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MEMORANDUM <br /> August 9, 1996 <br /> 1111 <br /> Page 6 <br /> 3. DESCRIPTION OF TRANSACTION. <br /> The transaction is a merger of Continental Cablevision, Inc. into US West, Inc. Following <br /> the merger, Continental Cablevision, Inc. will cease to exist as an independent entity. However, <br /> the existing local operating companies will be maintained as distinct legal entities and will <br /> continue to operate the Authorities' cable systems. The merger of the two companies is <br /> accomplished through the exchange of Continental common stock for U S West Media Group <br /> common stock and the assumption of Continental liabilities by U S West. <br /> In order to understand the merger transaction, it is important to know that in November, <br /> 1995, US West restructured its business into two separate units: the Communications Group which <br /> deals • <br /> with telephone and operations; and the Media Group which controls the cable television <br /> operations, wireless communication systems, and directory and information services. Both the <br /> Communications Group and the Media Group do business through subsidiaries of US West, Inc. <br /> US West has represented that the assets of Continental, including all subsidiary <br /> corporations which are the current franchise holders, will be placed in a new subsidiary of US <br /> West, Inc. called "Merger Subsidiary". The operating companies will become subsidiaries of the <br /> Merger Subsidiary. Because the local subsidiary remains the same and continues to hold the local <br /> franchise, albeit under US West's control, the local subsidiary will continue to be bound by all <br /> existing terms and conditions of the local franchise. However, there were a number of issues <br /> which had to be resolved before approval of the transaction could be recommended. <br /> 110 <br />