AGREEMENT AND PLAN OF MERGER
between
U S WEST, INC.
and
CONTINENTAL CABLEVISION, INC.
Dated as of February 27, 1996
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
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
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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
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 and the Proxy Statement;
Stockholders' Meeting; 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
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7.12 NYSE Listing......................................... 78
7.13 Affiliates........................................... 78
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
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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
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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:
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 I
DEFINITIONS
1.1 DEFINITIONS. For purposes of this Agreement, the following
terms shall have the meanings set forth below:
"ACQUIROR REGION" shall mean Arizona, Colorado, Idaho, Iowa,
Minnesota, Montana, Nebraska, New Mexico, North Dakota, Oregon, South Dakota,
Utah, Washington and Wyoming.
"AFFILIATE" shall mean, with respect to any Person, any other
Person directly or indirectly controlling, controlled by or under common control
with such other Person.
"APPRAISER" shall mean a nationally recognized investment banking
firm 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 programming service defined in 47 C.F.R. Section 76.901(a).
"BOARD OF DIRECTORS" shall mean the board of directors of the
Company.
"BUSINESS DAY" shall mean a day other than a Saturday, Sunday or
other day on 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 by the Cable Television
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Consumer Protection and Competition Act of 1992 and the Telecommunications Act
of 1996.
"CABLE PROGRAMMING SERVICE" shall mean as to each System those
video programming services defined in 47 C.F.R. Section 76.901(b).
"CALCULATION PRICE" shall mean the Determination Price, Cap Price
or Floor 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.
"CASH CONSIDERATION AMOUNT" shall equal $1 billion; PROVIDED,
HOWEVER, that 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 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 pursuant to Section 7.7(c).
"CATV" shall mean any method, presently existing, for the
transmission and/or 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 this Agreement.
"CLASS A COMMON PERCENTAGE" shall mean the quotient (rounded to
the nearest 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.
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"CLASS A PREFERRED CONSIDERATION AMOUNT" shall mean the product of
(x) the 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 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 (y) the Class A Common Percentage.
"CLASS B COMMON CONSIDERATION AMOUNT" shall mean the product of
(x) the Class B Percentage multiplied by (y) the Common Consideration Amount.
"CLASS B COMMON PERCENTAGE" shall mean the quotient (rounded to
the nearest 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 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 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.
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"CLASS B PREFERRED CONSIDERATION AMOUNT" shall mean the difference
between (x) the Preferred Consideration Amount and (y) the Class A Preferred
Consideration Amount.
"CLASS B PREFERRED CONVERSION NUMBER" shall mean the quotient of
(x) the product of (A) the Class B Preferred Percentage multiplied by (Hb) 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 Agreement.
"COMMON CONSIDERATION AMOUNT" shall equal the excess of (x) the
Transaction 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 U.S.C. Sections 151, et seq., as amended by the Telecommunications
1996.
"COPYRIGHT OFFICE" shall mean the United States Copyright Office
of the 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. Section 111.
"DBS" shall mean a system providing direct-to-home in the
broadcast satellite services authorized by the FCC.
"DETERMINATION PRICE" shall mean the average of the Intra-Day
Closing Prices for the Random Trading Days.
"DGCL" shall mean the Delaware General Corporation Law.
"DOJ" shall mean the Department of Justice.
"ENCUMBRANCES" shall mean any and all mortgages, security
interests, liens, claims, pledges, restrictions, leases, title exceptions,
charges or other encumbrances.
"ENVIRONMENTAL CLAIM" means any notice of violation, action,
claim, Environmental Lien, demand, abatement or other Order or direction
(conditional or
5
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, 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 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. Section 9601 ET SEQ., the
Hazardous Materials Transportation Act, 49 U.S.C. Section 1801 ET SEQ., the
Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 ET SEQ., the
Clean Water Act, 33 U.S.C. Section 1251 ET SEQ., the Clean Air Act, 33
U.S.C. Section 2601 ET SEQ., the Toxic Substances Control Act, 15 U.S.C.
Section 2601 ET SEQ., the
6
Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. Section 136 ET
SEQ., the Oil Pollution Act of 1990, 33 U.S.C Section 2701 ET SEQ. and the
relevant portions of the Occupational Safety and Health Act, 29 U.S.C. Section
651 ET SEQ., as such laws 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.
"ENVIRONMENTAL PERMIT" means any permit, approval, authorization,
license, variance, registration or permission required under any applicable
Environmental Law.
"ENVIRONMENTAL RELEASE" means any release, spill, emission,
leaking, pumping, 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 amended, and the applicable regulations promulgated thereunder.
"ERISA AFFILIATE" shall mean any corporation or trade or business
(whether or 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 the rules and regulations promulgated thereunder.
"FCC" shall mean the Federal Communications Commission.
"FINAL ORDER" shall mean an action or actions by any Governmental
Authority or 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
7
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.
"FTC" shall mean the Federal Trade Commission.
"GAAP" shall mean generally accepted accounting principles in
effect in the United States of America as of the date of the applicable
determination.
"GOVERNMENTAL AUTHORITY" shall mean any foreign, Federal, state,
municipal or 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 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, as amended.
"INDEBTEDNESS" shall mean, with respect to any Person, any
indebtedness, 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
8
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 of the Media Stock (regular way) as shown on the Composite Tape of
the NYSE.
"IRS" means the United States Internal Revenue Service.
"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, suits, proceedings (public or private) or governmental proceedings.
"MATERIAL ADVERSE EFFECT" shall mean, (i) with respect to the
Company, 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 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 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 of the Restated Certificate of Incorporation of Acquiror as in
effect as of the date hereof.
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"MERGER" shall have the meaning set forth in the first recital to
this Agreement.
"MMDS" shall mean a system operating in the Multichannel
Multipoint Distribution Services authorized by the FCC.
"NYSE" shall mean the New York Stock Exchange, Inc.
"PERSON" shall mean an individual, corporation, partnership, trust
or unincorporated organization or a government or any agency or political
subdivision thereof.
"PREFERRED CONSIDERATION AMOUNT" shall equal $1 billion.
"RANDOM TRADING DAYS" shall mean the 20 Trading Days selected by
Acquiror by 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 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, 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
10
with all applicable Environmental Laws and Environmental Permits.
"SEC" shall mean the Securities and Exchange Commission.
"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. Sections 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 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 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, 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
11
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 of this Agreement.
"SYSTEMS" shall mean the cable television systems listed in
Section 4.12(a) of 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 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 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 any similar state or local "plant closing" law.
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1.2 TERMS DEFINED ELSEWHERE IN THE AGREEMENT. For purposes of
this 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)
13
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
14
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)
1.3 OTHER DEFINITIONAL PROVISIONS. (a) The words "hereof",
"herein", and "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.
(b) The terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.
(c) The terms "dollars" and "$" shall mean United States dollars.
ARTICLE II
THE MERGER
2.1 THE MERGER. Upon the terms and subject to the conditions
set 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.
2.2 CLOSING. Unless this Agreement shall have been terminated
and the 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.
15
2.3 EFFECTIVE TIME. Subject to the provisions of this
Agreement, the 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").
2.4 EFFECTS OF THE MERGER. From and after the Effective Time,
the 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.
2.5 DIRECTORS; CERTIFICATE OF INCORPORATION; BYLAWS. (a) The
directors of 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.
(b) The Restated Certificate of Incorporation of Acquiror as in
effect immediately prior to the Effective Time shall be the Restated Certificate
of Incorporation of
16
the Surviving Corporation, until duly amended in accordance with the terms
thereof and the DGCL.
(c) 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 III
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF
THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
3.1 EFFECT ON CAPITAL STOCK. At the Effective Time, by virtue
of the 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:
(a) CAPITAL STOCK OF ACQUIROR. Each share of each class of
capital 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.
(b) CANCELLATION OF TREASURY STOCK AND ACQUIROR-OWNED STOCK.
Each share 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.
(c) CONVERSION OF COMPANY COMMON STOCK.
(i) 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,
17
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").
(ii) 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").
(iii) 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
18
(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.
(d) CERTAIN ADJUSTMENTS AND DETERMINATIONS. (i)If, between the
date of this 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.
(ii) 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
19
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, 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, 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
20
(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.
3.2 COMPANY COMMON STOCK ELECTIONS; EXCHANGE FUND. (a) Each
Person who, 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.
(b) 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
21
pursuant to the Merger shall be deemed to have been issued at the Effective
Time.
(c) 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.
(d) 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
22
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").
(e) 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.
(f) 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
23
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.
3.3 PRORATION. (a) The aggregate amount of cash to be paid to
holders of Class B Common Stock (the "Cash Cap") shall not exceed the Cash
Consideration Amount.
(b) 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.
(c) 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
24
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.
3.4 DIVIDENDS, FRACTIONAL SHARES, ETC. (a) Notwithstanding any
other 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.
(b) 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.
(c) (i) No certificates or scrip evidencing fractional shares of
Media Stock or Series D Preferred Stock
25
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.
(ii) 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.
(iii) 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 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.
(d) Any portion of the Exchange Fund that remains undistributed to
the holders of Company Common Stock for six
26
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.
(e) 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.
(f) 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
27
shares, and unpaid dividends and distributions on shares of Media Stock and
Series D Preferred Stock deliverable in respect thereof pursuant to this
Agreement.
(g) 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.
3.5 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.
3.6 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
28
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.
3.7 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, 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,
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 IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Acquiror as follows:
4.1 ORGANIZATION AND AUTHORITY OF THE COMPANY. (a)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
29
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.
(b) 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.
(c) Section 4.1 of the letter from the Company, dated the date
hereof, addressed to Acquiror (the "Company
30
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.
4.2 CAPITALIZATION. (a) 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
31
which the Company is a party or by which the Company is bound.
(b) 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.
4.3 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
32
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.
4.4 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.
4.5 BOARD RECOMMENDATION; OPINION OF FINANCIAL ADVISOR. (a)
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.
33
(b) 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.
4.6 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 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'
34
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 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.
4.7 COMPLIANCE; NO DEFAULTS. (a) 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
35
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.
(b) 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.
4.8 SEC DOCUMENTS; UNDISCLOSED LIABILITIES. (a) 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 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
36
(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.
(b) 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.
4.9 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.
4.10 TAXES. (a) 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
37
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.
(b) 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.
(c) 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
38
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.
(d) 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.
(e) 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.
(f) 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.
39
(g) As of December 31, 1995, the Company had net operating loss
carryforwards for Federal income tax purposes of no less than $900 million.
(h) 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.
(i) 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.
(j) 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.
(k) 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.
4.11 EMPLOYEE BENEFITS. (a) 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.
40
(b) 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").
(c) 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.
(d) 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).
(e) Each Benefit Plan, including any associated trust, intended to
qualify under Section 401 of the Code does so qualify.
(f) 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.
(g) 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
41
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.
(h) 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.
(i) 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.
(j) 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.
42
(k) 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.
4.12 CABLE TELEVISION FRANCHISES. (a) 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
43
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.
(b) 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.
(c) 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
44
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 Section 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.
(d) 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.
(e) 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
45
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.
(f) 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.
(g) 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.
(h) 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 Section 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 Basic Cable Service and associated equipment pursuant to 47
C.F.R Section 76.913; Section 4.12 of the Company Disclosure Letter also
lists each complaint filed against Cable
46
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.
(i) 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.
(j) 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.
(k) 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.
4.13 ENVIRONMENTAL MATTERS. Except as set forth in Section 4.13
of the Company Disclosure Letter:
(i) the operations of the Company and its Subsidiaries are in
material compliance with all applicable Environmental Laws;
(ii) 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
47
Environmental Costs and Liabilities to the Company in excess of $2,000,000;
(iii) 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;
(iv) 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;
(v) 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
(vi) 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.
4.14 LABOR. (a) 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-
48
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.
(b) 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.
(c) 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.
(d) 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
49
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.
(e) 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.
(f) 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.
4.15 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:
(i) 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;
(ii) any change, occurrence or circumstance that had a Material
Adverse Effect with respect to the Company;
(iii) 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
50
policies or rates theretofore adopted by the Company in connection with
the business of the Company and its Subsidiaries;
(iv) 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);
(v) 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;
(vi) 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
(vii) 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.
4.16 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
51
unlawful payment to any Person or entity with respect to matters pertaining to
the Company.
4.17 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 V
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
Acquiror represents and warrants to the Company that:
5.1 ORGANIZATION AND AUTHORITY OF ACQUIROR. (a) 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.
(b) 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
52
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.
5.2 CAPITALIZATION. (a) 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
53
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.
(b) 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.
5.3 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,
54
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.
5.4 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.
5.5 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
55
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.
5.6 COMPLIANCE; NO DEFAULTS. (a) 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.
(b) 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.
5.7 ACQUIROR SEC DOCUMENTS; UNDISCLOSED LIABILITIES. (a)
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
56
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.
(b) 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.
5.8 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.
57
5.9 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.
5.10 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.
5.11 OWNERSHIP OF COMPANY CAPITAL STOCK. Neither Acquiror nor any
of its Subsidiaries owns, directly or indirectly, any shares of Company Capital
Stock.
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
6.1 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
58
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:
(i) except for the Charter Amendment, amend its Restated
Certificate of Incorporation, Bylaws or other comparable organizational
documents;
(ii) 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;
(iii) 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;
(iv) 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
59
substantially all of its business or assets, or acquire all or
substantially all of the business or assets of any other Person;
(v) 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;
(vi) 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;
(vii) incur or assume any Indebtedness other than as specifically
set forth in Section 6.1(vii) of the Company Disclosure Letter;
(viii) voluntarily grant any material Encumbrance on any of its
material assets, other than Encumbrances that are incurred in the ordinary
course of business;
(ix) make any change in any method of accounting or accounting
practice or policy, except as required by Applicable Laws or by GAAP;
(x) 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;
(xi) 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
60
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;
(xii) 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);
(xiii) 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
61
respect to any Material Franchise, fail to file for renewal pursuant to
Section 626(a) of the Cable Act;
(xiv) 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;
(xv) 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;
(xvi) offer free or reduced-price service as an inducement to any
Person, except in the ordinary course of business consistent with past
practice;
(xvii) 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;
(xviii) 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;
(xix) invest or enter into any agreement, understanding or
commitment, whether written or oral, by or on behalf of the Company or its
Subsidiaries, to
62
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;
(xx) 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;
(xxi) 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;
(xxii) 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;
(xxiii) 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
(xxiv) agree, whether in writing or otherwise, to do any of the
foregoing.
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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.
6.2 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):
(i) 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;
(ii) 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;
(iii) declare, set aside or make any dividends or distributions in
cash, securities or property to holders of Media Stock;
(iv) 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;
64
(v) 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;
(vi) 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;
(vii) 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
(viii) 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.
6.3 ACCESS TO INFORMATION. (a) 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.
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(b) 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.
(c) 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 VII
ADDITIONAL AGREEMENTS
7.1 PREPARATION OF FORM S-4 AND THE PROXY STATEMENT;
STOCKHOLDERS' MEETING; CHARTER AMENDMENT. (a)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
66
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.
(b) 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.
(c) 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
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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.
(d) 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
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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).
(e) 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.
(f) 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.
7.2 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
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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.
7.3 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.
7.4 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.
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7.5 FRANCHISE AND LICENSE CONSENTS. (a) 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
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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.
(b) To 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.
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7.6 ANTITRUST NOTIFICATION. (a) 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.
(b) 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.
(c) 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.
(d) 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
73
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.
7.7 CERTAIN ACTIONS. (a) 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.
(b) 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.
(c) 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
74
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.
7.8 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.
7.9 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.
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7.10 NO SOLICITATION. (a) 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
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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.
(b) 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.
(c) 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.
(d) As 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.
7.11 INDEMNIFICATION; DIRECTORS' AND OFFICERS INSURANCE. (a)
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
77
Effective Time (including, without limitation, the transactions contemplated by
this Agreement), unless such modification is required by law.
(b) 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).
(c) 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.
7.12 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,
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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.
7.13 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.
7.14 EMPLOYEE BENEFITS. (a) 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.
(b) 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
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Effective Time and is implemented in a manner consistent with such purpose.
(c) 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.
7.15 REGISTRATION RIGHTS AGREEMENT. Acquiror shall execute and
deliver to the other parties thereto the Registration Rights Agreement at or
prior to the Closing.
7.16 TAX TREATMENT. (a) 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).
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(b) 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.
7.17 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.
7.18 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.
7.19 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.
7.20 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.
7.21 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
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this Agreement and to obtain in a timely manner all necessary waivers, consents
and approvals and to effect all necessary registrations and filings.
ARTICLE VIII
CONDITIONS PRECEDENT
8.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligation of each party to effect the Merger shall be subject to
the satisfaction prior to the Closing Date of the following conditions:
(a) 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.
(b) HSR ACT. (i) The waiting periods (and any extension
thereof) applicable to the Merger under the HSR Act shall have expired or
been terminated; (ii)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; (iii) no such proceeding will
be pending as of the Closing Date and (iv) 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.
(c) NO 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.
(d) 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.
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(e) 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.
(f) 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.
8.2 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:
(a) 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.
(b) 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.
(c) TAX 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
83
Company, Acquiror, and certain stockholders of the Company.
(d) 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.
(e) 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.
(f) 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.
(g) 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.
(h) OTHER ACTIONS. The Company shall have disposed of the
Designated Assets as provided in Section 7.7.
(i) 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
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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.
(j) 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
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require Franchise Consents, shall equal at least eighty-five percent (85%)
of the total number of Franchises as of the date hereof.
(k) 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.
8.3 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:
(a) 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.
(b) 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.
(c) TAX 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
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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.
(d) 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.
(e) TRANSACTION DOCUMENTS. Each of the Transaction Documents
shall have been duly authorized and executed by the parties thereto other
than the Company.
(f) 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.
(g) 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 IX
TERMINATION AND AMENDMENT
9.1 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:
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(a) by 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;
(b) by 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;
(c) by 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;
(d) by 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;
(e) by 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
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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;
(f) by 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;
(g) by 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;
(h) by the Company pursuant to Section 3.1(d)(ii)(B); or
(i) by Acquiror pursuant to Section 3.1(d)(ii)(C).
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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.
9.2 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.
9.3 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
90
Business Days following termination of this Agreement by Acquiror or the
Company, as the case may be.
9.4 CERTAIN PURCHASE OBLIGATIONS. (a) 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.
(b) 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.
(c) 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.
(d) 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:
(i) 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.
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(ii) 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.
(iii) 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.
(iv) 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.
(v) 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.
(vi) REGISTRATION RIGHTS AGREEMENT. The Company and Acquiror
shall have entered into a Registration Rights Agreement substantially in
the form of Exhibit F hereto.
(e) 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.
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9.5 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.
9.6 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 X
GENERAL PROVISIONS
10.1 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.
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10.2 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.
10.3 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.
10.4 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.
10.5 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.
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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.
10.6 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,
95
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.
10.7 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.
10.8 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.
10.9 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.
10.10 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.
10.11 SPECIFIC PERFORMANCE. The parties hereto agree that the
remedy at law for any breach of this
96
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.
10.12 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.
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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
98
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 Febuary 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 amendement 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 Febuary 27, 1996,
as the same may be amended from time to time, between US 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.
-2-
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 seperate class and (iii) the holders
of the Class B Common Stock voting together as a seperate 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:/s/
______________________________
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:
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
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(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.
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"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.
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
4
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.
3. PIGGY-BACK REGISTRATION RIGHTS. (a) 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.
5
(b) 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.
(c) 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.
(d) 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.
4. DEMAND REGISTRATION RIGHTS. (a) Upon the written request
(the "Initial Request") of Holders of at
6
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:
(i) if prior to the date of such request Acquiror shall have
effected four registrations pursuant to this Section 4;
(ii) if Acquiror has effected a registration pursuant to this
Section 4 within the 90-day period next preceding such request;
(iii) 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;
(iv) 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
(v) during the pendency of any Blackout Period;
7
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.
(b) 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.
(c) 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
8
request therefor, such registration shall not be deemed to have been effected
for purposes of this Section 4.
(d) 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)).
(e) 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.
(f) 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
9
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.
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.
10
6. BLACKOUT PERIODS. (a) 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.
(b) 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").
(c) 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
11
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.
(d) 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.
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:
(a) 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;
(b) 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
12
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;
(c) 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);
(d) 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
13
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;
(e) 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;
(f) notify each Holder covered by such Registration Statement at
any time:
(i) 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;
(ii) of any request by the SEC for amendments or supplements
to the Registration Statement or the Prospectus or for additional
information;
(iii) of the issuance by the SEC of any stop order suspending
the effectiveness of the Registration Statement or any order
preventing the
14
use of a related Prospectus, or the initiation (or any overt
threats) of any proceedings for such purposes;
(iv) 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
(v) 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;
(g) 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;
(h) 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;
(i) 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:
(i) make such representations and warranties to the Holders
of such Registrable Securities and the underwriters, if any, in
form, substance and
15
scope as are customarily made by Acquiror to underwriters in
comparable underwritten offerings;
(ii) 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;
(iii) 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;
(iv) 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
(v) 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;
(j) 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
16
managing underwriter or underwriters, if any, or such Holders may request
and/or in a form eligible for deposit with the Depository Trust Company;
(k) 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
(l) 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.
17
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).
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.
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
18
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.
10. INDEMNIFICATION; CONTRIBUTION. (a) 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
19
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.
(b) 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.
(c) 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
20
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
21
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.
(d) 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
22
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).
(e) 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.
11. PARTICIPATION IN UNDERWRITTEN OFFERINGS. No Holder may
participate in any underwritten offering hereunder unless such Holder (a) 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 (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements.
12. MISCELLANEOUS. (a) 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.
(b) AMENDMENTS AND WAIVERS. Except as otherwise provided
herein, the provisions of this Agreement may not be
23
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.
(c) 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
24
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.
(d) 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.
(e) 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.
(f) 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.
(g) 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.
(h) SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and 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
25
that all of the rights and privileges of the Holder shall be enforceable to the
fullest extent permitted by law.
(i) 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.
26
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:
27
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:
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:
1.1 "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.
1.2 "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).
1.3 "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.
1.4 "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.
2
1.5 "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.
1.6 "Conversion Date" shall have the meaning set forth in
Section 3.5.
1.7 "Conversion Price" shall have the meaning set forth in
Section 3.1 hereof.
1.8 "Conversion Rate" shall have the meaning set forth in
Section 3.1 hereof.
1.9 "Converting Holder" shall have the meaning set forth in
Section 3.5 hereof.
1.10 "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.
1.11 "Dividend Payment Date" shall have the meaning set forth in
Section 2.1 hereof.
1.12 "Effective Time" shall mean the effective time of the
Merger.
1.13 "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, and the rules and regulations thereunder.
1.14 "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
3
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.
1.15 "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.
1.16 "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.
1.17 "Liquidation Value" shall have the meaning set forth in
Section 6.2 hereof.
1.18 "Media Group Disposition Redemption" shall have the meaning
set forth in Section 4.1 hereof.
1.19 "Media Group Disposition Dividend" shall have the meaning
set forth in Section 4.1 hereof.
1.20 "Media Group Special Dividend" shall have the meaning set
forth in Section 4.1 hereof.
1.21 "Media Group Special Events" shall have the meaning set
forth in Section 4.1 hereof.
1.22 "Media Group Subsidiary Redemption" shall have the meaning
set forth in Section 4.1 hereof.
4
1.23 "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.
1.24 "Media Group Tender or Exchange Offer" shall have the
meaning set forth in Section 4.1 hereof.
1.25 "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.
1.26 "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.
1.27 "Nasdaq" shall mean the Nasdaq National Market.
1.28 "NYSE" shall mean the New York Stock Exchange, Inc.
1.29 "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
5
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.
1.30 "Person" shall mean an individual, corporation, limited
liability company, partnership, joint venture, association, trust,
unincorporated organization or other entity.
1.31 "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.
1.32 "Record Date" shall have the meaning set forth in Section
2.1 hereof.
1.33 "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.
1.34 "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.
1.35 "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
6
registered and listed for trading on any such exchange, in the over-the-counter
market) for more than six-and-one-half (61/2) 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).
1.36 "Rescission Date" shall have the meaning set forth in
Section 4.5 hereof.
1.37 "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.
7
1.38 "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.
1.39 "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.
1.40 "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.
1.41 "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.
1.42 "Surrendered Shares" shall have the meaning set forth in
Section 3.5 hereof.
1.43 "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.
2. DIVIDENDS.
2.1 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
8
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 dividends shall be
-------------------------
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.
(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;
(continued...)
9
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
-------------------------
1. (...continued)
(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%, (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%).
10
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 to time to reflect any
split or combination of the shares of this Series.
2.2 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.
11
3. CONVERSION RIGHTS.
3.1 (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).
(b) 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 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
-------------------------
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.
12
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.
3.2 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.
13
3.3 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.
3.4 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.
3.5 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,
14
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
15
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.
3.6 The Conversion Rate shall be adjusted from time to time as
follows for events occurring after the Effective Time:
(a) In case the Corporation shall, at any time or from time to
time, (i) pay a dividend or make a
16
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).
(b) 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
17
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.
(c) 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
18
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.
(d) 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
19
determination for purposes of determining the Current Market Price).
(e) 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.
(f) To 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.
(g) In 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, 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.
(h) All calculations under this Section 3 shall be made to the
nearest cent, one-hundredth of a
20
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.
(i) 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.
(j) 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.
3.7 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
21
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
22
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.
3.8 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.
3.9 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
23
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).
(b) Subject to the provisions of Section 3.9(c), if: (i) the
Corporation takes any action that would require an adjustment of the
Conversion Rate pursuant to Sections 3.6 through 3.8; (ii) 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
(iii) 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.
(c) 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
24
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
25
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.
3.10 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.
3.11 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 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.
3.12 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
26
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.
3.13 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.
4. REDEMPTION OR EXCHANGE.
4.1 (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 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
27
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).
(b) 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"):
(i) (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
28
(ii) 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 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.
(c) 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
29
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).
(d) 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.
(e) 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
30
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.
4.2 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.
4.3 (a) 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
31
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.
(b) 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
32
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.
(c) 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
33
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.
(d) 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
34
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.
(e) 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
35
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.
(f) 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
36
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.
(g) 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
37
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.
(h) 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.
4.4 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
38
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
39
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.
4.5 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
40
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.
5. VOTING. The shares of this Series shall have no voting rights
except as required by law or as set forth below.
5.1 (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 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.
(b) No 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
41
Stock or (iv) subject to Section 5.1(a), the authorization or issuance of any
other shares of Preferred Stock.
5.2 (a) 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.
(b) 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.
(c) At 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
42
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.
(d) 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.
(e) 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.
(f) In exercising the voting rights set forth in this Section
5.2, each share of this Series shall have one vote per share.
6. LIQUIDATION RIGHTS.
6.1 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.
43
6.2 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.
6.3 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.
6.4 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.
6.5 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.
7. OTHER PROVISIONS.
7.1 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
44
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.
7.2 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.
7.3 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.
7.4 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.
7.5 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
45
holder of shares of this Series, and such record holder shall be deemed the
holder of such shares for all purposes.
7.6 All notice periods referred to in the Certificate shall
commence on the date of the mailing of the applicable notice.
7.7 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.
7.8 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:
46
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:
1. 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.
2. 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.
3. 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.
4. 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.
5. 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
2
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."
6. 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
3
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:
4
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 (1),____________________________.
(1) The Dividend Rate shall be subject to an adjustment such that the
final Dividend Rate equals the sum of 5.875%, (the "Based 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.
(Cont'd on following page)
2
____________________________
(Cont'd from preceding page)
(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 10-year Treasury yield, calculated for each of
the 10 Trading Days after announcement of the termination of the transactons
contemplated by the Merger Agreement (as defined in Section 12).
"Change in Weighted Average Yield" shall equal the sum (whether
positive or negitive) of the folowing, based upon the average market closing
levels of Treasury securities for the 10 Trading Days after announcement of the
termination of the transactons 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;
(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.
(Cont'd on following page)
3
through and including the date on which such Series B Preferred Stock is no
longer issued and outstanding, which dividends shall be payable in equal
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
____________________________
(Cont'd from preceding page)
"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 of (6.0235%), rounded to the yield
which is at the nearest multiple of 0.125% (or 6.00%).
4
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.
5
(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
6
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.
7
(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
8
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
9
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
10
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
11
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
12
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
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
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
13
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
14
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
15
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.
16
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
17
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
18
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
19
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
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
20
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
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
21
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
22
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
23
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
24
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
25
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
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).
26
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
27
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
28
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
29
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 U S 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
30
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
31
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).
32
"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:
_________________________
33
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 1
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
-2-
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.
-3-
(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
-4-
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
-5-
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
-6-
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,
-7-
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)
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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
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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
-10-
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
-11-
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
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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
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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
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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 2
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
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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 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
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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
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,
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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.
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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.
-19-
(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 3
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
-20-
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,
-21-
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 4
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
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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,
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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.
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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
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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:
-26-
(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:
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