a) Annex 1 attached to this letter with effect from 1/04/95 for the Financial
Year in Question (1/04/95 to 31/03/96); and
b) Annex 2 attached to this letter with effect from 1/04/96 for the Financial
Year in Question (1/04/96 to 31/03/97).
It is agreed pursuant to paragraph 13.2.1 that the charges listed in Annex 1
shall be reviewed on the date that a determination by the Director General of
the Final Charges for Standard Services provided by BT for the Financial Year
in Question (1/04/95 to 31/03/96) is published.
It is further agreed pursuant to paragraph 13.2.1 that the charges listed in
Annex 2 shall be reviewed on the date that a determination by the Director
General of the:
a) Interim Charges; and
b) Final Charges
for Standard Services provided by BT for the Financial Year in Question
(1/04/96 to 31/3/97) is published.
Following the above reviews any changes to the charges for the Financial Year
in Question (1/04/95 to 31/03/96) for any service provided by the Operator,
will take effect from 1/04/95 and the Operator or BT, as the case may be, shall
recalculate the charges in respect of such service for the Financial Year in
Question using the new charge and calculate the interest for any sum overpaid
or underpaid at the OFTEL Interest Rate calculated from the later of the date
on which the relevant charges were due to be paid or were paid to the date on
which the difference is paid.
Following the above reviews any changes to the charges for the Financial Year
in Question (1/04/96 to 31/03/97) for any service provided by the Operator,
will take effect from 1/04/96 and the Operator
1 of 9
<PAGE> 2
or BT, as the case may be, shall recalculate the charges in respect of such
service for the Financial Year in question using the new charge and calculate
the interest for any sum overpaid or underpaid at the OFTEL Interest Rate
calculated from the later of the date on which the relevant charges were due to
be paid or were paid to the date on which the difference is paid.
It is agreed that the charges for the services to be provided by the Operator
under Schedule 546 are those referred to in Annex 3 attached to this letter.
Yours faithfully , Accepted and agreed:
/s/ [illegible] /s/ [illegible]
For and on behalf of For and on behalf of
BRITISH TELECOMMUNICATIONS PLC NYNEX CABLECOMMS BOLTON
2 of 9
<PAGE> 3
ANNEX 1
FINANCIAL YEAR IN QUESTION 01/4/95 TO 31/03/96
NYNEX CABLECOMMS BOLTON
The Interim Charges to be inserted into the Carrier Price List for the
following schedules to the Interconnect Agreement between NYNEX CableComms
Bolton and BT are : -
<TABLE>
<CAPTION>
SCHEDULE Daytime Evening Weekend
<S> <C> <C> <C>
541 1.174 0.693 0.519
545 1.174 0.693 0.519
</TABLE>
NOTES :
1) Daytime, Evening and Weekend are as defined in the BT Revised Standard
Contract.
2) Charges are quoted in Pence per Minute.
3 of 9
<PAGE> 4
ANNEX 1 CONT
IN SPAN INTERCONNECTION (ISI) & INTERCONNECT EXTENSION CIRCUITS
See ANNEX C, Schedule 01 of the Revised Standard Contract..
OPERATOR CHARGES
The Review Date for charges under this Schedule is 1st April 1996 and each
anniversary thereafter.
<TABLE>
<CAPTION>
DESCRIPTION INTERIM
CHARGE
<S> <C>
ISI
- - - Connection of ISI Interconnect Link Pounds Sterling Nil
- - - Rental of ISI Interconnect Link from jointing chamber to BT
premises where the jointing chamber is:
- - - Agreed Pounds Sterling Nil
- - - Nominated Pounds Sterling 125.00 per 100
metres p.a. (1,2,3b,8)
- - - new duct See BT Retail Price List
(MegaStream)
INTRABUILDING LINKS (9)
- - - Connection Pounds Sterling 1 161.00 per 2
Mbit/s
- - - Rental Pounds Sterling 68.00 per
2 Mbit/s p.a. (3a)
SIGNALLING LINK SET (including one route type) - unidirectional
- - - Connection Pounds Sterling 2790.00 per 2x2
Mbit/s
- - - Rental Pounds Sterling 188.00 per 2x2
Mbit/s p.a. (3a)
Additional Route Type if ordered at same time as Pounds Sterling 416.00 per Traffic
Signalling Link Set - Connection. Route
Additional Route Type if ordered subsequent to Pounds Sterling 666.00 per Traffic
Signalling Link Set - Connection. Route
MULTIPLEXOR SERVICE FOR PDH
- - - Connection Pounds Sterling 296.00 per 2
Mbit/s
- - - Rental Pounds Sterling 15.00 per 2
Mbit/s p.a. (3a)
MULTIPLEXOR SERVICE FOR SDH
- - - Connection Pounds Sterling 584.00 per 2
Mbit/s
- - - Rental Pounds Sterling 122.50 per
2 Mbit/s p.a. (3a)
</TABLE>
4 of 9
<PAGE> 5
<TABLE>
<CAPTION>
DESCRIPTION INTERIM
CHARGE
<S> <C>
INTERCONNECTION EXTENSION CIRCUIT (IEC)
- - - Connection Pounds Sterling 440.87 per 2
Mbit/s
- - - Rental - Fixed Element Pounds Sterling 3253.26 per 2
Mbit/s p.a. (3a)
- - - plus Rental - per Km charge Pounds Sterling 43.62 per 2 M/bits
p.a. (3a & 7)
RE-ARRANGEMENTS (6)
- - - of a Route Type Pounds Sterling 514.00 per
Traffic Route
- - - of a Signalling Link Set, including one Route Pounds Sterling 874.00 per 2x2
Type, to a different BT Switch Connection. Mbit/s
- - - of an additional Route Type to a different Pounds Sterling 416.00 per
BT Switch Connection. Traffic Route
- - - of an Intrabuilding Link to a different Pounds Sterling 514.00 per 2
BT Switch Connection. Mbit/s
- - - of a Signalling Link Set, including one Route Pounds Sterling 1791.00 per 2x2
Type, to a different Operator Switch Connection. Mbit/s
- - - of an additional Route Type to a different Pounds Sterling 416.00 per
Operator Switch Connection. Traffic Route
- - - of an Intrabuilding Link to a different Pounds Sterling 972.00 per 2
Operator Switch Connection. Mbit/s
Operator Switch modification due to
BT bearer change Pounds Sterling 626.00 per 2
Mbit/s
</TABLE>
NOTES :
1) Distance charged will be radial distance between relevant buildings and the
Point of Connection.
2) Or part thereof, ignoring the first 100 metres.
3a) Rental is payable annually in advance.
3b) Rental is payable annually in arrears.
4) Distance charged will be actual distance.
5) Charges to be met by the Party requesting the Capacity re-arrangement.
6) Rental charges will continue to apply to re-arranged links.
7) Distance charged will be the radial distance between the relevant building
and the Remote Switch.
8) The rental is calculated in accordance with Schedule 01 paragraph 11.
9) If an IBL contains a Signalling Link supporting unidirectional traffic, that
IBL charge is contained within the unidirectional Signalling Link Set
Charge applicable to that Signalling link
5 of 9
<PAGE> 6
ANNEX 2
FINANCIAL YEAR IN QUESTION 01/4/96 TO 31/03/97
NYNEX CABLECOMMS BOLTON
The Interim Charges to be inserted into the Carrier Price List for the
following schedules to the Interconnect Agreement between NYNEX CableComms
Bolton and BT are : -
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SCHEDULE Daytime Evening Weekend
541 1.174 0.693 0.519
545 1.174 0.693 0.519
</TABLE>
Notes :
1) Daytime, Evening and Weekend are as defined in the BT Revised Standard
Contract.
2) Charges are quoted in Pence per Minute.
Ref: PR/VF/L10-65
6 of 9
<PAGE> 7
ANNEX 2 CONT
IN SPAN INTERCONNECTION (ISI) & INTERCONNECT EXTENSION CIRCUITS
See ANNEX C, Schedule 01 of the Revised Standard Contract..
OPERATOR CHARGES
The Review Date for charges under this Schedule is 1st April 1997 and each
anniversary thereafter.
<TABLE>
<CAPTION>
DESCRIPTION INTERIM
CHARGE
<S> <C>
ISI
- - - Connection of ISI Interconnect Link Pounds Sterling Nil
- - - Rental of ISI Interconnect Link from jointing chamber to BT
premises where the jointing chamber is:
- - - Agreed Pounds Sterling Nil
- - - Nominated Pounds Sterling 125.00 per
100 metres p.a. (1,2,3b,8)
- - - new duct See BT Retail Price List
(MegaStream)
INTRABUILDING LINKS (9)
- - - Connection Pounds Sterling 1161.00 per
2 Mbit/s
- - - Rental Pounds Sterling 68.00 per
2 Mbit/s p.a. (3a)
SIGNALLING LINK SET (including one route type) - unidirectional
- - - Connection Pounds Sterling 2790.00 per
2x2 Mbit/s
- - - Rental Pounds Sterling 188.00 per
2x2 Mbit/s p.a. (3a)
Additional Route Type if ordered at same time as Pounds Sterling 416.00 per
Signalling Link Set - Connection. Traffic Route
Additional Route Type if ordered subsequent to Pounds Sterling 666.00 per
Signalling Link Set - Connection. Traffic Route
MULTIPLEXOR SERVICE FOR PDH
- - - Connection Pounds Sterling 296.00 per 2
Mbit/s
- - - Rental Pounds Sterling 15.00 per 2
Mbit/s p.a. (3a)
MULTIPLEXOR SERVICE FOR SDH
- - - Connection Pounds Sterling 584.00 per 2
Mbit/s
- - - Rental Pounds Sterling 122.50.00 per
2 Mbit/s p.a. (3a)
</TABLE>
7 of 9
<PAGE> 8
<TABLE>
<CAPTION>
DESCRIPTION INTERIM
CHARGE
<S> <C>
INTERCONNECTION EXTENSION CIRCUIT (IEC)
- - - Connection Pounds Sterling 440.87 per
2 Mbit/s
- - - Rental - Fixed Element Pounds Sterling 3253.26 per
2 Mbit/s p.a. (3a)
- - - plus Rental - per Km charge Pounds Sterling 43.62 per
2 M/bits p.a. (3a & 7)
RE-ARRANGEMENTS (6)
- - - of a Route Type Pounds Sterling 514.00 per
Traffic Route
- - - of a Signalling Link Set, including one Route Pounds Sterling 874.00 per
Type, to a different BT Switch Connection. 2x2 Mbit/s
- - - of an additional Route Type to a different Pounds Sterling 416.00 per
BT Switch Connection. Traffic Route
- - - of an Intrabuilding Link to a different Pounds Sterling 514.00 per
BT Switch Connection. 2 Mbit/s
- - - of a Signalling Link Set, including one Route Pounds Sterling 1791.00
Type, to a different Operator Switch Connection. per 2x2 Mbit/s
- - - of an additional Route Type to a different Pounds Sterling 416.00 per
Operator Switch Connection. Traffic Route
- - - of an Intrabuilding Link to a different Pounds Sterling 972.00 per
Operator Switch Connection. 2 Mbit/s
Operator Switch modification due to BT bearer change Pounds Sterling 626.00 per
2Mbit/s
</TABLE>
NOTES :
1) Distance charged will be radial distance between relevant buildings and the
Point of Connection.
2) Or part thereof, ignoring the first 100 metres.
3a) Rental is payable annually in advance.
3b Rental is payable annually in arrears.
4) Distance charged will be actual distance.
5) Charges to be met by the Party requesting the Capacity re-arrangement.
6) Rental charges will continue to apply to re-arranged links.
7) Distance charged will be the radial distance between the relevant building
and the Remote Switch.
8) The rental is calculated in accordance with Schedule 01 paragraph 11.
9) If an IBL contains a Signalling Link supporting unidirectional traffic, that
IBL charge is contained within the unidirectional Signalling Link Set
Charge applicable to that Signalling link
8 of 9
<PAGE> 9
ANNEX 3
FINANCIAL YEAR IN QUESTION 01/4/96 TO 31/03/97
NYNEX CABLECOMMS BOLTON
SCHEDULE 546
The charges specified from time to time in the Carrier Price List for Schedule
541 shall apply to Calls under Schedule 546.
9 of 9
<PAGE> 1
Exhibit 10.11(b)
[BT LOGO]
Telephone (0171) 250
International +44 171 250
Facsimile (0171) 250
International +44 171 250
General Manager Interconnect,
NYNEX Cablecomms Bolton
The Tolworth Tower
Ewell Road
Surbiton
Surrey KT6 7ED
19 July, 1996
Dear Sir
INTERCONNECT AGREEMENT BETWEEN NYNEX CABLECOMMS BOLTON AND
BRITISH TELECOMMUNICATIONS plc DATED 19 DAY of JULY 1996
We refer to the Agreement. Words and expressions used in this letter have the
same meanings as in the Agreement.
This letter is an agreement in writing by us pursuant to paragraph 30 of the
Agreement.
For the services to be provided by the Operator under the Schedules listed in
Annex 1 of this letter it is agreed, on a provisional basis, pursuant to
paragraph 13.2 of the Agreement (in addition to the provisions of paragraphs 19
and 20 of the Agreement), that the Interim Charges listed in Annex 1 are the
Interim Charges for such services with effect from 1/04/96 for the Financial
Year in Question (1/04/96 to 31/03/97).
It is agreed pursuant to paragraph 13.2.1 that the charges listed in Annex 1
shall be reviewed on the date that:
(a) a determination by the Director General of the BT Charges for the number
portability service provided by BT;
(b) a determination by the Director General of the charges for the number
portability service provided by the Operator; and
(c) a change (other than as a result of a determination by the Director
General) of the BT Charge for the number portability service provided by BT
in the Carrier Price List
is published for all or portion of the Financial Year in Question (1/04/96 to
31/03/97).
Following the above reviews any changes to the charges for the Financial Year in
Question (01/04/96 to 31/03/97) for any such services provided by the Operator,
will take effect from 01/04/96 and the Operator or BT, as the case may be, shall
recalculate the charges in respect of such service for the Financial Year in
Question using the new charge and calculate the interest for any sum overpaid or
underpaid at the OFTEL Interest Rate.
The Number Portability charges for the services provided by BT are listed in
Annex 2 attached to this letter.
It is agreed that, where a Party (the "Requested Party") does not offer a per
line set up service level which is equivalent to the service level offered by
the other Party (the "Requesting Party"), the per line set up charge paid by the
Requesting Party shall be the charge for the equivalent service offered by the
Requesting Party.
As Number Portability described in Schedule 04 (including the services referred
to in paragraph 2.9 in that Schedule) is not a standard service it will be shown
in the Carrier Price List as a BT Charge.
BT UK Carrier Services
Tenter House, 7th Floor, 45 Moorfield, LONDON EC2 9TH
BT is an ISO 9001 Registered Company
<PAGE> 2
It is agreed that pending a modification of the BT Licence relating to the
provision of a Number Portability service it is BT's intention to change the BT
Charge for Number Portability as detailed in Schedule 04 (including the
services referred to in paragraph 2.9 in that Schedule) taking into account the
changes in relevant costs as such costs are used by the Director General in
determining Interim Charges and Final Charges for the relevant Financial Years
in Question.
Notwithstanding that any determination by the Director General of charges (if
any) for services provided under Schedule 04 (including the services referred
to in paragraph 2.9 in that Schedule) are determined after the date of this
letter the Parties agree to apply the determined charges back to 01/04/96.
The Parties agree for the purpose of paragraph 19.1.1 of the Agreement, that
modification of either Party's Licence relating to the provision of a number
portability service shall entitle either Party to seek to amend the Agreement
by serving a review notice.
Yours faithfully Accepted and agreed:
/s/ [illegible] /s/ [illegible]
For and on behalf of For and on behalf of
BRITISH TELECOMMUNICATIONS plc NYNEX CABLECOMMS
BOLTON
<PAGE> 3
ANNEX 1
NYNEX CABLECOMMS BOLTON
1. NUMBER PORTABILITY CHARGES
Per line set up charge
<TABLE>
<S> <C>
Fax based, no Real Time Router Pounds Sterling 9.23
Electronic Data Interchange, no Real Time Router Pounds Sterling 8.03
Fax based, Real Time Router in use Pounds Sterling 8.60
Electronic Data Interchange, Real Time Router
in use Pounds Sterling 7.40
</TABLE>
Data Build Charges
<TABLE>
<S> <C>
Fixed charge Pounds Sterling 1,886.44
Zone charge Pounds Sterling 41.13
Processor charge Pounds Sterling 42.84
</TABLE>
Where BT's reqirement results in more than one prefix being implemented at the
same time at a particular Operator switch then the processor charge for the
second and each further prefix implementation shall be;
<TABLE>
<S> <C>
Processor charge Pounds Sterling 16.91
</TABLE>
ANNEX 2
BT
1. NUMBER PORTABILITY CHARGES
Per line set up charge
<TABLE>
<S> <C>
Fax based, no Real Time Router Pounds Sterling 9.23
Electronic Data Interchange, no Real Time Router Pounds Sterling 8.03
Fax based, Real Time Router in use Pounds Sterling 8.60
Electronic Data Interchange, Real Time Router
in use Pounds Sterling 7.40
</TABLE>
Additional Conveyance Charges
<TABLE>
<S> <C> <C> <C>
Daytime Evening Weekend
Pence per minute 0.15 0.09 0.07
</TABLE>
Data Build Charges
<TABLE>
<S> <C>
Fixed charge Pounds Sterling 1,886.44
Zone charge Pounds Sterling 41.13
Processor charge per system X Pounds Sterling 42.84
Processor charge per system AXE10 Pounds Sterling 44.83
</TABLE>
Where the Operator's reqirement results in more than one prefix being
implemented at the same time at a particular BT switch then the processor
charge for the second and each further prefix implementation shall be;
<TABLE>
<S> <C>
Processor charge per system X Pounds Sterling 16.91
Processor charge per system AXE10 Pounds Sterling 18.90
</TABLE>
1 of 1
<PAGE> 1
Exhibit 10.11(c)
[LETTERHEAD]
General Manager Interconnect,
NYNEX Cablecomms Bolton
The Tolworth Tower
Ewell Road
Surbiton
Surrey KT6 7ED
1996
Dear Sir,
STANDARD INTERCONNECT AGREEMENT BETWEEN NYNEX CABLECOMMS BOLTON AND BRITISH
TELECOMMUNICATIONS PLC DATED 19 OF JULY 1996
We have, today, entered into an Interconnect Agreement "the Agreement" which
provides for a process for the review and possible determination of certain
matters. This letter is an agreement, pursuant to paragraph 19.1.3 of the main
body of the Agreement, to the effect that those matters set out in the annex to
this letter shall be reviewed. This annex sets out the title and probable part
of the contract text of the matter to be reviewed in column 1, the period of
time for reaching agreement in substitution of the period of time referred to in
paragraph 20.1 in column 2 and brief details of the matter to be reviewed in
column 3.
This letter is a review notice in relation to such matters for the purposes of
paragraph 19.2 where the deemed date of service of the review notice shall be 1
April 1996. If we fail to reach agreement in respect of a matter in column 1
of the annex within the time period set out alongside it in column 2, then
either of us may, where appropriate, request in writing the Director General of
Telecommunications to make a determination. Where the matter is of a financial
nature the effective date of the agreements or determinations shall be 1 April
1996. For all other matters the effective date shall be the date when any
amendment to give effect to such agreement or determination is incorporated
into the Agreement.
Secondly, this letter acknowledges that there are other matters deserving of
further consideration between BT and the OLO Group. It is our intention to set
up a Forum, the purpose of which will be to continue the discussion process
which preceded the coming into being of the Agreement. The initial agreed set
of issues to be dealt with by this Forum are those contained in the annex but
we also agree that either of us may table other issues for discussion. As and
when any issue is agreed between us, we will incorporate such agreement into
the Agreement entered into today (as the same may have been amended by us
subsequently).
Thirdly, BT acknowledges that changes to the Agreement will be made available
to all operators, whether such changes are brought about as a consequence of
agreement following a review or as a consequence of determination by the
Director General.
Yours faithfully, Agreed and accepted
/s/ [illegible] /s/ [illegible]
................................... ...............................
For and on behalf of For and on behalf of BRITISH
TELECOMMUNICATIONS PLC NYNEX CABLECOMMS BOLTON
<PAGE> 2
Annex
<TABLE>
<CAPTION>
ISSUE PERIOD OF TIME FOR DETAILS OF ISSUES
REVIEW
<S> <C> <C>
Interim Prices for New Services One day The Operator believes that where agreement cannot be reached, the
(Main Body paragraph 8) temporary interconnect prices, for conveying calls to a new PSTN
services should be established by the Operator launching the service
in question. This would be a reciprocal arrangement. In each case
the matter could be referred in due course to OFTEL for
determination of the price.
Both Parties would, of course, remain free to retail charges for
new services as they see fit (subject to relevant fair trading
constraints within their respective Licences).
BT and the Operator have been unable to agree that the Party
launching the service should establish the temporary interconnect
charges, in all instances.
Connection Charges for CSI 1 month The Operator believes that no connection charges should be payable
provided under paragraph 3.2 of for CSI for BT's use provided under the circumstances set out in
the Main Body paragraph 3.2 of the Main Body.
ISI "bothway" (Schedule 01) 6 months The Parties agree that this is a new product for which the detailed
requirements are yet to be developed. The basic requirement is for
both Parties' traffic to be carried in the same Traffic Routes on
ISI. Whilst technically feasible, work needs to be undertaken to
ensure that each Party's Calls cannot be inadvertently "blocked" by
the other and to develop appropriate billing mechanisms.
DMA timescales (Schedule 140) 6 months The Operator wishes to have a DMA process that is faster than the
current process either for all or some DMAs.
</TABLE>
<PAGE> 3
Annex
<TABLE>
<CAPTION>
ISSUE PERIOD OF TIME FOR REVIEW NOTICE
REVIEW
<S> <C> <C>
ISI "bothway" (Schedule 01) 6 months The Parties agree that this is a new product for which the detailed
requirements are yet to be developed. The basic requirement is for
both Parties' traffic to be carried in the same Traffic Routes on ISI.
Whilst technically feasible, work needs to be undertaken to ensure that
each Party's Calls cannot be inadvertently "blocked" by the other and
to develop appropriate billing mechanisms.
DMA timescales (Schedule 140) 6 months The Operator wishes to have a DMA process that is faster than the
current process either for all or some DMAs.
DMA Abatement of Charges 6 months The Operator seeks financial compensation for late or incorrect
(Schedule 140) DMAs. BT believes the Operator already has a right to compensation
for damage under the contract. Any form of abatement would be a
disincentive to the faster process requested.
NIS Abatement of Charges 6 months The Operator seeks financial compensation for late or incorrect entries
(Schedule 150) into NIS. In such event BT would require payment for work associated with
rejecting erroneous entries. BT is currently developing a new product to
enable the Operator to enter its customer details into NIS.
CSI Separation (Schedule 130) 6 months The Parties agree that this is a product that needs a new product
definition and price.
NIS Charges (Schedule 150) 12 months NIS charging is being considered by OFTEL as part of the review of
the Use of Directory Information. The results of this may need to be
accommodated in the Agreement.
</TABLE>
<PAGE> 4
Annex
<TABLE>
<CAPTION>
ISSUE PERIOD OF TIME FOR REVIEW NOTICE
REVIEW
<S> <C> <C>
Duct Charges (Schedule 01 2 months BT charges for duct are the BT retail charges. The Operator disputes
and 130) this basis. The OFTEL consultation on duct and pole sharing is
considering this issue. The results may need to be accommodated into
the Agreement.
IDD charges where the Operator 2 months BT charges for IDD for routes where the Operator is providing service
has an International or ISR under its own licence are retail rates. The Operator believes that the
Licence (Schedule 104) "condition 13" IDD rates should apply.
DMA Charges (Schedule 140) 9 months This issue is whether charges should be levied for any or all DMA
requested in the other Party's network. The Parties may continue
discussing this matter in connection with the other DMA issues noted
above. This is being addressed by OFTEL as part of a review of
residual structural barriers. The results may need to be built into
the contract.
New Services Notice Periods 3 months Where either Party launches a PSTN service with obligatory access,
for PSTN services (Main Body (such as a new value added service) it should provide notice to the
para 8) other Party to enable access from the other Party's customers. Such
period of time needs to be agreed.
New Services Notice Periods 12 months The notice period of the launch of new services is planned to be
for NON PSTN services (Main considered by the IPF Sub Group. The results of this may need to be
Body para 8) built into the Agreement.
</TABLE>
<PAGE> 1
Exhibit 10.11(d)
(BT LOGO)
Telephone (0171) 250
International +44 171 250
Facsimile (0171) 250
International +44 171 250
The General Manager
NYNEX CableComms Bolton
The Tolworth Tower
Ewell Road
Surbiton
Surrey KT6 7ED
19 July 1996
Dear Sir,
INTERCONNECT AGREEMENT BETWEEN NYNEX CABLECOMMS BOLTON ("OPERATOR") AND BRITISH
TELECOMMUNICATIONS PLC ("BT") DATED 19 JULY 1996 (New Interconnect Agreement)
We refer to the Interconnection Agreement between BT and NYNEX CableComms
Bolton dated 1 August 1994 (the "Original Agreement").
Words and expressions used in this letter have the same meanings as in the New
Interconnect Agreement.
In respect of the period up to and including 31 March 1995 the Parties have
agreed a payment to be made by BT in the sum set opposite the name of the
Operator in the attached Annex 1.
BT undertakes to make the payment to the Operator not later than 10 calendar
days from the date of this letter (the "First Payment").
The Parties agree to use their reasonable endeavours to agree the finalisation
of all Billing Information in respect of Interconnect Links (not included in
the First Payment) and the calculation of interest at the OFTEL Interest Rate
(such calculation to be in respect of all services and facilities provided by
one Party to the other. (including Call Conveyance) ("the Relevant Billing
Information") for the period up to and including 31 March 1995 not later than
60 calendar days from the date hereof.
Following the finalisation of the Relevant Billing Information any resulting
settlement of monies (the "Second Payment") shall be made on the same basis
(including charges) as the First Payment, such Second Payment being in full and
final settlement of all monies payable by either BT or the Operator in respect
of the period up to and including 31 March 1995.
Subject to the Second Payment having been made:
(a) the Parties waive all rights each has (past, present and future) to
bring a claim against the other under the Original Agreement;
BT UK Carrier Services
Tenter House, 7th Floor, 45 Moorfield, LONDON EC2 9TH
BT is an ISO 9001 Registered Company
<PAGE> 2
(b) the Parties agree that no further invoices shall be raised in respect of
the Original Agreement;
(c) this letter insofar as it relates to the termination of the Original
Agreement is a variation in writing of the procedures specified in
paragraphs 3.3 and 3.4 of the Transition Agreement; and
(d) the Operator shall withdraw any request for determination by the
Director General in respect of the Original Agreement.
It is agreed that the settlement of charges for Calls and Data Management
Amendments for the period from 1 April 1995 to 31 March 1996 (inclusive) shall
be based on the Billing Information in Annex II attached to this letter. It is
noted that the invoices for BT operator services are up to and including 31
December 1995 and Interconnect Links is up to the billing period commencing 30
November 1995.
BT will prepare further Billing Information using the same methodology to enable
BT to prepare invoices of all amounts due and payable for Calls for the period
from 1 April 1996 until such time as INCA is able to process each of the types
of Call in accordance with the charging structure in the New Interconnect
Agreement.
The Operator shall prepare further Billing Information using the same
methodology to enable the Operator to prepare invoices for all amounts due and
payable for Calls for the period from 1 April 1996 until the end of the current
Billing Period.
For the purposes of Annex 2 - Part A of the Transition Agreement it is agreed
that the Billing Information to be converted into element-based segments shall
be the Billing Information prepared by BT for the month of July 1996.
Yours faithfully Accepted and agreed:
/s/ [illegible] /s/ [illegible]
- - ------------------------------ ------------------------------
For an on behalf of For and on behalf of
BRITISH TELECOMMUNICATIONS plc NYNEX CABLECOMMS BOLTON
<PAGE> 3
ANNEX I
<TABLE>
<CAPTION>
NYNEX OPERATOR TOTAL REFUND TO NYNEX
- - -------------- ---------------------
<S> <C>
Nynex CableComms Bromley 4001.52
Nynex CableComms Solent 218773.36
Nynex CableComms Surrey 33932.36
Nynex CableComms Sussex 145544.25
Nynex CableComms Wessex 32299.67
Nynex CableComms Bolton 2157.19
Nynex CableComms Greater Manchester 2555.67
Nynex CableComms Bury & Rochdale 719.06
Nynex CableComms Oldham 798.96
Nynex CableComms Stockport 1118.55
Nynex CableComms Cheshire 639.17
Nynex CableComms Macclesfield 1.00
Total 442540.76
</TABLE>
<PAGE> 4
Annex II
Data (excluding data management amendments shown on attached sheet) included in
NYNEX CableComms Greater Manchester billing data Annex II.
<PAGE> 5
NYNEX CABLECOMMS BOLTON
DATA MANAGEMENT AMENDMENTS
Bolton:
3 April 1995 01204 40, 0161 959,
15 March 96 01204 43, 01204 45, 01942 63, 0161 293, 0161 294,
<PAGE> 1
Exhibit 10.11(f)
[BT LOGO]
Telephone (0171) 250
International +44 171 250
Facsimile (0171) 250
International +44 171 250
Andrew Fleming
Nynex CableComms Limited
11th Floor, The Tollworth Tower
Ewell Road
Surbiton
Surrey KT6 7ED
13 June, 1996
Dear Andrew,
TERMINATION CONVEYENCE RATE (POLO)
Following negotiations between Nynex and BT I am writing to confirm BT's
acceptance to your offer for a terminating rate for Nynex CableComms Bolton,
from 1 April 1995 until 31 March 1997, of a rate payable which is equal to BT
Single Tandem rate. The agreed rate is as follows;
Daytime Evening Weekend
1.174 0.693 0.519
BT's acceptance is conditional on the acceptance of the review process detailed
in the pricing letter between BT and Nynex CableComms Bolton is that the rate
is to be applied to all calls conveyed under schedule 541 and 545 of the
Interconnect Agreement.
BT believes that termination payments to Operators should reflect the network
structure used for the delivery of calls and be based on relevant costs. BT's
acceptance of your offer is based on the arguments put forward by Nynex during
our discussions, which were also supported by Oftel, as to the level of those
Nynex costs.
It is also BT's expectation that Nynex CableComms Bolton costs will fall over
time and would therefore expect that this will be reflected in your offer to BT
following the 1 April 1997 review.
Yours sincerely
/s/Kevin Jackson
- - -----------------
Kevin Jackson
UK Carrier Services
BT UK Carrier Services
Tenter House, 7th Floor, 45 Moorfield, LONDON EC2 9TH
BT is an ISO 9001 Registered Company
<PAGE> 1
[BT LOGO] Exhibit 10.11(g)
Telephone (0171) 250
International +44 171 250
Facsimile (0171) 250
International +44 171 250
The General Manager
NYNEX CableComms Limited
The Tolworth Tower
Ewell Road
Surbiton
Surrey KT6 7ED
19 December 1996
Dear Sir,
REVISED STANDARD INTERCONNECT AGREEMENTS BETWEEN THE NYNEX COMPANIES LISTED ON
THE ATTACHED NOTE ("OPERATORS") AND BRITISH TELECOMMUNICATIONS PLC (BT) ("THE
AGREEMENTS")
SETTLEMENT OF CHARGES
We write to you as you as the agent of the Operators for the purposes of the
Agreements.
In respect of the settlement of charges for each of the services set opposite
the following periods;
<TABLE>
<CAPTION>
SERVICE PERIOD (all dates inclusive)
- - ------- ----------------------------
<S> <C>
Calls 1 April 1995 to 30 June 1996
Links 1 April 1995 to 30 November 1996
BT Operator Services 1 April 1995 to 30 September 1996
</TABLE>
the Parties have agreed a payment to be made by BT of the sum set opposite the
name of the Operator in the attached Annex. The payment is in settlement of
monies payable by either BT or the Operator, for those invoices which have
previously been paid, in respect of the agreed price adjustments following
implementation of the Interim charges for 95/96 and the BT Pre-Interim charges
for 96/97. It is noted that the Operators have yet to raise invoices for Calls
for the period from 1 April 1996.
The settlement does not include DMAs and Number Portability under the trial
agreements. It is noted that the calculation of interest at the Oftel Interest
Rate (such calculation to be in respect of all sevices and facilities provided
by one Party to the other) is yet to be agreed.
It is agreed that all payments and calculations of interest for the financial
year 95/96 are based on the agreed minutes per call type in the attached summary
reports and all subsequent re-calculations for 95/96 will be carried out using
the agreed minutes per call type, except for the following;
<TABLE>
<CAPTION>
REPORT SERVICE PERIOD (all dates inclusive)
- - ------ ------- ----------------------------
<S> <C> <C>
Derby Calls to BT 1 April 1995 to 31 March 1996
PRS
Swinton All Calls 1 April 1995 to 31 March 1996
</TABLE>
BT UK Carrier Services
Tenter House, 7th Floor, 45 Moorfield, LONDON EC2 9TH
BT is an ISO 9001 Registered Company
<PAGE> 2
Price adjustments have yet to be made for Double Tandem de-averaging.
For calls to BT 0345 and 0990 BT shall reconsider the issue of the applicable
retail prices (BT or the Operators) when the Final determination for 95/96 is
published by the Director General. BT confirms that the NTS transit rates will
be adjusted so as to accord with the payments which BT makes or receives from
the Operator to whom it hands over NTS calls.
It is further agreed that the New Pre-Interim Charge detailed in the current
issue of the Carrier Price List (Issue 2-Update 1) will not be applied
retrospectfully for the period from 1 April 1996 to 30 September 1996 but will
be used for ongoing billing from 1 October 1996 until the Carrier Price list is
updated to reflect the Interim determined rates for 96/97.
Yours faithfully Accepted and agreed,
/s/ [illegible] /s/ [illegible]
- - ----------------- ---------------------
For and on behalf of For and on behalf of
BRITISH TELECOMMUNICATIONS plc NYNEX CableComms Limited
for and on behalf of the
Operators
2 of 2
<PAGE> 3
ANNEX
LIST OF CONTRACTING PARTIES
Set out below are the names of the Nynex CableComms companies that have entered
into a Revised Standard Interconnect Agreement with British Telecommunications
plc being the "Operators" in the letter to which this note is attached:-
<TABLE>
<CAPTION>
NYNEX OPERATOR TOTAL REFUND TO NYNEX
- - -------------- ---------------------
<S> <C>
Nynex CableComms Blackburn 77193.74
Nynex CableComms Bolton 118017.14
Nynex CableComms Bromley 209414.61
Nynex CableComms Bury & Rochdale 60232.70
Nynex CableComms Cheshire 74046.37
Nynex CableComms Derby 104988.20
Nynex CableComms Macclesfield 14344.45
Nynex CableComms Greater Manchester 200657.70
Nynex CableComms Oldham 81767.27
Nynex CableComms Solent 377244.52
Nynex CableComms Stockport 79400.22
Nynex CableComms Stoke 55567.63
Nynex CableComms Surrey 177668.84
Nynex CableComms Sussex 242125.81
Nynex CableComms Wessex 120782.43
Nynex CableComms Wirral 35488.87
TOTAL 2,028,940.50
</TABLE>
<PAGE> 1
EXHIBIT 10.12
I N T E R C O N N E C T I O N A G R E E M E N T
MERCURY COMMUNICATIONS LIMITED
AND
NYNEX CABLECOMMS LIMITED
11 NOVEMBER 1996
Mercury-NYNEX 11 November 1996 Page 1 of 19
Interconnect Agreement Main Body
<PAGE> 2
I N D E X
<TABLE>
<S> <C>
CLAUSES
1 Interpretation
2 Points of Connection
3 Ordering and Provision of Capacity
4 Telecommunication Services
5 Estimates and Forecasting
6 Charges
7 Provision of Information
8 Introduction of New Services
9 Alterations to the System
10 Force Majeure
11 Liability
12 Confidentiality
13 Commencement and Duration
14 Review
15 Wayleaves
16 Assignment and Sub-Contracting
17 Publicity
18 Waiver
19 Severability
20 Modification
21 Entire Agreement
22 No Partnership
23 Notices
24 Costs
25 Governing Law and Jurisdiction
26 Joint and Several Liability
SCHEDULES
1 Definitions
2 Telecommunications Services
3 Charges
4 NNG Groups
APPENDICES
1 Technical Specifications
2 Operational Procedures
3 Billing Procedures
</TABLE>
Mercury-Nynex 11 November 1996 Page 2 of 19
Interconnect Agreement Main Body
<PAGE> 3
INTERCONNECTION AGREEMENT
THIS AGREEMENT is made the eleventh day of November 1996 between:
(I) MERCURY COMMUNICATIONS LIMITED whose registered office is at New Mercury
House, 26 Red Lion Square, London WC1R 4HQ whose registered number is 1541957
("Mercury") and
(II) NYNEX CABLECOMMS LIMITED whose registered office is at The Tolworth Tower,
Ewell Road, Surbiton, Surrey KT6 7ED whose registered number is 2664006 acting
for and on behalf of itself and as agent for and on behalf of each of the 16
franchise companies (specified in Part 1 of Appendix 2 below) (collectively
"NYNEX")
WHEREAS
(A) NYNEX has been granted licences under section 7 of the Act to provide
telecommunication services by means of the telecommunication systems which are
authorised to be run under such licences
(B) Mercury has also been granted a licence under section 7 of the Act to
provide telecommunication services by means of the telecommunication systems
which are authorised to be run under such licence
(C) The licences of both Parties authorise the connection of their respective
telecommunication systems and the Parties have agreed upon such interconnection
to enable calls to be conveyed between such systems, and on the provision of
certain telecommunication services, all upon the terms and conditions
hereinafter contained.
NOW IT IS HEREBY AGREED as follows:
Mercury-Nynex 11 November 1996 Page 3 of 19
Interconnect Agreement Main Body
<PAGE> 4
1 INTERPRETATION
1.1 The words and expressions set out in Schedule 1 shall have the meanings
ascribed therein.
1.2 References herein to Clauses, Schedules and Appendices and Parts thereof
are to Clauses, Schedules and Appendices and Parts thereof of this Agreement.
The Schedules and Appendices hereto shall be deemed to be incorporated herein
and to form a part hereof. In the event, and to the extent only, of a conflict
between the Clauses, Schedules and the Appendices, the Clauses shall prevail
over the Schedules which shall prevail over the Appendices.
1.3 References in this Agreement to "Mercury" and "NYNEX" shall include their
respective successors (whether by operation of law or otherwise) and permitted
assigns.
1.4 A reference in this Agreement to a statutory provision will, unless
expressly provided otherwise, be interpreted as a reference to such provision
as amended or re-enacted prior to the date hereof.
1.5 In this Agreement unless the context otherwise requires:
1.5.1 words in the singular include the plural and vice versa; and
1.5.2 words importing any gender include all genders.
1.6 The headings are for convenience only and do not affect the interpretation
of this Agreement.
2 POINTS OF CONNECTION
2.1 Mercury shall connect and keep connected the Mercury System to the NYNEX
System and NYNEX shall connect and keep connected the NYNEX System to the
Mercury System in accordance with the provisions of Part 1 of Appendix 2
(Operational Procedures). The existing Points of Connection specified in
paragraph 1.1 of Part 1 of Appendix 2 (Operational Procedures) shall conform to
the provisions of Appendix 1 (Technical Specifications) (save for Paragraph 3
thereof where existing points of connection are not In-Span).
2.2 Both Parties shall establish and maintain such Points of Connection as are
required for the provision of the Telecommunication Services to and from their
respective Systems.
Mercury-Nynex 11 November 1996 Page 4 of 19
Interconnect Agreement Main Body
<PAGE> 5
3 ORDERING AND PROVISION OF CAPACITY
The Parties shall observe the provisions of Part 2 of Appendix 2 (Operational
Procedures) with regard to the ordering and provision of Capacity for
Interconnection.
4 TELECOMMUNICATION SERVICES
4.1 Subject to the provisions of Clauses 4.2 and 4.3:
4.1.2 Mercury shall use all reasonable endeavours to provide to NYNEX the
Telecommunication Services, specified in paragraphs 3, 6, 8, 9, 10, 11
and 12 of Schedule 2, from the dates specified in Schedule 2; and
4.1.3 NYNEX shall provide to Mercury the Telecommunication Services,
specified in paragraphs 1B and 7 of Schedule 2, from the dates
specified in Schedule 2.
4.2 Neither Party shall be under any obligation:
4.2.1 to convey Calls directly to or from Systems run by another Operator
unless it has the requisite agreement with such Operator or with
another Operator under which Calls may be so conveyed and the relevant
point of connection between the Systems has been established; or
4.2.2 in respect of any Call once it ceases to be conveyed by means of its
own System.
4.3 Neither Party warrants that its System is or will be free from faults. In
the event of a fault within a Party's System which adversely affects the
provision by either Party of the Telecommunication Services, the relevant Party
shall use all reasonable endeavours to correct the fault as quickly as
reasonably possible in accordance with recognised engineering practices in the
telecommunications industry.
4.4 Calls conveyed by either Party to the System of the other shall, in respect
of routing arrangements, facilities and quality of network performance, be
treated and conveyed by the
Mercury-Nynex 11 November 1996 Page 5 of 19
Interconnect Agreement Main Body
<PAGE> 6
other Party within its System on a basis and priority equivalent to that for
equivalent Calls originating on and conveyed only within its System.
4.5 The Parties shall cooperate in resolving problems relating to Customers who
are or have been committing a breach of section 43 of the Act or otherwise
engaging in malicious or nuisance Calls in connection with any of the
Telecommunication Services specified in Schedule 2.
5 ESTIMATES AND FORECASTING
The Parties shall in good faith perform their respective obligations specified
in Parts 3 and 4 of Appendix 2 (Operational Procedures).
6 CHARGES
6.1 The Capacity Charges, the Order Cancellation Charges and the Rearrangement
Charges shall be payable in accordance with Part 2 of Appendix 2 (Operational
Procedures) at the rates specified in Schedule 3.
6.2 The charges payable for the provision of the Telecommunication Services
shall be calculated in accordance with Schedule 2 at the rates specified in
Schedule 3.
6.3 The Parties shall implement and observe the provisions in respect of
billing and payment of charges set out in Appendix 3 (Billing Procedures).
6.4 Mercury may at any time vary the charges payable to it for the provision of
the Telecommunication Services specified in sections 3, 6, 8, 9, 10, 11 and 12
of Schedule 2 upon one month's prior written notice to NYNEX.
7 PROVISION OF INFORMATION
Each Party shall promptly supply to the other all information and assistance
which the other may reasonably request to enable it to perform its obligations
under this Agreement. Each Party shall use all reasonable endeavours to ensure
that information provided to the other Party in accordance with this Agreement
is correct to the best of its knowledge at the time of such provision.
Mercury-Nynex 11 November 1996 Page 6 of 19
Interconnect Agreement Main Body
<PAGE> 7
8 INTRODUCTION OF NEW SERVICES
8.1 Subject to Clauses 8.4 and 8.5, if either Party (for the purpose of this
Clause, the "Requesting Party") wishes to make available a New Service to the
other Party, or wishes to obtain access to a New Service of the other Party,
the Requesting Party shall so notify the other Party in writing and the Parties
shall negotiate in good faith, within one month of the date of such notice, the
modifications to this Agreement required for the implementation of such a New
Service.
8.2 If the Parties are unable to agree the modifications under Clause 8.1,
either Party may initiate a review of this Agreement under Clause 14.1.3
8.3 If the Parties are able to agree the modifications under Clause 8.1 save in
respect of the charges for the New Service, the Parties shall implement the New
Service at interim charges proposed by the Party providing the New Service and
either Party may forthwith initiate a review of those interim charges under
Clause 14.1.3.
8.4 If a Party wishes to obtain access to a New Service of the other Party
which is identical to one of the Telecommunication Services save in respect of
the service access code, the Parties shall ensure that such New Service shall
be implemented via Interconnection within two months of a notice requesting
such implementation. The charges for such a New Service shall be the same as
the charges for the said Telecommunication Service.
8.5 If either Party (for the purpose of this Clause, the "First Party")
provides a New Service to another Operator, the other Party may request that
the First Party forthwith provides such New Service to it, subject to the
payment by the other Party of interim charges in accordance with Clause 8.3.
9 ALTERATIONS TO THE SYSTEM
The Parties shall comply with the provisions of Part 5 of Appendix 2
(Operational Procedures) with regard to alterations to their respective
Systems.
10 FORCE MAJEURE
10.1 Without prejudice to the power of the Director, any delay or failure by
either Party to perform any obligation imposed by this Agreement shall not
constitute a breach by that Party of this Agreement, to the extent that it is
caused by an event of "Force Majeure"; that is, an event outside the reasonable
control of the Party affected thereby (for the purpose of this Clause, the
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"Affected Party") including but not limited to acts of God, insurrection or
civil disorder, war or military operations, national or local emergency, acts
or omissions of Government or highway authority, industrial disputes of any
kind (not involving that Party's employees), fire, flood, lightning, explosion,
subsidence, seriously inclement weather, acts or omissions of Persons for whom
the Affected Party is not responsible or any other cause whether similar or
dissimilar which is outside the reasonable control of the Affected Party.
10.2 The Affected Party shall promptly give notice (for the purpose of this
Clause, the "Force Majeure Notice") to the unaffected Party in writing of the
estimated extent and duration of the delay or failure to perform the relevant
obligations due to the event of Force Majeure.
10.3 Upon the cessation of the event of Force Majeure the Affected Party shall
promptly notify the unaffected Party in writing of such cessation.
10.4 In the case of either Party giving a Force Majeure Notice then:
10.4.1 if the delay or failure caused by the event of Force Majeure lasts
for a continuous period of six months or less from the date of the Force
Majeure Notice (whether or not notice of cessation has been given
pursuant to Clause 10.3) any obligation that would have been performed
but due to the event of Force Majeure was not performed shall be
fulfilled by the Affected Party as soon as reasonably possible after the
Force Majeure event has ended, save to the extent that such fulfilment is
no longer possible or is not required by the unaffected Party; or
10.4.2 if the delay or failure caused by the event of Force Majeure lasts
for a continuous period of more than six months from the date of the
Force Majeure Notice and notice of cessation has not been given pursuant
to Clause 10.3 and the Affected Party continues to be delayed or to fail
in performing any of its material obligations in whole or in part, the
unaffected Party shall be entitled (but not obliged) to terminate this
Agreement by giving not less than 30 days written notice thereof to the
other Party, after expiry of the said six month period PROVIDED THAT such
notice shall be deemed not to have been given in the event that notice of
cessation of the event of Force Majeure shall have been given pursuant to
Clause 10.3 prior to the expiry of the 30 days notice. If this Agreement
is not terminated in accordance with the provisions of this Clause 10.4.2
then any obligation that would have been performed but due to the event
of Force Majeure was not performed shall be fulfilled by the Affected
Party as soon as reasonably possible after the Force Majeure event has
ended, save to the extent that such fulfilment is no longer possible or
is not required by the unaffected Party.
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10.5 If the Affected Party is delayed in or prevented from providing
Telecommunication Services by reason of an event of Force Majeure, the
unaffected Party shall be relieved pro tanto of its obligation to pay for such
Telecommunication Services.
11 LIABILITY
11.1 Neither Party excludes or restricts its liability:-
11.1.1 for death or personal injury resulting from its own negligence or
the negligence of its employees or agents while acting in the course
of their employment or agency; or
11.1.2 arising under Part 1 or Section 41(1) of the Consumer Protection Act
1987.
11.2 In performing any of its obligations under this Agreement, each Party
shall (subject to any higher duty stated in any Schedule or Appendix) exercise
all the reasonable care and skill of a competent Public Telecommunications
Operator.
11.3 Subject to Clause 11.1, neither Party (for the purposes of this Clause,
the "First Party") shall be liable to the other Party for any losses, demands,
damages or liabilities arising from any claims, proceedings or actions brought
or made against that other Party by any Person pursuant to a contractual or
other relationship of that Person with that other Party. The provisions of
this Clause 11.3 shall apply notwithstanding that such claims, proceedings or
actions arise through the acts or omissions of the First Party.
11.4 Subject to Clause 11.1, the liability of each Party to the other in
contract, tort (including negligence and breach of statutory duty) or otherwise
arising by reason of or in connection with this Agreement shall be limited to
one million pounds (L.1,000,000) for any one incident or series of events
arising from a single incident.
11.5 Subject to Clause 11.1, neither Party shall be liable to the other in
contract, tort (including negligence and breach of statutory duty) or otherwise
for indirect or consequential loss or damage. For these purposes, the
expression "indirect or consequential loss or damage" shall include but not be
limited to loss of revenue, profit, anticipated savings or business.
11.6 Should any limitation or provision contained in this Clause 11 be held to
be invalid under any applicable statute or rule of law, it shall to that extent
be deemed omitted.
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12 CONFIDENTIALITY
12.1 Subject to the provisions of Clause 12.2 each Party (in each case for the
purpose of this Clause, a "Recipient Party") hereto undertakes to the other
that for the term of this Agreement and after its expiry or termination without
limit in point of time it shall treat and procure that its directors and
employees treat as confidential the terms of this Agreement and all information
(written or oral) whether of a technical or business nature or otherwise
relating in any manner to the business or affairs of the other Party (in each
case for the purpose of this Clause, a "Disclosing Party") or otherwise
relating to this Agreement (together the "Confidential Information") and shall
not (and shall procure that any such directors and employees shall not)
disclose such Confidential Information.
12.2 The provisions of Clause 12.1 shall not apply to any Confidential
Information which:-
12.2.1 is in or comes into the public domain other than by default of the
Recipient Party;
12.2.2 had been at the time of disclosure by the Recipient Party or is
subsequently independently generated by the Recipient Party;
12.2.3 is in the possession of or is known by the Recipient Party prior to
its receipt from the Disclosing Party otherwise than subject to a
confidentiality obligation;
12.2.6 is properly disclosed by the Recipient Party to BT in connection
with the payment of applicable Access Deficit Contributions to BT;
or
12.2.7 is disclosed to a director, employee or professional advisor of the
Recipient Party subject to a duty of confidentiality; or
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12.2.8 is disclosed to an Associated Company of the Recipient Party subject
to receipt by the Disclosing Party, prior to such disclosure, of a
confidentiality undertaking in favour of the Disclosing Party
substantially in the terms of this Clause 12.
12.3 Confidential Information shall be used only for the purpose for which it
was disclosed and/or for the purposes of properly performing the obligations of
either Party under this Agreement.
12.4 Confidential Information may be disclosed by a Recipient Party to its
sub-contractors (but only to the extent reasonably required to enable such
sub-contractors to perform work sub-contracted under this Agreement) provided
that all such sub-contractors shall prior to receiving such Confidential
Information enter into a confidentiality undertaking to give effect to the
intent of this Clause 12 (with the exception of this Clause 12.4) with the
Recipient Party.
12.5 The Parties shall co-operate in complying with any requirements of the
Director or HM Government relating to the confidentiality of information
carried over the NYNEX System and the Mercury System and for the rendering of
assistance to the Director or HM Government.
13 COMMENCEMENT AND DURATION
13.1 Subject to the remaining provisions of this Clause 13, this Agreement
shall (subject as stated in Schedule 2) commence on the date hereof and shall
remain in force until the earlier of:
13.1.1 31 March 1998;
13.1.2 the expiry or, where NYNEX is not immediately granted another
Licence to run the NYNEX System, the earlier termination of the
NYNEX Licence; or
13.1.3 the expiry or, where Mercury is not immediately granted another
Licence to run the Mercury System, the earlier termination of the
Mercury Licence.
13.2 Without prejudice to the rights of either Party accrued or accruing as a
result hereof and to any rights under individual contracts for specific
apparatus equipment and/or services, the operation of this Agreement or any
part thereof and the provision of specific apparatus equipment and/or services
provided under or pursuant to this Agreement may be suspended forthwith at any
time by either Party giving such notice to the other in the event that and for
so long as the other Party is in material breach of this Agreement (including
non-payment of any sums due hereunder) and (where such breach is capable of
remedy) fails to remedy such breach within 30 days (except in case of
emergency, when the Party giving the notice may specify in
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that notice such shorter period as may be reasonable, such period not to be
less than three Working Days) after delivery of a notice from the Party not so
in breach specifying the breach and requiring it to be remedied.
13.3 This Agreement may be terminated at any time by either Party giving to the
other (without the need for further notice):-
13.3.1 at least six months notice in writing, at any time following that
Party giving notice of suspension to that other pursuant to Clause
13.2 PROVIDED THAT in a case where such breach shall have been fully
remedied within such six month period, such notice shall thereupon
be deemed void and this Agreement shall again come into full force
and effect; or
13.3.2 notice in writing having effect forthwith, if the other Party shall
become insolvent or have an administrator, receiver or
administrative receiver appointed over the whole or any part of its
assets or go into liquidation (whether compulsory or voluntarily)
otherwise than for the purposes of amalgamation or reconstruction or
shall make any arrangement or composition with its creditors or
cease to carry on business.
13.4 Any suspension, termination or expiry of this Agreement under this Clause
13 or otherwise shall not operate as a waiver of any breach by a Party of any
of the provisions hereof and shall be without prejudice to any rights
liabilities or obligations of either Party which may arise at law or in equity
as a consequence of such breach or which may have accrued up to the date of
such suspension, termination or expiry and Clauses 1, 11, 12, 13.4, 13.5, 14.7,
15, 17, 21 and 25 and Part 6 of Appendix 2 shall continue in full force and
effect notwithstanding such suspension, termination or expiry.
13.5 Without prejudice to the foregoing and to each Party's rights upon
termination or expiry of this Agreement each Party shall refund to the other a
fair and equitable proportion of those sums paid under this Agreement which are
periodic in nature and have been paid for a period extending beyond the date of
such termination or expiry as aforesaid.
14 REVIEW
14.1 Either Party may, at any time, by serving a written review notice (the
"Review Notice") on the other, seek to modify the terms of this Agreement if:
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14.1.1 either the NYNEX Licence or the Mercury Licence or any other
authority under which either Party runs its System is modified or
replaced in a manner which is significant for the purposes of this
Agreement;
14.1.2 there occurs a material change in any relevant circumstance
(including but not limited to any material change in the technology
or processes used by either Party in its System, any material change
in any law, statute or regulation governing telecommunications in
the United Kingdom or any material change caused or to be caused as
a result of any directive, regulation, decision, determination,
direction, order or code of conduct (whether having the force of law
or not) issued by a competent regulatory authority) which
significantly affects or which either Party reasonably expects
significantly to affect the commercial basis on which this Agreement
is founded;
14.1.3 there occurs any other event which the Parties agree should give
rise to a review of any term of this Agreement or this Agreement
makes express provision for such review; or
14.1.4 within a period of three months after 1 February 1997 (or any
subsequent anniversary thereof), it wishes on any grounds to
initiate a review of this Agreement (or any part thereof, including,
without limitation, the provisions of Clause 6 and Schedules 2 and
3).
14.2 Any Review Notice shall set out in reasonable detail the modifications
sought by the Party giving the Review Notice and (where appropriate) shall
specify such modification or replacement as is referred to in Clause 14.1.1,
such material change as is referred to in Clause 14.1.2 or such event as is
referred to in Clause 14.1.3.
14.3 Immediately after service of the Review Notice, the Parties shall discuss
and negotiate in good faith with a view to agreeing modifications to the terms
of this Agreement at the earliest possible date.
14.4 If, notwithstanding their negotiation under Clause 14.3, the Parties,
after a period of three months from the date of the relevant Review Notice,
nevertheless fail to agree upon any modifications to this Agreement which may
be desired by either Party, either Party may request that the Director
determines whether, and if so in what manner, this Agreement should be modified
in respect of any matters upon which the Parties have been unable to agree.
14.5 If a Party seeks a determination on the basis of Clause 14.1.1 or 14.1.2,
the Director may make a determination only if he is satisfied that there has
been such a modification or
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replacement as is referred to in Clause 14.1.1 or such a material change in
circumstances as is referred to in Clause 14.1.2.
14.6 Any determination by the Director under Clause 14.4 shall be limited to
such matters as the Director has power to determine under Condition 12 of the
Mercury Licence and the corresponding Condition of the NYNEX Licence where
there is no agreement between the Parties and, without prejudice to the
generality of the foregoing, any matter involving the conveyance of Calls to
the Mercury System shall be determined by reference to the Mercury Licence and
any matter involving the conveyance of Calls to the NYNEX System shall be
determined by reference to the NYNEX Licence. The principles to be applied by
the Director in making a determination shall be those set out in those
Conditions respectively.
14.7 If the Director should be unwilling or unable to make a determination,
under Clause 14.4, in respect of any events specified in Clause 14.1, either
Party shall have the right to terminate this Agreement upon service of not less
than six months written notice to the other (within 90 days of the Director
communicating his decision to the Parties) and, following such notice being
served, either Party shall be at liberty to apply to the Director for a
determination pursuant to Condition 12 of the Mercury Licence or the
corresponding Condition of the NYNEX Licence as appropriate. If such a
determination shall be made and issued prior to the expiry of such notice, such
notice shall be treated as void and of no further force and effect and this
Agreement shall promptly be modified by the Parties in accordance with such
determination.
14.8 The Parties shall be bound by a determination of the Director pursuant to
the provisions hereof and shall implement such determination by modifying the
terms of this Agreement insofar as the validity of such determination is not
the subject of judicial review or other legal proceedings challenging its
validity.
14.9 Any agreed modifications to the terms of this Agreement shall become
effective on the date agreed between the Parties for this purpose and any
modifications to the terms of this Agreement determined by the Director shall
be effective on, in the case of a review under Clause 14.1.4, the 1 April of
the year in question and otherwise on the date determined for this purpose by
the Director who may, where and to the extent he considers it appropriate,
determine that any such modifications shall be deemed to have been effective on
a date prior to his determination.
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15 WAYLEAVES
The Parties shall observe the provisions of Part 6 of Appendix 2 in respect of
wayleaves.
16 ASSIGNMENT AND SUB-CONTRACTING
16.1 This Agreement and all rights, benefits and obligations hereunder are
personal to the Parties and neither Party shall without the prior consent in
writing of the other assign, transfer, charge, encumber or otherwise deal with
or dispose of the whole or any part of this Agreement or its rights, benefits
or obligations hereunder other than as permitted under Clause 16.2.
16.2 Notwithstanding Clause 16.1, either Party may assign and transfer all its
rights, benefits and obligations hereunder in relation to all or part of that
Party's System to (a) an Associated Company of that Party, or (b) any Person
who has acquired that Party's System or part thereof PROVIDED THAT:
16.2.1 in the case of an assignment, the assignee is licensed or otherwise
authorised under the Act to run the relevant System; and
16.2.2 not less than fourteen days prior to any assignment, notice in
writing thereof shall be given by the relevant assignor to the other
Party.
16.3 The assigning Party shall in any case procure that the assignee shall
enter into a deed with the other Party hereto whereby the assignee undertakes
to observe and perform all of the terms and conditions of this Agreement
referable to the assigning Party.
16.4 If either Party sub-contracts any of its obligations under this Agreement,
it shall remain liable to the other Party for the acts and omissions of the
sub-contractor as if they were its own acts and omissions.
17 PUBLICITY
Without prejudice to the generality of Clause 13, neither Party shall without
the prior approval in writing (such approval not to be unreasonably withheld)
of the other directly or indirectly make any public announcement or give any
release or statement to the press, television, radio or other media relating to
or in any way connected with this Agreement.
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18 WAIVER
Failure or delay by either Party at any time in exercising any right, power or
privilege under any of the provisions of this Agreement shall neither be
construed as a waiver of its rights, power or privileges nor in any way affect
the validity of this Agreement or any part of it. No waiver shall be effective
unless given in writing and signed by the waiving Party and no waiver of a
breach of this Agreement shall constitute a waiver of any subsequent or other
breach.
19 SEVERABILITY
19.1 The invalidity or unenforceability for any reason of any part of this
Agreement shall not prejudice or affect the validity or enforceability of the
remainder of this Agreement.
19.2 If further lawful performance of this Agreement or any part of it shall be
made impossible by the determination, direction, directive, regulation,
decision, final judgement or final order of any court of competent
jurisdiction, commission or government agency or similar authority having
jurisdiction over either Party the Parties undertake that they will immediately
exert their best efforts to agree on a modification or modifications to this
Agreement or on modifications of their practices under this Agreement in such a
manner as will fully comply with such judgement or order and render further
performance lawful. Any such modification made to this Agreement or
modification of practices under this Agreement shall be subject to and become
effective upon the conclusion of an agreement (whether retrospective in effect
or not) in writing signed by Mercury and NYNEX and such approval (if any) as
may be necessary or required by the Government of the United Kingdom, the
Director or the Commission of the European Union as appropriate.
20 MODIFICATION
No modification to or cancellation of any provision of this Agreement shall be
effective unless agreed in writing by a director or other duly authorised
representative of Mercury and NYNEX.
21 ENTIRE AGREEMENT
This Agreement constitutes the entire understanding between the Parties
relating to Interconnection and shall supersede and replace all previous
agreements, understandings or commitments between the Parties or
representations made by either Party whether oral or written with respect to
Interconnection.
22 NO PARTNERSHIP
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The Parties declare that it is not the intention of either of them to enter
into a joint venture with each other hereby and nothing herein shall be deemed
to constitute a partnership between the Parties or constitute one Party the
agent of the other for any purpose whatsoever.
23 NOTICES
23.1 Any notice, demand or other communication required to be given for the
purposes of this Agreement shall be in writing sent by prepaid registered post
or facsimile transmission (immediately confirmed by post). Any letter or
facsimile sent for the purposes of this Agreement shall, if addressed to
Mercury be sent to:
The Company Secretary
Mercury Communications Limited
New Mercury House
26 Red Lion Square
London WC1R 4HQ
Fax No: 0171 528 2039
and with a copy to the Managing Director, Partner Services.
If addressed to NYNEX be sent to:
Interconnect Manager
NYNEX CableComms Limited
The Tolworth Tower
Ewell Road
Surbiton
Surrey KT6 7ED
Fax No.: 0181 873 5032
and with a copy to the Executive Director Legal and Regulatory Affairs, or to
such other Person or at such other address in England as may be notified in
writing by either Party to the other from time to time.
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23.2 Any notice, demand or other communication sent by prepaid registered post
shall be deemed (in the absence of evidence of earlier receipt) to have been
delivered on the second Working Day following its despatch and in proving the
fact of its despatch it shall be sufficient to show that the envelope
containing such notice was properly registered, addressed, stamped and posted.
Any notice, demand or other communication sent by facsimile transmission shall
be deemed (in the absence of evidence of earlier receipt) to have been
delivered on the first Working Day following its despatch provided that the
letter of confirmation has also been despatched and that the sender shall have
received a transmission report indicating that all pages of the notice have
been transmitted to the correct facsimile number.
24 COSTS
Each Party shall pay its own costs and expenses incurred in connection with the
negotiation, preparation and execution of this Agreement.
25 GOVERNING LAW AND JURISDICTION
25.1 This Agreement shall be governed and construed in accordance with English
law.
25.2 Without prejudice to Part 5 of Appendix 2 and Appendix 3 the Parties
hereby submit to the non-exclusive jurisdiction of the English Court for the
purpose of hearing and determining any dispute arising out of this Agreement
and for the purpose of enforcement of any judgement against their respective
assets.
26 JOINT AND SEVERAL LIABILITY
26.1 NYNEX acknowledges and confirms that all of its obligations under this
Agreement shall be joint and several obligations of NYNEX CableComms Limited
and the 16 franchise companies specified in Part 1 of Appendix 2.
26.2 NYNEX CableComms Limited warrants and represents that:
26.2.1 it has been duly appointed as agent of each of the 16 franchise
companies specified in Part 1 of Appendix 2;
26.2.2 none of the appointments as agent specified in Clause 26.2.1 has
been revoked; and
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26.2.3 execution of this Agreement by NYNEX CableComms Limited for and on
behalf of itself and as agent for and on behalf of each of the 16
franchise companies specified in Part 1 of Appendix 2 shall bind
NYNEX CableComms Limited and each of the said 16 franchise
companies.
26.3 Where any liability of one or more but not all of NYNEX CableComms Limited
and the 16 franchise companies specified in Part 1 of Appendix 2 is discharged,
whether by release, accord and satisfaction or otherwise, the others shall
continue to be jointly and severally liable on that obligation.
AS WITNESS the hands of the duly authorised representatives of the Parties at
the date first above written
) for and on behalf of
) Mercury Communications Limited
) for and on behalf of
) NYNEX CableComms Limited
) and as agent for and on behalf of the 16
) franchise companies specified in Part 1
) of Appendix 2
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SCHEDULE 1
DEFINITIONS
In this Agreement the following words, expressions and acronyms shall (unless
the context otherwise requires) have the meaning set opposite, namely-
"Access Deficit a contribution towards BT's access deficit which may
Contribution" be payable by NYNEX or Mercury pursuant to Condition
13.5A of BT's Licence
"ACO" an advance capacity order established in accordance with
the provisions of Part 2 of Appendix 2 (Operational
Procedures)
"Act" the Telecommunications Act 1984
"Alarm Call" a Call from a Mercury operator to a NYNEX Customer at a
time specified in advance by that NYNEX Customer
"Associated Company" in relation to either Party:-
(i) a company which is either directly or
indirectly a Subsidiary or Holding Company of the
relevant Party or a Subsidiary of such Holding
Company; or
(ii) an associated company (as defined in
Statement of Standard Accountancy Practice No 1
(1990) issued (inter alia) by the Council of the
Institute of Chartered Accountants in England and
Wales, as in effect on the date hereof), of the
relevant Party, of any Holding Company of such
relevant Party or of any Subsidiary of such
Holding Company; in this Agreement the terms
"company" and "investing group" as used in such
Statement shall be deemed to include a company
wherever incorporated
"Authorised Overseas
System" a System defined as such in the Mercury Licence
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"Billing Manual" a set of guidelines governing the billing services
provided in Interconnection and signed by the
Parties for the purposes of identification (as amended
from time to time with the written agreement of
the Parties)
"Billing Period" a period of one calendar month
"BT" British Telecommunications plc
"Call" the establishment of a transmission path through a
System, from the originator of a Message (being a
Message of the type which the Mercury System and the
NYNEX System are capable of conveying) to the intended
recipient thereof and a reference to conveyance of a
Call by a Party means the establishmenT by that Party
of such a transmission path and the conveyance in
accordance with this Agreement of a Message over such
transmission path
"Called Customer the signal that is provided by the terminating Switch
Answer Signal" (after the Customer answer signal has been validated)
and passed to the originating Switch to be used
for the purpose of charging
"Capacity" the switched telecommunications capacity in Circuits to
be made available pursuant to Clause 3 and
Part 2 of Appendix 2 (Operational Procedures) at a
Point of Connection
"Capacity Charge" a charge for Capacity specified in Part 1 of Schedule 3
"Capacity Profile" a profile of Capacity provided in accordance with Part 2
of Appendix 2 (Operational Procedures)
"CD Trans System" the data transfer system (accessed via lines which are
owned or leased by NYNEX) conforming to the Operator
Services Manual
"Charge Period" a charge period specified in Part 2 of Schedule 3
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"Circuit" a telecommunications transmission circuit which has
capacity of one unit of two MBit/s
"CLI" has the meaning given to it in the draft Code of
Practice for Network Operators in Relation to Calling
Line Identification Display Services and other Related
Services dated 16 November 1994
"Connect to Number" the telephone number of an Emergency Organisation
applicable to the geographic area of a Customer`s
line
"COSAR" a cable operator`s service activation request conforming
to the Operator Services Manual
"Customer" a Person (including for the avoidance of doubt an
operator of a Relevant Connectable System) having a
contractual relationship with a Party or (as the context
requires) with another Person for the provision of
telecommunication services which are to be provided in
part or in whole by means of that Party's System
"DIEL Database" the databases operated by BT, Kingston Communications
(Hull) Plc and Mercury which record details of
disabled and elderly persons who have registered as
being entitled to free directory enquiry services
in accordance with the procedures implemented by such
Operators from time to time
"Director" the Person appointed from time to time as the Director
General of Telecommunications pursuant to section 1 of
the Act
"Directory Database" such database or databases (whether operated by Mercury
or any third party) as Mercury may access (directly or
indirectly) from time to time in connection with its
directory enquiry services
"Emergency the relevant local public police, fire, ambulance and
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Organisation" coast guard services and other similar organisations
providing assistance to the public in emergencies
"Footway Box" the apparatus housing a Point of Connection used for
purposes of In-Span Interconnection
"Force Majeure" any event which is described as such in Clause 10.1
"Holding Company" the meaning given in sections 736 and 736A Companies Act
1985
"In-Span a method of effecting Interconnection where the Point
Interconnection" of Connection which is not located in a building housing
either the Mercury or NYNEX Switch being located at the
point at which the Mercury and NYNEX cables in the
Interconnect Link meet and are joined, or the
demarcation point in the Interconnect Link between the
Mercury System and the NYNEX System
"Interconnect Design" the agreed design of a Point of Connection as specified
in Part 1 of Appendix 2 (Operational Procedures)
"Interconnection" the interconnection of the NYNEX System and the Mercury
System in accordance with the provisions of this Agreement
"Interconnect Link" the telecommunication apparatus necessary to establish
one or more transmission paths between the Parties'
Systems
"International Call" a Call which has been addressed to an Authorised
Overseas System
"International ISDN
Call" a Call dialled or which would as at the date hereof be
dialled using the prefix 000 before the appropriate
country code
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<PAGE> 24
"ISDN Call" a Call comprising:
(1) a 64KBit/s unrestricted bearer service as
defined in PNO-ISC (I) CP001; or
(2) a 3.1KHz terminating bearer service as
described in PNO-ISC (I) CP001.
"ITU - T" the Telecommunications Standards Bureau (formerly the
International Telegraph and Telephone Consultative
Committee) of the International Telecommunication Union
"Licence" an individual licence granted under section 7 of the Act
"Local Call" a Call to an NNG that is geographically next to or the
same as the NNG in which the Call originates
"London Inter-Bank the rate per annum of the offered quotation for sterling
Offered Rate" deposits for delivery on the due date for payment for a
period of three months as displayed on page 3750 on the
Telerate Service (or any other page that may replace page
3750 on that service) at or about 11 am London time on
the due date of payment provided that if such a rate is
not so displayed London Inter Bank Offered Rate shall
mean the rate quoted by National Westminster Bank PLC to
leading banks in the London interbank market at or about
11 am London time on the due date of payment for the
offering of sterling deposits of a comparable amount for
a period of three months. Such interest shall be
calculated on a daily basis
"Manuals" the Billing Manual, the Mercury CAT Manual, the O&M
Manual, the Operator Services Manual, the Provisioning
Manual, the Technical Principles Manual or any other
manual which the Parties agree in writing should be a
manual for the purposes of this Agreement
"Mercury CAT Manual" a set of guidelines governing the acceptance testing of
the Interconnection, and signed by the Parties for the
Mercury-Nynex 11 November 1996 Page 5 of 9
Interconnect Agreement Schedule 1, Definitions
<PAGE> 25
purposes of identification (as amended from time to time
with the written agreement of the Parties)
"Mercury FreeCall a Non-Geographic Call to a service which if made
by a Mercury Customer on the Mercury System would
be free of charge to that Customer and paid for by
the provider of that service
"Mercury LocalCall" a Non-Geographic Call to a service which if made
by a Mercury Customer on the Mercury System would
be charged to that Customer at Mercury's local
Call rates
"Mercury
NationalCall" a Non-Geographic Call to a service which if made
by a Mercury Customer on the Mercury System would
be charged to that Customer at Mercury's national
Call rates
"Message" anything falling within paragraphs (a) to (d) of
section 4 (1) of the Act
"National Call" a Call (other than a Non-Geographic Call) which
has been addressed to a Network Termination Point
in the UK
"Network Termination
Point" a network termination point as defined, in the
case of Mercury, in Annex A of the Mercury Licence
and, in the case of any other Operator, in Annex A
of that Operator's Licence
"New Service" any telecommunication service which a Party is
obliged to provide to the other (under the
Condition in its Licence entitled "Connection of
the Systems Providing Connection Services") and
which is not specified in Schedule 2
"NNG Group" an NNG Group specified in Schedule 4
"NICC" Network Interoperability Co-ordinating Committee
Mercury-Nynex 11 November 1996 Page 6 of 9
Interconnect Agreement Schedule 1, Definitions
<PAGE> 26
"Non-Geographic Call" a Call in respect of which the location of the
called Customer cannot be determined by reference
only to the telephone number called
"O&M Manual" a set of guidelines governing the operation and
maintenance of the Interconnection, and signed by
the Parties for the purposes of identification (as
amended from time to time with the written
agreement of the Parties)
"Operator" a Person authorised by a Licence to run a System
"Operator Connected
Call" a Call connected by the Mercury operator
"Operator Services
Manual" a set of guidelines governing the operation of
Operator services of the Interconnection, and
signed by the Parties for the purposes of
identification (as amended from time to time with
the written agreement of the Parties)
"Order" an order for the provision of Capacity to be
provided by a Party pursuant to Part 2 of Appendix
2 (Operational Procedures)
"Order Cancellation
Charge" an order cancellation charge specified in Part 1
of Schedule 3 arising in respect of the
cancellation of an Order
"Partial CLI" information not identifying the specific number of
the telephone line on which the Call originated
but identifying:
(a) the first Switch which is capable of responding to
a request for CLI; and
(b) the incoming route to that Switch
"Party" a party to this Agreement
Mercury-Nynex 11 November 1996 Page 7 of 9
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<PAGE> 27
"Person" any individual or body of persons whether corporate or
incorporate
"PDH" plesiochronous digital hierarchy
"PNOIG" Public Network Operators Interest Group
"Point of Connection" a physical point at which the Mercury System and the
NYNEX System is or are to be connected in
accordance with Clause 2
"Provisioning a set of guidelines governing the provision of
Manual" Interconnection and signed by the Parties for the
purposes of identification (as amended from time to
time with the written agreement of the Parties)
"Public
Telecommunications an Operator defined as such under section 9(3) of the
Operator" Act
"QuickCall" a Call by a Customer to Mercury's national directory
enquiries service whereby the Customer may request one
number and the service will be provided by an automatic
voice response system
"Rearrangement
Charge" a rearrangement charge specified in Part 1 of Schedule 3
"Relevant Connectable
System" a relevant connectable system as defined in Condition 12
of the Mercury Licence
"RFS Date" the date on which Capacity is successfully tested and is
ready for service in accordance with this Agreement
"RFT Date" the date on which Capacity is ready for testing in
accordance with this Agreement
"Reverse Billed
Services" Telecommunication Services in respect of which the
Parties agree that Calls shall be recorded and invoiced
in accordance with paragraph 3 of Appendix 3 (Billing
Procedures)
Mercury-Nynex 11 November 1996 Page 8 of 9
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"SDH" synchronous digital hierarchy
"SelectCall" a Call by a NYNEX Customer to Mercury's national
directory enquiries service whereby the Customer may
request multiple numbers
"Subsidiary" the meaning given in sections 736 and 736A Companies Act
1985
"Switch" the telecommunication apparatus within a System which
performs the function of switching and routing Messages
and which can connect two or more points within such
System or connect one such point to a System run by
another Person
"System" any system falling within section 4(1) of the Act
(including the commands and protocols stored therein)
"Technical a set of guidelines governing the technical principles of
Principles Manual" the Interconnection, and signed by the Parties for the
purposes of identification (as amended from time to time
with the written agreement of the Parties)
"Telecommunication
Services" the services specified in Schedule 2
"Third Party
Operator" an Operator other than the Parties
"Traffic Route" a discrete and identifiable set of Circuits established
between a Mercury Switch and a NYNEX Switch
"Transit National
Call" a Call conveyed in accordance with paragraph 2.1
of Schedule 2
"Working Day" any day other than a Saturday, Sunday or public or bank
holiday in England
Mercury-Nynex 11 November 1996 Page 9 of 9
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<PAGE> 29
SCHEDULE 2
TELECOMMUNICATION SERVICES
1A NATIONAL CALLS TO A MERCURY NETWORK TERMINATION POINT
1.A1 Mercury shall convey each National Call handed over from the NYNEX System
to the appropriate Network Termination Point on the Mercury System to which
such National Call has been addressed.
1.A2 Mercury's charges for the conveyance of such National Calls shall be
calculated by reference to the rates specified in Tables 1.A.1 and 1.A.2 of
Part 2 of Schedule 3, the NNG Groups and the Charge Periods.
1.A3 Mercury shall convey such National Calls from the date hereof subject to
Part 6 of Appendix 1.
1B NATIONAL CALLS TO A NYNEX NETWORK TERMINATION POINT
1.B1 NYNEX shall convey each National Call handed over from the Mercury System
to the appropriate Network Termination Point on the NYNEX System to which such
National Call has been addressed.
1.B2 NYNEX's charges for the conveyance of such National Calls shall be
calculated by reference to the rates specified in Table 1.B of Part 2 of
Schedule 3, the NNG Groups and the Charge Periods.
1.B3 NYNEX shall convey such National Calls from the date hereof subject to
Part 6 of Appendix 1.
1.B4 In respect of National Calls conveyed in accordance with paragraph 1.B1
above after 1 April 1995, the rates set out at Table 1.B of Part 2 of Schedule
3 shall be adjusted from time to time so as to equal the corresponding
conveyance rates paid by BT to NYNEX. Such adjustment shall take effect
retrospectively on the date from which such rates were first offered to BT by
NYNEX or (if earlier) the date from which NYNEX agrees with BT that those rates
shall take effect.
1.B5 Where the charges calculated in accordance with paragraph 1.B4 are
different from those set out at Table 1.B of Part 2 of Schedule 3, the Parties
shall in respect of such periods
Mercury-Nynex 11 November 1996 Page 1 of 17
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<PAGE> 30
during which the charges differ reimburse or pay each other for any excess or
shortfall (as the case may be) which arises by virtue of such calculation or
re-calculation together with interest calculated on each excess and shortfall
from the date of payment of any excess and the due date of reimbursement or
payment (as the case may be) at the London Inter-Bank Offered Rate plus 3/8 per
cent. Such reimbursement or payment shall be made within one month of the
appropriate adjustment under paragraph 1.B4.
2 CONVEYANCE BY MERCURY OF TRANSIT NATIONAL CALLS
2.1 Mercury shall convey to a Third Party Operator Transit National Calls
handed over from the NYNEX System which are not addressed to a Network
Termination Point on the Mercury System.
2.2 Mercury's charges for the conveyance of Transit National Calls shall be
calculated by reference to the rates specified in Tables 2.1, 2.2 and 2.3 of
Part 2 of Schedule 3, the NNG Groups and the Charge Periods.
2.3 Mercury shall convey such Transit National Calls from the date hereof
subject to Part 6 of Appendix 1.
2.4 1995/6 National Backdating
2.4.1 Mercury shall generate samples of Call data records describing all
Transit National Calls sent by NYNEX to Mercury during a seven consecutive day
period in each calender month during the period 1 April 1995 to 31 March 1996
(the "95/96 National Backdating Period") and shall calculate for each month,
using volume of traffic in seconds, the percentage share of such traffic sent
to each of the NNG groups A to F, (the "Sample Percentage Share").
2.4.2 Mercury shall calculate the total Transit National Call traffic sent by
NYNEX to Mercury in each calendar month during the 95/6 National Backdating
Period.
2.4.3 Mercury shall calculate an estimate of the volumes of traffic sent by
NYNEX to Mercury for each of the NNG groups A to F in each calendar month in
the 95/6 National Backdating Period by multiplying the Transit National Call
total traffic volumes for each calendar month by the relevant Sample Percentage
Share.
2.4.4 Mercury shall calculate, for each calendar month in the 95/6 National
Backdating Period, the amount that NYNEX would have paid to Mercury (if Mercury
had charged at the
Mercury-Nynex 11 November 1996 Page 2 of 17
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<PAGE> 31
rates in Table 2.1 of Part 2 of Schedule 3) by applying such rates to the
volumes of traffic calculated under paragraph 2.4.3 above.
2.4.5 If the amount actually paid by NYNEX to Mercury in respect of such
Transit National Calls in any calendar month in the 95/6 National Backdating
Period is different from the amount for that month calculated under paragraph
2.4.4 above, the Parties shall reimburse or pay each other for any excess or
shortfall (as the case may be) within one month of the date of this Agreement
together with interest calculated on each excess and shortfall from the date of
payment of any excess and the due date of any shortfall to the date of
reimbursement or payment (as the case may be) at the London Inter-Bank Offered
Rate plus 3/8 per cent.
2.4.6 Following the completion of the activities specified in paragraphs 2.4.1
to 2.4.5 and a determination by the Director of the final charges payable by
Public Telecommunications Operators to BT in respect of Transit National Calls
conveyed during the year ending 31 March 1996, Mercury shall calculate the
total amount (the "Actual 95/6 National Amount") that NYNEX would have paid to
Mercury in respect of each month of the 95/6 National Backdating Period, if
Mercury had charged NYNEX for all Transit National Calls conveyed by Mercury
during such months destined to NNG groups A to F at the rates specified below:
Final 95/6 A = A + (ST1 - ST)
Final 95/6 B = B + (ST1 - ST)
Final 95/6 C = C + (ST1 - ST)
Final 95/6 D = ST1 + 0.8 (DT1 - ST1)
Final 95/6 E = ST1 +0.8 (DT1 - ST1)
Final 95/6 F = ST1 + 0.8 (DT1 - ST1)
Where
A,B and C are the rates in Table 2.1 of Part 2 of Schedule 3
ST = 1.2441 (Standard), 0.7346 (Economy), 0.5502 (Weekend)
ST1 = Final Determined BT Single Tandem Conveyance Rate
DT1 = Final Determined Average BT Double Tandem Plus Conveyance
Rate or where no such average rate is determined, a rate calculated
using the three Double Tandem bands (0-100km, 100-200km and 200+km)
and the ratio referred to in the Determination of Interim Standard
Charges for BT's Initial Standard Services for year ending 31 March
1996 and dated January 1996.
(where each excludes any Access Deficit Contribution payable to BT).
Mercury-Nynex 11 November 1996 Page 3 of 17
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<PAGE> 32
2.4.7 If the amount paid to Mercury in respect of any month (the "Mercury 95/6
National Amount") (net of any reimbursements under paragraph 2.4.5 above) for
such Transit National Calls during the 95/6 National Backdating Period
(destined for NNG groups A to F) shall be more than the Actual 95/6 National
Amount for that month, Mercury shall refund the difference to NYNEX within one
month of the determination by the Director of the final charges for such
Transit National Calls payable to BT together with interest calculated on each
excess from the date of payment of any excess to the date of reimbursement at
the London Inter-Bank Offered Rate plus 3/8 per cent.
2.4.8 For the avoidance of doubt, no additional payment shall be made to
Mercury if the Mercury 95/6 National Amount in respect of any month during the
95/6 National Backdating Period shall be less than the Actual 95/6 National
Amount for that month.
2.5 1996/7 Initial National Backdating
2.5.1 Mercury shall calculate the total Transit National Traffic sent by NYNEX
to Mercury in each of April, May, June and July 1996 (the "96/7 Initial
National Backdating Period").
2.5.2 Mercury shall calculate, for each calendar month in the 96/7 Initial
National Backdating Period, the amount that NYNEX would have paid to Mercury if
Mercury had charged at the rates in Table 2.2 of Part 2 of Schedule 3 by
applying such rates to the total Transit National traffic calculated under
paragraph 2.5.1.
2.5.3 If the amount actually paid by NYNEX to Mercury in any calendar month in
respect of such Transit National Calls in any month in the 96/7 Initial
National Backdating Period is more than the amount for that month calculated
under paragraph 2.5.2. above, Mercury shall refund the difference to NYNEX
within two months of the date of this Agreement together with interest
calculated on each excess from the date of payment of any excess to the date of
reimbursement at the London Inter-Bank Offered Rate plus 3/8 per cent.
2.5.4 Following a determination by the Director of the final charges payable by
Public Telecommunications Operators to BT in respect of Transit National Calls
conveyed during the year ending 31 March 1997, Mercury shall calculate the
total amount (the "BT 96/7 Initial National Amount") that NYNEX would have paid
to BT in respect of each month from 1 April 1996 to 31 July 1996 (the "96/7
Initial National Backdating Period"), if NYNEX had handed over to BT all
Transit National Calls destined to NNG Groups D, E and F which were actually
handed over to Mercury during the 96/7 Initial National Backdating Period.
Such calculation shall be performed using the final charges applicable to such
Transit National Calls payable to
Mercury-Nynex 11 November 1996 Page 4 of 17
Interconnect Agreement Schedule 2, Telecommunications Services
<PAGE> 33
BT for the relevant period as determined by the Director and applying such
final charges to the amount of traffic actually handed over to Mercury.
2.5.5 For the purposes of calculating the amount of traffic pursuant to
paragraph 2.5.4 all National Transit Calls passed by NYNEX to Mercury from the
period 1 July 1996 to 31 July 1996 shall be taken to be representative of the
Transit National Calls passed during the Initial National Backdating Period.
2.5.6 Mercury shall use the data contained in the first version of the
de-averaged EBC Matrix Build 007 published by BT and to be used with effect
from 1 October 1996 (the "BT Matrix"), to determine which rate shall apply to
each Transit National Call destined for NNG Groups D, E and F during the 96/7
Initial Backdating Period.
2.5.7 If the amount paid to Mercury (the "Mercury 96/7 National Amount") (net
of any reimbursements under paragraph 2.5.3 above) in respect of such Transit
National Calls in any month during the 96/7 National Backdating Period
(destined for NNG Groups D, E and F) shall be more than the BT 96/7 Initial
National Amount for that month, Mercury shall refund the difference to NYNEX
within one month of the determination by the Director of the final charges for
such Calls payable to BT together with interest calculated on each excess from
the date of payment of any excess to the date of reimbursement at the London
Inter-Bank Offered Rate plus 3/8 per cent.
2.5.8 For the avoidance of doubt, no additional payment shall be made to
Mercury if the Mercury 96/7 Initial National Amount in any month during the
96/7 Initial National Backdating Period shall be less than the BT 96/7 Initial
National Amount for that month.
2.6 1996/7 National Backdating
2.6.1 Mercury shall generate samples of Call data records describing all
Transit National Calls sent by NYNEX to Mercury during a seven day consecutive
period in each calendar month from 1 August 1996 until 31 March 1997 (the "96/7
National Backdating Period") and shall calculate for each month, using volume
of traffic in seconds, the percentage share of such traffic sent to each of the
NNG Groups D, E and F (the "Sample Percentage Share").
2.6.2 Following a determination by the Director of the final charges payable by
Public Telecommunications Operators to BT in respect of Transit National Calls
conveyed during the year ending 31 March 1997, Mercury shall calculate the
total amount (the "BT 96/7 National Amount") that NYNEX would have paid to BT
in respect of each month in the 96/7 National Backdating Period, if NYNEX had
handed over to BT all Transit National Calls destined to
Mercury-Nynex 11 November 1996 Page 5 of 17
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<PAGE> 34
NNG Groups D, E and F which were actually handed over to Mercury during the
96/7 National Backdating Period. Such calculation shall be performed using the
final charges applicable to such Transit National Calls payable to BT for the
relevant period as determined by the Director and applying such final charges
to the amount of traffic actually handed over to Mercury.
2.6.3 The amount of traffic actually handed over to Mercury by NYNEX to be used
for the purpose of the calculations in paragraph 2.6.2 shall be calculated
using Mercury's billing records.
2.6.4 Mercury shall use the data contained in the BT Matrix, to determine which
rate should apply to each National Transit Call destined for NNG Groups D, E
and F during the 96/7 National Backdating Period.
2.6.5 If the amount paid to Mercury (hereafter referred to as the "Mercury 96/7
National Amount") in respect of such Double Tandem Transit National Calls in
any month during the 96/7 National Backdating Period (destined for NNG Groups
D, E and F) shall be more than the BT 96/7 National Amount for that month,
Mercury shall refund the difference to NYNEX within one month of the
determination by the Director of the final charges for such Calls payable to BT
together with interest calculated on each excess from the date of payment of
any excess to the date of reimbursement at the London Inter-Bank Offered Rate
plus 3/8 per cent.
2.6.6 For the avoidance of doubt, no additional payment shall be made to
Mercury if the Mercury 96/7 National Amount in any month during the 96/7
National Backdating Period shall be less than the BT 96/7 National Amount for
that month.
2.7 Mercury shall be entitled to increase its charges for the conveyance of
Transit National Calls in accordance with this Section 2 of Schedule 2 by
giving not less than two months' prior written notice to NYNEX of it's new
charges. Such new charges shall, in any event, become effective on the first
day of a calendar month.
2.8 For the avoidance of doubt, for the period 1 April 1996 to 31 March 1997,
all Transit National Calls to NNG Groups D, E and F shall be rated for billing
purposes as Double plus Tandem Calls falling within bands 527, 528 and 529 of
the BT Matrix, and in particular, those Transit National Calls which would fall
into the Single Tandem Transit category (band 526) of the BT Matrix shall be
treated as Double plus Tandem - short Calls falling within band 527 of the BT
Matrix.
Mercury-Nynex 11 November 1996 Page 6 of 17
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<PAGE> 35
3 CONVEYANCE BY MERCURY OF INTERNATIONAL CALLS
3.1 Mercury shall convey each International Call received from the NYNEX System
either directly or indirectly to an Authorised Overseas System.
3.2 Mercury's charges for the conveyance of International Calls from 1 February
1996 onwards shall be calculated by reference to the rates specified in Tables
3.1, 3.2 and 3.3 of Part 2 of Schedule 3 and the Charge Periods.
3.3 Mercury shall convey such International Calls from the date hereof.
4 CONVEYANCE BY MERCURY OF NON-GEOGRAPHIC CALLS
4.1 Mercury shall convey each Non-Geographic Call handed over from the NYNEX
System to the Network Termination Point on the Mercury System to which such
Call has been addressed.
4.2 If NYNEX intends to charge one of its Customers for a Mercury FreeCall it
shall so inform the Customer prior to the Call being conveyed to the Mercury
System.
4.3 NYNEX shall ensure none of its promotional material will undermine the
public perception that Mercury FreeCalls are free to Mercury's Customers, that
Mercury LocalCalls are charged to Mercury's Customers at Mercury's local Call
rates, that Mercury NationalCalls are charged to Mercury's Customers at
Mercury's national Call rates and that Calls to Mercury's premium rate services
are charged to Mercury's Customers at Mercury's premium rates.
4.4 Mercury's charges for the conveyance of such Non-Geographic Calls shall be
calculated by reference to the rates specified in Table 4 of Part 2 of Schedule
3 and the Charge Periods.
4.5 Mercury shall convey such Non-Geographic Calls from the date hereof.
5 CONVEYANCE BY MERCURY OF TRANSIT NON-GEOGRAPHIC CALLS
5.1 Mercury shall convey to a Third Party Operator each Non-Geographic Call
handed over from the NYNEX System which is not addressed to a Network
Termination Point on the Mercury System.
Mercury-Nynex 11 November 1996 Page 7 of 17
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5.2 Mercury's charges for the conveyance of such Non-Geographic Calls shall be
calculated by reference to the rates specified in Table 5 of Part 2 of Schedule
3 and the Charge Periods.
5.3 The charges specified in Table 5 of Part 2 of Schedule 3 include the
payments that Mercury makes to or receives from Third Party Operators to which
Mercury conveys such Non-Geographic Calls. If any of those payments are varied
Mercury shall notify NYNEX and either Party may review the corresponding
charges specified in such Table 5 in accordance with the provisions of Clause
14.1.3.
5.4 Mercury shall convey such Non-Geographic Calls from the date hereof.
6 CONVEYANCE BY MERCURY OF INTERNATIONAL ISDN CALLS
6.1 Mercury shall convey each International ISDN Call handed over from the
NYNEX System either directly or indirectly to an Authorised Overseas System
provided that the appropriate Authorised Overseas System offers a complementary
ISDN service. The current service offerings are specified in Table 6 of Part 2
of Schedule 3.
6.2 Mercury's charges for the conveyance of such International ISDN Calls shall
be calculated by reference to the rates specified in Table 6 of Part 2 of
Schedule 3 and the Charge Periods.
6.3 Mercury shall convey such International ISDN Calls from the date hereof
subject to Part 6 of Appendix 1.
7 CALLING LINE IDENTIFICATION
7.1 Subject to paragraphs 7.2 and 7.3 below, if after the date hereof a Party
requests CLI from the other for the purpose of:
7.1.1 routing Calls;
7.1.2 the compilation of inter-Party bills;
7.1.3 agreed administrative use in accordance with accepted industry
practice from time to time which includes, at the date of this Agreement,
Call trace, malicious Call identification and compilation of statistics
relating to Call origin; and
Mercury-Nynex 11 November 1996 Page 8 of 17
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7.1.4 CLI Display Services and related services referred to in the Code of
Practice specified in paragraph 7.5 below
the originating Party shall generate CLI and convey it to the Party requesting
it who may use it solely for such purposes.
7.2 If a Party's System is unable to generate and convey CLI, but is able to
generate and convey Partial CLI, such Party shall generate Partial CLI and
convey it to the other Party.
7.3 A Party conveying Calls to a Third Party Operator shall convey, to the
extent received, CLI associated with those Calls.
7.4 Notwithstanding other provisions of this Agreement, a Party may use CLI to
pass telephone numbers to Emergency Organisations.
7.5 Each Party shall comply with the draft "Code of Practice for Network
Operators in relation to Calling Line Identification Services and other Related
Services" Version 6 dated 14 November 1994 in respect of CLI handed over from
one System to the other. If this draft Code of Practice is amended or replaced
either Party may initiate a review of this Agreement pursuant to Clause 14.1.3.
7.6 The charge for generating and conveying CLI is included in the relevant
conveyance rates for Calls from time to time specified in this Agreement.
Neither Party shall apply additional charges for CLI.
7.7 If a Party desires to charge separately for the generation or conveyance of
CLI such Party may initiate a review of this Agreement in accordance with
Clause 14.1.3.
7.8 If there is a change in applicable law or regulation materially affecting
the operation of CLI, the Parties shall seek to amend this Agreement to the
extent necessary to comply with the applicable law or regulation and if they
fail to agree such amendment, either Party may initiate a review of this
Agreement in accordance with Clause 14.1.3.
8 MERCURY NATIONAL DIRECTORY ENQUIRY SERVICES
8.1 NYNEX may ensure that its Customers may access Mercury's QuickCall and
SelectCall national directory enquiry services by routing Calls to the access
code(s) specified in Table 8 of Part 2 of Schedule 3.
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8.2 Mercury shall, subject to paragraph 8.3, inform the NYNEX Customer making
the enquiry of the telephone number of persons listed in the Directory Database
and located in the United Kingdom or Eire, upon NYNEX's Customer providing to
Mercury the following information relating to the person whose telephone number
is sought:
8.2.1 business or residential;
8.2.2 town/locality;
8.2.3 Customer surname;
8.2.4 Customer forename or initial;
8.2.5 street name; and
8.2.6 house number.
8.3 If a requested listing is identified in the Directory Database as
ex-directory, NYNEX's Customer making the enquiry shall be so informed and
shall not be supplied with the relevant number.
8.4 Mercury shall use its reasonable endeavours to answer ninety per cent of
all Calls made by NYNEX's Customers to the national directory enquiry services
(averaged over any twenty-four hour period) within fifteen seconds seven days
per week (with the exception of Christmas Day during which period seventy per
cent of Calls shall be answered within fifteen seconds). The balance of such
Calls shall be answered as soon as reasonably possible.
8.5 Mercury's charges for accessing its national directory enquiries services
are specified in Table 8 of Part 2 of Schedule 3.
8.6 Mercury shall commence the provision of the national directory enquiry
service on a date to be agreed.
8.7 Either Party may terminate the provision of the national directory enquiry
services on not less than three months prior notice in writing to the other
Party.
9 MERCURY INTERNATIONAL DIRECTORY ENQUIRY SERVICE
9.1 NYNEX may ensure that its Customers may access Mercury's international
directory enquiry service by routing Calls to the access code(s) specified in
Table 9 of Part 2 of Schedule 3. NYNEX's Customers may request up to two
numbers per Call.
9.2 Mercury shall, subject to paragraph 9.3, inform the NYNEX Customer making
the enquiry of the telephone number of persons listed in the Directory
Database, upon NYNEX`s
Mercury-Nynex 11 November 1996 Page 10 of 17
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Customer providing to Mercury the following information relating to the person
whose telephone number is sought:
9.2.1 business or residential;
9.2.2 country/town/locality;
9.2.3 Customer surname;
9.2.4 Customer forename or initial;
9.2.5 street name; and
9.2.6 house number.
9.3 If a requested listing is identified in the Directory Database as
ex-directory, NYNEX's Customer making the enquiry shall be so informed and
shall not be supplied with the relevant number.
9.4 Mercury shall use its reasonable endeavours to answer ninety per cent of
all Calls by NYNEX's Customers to the international directory enquiry service
(averaged over any twenty-four hour period) within fifteen seconds seven days
per week (with the exception of Christmas Day during which period seventy per
cent of Calls shall be answered within fifteen seconds). The balance of such
Calls shall be answered as soon as reasonably possible.
9.5 Mercury's charges for accessing its international directory enquiry
services are specified in Table 9 of Part 2 of Schedule 3.
9.6 Mercury shall commence the provision of the international directory enquiry
service on the date hereof.
9.7 Either Party may terminate the provision of the international directory
enquiries service on not less than three months prior notice in writing to the
other Party.
10 MERCURY DIEL DIRECTORY ENQUIRY SERVICE
10.1 NYNEX may ensure that its Customers who are registered in the DIEL
Database in accordance with paragraph 10.4 may access Mercury's DIEL directory
enquiries service by routing Calls to the access code(s) specified in Table 10
of Part 2 of Schedule 3.
10.2 Mercury shall, subject to paragraph 10.3, inform NYNEX's Customer making
the enquiry of the telephone number of persons listed in the Directory
Database, upon such Customer providing to Mercury the following information
relating to the person whose telephone number is sought:
Mercury-Nynex 11 November 1996 Page 11 of 17
Interconnect Agreement Schedule 2, Telecommunications Services
<PAGE> 40
10.2.1 business or residential;
10.2.2 country/town/locality;
10.2.3 Customer surname;
10.2.4 Customer forename or initial;
10.2.5 street name; and
10.2.6 house number.
10.3 If a requested listing is identified in the Directory Database as
ex-directory, NYNEX's Customer making the enquiry shall be so informed and
shall not be supplied with the relevant number.
10.4 Mercury shall register in its DIEL Database as blind or disabled those
Customers of NYNEX who apply to Mercury for registration subject to those
Customers fulfilling the same criteria as are applied to Mercury's Customers
for registration as blind or disabled.
10.5 Mercury shall use its reasonable endeavours to answer ninety per cent of
all Calls by Customers of NYNEX to the DIEL directory enquiries services
(averaged over any twenty-four hour period) within fifteen seconds seven days
per week (with the exception of Christmas Day during which period seventy per
cent of Calls shall be answered within fifteen seconds). The balance of such
Calls shall be answered as soon as reasonably possible.
10.6 Mercury's charges for accessing its DIEL directory enquiry service are
specified in Table 10 of Part 2 of Schedule 3.
10.7 Mercury shall commence the provision of the DIEL directory enquiry service
on a date to be agreed.
10.8 Either Party may terminate the provision of the DIEL directory enquiry
service on not less than three months prior notice in writing to the other
Party.
11 MERCURY NATIONAL OPERATOR ASSISTANCE SERVICE
11.1 NYNEX may ensure that its Customers may access Mercury's national operator
assistance service, other than from a payphone, by routing Calls to the access
code(s) specified in Table 11 of Part 2 of Schedule 3.
11.2 NYNEX shall send Mercury the identity of the originating line by means of
the CLI.
Mercury-Nynex 11 November 1996 Page 12 of 17
Interconnect Agreement Schedule 2, Telecommunications Services
<PAGE> 41
11.3 When so requested, Mercury shall:
11.3.1 assist NYNEX's Customers to complete calls to persons in the United
Kingdom and Eire via the Mercury System; and
11.3.2 provide Customers of NYNEX upon request with an Alarm Call to be
attempted within five minutes of the time requested by the Customer
of NYNEX provided that the request is made from a fixed exchange
line for an Alarm Call to be charged and attempted to that same
exchange line.
11.4 Mercury shall use its reasonable endeavours to answer ninety per cent of
all Call by NYNEX's Customers to the national operator assistance service
(averaged over any twenty-four hour period) within fifteen seconds seven days
per week (with the exception of Christmas Day during which period seventy per
cent of Calls shall be answered within fifteen seconds). The balance of such
Calls shall be answered as soon as reasonably possible.
11.5 Mercury shall use its reasonable endeavours to provide to NYNEX the called
Customer number for Alarm Calls and the following details of national Operator
Connected Calls:
11.5.1 calling Customer number;
11.5.2 Call destination;
11.5.3 Call duration; and
11.5.4 such other relevant information as may be agreed between the Parties
from time to time in writing.
Provided that NYNEX complies with paragraph 11.2, NYNEX shall have no
obligation to pay Mercury for those national Operator Connected Calls and Alarm
Calls where the above minimum information is not provided.
11.6 Mercury's charges for accessing its national operator assistance service
are specified in Table 11 of Part 2 of Schedule 3. With respect to an Alarm
Call such charges accrue at the time the request for an Alarm Call was made by
NYNEX's Customer.
11.7 Mercury's charges for the onward conveyance of national Operator Connected
Calls are specified in Tables 1.A, 2.1, 2.2, 2.3, 4 and 5 of Part 2 of Schedule
3.
Mercury-Nynex 11 November 1996 Page 13 of 17
Interconnect Agreement Schedule 2, Telecommunications Services
<PAGE> 42
11.8 Mercury shall commence the provision of the national operator assistance
service from the date hereof.
11.9 Either Party may terminate the provision of the national operator
assistance service on not less than three months prior notice in writing to the
other Party.
12 MERCURY INTERNATIONAL OPERATOR ASSISTANCE
12.1 NYNEX may ensure that its Customers may access Mercury's international
operator assistance service, other than from a payphone, by routing Calls to
the access code(s) specified in Table 12 of Part 2 of Schedule 3.
12.2 NYNEX shall send Mercury the identity of the originating line by means of
the CLI.
12.3 When so requested, Mercury shall:
12.3.1 provide advice and assistance to NYNEX's Customers on the completion
of Calls to Authorised Overseas Systems which can be reached via the
Mercury System;
12.3.2 provide information to NYNEX's Customers on international dial codes
and time zones; and
12.3.3 provide advice and assistance to NYNEX's Customers on the completion
of Calls to a ship at sea which possesses suitable satellite
communication equipment.
12.4 Mercury shall use its reasonable endeavours to answer ninety per cent of
all Calls by NYNEX Customers to the international operator assistance service
(averaged over any twenty-four hour period) within fifteen seconds seven days
per week (with the exception of Christmas Day during which period seventy per
cent of Calls shall be answered within fifteen seconds), the balance of such
Calls shall be answered as soon as reasonably possible.
12.5 Mercury shall use its reasonable endeavours to provide to NYNEX the
following details of international Operator Connected Calls to the Mercury
international operator assistance service:
12.5.1 calling Customer number;
12.5.2 Call destination;
Mercury-Nynex 11 November 1996 Page 14 of 17
Interconnect Agreement Schedule 2, Telecommunications Services
<PAGE> 43
12.5.3 Call duration; and
12.5.4 such other relevant information as may be agreed between the
Parties from time to time in writing.
Provided that NYNEX complies with paragraph 12.2, NYNEX shall have no
obligation to pay Mercury for those International Operator Connected Calls
where the above minimum information is not provided.
12.6 Mercury's charges for accessing its international operator assistance
service are specified in Table 12 of Part 2 of Schedule 3.
12.7 Mercury's charges for the onward connection of Calls from 1 February 1996
onwards are specified in Tables 3.1, 3.2 and 3.3 and 5 of Part 2 of Schedule 3.
12.8 Mercury shall commence the provision of the international operator
assistance service from the date hereof.
12.9 Either Party may terminate the provision of the international operator
assistance service on not less than three months prior notice in writing to the
other Party.
13 MERCURY EMERGENCY SERVICES
13.1 NYNEX may ensure that its Customers, subject to paragraph 13., may access
Mercury's emergency service by routing Calls to the access code(s) specified in
Table 13 of Part 2 of Schedule 3.
13.2 Mercury's emergency service shall only be available to those
Customers of NYNEX:
13.2.1 who are directly connected to NYNEX's System via fixed exchange
lines;
13.2.2 who have a telephone number conforming to the UK numbering schemes
established by the Director from time to time;
13.2.3 whose number, name, address and postcode details have been provided
by NYNEX in the form of a COSAR via the CD Trans System (or via
another form acceptable to Mercury); and
Mercury-Nynex 11 November 1996 Page 15 of 17
Interconnect Agreement Schedule 2, Telecommunications Services
<PAGE> 44
13.2.4 in respect of whom Mercury has assigned a Connect To Number in
accordance with paragraph 13.6.
13.3 NYNEX shall send Mercury the identity of the originating line by means of
the CLI.
13.4 NYNEX shall provide updates of all Customer details, activations and
cessations in the form of a COSAR via the CD Trans System (or via another form
acceptable to Mercury) as soon as reasonably practical.
13.5 Mercury shall include such updated Customer information supplied by NYNEX
pursuant to paragraph 13.4 above on Mercury`s emergency centre database as soon
as reasonably practicable and in any event no later than the timescale for
equivalent Mercury Customer information.
13.6 Mercury shall assign appropriate Connect To Numbers for each Customer of
NYNEX and, as soon as reasonably practical, install that information in
Mercury's emergency centre database.
13.7 Mercury shall use its reasonable endeavours:
13.7.1 to convey each Call from a Customer of NYNEX to the Emergency
Organisation requested by such Customer based upon the Connect To
Numbers in Mercury's emergency centre database; and
13.7.2 to liaise and co-operate with NYNEX in resolving any problems that
may arise and assist the Emergency Organisations with requests for
call-trace in the event of failure of a Call.
13.8 Mercury shall provide training to its emergency centre operators for the
purpose of providing its emergency service to NYNEX's Customers.
13.9 All Calls originating from NYNEX Customers shall be recorded by Mercury
and the recordings shall be archived for a period of three months. NYNEX shall
log all Calls to Mercury's emergency service at the originating switch.
13.10 Mercury's charges for its emergency service are specified in Table 13 of
Part 2 of Schedule 3.
Mercury-Nynex 11 November 1996 Page 16 of 17
Interconnect Agreement Schedule 2, Telecommunications Services
<PAGE> 45
13.11 Mercury's charges for processing a Customer's details via a form other
than the CD Trans System (provided by NYNEX in accordance with paragraphs
13.2.3 and 13.3) are specified in paragraph 13 of Part 2 of Schedule 3.
13.12 Mercury shall commence the provision of the emergency service from the
date hereof.
13.13 Either Party may terminate the provision of the emergency service on not
less than twelve months prior notice in writing to the other Party.
13.14 NYNEX shall maintain a primary and a secondary 24 hour point of contact
to give operational assistance to Mercury:
13.14.1 in resolving problems that may arise with Calls to the emergency
service from NYNEX Customers; and
13.14.2 in assisting the Emergency Organisations with requests for
information in respect of NYNEX Customers.
Mercury-Nynex 11 November 1996 Page 17 of 17
Interconnect Agreement Schedule 2, Telecommunications Services
<PAGE> 46
SCHEDULE 3 - CHARGES
PART 1 - CAPACITY
CAPACITY CHARGES
<TABLE>
<CAPTION>
PER CIRCUIT (2MB/S)
<S> <C>
Set Up L.2500
Annual Rental L.300
</TABLE>
ORDER CANCELLATION CHARGES
<TABLE>
<CAPTION>
Provision Timescale Days to % of Capacity Set
Cancellation Up Charges Payable
following Order
Date
<S> <C> <C>
65 days 0-5 0%
6-40 20%
41-64 40%
65+ 50%
25 days 0-5 0%
6-15 20%
16-24 40%
25+ 50%
</TABLE>
REARRANGEMENT CHARGES
<TABLE>
<CAPTION>
PER CIRCUIT (2MB/S)
<S> <C>
Set Up L.700
</TABLE>
Mercury-Nynex 11 November 1996 Page 1 of 28
Interconnect Agreement Schedule 3, Charges
<PAGE> 47
PART 2 - TELECOMMUNICATION SERVICES
CHARGE PERIODS
<TABLE>
<CAPTION>
TYPE PRIME STANDARD ECONOMY WEEKEND
<S> <C> <C> <C> <C>
1 - 0800 - 1800 All other hours -
Monday - Friday
2 - 0800 - 2000 All other hours -
Monday - Friday
3 - 0700 - 1430 All other hours -
1930 - 2400
Every day
4 - 0800 - 2000 All other hours -
Every day
5 - One charging - -
period only
6 - 0800 - 1800 1800 - 0800 0000 - 2400
Monday - Friday Monday - Friday Saturday - Sunday
7 0900 - 1300 0800 - 0900 All other hours -
Monday - Friday 1300 - 1800
Monday - Friday
8 1500 - 1700 0800 - 1500 All other hours -
Monday - Friday 1700 - 2000
Monday - Friday
</TABLE>
Certain days in the year are deemed (by Mercury and NYNEX as appropriate) for
certain services to be Special days. These days attract charges equivalent to
the applicable Sunday rate for the service. The Special days for 1996 listed
below are:
1 January
5 & 8 April
6 & 27 May
26 August
25 & 26 December
Mercury-Nynex 11 November 1996 Page 2 of 28
Interconnect Agreement Schedule 3, Charges
<PAGE> 48
1.A.1 RATES FOR NATIONAL CALLS TO A MERCURY NETWORK
---------------------------------------------
TERMINATION POINT: 1 APRIL 95 TO 31 MARCH 96
---------------------------------------------
<TABLE>
<CAPTION>
RATE CHARGE PERIOD TYPE STANDARD ECONOMY WEEKEND
<S> <C> <C> <C> <C>
RATE A 6 1.12 0.66 0.50
RATE B 6 1.12 0.66 0.50
RATE C 6 1.12 0.66 0.50
RATE D 6 1.69 1.00 0.75
RATE E 6 1.69 1.00 0.75
RATE F 6 1.69 1.00 0.75
</TABLE>
Note: The NNG groups in each of rate bands A to F are specified in respect of
each Point of Connection in Schedule 4.
1.A.2 RATES FOR NATIONAL CALLS TO A MERCURY NETWORK TERMINATION POINT: 1 APRIL
96 TO 31 MARCH 97
<TABLE>
<CAPTION>
RATE CHARGE PERIOD TYPE STANDARD ECONOMY WEEKEND
<S> <C> <C> <C> <C>
RATE A 6 1.12 0.66 0.50
RATE B 6 1.12 0.66 0.50
RATE C 6 1.12 0.66 0.50
RATE D 6 1.69 1.00 0.75
RATE E 6 1.69 1.00 0.75
RATE F 6 1.69 1.00 0.75
</TABLE>
Note: The NNG groups in each of rate bands A to F are specified in respect of
each Point of Connection in Schedule 4.
1.B RATES FOR NATIONAL CALLS TO A NYNEX NETWORK TERMINATION POINT: EFFECTIVE
FROM 1 APRIL 95
<TABLE>
<CAPTION>
RATE CHARGE PERIOD TYPE STANDARD ECONOMY WEEKEND
<S> <C> <C> <C> <C>
RATE A 6 1.40 0.63 0.63
</TABLE>
Note: The NNG groups in each of rate bands A to F are specified in respect of
each Point of Connection in Schedule 4.
Mercury-Nynex 11 November 1996 Page 3 of 28
Interconnect Agreement Schedule 3, Charges
<PAGE> 49
2.1 MERCURY TRANSIT NATIONAL CALL RATES:
-------------------------------------------------------------------------
1 APRIL 95 TO 31 MARCH 96
-------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATE CHARGE PERIOD TYPE STANDARD ECONOMY WEEKEND
<S> <C> <C> <C> <C>
RATE A 6 1.31 0.77 0.58
RATE B 6 1.79 1.06 0.79
RATE C 6 2.20 1.30 0.97
RATE D 6 1.88 1.11 0.83
RATE E 6 1.88 1.11 0.83
RATE F 6 1.88 1.11 0.83
</TABLE>
Note: The NNG groups in each of rate bands A to F are specified in respect of
each Point of Connection in Schedule 4.
2.2 MERCURY TRANSIT NATIONAL CALL RATES:
-------------------------------------------------------------------------
1 APRIL 96 TO 31 JULY 96
-------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATE CHARGE PERIOD TYPE STANDARD ECONOMY WEEKEND
ALL RATE BANDS: A -
<S> <C> <C> <C> <C>
F 6 1.490 0.880 0.660
</TABLE>
2.3 MERCURY TRANSIT NATIONAL CALL RATES:
1 AUGUST 96 TO 31 MARCH 97
<TABLE>
<CAPTION>
CHARGE BAND DAYTIME EVENING WEEKEND
CATEGORIES CHARGE PERIOD TYPE PENCE PER MINUTE PENCE PER MINUTE PENCE PER MINUTE
<S> <C> <C> <C> <C>
SINGLE TANDEM 6 1.139 0.708 0.535
DOUBLE TANDEM (1)
0 - <100KM 6 1.139 0.708 0.535
DOUBLE TANDEM (2)
100 - <200KM 6 1.288 0.801 0.605
DOUBLE TANDEM (3)
>=200 KM 6 1.555 0.967 0.731
</TABLE>
Note: The reference DMSU in respect of each Point of Connection is specified
in Schedule 4.
Mercury-Nynex 11 November 1996 Page 4 of 28
Interconnect Agreement Schedule 3, Charges
<PAGE> 50
3. MERCURY INTERNATIONAL CALL RATES
TABLE 3.1 - INTERNATIONAL RATES: 1 FEBRUARY 96 TO 31 MAY 96
<TABLE>
<CAPTION>
SPEND BAND BASE LEVEL 1 LEVEL 2
TOTAL INTERNATIONAL
MONTHLY REVENUE AT SPEND
BAND RATES L.0 TO L.30K OVER L.30K OVER L.150K
COUNTRY STD ECON STD ECON STD ECON
<S> <C> <C> <C> <C> <C> <C>
Afghanistan 101.31 101.31 101.31 101.31 101.31 101.31
Albania 48.16 48.16 48.16 48.16 48.16 48.16
Algeria 46.79 46.79 46.79 46.79 46.79 46.79
Andorra (France) 25.20 20.87 23.73 20.87 23.14 20.87
Angola 66.95 66.08 66.95 66.08 66.95 66.08
Anguilla 59.36 57.08 59.36 57.08 58.37 57.08
Antigua & Barbuda 59.36 48.74 51.89 48.74 49.30 48.74
Antilles (Netherlands) 63.49 50.94 50.64 46.11 49.37 43.80
Argentina 72.63 61.78 64.11 61.78 62.50 61.78
Armenia 67.57 67.57 67.57 67.57 67.57 67.57
Aruba 63.49 50.94 44.87 44.87 43.75 43.75
Ascension Island 66.00 60.00 66.00 60.00 66.00 60.00
Australia 26.14 24.57 24.16 23.11 22.95 21.95
Australian External
Territories (Antartica) 94.81 94.81 94.81 94.81 94.81 94.81
Austria 22.95 19.43 19.23 19.23 18.75 18.75
Azerbaijan 72.25 72.25 72.25 72.25 72.25 72.25
Azores (Portugal) 25.00 20.00 25.00 20.00 25.00 20.00
Bahamas 59.36 48.74 37.82 35.82 36.87 35.82
Bahrain 64.77 55.60 62.11 55.60 59.00 55.60
Bangladesh 97.13 97.13 97.13 97.13 97.13 97.13
Barbados 59.36 48.74 50.63 48.74 48.10 48.10
Belarus 63.49 50.94 39.74 39.74 38.75 38.75
Belgium 17.86 14.88 17.31 14.88 16.88 14.88
Belize 76.69 77.63 76.69 77.63 76.69 77.63
Benin 72.63 66.76 72.63 66.76 72.63 66.76
Bermuda 59.18 48.74 37.79 34.21 35.90 32.50
Bhutan 101.46 101.46 101.46 101.46 101.46 101.46
Bolivia 66.95 66.08 57.68 57.68 56.24 56.24
Bosnia-Hercegovinia 49.75 49.75 49.75 49.75 49.75 49.75
Botswana 62.00 61.00 62.00 61.00 62.00 61.00
Brazil 72.63 61.48 54.47 49.28 51.75 48.05
Brunei Darussalam 66.95 66.08 66.95 62.85 64.00 62.85
Bulgaria 30.00 25.30 30.00 25.30 30.00 25.30
Burkina Faso 66.95 66.08 64.10 64.10 62.50 62.50
Burundi 79.27 79.27 79.27 79.27 79.27 79.27
Cambodia 126.27 126.27 126.27 126.27 126.27 126.27
</TABLE>
Mercury-Nynex 11 November 1996 Page 5 of 28
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<PAGE> 51
Cameroon 72.63 61.48 72.63 61.48 71.87 60.96
Canada 14.90 14.90 9.94 9.94 9.44 9.44
Cape Verde 71.58 71.58 71.58 71.58 71.58 71.58
Cayman Islands 59.36 48.74 51.92 48.74 50.62 48.74
Central African Republic 93.40 93.40 93.40 93.40 93.40 93.40
Chad 101.13 101.13 101.13 101.13 101.13 101.13
Chatham Islands 22.50 22.50 22.50 22.50 22.50 22.50
Chile 72.63 61.48 58.19 49.26 56.73 46.80
China 110.02 110.40 110.02 110.40 110.02 110.40
Christmas Islands 66.95 66.08 64.10 64.10 62.50 62.50
Cocos Islands 38.71 32.12 38.71 32.12 38.71 32.12
Colombia 81.37 82.93 81.37 82.93 81.37 82.93
Comoros Islands 119.97 119.97 119.97 119.97 119.97 119.97
Congo 76.84 76.84 76.84 76.84 76.84 76.84
Cook Islands 106.74 106.74 106.74 106.74 106.74 106.74
Costa Rica 72.63 61.48 54.49 54.47 53.12 51.75
Cote D'Ivoire 93.30 93.30 93.30 93.30 93.30 93.30
Croatia 30.05 25.35 30.05 25.35 30.05 25.35
Cuba 72.40 72.40 72.40 72.40 72.40 72.40
Cyprus 32.70 27.94 32.05 27.94 30.45 27.94
Czech Republic 20.00 20.00 20.00 20.00 20.00 20.00
Denmark 17.86 14.88 15.38 14.88 15.00 14.88
Diego Garcia 101.31 101.31 101.31 101.31 101.31 101.31
Djibouti 88.10 88.10 88.10 88.10 88.10 88.10
Dominica 59.36 50.28 52.95 50.28 50.30 50.30
Dominican Republic 59.36 48.74 37.82 34.25 36.88 33.40
Easter Island 72.63 61.48 58.19 49.26 56.73 46.80
Ecuador 66.95 66.08 57.69 57.69 56.25 56.25
Egypt 77.94 66.90 62.79 56.25 59.65 54.85
El Salvador 72.63 61.48 57.69 57.69 56.25 56.25
Equatorial Guinea 101.62 101.62 101.62 101.62 101.62 101.62
Eritrea 101.31 101.31 101.31 101.31 101.31 101.31
Estonia 63.49 50.94 37.18 37.18 36.25 36.25
Ethiopia 83.74 83.74 83.74 83.74 83.74 83.74
Falkland Islands 66.95 66.08 66.95 66.08 66.95 66.08
Faroe Islands 25.20 20.87 25.20 20.87 25.20 20.87
Fiji 66.95 66.08 66.95 66.08 66.95 66.08
Finland 28.82 24.40 17.05 16.32 16.63 15.50
France 17.86 14.88 14.68 14.68 14.31 14.31
French Guiana 66.95 66.08 66.95 66.08 66.95 65.34
French Polynesia 101.30 101.30 101.30 101.30 101.30 101.30
Gabon 72.63 61.48 72.63 61.48 72.63 61.48
Gambia 72.63 61.48 72.63 61.48 72.63 61.48
Georgia 87.40 87.40 87.40 87.40 87.40 87.40
Germany 17.86 14.88 13.94 13.94 13.59 13.59
Ghana 72.63 61.48 57.69 57.69 56.25 56.25
Mercury-Nynex 11 November 1996 Page 6 of 28
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<PAGE> 52
Gibraltar 28.26 28.26 28.26 28.26 28.26 28.26
Greece 21.75 20.76 21.12 20.16 20.59 19.65
Greenland 112.02 112.02 112.02 112.02 112.02 112.02
Grenada (incl. Carriacou) 90.60 70.03 90.60 70.03 90.60 70.03
Guadeloupe 67.19 67.19 67.19 67.19 67.19 67.19
Guam 101.31 101.31 101.31 101.31 101.31 101.31
Guatemala 72.63 61.48 54.49 54.49 53.12 53.12
Guinea 101.31 101.31 101.31 101.31 101.31 101.31
Guinea Bissau 101.30 101.30 101.30 101.30 101.30 101.30
Guyana 63.49 56.93 56.93 56.93 56.93 56.93
Haiti 63.49 50.94 56.41 47.61 55.00 46.42
Honduras 72.63 61.48 54.49 54.49 53.12 53.12
Hong Kong 32.60 31.16 32.60 31.16 32.60 31.16
Hungary 24.00 20.30 24.00 20.30 24.00 20.30
Iceland 30.00 25.30 30.00 25.30 30.00 25.30
India 62.50 59.30 55.11 55.11 52.35 52.35
Indonesia 66.95 66.08 66.95 63.16 65.62 60.00
Iran 72.63 61.48 72.63 61.48 61.48 61.48
Iraq 80.49 80.49 80.49 80.49 80.49 80.49
Ireland (Eire) 15.00 12.20 15.00 12.20 15.00 12.20
Israel 72.16 61.94 49.26 50.51 48.03 49.24
Italy (incl. Vatican City) 18.14 15.87 17.95 15.87 17.50 15.87
Jamaica 62.76 62.77 62.76 62.77 62.76 62.77
Japan 51.50 48.93 26.92 26.92 26.25 26.25
Jordan 82.36 82.36 82.36 82.36 82.36 82.36
Kazakhstan 81.00 81.00 81.00 81.00 81.00 81.00
Kenya 72.63 61.48 72.63 61.48 61.48 61.48
Kiribati 89.82 89.82 89.82 89.82 89.82 89.82
Korea (North) 111.95 111.95 111.95 111.95 111.95 111.95
Korea (South) 66.95 66.08 47.37 47.37 45.00 45.00
Kuwait 63.49 50.94 57.68 50.94 54.80 50.94
Kyrgyzstan 63.49 56.93 63.49 56.93 63.49 56.93
Laos 108.38 108.38 108.38 108.38 108.38 108.38
Latvia 63.49 50.94 38.46 38.46 37.50 37.50
Lebanon 93.48 93.48 93.48 93.48 93.48 93.48
Lesotho 72.63 61.48 70.51 61.31 68.75 59.77
Liberia 72.63 61.48 65.38 57.51 63.75 56.07
Libya 47.16 47.16 47.16 47.16 47.16 47.16
Liechtenstein 25.20 20.87 18.48 15.41 18.02 15.03
Lithuania 63.49 56.57 63.49 56.57 63.49 56.57
Luxembourg 17.86 14.88 16.03 14.88 15.62 14.88
Macao 66.95 66.08 66.95 66.08 66.95 66.08
Macedonia 49.75 49.75 49.75 49.75 49.75 49.75
Madagascar 101.32 101.32 101.32 101.32 101.32 101.32
Madeira (Portugal) 25.20 20.87 25.20 20.87 25.20 20.39
Malawi 72.63 61.48 64.10 61.48 62.50 61.48
Mercury-Nynex 11 November 1996 Page 7 of 28
Interconnect Agreement Schedule 3, Charges
<PAGE> 53
Malaysia 66.95 66.08 44.84 44.84 42.60 42.60
Maldives 42.60 42.60 42.60 42.60 42.60 42.60
Mali 83.46 83.46 83.46 83.46 83.46 83.46
Malta 43.25 24.49 43.25 24.49 43.25 24.49
Marshall Islands 66.95 66.08 66.95 66.08 66.95 66.08
Martinique 66.87 66.87 66.87 66.87 66.87 66.87
Mauritania 101.31 101.31 101.31 101.31 101.31 101.31
Mauritius 88.90 88.90 88.90 88.90 88.90 88.90
Mexico 66.95 66.08 53.16 53.16 50.50 50.50
Micronesia 100.62 100.62 100.62 100.62 100.62 100.62
Midway Island 94.81 94.81 94.81 94.81 94.81 94.81
Moldova 63.49 55.94 63.49 55.94 63.49 55.94
Monaco (France) 17.86 14.88 14.68 14.68 14.31 14.31
Mongolia 60.30 59.50 60.30 59.50 60.30 59.50
Montserrat 59.36 48.74 51.28 48.74 50.00 48.70
Morocco 30.00 25.30 30.00 25.30 30.00 25.30
Mozambique 101.11 101.11 101.11 101.11 101.11 101.11
Myanmar (formerly Burma) 70.81 70.81 70.81 70.81 70.81 70.81
Namibia 95.59 95.59 95.59 95.59 95.59 95.59
Nauru 116.96 116.96 116.96 116.96 116.96 116.96
Nepal 66.95 66.08 66.95 66.08 66.95 66.08
Netherlands 17.86 14.88 16.03 14.28 15.62 13.93
New Caledonia 109.53 109.53 109.53 109.53 109.53 109.53
New Zealand 37.50 30.50 23.68 23.68 22.50 22.50
Nicaragua 72.63 61.48 64.10 61.48 62.50 61.39
Niger 72.47 72.47 72.47 72.47 72.47 72.47
Nigeria 72.63 61.48 64.10 61.09 62.50 59.57
Niue Island 101.31 101.31 101.31 101.31 101.31 101.31
Norfolk Island 73.50 73.50 73.50 73.50 73.50 73.50
North Mariana Island 66.95 66.08 66.95 66.08 66.95 66.08
Norway 23.75 19.95 20.51 19.95 16.63 15.50
Oman 55.50 45.30 55.50 45.30 55.50 45.30
Pakistan 70.00 67.00 70.00 67.00 70.00 67.00
Palau 107.32 107.32 107.32 107.32 107.32 107.32
Panama 72.63 61.48 60.89 60.89 59.37 59.37
Papua New Guinea 66.95 66.08 66.32 66.08 64.66 64.66
Paraguay 76.67 76.67 76.67 76.67 76.67 76.67
Peru 82.80 82.80 82.80 82.80 82.80 82.80
Philippines 66.95 66.08 57.68 57.68 54.80 54.80
Pitcairn Islands 94.81 94.81 94.81 94.81 94.81 94.81
Poland 24.50 21.00 24.50 21.00 24.50 21.00
Portugal 20.09 16.26 19.10 16.26 18.62 16.26
Puerto Rico 59.36 48.74 33.16 30.00 31.50 28.50
Qatar 63.49 50.94 60.00 50.94 58.50 50.94
Reunion 81.73 81.73 81.73 81.73 81.73 81.73
Mercury-Nynex 11 November 1996 Page 8 of 28
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<PAGE> 54
Rodriguez Islands 88.90 88.90 88.90 88.90 88.90 88.90
Romania 63.49 50.94 51.28 50.94 50.00 50.00
Russia (average) 63.49 50.94 43.59 43.59 42.50 42.50
Rwanda 66.95 66.78 66.95 66.78 66.95 66.78
Samoa (US) 101.68 101.68 101.68 101.68 101.68 101.68
San Marino 25.20 24.20 25.20 24.20 25.20 24.20
Sao Tome & Principe 101.33 101.33 101.33 101.33 101.33 101.33
Saudi Arabia 62.27 49.97 60.21 48.33 57.20 47.12
Senegal 72.63 69.31 72.63 69.31 72.63 69.31
Serbia 49.75 49.75 49.75 49.75 49.75 49.75
Seychelles 72.63 61.48 64.10 61.48 62.50 61.48
Sierra Leone 86.11 86.11 86.11 86.11 86.11 86.11
Singapore 25.64 25.64 25.63 25.63 24.35 24.35
Slovakia 24.00 20.00 24.00 20.00 24.00 20.00
Slovenia 30.00 25.00 30.00 25.00 30.00 25.00
Solomon Islands 72.33 72.33 72.33 72.33 72.33 72.33
Somalia 72.63 61.48 72.63 61.48 72.63 61.48
South Africa 58.00 50.00 37.89 37.74 36.00 35.85
Spain 18.00 16.26 18.00 16.26 18.00 16.26
Sri Lanka 62.50 59.30 56.84 56.12 54.00 54.71
St Helena 66.95 66.08 55.95 55.95 53.15 53.15
St Kitts & Nevis 59.36 48.74 51.92 48.74 50.62 48.74
St Lucia 59.36 48.74 51.92 48.74 50.62 48.74
St Pierre & Miquelon 69.17 69.17 69.17 69.17 69.17 69.17
St Vincent & The
Grenadines 59.36 48.74 54.21 48.74 51.50 48.74
Sudan 90.63 90.63 90.63 90.63 90.63 90.63
Suriname 77.12 77.12 77.12 77.12 77.12 77.12
Swaziland 72.63 70.29 72.63 70.29 72.63 70.29
Sweden 23.75 19.95 17.05 16.32 16.63 15.50
Switzerland 17.86 14.88 17.16 14.88 16.73 14.88
Syria 72.16 67.22 70.51 67.22 68.74 67.22
Taiwan 66.95 66.08 51.26 51.26 48.70 48.70
Tajikistan 66.37 66.37 66.37 66.37 66.37 66.37
Tanzania 72.63 61.48 70.47 61.48 66.95 61.48
Thailand 66.95 66.08 60.89 60.89 57.85 57.85
Togo 75.36 75.36 75.36 75.36 75.36 75.36
Tonga 92.71 92.71 92.71 92.71 92.71 92.71
Trinidad & Tobago 60.07 60.07 60.07 60.07 60.07 60.07
Tristan Da Cunha 94.81 94.81 94.81 94.81 94.81 94.81
Tunisia 30.06 25.38 30.06 25.38 30.06 25.38
Turkey 35.90 31.10 35.90 31.10 35.90 31.10
Turkmenistan 63.49 52.46 63.49 52.46 63.49 52.46
Turks & Caicos Islands 59.36 48.74 54.49 48.74 53.13 48.74
Tuvalu 101.31 101.31 101.31 101.31 101.31 101.31
Uganda 94.93 94.93 94.93 94.93 94.93 94.93
Mercury-Nynex 11 November 1996 Page 9 of 28
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<PAGE> 55
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Ukraine 63.49 50.94 38.46 38.46 37.50 37.50
United Arab Emirates 62.27 49.97 46.42 43.53 44.10 41.35
Uruguay 72.63 68.08 72.63 68.08 72.63 68.08
USA 13.90 13.90 9.94 9.94 9.44 9.44
Uzbekistan 71.20 71.20 71.20 71.20 71.20 71.20
Vanuatu 66.95 66.08 66.95 66.08 66.95 66.08
Venezuela 72.63 61.60 57.69 61.60 56.25 61.60
Vietnam 106.55 107.92 106.55 107.92 106.55 107.92
Virgin Islands (British) 59.36 53.58 59.36 53.58 59.35 53.55
Virgin Islands (US) 59.36 48.74 40.26 40.26 38.25 38.25
Wake Island 94.81 94.81 94.81 94.81 94.81 94.81
Wallis & Futuna 94.81 94.81 94.81 94.81 94.81 94.81
Western Samoa 101.68 101.68 101.68 101.68 101.68 101.68
Yemen (AR & PDR) 72.63 61.48 67.89 61.48 66.20 61.48
Yugoslavia 48.53 48.53 48.53 48.53 48.53 48.53
Zaire 101.32 101.32 101.32 101.32 101.32 101.32
Zambia 93.86 93.86 93.86 93.86 93.86 93.86
Zimbabwe 78.16 78.16 78.16 78.16 78.16 78.16
</TABLE>
Note: International Country Codes are listed in Schedule 4
TABLE 3.2 - INTERNATIONAL RATES: 1 JUNE 96 TO 30 SEPTEMBER 96
<TABLE>
<S> <C> <C>
COUNTRY STANDARD ECONOMY
Afghanistan 101.31 101.31
Albania 28.86 28.86
Algeria 34.36 34.36
American Samoa 66.00 66.00
Andorra (France) 20.50 16.25
Angola 66.95 66.08
Anguilla 58.37 57.25
Antigua & Barbuda 42.75 36.75
Antilles (Netherlands) 43.00 43.00
Argentina 60.00 60.00
Armenia 68.02 68.02
Aruba 42.50 42.50
Ascension Island 66.00 60.00
Australia 19.00 19.00
Austria 18.25 18.25
Azerbaijan 73.09 73.09
Azores (Portugal) 25.00 20.00
Bahamas 35.90 32.50
Bahrain 55.00 50.00
Bangladesh 85.14 85.14
Barbados 42.91 42.91
Belarus 37.70 37.70
Belgium 14.85 14.85
</TABLE>
Mercury-Nynex 11 November 1996 Page 10 of 28
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<PAGE> 56
Belize 61.85 78.01
Benin 72.63 61.48
Bermuda 35.90 32.50
Bhutan 66.95 66.08
Bolivia 55.16 55.16
Bosnia-Herzegovina 49.23 49.23
Botswana 62.00 61.00
Brazil 48.00 48.00
Brunei Darussalam 62.50 62.50
Bulgaria 30.00 25.30
Burkina Faso 60.90 60.90
Burundi 80.15 80.15
Cambodia 126.33 126.33
Cameroon 70.00 59.35
Canada 8.50 8.50
Canary Islands 18.00 16.20
Cape Verde 66.95 66.08
Cayman Islands 35.90 32.50
Central African Republic 93.97 93.97
Chad 101.22 101.22
Chile 50.00 46.00
China 87.09 89.22
Christmas Islands 60.50 60.50
Cocos Islands 38.70 32.10
Colombia 53.50 53.50
Comoros Islands 118.93 118.93
Congo 77.49 77.49
Cook Islands 72.35 72.35
Costa Rica 51.75 51.75
Cote D'Ivoire 66.52 66.52
Croatia 30.05 25.35
Cuba 64.12 64.12
Cyprus 24.80 21.35
Czech Republic 20.00 20.00
Denmark 14.50 14.50
Diego Garcia 88.55 88.55
Djibouti 88.10 88.10
Dominica 35.90 32.50
Dominican Republic 35.90 32.50
Easter Island (Chile) 50.00 46.00
Ecuador 53.50 53.50
Egypt 59.65 53.40
El Salvador 53.50 53.50
Equatorial Guinea 101.39 101.39
Estonia 34.80 34.80
Ethiopia 85.93 85.93
Falkland Islands 66.95 66.08
Faroe Islands 17.00 17.00
Fiji 66.95 66.08
Mercury-Nynex 11 November 1996 Page 11 of 28
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<PAGE> 57
Finland 16.20 15.50
France 13.50 13.50
French Guiana 66.95 66.08
French Polynesia 95.76 95.76
Gabon 72.63 61.48
Gambia 72.63 61.48
Georgia 72.11 72.11
Germany 13.00 13.00
Ghana 54.80 54.80
Gibraltar 28.16 28.16
Greece 20.00 19.63
Greenland 112.55 112.55
Grenada (including Carriacou) 43.11 43.11
Guadeloupe 52.30 52.30
Guam 51.70 51.70
Guatemala 51.70 51.70
Guinea Bissau 93.88 93.88
Guinea Rep 90.39 90.39
Guyana 56.93 56.93
Haiti 53.55 45.20
Honduras 51.75 51.75
Hong Kong 23.50 23.50
Hungary 24.00 20.30
Iceland 30.00 25.30
India 45.00 45.00
Indonesia 55.00 55.00
Iran 61.45 61.45
Iraq 86.61 86.61
Irish Republic 15.00 12.20
Israel 46.80 46.80
Italy (including Vatican City) 17.50 15.87
Jamaica 62.30 61.46
Japan 24.00 24.00
Jordan 66.39 66.39
Kazakhstan 103.24 103.24
Kenya 56.99 56.99
Kiribati 77.59 77.59
Korea (North) 112.89 112.89
Korea (South) 45.00 45.00
Krygyzstan (Kirghizia) 73.04 73.04
Kuwait 49.75 49.75
Laos 109.46 109.46
Latvia 36.50 36.50
Lebanon 65.81 65.81
Lesotho 66.95 58.20
Liberia 62.00 56.00
Libya 36.75 31.60
Liechtenstein 17.50 14.60
Lithuania 56.64 56.64
Mercury-Nynex 11 November 1996 Page 12 of 28
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<PAGE> 58
Luxembourg 15.20 14.50
Macao 47.50 40.20
Macedonia 40.50 40.50
Madagascar 101.33 101.33
Madeira (Portugal) 18.10 16.20
Malawi 93.94 93.94
Malaysia 40.50 40.50
Maldives 42.60 42.60
Mali 72.71 72.71
Malta 25.65 21.35
Marshall Islands 66.95 66.08
Martinique 51.75 48.42
Mauritania 84.27 84.27
Mauritius 89.04 89.04
Mexico 50.50 50.50
Micronesia 82.37 82.37
Moldova 56.10 56.10
Mongolia 60.30 59.50
Montserrat 42.75 36.75
Morocco 30.00 25.30
Mozambique 79.42 79.42
Myanmar 69.88 69.88
Namibia 64.34 64.34
Nauru 102.78 102.78
Nepal 66.95 66.08
Netherlands 14.50 12.75
Nevis 35.90 32.50
New Caledonia 66.95 66.08
New Zealand 20.00 20.00
Nicaragua 60.00 60.00
Niger 66.95 66.08
Nigeria 60.90 58.00
Niue 66.95 66.08
Norfolk Island 80.84 80.84
Northern Marianas 66.95 66.08
Norway 16.00 15.00
Oman 55.55 45.30
Pakistan 73.04 71.72
Palau 106.13 106.13
Panama 57.85 57.85
Papua New Guinea 64.57 64.57
Paraguay 64.10 64.10
Peru 54.75 54.75
Philippines 54.75 54.75
Poland 24.50 21.00
Portugal 18.10 16.20
Puerto Rico 35.90 32.50
Qatar 55.50 45.30
Reunion 78.05 78.05
Mercury-Nynex 11 November 1996 Page 13 of 28
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<PAGE> 59
Rodriguez Island 89.04 89.04
Romania 48.70 45.30
Russia 41.40 41.40
Rwandese Republic 74.64 74.64
San Marino 18.80 16.25
Sao Tome And Principe 66.95 66.08
Saudi Arabia 51.50 45.30
Senegal 74.51 74.51
Serbia & Montenegro 46.81 46.81
Seychelles 60.90 60.90
Sierra Leone 88.06 88.06
Singapore 21.50 21.50
Slovakia 24.00 20.00
Slovenia 30.00 25.00
Solomon Islands 71.17 71.17
Somalia 90.44 90.44
South Africa 33.00 33.00
Spain 18.00 16.20
Sri Lanka 54.00 54.00
St Helena 52.00 52.00
St Kitts & Nevis 35.90 32.50
St Lucia 35.90 32.50
St Pierre And Miquelon 35.90 32.50
St Vincent & The Grenadines 42.69 42.84
Sudan 79.69 79.69
Surinam 76.47 76.47
Swaziland 60.90 60.90
Sweden 14.50 13.95
Switzerland 15.75 13.95
Syria 69.53 69.62
Taiwan 43.00 43.00
Tajikistan 73.35 73.35
Tanzania 66.95 61.48
Thailand 53.00 53.00
Togo 76.67 76.67
Tonga 69.39 69.39
Trinidad And Tobago 42.70 36.70
Tunisia 30.06 25.38
Turkey 35.90 31.10
Turkmenistan 72.90 72.90
Turks And Caicos Islands 35.90 32.50
Tuvalu 101.31 101.31
Uganda 68.49 68.49
Ukraine 36.50 36.50
United Arab Emirates 44.00 41.00
Uruguay 53.50 53.50
USA 8.50 8.50
Uzbekistan 70.48 70.48
Vanuatu 66.95 66.08
Mercury-Nynex 11 November 1996 Page 14 of 28
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<PAGE> 60
<TABLE>
<S> <C> <C>
Vatican City 17.00 15.85
Venezuela 54.00 54.00
Vietnam 113.69 112.45
Virgin Islands (British) 48.70 48.70
Virgin Islands (US) 38.25 38.25
Western Samoa 174.88 174.88
Yemen Arab Republic 64.50 61.00
Zaire 66.50 63.50
Zambia 91.08 91.08
Zimbabwe 66.92 66.92
</TABLE>
TABLE 3.3 - INTERNATIONAL RATES: EFFECTIVE FROM 1 OCTOBER 96
<TABLE>
<S> <C> <C>
COUNTRY STANDARD ECONOMY
Afghanistan 101.31 101.31
Alaska 7.15 7.15
Albania 31.64 31.64
Algeria 34.36 34.36
American Samoa 73.44 73.44
Andorra 15.35 14.35
Angola 60.30 57.60
Anguilla 58.37 49.70
Antartic Australian Territories 16.75 14.75
Antigua & Barbuda 40.75 35.00
Argentina 54.00 49.00
Armenia 56.20 45.55
Aruba 38.75 38.75
Ascension 55.75 55.75
Australia 16.75 14.75
Austria 16.75 14.95
Azerbaijan 65.65 65.65
Azores 16.75 14.95
Bahamas 32.65 29.55
Bahrain 50.00 45.00
Balearic Islands 16.45 14.75
Bangladesh 85.14 85.14
Barbados 42.91 42.91
Belarus 34.95 34.95
Belgium 14.85 14.05
Belize 56.20 56.20
Benin 63.85 55.40
Bermuda 32.65 29.55
Bhutan 69.00 69.00
Bolivia 55.16 55.16
Bosnia-Herzegovina 44.66 44.66
Botswana 54.00 54.00
</TABLE>
Mercury-Nynex 11 November 1996 Page 15 of 28
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<PAGE> 61
Brazil 43.50 43.50
British Virgin Islands 41.95 41.95
Brunei 47.50 47.50
Bulgaria 24.37 20.57
Burkina Faso 54.95 52.35
Burundi 78.59 78.59
Cambodia 106.98 106.98
Cameroon 59.35 54.07
Canada 7.95 7.95
Canary Islands 16.45 14.75
Cape Verde 65.23 65.23
Cayman Islands 32.65 29.55
Central African Republic 93.97 93.97
Chad 118.60 118.60
Chatham Islands 20.50 20.50
Chile 45.00 41.95
China 60.42 57.69
Christmas Island 55.00 55.00
Cocos Islands 16.45 14.45
Colombia 48.50 48.50
Comoros 91.00 91.00
Congo 77.49 77.49
Cook Islands 80.39 80.39
Costa Rica 45.00 45.00
Croatia 24.30 20.50
Cuba 65.16 65.16
Cyprus 24.80 21.35
Czech Republic 15.75 13.05
Denmark 12.95 12.95
Diego Garcia 94.10 94.10
Djibouti 93.67 93.67
Dominica 35.90 32.50
Dominican Republic 32.65 29.55
Easter Island 45.00 41.95
Ecuador 48.65 48.65
Egypt 48.95 48.95
El Salvador 48.65 48.65
Equatorial Guinea 116.16 116.16
Eritrea 86.80 86.80
Estonia 32.10 32.10
Ethiopia 85.93 85.93
Falkland Islands 54.95 52.35
Faroe Islands 14.50 14.50
Fiji 147.62 147.62
Finland 14.75 14.10
France 11.95 9.75
Mercury-Nynex 11 November 1996 Page 16 of 28
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<PAGE> 62
French Guiana 58.00 58.00
French Polynesia 95.76 95.76
Gabon 63.85 63.85
Gambia 61.48 61.48
Georgia 72.11 72.11
Germany 12.30 11.85
Ghana 45.00 45.00
Gibraltar 17.35 14.46
Greece 20.00 18.71
Greenland 72.57 72.57
Grenada 39.95 36.75
Guadeloupe 56.21 52.30
Guam 47.00 47.00
Guatemala 47.00 47.00
Guinea 106.01 106.01
Guinea Bissau 116.88 116.88
Guyana 56.21 54.71
Haiti 48.95 41.95
Hawaii 7.15 7.15
Honduras 48.15 45.15
Hong Kong 21.50 21.50
Hungary 16.70 14.00
Iceland 24.30 20.50
India 40.95 39.95
Indonesia 47.75 47.75
Iran 55.95 54.00
Iraq 73.69 73.69
Irish Republic 10.40 7.15
Israel 39.95 39.95
Italy 17.00 15.85
Ivory Coast 66.52 66.52
Jamaica 59.00 49.80
Japan 19.95 19.95
Jordan 57.75 57.75
Kazakhstan 88.47 88.47
Kenya 49.50 49.50
Kiribati 77.59 77.59
Kuwait 45.55 45.55
Kyrgyzstan 56.21 45.55
Laos 109.46 109.46
Latvia 32.95 32.95
Lebanon 59.85 59.85
Lesotho 58.50 47.50
Liberia 58.50 47.50
Libya 45.60 45.60
Liechtenstein 15.95 13.25
Mercury-Nynex 11 November 1996 Page 17 of 28
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<PAGE> 63
Lithuania 56.21 56.21
Luxembourg 14.15 12.50
Macao 41.30 34.95
Macedonia 49.58 49.58
Madagascar 114.80 114.80
Madeira 16.75 14.95
Malawi 63.85 63.85
Malaysia 35.50 35.50
Maldives Islands 42.60 42.60
Mali 92.11 92.11
Malta 19.90 16.70
Marshall Islands 60.30 57.60
Martinique 45.00 45.00
Mauritania 84.27 84.27
Mauritius 89.04 89.04
Mexico 43.75 43.75
Micronesia 82.37 82.37
Moldova 48.55 45.55
Monaco 13.60 11.30
Mongolia 60.30 57.69
Montserrat 39.75 36.75
Morocco 24.37 20.57
Mozambique 79.42 79.42
Myanmar 69.88 69.88
Namibia 63.85 63.85
Nauru 71.72 71.72
Nepal 60.30 57.60
Netherlands 13.05 11.75
Netherlands Antilles 37.50 37.50
New Caledonia 59.18 57.69
New Zealand 20.45 18.95
Nicaragua 54.00 49.95
Niger 60.30 57.60
Nigeria 58.00 54.00
Niue 106.88 106.88
Norfolk Island 76.75 76.75
North Korea 107.00 107.00
Northern Marianas 60.42 57.69
Norway 13.45 11.95
Oman 50.00 45.00
Pakistan 73.04 58.50
Palau 106.13 106.13
Panama 79.45 79.45
Papua New Guinea 64.57 64.57
Paraguay 63.85 63.85
Peru 72.30 72.30
Mercury-Nynex 11 November 1996 Page 18 of 28
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<PAGE> 64
Philippines 45.75 45.75
Poland 18.10 15.20
Portugal 18.10 16.20
Puerto Rico 32.65 29.55
Qatar 55.50 45.30
Reunion 82.62 82.62
Rodriguez Island 89.04 89.04
Romania 42.35 39.35
Russia 39.95 39.95
Rwanda 71.46 71.46
San Marino 25.90 25.90
Sao Tome & Principe 60.42 57.69
Saudi Arabia 51.50 45.30
Senegal 73.70 73.70
Seychelles 60.90 54.00
Sierra Leone 88.06 88.06
Singapore 19.95 19.50
Slovakia 16.70 14.00
Slovenia 24.37 20.57
Solomon Islands 75.92 75.92
Somalia 63.85 63.85
South Africa 35.00 35.00
South Korea 40.00 40.00
Spain 18.00 16.20
Sri Lanka 49.00 49.00
St Helena 52.00 52.00
St Kitts & Nevis 35.90 32.50
St Lucia 35.90 32.50
St Pierre & Miquelon 32.65 29.55
St Vincent & The Grenadines 42.50 42.50
Sudan 79.69 79.69
Surinam 76.47 76.47
Swaziland 55.35 49.10
Sweden 12.85 10.85
Switzerland 11.95 10.05
Syria 76.07 76.07
Taiwan 43.00 43.00
Tajikistan 63.89 63.89
Tanzania 54.55 49.55
Thailand 49.95 49.95
Togo 76.67 76.67
Tonga 69.39 69.39
Trinidad & Tobago 42.70 36.70
Tristan Da Cunha 60.42 57.69
Tunisia 24.37 20.57
Turkey 23.35 19.75
Mercury-Nynex 11 November 1996 Page 19 of 28
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<PAGE> 65
<TABLE>
<S> <C> <C>
Turkmenistan 56.21 45.55
Turks & Caicos Islands 35.90 32.50
Tuvalu 101.31 101.31
Uganda 63.85 54.07
Ukraine 33.25 33.25
United Arab Emirates 39.95 37.35
Uruguay 53.50 53.50
US Virgin Islands 44.66 44.66
USA 7.15 7.15
Uzbekistan 63.89 63.89
Vanuatu 60.42 57.69
Vatican City 17.00 15.85
Venezuela 49.00 49.00
Vietnam 95.87 95.87
Wallis & Futuna 60.42 57.69
Western Samoa 78.42 78.42
Yemen 58.95 49.95
Yugoslavia 39.08 39.08
Zaire 58.45 57.69
Zambia 74.81 74.81
Zimbabwe 66.92 66.92
</TABLE>
Note: International Country Codes are listed in Schedule 4
[CAPTION]
4. MERCURY NON-GEOGRAPHIC CALL RATES
---------------------------------
<TABLE>
<CAPTION>
NUMBER SERVICE TYPE CHARGE TYPE PRIME STANDARD ECONOMY WEEKEND
ACCESS TO MERCURY SERVICES
- - --------------------------
<S> <C> <C> <C> <C> <C> <C>
0660 Information Services 6 - 32.65 29.00 28.98
0839 Information Services 6 - 32.65 29.00 28.98
0881 Information Services 6 - 24.88 19.86 19.84
0500 Mercury FreeCall 6 - -4.27 -1.84 -1.86
0645 Mercury LocalCall 6 - -0.89 -0.96 -0.98
0541 5 Mercury NationalCall 6 - 6.13 3.88 1.93
0991 1,9 Mercury Super 6 - 109.80 110.11 110.09
Premium Rate
123 Speaking Clock 5 - 3.00 - -
</TABLE>
Mercury-Nynex 11 November 1996 Page 20 of 28
Interconnect Agreement Schedule 3, Charges
<PAGE> 66
5. MERCURY TRANSIT NON-GEOGRAPHIC CALL RATES
-----------------------------------------
<TABLE>
<CAPTION>
NUMBER SERVICE TYPE CHARGE TYPE PRIME STANDARD ECONOMY WEEKEND
ACCESS TO BT SERVICES
- - ---------------------
<S> <C> <C> <C> <C> <C> <C>
0800 BT Freephone 6 - -2.20 -1.10 -0.69
0990 BT National Call 6 - 4.18 1.34 1.68
0345 BT Reduced Rate 6 - 1.29 0.45 0.91
0891 Information Services 7 31.58 33.00 28.91 -
0894 0-3, 5-9 Information * Services 6 - 29.17 29.17 29.17
0894 4 Information Services 6 - 6.64 1.31 1.38
0897 Information Services 7 99.37 106.58 115.12 -
0898 Information Services 7 31.58 33.00 28.91 -
0910 Phonebase 5 - 12.00 - -
ACCESS TO CELLNET SERVICES
- - --------------------------
0401 0-4, 6-9 Mobile - Direct Dial 6 - 27.00 21.00 21.00
0402 Mobile - Direct Dial 6 - 27.00 21.00 21.00
0410 Mobile - Direct Dial 6 - 27.00 21.00 21.00
0585 Mobile - Direct Dial 6 - 27.00 21.00 21.00
0589 Mobile - Direct Dial 6 - 27.00 21.00 21.00
0802 Mobile - Direct Dial 6 - 27.00 21.00 21.00
0850 Mobile - Direct Dial 6 - 27.00 21.00 21.00
0860 Mobile - Direct Dial 6 - 27.00 21.00 21.00
0408 Personal Assistance 6 - 15.03 9.33 9.33
ACCESS TO GUERNSEY TELECOM
- - --------------------------
04481 Mobile - GSM 6 - 23.58 18.59 18.41
ACCESS TO MANX TELECOM
- - -----------------------
04624 Mobile - GSM 6 - 23.32 18.39 18.21
ACCESS TO VODAFONE SERVICES
- - ---------------------------
0370 Mobile - Direct Dial 6 - 27.00 21.00 21.00
0374 0-4, 6-9 Mobile - Direct Dial 6 - 27.00 21.00 21.00
0378 Mobile - Direct Dial 6 - 27.00 21.00 21.00
0385 0-5, 7-9 Mobile - Direct Dial 6 - 27.00 21.00 21.00
0421 0, 2-9 Mobile - Direct Dial 6 - 27.00 21.00 21.00
0468 Mobile - Direct Dial 6 - 27.00 21.00 21.00
0831 Mobile - Direct Dial 6 - 27.00 21.00 21.00
0836 2, 3, 5-7 Mobile - Direct Dial 6 - 27.00 21.00 21.00
</TABLE>
Mercury-Nynex 11 November 1996 Page 21 of 28
Interconnect Agreement Schedule 3, Charges
<PAGE> 67
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
0441 Mobile - Direct Dial 6 - 27.00 21.00 21.00
0321 Freephone Access 6 - -4.15 -2.23 -2.25
0336 Information Services 6 - 32.60 27.28 27.26
0338 Information Services 6 - 32.60 27.28 27.26
0836 4 Information Services 6 - 32.60 27.28 27.26
0421 1 Message Retrieval 6 - 6.40 2.50 2.50
0467 Voice Messaging 6 - 10.60 7.20 7.20
0467 1-9 DD Mobile Services 6 - 26.00 17.50 17.50
0374 5 Messaging Service 6 - 3.00 1.81 1.30
0385 6 Messaging Service 6 - 3.00 1.81 1.30
0836 0, 8 Messaging Service 6 - 3.00 1.81 1.30
07000 Personal Numbering 1 8.27 5.64 -
0836 1, 9 Operator Services 6 - 7.00 2.50 2.50
0331 Super Premium Rate 6 - 111.09 111.93 111.91
ACCESS TO AT&T SERVICES
- - -----------------------
0800 064 Freephone 6 - -0.10 -0.10 -0.10
0800 013 Freephone 6 - -0.10 -0.10 -0.10
0800 597 Freephone 6 - -0.10 -0.10 -0.10
0845 84 Local Rate Service 6 - 2.93 1.16 0.95
ACCESS TO ENERGIS SERVICES
- - --------------------------
0800 072 Freephone 6 - -0.10 -0.10 -0.10
0800 316 Freephone 6 - -0.10 -0.10 -0.10
0845 07 Local rate 6 - 2.30 0.80 0.65
0870 16 National rate 6 - 8.76 5.54 2.76
0930 6 Premium rate 6 - 46.64 41.43 41.40
ACCESS TO MFS SERVICES
- - ----------------------
0845-08 Local Rate Service - 2.05 0.80 0.65
ACCESS TO PAGING OPERATORS
- - --------------------------
01426 2, 8 BT Display 6 - -0.53 -0.55 -0.56
01426 4, 5, 9 BT Display 6 - 0.30 0.23 0.21
01893 0, 2-8 BT Display 6 - 0.30 0.23 0.21
01893 9 BT Display 6 - -0.53 -0.55 -0.56
01426 0, 1, 7 BT Tone 5 - -4.15 - -
01893 1 BT Tone 5 - -4.15 - -
01426 3, 6 BT Display * 6 - 12.82 12.75 12.73
01459 1, 4, 5, 8 Aircall Display 6 - 0.14 0.08 0.06
01459 3, 6 Aircall Tone 5 - -4.79 - -
0941 1 Hutchison Display 6 - 1.00 0.10 0.10
01399 0, 1, 6-9 Vodafone Display 6 - -0.37 -0.39 -0.40
01399 2-5 Vodafone Tone 5 - -0.38 - -
01523 0 Mercury Paging 6 13.00 12.50 12.20
01523 3, 5, 6, 8 Mercury Display 6 - 0.14 0.08 0.06
</TABLE>
Mercury-Nynex 11 November 1996 Page 22 of 28
Interconnect Agreement Schedule 3, Charges
<PAGE> 68
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
01523 2 Mercury Tone 5 - -4.79 - -
01523 1, 4 Mercury Paging 6 42.00 26.90 26.90
01459 9 Mercury Tone 5 - -4.79 - -
01459 2 Mercury Display 6 - 0.14 0.08 0.06
ACCESS TO INMARSAT SERVICES
- - ---------------------------
INMARSAT A -
00 871 1/ 00 872 1/ Analogue Switched
00 873 1/ 00 874 1 Telephone 5 - 465.00 - -
INMARSAT B -
00 871 3/ 00 872 3/ Digital 64 kbit/s
00 873 3/ 00 874 3 switched 5 - 291.00 - -
INMARSAT M -
00 871 6/ 00 872 6/ Digital 2.4 kbit/s
00 873 6/ 00 874 6 switched 5 - 291.00 - -
058 11/ 058
21/ 058 31/ INMARSAT A -
058 41 Real Time Telex 5 - 205.00 - -
INMARSAT C -
058 14/ 058 24/ 058 Store & Forward
34/ 058 44 Telex 5 - 200.00 - -
ACCESS TO JERSEY TELECOM
- - ------------------------
0696 6 Jersey Telecom PRS 6 - 33.17 29.80 29.78
0979 7 Jersey Telecom GSM 6 - 19.97 13.30 13.28
ACCESS TO ONE-2-ONE SERVICES
- - ----------------------------
0701 0 Flextel Personal 6 - 7.44 5.10 5.08
Numbering
0701 7 One-2-One Value 6 - 7.44 5.10 5.08
Added Services
0956 Mercury One-2-One 6 - 7.44 5.10 5.08
0958 2-9 Mercury One-2-One 6 - 7.44 5.10 5.08
0958 0 One-2-One FreeCall 6 - -5.45 -3.13 -3.15
0958 1 One-2-One LocalCall 6 - -3.81 -1.59 -1.61
ACCESS TO ORANGE SERVICES
- - -------------------------
0973 Hutchison Mobile 6 - 8.27 5.64 5.62
0976 Hutchison Mobile 6 - 8.27 5.64 5.62
ACCESS TO SCOTTISH TELECOM
- - --------------------------
0800 027 Freephone service 6 -2.20 -1.10 -0.69
0845 27 LocalCall service 6 0.20 -0.30 -0.16
0930 5 Premium Rate 6 37.22 30.39 30.39
</TABLE>
Mercury-Nynex 11 November 1996 Page 23 of 28
Interconnect Agreement Schedule 3, Charges
<PAGE> 69
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
ACCESS TO TORCH TELECOM
- - -----------------------
0800 138 Freephone 6 - -0.10 -0.10 -0.10
0845 12 Local rate 6 - 2.84 1.28 1.25
0870 12 National Rate 6 - 7.97 5.18 4.00
0930 1 Premium Rate 6 - 38.81 31.28 31.38
0991 0 Premium Rate 6 - 119.19 119.53 119.64
ACCESS TO REDSTONE NETWORK
- - --------------------------
07050 Mobile 6 27.00 21.00 21.00
07020 Mobile - PCN 6 8.27 5.64 5.51
ACCESS TO NORWEB
- - ----------------
0845 05 Local Rate 6 - 2.93 1.16 0.95
0800 195 Freephone 6 - 0.00 0.00 0.00
RATE CHANGES EFFECTIVE 1 AUG 96 TO 30 SEP 96
- - --------------------------------------------
ACCESS TO CELLNET SERVICES
- - --------------------------
0401 0-4, 6-9 Mobile - Direct Dial 6 - 24.50 17.70 7.30
0402 Mobile - Direct Dial 6 - 24.50 17.70 7.30
0410 Mobile - Direct Dial 6 - 24.50 17.70 7.30
0585 Mobile - Direct Dial 6 - 24.50 17.70 7.30
0589 Mobile - Direct Dial 6 - 24.50 17.70 7.30
0802 Mobile - Direct Dial 6 - 24.50 17.70 7.30
0850 Mobile - Direct Dial 6 - 24.50 17.70 7.30
0860 Mobile - Direct Dial 6 - 24.50 17.70 7.30
ACCESS TO VODAFONE SERVICES
- - ---------------------------
0370 Mobile - Direct Dial 6 - 24.50 17.70 7.30
0374 0-4, 6-9 Mobile - Direct Dial 6 - 24.50 17.70 7.30
0378 Mobile - Direct Dial 6 - 24.50 17.70 7.30
0385 0-5, 7-9 Mobile - Direct Dial 6 - 24.50 17.70 7.30
0421 0, 2-9 Mobile - Direct Dial 6 - 24.50 17.70 7.30
0468 Mobile - Direct Dial 6 - 24.50 17.70 7.30
0831 Mobile - Direct Dial 6 - 24.50 17.70 7.30
0836 2, 3, 5-7 Mobile - Direct Dial 6 - 24.50 17.70 7.30
0441 Mobile - Direct Dial 6 - 24.50 17.70 7.30
</TABLE>
Mercury-Nynex 11 November 1996 Page 24 of 28
Interconnect Agreement Schedule 3, Charges
<PAGE> 70
<TABLE>
<CAPTION>
RATE CHANGES EFFECTIVE FROM 1 OCTOBER 96
- - ----------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ACCESS TO CELLNET SERVICES
- - --------------------------
0401 0-4, 6-9 Mobile - Direct Dial 6 - 22.97 14.98 7.30
0402 Mobile - Direct Dial 6 - 22.97 14.98 7.30
0410 Mobile - Direct Dial 6 - 22.97 14.98 7.30
0585 Mobile - Direct Dial 6 - 22.97 14.98 7.30
0589 Mobile - Direct Dial 6 - 22.97 14.98 7.30
0802 Mobile - Direct Dial 6 - 22.97 14.98 7.30
0850 Mobile - Direct Dial 6 - 22.97 14.98 7.30
0860 Mobile - Direct Dial 6 - 22.97 14.98 7.30
ACCESS TO VODAFONE SERVICES
- - ---------------------------
0370 Mobile - Direct Dial 6 - 22.97 14.98 7.30
0374 0-4, 6-9 Mobile - Direct Dial 6 - 22.97 14.98 7.30
0378 Mobile - Direct Dial 6 - 22.97 14.98 7.30
0385 0-5, 7-9 Mobile - Direct Dial 6 - 22.97 14.98 7.30
0421 0, 2-9 Mobile - Direct Dial 6 - 22.97 14.98 7.30
0468 Mobile - Direct Dial 6 - 22.97 14.98 7.30
0831 Mobile - Direct Dial 6 - 22.97 14.98 7.30
0836 2, 3, 5-7 Mobile - Direct Dial 6 - 22.97 14.98 7.30
0441 Mobile - Direct Dial 6 - 22.97 14.98 7.30
</TABLE>
Notes
- - -----
1) The symbol * signifies charge per call
2) There are no minimum charges or set up charges
3) Negative numbers indicate agreed Reverse Billed Services
Mercury-Nynex 11 November 1996 Page 25 of 28
Interconnect Agreement Schedule 3, Charges
<PAGE> 71
6. MERCURY INTERNATIONAL ISDN CALL RATES
<TABLE>
<S> <C> <C> <C>
COUNTRY CHARGE PERIOD TYPE RATE ISDN SERVICE
(P/MIN)
Australia 5 209.13 Full ISDN (Supplementary services)
Austria 5 93.21 Full ISDN (Supplementary services)
Barbados 5 104.08 Full ISDN (Supplementary services)
Belgium 5 90.41 Full ISDN (Supplementary services)
Bermuda 5 92.15 Switched 64kb/s data only
Canada 5 33.37 Full ISDN (Supplementary services)
Denmark 5 25.28 Full ISDN (Supplementary services)
Eire 5 78.32 Full ISDN (Supplementary services)
Finland 5 93.49 Full ISDN (Supplementary services)
France 5 25.28 Full ISDN (Supplementary services)
Germany 5 25.28 Full ISDN (Supplementary services)
Hong Kong 5 121.77 Switched 64kb/s data only
Israel 5 204.23 Full ISDN (Supplementary services)
Italy 5 92.82 Full ISDN (Supplementary services)
Japan 5 170.02 Full ISDN (Supplementary services)
Luxembourg 5 91.59 Full ISDN (Supplementary services)
Malaysia 5 207.20 Full ISDN (Supplementary services)
Netherlands 5 25.28 Full ISDN (Supplementary services)
New Zealand 5 209.75 Full ISDN (Supplementary services)
Norway 5 25.28 Full ISDN (Supplementary services)
Philippines 5 207.14 Switched 64kb/s data only
Portugal 5 25.28 Full ISDN (Supplementary services)
Russia (Moscow) 5 203.20 Switched 64kb/s data only
Singapore 5 100.91 Full ISDN (Supplementary services)
South Africa 5 207.20 Full ISDN (Supplementary services)
Spain 5 91.56 Full ISDN (Supplementary services)
Sweden 5 25.28 Switched 64kb/s data only
Switzerland 5 25.28 Full ISDN (Supplementary services)
Taiwan 5 211.34 Switched 64kb/s data only
UAE 5 203.84 Switched 64kb/s data only
USA 5 33.37 Full ISDN (Supplementary services)
</TABLE>
Mercury-Nynex 11 November 1996 Page 26 of 28
Interconnect Agreement Schedule 3, Charges
<PAGE> 72
7. CALLING LINE IDENTIFICATION RATES
Calling Line Identification is zero rated.
8. MERCURY NATIONAL DIRECTORY ENQUIRY RATES
<TABLE>
<S> <C> <C>
Call Code - Service 1/4/95 to 31/5/96 From 1/6/96
142/192 - SelectCall 45.4 p/min N/A
142 - SelectCall N/A 50.0 p/min
192 - QuickCall N/A 30.0 p/call
</TABLE>
9. MERCURY INTERNATIONAL DIRECTORY ENQUIRY RATES
<TABLE>
<S> <C> <C>
Call Code 1/4/95 to 31/3/96 From 1/4/96
153 145.0 p/call 145.0 p/call
</TABLE>
10. MERCURY DIEL DQ RATES
<TABLE>
<S> <C> <C>
Call Code 1/4/95 to 31/3/96 From 1/4/96
195 0.0 p/min 50.0 p/min
</TABLE>
11. MERCURY NATIONAL OPERATOR ASSISTANCE RATES
<TABLE>
<S> <C> <C>
Call Code - Service 1/4/95 to 31/3/96 From 1/4/96
100 - Operator Assistance 49.2 p/call 49.2 p/call
100 - Alarm Calls 200 p/call 200 p/call
100 - Operator Connected 49.2 ppc + call rate 49.2 ppc + call rate
</TABLE>
Call rate is the national call rate listed in paragraphs 1,2,4 and 5 of Part 2
of this Schedule 3.
12. MERCURY INTERNATIONAL OPERATOR ASSISTANCE RATES
<TABLE>
<S> <C> <C>
Call Code - Service 1/4/95 to 31/3/96 From 1/4/96
155 - Operator Assistance 88 p/call 250 p/call
155 - Operator Connected 88 p/call + call rate 250 p/call + call rate
</TABLE>
Call rate is the international call rate listed in paragraphs 3 and 6 of Part 2
of this Schedule 3.
Mercury-Nynex 11 November 1996 Page 27 of 28
Interconnect Agreement Schedule 3, Charges
<PAGE> 73
13. MERCURY EMERGENCY SERVICES RATES
<TABLE>
<S> <C> <C>
Call Code 1/4/95 to 31/3/96 From 1/4/96
999/112 179.0 p/call 77.1 p/call
</TABLE>
The charge for Manual data input for each COSAR entry is L.1.50 per SAR. This
charge has been effective from 1/1/95, for all entries that cannot be
automatically processed and received electronically by COSAR.
Set up charges L. 1000.00 per operator connection
Training charges L. 500.00 per operator connection
Mercury-Nynex 11 November 1996 Page 28 of 28
Interconnect Agreement Schedule 3, Charges
<PAGE> 74
SCHEDULE 4
NNG GROUPS
1 NATIONAL NUMBER GROUPS
NNG Groups are partially based on existing BT and other Operator rates and
charging structures. If BT or another Operator changes its rates or charging
structures beyond the provisions for change specified in sections 2 and 3 of
Schedule 2, either party may review the NNG Groups in accordance with Clause
14.1.3.
1.1 NATIONAL NUMBER GROUPS FOR NATIONAL TRANSIT CALLS CONVEYED BY MERCURY AND
NATIONAL CALLS TO A MERCURY TERMINATING POINT
For each franchise below, where there are valid NNG's which are missing from
the Group listings these NNG's shall be deemed to be within NNG Group F.
BOLTON / BURY & ROCHDALE / CHESHIRE / GREATER MANCHESTER / MACCLESFIELD
/ OLDHAM & TAMESIDE / STOCKPORT FRANCHISES
Reference DMSU: Manchester Bradley (except Cheshire)
Reference DMSU: Warrington Wire (Cheshire only)
<TABLE>
<CAPTION>
NNG GROUP A
- - -----------
<S> <C> <C> <C> <C> <C> <C> <C>
01484 01519 01618
NNG GROUP B
- - -----------
01298 01756
NNG GROUP D
- - -----------
01132 01142 01159 01162 01179 01189 01202 01203
01204 01206 01207 01208 01209 01212 01213 01214
01215 01216 01217 01222 01223 01224 01225 01226
01227 01232 01234 01235 01236 01238 01241 01242
01243 01244 01245 01246 01249 01252 01253 01254
01255 01256 01257 01258 01263 01268 01270 01273
01274 01275 01276 01277 01278 01279 01280 01283
01285 01287 01291 01293 01296 01303 01306 01307
01312 01314 01315 01316 01322 01323 01327 01329
01330 01332 01333 01334 01335 01337 01342 01344
01347 01352 01353 01354 01355 01357 01358 01360
01362 01367 01371 01372 01375 01376 01382 01383
01384 01389 01394 01398 01403 01404 01406 01412
01413 01414 01415 01416 01417 01418 01419 01422
01423 01425 01428 01429 01433 01438 01440 01442
01443 01444 01446 01449 01452 01453 01454 01455
01457 01458 01460 01462 01467 01473 01474 01477
</TABLE>
Mercury-Nynex 11 November 1996 Page 1 of 28
Interconnect Agreement Schedule 4, NNG Groups
<PAGE> 75
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
01483 01487 01488 01489 01491 01493 01494 01495
01505 01506 01508 01509 01512 01513 01514 01515
01516 01517 01518 01525 01527 01530 01531 01535
01536 01538 01543 01554 01560 01562 01564 01565
01569 01572 01582 01590 01594 01603 01604 01609
01612 01613 01614 01616 01617 01619 01621 01622
01623 01625 01628 01630 01633 01634 01635 01636
01638 01639 01642 01651 01653 01661 01663 01664
01666 01670 01672 01675 01676 01684 01689 01692
01695 01698 01702 01703 01704 01705 01706 01707
01708 01709 01712 01713 01714 01715 01716 01717
01718 01719 01721 01727 01728 01730 01732 01733
01737 01740 01744 01746 01748 01753 01757 01759
01761 01763 01767 01772 01773 01775 01778 01780
01782 01784 01785 01787 01788 01793 01794 01795
01797 01799 01812 01813 01814 01815 01816 01817
01818 01819 01821 01823 01825 01826 01827 01828
01830 01832 01833 01844 01846 01849 01858 01865
01869 01875 01883 01884 01889 01895 01902 01903
01904 01908 01909 01912 01913 01914 01915 01920
01922 01923 01924 01925 01926 01928 01929 01932
01933 01934 01936 01937 01942 01943 01945 01949
01952 01953 01954 01959 01960 01962 01968 01977
01983 01984 01989 01992 01993
NNG GROUP E
- - -----------
01200 01205 01229 01233 01247 01250 01259 01260
01264 01266 01267 01282 01284 01290 01294 01295
01297 01299 01300 01301 01302 01304 01305 01308
01324 01328 01339 01356 01359 01363 01366 01373
01377 01379 01380 01386 01388 01392 01395 01396
01400 01405 01420 01424 01430 01432 01434 01435
01436 01439 01451 01475 01476 01480 01502 01522
01524 01529 01550 01553 01555 01558 01561 01563
01574 01575 01577 01580 01584 01592 01600 01606
01608 01620 01629 01643 01656 01665 01669 01674
01677 01685 01693 01694 01722 01738 01743 01745
01747 01749 01750 01751 01760 01762 01765 01769
01771 01777 01779 01786 01789 01798 01820 01824
01829 01842 01843 01845 01861 01868 01873 01874
01877 01885 01886 01888 01892 01899 01905 01935
01939 01944 01947 01948 01963 01969 01975 01978
01980 01981 01986
NNG GROUP F
- - -----------
01228 01237 01248 01261 01265 01271 01286 01288
01292 01309 01320 01326 01340 01341 01343 01346
01349 01350 01351 01361 01364 01365 01368 01369
01381 01387 01393 01397 01407 01408 01409 01431
01445 01450 01456 01461 01463 01465 01470 01471
01478 01479 01485 01490 01492 01496 01497 01499
</TABLE>
Mercury-Nynex 11 November 1996 Page 2 of 28
Interconnect Agreement Schedule 4, NNG Groups
<PAGE> 76
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
01503 01504 01520 01528 01539 01540 01542 01544
01546 01547 01548 01549 01551 01556 01557 01566
01567 01568 01571 01576 01579 01581 01583 01586
01588 01591 01597 01598 01626 01631 01637 01641
01644 01647 01655 01659 01667 01671 01678 01680
01681 01683 01686 01687 01688 01690 01691 01697
01700 01720 01726 01736 01752 01754 01758 01764
01766 01768 01770 01776 01790 01796 01803 01805
01806 01807 01808 01809 01822 01835 01837 01838
01840 01847 01848 01852 01862 01863 01864 01866
01870 01871 01872 01876 01878 01879 01880 01882
01887 01890 01900 01931 01938 01946 01950 01951
01955 01957 01967 01971 01972 01982 01985 01988
01997
</TABLE>
BROMLEY FRANCHISE
Reference DMSU: London Grenville
<TABLE>
<CAPTION>
NNG GROUP A
- - -----------
<S> <C> <C> <C> <C> <C> <C> <C>
01883
NNG GROUP D
- - -----------
01132 01142 01159 01162 01179 01189 01202 01203
01204 01206 01207 01208 01209 01212 01213 01214
01215 01216 01217 01222 01223 01224 01225 01226
01227 01232 01234 01235 01236 01238 01241 01242
01243 01244 01245 01246 01249 01252 01253 01254
01255 01256 01257 01258 01263 01268 01270 01273
01274 01275 01276 01277 01278 01279 01280 01283
01285 01287 01291 01293 01296 01303 01306 01307
01312 01314 01315 01316 01322 01323 01327 01329
01330 01332 01333 01334 01335 01337 01342 01344
01347 01352 01353 01354 01355 01357 01358 01360
01362 01367 01371 01372 01375 01376 01382 01383
01384 01389 01394 01398 01403 01404 01406 01412
01413 01414 01415 01416 01417 01418 01419 01422
01423 01425 01428 01429 01433 01438 01440 01442
01443 01444 01446 01449 01452 01453 01454 01455
01457 01458 01460 01462 01467 01473 01474 01477
01483 01484 01487 01488 01489 01491 01493 01494
01495 01505 01506 01508 01509 01512 01513 01514
01515 01516 01517 01518 01519 01525 01527 01530
01531 01535 01536 01538 01543 01554 01560 01562
01564 01565 01569 01572 01582 01590 01594 01603
01604 01609 01612 01613 01614 01616 01617 01618
01619 01621 01622 01623 01625 01628 01630 01633
01634 01635 01636 01638 01639 01642 01651 01653
01661 01663 01664 01666 01670 01672 01675 01676
01684 01689 01692 01695 01698 01702 01703 01704
</TABLE>
Mercury-Nynex 11 November 1996 Page 3 of 28
Interconnect Agreement Schedule 4, NNG Groups
<PAGE> 77
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
01705 01706 01707 01708 01709 01712 01713 01714
01715 01716 01717 01718 01719 01721 01727 01728
01730 01732 01733 01737 01740 01744 01746 01748
01753 01757 01759 01761 01763 01767 01772 01773
01775 01778 01780 01782 01784 01785 01787 01788
01793 01794 01795 01797 01799 01812 01813 01814
01815 01816 01817 01818 01819 01821 01823 01825
01826 01827 01828 01830 01832 01833 01844 01846
01849 01858 01865 01869 01875 01884 01889 01895
01902 01903 01904 01908 01909 01912 01913 01914
01915 01920 01922 01923 01924 01925 01926 01928
01929 01932 01933 01934 01936 01937 01942 01943
01945 01949 01952 01953 01954 01959 01960 01962
01968 01977 01983 01984 01989 01992 01993
NNG GROUP E
- - -----------
01200 01205 01229 01233 01247 01250 01259 01260
01264 01266 01267 01282 01284 01290 01294 01295
01297 01298 01299 01300 01301 01302 01304 01305
01308 01324 01328 01339 01356 01359 01363 01366
01373 01377 01379 01380 01386 01388 01392 01395
01396 01400 01405 01420 01424 01430 01432 01434
01435 01436 01439 01451 01475 01476 01480 01502
01522 01524 01529 01550 01553 01555 01558 01561
01563 01574 01575 01577 01580 01584 01592 01600
01606 01608 01620 01629 01643 01656 01665 01669
01674 01677 01685 01693 01694 01722 01738 01743
01745 01747 01749 01750 01751 01756 01760 01762
01765 01769 01771 01777 01779 01786 01789 01798
01820 01824 01829 01842 01843 01845 01861 01868
01873 01874 01877 01885 01886 01888 01892 01899
01905 01935 01939 01944 01947 01948 01963 01969
01975 01978 01980 01981 01986
NNG GROUP F
- - -----------
01228 01237 01248 01261 01265 01271 01286 01288
01292 01309 01320 01326 01340 01341 01343 01346
01349 01350 01351 01361 01364 01365 01368 01369
01381 01387 01393 01397 01407 01408 01409 01431
01445 01450 01456 01461 01463 01465 01470 01471
01478 01479 01485 01490 01492 01496 01497 01499
01503 01504 01520 01528 01539 01540 01542 01544
01546 01547 01548 01549 01551 01556 01557 01566
01567 01568 01571 01576 01579 01581 01583 01586
01588 01591 01597 01598 01626 01631 01637 01641
01644 01647 01655 01659 01667 01671 01678 01680
01681 01683 01686 01687 01688 01690 01691 01697
01700 01720 01726 01736 01752 01754 01758 01764
01766 01768 01770 01776 01790 01796 01803 01805
01806 01807 01808 01809 01822 01835 01837 01838
01840 01847 01848 01852 01862 01863 01864 01866
</TABLE>
Mercury-Nynex 11 November 1996 Page 4 of 28
Interconnect Agreement Schedule 4, NNG Groups
<PAGE> 78
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
01870 01871 01872 01876 01878 01879 01880 01882
01887 01890 01900 01931 01938 01946 01950 01951
01955 01957 01967 01971 01972 01982 01985 01988
01997
</TABLE>
DERBY FRANCHISE
Reference DMSU: Nottingham Arrow
<TABLE>
<CAPTION>
NNG GROUP A
- - -----------
<S> <C> <C> <C> <C> <C> <C> <C>
01406 01623 01636 01775 01949
NNG GROUP B
- - -----------
01400 01476 01522 01529 01777
NNG GROUP C
- - -----------
01754 01790
NNG GROUP D
- - -----------
01132 01142 01159 01162 01179 01189 01202 01203
01204 01206 01207 01208 01209 01212 01213 01214
01215 01216 01217 01222 01223 01224 01225 01226
01227 01232 01234 01235 01236 01238 01241 01242
01243 01244 01245 01246 01249 01252 01253 01254
01255 01256 01257 01258 01263 01268 01270 01273
01274 01275 01276 01277 01278 01279 01280 01283
01285 01287 01291 01293 01296 01303 01306 01307
01312 01314 01315 01316 01322 01323 01327 01329
01330 01332 01333 01334 01335 01337 01342 01344
01347 01352 01353 01354 01355 01357 01358 01360
01362 01367 01371 01372 01375 01376 01382 01383
01384 01389 01394 01398 01403 01404 01412 01413
01414 01415 01416 01417 01418 01419 01422 01423
01425 01428 01429 01433 01438 01440 01442 01443
01444 01446 01449 01452 01453 01454 01455 01457
01458 01460 01462 01467 01473 01474 01477 01483
01484 01487 01488 01489 01491 01493 01494 01495
01505 01506 01508 01509 01512 01513 01514 01515
01516 01517 01518 01519 01525 01527 01530 01531
01535 01536 01538 01543 01554 01560 01562 01564
01565 01569 01572 01582 01590 01594 01603 01604
01609 01612 01613 01614 01616 01617 01618 01619
01621 01622 01625 01628 01630 01633 01634 01635
01638 01639 01642 01651 01653 01661 01663 01664
01666 01670 01672 01675 01676 01684 01689 01692
01695 01698 01702 01703 01704 01705 01706 01707
01708 01709 01712 01713 01714 01715 01716 01717
01718 01719 01721 01727 01728 01730 01732 01733
01737 01740 01744 01746 01748 01753 01757 01759
</TABLE>
Mercury-Nynex 11 November 1996 Page 5 of 28
Interconnect Agreement Schedule 4, NNG Groups
<PAGE> 79
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
01761 01763 01767 01772 01773 01778 01780 01782
01784 01785 01787 01788 01793 01794 01795 01797
01799 01812 01813 01814 01815 01816 01817 01818
01819 01821 01823 01825 01826 01827 01828 01830
01832 01833 01844 01846 01849 01858 01865 01869
01875 01883 01884 01889 01895 01902 01903 01904
01908 01909 01912 01913 01914 01915 01920 01922
01923 01924 01925 01926 01928 01929 01932 01933
01934 01936 01937 01942 01943 01945 01952 01953
01954 01959 01960 01962 01968 01977 01983 01984
01989 01992 01993
NNG GROUP E
- - -----------
01200 01205 01229 01233 01247 01250 01259 01260
01264 01266 01267 01282 01284 01290 01294 01295
01297 01298 01299 01300 01301 01302 01304 01305
01308 01324 01328 01339 01356 01359 01363 01366
01373 01377 01379 01380 01386 01388 01392 01395
01396 01405 01420 01424 01430 01432 01434 01435
01436 01439 01451 01475 01480 01502 01524 01550
01553 01555 01558 01561 01563 01574 01575 01577
01580 01584 01592 01600 01606 01608 01620 01629
01643 01656 01665 01669 01674 01677 01685 01693
01694 01722 01738 01743 01745 01747 01749 01750
01751 01756 01760 01762 01765 01769 01771 01779
01786 01789 01798 01820 01824 01829 01842 01843
01845 01861 01868 01873 01874 01877 01885 01886
01888 01892 01899 01905 01935 01939 01944 01947
01948 01963 01969 01975 01978 01980 01981 01986
NNG GROUP F
- - -----------
01228 01237 01248 01261 01265 01271 01286 01288
01292 01309 01320 01326 01340 01341 01343 01346
01349 01350 01351 01361 01364 01365 01368 01369
01381 01387 01393 01397 01407 01408 01409 01431
01445 01450 01456 01461 01463 01465 01470 01471
01478 01479 01485 01490 01492 01496 01497 01499
01503 01504 01520 01528 01539 01540 01542 01544
01546 01547 01548 01549 01551 01556 01557 01566
01567 01568 01571 01576 01579 01581 01583 01586
01588 01591 01597 01598 01626 01631 01637 01641
01644 01647 01655 01659 01667 01671 01678 01680
01681 01683 01686 01687 01688 01690 01691 01697
01700 01720 01726 01736 01752 01758 01764 01766
01768 01770 01776 01796 01803 01805 01806 01807
01808 01809 01822 01835 01837 01838 01840 01847
01848 01852 01862 01863 01864 01866 01870 01871
01872 01876 01878 01879 01880 01882 01887 01890
01900 01931 01938 01946 01950 01951 01955 01957
01967 01971 01972 01982 01985 01988 01997
</TABLE>
Mercury-Nynex 11 November 1996 Page 6 of 28
Interconnect Agreement Schedule 4, NNG Groups
<PAGE> 80
EAST LANCASHIRE FRANCHISE
Reference DMSU: Preston Guild
<TABLE>
<CAPTION>
NNG GROUP A
- - -----------
<S> <C> <C> <C> <C> <C> <C> <C>
01254
NNG GROUP B
- - -----------
01200 01229 01282 01301 01339 01436 01524 01771
01779 01975
NNG GROUP C
- - -----------
01228 01309 01340 01343 01369 01499 01539 01542
01586 01631 01680 01681 01688 01697 01768 01807
01838 01852 01866 01879 01900 01931 01946 01951
NNG GROUP D
- - -----------
01132 01142 01159 01162 01179 01189 01202 01203
01204 01206 01207 01208 01209 01212 01213 01214
01215 01216 01217 01222 01223 01224 01225 01226
01227 01232 01234 01235 01236 01238 01241 01242
01243 01244 01245 01246 01249 01252 01253 01255
01256 01257 01258 01263 01268 01270 01273 01274
01275 01276 01277 01278 01279 01280 01283 01285
01287 01291 01293 01296 01303 01306 01307 01312
01314 01315 01316 01322 01323 01327 01329 01330
01332 01333 01334 01335 01337 01342 01344 01347
01352 01353 01354 01355 01357 01358 01360 01362
01367 01371 01372 01375 01376 01382 01383 01384
01389 01394 01398 01403 01404 01406 01412 01413
01414 01415 01416 01417 01418 01419 01422 01423
01425 01428 01429 01433 01438 01440 01442 01443
01444 01446 01449 01452 01453 01454 01455 01457
01458 01460 01462 01467 01473 01474 01477 01483
01484 01487 01488 01489 01491 01493 01494 01495
01505 01506 01508 01509 01512 01513 01514 01515
01516 01517 01518 01519 01525 01527 01530 01531
01535 01536 01538 01543 01554 01560 01562 01564
01565 01569 01572 01582 01590 01594 01603 01604
01609 01612 01613 01614 01616 01617 01618 01619
01621 01622 01623 01625 01628 01630 01633 01634
01635 01636 01638 01639 01642 01651 01653 01661
01663 01664 01666 01670 01672 01675 01676 01684
01689 01692 01695 01698 01702 01703 01704 01705
01706 01707 01708 01709 01712 01713 01714 01715
01716 01717 01718 01719 01721 01727 01728 01730
01732 01733 01737 01740 01744 01746 01748 01753
01757 01759 01761 01763 01767 01772 01773 01775
</TABLE>
Mercury-Nynex 11 November 1996 Page 7 of 28
Interconnect Agreement Schedule 4, NNG Groups
<PAGE> 81
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
01778 01780 01782 01784 01785 01787 01788 01793
01794 01795 01797 01799 01812 01813 01814 01815
01816 01817 01818 01819 01821 01823 01825 01826
01827 01828 01830 01832 01833 01844 01846 01849
01858 01865 01869 01875 01883 01884 01889 01895
01902 01903 01904 01908 01909 01912 01913 01914
01915 01920 01922 01923 01924 01925 01926 01928
01929 01932 01933 01934 01936 01937 01942 01943
01945 01949 01952 01953 01954 01959 01960 01962
01968 01977 01983 01984 01989 01992 01993
NNG GROUP E
- - -----------
01205 01233 01247 01250 01259 01260 01264 01266
01267 01284 01290 01294 01295 01297 01298 01299
01300 01302 01304 01305 01308 01324 01328 01356
01359 01363 01366 01373 01377 01379 01380 01386
01388 01392 01395 01396 01400 01405 01420 01424
01430 01432 01434 01435 01439 01451 01475 01476
01480 01502 01522 01529 01550 01553 01555 01558
01561 01563 01574 01575 01577 01580 01584 01592
01600 01606 01608 01620 01629 01643 01656 01665
01669 01674 01677 01685 01693 01694 01722 01738
01743 01745 01747 01749 01750 01751 01756 01760
01762 01765 01769 01777 01786 01789 01798 01820
01824 01829 01842 01843 01845 01861 01868 01873
01874 01877 01885 01886 01888 01892 01899 01905
01935 01939 01944 01947 01948 01963 01969 01978
01980 01981 01986
NNG GROUP F
- - -----------
01237 01248 01261 01265 01271 01286 01288 01292
01320 01326 01341 01346 01349 01350 01351 01361
01364 01365 01368 01381 01387 01393 01397 01407
01408 01409 01431 01445 01450 01456 01461 01463
01465 01470 01471 01478 01479 01485 01490 01492
01496 01497 01503 01504 01520 01528 01540 01544
01546 01547 01548 01549 01551 01556 01557 01566
01567 01568 01571 01576 01579 01581 01583 01588
01591 01597 01598 01626 01637 01641 01644 01647
01655 01659 01667 01671 01678 01683 01686 01687
01690 01691 01700 01720 01726 01736 01752 01754
01758 01764 01766 01770 01776 01790 01796 01803
01805 01806 01808 01809 01822 01835 01837 01840
01847 01848 01862 01863 01864 01870 01871 01872
01876 01878 01880 01882 01887 01890 01938 01950
01955 01957 01967 01971 01972 01982 01985 01988
01997
</TABLE>
Mercury-Nynex 11 November 1996 Page 8 of 28
Interconnect Agreement Schedule 4, NNG Groups
<PAGE> 82
SOLENT FRANCHISE
Reference DMSU: Portsmouth Nelson
<TABLE>
<CAPTION>
NNG GROUP B
- - -----------
<S> <C> <C> <C> <C> <C> <C> <C>
01420
NNG GROUP D
- - -----------
01132 01142 01159 01162 01179 01189 01202 01203
01204 01206 01207 01208 01209 01212 01213 01214
01215 01216 01217 01222 01223 01224 01225 01226
01227 01232 01234 01235 01236 01238 01241 01242
01243 01244 01245 01246 01249 01252 01253 01254
01255 01256 01257 01258 01263 01268 01270 01273
01274 01275 01276 01277 01278 01279 01280 01283
01285 01287 01291 01293 01296 01303 01306 01307
01312 01314 01315 01316 01322 01323 01327 01329
01330 01332 01333 01334 01335 01337 01342 01344
01347 01352 01353 01354 01355 01357 01358 01360
01362 01367 01371 01372 01375 01376 01382 01383
01384 01389 01394 01398 01403 01404 01406 01412
01413 01414 01415 01416 01417 01418 01419 01422
01423 01425 01428 01429 01433 01438 01440 01442
01443 01444 01446 01449 01452 01453 01454 01455
01457 01458 01460 01462 01467 01473 01474 01477
01483 01484 01487 01488 01489 01491 01493 01494
01495 01505 01506 01508 01509 01512 01513 01514
01515 01516 01517 01518 01519 01525 01527 01530
01531 01535 01536 01538 01543 01554 01560 01562
01564 01565 01569 01572 01582 01590 01594 01603
01604 01609 01612 01613 01614 01616 01617 01618
01619 01621 01622 01623 01625 01628 01630 01633
01634 01635 01636 01638 01639 01642 01651 01653
01661 01663 01664 01666 01670 01672 01675 01676
01684 01689 01692 01695 01698 01702 01703 01704
01705 01706 01707 01708 01709 01712 01713 01714
01715 01716 01717 01718 01719 01721 01727 01728
01730 01732 01733 01737 01740 01744 01746 01748
01753 01757 01759 01761 01763 01767 01772 01773
01775 01778 01780 01782 01784 01785 01787 01788
01793 01794 01795 01797 01799 01812 01813 01814
01815 01816 01817 01818 01819 01821 01823 01825
01826 01827 01828 01830 01832 01833 01844 01846
01849 01858 01865 01869 01875 01883 01884 01889
01895 01902 01903 01904 01908 01909 01912 01913
01914 01915 01920 01922 01923 01924 01925 01926
01928 01929 01932 01933 01934 01936 01937 01942
01943 01945 01949 01952 01953 01954 01959 01960
01962 01968 01977 01983 01984 01989 01992 01993
</TABLE>
Mercury-Nynex 11 November 1996 Page 9 of 28
Interconnect Agreement Schedule 4, NNG Groups
<PAGE> 83
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
NNG GROUP E
- - -----------
01200 01205 01229 01233 01247 01250 01259 01260
01264 01266 01267 01282 01284 01290 01294 01295
01297 01298 01299 01300 01301 01302 01304 01305
01308 01324 01328 01339 01356 01359 01363 01366
01373 01377 01379 01380 01386 01388 01392 01395
01396 01400 01405 01424 01430 01432 01434 01435
01436 01439 01451 01475 01476 01480 01502 01522
01524 01529 01550 01553 01555 01558 01561 01563
01574 01575 01577 01580 01584 01592 01600 01606
01608 01620 01629 01643 01656 01665 01669 01674
01677 01685 01693 01694 01722 01738 01743 01745
01747 01749 01750 01751 01756 01760 01762 01765
01769 01771 01777 01779 01786 01789 01798 01820
01824 01829 01842 01843 01845 01861 01868 01873
01874 01877 01885 01886 01888 01892 01899 01905
01935 01939 01944 01947 01948 01963 01969 01975
01978 01980 01981 01986
NNG GROUP F
- - -----------
01228 01237 01248 01261 01265 01271 01286 01288
01292 01309 01320 01326 01340 01341 01343 01346
01349 01350 01351 01361 01364 01365 01368 01369
01381 01387 01393 01397 01407 01408 01409 01431
01445 01450 01456 01461 01463 01465 01470 01471
01478 01479 01485 01490 01492 01496 01497 01499
01503 01504 01520 01528 01539 01540 01542 01544
01546 01547 01548 01549 01551 01556 01557 01566
01567 01568 01571 01576 01579 01581 01583 01586
01588 01591 01597 01598 01626 01631 01637 01641
01644 01647 01655 01659 01667 01671 01678 01680
01681 01683 01686 01687 01688 01690 01691 01697
01700 01720 01726 01736 01752 01754 01758 01764
01766 01768 01770 01776 01790 01796 01803 01805
01806 01807 01808 01809 01822 01835 01837 01838
01840 01847 01848 01852 01862 01863 01864 01866
01870 01871 01872 01876 01878 01879 01880 01882
01887 01890 01900 01931 01938 01946 01950 01951
01955 01957 01967 01971 01972 01982 01985 01988
01997
</TABLE>
Mercury-Nynex 11 November 1996 Page 10 of 28
Interconnect Agreement Schedule 4, NNG Groups
<PAGE> 84
STAFFORDSHIRE FRANCHISE
Reference DMSU: Stoke Bennett
<TABLE>
<CAPTION>
NNG GROUP A
- - -----------
<S> <C> <C> <C> <C> <C> <C> <C>
01477 01538 01889 01936
NNG GROUP D
- - -----------
01132 01142 01159 01162 01179 01189 01202 01203
01204 01206 01207 01208 01209 01212 01213 01214
01215 01216 01217 01222 01223 01224 01225 01226
01227 01232 01234 01235 01236 01238 01241 01242
01243 01244 01245 01246 01249 01252 01253 01254
01255 01256 01257 01258 01263 01268 01270 01273
01274 01275 01276 01277 01278 01279 01280 01283
01285 01287 01291 01293 01296 01303 01306 01307
01312 01314 01315 01316 01322 01323 01327 01329
01330 01332 01333 01334 01335 01337 01342 01344
01347 01352 01353 01354 01355 01357 01358 01360
01362 01367 01371 01372 01375 01376 01382 01383
01384 01389 01394 01398 01403 01404 01406 01412
01413 01414 01415 01416 01417 01418 01419 01422
01423 01425 01428 01429 01433 01438 01440 01442
01443 01444 01446 01449 01452 01453 01454 01455
01457 01458 01460 01462 01467 01473 01474 01483
01484 01487 01488 01489 01491 01493 01494 01495
01505 01506 01508 01509 01512 01513 01514 01515
01516 01517 01518 01519 01525 01527 01530 01531
01535 01536 01543 01554 01560 01562 01564 01565
01569 01572 01582 01590 01594 01603 01604 01609
01612 01613 01614 01616 01617 01618 01619 01621
01622 01623 01625 01628 01630 01633 01634 01635
01636 01638 01639 01642 01651 01653 01661 01663
01664 01666 01670 01672 01675 01676 01684 01689
01692 01695 01698 01702 01703 01704 01705 01706
01707 01708 01709 01712 01713 01714 01715 01716
01717 01718 01719 01721 01727 01728 01730 01732
01733 01737 01740 01744 01746 01748 01753 01757
01759 01761 01763 01767 01772 01773 01775 01778
01780 01782 01784 01785 01787 01788 01793 01794
01795 01797 01799 01812 01813 01814 01815 01816
01817 01818 01819 01821 01823 01825 01826 01827
01828 01830 01832 01833 01844 01846 01849 01858
01865 01869 01875 01883 01884 01895 01902 01903
01904 01908 01909 01912 01913 01914 01915 01920
01922 01923 01924 01925 01926 01928 01929 01932
01933 01934 01937 01942 01943 01945 01949 01952
01953 01954 01959 01960 01962 01968 01977 01983
01984 01989 01992 01993
NNG GROUP E
- - -----------
</TABLE>
Mercury-Nynex 11 November 1996 Page 11 of 28
Interconnect Agreement Schedule 4, NNG Groups
<PAGE> 85
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
01200 01205 01229 01233 01247 01250 01259 01260
01264 01266 01267 01282 01284 01290 01294 01295
01297 01298 01299 01300 01301 01302 01304 01305
01308 01324 01328 01339 01356 01359 01363 01366
01373 01377 01379 01380 01386 01388 01392 01395
01396 01400 01405 01420 01424 01430 01432 01434
01435 01436 01439 01451 01475 01476 01480 01502
01522 01524 01529 01550 01553 01555 01558 01561
01563 01574 01575 01577 01580 01584 01592 01600
01606 01608 01620 01629 01643 01656 01665 01669
01674 01677 01685 01693 01694 01722 01738 01743
01745 01747 01749 01750 01751 01756 01760 01762
01765 01769 01771 01777 01779 01786 01789 01798
01820 01824 01829 01842 01843 01845 01861 01868
01873 01874 01877 01885 01886 01888 01892 01899
01905 01935 01939 01944 01947 01948 01963 01969
01975 01978 01980 01981 01986
NNG GROUP F
- - -----------
01228 01237 01248 01261 01265 01271 01286 01288
01292 01309 01320 01326 01340 01341 01343 01346
01349 01350 01351 01361 01364 01365 01368 01369
01381 01387 01393 01397 01407 01408 01409 01431
01445 01450 01456 01461 01463 01465 01470 01471
01478 01479 01485 01490 01492 01496 01497 01499
01503 01504 01520 01528 01539 01540 01542 01544
01546 01547 01548 01549 01551 01556 01557 01566
01567 01568 01571 01576 01579 01581 01583 01586
01588 01591 01597 01598 01626 01631 01637 01641
01644 01647 01655 01659 01667 01671 01678 01680
01681 01683 01686 01687 01688 01690 01691 01697
01700 01720 01726 01736 01752 01754 01758 01764
01766 01768 01770 01776 01790 01796 01803 01805
01806 01807 01808 01809 01822 01835 01837 01838
01840 01847 01848 01852 01862 01863 01864 01866
01870 01871 01872 01876 01878 01879 01880 01882
01887 01890 01900 01931 01938 01946 01950 01951
01955 01957 01967 01971 01972 01982 01985 01988
01997
</TABLE>
Mercury-Nynex 11 November 1996 Page 12 of 28
Interconnect Agreement Schedule 4, NNG Groups
<PAGE> 86
SURREY FRANCHISE
Reference DMSU: London Cromwell
<TABLE>
<CAPTION>
NNG GROUP D
- - -----------
<S> <C> <C> <C> <C> <C> <C> <C>
01132 01142 01159 01162 01179 01189 01202 01203
01204 01206 01207 01208 01209 01212 01213 01214
01215 01216 01217 01222 01223 01224 01225 01226
01227 01232 01234 01235 01236 01238 01241 01242
01243 01244 01245 01246 01249 01252 01253 01254
01255 01256 01257 01258 01263 01268 01270 01273
01274 01275 01276 01277 01278 01279 01280 01283
01285 01287 01291 01293 01296 01303 01306 01307
01312 01314 01315 01316 01322 01323 01327 01329
01330 01332 01333 01334 01335 01337 01342 01344
01347 01352 01353 01354 01355 01357 01358 01360
01362 01367 01371 01372 01375 01376 01382 01383
01384 01389 01394 01398 01403 01404 01406 01412
01413 01414 01415 01416 01417 01418 01419 01422
01423 01425 01428 01429 01433 01438 01440 01442
01443 01444 01446 01449 01452 01453 01454 01455
01457 01458 01460 01462 01467 01473 01474 01477
01483 01484 01487 01488 01489 01491 01493 01494
01495 01505 01506 01508 01509 01512 01513 01514
01515 01516 01517 01518 01519 01525 01527 01530
01531 01535 01536 01538 01543 01554 01560 01562
01564 01565 01569 01572 01582 01590 01594 01603
01604 01609 01612 01613 01614 01616 01617 01618
01619 01621 01622 01623 01625 01628 01630 01633
01634 01635 01636 01638 01639 01642 01651 01653
01661 01663 01664 01666 01670 01672 01675 01676
01684 01689 01692 01695 01698 01702 01703 01704
01705 01706 01707 01708 01709 01712 01713 01714
01715 01716 01717 01718 01719 01721 01727 01728
01730 01732 01733 01737 01740 01744 01746 01748
01753 01757 01759 01761 01763 01767 01772 01773
01775 01778 01780 01782 01784 01785 01787 01788
01793 01794 01795 01797 01799 01812 01813 01814
01815 01816 01817 01818 01819 01821 01823 01825
01826 01827 01828 01830 01832 01833 01844 01846
01849 01858 01865 01869 01875 01883 01884 01889
01895 01902 01903 01904 01908 01909 01912 01913
01914 01915 01920 01922 01923 01924 01925 01926
01928 01929 01932 01933 01934 01936 01937 01942
01943 01945 01949 01952 01953 01954 01959 01960
01962 01968 01977 01983 01984 01989 01992 01993
NNG GROUP E
- - -----------
01200 01205 01229 01233 01247 01250 01259 01260
01264 01266 01267 01282 01284 01290 01294 01295
</TABLE>
Mercury-Nynex 11 November 1996 Page 13 of 28
Interconnect Agreement Schedule 4, NNG Groups
<PAGE> 87
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
01297 01298 01299 01300 01301 01302 01304 01305
01308 01324 01328 01339 01356 01359 01363 01366
01373 01377 01379 01380 01386 01388 01392 01395
01396 01400 01405 01420 01424 01430 01432 01434
01435 01436 01439 01451 01475 01476 01480 01502
01522 01524 01529 01550 01553 01555 01558 01561
01563 01574 01575 01577 01580 01584 01592 01600
01606 01608 01620 01629 01643 01656 01665 01669
01674 01677 01685 01693 01694 01722 01738 01743
01745 01747 01749 01750 01751 01756 01760 01762
01765 01769 01771 01777 01779 01786 01789 01798
01820 01824 01829 01842 01843 01845 01861 01868
01873 01874 01877 01885 01886 01888 01892 01899
01905 01935 01939 01944 01947 01948 01963 01969
01975 01978 01980 01981 01986
NNG GROUP F
- - -----------
01228 01237 01248 01261 01265 01271 01286 01288
01292 01309 01320 01326 01340 01341 01343 01346
01349 01350 01351 01361 01364 01365 01368 01369
01381 01387 01393 01397 01407 01408 01409 01431
01445 01450 01456 01461 01463 01465 01470 01471
01478 01479 01485 01490 01492 01496 01497 01499
01503 01504 01520 01528 01539 01540 01542 01544
01546 01547 01548 01549 01551 01556 01557 01566
01567 01568 01571 01576 01579 01581 01583 01586
01588 01591 01597 01598 01626 01631 01637 01641
01644 01647 01655 01659 01667 01671 01678 01680
01681 01683 01686 01687 01688 01690 01691 01697
01700 01720 01726 01736 01752 01754 01758 01764
01766 01768 01770 01776 01790 01796 01803 01805
01806 01807 01808 01809 01822 01835 01837 01838
01840 01847 01848 01852 01862 01863 01864 01866
01870 01871 01872 01876 01878 01879 01880 01882
01887 01890 01900 01931 01938 01946 01950 01951
01955 01957 01967 01971 01972 01982 01985 01988
01997
</TABLE>
Mercury-Nynex 11 November 1996 Page 14 of 28
Interconnect Agreement Schedule 4, NNG Groups
<PAGE> 88
SUSSEX FRANCHISE
Reference DMSU: Crawley Newtown
<TABLE>
<CAPTION>
NNG GROUP A
- - -----------
<S> <C> <C> <C> <C> <C> <C> <C>
01342 01797 01825
NNG GROUP B
- - -----------
01435 01580
NNG GROUP D
- - -----------
01132 01142 01159 01162 01179 01189 01202 01203
01204 01206 01207 01208 01209 01212 01213 01214
01215 01216 01217 01222 01223 01224 01225 01226
01227 01232 01234 01235 01236 01238 01241 01242
01243 01244 01245 01246 01249 01252 01253 01254
01255 01256 01257 01258 01263 01268 01270 01273
01274 01275 01276 01277 01278 01279 01280 01283
01285 01287 01291 01293 01296 01303 01306 01307
01312 01314 01315 01316 01322 01323 01327 01329
01330 01332 01333 01334 01335 01337 01344 01347
01352 01353 01354 01355 01357 01358 01360 01362
01367 01371 01372 01375 01376 01382 01383 01384
01389 01394 01398 01403 01404 01406 01412 01413
01414 01415 01416 01417 01418 01419 01422 01423
01425 01428 01429 01433 01438 01440 01442 01443
01444 01446 01449 01452 01453 01454 01455 01457
01458 01460 01462 01467 01473 01474 01477 01483
01484 01487 01488 01489 01491 01493 01494 01495
01505 01506 01508 01509 01512 01513 01514 01515
01516 01517 01518 01519 01525 01527 01530 01531
01535 01536 01538 01543 01554 01560 01562 01564
01565 01569 01572 01582 01590 01594 01603 01604
01609 01612 01613 01614 01616 01617 01618 01619
01621 01622 01623 01625 01628 01630 01633 01634
01635 01636 01638 01639 01642 01651 01653 01661
01663 01664 01666 01670 01672 01675 01676 01684
01689 01692 01695 01698 01702 01703 01704 01705
01706 01707 01708 01709 01712 01713 01714 01715
01716 01717 01718 01719 01721 01727 01728 01730
01732 01733 01737 01740 01744 01746 01748 01753
01757 01759 01761 01763 01767 01772 01773 01775
01778 01780 01782 01784 01785 01787 01788 01793
01794 01795 01799 01812 01813 01814 01815 01816
01817 01818 01819 01821 01823 01826 01827 01828
01830 01832 01833 01844 01846 01849 01858 01865
01869 01875 01883 01884 01889 01895 01902 01903
01904 01908 01909 01912 01913 01914 01915 01920
01922 01923 01924 01925 01926 01928 01929 01932
01933 01934 01936 01937 01942 01943 01945 01949
</TABLE>
Mercury-Nynex 11 November 1996 Page 15 of 28
Interconnect Agreement Schedule 4, NNG Groups
<PAGE> 89
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
01952 01953 01954 01959 01960 01962 01968 01977
01983 01984 01989 01992 01993
NNG GROUP E
- - -----------
01200 01205 01229 01233 01247 01250 01259 01260
01264 01266 01267 01282 01284 01290 01294 01295
01297 01298 01299 01300 01301 01302 01304 01305
01308 01324 01328 01339 01356 01359 01363 01366
01373 01377 01379 01380 01386 01388 01392 01395
01396 01400 01405 01420 01424 01430 01432 01434
01436 01439 01451 01475 01476 01480 01502 01522
01524 01529 01550 01553 01555 01558 01561 01563
01574 01575 01577 01584 01592 01600 01606 01608
01620 01629 01643 01656 01665 01669 01674 01677
01685 01693 01694 01722 01738 01743 01745 01747
01749 01750 01751 01756 01760 01762 01765 01769
01771 01777 01779 01786 01789 01798 01820 01824
01829 01842 01843 01845 01861 01868 01873 01874
01877 01885 01886 01888 01892 01899 01905 01935
01939 01944 01947 01948 01963 01969 01975 01978
01980 01981 01986
NNG GROUP F
- - -----------
01228 01237 01248 01261 01265 01271 01286 01288
01292 01309 01320 01326 01340 01341 01343 01346
01349 01350 01351 01361 01364 01365 01368 01369
01381 01387 01393 01397 01407 01408 01409 01431
01445 01450 01456 01461 01463 01465 01470 01471
01478 01479 01485 01490 01492 01496 01497 01499
01503 01504 01520 01528 01539 01540 01542 01544
01546 01547 01548 01549 01551 01556 01557 01566
01567 01568 01571 01576 01579 01581 01583 01586
01588 01591 01597 01598 01626 01631 01637 01641
01644 01647 01655 01659 01667 01671 01678 01680
01681 01683 01686 01687 01688 01690 01691 01697
01700 01720 01726 01736 01752 01754 01758 01764
01766 01768 01770 01776 01790 01796 01803 01805
01806 01807 01808 01809 01822 01835 01837 01838
01840 01847 01848 01852 01862 01863 01864 01866
01870 01871 01872 01876 01878 01879 01880 01882
01887 01890 01900 01931 01938 01946 01950 01951
01955 01957 01967 01971 01972 01982 01985 01988
01997
</TABLE>
Mercury-Nynex 11 November 1996 Page 16 of 28
Interconnect Agreement Schedule 4, NNG Groups
<PAGE> 90
WESSEX FRANCHISE
Reference DMSU: Salisbury Sarum
<TABLE>
<CAPTION>
NNG GROUP B
- - -----------
<S> <C> <C> <C> <C> <C> <C> <C>
01300 01305 01308 01749 01963
NNG GROUP D
- - -----------
01132 01142 01159 01162 01179 01189 01202 01203
01204 01206 01207 01208 01209 01212 01213 01214
01215 01216 01217 01222 01223 01224 01225 01226
01227 01232 01234 01235 01236 01238 01241 01242
01243 01244 01245 01246 01249 01252 01253 01254
01255 01256 01257 01258 01263 01268 01270 01273
01274 01275 01276 01277 01278 01279 01280 01283
01285 01287 01291 01293 01296 01303 01306 01307
01312 01314 01315 01316 01322 01323 01327 01329
01330 01332 01333 01334 01335 01337 01342 01344
01347 01352 01353 01354 01355 01357 01358 01360
01362 01367 01371 01372 01375 01376 01382 01383
01384 01389 01394 01398 01403 01404 01406 01412
01413 01414 01415 01416 01417 01418 01419 01422
01423 01425 01428 01429 01433 01438 01440 01442
01443 01444 01446 01449 01452 01453 01454 01455
01457 01458 01460 01462 01467 01473 01474 01477
01483 01484 01487 01488 01489 01491 01493 01494
01495 01505 01506 01508 01509 01512 01513 01514
01515 01516 01517 01518 01519 01525 01527 01530
01531 01535 01536 01538 01543 01554 01560 01562
01564 01565 01569 01572 01582 01590 01594 01603
01604 01609 01612 01613 01614 01616 01617 01618
01619 01621 01622 01623 01625 01628 01630 01633
01634 01635 01636 01638 01639 01642 01651 01653
01661 01663 01664 01666 01670 01672 01675 01676
01684 01689 01692 01695 01698 01702 01703 01704
01705 01706 01707 01708 01709 01712 01713 01714
01715 01716 01717 01718 01719 01721 01727 01728
01730 01732 01733 01737 01740 01744 01746 01748
01753 01757 01759 01761 01763 01767 01772 01773
01775 01778 01780 01782 01784 01785 01787 01788
01793 01794 01795 01797 01799 01812 01813 01814
01815 01816 01817 01818 01819 01821 01823 01825
01826 01827 01828 01830 01832 01833 01844 01846
01849 01858 01865 01869 01875 01883 01884 01889
01895 01902 01903 01904 01908 01909 01912 01913
01914 01915 01920 01922 01923 01924 01925 01926
01928 01929 01932 01933 01934 01936 01937 01942
01943 01945 01949 01952 01953 01954 01959 01960
01962 01968 01977 01983 01984 01989 01992 01993
</TABLE>
Mercury-Nynex 11 November 1996 Page 17 of 28
Interconnect Agreement Schedule 4, NNG Groups
<PAGE> 91
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
NNG GROUP E
- - -----------
01200 01205 01229 01233 01247 01250 01259 01260
01264 01266 01267 01282 01284 01290 01294 01295
01297 01298 01299 01301 01302 01304 01324 01328
01339 01356 01359 01363 01366 01373 01377 01379
01380 01386 01388 01392 01395 01396 01400 01405
01420 01424 01430 01432 01434 01435 01436 01439
01451 01475 01476 01480 01502 01522 01524 01529
01550 01553 01555 01558 01561 01563 01574 01575
01577 01580 01584 01592 01600 01606 01608 01620
01629 01643 01656 01665 01669 01674 01677 01685
01693 01694 01722 01738 01743 01745 01747 01750
01751 01756 01760 01762 01765 01769 01771 01777
01779 01786 01789 01798 01820 01824 01829 01842
01843 01845 01861 01868 01873 01874 01877 01885
01886 01888 01892 01899 01905 01935 01939 01944
01947 01948 01969 01975 01978 01980 01981 01986
NNG GROUP F
- - -----------
01228 01237 01248 01261 01265 01271 01286 01288
01292 01309 01320 01326 01340 01341 01343 01346
01349 01350 01351 01361 01364 01365 01368 01369
01381 01387 01393 01397 01407 01408 01409 01431
01445 01450 01456 01461 01463 01465 01470 01471
01478 01479 01485 01490 01492 01496 01497 01499
01503 01504 01520 01528 01539 01540 01542 01544
01546 01547 01548 01549 01551 01556 01557 01566
01567 01568 01571 01576 01579 01581 01583 01586
01588 01591 01597 01598 01626 01631 01637 01641
01644 01647 01655 01659 01667 01671 01678 01680
01681 01683 01686 01687 01688 01690 01691 01697
01700 01720 01726 01736 01752 01754 01758 01764
01766 01768 01770 01776 01790 01796 01803 01805
01806 01807 01808 01809 01822 01835 01837 01838
01840 01847 01848 01852 01862 01863 01864 01866
01870 01871 01872 01876 01878 01879 01880 01882
01887 01890 01900 01931 01938 01946 01950 01951
01955 01957 01967 01971 01972 01982 01985 01988
01997
</TABLE>
Mercury-Nynex 11 November 1996 Page 18 of 28
Interconnect Agreement Schedule 4, NNG Groups
<PAGE> 92
WIRRAL FRANCHISE
Reference DMSU: Liverpool Crystal
<TABLE>
<CAPTION>
NNG GROUP A
- - -----------
<S> <C> <C> <C> <C> <C> <C> <C>
01513 01514 01515 01516 01517 01519 01695 01744
NNG GROUP B
- - -----------
01745 01829
NNG GROUP C
- - -----------
01248 01286 01407 01492 01690 01758 01766
NNG GROUP D
- - -----------
01132 01142 01159 01162 01179 01189 01202 01203
01204 01206 01207 01208 01209 01212 01213 01214
01215 01216 01217 01222 01223 01224 01225 01226
01227 01232 01234 01235 01236 01238 01241 01242
01243 01244 01245 01246 01249 01252 01253 01254
01255 01256 01257 01258 01263 01268 01270 01273
01274 01275 01276 01277 01278 01279 01280 01283
01285 01287 01291 01293 01296 01303 01306 01307
01312 01314 01315 01316 01322 01323 01327 01329
01330 01332 01333 01334 01335 01337 01342 01344
01347 01352 01353 01354 01355 01357 01358 01360
01362 01367 01371 01372 01375 01376 01382 01383
01384 01389 01394 01398 01403 01404 01406 01412
01413 01414 01415 01416 01417 01418 01419 01422
01423 01425 01428 01429 01433 01438 01440 01442
01443 01444 01446 01449 01452 01453 01454 01455
01457 01458 01460 01462 01467 01473 01474 01477
01483 01484 01487 01488 01489 01491 01493 01494
01495 01505 01506 01508 01509 01512 01518 01525
01527 01530 01531 01535 01536 01538 01543 01554
01560 01562 01564 01565 01569 01572 01582 01590
01594 01603 01604 01609 01612 01613 01614 01616
01617 01618 01619 01621 01622 01623 01625 01628
01630 01633 01634 01635 01636 01638 01639 01642
01651 01653 01661 01663 01664 01666 01670 01672
01675 01676 01684 01689 01692 01698 01702 01703
01704 01705 01706 01707 01708 01709 01712 01713
01714 01715 01716 01717 01718 01719 01721 01727
01728 01730 01732 01733 01737 01740 01746 01748
01753 01757 01759 01761 01763 01767 01772 01773
01775 01778 01780 01782 01784 01785 01787 01788
01793 01794 01795 01797 01799 01812 01813 01814
01815 01816 01817 01818 01819 01821 01823 01825
01826 01827 01828 01830 01832 01833 01844 01846
</TABLE>
Mercury-Nynex 11 November 1996 Page 19 of 28
Interconnect Agreement Schedule 4, NNG Groups
<PAGE> 93
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
01849 01858 01865 01869 01875 01883 01884 01889
01895 01902 01903 01904 01908 01909 01912 01913
01914 01915 01920 01922 01923 01924 01925 01926
01928 01929 01932 01933 01934 01936 01937 01942
01943 01945 01949 01952 01953 01954 01959 01960
01962 01968 01977 01983 01984 01989 01992 01993
NNG GROUP E
- - -----------
01200 01205 01229 01233 01247 01250 01259 01260
01264 01266 01267 01282 01284 01290 01294 01295
01297 01298 01299 01300 01301 01302 01304 01305
01308 01324 01328 01339 01356 01359 01363 01366
01373 01377 01379 01380 01386 01388 01392 01395
01396 01400 01405 01420 01424 01430 01432 01434
01435 01436 01439 01451 01475 01476 01480 01502
01522 01524 01529 01550 01553 01555 01558 01561
01563 01574 01575 01577 01580 01584 01592 01600
01606 01608 01620 01629 01643 01656 01665 01669
01674 01677 01685 01693 01694 01722 01738 01743
01747 01749 01750 01751 01756 01760 01762 01765
01769 01771 01777 01779 01786 01789 01798 01820
01824 01842 01843 01845 01861 01868 01873 01874
01877 01885 01886 01888 01892 01899 01905 01935
01939 01944 01947 01948 01963 01969 01975 01978
01980 01981 01986
NNG GROUP F
- - -----------
01228 01237 01261 01265 01271 01288 01292 01309
01320 01326 01340 01341 01343 01346 01349 01350
01351 01361 01364 01365 01368 01369 01381 01387
01393 01397 01408 01409 01431 01445 01450 01456
01461 01463 01465 01470 01471 01478 01479 01485
01490 01496 01497 01499 01503 01504 01520 01528
01539 01540 01542 01544 01546 01547 01548 01549
01551 01556 01557 01566 01567 01568 01571 01576
01579 01581 01583 01586 01588 01591 01597 01598
01626 01631 01637 01641 01644 01647 01655 01659
01667 01671 01678 01680 01681 01683 01686 01687
01688 01691 01697 01700 01720 01726 01736 01752
01754 01764 01768 01770 01776 01790 01796 01803
01805 01806 01807 01808 01809 01822 01835 01837
01838 01840 01847 01848 01852 01862 01863 01864
01866 01870 01871 01872 01876 01878 01879 01880
01882 01887 01890 01900 01931 01938 01946 01950
01951 01955 01957 01967 01971 01972 01982 01985
01988 01997
</TABLE>
Mercury-Nynex 11 November 1996 Page 20 of 28
Interconnect Agreement Schedule 4, NNG Groups
<PAGE> 94
1.2 NATIONAL NUMBER GROUPS FOR NATIONAL CALLS TO A NYNEX NETWORK
------------------------------------------------------------
TERMINATING POINT
------------------------------------------------------------
NNG GROUP A
BOLTON / BURY & ROCHDALE / CHESHIRE / GREATER MANCHESTER / MACCLESFIELD
/ OLDHAM & TAMESIDE / STOCKPORT FRANCHISES
<TABLE>
<S> <C>
01204 40, 41, 42, 43, 45
01457 55, 56, 57
0151 510, 511
</TABLE>
0161 (279), 280, 281, 282, 283, 284, 285, 286, 287, 288, 290, 291, 292, 293,
294, 295, 345, (355), 374, 610, 611, 612, (613), (614), 630, 631, 661,
666, 718, 950, 959
<TABLE>
<S> <C>
01625 25, 26, 27, (28), 62
01706 66, 67, 72
01925 45, 47, 48, 49
01928 77, 82, 83, 84
01942 63, 79
</TABLE>
BROMLEY FRANCHISE
<TABLE>
<S> <C>
01689 60, 61, 62, 81
01959 59, 70, 71
0181 249, 289, 325, 353, 402, 711
</TABLE>
DERBY FRANCHISE
01332 23, 60, 72, 73, 74
EAST LANCASHIRE FRANCHISE
01254 60, 61, 62, 63, 64, 72
01282 70, 71, 72, 73, 74, 82
SOLENT FRANCHISE
<TABLE>
<S> <C>
01243 43
01329 31, 51
01428 28
01489 48, 49, 60
01703 54, 56
01705 34, 35, 36, 42, 61, 64, 71, 78, 79
01730 30, 73
</TABLE>
STAFFORDSHIRE FRANCHISE
01782 23, 24, 25, 85, 86
Mercury-Nynex 11 November 1996 Page 21 of 28
Interconnect Agreement Schedule 4, NNG Groups
<PAGE> 95
SURREY FRANCHISE
<TABLE>
<S> <C>
01306 50, 60
01344 43
01372 20, 21, 80, 81
01737 21, 27, 28, 29
01784 74, 75
0181 224, 716, 873
01883 37, 38, 39
01932 42, 43, 70, 88
</TABLE>
SUSSEX FRANCHISE
01273 23, 27, 29, 38, 70, 88
01903 52, 53, 60, 61, 62
WESSEX FRANCHISE
01202 24, 25, 26, 38, 77
01425 25
WIRRAL FRANCHISE
<TABLE>
<S> <C>
01244 42, 44
0151 200, 201, 512, 513, 514
01928 87, 88
</TABLE>
Notes
NYNEX number ranges in brackets () are not yet in service.
Mercury-Nynex 11 November 1996 Page 22 of 28
Interconnect Agreement Schedule 4, NNG Groups
<PAGE> 96
2 INTERNATIONAL COUNTRY CODES
<TABLE>
<S> <C>
Afghanistan (1) 93
Albania (1) 355
Algeria 213, 214, 215
Andorra (France) 376
Angola 244
Anguilla 1 809 497
Antigua & Barbuda 1 809 (460-464, 480, 960)
Antilles (Netherlands) 599
Argentina 54
Armenia 374
Aruba 297
Ascension Island 247
Australia 61
Australian External
Territories (Antartica) (1) 672 1
Austria 43
Azerbaijan 994
Azores (Portugal) 351
Bahamas 1 809 (321-329, 331-339, 341-349 (ex 343),
351-359, 361-369, 373, 392, 393, 394)
Bahrain 973
Bangladesh 880
Barbados (until Jan 97) 1 809 (228-230, 420-439)
(from Jul 96) 1 246
Belarus 7015-7017, 7021-7023, 375
Belgium 32
Belize 501
Benin 229
Bermuda (until Sep 96) 1 809 (231-239, 291-299)
(from Oct 95) 1 441
Bhutan (1) 975
Bolivia 591
Bosnia-Hercegovinia 387
Botswana 267
Brazil 55
Brunei Darussalam 673
Bulgaria 359
Burkina Faso 226
Burundi 257
Cambodia 855
Cameroon 237
Canada 1 NPA
Cape Verde 238
</TABLE>
Mercury-Nynex 11 November 1996 Page 23 of 28
Interconnect Agreement Schedule 4, NNG Groups
<PAGE> 97
Cayman Islands 1 809 (945, 947-949)
Central African Republic 236
Chad 235
Chatham Islands (1) 643
Chile 56
China 86
Christmas Islands 619164
Cocos Islands 619162
Colombia 57
Comoros Islands (1) 269
Congo 242
Cook Islands 682
Costa Rica 506
Cote D'Ivoire 225
Croatia 385
Cuba 53
Cyprus 357, 905
Czech Republic 42
Denmark 45
Diego Garcia 246
Djibouti 253
Dominica 1 809 (445-449)
Dominican Republic 1 809 (220-227, 240-247, 320, 470-479,
521-549, 550-569 (ex 555), 571-590, 591-599,
681-689, 970,971)
Easter Island 563
Ecuador 593
Egypt 20
El Salvador 503
Equatorial Guinea 240
Eritrea 291
Estonia 3722-3727
Ethiopia 251
Falkland Islands 500
Faroe Islands 298
Fiji 679
Finland 358
France 33
French Guiana 594
French Polynesia 689
Gabon 241
Gambia 220
Georgia 7880-7884, 7888, 995
Germany 49
Ghana 233
Gibraltar 350
Mercury-Nynex 11 November 1996 Page 24 of 28
Interconnect Agreement Schedule 4, NNG Groups
<PAGE> 98
Greece 30
Greenland 299
Grenada (including Carriacou) 1 809 (440-444)
Guadeloupe 590
Guam 671
Guatemala 502
Guinea 224
Guinea Bissau 245
Guyana 592
Haiti 509
Honduras 504
Hong Kong 852
Hungary 36
Iceland 354
India 91
Indonesia 62
Iran 98
Iraq 964
Ireland (Eire) 353
Israel 972
Italy (including Vatican City) 39
Jamaica 1 809 (921-929, 931-933, 935-938, 942-944,
951-958, 962-969, 972-979, 982-988, 992-999)
Japan 81
Jordan 962
Kazakhstan 7310-7318, 732, 7336
Kenya 254
Kiribati 686
Korea (North) 850
Korea (South) 82
Kuwait 965
Kyrgyzstan 7319, 7331, 7332, 7334, 7335
Laos (1) 856
Latvia 371
Lebanon 961
Lesotho 266
Liberia 231
Libya 218
Liechtenstein 41
Lithuania 370
Luxembourg 352
Macao 853
Macedonia 389
Madagascar 261
Madeira (Portugal) 351 91
Malawi 265
Mercury-Nynex 11 November 1996 Page 25 of 28
Interconnect Agreement Schedule 4, NNG Groups
<PAGE> 99
Malaysia 60
Maldives 960
Mali 223
Malta 356
Marshall Islands 692
Martinique 596
Mauritania 222
Mauritius 230
Mexico 52
Micronesia 691
Midway Island (1) 6998
Moldova 373
Monaco (France) 33
Mongolia 976
Montserrat 1 809 (491,492)
Morocco 212
Mozambique 258
Myanmar (formerly Burma) 95
Namibia 264
Nauru 674
Nepal 977
Netherlands 31
New Caledonia 687
New Zealand 64
Nicaragua 505
Niger 227
Nigeria 234
Niue Island (1) 683
Norfolk Island 672 3
North Mariana Island 670
Norway 47
Oman 968
Pakistan 92
Palau 680
Panama 507
Papua New Guinea 675
Paraguay 595
Peru 51
Philippines 63
Pitcairn Islands (1) 6982
Poland 48
Portugal 351
1 809 (250-289, 371-379, 380-391, 395-399,
Puerto Rico 720-769, 780-799, 820-899
(from Mar 96) 1 787
Qatar 974
Mercury-Nynex 11 November 1996 Page 26 of 28
Interconnect Agreement Schedule 4, NNG Groups
<PAGE> 100
Reunion 262
Rodriguez Islands 230
Romania 40
Russia (average) 7
Rwanda 250
Samoa (US) 684
San Marino 39 549
Sao Tome (1) & Principe 239
Saudi Arabia 966
Senegal 221
Serbia 381
Seychelles 248
Sierra Leone 232
Singapore 65
Slovakia 42
Slovenia 386
Solomon Islands 677
Somalia 252
South Africa 27
Spain 34
Sri Lanka 94
St Helena 290
St Kitts & Nevis 1 809 (465-469)
St Lucia 1 809 (450-455, 459, 484)
St Pierre & Miquelon 508
St Vincent & The Grenadines 1 809 (456-458, 493)
Sudan 249
Suriname 597
Swaziland 268
Sweden 46
Switzerland 41
Syria 963
Taiwan 886
Tajikistan 7377, 7379, 7431, 7433,
Tanzania 255
Thailand 66
Togo 228
Tonga 676
Trinidad & Tobago 1 809 (620-680 [ex 626, 631, 641, 651, 661])
Tristan Da Cunha (1) 2897
Tunisia 216
Turkey 90
Turkmenistan 7360, 7363, 7370, 7378, 7432, 7597
Turks & Caicos Islands 1 809 (941, 946)
Tuvalu (1) 688
Uganda 256
Mercury-Nynex 11 November 1996 Page 27 of 28
Interconnect Agreement Schedule 4, NNG Groups
<PAGE> 101
<TABLE>
<S> <C>
Ukraine 703, 704, 705, 706, 380
United Arab Emirates 971
Uruguay 598
USA (2) 1 NPA
Uzbekistan 7361, 7362, 7365-7369, 7371-7376, 7434, 7436,
Vanuatu 678
Venezuela 58
Vietnam 84
Virgin Islands (British) 1 809 (494-496)
Virgin Islands (US) 1 809 (690-693, 771-779)
Wake Island (1) 6992
Wallis & Futuna (1) 681
Western Samoa 685
Yemen (AR & PDR) 967
Yugoslavia 381
Zaire 243
Zambia 260
Zimbabwe 263
</TABLE>
Notes
(1) No direct dial facility but available via operator when NYNEX takes
operator service
(2) Calls prefixed 00 1 800 are charged at USA rate
Mercury-Nynex 11 November 1996 Page 28 of 28
Interconnect Agreement Schedule 4, NNG Groups
<PAGE> 102
MERCURY COMMUNICATIONS LIMITED
AND
NYNEX CABLECOMMS LIMITED
TECHNICAL SPECIFICATIONS
APPENDIX 1
Mercury-Nynex 11 November 1996 Page 1 of 7
Interconnect Agreement Appendix 1, Technical Specifications
<PAGE> 103
APPENDIX 1 - TECHNICAL AND OPERATIONAL MATTERS
1 General
1.1 The guidelines for network performance, technical specifications, interface
standards, switching principles and other technical and operational matters
for the implementation of this Agreement are specified in the Manuals. These
Manuals constitute best working practice but are not legally binding upon the
Parties.
1.2 Each Party shall maintain a 24 hour point of contact to give operational
assistance in resolving problems that arise with Calls destined to each Party's
System
1.3 The Mercury System and the NYNEX System shall use digital transmission and
switching technology for Interconnection.
1.4 In the practical implementation of Interconnection the Parties shall at all
times apply standards and operating guidelines which in the first instance have
due regard to any legal requirements imposed upon them and thereafter wherever
practicable shall apply the relevant international standards (in particular but
not limited to those of ITU-T). Where alternative international standards
exist, in making their selection, the Parties shall give preference to those
adopted by European telecommunication administrations. Where relevant
international standards are not available, the Parties shall develop their own
common standards or other agreed solutions.
2 Transmission and synchronization
Mercury and NYNEX shall ensure that their respective Systems perform in
accordance with Transmission Specification NPDS7/94/4 developed by the Network
Performance Standards Group of the PNO-IG of the NICC in force at the date
hereof.
3 In-Span Interconnection
3.1 Each additional Point of Connection established under this Agreement shall
be In-Span Interconnection. In-Span Interconnection may be provided using
either PDH or SDH terminal equipment (as agreed between the Parties) without
the need for signal regeneration.
3.2 In the case of Interconnection using PDH equipment, the Parties shall agree
the type and manufacturer of the optical line terminating equipment to be used
by each Party.
Mercury-Nynex 11 November 1996 Page 2 of 7
Interconnect Agreement Appendix 1, Technical Specifications
<PAGE> 104
3.3 In the case of Interconnection using SDH equipment, each Party shall ensure
that such equipment as used by it shall conform to the following PNO-IG
technical recommendations (in force at the date hereof):
3.3.1 PNO-CSI SDH interconnection between UK Operators
-Interconnect Commissioning Recommendations;
3.3.2 PNO-CSI SDH interconnection between UK Operators -Operations
and Maintenance Recommendations; and
3.3.3 PNO-CSI SDH interconnection between UK Operators -Overview
and Technical Recommendations.
3.4 In the case of Interconnection using SDH equipment, the Parties shall
provide a single physical connection operating at the 155MBit/s STM-1 level.
Ring structures using a single Mercury add drop multiplexer and one or more
Points of Connection as appropriate may be employed. Any onward connections
within the Mercury System may be made using PDH equipment.
3.5 Prior to establishing a Point of Connection using SDH equipment, the
Parties shall agree any interworking acceptance test in addition to the normal
commissioning tests. The Parties shall not exchange timing across an SDH Point
of Connection until the implementation of the timing status flag has been
standardised. Network management actions and reconfigurations shall not be made
by one Party on the other Party's Add Drop Multiplexer.
3.6 The physical connection between each Party's System shall be made at the
optical level in each Footway Box.
3.7 The specification of the cable to be used for In-Span Interconnection shall
be agreed between the Parties prior to installation. Each Party shall supply,
instal and test the cable from its System to the Footway Box.
3.8 The Party providing a Footway Box shall either arrange to join each Party's
cable at the Footway Box or, where practical and subject to good engineering
practice, shall arrange for one Party's cable to be inserted and connected
directly within the other Party's building. Under such circumstances
demarcation of each Party's System remains at the Footway Box.
3.9 The provider of the Footway Box shall join the duct systems at the Footway
Box.
Mercury-Nynex 11 November 1996 Page 3 of 7
Interconnect Agreement Appendix 1, Technical Specifications
<PAGE> 105
3.10 All work performed on either Party's plant shall be performed to that
Party's standards by that Party's approved contractors and under that Party's
supervision.
3.11 Commissioning and acceptance of the interconnecting cable shall be carried
out by both Parties in accordance with a cable acceptance specification to be
agreed between the Parties.
3.12 The optical fibre cables shall be terminated at each end on an optical
distribution frame. The optical line terminating equipment shall be connected
to suitable multiplex equipment. Each Party shall be responsible for the
terminal equipment at its end of the Interconnect Link, including any necessary
multiplex equipment, optical distribution frame and miscellaneous items.
Circuits shall conform to ITU-T Recommendations G.703 and G.704 at the
interfaces to the multiplexers.
3.13 The Interconnect Link shall be jointly tested end to end using a
specification to be agreed between the Parties for PDH equipment and using the
PNO-IG test specification for SDH equipment.
4 Routing and Architecture
4.1 Traffic Routes shall be planned to operate so that during the busy hour a
maximum of eight out of 1000 Calls shall be lost due to congestion.
4.2 Each Party shall use all reasonable endeavours to manage its System by
taking real time network management actions agreed between the Parties'
appropriate network management centres to protect the Systems in the event of
national emergencies, System failures, mass calling events and any event having
a similar impact on either System.
4.3 Wherever possible advance warning should be given to the other Party when a
Party becomes aware of a mass calling event likely to introduce higher than
normal traffic levels across a particular Traffic Route.
4.4 Should either Party (for the purposes of this paragraph, the "First Party")
fail to take appropriate network management action or give advance warning in
accordance with paragraphs 4.2 or 4.3 above then the other Party may in order
to protect all or part of its System arrange to disconnect any Traffic Routes
creating or helping to create such failure. Such action shall be notified to
the First Party prior to disconnection.
Mercury-Nynex 11 November 1996 Page 4 of 7
Interconnect Agreement Appendix 1, Technical Specifications
<PAGE> 106
4.5 NYNEX shall use separate and dedicated Traffic Routes for emergency service
traffic. The Circuits employed shall, where possible, be the signalling link
circuits. Where possible, the Circuits shall be diversely routed via a second
Point of Connection.
5 Signalling
5.1 In respect of the Telecommunications Services, Mercury and NYNEX shall
ensure that their respective signalling arrangements between their respective
Systems conform to the UK C7 signalling protocols as defined in Specifications
PNO-ISO/Spec/005 Message Transmission Part and PNO-ISC/Spec/006 Interconnect
User Part in force at the date hereof
5.2 Signalling links shall be carried in time slot 16 of a Circuit. Each
Circuit which is required to carry signalling shall also be capable of
conveying Calls.
5.3 Signalling links shall be carried in the first and second Circuit of a
Traffic Route.
5.4 One pair of signalling links (always in separate Circuits and over separate
physical routes where possible) shall be used for each group of up to 40
Circuits.
5.5 NYNEX and Mercury shall configure and utilise Circuits in a uni-directional
manner.
5.6 In the event that the Parties agree to configure a Circuit in a
bi-directional manner, either Switch may seize the free traffic channels and
one or both Switches shall clear the seizure and re-attempt the Call set-up.
Priority on dual seizure shall be given to Mercury. In order to minimise the
number of simultaneous traffic seizures, each Switch shall search its traffic
channels in the reverse sequence to the other Switch. The NYNEX Switch shall
seize channels in ascending order and the Mercury Switch shall seize channels
in descending order.
6 Testing
6.1 The Parties shall agree (subject as stated in paragraph 6.2) the testing
required to establish an additional Point of Connection in the Interconnect
Design and the testing required prior to commencing the conveyance of ISDN
Calls.
6.2 The extent of the testing will be dependent on the expected impact on the
Systems. At the request of either Party, the testing described below shall be
undertaken. The Parties may agree a reduced level of testing, when Switches of
the same type, at the same build level, have previously been successfully
interconnected or where testing involves new processes, new builds or new
elements from previously proven Switch types.
Mercury-Nynex 11 November 1996 Page 5 of 7
Interconnect Agreement Appendix 1, Technical Specifications
<PAGE> 107
6.2.1 Simulator Testing: this phase involves the provision of suitable
simulator test results by NYNEX, to allow visibility of meaningful
test results prior to the Switch being integrated into the
Interconnection.
6.2.2 Switch to Switch Testing: these are provocative tests involving
simulated hardware failures and Switch restarts during various phases
of Call set up and various speech circuit states. The tests involve
either captive Switches or operational Switches not yet carrying live
traffic. Should any new feature, service or facility be introduced
across the Interconnection such tests may also be required. Tests
will also be necessary to prove new features and facilities.
6.2.3 Commissioning and Acceptance Testing (CAT): these are standard
Traffic Route commissioning tests which will be performed whenever a
new Circuit is introduced to service. For route augmentations a
subset of the tests will be performed as detailed in the Mercury CAT
Manual.
6.2.4 Pilot Service: this will be a period (usually several weeks) in
which live traffic of all Call types is passed across the Point of
Connection while statistics are gathered from the Switches to ensure
satisfactory performance is obtained. (Statistics gathered are likely
to be in the form of answer to seize ratios, number of Calls offered,
number of Calls lost etc.) Live traffic may be substituted by traffic
from a Call simulator where considered appropriate.
6.3 Suggested timescales for all of the above are as follows:-
6.3.1 simulator testing - up to 4 months;
6.3.2 Switch to Switch - up to 4 weeks;
6.3.3 commissioning (CAT) - up to 2 weeks; and
6.3.4 pilot service - up to 6 weeks.
6.4 Timescales specified in paragraphs 5.4.1 and 5.4.4 above will be dependent
on the new Switch type, NYNEX's own test plan and the level of testing agreed.
6.5 The Parties shall both confirm in writing when such testing has been
completed satisfactorily.
7 Numbering
Mercury-Nynex 11 November 1996 Page 6 of 7
Interconnect Agreement Appendix 1, Technical Specifications
<PAGE> 108
7.1 Both parties shall conform to the national and international numbering
formats in place from time to time.
7.2 Both parties shall at all times notify the other in writing giving details
of new number ranges allocated to them and amendments to existing number
ranges.
7.3 When conveying a Call to the other party's System, each party shall convey
to the other the complete number including the national and international
dialling prefix.
7.4 Each party (for the purpose of this paragraph the "First Party") shall use
its reasonable endeavours to notify the other party in writing, giving details
of new number ranges allocated to the First Party and amendments to or
deletions of existing number ranges, in each case at least 30 days prior to the
implementation of the same.
Mercury-Nynex 11 November 1996 Page 7 of 7
Interconnect Agreement Appendix 1, Technical Specifications
<PAGE> 109
MERCURY COMMUNICATIONS LIMITED
AND
NYNEX CABLECOMMS LIMITED
OPERATIONAL PROCEDURES
APPENDIX 2
Mercury-Nynex 11 November 1996 Page 1 of 13
Interconnect Agreement Appendix 2, Operational Procedures
<PAGE> 110
APPENDIX 2 - OPERATIONAL PROCEDURES
1 POINTS OF CONNECTION
1.1 Prior to the date hereof, the Parties have established Points of Connection
at the following addresses;
<TABLE>
<CAPTION>
Franchise Point of Connection
<S> <C>
NYNEX CableComms Bolton. 1. Junction of Swan Street/Great
Ancoats Street/Tib Street, Manchester.
2. Junction of Chapletown
Street/Great Ancoats Street,
Manchester.
NYNEX CableComms Bromley. 1. Junction of Annereley Park and
Annereley Road, Beckenham, Kent.
2. Micro Wave link between NYNEX
Bromley Switch and MCL Croydon
Switch.
NYNEX CableComms Bury 1. Junction of Swan Street/Great
and Rochdale Ancoats Street/Tib Street, Manchester.
2. Junction of Chapletown
Street/Great Ancoats Street,
Manchester.
NYNEX CableComms Cheshire. 1. Junction of ChapletownStreet/
Great Ancoats Street, Manchester.
2. Junction of Woolston Grange
Ave-nue / Kingsland Grange,
Warrington.
NYNEX CableComms Derby. Opposite car park Hulland Street,
Derby.
</TABLE>
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<TABLE>
<S> <C>
NYNEX CableComms East 1. Opposite Junction of A675 and
Lancashire. Pleasington Lane.
2. Opposite Swan Street/ Great
Ancoats Street, Manchester.
NYNEX CableComms Greater 1. Junction of Swan Street/Great
Manchester. Ancoats Street/Tib Street, Manchester.
2. Junction of Chapletown Street/
Great Ancoats Street, Manchester.
NYNEX CableComms 1. Junction of Swan Street/Great
Macclesfield. Ancoats Street/ Tib Street,
Manchester.
2. Junction of Chapletown
Street/Great Ancoats Street,
Manchester.
NYNEX CableComms Oldham 1. Junction of Swan Street/Great
and Tameside. Ancoats Street/Tib Street, Manchester.
2. Junction of Chapletown
Street/Great Ancoats Street,
Manchester.
NYNEX CableComms Solent. 1. Junction of Portsdown Hill Road
& Widley Walk, Portsmouth, Hampshire.
2. Junction of Western Road &
Osborn Road, Portsmouth, Hampshire.
NYNEX CableComms 1. Opposite BT Hanley Building,
Staffordshire. Clough Street, Hanley, Stoke on Trent.
2. Opposite entrance to BR Railway
Depot on A5003, Stoke Road, Stoke on
Trent.
</TABLE>
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<TABLE>
<S> <C>
NYNEX CableComms Stockport. 1. Junction of Swan Street/Great
Ancoats Street/ Tib Street,
Manchester.
2. Junction of Chapletown Street/
Great Ancoats Street, Manchester.
NYNEX CableComms Surrey. Junction of Nursery Road and Upper
Halliford Road, near Upper Halliford
Station (BR), Sunbury, Middlesex.
NYNEX CableComms Sussex. Opposite Sphinx Kebab House, Queens
Road, Brighton, East Sussex.
NYNEX CableComms Wessex. 1. Junction of Ashley Road &
Clanbrook Road, Poole, Hampshire.
2. Junction of Ashley Road &
Highland Road, Poole, Hampshire.
NYNEX CableComms Wirral. 1. Opposite Last Junction Box of
jointly provided duct route along
the A41.
2. Opposite Chapel Street/ Great
Ancoats Street, Manchester.
</TABLE>
1.2 Either Party may request in writing additional Points of Connection at any
time.
1.3 The physical implementation of any additional Points of Connection shall be
at a Footway Box.
1.4 The Parties shall agree which of them shall provide and own such Footway
Box. In the event of a failure to agree, a Footway Box shall be provided and
owned by the Party receiving a request for an additional Point of Connection.
Each Footway Box may be used by the Party owning it to establish points of
connection with other Operators.
1.5 The Parties shall use their respective reasonable endeavours to agree the
Interconnection Design for an additional Point of Connection within eight weeks
of the request under paragraph 1.2 above. Such Interconnect Design shall
identify:
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1.5.1 the location for the Footway Box;
1.5.2 the allocation between the Parties of the costs of
construction of the Point of Connection;
1.5.3 the Parties' respective Switches which are to be
connected; and
1.5.4 the testing to be undertaken by the Parties in
accordance with Appendix 1.
1.6 The Party requesting an additional Point of Connection shall, forthwith
upon the agreement of the Interconnect Design under paragraph 1.5 above,
specify the initial number of Circuits to be made available at that additional
Point of Connection. Each additional Point of Connection shall have a minimum
configuration of two Circuits.
1.7 The Parties shall use their respective reasonable endeavours to build and
test the Interconnect Link within 15 weeks of agreeing the Interconnect Design
under paragraph 1.5 above.
1.8 If the Parties have agreed to establish a new Point of Connection and
either Party subsequently defaults in establishing such Point of Connection,
the non-defaulting Party shall be entitled to reclaim its reasonable costs
directly arising by reason of such default provided (and to the extent only)
that it is not also in default in relation to the establishment of such Point
of Connection.
1.9 Failure to agree the Interconnect Design under paragraph 1.5 above shall
entitle either of the Parties to initiate a review pursuant to Clause 14.1.3.
2 ORDERING AND PROVISION OF CAPACITY
2.1 In respect of each existing Point of Connection, each Party shall provide
Capacity Profiles to the other on or before 1 March, 1 July and 1 November in
each year giving its best estimate of the contents of the Orders for Capacity
likely to be placed by that Party within the twelve month period (divided into
three periods: 1 April - 31 July, 1 August - 30 November, 1 December - 31
March) commencing on the date one month after such required date of provision
of the Capacity Profile. Each Capacity Profile will contain at a minimum the
following information: 1) the Point of Connection in question, 2) the relevant
Switch in the other Party's System and 3) the amount of additional Capacity
required at that Point of Connection.
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2.2 Within one month after the Capacity Profile is issued, the Party (for the
purpose of this Part 2 of Appendix 2, the "Supplying Party") in receipt of the
other's Capacity Profile shall, following discussions with the other Party (for
the purpose of this Part 2 of Appendix 2, the "Ordering Party"), indicate any
difficulties the Supplying Party may anticipate in satisfying the Ordering
Party's Capacity Profile and shall agree with the Ordering Party in writing:
2.2.1 which part of the Capacity Profile the Supplying Party will be able
to satisfy; and
2.2.2 the date by which provision may be practicable in respect of any
part of the Capacity Profile which the Supplying Party will not be
able to satisfy.
2.3 Notwithstanding the provisions of paragraph 2.2 above, the Supplying Party
shall, if so required by the Ordering Party, maintain any existing Capacity and
supply at least four additional Circuits at each Point of Connection in any
four months period commencing on any of 1 April, 1 August or 1 December.
2.4 Requirements for additional Capacity during the first four month period of
any Capacity Profile which the Supplying Party agrees with the Ordering Party
(under paragraph 2.2.1 above) it will be able to satisfy, will comprise an ACO.
2.5 The Ordering Party shall, in respect of each ACO, place (and not
subsequently cancel) Orders for additional Capacity (during the four month
period covered by the ACO) amounting to not less than the amount of the
Ordering Party's additional Capacity requirement specified in such ACO less two
Circuits. The Supplying Party shall use all reasonable endeavours to
acknowledge Orders within one Working Day of receipt of the same.
2.6 Without prejudice to paragraphs 2.3 above and 2.7 below, to the extent that
additional Capacity the subject of an Order (when aggregated with the
additional Capacity the subject of other Orders during the four month period
covered by an ACO) exceeds the additional Capacity set out in that ACO, the
Supplying Party shall use its reasonable endeavours to ensure that such excess
Capacity is ready for testing as soon as is reasonably practicable.
2.7 The Supplying Party shall, in respect of Orders placed in accordance with
paragraphs 2.3 and 2.5 above, comply with the following timescales:
2.7.1 where Capacity is to be made available involving the opening of a
Traffic Route to a different Switch in the Supplying Party's System:
65 Working Days from date of Order to RFT Date; and
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2.7.2 where Capacity is to be made available involving expansion of an
existing Traffic Route without opening a Traffic Route to a
different Switch in the Supplying Party's System: 25 Working Days
from date of Order to RFT Date.
2.8 In respect of the scenarios outlined in paragraph 2.7 above, the Parties
shall use their best endeavours to ensure that the RFS Date falls within 20
Working Days of the relevant RFT Date.
2.9 In respect of additional Capacity, Capacity Charges shall be paid by the
Ordering Party from the earlier of the RFS Date or (if the RFS Date has been
delayed beyond 20 Working Days after the RFT Date by an act or omission of the
Ordering Party) 20 Working Days after the RFT Date.
2.10 Either Party having placed an Order on the other may cancel such Order by
notice in writing to the other at any time prior to the RFT Date subject to
payment of the relevant Order Cancellation Charges. The Parties agree that
Order Cancellation Charges are a genuine pre-estimate of the losses of the
Supplying Party resulting from such cancellation, are not penalties and shall
be in full and final settlement of all and any losses suffered in relation to
cancellation of the Order for Capacity and that payment of Order Cancellation
Charges shall be without prejudice to any liability under paragraph 2.13 below.
2.11 If the Supplying Party fails, otherwise than through the fault of the
Ordering Party, to make available to the Ordering Party Capacity the subject of
an Order within the relevant timescale set out in paragraph 2.7 above, then
without prejudice to paragraph 2.12 below, the Ordering Party shall be entitled
to receive from the Supplying Party by way of liquidated damages for delay an
amount which is equal to 2% of the set up and annual rental elements of the
relevant Capacity Charges for each day that the RFS Date is later than the date
20 Working Days after the RFT Date, up to a total maximum of L.2,500 per Order
the subject of such delay. The Parties acknowledge that such sum constitutes a
genuine pre-estimate of the Ordering Party's losses resulting from such delay,
is not a penalty and shall (subject as stated in paragraph 2.12 below) be in
full and final settlement of all and any losses suffered in relation to the
delay.
2.12 The payment of the liquidated damages referred to in paragraph 2.11 above
shall not release the Supplying Party from the obligation to deliver to the
Ordering Party the Capacity ordered by the Ordering Party or from any other
obligation under this Agreement. Without prejudice to its other rights and
remedies, the Ordering Party may by notice in writing cancel an Order without
liability to the Supplying Party provided that:
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2.12.1 the Supplying Party has failed to make available for testing
Capacity which is the subject of the Order by the RFT Date; and
2.12.2 the notice is given prior to both the relevant RFS Date and the
Parties agreeing a new RFT Date.
If the Parties agree a new RFT Date, the provisions of this Part 2 of Appendix
2 shall apply in respect of such new RFT Date.
2.13 If the Ordering Party shall place Orders on the Supplying Party for less
than the minimum Capacity specified at paragraph 2.5, it shall pay to the
Supplying Party the set up element of the Capacity Charges in respect of the
shortfall in ordered Capacity. Such payments shall be deemed to be a
pre-payment in respect of further Orders placed during the subsequent 12
months. In the absence of such further Orders, such payments shall be deemed to
be liquidated damages in compensation for loss suffered as a result of the
Ordering Party's failure to Order the minimum Capacity and shall not be
regarded as a penalty.
2.14 The Supplying Party may by service of one month`s prior written notice, in
the event of an over provision of Capacity connected to any one Switch of the
Ordering Party, terminate Capacity equal to the difference between the total
number of Circuits connected to that Switch and 1.25 times the number of
utilised Circuits. The utilised circuits are the circuits required to carry
the average busy hour traffic as measured over a continuous period of six
months and assessed in accordance with the traffic tables agreed between the
Parties from time to time.
2.15 The Ordering Party may, within one year of the termination of a Circuit
under paragraph 2.14, specify in a Capacity Profile a requirement for the
terminated Circuit. In such event:
2.15.1 the Circuit shall be re-established within 25 Working Days of the
Order for that Circuit; and
2.15.2 the Ordering Party shall not be required to pay a Rearrangement
Charge or the set-up element of the Capacity Charge when the Circuit
is re-established.
2.16 The Ordering Party may terminate the provision of a Circuit by the
Supplying Party by serving not less than three months' prior written notice on
the Supplying Party.
2.17 Either Party (for the purpose of this paragraph, the "First Party") can
rearrange the Capacity configuration at its end of the Interconnect Link. The
other Party shall, within 25
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Working Days of delivery of written notification of such a rearrangement, make
the necessary updates to the relevant data stored in its Switch in order for
the Parties to test the rearranged configuration. If the aggregate Capacity
made available to the First Party at all Points of Connection is not less than
the existing Capacity together with additional Capacity specified in ACOs in
respect of the period in which the Capacity rearrangement is completed, the
only charges payable by the First Party shall be the Rearrangement Charges.
2.18 Additional Capacity at the established Points of Connection specified in
paragraph 1.1 of Appendix 2 (which are not by way of In-Span Interconnection)
may only be ordered in accordance with this Part 2 of Appendix 2 if there is
sufficient available space in the relevant building.
3 ESTIMATES OF INTERNATIONAL, DIRECTORY ENQUIRY AND OPERATOR ASSISTANCE
CALLS
3.1 NYNEX shall provide to Mercury, on or before each 1 March, 1 June, 1
September and 1 December, estimates of the total traffic for the next year
(specifying total minutes, number of calls and seven day profile) which it
could convey to Mercury in respect of International Calls and International
ISDN Calls to each of the 25 countries with the highest volumes of Calls
originating on the NYNEX System.
3.2 As a condition of Mercury providing to NYNEX any or all of the
Telecommunication Services listed in Tables 8, 9, 10, 11 and 12 of Schedule 3,
NYNEX shall provide to Mercury on or before 1 March in each year, an estimate
of its total traffic for the subsequent twelve months in respect of such
Telecommunication Services (whether to be provided by Mercury or not).
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4 FORECASTING OF NATIONAL AND EMERGENCY CALLS
4.1 Each Party shall provide to the other, on or before 1 March and 1 September
in each year, a written forecast of its traffic at each Point of Connection
during the following two years, broken down according to each three month
period (for the purposes of this Appendix 2, a "Quarter"). Such forecast shall,
in respect of each Traffic Route, specify the weekday total traffic, weekday
busy hour traffic (for both am and pm) in erlangs and weekday busy hour call
attempts in respect of each of the Telecommunication Services (other than those
specified in paragraphs 3, 6, 8, 9, 10, 11 and 12 of Schedule 2).
4.2 If, during a period of one month, the traffic conveyed by one Party (for
the purposes of this Appendix 2, the "Conveying Party") to the other differs in
any material respect from that specified in the Conveying Party's forecast for
that period, the other Party may request a revised forecast for the remaining
portion of the period covered by the forecast. Such forecast shall be provided
by the Conveying Party within one month of such request.
4.3 If, following the provision of a revised forecast under paragraph 4.2
above, the traffic conveyed by the Conveying Party to the other during a period
of one month differs in any material respect from that specified in the
Conveying Party's forecast for that period, the other Party's obligations under
Clause 4.1 shall be modified so that it is only obliged to use its reasonable
endeavours to provide the Telecommunication Service in question for the
remaining portion of the first six month period covered by the revised
forecast.
4.4 The Conveying Party's obligations under Clauses 4.1.1 and 4.1.3
respectively shall be modified so that it is only obliged to use its reasonable
endeavours thereunder in respect of a material change in the forecast traffic
for any Quarter unless such material change has been specified for such Quarter
in two consecutive forecasts provided under paragraph 4.1 above (in which case
such modification shall cease to apply for such Quarter). In the event that
either Party forecasts a material change in traffic under paragraph 4.1 above,
the other Party may, within 30 days of receipt of that forecast, initiate a
review of its own relevant charges in accordance with Clause 14.1.3. Any
modification to such charges resulting from such review shall be effective from
the beginning of the second Quarter commencing after the date of the relevant
Review Notice.
4.5 Without prejudice to paragraphs 4.2, 4.3, 4.4 and 4.5 above, each Party
shall give the other as much notice as is reasonably practicable of material
changes in traffic volumes.
4.6 For the purposes of paragraphs 4.3 and 4.4 of this Part 4 of Appendix 2,
traffic conveyed by one Party shall only be deemed to differ in a material
respect from that Party's
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forecast for a period if the volume of traffic conveyed materially exceeds the
volume which was forecast or if the profile of traffic conveyed materially
differs from the profile which was forecast.
4.7 As a condition of Mercury providing to NYNEX the Telecommunication Service
listed in paragraph 13 of Schedule 2, NYNEX shall provide to Mercury:
4.7.1 on or before 1 March in each year, a forecast of its total traffic
for the subsequent twelve months in respect of such
Telecommunication Service (whether to be provided by Mercury or
not); and
4.7.2 during the first week of each calendar month, a forecast of the
actual traffic which NYNEX anticipates conveying to Mercury in
respect of such Telecommunication Services during the immediately
following calendar month.
4.8 The information to be provided by NYNEX to Mercury in respect of forecasts
in accordance with paragraph 4.8 shall compromise the following:
4.8.1 number of call attempts during busiest hour of estimate period;
4.8.2 total call minutes during busiest hour of estimate period;
4.8.3 cumulative calls for the estimate period;
4.8.4 cumulative call minutes for the estimate period;
4.8.5 24 hour time of day profile for weekdays; and
4.8.6 average call duration.
4.9 NYNEX shall provide to Mercury such prior notification as is reasonably
possible of any anticipated increase or decrease of 10% or more of the current
level of traffic estimated under paragraph 3.1.2 above (whether due to planned
marketing campaigns or any other reason).
5 ALTERATIONS TO THE SYSTEMS
5.1 Neither Party shall make or permit to be made any alteration, adjustment or
addition to its System (which for the purpose of this paragraph 5 includes each
Point of Connection) or to any of its plant equipment or apparatus used in
connection therewith in such a way as materially to impair the operation of the
System of the other Party or otherwise materially to affect the provision of
the Telecommunication Services pursuant to this Agreement. Without prejudice to
paragraph 5.2 below, if any such alteration, adjustment or addition is
necessarily to be made by
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a Party, it shall use its reasonable endeavours to minimise the impact on the
other Party of such alteration, adjustment or addition and shall give the other
as much notice thereof as is reasonably practicable in all the circumstances.
5.2 Each Party (for the purposes of this paragraph 5, the "Altering Party")
shall give notice to the other Party in writing of any proposals for
alterations, adjustments or additions to its System which the Altering Party
might reasonably anticipate (from the facts known to it) would or might when
made have the effect of requiring the other Party materially to modify or
replace any part of that other Party's System. Such information shall be given
by whichever is the earlier of (a) the date being seven months prior to the
date of such change and (b) the date on which the Altering Party is obliged to
inform the other in accordance with its Licence.
5.3 The Altering Party shall, on the request of the other, consult with the
other Party and provide all reasonable co-operation and assistance to
facilitate the introduction of any proposed modification or replacement
referred to in paragraph 5.2 above. Such other Party shall notify the Altering
Party of the nature and costs of such modification or replacement as soon as
reasonably practicable, after receipt of the Altering Party's notice paragraph
5.2, and shall use reasonable endeavours to minimise such costs.
5.4 The Altering Party shall bear the costs of any alterations, adjustments or
additions to its System and the reasonable costs incurred by the other Party by
reason of any such modification or replacement referred to in paragraph 5.2
above, except that each Party shall pay its own costs arising out of an
alteration, adjustment or addition where:
5.4.1 the Parties agree in writing to alter, adjust or add to their
respective Systems for their mutual benefit;
5.4.2 the alteration, adjustment or addition by the Altering Party is
directed or is the result of a determination made by the Director
(otherwise than by reason of a breach by the Altering Party of any
condition of its Licence); or
5.4.3 the alteration is a global revision of the Generic C7 Signalling
Interface Specification in compliance with the then current
international signalling standards.
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6 WAYLEAVES
6.1 Upon termination of this Agreement, each Party shall be entitled, after
reasonable prior notice in writing to the other Party, to enter the premises of
such other Party for the purposes of carrying out any necessary disconnection
works and repossessing any plant, equipment or apparatus which is its property
or is the property of another person and has been installed by or for such
Party.
6.2 The Party on whose premises such plant, equipment or apparatus was
installed shall compensate the other for any such plant, equipment or apparatus
belonging to such other or any other person as aforesaid which are not so
delivered up or repossessed in good condition (fair wear and tear excepted).
6.3 The Party entering and carrying out such disconnection works shall
indemnify the other in respect of any damage thereby caused to the premises,
fixtures and fittings of the other.
6.4 Either such Party desiring to enter and carry out works as aforesaid shall
give the other reasonable notice requesting the other to carry out the
disconnection and to return any such plant equipment and apparatus and shall
enter the premises for such purposes only if such other Party shall have failed
to comply with such request.
6.5 A Party so entering the premises of the other shall observe the reasonable
requirements in respect of health and safety while at the premises.
6.6 Each Party shall at its own expense obtain such wayleaves as may reasonably
be required by the other from any third party in respect of the premises it
uses for the purpose of effecting Interconnection.
6.7 Each Party (in exercising rights obtained under paragraph 6.6) shall comply
with the terms of the wayleaves.
6.8 The provisions of this Part 6 of Appendix 2 shall apply for the duration of
this Agreement and for so long thereafter as may be necessary for the Parties
to disconnect and remove their respective equipment.
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MERCURY COMMUNICATIONS LIMITED
AND
NYNEX CABLECOMMS LIMITED
BILLING PROCEDURES
APPENDIX 3
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APPENDIX 3 - BILLING PROCEDURES
1 Subject to paragraph 16 of this Appendix and save in respect of Reverse
Billed Services, Mercury shall be responsible for recording and shall invoice
NYNEX in accordance with the provisions of this Appendix in respect of Calls
which are passed to the Mercury System from the NYNEX System.
2 Subject to paragraph 16 of this Appendix and save in respect of Reverse
Billed Services, NYNEX shall be responsible for recording and shall invoice
Mercury in accordance with the provisions of this Schedule in respect of Calls
which are passed to the NYNEX System from the Mercury System.
3 In respect of Reverse Billed Services, each Call shall be recorded by the
Party running the System on which the Call originates and such Party shall
invoice the Party running the System to which the Call is conveyed.
4 Each Party (for the purpose of this Appendix, the "Billing Party") shall
submit to the other (for the purpose of this Appendix, the "Paying Party")
invoices in respect of charges for which the Billing Party is entitled to
charge the Paying Party under this Agreement.
5 The Billing Party shall use all reasonable endeavours to invoice:
5.1 the set up part of Capacity Charges on the date
specified in paragraph 2.9 of Appendix 2
5.2 the annual rental part of Capacity Charges in quarterly
instalments in advance in December, March, June and September for
the quarters beginning on the first day of January, April, July
and October respectively (Capacity Charges shall be pro-rated
over the first quarter during which the charges for the relevant
Circuits) accrue pursuant to paragraph 2.9 of Appendix 2;
5.3 Order Cancellation Charges and Rearrangement Charges
within 14 days of the Order cancellation or completion of the
rearrangement (as appropriate); and
5.4 charges for the Telecommunication Services within 30
days of the end of the Billing Period in which they accrue.
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5.5 charges for set up and training in respect of Mercury's
emergency service in advance of Mercury commencing the provision
of that service; and
5.6 charges for the manual entry of COSAR data within 30
days of the end of the Billing Period in which they accrue.
6 Each invoice submitted by the Billing Party shall be delivered to the Paying
Party by first-class post or facsimile transmission and shall contain the
following information:
- invoice date;
- Billing Period;
- billed amounts broken down into standard, exempt and
zero; VATable amounts;
- VAT amounts per invoice for standard amounts only;
- VAT registration number and company number;
- VAT rates used;
- total amount payable; and
- due date for payment.
7 The Billing Party shall provide, at the same time as it delivers an invoice
to the Paying Party, a summary statement relating to such invoice containing
the following information (by Point of Connection with an aggregate figure for
all Points of Connection) split between charge periods for each of the
Telecommunication Services:
- number of Calls;
- total duration of Calls (in hours, minutes and seconds); and
- total revenue.
8 The Billing Party shall maintain and retain for a period of three years from
its submission of each invoice true and accurate books of account and such
information (contained in or on discs, tapes, documents or other records) as
may reasonably be required for calculation or verification of the amounts
payable under such invoice.
9 Charges for the conveyance of Calls shall accrue only when:
9.1 the Call is conveyed by the Mercury System to the NYNEX
System or vice versa and connection is made to the called
Customer's System (whether or not via a Third Party Operator's
System or an Authorised
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Overseas System) and the Called Customer Answer Signal is
received by the System on which the Call originated; or
9.2 the Call cannot be conveyed in accordance with
paragraph 9.1 and as a consequence is diverted to a service or
system in accordance with arrangements previously agreed with the
called Customer; or
9.3 as otherwise agreed in writing by the Parties from time
to time.
10 Charging will cease on the earlier of the detection of the calling or called
Customer's release signal. This release signal will be generated:
10.1 by the Operator of the System of the calling Customer
immediately after the calling Customer has cleared the
connection; or
10.2 in the case of the Operator of the System of the called
Customer, immediately after the called Customer held time-out
(that is the period of time between the called Customer clearing
the connection and the connection being released as agreed
between the Parties);
11 Charges for the conveyance of Calls shown in Part 2 of Schedule 3 are
expressed either per minute (when Call duration is measured in minutes and
seconds) or as a charge per Call.
12 The charge for conveyance of a Call is calculated by the following formula:
D = (AxB) + C
Where:
A = the Call duration in minutes rounded to the nearest 0.1 second
B = the relevant pence per minute charge specified in Schedule 3
C = the relevant pence per call charge specified in Schedule 3
D = the charge rounded to the nearest 0.1 pence.
12.1 Where the duration of the Call extends across more than
one time band, the total charge will be comprised of the sum of
the duration of the components multiplied by the rates relevant
to each individual time band.
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12.2 Where it is impracticable for Mercury and NYNEX to
record such information as is necessary to raise an invoice,
Mercury and NYNEX shall agree the appropriate charge.
13 Subject to paragraph 17 below, all charges invoiced under this Agreement
shall be payable within 30 days of the date of issue of the invoice requiring
payment thereof.
14 The Billing Party shall be entitled to charge and receive interest in
respect of any amount due or deemed to be payable hereunder, which shall be the
subject of a separate invoice containing the information set out in paragraph
15, at the rate of 2% above the one month London Inter-Bank Offered Rate from
the later of the two dates specified below until the date of payment in full,
whether before or after any judgement:
14.1 the day following the end of the 30 day period
referred to in paragraph 13 above; or
14.2 the day following the end of a period of not less
than seven days after service of written notice that the
Billing Party intends to claim interest on the overdue sum.
Any such interest shall accrue day by day and shall be compounded monthly.
15 Each invoice claiming interest shall contain the following information:
- invoice date;
- date and number of original invoice on which interest is being
charged;
- start date and end date for interest period being invoiced;
- interest rate applied; and
- interest charged.
15.1 If either Party disputes the amount of any invoice (for the purpose of
this paragraph 15 a "Disputed Invoice") delivered by the other Party under this
Agreement that Party (for the purpose of this paragraph 15, "the Disputing
Party") shall use its reasonable endeavours to issue a notice in writing
setting out its objection to the Disputed Invoice and containing the following
information within 30 days of receipt of the Disputed Invoice:
- date and number of disputed invoice;
- amount in dispute;
- reason for dispute; and
Mercury-Nynex 11 November 1996 Page 5 of 7
Interconnect Agreement Appendix 3, Billing Procedures
<PAGE> 127
- supporting documentation as appropriate.
In any event such notice shall be issued within 12 months of the delivery of
the Disputed Invoice, failing which it shall be of no effect. The dispute may
thereafter be referred forthwith by either Party (having given prior written
notice to the other to such effect) for investigation and determination by such
Person (being chartered accountants) as the Parties may agree, or in default of
agreement, as may be nominated by the President of the Institute of Chartered
Accountants in England and Wales at that time to act as an expert and not as an
arbitrator and whose decision, in the absence of evidence of manifest error,
shall be final and binding. The Parties shall co-operate in such investigation.
15.2 Subject as provided in paragraph 17 below any sum thus found after such
determination or settlement between the Parties to be due shall be promptly
paid (including any interest payable pursuant to paragraph 14 above on any part
of such sum deemed payable in full under paragraph 17 below), within 30 days of
the date of such determination or settlement between the Parties.
15.3 Any sum found after such determination or settlement between the Parties
to be overpaid (including any interest payable or paid pursuant to paragraph 14
above) shall be deducted from the first invoice rendered by the Party so
overpaid after either the date of such determination or settlement between the
Parties or repaid to the other party if no subsequent invoices are rendered
within 30 days of such determination or settlement.
15.4 The costs of such expert shall be paid by the Disputing Party unless the
Disputed Invoice is established by the expert to have been incorrect by greater
than a 5% margin in which case the Party delivering the Disputed Invoice shall
pay such costs.
16 Notwithstanding the reference of any dispute for investigation and
determination under paragraph 15 above, if the amount in dispute represents
less than five percent of the total amount (excluding VAT) of the Disputed
Invoice, the invoiced amount shall, for the purposes of paragraph 13 above be
deemed payable in full. If the amount in dispute represents five percent or
more of the total amount (excluding VAT) of the Disputed Invoice such disputed
amount shall, for the purposes of paragraph 13 above be deemed not payable
pending issue of the expert's decision as aforesaid and, for the avoidance of
doubt, any undisputed balance shall be payable in full.
17 All charges specified in Schedule 3 are exclusive of value added tax which
shall be paid at the rate and in the manner prescribed by law from time to
time.
Mercury-Nynex 11 November 1996 Page 6 of 7
Interconnect Agreement Appendix 3, Billing Procedures
<PAGE> 128
18 If the Billing Party cannot record Calls for the purpose of preparing
invoices, then the Paying Party shall, if practicable, do so until such time as
the Billing Party can record Calls as aforesaid subject to the Billing Party
meeting the Paying Party's reasonable costs incurred in connection therewith.
Mercury-Nynex 11 November 1996 Page 7 of 7
Interconnect Agreement Appendix 3, Billing Procedures
<PAGE> 1
Exhibit 10.12(a)
PETER HOWARD-DOBSON Managing Director, Partner Services
[MERCURY COMMUNICATIONS LOGO]
11 November 1996 MERCURY COMMUNICATIONS LTD.
New Mercury House
26 Red Lion Square
London WC1R 4HQ
//Direct Tel: (0171) 528 2466
//Direct Fax: (0171) 528 2392
NYNEX CableComms Limited
The Tolworth Tower
Ewell Road
Surbiton
Surrey KT6 7ED
Dear Mr Repp
I am writing with the intention of agreeing the terms for settlement of
backdating claims in respect of the services detailed in the attached Schedule.
The applicable terms are as detailed in the attached Schedule.
I have attached a second copy of this letter, including the Schedule and would
be grateful if you could sign both copies of the letter and attachment to
indicate NYNEX's acceptance of these terms and return one copy to me.
Yours sincerely
/s/ Peter Howard-Dobson
- - ------------------------------------
Peter Howard-Dobson Date: 13.11.96
Managing Director, Partner Services
For and on behalf of
Mercury Communications Limited
Agreed and accepted Date: 21.11.96
/s/ [illegible]
For and on behalf of
NYNEX CableComms Limited
and as agent and on behalf of
each of the 16 franchise companies
specified in Annex 1 to the
attached Schedule
//Mobile: (0836) 332932
//Switchboard: (0171) 528 2000
//E-Mail:
[email protected]
Registered in England Number: 154-1957,
Registered Office: New Mercury House, 26 Red Lion Square, London WC1R 4HQ
[LOGO] A MEMBER OF THE CABLE & WIRELESS GROUP
<PAGE> 2
SCHEDULE
(Schedule to the letter dated 11 November 1996)
1. SETTLEMENT OF CLAIMS
1.1 Mercury Communications Limited ("Mercury") shall pay to NYNEX
CableComms Limited pound sterling 220,000 (Two Hundred and Twenty
Thousand Pounds) in full and final settlement of any and all sums
owing and claims due, or allegedly due, between Mercury and NYNEX
CableComms Limited and the franchise companies specified in Annex 1 to
this schedule (collectively, "NYNEX") under the Marketing and
Operations Agreements referred to in Annex 1 (and any amendment or
variation thereof), up to, and including, 31st March, 1995.
1.2 In addition, Mercury shall pay, to NYNEX CableComms Limited, pound
sterling 394,940 (Three Hundred and Ninety Four Thousand Nine Hundred
and Forty Pounds) in full and final settlement of any and all Relevant
Claims between Mercury and NYNEX, as detailed in clause 2 of this
schedule and for the periods specified in said clause 2.
1.3 For the purposes of this Schedule, a "Relevant Claim" is any actual
or potential claim, or sum owing, (whether known or not at the time of
this Schedule) which relates to any charges, payments, rebates and /
or abatements due or allegedly due either to NYNEX, or Mercury under
the Marketing and Operations Agreements referred to in Annex 1 (and
any amendment or variation thereof), in respect of the services
specified in clause 2 of this Schedule.
2. SERVICES FOR RELEVANT CLAIMS
2.1 National Operator Assistance Calls - 1st April, 1995 to 31st March, 1996
The conveyance of Calls in the year 1 April 1995 to 31 March 1996, which
were passed, by NYNEX, to Mercury, enabling NYNEX customers to access
Mercury's national operator assistance service by dialling 100 ("95/6
National Operator Assistance Calls").
2.2 International Calls - 1st July, 1995 to 31st January, 1996
The conveyance of Calls in the period 1 July 1995 to 31 January 1996, which
were passed, by NYNEX, to Mercury, for delivery to a destination outside of
the UK which is on the system of a third party ("95/6 International
Calls").
2.3 Mobile Incentive Payment - 1st January, 1996 to 30th June, 1996
The conveyance of Calls in the period 1 January 1996 to 30 June 1996, which
were passed, by NYNEX, to Mercury, for delivery to any of the dial code
ranges specified in the Mobile Incentive Agreement between Mercury and
NYNEX and dated the same date as this Schedule ("96 Mobile Incentive
Payment").
Mercury-NYNEX 11 November 1996 Main Body
Backdating Agreement Page 1 of 3
<PAGE> 3
2.4 Interest Payments
For the avoidance of doubt, the payments referred to in clauses 1.1 and 1.2
include any claim for the payment of interest in respect of the claims
specified in clause 1.1 and in respect of the services specified in clauses
2.1 to 2.3 above.
3. PAYMENTS
3.1 Timing and Method
The payment referred to in clauses 1.1 and 1.2 shall be made on or before
the Effective Date, by cheque, or in such other manner as the parties may
agree.
3.2 VAT
Where appropriate, value added tax (VAT) shall be added to the payment to
be made under this Schedule and be paid by the party responsible for making
such payment.
4. ANNOUNCEMENTS
The parties shall consult together as to the terms of any announcement
which either of them may desire, or be obliged, to make regarding this
Schedule and/or its terms and neither party shall make, or permit to be
made, by any of its directors or employees or on its behalf, any such
announcement without the other party's prior written consent, unless it is
made pursuant to a statutory, regulatory, or Stock Exchange requirement.
Where any announcement is required to be made pursuant to a statutory,
regulatory, or Stock Exchange requirement, the parties will, insofar as is
possible, consult together in accordance with the terms of this clause
prior to the issue of any announcement.
5. WARRANTIES
5.1 Each party warrants to the other that:
a) the execution and performance of this Schedule is within its objects and
powers and has been duly authorised by all necessary corporate actions; and
b) its obligations under this Schedule constitute legal, valid and binding
obligations, enforcable in accordance with the terms of this Schedule.
5.2 NYNEX CableComms Limited warrants and represents that:
a) it has been duly appointed as agent of each of the 16 franchise companies
specified in Annex 1;
b) none of the appointments as agent specified in clause 5.2(a) has been
revoked; and
Mercury-NYNEX 11 November 1996 Main Body
Backdating Agreement Page 2 of 3
<PAGE> 4
c) execution of this schedule by NYNEX CableComms Limited, for and on behalf
of each of the 16 franchise companies specified in Annex 1, shall bind
NYNEX CableComms Limited and each of the said 16 franchise companies.
5.3 Each party undertakes to the other to comply with all applicable laws and
regulations to the extent relevant to this schedule.
6. GOVERNING LAW
This schedule shall be governed by, and construed and interpreted in
accordance with, the laws of England and shall be subject to the
non-exclusive jurisdiction of the English courts.
7. GENERAL
7.1 In this Schedule
"Calls" has the same meaning as set out in the Marketing and Operations
Agreement referred to in Annex 1.
"Effective Date" means ten working days after the signature, by NYNEX, of
this Schedule.
/s/ [illegible] Date: 13.11.96
--------------------------------------------- -----------
for, and on behalf of,
Mercury Communications Limited
/s/ [illegible] Date: 21 Nov. '96
--------------------------------------------- -----------
for, and on behalf of,
NYNEX CableComms Limited
and as agent for, and on behalf of,
the 16 franchise companies specified in Annex 1
Mercury-NYNEX 11 November 1996 Main Body
Backdating Agreement Page 3 of 3
<PAGE> 5
ANNEX 1
<TABLE>
<CAPTION>
Date of Marketing and
Franchise Operations Agreement
<S> <C>
NYNEX CableComms Bolton 21 October 1994
NYNEX CableComms Bromley 20 August 1993
NYNEX CableComms Bury and Rochdale 21 October 1994
NYNEX CableComms Cheshire 21 October 1994
NYNEX CableComms Derby 21 October 1994
NYNEX CableComms East Lancashire 21 October 1994
NYNEX CableComms Greater Manchester 21 October 1994
NYNEX CableComms Macclesfield 21 October 1994
NYNEX CableComms Oldham and Tameside 21 October 1994
NYNEX CableComms Solent 20 August 1993
NYNEX CableComms Staffordshire 21 October 1994
NYNEX CableComms Stockport 21 October 1994
NYNEX CableComms Surrey 20 August 1993
NYNEX CableComms Sussex 20 August 1993
NYNEX CableComms Wessex 21 October 1994
NYNEX CableComms Wirral 21 October 1994
</TABLE>
Mercury-NYNEX 11 November 1996 Annex 1
Backdating Agreement Page 1 of 1
<PAGE> 1
Exhibit 10.12(b)
THIS AGREEMENT is made the 11th day of November 1996
BETWEEN Mercury Communications Limited ("Mercury") and NYNEX CableComms Limited
("NYNEX"), for itself and on behalf of those of its franchisees which are
wholly owned subsidiaries of NYNEX CableComms Group plc and NYNEX CableComms
Group Inc as at 1st January 1996 ("Franchisees").
1. PRELIMINARY
1.1 This Agreement relates to the charges to be made by Mercury in respect
of the applicable NYNEX and Franchisee originated mobile traffic (as described
below) carried by Mercury in the period from 1st January 1996 to 30th June 1996
("the Period").
2. APPLICABLE TRAFFIC
2.1 The Incentive Rates, as defined in Clause 4 below, available to NYNEX
subject to the further terms of this Agreement only apply to the following
traffic:
outgoing switched direct dial calls from NYNEX and its Franchisees' system(s)
passing over the Mercury network, and destined for one of the following mobile
operators system(s) in the dial code ranges listed:
Vodafone (dial code ranges: 0370, 0374, 0378, 0385, 0421, 0831, 0468 and
0836, excluding sub ranges 0374-5, 0385-6, 0421-1, 0836-0, 0836-1,
0836-4, 0836-8 and 0836-9)
Cellnet (dial code ranges: 0585, 0589, 0802, 0850 and 0860)
("the Applicable Traffic")
2.2 The Incentive Rates do not apply to any other traffic, in any
circumstances.
3. VOLUME THRESHOLDS
3.1 To qualify for the Incentive Rates on the Applicable Traffic, certain
monthly volumes for both Applicable Traffic and international transit traffic
(being outgoing switched direct dial calls from NYNEX and its Franchisees'
system(s) passing over the Mercury network, and destined for a recognised
system outside the UK) must be attained throughout the Period. The total
monthly volumes of Applicable Traffic and international transit traffic minutes
must each exceed the levels specified below:
Applicable Traffic: 600,000 minutes/month during the Period; and
International transit traffic: 750,000 minutes/month during the Period
(together, "the Volume Threshold").
Mercury-NYNEX 11 November 1996 Page 1 of 3
Mobile Agreement
<PAGE> 2
3.2 If, in any month during the Period, the total volume of minutes for
either Applicable Traffic or international transit traffic falls below the
monthly levels stated in Clause 3.1 above, the Volume Threshold will not
have been attained and the Incentive Rates will not apply to any Applicable
Traffic, including any generated in any month when the monthly levels so
stated have been attained.
4. INCENTIVE RATES
Subject to the attainment of the Volume Threshold defined in Clause 3 above
throughout the Period, the following incentive rates will apply in respect
of the Applicable Traffic, for the Period:
<TABLE>
<CAPTION>
Mobile Transit Rates
PPM
----------------------------------
Charge band Base Rate Incentive Rate for
Applicable Traffic
--------- ------------------
<S> <C> <C>
Standard 27.00 24.00
Economy 21.00 18.00
</TABLE>
5. ACCOUNTING FOR INCENTIVE RATES
5.1 Where the Incentive Rates apply, following the expiry of the Period a
single adjustment will be made as a retrospective credit.
5.2 Where the duration of a Call continues extends across more than one
charge band, the total charge will be comprised of the sum of the duration of
the components multiplied by the rates relevant to each individual charge band.
5.3 In calculating the credit to be made under Clause 5.1 above, Mercury
retains the right to offset against such credit any sums which may be owed to
Mercury by NYNEX or any Franchisee.
6. CONFIDENTIALITY
6.1 The parties agree that this Agreement and the information contained in
it is confidential and that accordingly:
(a) its confidentiality must be maintained at all times;
(b) its contents must only be disclosed to and used or copied by those members
of staff who require access to the same for the purpose of the
administration of this Agreement;
(c) it must not be disclosed, directly or indirectly, and whether by express
disclosure or by implication, in any form to any third parties (in detail
or in summary).
6.2 The obligations of confidentiality contained in Clause 6.1 above shall
not apply to the extent that information is properly disclosed pursuant to and
in accordance with the Operator's or Mercury's Licence (as defined in any
Mercury-NYNEX 11 November 1996 Page 2 of 3
Mobile Agreement
<PAGE> 3
interconnection agreement between the parties in force at the date of this
Agreement) or a relevant statutory or regulatory obligation or (with the prior
written consent of the other party, such consent not to be unreasonably
withheld) to obtain or maintain any listing on a recognised investment exchange
(as defined in the Financial Services Act)
6.3 These obligations of confidentiality shall survive the termination of this
Agreement.
7. EXCLUSION OF OTHER CLAIMS
No adjustments, apart from that specified in Clause 5.1 above, relating to the
Applicable Traffic passed by NYNEX to Mercury over the period from 1st January
1996 to 30th June 1996 will be made or considered by either party.
8. TRANSFER
This Agreement is non-transferable
9. NYNEX FRANCHISEES
NYNEX acknowledges that it remains fully responsible for the actions and
omissions of any of the Franchisees where such actions and omissions if
committed by NYNEX would constitute a breach of this Agreement.
10. ENTIRE AGREEMENT
This Agreement supersedes all other agreements and representations made by
either party, whether oral or written relating to the availability of the
Incentive Rates. This Agreement may only be modified if such modification is in
writing and signed by a duly authorised representative of each party thereto.
Agreed on behalf of Mercury Communications Ltd
Signature /s/ Peter Howard-Dobson
------------------------------------
Name Peter Howard-Dobson Date 13.11.96
------------------------------------ -----------
Agreed on behalf of NYNEX CableComms Ltd
Signature /s/ Paul H. Repp
------------------------------------
Name Paul H. Repp Date 21 Nov. '96
------------------------------------ ------------
Mercury-NYNEX 11 November 1996 Page 3 of 3
Mobile Agreement
<PAGE> 1
Exhibit 10.12(c)
AMENDMENT TO
INTERCONNECTION AGREEMENT
MERCURY COMMUNICATIONS LIMITED
and
NYNEX CABLECOMMS LIMITED
11 FEBRUARY 1997
<PAGE> 2
AMENDMENT TO INTERCONNECTION AGREEMENT
THIS AGREEMENT is made the eleventh day of February 1997 between:
(I) MERCURY COMMUNICATIONS LIMITED whose registered office is at New
Mercury House, 26 Red Lion Square, London WC1R 4HQ whose registered
number is 1541957 ("Mercury") and
(II) NYNEX CABLECOMMS LIMITED whose registered office is at The Tolworth
Tower, Ewell Road, Surbiton, Surrey KT6 7ED whose registered number is
2664006 acting for and on behalf of itself and as agent for and on
behalf of each of the franchise companies specified in Part 1 of
Appendix Z to the Interconnection Agreement (as defined below)
(collectively "NYNEX").
WHEREAS
A. Mercury and Nynex have entered into an Interconnection Agreement dated
11th November 1996 (referred to herein as "the Interconnection
Agreement").
B. Mercury and Nynex have agreed to modify the Interconnection Agreement
in accordance with the terms of this Agreement.
IT IS HEREBY AGREED as follows:
1. INTERPRETATION
1.1 This Agreement amends the Interconnection Agreement, and the terms of
this Agreement shall be incorporated into the Interconnection Agreement.
1.2 Words and expressions defined in Schedule 1 of the Interconnection
Agreement shall have the same meaning in this Agreement.
1.3 In this Agreement the following words and expression shall have the
following meanings:
"BT Matrix" means the first version of the de-averaged EBC
Matrix Build 007 published by BT and to be used
with effect from 1st October 1996;
"Cellnet/Vodafone Direct
Dial Mobile Numbers" means those access numbers specified in
Schedule 2 of this Agreement and any other
numbers which Cellnet or Vodafone may introduce
during the Discount Period for the purpose of
direct dial access to their mobile customers;
"Discount Period" means 13th November 1996 to 31st March 1997;
<PAGE> 3
"National Double
Tandem Calls" means all Transit National Calls listed as double plus
tandem calls falling within banks 527, 528 and 529 of the
BT Matrix;
"Rebate" means the rebate payable in accordance with Clause 3.
2. NYNEX OBLIGATIONS
2.1 Nynex undertakes during the Discount Period to convey all Calls in the
categories listed below which originate on the Nynex System to the Mercury
System. The categories are:
a) National Double Tandem Calls;
b) International Calls;
c) Calls addressed to Cellnet/Vodafone Direct Dial Mobile Numbers
2.2 Nynex will endeavor to convey to the Mercury system at least the minimum
volumes of Calls specified in Schedule 1.
2.3 Nynex will supply Mercury on reasonable written request with information,
data and statistics relating to Calls of the types specified in Clause 2.1
of this Agreement, sufficient to show that Nynex is complying with its
obligations hereunder.
3. REBATE
3.1 Provided Nynex complies with Clause 2 hereof during the whole of the
Discount Period Mercury shall pay a Rebate to Nynex equivalent to 15% of
all charges due from Nynex to Mercury in respect of International Calls
during the Discount Period.
3.2 In the event that Nynex fails to achieve the minimum volumes specified in
Clause 2.2, Nynex shall nevertheless be entitled to the Rebate in
accordance with this Clause 3, provided that Mercury is reasonably
satisfied that Nynex has complied with Clause 2.1 hereof for the whole of
the Discount Period.
3.3 The Rebate shall be calculated by Mercury and, subject to Nynex's
agreement, paid by way of a credit against the next invoice issued by
Mercury to Nynex under the Interconnection Agreement following the end of
the Discount Period.
3.4 Should there be a dispute as to the rebated amount, the relevant procedures
in the Interconnection Agreement shall apply.
<PAGE> 4
3.5 The Interconnection Agreement shall continue in full effect except as
expressly varied hereby.
4. TERMINATION
4.1 This Agreement shall terminate automatically upon receipt in full by Nynex
of the Rebate or if the Interconnection Agreement is terminated for any
reason.
4.2 Both parties reserve the right to terminate this Agreement forthwith by
notice in writing if the other party commits a breach of any of its
obligations under this Agreement.
4.3 Nynex may terminate this Agreement by notice in writing at any time prior
to the end of the Discount Period.
4.4 Where this Agreement is terminated as a result of a breach by Nynex or by
notice from Nynex under Clause 4.3 prior to the end of the Discount Period
no Rebate or any part thereof shall be payable.
4.5 Where this Agreement is terminated as a result of a breach by Mercury the
Rebate shall be payable in respect of the period up to termination but not
thereafter.
4.6 Expiry or termination of this Agreement shall not serve to terminate the
Interconnection Agreement.
5. ENTIRE AGREEMENT
This Agreement together with the Interconnection Agreement constitutes the
entire understanding between the parties in relation to their obligations
and the availability of the Rebate hereunder, and shall supersede and
replace all previous agreements, understandings or commitments between the
Parties or representations made by either Party whether oral or written
with respect to such matters.
AS WITNESS the hands of the duly authorized representatives of the Parties at
the date first above written
) Ian Ashby, Managing Director of Partner Services for
/s/ IAN F. ASHBY ) and on behalf of Mercury Communications Limited
)
) Paul Repp, Executive Director; Chief Legal and
) Regulatory Officer and Company Secretary for and on
) behalf of NYNEX CableComms Limited and as agent
/s/ PAUL REPP ) for and on behalf of the 16 franchise) companies
) specified in Part 1 of Appendix 2 to the Interconnection
) Agreement
<PAGE> 5
SCHEDULE 1
<TABLE>
<CAPTION>
International Actual traffic 1/11/96-31/3/96
- - ------------- 1/10/96 1/10/96 August 96 Traffic Projection
Country Std Econ Total (kmins) Total (kmins)
- - ------------- ------- ------- -------------- ------------------
<S> <C> <C> <C> <C>
Australia 16.75 14.75 126 690
Austria 16.75 14.95 13 69
Belgium 14.85 14.05 36 198
Canada 7.95 7.95 109 600
China 60.42 57.69 2 13
Denmark 12.95 12.95 26 142
Egypt 48.95 48.95 7 38
France 11.95 9.75 212 1166
Germany 12.30 11.85 200 1099
Gibraltar 17.35 14.46 1 6
Greece 20.00 18.71 32 178
Guyana 56.21 54.71 20 108
Hong Kong 21.50 21.50 31 172
India 40.95 39.95 37 203
Indonesia 47.75 47.75 4 20
Iran 55.95 54.00 9 48
Irish Republic 10.40 7.15 288 1585
Israel 30.95 39.95 9 50
Italy 17.00 15.85 71 389
Japan 19.95 19.95 10 57
Malaysia 35.50 35.50 14 77
Netherlands 13.05 11.75 76 420
New Zealand 20.45 18.95 43 238
Norway 13.45 11.95 17 94
Poland 18.10 15.20 14 75
Portugal 18.10 16.20 37 206
Russia 39.95 39.95 9 51
Saudi Arabia 51.50 45.30 17 92
South Africa 35.00 35.00 41 226
Spain 18.00 16.20 151 830
Sweden 12.85 10.85 33 184
Switzerland 11.95 10.05 33 182
Taiwan 43.00 43.00 5 30
Thailand 49.95 49.95 10 55
Turkey 23.35 19.75 28 152
United Arab 39.95 37.35 13 72
Emirates
USA 7.15 7.15 438 2407
</TABLE>
- - ----------
UK National
Target traffic for period: 137.5 million minutes
Cellnet & Vodafone Mobile
Target traffic for period: 8.34 million minutes
<PAGE> 6
SCHEDULE 2
DIRECT DIAL NUMBERS
-------------------
Numbers on the Vodafone Network:
Dial code ranges: 0370, 0374, 0378, 0385, 0421, 0441, 0468, 0831 and 0836,
excluding sub ranges 0374-5, 0385-6, 0421-1, 0836-0, 0836-1, 0836-4, 0836-8 and
0836-9.
Numbers on the Cellnet Network:
Dial code ranges: 0401, 0402, 0410, 0411, 0585, 0589, 0802, 0850 and 0860,
excluding sub range 0401-5.
<PAGE> 1
EXHIBIT 10.17(b)
SECOND
VARIATION
AGREEMENT
between
NYNEX CABLECOMMS LIMITED
and
JOHN F. KILLIAN
and
NYNEX CABLECOMMS GROUP PLC and
NYNEX CABLECOMMS GROUP INC.
DATED 1 October, 1996
<PAGE> 2
THIS AGREEMENT is made the first day of October, 1996
BETWEEN:
(1) NYNEX CableComms Limited (registered in England, No. 2664006) whose
registered office is at The Tolworth Tower, Ewell Road, Surbiton,
Surrey KT6 7ED (the "Company");
(2) John F. Killian of Five Anchors, 21 Eriswell Crescent, Burwood Park, Walton
on Thames, Surrey KT12 5DS (the "Executive"); and
(3) NYNEX CableComms Group PLC (registered in England, No. 3024703) whose
registered office is at The Tolworth Tower, Ewell Road, Surbiton, Surrey
KT6 7ED ("UK CableComms") and NYNEX CableComms Group Inc., a corporation
incorporated under the laws of the State of Delaware, United States of
America ("US CableComms") whose principal place of business is The
Tolworth Tower, aforesaid.
WHEREAS
(1) The Executive is employed by the Company pursuant to an agreement between
the parties hereto dated 15 May 1995, and modified by the Variation
Agreement dated 7 December 1995 (the "Contract of Employment"); and
(2) The parties hereto wish to vary the terms of the Contract of Employment,
<PAGE> 3
IT IS HEREBY AGREED as follows:
1. Effective 1 October, 1996, Clause 5(C) shall be modified to provide that
the Executive shall participate in the following additional Senior Management
Program:
NYNEX 1987 Restricted Stock Award Plan.
2. Effective 1 October, 1996 the first sentence of Clause 11(B) shall be
modified to read as follows:
(B) The Company may if it so decides terminate this Agreement by paying to
the Executive the Clause 18 Severance Amount and by allowing the
Executive to retain such rights (if any) as he has to acquire stock
pursuant to Clause 6, in lieu of the unexpired proportion of the fixed
term or notice entitlement (as specified in Clause 2).
3. Effective 1 October, 1996, Clause 11(C) shall be modified to read as
follows:
(C) Should it so require the Company may instruct the Executive to remain
away from work during the remainder of the fixed term or the notice
period (as specified in Clause 2), as appropriate, in which case (and
whether it is the Executive or the Company, as appropriate, which has
given notice) the Executive will be required to comply with any
conditions laid down by the Company
3
<PAGE> 4
and whilst on full pay and benefits hereunder during that time the
Executive will not be permitted to work for any other person firm
client corporation or on the Executive's own behalf without the
Company's prior written permission and provided further that, if the
Executive is entitled to the Clause 18 Severance Amount upon
termination of his employment, the Company shall pay such amount to
the Executive at the end of the fixed term or notice period, as
appropriate.
1. Effective 1 October, 1996, a new Clause 18 is added to read as follows:
18. SEVERANCE
(A) Subject to the provisions of sub-clauses (C), (D), (E), (F), and (G)
below, the Executive (or his heirs, as the case may be) shall be
entitled to the amount described in sub-clause (B) below in the event
that:
(i) The Executive voluntarily separates from employment with the
Company with the consent of the Remuneration Committee of each of
UK CableComms and US CableComms (for purposes of this Clause 18,
collectively, the "Remuneration Committee");
(ii) The Executive's employment is terminated by the Company during
the initial fixed term or is thereafter terminated by the Company
by Notice pursuant to Clause 2(B);
4
<PAGE> 5
(iii) The Executive dies; or
(iv) The Executive becomes disabled as defined in the NYNEX Senior
Management Long Term Disability and Survivor Protection Plan (the
"LTD Plan") and remains disabled for a period described in
paragraph 1(b) of section 2 of the LTD Plan.
(B) The Executive (or his heirs, as the case may be) shall be entitled to the
sum of (i) and (ii) as follows:
(i) The monetary value of the Retention Award (as defined in the Second
Amendment to Assignment Letter between NYNEX Corporation, NYNEX
Worldwide Services Group, Inc. and the Executive, dated October 1,
1996) granted to the Executive under the NYNEX 1987 Restricted Stock
Award Plan. Such value shall be determined as of the Executive's
last day of employment, and shall be the mean between the high and
low sale prices of the shares which comprise the Retention Award as
quoted by the New York Stock Exchange - Composite Transactions
listing for the last day of employment, or such other appropriate
measurement of fair market value as the Remuneration Committee shall
select. If the last day of employment is a non-trading day,
<PAGE> 6
then the high and low sale prices for the last trading day prior to
such date shall be used.
(ii) The balance on the Executive's last day of employment in the
Executive's phantom Global Balanced Fund Account, as defined by the
Remuneration Committee, but in no event shall this balance be less
than the amount specified for the Executive as of 1 October, 1996,
which amount is $225,000.
The sum of (i) and (ii) above shall be referred to herein as the "Clause
18 Severance Amount."
(C) Notwithstanding any other provisions hereof, the Clause 18 Severance
Amount shall not be payable if:
(i) The Executive voluntarily separates from service with the Company
without the consent of the Remuneration Committee;
(ii) The Executive's employment with the Company is terminated pursuant
to Clause 11(A);
(iii) The Executive is employed by or offered employment by NYNEX
Corporation, any NYNEX Group company, any Group Company, or any
successor to any of such
<PAGE> 7
companies within sixty days of the date the Executive terminates
employment with the Company;
(iv) The Executive is terminated by the Company as a consequence of the
sale or transfer to another party of the stock or assets of the
Company or any affiliate of the Company under circumstances where
the Executive is hired or offered employment by the purchaser or
transferee or its affiliates, successor or assignees within sixty
days of the date the Executive is terminated by the Company.
(D) The Executive shall receive the Clause 18 Severance Amount only if he (or
his heirs, as the case may be) signs and delivers to the Company a release
substantially in the form attached as Exhibit A (with local law revisions,
if any, as may be reasonably required by the Company).
(E) In the event that the Executive becomes disabled as described in Clause
18(A)(iv) above, he shall only be entitled to the Clause 18 Severance
Amount at the expiration of the period described in paragraph 1(b) of
Section 2 of the LTD Plan.
(F) If the Executive is employed by or offered employment by NYNEX Corporation,
any NYNEX Group company, any
<PAGE> 8
Group Company or any successor to any of such entities within the
first year following the termination of the Executive's employment
with the Company, a pro rata share of the Clause 18 Severance Amount
shall be repaid by the Executive to the Company.
(G) Notwithstanding any other provisions hereof, the terms of Exhibit B
shall apply to all payments under this Agreement.
6. Save as varied herein, the provisions of the Contract of Employment shall
continue in full force and effect.
AS WITNESS this Agreement has been signed on the date written above.
SIGNED AND DELIVERED ) /s/ Paul Repp
AS A DEED by the )
Company )
SIGNED AND DELIVERED ) /s/ John F. Killian
AS A DEED BY JOHN F. )
KILLIAN in the presence )
of: )
SIGNED AND DELIVERED )
AS A DEED BY UK CABLECOMMS ) /s/ Richard W. Blackburn
and by US CABLECOMMS ) /s/ Richard W. Blackburn
<PAGE> 9
EXHIBIT A
SEPARATION AGREEMENT AND RELEASE
In consideration of the fact that I, _____________________________ (the
employee), have voluntarily and of my own free will, elected to resign and
accept a payment ("Severance Payment") in the amount of ____________, and that
NYNEX Corporation, or its subsidiaries and affiliates (hereinafter "NYNEX
Corporation" or "the Company") has agreed to pay me the above amount, I
acknowledge and agree to the following:
1. I understand that as of _____________________________ my employment with
_____________________________________ (the Company) will cease.
2. I understand that the Severance Payment is being paid as consideration for
my signing this Separation Agreement and Release and that these are
benefits to which I would not otherwise have been entitled had I not signed
this Separation Agreement and Release.
3. I also understand that, pursuant to the Older Workers Benefit Protection
Act of 1990, I have the right to consult with an attorney before signing
this Separation Agreement and Release, I have 21 days to consider the
Release before signing it, and I may revoke the Release within 7 calendar
days after signing it.
4. I realize that there are various State and Federal laws that govern my
employment relationship with the Company and/or prohibit employment
discrimination on the basis of age, color, race, gender, sexual
preference/orientation, marital status, national origin, mental or physical
disability, religious affiliation or veteran status and that these laws are
enforced through the courts and agencies such as the Equal Employment
Opportunity Commission, Department of Labor and State Human Rights
Agencies. Such laws include, but are not limited to, Title VII of the Civil
Rights Act of 1964, as amended, the Age Discrimination in Employment Act of
1967, as amended, the Employee Retirement Income Security Act of 1974, as
amended, and the Americans with Disabilities Act of 1990. In consideration
of the Severance Payment provided for in this Agreement, I intend to give
up any rights I may have under these or any other laws or agreements with
respect to my employment and termination of employment at the Company and
acknowledge that the Company (including NYNEX Corporation, its subsidiaries
and affiliates) has not (a) discriminated against me, (b) breached any
express or implied contract with me, or (c) otherwise
<PAGE> 10
acted unlawfully toward me.
5. Subject to paragraph 6 herein, on behalf of myself, my heirs, executors,
administrators, successors and assigns, I release and discharge NYNEX
Corporation, its successors, assigns, subsidiaries, affiliates, directors,
officers, representatives, agents and employees and the fiduciaries of any
employee benefit plan maintained by any of the foregoing ("Releasees") from
any and all claims, including claims for attorney's and experts' fees and
costs, charges, actions and causes of action with respect to, or arising
out of, my employment or termination of employment with the Company. This
includes, but is not limited to, claims arising under contract, federal,
state, or local laws prohibiting age, color, race, gender, sexual
preference/orientation, marital status, national origin, mental or physical
disability, religious affiliation or veteran status or any other forms of
discrimination or claims growing out of the Company's termination of its
employees. With respect to any charges that have been or may be filed
concerning events or actions relating to my employment or the termination
of my employment and which occurred on or before the date of this
agreement, I additionally waive and release any right I may have to recover
in any lawsuit or proceeding brought by me, an administrative agency, or
any other person on my behalf or which includes me in any class. If I
breach this paragraph, I understand that I will be liable for all expenses,
including costs and reasonable attorney's fees, incurred by any Releasee in
defending the lawsuit or charge of discrimination, regardless of the
outcome. I agree to pay such expenses within thirty (30) calendar days of
written demand. This paragraph is not intended to limit me from instituting
legal action for the sole purpose of enforcing this Agreement.
6. I understand that this Separation Agreement and Release in no way affects
any rights I may have for benefits under the NYNEX Corporation Management
Pension Plan or any other applicable NYNEX Corporation benefit plan.
7. In accordance with my existing and continuing obligations to the Company, I
have returned or will immediately return to the Company, on or before my
termination date, all Company property, including, but not limited to,
files, records, computer access codes, computer programs, instruction
manuals, business plans, and other property which I prepared or helped to
prepare or which came into my possession in connection with my employment
with the Company.
<PAGE> 11
8. I affirm my obligation to keep all proprietary Company information
confidential and not to disclose it to any third party in the future. I
understand that the term "proprietary Company information" includes, but
is not limited to, technical, marketing, business, financial or other
information which constitutes trade secret information or information not
available to competitors of the Company, the use or disclosure of which
might reasonably be construed to be contrary to the interest of the Company
or its subsidiaries or affiliates. I understand that this paragraph does
not prevent me from talking with any regulatory or law enforcement
agencies.
9. The construction, interpretation and performance of this Agreement shall
be governed by the laws of [ ].
10. In the event that any one or more of the provisions contained in this
Agreement shall for any reason be held to be unenforceable in any respect
under the law of any state or of the United States of America, such
unenforceability shall not affect any other provisions of this Separation
Agreement and Release, but, with respect only to that jurisdiction holding
the provision to be unenforceable, this Separation Agreement and Release
shall then be construed as if such unenforceable provision or provisions
had never been contained herein.
11. This Separation Agreement and Release contains the entire agreement between
the Company and me and fully supersedes any and all prior agreements or
understandings pertaining to the subject matter hereof. I represent and
acknowledge that in executing this Separation Agreement and Release I have
not relied upon any representation or statement not set forth herein made
by any of the Releasees or by any of the Releasee's agents, representatives
or attorneys with regard to the subject matter of this Separation Agreement
and Release.
BY SIGNING THIS SEPARATION AGREEMENT AND RELEASE, I STATE THAT: I HAVE READ IT;
I UNDERSTAND IT AND KNOW THAT I AM GIVING UP IMPORTANT RIGHTS; I AGREE WITH
EVERYTHING IN IT; I AM AWARE OF MY RIGHT TO CONSULT AN ATTORNEY BEFORE SIGNING
IT; AND I HAVE SIGNED IT KNOWINGLY AND VOLUNTARILY.
<PAGE> 12
_______________________________________
Date
_______________________________________
Employee Signature
_______________________________________
Employee Name Printed
<PAGE> 13
EXHIBIT B
Golden Parachute Cap
(1) Notwithstanding anything to the contrary contained herein, in the event
that any payment received or to be received by the Executive under this
Agreement (the "Contract Payment") would, in the opinion of independent tax
counsel selected by the Company and reasonably acceptable to the Executive
("Tax Counsel"), be subject to the excise tax (the "Excise Tax") imposed by
Section 4999 of the Code (in whole or part), the Contract Payment shall be
reduced (but not below zero) until no portion of such payments would be subject
to the Excise Tax. For purposes of this limitation, (i) no portion of such
payments the receipt or employment of which the Executive shall have effectively
waived in writing shall be taken into account, (ii) only the portion of such
payments which in the opinion of Tax Counsel constitute a "parachute payment"
within the meaning of Section 280G(b)(2) of the code shall be taken into
account, (iii) such payments shall be reduced only to the extent necessary so
that such payments would not be subject to the Excise Tax, in the opinion of Tax
Counsel and (iv) the value of any noncash benefit or any deferred payment or
benefit included in such payments shall be determined in accordance with the
principles of Sections 280G(d)(3) and (4) of the Code. The Executive shall be
entitled, at any time by written notice to the Company, to reduce the amount of
any Contract Payment otherwise payable to him, and to select from among such
payments those to be so reduced.
(2)(i) If it is established pursuant to an opinion of Tax Counsel or a
final determination of a court or an Internal Revenue Service proceeding that,
notwithstanding the good faith of the Executive and the Company in applying the
terms of Section (1) hereof, any Contract Payment paid to the Executive or for
his benefit exceeded the limitation contained in Section (1) hereof, then he
shall pay to the Company, within five days of receipt of notice of such final
determination or opinion, an amount equal to the sum of (A) the excess of the
payments paid to him or for his benefit over the maximum payments that should
have been paid to or for his benefit taking into account the limitations
contained in Section (1) hereof and (B) interest on the amount set forth in
clause (A) of this sentence at the applicable federal rate (as defined in
Section 1274(d) of the Code) from the date of his receipt of such excess until
the date of such payment; provided, however, that he shall not be required to
make any payment to the Company pursuant to this Section (2)(i) if such final
determination requires the payment by him of an Excise Tax by reason of any
Contract Payment or portion thereof.
(ii) If it is established pursuant to an opinion of Tax Counsel or a final
determination of a court or an Internal Revenue Service proceeding that,
<PAGE> 14
notwithstanding the good faith of the Executive and the Company in applying the
terms of Section (1) hereof, any Contract Payment paid to him or for his
benefit was in an amount less than the maximum Contract Payment which could be
payable to him without such payments being subject to the Excise Tax, then the
Company shall pay to him, within five days of receipt of notice of such final
determination or opinion, an amount equal to the sum of (A) the excess, if any,
of the payments that should have been paid to him or for his benefit over the
payments paid to or for his benefit and (B) interest on the amount set forth in
clause (A) of this sentence at the applicable federal rate (as defined in
Section 1274(d) of the Code) from the date of his non-receipt of such excess
until the date of such payment.
(3) The Company shall pay the Contract Payment at such times as set forth
in the applicable paragraph hereof; provided, however, that if the Company in
good faith believes that any such payments shall be reduced under the provisions
of Section (1) hereof, the Company shall pay to the Executive at such time a
good faith estimate of the reduced payments, the computation of which shall be
given to him in writing together with a written explanation of the basis for
making such adjustment. The Company shall, within thirty days of the otherwise
applicable payment date, either (i) pay to the Executive the balance of the
payments together with interest thereon at the applicable federal rate (as
defined in Section 1274(d) of the Code) or (ii) deliver to him a copy of the
opinion of Tax Counsel referred to in Section (1) hereof, as applicable,
establishing the amount of the reduced payments over the estimate previously
paid on account thereof, together with interest thereon at the applicable
federal rate (as defined in Section 1274(d) of the Code).
<PAGE> 15
<PAGE> 1
Exhibit 10.20(b)
SECOND AMENDMENT
TO SECONDMENT AGREEMENT
THIS AGREEMENT is made the first day of October, 1996
BETWEEN:
(1) NYNEX CableComms Limited, (registered in England, No. 2664006) whose
registered office is at The Tolworth Tower, Ewell Road, Surbiton, Surrey
KT6 7ED (the "Company"); and
(2) NYNEX Worldwide Services Group, Inc., a company incorporated under the laws
of the State of Delaware, with its principal place of business at 1113
Westchester Avenue, White Plains, New York 10604, USA ("WSG"),
WHEREAS:
(1) The parties have entered into a Secondment Agreement dated May 15, 1995 and
modified by the First Amendment to Secondment Agreement dated December 7,
1995 (together, the "Secondment Agreement") under which WSG has agreed to
make available to the Company the services of JOHN F. KILLIAN (the
"Employee") for the consideration and subject to the terms and conditions
of the Secondment Agreement; and
(2) The parties hereto wish to modify the terms of the Secondment Agreement:
IT IS HEREBY AGREED as follows:
1. Effective 1 October, 1996, Clause 4(B) is amended by adding the following
plan to the end of the section entitled "Senior Management Programs":
NYNEX 1987 Restricted Stock Award Plan.
<PAGE> 2
2
2. Save as modified herein, the provisions of the Secondment Agreement shall
continue in full force and effect.
SIGNED BY PAUL REPP for and ) /s/ Paul Repp
on behalf of NYNEX CABLECOMMS )
LIMITED in the presence of: ) /s/ Richard W. Blackburn
SIGNED BY R.W. BLACKBURN for and ) /s/ Richard W. Blackburn
on behalf of NYNEX WORLDWIDE )
SERVICES GROUP, INC. In the )
presence of: ) /s/ Paul Repp
<PAGE> 1
Exhibit 10.22(a)
[LETTERHEAD]
Direct Tel: 0181 873 5015
Direct Fax: 0181 873 5256
11th July 1996
Mr John Rennocks
Executive Director Finance
PowerGen plc
53 New Broad Street
London
EC2M 1JJ
Dear Mr Rennocks,
RE: AMENDMENT TO LETTER OF APPOINTMENT
In the light of your election and agreement to serve in the capacity of Deputy
Chairman as well as non-executive director of NYNEX CableComms Group PLC and
NYNEX CableComms Group Inc. (the "Companies"), this is to confirm that your
Letter of Appointment dated 3rd May 1995 is hereby deemed amended, effective
11th July 1996, to reflect:
(1) Your appointment to the additional capacity of Deputy Chairman; and
(2) An increase in your aggregate per annum fee to Pounds Sterling 27,000.
If the amended terms set forth above are acceptable to you, please sign, date
and return the attached copy of this letter to Paul Repp, Executive Director,
Chief Legal and Regulatory Officer and Company Secretary.
This letter is governed by and shall be construed in accordance with English
Law.
Yours sincerely,
/s/ Richard W. Blackburn
.............................................................................
For and on behalf of NYNEX CableComms Group PLC
/s/ Richard W. Blackburn
.............................................................................
For and on behalf of NYNEX CableComms Group Inc.
I hereby agree to the terms and conditions set out in this letter
/s/ John Rennocks
.............................................................................
Signed by Mr John Rennocks on this 11 day of July 1996
<PAGE> 1
Exhibit 10.37(a)
SUPPLEMENTAL FACILITY
AGREEMENT
between
NYNEX UK CableComms Holdings,
Inc.
as Borrower
and
NYNEX CORPORATION
as Lender
SIMMONS & SIMMONS
21 Wilson Street London EC2M 2TQ
Tel: 0171-628 2020/528 9292 Fax: 01/1-628 2070 DX Box No. 12
<PAGE> 2
THIS AGREEMENT is made the day of March 1996
BETWEEN:
(1) NYNEX UK CableComms Holdings, Inc., a Delaware corporation (the
"Borrower"); and
(2) NYNEX CORPORATION, a Delaware corporation (the "Lender").
NOW IT IS HEREBY AGREED as follows:
1. Supplemental Agreement
1. This agreement is supplemental to an agreement dated 15 May 1995 between
the parties and relating to an original commitment of pound sterling 100
million (the "Original Agreement").
2. In consideration of the payment of pound sterling 1 from the Lender to the
Borrower (the receipt and adequacy of which is hereby acknowledged by the
Lender) this Supplemental Agreement has been entered into.
2. Amendments to the Original Agreement
The Original Agreement shall be amended by changing the reference:
(a) to "pound sterling 100 million" in the first line of the definition of
"Commitment" to "pound sterling 200 million";
(b) to "pound sterling 100 million (one hundred million pounds)" in the
second and third lines of clause 2 to "pound sterling 200 million (two
hundred million pounds)"; and
(c) to "(being 3/8ths of 1% of pound sterling 100 million)" in the third
line of clause 15 to "(being 3/16ths of 1% of pound sterling 200
million)".
3. No other changes
Save as expressly provided in this Supplemental Agreement the Original
Agreement shall continue in full force and effect.
4. Law
This Supplemental Agreement shall be governed by, and shall be construed in
accordance with, English law.
5. Counterparts
This Supplemental Agreement may be executed in any number of counterparts,
each of which shall together constitute one and the same agreement.
<PAGE> 3
AS WITNESS the hands of the duly authorised representatives of the parties
hereto the day and year first before written.
The Borrower
NYNEX UK CableComms Holdings Inc.
By:
Address: The Tolworth Tower
Ewell Road
Tolworth
Surrey
KT6 7ED
Attention: Paul Repp, Company Secretary
Facsimile No: 0181-873-5018
The Lender
NYNEX Corporation
By: /s/ [illegible]
------------------------------
Address: 1113 Westchester Avenue
White Plains
New York 10604-3310
USA
Attention: Legal Department
Facsimile No: 001-914-644-6595
2
<PAGE> 1
Exhibit 10.39(b)
SECOND AMENDMENT TO
ASSIGNMENT LETTER
THIS AGREEMENT (the "Agreement") is made the first day of October, 1996
BETWEEN:
(1) NYNEX Corporation, a corporation incorporated under the laws of the State
of Delaware, whose principal office is at 1095 Avenue of the Americas, New
York, New York 10036;
(2) NYNEX WORLDWIDE SERVICES GROUP, INC., a company incorporated under the laws
of the State of Delaware, with its principal place of business at 1113
Westchester Avenue, White Plains, New York 10604 ("WSG"); and
(3) JOHN F. KILLIAN, of Five Anchors, 21 Eriswell Crescent, Burwood Park,
Walton on Thames, Surrey KT12 5DS (the "Employee").
WHEREAS:
(1) The Employee is performing certain services for NYNEX CableComms Limited
(the "Company") pursuant to the Assignment Letter between the parties
dated as of May 3, 1995 and amended by the First Amendment to Assignment
Letter dated December 7, 1995 (together, the "Assignment Letter"); and
(2) The parties hereto wish to vary the terms of the Assignment Letter,
IT IS HEREBY AGREED as follows:
1. Effective 1 October, 1996, Section 2.7 is amended to read as follows:
<PAGE> 2
2.7 Notwithstanding any other provisions of this Agreement, Employee will
remain an at-will employee of WSG, Employee has no guarantee of
reassignment upon his return to the United States, provided, however,
that in the event employee is reassigned, NYNEX will enter into an
Executive Retention Agreement with Employee providing for the payment
of a severance benefit
(i) substantially equivalent in amount to the severance benefit
described in Clause 18(b) of Employee's Service Agreement; and
(ii) on terms comparable to the terms of the standard Executive
Retention Agreement which NYNEX enters into with members of the
Senior Management Compensation Group.
2. Effective 1 October, 1996, section 2.9 is amended to read as follows:
2.9 Except for section 2.7 hereof, this Agreement shall terminate upon the
termination of the Service Agreement.
3. Effective 1 October, 1996, the following new Section 3.8 is added to the
end of Section 3:
3.8 Retention Award. As of October 1, 1996, NYNEX Corporation will award
the Employee 3,589 shares of restricted stock (the "Award"),
pursuant to the terms of the NYNEX 1987 Restricted Stock Award Plan
(the "1987 Plan") under the following terms:
(i) the Award shall be conditioned on the approval of the
Remuneration Committee of the Board of Directors of each of
NYNEX CableComms Group PLC and NYNEX CableComms Group, Inc.
(ii) dividends on the Award will be used to purchase additional
shares of restricted stock (the additional shares and the
Awarded shares shall be referred to collectively as the
"Retention Award").
(iii) the shares which comprise the Retention Award shall be subject
to the terms and conditions provided in the 1987 Plan.
(iv) the Restriction Period for the Retention Award as defined in the
1987 Plan shall end when the Employee:
(A) voluntarily separates from service with NYNEX Corporation
with the consent of the Chairman and Chief Executive
Officer of NYNEX Corporation;
2
<PAGE> 3
(B) dies; or
(C) is terminated without cause.
(v) (A) If the Employee voluntarily separates from service with
NYNEX Corporation without the consent of the Chairman and
Chief Executive Officer of NYNEX Corporation, the Retention
Award shall be forfeited.
(B) If the Employee's employment is terminated for cause, the
Retention Award shall be forfeited.
The term "cause" shall mean grossly incompetent performance
or substantial or continuing inattention to or neglect of
the duties and responsibilities assigned to the Employee,
as determined in the sole discretion and judgment of the
Chairman and Chief Executive Officer of NYNEX Corporation;
fraud, misappropriation, embezzlement, involving NYNEX
Corporation or any of its subsidiaries or affiliates; or
commission of any felony of which the Employee is finally
adjudged guilty in a court of competent jurisdiction; a
breach of the provisions of Clause 12 of the Employee's
Service Agreement; or a breach of Section 2.6 of this
Agreement.
(C) If the Employee becomes disabled as defined in the NYNEX
Senior Management Long Term Disability and Survivor
Protection Plan (the "LTD Plan") such that the Employee
is eligible for a disability allowance pursuant to the LTD
Plan, the Retention Award shall be continued until the
expiration of the period described in paragraph 1(a) of
Section 2 of the LTD Plan; if the Employee remains disabled
for a period described in paragraph 1(b) of Section 2 of
the LTD Plan, the Term of Employment shall end, the
Employee shall be deemed to have voluntarily separated from
service with NYNEX Corporation with the consent of the
Chairman and Chief Executive Officer of NYNEX Corporation,
and the restrictions on the Retention Award shall lapse.
(vi) Unless otherwise determined by the Chairman and Chief Executive
Officer, the following shall not constitute grounds for a
termination of employment by NYNEX Corporation to be considered
"without cause" for purposes of this section:
3
<PAGE> 4
(A) Relocation of the Employee's primary work location;
(B) Changes in the Employee's job responsibilities; and
(C) Changes in the Employee's reporting relationships.
For purposes of the NYNEX 1987 Restricted Stock Award Plan, this
Agreement is deemed to be the Employee's Retention Agreement.
4. Effective 1 October, 1996, the following plan is added to the end of the
portion of Schedule 3.1 entitled "Senior Management Programs":
NYNEX 1987 Restricted Stock Award Plan.
5. Effective 1 October, 1996, the following plan is deleted from the end of
Schedule 3.2:
NYNEX 1987 Restricted Stock Award Plan.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
NYNEX CORPORATION
By: /s/ Richard W. Blackburn
-------------------------------
Name:
Title:
NYNEX WORLDWIDE SERVICES GROUP, INC.
By: /s/ Richard W. Blackburn
-------------------------------
Name:
Title:
/s/ John F. Killian
--------------------------------
John F. Killian
4
<PAGE> 1
[SKY LOGO] Exhibit 10.44(a)
JCL085.1m
28 July 1995
Mr Henry Emden
Assistant Director Competition Policy
Office of Fair Trading
Field House
15-25 Bream's Buildings
London
EC4A 1PR
Dear Mr Emden
Following David Chance's letter to you of July 26, 1995, I attach a draft
amendment letter (in a form agreed between Sky and Nynex) reflecting the
parties' proposals to date.
Yours sincerely
/s/ Jammes Conyers
___________________________
JAMMES CONYERS
cc: David Chance
British Sky Broadcasting Ltd
Head Office and Registered Office: Grant Way, Isleworth, Middlesex TW7 5GD
Telephone: 0171-705 3000 Facsimile: 0171-705 3030
Registered in England No 2906997 Registered No 1-1062/46/
<PAGE> 2
Date: [July/August] 1995
To: NYNEX CableComms Limited
From: British Sky Broadcasting Limited
British Sky Broadcasting Group plc.
Dear Sirs
Amendment to Standard Cable Operator Agreement dated 4th May 1995 between the
parties referred to above and the companies whose names, and principal places of
business are set out in the first column of Exhibit A, Part 1 to that Agreement
The parties to the Agreement have agreed to amend the Agreement (such
amendments to take effect from commencement of the Agreement) as follows;
headings, page numbers and Clause numbers correspond to headings, page numbers
and Clause numbers in the Agreement:
1. Clause 1 - Definitions - Page 6
Add after the definition of "Public Premises Subcriber" the following
additional definitions:
"Qualifying Movie Programming": full length feature films:
(i) having (a) US and/or UK theatrical release and/or (b) a US
and/or UK video release; AND
(ii) which are available for exploitation in the Territory
during the UK Pay Television Window, being a period
immediately following the Video and/or Pay-per-View window
in the Territory; AND
(iii) which have not previously been available for any form of
exploitation in the Territory (other than by means of
Pay-per-View)
but, for the avoidance of doubt, excludes made for television
movies which are not released theatrically either in the US or
the UK and which are first exploited on US network television
or UK national television prior to any video or other
exploitation;
"Qualifying Sports Programming rights": rights to exhibit on
television in the Territory (whether live action or delayed) sports
events (whether domestic or international in nature) in any of the
following categories: Football (Soccer), Rugby Union, Rugby League,
Golf, Cricket, Boxing, Motorsports, Wrestling, Tennis, Horse Racing,
Basketball, Ice-Hockey, Speedway, Darts, Snooker,
<PAGE> 3
American Football and Athletics PROVIDED THAT programming rights
acquired prior to the date of this Agreement to televise in the
Territory Welsh Rugby Union, Secondary rights to the Wimbledon Tennis
Tournament, the Vauxhall Football League (as understood at the date of
this Agreement), the Cricket World Cup 1996, such rights in such
Speedway programming as are held by CPP-I as at the date of this
Agreement, and such sports programming rights as are held by the MSO
at the date of this Agreement, in each case until expiry of the
relevant rights contract, shall not be considered Qualifying Sports
Programming rights hereunder."
2. Clause 2.1(b)-Page 11
The deletion of Clauses 2.1(b)(i) and (ii) and their replacement with the
following:
"(aa) in the case of digital PPV Services:
(i) during the first twelve months after launch by Sky of the
PPV Services, the Operator agrees to carry a minimum of 50
digital PPV Services (or, if less, the number of PPV
Services offered by Sky) PROVIDED THAT in no event will the
Operator by obliged to utilise more than 15% of its total
allocated digital channel capacity (if any) in so doing; and
(ii) during the remainder of the Term, the Operator agrees to
carry a minimum of 100 digital PPV Services (or, if less,
the number of PPV Services offered by SKY) ((i) or (ii) as
the case may be, being "the Minimum PPV Commitment")
The deletion, from the following paragraph (commencing "SUBJECT ALWAYS"),
of the words "but without prejudice to the priority afforded to Sky
pursuant to sub-paragraphs (aa) and (bb) below".
The addition after such paragraph, of the following:
(bb) In the case of analogue PPV Services:
In the event of Sky notifying the MSO prior to 30th June 1996 of
its firm intention to launch analogue PPV Services, the MSO and
the Operators will use all reasonable endeavours to accommodate
the carriage of at least three of such PPV Services on the
Operators' Cable Services within six months of receiving such
notice, to the extent that such PPV Services comprise movies
and/or sports programming. For the avoidance of doubt:
(i) the obligation of the MSO and the Operator is subject
to the Operator having allocated analogue capacity on
its Cable Services for the purpose of offering analogue
PPV Services, (other than such capacity as it shall
have allocated to accommodate foreign language
Pay-per-View
<PAGE> 4
services); AND
(ii) any PPV Service of Sky so carried will, with effect
from its launch on the Operator's Cable Services,
constitute a "PPV Movie Service" or "PPV Sports
Service", as the case may be, under the Agreement, for
all purposes other than the provisions of Clause 2.1(a)
sub-paragraph (aa) relating to digital PPV Services."
The deletion, on page 11, of the words from "The Operator
recognises" to the end of Clause 2.1, and their replacement with
the following:
"For the avoidance of doubt, the Operator has the right but not
the obligation, to carry the PPV Services on SMATV Systems within
its Licensed Areas, and the provisions of sub-paragraphs (aa) and
(bb) above shall not apply to carriage of PPV Services on such
SMATV Systems".
3. Clause 2.4-Page 16
The deletion of the heading and its replacement with the words,
"Co-operation in Programming",
The deletion of the words, "In consideration of Sky's commitment"
until the end of sub-paragraph (b) on page 17;
The renumbering of sub-paragraph (c) to read sub-paragraph (a)(i); and
the renumbering of the reference to sub-paragraph (e) in that
paragraph to read sub-paragraph (h);
The insertion of a new sub-paragraph (a)(ii) as follows:
"In the event that the MSO or any Operator or any Subsidiary of
either has the opportunity during the Term of the Agreement of
taking a Financial Interest in a television programme service
comprising Qualifying Movie Programming and/or Qualifying Sports
Programming, or a Pay-per-View movies or sports service, in any
case for distribution in the Territory ("New Service"), then the
MSO will notify Sky of any intention to pursue such opportunity
and if Sky notifies the MSO, within 7 days of receipt of such
notification, of Sky's interest in such opportunity, the MSO will
negotiate in good faith with Sky with a view to Sky taking a
Financial Interest in such New Service at least equal to the
Financial Interest to be taken by the MSO, the Operator or the
respective Subsidiary (as the case may be).
In the event of such negotiations, the MSO agrees to use best
endeavours to agree with Sky suitable terms upon which Sky may
participate in such New Service. If no such agreement has been
reached within 120 days of the commencement of discussions, then
the MSO, Operator or Subsidiary (as the case may be) may take a
Financial Interest in such New Service without any participation
by Sky, PROVIDED THAT the MSO will use all reasonable endeavours
to ensure that any such New Service in which such a Financial
Interest is taken by any of the
<PAGE> 5
- same is offered to Sky for DTH distribution in Sky's territory (as
defined above) on terms consistent with sub-paragraph (b) below.
For the avoidance of doubt, all obligations pursuant to this Clause
2.4(a) shall cease upon expiration or earlier termination of this
Agreement in accordance with its terms."
The deletion of Clause 2.4(d)(i) and (ii).
The renumbering of sub-paragraph (e) to read sub-paragraph (b), the
deletion from such sub-paragraph of the words, "Subject to the provisions
of Sub-Clause (f) below", and the renumbering of the reference to
sub-paragraph (c) in such paragraph to read sub-paragraph (a).
The deletion of sub-paragraph (f).
4. Clause 5.3 - Page 34
The addition at the end of this Clause of the words;
"For the avoidance of doubt, the Operator's obligation to give equal
prominence to the programme schedule for the Channels and the PPV Services
is not intended to mean that, in any event, at least 51% of the physical
space within the guide is to be devoted to publicising the Channels and the
PPV Services."
5. In addition to those amendments set out above, a further Clause shall be
added as Clause 3.1(d).
"The MSO shall have the right to elect, on behalf of all of the Operators,
to move, once at any time during the Term, to the industry rate card then
in force, at which point, at the option of the MSO, to be exercised in
writing, either (i) such rate card (and any subsequent rate cards in force
from time to time) will apply in place of Exhibit B to this Agreement, or
(ii) this Agreement will terminate in its entirety and continued carriage
of Sky's Channels will be in accordance with the industry rate card from
time to time in force."
The above agreement to amend the Agreement of 30th April 1995 is conditional
upon (a) the OFT sanctioning such changes; and (b) the OFT sanctioning the
parties' proposals on the amendments to the Agreement relating to modification
of the pricing structure, such amendments to be incorporated within the
Agreement. In the event that these matters cannot be achieved, the Agreement of
30th April 1995 remains unamended.
It is the intention of the parties to be bound by the terms of this letter
agreement, which shall be construed in accordance with the laws of England and
Wales, and the parties hereby submit to the non-exclusive jurisdiction of the
English Courts.
Except as amended hereby, the Agreement remains in full force and effect.
Please signify your agreement to the terms of this letter agreement by returning
the attached
<PAGE> 6
duplicate copy duly executed on behalf of NYNEX CableComms Limited, acting for
itself and as agent for the companies set out in the first column of Exhibit A,
Part I, to the Agreement.
Yours faithfully
- - ----------------------------------------
for and on behalf of
British Sky Broadcasting Limited
Signed by
- - ----------------------------------------
for and on behalf of
British Sky Broadcasting Group plc
Accepted and Agreed
- - ----------------------------------------
for and on behalf of NYNEX CableComms Limited,
for itself and as agent for the companies set out in
the first column of Exhibit A, Part I of the Agreement
<PAGE> 1
Exhibit 10.45
NYNEX CableComms Group PLC
NYNEX CableComms Group Inc.
The Tolworth Tower
Ewell Road
Surbiton
Surrey KT6 7ED
Telephone: 0181 873 2000
Facsimile: 0181 390 9993
[NYNEX LOGO]
11th July 1996
Sir Bryan Carsberg
The International Accounting Standards Committee
167 Fleet Street
London
EC4A 2ES
Dear Sir Bryan,
Following recent discussions with you concerning the possibility of you agreeing
to become a non-executive director of NYNEX CableComms Group PLC (registered in
England No. 3024703) and NYNEX CableComms Group Inc. (registered in Delaware,
United States of America) ("the Companies"), I set out below (subject to your
formal acceptance) the terms of your appointment to each of the Boards of
directors of the Companies ("the Boards") as a non-executive director. The
terms are as follows:-
(1) Subject to applicable law and applicable provisions of the Articles of
Association or, as appropriate, Certificate of Incorporation and By-Laws,
the Companies hereby appoint you as a non-executive director of each of the
Companies for a period commencing on 11th July 1996 and expiring on the
date in 1997 on which the Annual General Meeting of the Companies shall
take place; subject as aforesaid either the Companies or you may terminate
this appointment at any time by the giving of one month's written notice to
that effect. If you and the Boards and the shareholders of the Companies
agree then your appointment may be renewed for a further period to be
agreed.
(2) Under the terms of your appointment you shall be entitled to receive from
the Companies a fee in the aggregate of 22,000 pound sterling per annum
for serving as a non-executive director of both of the Companies and for
serving on any Committees of the Boards. You shall also be entitled to
receive a further fixed sum of 1,000 pound sterling in respect of each
meeting that you attend during the course of your duties. These fees shall
be payable in equal quarterly instalments in arrears, such fees to be paid
to you or to such person, firm or company as you shall nominate, after the
deduction of any income tax and national insurance contributions as may be
appropriate. The level of fees may be reviewed by each of the Boards from
time to time.
Cont'd....
NYNEX CableComms Group PLC:
Registered in England and Wales with Number 3024703
Registered Office: as above.
NYNEX CableComms Group Inc.:
A Delaware, United States of America, corporation
The liability of members is limited
Head office: as above.
<PAGE> 2
- 2 -
(3) During the period of your appointment you will be required to make
available to the Companies your services as a non-executive director as and
when the Companies shall reasonably require.
(4) You are required as a term of your appointment hereunder not to render your
services whether as a consultant or employee or non-executive director or
executive director to any other individual, company, corporation, firm,
joint venture, organisation or trust (in each case whether or not having a
legal personality) where the business of such individual or entity is the
same as or similar to the business of the Companies or of any other
subsidiary company of the Companies ("Group Company"). For the purposes of
this clause, business shall mean the provision of television,
telecommunications and other services by cable whether for domestic or
business use.
(5) Your duties during your appointment as a non-executive director to each of
the Boards shall be those of a director of a public corporation and,
provided that the same are consistent with the foregoing, as notified to
you from time to time by each of the Boards which will include, without
limitation, such duties as are consistent with your appointment as a member
of the Remuneration Committee and your appointment as a member of the Audit
Committee.
(6) Nothing in the terms of your appointment as a non-executive director is
intended to nor shall it be deemed to give rise to the relationship between
you and the Companies of employee and employer.
(7) The boards generally meet every other month at The Tolworth Tower, Ewell
Road, Tolworth, Surrey KT 7ED. Your attendance at such meetings by
telephone conference facilities is permitted.
(8) The Companies each provide liability insurance for its officers and
directors when acting for and on behalf of the relevant Company on terms
from time to time notified to you. In addition, if circumstances should
arise in which it becomes necessary for you to obtain separate professional
advice about the performance of your duties any reasonable expenses thereby
incurred will be met by the relevant Company provided you have obtained
prior written approval from the Company Secretary in respect of obtaining
such separate professional advice.
Cont'd....
<PAGE> 3
-3-
(9) The Companies shall pay to you or refund to you such sums as shall cover
all reasonable out of pocket expenses necessarily and wholly incurred by
you in or about the performance of the duties of your appointment
hereunder.
(10) During your appointment you are likely to come into possession of
confidential information, the proprietary interest in which belongs to the
Companies or any Group Company. Accordingly, you agree that you will not at
any time (whether during or after your appointment hereunder) divulge to
any person, firm or company or use for your own benefit or the benefit of
any person, firm or company any information of a private, secret or
confidential nature concerning the business, accounts or finances of the
Companies or of any Group Company or any of the secrets, dealings,
transactions or affairs of the Companies or of any Group Company or of any
client or customer of the Companies or of any Group Company which have or
may have come to your knowledge during the term of your appointment or
otherwise.
(11) Upon the termination of your appointment as a non-executive director to
each of the Boards (for whatever reason and howsoever caused) you shall
forthwith resign without any claim for compensation from any position in or
office with the Companies which you hold pursuant to your appointment as
non-executive director to the Boards.
(12) In addition, upon the termination of your appointment (for whatever reason
and howsoever caused) you agree that you will forthwith deliver to the
Companies any and all property in your possession or under your control
relating to the affairs and business and clients of the Companies or of any
Group Company. Such property will include, without limitation, all lists of
clients or customers, correspondence, notes, reports, plans, designs,
specifications, records, documents, accounts and any other papers of any
description and any copies thereof.
If the terms set out herein are acceptable to you, I should be grateful if you
would sign, date and return the attached copy of this letter to Paul Repp,
Executive Director, Chief Legal and Regulatory Officer and Company Secretary, in
order to evidence that agreement between the Companies and you has been reached
in respect of the terms of your appointment as a non-executive director to each
of the Boards.
Cont'd....
<PAGE> 4
-4-
This letter is governed by and shall be construed in accordance with English
law.
Yours sincerely,
/s/ Richard W. Blackburn
- - ------------------------------------------------
For and on behalf of NYNEX CableComms Group PLC
/s/ Richard W. Blackburn
- - ------------------------------------------------
For and on behalf of NYNEX CableComms Group Inc.
I hereby agree to the terms and conditions set out in this letter:
/s/ Sir Bryan Carsberg
- - ----------------------------------------------------------
Signed by Sir Bryan Carsberg on this 27th day of July 1996
<PAGE> 1
Exhibit 10.46
NYNEX CableComms Group PLC
NYNEX CableComms Group Inc.
The Tolworth Tower
Ewell Road
Surbiton
Surrey KT8 7ED
Telephone: 0181 873 2000
Facsimile: 0181 890 9983
11th July 1996
[NYNEX LOGO]
Mel Meskin
c/o NYNEX Corporation
1095 Avenue of the Americas
New York, NY 10036
Dear Mr. Meskin,
Following recent discussions with you concerning the possibility of you
agreeing to become a non-executive director of NYNEX CableComms Group PLC
(registered in England No. 3024703) and NYNEX CableComms Group Inc. (registered
in Delaware, United States of America) ("the Companies"), I set out below
(subject to your formal acceptance) the terms of your appointment to each of
the Boards of directors of the Companies ("the Boards") as a non-executive
director. The terms are as follows:-
(1) Subject to applicable law and applicable provisions of the Articles of
Association or, as appropriate, Certificate of Incorporation and By-Laws,
the Companies hereby appoint you as a non-executive director of each of the
Companies for a period commencing on 11th July 1996 and expiring on the
date in 1997 on which the Annual General Meeting of the Companies shall
take place; subject as aforesaid either the Companies or you may terminate
this appointment at any time by the giving of one month's written notice to
that effect. If you and the Boards and the shareholders of the Companies
agree then your appointment may be renewed for a further period to be
agreed.
(2) During the period of your appointment you will be required to make
available to the Companies your services as a non-executive director as and
when the Companies shall reasonably require.
(3) With the exception of NYNEX Corporation and any subsidiaries or
partnerships in which NYNEX Corporation has or from time to time will have
the entire or a majority ownership interest, you are required as a term of
your appointment hereunder not to render your services whether as a
consultant or employee or non-executive director or executive director to
any other individual, company, corporation, firm, joint venture,
organisation or trust (in each case whether or not having a legal
personality) where the business of such individual or entity is the same as
or similar to the business of the Companies or of any other subsidiary
company of the Companies ("Group Company"). For the purposes of this
clause, business shall mean the provision of television, telecommunications
and other services by cable whether for domestic or business use.
Cont'd...
NYNEX CableComms Group PLC:
Registered in England and Wales with Number 3024703
Registered Office: as above.
NYNEX CableComms Group Inc.:
A Delaware, United States of America, corporation
The liability of members is limited
Head office: as above.
<PAGE> 2
- 2 -
(4) Your duties during your appointment as a non-executive director to each of
the Boards shall be those of a director of a public corporation and,
provided that the same are consistent with the foregoing, as notified to
you from time to time by each of the Boards which will include, without
limitation, such duties as are consistent with your appointment as a member
of the Audit Committee.
(5) Nothing in the terms of your appointment as a non-executive director is
intended to nor shall it be deemed to give rise to the relationship between
you and the Companies of employee and employer.
(6) The boards generally meet every other month at The Tolworth Tower, Ewell
Road, Tolworth, Surrey KT6 7ED. Your attendance at such meetings by
telephone conference facilities is permitted.
(7) The Companies each provide liability insurance for its officers and
directors when acting for and on behalf of the relevant Company on terms
from time to time notified to you. In addition, if circumstances should
arise in which it becomes necessary for you to obtain separate professional
advice about the performance of your duties any reasonable expenses thereby
incurred will be met by the relevant Company provided you have obtained
prior written approval from the Company Secretary in respect of obtaining
such separate professional advice.
(8) The Companies shall pay to you or refund to you such sums as shall cover
all reasonable out of pocket expenses necessarily and wholly incurred by
you in or about the performance of the duties of your appointment
hereunder.
(9) During your appointment you are likely to come into possession of
confidential information, the proprietary interest in which belongs to the
Companies or any Group Company. Accordingly, you agree that you will not at
any time (whether during or after your appointment hereunder) divulge to
any person, firm or company or use for your own benefit or the benefit of
any person, firm or company any information of a private, secret or
confidential nature concerning the business, accounts or finances of the
Companies or of any Group Company or any of the secrets, dealings,
transactions or affairs of the Companies or of any Group Company or of any
client or customer of the Companies or of any Group Company which have or
may have come to your knowledge during the term or your appointment of
otherwise.
Cont'd....
<PAGE> 3
-3-
(10) Upon the termination of your appointment as a non-executive director to
each of the Boards (for whatever reason and howsoever caused) you shall
forthwith resign without any claim for compensation from any position in or
office with the Companies which you hold pursuant to your appointment as
non-executive director to the Boards.
(11) In addition, upon the termination of your appointment (for whatever reason
and howsoever caused) you agree that you will forthwith deliver to the
Companies any and all property in your possession or under your control
relating to the affairs and business and clients of the Companies or of any
Group Company. Such property will include, without limitation, all lists of
clients or customers, correspondence, notes, reports, plans, designs,
specifications, records, documents, accounts and any other papers of any
description and any copies thereof.
If the terms set out herein are acceptable to you, I should be grateful if you
would sign, date and return the attached copy of this letter to Paul Repp,
Executive Director, Chief Legal and Regulatory Officer and Company Secretary, in
order to evidence that agreement between the Companies and you has been reached
in respect of the terms of your appointment as a non-executive director to each
of the Boards.
This letter is governed by and shall be construed in accordance with English
law.
Yours sincerely,
/s/ Richard W. Blackburn
- - ------------------------------------------------
For and on behalf of NYNEX CableComms Group PLC
/s/ Richard W. Blackburn
- - ------------------------------------------------
For and on behalf of NYNEX CableComms Group Inc.
I hereby agree to the terms and conditions set out in this letter:
/s/ M. Meskin
- - -----------------------------------------------------
Signed by Mr Mel Meskin on this 11th day of July 1996
<PAGE> 1
Exhibit 10.47
[LETTERHEAD]
Direct Tel: 0181 873 5455
Direct Fax: 0181 873 5256
Mr Jeff Henry
Silverwood
9 Fairmile Lane
Cobham
Surrey
KT11 2DL
16th April 1996
Dear Jeff,
I refer to our recent discussions and now write to confirm, consistent with
those discussions, that your employment with NYNEX CableComms Limited (the
"Company") will cease, effective 30th April 1996.
In consideration of the Company's treatment of your leaving as being by reason
of "redundancy" (for purposes only of your retaining certain rights under the
Company's Inland Revenue Approved Employee Share Option Plan), you have agreed
that such consideration shall be in full and final settlement of all and any
claims, whether contractual, statutory or otherwise, that you may have against
the Company and any of its employees or any other Company within the NYNEX
Group relating to your employment or cessation of your employment including,
without limitation, any claims for notice or other payments under any contract,
agreement, understanding or policy.
Please confirm your agreement to the terms of this letter by signing and
returning a copy of this letter to me.
Thank you for your contributions to the business during your tenure, and all
the best in your future endeavours.
Yours sincerely,
/s/ John F. Killian
- - ------------------------------------
JOHN F. KILLIAN
President and Chief Executive Officer
AGREED:
Signed /s/ Jeff Henry
-------------------------------------
Dated -------------------------------------
<PAGE> 1
Exhibit 10.48
DOCUMENT: EXECUTIVE DIRECTOR (COMMISSIONED)
12th December 1996
[name]
[address]
Dear [name]
The recently proposed merger of NYNEX CableComms, Bell Cablemedia and Mercury
has undoubtedly created uncertainty amongst our employees.
We now face the task of managing the business over the coming months, without
either losing key players nor taking the eye off the ball of maintaining good
company performance.
As an Executive Director, you are a key to the success of the business over the
coming months. It is important that personal worries and uncertainties be
alleviated to the extent possible so as to not interfere with business
activities, and that your efforts are fully focused at this critical time on
achieving business objectives.
This circumstance has lead to the introduction of a performance-based loyalty
bonus ("Loyalty Bonus") and an improved payment in the event of severance
("Severance Payment") for Executive Directors, as follows:
LOYALTY BONUS
A taxable Loyalty Bonus of up to 60% of base salary will be payable to you upon
the Loyalty Bonus Date, such date being either
(a) the date of successful completion of the merger; or
(b) the date at which it is confirmed that the proposed merger
will not proceed.
This Loyalty Bonus will be discretionary and performance-related, and is
subject to your being an active employee of NYNEX CableComms or any associated
or successor company on the Loyalty Bonus Date. My recommendations on any
Loyalty Bonus to be awarded will be based on your contribution to the success
of the business over the period and will be made in consultation with the
Chairman, Dick Blackburn, and subject to review by the Remuneration Committee
of NYNEX CableComms.
1/...........
<PAGE> 2
- 2 -
SEVERANCE PAYMENT
A Severance Payment of twelve months compensation would be payable in the event
of dismissal by reason of redundancy (within the meaning of the Employment
Rights Act 1996), such dismissal being the direct consequence of the completion
of the merger of NYNEX Cablecomms, Bell Cablemedia and Mercury. The Severance
Payment would provide three months in lieu of notice pay and an amount
equivalent to nine months basic pay and commission, such commission being based
on average commission earnings over the prior six months, and would be
inclusive of existing notice provisions and any and all other statutory or
contractual entitlements. The Severance Payment would also be subject to
completion of a compromise agreement in form and substance satisfactory to the
company.
Please note that we are currently in discussions with the Inland Revenue to
confirm the taxable status of the various elements of the Severance Payment and
will advise accordingly when we have received written confirmation.
Please also note that the improved Severance Payment is only available to
employees not on secondment from NYNEX Corporation because such assignments, in
this regard, are governed by NYNEX Corporation personnel policies.
I appreciate your efforts in developing the business. I hope these
arrangements will be received positively by you and will help us to continue to
effectively work as a team over the challenging and exciting months ahead.
Yours sincerely
/s/ John Killian
- - ----------------------------
John Killian
President & Chief Executive Officer
<PAGE> 1
Exhibit 10.49
Document: Executive Director (non-commissioned)
12th December 1996
[name]
[address]
Dear [name]
The recently proposed merger of NYNEX CableComms, Bell Cablemedia and Mercury
has undoubtedly created uncertainty amongst our employees.
We now face the task of managing the business over the coming months, without
either losing key players nor taking the eye off the ball of maintaining good
company performance.
As an Executive Director, you are a key to the success of the business over the
coming months. It is important that personal worries and uncertainties be
alleviated to the extent possible so as to not interfere with business
activities, and that your efforts are fully focused at this critical time on
achieving business objectives.
This circumstance has lead to the introduction of a performance-based loyalty
bonus ("Loyalty Bonus") and an improved payment in the event of severance
("Severance Payment") for Executive Directors, as follows:
LOYALTY BONUS
A taxable Loyalty Bonus of up to 60% of base salary will be payable to you upon
the Loyalty Bonus Date, such date being either
(a) the date of successful completion of the merger; or
(b) the date at which it is confirmed that the proposed merger
will not proceed.
This Loyalty Bonus will be discretionary and performance-related, and is
subject to your being an active employee of NYNEX CableComms or any associated
or successor company on the Loyalty Bonus Date. My recommendations on any
Loyalty Bonus to be awarded will be based on your contribution to the success
of the business over the period and will be made in consultation with the
Chairman, Dick Blackburn, and subject to review by the Remuneration Committee
of NYNEX CableComms.
1/...........
<PAGE> 2
- 2 -
SEVERANCE PAYMENT
A Severance Payment of twelve months compensation would be payable in the event
of dismissal by reason of redundancy (within the meaning of the Employment
Rights Act 1996), such dismissal being the direct consequence of the completion
of the merger of NYNEX Cablecomms, Bell Cablemedia and Mercury. The Severance
Payment would provide three months in lieu of notice pay and an amount
equivalent to nine months basic pay, and would be inclusive of existing notice
provisions and any and all other statutory or contractual entitlements. The
Severance Payment would also be subject to completion of a compromise agreement
in form and substance satisfactory to the company.
Please note that we are currently in discussions with the Inland Revenue to
confirm the taxable status of the various elements of the Severance Payment and
will advise accordingly when we have received written confirmation.
Please also note that the improved Severance Payment is only available to
employees not on secondment from NYNEX Corporation because such assignments, in
this regard, are governed by NYNEX Corporation personnel policies.
I appreciate your efforts in developing the business. I hope these
arrangements will be received positively by you and will help us to continue to
effectively work as a team over the challenging and exciting months ahead.
Yours sincerely
John Killian
President & Chief Executive Officer
<PAGE> 1
Exhibit 10.50
Document: Executive Director (special conditions CFO)
12th December 1996
[name]
[address]
Dear [name]
The recently proposed merger of NYNEX CableComms, Bell Cablemedia and Mercury
has undoubtedly created uncertainty amongst our employees.
We now face the task of managing the business over the coming months, without
either losing key players nor taking the eye off the ball of maintaining good
company performance.
As an Executive Director, you are a key to the success of the business over the
coming months. It is important that personal worries and uncertainties be
alleviated to the extent possible so as to not interfere with business
activities, and that your efforts are fully focused at this critical time on
achieving business objectives.
This circumstance has lead to the introduction of a performance-based loyalty
bonus ("Loyalty Bonus") and an improved payment in the event of severance
("Severance Payment") for Executive Directors, as follows:
LOYALTY BONUS
A taxable Loyalty Bonus of up to 60% of base salary will be payable to you upon
the Loyalty Bonus Date, such date being either
(a) the date of successful completion of the merger; or
(b) the date at which it is confirmed that the proposed merger
will not proceed.
This Loyalty Bonus will be discretionary and performance-related, and is
subject to your being an active employee of NYNEX CableComms or any associated
or successor company on the Loyalty Bonus Date. My recommendations on any
Loyalty Bonus to be awarded will be based on your contribution to the success
of the business over the period and will be made in consultation with the
Chairman, Dick Blackburn, and subject to review by the Remuneration Committee
of NYNEX CableComms.
1/...........
<PAGE> 2
- 2 -
SEVERANCE PAYMENT
A Severance Payment of twelve months compensation would be payable in the event
of dismissal by reason of redundancy (within the meaning of the Employment
Rights Act 1996), such dismissal being the direct consequence of the completion
of the merger of NYNEX Cablecomms, Bell Cablemedia and Mercury. The Severance
Payment would provide three months in lieu of notice pay and an amount
equivalent to nine months basic pay, and would be inclusive of existing notice
provisions and any and all other statutory or contractual entitlements. The
Severance Payment would also be subject to completion of a compromise agreement
in form and substance satisfactory to the company.
Please note that we are currently in discussions with the Inland Revenue to
confirm the taxable status of the various elements of the Severance Payment and
will advise accordingly when we have received written confirmation.
Please also note that the improved Severance Payment is only available to
employees not on secondment from NYNEX Corporation because such assignments, in
this regard, are governed by NYNEX Corporation personnel policies.
Finally, as I believe you are aware, as a Director of NYNEX CableComms Group
your eligibility to participate in the Loyalty Bonus and Severance Payment
schemes is subject to receipt of satisfactory clearance from the Panel on
Takeovers and Mergers. In this regard you will be advised further, as
appropriate.
I appreciate your efforts in developing the business. I hope these
arrangements will be received positively by you and will help us to continue to
effectively work as a team over the challenging and exciting months ahead.
Yours sincerely
/s/ John Killian
- - -----------------------------------
John Killian
President & Chief Executive Officer
<PAGE> 1
Exhibit 24
POWER OF ATTORNEY
NYNEX CableComms Group PLC
NYNEX CableComms Group Inc.
The undersigned, acting in the capacity or capacities stated opposite their
respective names below, hereby severally constitute and appoint John F.
Killian, Paul H. Repp and Graham L. Robertson, and each of them, with full
power to act alone, our true and lawful attorneys and agents to do any and all
acts and things and to execute any and all instruments which they deem
necessary or advisable to enable NYNEX CableComms Group PLC, a public limited
company incorporated under the laws of England and Wales, and NYNEX CableComms
Group Inc., a Delaware company (collectively, the "Companies"), to comply with
the Securities Exchange Act of 1934, as amended, and any rules, regulations and
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the filing under Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended, of the Companies' Annual Report on Form 10-K for the
year ended December 31, 1996, and any amendments thereto, including
specifically, but without limiting the generality of the foregoing, the power
and authority to sign the name of each of the Companies and the names of the
undersigned directors and officers in the capacities indicated below to such
annual Report and any amendment thereto.
<TABLE>
<CAPTION>
Signature Title with Each of the Companies Date
- - --------- -------------------------------- ----
<S> <C> <C>
/s/ Richard W. Blackburn
- - ------------------------- March 13, 1997
Richard W. Blackburn Chairman and Director
/s/ John L. Rennocks
- - ------------------------- March 14, 1997
John L. Rennocks Deputy Chairman and Director
/s/ John F. Killian
- - ------------------------- March 13, 1997
John F. Killian President and Chief Executive Officer
(Principal Executive Officer) and Director
/s/ Graham L. Robertson
- - -------------------------
Graham L. Robertson Acting Chief Financial Officer March 13, 1997
(Principal Financial and Accounting Officer)
/s/ Robert T. Anderson
- - ------------------------- March 14, 1997
Robert T. Anderson Director
/s/ Jeffrey A. Bowden
- - ------------------------- March 14, 1997
Jeffrey A. Bowden Director
/s/ Sir Bryan Carsberg
- - ------------------------- March 19, 1997
Sir Bryan Carsberg Director
/s/ Sir Michael Checkland
- - ------------------------- March 13, 1997
Sir Michael Checkland Director
/s/ Nicholas P. Mearing-Smith
- - ----------------------------- March 13, 1997
Nicholas P. Mearing-Smith Director
/s/ Mel Meskin
- - ------------------------- March 14, 1997
Mel Meskin Director
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000939915
0000939916
<NAME> NYNEX CABLECOMMS GROUP PLC
NYNEX CABLECOMMS GROUP INC
<MULTIPLIER> 1,000
<CURRENCY> POUNDS STERLING
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1.7123
<CASH> 15,430
<SECURITIES> 0
<RECEIVABLES> 56,577
<ALLOWANCES> 3,536
<INVENTORY> 0
<CURRENT-ASSETS> 71,744
<PP&E> 1,213,273
<DEPRECIATION> 115,154
<TOTAL-ASSETS> 1,248,887
<CURRENT-LIABILITIES> 114,705
<BONDS> 447,649
0
0
<COMMON> 98,315
<OTHER-SE> 502,971
<TOTAL-LIABILITY-AND-EQUITY> 1,248,887
<SALES> 0
<TOTAL-REVENUES> 151,241
<CGS> 0
<TOTAL-COSTS> 211,290
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 23,229
<INCOME-PRETAX> (22,845)
<INCOME-TAX> 0
<INCOME-CONTINUING> (22,845)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (22,845)
<EPS-PRIMARY> (0.247)
<EPS-DILUTED> (0.247)
</TABLE>
