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AGREEMENT AND PLAN OF MERGER
between
U S WEST, INC.
and
CONTINENTAL CABLEVISION, INC.
Dated as of February 27, 1996
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TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS.......................................................... 2
1.1 Definitions.................................................. 2
1.2 Terms Defined Elsewhere in the Agreement..................... 13
1.3 Other Definitional Provisions................................ 14
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ARTICLE II
THE MERGER........................................................... 15
2.1 The Merger................................................... 15
2.2 Closing...................................................... 15
2.3 Effective Time............................................... 15
2.4 Effects of the Merger........................................ 16
2.5 Directors; Certificate of Incorporation; Bylaws.............. 16
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES................... 17
3.1 Effect on Capital Stock...................................... 17
3.2 Company Common Stock Elections; Exchange Fund................ 21
3.3 Proration.................................................... 24
3.4 Dividends, Fractional Shares, Etc............................ 24
3.5 Restricted Stock............................................. 28
3.6 Dissenting Shares............................................ 28
3.7 Share Price Adjustment....................................... 29
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................ 29
4.1 Organization and Authority of the Company.................... 29
4.2 Capitalization............................................... 31
4.3 No Conflicts................................................. 32
4.4 Vote Required................................................ 33
4.5 Board Recommendation; Opinion of Financial Advisor........... 33
4.6 Consents..................................................... 34
4.7 Compliance; No Defaults...................................... 35
4.8 SEC Documents; Undisclosed Liabilities....................... 36
4.9 Litigation................................................... 37
4.10 Taxes........................................................ 37
4.11 Employee Benefits............................................ 40
4.12 Cable Television Franchises.................................. 43
4.13 Environmental Matters........................................ 47
4.14 Labor........................................................ 48
4.15 Absence of Changes or Events................................. 50
4.16 Unlawful Payments and Contributions.......................... 51
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4.17 Brokers and Intermediaries................................... 51
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ACQUIROR........................... 52
5.1 Organization and Authority of Acquiror....................... 52
5.2 Capitalization............................................... 53
5.3 No Conflicts................................................. 54
5.4 Stockholder Vote............................................. 55
5.5 Consents..................................................... 55
5.6 Compliance; No Defaults...................................... 56
5.7 Acquiror SEC Documents; Undisclosed Liabilities.............. 56
5.8 Litigation................................................... 57
5.9 Absence of Changes or Events................................. 57
5.10 Brokers and Intermediaries................................... 58
5.11 Ownership of Company Capital Stock........................... 58
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS............................ 58
6.1 Conduct of Business of the Company........................... 58
6.2 Conduct of Business of Acquiror.............................. 63
6.3 Access to Information........................................ 65
ARTICLE VII
ADDITIONAL AGREEMENTS................................................ 66
7.1 Preparation of Form S-4 Statement; Stockholders' Meeting;
and the Proxy Charter Amendment.............................. 66
7.2 Letter of the Company's Accountants.......................... 69
7.3 Letter of Acquiror's Accountants............................. 69
7.4 Reasonable Best Efforts...................................... 70
7.5 Franchise and License Consents............................... 70
7.6 Antitrust Notification....................................... 72
7.7 Certain Actions.............................................. 74
7.8 Supplemental Disclosure...................................... 75
7.9 Announcements................................................ 75
7.10 No Solicitation.............................................. 75
7.11 Indemnification; Directors' and Officers Insurance........... 77
7.12 NYSE Listing................................................. 78
7.13 Affiliates................................................... 78
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7.14 Employee Benefits............................................ 79
7.15 Registration Rights Agreement................................ 80
7.16 Tax Treatment................................................ 80
7.17 Series D Preferred Stock..................................... 80
7.18 Company Indebtedness......................................... 81
7.19 Authorization of Issuance of Merger Consideration............ 81
7.20 Attribution.................................................. 81
7.21 Further Assurances........................................... 81
ARTICLE VIII
CONDITIONS PRECEDENT................................................. 82
8.1 Conditions to Each Party's Obligation to Effect the Merger... 82
8.2 Conditions of Obligations of Acquiror........................ 83
8.3 Conditions of Obligations of the Company..................... 86
ARTICLE IX
TERMINATION AND AMENDMENT............................................ 87
9.1 Termination.................................................. 87
9.2 Effect of Termination........................................ 90
9.3 Fees and Expenses............................................ 90
9.4 Certain Purchase Obligations................................. 91
9.5 Amendment.................................................... 92
9.6 Extension; Waiver............................................ 93
ARTICLE X
GENERAL PROVISIONS 93
10.1 Frustration of the Closing Conditions 93
10.2 Effectiveness of Representations, Warranties and Agreements 93
10.3 Expenses 94
10.4 Applicable Law 94
10.5 Notices 94
10.6 Entire Agreement 95
10.7 Headings; References 96
10.8 Counterparts 96
10.9 Parties in Interest; Assignment 96
10.10 Severability; Enforcement 96
10.11 Specific Performance 96
10.12 Jurisdiction 97
EXHIBITS
Exhibit A Form of Charter Amendment
Exhibit B Form of Registration Rights Agreement for Media Stock and Series D
Preferred Stock
Exhibit C Form of Certificate of Designation for Series D Convertible
Preferred Stock
Exhibit D
Form of Affiliate Letter
Exhibit E Form of Certificate of Designation for Put Shares
Exhibit F Form of Registration Rights Agreement for Put Shares
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of February 27, 1996, between U S WEST,
INC., a Delaware corporation ("Acquiror"), and CONTINENTAL CABLEVISION, INC., a
Delaware corporation (the "Company").
W I T N E S S E T H:
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WHEREAS, upon the terms and subject to the conditions set forth in this
Agreement, the Company and Acquiror will enter into a business combination
transaction pursuant to which the Company will merge with and into Acquiror (the
"Merger"), with Acquiror continuing as the surviving corporation (the "Surviving
Corporation");
WHEREAS, the board of directors of the Company has determined that the Merger
would be fair to and in the best interests of its stockholders, and such board
of directors has approved this Agreement and the transactions contemplated
hereby and has recommended the adoption by the stockholders of the Company of
this Agreement and the amendment, substantially in the form of Exhibit A hereto
(the "Charter Amendment"), to the Company's Restated Certificate of
Incorporation to be effected immediately prior to the consummation of the
Merger;
WHEREAS, the board of directors of Acquiror has determined that the Merger
would be fair to and in the best interests of its stockholders, and such board
of directors has approved this Agreement and the transactions contemplated
hereby;
WHEREAS, concurrently with the execution of this Agreement and in order to
induce Acquiror to enter into this Agreement, certain stockholders of the
Company have executed and delivered an agreement (the "Stockholders' Agreement")
pursuant to which, among other things, such Stockholders have granted to
Acquiror their proxy to vote all of the votes entitled to be cast by such
stockholders in
favor of the adoption of this Agreement and the Charter Amendment;
WHEREAS, for Federal income tax purposes, it is intended that the Merger shall
qualify as a reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended, and the rules and regulations promulgated
thereunder (the "Code"); and
WHEREAS, Acquiror and the Company desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also to
prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements herein contained, the parties hereto agree
as follows:
ARTICLE Section 1
DEFINITIONS
a. Definitions. For purposes of this Agreement, the following terms shall
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have the meanings set forth below:
"Acquiror Region" shall mean Arizona, Colorado, Idaho, Iowa, Minnesota,
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Montana, Nebraska, New Mexico, North Dakota, Oregon, South Dakota, Utah,
Washington and Wyoming.
"Affiliate" shall mean, with respect to any Person, any other Person
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directly or indirectly controlling, controlled by or under common control with
such other Person.
"Appraiser" shall mean a nationally recognized investment banking firm
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that is independent of the Company, Acquiror and their respective Subsidiaries
and has significant experience and expertise in the valuation of entities with
businesses comparable to those being appraised.
"Basic Cable Service" shall mean as to each System the tier of video
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programming service defined in 47 C.F.R. (S) 76.901(a).
"Board of Directors" shall mean the board of directors of the Company.
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"Business Day" shall mean a day other than a Saturday, Sunday or other day on
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which commercial banks in New York City are authorized or required by law to
close.
"Cable Act" shall mean the Cable Communications Policy Act of 1984, as amended
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by the Cable Television Consumer Protection and Competition Act of 1992 and the
Telecommunications Act of 1996.
"Cable Programming Service" shall mean as to each System those video
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programming services defined in 47 C.F.R. (S) 76.901(b).
"Calculation Price" shall mean the Determination Price, Cap Price or Floor
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Price, as applicable, based upon which the Class A Common Conversion Number or
Class B Common Conversion Number is determined in accordance with Section
3.1(d).
"Cap Price" shall mean $28.175.
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"Cash Consideration Amount" shall equal $1 billion; provided, however, that
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the board of directors of Acquiror shall have the right, in its sole discretion,
to increase the Cash Consideration Amount to a maximum of $1.5 billion so long
as notice of such change is given to the Company no later than one Business Day
prior to the Effective Time; provided, further, that the board of directors of
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Acquiror shall have the right to increase the Cash Consideration Amount above
$1.5 billion in an amount equal to (x) the number of shares of Company Common
Stock issued or to be issued in connection with any acquisition by the Company
approved by Acquiror pursuant to Section 6.1 hereof multiplied by (y) the Share
Price; and provided, further, that the Cash Consideration Amount may be reduced
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pursuant to Section 7.7(c).
"CATV" shall mean any method, presently existing, for the transmission and/or
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exhibition (whether by microwave, fiber optics or coaxial cable) of broadband
video signals other than by means of DBS, MMDS, broadcast television and in-home
video players (and which is based on the expectation of payment by the
recipient), and shall include without limitation cable television (basic and
premium) and pay-per-view television.
"Charter Amendment" shall have the meaning set forth in the second recital to
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this Agreement.
"Class A Common Percentage" shall mean the quotient (rounded to the nearest
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hundredth, or if there shall not be a nearest hundredth, to the next lowest
hundredth) of (x) the Common Consideration Amount divided by (y) the Transaction
Value.
"Class A Preferred Consideration Amount" shall mean the product of (x) the
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Class A Preferred Percentage multiplied by (y) the Share Price multiplied by (z)
the number of shares of Class A Common Stock outstanding immediately prior to
the Effective Time on a fully diluted basis.
"Class A Preferred Conversion Number" shall mean the quotient of (x) the
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product of (A) the Class A Preferred Percentage multiplied by (B) the Share
Price divided by (y) the Liquidation Value (rounded to the nearest hundredth, or
if there shall not be a nearest hundredth, to the next lowest hundredth).
"Class A Preferred Percentage" shall mean the difference between (x) one and
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(y) the Class A Common Percentage.
"Class B Common Consideration Amount" shall mean the product of (x) the Class
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B Percentage multiplied by (y) the Common Consideration Amount.
"Class B Common Percentage" shall mean the quotient (rounded to the nearest
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hundredth, or if there shall not be a nearest hundredth, to the next lowest
hundredth) of (x) the Class B Common Consideration Amount divided by (y) the sum
of the Class B Common Consideration Amount and the Class B Preferred
Consideration Amount.
"Class B Preferred Percentage" shall mean the quotient (rounded to the nearest
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hundredth, or if there shall not be a nearest hundredth, to the next highest
hundredth) of (x) the Class B Preferred Consideration Amount divided by (y) the
sum of the Class B Common Consideration Amount and the Class B Preferred
Consideration Amount.
"Class B Percentage" shall mean the quotient (rounded to the nearest
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hundredth, or if there shall not be a nearest hundredth, to the next lowest
hundredth) of (i) the number of shares of Class B Common
Stock outstanding immediately prior to the Effective Time on a fully diluted
basis, including giving effect to the conversion of all outstanding shares of
Company Preferred Stock divided by (ii) the number of shares of Company Common
Stock outstanding immediately prior to the Effective Time on a fully diluted
basis, including giving effect to the conversion of all outstanding shares of
Company Preferred Stock.
"Class B Preferred Consideration Amount" shall mean the difference between (x)
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the Preferred Consideration Amount and (y) the Class A Preferred Consideration
Amount.
"Class B Preferred Conversion Number" shall mean the quotient of (x) the
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product of (A) the Class B Preferred Percentage multiplied by (B) the Share
Price divided by (y) the Liquidation Value (rounded to the nearest hundredth, or
if there shall not be a nearest hundredth, to the next lowest hundredth).
"Code" shall have the meaning set forth in the fifth recital of this
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Agreement.
"Common Consideration Amount" shall equal the excess of (x) the Transaction
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Value over (y) the sum of the Preferred Consideration Amount and the Cash
Consideration Amount.
"Communications Act" shall mean the Communications Act of 1934, as amended, 47
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U.S.C. (S)(S) 151, et seq., as amended by the Telecommunications Act of 1996.
"Copyright Office" shall mean the United States Copyright Office of the
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Library of Congress or any successor agency that shall hold principal
responsibility for administering the cable television compulsory license for
retransmission of broadcast signals established pursuant to Section 111 of the
Copyright Act, 17 U.S.C. (S) 111.
"DBS" shall mean a system providing direct-to-home in the broadcast satellite
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services authorized by the FCC.
"Determination Price" shall mean the average of the Intra-Day Closing Prices
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for the Random Trading Days.
"DGCL" shall mean the Delaware General Corporation Law.
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"DOJ" shall mean the Department of Justice.
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"Encumbrances" shall mean any and all mortgages, security interests, liens,
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claims, pledges, restrictions, leases, title exceptions, charges or other
encumbrances.
"Environmental Claim" means any notice of violation, action, claim,
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Environmental Lien, demand, abatement or other Order or direction (conditional
or otherwise) by any Governmental Authority or any other Person for personal
injury (including sickness, disease or death), tangible or intangible property
damage, damage to the environment, pollution, contamination or other adverse
effects on the environment, or for fines, penalties or restrictions resulting
from or based upon (i) the existence of an Environmental Release (including,
without limitation, sudden or non-sudden accidental or non-accidental
Environmental Releases) of, or exposure to, any Hazardous Material, noxious odor
or illegal audible noise in, into or onto the environment (including, without
limitation, the air, soil, surface water or groundwater) at, in, by, from or
related to any property owned, operated or leased by the Company or its
Subsidiaries or any activities or operations thereof; (ii) the transportation,
storage, treatment or disposal of Hazardous Materials in connection with any
property owned, operated or leased by the Company or its Subsidiaries or their
operations or facilities; or (iii) the violation, or alleged violation, of any
Environmental Law or Environmental Permit of or from any Governmental Authority
relating to environmental matters connected with any property owned, leased or
operated by the Company or any of its Subsidiaries.
"Environmental Costs and Liabilities" means any and all losses, liabilities,
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obligations, damages, fines, penalties, judgments, actions, claims, costs and
expenses (including, without limitation, fees, disbursements and expenses of
legal counsel, experts, engineers and consultants and the costs of investigation
and feasibility studies and Remedial Action) arising from or under any
Environmental Law or contract, agreement or similar arrangement with any
Governmental Authority or other Person required under any Environmental Law.
"Environmental Law" means any Federal, state, local, or foreign law (including
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common law), statute, code, ordinance, rule, regulation or other legally
enforceable requirement relating to the environment, natural resources, or
public or employee health and safety as it relates to exposure to Hazardous
Materials and includes, but is not limited to, the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. (S) 9601 et seq., the
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Hazardous Materials Transportation Act, 49 U.S.C. (S) 1801 et seq., the Resource
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Conservation and Recovery Act, 42 U.S.C. (S) 6901 et seq., the Clean Water Act,
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33 U.S.C. (S) 1251 et seq., the Clean Air Act, 33 U.S.C. (S) 2601 et seq., the
-- ---- -- ----
Toxic Substances Control Act, 15 U.S.C. (S) 2601 et seq., the Federal
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Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. (S) 136 et seq., the Oil
-- ----
Pollution Act of 1990, 33 U.S.C (S) 2701 et seq. and the relevant portions of
-- ---
the Occupational Safety and Health Act, 29 U.S.C. (S) 651 et seq., as such laws
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have been amended or supplemented as of the date hereof, and the regulations
promulgated pursuant thereto, and all analogous state or local statutes as of
the date hereof.
"Environmental Lien" means any lien arising under Environmental Laws.
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"Environmental Permit" means any permit, approval, authorization, license,
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variance, registration or permission required under any applicable Environmental
Law.
"Environmental Release" means any release, spill, emission, leaking, pumping,
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pouring, dumping, emptying, injection, deposit, disposal, discharge, dispersal,
leaching, or migration on or into the indoor or outdoor environment or into or
out of any property not authorized under any Environmental Permit and requiring
notification under any applicable Environmental Law.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
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amended, and the applicable regulations promulgated thereunder.
"ERISA Affiliate" shall mean any corporation or trade or business (whether or
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not incorporated) which are or have ever been treated as a single employer with
or which are or have been under common control with the Company within the
meaning of Section 414(b), (c), (m) or (o) of the Code.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, and
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the rules and regulations promulgated thereunder.
"FCC" shall mean the Federal Communications Commission.
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"Final Order" shall mean an action or actions by any Governmental Authority or
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the FCC which has not been reversed, stayed, enjoined, set aside, annulled or
suspended, and as to the FCC with respect to which the time for filing any
request, petition or appeal of such action has expired and the time for the FCC
to set aside its action on its own motion has passed, and as to any Franchise
Consent, when the Franchise Consent has been or is deemed to be approved as
provided in Section 617 of the Cable Act.
"Floor Price" shall mean $20.825.
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"FTC" shall mean the Federal Trade Commission.
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"GAAP" shall mean generally accepted accounting principles in effect in the
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United States of America as of the date of the applicable determination.
"Governmental Authority" shall mean any foreign, Federal, state, municipal or
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other governmental department, commission, board, bureau, agency or
instrumentality.
"Hazardous Material" means any substance, material or waste which is regulated
------------------
by any Governmental Authority in jurisdictions in which the Company operates,
including, without limitation, any material, substance or waste which is defined
as a "hazardous waste," "hazardous material," "hazardous substance," "extremely
hazardous waste," "restricted hazardous waste," "contaminant," "toxic waste" or
"toxic substance" under any provision of Environmental Law, which includes, but
is not limited to, petroleum, petroleum products, asbestos, and polychlorinated
biphenyls.
"Homes Passed" shall mean the number of homes to which CATV service is
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currently available from the Company or the Subsidiaries, whether or not a given
household subscribes to such service.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
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as amended.
"Indebtedness" shall mean, with respect to any Person, any indebtedness,
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secured or unsecured, (i) in respect of borrowed money (whether or not the
recourse of the lender is to the whole of the assets of such Person or only to a
portion thereof), and evidenced by bonds, notes, debentures or similar
instruments or letters of credit, to the extent of the face value thereof (or,
in the case of evidence of indebtedness issued at a discount, the current
accredit value thereof) or (ii) representing the balance deferred and unpaid of
the purchase price of property or services (other than accounts payable in the
ordinary course of business) and shall also include, to the extent not otherwise
included, (A) any capitalized lease obligations and (B) the face value of
guaranties of items of other Persons which would be included within this
definition for such other Persons (whether or not such items would appear upon
the balance sheet of the guarantor). No item constituting Indebtedness under
any of the definitions set forth above shall be counted twice by virtue of the
fact that it constitutes "Indebtedness" under more than one of such definitions.
"Intra-Day Closing Prices" shall mean the volume weighted average sale price
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of the Media Stock (regular way) as shown on the Composite Tape of the NYSE.
"IRS" means the United States Internal Revenue Service.
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"Knowledge of the Company" and "to the Company's Knowledge" shall mean the
------------------------ --------------------------
actual knowledge of the executive officers (as identified in the Company SEC
Documents), the Senior Vice President-Corporate & Legal Affairs and the regional
Senior Vice Presidents, in each case of the Company after reasonable
investigation and due inquiry.
"Legal Proceedings" means any judicial, administrative or arbitral actions,
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suits, proceedings (public or private) or governmental proceedings.
"Material Adverse Effect" shall mean, (i) with respect to the Company, any
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change or effect that is or is reasonably likely to be materially adverse to the
business, results of operations, properties, assets, liabilities or condition
(financial or otherwise) of the
Company and its Subsidiaries taken as whole and (ii) with respect to Acquiror,
any change or effect that is or is reasonably likely to be materially adverse to
the business, results of operations, properties, assets, liabilities or
condition (financial or otherwise) of either (x) the Media Group or (y) Acquiror
and its Subsidiaries taken as a whole; provided, however, that Material Adverse
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Effect shall in each instance exclude any change or effect due to general
economic or industry wide conditions.
"Media Group" shall have the meaning set forth in Section 2.6.15 of Article V
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of the Restated Certificate of Incorporation of Acquiror as in effect as of the
date hereof.
"Merger" shall have the meaning set forth in the first recital to this
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Agreement.
"MMDS" shall mean a system operating in the Multichannel Multipoint
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Distribution Services authorized by the FCC.
"NYSE" shall mean the New York Stock Exchange, Inc.
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"Person" shall mean an individual, corporation, partnership, trust or
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unincorporated organization or a government or any agency or political
subdivision thereof.
"Preferred Consideration Amount" shall equal $1 billion.
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"Random Trading Days" shall mean the 20 Trading Days selected by Acquiror by
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lot (through a method reasonably satisfactory to the Company) from the 30
Trading Days ending on the fourth Trading Day prior to the Closing Date.
"Recently Acquired Systems" shall mean the Systems acquired by the Company or
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its Subsidiaries from Providence Journal Company, Cablevision of Chicago,
Columbia of Michigan, Consolidated Cablevision of California and N-COM Limited
Partnership II since August 1, 1995.
"Registration Rights Agreement" shall mean the registration rights agreement,
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substantially in the form of Exhibit B hereto, to be entered into by Acquiror,
Xxxx X. Xxxxxxxxx, Xx. and the Xxxx X. Xxxxxxxxx, Xx. 1989 Trust.
"Remedial Action" means all actions required under any applicable
---------------
Environmental Law or otherwise undertaken by any Governmental Authority,
including, without limitation, any capital expenditures, required or undertaken
to (i) clean up, remove, treat, or in any other way address any Hazardous
Material; (ii) prevent the Release or threat of Release, or minimize the further
Release of any Hazardous Material so it does not migrate or endanger or threaten
to endanger public health or welfare or the indoor or outdoor environment; (iii)
perform pre-remedial studies and investigations or post-remedial monitoring and
care; or (iv) bring facilities on any property owned, operated or leased by the
Company or its Subsidiaries and the facilities located and operations conducted
thereon into compliance with all applicable Environmental Laws and Environmental
Permits.
"SEC" shall mean the Securities and Exchange Commission.
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"Securities Act" shall mean the Securities Act of 1933, as amended, and the
--------------
rules and regulations promulgated thereunder.
"Share Price" shall mean $30, decreased by the Per Share Adjustment Amount, if
-----------
any, plus the Additional Amount, if any, in accordance with the terms of Section
3.7.
"Stockholders' Agreement" shall have the meaning set forth in the first
-----------------------
recital of this Agreement.
"Subpart N of the FCC Rules" shall refer to the Subpart N of Part 76 of the
--------------------------
FCC's rules (47 C.F.R. (S)(S) 76.900 through 76.985), entitled "Cable Rate
Regulation," added by order in Docket 92-266, adopted by the FCC on April 1,
1993, as such Subpart may be amended from time to time thereafter, as such rules
were in effect on any particular date, and shall include successor provisions if
recodified or otherwise modified.
"Subscriber" shall mean a member of the general public who receives video
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programming services distributed by a System and does not further distribute it;
provided, however, that the number of Subscribers in a multi-unit dwelling or
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commercial structure that obtains service on a "bulk rate" basis shall be
determined by dividing the bulk rate charge by the rate for individual
households subscribing to the same level of service as the multi-unit structure
(e.g., if the basic subscription rate
for individual households is $10 and the multi-unit dwelling or commercial
structure paid a bulk fee of $100 for the same level of service, then that
multi-unit dwelling or structure shall be counted as having 10 Subscribers).
"Subsidiary" shall mean, with respect to any Person, (i) each corporation,
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partnership, joint venture or other legal entity of which such Person owns,
either directly or indirectly, more than 50% of the stock or other equity
interests the holders of which are generally entitled to vote for the election
of the board of directors or similar governing body of such corporation,
partnership, joint venture or other legal entity, (ii) each partnership in which
such Person or another Subsidiary of such Person is the sole general partner or
sole managing partner and (iii) each limited liability company in which such
Person or another Subsidiary of such Persons is the managing member or otherwise
controls.
"Surviving Corporation" shall have the meaning set forth in the first recital
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of this Agreement.
"Systems" shall mean the cable television systems listed in Section 4.12(a) of
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the Company Disclosure Letter.
"Tax" or "Taxes" shall mean all taxes, charges, fees, imposts, levies or other
--- -----
assessments, including, without limitation, all net income, gross receipts,
capital, sales, use, ad valorem, value added, transfer, franchise, profits,
inventory, capital stock, license, withholding, payroll, employment, social
security, unemployment, excise, severance, stamp, occupation, property and
estimated taxes, customs duties, fees, assessments and charges of any kind
whatsoever, together with any interest and any penalties, fines, additions to
tax or additional amounts imposed by any taxing authority (domestic or foreign)
and shall include any transferee liability in respect of Taxes.
"Third Party" shall mean a party or parties unaffiliated with either the
-----------
Company or Acquiror.
"Trading Day" shall mean a day on which (i) the NYSE is open for the
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transaction of business and (ii) there is no suspension of trading of the Media
Stock.
"Transaction Documents" shall mean the Stockholders' Agreement and the
---------------------
Registration Rights Agreement.
"Transaction Value" shall equal the product of (x) the Share Price multiplied
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by (y) the number of shares of Company Common Stock outstanding immediately
prior to the Effective Time on a fully diluted basis, including giving effect to
the conversion of all outstanding shares of Company Preferred Stock.
"WARN" shall mean the Worker Adjustment and Retraining Notification Act and
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any similar state or local "plant closing" law.
b. Terms Defined Elsewhere in the Agreement. For purposes of this
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Agreement, the following terms have the meanings set forth in the sections
indicated:
Term Section
---- -------
Acceleration Event
7.14(c)
Acquiror Certificates
3.2(b)
Acquiror Consents
5.5
Acquiror Disclosure Letter
5.2(b)
Acquiror SEC Documents
5.7(a)
Acquiror Termination Notice
3.1(d)(ii)
Acquisition Proposal
7.10(d)
Additional Amount
3.7
Additional Payment
7.14(c)
Additional Stockholders' Meeting
7.1(d)
Allocation Determination
3.2(d)
Applicable Laws
4.7(a)
Articles
10.7
Benefit Plans
4.11(a)
Cap Top-Up Intent Notice
3.1(d)(ii)
Cash Cap
3.3(a)
Cash Election
3.1(c)(ii)
Certificate of Merger
2.3
Certificates
3.2(b)
Class A Common Conversion Number
3.1(d)
Class A Common Stock
3.1(c)(i)
Class A Merger Consideration
3.1(c)(i)
Class B Common Conversion Number
3.1(d)
Class B Common Stock
3.1(c)(ii)
Class B Cash Consideration
3.1(c)(ii)
Class B Merger Consideration
3.1(c)(ii)
Class B Stock Consideration
3.1(c)(ii)
Class B Stock Election
3.2(a)
Closing
2.2
Closing Date
2.2
Communications Stock
5.2(a)
Company Capital Stock
4.2(a)
Company Certificate
3.1(c)(iii)
Company Common Stock
3.1
Company Consents
4.6
Company Letter of Transmittal
3.2(c)
Company Disclosure Letter
4.1(c)
Company Preferred Stock
4.2(a)
Company Representatives
7.10(a)
Company SEC Documents
4.8(a)
Company Termination Notice
3.1(d)(ii)
Confidentiality Agreements
6.3(c)
Copyright Act
4.12(e)
Designated Assets
7.7(b)
Designated Asset Fair Market Value
7.7(c)
Dissenting Shares
3.6
Effective Time
2.3
Election Deadline
3.2(d)
Election Form
3.2(c)
Equity Appreciation Rights Plans
4.11(i)
Excess Cash Amount
3.3(c)
Excise Tax
7.14(c)
Exchange Agent
3.2(b)
Exchange Fund
3.2(b)
Exhibits
10.7
Floor Top-Up Intent Notice
3.1(d)(ii)
Foreign Benefit Plans
4.11(b)
Form S-4
5.5
Fractional Shares
3.4(c)(i)
Franchise Consents
4.6
Franchises
4.12(a)
Gains Taxes
4.6
Incremental Excise Tax
7.14(c)
Indemnified Liabilities
7.11(b)
Indemnified Parties
7.11(b)
Initial Stockholders' Meeting
7.1(d)
Liquidation Value
3.1(c)(i)
License Consents
4.6
Material Franchises
4.12(c)
Media Stock
3.1(c)(i)
Merger Consideration
3.2(b)
Non-Required Franchises
7.5(b)
Non-Required Systems
7.5(b)
Permits
4.7(a)
Per Share Adjustment Amount
7.7(c)
Prorated Cash Amount
3.3(b)
Proxy Statement
4.6
Put Closing Date
9.4(c)
Put Exercise Notice
9.4(b)
Put Right
9.4(a)
Put Shares
9.4(a)
Requested Cash Amount
3.3(a)
Required Franchise Consents
8.2(j)
Restricted Company Common Stock
3.5
Rights Agreement
5.2(a)
RSPA
3.5
Sections
10.7
Series D Preferred Stock
3.1(c)(i)
Social Contract Amendment
4.6
Social Contract Consents
4.6
Social Contract Order
4.6
Stock Election
3.2(a)
Stockholder Approvals
4.1(b)
Stockholders' Meeting
7.1(d)
Tax Returns
4.10(a)
Termination Date
9.1(d)
c. Other Definitional Provisions. The words "hereof", "herein", and
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"hereunder" and words of similar import, when used in this Agreement,
shall refer to this Agreement as a whole and not to any particular
provision of this Agreement.
i. The terms defined in the singular shall have a comparable meaning
when used in the plural, and vice versa.
ii. The terms "dollars" and "$" shall mean United States dollars.
ARTICLE Section 2
THE MERGER
a. The Merger. Upon the terms and subject to the conditions set
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forth in this Agreement, and in accordance with the DGCL, the Company
shall be merged with and into Acquiror at the Effective Time (as defined
in Section 2.3). At the Effective Time, the separate corporate existence
of the Company shall cease, and Acquiror shall continue as the Surviving
Corporation and shall succeed to and assume all of the rights,
properties, liabilities and obligations of the Company in accordance
with the DGCL.
b. Closing. Unless this Agreement shall have been terminated and the
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transactions herein contemplated shall have been abandoned pursuant to
Section 9.1, the closing of the Merger (the "Closing") shall take place
at 10:00 a.m., New York City time, the later of (i) the fifth Business
Day after the date on which the last of the conditions set forth in
Article VIII is fulfilled or waived, other than conditions requiring
deliveries at the Closing and (ii) November 15, 1996 (the "Closing
Date"), at the offices of Weil, Gotshal & Xxxxxx LLP, 000 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, unless another date, time or place is agreed
to in writing by the parties hereto.
c. Effective Time. Subject to the provisions of this Agreement, the
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parties hereto shall cause the Merger to be consummated by filing a
certificate of merger (the "Certificate of Merger") with the Secretary
of State of the State of Delaware, as provided in the DGCL, as soon as
practicable on or after the Closing Date. The Merger shall become
effective upon such filing or at such time thereafter as is provided in
the Certificate of Merger (the "Effective Time").
d. Effects of the Merger. From and after the Effective Time, the
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Surviving Corporation shall possess all the rights, privileges, powers
and franchises of a public as well as of a private nature, and be
subject to all the restrictions, disabilities and duties of each of
Acquiror and the Company; and all and singular rights, privileges,
powers and franchises of each of Acquiror and the Company, and all
property, real, personal and mixed, and all debts due to either of
Acquiror or the Company on whatever account, as well as for stock
subscriptions and all other things in action or belonging to each of
Acquiror and the Company, shall be vested in the Surviving Corporation;
and all property, rights, privileges, powers and franchises,
and all and every other interest shall be thereafter as effectually the
property of the Surviving Corporation as they were of Acquiror and the
Company; and the title to any real estate vested by deed or otherwise,
in either of Acquiror or the Company, shall not revert or be in any way
impaired; but all rights of creditors and all liens upon any property of
either of Acquiror or the Company shall be preserved unimpaired; and all
debts, liabilities and duties of Acquiror and the Company shall
thenceforth attach to the Surviving Corporation, and may be enforced
against it to the same extent as if said debts and liabilities had been
incurred by it.
e. Directors; Certificate of Incorporation; Bylaws. The directors of
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Acquiror and the officers of Acquiror immediately prior to the Effective
Time shall be the directors and officers of the Surviving Corporation
until their successors have been duly elected or appointed and
qualified, or until their earlier death, resignation or removal in
accordance with the Surviving Corporation's certificate of incorporation
and bylaws.
i. The Restated Certificate of Incorporation of Acquiror as in effect
immediately prior to the Effective Time shall be the Restated
Certificate of Incorporation of the Surviving Corporation, until duly
amended in accordance with the terms thereof and the DGCL.
ii. The Bylaws of Acquiror as in effect immediately prior to the
Effective Time shall be the bylaws of the Surviving Corporation until
thereafter amended as provided by Applicable Law, the Restated
Certificate of Incorporation of the Surviving Corporation or such
Bylaws.
ARTICLE Section 3
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF
THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
a. Effect on Capital Stock. At the Effective Time, by virtue of the
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Merger and without any action on the part of the holder of any shares of
Company Capital Stock (as defined in Section 4.2) or the holder of any
shares of capital stock of Acquiror:
i. Capital Stock of Acquiror. Each share of each class of capital
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stock of Acquiror issued and outstanding immediately prior to the
Effective Time shall remain an issued and outstanding share of the same
class of capital stock of the Surviving Corporation.
ii. Cancellation of Treasury Stock and Acquiror-Owned Stock. Each share
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of Company Capital Stock that is owned by the Company or any wholly
owned Subsidiary of the Company and each share of Company Capital Stock
that is owned by Acquiror or any wholly owned subsidiary of Acquiror
shall be canceled and retired and shall cease to exist and no
consideration shall be delivered or deliverable in exchange therefor.
b. Conversion of Company Common Stock.
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(1) Subject to Sections 3.5 and 3.6, at the Effective Time, each issued
and outstanding share (excluding shares cancelled pursuant to Section
3.1(b)) of Class A Common Stock, par value $.01 per share, of the
Company ("Class A Common Stock") shall be converted into the right to
receive (x) a number of shares of U S WEST Media Group Common Stock, par
value $.01 per share, of Acquiror (the "Media Stock") equal to the Class
A Common Conversion Number (as determined in accordance with Section
3.1(d)) and (y) a number of shares of Series D Convertible Preferred
Stock, par value $1.00 per share,
of Acquiror (the "Series D Preferred Stock"), having the rights,
preferences and terms set forth in the Certificate of Designation
attached as Exhibit C hereto, with a liquidation value of $50 per share
(the "Liquidation Value"), equal to the Class A Preferred Conversion
Number (collectively, the "Class A Merger Consideration").
(2) Except as otherwise provided in Section 3.3 and subject to Sections
3.5 and 3.6, at the Effective Time each issued and outstanding share
(excluding shares cancelled pursuant to Section 3.1(b)) of Class B
Common Stock, par value $.01 per share, of the Company ("Class B Common
Stock"), shall be converted into, at the election of the holder thereof,
one of the following (as adjusted pursuant to Section 3.3, the "Class B
Merger Consideration"):
(x) for each such share of Class B Common Stock with respect to which an
election to receive cash has been effectively made and not revoked, pursuant to
Sections 3.2(c), (d) and (e) (a "Cash Election"), the right to receive an amount
in cash from Acquiror, without interest, equal to the Share Price (the "Class B
Cash Consideration"); or
(y) for each such share of Class B Common Stock (other than shares as to which
a Cash Election was effectively made and not revoked), the right to receive (1)
a number of shares of Media Stock equal to the Class B Common Conversion Number
(as determined in accordance with Section 3.1(d)) and (2) a number of shares of
Series D Preferred Stock equal to the Class B Preferred Conversion Number
(collectively, the "Class B Stock Consideration").
(3) As a result of the Merger and without any action on the part of the
holder thereof, at the Effective Time all shares of Company Common Stock
shall cease to be outstanding and shall be cancelled and retired and
shall cease to exist, and each holder of shares of Company Common Stock
shall thereafter cease to have any rights with respect to such shares of
Company
Common Stock, except the right to receive, without interest, the Class A
Merger Consideration or Class B Merger Consideration, as applicable, and
cash for fractional shares of Media Stock or Series D Preferred Stock in
accordance with Section 3.6(c) upon the surrender of a certificate
representing such shares of Company Common Stock (a "Company
Certificate"). The Media Stock and Series D Preferred Stock comprising
part of the Merger Consideration, when issued to the holders of Company
Common Stock, will be duly authorized, validly issued, fully paid, non-
assessable and not subject to preemptive rights created by statute,
Acquiror's Restated Certificate of Incorporation or Bylaws or any
agreement to which Acquiror is a party or by which Acquiror is bound.
i.Certain Adjustments and Determinations. If, between the date of this
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Agreement and the Effective Time, the outstanding shares of Media Stock,
Series D Preferred Stock or Company Common Stock shall have been changed
into a different number of shares or a different class, by reason of any
stock dividend, subdivision, reclassification, recapitalization, split,
combination or exchange of shares, the Common Conversion Number and the
Preferred Conversion Number correspondingly shall be adjusted to reflect
such stock dividend, subdivision, reclassification, recapitalization,
split, combination or exchange of shares.
(1) The Class A Common Conversion Number and Class B Common Conversion
Number shall be determined in the following manner:
(a)If the Determination Price is greater than or equal to the Floor
Price and less than or equal to the Cap Price, (x) the Class A Common
Conversion Number shall be equal to the quotient of (1) the product of
(I) the Class A Common Percentage multiplied by (II) the Share Price
divided
by (2) the Determination Price (rounded to the nearest hundredth, or if
there shall not be a nearest hundredth, to the next lowest hundredth)
and (y) the Class B Common Conversion Number shall be equal to the
quotient of (1) the product of (I) the Class B Common Percentage
multiplied by (II) the Share Price divided by (2) the Determination
Price (rounded to the nearest hundredth, or if there shall not be a
nearest hundredth, to the next lowest hundredth).
(b)If the Determination Price is less than the Floor Price, (x) the
Class A Common Conversion Number shall be equal to the quotient of (1)
the product of (I) the Class A Common Percentage multiplied by (II) the
Share Price divided by (2) the Floor Price (rounded to the nearest
hundredth, or if there shall not be a nearest hundredth, to the next
lowest hundredth) and (y) the Class B Common Conversion Number shall be
equal to the quotient of (1) the product of (I) the Class B Common
Percentage multiplied by (II) the Share Price divided by (2) the Floor
Price (rounded to the nearest hundredth, or if there shall not be a
nearest hundredth, to the next lowest hundredth); provided, however,
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that in such event Acquiror shall have the right to give written notice
to the Company (the "Floor Top-Up Intent Notice") that the board of
directors of Acquiror elects to increase both (x) the Class A Common
Conversion Number to the quotient of (1) the product of (I) the Class A
Common Percentage multiplied by (II) the Share Price divided by (2) the
Determination Price (rounded to the nearest hundredth, or if there shall
not be a nearest hundredth, to the next lowest hundredth) and (y) the
Class B Common Conversion Number to the quotient of (1) the product of
(I) the Class B Common Percentage multiplied by (II) the Share Price
divided by (2) the Determination Price (rounded to the nearest
hundredth, or if there shall not be a nearest hundredth,
to the next lowest hundredth). The Floor Top-Up Intent Notice shall be
delivered to the Company no later than 2:00 p.m. on the second Business
Day prior to the Closing Date. If, in such case, Acquiror does not
deliver a Floor Top-Up Intent Notice, the Company shall have the right
to give written notice to Acquiror (the "Company Termination Notice")
that the Company elects to terminate this Agreement. The Company
Termination Notice shall be delivered to Acquiror no later than 2:00
p.m. on the Business Day prior to the Closing Date.
(c) If the Determination Price is greater than the Cap Price, (x) the
Class A Common Conversion Number shall be equal to the quotient of (1)
the product of (I) the Class A Common Percentage multiplied by (II) the
Share Price divided by (2) the Cap Price (rounded to the nearest
hundredth, or if there shall not be a nearest hundredth, to the next
lowest hundredth) and (y) the Class B Common Conversion Number shall be
equal to the quotient of (1) the product of (I) the Class B Common
Percentage multiplied by (II) the Share Price divided by (2) the Cap
Price (rounded to the nearest hundredth, or if there shall not be a
nearest hundredth, to the next lowest hundredth); provided, however,
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that in such event, the Company shall have the right to give written
notice to Acquiror (the "Cap Top-Up Intent Notice") that the Board of
Directors elects to decrease both (x) the Class A Common Conversion
Number to the quotient of (1) the product of (I) the Class A Common
Percentage multiplied by (II) the Share Price divided by (2) the
Determination Price (rounded to the nearest hundredth, or if there shall
not be a nearest hundredth, to the next lowest hundredth) and (y) the
Class B Common Conversion Number to the quotient of (1) the product of
(I) the Class B Common Percentage multiplied by (II) the Share Price
divided by (2) the Determination Price (rounded to the nearest
hundredth, or
if there shall not be a nearest hundredth, to the next lowest
hundredth). The Cap Top-Up Intent Notice shall be delivered to Acquiror
no later than 2:00 p.m. on the second Business Day prior to the Closing
Date. If, in such case, the Company does not deliver a Cap Top-Up Intent
Notice, Acquiror shall have the right to give written notice to the
Company (the "Acquiror Termination Notice") that Acquiror elects to
terminate this Agreement. The Acquiror Termination Notice shall be
delivered to the Company no later than 2:00 p.m. on the Business Day
prior to the Closing Date.
c. Company Common Stock Elections; Exchange Fund. Each Person who,
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at the Effective Time, is a record holder of shares of Class B Common
Stock (other than holders of shares of Class B Common Stock to be
cancelled as set forth in Section 3.1(b) or subject to Section 3.5 or
3.6) shall have the right to submit an Election Form (as defined in
Section 3.2(c)) specifying the number of shares of Class B Common Stock
that such Person desires to have converted into the right to receive the
Class B Stock Consideration (the "Stock Election") and the number of
shares of Class B Common Stock that such Person desires to have
converted into the right to receive the Class B Cash Consideration
pursuant to the Class B Cash Election.
i. Promptly after the Allocation Determination (as defined in Section
3.2(d)), (i) Acquiror shall deposit (or cause to be deposited) with a
bank or trust company to be designated by Acquiror and reasonably
acceptable to the Company (the "Exchange Agent"), for the benefit of the
holders of shares of Class B Common Stock, for exchange in accordance
with this Article III, cash in the amount sufficient to pay the
aggregate Class B Cash Consideration and (ii) Acquiror shall deposit (or
cause to be deposited) with the Exchange Agent, for the benefit of
holders
of shares of Company Common Stock, certificates representing the shares
of Media Stock and Series D Preferred Stock ("Acquiror Certificates")
for exchange in accordance with this Article III (the cash and shares
deposited pursuant to clauses (i) and (ii) being hereinafter referred to
as the "Exchange Fund"). The Media Stock and Series D Preferred Stock
into which Company Common Stock shall be converted pursuant to the
Merger shall be deemed to have been issued at the Effective Time.
ii. As soon as reasonably practicable after the Effective Time, the
Exchange Agent shall mail to each holder of record of Company Common
Stock immediately prior to the Effective Time (excluding any shares of
Company Common Stock which will be cancelled pursuant to Section 3.1(b)
or which are subject to Section 3.5 or 3.6) (A) a letter of transmittal
(the "Company Letter of Transmittal") (which shall specify that delivery
shall be effected, and risk of loss and title to the Company
Certificates shall pass, only upon delivery of such Company Certificates
to the Exchange Agent and shall be in such form and have such other
provisions as Acquiror shall specify) and (B) instructions for use in
effecting the surrender of the Company Certificates in exchange for the
Class A Merger Consideration or Class B Merger Consideration, as
applicable, with respect to the shares of Company Common Stock formerly
represented thereby. The Exchange Agent shall also mail to holders of
Class B Common Stock, together with the items specified in the preceding
sentence, an election form (the "Election Form") providing for such
holders to make the Cash Election or the Stock Election. The Election
Form shall include information as to the Share Price, the Class B Common
Conversion Number, the Class B Preferred Conversion Number and the Cash
Consideration Amount and state the pricing terms of the Series D
Preferred Stock. As of the Election Deadline (as hereinafter
defined) all holders of Class B Common Stock immediately prior to the
Effective Time that shall not have submitted to the Exchange Agent or
shall have properly revoked an effective, properly completed Election
Form shall be deemed to have made a Stock Election.
iii. Any Cash Election or Stock Election (other than a deemed Stock
Election) shall have been validly made only if the Exchange Agent shall
have received by 5:00 p.m. New York, New York time on a date (the
"Election Deadline") to be mutually agreed upon by Acquiror and the
Company (which date shall not be later than the twentieth Business Day
after the Effective Time), an Election Form properly completed and
executed (with the signature or signatures thereof guaranteed to the
extent required by the Election Form) by such holder accompanied by such
holder's Company Certificates, or by an appropriate guarantee of
delivery of such Company Certificates from a member of any registered
national securities exchange or of the National Association of
Securities Dealers, Inc. or a commercial bank or trust company in the
United States as set forth in such Election Form. Any holder of Class B
Common Stock (other than a holder who has submitted an irrevocable
election) who has made an election by submitting an Election Form to the
Exchange Agent may at any time prior to the Election Deadline change
such holder's election by submitting a revised Election Form, properly
completed and signed that is received by the Exchange Agent prior to the
Election Deadline. Any holder of Class B Common Stock may at any time
prior to the Election Deadline revoke such holder's election by written
notice to the Exchange Agent received by the Close of business on the
day prior to the Election Deadline. As soon as practicable after the
Election Deadline, the Exchange Agent shall determine the allocation of
the cash portion of the Class B Merger Consideration and the stock
portion of the Class B Merger
Consideration and shall notify Acquiror of its determination (the
"Allocation Determination").
iv. Upon surrender of a Company Certificate for cancellation to the
Exchange Agent, together with the Company Letter of Transmittal, duly
executed, and such other documents as Acquiror or the Exchange Agent
shall reasonably request, the holder of such Company Certificate shall
be entitled to receive promptly after the Election Deadline in exchange
therefor (A) a certified or bank cashier's check in the amount equal to
the cash, if any, which such holder has the right to receive pursuant to
the provisions of this Article III (including any cash in lieu of
fractional shares of Media Stock and Series D Preferred Stock pursuant
to Section 3.4(c)), and (B) Acquiror Certificates representing that
number of shares of Media Stock and Series D Preferred Stock, if any,
which such holder has the right to receive pursuant to this Article III
(in each case less the amount of any required withholding taxes, if any,
determined in accordance with Section 3.4(g)), and the Company
Certificate so surrendered shall forthwith be cancelled. Until
surrendered as contemplated by this Section 3.3, each Company
Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive the Class A Merger Consideration or
Class B Merger Consideration, as applicable, with respect to the shares
of Company Common Stock formerly represented thereby.
v. Acquiror shall have the right to make reasonable rules, not
inconsistent with the terms of this Agreement, governing the validity of
the Election Forms, the manner and extent to which Cash Elections or
Stock Elections are to be taken into account in making the
determinations prescribed by Section 3.3, the issuance and delivery of
certificates for Media Stock and Series D Preferred Stock into which
shares of
Class B Common Stock are converted in the Merger, and the payment of
cash for shares of Class B Common Stock converted into the right to
receive cash in the Merger.
d. Proration. The aggregate amount of cash to be paid to holders of
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Class B Common Stock (the "Cash Cap") shall not exceed the Cash
Consideration Amount.
i. In the event that the aggregate amount of cash represented by the
Cash Elections received by the Exchange Agent (the "Requested Cash
Amount") exceeds the Cash Cap, each holder making a Cash Election shall
receive, for each share of Class B Common Stock for which a Cash
Election has been made, (x) cash in an amount equal to the product of
the Class B Cash Consideration and a fraction, the numerator of which is
the Cash Cap and the denominator of which is the Requested Cash Amount
(such product, the "Prorated Cash Amount"), (y) a number of shares of
Media Stock equal to the product of the Class B Common Percentage and a
fraction, the numerator of which is equal to the Share Price minus the
Prorated Cash Amount and the denominator of which is the Calculation
Price and (z) a number of shares of Series D Preferred Stock equal to
the product of the Class B Preferred Percentage and a fraction, the
numerator of which is equal to the Share Price minus the Prorated Cash
Amount and the denominator of which is equal to the Liquidation Value.
ii. In the event the Requested Cash Amount is less than the Cash Cap,
each holder making a Stock Election (other than as set forth in Section
3.5) shall receive for each share of Class B Common Stock for which a
Stock Election has been made, (x) cash in an amount equal to the
quotient of (1) the excess of the Cash Cap over the Requested Cash
Amount divided by (2) the number of shares of Class B Common Stock for
which such Stock Elections have been made or have been deemed to have
been made
(such quotient, the "Excess Cash Amount"), (y) a number of shares of
Media Stock equal to the product of the Class B Common Percentage and a
fraction, the numerator of which is equal to the difference between the
Share Price and the Excess Cash Amount and the denominator of which is
equal to the Calculation Price and (z) a number of shares of Series D
Preferred Stock equal to the product of the Class B Preferred Percentage
and a fraction, the numerator of which is equal to the difference
between the Share Price and the Excess Cash Amount and the denominator
of which is equal to the Liquidation Value.
e. Dividends, Fractional Shares, Etc. Notwithstanding any other
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provisions of this Agreement, no dividends or other distributions
declared after the Effective Time on Media Stock or Series D Preferred
Stock shall be paid with respect to any whole shares of Media Stock or
Series D Preferred Stock represented by a Company Certificate until such
Company Certificate is surrendered for exchange as provided herein.
Subject to the effect of Applicable Laws, following surrender of any
such Company Certificate, there shall be paid to the holder of the
Acquiror Certificates issued in exchange therefor, without interest,
(i) at the time of such surrender, the amount of dividends or other
distributions with a record date after the Effective Time theretofore
payable with respect to such whole shares of Media Stock and Series D
Preferred Stock and not paid, less the amount of any withholding taxes
which may be required thereon, and (ii) at the appropriate payment date,
the amount of dividends or other distributions with a record date after
the Effective Time but prior to surrender and a payment date subsequent
to surrender payable with respect to such whole shares of Media Stock
and Series D Preferred Stock, less the amount of any withholding taxes
which may be required thereon.
i. At or after the Effective Time, there shall be no transfers on the
stock transfer books of the Company of the shares of Company Common
Stock which were outstanding immediately prior to the Effective Time.
If, after the Effective Time, certificates representing any such shares
are presented to the Surviving Corporation, they shall be cancelled and
exchanged for certificates for the consideration, if any, deliverable in
respect thereof pursuant to this Agreement in accordance with the
procedures set forth in this Article III. Company Certificates
surrendered for exchange by any Person constituting an "affiliate" of
the Company for purposes of Rule 145(c) under the Securities Act shall
not be exchanged until Acquiror has received a written agreement from
such Person as provided in Section 7.13.
ii. No certificates or scrip evidencing fractional shares of Media Stock
or Series D Preferred Stock shall be issued upon the surrender for
exchange of Company Certificates, and such fractional share interests
will not entitle the owner thereof to vote or to any rights of a
stockholder of Acquiror. In lieu of any such fractional shares, the
Exchange Agent shall, on behalf of all holders of fractional shares of
Media Stock and Series D Preferred Stock, as soon as practicable after
the Effective Time, aggregate all such fractional interests
(collectively, the "Fractional Shares") and, at Acquiror's option, such
Fractional Shares shall be purchased by Acquiror or otherwise sold by
the Exchange Agent as agent for the holders of such Fractional Shares,
in either case at the then prevailing price on the NYSE, all in the
manner provided hereinafter. Until the net proceeds of such sale or
sales have been distributed to the holders of Fractional Shares, the
Exchange Agent shall retain such proceeds in trust for the benefit of
such holders. Acquiror shall pay all commissions, transfer taxes and
other out-of-pocket transaction costs,
including expenses and compensation of the Exchange Agent, incurred in
connection with such sale of the Fractional Shares.
(1) To the extent not purchased by Acquiror, the sale of the Fractional
Shares by the Exchange Agent shall be executed on the NYSE or through
one or more member firms of the NYSE and will be executed in round lots
to the extent practicable. In either case, the Exchange Agent will
determine the portion, if any, of the net proceeds of such sale to which
each holder of Fractional Shares is entitled, by multiplying the amount
of the aggregate net proceeds of the sale of the Fractional Shares, by a
fraction, the numerator of which is the amount of Fractional Shares to
which such holder is entitled and the denominator of which is the
aggregate amount of Fractional Shares to which all holders of Fractional
Shares are entitled.
(2) As soon as practicable after the determination of the amount of
cash, if any, to be paid to holders of Fractional Shares in lieu of such
Fractional Shares, the Exchange Agent shall mail such amounts, without
interest, to such holders; provided, however, that no such amount will
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be paid to any holder of such Fractional Shares prior to the surrender
by such holder of the Company Certificates formerly representing such
holder's shares of Company Common Stock.
iii.Any portion of the Exchange Fund that remains undistributed to the
holders of Company Common Stock for six months after the Effective Time
shall be delivered to Acquiror, upon demand, and any holders of Company
Common Stock who have not theretofore complied with this Article III
shall thereafter look only to Acquiror for the Class A Merger
Consideration or Class B Merger Consideration, as applicable, net cash
proceeds from the sale of Fractional Shares and unpaid dividends and
distributions on the Media Stock and Series
D Preferred Stock to which they are entitled. All interest accrued in
respect of the Exchange Fund shall inure to the benefit of and be paid
to Acquiror.
iv.None of Acquiror, the Company or the Exchange Agent shall be liable
to any holder of shares of Company Common Stock for any cash, shares of
Media Stock or Series D Preferred Stock, net cash proceeds from the sale
of Fractional Shares or unpaid dividends or distributions with respect
to Media Stock or Series D Preferred Stock from the Exchange Fund
delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law. If any Company Certificates shall not
have been surrendered prior to seven years after the Effective Time (or
immediately prior to such earlier date on which any cash, shares of
Media Stock or Series D Preferred Stock, net cash proceeds from the sale
of Fractional Shares or unpaid dividends or distributions with respect
to Media Stock or Series D Preferred Stock in respect of such Company
Certificates would otherwise escheat to or become the property of any
Governmental Authority), any such cash, shares or unpaid dividends or
distributions in respect of such Company Certificates shall, to the
extent permitted by Applicable Laws, become the property of the
Surviving Corporation; provided, however, that any holder of Company
-------- -------
Common Stock shall thereafter have the right to demand from Acquiror any
such cash, shares or unpaid dividends or distributions.
v. In the event that any Company Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the
Person claiming such Company Certificate to be lost, stolen or destroyed
and, if required by Acquiror, the posting by such Person of a bond in
such reasonable amount as Acquiror may direct as indemnity against any
claim that may be made against it with respect to such
Company Certificate, the Exchange Agent (or Acquiror, as the case may
be) will issue in exchange for such lost, stolen or destroyed Company
Certificate the Class A Merger Consideration or Class B Merger
Consideration, as applicable, cash in lieu of fractional shares, and
unpaid dividends and distributions on shares of Media Stock and Series D
Preferred Stock deliverable in respect thereof pursuant to this
Agreement.
vi. Acquiror shall be entitled to, or shall be entitled to cause the
Exchange Agent to, deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of shares of Company
Common Stock such amounts as are required to be deducted and withheld
with respect to the making of such payment under the Code, or any
provision of state, local or foreign tax law. To the extent that amounts
are so withheld by Acquiror or the Exchange Agent, as the case may be,
such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the shares of Company
Common Stock in respect of which such deduction and withholding was made
by Acquiror.
f. Restricted Stock. To the extent any Company Common Stock that is
----------------
unvested and outstanding immediately prior to the Effective Time is
subject to the terms and conditions of a Restricted Stock Purchase
Agreement ("RSPA") between the Company and any current or former
employee of the Company ("Restricted Company Common Stock"), (i) the
holder of such Restricted Company Common Stock shall not be entitled to
make a Cash Election in respect of such Restricted Company Common Stock
nor shall it receive cash pursuant to Section 3.3 and (ii) any Media
Stock or Series D Preferred Stock received with respect to such
Restricted Company Common Stock shall be subject to the terms of such
RSPA, as amended by an Amendment to Restricted Stock Purchase Agreement
substantially in the
form set forth in Section 3.5 of the Company Disclosure Letter.
g. Dissenting Shares. Notwithstanding any other provisions of this
-----------------
Agreement to the contrary, shares of Company Common Stock that are
outstanding immediately prior to the Effective Time and that are held by
stockholders who shall have not voted in favor of the Merger or
consented thereto in writing and who shall have demanded properly in
writing appraisal for such shares in accordance with Section 262 of the
DGCL (collectively, the "Dissenting Shares") shall not be converted into
or represent the right to receive the Class A Merger Consideration or
Class B Merger Consideration, as applicable. Such stockholders shall be
entitled to receive payment of the appraised value of such shares of
Company Common Stock held by them in accordance with the provisions of
such Section 262, except that all Dissenting Shares held by stockholders
who shall have failed to perfect or who effectively shall have withdrawn
or lost their rights to appraisal of such shares of Company Common Stock
under such Section 262 shall thereupon be deemed to have been converted
into and to have become exchangeable, as of the Effective Time, for the
right to receive, without any interest thereon, the Class A Merger
Consideration or Class B Merger Consideration, as applicable, upon
surrender in the manner provided in this Article III, of the Company
Certificate or Company Certificates that formerly evidenced such shares
of Class B Common Stock.
h. Share Price Adjustment. If the Closing shall not have occurred on or
----------------------
prior to January 3, 1997, the Share Price shall be increased at a rate
equal to 8% per annum from and including January 1, 1997 to and
excluding the Closing Date calculated on the basis of the actual number
of days in the period (such amount being the "Additional Amount");
provided, however,
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that no such amount shall be added to the Share Price if (i) the Closing
has not occurred on or prior to January 3, 1997 and the last of the
conditions set forth in Article VIII to be fulfilled is the condition
set forth in Section 8.2(h) or the condition set forth in Section
8.1(a), other than, in each case as a result of any action taken or not
taken by Acquiror or (ii) the Company has taken any action that would
result in any of the conditions to the consummation of the Merger set
forth herein not being satisfied at such time; provided, further,
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that upon satisfaction of the conditions described in clause (i) above
if either such condition is the last condition to be fulfilled, the
Additional Amount shall be added to the Share Price and shall be
calculated commencing five Business Days after the date of such
satisfaction.
ARTICLE Section 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Acquiror as follows:
a.Organization and Authority of the Company.
-----------------------------------------
i. Each of the Company and its Subsidiaries is a corporation or
partnership duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation or organization with all
requisite power to enable it to own, lease and operate its assets and
properties and to conduct its business as currently being conducted and
is qualified and in good standing to do business in each jurisdiction in
which the nature of the business conducted by it or the character or
location of the properties owned or leased by it requires such
qualification, except to the extent the failure so to qualify would not
have a
Material Adverse Effect with respect to the Company. Complete and
correct copies of the Restated Certificate of Incorporation and Bylaws,
each as amended to date, of the Company have been delivered to Acquiror.
Such Restated Certificate of Incorporation and Bylaws are in full force
and effect.
ii.The Company has all requisite corporate power and authority to
execute and deliver this Agreement and the Transaction Documents to
which it is a party and to perform its obligations hereunder and
thereunder and, subject to (i) the adoption of this Agreement by the
holders of a majority of the voting power of the outstanding shares of
Company Capital Stock, voting as a single class and (ii) the adoption of
the Charter Amendment by 66-2/3% of the voting power of the outstanding
shares of Company Capital Stock voting as a single class and a majority
of the voting power of each of the outstanding shares of the Class A
Common Stock and the Class B Common Stock voting as separate classes
(collectively, the "Stockholder Approvals"), to consummate the
transactions contemplated hereby and thereby. The execution and delivery
of this Agreement and such Transaction Documents and the consummation of
the transactions contemplated hereby and thereby have been duly
authorized by all requisite corporate action on the part of the Company,
subject, in the case of this Agreement, the Merger and the Charter
Amendment, to the Stockholder Approvals. This Agreement and each
Transaction Document to which the Company is a party has been duly
executed and delivered by the Company and constitutes the legal, valid
and binding obligation of the Company, enforceable against it in
accordance with its terms, except (i) as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors' rights generally and (ii) as the remedy of
specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the
court before which any proceeding therefor may be brought.
iii.Section 4.1 of the letter from the Company, dated the date hereof,
addressed to Acquiror (the "Company Disclosure Letter") sets forth, as
of the date hereof, a true and complete list of all of the Company's
Subsidiaries, including the jurisdiction of incorporation or
organization of each Subsidiary and the percentage of each Subsidiary's
outstanding capital stock or other ownership interest owned by the
Company or another Subsidiary of the Company or by any other Person. All
of the outstanding shares of capital stock of each Subsidiary have been
validly issued and are fully paid and nonassessable and, except as set
forth in Section 4.1 of the Company Disclosure Letter, are owned by the
Company or a Subsidiary, free and clear of all Encumbrances. Except as
set forth in Section 4.1 of the Company Disclosure Letter, the Company
does not, directly or indirectly, own any capital stock of or other
equity interests in any corporation, partnership or other Person and
neither the Company nor any of its Subsidiaries is a member of or
participant in a partnership, joint venture or similar Person.
b. Capitalization. As of the date hereof, the authorized capital stock
--------------
of the Company consists of: (i) 425,000,000 shares of Class A Common
Stock, of which (A) 38,885,385 shares are issued and outstanding, all of
which are duly authorized, validly issued, fully paid and nonassessable
and not subject to preemptive rights created by statute, the Company's
Restated Certificate of Incorporation or Bylaws or any agreement to
which the Company is a party or by which the Company is bound and (B) no
shares are held in the treasury of the Company; (ii) 200,000,000 shares
of Class B Common Stock, of which (A) 109,349,496 shares are issued and
outstanding, all of which are duly authorized, validly issued, fully
paid and nonassessable and not subject to preemptive rights created by
statute, the Company's Restated Certificate of Incorporation or Bylaws
or any agreement to which the Company is a party or by which the Company
is bound, (B) no shares are held in the treasury of the Company and (C)
28,571,450 shares are issuable upon conversion of Company Preferred
Stock; and (iii) 200,000,000 shares of Preferred Stock, par value $.01
per share, of the Company, of which 1,142,858 shares have been
designated Series A Participating Convertible Preferred Stock (the
"Company Preferred Stock" and, together with the Company Common Stock,
the "Company Capital Stock") and are issued and outstanding, all of
which are duly authorized, validly issued, fully paid and nonassessable
and not subject to preemptive rights created by statute, the Company's
Certificate of Incorporation or Bylaws or any agreement to which the
Company is a party or by which the Company is bound.
i.Other than as described in this Section 4.2, or as listed in Section
4.2(b) of the Company Disclosure Letter, no shares of the capital stock
of the Company are authorized, issued or outstanding, or reserved for
any other purpose, and there are no options, warrants or other rights
(including tag-along, right of first refusal, buy-sell, registration or
similar rights), agreements, arrangements or commitments of any
character to which the Company, any of its Subsidiaries or any Person in
which the Company or its Subsidiaries own any interest is a party
relating to the issued or unissued capital stock of the Company, any of
its Subsidiaries or any such Person or obligating or which could
obligate the Company or any of its Subsidiaries to grant, issue or sell
any shares of capital stock of the Company, any of its Subsidiaries or
any Person in which the
Company or its Subsidiaries own any interest, by sale, lease, license or
otherwise. Except as described in Section 4.2(b) of the Company
Disclosure Letter, the Company has no outstanding bonds, debentures,
notes or other obligations the holders of which have the right to vote
or that are convertible into or exercisable for securities having the
right to vote with the stockholders of the Company on any matter. Except
as set forth in Section 4.2(b) of the Company Disclosure Letter, there
are, to the Knowledge of the Company, no voting trusts or other
agreements or understandings with respect to the voting of Company
Capital Stock. Except as set forth on Section 4.2 of the Company
Disclosure Letter, none of the Company, its Subsidiaries or any Person
in which the Company or its Subsidiaries own any interest is a party to
any non-competition agreement or other agreement or arrangement which
restrains, limits or impedes the current or contemplated business or
operations of the Company or any of its Subsidiaries or would apply to
Acquiror or any of its Affiliates following the Effective Time.
c. No Conflicts. Except as set forth in Section 4.3 of the Company
------------
Disclosure Letter, subject to obtaining the Company Consents (as defined
in Section 4.6), the execution and delivery of this Agreement and each
of the Transaction Documents to which the Company is a party by the
Company do not, and the consummation of the transactions contemplated
hereby and thereby and compliance with the terms hereof and thereof will
not, conflict with, or result in any violation of or default (with or
without notice or lapse of time, or both) under, or give rise to a right
of termination, cancellation or acceleration of any obligation or to
loss of a material benefit under, or to increased, additional,
accelerated or guaranteed rights or entitlements of any Person under, or
result in the creation of any Encumbrances upon
any of the properties or assets of the Company or its Subsidiaries under
any provision of (i) the Certificate of Incorporation, Bylaws or other
organizational document of the Company or any Subsidiary, (ii) any note,
bond, mortgage, indenture or deed of trust, deed to secure debt or any
license, lease, contract, commitment, permit, concession, franchise,
agreement or other binding arrangement to which the Company or any of
its Subsidiaries is a party or by which any of them or their respective
properties or assets are bound, including any Franchise, (iii) any
judgment, order, writ, injunction or decree of any court, governmental
body, administrative agency or arbitrator applicable to the Company or
any Subsidiary or their respective properties or assets as of the date
hereof or (iv) any law, statute, rule, regulation or judicial or
administrative decision applicable to the Company or any Subsidiary,
except in the case of clauses (ii) and (iv), such conflicts, violations
and defaults, termination, cancellation and acceleration rights and
entitlements and Encumbrances that in the aggregate would not hinder or
impair the consummation of the transactions contemplated hereby or have
a Material Adverse Effect with respect to the Company.
d. Vote Required. The Stockholder Approvals are the only votes of the
-------------
holders of any class or series of Company Capital Stock necessary or
required (under Applicable Law or otherwise) to approve this Agreement
and the transactions contemplated hereby.
e. Board Recommendation; Opinion of Financial Advisor. The Board of
--------------------------------------------------
Directors at a meeting duly called and held, has by unanimous vote of
those directors present (who constituted 100% of the directors then in
office) (i) determined that this Agreement and the transactions
contemplated hereby, including the Merger, are fair to and in the best
interests of the stockholders of the Company and has
approved the same, and (ii) resolved to recommend that the holders of
the shares of Company Capital Stock adopt this Agreement and the
transactions contemplated hereby, including the Merger.
i.The Company has received the opinions of (i) Lazard Freres & Co. LLC,
dated February 27, 1996, to the effect that, as of the date hereof, the
consideration to be received by the holders of shares of Company Capital
Stock in the Merger is fair from a financial point of view to such
holders and (ii) Xxxxx & Company Incorporated, dated February 27, 1996,
to the effect that, as of the date hereof, the consideration to be
received by the holders of the Class A Common Stock in the Merger is
fair from a financial point of view to such holders. A signed, true and
complete copy of such opinions has been delivered to Acquiror.
f. Consents. Not later than 30 days after the date of this Agreement, the
--------
Company shall furnish to Acquiror a list of each Franchise as to which
notice to, or the consent of, a Governmental Authority is required as a
condition to the transfer of control or the right to control the
Franchise in connection with the transactions contemplated hereby (all
such notices and consents being "Franchise Consents"). Section 4.6 of
the Company Disclosure Letter lists each FCC license held by the Company
or any Subsidiary, other than private mobile radio service licenses, as
to which FCC consent is required prior to the assignment or transfer of
control of such license in connection with the transactions contemplated
hereby (all such notices and consents being "License Consents"). Except
for (i) the Franchise Consents and License Consents, (ii) as set forth
in Section 4.6 of the Company Disclosure Letter, (iii) compliance with
and filings under the HSR Act, (iv) the filing with the SEC of (A) a
proxy statement under the Exchange
45
Act relating to the meeting (or meetings) of the Company's stockholders
to be held in connection with the Merger, the Charter Amendment and the
other transactions contemplated by this Agreement (the "Proxy
Statement"), (B) any registration statement required to be filed in
connection with any action taken by the Company pursuant to Section 7.7
and (C) such reports under the Exchange Act as may be required in
connection with this Agreement and the transactions contemplated hereby,
(v) the filing of the Certificate of Merger with the Secretary of State
of the State of Delaware and appropriate documents with the relevant
authorities of other states in which the Company is qualified to do
business, (vi) such filings and approvals as may be required by any
applicable state securities, "blue sky" or takeover laws, (vii) such
filings in connection with any state or local tax which is attributable
to the beneficial ownership of the Company's or its Subsidiaries' real
property, if any (collectively, "Gains Taxes"), and (viii) such filings
as may be required with the FCC or any Governmental Authority to obtain
their consent to the assumption by the Acquiror of the Social Contract
(including all Systems and communities encompassed thereby) between the
Company and the FCC, as approved by Memorandum Opinion and Order
released August 3, 1995 (FCC 95-335) (the "Social Contract Order") and
as may be modified thereafter by a proposed Social Contract Amendment
that is substantially similar to that which the Company has provided to
Acquiror (the "Social Contract Amendment") (such notice and consent
being the "Social Contract Consents") (the items in clauses (i) through
(vi) being collectively referred to herein as "Company Consents"), no
consents, approvals, licenses, permits, orders or authorizations of, or
registrations, declarations, notices or filings with, any Governmental
Authority or any Third Party are required to be obtained or made by or
with respect to the Company or any of its
46
Subsidiaries on or prior to the Closing Date in connection with (A) the
execution, delivery and performance of this Agreement or any of the
Transaction Documents to which the Company is a party, the consummation
of the transactions contemplated hereby and thereby or the taking by the
Company of any other action contemplated hereby or thereby, (B) the
continuing validity and effectiveness of (and prevention of any material
default under or violation of the terms of) any Franchise or any other
material, license, permit or authorization or any material contract,
agreement or lease to which the Company or any Subsidiary is a party or
(C) the conduct by the Company or any of its Subsidiaries of their
respective businesses following the Closing as conducted on the date
hereof, which, if not obtained or made in connection with clauses (A),
(B) and (C), would have a Material Adverse Effect with respect to the
Company.
g. Compliance; No Defaults. Except as set forth in Section 4.7 of the
-----------------------
Company Disclosure Letter, neither the Company nor any of its
Subsidiaries is in violation of, is, to the Knowledge of the Company,
under investigation with respect to any violation of, has been given
notice or been charged with violation of, or failed to comply with any
statute, law, ordinance, rule, order or regulation of any Governmental
Authority (including but not limited to the Social Contract Order, as
amended) applicable to its business or operations ("Applicable Laws"),
except for violations and failures to comply that would not have a
Material Adverse Effect with respect to the Company. Except as set forth
in Section 4.7 of the Company Disclosure Letter, the Company and its
Subsidiaries have all permits, licenses, variances, exemptions, orders
and approvals of all Governmental Authorities ("Permits") which are
material to the operation of the businesses of the Company and its
Subsidiaries, taken as a whole.
47
i. Neither the Company nor any of its Subsidiaries is in default or
violation (and no event has occurred which, with notice or the lapse of
time or both, would constitute a default or violation) of any term,
condition or provision of (i) its Certificate of Incorporation, as
amended, or Bylaws or other comparable organizational document or (ii)
any note, bond, mortgage, indenture, license, agreement or other
instrument or obligation to which the Company or any of its Subsidiaries
is now a party or by which the Company or any of its Subsidiaries or any
of their respective properties or assets may be bound, except in the
case of clause (ii), for defaults or violations which in the aggregate
would not have a Material Adverse Effect with respect to the Company.
h. SEC Documents; Undisclosed Liabilities. The Company has made
--------------------------------------
available to Acquiror a true and complete copy of each report, schedule,
registration statement and definitive proxy statement filed by the
Company with the SEC since January 1, 1993 (as such documents have since
the time of their filing been amended, the "Company SEC Documents"),
which are all the documents (other than preliminary proxy materials)
that the Company was required to file with the SEC since such date. As
of their respective dates, the Company SEC Documents (including any
financial statements filed, to be filed or required to have been filed
as a part thereof) complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as applicable,
and the rules and regulations of the SEC thereunder applicable to such
Company SEC Documents, and none of the Company SEC Documents contained
any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the
Company SEC Documents
48
comply as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC
with respect thereto, have been prepared in accordance with GAAP applied
on a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly present (subject, in the case
of the unaudited financial statements, to normal, recurring audit
adjustments, which were not individually or in the aggregate material)
the consolidated financial position of the Company and its consolidated
Subsidiaries as at the dates thereof and the consolidated results of
their operations and cash flows for the periods then ended.
i.Except as disclosed in the Company SEC Documents or in Section 4.8 or
4.9 of the Company Disclosure Letter, as of the date hereof the Company
and its Subsidiaries do not have any material indebtedness, obligations
or liabilities of any kind (whether accrued, absolute, contingent or
otherwise, and whether due or to become due or asserted or unasserted)
required by GAAP to be reflected on a consolidated balance sheet of the
Company and its consolidated Subsidiaries or in the notes, exhibits or
schedules thereto.
i. Litigation. Except as set forth in the Company SEC Documents or in
----------
Section 4.9 of the Company Disclosure Letter, there are no Legal
Proceedings against or affecting the Company or any of its Subsidiaries
or their respective properties or assets pending or, to the Knowledge of
the Company, threatened against the Company or any of its Subsidiaries,
that individually or in the aggregate could (i) have a Material Adverse
Effect with respect to the Company or (ii) as of the date hereof,
prevent, materially hinder or delay the consummation of the transactions
contemplated by this Agreement or the Transaction Documents or seek to
limit the ownership or operation of the Company by Acquiror. Except as
set
forth in Section 4.9 of the Company Disclosure Letter, neither the
Company nor any of its Subsidiaries is a party or subject to or in
default under any judgment, order, injunction or decree of any
Governmental Authority applicable to it or to its respective properties
or assets, which judgment, order, injunction, decree or default
thereunder constitutes a Material Adverse Effect with respect to the
Company.
j. Taxes. Except as set forth in Section 4.10(a) of the Company
-----
Disclosure Letter, (i) all Federal, state, local and foreign Tax
returns, declarations and reports ("Tax Returns") required to be filed
by or on behalf of the Company or any of its Subsidiaries have been
filed on a timely basis with the appropriate Governmental Authorities in
all jurisdictions in which such Tax Returns are required to be filed
(after giving effect to any valid extensions of time in which to make
such filings), except for Tax Returns as to which the failure to file
would not individually or in the aggregate have a Material Adverse
Effect with respect to the Company, and all such Tax Returns were true,
correct and complete in all material respects; (ii) all amounts due and
payable in respect of such Tax Returns (including interest and
penalties) have been fully and timely paid or are or will be adequately
provided for in the appropriate financial statements of the Company and
its Subsidiaries, except for amounts the failure to pay would not have a
Material Adverse Effect with respect to the Company; (iii) no waivers of
statutes of limitations have been given or requested with respect to the
Company or any of its Subsidiaries in connection with any Tax Returns
covering the Company or any of its Subsidiaries with respect to any
income or franchise Taxes or other material Taxes payable by any of
them; and (iv) each of the Company and its Subsidiaries has duly and
timely withheld from salaries, wages and other compensation
of its employees and paid over to the appropriate taxing authorities all
amounts required to be so withheld and paid over for all periods not
barred by applicable statutes of limitations under all Applicable Laws,
except for amounts as to which the failure to withhold or pay would not
have a Material Adverse Effect with respect to the Company.
i.Except as set forth in Section 4.10(b) of the Company Disclosure
Letter, all deficiencies asserted or assessments made in an amount in
excess of $300,000 by the IRS or any other taxing authority of the Tax
Returns of or covering the Company or any of its Subsidiaries have been
fully paid or are or will be adequately provided for in the appropriate
financial statements of the Company and its Subsidiaries.
ii.Except as set forth in Section 4.10(c) of the Company Disclosure
Letter, neither the Company nor any of its Subsidiaries nor any other
Person on behalf of the Company or any of its Subsidiaries: (i) has
filed a consent pursuant to Section 341(f) of the Code or agreed to have
Section 341(f)(2) of the Code apply to any disposition of a subsection
(f) asset (as such term is defined in Section 341(f)(4) of the Code)
owned by the Company or any of its Subsidiaries; (ii) has executed or
entered into a closing agreement pursuant to Section 7121 of the Code or
any predecessor provision thereof or any similar provision of state,
local or foreign law; or (iii) has agreed to or is required to make any
adjustments pursuant to Section 481(a) of the Code or any similar
provision of state, local or foreign law by reason of a change in
accounting method initiated by the Company or any of its Subsidiaries
nor to the Knowledge of the Company (which for purposes of this Section
4.10 shall include the tax director) has the IRS proposed any such
adjustment or change in accounting method, or has any application
pending with any taxing authority requesting permission
for any changes in accounting methods that relate to the business or
operations of the Company or any of its Subsidiaries.
iii.Except as set forth in Section 4.10(d) of the Company Disclosure
Letter, none of the assets of the Company and its Subsidiaries is
property required to be treated as being owned by another Person
pursuant to the provisions of Section 168(f)(8) of the Internal Revenue
Code of 1954, as amended and in effect immediately prior to the
enactment of the Tax Reform Act of 1986 or is "tax-exempt use property"
within the meaning of Section 168(h)(l) of the Code.
iv.The Federal income Tax Returns of the Company and its Subsidiaries,
any of their predecessors or any affiliated group of which the Company
or any of its Subsidiaries is or was a member have been examined by the
IRS, or the periods covered by such Tax Returns have been closed by
applicable statute of limitations, for all periods through December 31,
1991, except to the extent such Tax Returns may be examined for the
purpose of determining loss or credit carryforwards to a year not so
closed. The state income or franchise Tax Returns of the Company and its
Subsidiaries, any of their predecessors or any affiliated, combined or
unitary group of which the Company or any of its Subsidiaries is or was
a member have been examined by the relevant taxing authorities, or the
periods covered by such Tax Returns have been closed by applicable
statute of limitations, in each case through at least December 31, 1991,
except to the extent such Tax Returns may be examined for the purpose of
determining loss or credit carryforwards to a year not so closed.
v.Except as set forth in Section 4.10(f) of the Company Disclosure
Letter, (i) no Tax audits or other administrative proceedings are
pending with regard to any Taxes for
which the Company or any of its Subsidiaries may be liable and (ii) no
written notice of any such audit has been received by the Company or any
of its Subsidiaries.
xx.Xx of December 31, 1995, the Company had net operating loss
carryforwards for Federal income tax purposes of no less than $900
million.
vii.Except as set forth in Section 4.10(h) of the Company Disclosure
Letter, neither the Company nor any of its Subsidiaries is a party to or
bound by any agreement providing for the allocation or sharing of Taxes.
viii.Except as set forth in Section 4.10(i) of the Company Disclosure
Letter, since January 1, 1989 neither the Company nor any of its
Subsidiaries has been a member of, or was acquired from, any "affiliated
group" (as defined in Section 1504 of the Code) other than (i) in a
transaction in which the common parent of such affiliated group was
acquired or (ii) the affiliated group in which the Company is the common
parent.
ix.Except as set forth in Section 4.10(j) of the Company Disclosure
Letter, the performance of the transactions contemplated by this
Agreement will not (either alone or upon the occurrence of any
additional or subsequent event) result in any payment that would
constitute an "excess parachute payment" within the meaning of Section
280G of the Code.
x.The Company and each of its Subsidiaries is not currently, has not
been within the last five years and does not anticipate becoming a
"United States real property holding corporation" within the meaning of
Section 897(c) of the Code.
k. Employee Benefits. Section 4.11(a) of the Company Disclosure Letter
-----------------
lists all
"employee benefit plans," as defined in Section 3(3) of ERISA, and all
other deferred compensation, bonus or other incentive compensation,
stock purchase or other Equity Appreciation Rights Plans, severance pay,
salary continuation for disability or other leave of absence,
supplemental unemployment benefits, lay-off or reduction in force,
change in control or educational assistance arrangements or policies for
which the Company or any of its Subsidiaries has any material obligation
or liability (each a "Benefit Plan" and collectively, the "Benefit
Plans"), including, but not limited to, any individual benefit
arrangement, policy or practice with respect to any current or former
officer, employee or director of the Company or any of its Subsidiaries.
i.Section 4.11(b) of the Company Disclosure Letter lists, separately for
each foreign country, all Benefit Plans covering employees of the
Company and its Subsidiaries who are employed outside of the United
States ("Foreign Benefit Plans").
ii.The Company and its Subsidiaries have delivered to Acquiror correct
and complete copies of all Benefit Plans, and, where applicable, each of
the following documents with respect to such plans: (i) any amendments,
(ii) any related trust documents, (iii) the two most recently filed IRS
Forms 5500 with all attachments thereto, (iv) the last IRS determination
letter, (v) the most recent summary plan descriptions and summaries of
material modifications, (vi) the last actuarial valuation report and
(vii) written communications to employees to the extent the substance of
the Benefit Plans described therein differs materially from the other
documentation furnished under this Section.
iii.Except as disclosed in Section 4.11(d) of the Company Disclosure
Letter, none of
the Benefit Plans is subject to Title IV of ERISA or Section 412 of the
Code, and the Company and its ERISA Affiliates from time to time have
not within the preceding six years had any obligation to make any
contribution to a retirement plan subject to Title IV of ERISA or
incurred any liability (contingent or otherwise) under Title IV of ERISA
and neither the Company, its Subsidiaries nor any of its ERISA
Affiliates has any actual or potential obligation or liability to any
multiemployer plan (as defined in Section 4001(a)(3) of ERISA).
iv.Each Benefit Plan, including any associated trust, intended to
qualify under Section 401 of the Code does so qualify.
v.Except as disclosed on Section 4.11(f) of the Company Disclosure
Letter and except as would not have a Material Adverse Effect with
respect to the Company, the Benefit Plans have been maintained and
administered in accordance with their terms and with the provisions of
ERISA, the Code and other Applicable Laws.
vi.There are no pending or, to the Company's Knowledge, overtly
threatened actions, claims or lawsuits that have been asserted or
instituted against any of the Benefit Plans, the assets of any of the
trusts under such plans or the plan sponsor, plan administrator or
fiduciary of any of the Benefit Plans with respect to the operation of
such plans (other than routine benefit claims) that individually or in
the aggregate could have a Material Adverse Effect with respect to the
Company.
vii.The Company and its Subsidiaries do not provide, and are not
obligated to provide, retiree life insurance or retiree health benefits
to any current or former employee after his or her termination of
employment with the Company or any Subsidiary, except as may be required
under Section 4980B of the Code and Part 6 of Subtitle B of Title
I of ERISA or as disclosed in Section 4.11(h) of the Company Disclosure
Letter.
viii.Except as disclosed in Section 4.11(i) of the Company Disclosure
Letter and except with respect to payments under the Equity Appreciation
Rights Plans that will be paid or satisfied by the Company on or prior
to Closing of all estimated payments, neither the execution and delivery
of this Agreement nor the consummation of the transactions contemplated
hereby will (i) result in any payment becoming due to any employee
(current or former) of the Company or any Subsidiary, (ii) increase any
benefits otherwise payable under any Benefit Plan or (iii) result in the
acceleration of the time of payment or the vesting of any benefits under
any Benefit Plan. The Company has also delivered to Acquiror a schedule
of all estimated payments to be made under each Equity Appreciation
Rights Plan on or prior to the Closing. "Equity Appreciation Rights
Plans" are all plans or arrangements maintained by the Company or any of
its Subsidiaries that provide for a benefit based upon the issuance of
stock, restricted stock, stock options, phantom stock or other equity
appreciation rights or incentive awards, determined by the book, fair
market or formula value of a share of stock of the Company.
ix.Except as disclosed in Section 4.11(j) of the Company Disclosure
Letter, (i) no employee of the Company or any Subsidiary will be
entitled to any severance payments upon the sale of the Company or any
Subsidiary, or any divisions or business units thereof, absent an
employee's actual loss of employment and (ii) none of the executives of
the Company or any Subsidiary are eligible to receive any payment under
any severance pay, stay bonus or other retention plan, program or
arrangement of the Company or any of its Subsidiaries.
x.Except as disclosed in Schedule 4.11(k) of the Company Disclosure
Letter, the projected benefit obligation of the Company or any
Subsidiary (as calculated using actuarial assumptions used to calculate
liabilities under FAS 87 with respect to post-employment benefits
accrued) under each Benefit Plan that is a defined benefit pension plan
is fully funded by assets of such plan or by an adequate reserve on the
applicable balance sheet of the Company or any Subsidiary.
l. Cable Television Franchises. Section 4.12 of the Company Disclosure
---------------------------
Letter sets forth a list of the Systems, and as to each such System, (i)
the geographic area and FCC community unit(s) served, (ii) the name of
the legal entity that owns such System and holds the applicable
franchise, as well as the identity, ownership interest and relationship
to the Company, if any, of each owner of any interest in such legal
entity, (iii) as of December 31, 1995, the number of Homes Passed and
Subscribers served by such System, and (iv) the names and addresses of
the Governmental Authorities issuing the franchises and/or implementing
such ordinances. By no later than 30 days after the date of this
Agreement, the Company shall furnish to Acquiror a complete and accurate
list and copy of all of the franchise agreements and similar governing
agreements, instruments, resolutions, statutes and/or CATV-franchise-
related ordinances that are used, necessary or required in order to
operate, or to which the Company or its Subsidiaries are subject by
reason of their operation of, the Systems (individually as to each
System, its "Franchise" and collectively, the "Franchises"), and, as of
December 31, 1995, the number of Homes Passed and Subscribers served by
the Systems by Franchise. The Systems listed in Section 4.12 of the
Company Disclosure Letter represent all of the "cable television
systems", as defined in Section 602(7) of the Cable Act, owned and
operated by the
Company and its Subsidiaries in the United States. The Franchises and
any related regulatory ordinances contain all material commitments,
obligations and rights of the Company and its Subsidiaries with respect
to each of the Governmental Authorities granting such Franchises, in
connection with the construction, ownership and operation of the
Systems. The Franchises enable the Company and its Subsidiaries to
operate, and, subject to obtaining the Franchise Consents and License
Consents, immediately following the Closing will enable the Surviving
Corporation and its Subsidiaries to continue to operate all of the
Systems as and where they are presently operated. To the Knowledge of
the Company, each Franchise is valid under all Federal, state and local
laws and is validly held by the Company or its Subsidiaries, as the case
may be. The Company and its Subsidiaries have complied with the material
terms and conditions of the Franchises and the same will not be subject
to revocation or nonrenewal as a result of the execution and delivery of
this Agreement or the Transaction Documents, or the consummation of the
transactions contemplated hereby and thereby, subject to obtaining the
Franchise Consents and License Consents. Except as set forth in Section
4.12 of the Company Disclosure Letter, there are no lawsuits, revocation
proceedings or disputes pending with respect to any of the Franchises or
Systems that would material affect the right of the Company or any
Subsidiary to operate a System, and no Governmental Authority or other
Person has notified the Company or any of its Subsidiaries in writing of
its intention to conduct or initiate the same. Neither the Company nor
any of its Subsidiaries has received any written notice that any such
Franchise is under consideration to be revoked nor, except for
Franchises that are subject to renewal negotiations, to be modified in
any material respect.
i. Except as set forth in Section 4.12 of the Company Disclosure Letter,
no Person other than certain municipalities (a list of which will be
provided no later than 30 days after the date of this Agreement) has any
right to acquire any interest in any of the Systems, or to designate any
other person or entity to acquire any interest in any of the Systems
(including, without limitation, any right of first refusal or similar
right to purchase any interest in the Systems), which right has not been
validly, properly and irrevocably (except for the right to revoke such
waiver only if this Agreement is terminated pursuant to Article IX
hereof) waived by the party entitled to assert such right.
ii. Section 4.12 of the Company Disclosure Letter lists the date on
which each Franchise will expire or has expired. Except as set forth in
Section 4.12 of the Company Disclosure Letter, there are not now pending
any proceedings of any Governmental Authority with respect to any
proposal for renewal of any Franchise. There exists no fact or
circumstance that makes it likely that any Franchise will not be renewed
or extended on commercially reasonable terms. Except where the Company
or its Subsidiaries are proceeding under informal renewal procedures as
provided for by the Cable Act, the Company and its Subsidiaries have
timely filed with the appropriate Governmental Authority all appropriate
requests for renewal within 30 to 36 months under the Cable Act. Section
4.12 of the Company Disclosure Letter sets forth those Franchises
serving 25,000 or more Subscribers ("Material Franchises") where the
Company or a Subsidiary has not filed a written renewal notice pursuant
to (S) 626(a)(1) of the Cable Act. Except as set forth in Section 4.12
of the Company Disclosure Letter, as to any Franchise that has expired
prior to the date hereof, the Company is currently operating such
Franchise under duly authorized extensions, and the Company has no
reason to believe
that such extensions will not be renewed until such time as the
Franchise itself has been renewed for an additional term.
iii. To the Company's Knowledge, the Systems and all related businesses
of the Company and its Subsidiaries are, and have been, operated in
compliance with the Communications Act and all regulations of the FCC
established pursuant thereto, and the Company and its Subsidiaries have
submitted to the FCC all filings that are required under the rules,
orders and regulations of the FCC or other Governmental Authorities with
jurisdiction. Except as set forth in Section 4.12 of the Company
Disclosure Letter, the operation of the Systems has been, and is, in
compliance with the rules and regulations of the FCC or other
Governmental Authorities with jurisdiction and the Company and its
Subsidiaries have not received any written notice from the FCC or other
Governmental Authorities with jurisdiction with respect to any material
violation of its rules and regulations or from any other Governmental
Authorities with jurisdiction with respect to any material violation of
any Franchise.
iv. To the Company's Knowledge, for each relevant semi-annual reporting
period, the Company has timely filed with the United States Copyright
Office all required Statements of Account in true and correct form in
all material respects, and has paid when due all required copyright
royalty fee payments in the correct amount, relating to the Systems'
carriage of television broadcast signals and appropriately classifying
the applicable tiers on which the Systems carry television broadcast
signals. To the Company's Knowledge, carriage of all broadcast signals
is in compliance with the Copyright Act of 1976, as amended (the
"Copyright Act") and the rules and regulations of the Copyright Office
and is eligible for the compulsory license under Section 111 of the
Copyright Act. Except as set forth in Section 4.12
of the Company Disclosure Letter, neither the Company nor any of its
Subsidiaries has received any inquiry from the Copyright Office or any
Third Party challenging or questioning the information submitted in any
Statement of Account or the amount of any royalty payment, for which the
Company has not provided adequate reserves in its reasonable business
judgment, nor are the Company or its Subsidiaries aware of any basis for
such inquiry. Except as set forth in Section 4.12 of the Company
Disclosure Letter, to the Company's Knowledge, no claim or copyright
infringement has been made against the Company or any of its
Subsidiaries that has not been settled, nor is any such claim pending or
threatened.
v. Other than as set forth in Section 4.12 of the Company Disclosure
Letter, neither the Company nor any of its Subsidiaries is subject to
any FCC proceeding challenging the rights of the Company or its
Subsidiaries to carry or not carry any signal, nor has the Company or
any of its Subsidiaries received any written notice or demand to carry
or not carry any signal, the carriage or non-carriage of which could
have a material adverse effect on any System.
vi. The Systems (other than the Recently Acquired Systems) are, and have
been, operated in material compliance with the Social Contract Order and
the Company and its Subsidiaries have submitted to the FCC and any
relevant Governmental Authority all forms, notices and other written
material required thereunder for implementation of the Social Contract.
Each such filing has been prepared and filed in compliance with the
Social Contract Order and is complete and accurate in all material
respects. Neither the Company nor any Subsidiary has received written
notice from the FCC as to any non-compliance with the Social Contract
Order. The Company shall use its reasonable best efforts to seek
amendment
of the Social Contract Order to bring the Recently Acquired Systems
under terms substantially the same as those contained in the proposed
Social Contract Amendment.
vii. Section 4.12 of the Company Disclosure Letter lists each of the
Governmental Authorities that (i) has been certified by the FCC pursuant
to 47 C.F.R. (S) 76.910 to regulate Basic Cable Service and associated
equipment of a System or (ii) has petitioned the FCC to regulate the
rates for Basic Cable Service and associated equipment pursuant to 47
C.F.R. (S) 76.913; Section 4.12 of the Company Disclosure Letter also
lists each complaint filed against Cable Programming Service rates on
FCC Form 329 that has not been settled by the Social Contract Order. Of
those listed, the Form 329 complaints pertaining to the Recently
Acquired Systems would be settled by the proposed Social Contract
Amendment.
viii. To the extent that the Company's and/or its Subsidiaries' rates
have not been settled pursuant to the Social Contract or would not be
settled by the proposed Social Contract Amendment, the Company and/or
its Subsidiaries are in compliance in all material respects with FCC
rate requirements.
ix.Except as set forth in Section 4.12 of the Company Disclosure Letter,
neither the Company nor any of its Subsidiaries (x) is under any
investigation by the FCC or any Governmental Authority with respect to
any of its rates for Basic Cable Service or any Cable Programming
Service (including but not limited to rates for associated equipment) or
(y) is a party to any proceeding before the FCC or any other
Governmental Authority the collective outcome of which could result in
the Company or any of its Subsidiaries being ordered to make refunds to
Subscribers in excess of $2,000,000 (exclusive of potential Social
Contract Amendment
refunds) or reduce the rates currently charged to Subscribers when
netted against any increases to which the Company is entitled.
x.Section 4.12 of the Company Disclosure Letter lists each System, and
the Franchise(s) by which it is authorized, that is subject to effective
competition (as that term is defined in Section 623(l)(1) of the Cable
Act) and the basis for the Company's determination that the System
operating under that Franchise is subject to effective competition.
m. Environmental Matters. Except as set forth in Section 4.13 of the
---------------------
Company Disclosure Letter:
(1) the operations of the Company and its Subsidiaries are in material
compliance with all applicable Environmental Laws;
(2) to the Company's Knowledge, all real property owned, operated or
leased by the Company and its Subsidiaries are free from contamination
by any Hazardous Material that is reasonably likely to result in
Environmental Costs and Liabilities to the Company in excess of
$2,000,000;
(3) to the Knowledge of the Company, the Company and its Subsidiaries
have obtained and currently maintain all material Environmental Permits
necessary for their operations and are in material compliance with such
Environmental Permits;
(4) except to the extent such matters are the subject matter of other
representations and warranties of the Company contained herein, there
are no Legal Proceedings or Environmental Claims pending, or to the
Knowledge of the Company, threatened against the Company or its
Subsidiaries alleging the violation of any Environmental Law or
asserting claims regarding Environmental Costs and Liabilities under any
Environmental Law;
(5) neither the Company nor its Subsidiaries nor to the Knowledge of the
Company, any predecessor of the Company or its Subsidiaries or any owner
of premises leased or operated by the Company or its Subsidiaries with
respect to such property, has filed any formal notice under Federal,
state, local or foreign law indicating past or present generation
treatment, storage, or disposal of or reporting a Release of Hazardous
Material into the environment; and
(6) to the Knowledge of the Company, there is not now, nor has there
been in the past, on, in or under any real property owned, leased or
operated by the Company or its Subsidiaries (A) any underground storage
tanks, above-ground storage tanks, dikes or impoundments, (B) any
friable asbestos-containing materials or (C) any polychlorinated
biphenyls which, in each case, is material to the operation of its
business at such real property.
n. Labor. Except as set forth in Section 4.14(a)(1) of the Company
-----
Disclosure Letter, neither the Company nor any of its Subsidiaries is a
party to any labor or collective bargaining agreement and there are no
labor or collective bargaining agreements that govern the terms and
conditions of employment with the Company or its Subsidiaries with
respect to employees of the Company or its Subsidiaries. Section
4.14(a)(2) of the Company Disclosure Letter lists all employment,
management, consulting, management retention or other personal service,
or compensation agreements or arrangements covering one or more non-
employees (including severance, termination or change-of-control
arrangements) and all material employment, management, consulting,
management retention or other personal service, or compensation
agreements or arrangements covering one or more employees (including
severance,
termination or change-of-control arrangements) in each case, entered
into by the Company or any of its Subsidiaries and a copy of each such
agreement has been delivered to Acquiror.
i.Except as set forth in Section 4.14(b) of the Company Disclosure
Letter, no employees of the Company or any of its Subsidiaries are
represented by any labor organization; no labor organization or group of
employees of the Company or any of its Subsidiaries has made a pending
demand against the Company or any Subsidiary for recognition, and there
are no representation proceedings or petitions seeking a representation
proceeding presently pending against or, to the knowledge of the
Company, threatened to be brought or filed against the Company or any
Subsidiary, with the National Labor Relations Board or other labor
relations tribunal; there is no organizing activity involving the
Company or any of the Subsidiaries pending or, to the Knowledge of the
Company, threatened by any labor organization or group of employees of
the Company or any its Subsidiaries.
ii.There are no (i) strikes, work stoppages, slowdowns, lockouts or
arbitrations (in the case of arbitrations which if adversely decided
would reasonably be expected to involve the payment of damages of more
than $500,000) or (ii) material grievances or other material labor
disputes pending or, to the Knowledge of the Company, threatened against
or involving the Company or any of its Subsidiaries. There are no unfair
labor practice charges, grievances or complaints pending or, to the
Knowledge of the Company, threatened by or on behalf of any employee or
group of employees of the Company or any of its Subsidiaries that
individually or in the aggregate involve more than $500,000.
iii.Except as set forth in Section 4.14(d) of the Company Disclosure
Letter, there are
no material complaints, charges or claims against the Company and its
Subsidiaries pending or, to the Knowledge of the Company, threatened to
be brought or filed with any Governmental Authority or in which an
employee or former employee of the Company or any of its Subsidiaries is
a party or a complainant based on, arising out of, in connection with,
or otherwise relating to the employment or termination of employment by
the Company or a Subsidiary of any individual, including any claim for
workers' compensation or under the Occupational Safety and Health Act of
1970, as amended. In the aggregate, the complaints and charges set forth
in Section 4.14(d) of the Company Disclosure Letter would not have,
singly or in the aggregate, a Material Adverse Effect with respect to
the Company even if each were resolved adversely to the Company and its
Subsidiaries.
iv.Hours worked by and payments made to employees of the Company and its
Subsidiaries have not been in material violation of the Federal Fair
Labor Standards Act or any other Applicable Law dealing with such
matters.
v.The Company and its Subsidiaries are in material compliance with all
Applicable Laws relating to the FCC-Equal Employment Opportunity
Commission standards and employment or termination of employment of
labor (including, but not limited to, leased workers and independent
contractors), including all such Applicable Laws and WARN relating to
wages, hours, collective bargaining, employment discrimination, civil
rights, safety and health, workers' compensation, pay equity and the
collection and payment of withholding and/or social security taxes and
similar Taxes.
o. Absence of Changes or Events. Except as set forth in Section 4.15 of the
----------------------------
Company Disclosure Letter or disclosed in the
Company SEC Documents, since the date of the most recent audited
financial statements included in the Company SEC Documents, the Company
and its Subsidiaries have operated their respective businesses only in
the ordinary and usual course and in substantially the same manner as
previously conducted and there has not been:
(1)any damage, destruction or loss with respect to the properties or
assets of the Company or its Subsidiaries whether covered by insurance
or not, which has had or would have, individually or in the aggregate, a
Material Adverse Effect with respect to the Company;
(2)any change, occurrence or circumstance that had a Material Adverse
Effect with respect to the Company;
(3) any change in the accounting principles, methods, practices or
procedures followed by the Company in connection with the business of
the Company or any change in the depreciation or amortization policies
or rates theretofore adopted by the Company in connection with the
business of the Company and its Subsidiaries;
(4)any declaration or payment of any dividends, or other distributions
in respect of the outstanding shares of Capital Stock of the Company or
any of its Subsidiaries (other than dividends declared or paid by
wholly-owned Subsidiaries);
(5)any split, combination or reclassification of the Company's capital
stock or any issuance of shares of capital stock of the Company or any
Subsidiary or any other change in the authorized capitalization of the
Company or any Subsidiary, except as contemplated by this Agreement;
(6)any repurchase or redemption by the Company of shares of its capital
stock or any issuance by the Company of any other securities in exchange
or in substitution for shares of its capital stock except pursuant to
employee benefit plans, programs or arrangements in existence on the
date hereof, in the ordinary course of business consistent with past
practice; or
(7) any grant or award of any options, warrants, conversion rights or
other rights to acquire any shares of capital stock of the Company or
any Subsidiary, except as contemplated by this Agreement or except
pursuant to employee benefit plans, programs or arrangements in
existence on the date hereof, in the ordinary course of business
consistent with past practice.
p. Unlawful Payments and Contributions. Neither the Company nor, to the
-----------------------------------
Knowledge of the Company, any of its directors, officers or any of its
other employees or agents has (a) used any Company funds for any
unlawful contribution, endorsement, gift, entertainment or other
unlawful expense relating to political activity; (b) made any direct or
indirect unlawful payment to any government official or employee from
Company funds; (c) violated or is in violation of any provision of the
Foreign Corrupt Practices Act of 1977, as amended, in connection with
the Company's and its Subsidiaries' business; or (d) made any bribe,
rebate, payoff, influence payment, kickback or other unlawful payment to
any Person or entity with respect to matters pertaining to the Company.
q. Brokers and Intermediaries. Neither the Company nor any of its officers,
--------------------------
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finder's fees in
connection with the transactions contemplated by this Agreement and the
Transaction Documents, except that the Company has retained Lazard
Freres & Co.
LLC and Xxxxx & Company Incorporated as its financial advisors, whose
respective fees and expenses shall be paid by the Company. The Company
has delivered to Acquiror a copy of the retention agreement related
thereto.
ARTICLE
Section 5
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
Acquiror represents and warrants to the Company that:
a.Organization and Authority of Acquiror.
--------------------------------------
i. Each of Acquiror and its Subsidiaries is a corporation or partnership
duly organized, validly existing and in good standing under the laws of
its jurisdiction of incorporation or organization with all requisite
power to enable it to own, lease and operate its assets and properties
and to conduct its business as currently being conducted and is
qualified and in good standing to do business in each jurisdiction in
which the nature of the business conducted by it or the character or
location of the properties owned or leased by it requires such
qualification, except to the extent the failure so to qualify would not
have a Material Adverse Effect with respect to Acquiror. Complete and
correct copies of the Certificate of Incorporation and Bylaws, each as
amended to date, of Acquiror have been delivered to the Company. Such
Restated Certificate of Incorporation and Bylaws are in full force and
effect.
ii.Acquiror has all requisite corporate power and authority to execute
and deliver this Agreement and the Transaction Documents to which it is
a party and to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement and such
Transaction Documents and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all
requisite corporate action on the part of Acquiror. This Agreement and
each Transaction Document to which Acquiror is a party has been duly
executed and delivered by Acquiror and constitutes the legal, valid and
binding obligation of Acquiror, enforceable against it in accordance
with its terms, except (i) as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally and (ii) as the remedy of specific
performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought.
b. Capitalization. As of the date hereof, the authorized capital stock of
--------------
Acquiror consists of (i) 2,000,000,000 shares of U S WEST Communications
Group Common Stock, par value $.01 per share ("Communications Stock"),
of which 475,604,443 shares were issued and outstanding as of February
23, 1996, all of which are duly authorized, validly issued, fully paid
and nonassessable and not subject to preemptive rights created by
statute, Acquiror's Restated Certificate of Incorporation or any
agreement to which Acquiror is a party or by which Acquiror is bound,
(ii) 2,000,000,000 shares of Media Stock, of which 473,225,728 shares
were issued and outstanding as of February 23, 1996, all of which are
duly authorized, validly issued, fully paid and nonassessable and not
subject to preemptive rights created by statute, Acquiror's Restated
Certificate of Incorporation or any agreement to which Acquiror is a
party or by which Acquiror is bound, and (iii) 200,000,000 shares of
Preferred Stock, par value $1.00 per share,
of which (A) 10,000,000 shares have been designated as Series A Junior
Participating Cumulative Preferred Stock, none of which are issued and
outstanding and all of which are reserved for issuance in connection
with rights to purchase Communications Stock pursuant to the Amended and
Restated Rights Agreement, dated as of October 31, 1995 (the "Rights
Agreement"), by and between Acquiror and State Street Bank and Trust
Company, as rights agent, (B) 10,000,000 shares have been designated as
Series B Junior Participating Cumulative Preferred Stock, none of which
are issued and outstanding and all of which are reserved for issuance in
connection with rights to purchase Media Stock pursuant to the Rights
Agreement, and (C) 50,000 shares have been designated as Series C
Cumulative Redeemable Preferred Stock and are issued and outstanding,
all of which are duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights created by statute,
Acquiror's Restated Certificate of Incorporation or Bylaws or any
agreement to which Acquiror is a party or by which Acquiror is bound. As
of the date hereof, the Number of Shares Issuable with Respect to the
InterGroup Interest (as defined in Section 2.6.19 of Article V of
Acquiror's Restated Certificate of Incorporation) is zero.
i.Other than as described in the Acquiror SEC Documents or in Section
5.2 of the Letter from Acquiror, dated the date hereof, addressed to the
Company (the "Acquiror Disclosure Letter"), no shares of the capital
stock of Acquiror are authorized, issued or outstanding, or reserved for
any other purpose, and there are no options, warrants or other rights
(including registration rights), agreements, arrangements or commitments
of any character to which Acquiror is a party relating to the issued or
unissued capital stock of Acquiror or any obligation of Acquiror to
grant, issue or sell any shares of capital stock of Acquiror by sale,
lease, license or otherwise. Except as disclosed in the Acquiror SEC
Documents or in Section 5.2 of the Acquiror Disclosure Letter, Acquiror
has no outstanding bonds, debentures, notes or other obligations the
holders of which have the right to vote or which are convertible into or
exercisable for securities having the right to vote with the
stockholders of Acquiror on any matter. Except as set forth in Section
5.2 of the Acquiror Disclosure Letter there are no voting trusts or
other agreements or understandings with respect to the voting of the
capital stock of Acquiror.
c. No Conflicts. Subject to obtaining the Acquiror Consents (as defined in
------------
Section 5.5), the execution and delivery of this Agreement and each of
the Transaction Documents to which Acquiror is a party do not, and the
consummation of the transactions contemplated hereby and thereby and
compliance with the terms hereof and thereof will not, conflict with, or
result in any violation of or default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to loss of a material
benefit under, or to the increased, additional, accelerated or
guaranteed rights or entitlements of any Person under, or result in the
creation of any Encumbrances upon any of the properties or assets of
Acquiror under, any provision of (i) the Restated Certificate of
Incorporation and Bylaws of Acquiror, (ii) any note, bond, mortgage,
indenture or deed of trust, deed to secure debt or any license, lease,
contract, commitment, permit, concession, franchise, agreement or other
binding arrangement to which Acquiror is a party or by which any of its
properties or assets may be bound or subject, (iii) any judgment, order,
writ, injunction or decree of any court, governmental body,
administrative agency or arbitrator applicable to Acquiror or its
properties or assets, or (iv) any law,
statute, rule, regulation or judicial or administrative decision
applicable to Acquiror; except in the case of clauses (ii) and (iv),
such conflicts, violations and defaults, termination, cancellation and
acceleration rights and entitlements and Encumbrances that in the
aggregate would not hinder or impair the consummation of the
transactions contemplated hereby or have a Material Adverse Effect with
respect to Acquiror.
d. Stockholder Vote. At such time as all conditions to the Merger have
----------------
otherwise been satisfied, no vote of the holders of any class or series
of Acquiror's capital stock not theretofore obtained will be necessary
or required (under Applicable Law or otherwise) to approve this
Agreement and the transactions contemplated hereby.
e. Consents. Except for (i) as set forth in Section 5.5 of the Acquiror
--------
Disclosure Letter, (ii) compliance with and filings under the HSR Act,
(iii) the filing with the SEC by Acquiror of a registration statement on
Form S-4 registering under the Securities Act the shares of Media Stock
and Series D Preferred Stock to be issued in the Merger (the "Form S-4")
and such reports under the Exchange Act as may be required in connection
with this Agreement and the transactions contemplated hereby, (iv) the
filing of the Certificate of Merger with the Secretary of State of the
State of Delaware and appropriate documents with the relevant
authorities of other states in which the Company is qualified to do
business, (v) such filings and approvals as may be required by any
applicable state securities, "blue sky" or takeover laws, and (vi) such
filings in connection with Gains Taxes (the items in clauses (i) through
(vi) being collectively referred to herein as "Acquiror Consents"), no
consents, approvals, licenses, permits, orders or authorizations of, or
registrations, declarations, notices or filings with, any Governmental
Authority or
any Third Party are required to be obtained or made by or with respect
to Acquiror in connection with the execution, delivery and performance
of this Agreement or any of the other agreements contemplated hereby to
which it is a party or the consummation of the transactions contemplated
hereby and thereby or the taking by Acquiror of any other action
contemplated hereby or thereby, which, if not obtained or made, would
have a Material Adverse Effect with respect to Acquiror.
f. Compliance; No Defaults. Except as set forth in Section 5.6 of the
-----------------------
Acquiror Disclosure Letter, neither Acquiror nor any of its Subsidiaries
is in violation of, is, to the knowledge of Acquiror, under
investigation with respect to any violation of, has been given notice or
been charged with violation of, or failed to comply with any Applicable
Laws, except for violations and failures to comply that would not have a
Material Adverse Effect with respect to Acquiror. Except as set forth in
Section 5.6 of the Acquiror Disclosure Letter, Acquiror and its
Subsidiaries have all Permits which are material to the operation of the
businesses of Acquiror and its Subsidiaries.
i. Neither Acquiror nor any of its Subsidiaries is in default or
violation (and no event has occurred which, with notice or the lapse of
time or both, would constitute a default or violation) of any term,
condition or provision of (i) its Restated Certificate of Incorporation
or Bylaws or other comparable organizational document or (ii) any note,
bond, mortgage, indenture, license, agreement or other instrument or
obligation to which Acquiror or any of its Subsidiaries is now a party
or by which Acquiror or any of its Subsidiaries or any of their
respective properties or assets may be bound, except in the case of
clause (ii), for defaults or violations which in the aggregate would not
have a Material Adverse Effect with respect to Acquiror.
g. Acquiror SEC Documents; Undisclosed Liabilities. Acquiror has filed all
-----------------------------------------------
required reports, schedules, registration statements and definitive
proxy statements with the SEC since January 1, 1993 (as such documents
have since the time of their filing been amended, the "Acquiror SEC
Documents"). As of their respective dates, the Acquiror SEC Documents
(including any financial statements filed, to be filed or required to
have been filed as a part thereof) complied in all material respects
with the requirements of the Securities Act or the Exchange Act, as
applicable, and the rules and regulations of the SEC thereunder
applicable to such Acquiror SEC Documents, and none of the Acquiror SEC
Documents contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which
they were made, not misleading. The financial statements of Acquiror
included in the Acquiror SEC Documents comply as to form in all material
respects with applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto, have been
prepared in accordance with GAAP applied on a consistent basis during
the periods involved (except as may be indicated in the notes thereto)
and fairly present (subject, in the case of the unaudited financial
statements, to normal, recurring audit adjustments, which were not
individually or in the aggregate material) the consolidated financial
position of Acquiror and its consolidated Subsidiaries as at the dates
thereof and the consolidated results of their operations and cash flows
for the periods then ended.
i.Except as disclosed in the Acquiror SEC Documents or in Section 5.7 of
the Acquiror Disclosure Letter, as of the date hereof,
Acquiror and its Subsidiaries do not have any material indebtedness,
obligations or liabilities of any kind (whether accrued, absolute,
contingent or otherwise, and whether due or to become due or asserted or
unasserted) required by GAAP to be reflected on a consolidated balance
sheet of the Acquiror and its consolidated Subsidiaries or in the notes,
exhibits or schedules thereto.
h. Litigation. Except as set forth in the Acquiror SEC Documents or in
----------
Section 5.8 of the Acquiror Disclosure Letter, there are no Legal
Proceedings against or affecting Acquiror or any of its Subsidiaries or
their respective properties or assets pending or, to the knowledge of
Acquiror, threatened, that individually or in the aggregate could (i)
have a Material Adverse Effect with respect to Acquiror or (ii) prevent,
hinder or materially delay the consummation of the transactions
contemplated by this Agreement or the Transaction Documents. Except as
set forth in Section 5.8 of the Acquiror Disclosure Letter, neither
Acquiror nor any of its Subsidiaries is a party or subject to or in
default under any judgment, order, injunction or decree of any
Governmental Authority applicable to it or to its respective properties
or assets, which judgment, order, injunction, decree or default
thereunder constitutes a Material Adverse Effect with respect to
Acquiror.
i. Absence of Changes or Events. Except as disclosed in the Acquiror SEC
----------------------------
Documents, since the date of the most recent audited financial
statements included in the Acquiror SEC Documents, Acquiror and its
Subsidiaries have conducted their business operations only in the
ordinary course and there has not occurred (i) any change, occurrence or
circumstance that had any Material Adverse Effect with respect to
Acquiror or (ii) other events or conditions of any character that,
individually or in the aggregate, have or would reasonably be
expected to have, a Material Adverse Effect with respect to Acquiror or
on the ability of Acquiror to perform its material obligations under
this Agreement and the Transaction Documents to which it is a party.
j. Brokers and Intermediaries. Neither Acquiror nor any of its officers,
--------------------------
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders' fees in
connection with the transactions contemplated by this Agreement and the
Transaction Documents, except that Acquiror has retained Xxxxxx Brothers
Inc., as its financial advisor, whose fees and expenses shall be paid by
Acquiror.
k. Ownership of Company Capital Stock. Neither Acquiror nor any of its
----------------------------------
Subsidiaries owns, directly or indirectly, any shares of Company
Capital Stock.
ARTICLE Section 6
COVENANTS RELATING TO CONDUCT OF BUSINESS
a.Conduct of Business of the Company. Except as otherwise expressly
----------------------------------
permitted by the terms of this Agreement, from the date hereof to the
Effective Time, the Company shall, and shall cause its Subsidiaries to,
carry on their respective businesses in the ordinary course in
substantially the same manner as presently conducted (including with
respect to advertising, promotions and capital expenditures) and in
compliance in all material respects with Applicable Laws, use their
reasonable best efforts consistent with past practices to keep available
the services of the present employees of the Company and its
Subsidiaries and to preserve their relationships with customers,
suppliers and others with whom the Company and its Subsidiaries deal to
the end that their goodwill and ongoing businesses shall not
be materially impaired in any material respect at the Closing Date. The
Company shall not, and shall cause its Subsidiaries not to, take any
action that would, or that is reasonably likely to, result in any of the
representations and warranties of the Company set forth in Article IV
being untrue in any material respect as of the date made or in any of
the conditions to the consummation of the Merger set forth herein not
being satisfied. In addition, and without limiting the generality of the
foregoing, except as otherwise expressly permitted by the terms of this
Agreement or as set forth in Section 6.1 of the Company Disclosure
Letter, during the period from the date hereof to the Effective Time,
the Company shall not (and shall cause its Subsidiaries not to), without
the written consent of Acquiror, which decision regarding consents shall
be made promptly (in light of its circumstances) after receipt of notice
seeking such consent:
(1)except for the Charter Amendment, amend its Restated Certificate of
Incorporation, Bylaws or other comparable organizational documents;
(2)subject to Sections 7.7 and 7.14(b), redeem or otherwise acquire any
shares of its capital stock, or issue any capital stock or any option,
warrant or right relating thereto or any securities convertible into or
exchangeable for any shares of its capital stock, or split, combine or
reclassify any of its capital stock or issue any securities in exchange
or in substitution for shares of its capital stock;
(3) subject to Section 7.14(b), (A) grant or agree to grant to any
employee any increase in wages or bonus, severance, profit sharing,
retirement, deferred compensation, insurance or other compensation or
benefits, or establish any new compensation or benefit plans or
arrangements, or amend or agree to amend
any existing Benefit Plans or Equity Appreciation Rights Plans, except
as may be required under existing agreements or in the ordinary course
of business consistent with past practices or (B) enter into any new
RSPA or amend the terms of any existing RSPA or accelerate the vesting
of any shares of Class B Common Stock issued thereunder;
(4) merge, amalgamate or consolidate with any other entity in any
transaction in which the Company is not the surviving corporation (other
than mergers between Subsidiaries of the Company), sell all or
substantially all of its business or assets, or acquire all or
substantially all of the business or assets of any other Person;
(5) enter into or amend any employment, consulting, severance or similar
agreement with any individual, except with respect to severance gifts or
payments of a nominal nature to persons holding non-officer/executive
level positions in the ordinary course of business consistent with past
practice;
(6) subject to Section 7.7, declare, set aside or make any dividends,
payments or distributions in cash, securities or property to the
stockholders of the Company, whether or not upon or in respect of any
share of Company Capital Stock;
(7) incur or assume any Indebtedness other than as specifically set
forth in Section 6.1(vii) of the Company Disclosure Letter;
(8) voluntarily grant any material Encumbrance on any of its material
assets, other than Encumbrances that are incurred in the ordinary course
of business;
(9) make any change in any method of accounting or accounting practice
or policy, except as required by Applicable Laws or by GAAP;
(10) make or incur any capital expenditures that are not set forth in
Section 6.1(x) of the Company Disclosure Letter or that, individually,
are in excess of $25 million or, in the aggregate, in excess of $50
million;
(11) subject to Section 7.7, sell, lease, swap or otherwise dispose of
any assets, other than (A) sales, leases, swaps or other dispositions of
such assets not having a fair market value in excess of $15 million
individually or $30 million in the aggregate (so long as the Company
provides notice to Acquiror of any sale, lease, swap or other
disposition of any asset having a fair market value of greater than $5
million) or (B) swaps of Systems or assets of Systems in order to
facilitate the clustering of Systems or dispose of Systems located in
the Acquiror Region; provided, however, that (1) such swaps shall not in
-------- -------
the aggregate involve more than 500,000 Subscribers of the Company or
its Subsidiaries, (2) any cable television systems acquired by the
Company or any of its Subsidiaries in any such swap shall not be located
in the Acquiror Region, (3) any cable television systems acquired by the
Company in any such swap shall not be in a franchise area where there is
a substantial overbuild with any other CATV system owned by the Company,
Acquiror or any of their respective Affiliates, (4) the aggregate amount
of cash paid by the Company or any of its Subsidiaries in any such swap
shall not exceed $50 million in the aggregate, (5) any such swap shall
require the approval of Acquiror, which approval shall not be
unreasonably withheld and Acquiror shall be reasonably satisfied that
the Company has received substantially equivalent value including cash
or other assets and (6) to the extent that the Company or any Subsidiary
must apply for the consent of the Governmental Authority as a condition
to the transfer of control or assignment of any Franchise associated
with any such swap, such application shall include an application to the
Governmental Authority, and relevant information relating to the
proposed transaction, requesting contemporaneous approval for the
anticipated acquisition of the Company or its Subsidiary by Acquiror as
contemplated herein and the transfer of control of said Franchise to the
Surviving Corporation in accordance with the terms hereof; and provided,
--------
further, that any consent required from a Governmental Authority as a
-------
condition to consummating such swap shall be deemed a Required Franchise
Consent;
(12) acquire or agree to acquire by merging or consolidating with, or by
purchasing all or a substantial portion of the assets of or equity in,
or by any other manner, any business of any Person or acquire or agree
to acquire any assets (other than supplies, raw materials and inventory
in the ordinary course, capital expenditures permitted by clause (x)
above and asset swaps permitted by clause (xi) above);
(13) abandon, avoid, dispose, surrender, fail to file for timely
renewal, terminate or amend in any materially adverse manner the terms
of any material Franchises, any FCC license that would have a material
adverse effect on the operation of a System or the Social Contract
Order, except as amended by virtue of the proposed Social Contract
Amendment, or, with respect to any Material Franchise, fail to file for
renewal pursuant to Section 626(a) of the Cable Act;
(14) delete any programming service on the Systems or make material
change in the programming services offered on the Systems other than in
the ordinary course of business or as required by the Cable Act, the
Social Contract Order or any amendments thereto;
(15) except as otherwise permitted by clauses (xi) and (xii), modify,
amend, terminate, renew or fail to use reasonable efforts to renew any
material contract or agreement necessary to continue the Company's
business in the ordinary course or waive, release or assign any material
rights or claims, other than in the ordinary course of business;
(16) offer free or reduced-price service as an inducement to any Person,
except in the ordinary course of business consistent with past practice;
(17) except as permitted by Applicable Law, including the Social
Contract Order and any amendments thereto, and (A) as disclosed to
Acquiror in writing at least 30 days prior to any rate change, implement
any rate change, retiering or repackaging of CATV programming offered by
any of its Subsidiaries, (B) and as disclosed in writing to Acquiror at
least 30 days prior to any cost-of-service rate change make any cost-of-
service election under the rules and regulations adopted under the Cable
Act, (C) determine a method of refund pursuant to 47 C.F.R. Section
76.942(d) or 76.961(c) or (D) amend any Franchise or agree to make any
payments or commitments, including commitments to make future capital
improvements or provide future services, in connection with any renewal
of any Franchise other than that which the Company would make in the
ordinary course of business;
(18) enter into any agreement, understanding or commitment that
restrains, limits or impedes the Company's or Acquiror's ability to
compete with or conduct any business or line of business;
(19) invest or enter into any agreement, understanding or commitment,
whether written or oral, by or on behalf of the Company or its
Subsidiaries, to invest or provide additional capital in respect of
assets, businesses or entities; provided, however, that the restrictions
-------- -------
contained in this clause shall not apply to existing commitments as set
forth in Section 6.1(xix) of the Company Disclosure Letter or to any
investments in excess of $10 million individually or $20 million in the
aggregate;
(20) except as otherwise provided in clause (xix) above or Section 7.14,
enter into any material contract or agreement with, or make any loan or
advance to, any Affiliate (other than a wholly owned Subsidiary) of the
Company or any stockholder or Affiliate thereof;
(21) enter into, or amend the terms of, any agreement relating to
interest rate swaps, caps or other hedging or derivative instruments
relating to Indebtedness of the Company and its Subsidiaries, except as
required under agreements relating to existing Indebtedness and
Indebtedness permitted by clause (vii) above;
(22) conduct its business in a manner or take, or cause to be taken, any
other action (including, without limitation, effecting or agreeing to
effect or announcing an intention or proposal to effect, any
acquisition, business combination, merger, consolidation, restructuring
or similar transaction) that would or might reasonably be expected to
prevent Acquiror or the Company from consummating the transactions
contemplated hereby in accordance with the terms of this Agreement
(regardless of whether such action would otherwise be permitted or not
prohibited hereunder), including, without limitation, any action which
may limit the ability of Acquiror or the Company to consummate the
transactions contemplated hereby as a result of antitrust or other
regulatory concerns;
(23) purchase, sell or trade (or announce any intention or proposal
to purchase, sell
or trade) any shares of Media Stock, or take any other action a
principal purpose of which is to affect the calculation of the
Determination Price; or
(24) agree, whether in writing or otherwise, to do any of the foregoing.
Prior to the date hereof, Acquiror has delivered to the Company a list (which
the Acquiror may update from time to time) designating certain individuals of
the Acquiror to whom the Company may direct requests for consents under this
Section 6.1.
b.Conduct of Business of Acquiror. Except as set forth in Section 6.2 of
---------------------------------
the Acquiror Disclosure Letter, from the date hereof to the Effective
Time, Acquiror shall not (and shall cause its Subsidiaries not to):
(1) issue shares of Media Stock or any option, warrant or right relating
thereto or any securities convertible into or exchangeable for any
shares of Media Stock at less than fair market value as determined by
the Board of Directors of Acquiror (other than pursuant to the terms of
existing options or benefit plans), or split, combine, redeem, convert
or reclassify the Media Stock or issue any securities in exchange or in
substitution for shares of Media Stock;
(2) amend its Certificate of Incorporation or Bylaws (other than the
filing of a Certificate of Designations for the issuance of any series
of Preferred Stock of Acquiror) in any manner adverse to the holders of
Media Stock;
(3) declare, set aside or make any dividends or distributions in cash,
securities or property to holders of Media Stock;
(4) conduct its business in a manner or take, or cause to be taken, any
other action (including, without limitation, effecting or agreeing to
effect or
announcing an intention or proposal to effect, any acquisition, business
combination, merger, consolidation, restructuring or similar
transaction) that would or might reasonably be expected to prevent
Acquiror or the Company from consummating the transactions contemplated
hereby in accordance with the terms of this Agreement (regardless of
whether such action would otherwise be permitted or not prohibited
hereunder), including, without limitation, any action which may limit
the ability of Acquiror or the Company to consummate the transactions
contemplated hereby as a result of antitrust or other regulatory
concerns;
(5) take any action that would, or that is reasonably likely to, result
in any of the representations and warranties of Acquiror set forth in
Article V being untrue in any material respect as of the date made or
any of the conditions to the Merger set forth herein not being
satisfied;
(6) purchase, sell (other than through primary issuances) or trade (or
announce any intention or proposal to purchase, sell or trade) any
shares of Media Stock, or take any other action a principal purpose of
which is to affect the calculation of the Determination Price, other
then pursuant to benefit plans in the ordinary course of business;
(7) sell all or substantially all of the properties and assets of the
Media Group (within the meaning of Section 2.4.1(B) of Article V of the
Restated Certificate of Incorporation of Acquiror); or
(8) acquire, or agree to acquire, any shares of Company Capital Stock so
long as, after giving effect to the purchase of the Put Shares pursuant
to Section 9.4, Acquiror would beneficially own less than 10% of the
Company Capital Stock.
c. Access to Information. From the date hereof until the Closing Date, the
---------------------
Company shall permit Acquiror and its representatives to have full
access to the management, facilities, suppliers, accounts, books,
records (including, without limitation, budgets, forecasts and personnel
files and records), contracts and other materials of the Company and its
Subsidiaries reasonably requested by Acquiror or such representatives
and to make available to Acquiror and its representatives the directors,
officers, employees and independent accountants of the Company for
interviews for the purpose, among other things, of verifying the
information furnished to Acquiror, developing transition plans and
integrating the operations of the Company and its Subsidiaries with the
operations of Acquiror and its Subsidiaries and Affiliates. Such access
shall be subject to existing confidentiality agreements and shall be
conducted by Acquiror and its representatives during normal business
hours, upon reasonable advance notice and in such a manner as not to
interfere unreasonably with the business or operations of the Company
and its Subsidiaries.
i.From the date hereof until the Closing Date, Acquiror shall permit the
Company and its representatives to have full access to the management,
facilities, suppliers, accounts, books, records (including, without
limitation, budgets and forecasts), contracts and other materials of the
Media Group reasonably requested by the Company or such representatives
and to make available to the Company and its representatives the
directors, officers, employees and independent accountants of the Media
Group for interviews for the purpose, among other things, of verifying
the information furnished to the Company. Such access shall be subject
to existing confidentiality agreements and shall be conducted by the
Company and its
representatives during normal business hours, upon reasonable advance
notice and in such a manner as not to interfere unreasonably with the
business or operations of the Media Group.
ii.Each of the Company and Acquiror agrees that it will not, and will
cause each of their respective Affiliates and representatives not to,
use any information obtained pursuant to this Section 6.3 for any
purpose unrelated to the consummation of the transactions contemplated
by this Agreement. The Confidentiality Agreement, dated as of September
26, 1994, as amended on January 11, 1996, between Acquiror and the
Company and the Confidentiality Agreement, dated as of April 19, 1995,
between Acquiror and the Company (the "Confidentiality Agreements")
shall apply with respect to information furnished thereunder or
hereunder and any other activities contemplated thereby.
ARTICLE Section 7
ADDITIONAL AGREEMENTS
a.Preparation of Form S-4 and the Proxy Statement; Stockholders'
-------------------------------------------------------------
Meeting; Charter Amendment. Promptly following the date of this
--------------------------
Agreement, the Company shall prepare and file with the SEC the Proxy
Statement and Acquiror shall prepare and file with the SEC the Form S-4,
in which the Proxy Statement will be included as a prospectus. Each of
the Company and Acquiror shall use its reasonable best efforts to have
the Form S-4 declared effective under the Securities Act as promptly as
practicable after such filing. The Company shall use its reasonable best
efforts to cause the Proxy Statement to be mailed to the Company's
stockholders, as promptly as practicable after the Form S-4 is declared
effective under the Securities Act. Acquiror shall also take any action
(other than qualifying to do business in
any jurisdiction in which it is not now so qualified or consenting to
service of process in any jurisdiction in which it has not previously so
consented in any action other than one arising out of the offering of
the Media Stock and the Series D Preferred Stock in such jurisdiction)
required to be taken to qualify the Media Stock and Series D Preferred
Stock to be issued in the Merger under any applicable state securities
or "blue sky" laws prior to the Effective Time, and the Company shall
furnish all information concerning the Company and the holders of the
Company Capital Stock as may be reasonably requested in connection with
any such action.
i.None of the information supplied or to be supplied by the Company, on
the one hand, or Acquiror, on the other hand, for inclusion or
incorporation by reference in (i) the Form S-4 will, at the time the
Form S-4 is filed with the SEC, at any time it is amended or
supplemented or at the time it becomes effective under the Securities
Act, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading, or (ii) the Proxy Statement will, at
the date it is first mailed to the stockholders of the Company or at the
time of each Stockholders' Meeting (as defined in Section 7.1(d)),
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which
they are made, not misleading. The Proxy Statement and the Form S-4 will
comply as to form in all material respects with the requirements of the
Exchange Act or the Securities Act, as the case may be. Notwithstanding
the foregoing, (i) no representation is made by the Company with respect
to statements made or incorporated by reference therein based on
information supplied in writing by
Acquiror specifically for inclusion or incorporation by reference in the
Proxy Statement and (ii) no representation is made by Acquiror with
respect to statements made or incorporated by reference therein based on
information supplied in writing by the Company specifically for
inclusion or incorporation by reference in the Form S-4.
ii.The Company and Acquiror shall cooperate with each other and provide
to each other all information necessary in order to prepare the Proxy
Statement and the Form S-4. The Company and Acquiror shall notify each
other promptly of the receipt of any comments from the SEC or its staff
and of any requests by the SEC or its staff for amendments or
supplements to the Form S-4 or the Proxy Statement or for additional
information and shall supply the other parties with copies of all
correspondence between the Company or any of its representatives, or
Acquiror or any of its representatives, as the case may be, on the one
hand, and the SEC or its staff, on the other hand, with respect thereto.
The Company and Acquiror shall use their respective reasonable best
efforts to respond to any comments of the SEC with respect to the Form
S-4 and the Proxy Statement as promptly as practicable. If at any time
prior to the Effective Time there shall occur (i) any event with respect
to the Company or any of its Subsidiaries, or with respect to other
information supplied by the Company for inclusion in the Proxy Statement
or (ii) any event with respect to Acquiror, or with respect to
information supplied by Acquiror for inclusion in the Form S-4, in
either case which event is required to be described in an amendment of,
or a supplement to, the Proxy Statement or Form S-4, such event shall be
so described, and such amendment or supplement shall be promptly filed
with the SEC and, as required by law, disseminated to the stockholders
of the Company. Acquiror shall notify the Company promptly upon
(i) the declaration by the SEC of the effectiveness of the Form S-4,
(ii) the issuance or threatened issuance of any stop order or other
order preventing or suspending the use of any prospectus relating to the
Form S-4, (iii) any suspension or threatened suspension of the use of
any prospectus relating to the Form S-4 in any state, (iv) any
proceedings commenced or threatened to be commenced by the SEC or any
state securities commission that might result in the issuance of a stop
order or other order or suspension of use or (v) any request by the SEC
to supplement or amend any prospectus relating to the Form S-4 after the
effectiveness thereof. Acquiror and, to the extent applicable, the
Company, shall use its reasonable best efforts to prevent or promptly
remove any stop order or other order preventing or suspending the use of
any prospectus relating to the Form S-4 and to comply with any such
request by the SEC or any state securities commission to amend or
supplement the Form S-4 or the prospectus relating thereto.
iii.The Company shall, as promptly as practicable, duly call, give
notice of, convene and hold a meeting of its stockholders (the "Initial
Stockholders' Meeting") for the purpose of obtaining the Stockholder
Approvals. The Company shall use its reasonable best efforts to hold
such meeting as soon as practicable. In the event the Charter Amendment
is not approved at the Initial Stockholders' Meeting, the Company shall,
as promptly as practicable following the date of the Initial
Stockholders' Meeting, duly call, give notice of, convene and hold
another meeting of its stockholders (the "Additional Stockholders'
Meeting" and, together with the Initial Stockholders' Meeting,
collectively, the "Stockholders' Meetings" and individually, a
"Stockholders' Meeting") for the purpose of obtaining the Stockholder
Approvals. The Company shall, as promptly as practicable
after the date of the Initial Stockholders' Meeting, hold the Additional
Stockholders' Meeting. Subject to the fiduciary duties of the Board of
Directors of the Company under Applicable Laws and to Section 9.1(g),
the Company shall, through the Board of Directors, recommend to its
stockholders adoption of this Agreement, the Charter Amendment and the
other transactions contemplated hereby and shall use its best efforts to
solicit from stockholders proxies in favor of adoption of this Agreement
and the Charter Amendment and to take all other action necessary to
secure the Stockholder Approvals at the Initial Stockholders' Meeting or
the Additional Stockholders' Meeting, as the case may be. Without
limiting the generality of the foregoing, the Company agrees that its
obligations pursuant to the first and third sentences of this Section
7.1(d) shall not be altered by the commencement, public proposal or
communication to the Company of any Acquisition Proposal (as defined in
Section 7.10).
iv.Subject to receipt of the Stockholder Approvals, the Company shall
take all actions necessary to cause the Charter Amendment to be
executed, acknowledged and filed and to become effective no later than
immediately prior to the Effective Time in accordance with the DGCL as
soon as practicable after the approval thereof at a Stockholders'
Meeting.
v.The Company shall make stock transfer records relating to the Company
available to Acquiror to the extent reasonably necessary to effectuate
the intent of this Agreement.
b. Letter of the Company's Accountants. The Company shall use its
-----------------------------------
reasonable best efforts to cause to be delivered to Acquiror letters of
(i) Deloitte & Touche LLP, the Company's independent public accountants
and (ii) any other independent
public accountants whose reports are included or incorporated by
reference in the Form S-4, each dated a date within two business days
before the date on which the Form S-4 shall become effective and
addressed to Acquiror, in form and substance reasonably satisfactory to
Acquiror and customary in scope and substance for letters delivered by
independent public accountants in connection with registration
statements similar to the Form S-4.
c. Letter of Acquiror's Accountants. Acquiror shall use its reasonable best
--------------------------------
efforts to cause to be delivered to the Company a letter of Coopers &
Xxxxxxx L.L.P., Acquiror's independent public accountants, dated a date
within two business days before the date on which the Form S-4 shall
become effective and addressed to the Company, in form and substance
reasonably satisfactory to the Company and customary in scope and
substance for letters delivered by independent public accountants in
connection with registration statements similar to the Form S-4.
d. Reasonable Best Efforts. Subject to the terms and conditions of this
-----------------------
Agreement, including, without limitation, Section 7.6, each of the
parties hereto agrees to use its reasonable best efforts to take, or
cause to be taken, all action and to do, or cause to be done, all things
necessary, proper or advisable under Applicable Laws and regulations to
consummate and make effective the transactions contemplated by this
Agreement (including the execution of the Transaction Documents to which
they or any of their Affiliates are a party), subject to the Stockholder
Approval, including (a) the obtaining of all necessary actions or
nonactions, waivers, consents and approvals from Governmental
Authorities and the making of it all necessary registrations and filings
(including filings with Governmental Authorities, if any), and the
taking of all
reasonable steps as may be necessary to obtain an approval or waiver
from, or to avoid an action or proceeding by, any Governmental
Authorities, (b) the obtaining of all necessary consents, approvals or
waivers from Third Parties and (c) the execution and delivery of any
additional instruments necessary to consummate the transactions
contemplated by this Agreement and the Transaction Documents. In
furtherance of the foregoing, Acquiror and the Company each shall
furnish to the other such necessary information and reasonable
assistance as the other may request in connection with obtaining any
consents required to be obtained by it hereunder.
e. Franchise and License Consents. Without limiting the generality of
------------------------------
Section 7.4, the Company and Acquiror shall each use their respective
reasonable best efforts to obtain all Franchise Consents and License
Consents, including taking the actions specified herein. In order to
secure the Franchise Consents and License Consents from Governmental
Authorities and the FCC, the Company shall proceed immediately in good
faith and using its reasonable best efforts, to prepare, file and
prosecute each Franchise Consent and License Consent from the relevant
Governmental Authority and the FCC, with the full right of participation
by Acquiror including, without limitation, the right of prior review and
approval of correspondence or forms of transfer resolutions,
applications, ordinances or agreements to be submitted to Governmental
Authorities and the FCC (which approval shall not be unreasonably
withheld or delayed) and to be represented at all meetings or hearings
as may be scheduled to consider such submissions. The Company shall send
notice of the transactions contemplated in this Agreement to all
Governmental Authorities. The Company shall submit to each Governmental
Authority whose consent is required a form of ordinance or resolution,
as appropriate, relating to the transfer of
the Franchise, which ordinance or resolution shall be in a form
reasonably acceptable to Acquiror and the Company. The Company shall
consult with Acquiror and promptly and regularly notify Acquiror with
regard to all material developments of the Franchise Consent and License
Consent process, and shall give Acquiror reasonable prior notice of all
meetings scheduled with the Governmental Authorities and the FCC.
Acquiror shall use its reasonable best efforts to promptly assist the
Company and shall take such prompt and affirmative actions as may
reasonably be necessary in obtaining such approvals and shall cooperate
with the Company in the preparation, filing and prosecution of such
applications as may reasonably be necessary, including the preparation,
filing and prosecution of any joint applications required to be filed
with the Governmental Authorities or the FCC, and agrees to use its
reasonable best efforts to furnish all information as is reasonably or
as is customarily required by the approving entity, and, if required by
a Governmental Authority or the FCC upon reasonable notice, Acquiror
shall have the obligation to be represented at such meetings or hearings
as may be scheduled to consider such applications. Any administrative
filing fees imposed or expenses for which reimbursement is required by
the Governmental Authority in connection with obtaining the Franchise
Consents or the License Consents shall be borne by the Company and each
of the parties shall bear its own legal fees or other costs of
professional advisors incurred in the filing and prosection of such
applications. If, in connection with obtaining Franchise Consents or the
License Consents from a Governmental Authority or the FCC, a
Governmental Authority or the FCC impose new, material Franchise or
license conditions as a condition to granting its consent, Acquiror and
the Company shall negotiate jointly with such Governmental Authority or
the FCC with
respect to such conditions, with such conditions to be accepted only if
consented to by Acquiror and the Company, which consent shall not be
unreasonably withheld. Acquiror agrees that prior to the Closing Date,
it will not, without the prior written consent of the Company, seek
amendments, modifications or other changes to Franchises and shall not
institute any discussions with Governmental Authorities or the FCC
without the prior written consent of the Company and without offering a
representative of the Company an opportunity to participate or observe
such discussions. To the extent such request would not, in the
reasonable judgment of the Company, delay or impair the ability to
obtain any Franchise Consents, any application to any Governmental
Authority for any Franchise Consent necessary for the transfer of
control of any Franchise shall request that the relevant Governmental
Authority also agree that no further Franchise Consent shall be required
for the subsequent transfer of control of, or assignment of, such
Franchise to a specified Person identified in such application who is an
Affiliate of Acquiror to which Acquiror intends to transfer or assign
the Franchise immediately prior to Closing. In addition, the Company
will use reasonable best efforts to obtain necessary transfers of all
private mobile radio service licenses.
x.Xx the extent that any Franchise Consents listed in Section 4.6 of the
Company Disclosure Letter have not been obtained by Final Order prior to
Closing (such Franchises hereinafter referred to as the "Non-Required
Franchises"), Acquiror and Company shall enter into negotiations to
determine the disposition of the Non-Required Franchises after Closing.
In the event that the parties agree to transfer any part of a System
which includes, in part, areas covered by a Non-Required Franchise
(hereinafter the "Non-Required Systems"), the parties shall continue to
be
subject to Section 7.5(a) until such time as all Franchise Consents are
obtained and the Non-Required Franchises are transferred to Acquiror.
f. Antitrust Notification. The Company and Acquiror shall as promptly as
----------------------
practicable, but in no event later than 30 Business Days following the
execution and delivery of this Agreement, file with the FTC and the DOJ
the notification and report form required for the transactions
contemplated hereby and any supplemental information requested in
connection therewith pursuant to the HSR Act. Each of Acquiror and the
Company shall furnish to each other's counsel such necessary information
and reasonable assistance as the other may request in connection with
its preparation of any filing or submission that is necessary under the
HSR Act. The Company and Acquiror acknowledge that more than one filing
may be required under the HSR Act in order to consummate the
transactions contemplated by this Agreement, and agree to cooperate and
furnish to each other's counsel such necessary information and
reasonable assistance as the other may request in connection with its
preparation of any subsequent filing.
i.The Company and Acquiror shall keep each other apprised of the status
of any communications with, and any inquiries or requests for additional
information from, the FTC and the DOJ and shall comply promptly with any
such inquiry or request.
ii.Each of the Company and Acquiror shall use its reasonable best
efforts to obtain any clearance required under the HSR Act for the
consummation of the Merger, which efforts, for purposes of this
Agreement shall not, except as provided in Section 7.6(d), require
Acquiror in order to obtain any consent or clearance from the DOJ or any
other Governmental Authority to (i) hold separate, sell or otherwise
dispose of any assets, including assets of
the Company, the effect of any of which, in the reasonable judgment of
Acquiror, would be to materially impair the value of the Merger to
Acquiror or (ii) contest any suit brought or threatened by the FTC or
DOJ or attempt to lift or rescind any injunction or restraining order
obtained by the FTC or DOJ adversely affecting the ability of the
parties hereto to consummate the transactions contemplated hereby.
iii.For purposes of Section 7.6(c), "reasonable best efforts" shall
include entry into a consent decree in any action brought by the DOJ or
into a consent order with the FTC where such decree or order requires
the divestiture of the Designated Assets and of the assets set forth in
Section 7.6(d) of the Company Disclosure Letter, if and only if, such
decree or order does not require, either absolutely or conditionally,
the divestiture of any other assets or of the stock of any other
corporation, or (except for reasonable and customary compliance and
other requirements ancillary to the required divestiture) impose any
additional requirement or limitation on Acquiror, on its ability to
operate its current and contemplated businesses, or on its ability to
acquire assets or stock in any corporation; and only if such decree or
order provides that Acquiror shall have a period of at least 12 months
to effect such divestiture itself and an additional 12 months to divest
pursuant to a reasonable and customary trusteeship provision.
g. Certain Actions. Except as otherwise specifically limited by this
---------------
Agreement, each of the Company and Acquiror agrees to use its reasonable
best efforts and to take, or cause to be taken, all actions and to do,
or cause to be done, all things necessary, proper or advisable to ensure
that there shall be no regulatory impediments, pursuant to the
Communications Act, the rules and regulations of the FCC, or otherwise,
to the closing of the
transactions contemplated hereby and the Company agrees not to acquire
any assets or engage in any activities prior to the Closing of a type
which Acquiror would be precluded from acquiring or engaging in pursuant
to the Communications Act, the rules and regulations of the FCC or
otherwise.
i.On or prior to the Closing Date, the Company shall sell, distribute to
stockholders or otherwise dispose of the properties of the Company and
its Subsidiaries listed in Section 7.7 of the Company Disclosure Letter
(the "Designated Assets") in a manner acceptable to Acquiror, in its
sole discretion.
ii.Not later than one hundred and twenty (120) days following the date
hereof, the Company and Acquiror shall agree to the fair market value of
the Designated Assets (the "Designated Asset Fair Market Value"). In the
event of a sale or other disposition of the Designated Assets for an
amount less than the Designated Asset Fair Market Value, the Share Price
shall be reduced by the quotient of (i) the excess of (x) the Designated
Asset Fair Market Value over (y) the amount of consideration received by
the Company in respect of such sale or disposition divided by (ii) the
number of shares of Company Common Stock outstanding immediately prior
to the Effective Time on a fully diluted basis, including giving effect
to the conversion of all outstanding shares of Company Preferred Stock.
In the event of a distribution of the Designated Assets to the
stockholders of the Company, the Share Price shall be reduced by an
amount equal to the quotient of (i) the Designated Asset Fair Market
Value divided by (ii) the number of shares of Company Common Stock
outstanding immediately prior to the Effective Time on a fully diluted
basis, including giving effect to the conversion of all outstanding
shares of Company Preferred Stock. The amount of any adjustment to the
Share Price pursuant to
this Section 7.7(c) shall be referred to as the "Per Share Adjustment
Amount" and the Cash Consideration Amount shall be reduced by the Per
Share Adjustment Amount multiplied by the number of shares of Company
Common Stock outstanding immediately prior to the Effective Time on a
fully diluted basis, including giving effect to the conversion of all
outstanding shares of Company Preferred Stock.
h. Supplemental Disclosure. The Company shall confer on a regular and
-----------------------
frequent basis with Acquiror, report on operational matters and promptly
notify Acquiror of, and furnish Acquiror with, any information it may
reasonably request with respect to, any event or condition or the
existence of any fact that would cause any of the conditions to
Acquiror's obligation to consummate the Merger not to be completed, and
Acquiror shall promptly notify the Company of, and furnish the Company
any information it may reasonably request with respect to, any event or
condition or the existence of any fact that would cause any of the
conditions to the Company's obligation to consummate the Merger not to
be completed.
i. Announcements. Prior to the Closing, neither the Company nor Acquiror
-------------
will issue any press release or otherwise make any public statement with
respect to this Agreement and the transactions contemplated hereby
without the prior consent of the other (which consent shall not be
unreasonably withheld), except as may be required by Applicable Law or
stock exchange regulations (including, without limitation, pursuant to
the United States Federal securities laws in connection with any
registration statement or report filed thereunder), in which event the
party required to make the release or announcement shall, if possible,
allow the other party reasonable time to comment on such release or
announcement in advance of such issuance.
j. No Solicitation. From the date hereof until the Effective Time, the
---------------
Company shall not, nor shall it permit any of its Subsidiaries to, nor
shall it authorize or permit any of its officers, directors, employees,
agents, investment bankers, attorneys, financial advisors or other
representatives or those of any of its Subsidiaries (collectively,
"Company Representatives") to, directly or indirectly, solicit, initiate
or encourage (including by way of furnishing information or assistance)
or take other action to facilitate any inquiries or the making of any
proposal that constitutes or may reasonably be expected to lead to, an
Acquisition Proposal from any Third Party, or engage in any discussions
or negotiations relating thereto or in furtherance thereof or accept or
enter any agreement with respect to any Acquisition Proposal; provided,
--------
however, that, notwithstanding anything to the contrary in this
-------
Agreement, (i) prior to the approval of this Agreement by the
Stockholders of the Company, the Company may engage in discussions or
negotiations with, and may furnish information concerning the Company
and its business, properties and assets to, a Third Party who, without
any solicitation, initiation, encouragement, discussion or negotiation,
directly or indirectly, by or with the Company or any Company
Representatives, or in furtherance thereof makes a written, bona fide
Acquisition Proposal that is not subject to any material contingencies
relating to financing and that is reasonably capable of being financed
and is financially superior to the consideration to be received by the
Company's stockholders pursuant to the Merger (as determined in good
faith by the Board of Directors after consultation with the Company's
financial advisors) if (1) the Board of Directors determines in its good
faith, after receipt of written advice of the Company's outside legal
counsel, that such action is advisable for the Board of Directors to act
in a manner
consistent with its fiduciary duties under Applicable Law and (2) prior
to furnishing information with respect to the Company and its
Subsidiaries to, such Third Party, the Company shall receive from such
Third Party an executed confidentiality agreement in reasonably
customary form on terms not more favorable to such Person or entity than
the terms contained in the Confidentiality Agreements, or (ii) the Board
of Directors may take and disclose to the Company's stockholders a
position with regard to a tender offer or exchange offer to the extent
required by Rule 14e-2(a) under the Exchange Act. Without limiting the
foregoing, it is understood that any violation of the restrictions set
forth in the preceding sentence by any investment banker or financial
advisor retained by the Company, whether or not such Person is
purporting to act of behalf of the Company of any of its Subsidiaries or
otherwise, shall constitute a breach of this Section 7.10 by the
Company.
i.The Company shall promptly notify Acquiror orally and in writing of
any Acquisition Proposal or any inquiry with respect to or which could
lead to any Acquisition Proposal, within 24 hours of the receipt
thereof, including the identity of the Third Party making any such
Acquisition Proposal or inquiry and the material terms and conditions of
any Acquisition Proposal, and if such Acquisition Proposal or inquiry is
in writing, shall deliver to Acquiror a copy of such Acquisition
Proposal or inquiry. The Company shall keep Acquiror informed of the
status and details of any such Acquisition Proposal or inquiry.
ii.The Company shall immediately cease and cause to be terminated any
existing solicitation, initiation, encouragement, activity, discussion
or negotiation with any parties conducted heretofore by the Company or
any Company Representatives with respect to any of the foregoing.
xxx.Xx used in this Agreement, "Acquisition Proposal" shall mean any
proposal or offer, other than a proposal or offer by Acquiror or any of
its Affiliates, for a tender or exchange offer, merger, consolidation or
other business combination involving the Company or any of its material
Subsidiaries or any proposal to acquire in any manner a substantial
equity interest in or a substantial portion of the assets of the Company
or any of its material Subsidiaries; provided, however, that, the term
--------- -------
"Acquisition Proposal" shall not include any acquisition by the Company
or any of its Subsidiaries of any assets, businesses or entities in any
transaction or series of related transactions in exchange for other
assets, businesses or entities of any Third Party.
k. Indemnification; Directors' and Officers Insurance. The Restated
--------------------------------------------------
Certificate of Incorporation and Bylaws of the Surviving Corporation at
the Effective Time shall not be amended, repealed or otherwise modified
for a period of six years after the Effective Time in any manner that
would adversely affect the rights thereunder of individuals who at any
time prior to the Effective Time were directors or officers of the
Company or its Subsidiaries in respect of actions or omissions occurring
at or prior to the Effective Time (including, without limitation, the
transactions contemplated by this Agreement), unless such modification
is required by law.
i.From and after the Effective Time, the Surviving Corporation shall,
indemnify, defend and hold harmless each Person who is now, or has been
at any time prior to the date hereof or who becomes prior to the
Effective Time, an officer or director of the Company or any of its
Subsidiaries (the "Indemnified Parties") against all losses, claims,
damages, costs, expenses (including attorneys' fees and expenses),
liabilities
or judgments or amounts that are paid in settlement with the approval of
the indemnifying party (which approval shall not be unreasonably
withheld) of or in connection with any threatened or actual claim,
action, suit, proceeding or investigation based in whole or in part on
or arising in whole or in part out of the fact that such Person is or
was a director or officer of the Company or any of its Subsidiaries or
served as a director of any Third Party on behalf of the Company or any
of its Subsidiaries whether pertaining to any matter existing or
occurring at or prior to the Effective Time and whether asserted or
claimed prior to, or at or after, the Effective Time ("Indemnified
Liabilities"), including, without limitation, all Indemnified
Liabilities based in whole or in part on, or arising in whole or in part
out of, or pertaining to this Agreement or the transactions contemplated
hereby, in each case to the fullest extent a corporation is permitted
under the DGCL to indemnify its own directors or officers as the case
may be (and the Company or the Surviving Corporation, as the case may
be, will pay expenses in advance of the final disposition of any such
action or proceeding to each Indemnified Party to the full extent
permitted by law).
ii.The provisions of this Section 7.11 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party, his or
her heirs and his or her personal representatives and shall be binding
on all successors and assigns of Acquiror and the Company.
l. NYSE Listing. Acquiror shall use its best efforts to cause the shares of
------------
Media Stock and Series D Preferred Stock to be issued in the Merger to
be approved for listing on the NYSE, subject only to notice of official
issuance, prior to the Effective Time. If, for any reason, Acquiror
shall not be able to list the shares of the
Series D Preferred Stock to be issued in the Merger on the NYSE,
Acquiror shall use its best efforts to, prior to the Effective Date,
list such shares on such other stock exchange, or cause such shares to
be eligible for trading on such other trading facility, as the Company
may request.
m. Affiliates. Prior to the Closing Date, the Company shall deliver to
----------
Acquiror a letter identifying all Persons who are, at the time this
Agreement is submitted to the stockholders of the Company, "affiliates"
of the Company for purposes of Rule 145 under the Securities Act. The
Company shall use its best efforts to cause each such Person to deliver
to Acquiror on or prior to the Closing Date a written agreement
substantially in the form attached as Exhibit D.
n. Employee Benefits. For a period of one year following the Effective
-----------------
Time, Acquiror shall maintain in effect for employees of the Company and
its Subsidiaries benefits (other than RSPAs or similar benefits) no less
favorable in the aggregate than the benefits offered by the Company
immediately prior to the Effective Time. Acquiror agrees to honor and
perform all severance, employment and similar agreements of the Company
disclosed in Section 4.11 of the Company Disclosure Letter and each RSPA
and related Tax Liability Financing Agreement.
i. Following the date hereof, the Company shall, after consultation with
Acquiror, be permitted to (i) forgive up to $35.7 million principal
amount of outstanding loans made by the Company to employees to enable
such employees to pay income Taxes incurred by such employees as a
result of the purchase of shares of Company Common Stock by such
employees pursuant to the RSPAs in accordance with the terms of an
amendment to the Tax Liability Financing Agreement substantially in the
form set forth in Section 7.14 of the Company Disclosure Letter;
provided, however, that
-------- -------
any loan to an employee of the Company who is, or reasonably can be
expected to become, a "covered employee" (within the meaning of Section
162(m) of the Code) shall in no event be forgiven, in whole or in part,
prior to the day following the Closing Date, (ii) issue up to 350,000
shares of Company Common Stock pursuant to RSPAs substantially in the
form heretofore provided to Acquiror to employees of the Company or any
of its Subsidiaries; and provided, further, that, in each case, such
-------- -------
forgiveness or issuance acts as incentive for the purpose of retaining
and motivating such employee to continue in the employment of the
Company following the Effective Time and is implemented in a manner
consistent with such purpose.
ii.If, following the Effective Time, the termination of the employee's
employment with the Company or any of its Subsidiaries results in the
acceleration of the vesting of an award under any RSPA or the
forgiveness of a loan related to an RSPA pursuant to a Tax Liability
Financing Agreement (other than as a result of termination of employment
by reason of the employee's death or disability) (an "Acceleration
Event") and as a result of such Acceleration Event, the employee either
(i) becomes subject to an excise tax (the "Excise Tax") under Section
4999 of the Code that such employee would not have been subject to
without the occurrence of such Acceleration Event or (ii) the amount of
the Excise Tax imposed on such employee is greater than the amount of
the Excise Tax that would have been imposed without the occurrence of
such Acceleration Event (the "Incremental Excise Tax"), Acquiror shall
pay or shall cause to be paid to the employee, at the time specified
below, an additional amount (the "Additional Payment") sufficient to (a)
in the case of clause (i) above, reimburse the employee for the Excise
Tax and in the case of clause (ii) above, reimburse the employee for the
Incremental Excise Tax and (b) in
either case, reimburse the employee for any federal, state or local
income tax or any additional excise tax under Section 4999 of the Code
payable with respect to any Additional Payment made pursuant to this
Section 7.14(c). The Additional Payment provided for in this Section
7.14(c) shall be made no later than the due date for the Excise Tax or
Incremental Excise Tax (as the case may be) imposed. In the event of any
dispute in the calculations made pursuant to this Section 7.14(c), an
independent big six accounting firm shall be selected to resolve any
such dispute and the decision of such accounting firm shall be final and
binding on the Company and the employee. The fees and costs of such
accounting firm shall be shared equally among the Company and the
employee.
o. Registration Rights Agreement. Acquiror shall execute and deliver to the
-----------------------------
other parties thereto the Registration Rights Agreement at or prior to
the Closing.
p. Tax Treatment. Each of Acquiror and the Company shall use its reasonable
-------------
best efforts to cause the Merger to qualify as a reorganization under
the provisions of Sections 368(a) of the Code and to obtain the opinions
of counsel referred to in Sections 8.2(c) and 8.3(c).
i.The Company and Acquiror agree that if a ruling satisfactory to the
Company, Acquiror and The Providence Journal Company is obtained from
the IRS, this Agreement shall be amended to permit the creation of a
newly-formed holding company to acquire the capital stock of the Company
and Acquiror.
q. Series D Preferred Stock. Prior to the Effective Time, Acquiror shall
------------------------
file with the Secretary of State of the State of Delaware a Certificate
of Designation, in the form of Exhibit C hereto, with respect to the
shares of Series D Preferred Stock issuable pursuant to Section 3.1.
r. Company Indebtedness. The Company shall assist Acquiror, and shall take
--------------------
such actions as Acquiror may reasonably request at Acquiror's sole
expense in order to facilitate with respect to the amendment, repayment,
redemption, refinancing or other restructuring of outstanding
Indebtedness of the Company on or after the Effective Time in connection
with the Merger.
s. Authorization of Issuance of Merger Consideration. Acquiror shall obtain
-------------------------------------------------
any authorizations and consents necessary, and shall take such further
actions as may be required, for the issuance of the Media Stock and the
Series D Preferred Stock to holders of Company Common Stock pursuant to
the terms of this Agreement.
t. Attribution. Following the Effective Time, the board of directors of
-----------
Acquiror shall attribute all of the assets and liabilities of the
Company and its Subsidiaries to the Media Group pursuant to Sections
2.5.1 and 2.6.15 of Article V of the Restated Certificate of
Incorporation of Acquiror as in effect as of the date hereof.
u. Further Assurances. Each of the parties hereto shall execute such
------------------
documents and other instruments and take such further actions as may be
reasonably required or desirable to carry out the provisions hereof and
consummate and evidence the transactions contemplated hereby or, at and
after the Closing Date, to evidence the consummation of the transactions
contemplated by this Agreement. Upon the terms and subject to the
conditions hereof, each of the parties hereto shall take or cause to be
taken all actions and to do or cause to be done all other things
necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by this Agreement
and to obtain in a timely manner all necessary waivers, consents and
approvals and to
effect all necessary registrations and filings.
ARTICLE Section 8
CONDITIONS PRECEDENT
a.Conditions to Each Party's Obligation to Effect the Merger. The
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respective obligation of each party to effect the Merger shall be
subject to the satisfaction prior to the Closing Date of the following
conditions:
i.Stockholder Approvals; Charter Amendment. The Company shall have
----------------------------------------
obtained the Stockholder Approvals and the Charter Amendment shall have
been executed, acknowledged and filed and shall have become effective in
accordance with the DGCL.
ii.HSR Act. The waiting periods (and any extension thereof) applicable
-------
to the Merger under the HSR Act shall have expired or been terminated;
neither the FTC nor DOJ shall have authorized the institution of
enforcement proceedings (that have not been dismissed or otherwise
disposed of) to delay, prohibit, or otherwise restrain the transactions
contemplated by the Agreement; no such proceeding will be pending as of
the Closing Date and other than as contemplated by Section 7.6(d), no
injunction or order shall have been issued by a court of competent
jurisdiction and remain in effect as of the Closing Date.
xxx.Xx Injunctions or Restraints. No statute, rule, regulation,
----------------------------
injunction, restraining order or decree of any court or Governmental
Authority of competent jurisdiction shall be in effect that restrains or
prevents the transactions contemplated hereby.
iv.Form S-4. The Form S-4 shall have been declared effective under the
--------
Securities Act
and shall not be the subject of any stop order or proceedings seeking a
stop order, and any material "blue sky" and other state securities laws
applicable to the issuance of the Media Stock and Series D Preferred
Stock shall have been complied with.
v.NYSE Listing. The shares of Media Stock issuable to the Company's
------------
stockholders pursuant to this Agreement shall have been approved for
listing on the NYSE, subject only to official notice of issuance.
vi.Conversion of Company Preferred Stock; Certain Elections. The holders
--------------------------------------------------------
of shares of Company Preferred Stock shall have converted such shares
into shares of Company Common Stock, effective no later than immediately
prior to the Effective Time.
b. Conditions of Obligations of Acquiror. The obligations of Acquiror to
-------------------------------------
effect the Merger are subject to the satisfaction of the following
conditions, any or all of which may be waived in whole or in part by
Acquiror:
i.Representations and Warranties. There shall be no breach of any
------------------------------
representation or warranty of the Company made hereunder that,
individually or together with all other such breaches, results in a
Material Adverse Effect with respect to the Company. Acquiror shall have
received a certificate from the Company dated the Closing Date signed by
an authorized officer of the Company certifying to the fulfillment of
this condition.
ii.Agreements. The Company shall have performed and complied in all
----------
material respects with all of its respective undertakings, covenants,
conditions and agreements required by this Agreement to be performed or
complied with by it prior to or at the Closing. Acquiror shall have
received a certificate from the Company dated the Closing Date signed by
an
authorized officer of the Company and certifying to the fulfillment of
this condition.
xxx.Xxx Opinion. Acquiror shall have received an opinion of Weil,
-----------
Gotshal & Xxxxxx LLP, dated the Closing Date, to the effect that (i) the
Merger should be treated for Federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code; (ii)
each of Acquiror and the Company should be a party to the reorganization
within the meaning of Section 368(b) of the Code; and (iii) no gain or
loss should be recognized by the Company or Acquiror as a result of the
Merger. In rendering such opinion, Weil, Gotshal & Xxxxxx LLP may
receive and rely upon representations contained in certificates of the
Company, Acquiror, and certain stockholders of the Company.
iv.Letters from Affiliates. Acquiror shall have received from each
-----------------------
Person in the letter referred to in Section 7.13 an executed copy of an
agreement substantially in the form of Exhibit D.
v.Consents. All Company Consents (other than Franchise Consents) and
--------
Acquiror Consents shall have been obtained, except where the failure to
obtain any such consent would not have a Material Adverse Effect with
respect to the Company or Acquiror, as the case may be.
vi.Transaction Documents. Each of the Transaction Documents which were
---------------------
not executed on the date hereof shall have been duly authorized and
executed by the parties thereto other than Acquiror.
vii.Dissenting Shares. Acquiror shall have received evidence, in form
-----------------
and substance reasonably satisfactory to it, that the number of
Dissenting Shares shall constitute no greater than 10% of the total
number of shares of Company Common Stock (assuming conversion of the
Company
Preferred Stock) outstanding immediately prior to the Effective Time.
viii.Other Actions. The Company shall have disposed of the Designated
-------------
Assets as provided in Section 7.7.
ix.Litigation. Except as described in Section 7.6(c), there shall not be
----------
pending or threatened by any Governmental Authority any suit, action or
proceeding, (i) seeking to restrain or prohibit the Merger or seeking to
obtain from Acquiror or the Company or any of their respective
Subsidiaries in connection with the Merger any material damages, (ii)
seeking to prohibit or limit the ownership or operation by Acquiror, the
Company or any of their respective Subsidiaries of any material portion
of the business or assets of Acquiror and its Subsidiaries taken as a
whole or the Company and its Subsidiaries taken as a whole, or to compel
Acquiror, the Company or any of their respective Subsidiaries to dispose
of or hold separate any material portion of the business or assets of
Acquiror and its Subsidiaries taken as a whole or the Company and its
Subsidiaries taken as a whole, in each case as a result of the Merger or
any of the other transactions contemplated by this Agreement or the
Transaction Documents, (iii) seeking to impose limitations on the
ability of Acquiror to acquire or hold, or exercise full rights of
ownership of, the shares of Company Capital Stock, including the right
to vote such shares of Company Capital Stock on all matters properly
presented to the stockholders of the Company or (iv) seeking to prohibit
Acquiror from effectively controlling in any material respect any
portion of the business or operations of the Company or any of its
Subsidiaries taken as a whole, which, in each case, has a reasonable
likelihood of success and if determined in a manner adverse to the
Company or Acquiror, could reasonably be expected to
result in a Material Adverse Effect with respect to Acquiror or the
Company.
x.Franchise and License Consents. The Company shall have obtained, in
------------------------------
accordance with the terms of Section 7.5, (i) all Franchise Consents
required pursuant to this Section 8.2(j) (the "Required Franchise
Consents"); (ii) all License Consents for each FCC license set forth in
Section 4.6 of the Company Disclosure Letter and (iii) to the extent
required by the FCC or any Governmental Authority with jurisdiction, the
Social Contract Consent; provided, however, that each Franchise Consent
-------- -------
and License Consent and the Social Contract Consent required to be
obtained hereunder shall be a Final Order. The aggregate number of
Subscribers covered by the Required Franchise Consents (i) as to which
Franchise Consents are obtained in accordance with the terms of Section
7.5 and (ii) that do not require Franchise Consents, shall equal at
least ninety percent (90%) of the total number of Subscribers covered by
all Franchises and shall equal at least ninety-five percent (95%) of the
total number of Subscribers covered by Franchises located within the
thirty largest Metropolitan Statistical Areas (as ranked on the basis of
the 1994 U.S. Census by Rand XxXxxxx) in which the Company or its
Subsidiaries operates a Franchise, in each case as of March 31, 1996
based on the Company's month-end billing report as of such date, as
adjusted to reflect any acquisitions or dispositions of Systems. The
aggregate number of Required Franchise Consents (i) as to which
Franchise Consents are obtained in accordance with the terms of Section
7.5 and (ii) that do not require Franchise Consents, shall equal at
least eighty-five percent (85%) of the total number of Franchises as of
the date hereof.
xi. Corporate Proceedings and Documents. All corporate proceedings taken
-----------------------------------
by the Company in connection with the transactions
contemplated hereby and all documents incident thereto shall be
reasonably satisfactory in all material respects to Acquiror and
Acquiror's counsel, and Acquiror and Acquiror's Counsel shall have
received all such counterpart originals or certified or other copies of
such documents as they may reasonably request.
c. Conditions of Obligations of the Company. The obligation of the Company
----------------------------------------
to effect the Merger is subject to the satisfaction of the following
conditions, any or all of which may be waived in whole or in part by the
Company:
i.Representations and Warranties. There shall be no breach of any
------------------------------
representation or warranty of Acquiror made hereunder that, individually
or together with all other such breaches, results in a Material Adverse
Effect with respect to Acquiror. The Company shall have received a
certificate dated the Closing Date signed by an authorized officer of
Acquiror certifying to the fulfillment of this condition.
ii.Agreements. Acquiror shall have performed and complied in all
----------
material respects with all of their respective undertakings, covenants,
conditions and agreements required by this Agreement to be performed or
complied with by Acquiror prior to or at the Closing. The Company shall
have received a certificate dated the Closing Date signed by an
authorized officer of Acquiror certifying to the fulfillment of this
condition.
xxx.Xxx Opinion. The Company shall have received an opinion of Xxxxxxxx
-----------
& Worcester LLP, dated the Closing Date, to the effect that (i) the
Merger will be treated for Federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code; (ii)
each of the Acquiror and the Company will be a party to the
reorganization within the
meaning of Section 368(b) of the Code; and (iii) gain, if any, realized
will be recognized by a stockholder of the Company as a result of the
Merger, but not in excess of the amount of cash received by such
stockholder. In rendering such opinion, Xxxxxxxx & Worcester LLP, may
receive and rely upon representations contained in certificates of
Acquiror, the Company, and certain stockholders of the Company.
iv.Consents. All Company Consents and Acquiror Consents shall have been
--------
obtained, except where the failure to obtain any such consent would not
have a Material Adverse Effect with respect to the Company or Acquiror,
as the case may be.
v.Transaction Documents. Each of the Transaction Documents shall have
---------------------
been duly authorized and executed by the parties thereto other than the
Company.
vi.Preferred Stock Listing. The shares of Series D Preferred Stock
-----------------------
issuable to the Company's stockholders pursuant to this Agreement shall
have been approved for listing on the NYSE or otherwise approved for
listing or eligible for trading as provided in Section 7.12 hereof,
subject only to official notice of issuance.
vii.Corporate Proceedings and Documents. All corporate proceedings taken
-----------------------------------
by Acquiror in connection with the transactions contemplated hereby and
all documents incident thereto shall be reasonably satisfactory in all
material respects to the Company and the Company's counsel, and the
Company and the Company's counsel shall have received all such
counterpart originals or certified or other copies of such documents as
they may reasonably request.
ARTICLE Section 9
TERMINATION AND AMENDMENT
a.Termination. This Agreement may be terminated and the Merger may be
-----------
abandoned at any time prior to the Effective Time, whether before or
after approval of the matters presented in connection with the Merger by
the stockholders of the Company:
x.xx mutual written consent of the Company, on the one hand, and
Acquiror, on the other hand, or by mutual action of their respective
boards of directors;
xx.xx Acquiror, if any of the conditions set forth in Section 8.1 or 8.2
shall have become incapable of fulfillment, and shall not have been
waived by Acquiror, or if the Company shall breach in any material
respect any of its representations, warranties or obligations hereunder
and such breach shall not have been cured in all material respects or
waived and the Company shall not have provided reasonable assurance that
such breach will be cured in all material respects on or before the
Closing Date, but only if such breach, singly or together with all other
such breaches, would have a Material Adverse Effect with respect to the
Company;
xxx.xx the Company, if any of the conditions set forth in Section 8.1 or
8.3 shall have become incapable of fulfillment, and shall not have been
waived by the Company, or if Acquiror shall breach in any material
respect any of its representations, warranties or obligations hereunder
and such breach shall not have been cured in all material respects or
waived and Acquiror shall not have provided reasonable assurance that
such breach will be cured in all material respects on or before the
Closing Date, but only if such breach, singly or together with all other
such breaches, would have a Material Adverse Effect with respect to
Acquiror;
xx.xx either the Company or Acquiror, if the Merger shall not have been
consummated on or before August 31, 1997 (the "Termination Date");
provided, however, that if all the conditions set forth in Article VIII
-------- -------
(other than the conditions set forth in Sections 8.1(a), 8.1(b), 8.1(c),
8.2(e), 8.2(h), 8.2(i) and 8.2(j)) have been satisfied at the
Termination Date, either Acquiror or the Company may, by notice to the
other prior to such date, extend the Termination Date to the latest date
so extended by either party but in no event later than December 31,
1997;
x.xx either the Company or Acquiror if the Stockholder Approvals shall
not have been obtained by reason of the failure to obtain the required
vote upon a vote held at the Stockholders' Meetings (including any
postponements or adjournments thereof); provided, however, that if the
-------- -------
Stockholder Approvals are not obtained at the Initial Stockholders'
Meeting solely by reason of a failure to obtain approval of the Charter
Amendment, then this Agreement shall not be terminable unless the
Stockholder Approvals shall not have been obtained by reason of a
failure to obtain the required vote upon a vote held at the Additional
Stockholders' Meeting;
xx.xx Acquiror, if the Company shall have (i) withdrawn or modified, in
a manner adverse to Acquiror, its approval or recommendation of this
Agreement or any of the transactions contemplated hereby, (ii) failed to
include such recommendation in the Proxy Statement, (iii) approved or
recommended any Acquisition Proposal from a Third Party or (iv) resolved
to do any of the foregoing;
xxx.xx the Company, prior to the approval of this Agreement by the
stockholders of the Company, if the Board of Directors shall approve,
and the Company shall enter into, a definitive agreement providing for
the implementation of an Acquisition Proposal; provided, however, that
-------- -------
(i) the Company is not then in breach of Section 7.10, (ii) prior to
such termination, the Company has negotiated with Acquiror in good faith
to make such adjustments in the terms and conditions of this Agreement
as would enable the Company to proceed with the transactions
contemplated hereby and (iii) the Board of Directors, has determined in
good faith (on the basis of the terms of such Acquisition Proposal and
the terms of this Agreement, after giving effect to any concessions
offered by Acquiror pursuant to clause (ii) above), after receipt of
written advice from the Company's outside legal counsel, that such
termination is advisable for the Board of Directors to act in a manner
consistent with its fiduciary duties to stockholders under Applicable
Law and (iv) the Company shall provide to Acquiror prior written notice
of such termination, which notice shall advise Acquiror of the matters
described in clauses (ii) and (iii) above;
viii. by the Company pursuant to Section 3.1(d)(ii)(B); or
ix. by Acquiror pursuant to Section 3.1(d)(ii)(C).
Notwithstanding the foregoing, a party shall not be permitted to terminate this
Agreement pursuant to clause (b), (c) or (d) hereof if such party is in breach
of any of its material representations, warranties, covenants or agreements
contained in this Agreement.
b. Effect of Termination. In the event of termination by the Company or
---------------------
Acquiror pursuant to Section 9.1, written notice thereof shall promptly
be given to the other parties and, except as otherwise provided herein,
the transactions contemplated by this Agreement shall be terminated,
without further action by any party. Notwithstanding the foregoing,
nothing in this Section 9.2 shall be deemed to release any party from
any liability for
any breach by such party of the terms and provisions of this Agreement
or to impair the right of the Company, on the one hand, and Acquiror, on
the other hand, to compel specific performance of the other party of its
or their obligations under this Agreement
c. Fees and Expenses. In order to induce Acquiror to, among other things,
-----------------
enter into this Agreement, the Company agrees that if this Agreement is
terminated (A) by Acquiror pursuant to Section 9.1(f) hereof, (B) by the
Company pursuant to Section 9.1(g) hereof, or (C) by the Company or
Acquiror pursuant to Section 9.1(e) hereof and the Board of Directors
shall have materially modified or withdrawn its approval, determination
or recommendation of this Agreement or any of the transactions
contemplated hereby prior to the Initial Stockholders' Meeting or there
shall have been an Acquisition Proposal and such proposal shall not have
been withdrawn prior to the Initial Stockholders' Meeting and within one
year thereafter the Company enters into a definitive agreement with
respect to such Acquisition Proposal (including any definitive agreement
relating to an Acquisition Proposal offered by the same proponent or its
Affiliate as such Acquisition Proposal), then the Company shall promptly
pay Acquiror a fee of $125 million, plus an amount equal to the actual
reasonable fees and expenses paid or payable by or on behalf of Acquiror
to its attorneys, accountants, environmental consultants, management
consultants, and other consultants and advisors in connection with the
negotiation, execution and delivery of this Agreement and the
transactions contemplated hereby; provided, however, that
-------- -------
payment for fees and expenses shall in no event exceed $15 million. Any
payment required by this Section 9.3 shall be made in same day funds to
Acquiror by the Company no later than five Business Days following
termination of this Agreement by Acquiror or the Company, as the case
may be.
d.Certain Purchase Obligations. In order to induce the Company to, among
----------------------------
other things, enter into this Agreement, Acquiror agrees that if this
Agreement is terminated by the Company pursuant to Section 9.1(h), then
the Company shall have the right, for a period of 30 days thereafter, to
require Acquiror to purchase from the Company (the "Put Right")
5,650,000 shares of Series B Convertible Preferred Stock, par value $.01
per share, of the Company, having the rights, preferences and terms set
forth in the Certificate of Designations attached as Exhibit E hereto
(the "Put Shares") for an aggregate purchase price of $282.5 million.
i.Following termination by the Company of this Agreement pursuant to
Section 9.1(h), the Company may exercise the Put Right by delivering to
Acquiror a written notice of such exercise (the "Put Exercise Notice"),
which shall specify a date not less than 90 days from the date of such
notice for the closing of the purchase of the Put Shares by Acquiror.
ii.The closing with respect to the purchase of the Put Shares shall take
place on the earlier of (i) the date specified in the Put Exercise
Notice and (ii) the second Business Day following the date on which the
last of the conditions set forth in Section 9.4(d) is fulfilled or
waived, unless another date, time or place is agreed to in writing by
the parties hereto (the "Put Closing Date"). At such closing, the
Company shall deliver to Acquiror certificates representing the Put
Shares and Acquiror shall deliver to the Company $282.5 million by wire
transfer of immediately available funds to an account designated by the
Company.
iii.The obligations of Acquiror to purchase the Put Shares shall be
subject to the satisfaction prior to the Put Closing Date of the
following conditions:
(1) HSR Act. The waiting periods (and any extension thereof) applicable
-------
to the purchase of the Put Shares under the HSR Act shall have expired
or been terminated and there shall be no authorized or pending action by
a Governmental Authority seeking to restrain or prevent the purchase of
the Put Shares.
(2) No Injunctions or Restraints. No statute, rule, regulation,
----------------------------
injunction, restraining order or decree of any nature of any court or
Governmental Authority shall be in effect that restrains or prevents the
purchase of the Put Shares.
(3) Representations and Warranties. There shall be no breach of any
------------------------------
representation or warranty of the Company made hereunder that,
individually or together with all other such breaches, results in a
Material Adverse Effect with respect to the Company. Acquiror shall have
received a certificate from the Company dated the Put Closing Date
signed by an authorized officer of the Company certifying to the
fulfillment of this condition.
(4) Agreements. The Company shall have performed and complied in all
----------
material respects with all of its respective undertakings, covenants,
conditions and agreements required by this Agreement to be performed or
complied with by it prior to or at the Put Closing Date. Acquiror shall
have received a certificate from the Company dated the Put Closing Date
signed by an authorized officer of the Company and certifying to the
fulfillment of this condition.
(5) Franchise Consents. To the extent any Franchise(s) individually or
------------------
collectively representing more than 5% of total Subscribers of the
Company and its Subsidiaries require notice to, or the consent of, a
Governmental Authority in connection with the purchase by Acquiror of
the Put Shares, the consent of each such
Governmental Authority shall have been obtained by the Company.
(6) Registration Rights Agreement. The Company and Acquiror shall have
-----------------------------
entered into a Registration Rights Agreement substantially in the form
of Exhibit F hereto.
iv.From and after the Put Closing Date, for so long as Acquiror owns any
of the Put Shares, Acquiror shall not acquire, or agree to acquire,
directly or indirectly, any shares of Company Capital Stock, or any
rights or options to acquire shares of Company Capital Stock, if as a
result of any such acquisition, Acquiror would beneficially own 10
percent or more of the Company Capital Stock.
e. Amendment. Subject to Applicable Law, this Agreement may be amended,
---------
modified or supplemented only by written agreement of Acquiror and the
Company at any time prior to the Effective Time with respect to any of
the terms contained herein; provided, however, that, after this
-------- -------
Agreement is approved by the Company's stockholders, no such amendment
or modification shall (i) alter or change the amount or kind of
consideration to be delivered to the stockholders of the Company or (ii)
alter or change any of the terms and conditions of this Agreement, if
such alteration or change would adversely affect the holders of any
class of capital stock of the Company.
f.Extension; Waiver. At any time prior to the Effective Time, the
-----------------
parties hereto, by action taken or authorized by their respective boards
of directors, may, to the extent legally allowed: (i) extend the time
for the performance of any of the obligations or other acts of the other
parties hereto; (ii) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant
hereto; and (iii) waive
compliance with any of the agreements or conditions contained herein.
Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in a written instrument signed
on behalf of such party. The failure of any party hereto to assert any
of its rights hereunder shall not constitute a waiver of such rights nor
in any way effect the validity of this Agreement or any part hereof or
the right of such party thereafter to enforce each and every provision
of this Agreement. No waiver of any breach of or non-compliance with
this Agreement shall be held to be a waiver of any other or subsequent
breach or non-compliance.
ARTICLE Section 10
GENERAL PROVISIONS
a.Frustration of the Closing Conditions. Neither the Company nor
-------------------------------------
Acquiror may rely on the failure of any condition precedent set forth in
Article VIII to be satisfied if such failure was caused by such party's
(or parties') failure to act in good faith or to use its reasonable best
efforts to consummate the transactions contemplated by this Agreement in
accordance with Section 7.4.
b.Effectiveness of Representations, Warranties and Agreements. The
-----------------------------------------------------------
representations, warranties and agreements in this Agreement shall
terminate at the Effective Time or upon the termination of this
Agreement pursuant to Article IX, except that the agreements set forth
in Articles I, II and III and Sections 7.11, 7.14 and 7.20 shall survive
the Effective Time and those set forth in Sections 9.2, 9.3, 9.4 and
Article X hereof shall survive termination.
c.Expenses. Except as otherwise provided herein, including in Sections
--------
7.5 and 9.3,
each of the parties hereto shall pay the fees and expenses of its
respective counsel, accountants and other experts and shall pay all
other costs and expenses incurred by it in connection with the
negotiation, preparation and execution of this Agreement and the
Transaction Documents and the consummation of the transactions
contemplated hereby and thereby; provided, however, that the
-------- -------
Company shall pay, with funds of the Company and not with funds provided
by Acquiror, any and all property or transfer Taxes imposed on the
Company or any Gains Taxes.
d.Applicable Law. This Agreement shall be governed by, and construed in
--------------
accordance with, the laws of the State of Delaware without reference to
choice of law principles, including all matters of construction,
validity and performance.
e.Notices. Notices, requests, permissions, waivers, and other
-------
communications hereunder shall be in writing and shall be deemed to have
been duly given if signed by the respective Persons giving them (in the
case of any corporation the signature shall be by an officer thereof)
and delivered by hand, deposited in the United States mail (registered
or certified, return receipt requested), properly addressed and postage
prepaid, or delivered by telecopy:
If to the Company, to:
Continental Cablevision, Inc.
The Xxxxx Xxxxx
Xxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxxxxxx, Xx.
with a copy to:
Xxxxxxxxxx & Xxxxx LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
and:
Xxxxxxxx & Worcester LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
If to Acquiror, to:
U S WEST, Inc
0000 Xxxx Xxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: General Counsel
with a copy to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Block, Esq.
Such names and addresses may be changed by notice given in accordance with this
Section 10.5.
f.Entire Agreement. This Agreement and the Transaction Documents
----------------
(including the Exhibits attached hereto, all of which are a part hereof)
contain the entire understanding of the parties hereto and thereto with
respect to the subject matter contained herein and therein, supersede
and cancel all prior agreements, negotiations, correspondence,
undertakings and communications of the parties, oral or
written, respecting such subject matter. There are no restrictions,
promises, representations, warranties, agreements or undertakings of any
party hereto or to any of the Transaction Documents with respect to the
transactions contemplated by this Agreement and the Transaction
Documents other than those set forth herein or therein or made hereunder
or thereunder. Notwithstanding the foregoing, the Confidentiality
Agreements shall remain in full force and effect and shall survive any
termination of this Agreement.
g.Headings; References. The article, section and paragraph headings
--------------------
contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.
All references herein to "Articles", "Sections" or "Exhibits" shall be
deemed to be references to Articles or Sections hereof or Exhibits
hereto unless otherwise indicated.
h.Counterparts. This Agreement may be executed in one or more
------------
counterparts and each counterpart shall be deemed to be an original, but
all of which shall constitute one and the same original.
i.Parties in Interest; Assignment. Neither this Agreement nor any of the
-------------------------------
rights, interest or obligations hereunder shall be assigned by any of
the parties hereto without the prior written consent of the other
parties. This Agreement shall inure to the benefit of and be binding
upon the Company and Acquiror and shall inure to the sole benefit of the
Company and Acquiror and their respective successors and permitted
assigns. Except as set forth in Section 7.11 and Section 7.14(c),
nothing in this Agreement, express or implied, is intended to confer
upon any other Person any rights or remedies under or by reason of this
Agreement.
j. Severability; Enforcement. The invalidity of any portion hereof shall
-------------------------
not affect the validity, force or effect of the remaining portions hereof.
If it is ever held that any restriction hereunder is too broad to permit
enforcement of such restriction to its fullest extent, each party agrees
that a court of competent jurisdiction may enforce such restriction to the
maximum extent permitted by law, and each party hereby consents and agrees
that such scope may be judicially modified accordingly in any proceeding
brought to enforce such restriction.
k. Specific Performance. The parties hereto agree that the remedy at law
--------------------
for any breach of this Agreement will be inadequate and that any party by
whom this Agreement is enforceable shall be entitled to specific
performance in addition to any other appropriate relief or remedy. Such
party may, in its sole discretion, apply to a court of competent
jurisdiction for specific performance or injunctive or such other relief
as such court may deem just and proper in order to enforce this Agreement
or prevent any violation hereof and, to the extent permitted by Applicable
Law, each party waives any objection to the imposition of such relief.
l. Jurisdiction. Each party to this Agreement hereby irrevocably agrees
------------
that any legal action, suit or proceeding arising out of or relating to
this Agreement, the Transaction Documents or any other agreements or
transactions contemplated hereby shall be brought in the Chancery Court of
the State of Delaware and each party hereto agrees not to assert, by way
of motion, as a defense or otherwise, in any such action, suit or
proceeding any claim that it is not subject personally to the jurisdiction
of such court, that the action, suit or proceeding is brought in an
inconvenient forum, that the venue of the action, suit or proceeding is
improper or that this Agreement, any Transaction
Document, any other agreement or transaction or the subject matter hereof
or thereof may not be enforced in or by such court. Each party hereto
further and irrevocably submits to the jurisdiction of such court in any
action, suit or proceeding.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the date first above written.
U S WEST, INC.
By:/s/ Xxxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Executive Vice President; President
and Chief Executive Officer of the U S WEST
Media Group
CONTINENTAL CABLEVISION, INC.
By:/s/ Xxxx X. Xxxxxxxxx, Xx.
--------------------------------
Name: Xxxx X. Xxxxxxxxx, Xx.
Title: Chairman of the Board and Chief
Executive Officer
Exhibit A
---------
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
CONTINENTAL CABLEVISION, INC.
Continental Cablevision, Inc., a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of the Corporation, at a meeting duly
called and held on February 27, 1996, in accordance with the provisions of
Section 242 of the General Corporation Law of the State of Delaware, duly
adopted resolutions setting forth a proposed amendment to the Restated
Certificate of Incorporation of the Corporation. The resolutions setting forth
the proposed amendment are as follows:
RESOLVED: That Section H of Article FOURTH of the Corporation's Restated
-------- Certificate of Incorporation be amended to read as follows:
H.Other Rights. Except as otherwise required by the Delaware
------------
General Corporation Law or as otherwise provided in this
Restated Certificate of Incorporation, and except as provided in
the Agreement and Plan of Merger, dated as of February 27, 1996,
as the same may be amended from time to time, between U S WEST,
Inc., a Delaware corporation, and the Corporation, each share of
Class A Common Stock
and each share of Class B Common Stock shall have identical
powers, preferences, rights and privileges.
RESOLVED: That the foregoing amendment to the Restated Certificate of
-------- Incorporation of the Corporation is recommended to the
stockholders for approval as being in the best interests of the
Corporation and that said amendment be presented to the
stockholders for their adoption and that a special meeting of
the stockholders duly be called for that purpose.
SECOND: The stockholders of the Corporation (including (i) the holders of the
Class A Common Stock, the Class B Common Stock, and the Series A Convertible
Preferred Stock voting together as a single class, (ii) the holders of the Class
A Common Stock voting together as a separate class and (iii) the holders of the
Class B Common Stock voting together as a separate class) approved said proposed
amendment at a special meeting of stockholders for which written notice was
given pursuant to Section 222 of the General Corporation Law of the State of
Delaware.
THIRD: That said amendment was duly adopted in accordance with the provisions
of Section 242 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be signed
by Xxxxxxx X. Xxxxxxxx, its duly authorized officer, this ___ day of
___________, 1996.
CONTINENTAL CABLEVISION, INC.
By:
----------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President
EXHIBIT B
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of _________ __, 1996, among U S WEST,
INC. , a Delaware corporation ("Acquiror"), Xxxx X. Xxxxxxxxx, Xx.
("Xxxxxxxxx"), the Xxxx X. Xxxxxxxxx, Xx. 1989 Trust (the "Trust") and the
Xxxxxxxxx Foundation (the "Foundation" and, together with Xxxxxxxxx and the
Trust, the "Stockholders").
W I T N E S S E T H:
-------------------
WHEREAS, Acquiror and CONTINENTAL CABLEVISION, INC., a Delaware
corporation (the "Company"), are parties to an Agreement and Plan of Merger,
dated as of February 27, 1996 (as in effect on the date hereof, the "Merger
Agreement"), pursuant to which the Company will merge with and into Acquiror
(the "Merger"), with Acquiror continuing as the surviving corporation; and
WHEREAS, Acquiror has agreed to provide registration rights to the
Stockholders with respect to the stock to be received in connection with the
Merger, subject to the terms and conditions set forth herein.
NOW, THEREFORE, the parties hereby agree as follows:
Section 1 Definitions. Capitalized terms used but not defined herein shall
-----------
have the meanings assigned to such terms in the Merger Agreement. For purposes
of this Agreement, the following terms shall have the following meanings:
"Blackout Period" shall mean any Section 6(a) Period and any Section 6(b)
---------------
Period.
"Closing Price", for any class of securities, shall mean the last reported
-------------
sale price per share of such security, regular way, as shown on the Composite
Tape of the NYSE, or, in case no such sale takes place on such day, the average
of the closing bid and asked prices on the NYSE, or, if such security is not
listed or admitted to trading on the NYSE, on the principal national securities
exchange on which such security is listed or admitted to trading, or, if it is
not listed or admitted to trading on any national securities exchange, the last
reported sale price per share of such security, or, in case no such sale takes
place on such day, the average of the closing bid and asked prices, in either
case as reported by Nasdaq.
"Current Market Price" for any class of securities on any applicable date
--------------------
shall mean the average of the daily Closing Prices per share of such security
for the ten (10) consecutive Trading Days ending on the third Trading Day
immediately preceding such date.
"Effective Period" shall mean a period commencing on the date of this
----------------
Agreement and ending on the earliest of (i) the first date as of which all
Registrable Securities cease to be Registrable Securities, (ii) the sixth
anniversary of the Closing Date and (iii) the date on which the aggregate number
of Registrable Securities issued and outstanding (assuming conversion of all
shares of Series D Preferred Stock held by the Holders) shall no longer exceed
one tenth (1/10) of the aggregate number of Registrable Securities (adjusted
appropriately to reflect any stock dividends, splits, combinations, exchange,
reorganization, recapitalization or reclassification involving the Media Stock
or Series D Preferred Stock or resulting from a merger or consolidation or
similar transaction involving Acquiror or the like after the date hereof)
outstanding on the date hereof.
"Holder" shall mean each Stockholder listed on Schedule A hereto and each
------
Permitted Assignee that becomes a holder of Registrable Securities, provided
that if such Person is not a Stockholder listed on Schedule A hereto, such
Permitted Assignee has agreed in writing to become a Holder hereunder and to be
bound by the terms and conditions of this Agreement.
"NASD" shall mean the National Association of Securities Dealers, Inc.
----
"Nasdaq" shall mean the Nasdaq National Market.
------
"NYSE" shall mean the New York Stock Exchange, Inc.
----
"Permitted Assignee" shall mean (w) Xxxxxxxxx, (x) Xxxxxxxxx'x lineal
------------------
descendants, (y) a trust for the benefit of, the estate of, executors, personal
representatives, administrators, guardians or conservators of any of the
individuals referred to in the foregoing
clauses (w) and (x) (but only in their capacity as such) and (z) charitable
trusts and charitable foundations (in addition to the Foundation) formed by
Xxxxxxxxx or the Trust.
"Prospectus" shall mean the prospectus included in any Registration Statement,
----------
as amended or supplemented by any prospectus supplement with respect to the
terms of the offering of any portion of the Registrable Securities covered by
any Registration Statement and by all other amendments and supplements to the
prospectus, including post-effective amendments and all material incorporated by
reference in such prospectus.
"Registrable Securities" shall mean any and all of (i) the shares of Media
----------------------
Stock issued pursuant to the Merger, (ii) the shares of Series D Preferred Stock
issued pursuant to the Merger, (iii) the shares of Media Stock or other
securities of Acquiror issuable or issued upon conversion of the Series D
Preferred Stock issued pursuant to the Merger and (iv) any securities issuable
or issued or distributed in respect of any of the securities identified in
clauses (i), (ii) or (iii) by way of stock dividend or stock split or in
connection with a combination of shares, recapitalization, reorganization,
merger, consolidation or otherwise. Securities will cease to be Registrable
Securities in accordance with Section 2 hereof.
"Registration Expenses" means any and all expenses incident to performance of
---------------------
or compliance with this Agreement, including, without limitation, (i) all SEC,
NASD and securities exchange registration and filing fees, (ii) all fees and
expenses of complying with state securities or blue sky laws (including fees and
disbursements of counsel for any underwriters in connection with blue sky
qualifications of the Registrable Securities), (iii) all processing, printing,
copying, messenger and delivery expenses, (iv) all fees and expenses incurred in
connection with the listing of the Registrable Securities on any securities
exchange pursuant to Section 7(h), (v) the fees and disbursements of counsel for
Acquiror and of its independent public accountants and (vi) the reasonable fees
and expenses of any special experts retained in connection with the requested
registration, but excluding (x) underwriting discounts and commissions and
transfer taxes, if any, and (y) any fees or disbursements of counsel to the
Holders or any Holder.
"Registration Statement" means any registration statement (including a Shelf
----------------------
Registration) of Acquiror referred to in Section 3 or 4, including any
Prospectus, amendments and supplements to any such registration statement,
including post-effective amendments, and all exhibits and all material
incorporated by reference in any such registration statement.
"Related Securities" means any securities of Acquiror similar or identical to
------------------
any of the Registrable Securities, including, without limitation, any class of
capital stock of Acquiror and all options, warrants, rights and other securities
convertible into, or exchangeable or exercisable for, any class of capital stock
of Acquiror.
"Section 6(a) Period" has the meaning specified in Section 6(a).
-------------------
"Section 6(b) Period" has the meaning specified in Section 6(b).
-------------------
"Shelf Registration" means a "shelf" registration statement on an appropriate
------------------
form pursuant to Rule 415 under the Securities Act (or any successor rule that
may be adopted by the SEC).
"Trading Day", for any class of securities, shall mean, so long as such
-----------
securities are listed or admitted to trading on the NYSE, a day on which the
NYSE is open for the transaction of business, or, if such securities are not
listed or admitted to trading on the NYSE, a day on which the principal national
securities exchange on which such securities are listed is open for the
transaction of business, or, if such securities are not so listed or admitted
for trading on any national securities exchange, a day on which Nasdaq is open
for the transaction of business.
"underwritten registration or underwritten offering" shall mean an offering in
--------------------------------------------------
which securities of Acquiror are sold to an underwriter for reoffering to the
public.
Section 2 Securities Subject to this Agreement. The securities entitled to
------------------------------------
the benefits of this Agreement are the Registrable Securities. For the purposes
of this Agreement, as to any particular Registrable Securities, such Registrable
Securities shall cease to be Registrable Securities when and to the extent that
(i) a Registration Statement covering such Registrable Securities has been
declared effective under the Securities Act and such
Registrable Securities have been disposed of pursuant to such effective
Registration Statement, (ii) such Registrable Securities are distributed to the
public pursuant to and in accordance with Rule 144 (or any similar provision
then in force) under the Securities Act, (iii) such Registrable Securities have
been otherwise transferred to a party that is not a Permitted Assignee, (iv) the
Effective Period ends or (v) such Registrable Securities have ceased to be
outstanding.
Section 3 Piggy-Back Registration Rights. Whenever Acquiror shall propose
------------------------------
to file a Registration Statement under the Securities Act relating to the public
offering of Media Stock for cash (other than pursuant to a Registration
Statement on Form S-4 or Form S-8 or any successor forms thereto, or filed in
connection with an exchange offer or an offering of securities solely to
existing stockholders or employees of Acquiror and other than pursuant to a
Registration Statement filed in connection with an offering by Acquiror of
securities convertible into or exchangeable for Media Stock) for sale for its
own account, Acquiror shall (i) give written notice at least fifteen Business
Days prior to the filing thereof to each Holder then outstanding, specifying the
approximate date on which Acquiror proposes to file such Registration Statement
and the intended method of distribution in connection therewith, and advising
such Holder of such Holder's right to have any or all of the Registrable
Securities then held by such Holder included among the securities to be covered
thereby and (ii) at the written request of any such Holder given to Acquiror at
least two Business Days prior to the proposed filing date, include among the
securities covered by such Registration Statement the number of Registrable
Securities that such Holder shall have requested be so included. Subject to
reduction in accordance with paragraph (b) of this Section 3, Acquiror shall
cause the Registration Statement to include the Registrable Securities requested
to be included in the Registration Statement for such offering in the case of
Registrable Securities which are Media Stock, on the same terms and conditions
as the shares of Media Stock included therein and in the case of Registrable
Securities which are Series D Preferred Stock, on terms which would not conflict
or interfere with in any material respect (including, without limitation,
adversely affect the pricing of) the offering by Acquiror of Media Stock.
i. If the lead managing underwriter selected by Acquiror for an
underwritten
offering pursuant to Section 3(a) determines in writing that
marketing factors require a limitation on the number of shares of
Media Stock and/or Series D Preferred Stock (or other securities
convertible into or exchangeable for Media Stock) to be offered and
sold by stockholders of Acquiror in such offering, there shall be
included in the offering, first, all securities proposed by Acquiror
to be sold for its account and, second, only that number of shares of
Media Stock and Series D Preferred Stock (and other securities
convertible into or exchangeable for Media Stock), if any, requested
to be included in such Registration Statement by stockholders of
Acquiror that such lead managing underwriter reasonably and in good
faith believes will not substantially interfere with (including,
without limitation, adversely affect the pricing of) the offering of
all the shares of Media Stock that the Company desires to sell for
its own account. In such event and provided the managing underwriter
has so notified Acquiror in writing, the number of shares of Media
Stock and Series D Preferred Stock (and other securities of Acquiror
convertible into or exchangeable for Media Stock) to be offered and
sold by stockholders of Acquiror, including Holders of Registrable
Securities, desiring to participate in such offering shall be
allocated among such stockholders of Acquiror on a pro rata basis
based upon the number of shares of Media Stock (assuming conversion
of the Series D Preferred Stock and other securities convertible into
or exchangeable for Media Stock held by such stockholders) each such
stockholder beneficially owns.
ii. Nothing in this Section 3 shall create any liability on the part
of Acquiror to the Holders of Registrable Securities if Acquiror for
any reason should decide not to file a Registration Statement
proposed to be filed under Section 3(a) or to withdraw such
Registration Statement
subsequent to its filing, regardless of any action whatsoever that a
Holder may have taken, whether as a result of the issuance by
Acquiror of any notice hereunder or otherwise.
a. A request by Holders to include Registrable Securities in a
proposed offering pursuant to Section 3(a) shall not be deemed to be
a request for a demand registration pursuant to Section 4.
Section 4 Demand Registration Rights. Upon the written request (the
--------------------------
"Initial Request") of Holders of at least a majority in number of the
Registrable Securities (assuming conversion of all Series D Preferred Stock held
by Holders) that Acquiror effect the registration with the SEC under and in
accordance with the provisions of the Securities Act of all or part of such
Holder's or Holders' Registrable Securities and specifying the aggregate number
of shares of Registrable Securities requested to be so registered, Acquiror will
promptly give written notice of such requested registration to all other
Holders. Within 15 days after receipt of Acquiror's notice (such 15 day period
being the "Additional Request Period"), each such other Holder shall notify
Acquiror in writing as to whether such Holder wishes to have any or all of its
Registrable Securities included in such requested registration. Thereupon,
subject to Section 4(f), Acquiror shall use its best efforts to file a
Registration Statement as expeditiously as practicable (the terms of any
underwritten offering or other distribution to be determined by the Holders of a
majority of the Registrable Securities so requested to be registered); provided,
--------
however, that Acquiror shall not be required to take any action pursuant to this
-------
Section 4:
(a)if prior to the date of such request Acquiror shall have effected
four registrations pursuant to this Section 4;
(1)if Acquiror has effected a registration pursuant to this Section 4
within the 90-day period next preceding such request;
(2) if Acquiror shall at the time have effective a Shelf Registration
pursuant to which the Holder or Holders that requested registration
could effect the disposition
of such Registrable Securities pursuant to an underwritten offering
or such other method of distribution requested by such Holder or
Holders;
(3)if the Registrable Securities that Acquiror shall have been
requested to register shall have a then current market value of less
than $100,000,000, unless such registration request is for all
remaining Registrable Securities; or
(4)during the pendency of any Blackout Period;
and provided, further, that Acquiror shall be permitted to satisfy its
-------- -------
obligations under this Section 4(a) by amending (to the extent permitted by
applicable law) any Shelf Registration previously filed by Acquiror under the
Securities Act so that such Shelf Registration (as amended) shall permit the
disposition (in accordance with the intended methods of disposition specified as
aforesaid) of all of the Registrable Securities for which a demand for
registration has been made under this Section 4(a). If Acquiror shall so amend
a previously filed Shelf Registration, it shall be deemed to have effected a
registration for purposes of this Section 4.
i. A registration requested pursuant to this Section 4 shall not be
deemed to be effected for purposes of this Section 4: (i) if it has
not been declared effective by the SEC or become effective in
accordance with the Securities Act, (ii) if after it has become
effective, such registration is materially interfered with by any
stop order, injunction or similar order or requirement of the SEC or
other governmental agency or court for any reason not attributable to
any of the Holders and has not thereafter become effective, or (iii)
if the conditions to closing specified in the underwriting agreement,
if any, entered into in connection with such registration are not
satisfied or waived, other than by reason of a failure on the part of
any of the Holders.
ii. Should a Registration Statement filed pursuant to this Section 4
not become effective due to the failure of the Holders to perform
their obligations under this Agreement or the inability of the
Holders to reach agreement with the underwriters on price or other
customary terms for such transaction, or in the event the Holders of
a majority in number of the Registrable Securities (assuming
conversion of all Series D Preferred Stock held by Holders) determine
to withdraw or do not pursue a request for registration pursuant to
this Section 4 (in each of the foregoing cases, provided that at such
time Acquiror is in compliance in all material respects with its
obligations under this Agreement), then (subject to the last sentence
of this Section 4(c)) such registration shall be deemed to have been
effected for purposes of this Section 4. In such event, the Holders
of Registrable Securities who requested registration shall reimburse
Acquiror for all its out-of-pocket expenses incurred in the
preparation, filing and processing of the Registration Statement. If
such reimbursement is made within 30 Business Days following a
request therefor, such registration shall not be deemed to have been
effected for purposes of this Section 4.
iii. Acquiror will not include any securities that are not
Registrable Securities in any Registration Statement (including a
Shelf Registration referred to in the second proviso of Section 4(a))
filed pursuant to a demand made under this Section 4 without the
prior written consent of the Holders of a majority in number of the
Registrable Securities covered by such Registration Statement
(including a Shelf Registration referred to in the second proviso of
Section 4(a)).
iv. If the lead managing underwriter of an underwritten offering
made pursuant to this Section 4 shall advise Acquiror in writing
(with a copy to the Holders of Registrable
Securities participating in such offering) that, in its opinion, the
number of Registrable Securities requested to be included in such
registration exceeds the number which can be sold in such offering
within a price range acceptable to the Holders of a majority in
number of the Registrable shares requested to be included in such
offering, Acquiror will reduce to the number which Acquiror is so
advised can be sold in such offering within such price range the
Registrable Securities requested to be included in such offering. If,
as a result of any such reduction, the number of Registrable
Securities requested to be included in such registration by the
Holders of Registrable Securities participating in such offering is
reduced by twenty-five percent (25%) or more, then notwithstanding
anything to the contrary contained in this Agreement, a registration
will not be deemed to have been effected for purposes of this Section
4; provided, however, that the provisions of this sentence shall only
-------- -------
apply to the first request made by Holders for a registration
pursuant to this Section 4. In the case of such a registration which
would have been deemed to be a registration for purposes of this
Section 4 but for the application of the immediately preceding
sentence, Acquiror nonetheless shall pay the Registration Expenses in
connection with such registration.
v. Prior to the filing by Acquiror of a Registration Statement
pursuant to Section 4(a), Acquiror shall have the right, exercisable
for the ten day period following the end of the Additional Request
Period, upon written notice to the Holders requesting registration,
to purchase for cash from such Holders on a pro rata basis all of the
Registrable Securities which such Holders requested to be registered
pursuant to such Registration Statement (the "Purchased Securities").
The exercise of such right shall constitute Acquiror's legal and
binding commitment to purchase
the Purchased Securities in accordance with this Section 4(f). The
closing of the purchase by Acquiror of the Purchased Securities shall
take place within 30 days of delivery of such notice and the purchase
price per Purchased Security shall be equal to the Current Market
Price of such Purchased Security on the date of the Initial Request,
less the amount of any customary discounts and commissions that would
be payable by Acquiror or a similar issuer in connection with an
underwritten offering of similar securities (which discounts and
commissions shall not exceed 5% of such Current Market Price). At the
closing of the sale of the Purchased Securities, the Holders shall
deliver to Acquiror certificates representing the Purchased
Securities and Acquiror shall deliver to the Holders the purchase
price of the Purchased Securities by wire transfer of immediately
available funds. Following the purchase of the Purchased Shares by
Acquiror, a registration shall be deemed to have been effected for
purposes of this Section 4.
Section 5 Selection of Underwriters. In connection with any offering
-------------------------
pursuant to a Registration Statement filed pursuant to a demand made in
accordance with Section 4, Acquiror shall have the right to select a managing
underwriter or underwriters to administer the offering, so long as such managing
underwriter or underwriters shall be reasonably satisfactory to Holders of a
majority in number of the Registrable Securities to be included in such offering
(assuming conversion of all Series D Preferred Stock held by Holders); provided,
--------
however, that such Holders shall have the right to select one co-managing
-------
underwriter, so long as such co-managing underwriter shall be reasonably
satisfactory to Acquiror. The managing underwriter or underwriters selected by
Acquiror shall be deemed reasonably satisfactory to Holders of a majority in
number of the Registrable Securities to be included in such offering (assuming
conversion of all Series D Preferred Stock held by Holders) unless such Holders
sends a written notice of objection to Acquiror within 10 days of receipt of
notice from Acquiror of the appointment of a managing underwriter or
underwriters and the co-managing underwriter selected by such Holders shall be
deemed to be reasonably satisfactory
to Acquiror unless Acquiror sends a written notice of objection to such Holders
within 10 days of receipt of notice from such Holders of the appointment of a
co-managing underwriter.
Section 6 Blackout Periods.
----------------
i. If Acquiror determines in good faith that the registration
and distribution of Registrable Securities (or the use of the
Registration Statement or related Prospectus) would interfere
with any pending financing, acquisition, corporate reorganization
or any other corporate development involving Acquiror or any of
its subsidiaries (or would require premature disclosure thereof)
and promptly gives the Holders of Registrable Securities written
notice of such determination, Acquiror shall be entitled to (i)
postpone the filing of the Registration Statement otherwise
required to be prepared and filed by Acquiror pursuant to Section
3 or 4, or (ii) elect that the Registration Statement not be
used, in either case for a reasonable period of time, but not to
exceed 90 days (a "Section 6(a) Period"). Any such written notice
shall contain a general statement of the reasons for such
postponement or restriction on use and an estimate of the
anticipated delay. Acquiror shall promptly notify each Holder of
the expiration or earlier termination of a Section 6(a) Period.
ii. If (i) during the Effective Period, Acquiror shall file a
registration statement (other than in connection with the
registration of securities issuable pursuant to an employee stock
option, stock purchase or similar plan on Form S-8 or pursuant to
a merger, exchange offer or a transaction of the type specified
in Rule 145(a) under the Securities Act) with respect to any
Related Securities and (ii) with reasonable written prior notice,
(A) Acquiror (in the case of a non-underwritten offering pursuant
to such registration statement) advises the Holders
in writing that a sale or distribution of Registrable Securities
would adversely affect such offering or (B) the managing
underwriter or underwriters (in the case of an underwritten
offering) advise Acquiror in writing (in which case Acquiror
shall notify the Holders), that a sale or distribution of
Registrable Securities would adversely impact such offering, then
each Holder shall, to the extent not inconsistent with Applicable
Law, refrain from effecting any sale or distribution of
Registrable Securities, including sales pursuant to Rule 144
under the Securities Act, during the 10-day period prior to, and
during the 90-day period beginning on, the effective date of such
registration statement (a "Section 6(b) Period").
iii. The Effective Period and, in the case where the use of an
effective Registration Statement is prohibited under Section
6(a), the period for which a Registration Statement shall be kept
effective pursuant to Section 7(b), as the case may be, shall be
extended by a number of days equal to the number of days of any
Blackout Period occurring during such period. Except as provided
below, the beginning of any Blackout Period shall be at least 120
days after the end of any prior Blackout Period; provided,
--------
however, that once during any consecutive 12 months during the
-------
Effective Period a Section 6(b) Period may begin on or within
five days of the last day of a Section 6(a) Period.
Notwithstanding anything to the contrary contained herein, the
aggregate number of days included in all Blackout Periods during
any consecutive 18 months during the Effective Period shall not
exceed 180 days.
iv. During the five day period prior to, and during the 30 day
period commencing on, the effective date of a registration
statement filed by Acquiror on behalf of Holders in connection
with an underwritten offering pursuant to Section 4(a), Acquiror
hereby agrees not to effect (except
pursuant to employee benefit plans, the U S WEST Shareowner
Investment Plan or a similar plan) any public sale or
distribution of (i) Media Stock, if the Registrable Securities
included in such registration include shares of Media Stock, and
(ii) preferred stock convertible into Media Stock, if the
Registrable Securities included in such registration include
shares of Series D Preferred Stock.
Section 7 Registration Procedures. If and whenever Acquiror is required to
-----------------------
use its best efforts to effect or cause the registration of any Registrable
Securities under the Securities Act as provided in this Agreement, Acquiror
shall, as expeditiously as possible:
i. prepare and file with the SEC a Registration Statement with
respect to such Registrable Securities on any form for which
Acquiror then qualifies or that counsel for Acquiror shall deem
appropriate, and which form shall be available for the sale of
the Registrable Securities in accordance with the intended
methods of distribution thereof, and use its best efforts to
cause such Registration Statement to become and remain effective;
ii. prepare and file with the SEC amendments and post-effective
amendments to such Registration Statement and such amendments and
supplements to the Prospectus used in connection therewith as may
be necessary to maintain the effectiveness of such registration
or as may be required by the rules, regulations or instructions
applicable to the registration form utilized by Acquiror or by
the Securities Act for a Shelf Registration or otherwise
necessary to keep such Registration Statement effective for at
least 90 days and cause the Prospectus as so supplemented to be
filed pursuant to Rule 424 under the Securities Act, and to
otherwise comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such
Registration Statement until the
earlier of (x) such 90th day and (y) such time as all Registrable
Securities covered by such Registration Statement have ceased to
be Registrable Securities (it being understood that Acquiror at
its option may determine to maintain such effectiveness for a
longer period, whether pursuant to a Shelf Registration or
otherwise); provided, however, that a reasonable time before
-------- -------
filing a Registration Statement or Prospectus, or any amendments
or supplements thereto (other than reports required to be filed
by it under the Exchange Act), Acquiror shall furnish to the
Holders, the managing underwriter and their respective counsel
for review and comment, copies of all documents proposed to be
filed and shall not file any such documents (other than as
aforesaid) to which any of them reasonably object prior to the
filing thereof;
iii. furnish to each Holder of such Registrable Securities and
to any underwriter in connection with an underwritten offer such
number of conformed copies of such Registration Statement and of
each amendment and post-effective amendment thereto (in each case
including all exhibits) and such number of copies of any
Prospectus or Prospectus supplement and such other documents as
such Holder or underwriter may reasonably request in order to
facilitate the disposition of the Registrable Securities by such
Holder or underwriter (Acquiror hereby consenting to the use
(subject to the limitations set forth in the last paragraph of
this Section 7) of the Prospectus or any amendment or supplement
thereto in connection with such disposition);
iv. use its best efforts to register or qualify such Registrable
Securities covered by such Registration Statement under such
other securities or "blue sky" laws of such jurisdictions as each
Holder shall reasonably request, except that Acquiror shall not
for any such purpose be required
to qualify generally to do business as a foreign corporation in
any jurisdiction where, but for the requirements of this Section
7(d), it would not be obligated to be so qualified, to subject
itself to taxation in any such jurisdiction, or to consent to
general service of process in any such jurisdiction;
v. notify each Holder of any such Registrable Securities covered
by such Registration Statement, at any time when a Prospectus
relating thereto is required to be delivered under the Securities
Act within the appropriate period mentioned in Section 7(b), of
Acquiror's becoming aware that the Prospectus included in such
Registration Statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then
existing, and at the request of any such Holder, prepare and
furnish to such Holder a reasonable number of copies of an
amendment or supplement to such Registration Statement or related
Prospectus as may be necessary so that, as thereafter delivered
to the purchasers of such Registrable Securities, such Prospectus
shall not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light
of the circumstances then existing;
vi. notify each Holder covered by such Registration Statement at
any time:
(1)when the Prospectus or any Prospectus supplement or post-
effective amendment has been filed, and, with respect to the
Registration Statement or any post-effective amendment, when the
same has become effective;
(2) of any request by the SEC for amendments or supplements to
the Registration Statement or the Prospectus or for additional
information;
(3) of the issuance by the SEC of any stop order suspending the
effectiveness of the Registration Statement or any order
preventing the use of a related Prospectus, or the initiation (or
any overt threats) of any proceedings for such purposes;
(4) of the receipt by Acquiror of any written notification of the
suspension of the qualification of any of the Registrable
Securities for sale in any jurisdiction or the initiation (or
overt threats) of any proceeding for that purpose); and
(5)if at any time the representations and warranties of Acquiror
contemplated by paragraph (i)(1) below cease to be true and
correct in all material respects;
vii. otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make available
to its security holders an earnings statement that shall satisfy
the provisions of Section 11(a) of the Securities Act, provided
that Acquiror shall be deemed to have complied with this
paragraph if it has complied with Rule 158 of the Securities Act;
viii. use its best efforts to cause all such Registrable
Securities to be listed on any securities exchange on which the
class of Registrable Securities being registered is then listed,
if such Registrable Securities are not already so listed and if
such listing is then permitted under the rules of such exchange,
and to provide a transfer agent and registrar for such
Registrable Securities covered by such Registration Statement no
later than the effective date of such Registration Statement;
ix. enter into agreements (including an underwriting agreement
in the form customarily entered into by Acquiror in a comparable
underwritten offering) and take all other appropriate and all
commercially reasonable actions in order to expedite or
facilitate the disposition of such Registrable Securities and in
such connection, whether or not an underwriting agreement is
entered into and whether or not the registration is an
underwritten registration:
(1)make such representations and warranties to the Holders of
such Registrable Securities and the underwriters, if any, in
form, substance and scope as are customarily made by Acquiror to
underwriters in comparable underwritten offerings;
(2) obtain opinions of counsel to Acquiror and updates thereof
(which counsel and opinions shall be reasonably satisfactory (in
form, scope and substance) to the managing underwriters, if any,
and the Holders of a majority in number of the Registrable
Securities being sold) addressed to such Holders and the
underwriters covering the matters customarily covered in opinions
requested in comparable underwritten offerings by Acquiror;
(3) obtain "cold comfort" letters and updates thereof from
Acquiror's independent certified public accountants addressed to
the selling Holders of Registrable Securities and the
underwriters, if any, such letters to be in customary form and
covering matters of the type customarily covered in "cold
comfort" letters by independent accountants in connection with
comparable underwritten offerings on such date or dates as may be
reasonably requested by the managing underwriter;
(4) provide the indemnification in accordance with the
provisions and
procedures of Section 10 hereof to all parties to be indemnified
pursuant to such Section; and
(5)deliver such documents and certificates as may be reasonably
requested by the Holders of a majority in number of the
Registrable Securities being sold and the managing underwriters,
if any, to evidence compliance with clause (f) above and with any
customary conditions contained in the underwriting agreement or
other agreement entered into by Acquiror;
x. cooperate with the Holders of Registrable Securities covered
by such Registration Statement and the managing underwriter or
underwriters to facilitate, to the extent reasonable under the
circumstances, the timely preparation and delivery of
certificates (not bearing any restrictive legends) representing
the securities to be sold under such Registration Statement, and
enable such securities to be in such denominations and registered
in such names as the managing underwriter or underwriters, if
any, or such Holders may request and/or in a form eligible for
deposit with the Depository Trust Company;
xi. make available for inspection by any Holder included in such
Registration Statement, any underwriter participating in any
disposition pursuant to such Registration Statement, and any
attorney, accountant or other agent retained by any such Holder
or underwriter (collectively, the "Inspectors"), reasonable
access to appropriate officers of Acquiror and Acquiror's
subsidiaries to ask questions and to obtain information
reasonably requested by such Inspector and all financial and
other records and other information, pertinent corporate
documents and properties of any of Acquiror and its subsidiaries
and affiliates (collectively, the "Records"), as shall be
reasonably necessary to enable them to exercise their
due diligence responsibility; provided, however, that the Records
-------- -------
that Acquiror determines, in good faith, to be confidential and
which it notifies the Inspectors in writing are confidential
shall not be disclosed to any Inspector unless such Inspector
signs a confidentiality agreement reasonably satisfactory to
Acquiror or either (i) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission of a
material fact in such Registration Statement or (ii) the release
of such Records is ordered pursuant to a subpoena or other order
from a court of competent jurisdiction; provided, further, that
-------- -------
any decision regarding the disclosure of information pursuant to
subclause (i) shall be made only after consultation with counsel
for the applicable Inspectors; and provided, further, that each
-------- -------
Holder agrees that it will, promptly after learning that
disclosure of such Records is sought in a court having
jurisdiction, give notice to Acquiror and allow Acquiror, at
Acquiror's expense, to undertake appropriate action to prevent
disclosure of such Records; and
xii. in the event of the issuance of any stop order suspending
the effectiveness of the Registration Statement or of any order
suspending or preventing the use of any related Prospectus or
suspending the qualification of any Registrable Securities
included in the Registration Statement for sale in any
jurisdiction, Acquiror will use all commercially reasonable
efforts promptly to obtain its withdrawal.
Acquiror may require each Holder as to which any registration is
being effected to furnish Acquiror with such information regarding such Holder
and pertinent to the disclosure requirements relating to the registration and
the distribution of such securities as Acquiror may from time to time reasonably
request in writing.
Each Holder agrees that, upon receipt of any notice from Acquiror
of the happening of any event of
the kind described in Section 7(e), such Holder shall forthwith discontinue
disposition of Registrable Securities pursuant to the Prospectus or Registration
Statement covering such Registrable Securities until such Holder's receipt of
the copies of the supplemented or amended Prospectus contemplated by Section
7(e), and, if so directed by Acquiror, such Holder will deliver to Acquiror (at
Acquiror's expense) all copies, other than permanent file copies then in such
Holder's possession, of the Prospectus covering such Registrable Securities
current at the time of receipt of such notice. In the event Acquiror shall give
any such notice, the Effective Period and the period mentioned in Section 7(b)
shall be extended by the number of days during the period from the date of the
giving of such notice pursuant to Section 7(e) and through the date when each
seller of Registrable Securities covered by such Registration Statement shall
have received the copies of the supplemented or amended Prospectus contemplated
by Section 7(e).
Section 8 Registration Expenses. Acquiror shall pay all Registration
---------------------
Expenses in connection with all registrations of Registrable Securities pursuant
to Sections 3 and 4 and each Holder shall pay (x) all fees and expenses of
counsel to such Holder and any counsel to the Holders and (y) all underwriting
discounts and commissions and transfer taxes, if any, relating to the sale or
disposition of such Holder's Registrable Securities pursuant to the Registration
Statement.
Section 9 Rule 144. Acquiror agrees that it shall timely file the reports
--------
required to be filed by it under the Securities Act or the Exchange Act
(including, without limitation, the reports under sections 13 and 15 (d) of the
Exchange Act referred to in paragraph (c)(1) of Rule 144 under the Securities
Act), and shall take such further actions as any Holder may reasonably request,
all to the extent required to enable Holders to sell Registrable Securities,
from time to time, pursuant to the resale limitations of (a) Rule 144 under the
Securities Act, as such rule may be hereafter amended, or (b) any similar rules
or regulations hereafter adopted by the SEC. Upon the written request of any
Holder, Acquiror shall deliver to such Holder a written statement verifying that
it has complied with such requirements.
Section 10 Indemnification; Contribution. Indemnification by Acquiror.
----------------------------- ---------------------------
Acquiror agrees to indemnify and hold harmless each Holder included in any
registration of
Registrable Securities pursuant to this Agreement, its trustees, officers and
directors and each Person who controls such Holder (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act), and any
agent or investment adviser thereof against all losses, claims, damages,
liabilities and expenses (including reasonable attorneys' fees and expenses)
incurred by such party pursuant to any actual or threatened action, suit,
proceeding or investigation arising out of or based upon (i) any untrue or
alleged untrue statement of material fact contained in any Registration
Statement, any Prospectus or preliminary Prospectus, or any amendment or
supplement to any of the foregoing or (ii) any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein (in the case of a Prospectus or a preliminary Prospectus,
in light of the circumstances then existing) not misleading, except in each case
insofar as the same arise out of or are based upon, any such untrue statement or
omission made in reliance on and in conformity with information with respect to
such Holder furnished in writing to Acquiror by such Holder or its counsel
expressly for use therein. In connection with an underwritten offering,
Acquiror will indemnify the underwriters thereof, their officers, directors and
agents and each Person who controls such underwriters (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) to the same
extent as provided above with respect to the indemnification of the Holders.
Notwithstanding the foregoing provisions of this Section 10(a), Acquiror will
not be liable to any Holder, any Person who participates as an underwriter in
the offering or sale of Registrable Securities or any other Person, if any, who
controls such Holder or underwriter (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act), under the indemnity agreement
in this Section 10(a) for any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense that arises out of such Holder's or
other Person's failure to send or deliver a copy of a final Prospectus to the
Person asserting an untrue statement or alleged untrue statement or omission or
alleged omission at or prior to the written confirmation of the sale of the
Registrable Securities to such Person if such statement or omission was
corrected in such final Prospectus and Acquiror has previously furnished copies
thereof to such Holder in accordance with this Agreement.
i.Indemnification by Holders of Registrable Securities.
----------------------------------------------------
In connection with the any
registration of Registrable Securities pursuant to this Agreement, each
Holder included in such registration shall furnish to Acquiror and any
underwriter in writing such information, including the name, address and
the amount of Registrable Securities held by such Holder, as Acquiror or
any underwriter reasonably requests for use in the Registration Statement
relating to such registration or the related Prospectus and agrees to
indemnify and hold harmless Acquiror, all other Holders and any
underwriter, each such party's officers and directors and each Person who
controls each such party (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act), and any agent or
investment adviser thereof against all losses, claims, damages, liabilities
and expenses (including reasonable attorneys' fees and expenses) incurred
by each such party pursuant to any actual or threatened action, suit,
proceeding or investigation arising out of or based upon (i) any untrue or
alleged untrue statement of material fact contained in any Registration
Statement, any Prospectus or preliminary Prospectus, or any amendment or
supplement to any of the foregoing or (ii) any omission or alleged omission
to state therein a material fact required to be stated therein or necessary
to make the statements therein (in the case of a Prospectus or a
preliminary Prospectus, in light of the circumstances then existing) not
misleading, but only to the extent that any such untrue statement or
omission is made in reliance on and in conformity with information with
respect to such Holder furnished in writing to Acquiror or any underwriter
by such Holder or its counsel specifically for inclusion therein.
ii.Conduct of Indemnification Proceedings. Any Person entitled to
--------------------------------------
indemnification hereunder agrees to give prompt written notice to the
indemnifying party after the receipt by such indemnified party of any
written notice of the commencement of any
action, suit, proceeding or investigation or threat thereof made in writing
for which such indemnified party may claim indemnification or contribution
pursuant to this Section 10 (provided that failure to give such
notification shall not affect the obligations of the indemnifying party
pursuant to this Section 10 except to the extent the indemnifying party
shall have been actually prejudiced as a result of such failure). In case
any such action shall be brought against any indemnified party and it shall
notify the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it
shall wish, jointly with any other indemnifying party similarly notified,
to assume the defense thereof, with counsel satisfactory to such
indemnified party (who shall not, except with the consent of the
indemnified party, be counsel to the indemnifying party), and after notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party shall not be liable to
such indemnified party under these indemnification provisions for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof
other than reasonable costs of investigation. Notwithstanding the
foregoing, if (i) the indemnifying party shall not have employed counsel
reasonably satisfactory to such indemnified party to take charge of the
defense of such action within a reasonable time after notice of
commencement of such action (so long as such failure to employ counsel is
not the result of an unreasonable determination by such indemnified party
that counsel selected pursuant to the immediately preceding sentence is
unsatisfactory), or (ii) the actual or potential defendants in, or targets
of, any such action include both the indemnifying party and such
indemnified party and such indemnified party shall have
reasonably concluded that there may be legal defenses available to it which
are different from or additional to those available to the indemnifying
party which, if the indemnifying party and such indemnified party were to
be represented by the same counsel, could result in a conflict of interest
for such counsel or materially prejudice the prosecution of the defenses
available to such indemnified party, then such indemnified party shall have
the right to employ separate counsel, in which case the fees and expenses
of one counsel or firm of counsel (plus one local or regulatory counsel or
firm of counsel) selected by a majority in interest of the indemnified
parties shall be borne by the indemnifying party and the fees and expenses
of all other counsel retained by the indemnified parties shall be paid by
the indemnified parties. No indemnified party shall consent to entry of any
judgment or enter into any settlement without the consent (which consent,
in the case of an action, suit, claim or proceeding exclusively seeking
monetary relief, shall not be unreasonably withheld) of each indemnifying
party.
iii.Contribution. If the indemnification from the indemnifying party
------------
provided for in this Section 10 is unavailable to an indemnified party
hereunder in respect of any losses, claims, damages, liabilities or
expenses referred to therein, then the indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims,
damages, liabilities and expenses in such proportion as is appropriate to
reflect the relative fault of the indemnifying party and indemnified party
in connection with the actions which resulted in such losses, claims,
damages, liabilities and expenses, as well as any other relevant equitable
considerations. The relative fault of such indemnifying party and
indemnified party shall be
determined by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact, has been
made by, or relates to information supplied by, such indemnifying party or
indemnified party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount
paid or payable by a party as a result of the losses, claims, damages,
liabilities and expenses referred to above shall be deemed to include,
subject to the limitations set forth in Section 10(c), any legal and other
fees and expenses reasonably incurred by such indemnified party in
connection with any investigation or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 10(d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 10(d), no underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Registrable Securities underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages which
such underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission and no Holder shall be
required to contribute any amount in excess of the amount by which the total
price at which the Registrable Securities of such Holder were offered to the
public exceeds the amount of any damages which such Holder has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No Person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
If indemnification is available under this Section 10, the indemnifying
parties shall indemnify each indemnified party to the fullest extent provided in
Section 10(a) or (b), as the case may be, without regard to the relative
fault of such indemnifying parties or indemnified party or any other equitable
consideration provided for in this Section 10(d).
iv.The provisions of this Section 10 shall be in addition to any liability
which any party may have to any other party and shall survive any
termination of this Agreement. The indemnification provided by this Section
10 shall remain in full force and effect irrespective of any investigation
made by or on behalf of an indemnified party, so long as such indemnified
party does not act in a fraudulent, reckless or grossly negligent manner.
Section 11
Participation in Underwritten Offerings. No Holder may participate in any
---------------------------------------
underwritten offering hereunder unless such Holder in the case of a registration
pursuant to Section 3, agrees to sell such Holder's securities on the basis
provided in any underwriting arrangements approved by Acquiror in its reasonable
discretion and completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents reasonably required
under the terms of such underwriting arrangements.
Section 12
Miscellaneous. Remedies. Each Holder, in addition to being entitled to
------------- --------
exercise all rights granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Agreement.
i.Amendments and Waivers. Except as otherwise provided herein, the
----------------------
provisions of this Agreement may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given, unless Acquiror has obtained the written consent of Holders of at
least a majority in number of the Registrable Securities then outstanding.
ii.Notices. Notices, requests, permissions, waivers, and other
-------
communications hereunder shall be in writing and shall be deemed to have
been duly given if signed by the respective Persons giving them (in the
case
of any corporation the signature shall be by an officer thereof) and
delivered by hand, deposited in the United States mail (registered or
certified, return receipt requested), properly addressed and postage
prepaid, or delivered by telecopy:
If to a Holder, to:
Xxxx X. Xxxxxxxxx, Xx.
c/o CONTINENTAL CABLEVISION, INC.
The Xxxxx Xxxxx, Xxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxxxxxx, Xx.
with a copy to:
Xxxxxxxx & Worcester LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
If to Acquiror, to:
U S WEST, INC.
0000 Xxxx Xxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: General Counsel
with a copy to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Block, Esq.
iii.Successors and Assigns. This Agreement shall inure to the benefit of
----------------------
and be binding upon the successors of each of the parties; provided,
--------
however, that any successor to a Holder shall have agreed in writing to
-------
become a Holder under this Agreement and to be bound by the terms and
conditions hereof and to become a Stockholder under the Stockholders
Agreement and to be bound by the terms and conditions thereof. This
Agreement and the provisions of this Agreement that are for the benefit of
the Holders shall not be assignable by any Holder to any Person and any
such purported assignment shall be null and void.
iv.Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed
by each of the parties and delivered to the other parties.
v.Descriptive Headings. The descriptive headings used herein are inserted
--------------------
for convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.
vi.Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of New York, regardless of the laws
that might otherwise govern under applicable principles of conflicts of
laws thereof.
vii.Severability. In the event that any one or more of the provisions
------------
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be in
any way impaired thereby, it being intended that all remaining provisions
contained herein shall not be in any way impaired thereby, it being
intended that all of the rights and privileges of the Holder shall be
enforceable to the fullest extent permitted by law.
viii.Entire Agreement. This Agreement is intended by the parties as a final
----------------
expression and a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter
hereof. There are no restrictions, promises, warranties or undertakings
with respect to the subject matter hereof, other than those set forth or
referred to herein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
U S WEST, INC.
By: ___________________________
Name:
Title:
________________________________________
Xxxx X. Xxxxxxxxx, Xx.
XXX XXXX X. XXXXXXXXX, XX. 0000 TRUST
By:_____________________________________
Name: Xxxx X. Xxxxxxxxx, Xx.
Title: Trustee
By:_____________________________________
Name: Xxxxxxx X. Xxxxx
Title: Trustee
THE XXXXXXXXX FOUNDATION
By:_____________________________________
Name:
Title:
EXHIBIT C
CERTIFICATE OF THE VOTING POWERS, DESIGNATIONS, PREFERENCES
AND RELATIVE, PARTICIPATING, OPTIONAL OR OTHER
SPECIAL RIGHTS, AND QUALIFICATIONS, LIMITATIONS OR
RESTRICTIONS THEREOF, OF SERIES D CONVERTIBLE
PREFERRED STOCK
OF
U S WEST, INC.
_____________________
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
_____________________
U S WEST, INC., a corporation organized and existing by virtue of the
General Corporation Law of the State of Delaware (the "Corporation"), does
hereby certify that the following resolution was duly adopted by action of the
Board of Directors of the Corporation at a meeting duly held on February 26,
1996.
RESOLVED that pursuant to the authority expressly granted to and
vested in the Board of Directors of the Corporation by the provisions of Section
3 of Article V of the Restated Certificate of Incorporation of the Corporation
(the "Certificate of Incorporation"), and Section 151(g) of the General
Corporation Law of the State of Delaware, such Board of Directors hereby
creates, from the authorized shares of Preferred Stock, par value $1.00 per
share (the "Preferred Stock"), of the Corporation authorized to be issued
pursuant to the Certificate of Incorporation, a series of Preferred Stock, and
hereby fixes the voting powers, designations, preferences and relative,
participating, optional or other special rights, and qualifications, limitations
or restrictions thereof, of the shares of such series as follows:
The series of Preferred Stock hereby established shall consist of
20,000,000 shares designated as Series D Convertible Preferred Stock. The
rights,
preferences and limitations of such series shall be as follows:
Section 1 Definitions. Unless otherwise defined herein, terms used herein
-----------
shall have the meanings assigned to them in Section 2.6 of Article V of the
Certificate of Incorporation and the following terms shall have the indicated
meanings:
a. "Board of Directors" shall mean the Board of Directors of the Corporation
or, with respect to any action to be taken by the Board of Directors, any
committee of the Board of Directors duly authorized to take such action.
b. "Capital Stock" shall mean any and all shares of corporate stock of a
Person (however designated and whether representing rights to vote, rights
to participate in dividends or distributions upon liquidation or otherwise
with respect to the Corporation, or any division or subsidiary thereof, or
any joint venture, partnership, corporation or other entity).
c. "Certificate" shall mean the certificate of the voting powers,
designations, preferences and relative, participating, optional or other
special rights, and qualifications, limitations or restrictions thereof, of
Series D Convertible Preferred Stock filed with respect to this resolution
with the Secretary of State of the State of Delaware pursuant to Section
151 of the General Corporation Law of the State of Delaware.
d. "Closing Price" shall mean the last reported sale price of the Media Stock
(or such other class or series of common stock into which shares of this
Series are then convertible), regular way, as shown on the Composite Tape
of the NYSE, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices on the NYSE, or, if the Media
Stock (or such other class or series of common stock) is not listed or
admitted to trading on the NYSE, on the principal national securities
exchange on which such stock is listed or admitted to trading, or, if it is
not listed or admitted to trading on any national securities exchange, the
last reported sale price of the Media Stock (or such other class or series
of common stock), or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, in either case as reported by
Nasdaq.
e. "Communications Stock" shall mean the class of U S WEST Communications
Group Common Stock, par value $.01 per share, of the Corporation or any
other class of stock resulting from (x) successive changes or
reclassifications of such stock consisting solely of changes in par value,
or from par value to no par value or (y) a subdivision or combination, and
in any such case including any shares thereof authorized after the date of
the Certificate, together with any associated rights to purchase other
securities of the Corporation which are at the time represented by the
certificates representing such shares.
f. "Conversion Date" shall have the meaning set forth in Section 3.5.
g. "Conversion Price" shall have the meaning set forth in Section 3.1 hereof.
h. "Conversion Rate" shall have the meaning set forth in Section 3.1 hereof.
i. "Converting Holder" shall have the meaning set forth in Section 3.5
hereof.
j. "Current Market Price" on any applicable record date, Conversion Date or
Redemption Date referred to in Section 3 or Section 4 shall mean the
average of the daily Closing Prices per share of Media Stock (or such other
class or series of common stock into which shares of this Series are then
convertible) for the ten (10) consecutive Trading Days ending on the third
Trading Day immediately preceding such record date, Conversion Date or
Redemption Date.
k. "Dividend Payment Date" shall have the meaning set forth in Section 2.1
hereof.
l. "Effective Time" shall mean the effective time of the Merger.
m. "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder.
n. "Exchange Rate" for each share of this Series called for exchange shall
be a number of shares of Media Stock (or such other class or series of
common stock into which shares of this Series are then convertible) equal
to the quotient of (x) the sum of (I) the Liquidation Value plus (II) the
amount of accrued and unpaid dividends on such share of Series D Stock to
the Redemption Date divided by (y) the product of (I) .95 multiplied by
(II) the Current Market Price on the Redemption Date.
o. "Extraordinary Cash Distributions" shall mean, with respect to any
consecutive 12-month period, all cash dividends and cash distributions on
the outstanding shares of Media Stock during such period (other than cash
dividends or cash distributions for which a prior adjustment to the
Conversion
Rate was previously made) to the extent such cash dividends and cash
distributions exceed, on a per share of Media Stock basis, 10% of the
average daily Closing Price of the Media Stock over such period.
p. "Junior Stock" shall mean the Media Stock, the Communications Stock and
the shares of any other class or series of stock of the Corporation which,
by the terms of the Certificate of Incorporation or of the instrument by
which the Board of Directors, acting pursuant to authority granted in the
Certificate of Incorporation, shall fix the relative rights, preferences
and limitations thereof, shall be junior to the Series D Stock in respect
of the right to receive dividends or to participate in any distribution of
assets other than by way of dividends.
q. "Liquidation Value" shall have the meaning set forth in Section 6.2
hereof.
r. "Media Group Disposition Redemption" shall have the meaning set forth in
Section 4.1 hereof.
s. "Media Group Disposition Dividend" shall have the meaning set forth in
Section 4.1 hereof.
t. "Media Group Special Dividend" shall have the meaning set forth in
Section 4.1 hereof.
u. "Media Group Special Events" shall have the meaning set forth in Section
4.1 hereof.
v. "Media Group Subsidiary Redemption" shall
have the meaning set forth in Section 4.1 hereof.
w. "Media Stock" shall mean the class of U S WEST Media Group Common Stock,
par value $.01 per share, of the Corporation or any other class of stock
resulting from (x) successive changes or reclassifications of such stock
consisting solely of changes in par value, or from par value to no par
value or (y) a subdivision or combination, and in any such case including
any shares thereof authorized after the date of the Certificate, together
with any associated rights to purchase other securities of the Corporation
which are at the time represented by the certificates representing such
shares.
x. "Media Group Tender or Exchange Offer" shall have the meaning set forth
in Section 4.1 hereof.
y. "Merger" shall mean the merger of Continental Cablevision, Inc., a
Delaware corporation, with and into the Corporation pursuant to the terms
of the Merger Agreement.
z. "Merger Agreement" shall mean the Agreement and Plan of Merger, dated as
of February 27, 1996, between the Corporation and Continental Cablevision,
Inc., a Delaware corporation.
aa. "Nasdaq" shall mean the Nasdaq National Market.
bb. "NYSE" shall mean the New York Stock Exchange, Inc.
cc. "Parity Stock" shall mean the Series A
Stock, the Series B Stock, the Series C Stock and the shares of any other
class or series of stock of the Corporation (other than Junior Stock)
which, by the terms of the Certificate of Incorporation or of the
instrument by which the Board of Directors, acting pursuant to authority
granted in the Certificate of Incorporation, shall fix the relative rights,
preferences and limitations thereof, shall, in the event that the stated
dividends thereon are not paid in full, be entitled to share ratably with
the Series D Stock in the payment of dividends, including accumulations, if
any, in accordance with the sums which would be payable on such shares if
all dividends were declared and paid in full, or shall, in the event that
the amounts payable thereon on liquidation are not paid in full, be
entitled to share ratably with the Series D Stock in any distribution of
assets other than by way of dividends in accordance with the sums which
would be payable in such distribution if all sums payable were discharged
in full; provided, however, that the term "Parity Stock" shall be deemed to
-------- -------
refer (i) in Section 6 hereof, to any stock which is Parity Stock in
respect of the distribution of assets; and (ii) in Sections 5.1 and 5.2
hereof, to any stock which is Parity Stock in respect of either dividend
rights or the distribution of assets and which, pursuant to the Certificate
of Incorporation or any instrument in which the Board of Directors, acting
pursuant to authority granted in the Certificate of Incorporation, shall so
designate, is entitled to vote with the holders of Series D Stock.
dd. "Person" shall mean an individual, corporation, limited liability
company, partnership, joint venture, association, trust, unincorporated
organization or other entity.
ee. "Preferred Stock" shall mean the class of
Preferred Stock, par value $1.00 per share, of the Corporation authorized
at the date of the Certificate, including any shares thereof authorized
after the date of the Certificate.
ff. "Record Date" shall have the meaning set forth in Section 2.1 hereof.
gg. "Redemption Date" shall mean the date on which the Corporation shall
effect the redemption or exchange of all or any part of the outstanding
shares of this Series pursuant to Section 4.1.
hh. "Redemption Price" for each share of this Series called for redemption
shall be equal to the sum of (x) the Liquidation Value plus (y) an amount
equal to the accrued and unpaid dividends on such share of Series D Stock
to the Redemption Date.
ii. "Redemption Rescission Event" shall mean the occurrence of (a) any
general suspension of trading in, or limitation on prices for, securities
on the principal national securities exchange on which shares of Media
Stock (or such other class or series of common stock into which shares of
this Series are then convertible) are registered and listed for trading
(or, if shares of Media Stock (or such other class or series of common
stock) are not registered and listed for trading on any such exchange, in
the over-the-counter market) for more than six-and-one-half (6 1/2)
consecutive trading hours, (b) any decline in either the Dow Xxxxx
Industrial Average or the Standard & Poor's Index of 500 Industrial
Companies (or any successor index published by Dow Xxxxx & Company, Inc. or
Standard & Poor's Corporation) by either (i) an amount in excess of 10%,
measured from the close of business on any Trading Day to the close of
business on the
next succeeding Trading Day during the period commencing on the Trading Day
preceding the day notice of any redemption or exchange of shares of this
Series is given (or, if such notice is given after the close of business on
a Trading Day, commencing on such Trading Day) and ending at the Redemption
Date or (ii) an amount in excess of 15% (or, if the time and date fixed for
redemption or exchange is more than 15 days following the date on which
notice of redemption or exchange is given, 20%), measured from the close of
business on the Trading Day preceding the day notice of such redemption or
exchange is given (or, if such notice is given after the close of business
on a Trading Day, from such Trading Day) to the close of business on any
Trading Day on or prior to the Redemption Date, (c) a declaration of a
banking moratorium or any suspension of payments in respect of banks by
Federal or state authorities in the United States or (d) the commencement
of a war or armed hostilities or other national or international calamity
directly or indirectly involving the United States which in the reasonable
judgment of the Corporation could have a material adverse effect on the
market for the Media Stock (or such other class or series of common stock
into which shares of this Series are then convertible).
jj. "Rescission Date" shall have the meaning set forth in Section 4.5
hereof.
kk. "Senior Stock" shall mean the shares of any class or series of stock of
the Corporation which, by the terms of the Certificate of Incorporation or
of the instrument by which the Board of Directors, acting pursuant to
authority granted in the Certificate of Incorporation, shall fix the
relative rights, preferences and limitations thereof, shall be senior to
the Series D Stock in respect of the right to
receive dividends or to participate in any distribution of assets other
than by way of dividends.
ll. "Series A Stock" shall mean the series of Preferred Stock authorized
and designated as Series A Junior Participating Cumulative Preferred Stock
at the date of the Certificate, including any shares thereof authorized and
designated after the date of the Certificate.
mm. "Series B Stock" shall mean the series of Preferred Stock authorized
and designated as Series B Junior Participating Cumulative Preferred Stock
at the date of the Certificate, including any shares thereof authorized and
designated after the date of the Certificate.
nn. "Series C Stock" shall mean the series of Preferred Stock authorized
and designated as Series C Cumulative Redeemable Preferred Stock at the
date of the Certificate, including any shares thereof authorized and
designated after the date of the Certificate.
oo. "Series D Stock" and "this Series" shall mean the series of Preferred
Stock authorized and designated as the Series D Convertible Preferred
Stock, including any shares thereof authorized and designated after the
date of the Certificate.
pp. "Surrendered Shares" shall have the meaning set forth in Section 3.5
hereof.
qq. "Trading Day" shall mean, so long as the Media Stock (or such other
class or series of common stock into which shares of this Series are then
convertible) is listed or admitted to trading on the NYSE, a day on
which the NYSE is open for the transaction of business, or, if the Media
Stock (or such other class or series of common stock) is not listed or
admitted to trading on the NYSE, a day on which the principal national
securities exchange on which the Media Stock (or such other class or series
of common stock) is listed is open for the transaction of business, or, if
the Media Stock (or such other class or series of common stock) is not so
listed or admitted for trading on any national securities exchange, a day
on which Nasdaq is open for the transaction of business.
Section 2 Dividends.
---------
a. The holders of the outstanding Series D Stock shall be entitled to receive
dividends, as and when declared by the Board of Directors out of funds
legally available therefor, and any dividends declared by the Board of
Directors out of funds legally available therefor in accordance with
Section 3.6(d). Each dividend shall be at the annual rate equal to ____%
per share of Series D Stock (which is equivalent to $__________ quarterly
and $__________ annually per share)./1/ All
--------------------------
/1/. The dividend rate (the "Dividend Rate") shall be equal to the sum of
4.375% (the "Base Dividend Rate") plus the Adjustment Amount (as defined below).
If the Calculation Price (as defined in the Merger Agreement) is less than
$24.50, the Corporation shall have the right, in its sole discretion, to (i)
increase the Base Dividend Rate to 6.00% and (ii) increase the Conversion Rate
pursuant to footnote 2.
The Base Dividend Rate shall be subject to adjustment in the following manner:
(i) If the Adjustment Amount is less than seven basis points in absolute
terms, then the Adjustment Amount shall be deemed to be zero and the
Dividend Rate shall equal the Base Dividend Rate.
(continued...)
-------------------------
1. (...continued)
(ii) If the Adjustment Amount is greater than or equal to seven basis points
in absolute terms, then the Dividend Rate shall be equal to the Base
Dividend Rate plus the Adjustment Amount, rounded to the nearest
multiple of 0.125%.
"Adjustment Amount" shall be equal to the product of (x) the sum of (1) the
Change In Weighted Average Yield plus (2) the Change In Credit Spread multiplied
by (y) the Discount Factor.
"Change In Weighted Average Yield" shall equal the sum (whether positive or
negative) of the following, based upon the average market closing levels of
Treasury securities for the 10 Trading Days ending 5 Trading Days prior to the
Effective Time:
(i) the change (whether positive or negative) since February 27, 1996 in
basis points in 3-year Treasury yields x 0.25;
(ii) the change (whether positive or negative) since February 27, 1996 in
basis points in 5-year Treasury yields x 0.25;
(iii) the change (whether positive or negative) since February 27, 1996 in
basis points in 10-year Treasury yields x 0.25; and
(iv) the change (whether positive or negative) since February 27, 1996 in
basis points in 20-year Treasury yields x 0.25.
"Change In Credit Spread" shall equal (whether positive or negative) the
average credit spread measured in basis points on U S WEST Financing I's 7.96%
Trust Originated Preferred Securities (based upon the closing market price
expressed as a stripped current yield) over the 30-year Treasury "pricing bond"
for the 10 Trading Days ending 5 Trading Days prior to the Effective Time minus
159.5 basis points.
"Discount Factor" shall equal 0.55.
For example, if (i) the Base Dividend Rate is 4.375%,
(continued...)
dividends shall be payable in cash on or about the first day of November,
February, May and August in each year, beginning on the first such date
that is more than 15 days after the Effective Time, as fixed by the Board
of Directors, or such other dates as are fixed by the Board of Directors
(each a "Dividend Payment Date"), to the holders of record of Series D
Stock at the close of business on or about the 15th day of the month next
preceding such first day of January, April, July or October as the case may
be, as fixed by the Board of Directors, or such other dates as are fixed by
the Board of Directors (each a "Record Date"). Such dividends shall accrue
on each share cumulatively on a daily basis, whether or not there are
unrestricted funds legally available for the payment of such dividends and
whether or not earned or declared, from and after the day immediately
succeeding the Effective Time and any such dividends that become payable
for any partial dividend period shall be computed on the basis of the
actual days elapsed in such period. All dividends that accrue in accordance
with the foregoing provisions shall be cumulative from and after the day
immediately succeeding the Effective Time. The per share dividend amount
payable to each holder of record of Series D Stock on any Dividend Payment
Date shall be rounded to the nearest cent. The dividend rate per share of
this Series shall be appropriately adjusted from time
----------------------
1. (...continued)
(ii) the average 3-year Treasury, 5-year Treasury, 10-year Treasury and 20-year
Treasury yields are each 20 basis points lower at the Effective Time than they
are on February 27, 1996 and (iii) the Change In Credit Spread is fifty basis
points, then the Adjustment Amount shall equal 16.5 basis points ((-20 basis
points + fifty basis points) x 0.55). Because such Adjustment Amount is greater
than seven basis points, the Dividend Rate would be equal to the Base Dividend
Rate plus the Adjustment Amount (or 4.540%), rounded to the yield which is at
the nearest multiple of 0.125% (or 4.500%).
to time to reflect any split or combination of the shares of this Series.
b. Except as hereinafter provided in this Section 2.2 and except for
redemptions by the Corporation pursuant to Sections 4.1(b), 4.1(c) or
4.1(d), unless all dividends on the outstanding shares of Series D Stock
and any Parity Stock that shall have accrued through any prior Dividend
Payment Date shall have been paid, or declared and funds set apart for
payment thereof, no dividend or other distribution (payable other than in
shares of Junior Stock) shall be paid to the holders of Junior Stock or
Parity Stock, and no shares of Series D Stock, Parity Stock or Junior Stock
shall be purchased, redeemed or otherwise acquired by the Corporation or
any of its subsidiaries (except by conversion into or exchange for Junior
Stock), nor shall any monies be paid or made available for a purchase,
redemption or sinking fund for the purchase or redemption of any Series D
Stock, Junior Stock or Parity Stock. When dividends are not paid in full
upon the shares of this Series and any Parity Stock, all dividends declared
upon shares of this Series and all Parity Stock shall be declared pro rata
so that the amount of dividends declared per share on this Series and all
such Parity Stock shall in all cases bear to each other the same ratio that
accrued dividends per share on the shares of this Series and all such
Parity Stock bear to each other. No interest, or sum of money in lieu of
interest, shall be payable in respect of any dividend payment or payments
on this Series which may be in arrears.
Section 3 Conversion Rights.
-----------------
a. Subject to Section 3.1(b), each holder of a share of this Series shall
have the right at any time to convert such share into a number of shares of
Media Stock equal to
[ ] shares of Media Stock for each share of this Series, subject to
adjustment as provided in this Section 3 (such rate, as so adjusted from
time to time, is herein called the "Conversion Rate"; and the "Conversion
Price" at any time shall mean the Liquidation Value per share divided by
the Conversion Rate in effect at such time (rounded to the nearest one
hundredth of a cent))/2/.
i. The right of a holder of a share of this Series called for redemption or
exchange pursuant to Sections 4.1(a) or 4.1(c) to convert such share into
Media Stock (or such other class or series of common stock into which
shares of this Series are then convertible) pursuant to Section 3.1(a)
shall terminate at the close of business on the Redemption Date unless the
Corporation defaults in the payment of the Redemption Price or Exchange
Rate or, in the case of a redemption or exchange pursuant to Section
4.1(a), the Corporation exercises its right to rescind such redemption or
exchange pursuant to Section 4.5, in which case such right of conversion
shall not terminate at the close of business on such date. The right of a
holder of a share of this Series called for redemption pursuant to Section
4.1(b): (i) in connection with a Media Group Subsidiary Redemption, a Media
Group Tender or Exchange Offer or a Media Group Disposition Redemption
involving a Disposition of all (not merely substantially all) of the
properties and
----------------
2. The Conversion Rate shall be equal to the quotient of (x) $50 divided by
(y) the product of (I) 1.25 multiplied by (II) the Calculation Price (as defined
in the Merger Agreement). If the Calculation Price is less than $24.50, the
Corporation shall have the right, in its sole discretion, to (i) set the
Conversion Rate equal to the quotient of (x) $50 divided by (y) the product of
(I) 1.40 multiplied by (II) the Calculation Price and (ii) increase the Base
Dividend Rate in accordance with footnote 1.
assets attributed to the Media Group, to convert such share into Media
Stock pursuant to Section 3.1(a) shall terminate at the close of business
on the Redemption Date; (ii) in connection with a Media Group Disposition
Dividend or Media Group Special Dividend, to convert such share into Media
Stock pursuant to Section 3.1(a) shall terminate at the close of business
on the record date for determining holders entitled to receive such
dividend; and (iii) in connection with a Media Group Disposition Redemption
involving a Disposition of substantially all (but not all) of the
properties and assets attributed to the Media Group, to convert such share
into Media Stock shall terminate at the close of business on the date on
which shares of Media Stock are selected to be redeemed in such Media Group
Disposition Redemption, unless, in any of the foregoing cases, the
Corporation defaults in the payment of the Redemption Price or the
conditions to such redemption set forth in the last sentence of Section
4.1(b) shall not have been satisfied, in which event such right of
conversion shall not terminate at the close of business on such date. In
the event the Corporation converts all of the outstanding shares of Media
Stock into shares of Communications Stock (or, if the Communications Stock
is not Publicly Traded at such time and shares of any other class or series
of common stock of the Corporation (other than Media Stock) are then
Publicly Traded, of such other class or series of common stock as has the
largest Market Capitalization), the right of a holder of a share of this
Series called for redemption pursuant to Section 4.1(d) in connection with
an event substantially similar to a Media Group Special Event to convert
such share into Communications Stock (or such other class or series of
common stock) shall terminate on a date comparable to the date specified in
the preceding sentence with respect to a Media Group Special Event
substantially similar to such event.
b. If any shares of this Series are surrendered for conversion subsequent to
the Record Date preceding a Dividend Payment Date but on or prior to such
Dividend Payment Date (except shares called for redemption or exchange on
a Redemption Date between such Record Date and Dividend Payment Date and
with respect to which such redemption or exchange has not been rescinded),
the registered holder of such shares at the close of business on such
Record Date shall be entitled to receive the dividend, if any, payable on
such shares on such Dividend Payment Date notwithstanding the conversion
thereof. Except as provided in this Section 3.2, no adjustments in respect
of payments of dividends on shares surrendered for conversion or any
dividend on the Media Stock issued upon conversion shall be made upon the
conversion of any shares of this Series.
c. The Corporation may, but shall not be required to, in connection with any
conversion of shares of this Series, issue a fraction of a share of Media
Stock, and if the Corporation shall determine not to issue any such
fraction, the Corporation shall, subject to Section 3.6(g), make a cash
payment (rounded to the nearest cent) equal to such fraction multiplied by
the Closing Price of the Media Stock on the last Trading Day prior to the
date of conversion.
d. Any holder of shares of this Series electing to convert such shares into
Media Stock shall surrender the certificate or certificates for such
shares at the office of the transfer agent or agents therefor (or at such
other place in the United States as the Corporation may designate by
notice to the holders of shares of this Series) during regular business
hours, duly
endorsed to the Corporation or in blank, or accompanied by instruments of
transfer to the Corporation or in blank, or in form satisfactory to the
Corporation, and shall give written notice to the Corporation at such
office that such holder elects to convert such shares of this Series. The
Corporation shall, as soon as practicable and in any event within five
Trading Days (subject to Section 3.6(g)) after such surrender of
certificates for shares of this Series, accompanied by the written notice
above prescribed issue and deliver at such office to the holder for whose
account such shares were surrendered, or to his nominee, (i) certificates
representing the number of shares of Media Stock to which such holder is
entitled upon such conversion and (ii) if less than the full number of
shares of this Series represented by such certificate or certificates is
being converted, a new certificate of like tenor representing the shares
of this Series not converted.
e. Conversion shall be deemed to have been made immediately prior to the
close of business as of the date that certificates for the shares of this
Series to be converted, and the written notice prescribed in Section 3.4,
are received by the transfer agent or agents for this Series (such date
being referred to herein as the "Conversion Date"). The Person entitled to
receive the Media Stock issuable upon such conversion shall be treated for
all purposes as the record holder of such Media Stock as of the close of
business on the Conversion Date and such conversion shall be at the
Conversion Rate in effect on such date. Notwithstanding anything to the
contrary contained herein, in the event the Corporation shall have
rescinded a redemption or exchange of shares of this Series pursuant to
Section 4.5, any holder of shares of this Series that shall have
surrendered shares of this Series for conversion following the day on
which notice of the redemption or exchange shall have been given but prior
to the later of (a) the close of business on the Trading Day next
succeeding the date on which public announcement of the rescission of such
redemption or exchange shall have been made and (b) the date which is
three Trading Days following the mailing of the notice of rescission
required by Section 4.5 (a "Converting Holder") may rescind the conversion
of such shares surrendered for conversion by (i) properly completing a
form prescribed by the Corporation and mailed to holders of shares of this
Series (including Converting Holders) with the Corporation's notice of
rescission, which form shall provide for the certification by any
Converting Holder rescinding a conversion on behalf of any beneficial
owner (within the meaning of Rule 13d-3 under the Exchange Act) of shares
of this Series that the beneficial ownership (within the meaning of such
Rule) of such shares shall not have changed from the date on which such
shares were surrendered for conversion to the date of such certification
and (ii) delivering such form to the Corporation no later than the close
of business on that date which is fifteen (15) Trading Days following the
date of the mailing of the Corporation's notice of rescission. The
delivery of such form by a Converting Holder shall be accompanied by (x)
any certificates representing shares of Media Stock issued to such
Converting Holder upon a conversion of shares of this Series that shall be
rescinded by the proper delivery of such form (the "Surrendered Shares"),
(y) any securities, evidences of indebtedness or assets (other than cash)
distributed by the Corporation to such Converting Holder by reason of such
Converting Holder's being a record holder of the Surrendered Shares and
(z) payment in New York Clearing House funds or other funds acceptable to
the Corporation of an amount equal to the sum of (I) any cash such
Converting Holder may have received in lieu of the issuance of fractional
shares
upon conversion and (II) any cash paid or payable by the Corporation to
such Converting Holder by reason of such Converting Holder being a record
holder of the Surrendered Shares. Upon receipt by the Corporation of any
such form properly completed by a Converting Holder and any certificates,
securities, evidences of indebtedness, assets or cash payments required to
be returned or made by such Converting Holder to the Corporation as set
forth above, the Corporation shall instruct the transfer agent or agents
for shares of Media Stock and shares of this Series to cancel any
certificates representing the Surrendered Shares (which Surrendered Shares
shall be deposited in the treasury of the Corporation) and reissue
certificates representing shares of this Series to such Converting Holder
(which shares of this Series shall, notwithstanding their surrender for
conversion, be deemed to have been outstanding at all times). The
Corporation shall, as promptly as practicable, and in no event more than
five (5) Trading Days, following the receipt of any such properly
completed form and any such certificates, securities, evidences of
indebtedness, assets or cash payments required to be so returned or made,
pay to the Converting Holder or as otherwise directed by such Converting
Holder any dividend or other payment made on such shares of this Series
during the period from the time such shares shall have been surrendered
for conversion to the rescission of such conversion. All questions as to
the validity, form, eligibility (including time of receipt) and acceptance
of any form submitted to the Corporation to rescind the conversion of
shares of this Series, including questions as to the proper completion or
execution of any such form or any certification contained therein, shall
be resolved by the Corporation, whose good faith determination shall be
final and binding. The Corporation shall not be required to deliver
certificates for shares of Media
Stock while the stock transfer books for such stock or for this Series are
duly closed for any purpose (but not for a period in excess of two Trading
Days) or during any period commencing at a Redemption Rescission Event and
ending at either (i) the time and date at which the Corporation's right of
rescission shall expire pursuant to Section 4.5 if the Corporation shall
not have exercised such right or (ii) the close of business on that day
which is fifteen (15) Trading Days following the date of the mailing of a
notice of rescission pursuant to Section 4.5 if the Corporation shall have
exercised such right of rescission, but certificates for shares of Media
Stock shall be delivered as soon as practicable after the opening of such
books or the expiration of such period.
f. The Conversion Rate shall be adjusted from time to time as follows for
events occurring after the Effective Time:
x.Xx case the Corporation shall, at any time or from time to time, (i) pay
a dividend or make a distribution in shares of Media Stock, (ii) combine
the outstanding shares of Media Stock into a smaller number of shares, or
(iii) subdivide or reclassify the outstanding shares of Media Stock, then
the Conversion Rate in effect immediately before such action shall be
adjusted so that immediately following such event the holders of the
Series D Stock shall be entitled to receive upon conversion thereof the
kind and amount of shares of capital stock of the Corporation which they
would have owned or been entitled to receive upon or by reason of such
event if such shares of Series D Stock had been converted immediately
before the record date (or, if no record date, the effective date) for
such event. An adjustment made pursuant to this Section 3.6(a) shall
become effective immediately after the opening of business
on the day next following the record date in the case of a dividend or
distribution and shall become effective immediately after the opening of
business on the day next following the effective date in the case of a
subdivision, combination or reclassification. For the purposes of this
Section 3.6(a), if holders of Media Stock are entitled to elect the kind
or amount of securities receivable upon the payment of any such divided,
subdivision, combination or reclassification, each holder of Series D
Stock shall be deemed to have failed to exercise any such right of
election (provided that if the kind or amount of securities receivable
upon such dividend, distribution, subdivision, combination or
reclassification is not the same for each nonelecting share, then the kind
and amount of securities receivable upon such dividend, distribution,
subdivision, combination or reclassification for each nonelecting share
shall be deemed to be the kind and amount so receivable per share by a
plurality of the nonelecting shares).
ii.If the Corporation shall issue rights, warrants or options to all
holders of Media Stock entitling them (for a period not exceeding 45 days
from the record date referred to below) to subscribe for or purchase
shares of Media Stock at a price per share less than the Current Market
Price (determined as of the record date for the determination of
stockholders entitled to receive such rights, warrants or options), then,
in any such event, the Conversion Rate shall be adjusted by multiplying
the Conversion Rate in effect immediately prior to the opening of business
on such record date by a fraction, the numerator of which shall be the
number of shares of Media Stock outstanding on such record date plus the
maximum number of additional shares of Media Stock offered for
subscription pursuant to such rights, warrants or options, and the
denominator of which shall be the number of shares of
Media Stock outstanding on such record date plus the maximum number of
additional shares of Media Stock which the aggregate offering price of the
maximum number of shares of Media Stock so offered for subscription or
purchase pursuant to such rights, warrants or options would purchase at
such Current Market Price (determined by multiplying such maximum number
of shares by the exercise price of such rights, warrants or options (plus
any other consideration received by the Corporation upon the issuance or
exercise of such rights, warrants or options) and dividing the product so
obtained by such Current Market Price). Such adjustment shall become
effective at the opening of business on the day next following the record
date for the determination of stockholders entitled to receive such
rights, warrants or options. To the extent that shares of Media Stock are
not delivered after the expiration of such rights, warrants or options,
the Conversion Rate shall be readjusted to the Conversion Rate which would
then be in effect had the adjustments made upon the record date for the
determination of stockholders entitled to receive such rights, warrants or
options been made upon the basis of delivery of only the number of shares
of Media Stock actually delivered and the amount actually paid therefor.
In determining whether any rights, warrants or options entitle the holders
to subscribe for or purchase shares of Media Stock at a price per share
less than such Current Market Price, there shall be taken into account any
consideration received by the Corporation upon issuance and upon exercise
of such rights, warrants or options. The value of such consideration, if
other than cash, shall be determined by the good faith business judgment
of the Board of Directors, whose determination shall be conclusive.
iii. If the Corporation shall pay a dividend or make a distribution to all
holders of outstanding shares of Media
Stock, of capital stock, cash, evidences of its indebtedness or other
assets of the Corporation (but excluding (x) any cash dividends or
distributions (other than Extraordinary Cash Distributions) and (y)
dividends or distributions referred to in Section 3.6(a)), then the
Conversion Rate shall be adjusted by multiplying the Conversion Rate in
effect immediately prior to the opening of business on the record date for
the determination of stockholders entitled to receive such dividend or
distribution by a fraction, the numerator of which shall be the Current
Market Price (determined as of such record date), and the denominator of
which shall be such Current Market Price less either (A) the fair market
value (as determined by the good faith business judgment of the Board of
Directors, whose determination shall be conclusive), as of such record
date, of the portion of the capital stock, assets or evidences of
indebtedness to be so distributed applicable to one share of Media Stock
or (B), if applicable, the amount of the Extraordinary Cash Distribution
to be distributed per share of Media Stock. The adjustment pursuant to the
foregoing provisions of this Section 3.6(c) shall become effective at the
opening of business on the day next following the record date for the
determination of stockholders entitled to receive such dividend or
distribution.
iv. In lieu of making an adjustment to the Conversion Rate pursuant to
Sections 3.6(a), 3.6(b) or 3.6(c) above for a dividend or distribution or
an issue of rights, warrants or options, the Corporation may distribute
out of funds legally available therefor to the holders of shares of this
Series, or reserve for distribution out of funds legally available
therefor with each share of Media Stock delivered to a person converting a
share of this Series pursuant to this Section 3, such dividend or
distribution or such rights, warrants or options; provided,
--------
however, that in the case of such a reservation, on the date, if any,
-------
on which a person converting a share of this Series would no longer
be entitled to receive such dividend or distribution or receive or
exercise such rights, warrants or options, such dividend or
distribution shall be deemed to have occurred, or such rights,
warrants or options shall be deemed to have issued, and the
Conversion Rate shall be adjusted as provided in Section 3.6(a),
3.6(b) or 3.6(c), as the case may be (with such termination date
being the relevant date of determination for purposes of determining
the Current Market Price).
v.The Corporation shall be entitled to make such additional increases
in the Conversion Rate, in addition to the adjustments required by
subsections 3.6(a) through 3.6(c), as shall be determined by the
Board of Directors to be necessary in order that any dividend or
distribution in Media Stock, any subdivision, reclassification or
combination of shares of Media Stock or any issuance of rights or
warrants referred to above, shall not be taxable to the holders of
Media Stock for United States Federal income tax purposes.
xx.Xx the extent permitted by applicable law, the Corporation may
from time to time increase the Conversion Rate by any amount for any
period of time if the period is at least 20 Trading Days, the
increase is irrevocable during such period and the Board of Directors
shall have made a determination that such increase would be in the
best interests of the Corporation, which determination shall be
conclusive.
xxx.Xx any case in which this Section 3.6 shall require that any
adjustment be made effective as of or immediately following a record
date, the Corporation may elect to defer (but only for five (5)
Trading Days following the occurrence of the event which necessitates
the filing of the statement referred to in Section 3.9(a)) issuing to
the holder of any shares of this Series converted after such record
date (i) the shares of Media Stock and other capital stock of the
Corporation issuable upon such conversion over and above the shares
of Media Stock and other capital stock of the Corporation issuable
upon such conversion on the basis of the Conversion Rate prior to
adjustment and (ii) paying to such holder any amount in cash in lieu
of any fraction thereof pursuant to Section 3.3; provided, however,
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that the Corporation shall deliver to such holder a due xxxx or other
appropriate instrument evidencing such holder's right to receive such
additional shares upon the occurrence of the event requiring such
adjustment.
viii.All calculations under this Section 3 shall be made to the
nearest cent, one-hundredth of a share or, in the case of the
Conversion Rate, one hundred-thousandth. Notwithstanding any other
provision of this Section 3, the Corporation shall not be required to
make any adjustment of the Conversion Rate unless such adjustment
would require an increase or decrease of at least 1.00000% of such
Conversion Rate. Any lesser adjustment shall be carried forward and
shall be made at the time of and together with the next subsequent
adjustment which, together with any adjustment or adjustments so
carried forward, shall amount to an increase or decrease of at least
1.00000% in such rate. Any adjustments under this Section 3 shall be
made successively whenever an event requiring such an adjustment
occurs.
ix.If the Corporation shall take a record of the holders of Media
Stock for the purpose of entitling them to receive a dividend or
other distribution, and shall thereafter and before the distribution
to stockholders thereof legally abandon its plan to pay or deliver
such dividend or distribution, then thereafter no adjustment in the
Conversion Rate then in effect shall
be required by reason of the taking of such record.
x.Subject to Section 3.6(e) hereof, no adjustment shall be made
pursuant to this Section 3.6 with respect to any share of Series D
Stock that is converted prior to the time such adjustment otherwise
would be made.
g. In case of (a) any consolidation or merger to which the Corporation
is a party, other than a merger or consolidation in which the
Corporation is the surviving or continuing corporation and which does
not result in any reclassification of, or change (other than a change
in par value or from par value to no par value or from no par value
to par value, or as a result of a subdivision or combination) in,
outstanding shares of Media Stock (or such other class or series of
common stock into which shares of this Series are then convertible)
or (b) any sale or conveyance of all or substantially all of the
property and assets of the Corporation, then lawful provision shall
be made as part of the terms of such transaction whereby the holder
of each share of Series D Stock which is not converted into the right
to receive stock or other securities and property in connection with
such transaction shall have the right thereafter, during the period
such share shall be convertible, to convert such share into the kind
and amount of shares of stock or other securities and property
receivable upon such consolidation, merger, sale or conveyance by a
holder of the number of shares of Media Stock (or such other class or
series of common stock into which shares of this Series are then
convertible) into which such shares of this Series could have been
converted immediately prior to such consolidation, merger, sale or
conveyance, subject to adjustment which shall be as nearly equivalent
as may be practicable to the adjustments provided for in this
Section 3. If holders of Media Stock (or such other class or series
of common stock into which shares of this Series are then
convertible) are entitled to elect the kind or amount of securities
or other property receivable upon such consolidation, merger, sale or
conveyance, all adjustments made pursuant to this Section 3.7 shall
be based upon (i) the election, if any, made in writing to the
Secretary of the Corporation by the record holder of the largest
number of shares of Series D Stock prior to the earlier of (x) the
last date on which a holder of Media Stock (or such other class or
series of common stock) may make such an election and (y) the date
which is five (5) Trading Days prior to the record date for
determining the holders of Media Stock (or such other class or series
of common stock) entitled to participate in the transaction (or if no
such record date is established, the effective date of such
transaction) or (ii) if no such election is timely made, an
assumption that such holder of Media Stock (or such other class or
series of common stock) failed to exercise such rights of election
(provided that if the kind or amount of securities or other property
receivable upon such consolidation, merger, sale or conveyance is not
the same for each nonelecting share, then the kind and amount of
securities or other property receivable upon such consolidation,
merger, sale or conveyance for each nonelecting share shall be deemed
to be the kind and amount so receivable per share by a plurality of
the nonelecting shares). Concurrently with the mailing to holders of
Media Stock (or such other class or series of common stock) of any
document pursuant to which such holders may make an election
regarding the kind or amount of securities or other property that
will be receivable by such holder in any transaction described in
clause (a) or (b) of the first sentence of this Section 3.7, the
Corporation shall mail a copy thereof to the holders of shares of the
Series D Stock. The Corporation shall not enter into any of the
transactions referred to in
clauses (a) or (b) of the first sentence of this Section 3.7 unless,
prior to the consummation thereof, effective provision shall be made
in a certificate or articles of incorporation or other constituent
document or written instrument of the Corporation or the entity
surviving the consolidation or merger, if other than the Corporation,
or the entity acquiring the Corporation's assets, unless, in either
case, such entity is a direct or indirect subsidiary of another
entity, in which case such provision shall be made in the certificate
or articles of incorporation or other constituent document or written
instrument of such other entity (any such entity or other entity
being the "Surviving Entity") so as to assume the obligation to
deliver to each holder of shares of Series D Stock such stock or
other securities and property and otherwise give effect to the
provisions set forth in this Section 3.7. The provisions of this
Section 3.7 shall apply similarly to successive consolidations,
mergers, sales or conveyances .
h. After the date, if any, on which all outstanding shares of Media
Stock (or such other class or series of common stock into which
shares of this Series are then convertible) are converted into or
exchanged for shares of another class or series of common stock of
the Corporation, each share of this Series shall thereafter be
convertible into or exchangeable for the number of shares of such
other class or series of common stock receivable upon such conversion
or exchange by a holder of that number of shares or fraction thereof
of Media Stock (or such other class or series of common stock into
which shares of this Series are then convertible) into which one
share of this Series was convertible immediately prior to such
conversion or exchange. From and after any such conversion or
exchange, Conversion Rate adjustments as nearly equivalent as may be
practicable to the adjustments pursuant to Sections 3.6 and 3.7
which, prior to such exchange, were made in respect of Media Stock
(or such other class or series of common stock into which shares of
this Series are then convertible) shall instead be made pursuant to
such Sections 3.6 and 3.7 in respect of shares of such other class or
series of common stock.
i. Whenever the Conversion Rate is adjusted as provided in this Section
3, the Corporation (or, in the case of Section 3.7, the Corporation
or the Surviving Entity, as the case may be, shall forthwith place on
file with its transfer agent or agents for this Series a statement
signed by a duly authorized officer of the Corporation or the
Surviving Entity, as the case may be, stating the adjusted Conversion
Rate determined as provided herein. Such statements shall set forth
in reasonable detail such facts as shall be necessary to show the
reason for and the manner of computing such adjustment. Promptly
after the adjustment of the Conversion Rate, the Corporation or the
Surviving Entity, as the case may be, shall mail a notice thereof to
each holder of shares of this Series. Whenever the Conversion Rate is
increased pursuant to Section 3.6(f), such notice shall be mailed to
each holder of shares of this Series as promptly as possible after
the Corporation shall have determined to effect such increase and, in
any event, at least 15 Trading Days prior to the date such increased
Conversion Rate takes effect, and such notice shall state such
increased Conversion Rate and the period during which it will be in
effect. Where appropriate, the notice required by this Section 3.9(a)
may be given in advance and included as part of the notice required
pursuant to Section 3.9(b) or 3.9(c).
i. Subject to the provisions of Section
3.9(c), if: the Corporation takes any action that would require an
adjustment of the Conversion Rate pursuant to Sections 3.6 through
3.8; there shall be any consolidation or merger to which the
Corporation is a party and for which approval of any stockholders of
the Corporation is required, or the sale or transfer of all or
substantially all of the assets of the Corporation; or there shall
occur the voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, then the Corporation shall, as
promptly as possible, but at least 10 Trading Days prior to the
record date or other date set for definitive action if there shall be
no record date, a notice stating the action or event for which such
notice is being given and the record date for and the anticipated
effective date of such action or event. Failure to give or receive
such notice or any defect therein shall not affect the legality or
validity of the related transaction.
ii.If the Corporation intends to convert all of the outstanding
shares of Media Stock into shares of Communications Stock (or, if the
Communications Stock is not Publicly Traded at such time and shares
of any other class or series of common stock of the Corporation
(other than Media Stock) are then Publicly Traded, of such other
class or series of common stock as has the largest Market
Capitalization) (as provided in Section 2.4 of Article V of the
Certificate of Incorporation), then the Corporation shall, not
earlier than the 35th Trading Day and not later than the 45th Trading
Day prior to the date of such conversion, cause notice to be filed
with the transfer agent or agents for this Series and given to each
record holder of shares of this Series, setting forth: (1) a
statement that all outstanding shares of Media Stock shall be
converted; (2) the date of such conversion; (3) the per share
number of shares of Communications Stock (or such other class or
series of common stock) to be received with respect to each share of
Media Stock, including details as to the calculation thereof; (4) the
place or places where certificates for shares of Media Stock,
properly endorsed or assigned for transfer (unless the Corporation
shall waive such requirement), are to be surrendered for delivery of
certificates for shares of Communications Stock (or such other class
or series of common stock); (5) the number of shares of Media Stock
outstanding and the number of shares of Media Stock into or for which
outstanding Convertible Securities are then convertible, exchangeable
or exercisable and the conversion, exchange or exercise price
thereof, including the number of outstanding shares of this Series
and the Conversion Price; (6) a statement to the effect that, subject
to Section 2.4.5(I) of Article V of the Certificate of Incorporation,
dividends on shares of such Media Stock shall cease to be paid as of
the date of such conversion; (7) that a holder of shares of this
Series shall be entitled to receive shares of Communications Stock
(or such other class or series of common stock) pursuant to such
conversion if such holder converts shares of this Series on or prior
to the date of such conversion; and (8) a statement as to what such
holder will be entitled to receive pursuant to the terms of Section
3.8 if such holder thereafter properly converts shares of this
Series. In addition, from and after any conversion of Media Stock
effected in accordance with Section 2.4 of Article V of the
Certificate of Incorporation, if (x) a class or series of common
stock of the Corporation exists in addition to the class or series of
common stock into which the Media Stock was converted and (y) the
Corporation intends to convert the class or series of common stock
into which the Media Stock was converted into another such class or
series of common stock of the Corporation, then
the Corporation shall give notice comparable to the notice described
in the preceding sentence of its intention to effect such a
conversion. In the event of any conflict between the notice
provisions of this Section 3.9(c) and Section 3.9(b), the notice
provisions of this Section 3.9(c) shall govern.
j. There shall be no adjustment of the Conversion Rate in case of the
issuance of any stock of the Corporation in a reorganization,
acquisition or other similar transaction except as specifically set
forth in this Section 3. If any action or transaction would require
adjustment of any Conversion Rate established hereunder pursuant to
more than one paragraph of this Section 3, only the adjustment which
would result in the largest increase of such Conversion Rate shall be
made.
k. The Corporation shall at all times reserve and keep available, free
from preemptive rights, out of its authorized but unissued stock, for
the purpose of effecting the conversion of the shares of this Series,
such number of its duly authorized shares of Media Stock (or, if
applicable, any other shares of Capital Stock of the Corporation) as
shall from time to time be sufficient to effect the conversion of all
outstanding shares of this Series into such Media Stock (or such
other shares of Capital Stock) at any time; provided, however, that
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nothing contained herein shall preclude the Corporation from
satisfying its obligations in respect of the conversion of the shares
by delivery of purchased shares of Media Stock (or such other shares
of Capital Stock) that are held in the treasury of the Corporation.
All shares of Media Stock (or such other shares of Capital Stock of
the Corporation) which shall be deliverable upon conversion of the
shares of this Series shall be duly and validly issued, fully paid
and
nonassessable. For purposes of this Section 3, the number of shares
of Media Stock or any other class or series of common stock of the
Corporation at any time outstanding shall not include any shares of
Media Stock or such other class or series of common stock then owned
or held by or for the account of Corporation or any subsidiary of the
Corporation.
l. If any shares of Media Stock (or such other class or series of common
stock into which shares of this Series are then convertible) which
would be issuable upon conversion of shares of this Series hereunder
require registration with or approval of any governmental authority
before such shares may be issued upon conversion, the Corporation
will in good faith and as expeditiously as possible cause such shares
to be duly registered or approved, as the case may be. The
Corporation will endeavor to list the shares of (or depositary shares
representing fractional interests in) Media Stock (or such other
class or series of common stock into which shares of this Series are
then convertible) required to be delivered upon conversion of shares
of this Series prior to such delivery upon the principal national
securities exchange upon which the outstanding Media Stock (or such
other class or series of common stock) is listed at the time of such
delivery.
m. The Corporation shall pay any and all issue, stamp, documentation,
transfer or other taxes that may be payable in respect of any issue
or delivery of shares of Media Stock (or such other class or series
of common stock into which shares of this Series are then
convertible) on conversion of shares of this Series pursuant hereto.
The Corporation shall not, however, be required to pay any tax which
is payable in respect of any transfer involved in the issue or
delivery of Media Stock (or such
other class or series of common stock) in a name other than that in
which the shares of this Series so converted were registered, and no
such issue or delivery shall be made unless and until the Person
requesting such issue has paid to the Corporation the amount of such
tax, or has established, to the satisfaction of the Corporation, that
such tax has been paid.
Section 4 Redemption or Exchange.
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a. Except as provided in Section 4.1(b), the shares of this Series shall
not be redeemable by the Corporation prior to the third anniversary
of the Effective Time. The Corporation may, at its sole option,
subject to Section 2.2 hereof, from time to time on and after the
third anniversary of the Effective Time and prior to the fifth
anniversary of the Effective Time, exchange shares of Media Stock (or
such other class or series of common stock into which shares of this
Series are then convertible) for all or any part of the outstanding
shares of this Series at the Exchange Rate; provided, however, that
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such an exchange may only be effected if the Closing Price shall be
greater than the product of (x) the Conversion Price multiplied by
(y) 1.35, on 20 of the 30 Trading Days immediately prior to the date
of the notice delivered by the Corporation pursuant to Section 4.3(a)
to holders of shares of this Series to be exchanged. The Corporation
may, at its sole option, subject to Section 2.2 hereof, from time to
time on and after the fifth anniversary of the Effective Time, at its
election either: (i) redeem, out of funds legally available therefor,
all or any part of the outstanding shares of this Series at the
Redemption Price; (ii) exchange shares of Media Stock (or such other
class or series of common stock into which shares of this Series are
then convertible) for all or any part of the outstanding shares of
this Series at the Exchange Rate; or (iii) effect a
combination of the options described in the foregoing clauses (i) and
(ii) (in which event each holder of shares of this Series which are
selected for redemption and exchange pursuant to Section 4.2 shall
receive the same proportion of cash and shares of Media Stock (or
such other class or series of common stock into which shares of this
Series are then convertible) (except for cash paid in lieu of
fractional shares) paid to other holders of shares of this Series
selected for redemption and exchange).
i. The Corporation shall redeem, out of funds legally available
therefor, all of the outstanding shares of this Series, at the
Redemption Price, if any of the following events with respect to the
Media Group occur (such events being collectively referred to herein
as the "Media Group Special Events"):
(1) (A) the Corporation redeems all of the outstanding shares of
Media Stock in exchange for shares of common stock of the Media Group
Subsidiaries as provided in Section 2.4.3 of Article V of the
Certificate of Incorporation (the "Media Group Subsidiary
Redemption") or (B) following a Disposition of all or substantially
all of the properties and assets attributed to the Media Group, the
Corporation either (1) pays a dividend on the Media Stock in an
amount equal to the product of the Outstanding Media Fraction
multiplied by the Fair Value of the Net Proceeds of such Disposition
as provided in Section 2.4.1(A)(1)(a) of Article V of the Certificate
of Incorporation (the "Media Group Disposition Dividend"), or (2)
redeems shares of Media Stock for an amount equal to the product of
the Outstanding Media Fraction multiplied by the Fair Value of the
Net Proceeds of such Disposition as provided in Section
2.4.1(A)(1)(b) of Article V of the
Certificate of Incorporation (the "Media Group Disposition
Redemption"); or
(2) the Corporation pays a dividend on, or the Corporation or any of
its subsidiaries consummates a tender offer or exchange offer for,
shares of Media Stock and the aggregate amount of such dividend or
the consideration paid in such tender offer or exchange offer is an
amount equal to the Fair Value of all or substantially all of the
properties and assets attributed to the Media Group (the "Media Group
Special Dividend" or the "Media Group Tender or Exchange Offer",
respectively); provided, however, that the calculation of the Fair
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Value of all or substantially all of the properties and assets
attributed to the Media Group shall be made without giving effect to
any money borrowed by the Corporation or any of its subsidiaries in
connection with such dividend or tender offer or exchange offer, as
the case may be.
The Redemption Date for shares of this Series to be redeemed by the Corporation
pursuant to this Section 4.1(b) shall be, if the applicable Media Group Special
Event is (I) the Media Group Subsidiary Redemption, the date of such exchange,
(II) the Media Group Disposition Dividend or the Media Group Special Dividend,
the date of payment of such dividend, (III) the Media Group Disposition
Redemption, the date of such redemption or (IV) the Media Group Tender or
Exchange Offer, the date such tender offer or exchange offer is consummated.
Notwithstanding anything to the contrary contained in this Section 4.1(b), any
redemption pursuant to this Section 4.1(b) shall be conditioned upon the actual
redemption of Media Stock for shares of common stock of the Media Group
Subsidiaries, payment of the Media Group Disposition Dividend or the amount due
as a result of the Media Group Disposition Redemption (in each case in the
required kind of capital stock, cash, securities and/or other property), payment
of the Media Group Special Dividend or the consummation of the Media Group
Tender or Exchange Offer, as the case may be.
ii. The Corporation shall, on the twentieth anniversary of the
Effective
Time, at its election either: (i) redeem, out of funds legally
available therefor, all of the outstanding shares of this Series at
the Redemption Price; (ii) exchange shares of Media Stock (or such
other class or series of common stock into which shares of this
Series are then convertible) for all of the outstanding shares of
this Series at the Exchange Rate; or (iii) effect a combination of
the options described in the foregoing clauses (i) and (ii) (in which
event each holder of shares of this Series shall receive the same
proportion of cash and shares of Media Stock (or such other class or
series of common stock into which shares of this Series are then
convertible) (except for cash paid in lieu of fractional shares) paid
to other holders of shares of this Series).
iii. The Corporation shall redeem, out of funds legally available
therefore, all of the outstanding shares of this Series at the
Redemption Price, if (i) the Corporation converts all of the
outstanding shares of Media Stock into shares of Communications Stock
(or, if the Communications Stock is not Publicly Traded at such time
and shares of any other class or series of common stock of the
Corporation (other than Media Stock) are then Publicly Traded, of
such other class or series of common stock as has the largest Market
Capitalization) as provided in Section 2.4 of Article V of the
Certificate of Incorporation and (ii) at any time following such
conversion (A) an event substantially similar to any Media Group
Special Event occurs in respect to the Communications Stock (or such
other class or series of common stock) and (B) at the time of such
event shares of another class or series of common stock of the
Corporation (other then Communications Stock or such other class or
series of common stock) are then Publicly Traded. The Redemption Date
for, and the conditions
to, any such redemption shall be determined in a manner consistent
with the Redemption Date and conditions set forth in Section 4.1(b)
for a redemption resulting from a substantially similar Media Group
Special Event.
iv. The Corporation shall be entitled to effect an exchange of shares
of Media Stock (or such other class or series of common stock into
which shares of this Series are then convertible) for shares of
Series D Stock pursuant to Section 4.1(a) or 4.1(c) only to the
extent Media Stock (or such other class or series of common stock)
shall be available for issuance (including delivery of previously
issued shares of Media Stock (or such other class or series) held in
the Corporation's treasury on the Redemption Date). The Corporation
may, but shall not be required to, in connection with any exchange of
shares of this Series pursuant to Section 4.1(a) or 4.1(c), issue a
fraction of a share of Media Stock (or such other class or series of
common stock into which shares of this Series are then convertible),
and if the Corporation shall determine not to issue any such
fraction, the Corporation shall make a cash payment (rounded to the
nearest cent) equal to such fraction multiplied by the Closing Price
of the Media Stock (or such other class or series of common stock) on
the last Trading Day prior to the Redemption Date.
b. In the event that fewer than all of the outstanding shares of this
Series are to be redeemed and/or exchanged pursuant to Section
4.1(a), subject to clause (iii) of the third sentence of Section
4.1(a), the aggregate number of shares of this Series held by each
holder which will be redeemed and/or exchanged shall be determined by
the Corporation by lot or pro rata or by any other method as may be
determined by the Board of Directors in its sole discretion to be
equitable, and the certificate of the
Corporation's Secretary or an Assistant Secretary filed with the
transfer agent or transfer agents for this Series in respect of such
determination by the Board of Directors shall be conclusive.
c. If the Corporation determines to redeem and/or exchange shares of
this Series pursuant to Section 4.1(a) or 4.1(c), the Corporation
shall, not later than the 15th Trading Day nor earlier than the 60th
Trading Day prior to the Redemption Date, cause notice to be filed
with the transfer agent or agents for this Series and to be given to
each record holder of the shares to be redeemed and/or exchanged,
setting forth: (1) the Redemption Date; (2) in the case of a
redemption or exchange pursuant to Section 4.1(c), that all shares of
this Series outstanding on the Redemption Date shall be redeemed
and/or exchanged by the Corporation; (3) in the case of a redemption
or exchange pursuant to Section 4.1(a), the total number of shares of
this Series to be redeemed and/or exchanged and, if fewer than all
the shares held by such holder are to be redeemed and/or exchanged,
the aggregate number of such shares which will be redeemed and/or
exchanged; (4) the Redemption Price and/or the manner in which the
Exchange Rate will be calculated prior to the Redemption Date; (5)
that, if applicable, the Corporation shall determine on or prior to
the second Trading Day preceding the Redemption Date the percentage
of such holder's shares to be redeemed and the percentage of such
holder's shares to be exchanged; (6) that shares of this Series
called for redemption or exchange may be converted at any time prior
to the Redemption Date (unless the Corporation (i) shall, in the case
of a redemption, default in payment of the Redemption Price or, in
the case of an exchange, fail to exchange the shares of this Series
for the applicable number of shares of Media Stock or (ii) shall, in
the case of a redemption pursuant to Section
4.1(a), exercise its right to rescind such redemption or exchange
pursuant to Section 4.5, in which case such right of conversion shall
not terminate at such time and date); (7) the applicable Conversion
Price; (8) the place or places where certificates for such shares are
to be surrendered for payment of the Redemption Price and/or the
Exchange Rate, as the case may be; and (9) that dividends on the
shares to be redeemed and/or exchanged will cease to accrue on the
Redemption Date. Promptly, following the Redemption Date, the
Corporation shall cause notice to be filed with the transfer agent or
agents for this Series and to be given to each record holder of the
shares to be redeemed and/or exchanged setting forth the percentage
of such holder's shares which the Corporation has elected to redeem
and the percentage of such holder's shares which the Corporation has
elected to exchange.
i. If the Corporation determines to effect a Media Group Subsidiary
Redemption, the Corporation shall, not later than the 30th Trading
Day and not earlier than the 45th Trading Day prior to the Redemption
Date, cause notice to be filed with the transfer agent or agents for
this Series and given to each record holder of shares of this Series,
setting forth: (1) the Redemption Date (which, pursuant to the
penultimate sentence of Section 4.1(b), shall be the same as the date
specified in clause (8) below); (2) that all shares of this Series
outstanding on the Redemption Date shall be redeemed by the
Corporation; (3) the Redemption Price; (4) that the redemption of the
shares of this Series shall be conditioned upon the consummation of
the Media Group Subsidiary Redemption; (5) the place or places where
certificates for shares of this Series, properly endorsed or assigned
for transfer (unless the Corporation waives such requirement), are to
be surrendered for payment of the Redemption Price; (6) that
dividends on the
shares to be redeemed will cease to accrue on the Redemption Date;
(7) a statement that all shares of Media Stock outstanding on the
date of the Media Group Subsidiary Redemption shall be redeemed in
exchange for shares of common stock of the Media Group Subsidiaries;
(8) the date of such Media Group Subsidiary Redemption; (9) the
Outstanding Media Fraction on the date of such notice; (10) the place
or places where certificates for shares of Media Stock, properly
endorsed or assigned for transfer (unless the Corporation shall waive
such requirement), are to be surrendered for delivery of certificates
for shares of the Media Group Subsidiaries; (11) a statement to the
effect that, subject to Section 2.4.5(I) of Article V of the
Certificate of Incorporation, dividends on the Media Stock shall
cease to be paid as of the Redemption Date; (12) the number of shares
of Media Stock outstanding and the number of shares of Media Stock
into or for which outstanding Convertible Securities are then
convertible, exchangeable or exercisable and the conversion, exchange
or exercise price thereof, including the number of outstanding shares
of this Series and the Conversion Price; and (13) that a holder of
shares of this Series shall be entitled to receive shares of common
stock of the Media Group Subsidiaries upon the Media Group Subsidiary
Redemption in lieu of the Redemption Price only if such holder
converts such shares of this Series on or prior to the Redemption
Date.
ii. If the Corporation determines to effect a Media Group Disposition
Dividend, the Corporation shall, not later than the 30th Trading Day
following the consummation of the Disposition by the Corporation of
all or substantially all of the properties and assets attributed to
the Media Group, cause notice to be filed with the transfer agent or
agents for this Series and given to each record holder of shares of
this Series, setting forth: (1) the anticipated
Redemption Date (which, pursuant to the penultimate sentence of
Section 4.1(b), shall be the same as the date specified in clause (8)
below); (2) that all shares of this Series outstanding on the
Redemption Date shall be redeemed by the Corporation; (3) the
Redemption Price; (4) that the redemption of the shares of this
Series shall be conditioned upon the payment of the Media Group
Disposition Dividend; (5) the place or places where certificates for
shares of this Series, properly endorsed or assigned for transfer
(unless the Corporation waives such requirement), are to be
surrendered for payment of the Redemption Price; (6) that dividends
on the shares to be redeemed will cease to accrue on the Redemption
Date; (7) the record date for determining holders of Media Stock
entitled to receive the Media Group Disposition Dividend, which shall
be not earlier than the 40th Trading Day and not later than the 50th
Trading Day following the consummation of such Disposition; (8) the
anticipated date of payment of the Media Group Disposition Dividend
(which shall not be more than 85 Trading Days following the
consummation of such Disposition); (9) the type of property to be
paid as such dividend in respect of the outstanding shares of Media
Stock; (10) the Net Proceeds of such Disposition; (11) the
Outstanding Media Fraction on the date of such notice; (12) the
number of outstanding shares of Media Stock and the number of shares
of Media Stock into or for which outstanding Convertible Securities
are then convertible, exchangeable or exercisable and the conversion,
exchange or exercise price thereof, including the number of
outstanding shares of this Series and the Conversion Price in effect
at such time; and (13) that a holder of shares of this Series shall
be entitled to receive such dividend in lieu of the Redemption Price
only if such holder properly converts such shares on or prior to the
record date referred to in clause (7) of this sentence
and that shares of this Series shall not be convertible after such
record date.
iii. If the Corporation determines to effect a Media Group
Disposition Redemption following a Disposition of all (not merely
substantially all) of the properties and assets attributed to the
Media Group (in accordance with Section 2.4.1(A)(1)(b)(i) of Article
V of the Certificate of Incorporation), the Corporation shall, not
later than the 35th Trading Day and not earlier than the 45th Trading
Day prior to the Redemption Date, cause notice to be filed with the
transfer agent or agents for this Series and given to each record
holder of shares of this Series, setting forth: (1) the Redemption
Date (which, pursuant to the penultimate sentence of Section 4.1(b),
shall be the same as the date specified in clause (8) below); (2)
that all shares of this Series outstanding on the Redemption Date
shall be redeemed by the Corporation; (3) the Redemption Price; (4)
that the redemption of shares of this Series shall be conditioned
upon the consummation of the Media Group Disposition Redemption; (5)
the place or places where certificates for shares of this Series,
properly endorsed or assigned for transfer (unless the Corporation
waives such requirement), are to be surrendered for payment of the
Redemption Price; (6) that dividends on the shares to be redeemed
will cease to accrue on the Redemption Date; (7) that all shares of
Media Stock outstanding on the date of such Media Group Disposition
Redemption shall be redeemed; (8) the date of such Media Group
Disposition Redemption (which shall not be more than 85 Trading Days
following the consummation of such Disposition); (9) the type of
property in which the redemption price for the shares of Media Stock
to be redeemed is to be paid; (10) the Net Proceeds of such
Disposition; (11) the Outstanding Media Fraction on the date of such
notice; (12) the place or places where certificates
for shares of Media Stock, properly endorsed or assigned for transfer
(unless the Corporation waives such requirement), are to be
surrendered for delivery of cash and/or securities or other property;
(13) the number of outstanding shares of Media Stock and the number
of shares of Media Stock into or for which such outstanding
Convertible Securities are then convertible, exchangeable or
exercisable and the conversion, exchange or exercise price thereof,
including the number of outstanding shares of this Series and the
Conversion Price in effect at such time; (14) that a holder of shares
of this Series shall be entitled to participate in the Media Group
Disposition Redemption in lieu of participating in the redemption of
the shares of this Series only if such holder properly converts such
shares of this Series on or prior to the Redemption Date; and (15)
that, except as otherwise provided by Section 2.4.5(I) of Article V
of the Certificate of Incorporation, dividends on shares of Media
Stock shall cease to be paid as of the Redemption Date.
iv. If the Corporation determines to effect a Media Group Disposition
Redemption following a Disposition of substantially all (but not all)
of the properties and assets attributed to the Media Group (in
accordance with Section 2.4.1(A)(1)(b)(ii) of Article V of the
Certificate of Incorporation), the Corporation shall, not later than
the 30th Trading Day following the consummation of such Disposition,
cause notice to be filed with the transfer agent or agents for this
Series and given to each record holder of shares of this Series,
setting forth: (1) the anticipated Redemption Date (which, pursuant
to the penultimate sentence of Section 4.1(b), shall be the same as
the date specified in clause (8) below); (2) that all shares of this
Series outstanding on the Redemption Date shall be redeemed by the
Corporation; (3) the Redemption Price; (4) that the
redemption of shares of this Series shall be conditioned upon the
consummation of the Media Group Disposition Redemption; (5) the place
or places where certificates for shares of this Series, properly
endorsed or assigned for transfer (unless the Corporation waives such
requirement), are to be surrendered for payment of the Redemption
Price; (6) that dividends on the shares to be redeemed will cease to
accrue on the Redemption Date; (7) a date not earlier than the 40th
Trading Day and not later than the 50th Trading Day following the
consummation of such Disposition on which shares of Media Stock shall
be selected for redemption pursuant to such Media Group Disposition
Redemption; (8) the anticipated date of such Media Group Disposition
Redemption (which shall not be more than 85 Trading Days following
the consummation of such Disposition); (9) the type of property in
which the redemption price for the shares of Media Stock to be
redeemed is to be paid; (10) the Net Proceeds of such Disposition;
(11) the Outstanding Media Fraction; (12) the number of shares of
Media Stock outstanding and the number of shares of Media Stock into
or for which outstanding Convertible Securities are then convertible,
exchangeable or exercisable and the conversion, exchange or exercise
price thereof, including the number of outstanding shares of this
Series and the Conversion Price in effect at such time; (13) that a
holder of shares of this Series shall be eligible to participate in
such selection for redemption pursuant to such Media Group
Disposition Redemption in lieu of participating in the redemption of
shares of this Series only if such holder properly converts such
shares of this Series on or prior to the date referred to in clause
(7) of this sentence and that shares of this Series shall not be
convertible after such date; and (14) a statement that the
Corporation will not be required to register a transfer of any shares
of Media Stock for a period of 15
Trading Days next preceding the date referred to in clause (7) of
this sentence.
v. If the Corporation determines to effect a Media Group Special
Dividend, the Corporation shall, not later than the 45th Trading Day
and not earlier than the 60th Trading day prior to the date of
payment of such dividend, cause notice to be filed with transfer
agent or agent for this Series and given to each record holder of
shares of this Series, setting forth: (1) the anticipated Redemption
Date (which, pursuant to the penultimate sentence of Section 4.1(b),
shall be the same as the date specified in clause (8) below); (2)
that all shares of this Series outstanding on the Redemption Date
shall be redeemed by the Corporation; (3) the Redemption Price; (4)
that the redemption of the shares of this Series shall be conditioned
upon the payment of the Media Group Special Dividend; (5) the place
or places where certificates for shares of this Series, properly
endorsed or assigned for transfer (unless the Corporation waives such
requirement), are to be surrendered for payment of the Redemption
Price; (6) that dividends on the shares to be redeemed will cease to
accrue on the Redemption Date; (7) the record date for determining
holders of Media Stock entitled to receive the Media Group Special
Dividend, which shall be not earlier than the 20th Trading Day prior
to the date of payment of such dividend; (8) the anticipated date of
payment of the Media Group Special Dividend; (9) the type of property
to be paid as such dividend in respect of the outstanding shares of
Media Stock; (10) the Outstanding Media Fraction on the date of such
notice; (11) the number of outstanding shares of Media Stock and the
number of shares of Media Stock into or for which outstanding
Convertible Securities are then convertible, exchangeable or
exercisable and the conversion, exchange or exercise price
thereof, including the number of outstanding shares of this Series
and the Conversion Price in effect at such time; and (12) that a
holder of shares of this Series shall be entitled to receive such
dividend in lieu of the Redemption Price only if such holder properly
converts such shares on or prior to the record date referred to in
clause (7) of this sentence and that shares of this Series shall not
be convertible after such record date.
vi. If the Corporation or any of its subsidiaries determines to
effect a Media Group Tender or Exchange Offer, the Corporation shall,
on the date of the public announcement of such tender offer or
exchange offer by the Corporation or any of its subsidiaries but in
any event not later than the 35th Trading Day prior to such
redemption, cause notice to be filed with the transfer agent or agent
for this Series and given to each record holder of shares of this
Series, setting forth: (1) the anticipated Redemption Date (which,
pursuant to the penultimate sentence of Section 4.1(b), shall be the
same as the date specified in clause (7) below); (2) that all shares
of this Series outstanding on the Redemption Date shall be redeemed
by the Corporation; (3) the Redemption Price; (4) that the redemption
of shares of this Series shall be conditioned upon the consummation
of the Media Group Tender or Exchange Offer; (5) the place or places
where certificates for shares of this Series, properly endorsed or
assigned for transfer (unless the Corporation waives such
requirement), are to be surrendered for payment of the Redemption
Price; (6) that dividends on the shares to be redeemed will cease to
accrue on the Redemption Date; (7) the anticipated date of
consummation of such Media Group Tender or Exchange Offer; (8) the
type of consideration to be paid by the Corporation or its subsidiary
in such Media Group Tender Offer or Exchange Offer for shares
of Media Stock; (9) the date on which such Media Group Tender or
Exchange Offer commenced, the date on which such Media Group Tender
or Exchange Offer is scheduled to expire unless extended and any
other material terms thereof (or the material terms of any amendment
thereto); (10) the Outstanding Media Fraction on the date of such
notice; (11) the number of outstanding shares of Media Stock and the
number of shares of Media Stock into or for which such outstanding
Convertible Securities are then convertible, exchangeable or
exercisable and the conversion, exchange or exercise price thereof,
including the number of outstanding shares of this Series and the
Conversion Price in effect at such time; and (12) that a holder of
shares of this Series shall be entitled to participate in the Media
Group Tender or Exchange Offer in lieu of participating in the
redemption of the shares of this Series only if such holder properly
converts such shares of this Series on or prior to the Redemption
Date and then complies with the terms and conditions of the Media
Group Tender or Exchange Offer and that such holder shall be
permitted to tender or exchange shares of Media Stock upon conversion
of shares of this Series by notice of guaranteed delivery so long as
physical certificates are tendered as soon as practicable after
physical receipt thereof.
vii. In the event the Corporation shall redeem shares of this Series
pursuant to Section 4.1(d), notice of such redemption shall be given
by the Corporation at a time, and such notice shall contain
information, comparable to the time or information, as the case may
be, specified in Sections 4.3(b) through (g) with respect to a notice
of a redemption pursuant to Section 4.1(b) resulting from a
substantially similar Media Group Special Event.
d. If notice of redemption or exchange shall have been given by the
Corporation as provided in Section 4.3, from and after the Redemption
Date, dividends on the shares of this Series so called for redemption
or exchange shall cease to accrue, such shares shall no longer be
deemed to be outstanding, and all rights of the holders thereof as
stockholders of the Corporation with respect to shares so called for
redemption or exchange (except, in the case of a redemption, the
right to receive from the Corporation the Redemption Price without
interest and, in the case of an exchange, the right to receive from
the Corporation the Exchange Rate without interest) shall cease
(including any right to receive dividends otherwise payable on any
Dividend Payment Date that would have occurred after the Redemption
Date), unless (a) the Corporation, in the case of a redemption,
defaults in the payment of the Redemption Price and, in the case of
an exchange, the Corporation fails to exchange the shares of this
Series for the applicable number of shares of Media Stock, (b) in the
case of a redemption or exchange pursuant to Section 4.1(a), the
Corporation exercises its right to rescind such redemption or
exchange pursuant to Section 4.5 or (c) in the case of a redemption
pursuant to Section 4.1(b) or 4.1(d), the conditions to such
redemption shall not have been satisfied, in which case such rights
shall not terminate at the close of business on such date. On or
before the Redemption Date, the Corporation shall deposit with a bank
or trust company doing business in New York, as paying agent, in the
case of a redemption, money sufficient to pay the Redemption Price on
the Redemption Date, and in the case of an exchange, certificates
representing the shares of Media Stock to be exchanged on the
Redemption Date, in trust, with irrevocable instructions that such
money or shares be applied to the redemption or exchange of shares of
this Series so called
for redemption or exchange. Any money or certificates so deposited
with any such paying agent which shall not be required for such
redemption or exchange because of the exercise of any right of
conversion, rescission or otherwise (including if the conditions to a
redemption pursuant to Section 4.1(b) or 4.1(d) are not satisfied)
shall be returned to the Corporation forthwith. Upon surrender (in
accordance with the notice of redemption or exchange) of the
certificate or certificates for any shares of this Series to be so
redeemed or exchanged (properly endorsed or assigned for transfer, if
the Corporation shall so require and the notice of redemption or
exchange shall so state), such shares shall be redeemed by the
Corporation at the Redemption Price or exchanged by the Corporation
at the Exchange Rate, as applicable (unless, in the case of a
redemption or exchange pursuant to Section 4.1(a), the Corporation
shall have exercised its right to rescind such redemption or exchange
pursuant to Section 4.5 or, in the case of a redemption pursuant to
Section 4.1(b) or 4.1(d), the conditions to such redemption shall not
have been satisfied). In case fewer than all the shares represented
by any such certificate are to be redeemed or exchanged, a new
certificate shall be issued representing the unredeemed and
unexchanged shares (or fractions thereof as provided in Section 7.4),
without cost to the holder thereof. Subject to applicable escheat
laws, any moneys or shares so set aside by the Corporation and
unclaimed at the end of two years from the Redemption Date shall
revert to the general funds of the Corporation, after which reversion
the holders of such shares so called for redemption or exchange shall
look only to the Corporation for the payment of the Redemption Price
or the Exchange Rate, as the case may be, without interest. Any
interest accrued on any funds so deposited shall be paid to the
Corporation from time to time.
e. If notice of redemption or exchange pursuant to Section 4.1(a) shall
have been given by the Corporation pursuant to Section 4.3(a), in the
event that a Redemption Rescission Event shall occur following the
date of such notice but at or prior to the Redemption Date, the
Corporation may, at its sole option, at any time prior to the earlier
of (i) the close of business on that day which is five (5) Trading
Days following such Redemption Rescission Event and (ii) the
Redemption Date, rescind such redemption or exchange by making a
public announcement of such rescission (the date on which such public
announcement shall have been made being hereinafter referred to as
the "Rescission Date"). The Corporation shall be deemed to have made
such announcement if it shall issue a release to the Dow Xxxxx News
Service and Reuters Information Services or any successor news wire
service. From and after the making of such announcement, the
Corporation shall have no obligation to effect such redemption or
exchange or to pay the Redemption Price or Exchange Rate therefor and
all rights of holders of shares of this Series shall be restored as
if notice of redemption or exchange had not been given. The
Corporation shall give notice of any such rescission by first-class
mail, postage prepaid, mailed as promptly as practicable, but in no
event later than the close of business on that date which is five (5)
Trading Days following the Rescission Date to each record holder of
shares of this Series at the close of business on the Rescission Date
and to any other Person or entity that was a record holder of shares
of this Series and that shall have surrendered shares of this Series
for conversion following the giving of notice of the subsequently
rescinded redemption or exchange. Each notice of rescission shall (w)
state that such redemption or exchange has been rescinded, (x) state
that any
Converting Holder shall be entitled to rescind the conversion of
shares of this Series surrendered for conversion following the day on
which notice of such redemption or exchange was given but on or prior
to the later of (I) the close of business on the Trading Day next
succeeding the date on which public announcement of the rescission of
such redemption or exchange shall have been made and (II) the date
which is three Trading Days following the mailing of the
Corporation's notice of rescission, (y) be accompanied by a form
prescribed by the Corporation to be used by any Converting Holder
rescinding the conversion of shares so surrendered for conversion
(and instructions for the completion and delivery of such form,
including instructions with respect to payments that may be required
to accompany such delivery in accordance with Section 3.5) and (z)
state that such form must be properly completed and received by the
Corporation no later than the close of business on a date that shall
be fifteen (15) Trading Days following the date of the mailing of
such notice of rescission.
Section 5 Voting.
------
The shares of this Series shall have no voting rights except as required by
law or as set forth below.
a. So long as any shares of this Series remain outstanding, unless a
greater percentage shall then be required by law, the Corporation
shall not, without the affirmative vote at a meeting or the written
consent with or without a meeting of the holders of shares of this
Series representing at least a majority of the shares of this Series
then outstanding (i) authorize any Senior Stock or reclassify any
Junior Stock or Parity Stock as Senior Stock, or (ii) amend, alter or
repeal any of the provisions of the Certificate or the Certificate of
Incorporation, so as in any such case to materially and adversely
affect the voting
powers, designations, preferences and relative, participating,
optional or other special rights, and qualifications, limitations or
restrictions of the shares of this Series; provided, however, that an
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amendment which effects a split of this Series or which effects a
combination of the shares of this Series into a fewer number of
Shares shall not be deemed to have any such material adverse effect.
x.Xx vote or consent of holders of shares of this Series shall be
required for (i) the creation of any indebtedness of any kind of the
Corporation, (ii) the authorization or issuance of any class of
Junior Stock (including any class or series of common stock of the
Corporation) or Parity Stock, (iii) the authorization, designation or
issuance of additional shares of Series D Stock or (iv) subject to
Section 5.1(a), the authorization or issuance of any other shares of
Preferred Stock.
b. If and whenever at any time or times dividends payable on shares of
this Series shall have been in arrears and unpaid in an aggregate
amount equal to or exceeding the amount of dividends payable thereon
for six quarterly dividend periods, then the number of directors
constituting the Board of Directors shall be automatically increased
by two and the holders of shares of this Series, together with the
holders of any shares of any Parity Stock as to which in each case
dividends are in arrears and unpaid in an aggregate amount equal to
or exceeding the amount of dividends payable thereon for six
quarterly dividend periods, shall have the exclusive right, voting
separately as a class with such other series, to elect two directors
of the Corporation.
i.Such voting right may be exercised
initially either by written consent or at a special meeting of the
holders of the Preferred Stock having such voting right, called as
hereinafter provided, or at any annual meeting of stockholders held
for the purpose of electing directors, and thereafter at each such
annual meeting until such time as all dividends in arrears on the
shares of this Series shall have been paid in full and all dividends
payable on the shares of this Series on four subsequent consecutive
Dividend Payment Dates shall have been paid in full on such dates or
funds shall have been set aside for the payment thereof, at which
time such voting right and the term of the directors elected pursuant
to Section 5.2(a) shall terminate.
xx.Xx any time when such voting right shall have vested in holders of
shares of such series of Preferred Stock described in Section 5.2(b),
and if such right shall not already have been exercised by written
consent, a proper officer of the Corporation may call, and, upon the
written request, addressed to the Secretary of the Corporation, of
the record holders of either (i) shares representing twenty-five
percent (25%) of the voting power of the shares then outstanding of
the Series D Stock or (ii) shares representing twenty-five percent
(25%) of the voting power of shares of all series of Preferred Stock
having such voting right, shall call, a special meeting of the
holders of Preferred Stock having such voting right. Such meeting
shall be held at the earliest practicable date upon the notice
required for annual meetings of stockholders at the place for holding
annual meetings of stockholders of the Corporation, or, if none, at a
place designated by the Board of Directors. Notwithstanding the
provisions of this Section 5.2(c), no such special meeting shall be
called during a period within 60 days immediately preceding the
date fixed for the next annual meeting of stockholders.
xxx.Xx any meeting held for the purpose of electing directors at
which the holders of such Preferred Stock shall have the right to
elect directors as provided herein, the presence in person or by
proxy of the holders of shares representing more than fifty percent
(50%) in voting power of the then outstanding shares of such
Preferred Stock having such right shall be required and shall be
sufficient to constitute a quorum of such class for the election of
directors by such class.
iv.Any director elected by holders of Preferred Stock pursuant to the
voting right created under this Section 5.2 shall hold office until
the next annual meeting of stockholders (unless such term has
previously terminated pursuant to Section 5.2(b)) and any vacancy in
respect of any such director shall be filled only by vote of the
remaining director so elected, or if there be no such remaining
director, by the holders of such Preferred Stock entitled to elect
such director or directors by written consent or at a special meeting
called in accordance with the procedures set forth in Section 5.2(c),
or, if no special meeting is called or written consent executed, at
the next annual meeting of stockholders.
x.Xx exercising the voting rights set forth in this Section 5.2, each
share of this Series shall have one vote per share.
Section 6 Liquidation Rights.
------------------
a. Upon the dissolution, liquidation or winding up of the Corporation,
whether voluntary or involuntary, the holders of the shares of this
Series shall be entitled to receive out of the assets of the
Corporation available for distribution to stockholders, in preference
to the holders of, and before any payment of distribution shall be
made on, Junior Stock, the Liquidation Value in effect at such time,
plus an amount equal to all accrued and unpaid dividends to the date
of final distribution.
b. The Liquidation Value shall initially be equal to $50 per share of
Series D Stock. The Liquidation Value shall be subject to adjustment
from time to time to appropriately give effect to any split or
combination of the shares of this Series.
c. Neither the sale, exchange or other conveyance (for cash, shares of
stock, securities or other consideration) of all or substantially all
the property and assets of the Corporation nor the merger or
consolidation of the Corporation into or with any other corporation,
or the merger or consolidation of any other corporation into or with
the Corporation, shall be deemed to be a dissolution, liquidation or
winding up, voluntary or involuntary, for the purposes of this
Section 6.
d. After the payment to the holders of the shares of this Series of full
preferential amounts provided for in this Section 6, the holders of
this Series as such shall have no right or claim to any of the
remaining assets of the Corporation.
e. In the event the assets of the Corporation available for distribution
to the holders of shares of this Series upon any dissolution,
liquidation or winding up of the Corporation, whether voluntary or
involuntary, shall be insufficient to pay in full all amounts to
which such holders are entitled pursuant to Section 6.1, no such
distribution shall be made on account
of any shares of any Parity Stock upon such dissolution, liquidation
or winding up unless proportionate distributive amounts shall be paid
on account of the shares of this Series, ratably, in proportion to
the full distributable amounts for which holders of all Parity Stock
are entitled upon such dissolution, liquidation or winding up.
Section 7 Other Provisions.
----------------
a. All notices from the Corporation to the holders shall be given by
first class mail, postage prepaid, to the holders of shares of this
Series at their last address as it shall appear on the stock
register. With respect to any notice to a holder of Shares of this
Series required to be provided hereunder, neither failure to mail
such notice, nor any defect therein or in the mailing thereof, shall
affect the sufficiency of the notice or the validity of the
proceedings referred to in such notice or affect the legality or
validity of any distribution, right, warrant, reclassification,
consolidation, merger, conveyance, transfer, dissolution, liquidation
or winding up, or the vote upon any such action. Any notice which was
mailed in the manner herein provided shall be conclusively presumed
to have been duly given whether or not the holder receives the
notice.
b. All notices and other communications from a holder of shares of this
Series shall be deemed given if delivered personally or sent by
overnight courier (providing proof of delivery) to the Corporation at
the following address (or at such other address as the Corporation
shall specify in a notice pursuant to Section 7.1): U S WEST, Inc.,
0000 Xxxx Xxxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxx 00000, Attention: General
Counsel.
c. Any shares of this Series which have been converted, redeemed,
exchanged or otherwise acquired by the Corporation shall, after such
conversion, redemption, exchange or acquisition, as the case may be,
be retired and promptly cancelled and the Corporation shall take all
appropriate action to cause such shares to obtain the status of
authorized but unissued shares of Preferred Stock, without
designation as to series, until such shares are once more designated
as part of a particular series by the Board of Directors. The
Corporation may cause a certificate setting forth a resolution
adopted by the Board of Directors that none of the authorized shares
of this Series are outstanding to be filed with the Secretary of
State of the State of Delaware. When such certificate becomes
effective, all references to Series D Stock shall be eliminated from
the Certificate of Incorporation and the shares of Preferred Stock
designated hereby as Series D Stock shall have the status of
authorized and unissued shares of Preferred Stock and may be reissued
as part of any new series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors.
d. The shares of this Series shall be issuable in whole shares or in any
fraction of a whole share or any integral multiple of such fraction.
e. The Corporation shall, to the fullest extent permitted by law, be
entitled to recognize the exclusive right of a Person registered on
its records as the holder of shares of this Series, and such record
holder shall be deemed the holder of such shares for all purposes.
f. All notice periods referred to in the Certificate shall commence on
the date of the mailing of the applicable notice.
g. Subject to applicable law, any determinations made in the exercise of
the good faith business judgment of the Board of Directors under any
provision of the Certificate shall be final and binding on all
stockholders of the Corporation, including the holders of shares of
this Series.
h. Certificates for shares of this Series shall bear such legends as the
Corporation shall from time to time deem appropriate.
IN WITNESS WHEREOF, U S WEST, INC. has caused this certificate to be
signed and attested this [ ] day of [ ], 1996.
U S WEST, INC.
By:
----------------------------------------
Name:
Title:
EXHIBIT D
EXHIBIT D
[Form of Affiliate Letter]
U S WEST, Inc.
0000 Xxxx Xxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
I have been advised that as of the date of this letter I may be deemed to
be an "affiliate" of Continental Cablevision, Inc., a Delaware corporation (the
"Company"), as such term is (i) defined for purposes of paragraphs (c) and (d)
of Rule 145 of the rules and regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended (the "Securities Act"), or (ii) used in and for purposes of
Accounting Series Releases 130 and 135, as amended, of the Commission. Pursuant
to the terms of the Agreement and Plan of Merger, dated as of February 27, 1996
(as amended from time to time, the "Merger Agreement"), between U S WEST, Inc.,
a Delaware corporation ("Acquiror"), and the Company, the Company will be merged
with and into Acquiror (the "Merger"), with Acquiror continuing as the surviving
corporation.
Pursuant to the Merger, each share of Class A Common Stock, par value $.01
per share, of the Company owned by me, if any, and each share of Class B Common
Stock, par value $.01 per share, of the Company ("Class B Common Stock") owned
by me will be converted into the right to receive, at my election, either (i)
cash (in the case of
shares of Class B Common Stock only) or (ii) shares of U S WEST Media Group
Common Stock, par value $.01 per share, of Acquiror (the "Media Stock") and
shares of Series D Convertible Preferred Stock, par value $1.00 per share, of
Acquiror (the "Series D Preferred Stock").
I represent, warrant and covenant to Acquiror that, with respect to all
Media Stock and Series D Preferred Stock received by me as a result of the
Merger:
i.I shall not make any sale, transfer or other disposition of Media Stock
or Series D Preferred Stock in violation of the Securities Act or the Rules
and Regulations.
ii.I have carefully read this letter and the Merger Agreement and discussed
the requirements of such documents and any other applicable limitations
upon my ability to sell, transfer or otherwise dispose of Media Stock or
Series D Preferred Stock to the extent I felt necessary, with my counsel or
counsel for the Company.
iii.I have been advised that the issuance of Media Stock and Series D
Preferred Stock to me pursuant to the Merger has been registered with the
Commission under the Securities Act. However, I have also been advised
that, since at the time the Merger Agreement was submitted for a vote of
the stockholders of the Company, I may be deemed to have been an
"affiliate" of the Company and the distribution by me of Media Stock and
Series D Preferred Stock has not been registered under the Act, I may not
sell, transfer or otherwise dispose of Media Stock and Series D Preferred
Stock issued to me in the Merger unless (i) such sale, transfer or other
disposition has been registered under the Securities Act or is made in
conformity with Rule 145 under
the Securities Act, or (ii) in the opinion of counsel reasonably acceptable
to Acquiror, or pursuant to a "no action" letter obtained by me from the
staff of the Commission, such sale, transfer or other disposition is
otherwise exempt from registration under the Securities Act.
iv.I understand, that, except as may be provided in a registration rights
agreement, if any, to be entered into by Acquiror and me as contemplated by
the Merger Agreement, Acquiror is under no obligation to register under the
Securities Act the sale, transfer or other disposition of Media Stock or
Series D Preferred Stock by me or on my behalf or to take any other action
necessary in order to make compliance with an exemption from such
registration available.
v.I understand that Acquiror will give stop transfer instructions to
Acquiror's transfer agents with respect to the Media Stock and Series D
Preferred Stock and that the certificates for the Media Stock and Series D
Preferred Stock issued to me, or any substitutions therefor, will bear a
legend substantial to the following effect:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A TRANSACTION TO
WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF 1933 APPLIES. THE
SECURITIES REPRESENTED BY THIS CERTIFICATE MAY ONLY BE TRANSFERRED IN ACCORDANCE
WITH THE TERMS OF AN AGREEMENT, DATED _________ __, 1996, BETWEEN THE REGISTERED
HOLDER HEREOF AND U S WEST, INC., A COPY OF WHICH AGREEMENT IS ON FILE AT THE
PRINCIPAL OFFICES OF U S WEST, INC."
vi.I also understand that unless the transfer by me of my Media Stock or
Series D Preferred Stock has been registered under the Securities Act or is
a
sale made in conformity with the provisions of Rule 145, Acquiror reserves
the right to place the following legend on the certificates issued to any
transferee:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 AND WERE ACQUIRED FROM A PERSON WHO RECEIVED SUCH
SECURITIES IN A TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES
ACT OF 1933 APPLIES. THE SECURITIES HAVE NOT BEEN ACQUIRED BY THE HOLDER WITH A
VIEW TO, OR FOR RESALE IN CONNECTION WITH, ANY DISTRIBUTION THEREOF WITHIN THE
MEANING OF THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR
IN ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT OF 1933."
It is understood and agreed that the legends set forth in paragraphs 5 and
6 above shall be removed by delivery of substitute certificates without such
legend if such legend is not required for purposes of the Securities Act. It is
understood and agreed that such legends and the stop orders referred to above
will be removed if (i) two years shall have elapsed from the date I acquired
Media Stock and Series D Preferred Stock received in the Merger and the
provisions of Rule 145(d)(2) are then available to me, (ii) three years shall
have elapsed from the date I acquired Media Stock and Series D Preferred Stock
received in the Merger and the provisions of Rule 145(d)(3) are then available
to me, or (iii) Acquiror has received either an opinion of counsel, which
opinion and counsel shall be reasonably satisfactory to Acquiror, or a "no-
action" letter obtained by me from the staff of the Commission, to the effect
that the restrictions imposed by Rule 145 under the Securities Act no longer
apply to me.
Execution of this letter should not be considered an admission on my part
that I am an "affiliate" of the Company as described in the first paragraph of
this letter or as a waiver of any rights that I may have to object to any claim
that I am such an affiliate on or after the date of this letter.
Sincerely,
_________________________________
Name:
Accepted this __ day of
_______ __, 1996:
U S WEST, INC.
By: __________________________
Name:
Title:
Exhibit E
---------
CONTINENTAL CABLEVISION, INC.
CERTIFICATE OF DESIGNATION
OF SERIES B CONVERTIBLE
PREFERRED STOCK SETTING FORTH THE POWERS,
PREFERENCES RIGHTS, QUALIFICATIONS,
LIMITATIONS AND RESTRICTIONS OF
SUCH SERIES OF PREFERRED STOCK
Pursuant to Section 151 of the General Corporation Law of the State of
Delaware, Continental Cablevision, Inc. (the "Corporation"), a corporation
organized and existing under the General Corporation Law of the State of
Delaware, in accordance with the provisions of Section 103 thereof, DOES HEREBY
CERTIFY:
That pursuant to the authority conferred upon the Board of Directors of the
Corporation by Article FOURTH of the Restated Certificate of Incorporation of
the Corporation (as in effect on the date hereof and as amended from time to
time in accordance with its terms, the "Restated Certificate of Incorporation"),
and in accordance with the provisions of Section 151 of the General Corporation
Law of the State of Delaware, the Board of Directors of the Corporation on
______, 199_, adopted the following resolution creating a series of Preferred
Stock designated as Series B Convertible Preferred Stock:
RESOLVED that, pursuant to the authority vested in the Board of Directors
of the Corporation in accordance with the provisions of the Restated Certificate
of Incorporation, a series of the class of authorized Preferred Stock, par value
$.01 per share, of the Corporation is hereby created and that the designation
and number of shares thereof and the voting powers, preferences and relative,
participating, optional and other special rights of the shares of such series,
and the qualifications, limitations and restrictions thereof are as follows:
Section 1 Designation and Number. (a) The shares of such series shall be
----------------------
designated as "Series B Convertible Preferred Stock" (the "Series B Preferred
Stock" or "this Series"). The number of shares initially constituting the
Series B Preferred Stock shall be 5,650,000, which number may be decreased (but
not increased) by the Board of Directors without a vote of stockholders;
provided, however, that such number may not be decreased below the number of
-------- -------
then outstanding shares of Series B Preferred Stock.
Notwithstanding any other provision in this Certificate of Designation, the
Corporation shall not be required to issue fractional shares of the Series B
Preferred Stock.
Section 2 Ranking. The Series B Preferred Stock shall, with respect to
-------
dividend rights and rights on liquidation, dissolution or winding up, rank pari
passu with the Series A Preferred Stock and prior to or pari passu with all
other classes and series of the Corporation's preferred stock (other than
preferred stock that is not convertible into or exchangeable for any class or
series of the Corporation's equity securities or for any other property,
including without limitation securities other than the Corporation's equity
securities referred to herein) and prior to all classes of the Common Stock, par
value $.01 per share, of the Corporation (the "Common Stock").
Section 3 Dividends and Distributions. (a) The holders of shares of Series
---------------------------
B Preferred Stock shall be entitled to receive as and when declared by the Board
of Directors out of funds legally available therefor, cash dividends at the rate
(the "Dividend Rate") of ___________ ___________________ percent (_____%) per
annum/3/, through and _______________________
3. The Dividend Rate shall be subject to an adjustment such that the final
Dividend Rate equals the sum of 5.875%, (the "Base Dividend Rate") plus the
Adjustment Amount (as defined below).
The Base Dividend Rate shall be subject to adjustment in the following
manner:
(i) If the Adjustment Amount is less than seven basis points in absolute
terms, then the Adjustment Amount shall be deemed to be zero and the Dividend
Rate shall equal the Base Dividend Rate.
(ii) If the Adjustment Amount is greater than or equal to seven basis
points in absolute terms, then the Dividend Rate shall be equal to the Base
Dividend Rate plus the Adjustment Amount (whether positive or negative), rounded
to the nearest multiple of 0.125%.
"Adjustment Amount" shall be equal to the product of (x) the sum of (1) the
Change In Weighted Average Yield plus (2) the Credit Spread multiplied by (y)
the Discount Factor.
"Average Credit Spread" shall be equal to the average of the difference
between the closing bid-side yield of the Corporation's 8.30% senior unsecured
notes due 2006 and the
(continued...)
_____________________ including the date on which such Series B Preferred Stock
is no longer issued and outstanding, which dividends shall be payable in equal
---------------------
3. (...continued)
10-year Treasury yield, calculated for each of the 10 Trading Days after
announcement of the termination of the transactions contemplated by the Merger
Agreement (as defined in Section 12).
"Change In Weighted Average Yield" shall equal the sum (whether positive or
negative) of the following, based upon the average market closing levels of
Treasury securities for the 10 Trading Days after announcement of the
termination of the transactions contemplated by the Merger Agreement:
(i) the change (whether positive or negative) since February 27, 1996 in
basis points in 3-year Treasury yields x 0.25;
(ii) the change (whether positive or negative) since February 27, 1996 in
basis points in 5-year Treasury yields x 0.25; and
(iii) the change (whether positive or negative) since February 27, 1996 in
basis points in 10-year Treasury yields x 0.25; and
(iv) the change (whether positive or negative) since February 27, 1996 in
basis points in 20-year Treasury yields x 0.25.
"Credit Spread" shall equal the difference between (A) the product of
1.87234 multiplied by the Average Credit Spread minus (B) 440 basis points.
"Discount Factor" shall equal 0.55.
For example, if (i) the Base Dividend Rate is 5.875%, (ii) the average 3-year
Treasury, 5-year Treasury, 10-year Treasury and 20-year Treasury yields are each
20 basis points lower at closing than they are currently and (iii) the Average
Credit Spread is 260 basis points, the Credit Spread would be equal to 47 basis
points ((260 x 1.87234) -440). The resulting Adjustment Amount would be equal
to 14.85 basis points ((-20 + 47) x 0.55). Because such Adjustment Amount is
greater than seven basis points, the Dividend Rate would be equal to the Base
Dividend Rate plus the Adjustment Amount (or 6.0235%), rounded to the yield
which is at the nearest multiple of 0.125% (or 6.00%).
quarterly installments on _______, ________, _________ and _______ each year
(each such date, regardless of whether any dividends have been paid or declared
and set aside for payment on such date, being a "Dividend Payment Date") to
holders of record as they appear on the stock books on such record dates as are
fixed by the Board of Directors, but only when, as and if declared by the Board
of Directors out of funds at the time legally available for the payment of
dividends. For purposes of calculation of such cash dividends, the Series B
Preferred Stock shall be valued at the Stated Value (as defined in Section 12).
Such dividends shall begin to accrue on outstanding shares of Series B Preferred
Stock from the date of issuance and shall be deemed to accrue from day to day
whether or not earned or declared until paid; provided, however, that dividends
-------- -------
accrued or deemed to have accrued for any period shorter than the full three-
month period between Dividend Payment Dates shall be computed based on the
actual number of days elapsed in the three-month period for which such dividends
are payable. Dividends on the Series B Preferred Stock shall be cumulative.
The Dividend Rate per share of Series B Preferred Stock shall be appropriately
adjusted from time to time to reflect any split or combination of the shares of
the Series B Preferred Stock.
(b) No dividends or other distributions, other than dividends or other
distributions payable solely in shares of capital stock ranking junior (both as
to dividends and upon liquidation, dissolution or winding up) to the Series B
Preferred Stock (or cash in lieu of fractional shares with respect to such
dividends or distributions) and liquidating distributions which are subject to
the provisions of Section 8 hereof, shall be paid or set aside for payment on,
and no purchase, redemption or other acquisition shall be made of, any shares of
capital stock of the Corporation (other than any class or series of Preferred
Stock that, in accordance with Section 2 hereof, (i) ranks senior to the Series
B Preferred Stock or (ii) is Parity Stock (as defined in Section 12), so long as
any dividend payments per share on Parity Stock as a percentage of accrued and
unpaid dividends per share on Parity Stock do not exceed contemporaneous
dividend payments per share on the Series B Preferred Stock as a percentage of
accrued and unpaid dividends per share on the Series B Preferred Stock), unless
and until all accrued and unpaid dividends on the Series B Preferred Stock for
any prior quarterly dividend period shall have been declared and paid or a sum
sufficient for the payment thereof set aside for such purposes. No interest, or
sum of money in lieu of interest, shall be payable in respect of any dividend
payment or payments on the Series B Preferred Stock which may be in arrears.
(c) Any reference to "distribution" contained in this Section 3 shall not
be deemed to include any stock dividend or distributions made in connection with
any
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary.
(d) The holders of shares of Series B Preferred Stock shall not be
entitled to receive any dividends or other distributions with respect to such
shares except as provided herein.
Section 4 Voting. (a) The holders of record of shares of Series B
------
Preferred Stock shall have no voting rights except as required by law or as set
forth below; provided, however, that the rights set forth in Section 4(c) hereof
-------- -------
may be exercised only to the extent that such exercise would not result in a
Legal Prohibition or any violation of applicable law or regulation.
(b) (i) So long as any shares of Series B Preferred Stock remain
outstanding, unless a greater percentage shall then be required by law, the
Corporation shall not, without the affirmative vote at a meeting or the written
consent with or representing at least 51% of the shares of Series B Preferred
Stock then outstanding (A) authorize any Senior Stock or reclassify any Junior
Stock or Parity Stock as Senior Stock or (B) amend, alter or repeal any of the
provisions of the Certificate or the Restated Certificate of Incorporation, so
as in any such case to materially and adversely affect the voting powers,
designations, preferences and relative, participating, optional or other special
rights, and qualifications, limitations or restrictions of the Series B
Preferred Stock; provided, however, that an amendment which effects a split of
-------- -------
Series B Preferred Stock or which effects a combination of the shares of Series
B Preferred Stock into a fewer number of shares shall not be deemed to have any
such material adverse effect.
(ii) No vote or consent of holders of shares of Series B Preferred Stock
shall be required for (A) the creation of any indebtedness of any kind of the
Corporation, (B) the authorization or issuance of any class of Junior Stock
(including any class or series of common stock of the Corporation) or Parity
Stock, (C) the authorization, designation or issuance of additional shares of
Series B Preferred Stock or (D) subject to Section 4(b)(i), the authorization
or issuance of any other shares of Preferred Stock.
(c) (i) If and whenever at any time or times dividends payable on shares
of this Series shall have been in arrears and unpaid in an aggregate amount
equal to or exceeding the amount of dividends payable thereon for six quarterly
dividend periods, then the number of directors constituting the Board of
Directors shall be automatically increased by two and the holders of shares of
Series B Preferred Stock, together with the holders of any shares of
any Parity Stock as to which in each case dividends are in arrears and unpaid in
an aggregate amount equal to or exceeding the amount of dividends payable
thereon for six quarterly dividend periods, shall have the exclusive right,
voting separately as a class with the holders of any such Parity Stock, to elect
two directors of the Corporation.
(ii) Such voting right may be exercised initially either by written
consent or at a special meeting of the holders of Preferred Stock having such
voting right, called as hereinafter provided, or at any annual meeting of
stockholders held for the purpose of electing directors, and thereafter at each
such annual meeting until such time as all dividends in arrears on the shares of
this Series shall have been paid in full and all dividends payable on the shares
on this Series on four subsequent consecutive Dividend Payment Dates shall have
been paid in full on such dates or funds shall have been set aside for the
payment thereof, at which time such voting right and the term of the directors
elected pursuant to Section 4(c)(i) shall terminate.
(iii) At any time when such voting right shall have vested in holders of
shares of such series of Preferred Stock described in Section 4(c)(ii), and if
such right shall not already have been exercised by written consent, a proper
officer of the Corporation may call, and, upon the written request, addressed to
the Secretary of the Corporation, of the record holders of either (A) shares
representing twenty-five percent (25%) of the voting power of the shares then
outstanding of Series B Preferred Stock or (B) shares representing twenty-five
percent (25%) of the voting power of shares of all series of Preferred Stock
having such voting right, shall call, a special meeting of the holders of all
such series of Preferred Stock having such voting right. Such meeting shall be
held at the earliest practicable date upon the notice required for annual
meetings of stockholders at the place for holding annual meetings of
stockholders of the Corporation, or, if none, at a place designated by the Board
of Directors. Notwithstanding the provisions of this Section 4(c)(iii), no such
special meeting shall be called during a period within 60 days immediately
preceding the date fixed for the next annual meeting of stockholders.
(iv) At any meeting held for the purpose of electing directors at which
the holders of such Preferred Stock shall have the right to elect directors as
provided herein, the presence in person or by proxy of the holders of shares
representing more than fifty percent (50%) in voting power of the then
outstanding shares of such Preferred Stock having such right shall be required
and shall be sufficient to constitute a quorum of such class for the election of
directors by such class.
(v) Any director elected by holders of such Preferred Stock pursuant to
the voting right created under this Section 4(c) shall hold office until the
next annual meeting of stockholders (unless such term has previously terminated
pursuant to Section 4(c)(ii)) and any vacancy in respect of any such director
shall be filled only by vote of the remaining director so elected, or if there
be no such remaining director, by the holders of such Preferred Stock entitled
to elect such director or directors by written consent or at a special meeting
called in accordance with the procedures set forth in Section 4(c)(iii), or, if
no special meeting is called or written consent executed, at the next annual
meeting of stockholders.
(vi) In exercising the voting rights set forth in this Section 4(c), each
share of Series B Preferred Stock shall have one vote per share.
Section 5 Certain Restrictions. (a) Whenever dividends or distributions
--------------------
payable on shares of Series B Preferred Stock as provided in Section 3 for any
prior quarterly dividend period are not paid in full, thereafter and until all
such unpaid dividends or distributions payable, whether or not declared, on the
outstanding shares of Series B Preferred Stock shall have been paid in full or
declared and set apart for payment, the Corporation shall not: (i) redeem,
purchase or otherwise acquire for consideration any shares of Junior Stock or
Parity Stock pursuant to any mandatory redemption, put, sinking fund or other
similar obligation; provided that (A) the Corporation may at any time redeem,
--------
purchase or otherwise acquire shares of Junior Stock or Parity Stock, in
exchange for any shares of Common Stock or for other capital stock of the
Corporation ranking junior (both as to dividends and upon liquidation,
dissolution or winding up) to the Series B Preferred Stock and (B) the
Corporation may accept shares of any Parity Stock for conversion; or (ii) redeem
or purchase or otherwise acquire for consideration any shares of Series B
Preferred Stock; provided that the Corporation may accept shares of Series B
--------
Preferred Stock surrendered for conversion into shares of capital stock of the
Corporation pursuant to Section 9.
(b) The Corporation shall not permit any Subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of capital stock of
the Corporation or to make or extend any loan or advance specified in clause
(iii) of Section 5(a) unless the Corporation could, pursuant to paragraph (a) of
this Section 5, purchase such shares at such time and in such manner or make or
extend such loan or advance at such time, as the case may be.
Section 6 Redemption or Exchange. (a) The Corporation shall not have any
----------------------
right to redeem any shares of
Series B Preferred Stock prior to the third anniversary of the Issue Date (as
defined in Section 12). The Corporation may, at its sole option, subject to
Section 3(b) hereof, from time to time on and after the third anniversary of the
Issue Date, at its election either: (i) redeem, out of funds legally available
therefor, all or any part of the outstanding shares of the Series B Preferred
Stock at the Redemption Price (as defined in Section 12); (ii) subject to
Section 6(f) hereof, exchange shares of Class A Common Stock (or such other
class or series of common stock into which shares of this Series are then
convertible) for all or any part of the outstanding shares of this Series at the
Exchange Price (as defined in Section 12); or (iii) subject to Section 6(f)
hereof, effect a combination of the options described in the foregoing clauses
(i) and (ii) (in which event each holder of shares of this Series which are
selected for redemption and exchange pursuant to Section 6(e) shall receive the
same proportion of cash and shares of Class A Common Stock (or such other class
or series of common stock into which shares of this Series are then convertible)
(except for cash paid in lieu of fractional shares) paid to other holders of
shares of this Series selected for redemption and exchange); provided, however,
-------- -------
that shares of Series B Preferred Stock shall not be redeemable by the
Corporation prior to the fifth anniversary of the Issue Date unless the Current
Market Price (as defined in Section 12) shall be greater than the product of (x)
the Conversion Price (as defined in Section 9) multiplied by (y) 1.35 , on at
least 20 of the 30 Trading Days immediately prior to the date of the notice
delivered by the Corporation to holders of shares of Series B Preferred Stock to
be redeemed pursuant to paragraph (d) of this Section 6.
(b) Not more than 60 nor less than 15 Trading Days prior to the Redemption
Date, the Corporation shall, if the Series B Preferred Stock is listed on any
national securities exchange or traded in the over-the-counter market, give
notice by publication in a newspaper of general circulation in the Borough of
Manhattan, The City of New York, that the Corporation has elected in accordance
with paragraph (a) of this Section 6 to redeem and/or exchange any or all shares
of the Series B Preferred Stock. The notice shall also specify (i) the
percentage of the Series B Preferred Stock to be redeemed and/or exchanged, if
less than all, (ii) if more than one form of consideration has been elected by
the Corporation, the portion of such shares to be redeemed and the portion of
such shares to be exchanged, (iii) the Redemption Price and the manner in which
the Exchange Price shall be calculated prior to the Redemption Date, and (iv)
the procedures to be followed to receive payment of the Redemption Price and/or
the Exchange Price, as the case may be; and, a similar notice shall be mailed
concurrently to each record holder of shares of Series B Preferred Stock, at
such holder's address as it
appears on the transfer books of the Corporation; provided, however, that if the
-------- -------
Series B Preferred Stock is owned of record by 50 or fewer holders or groups of
affiliated holders, the Corporation shall publicly announce the information
contained in the notice by issuance of a press release and such notice shall be
mailed in not more than 60 or less than 15 Trading Days prior to the Redemption
Date, and shall set forth the information contained above.
(c) On or before the Redemption Date, the Corporation shall deposit for
the benefit of the holders of shares of Series B Preferred Stock, in the case of
a redemption, the funds necessary for such redemption and, in the case of an
exchange, certificates representing the shares of Class A Common Stock to be
exchanged, with a bank or trust company in the Borough of Manhattan, The City of
New York, or in the City of Boston, in either case having a capital and surplus
of at least $2,000,000,000. Any moneys or certificates so deposited by the
Corporation and unclaimed at the end of two years from the date designated for
such redemption or exchange shall be released from any such deposit and revert
to the general funds of the Corporation. After such conversion, any such bank or
trust company shall, upon demand, pay over to the Corporation such unclaimed
amounts or certificates, as the case may be, and thereupon such bank or trust
company shall be relieved of all responsibility in respect thereof and any
holder of shares of Series B Preferred Stock to be redeemed shall look only to
the Corporation for the payment of the Redemption Price. In the event that
moneys or certificates are deposited pursuant to this paragraph (c) in respect
of shares of Series B Preferred Stock that are converted in accordance with the
provisions of Section 9, such moneys or certificates, as the case may be, shall,
upon such conversion, be released from any such deposit and revert to the
Corporation. After such reversion, any such bank or trust company shall pay over
to the Corporation such moneys or certificates and shall be relieved of all
responsibility to the holders of such converted shares in respect thereof. Any
interest accrued on funds deposited pursuant to this paragraph (c) shall be paid
from time to time to the Corporation.
(d) Notice of redemption or exchange having been given as aforesaid, upon
the deposit of funds or certificates, as the case may be, pursuant to paragraph
(c) in respect of shares of Series B Preferred Stock to be redeemed or exchanged
pursuant to this Section 6, notwithstanding that any certificates for such
shares to be redeemed or exchanged shall not have been surrendered for
cancellation, from and after the Redemption Date (i) the shares represented
thereby shall no longer be deemed outstanding, (ii) the rights to receive
dividends thereon shall cease and terminate and dividends on the Series B
Preferred Stock shall cease to accrue and (iii) all rights
of the holders of shares of Series B Preferred Stock to be redeemed or exchange
shall cease and terminate, excepting only the right to receive the Redemption
Price and/or Exchange Price therefor, without any interest thereon.
(e) In the event that fewer than all of the outstanding shares of this
Series are to be redeemed and/or exchanged pursuant to Section 6(a), subject to
clause (iii) of the second sentence of section 6(a), the aggregate number of
shares of this Series held by each holder which will be redeemed and/or
exchanged shall be determined by the Corporation by lot or pro rata or by any
other method as may be determined by the Board of Directors in its sole
discretion to be equitable, and the certificate of the Corporation's Secretary
or an Assistant Secretary filed with the transfer agent or transfer agents for
this Series in respect of such determination by the Board of Directors shall be
conclusive.
(f) Notwithstanding anything contained herein to the contrary, the
Corporation shall not be permitted to exchange any shares of Class A Common
Stock (or such other class or series of common stock into which shares of this
Series are convertible) for all or any part of the outstanding shares of this
Series if such stock which the Corporation seeks to exchange for shares of this
Series is not listed or admitted for trading on any national securities exchange
or the Nasdaq National Market. In connection with the exchange of any shares of
this Series, the Corporation may, but shall not be required to, issue a fraction
of a share of Class A Common Stock (or such other class or series of common
stock into which shares of this Series are then convertible) and, if the
Corporation shall determine not to issue such fraction, the Corporation shall
pay a cash payment (rounded to the nearest cent) equal to such fraction
multiplied by the Current Market Price per share of Class A Common Stock (or
such other class or series of common stock into which shares of this Series are
then convertible) on the last Trading Day prior to the Redemption Date.
Notwithstanding the foregoing, this Section 6(f) shall in no way restrict or
limit the Corporation's right to redeem all or any part of the outstanding
shares of this Series for cash at the Redemption Price.
Section 7 Reacquired Shares. Any shares of Series B Preferred Stock
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converted, redeemed, purchased or otherwise acquired by the Corporation in any
manner whatsoever shall be retired and canceled promptly after the acquisition
thereof. All such shares of Series B Preferred Stock shall upon their
cancellation, and upon the filing of an appropriate certificate with the
Secretary of State of the State of Delaware, become authorized but unissued
shares of Preferred Stock, par value $.01 per share, of the Corporation and may
be reissued as part of another series of
Preferred Stock, par value $.01 per share, of the Corporation subject to the
conditions or restrictions on issuance set forth herein.
Section 8 Liquidation, Dissolution or Winding Up. (a) Upon the
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liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary, no distribution shall be made (i) to the holders of shares of
Junior Stock upon liquidation, dissolution or winding up unless, prior thereto,
the holders of shares of Series B Preferred Stock, subject to Section 9, shall
have received the Liquidation Preference (as defined in Section 12 with respect
to each share, or (ii) to the holders of shares of Parity Stock upon
liquidation, dissolution or winding up, except distributions made ratably on all
such Parity Stock and the Series B Preferred Stock in proportion to the total
amounts to which the holders of all shares of such Parity Stock and the Series B
Preferred Stock are entitled upon such liquidation, dissolution or winding up.
(b) Neither the consolidation, merger or other business combination of the
Corporation with or into any other Person or Persons nor the sale of all or
substantially all the assets of the Corporation shall be deemed to be a
liquidation, dissolution or winding up of the Corporation for purposes of this
Section 8.
Section 9 Conversion. (a) Each holder of shares of Series B Preferred
----------
Stock may, at its option at any time and from time to time, upon surrender of
the certificates therefor, convert any or all of its shares of Series B
Preferred Stock into Common Stock as follows. The number of fully paid and
nonassessable shares of Class A Common Stock deliverable on conversion of a
share of Series B Preferred Stock is referred to as the "Conversion Ratio". The
Conversion Ratio shall initially be equal to the quotient of $50 per share
divided by the Conversion Price and shall be subject to adjustment from time to
time pursuant to paragraph (f) of this Section 9. The "Conversion Price" shall
be equal to the product of 1.25 multiplied by the greater of: (i) $20 per share,
(ii) if shares of Class A Common Stock are publicly traded on the New York Stock
Exchange, then over the fifteen Trading Days beginning the first Trading Day
after the announcement of the termination of the Merger Agreement (the
"Measurement Period"), (a) if the average of the daily volume of Class A Common
Stock traded during the Measurement Period exceeds or is equal to 100,000 shares
per day, the average of the Current Market Price of Class A Common Stock over
the Measurement Period, or (b) if the average of the daily volume of Class A
Common Stock traded during the Measurement Period is less than 100,000 shares
per day, the product of .925 multiplied by the average of the Current Market
Price of Class A Common Stock over the Measurement Period, or (iii) if shares of
Class A Common Stock are publicly traded on the Nasdaq
National Market, over the Measurement Period, (a) if the average of the daily
volume of Class A Common Stock traded during the Measurement Period exceeds or
is equal to 200,000 shares per day, the average of the Current Market Price of
Class A Common Stock over the Measurement Period, or (b) if the average of the
daily volume of Class A Common Stock traded during the Measurement Period is
less than 200,000 shares per day, the product of .925 multiplied by the average
of the Current Market Price of Class A Common Stock over the Measurement Period.
(b) Conversion of the Series B Preferred Stock may be effected by any such
holder upon the surrender to the Corporation at the principal office of the
Corporation in the Commonwealth of Massachusetts (the "Transfer Agent") or at
the office of any agent or agents of the Corporation, as may be designated by
the Board of Directors of the Corporation, of the certificate for such Series B
Preferred Stock to be converted at any time after the Issue Date accompanied by
a written notice stating that such holder elects to convert all or a specified
whole number of such shares in accordance with the provisions of this Section 9
and specifying the name or names in which such holder wishes the certificate or
certificates for shares of Common Stock to be issued. In case such notice shall
specify a name or names other than that of such holder, such notice shall be
accompanied by payment of all issue, stamp, documentation and transfer taxes
payable upon the issuance of shares of Common Stock in such name or names.
Other than such taxes, the Corporation will pay any and all issue, stamp,
documentation, transfer and other taxes (other than taxes based on gross or net
income) that may be payable in respect of any issue or delivery of shares of
Common Stock on conversion of Series B Preferred Stock pursuant hereto. As
promptly as practicable, and in any event within five Business Days after the
surrender of such certificate or certificates and the receipt of such notice
relating thereto and, if such notice shall specify a name or names other than
that of such holder, (a) payment of all transfer taxes (or the demonstration to
the satisfaction of the Corporation that such taxes have been paid), and (b)
unless such issuance is registered under the Securities Act and all applicable
state securities laws, the holder of the applicable shares of Series B Preferred
Stock which are to be converted into Class A Common Stock hereunder shall have
furnished to the Corporation evidence satisfactory to it that such issuance is
exempt from registration under the Securities Act and all applicable state
securities laws, the Corporation shall deliver or cause to be delivered (i)
certificates representing the number of validly issued, fully paid and non
assessable full shares of Class A Common Stock to which the holder of shares of
Series B Preferred Stock being converted shall be entitled and (ii) if less than
the full number of shares of Series B Preferred Stock evidenced by the
surrendered certificate or certificates is
being converted, a new certificate or certificates, of like tenor, for the
number of shares evidenced by such surrendered certificate or certificates less
the number of shares being converted. Such conversion shall be deemed to have
been made at the close of business on the date of receipt of such notice and of
such surrender of the certificate or certificates representing the shares of
Series B Preferred Stock to be converted so that the rights of the holder
thereof as to the shares being converted shall cease except for the right to
receive shares of Class A Common Stock in accordance herewith, and the person
entitled to receive the shares of Class A Common Stock shall be treated for all
purposes as having become the record holder of such shares of Class A Common
Stock at such time. The Corporation shall not be required to convert, and no
surrender of shares of Series B Preferred Stock shall be effective for that
purpose, while the transfer books of the Corporation for the Common Stock are
closed for any purpose (but not for any period in excess of 2 days); but the
surrender of shares of Series B Preferred Stock for conversion during any period
while such books are so closed shall become effective for conversion immediately
upon the reopening of such books, as if the conversion had been made on the date
such shares of Series B Preferred Stock were surrendered, and at the Conversion
Ratio in effect at the date of such surrender.
(c) In case any shares of Series B Preferred Stock are to be redeemed
pursuant to Section 6, the right of conversion under this Section 9 shall cease
and terminate as to the shares of Series B Preferred Stock to be redeemed at the
close of business on the second Business Day next preceding the Redemption Date
unless the Corporation shall default in the payment of the Redemption Price.
(d) In connection with the conversion of any shares of Series B Preferred
Stock, no fractions of shares of Class A Common Stock shall be issued, but in
lieu thereof the Corporation shall pay a cash adjustment in respect of such
fractional interest in an amount equal to such fractional interest multiplied by
the Current Market Price per share of Class A Common Stock on the Trading Day on
which such shares of Series B Preferred Stock are deemed to have been converted.
If more than one share of Series B Preferred Stock shall be surrendered for
conversion by the same holder at the same time, the number of full shares of
Class A Common Stock issuable on conversion thereof shall be computed on the
basis of the total number of shares of Series B Preferred Stock so surrendered.
(e) The Corporation shall at all times reserve and keep available for
issuance upon the conversion of the Series B Preferred Stock, such number of its
authorized but unissued shares of Class A Common Stock as will from time to time
be sufficient to permit the
conversion of all outstanding shares of Series B Preferred Stock, and shall take
all action required to increase the authorized number of shares of Class A
Common Stock if necessary to permit the conversion of all outstanding shares of
Series B Preferred Stock.
(f) The Conversion Ratio shall be subject to adjustment from time to time
as follows:
(i)In case the Corporation shall (i) declare a dividend or make a
distribution on the outstanding shares of its Common Stock in shares of its
Common Stock, (ii) subdivide its outstanding shares of Common Stock into a
greater number of shares, or (iii) combine its outstanding shares of Common
Stock into a smaller number of shares, the Conversion Price in effect at
the time of the record date for such dividend or distribution or the
effective date of such subdivision or combination shall be proportionately
adjusted so that the holder of any shares of Series B Preferred Stock
surrendered for conversion after such time shall be entitled to receive the
aggregate number of shares of Class A Common Stock which the holder would
have owned or been entitled to receive had such shares of Series B
Preferred Stock been converted immediately prior to such record date or
effective date and the resulting Common Stock had been subject to such
dividend, distribution, subdivision or combination. An adjustment made
pursuant to this clause (i) shall become effective (x) in the case of any
such dividend or distribution, immediately after the close of business on
the record date for the determination of holders of shares of Common Stock
entitled to receive such dividend or distribution, or (y) in the case of
any such subdivision, combination, consolidation or reclassification, at
the close of business on the day upon which such corporate action becomes
effective.
(ii)If the Corporation shall issue rights, warrants or options to all
holders of Class A Common Stock entitling them (for a period not exceeding
45 days from the record date referred to below) to subscribe for or
purchase shares of Class A Common Stock at a price per share less than the
Current Market Price (determined over the Value Period (as defined in
Section 12) as of the date of determination of stockholders entitled to
receive such rights, warrants or options), then, in any such event, the
Conversion Ratio shall be adjusted by multiplying the Conversion Ratio in
effect immediately prior to the opening of business on such record date by
a fraction, the numerator of which shall be the number of shares of Class A
Common Stock outstanding on such record date plus the maximum number of
additional shares of Class A Common Stock offered for subscription pursuant
to such
rights, warrants or options, and the denominator of which shall be the
number of shares of Class A Common Stock outstanding on such record date
plus the maximum number of additional shares of Class A Common Stock which
the aggregate offering price of the maximum number of shares of Class A
Common Stock so offered for subscription or purchase pursuant to such
rights, warrants or options would purchase at such Current Market Price
(determined by multiplying such maximum number of shares by the exercise
price of such rights, warrants or options (plus any other consideration
received by the Corporation upon the issuance or exercise of such rights,
warrants or options) and dividing the product so obtained by such Current
Market Price). Such adjustment shall become effective at the opening of
business on the day next following the record date for the determination of
stockholders entitled to receive such rights, warrants or options. To the
extent that shares of Class A Common Stock are not delivered after the
expiration of such rights, warrants or options, the Conversion Ratio shall
be readjusted to the Conversion Ratio which would then be in effect had the
adjustments made upon the record date for the determination of stockholders
entitled to receive such rights, warrants or options been made upon the
basis of delivery of only the number of shares of Class A Common Stock
actually delivered and the amount actually paid therefor. In determining
whether any rights, warrants or options entitle the holders to subscribe
for or purchase shares of Class A Common Stock at a price per share less
than such Current Market Price, there shall be taken into account any
consideration received by the Corporation upon issuance and upon exercise
of such rights, warrants or options. The value of such consideration, if
other than cash, shall be determined by the good faith business judgment of
the Board of Directors, whose determination shall be conclusive.
(iii) If the Corporation shall pay a dividend or make a distribution to all
holders of outstanding shares of Class A Common Stock, of capital stock,
cash, evidences of its indebtedness or other assets of the Corporation (but
excluding (x) any cash dividends or distributions (other than Extraordinary
Cash Distributions) and (y) dividends or distributions referred to in
Section 9(f)(i)), then the Conversion Ratio shall be adjusted by
multiplying the Conversion Ratio in effect immediately prior to the opening
of business on the record date for the determination of stockholders
entitled to receive such dividend or distribution by a fraction, the
numerator of which shall be the Current Market Price (determined over the
Value Period as of such record date), and the denominator of which shall be
such Current Market Price
less either (A) the fair market value (as determined by the good faith
business judgment of the Board of Directors, whose determination shall be
conclusive), as of such record date, of the portion of the capital stock
assets or evidences of indebtedness to be so distributed applicable to one
share of Class A Common Stock or (B), if applicable, the amount of the
Extraordinary Cash Distribution to be distributed per share of Class A
Common Stock. The adjustment pursuant to the foregoing provisions of this
Section 9(f)(iii) shall become effective at the opening of business on the
day next following the record date for the determination of stockholders
entitled to receive such dividend or distribution.
(iv)In lieu of making an adjustment to the Conversion Ratio pursuant to
Sections 9(f)(i), 9(f)(ii) or 9(f)(iii) above for a dividend or
distribution or an issue or rights, warrants or options, the Corporation
may distribute to the holders of shares of Series B Preferred Stock, or
reserve for distribution with each share of Class A Common Stock delivered
to a person converting a share of Series B Preferred Stock pursuant to this
Section 9, such dividend or distribution or such rights, warrants or
options; provided, however, that in the case of such a reservation, on the
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date, if any, on which a person converting a share of Series B Preferred
Stock would no longer be entitled to receive such dividend or distribution
or to receive or exercise such rights, warrants or options, such dividend
or distribution shall be deemed to have occurred, or such rights, warrants
or options shall be deemed to have issued, and the Conversion Ratio shall
be adjusted as provided in Section 9(f)(i), 9(f)(ii) or 9(f)(iii), as the
case may be (with such termination date being the relevant date of
determination for purposes of determining the Current Market Price).
(v)The Corporation shall be entitled to make such additional increases in
the Conversion Ratio, in addition to those required by subsections 9(f)(i)
thorough 9(f)(iii), as shall be determined by the Board of Directors to be
necessary in order that any dividend or distribution in Class A Common
Stock, any subdivision, reclassification or combination of shares of Class
A Common Stock or any issuance of rights or warrants referred to above,
shall not be taxable to the holders of Class A Common Stock for United
States Federal income tax purposes.
(vi)To the extent permitted by applicable law, the Corporation may from
time to time increase the Conversion Ratio by any amount for any period of
time if the period is at least 20 Trading Days, the increase is irrevocable
during such period and the Board of
Directors shall have made a determination that such increase would be in
the best interests of the Corporation, which determination shall be
conclusive.
(vii) In any case in which this Section 9(f) shall require that any
adjustment be made effective as of or immediately following a record date,
the Corporation may elect to defer (but only for five (5) Trading Days
following the occurrence of the event which necessitates the filing of the
statement referred to in Section 10) issuing to the holder of any shares of
this Series converted after such record date (i) the shares of Class A
Common Stock and other capital stock of the Corporation issuable upon such
conversion over and above the shares of Class A Common Stock and other
capital stock of the Corporation issuable upon such conversion on the basis
of the Conversion Ratio prior to adjustment and (ii) paying to such holder
any amount in cash in lieu of any fraction thereof pursuant to Section
9(d); provided, however, that the Corporation shall deliver to such holder
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a due xxxx or other appropriate instrument evidencing such holder's right
to receive such additional shares upon the occurrence of the event
requiring such adjustment.
(viii) For purposes of this paragraph (f), the number of shares of Common
Stock at any time outstanding shall not include any shares of Common Stock
then owned or held by or for the account of the Corporation or a Subsidiary
of the Corporation.
(xi) The certificate of any firm of independent public accountants of
recognized standing selected by the Board of Directors of the Corporation
(which may be the firm of independent public accountants regularly employed
by the Corporation) shall be presumptively correct for any computation made
under this paragraph (f).
(x)If the Corporation shall take a record of the holders of its Common
Stock for the purpose of entitling them to receive a dividend or other
distribution, and shall thereafter and before the distribution to
stockholders thereof legally abandon its plan to pay or deliver such
dividend or distribution, then thereafter no adjustment in the number of
shares of Common Stock issuable upon exercise of the right of conversion
granted by this paragraph (f) or in the Conversion Ratio then in effect
shall be required by reason of the taking of such record.
(g) In case of any capital reorganization or reclassification of
outstanding shares of Common Stock (other than a reclassification covered by
paragraph (f)(i) of this Section 9), or in case of any consolidation or
merger of the Corporation with or into another corporation, or in case of any
sale or conveyance to another corporation of the property of the Corporation as
an entirety or substantially as an entirety (each of the foregoing being
referred to as a "Transaction"), each share of Series B Preferred Stock then
outstanding shall thereafter be convertible into, in lieu of the Class A Common
Stock issuable upon such conversion prior to the consummation of such
Transaction, the kind and amount of shares of stock and other securities and
property (including cash) receivable upon the consummation of such Transaction
by a holder of that number of shares of Class A Common Stock into which one
share of Series B Preferred Stock was convertible immediately prior to such
Transaction (including, on a pro rata basis, the cash, securities or property
received by holders of Class A Common Stock in any tender or exchange offer that
is a step in such Transaction). In any such case, if necessary, appropriate
adjustment (as determined by the Board of Directors) shall be made in the
application of the provisions set forth in this Section 9 with respect to rights
and interests thereafter of the holders of shares of Series B Preferred Stock to
the end that the provisions set forth herein for the protection of the
conversion rights of the Series B Preferred Stock shall thereafter be
applicable, as nearly as reasonably may be, to any such other shares of stock
and other securities and property deliverable upon conversion of the shares of
Series B Preferred Stock remaining outstanding. In case securities or property
other than Class A Common Stock shall be issuable or deliverable upon conversion
as aforesaid, then all references in this Section 9 shall be deemed to apply, so
far as appropriate and as nearly as may be, to such other securities or
property.
Notwithstanding anything contained herein to the contrary, the Corporation
will not effect any Transaction unless, prior to the consummation thereof, the
Surviving Person (as defined in Section 12) thereof shall assume, by written
instrument mailed to each record holder of shares of Series B Preferred Stock at
the addresses of each as shown on the books of the Corporation maintained by the
Transfer Agent thereof if such shares are held by 50 or fewer holders or groups
of affiliated holders or to each Transfer Agent for the shares of Series B
Preferred Stock at the addresses of each as shown on the books of the
Corporation maintained by the Transfer Agent thereof, if such shares are held by
a greater number of holders, the obligation to deliver to such holder such cash
and such securities to which, in accordance with the foregoing provisions, such
holder is entitled and such Surviving Person shall have mailed to each record
holder of shares of Series B Preferred Stock at the addresses of each as shown
on the books of the Corporation maintained by the Transfer Agent thereof, if
such shares are held by 50 or fewer holders or groups of affiliated holders, or
to each Transfer
Agent for the shares of Series B Preferred Stock, if such shares are held by a
greater number of holders, an opinion of independent counsel for such Person
stating that such assumption agreement is a valid, binding and enforceable
agreement of the Surviving Person (subject to customary exceptions).
(h) In case at any time or from time to time the Corporation shall pay any
dividend or make any other distribution to the holders of its Common Stock, or
shall offer for subscription pro rata to the holders of its Common Stock any
additional shares of stock of any class or any other right, or there shall be
any capital reorganization or reclassification of the Common Stock of the
Corporation or consolidation or merger of the Corporation with or into another
corporation, or any sale or conveyance to another corporation of the property of
the Corporation as an entirety or substantially as an entirety, or there shall
be a voluntary or involuntary dissolution, liquidation or winding up of the
Corporation, then, in any one or more of said cases the Corporation shall give
at least 10 days' prior written notice (the time of mailing of such notice shall
be deemed to be the time of giving thereof) to the record holders of the Series
B Preferred Stock at the addresses of each as shown on the books of the
Corporation maintained by the Transfer Agent thereof of the date on which (i)
the books of the Corporation shall close or a record shall be taken for such
stock dividend, distribution or subscription rights or (ii) such reorganization,
reclassification, consolidation, merger, sale or conveyance, dissolution,
liquidation or winding up shall take place, as the case may be, provided that in
the case of any Transaction to which paragraph (g) of this Section 9 applies the
Corporation shall give at least 30 days' prior written notice as aforesaid.
Such notice shall also specify the date as of which the holders of the Common
Stock and of the Series B Preferred Stock of record shall participate in said
dividend, distribution or subscription rights or shall be entitled to exchange
their Common Stock or Series B Preferred Stock for securities or other property
deliverable upon such reorganization, reclassification, consolidation, merger,
sale or conveyance or participate in such dissolution, liquidation or winding
up, as the case may be. Failure to give such notice shall not invalidate any
action so taken.
(i) The Corporation will at no time effect conversion of any Series B
Preferred Stock pursuant to this Section 9, and any purported conversion of any
Series B Preferred Stock shall be null and void, if such conversion would result
in the violation of a Legal Prohibition (as defined in Section 12).
(j) All calculations under this Section 9 shall be made to the nearest
cent or to the nearest one
one-hundredth of a share of Common Stock as the case may be. Notwithstanding any
other provision of this Section 9, the Corporation shall not be required to make
any adjustment of the Conversion Ratio unless such adjustment would require an
increase or decrease of at least 1.00% of such Conversion Ratio. Any lesser
adjustment shall be carried forward and shall be made at the time of and
together with the next subsequent adjustment which, together with any adjustment
or adjustments so carried forward, shall amount to an increase or decrease of at
least 1.00% in the Conversion Ratio. Any adjustments under this Section 9 shall
be made successively whenever an event requiring such an adjustment occurs.
(k) Upon the surrender of certificates representing shares of Series B
Preferred Stock in accordance with the terms hereof, the Person converting or
exchanging shall be deemed to be the holder of record at such time of the shares
of Class A Common Stock and other securities or property issuable on such
conversion or exchange and all rights with respect to the shares of Series B
Preferred Stock surrendered shall forthwith terminate except the right to
receive the shares of Class A Common Stock or other securities or property
issuable on such conversion or exchange, as the case may be. If any shares of
Series B Preferred Stock are surrendered for conversion or exchange subsequent
to the record date preceding a Dividend Payment Date but on or prior to such
Dividend Payment Date (except shares called for redemption or exchange on a
Redemption Date between such record date and Dividend Payment Date), the
registered holder of such shares at the closed of business on such record date
shall be entitled to receive the dividend, if any, payable on such shares on
such Dividend Payment Date notwithstanding the conversion thereof. Except as
provided in this Section 9, no adjustments in respect of payments of dividends
on shares surrendered for conversion or exchange or any dividend on the Common
Stock issued upon conversion or exchange shall be made upon the conversion or
exchange of any shares of this Series.
(l) The Corporation will endeavor to list the shares of (or depositary
shares representing fractional interests in) Class A Common Stock required to be
delivered upon conversion of shares of Series B Preferred Stock prior to such
delivery upon the principal national securities exchange upon which the
outstanding Class A Common Stock is listed at the time of such delivery.
Section 10 Reports as to Adjustments. Upon any adjustment of the
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Conversion Ratio then in effect and any increase or decrease in the number of
shares of Common Stock issuable upon the operation of the conversion set forth
in Section 9, then, and in each such case, the Corporation shall promptly
deliver to the Transfer Agent of the Series B Preferred Stock and Common Stock a
certificate signed by the
President or a Vice President and by the Treasurer or an Assistant Treasurer or
the Secretary or an Assistant Secretary of the Corporation setting forth in
reasonable detail the event requiring the adjustment and the method by which
such adjustment was calculated and specifying the Conversion Ratio then in
effect following such adjustment and the increased or decreased number of shares
issuable upon the conversion set forth in Section 9. The Corporation shall also
promptly after the making of such adjustment give written notice to the record
holders of the Series B Preferred Stock at the address of each holder as shown
on the books of the Corporation maintained by the Transfer Agent thereof, which
notice shall state the Conversion Ratio then in effect, as adjusted, and the
increased or decreased number of shares issuable upon the exercise of the right
of conversion granted by Section 9, and shall set forth in reasonable detail the
method of calculation of each and a brief statement of the facts requiring such
adjustment. Where appropriate, such notice to record holders of the Series B
Preferred Stock may be given in advance and included as part of the notice
required under the provisions of Section 9(h).
Section 11 Certain Covenants. Any record holder of Series B Preferred
-----------------
Stock may proceed to protect and enforce its rights and the rights of such
holders by any available remedy by proceeding at law or in equity to protect and
enforce any such rights, whether for the specific enforcement of any provision
in this Certificate of Designation or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy.
Section 12 Definitions. For the purposes of this Certificate of
-----------
Designation of Series B Convertible Preferred Stock, the following terms shall
have the meanings indicated:
"Affiliate" and "Associate" shall have the respective meanings ascribed to
such terms in Rule 12b-2 of the General Rules and Regulations under the Exchange
Act.
"Business Day" shall mean any day other than a Saturday, Sunday or a day on
which banking institutions in the State of New York are authorized or obligated
by law or executive order to close.
"Certificate" shall mean the certificate of the voting powers,
designations, preferences and relative, participating, optional or other special
rights, and qualifications, limitations or restrictions thereof, of Series B
Preferred Stock filed with respect to this Certificate of Designation with the
Secretary of State of the State of Delaware pursuant to Section 151 of the
General Corporation Law of the State of Delaware.
"Class A Common Stock" and "Class B Common Stock" each shall have the
meaning assigned to such term in the Corporation's Restated Certificate of
Incorporation. "Common Stock" shall mean either the Class A Common Stock or the
Class B Common Stock.
"Current Market Price", when used with reference to shares of Common Stock
or other securities on any date, shall mean the closing price per share of
Common Stock or such other securities on such date and, when used with reference
to shares of Common Stock or other securities for any period shall mean the
average of the daily closing prices per share of Common Stock or such other
securities for such period. The closing price for each day shall be the last
sale price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the Common Stock or such other securities are not listed or admitted to
trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting systems with respect to securities listed on
the principal national securities exchange on which the Common Stock or such
other securities are listed or admitted to trading or, if the Common Stock or
such other securities are not listed or admitted to trading on any national
securities exchange, the last quoted sale price or, if not so quoted, the
average of the high bid and low asked prices, as reported by the Nasdaq National
Market or such other system then in use, or, if on any such date the Common
Stock or such other securities are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by the primary
professional market maker making a market in the Common Stock or such other
securities as selected by the Board of Directors of the Corporation. If the
Common Stock is not publicly held or so listed or publicly traded, "Current
Market Price" shall mean the amount as determined by investment bankers mutually
agreeable to the Corporation and the holders of a majority of the outstanding
shares of Series B Preferred Stock (the fees and expenses of which shall be paid
by the Corporation) equal to the net proceeds that would be expected to be
received by a stockholder of the Corporation from the sale of such shares of
Common Stock in an underwritten public offering after being reduced by pro forma
expenses and underwriting discounts and commissions. If securities other than
Common Stock are not publicly held or so listed or publicly traded, "Current
Market Price" shall mean the Fair Market Value per share of such other
securities as determined by an independent investment banking firm mutually
agreeable to the Corporation and the holders of a majority of the outstanding
shares of Series B Preferred Stock (the fees and expenses of which shall be paid
by the Corporation).
"Dividend Payment Date" shall have the meaning set forth in Section 3(a)
hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"Exchange Price" for each share of this Series called for exchange shall be
a number of shares of Class A Common Stock (or such other class or series of
common stock into which shares of this Series are then convertible) equal to the
quotient of (x) the sum of (I) the Stated Value plus (II) the amount of accrued
or unpaid dividends on this Series to the Redemption Date divided by (y) the
product of (I) .95 multiplied by (II) the Current Market Price determined over
the Value Period as of the Redemption Date.
"Extraordinary Cash Distributions" shall mean, with respect to any
consecutive 12-month period, all cash dividends and cash distributions on the
outstanding shares of Series B Preferred Stock during such period (other than
cash dividends or cash distributions for which a prior adjustment to the
Conversion Ratio was previously made) to the extent such cash dividends and cash
distributions exceed, on a per share of Series B Preferred Stock basis, 10% of
the average daily Closing Price of the Series B Preferred Stock over such
period.
"Fair Market Value" shall mean the amount which a willing buyer would pay a
willing seller in an arm's-length transaction.
"Issue Date" shall mean the date on which shares of Series B Preferred
Stock are issued.
"Junior Stock" shall mean any capital stock of the Corporation ranking
junior (either as to dividends or upon liquidation, dissolution or winding up)
to the Series B Preferred Stock.
"Legal Prohibition" shall mean any law, statute, rule, regulation or
judicial or administrative decision which would prohibit a holder of Series B
Preferred Stock from owning such number of shares of Common Stock which such
holder would receive upon converting the Series B Preferred Stock or which would
require the Corporation to dispose of any assets or terminate any business
activity as a result of a holder of the Series B Preferred Stock owning such
number of shares of Common Stock which such holder would receive upon converting
the Series B Preferred Stock.
"Liquidation Preference" with respect to a share of the Series B Preferred
Stock shall mean an amount equal to the Stated Value plus an amount per share
equal to
all unpaid dividends accrued thereon to the date of final distribution to the
holder thereof (without interest).
"Merger Agreement" shall mean the Agreement and Plan of Merger, dated as of
February 27, 1996, between the Corporation and US WEST, Inc., a Delaware
Corporation.
"Parity Stock" shall mean the Series A Participating Convertible Preferred
Stock and any other capital stock of the Corporation (other than Junior Stock)
ranking on a parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Series B Preferred Stock.
"Person" shall mean any individual, firm, trust, partnership, corporation
or other entity, and shall include any successor (by merger or otherwise) of
such entity.
"Preferred Stock" shall mean the class of Preferred Stock, par value $0.01
per share, of the Corporation authorized at the date of the Certificate,
including any shares thereof authorized after the date of the Certificate.
"Redemption Date" shall mean the date on which the Corporation shall effect
the redemption or exchange, as the case may be, of all or any part of the
outstanding shares of the Series B Preferred Stock pursuant to Section 6 hereof.
"Redemption Price" in respect of a share of Series B Preferred Stock shall
mean the Stated Value as of the Redemption Date, plus an amount per share equal
to all unpaid dividends thereon, whether or not declared, to the date of
redemption (without interest).
"Securities Act" shall mean the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Senior Stock" shall mean the shares of any class or series of stock of the
Corporation which, by the terms of the Restated Certificate of Incorporation or
of the instrument by which the Board of Directors, acting pursuant to authority
granted in the Restated Certificate of Incorporation, shall fix the relative
rights, preferences and limitations thereof, shall be senior to the Series B
Preferred Stock in respect of the right to receive dividends or to participate
in any distribution of assets other than by way of dividends.
"Stated Value" in respect of the Series B Preferred Stock shall initially
be $50 per share, as appropriately adjusted from time to time to reflect any
split or combination of the shares of the Series B Preferred Stock.
"Subsidiary" of any Person means any corporation or other entity of which a
majority of the voting power of the voting equity securities or equity interest
is owned, directly or indirectly, by such Person.
"Surviving Person" shall mean the continuing or surviving Person of a
merger, consolidation or other corporate combination, the Person receiving a
transfer of all or a substantial part of the properties and assets of the
Corporation, or the Person consolidating with or merging into the Corporation in
a merger, consolidation or other corporate combination in which the Corporation
is the continuing or surviving person, but in connection with which the Series B
Preferred Stock or Common Stock of the Corporation is exchanged, converted or
reinstated into the securities of any other Person or cash or other property;
provided, however, if such Surviving Person is a direct or indirect Subsidiary
-------- -------
of a Person, the parent entity also shall be deemed to be a Surviving Person.
"Trading Day" means a day on which the principal national securities
exchange on which the Common Stock is listed or admitted to trading is open for
the transaction of business or, if the Common Stock is not listed or admitted to
trading on any national securities exchange, a Business Day.
"Transaction" has the meaning specified in Section 9(g).
"Value Period" shall mean the ten (10) consecutive Trading Days ending on
the third Trading Day immediately preceding the applicable date.
IN WITNESS WHEREOF, Continental Cablevision, Inc. has caused this
Certificate to be duly executed in its corporate name as of the th day of [ ]
CONTINENTAL CABLEVISION, INC.
By___________________________
Attest:
____________________
EXHIBIT F
---------
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and entered
into as of _________ __, 199_ among Continental Cablevision, Inc., a Delaware
corporation (the "Company"), and U S WEST, Inc., a Delaware corporation (the
"Holder").
RECITALS
--------
A. This Agreement is being entered into in connection with, and pursuant
to section [_.__] of, the Agreement and Plan of Merger, dated as of February 27,
1996, between the Company and the Holder (the "Merger Agreement").
B. The Company has heretofore entered into (i) a Registration Rights
Agreement dated as of June 22, 1992 with Corporate Partners, L.P. and certain
other signatories thereto and (ii) an amendment thereto dated as of July 15,
1992 (said Registration Rights Agreement and amendment are hereinafter referred
to as the "CP Agreement").
C. The Company has heretofore entered into a Registration Rights
Agreement dated as of July 15, 1992 with Boston Ventures Limited Partnership III
and certain other signatories thereto (said Registration Rights Agreement is
hereinafter referred to as the "BV Agreement").
D. The Company has heretofore entered into a Registration Rights
Agreement dated as of October 5, 1995 with The Providence Journal Company, as
Representative, and certain other signatories thereto (said Registration Rights
Agreement is hereinafter referred to as the "ProJo Agreement").
E. It is intended by the Company and the Holder that this Agreement shall
become effective immediately upon the issuance to the Holder of the [_________]
shares of Series D Convertible Preferred Stock, par value $.01 per share, of the
Company to be issued pursuant to Section [_.__] of the Merger Agreement (the
"Preferred Securities").
AGREEMENT
---------
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
covenants contained herein, and of other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Holder, intending to be legally bound, each hereby agrees as follows:
ARTICLE 13.
REGISTRATION UNDER SECURITIES ACT
---------------------------------
Section 1.01 Registration Upon Request. (a) Request. Subject to the
------------------------- -------
provisions of this Agreement (including Section 4.11 hereof), upon the written
request of the Holder requesting that the Company effect the registration under
the Securities Act of Registrable Securities (as hereinafter defined), which
request shall specify in reasonable detail the number of Registrable Securities
to be registered and the intended method of distribution thereof, the Company
shall use its best efforts to register under the Securities Act (a "Demand
Registration"), including by means of a shelf registration pursuant to Rule 415
under the Securities Act if so requested in such request and if the Company is
then eligible to use such a registration, as expeditiously as may be
practicable, the Registrable Securities which the Company has been requested to
register by the Holder, all to the extent requisite to permit the disposition of
such Registrable Securities in accordance with the plan of distribution set
forth in the applicable registration statement. In the case of such Demand
Registration, the Holder must request registration of Registrable Securities
representing not less than such number of Registrable Securities the Expected
Proceeds of which, on the date of the aforementioned written request, would
equal at least $100 million unless such registration request is for all
remaining Registrable Securities.
(b) Registration of Other Securities. Whenever the Company shall effect
--------------------------------
a registration pursuant to this Section 1.01 in connection with an underwritten
offering by the Holder of Registrable Securities, no securities (other than
Registrable Securities) shall be included among the securities covered by such
registration if the managing underwriter, if any, of such offering shall have
advised the Holder and the Company in writing of its belief that the inclusion
of such other securities would substantially interfere with such offering.
(c) Registration Statement Form. Registrations under this Section 1.01
---------------------------
shall be on such appropriate registration form of the Commission as shall be
selected by the Company and available to it under the Securities Act. The
Company agrees to include in any such registration statement all information
which, in the opinion of counsel to the Holder and counsel to the Company, is
reasonably required to be included therein under the Securities Act.
(d) Limitations on Registration; Expenses. The Company will not be
-------------------------------------
required to effect more than two (2) Demand Registrations pursuant to this
Section 1.01. Subject to the provisions of Sections 1.01(h) and 1.02(b) hereof,
the Company shall pay the Registration Expenses in connection with such Demand
Registration.
(e) Effective Registration Statement. Subject to the provisions of
--------------------------------
Section 1.01(i) hereof, a registration requested pursuant to this Section 1.01
shall not be deemed to have been effected (i) unless a registration statement
with respect thereto has become effective, (ii) if after it has become
effective, such registration is materially interfered with by any stop order,
injunction or similar order or requirement of the Commission or other
governmental agency or court for any reason not attributable to any of the
Holder and has not thereafter become effective, or (iii) if the conditions to
closing specified in the underwriting agreement, if any, entered into in
connection with such registration are not satisfied or waived, other than by
reason of a failure on the part of the Holder.
(f) Selection of Underwriters. In the case of such Demand Registration,
-------------------------
the selection of any managing underwriter(s) shall be made by the Company (with
the consent of the Holder, which consent shall not be unreasonably withheld),
provided, however, that (i) the Holder shall be entitled to select (with the
-------- -------
consent of the Company, which consent shall not be unreasonably withheld) one
(1) managing underwriter other than the lead managing underwriter, and (ii) the
selection of the underwriters (other than the managing underwriter(s)) shall be
made by the mutual agreement of the Company and the Holder.
(g) Certain Requirements in Connection with Registration Rights. In the
-----------------------------------------------------------
case of such Demand Registration, if the Holder has determined to enter into one
or more underwriting agreements in connection therewith, no Person may
participate in such Demand Registration unless such Person agrees to sell his or
its securities on the basis provided in the underwriting arrangements and
completes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents which are reasonable and customary under the
circumstances.
(h) Priority in Demand Registration. If the managing underwriter of any
-------------------------------
underwritten offering shall advise the Company in writing (with a copy to the
Holder) that, in its opinion, the number of Registrable Securities requested to
be included in such registration exceeds the number which can be sold in such
offering within a price range acceptable to the Holder, the Company will reduce
to the number which the Company is so advised can be sold in such offering
within such price range (the "Actual Number of Securities to be Registered"),
the Registrable Securities requested to be included in such registration. If,
as a result of any such reduction, the number of Registrable Securities
requested to be included in such registration by the Holder of the Registrable
Securities is reduced by
twenty-five percent (25%) or more, then notwithstanding anything to the contrary
contained in this Agreement, a Demand Registration in connection with such
registration will not be deemed to have been effected under Section 1.01(e)
hereof; provided, however, that the provisions of this sentence shall apply to
-------- -------
and be operative in respect of only the first request in writing made by the
Holder under this Section 1.01 for the registration of Registrable Securities.
In the case of such a registration which would have been deemed to be a Demand
Registration under Section 1.01(e) hereof but for the application of the
immediately preceding sentence of this Section 1.01(h), (i) the Company
nonetheless shall pay the Registration Expenses of the Holder in connection with
such registration, and (ii) no securities other than Registrable Securities
shall be covered by such registration.
(i) Certain Other Matters. For purposes of Section 1.01(e)(i) hereof,
---------------------
should a Demand Registration not become effective due to the failure of the
Holder to perform its obligations under this Agreement or the inability of the
Holder to reach agreement with the underwriters on price or other customary
terms for such transaction, or in the event the Holder withdraws or does not
pursue the request for the Demand Registration (in each of the foregoing cases,
provided that at such time the Company is in compliance in all material respects
with its obligations under this Agreement), then, except as otherwise provided
in the last sentence of this Section 1.01(i), such Demand Registration shall be
deemed to have been effected. In such event, the Holder shall reimburse the
Company for all of the Registration Expenses (other than the Registration
Expenses referred to in clause (a) of the definition of Registration Expenses)
incurred by the Company in the preparation, filing and processing of such
registration. If such reimbursement is made within thirty (30) business days
following a request therefor, a Demand Registration shall not be deemed to have
been effected for purposes of this Section 1.01.
Section 1.02 Incidental Registration. (a) Rights to Include. Subject to
----------------------- -----------------
the provisions of this Agreement (including Section 4.11 hereof)and the rights
of the holders of the CP/BV Registrable Securities under the BV Agreement or the
CP Agreement, if at any time the Company proposes to register the offering for
cash of any shares of Class A Common Stock under the Securities Act on Form X-0,
X-0 or S-3 (or any successor or similar form thereto) for the account of the
Company, the Company shall furnish prompt written notice to the Holder of its
intention to effect such registration and the intended method of distribution in
connection therewith. Upon the written request of the Holder made to the Company
within fifteen (15) business days after the delivery of the aforementioned
notice by the Company, which request shall specify the number of shares of
Registrable Securities intended to be registered, the
Company shall include such Registrable Securities in such registration, subject
however to the following sentence of this Section 1.02(a) and to the provisions
of Section 1.02(c) hereof. If the Company shall thereafter determine in its
sole discretion not to register or to delay the registration of such securities,
the Company may, at its election, provide written notice of such determination
to the Holder and, (i) in the case of a determination not to effect a
registration, shall thereupon be relieved of the obligation to register such
Registrable Securities (but, under such circumstances, the Company shall pay any
Registration Expenses reasonably incurred by the Holder until such time as the
Holder received the Company's written notice) and, (ii) in the case of a
determination to delay a registration, shall thereupon be permitted to delay
registering any Registrable Securities for the same period as the delay in
respect of securities being registered for the Company's own account. No
incidental registration effected pursuant to this Section 1.02 shall be deemed
to have been effected or otherwise relieve the Company of any of its obligations
to the Holder pursuant to Section 1.01 hereof.
(b) In connection with any incidental registration as provided in
Section 1.02(a) hereof, the Company shall pay the Registration Expenses for the
registration in question.
(c) Priority in Incidental Registrations. If the lead managing
------------------------------------
underwriter of any underwritten offering shall inform the Company by letter of
its belief that the number of Registrable Securities requested to be included in
such registration would substantially interfere with (including without
limitation adversely affect the pricing of) such offering, then the Company will
include in such registration, to the extent of the number and type which the
Company is so advised can be sold in (or during the time of) such offering
without such substantial interference, first, all securities proposed by the
Company to be sold for its own account, second, subject to the provisions of
Section 4.11 hereof, all securities of the Company ranking senior to or on a
parity with (as to rights to dividends and upon liquidation) the Company's
Series A Participating Convertible Preferred Stock ("Senior Securities") and
CP/BV Registrable Securities requested to be included in such registration (such
securities to be included in such registration pro rata on the basis of the
Expected Proceeds from the sale thereof), and third, any other securities of the
Company requested to be included in such registration.
Section 1.03 Registration Procedures. If and whenever the Company is
-----------------------
required by the provisions of this Agreement to effect or cause the registration
of any Registrable Securities under the Securities Act as provided in this
Agreement, the Company shall, as expeditiously as practicable:
(a) In the case of a Demand Registration, use its best efforts to prepare
and file with the Commission and obtain the effectiveness of a registration
statement on such form as is available for the sale of Registrable Securities by
the Holder in accordance with the plan of distribution set forth in such
registration statement; provided, however, if a request for registration
-------- -------
pursuant to Section 1.01 hereof is made within sixty (60) days before the end of
the Company's fiscal year and the Company is not then eligible to effect a
registration under the Securities Act by use of Form S-3 (or other comparable
short-form registration statement), the Company shall be entitled to delay the
filing of such registration statement until the earlier of (i) such time as the
Company receives audited financial statements for such fiscal year and (ii) the
expiration of 90 days after the last day of such fiscal year; and provided,
--------
further, that if the Company shall furnish to the Holder a certificate signed by
-------
the President of the Company stating that, in the good faith judgment of the
Board of Directors of the Company, it would be seriously detrimental to the
Company and its stockholders for such registration statement to be filed on the
date filing would be required under this Agreement because such registration
would require premature disclosure of any acquisition, corporate reorganization
or other material transaction involving the Company and that it is therefore
essential to defer taking action with respect to the filing of such registration
statement, then the Company may direct that such request for registration be
delayed for a period not to exceed ninety (90) days, such right to delay a
request to be exercised by the Company not more than once in any 12-month
period.
(b) Prepare and file with the Commission such amendments, post-effective
amendments and supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such registration
statement effective for up to ninety (90) days (unless the Registrable
Securities registered thereunder have been sold or disposed of prior to the
expiration of such 90-day period); and to comply with the provisions of the
Securities Act applicable to the Company with respect to the disposition of all
securities covered by such registration statement during such time as such
registration statement is effective.
(c) Furnish to the Holder and each underwriter of the Registrable
Securities being sold, as the Holder and such underwriter may reasonably request
in order to facilitate the disposition of Registrable Securities in accordance
with the plan of distribution set forth in such registration statement, (i) such
number of copies (including manually executed and conformed copies) of such
registration
statement and of each such amendment thereof and supplement thereto (including
all annexes, appendices, schedules and exhibits), (ii) such number of copies of
the prospectus used in connection with such registration statement (including
each preliminary prospectus and the final prospectus filed pursuant to Rule
424(b) under the Securities Act), and (iii) such other documents incident
thereto.
(d) Use its best efforts to register or qualify the Registrable
Securities covered by such registration statement under the securities or "blue
sky" laws of such jurisdictions in which an exemption is not available as the
Holder and the managing underwriter shall reasonably request, and do any and all
other reasonable acts and things which may be necessary or advisable to permit
the offering and disposition of Registrable Securities in such jurisdictions in
accordance with the plan of distribution set forth in the registration
statement; provided, however, the Company shall not be required to qualify
-------- -------
generally to do business as a foreign corporation, subject itself to taxation,
or consent to general service of process, in any jurisdiction wherein it would
not, but for the requirements of this Section 1.03, be obligated to do so.
(e) Use its best efforts to cause the Registrable Securities covered by
such registration statement to be registered with, or approved by, such other
public, governmental or regulatory authorities as may be necessary in the
reasonable judgment of counsel for the Holder and the Company to facilitate the
disposition of such Registrable Securities in accordance with the plan of
distribution set forth in such registration statement.
(f) Notify the Holder and the managing underwriter, if any, promptly and,
if requested by any such Person, confirm such notification in writing, (i) when
a prospectus or any prospectus supplement has been filed with the Commission,
and, with respect to such registration statement or any post-effective amendment
thereto, when the same has been declared effective by the Commission, (ii) of
any request by the Commission for amendments or supplements to such registration
statement or related prospectus, or any written request by the Commission for
additional information, (iii) of the issuance by the Commission of any stop
order or the receipt of notice of the initiation of any proceedings for such or
a similar purpose (and the Company shall make every reasonable effort to obtain
the withdrawal of any such order at the earliest possible moment and the Holder
shall cooperate in all reasonable respects in such efforts), (iv) of the receipt
by the Company of any notification with respect to the suspension of the
qualification of any of the Registrable Securities for sale in any jurisdiction
or the receipt of notice of the initiation or threatening of any proceeding for
such purpose (and the Company shall make every reasonable effort to
obtain the withdrawal of any such suspension at the earliest possible moment and
the Holder shall cooperate in all reasonable respects in such efforts), (v) of
the occurrence of any event during the period when a prospectus with respect to
the Registrable Securities is required to be delivered under the Securities Act
which requires the making of any changes to such registration statement or
related prospectus so that such documents will not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading (and the Company shall
promptly prepare and furnish to the Holder and any managing underwriter a
reasonable number of copies of a supplemented or amended prospectus or
preliminary prospectus such that, as thereafter delivered to the purchasers of
such Registrable Securities, such prospectus or preliminary prospectus shall not
include an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they are made, not misleading), and (vi)
of the Company's determination that the filing of a post-effective amendment to
such registration statement shall be necessary or appropriate. The Holder shall
be deemed to have agreed by its acquisition of Registrable Securities that upon
the receipt of any notice from the Company of the occurrence of any event of the
kind described in clause (v) of this Section 1.03(f), the Holder shall forthwith
discontinue the Holder's offer and disposition of Registrable Securities until
the Holder shall have received copies of an appropriately supplemented or
amended prospectus or preliminary prospectus and, if so directed by the Company,
shall deliver to the Company, at its expense, all copies (other than permanent
file copies) of the prospectus or preliminary prospectus covering such
Registrable Securities which are then in the Holder's possession. In the event
the Company shall provide any notice of the type referred to in the preceding
sentence, the 90-day period mentioned in Section 1.03(b) hereof shall be
extended by the number of days from and including the date such notice is
provided to and including the date when each seller of any Registrable
Securities covered by such registration statement and the managing underwriter
shall have received copies of the corrected prospectus contemplated by clause
(v) of this Section 1.03(f), plus an additional seven (7) days. The
underwriters or, if there are no underwriters, the Holder shall deliver such
supplemented or amended prospectus or preliminary prospectus to all purchasers
or offerees of the Registrable Securities sold by it to which such delivery may
be required or advisable under the Securities Act and any applicable state
securities or "blue sky" laws.
(g) Otherwise use its best efforts in connection with each registration
and offering of Registrable
Securities hereunder to comply with all applicable rules and regulations of the
Commission, as the same may hereafter be amended, including section 11(a) of the
Securities Act and Rule 158 thereunder.
(h) Use its best efforts to cause all such Registrable Securities covered
by such registration statement to be listed on each securities exchange on which
the same class of securities issued by the Company are then listed, if the
listing of such Registrable Securities is then permitted under the rules and
regulations of such exchange and, if requested by the Holder, cause all such
Registrable Securities that are of a different class or series than those
Company securities already listed or traded to be listed on one (but not more
than one) securities exchange reasonably requested by the Holder.
(i) Engage and provide a transfer agent and registrar for all Registrable
Securities covered by such registration statement not later than the effective
date of such registration statement.
(j) Furnish to the Holder a signed counterpart of an opinion from counsel
to the Company, and a "cold comfort" letter from the Company's independent
certified public accounting firm covering such matters of the type customarily
covered by such opinions and "cold comfort" letters as any managing underwriter
and the Holder shall reasonably request.
(k) Subject to confidentiality restrictions reasonably required by the
Company, at reasonable times and upon reasonable notice, and as necessary to
permit a reasonable investigation with respect to the Company and its business
in connection with the preparation and filing of such registration statement,
make available for inspection by the Holder, by any managing underwriter or
other underwriters participating in any disposition of Registrable Securities,
and by any attorney, accountant or other agent, representative or advisor
retained by any such seller or underwriters, all pertinent financial and other
records and corporate documents of the Company; and cause all of the Company's
officers, directors and employees to discuss pertinent aspects of the Company's
business with the Holder and any such underwriter, accountant, agent,
representative or advisor in connection with such registration statement;
provided, however, that the Company shall not be obligated pursuant to this
-------- -------
Section 1.03(k) to provide access to any information which it reasonably
considers to be a trade secret or similar confidential information.
(l) Permit the Holder, if the Holder, in the judgment of its counsel,
might be deemed to be a "control person" of the Company (within the meaning of
section 15 of the Securities Act or section 20 of the Exchange Act), to
participate in the preparation of such registration statement and include
therein material, furnished to the Company in writing which, in the reasonable
judgment of the Holder and its counsel, is required to be included therein; and
(m) If any registration statement refers to the Holder by name or
otherwise as the holder of any securities of the Company, and if the Holder
reasonably believes it is or may be deemed to be a control person in relation
to, or an Affiliate of, the Company, then the Holder shall have the right to
require (i) the insertion in such registration statement of language, in form
and substance reasonably satisfactory to the Holder, to the effect that the
ownership by the Holder of such securities is not to be construed as and is not
intended to be a recommendation by the Holder of the investment quality of, or
the relative merits and risks attendant to the purchase of, the Company's
securities covered thereby, and that such ownership does not imply that the
Holder will assist in meeting any future financial or operating requirements of
the Company, or (ii) in the case where the reference to the Holder by name or
otherwise is not required by the Securities Act or any similar federal or state
statute then in effect, the deletion of the reference to the Holder.
Section 1.04 Underwritten Offerings. (a) Requested Underwritten Offerings.
---------------------- --------------------------------
If requested by the underwriters for any underwritten offering by the Holder of
Registrable Securities pursuant to a Demand Registration, the Company and the
Holder will use their best efforts to enter into an underwriting agreement with
such underwriters for such offering, such agreement (i) to be reasonably
satisfactory in substance and form to the Company, the Holder and the
underwriters and (ii) to contain such representations and warranties by the
Company and such other terms as are reasonable and customary in the
circumstances on the part of an issuer in agreements of that type, including,
without limitation, indemnities to the effect and to the extent provided in
Article 2 hereof. The Holder shall cooperate with the Company in the negotiation
of the underwriting agreement, and shall be party to such underwriting agreement
and may, at its option, require that any or all of the representations and
warranties by, and the other agreements on the part of, the Company to and for
the benefit of such underwriters shall also be made to and for the benefit of
the Holder and that any or all of the conditions precedent to the obligations of
such underwriters under such underwriting agreement be conditions precedent to
the obligations of the Holder. The Company shall notify the Holder if at any
time the representations and warranties contemplated by such underwriting
agreement cease to be true and correct in all material respects. The Holder
shall not be required to make any representations or warranties to or agreements
with the Company other than representations,
warranties or agreements regarding the Holder, the Holder's Registrable
Securities and the Holder's intended method of distribution as otherwise
required by law.
(b) Incidental Underwritten Offerings. If the Company proposes to
---------------------------------
register any of its securities under the Securities Act as contemplated by
Section 1.02 hereof and such securities are distributed by or through one or
more underwriters, the Holder of Registrable Securities to be distributed by
such underwriters shall be party to the underwriting agreement between the
Company and such underwriters and may, at its option, require that any or all of
the representations and warranties by, and the other agreements on the part of,
the Company to and for the benefit of such underwriters shall also be made to
and for the benefit of the Holder and that any or all of the conditions
precedent to the obligations of such underwriters under such underwriting
agreement be conditions precedent to the obligations of the Holder. The Company
shall notify the Holder if at any time the representations and warranties
contemplated by such underwriting agreement cease to be true and correct in all
material respects. The Holder shall not be required to make any representations
or warranties to or agreements with the Company or the underwriters other than
representations, warranties or agreements regarding the Holder, the Holder's
Registrable Securities and the Holder's intended method of distribution or as
otherwise required by law.
(c) Limitations on Sale or Distribution of Other Securities. Anything
-------------------------------------------------------
herein to the contrary notwithstanding (including Section 1.01(a) hereof), if
the Company shall file a registration statement with respect to any of the
Company's securities, whether or not for its own account, by means of an
underwritten offering, the Holder agrees not to effect any public sale or
distribution of any Registrable Securities, including any resale pursuant to
Rule 144 under the Securities Act, and to use the Holder's best efforts not to
effect any such public sale or distribution (other than as part of such
underwritten offering) of any other securities which, with notice, lapse of time
and/or payment of monies, are exchangeable or exercisable for or convertible
into any Registrable Securities, during the 15-day period prior to, and during
the 120-day period (or such longer period as shall have been requested by the
managing underwriters) commencing on, the effective date of the registration
statement filed with the Commission in connection with such underwritten
offering.
(d) In order to ensure compliance with the provisions of Section 1.04(c)
hereof, the Company hereby agrees to notify the Holder as to the status and
proposed effective date of any registration statement of the Company which is
filed with the Commission.
(e) The Company hereby agrees not to effect, except pursuant to employee
benefit plans, any public sale or distribution of any securities of the same
class as (or otherwise similar to) the Registrable Securities, or any securities
which, with notice, lapse of time and/or payment of monies, are exchangeable or
exercisable for or convertible into any such securities during the 15-day period
prior to, and during the 90-day period commencing on, the effective date of a
registration statement filed with the Commission in connection with an
underwritten offering effected pursuant to Section 1.01 of this Agreement,
except to the extent otherwise required by the CP Agreement, the BV Agreement or
the ProJo Agreement.
(f) Without limiting the generality of the foregoing, the provisions of
Section 1.04(c) hereof shall not apply to the Holder if the Holder is prevented
by statute or other applicable regulation from agreeing to such provisions.
Section 1.05 Certain Agreements of the Company and Holder. (a) The
--------------------------------------------
Holder, in connection with any registration of Registrable Securities, shall
furnish to the Company such information regarding the Holder and the plan of
distribution proposed by the Holder as the Company may reasonably request and as
shall reasonably be required in connection with any registration, qualification
or compliance referred to in this Agreement. In the case of a Demand
Registration, the Company agrees that any plan of distribution included in the
registration statement (which plan relates to the Holder) shall be as reasonably
specified by the Holder.
If requested by the Company, information with respect to the Holder
required, in the opinion of counsel for the Company, to be included pursuant to
the Securities Act in any registration statement or prospectus for an offering
of Registrable Securities shall be furnished to the Company promptly by the
Holder in writing in a form specifically and expressly for use in such
registration statement or prospectus.
(b) If at the time of any transfer of any Registrable Securities, such
Registrable Securities shall not have been theretofore registered under the
Securities Act, the Company may require, as a condition of allowing such
transfer, that the Holder or the Holder's transferee furnish to the Company (i)
such information as is necessary in order to establish that such transfer may be
made without registration under the Securities Act; and (ii) at the expense of
the Holder or the Holder's transferee, an opinion of legal counsel designated by
the Holder or the Holder's transferee to the effect that such transfer may be
made without registration under the Securities Act, except that nothing
contained in this Section 1.05(b) shall relieve the
Company from complying with any request for registration, qualification or
compliance made pursuant to the other provisions of this Agreement.
(c) The Holder agrees that it will keep confidential and will not
disclose or divulge any confidential, proprietary or secret information that the
Holder may obtain from the Company, and that the Company has marked
"Confidential", "Proprietary" or "Secret" or has otherwise identified as being
such, pursuant to financial information, reports and other materials and
discussions with officers, directors, employees or agents made available by the
Company as required hereunder unless such information is or becomes known to the
Holder from a Person other than the Company (other than as a result of a breach
of a duty of confidentiality owed to the Company by such Person) or is or
becomes publicly known other than as a result of a breach of this provision, or
unless the Company gives its written consent to the Holder's release of such
information, except that no such written consent shall be required (and the
Holder shall be free to release such information) if such information is to be
provided to the Holder's counsel or accountant, or to an officer, director,
employee, advisor or partner of the Holder, provided that the Holder shall
--------
inform the recipient of the confidential nature of such information, and shall
require the recipient to treat the information as confidential to the same
extent as the Holder.
(d) The Holder agrees to perform any further acts and to execute and
deliver any further documents that may reasonably be requested or necessary to
confirm, or to carry out, the provisions of this Agreement (including the
provisions of Article 2 of this Agreement).
ARTICLE 14.
INDEMNIFICATION
---------------
Section 2.01 Indemnification. (a) With respect to each registration of
---------------
Registrable Securities pursuant to this Agreement, the Company hereby
indemnifies, to the fullest extent permitted by law, the Holder, its officers
and directors, if any, and each Person, if any, who controls the Holder within
the meaning of section 15 of the Securities Act and section 20 of the Exchange
Act, against all losses, claims, damages, liabilities (or proceedings in respect
thereof) and reasonable expenses (under the Securities Act, common law and
otherwise), joint or several, caused by (i) any untrue statement or alleged
untrue statement of a material fact contained in the applicable registration
statement or prospectus or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light (in the case of a prospectus) of the circumstances
under which they were made, not misleading, or (ii) any untrue statement or
alleged untrue statement of a material fact contained in any preliminary
prospectus or any omission or alleged omission to state therein a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading if used prior to the effective date
of such registration statement (unless such statement or omission is corrected
in the final prospectus and the Company has previously furnished copies thereof
to the Holder included in such registration which is seeking such
indemnification and to the underwriters of the registration in question);
provided, however, that such indemnification shall not extend to any such
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losses, claims, damages, liabilities (or proceedings in respect thereof) or
expenses which are caused (x) by any untrue statement or alleged untrue
statement contained in, or by any omission or alleged omission from, information
furnished in writing to the Company by the Holder or any underwriter thereof
specifically and expressly for use in any such registration statement or
prospectus or (y) any failure by the Holder or any underwriter to deliver a
prospectus or preliminary prospectus (or amendment or supplement thereto) as and
when required under the Securities Act after such prospectus has been timely
furnished by the Company.
(b) In the case of an underwritten offering in which the registration
statement covers Registrable Securities, the Company agrees to indemnify the
underwriters, their officers and directors, if any, and each Person, if any, who
controls such underwriters within the meaning of section 15 of the Securities
Act and section 20 of the Exchange Act, to the extent customary in the
circumstances for an issuer in an underwritten public offering.
(c) In connection with any written information furnished to the Company
or any underwriter of any underwritten offering specifically and expressly for
use in a registration statement with respect to the Holder, the Holder hereby
indemnifies severally (but not jointly), to the fullest extent permitted by law,
the Company, its officers and directors and each Person, if any, who controls
the Company within the meaning of section 15 of the Securities Act and section
20 of the Exchange Act, against any losses, claims, damages, liabilities (or
proceedings in respect thereof) and expenses caused by (i) any untrue statement
or alleged untrue statement of a material fact contained in the applicable
registration statement, prospectus or preliminary prospectus or any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light (in the case of a
prospectus) of the circumstances under which they were made, not misleading;
provided, however, that the indemnification set forth in
-------- -------
this Section 2.01(c) shall only apply if, and the Holder shall be liable
hereunder if and only to the extent that, any such loss, claim, damage or
liability arises solely out of or is based solely upon an untrue statement or
alleged untrue statement or omission or alleged omission, made in reliance upon
and in conformity with information pertaining to the Holder, which is furnished
in writing to the Company or any underwriter of any underwritten offering by the
Holder expressly for use in any such registration statement or prospectus.
(d) In the case of an underwritten offering of Registrable Securities,
the Holder shall agree to indemnify such underwriters, their officers and
directors, if any, and each Person, if any, who controls such underwriters
within the meaning of section 15 of the Securities Act and section 20 of the
Exchange Act, to the extent customary in the circumstances for a selling
stockholder in an underwritten public offering.
Section 2.02 Notices of Claims. (a) Any Person seeking indemnification
-----------------
under the provisions of this Article 2 shall, promptly after receipt by such
Person of notice of the existence of such claim or of the commencement of any
action, suit, claim or proceeding, notify each party against whom
indemnification is to be sought in writing of the existence or commencement
thereof; provided, however, the failure so to notify an indemnifying party shall
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not relieve the indemnifying party from any liability which it may have under
this Article 2 or from any liability which the indemnifying party may otherwise
have (except if and to the extent that it has been prejudiced in any material
respect by such failure). In case any such action, suit, claim or proceeding is
brought against any indemnified party, and it notifies an indemnifying party of
the commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent it may elect by written notice delivered
to the indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party, except as otherwise provided in Section
2.02(c) hereof. Upon delivery of such notice by the Company (if it is the
indemnifying party) to such indemnified party and approval of such counsel by
such indemnified party, the Company will not be liable under this Article 2 for
any legal or other expenses subsequently incurred by the Holder in connection
with the defense of such action, suit, claim or proceeding, except as otherwise
provided in Section 2.02(b) hereof.
(b) Notwithstanding the foregoing, the indemnified party shall have the
right to employ its own counsel in any such case, but the fees and expenses of
such counsel shall be at the expense of such indemnified party unless (i) the
employment of such counsel shall have been authorized in
writing by the indemnifying party in connection with the defense of such suit,
action, claim or proceeding, (ii) the indemnifying party shall not have employed
counsel (reasonably satisfactory to the indemnified party) to take charge of the
defense of such action, suit, claim or proceeding within a reasonable time after
notice of commencement of the action, suit, claim or proceeding, or (iii) such
indemnified party shall have reasonably concluded that there may be defenses
available to it which are different from or additional to those available to the
indemnifying party which, if the indemnifying party and the indemnified party
were to be represented by the same counsel, could result in a conflict of
interest for such counsel or materially prejudice the prosecution of the
defenses available to such indemnified party. If any of the events specified in
clauses (ii) or (iii) of the preceding sentence shall have occurred or such
clauses shall otherwise be applicable, then the fees and expenses of one counsel
or firm of counsel, plus one local or regulatory counsel or firm of counsel,
selected by a majority in interest of the indemnified parties shall be borne by
the indemnifying party.
(c) If, in any case, the indemnified party employs separate counsel, the
indemnifying party shall not have the right to direct the defense of such
action, suit, claim or proceeding on behalf of the indemnified party.
(d) Anything in this Article 2 to the contrary notwithstanding, an
indemnifying party shall not be liable for any settlement or compromise of, or
consent to entry of any judgment with respect to, any action, suit, claim or
proceeding effected without its prior written consent (which consent in the case
of an action, suit, claim or proceeding exclusively seeking monetary relief
shall not be unreasonably withheld). Such indemnification shall remain in full
force and effect irrespective of any investigation made by or on behalf of an
indemnified party.
Section 2.03 Contribution. (a) If the indemnification from the
------------
indemnifying party as provided in this Article 2 is unavailable or is otherwise
insufficient to hold harmless an indemnified party in respect of any losses,
claims, damages, liabilities or expenses referred to therein, then the
indemnifying party shall, to the fullest extent permitted by law, contribute to
the amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or expenses in such proportion as is appropriate to
reflect the relative fault of the indemnifying party and indemnified parties in
connection with the actions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations,
subject to the provisions of Section 2.03(b) hereof. The relative fault of such
indemnifying party shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact, has been made, or relates to information supplied by such
indemnifying party, and the parties, relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount paid
or payable by a party as a result of the losses, claims, damages, liabilities
and expenses referred to above shall be deemed to include, subject to the
limitations set forth in Section 2.02 hereof, any legal or other fees or
expenses reasonably incurred by such party in connection with any investigation
or proceeding. The parties hereto agree that it would not be just and equitable
if contribution pursuant to this Article 2 were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in this Section 2.03(a).
Notwithstanding the provisions of this Section 2.03, no underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Registrable Securities underwritten by it and offered to the
public exceeds the amount of any damages for which such underwriter has
otherwise been held liable by reason of such untrue statement or alleged untrue
statement or omission or alleged omission; and the Holder shall not be required
to contribute any amount in excess of the amount by which the total price at
which the Registrable Securities offered to the public exceeds the amount of any
damages for which the Holder has otherwise been held liable by reason of such
untrue statement or alleged untrue statement or omission or alleged omission.
(b) No Person guilty of fraudulent misrepresentation (within the meaning
of section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation.
(c) If indemnification is available under this Article 2, the
indemnifying parties shall indemnify each indemnified party to the fullest
extent provided in Section 2.01 and Section 2.02 hereof without regard to the
relative fault of said indemnifying party or indemnified party or any other
equitable consideration provided for in this Section 2.03.
Section 2.04 Indemnification Payments. The indemnification and
------------------------
contribution required by this Article 2 shall be made by periodic payments of
the amount thereof during the course of the investigation or defense, as and
when bills are received or expense, loss, damage or liability is incurred.
ARTICLE 15.
CERTAIN DEFINITIONS
-------------------
As used herein, the following terms have the following respective meanings:
"Affiliate" shall have the meaning specified for "affiliate" in Rule 12b-2
under the Exchange Act.
"Commission" shall mean the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
"Class A Common Stock" shall mean Class A Common Stock, par value $.01 per
share, of the Company.
"CP/BV Registrable Securities" shall mean the securities of the Company
which are defined as "Registrable Securities" under either the CP Agreement or
the BV Agreement.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission thereunder, all as the same
shall be in effect at the time.
"Expected Proceeds" shall mean, as of any date, the aggregate proceeds that
would be expected to be received by a holder of securities from the sale of such
securities in an offering made on such date (without being reduced by any pro
forma expenses or underwriting discounts). The determination of Expected
Proceeds shall be made (a) if the offering is intended to be made in an
underwritten public offering, then by the intended managing underwriter of such
offering or (b) if the offering is not intended to be made in an underwritten
public offering, then by investment bankers mutually agreeable to the Company
and the Holder, the fees and expenses of which shall be paid by the Company.
"Person" shall mean a corporation, an association, a partnership, an
organization, a business, an individual, a governmental or political subdivision
thereof or a governmental agency.
"Register", "registered" and "registration" shall mean a registration
effected by preparing and filing a registration statement in compliance with the
Securities Act and the declaration or ordering of the effectiveness of such
registration statement.
"Registrable Securities" shall mean, subject to the provisions of Sections
4.02(b) and 4.11 hereof, any and all shares of Class A Common Stock issued or
issuable upon conversion of the Preferred Securities. As to any particular
Registrable Securities, such securities shall cease to constitute Registrable
Securities when (i) a registration statement with respect to the sale of such
securities shall have been declared effective under the Securities Act and such
securities shall have been disposed of in accordance with the methods
contemplated by the registration statement, (ii) such securities (or the
Preferred Securities that are convertible into such securities) shall have been
sold in satisfaction of all applicable conditions to the resale provisions of
Rule 144 under the Securities Act (or any successor provision thereto), (iii)
such securities (or the Preferred Securities that are convertible into such
securities) shall have been otherwise transferred except to a permitted assignee
pursuant to Section 4.02(b) hereof, or (iv) such securities shall have been
issued upon conversion of the Preferred Securities and thereafter shall have
ceased to be issued and outstanding.
"Registration Expenses" shall mean all expenses incident to the Company's
performance of or compliance with Article 1, including, without limitation, (a)
any allocation of salaries and expenses of Company personnel or other general
overhead expenses of the Company, or other expenses for the preparation of
historical and pro forma financial statements or other data normally prepared by
the Company in the ordinary course of business; (b) all registration,
application, filing, listing, transfer and registrar fees; (c) all NASD fees and
fees and expenses of registration or qualification of Registrable Securities
under state securities or "blue sky" laws pursuant to Section 1.03(d) hereof;
(d) all word processing, duplicating and printing expenses, messenger and
delivery expenses; (e) the fees and disbursements of counsel for the Company and
of its independent public accountants, including the expenses of customary "cold
comfort" letters required by or incident to such performance and compliance; and
(f) any fees and disbursements of underwriters and broker-dealers customarily
paid by issuers or sellers of securities; provided, however, Registration
-------- -------
Expenses shall exclude, and the sellers of the Registrable Securities being
registered shall pay, the fees and disbursements of counsel to such sellers, and
underwriting discounts and commissions and transfer taxes in respect of the
Registrable Securities being registered and, to the extent such laws prohibit
the Company from paying such expenses on behalf of the Holder, expenses of
registering or qualifying Registrable Securities under state securities or blue
sky laws.
"Securities Act" shall mean the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder, all as the same shall be in
effect at the time.
ARTICLE 16.
MISCELLANEOUS
-------------
Section 4.01 Rule 144. If the Company shall have filed with the
--------
Commission and obtained the effectiveness of a registration statement covering
the Company's equity securities pursuant to the requirements of section 12 of
the Exchange Act or pursuant to the requirements of the Securities Act, the
Company agrees that it shall timely file the reports required to be filed by it
under the Securities Act or the Exchange Act (including, without limitation, the
reports under sections 13 and 15(d) of the Exchange Act referred to in paragraph
(c)(1) of Rule 144 under the Securities Act), and shall take such further
actions as the Holder may reasonably request, all to the extent necessary to
enable the Holder to sell Registrable Securities, from time to time, pursuant to
the resale limitations of (a) Rule 144 under the Securities Act, as such rule
may be hereafter amended, or (b) any similar rules or regulations hereafter
adopted by the Commission. Upon the written request of the Holder, the Company
shall deliver to the Holder a written statement verifying that it has complied
with such requirements.
Section 4.02 Assignment. (a) This Agreement shall be binding upon and
----------
inure to the benefit of and be enforceable by the Company and the Holder and,
with respect to the Company, its respective successors and assigns.
(b) The rights of the Holder to cause the Company to register Registrable
Securities under Sections 1.01 and 1.02 hereof may not be assigned or otherwise
conveyed, whether directly or indirectly or by operation of law or otherwise, to
any Person, including any transferee or assignee of any of the Preferred
Securities or the Registrable Securities; provided, however, that the Holder
-------- -------
shall have the right to assign, on one and only one occasion (whether by
instrument of assignment, operation of law or otherwise), to a third party any
of its rights to require the Company to register Registrable Securities under
Section 1.01 or 1.02 hereof in connection with a transfer by the Holder of more
than fifty percent (50%) of the aggregate number of Registrable Securities
(adjusted appropriately to reflect any stock dividends, splits, combinations,
exchange, reorganization, recapitalization or reclassification involving the
Class A Common Stock or resulting from a merger or consolidation or similar
business combination transaction involving the Company after the date hereof)
issuable at the date hereof upon conversion of the Preferred Securities,
provided that such third party shall have executed and delivered to the Company
a written agreement, in form and substance reasonably satisfactory to the
Company, by which such third party shall have agreed to become party to and
bound by the terms and conditions of this Agreement as though it were the
Holder.
Section 4.03 Notices. Except as otherwise provided below, whenever it is
-------
provided in this Agreement that any
notice, demand, request, consent, approval, declaration or other communication
shall or may be given to or served upon the Company, the Holder, or whenever the
Company or the Holder desires to provide to or serve upon any Person any other
communication with respect to this Agreement, each such notice, demand, request,
consent, approval, declaration or other communication shall be in writing and
either shall be delivered in person with receipt acknowledged or sent by
registered or certified mail (return receipt requested, postage prepaid), or by
overnight mail, courier, or delivery service or by telecopy and confirmed by
telecopy answerback, addressed as follows:
(a) If to the Company, to:
---------------------
Attention: Vice President and Treasurer
---------
- With a copy to -
Xxxxxxxx & Worcester
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
---------
(b) If to the Holder, to:
----------------
- With a copy to -
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Block, Esq.
---------
or at such other address as may be substituted by it by notice delivered as
provided herein. The furnishing of any notice required hereunder may be waived
in writing by the
party entitled to receive such notice. Every notice, demand, request, consent,
approval, declaration or other communication hereunder shall be deemed to have
been duly delivered, furnished or served on (i) the date on which personally
delivered, with receipt acknowledged, (ii) the date on which telecopied and
confirmed by telecopy answerback, (iii) the next business day if delivered by
overnight or express mail, courier or delivery service, or (iv) three business
days after the same shall have been deposited in the United States mail, as the
case may be. Failure or delay in delivering copies of any notice, demand,
request, consent, approval, declaration or other communication to the persons
designated above to receive copies shall in no way adversely affect the
effectiveness of such notice, demand, request, consent, approval, declaration or
other communication.
Section 4.04 Entire Agreement; Amendment. This Agreement represents the
---------------------------
entire agreement and understanding among the parties hereto with respect to the
subject matter hereof and supersedes any and all prior oral and written
agreements, arrangements and understandings among the parties hereto with
respect to such subject matter; and can be amended, supplemented or changed, and
any provision hereof can be waived, only by a written instrument making specific
reference to this Agreement signed by the Company and the Holder.
Section 4.05 Paragraph Headings, etc. The paragraph headings contained in
-----------------------
this Agreement are for general reference purposes only and shall not affect in
any manner the meaning, interpretation or construction of the terms or other
provisions of this Agreement. The terms "including", "includes" and "included"
shall not be limiting.
Section 4.06 Applicable Law. This Agreement shall be governed by,
--------------
construed and enforced in accordance with the laws of The Commonwealth of
Massachusetts, applicable to contracts to be made, executed, delivered and
performed wholly within such state and, in any case, without regard to the
conflicts of law principles of such state.
Section 4.07 Severability. If at any time subsequent to the date hereof,
------------
any provision of this Agreement shall be held by any court of competent
jurisdiction to be illegal, void or unenforceable, such provision shall be of no
force and effect, but the illegality or unenforceability of such provision shall
have no effect upon and shall not impair the enforceability of any other
provision of this Agreement.
Section 4.08 Equitable Remedies. The parties hereto agree that
------------------
irreparable harm would occur in the event that any of the agreements and
provisions of this Agreement were not performed fully by the parties hereto in
accordance with their specific terms or conditions or were otherwise
breached, and that money damages are an inadequate remedy for breach of this
Agreement because of the difficulty of ascertaining and quantifying the amount
of damage that will be suffered by the parties hereto in the event that this
Agreement is not performed in accordance with its terms or conditions or is
otherwise breached. It is accordingly hereby agreed that the parties hereto
shall be entitled to an injunction or injunctions to restrain, enjoin and
prevent breaches of this Agreement by the other parties and to enforce
specifically the terms and provisions hereof in any court of the United States
or any state having jurisdiction, such remedy being in addition to and not in
lieu of, any other rights and remedies to which the other parties are entitled
to at law or in equity.
Section 4.09 No Waiver. The failure of any party at any time or times to
---------
require performance of any provision hereof shall not affect the right at a
later time to enforce the same. No waiver by any party of any condition, and no
breach of any provision, term, covenant, representation or warranty contained in
this Agreement, whether by conduct or otherwise, in any one or more instances,
shall be deemed to be construed as a further or continuing waiver of any such
condition or of the breach of any other provision, term, covenant,
representation or warranty of this Agreement.
Section 4.10 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same original instrument.
Section 4.11 Special Limitation and Termination of Registration Rights.
---------------------------------------------------------
Anything in this Agreement to the contrary notwithstanding:
(a) The obligations of the Company to the Holder with respect to its
rights of registration provided for in Sections 1.01 and 1.02 hereof shall cease
and terminate upon the earlier of (i) six (6) years after the date hereof and
(ii) the date on which the aggregate number of Registrable Securities issued and
outstanding (or issuable and which would be outstanding upon conversion of the
Preferred Securities) shall no longer exceed one third (1/3) of the aggregate
number of shares (adjusted appropriately downward or upward to reflect any stock
dividends, splits, combinations, exchange, reorganization, recapitalization or
reclassification involving Class A Common Stock of the Company or pursuant to a
merger or consolidation or similar transaction involving the Company or the like
after the date hereof) of Registrable Securities issuable at the date hereof
upon conversion of the Preferred Securities.
(b) The rights of registration provided for in Sections 1.01 and 1.02
hereof are subject to and limited by the terms and provisions of Article XIII of
the Restated By-
Laws of the Company effective as of May 14, 1992, as amended through the date
hereof.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered by their respective officers thereunto duly authorized as of the
date first above written.
CONTINENTAL CABLEVISION, INC.
By:________________________________
Name:
Title:
U S WEST, INC.
By:________________________________
Name:
Title:
