EXHIBIT (5)
AMENDED AND RESTATED
OPERATING AGREEMENT
OF
TW HOLDINGS, L.L.C.
This Amended and Restated Operating Agreement is made as of _________ __,
1998 by the members of TW Holdings, L.L.C., a Colorado limited liability company
(the "Company").
RECITALS
WHEREAS, United Artists Programming-Europe, Inc. ("UAPE"), U S WEST UK
Cable, Inc. ("USW-UK") and U S WEST Cable Partnership Holdings, Inc. ("USW
Holdings"), the members of the Company (collectively, the "Members"), entered
into an Operating Agreement for the Company dated as of June 16, 1995 (the
"Original Agreement");
WHEREAS, on the date of this Agreement [a] Cox U.K. Communications, L.P.
(the "Cox Shareholder") will sell and assign to the Company certain ordinary
shares of Telewest Communications plc owned by it (other than the economic
benefits associated with such shares, which will be retained by the Cox
Shareholder), [b] the Members will make cash contributions to the Company to
fund the purchase of additional ordinary shares of Telewest Communications plc
and [c] the Members will purchase additional ordinary shares of Telewest
Communications plc, the beneficial interests in which they will contribute to
the Company; and
WHEREAS, the Members have determined that it is in their best interests to
amend and restate the Original Agreement as set forth herein.
NOW, THEREFORE, in consideration of their mutual promises, the Members
agree as follows:
ARTICLE 1: FORMATION AND DEFINITIONS
1.1 Formation. The Company was formed on June 16, 1995 by filing Articles
with the Colorado Secretary of State pursuant to the Act.
1.2 Company Name. The business of the Company will be conducted under the
name "TW Holdings, L.L.C." or any other name determined from time to time by the
Board in accordance with applicable law.
1.3 Office and Agent. The registered office of the Company in Colorado is
at ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and its registered agent is
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇. The Company may subsequently change its registered office or
registered agent in Colorado in accordance with the Act.
1.4 Foreign Qualification. The Company will apply for a certificate of
authority to do business in any other jurisdiction where such authority is
required.
1.5 Term. The Company began on the date its Articles were filed with the
Colorado Secretary of State and will continue until its Dissolution.
1.6 Definitions. The following capitalized terms, when used in this
Agreement, have the meanings set forth below:
Act: the Colorado Limited Liability Company Act, as amended from time to
time.
Additional Contribution: a capital contribution (other than the Initial
Contributions) that a Member makes to the Company, as described in Section 4.4.
Affiliate: with respect to any Person, any other Person directly or
indirectly Controlling, directly or indirectly Controlled by or under direct or
indirect common Control with such Person.
Agreement: this Amended and Restated Operating Agreement, as amended from
time to time.
Articles: the articles of organization of the Company filed under the Act,
as amended from time to time.
Bankruptcy: of a Member will be deemed to occur when such Member [a] files
a voluntary petition in bankruptcy, [b] is adjudged bankrupt or insolvent or has
entered against such Member an order for relief in any bankruptcy or insolvency
proceeding, [c] files a petition or answer seeking for such Member any
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any statute, law or regulation, [d] files an answer or
other pleading admitting or failing to contest the material allegations of a
petition filed against such Member in any proceeding of that nature or [e]
seeks, consents to or acquiesces in the appointment of a trustee, receiver or
liquidator of all or any substantial part of such Member's property.
Board: as defined in Section 3.2.
Capital Account: the book capital account to be established and maintained
for each Member in accordance with this Agreement.
Capital Contribution: any contribution by a Member to the Company which is
either an Initial Contribution or an Additional Contribution.
Change in Control: with respect to U S WEST International Holdings, Inc.
("USWIH") and its Affiliates (other than MediaOne) or TINTA and its Affiliates
(other than TCI), the acquisition (whether by merger, consolidation, sale,
assignment, lease, transfer or otherwise, in one transaction or any related
series of transactions) of beneficial ownership by any Person (other than
pursuant to a distribution in specie, spin off, share dividend, demerger or
similar transaction and other than, with respect to beneficial ownership of
equity interests in TINTA or any of its Affiliates, by TINTA or any of its
Affiliates and, with respect to beneficial ownership of equity interests in
USWIH or any of its Affiliates, by USWIH or any of its Affiliates) of equity
interests in USWIH and/or any of its Affiliates (other than MediaOne) or TINTA
and/or any of its Affiliates (other than TCI), as the case may be, as a result
of which such Person has the power, directly or indirectly, to direct the voting
and disposition of Ordinary Shares held by TINTA and its Affiliates or USWIH and
its Affiliates, as the case may be, representing at least 15% of the outstanding
Ordinary Shares of Telewest. For purposes of this definition, a Member shall be
deemed to control the voting and disposition of such Member's Pro Rata Shares. A
Change in Control shall be deemed voluntary if it is the result of a transaction
agreed to by TINTA or any of its Affiliates or USWIH or any of its Affiliates,
as the case may be. A Change in Control shall be deemed involuntary if it is the
result of actions by Persons (other than TINTA or any of its Affiliates or USWIH
or any of its Affiliates, as the case may be) taken without the agreement or
consent of TINTA or any of its Affiliates or USWIH or any of its Affiliates, as
the case may be.
Closing Price: [a] with respect to Ordinary Shares to be offered on the
London Stock Exchange, will be the sale price which appears on the relevant
Reuters Screen No. for Telewest as of 11:00 a.m. (London time) on a Trading Day,
provided that if such Ordinary Shares do not appear on such Reuters Screen or
such Reuters Screen is temporarily unavailable, the sale price with respect to
the Ordinary Shares will be the last reported sale price which appears in the
Official List of the London Stock Exchange on a Trading Day and [b] with respect
to Ordinary Shares to be offered on the New York Stock Exchange or another U.S.
national securities exchange in the form of ADSs, will be the last reported sale
price on a Trading Day on such exchange or, if no such sale takes place on such
day, the average of the high and low sales prices for such day as reported on
the New York Stock Exchange Composite Tape, or, if no such sales are reported,
the
reported last sale price (or, if no such sale takes place on such day, the
average of the reported closing bid and asked prices), on the Nasdaq National
Market, or if the ADSs are not quoted on such National Market, the average of
the closing bid and asked prices in the over-the-counter market as furnished by
any New York Stock Exchange member firm selected by the Board for that purpose.
Code: the Internal Revenue Code of 1986, as amended from time to time
(including corresponding provisions of subsequent revenue laws).
Contribution Agreement: the Contribution Agreement dated as of April 15,
1998 among the Members and the Company.
Control: with respect to any Person, the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of the Controlled Person, whether through equity ownership, by contract
or otherwise, but a Person shall not be deemed to Control another Person solely
by virtue of any veto rights granted to it as a minority equity owner or by
virtue of super majority voting rights.
Dissolution: the change in the relationship of the Members caused by the
occurrence of an event described in Section 12.1.
Distribution: a distribution of money or other property made by the Company
with respect to an Ownership Interest.
Event of Withdrawal: the occurrence of an event which terminates a Member's
membership in the Company, as provided in Section 11.12.
Fair Market Value: as to any property, the price at which a willing seller
would sell and a willing buyer would buy such property having full knowledge of
the facts, in an arm's-length transaction without time constraints, and without
being under any compulsion to buy or sell.
Fiscal Year: the fiscal and taxable year of the Company as determined under
this Agreement, including both 12-month and short taxable years.
Initial Contribution: the initial capital contribution made by each Member
to the Company, as set forth on Exhibit A.
Liquidation: the process of terminating the Company and winding up its
business under Article 13 after its Dissolution.
Losses: the Company's net loss (including deductions) for any Fiscal Year,
determined under Section 5.1.
Managing Director: as defined in Section 3.2.
MediaOne: U S WEST, Inc., a Delaware corporation to be renamed MediaOne
Group, Inc., and its successors, whether by merger or otherwise.
MediaOne Directors: as defined in Section 3.2.
MediaOne Shareholder: USW-UK or USW Holdings.
MediaOneShareholder Group: each MediaOne Shareholder and any member of the
group consisting of MediaOne and its Affiliates to whom Ownership Interests or
Shares originally issued to a MediaOne Shareholder are Transferred in accordance
with this Agreement or the Relationship Agreement.
Member: a Person who is a Member on the date of this Agreement or who is
subsequently admitted as a Member as provided in this Agreement.
Member Group: all of the Members included in any Shareholder Group.
Net Cash: cash receipts of the Company less payment of, or reasonable
reserves for, operating expenses, capital requirements, improvements, debt
service, and other cash requirements of the Company as determined by the Board.
Ordinary Share: an ordinary share, 10p par value (including ordinary shares
represented by American Depository Shares), in the capital of Telewest, or any
other shares of capital stock issued in substitution or replacement thereof in
any merger, share exchange, recapitalization or other similar transaction.
Ownership Interest: with respect to each Person owning an interest in the
Company, all of the interests of such Person in the Company (including, without
limitation, an interest in the Profits and Losses, a Capital Account interest
and all other rights and obligations of such Person under this Agreement) in the
percentages set forth on Exhibit A, as the same may be amended from time to time
in accordance with this Agreement.
Permitted Transferee: a Person described in Section 11.3 to whom an
Ownership Interest may be Transferred without the Transferor offering the other
Member Group a right of first refusal under this Agreement.
Person: an individual, corporation, trust, partnership, limited liability
company, unincorporated organization, association or other entity.
Pro Rata Shares: with respect to any Member, a portion of the number of
Shares owned by the Company attributable to such Member's Ownership Interest,
which will equal the product of [x] the aggregate number of Shares owned
by the Company (except those Shares in which the Cox Shareholder owns an
economic interest pursuant to the Co-Ownership Deed between the Company and the
Cox Shareholder dated as of the date of this Agreement) multiplied by [y] such
Member's percentage Ownership Interest in the Company, expressed as a decimal.
Profits: the Company's net profit (including income and gains) for any
Fiscal Year, determined under Section 5.1.
Related Transfer: a Transfer by means of a distribution, spin-off, stock
dividend or other transaction as a result of which one or more Affiliates of the
transferor beneficially own 80% or more of the Pro Rata Shares that immediately
prior to such Transfer were beneficially owned by the Shareholder Group of which
the transferor is a member.
Relationship Agreement: the Relationship Agreement dated as of April 15,
1998 among Telewest, the TCI Shareholder, the MediaOne Shareholders and other
parties.
Shareholder: the TCI Shareholder, each MediaOne Shareholder and any other
Person who acquires Shares in accordance with this Agreement or the Relationship
Agreement and becomes a party to, or otherwise agrees to be bound by, the
Relationship Agreement subsequent to the date hereof by signing a counterpart of
the Relationship Agreement or another document to the same effect.
Shareholder Group: the TCI Shareholder Group or the MediaOne Shareholder
Group.
Shares: [a] Ordinary Shares and [b] convertible preference shares, 10p par
value per share, of Telewest (or any other shares of capital stock issued in
substitution or replacement thereof in any merger, share exchange,
recapitalization, scheme of arrangement or other similar transaction). In
calculating the percentage ownership of Shares for purposes of this Agreement, a
holder of Shares will be deemed to own the number of Ordinary Shares into which
its convertible preference shares are then convertible, without regard to any
prohibition or restriction on conversion.
TCI: Tele-Communications, Inc., a Delaware corporation, and its successors,
whether by merger or otherwise.
TCI Directors: as defined in Section 3.2.
TCI Shareholder: United Artists Programming - Europe, Inc.
TCI Shareholder Group: the TCI Shareholder and any member of the group
consisting of TCI and its Affiliates to whom Ownership Interests or Shares
originally issued to the TCI Shareholder are Transferred in accordance with this
Agreement or the Relationship Agreement.
Telewest: Telewest Communications plc, a public limited company organized
under the laws of England and Wales, and its successors and assigns, whether by
merger, scheme of arrangement or otherwise.
Third Party: with respect to any Member, a Person other than an Affiliate
of such Member.
Third Party Offer: a bona fide, non-collusive, binding, arms'-length
written offer to purchase from a Third Party with the purchase price stated in
terms of U.S. dollars or English pounds sterling.
Trading Day: each Monday, Tuesday, Wednesday, Thursday and Friday, other
than any day on which securities are not traded on the applicable exchange or
market.
Transfer: a sale, exchange, assignment, transfer, pledge or other
disposition, whether voluntary or by operation of law.
Transferee: a Person to whom an Ownership Interest is Transferred in
compliance with this Agreement.
Transferor: a Person who Transfers an Ownership Interest in compliance with
this Agreement.
Vote: the action of the Company by its Members or the Board, either in
meeting assembled or by written consent without a meeting.
ARTICLE 2: PURPOSES AND POWERS
2.1 Purpose. The purpose of the Company shall be to own the Shares
contributed to it by the Members, to acquire further Shares in accordance with
the terms of this Agreement and the Contribution Agreement and to vote, dispose
and otherwise take actions in respect of the Shares owned by the Company in
accordance with the terms of this Agreement. The Company shall be permitted to
conduct such lawful business [a] as may be necessary or appropriate to give full
effect to the foregoing purpose and to all of the provisions of this Agreement
and [b] as may be consented to by the unanimous Vote of the Members.
2.2 Powers. The Company shall have any and all powers necessary or
desirable to carry out the purpose and business of the Company to the extent the
same may be legally exercised by limited liability companies under the Act.
Without limiting the foregoing, and subject to the other provisions of this
Agreement, the purposes of the Company may be accomplished through the following
powers (which are not exclusive):
[a] to acquire, hold, transfer, distribute, or otherwise dispose of Company
assets (or rights or interests in such property);
[b] to enter into any contracts or agreements concerning the assets of the
Company;
[c] to execute and deliver all instruments, including proxies, assignments, and
other documents of transfer, as may be necessary or advisable for the
administration of the Company;
[d] to hold the assets of the Company in the name of a nominee;
[e] to vote securities, exercise rights, and pay calls and assessments;
[f] to settle claims and take or defend judicial and administrative
proceedings:
[g] to employ agents and independent contractors as may be necessary or
advisable for the administration of the Company;
[h] to establish reserves for taxes, assessments, insurance premiums, repairs,
maintenance, improvements, depreciation, depletion and obsolescence out of
the rents, profits or other income received;
[i] to pay all expenses reasonably incurred in the administration of the
Company; and
[j] to do such other things and engage in such other activities related
directly or indirectly to the foregoing as may be necessary, convenient or
advisable to the conduct of the business of the Company.
ARTICLE 3: MEMBERS; MANAGEMENT; VOTING
3.1 Admission of Transferees as Members. A Transferee shall be admitted as
a Member of the Company only upon the affirmative unanimous Vote of Members,
except that a Transferee which is an Affiliate of a Member shall automatically
be admitted as a Member, subject to compliance with Section 11.7, without any
action on the part of the other Members.
3.2 Managing Directors. Except as specifically set forth in Section 3.4,
the management and policy-making functions of the Company shall reside in a
board (the "Board") composed of four individuals (each, a "Managing Director")
to be
elected annually and who shall serve until their successors are elected and
qualified. Such Managing Directors shall be elected by unanimous Vote of the
Members. Members included in the TCI Shareholder Group shall be entitled to
nominate two Managing Directors ("TCI Directors") and Members included in the
MediaOne Shareholder Group shall be entitled to nominate the other two Managing
Directors ("MediaOne Directors"). Each Member agrees to Vote all of its
Ownership Interest in any election of Managing Directors in favor of the Persons
nominated in accordance with the preceding sentence. Upon the occurrence of a
vacancy in the Board, the Member who nominated the Managing Director in respect
of whom such vacancy exists may nominate a replacement, and the Members shall
Vote in favor of such replacement, who shall serve until such replacement
Managing Director's successor is elected.
3.3 Board Vote. Except as set forth in Section 7.9 and except as provided
in Section 3.4 relating to a unanimous Vote of Members, all decisions by the
Company (including the incurrence of any liabilities by the Company other than
those related solely to the ownership of the Shares) will be made by the
affirmative Vote of a majority of the Managing Directors without regard to
vacancies.
3.4 Unanimous Vote. The following decisions or actions will require the
unanimous Vote of the Members: [a] the payment of compensation to any Member or
any Affiliate of a Member for services rendered to the Company, other than such
Member's share of Profits; [b] the approval of any voluntary Additional
Contribution as provided in Section 4.4 (except those required by the
Contribution Agreement or Section 11.13); [c] the making of any curative or
remedial ss. 704(c) allocation under Section 5.6; [d] the voluntary Dissolution
of the Company under Section 12.1; [e] any amendment of this Agreement; [f] the
sale, exchange or other disposition of any of the Shares, other than (i) a
Transfer permitted under Article 11 or a distribution of Pro Rata Shares to a
Member on or after December 31, 1999 as permitted by Section 6.5 and (ii) any
Transfer to the Cox Shareholder pursuant to the Co-Ownership Deed among ▇▇▇
Communications, Inc., the Cox Shareholder, U S WEST International Holdings,
Inc., Tele-Communications International, Inc. and the Company dated April 15,
1998; [g] any Distribution to a Member of its Pro Rata Shares prior to December
31, 1999 pursuant to Section 6.5; and [h] the admission of any new or substitute
Member except pursuant to the last sentence of Section 11.9.
3.5 Expense Reimbursement; Indemnification. Except as otherwise provided in
this Agreement, upon compliance with such policies and procedures as the Company
may from time to time adopt, the Members and the Managing Directors will be
reimbursed by the Company for all reasonable expenses incurred on behalf of the
Company in connection with its business. The Company will indemnify its Managing
Directors against liability incurred in any proceeding in which such Managing
Director is made a party because he or she is or was a manager of the Company to
the maximum extent permitted by the Act.
3.6 No Resignation or Retirement. Each Member agrees not to voluntarily
resign or retire from the Company, except for permissible Transfers as provided
in Article 11 and in connection with Pro Rata Share Distributions permitted by
Section 6.5. However, if such voluntary resignation or retirement occurs in
contravention of this Agreement, the withdrawing Member will, without further
act, become a Transferee of its entire Ownership Interest with the limited
rights of a Transferee who has not been admitted as a Member in accordance with
this Agreement, as set forth in Section 11.8.
ARTICLE 4: CAPITAL AND CAPITAL ACCOUNTS
4.1 Maintenance. A Capital Account will be maintained for each Member and
credited, charged and otherwise adjusted as follows:
[a] Credited with [i] the amount of money contributed by the Member as an
Initial Contribution or Additional Contribution, [ii] the Fair Market Value
of Shares and other property contributed by the Member as an Initial
Contribution or Additional Contribution (net of liabilities secured by such
property that the Company takes subject to or assumes), [iii] the Member's
allocable share of Profits and [iv] all other items properly credited to
its Capital Account in accordance with U.S. generally accepted accounting
principles consistently applied; and
[b] Charged with [i] the amount of money distributed to the Member by the
Company, [ii] the Fair Market Value of Shares and other property
distributed to the Member by the Company (net of liabilities secured by
such property that the Member takes subject to or assumes), [iii] the
Member's allocable share of Losses and [iv] all other items properly
charged to its Capital Account in accordance with U. S. generally accepted
accounting principles consistently applied.
Any unrealized appreciation or depreciation with respect to any asset
distributed in kind will be allocated among the Members in accordance with the
provisions of Article 5 as though such asset had been sold for its Fair Market
Value on the date of Distribution, and the Members' Capital Accounts will be
adjusted to reflect both the deemed realization of such appreciation or
depreciation and the Distribution of such property.
4.2 Revaluation. Upon a contribution of money, Shares or other property to
the Company by a new or continuing Member as consideration for an Ownership
Interest in the Company, and upon a Distribution of money, Shares or other
property to a retiring or existing Member in consideration of an Ownership
Interest in the Company that is being redeemed by the Company, the Capital
Accounts of the Members will be increased or decreased to reflect the Fair
Market Value of the assets of the Company as of the date of such contribution or
Distribution. Adjustments made pursuant to the preceding sentence will reflect
the manner in which any unrealized appreciation or depreciation with respect to
the assets of the Company (which appreciation or depreciation is not reflected
in the Capital
Accounts as of the adjustment date) would be allocated among the Members if such
assets were sold at Fair Market Value on the adjustment date. Following any
adjustment under this Section 4.2, for purposes of computing Profits or Losses
of the Company, items of depreciation, amortization, depletion, gain or loss
relating to revalued property will be determined based upon the Fair Market
Value of such property at the adjustment date. For purposes of making any
adjustment pursuant to this Section 4.2, Fair Market Value shall be determined
by agreement of the Members or, if they cannot so agree within 7 days following
the date on which a contribution or Distribution is made, by following the
procedure set forth in Section 11.5[d].
4.3 Contributions; Ownership Interests. Each Member has made the Initial
Contribution to the Company as set forth opposite such Member's name on the
attached Exhibit A, and on the date of this Agreement is making the Additional
Contribution set forth opposite its name on Exhibit A. The Ownership Interests
of the Members as of the date of this Agreement are as set forth on Exhibit A.
4.4 Additional Contributions. Except as required by Section 11.13 or the
Contribution Agreement or upon the unanimous Vote of the Members, no Additional
Contribution by any Member will be required or permitted unless otherwise
required by law. If any Additional Contribution is made after the date of this
Agreement, Exhibit A will be amended to reflect the Additional Contribution and
any resulting change in the Ownership Interests of the Members. Upon the making
of an Additional Contribution by any Member or Members, the percentage Ownership
Interest of each Member will be adjusted (or, in the case of a Shareholder
admitted as a new Member under Section 11.13, determined) to equal the
percentage obtained by dividing the sum of [a] the Fair Market Value of the
assets of the Company less the liabilities of the Company immediately prior to
the Additional Contribution(s) ("Pre-Contribution Company Value"), multiplied by
that Member's percentage Ownership Interest in the Company immediately prior to
the Additional Contribution(s), plus [b] the Fair Market Value of that Member's
Additional Contribution, if any, on that date, by the sum of [y] the
Pre-Contribution Company Value plus [z] the Fair Market Value of all Members'
Additional Contributions on that date. For purposes of this Section 4.4, any
Shares contributed by a Shareholder admitted as a new Member under Section 11.13
shall be treated as an Additional Contribution by such Shareholder. In adjusting
or determining Ownership Interests pursuant to this Section 4.4, Fair Market
Value shall be determined by agreement of the Members or, if they cannot so
agree within 7 days following the date on which an Additional Contribution is
made to the Company, by following the procedure set forth in Section 11.5[d].
4.5 No Withdrawal of Capital. Except as specifically provided in Section
6.5, no Member will be entitled to withdraw all or any part of such Member's
capital from the Company or, when such withdrawal of capital is permitted, to
demand a Distribution of property other than money.
4.6 No Interest on Capital. No Member will be entitled to receive interest
on such Member's Capital Contributions or Capital Account.
4.7 No Drawing Accounts. The Company will not maintain a drawing account
for any Member. All Distributions to Members will be governed by Article 6
(relating to Distributions) and by Article 13 (relating to Liquidation).
4.8 Transfers of Capital Accounts. If all or any part of an Ownership
Interest is Transferred in accordance with this Agreement, the Capital Account
of the Transferor that is attributable to the Transferred Ownership Interest
will carry over to the Transferee.
ARTICLE 5: ALLOCATION OF PROFITS AND LOSSES
5.1 Profits and Losses. For each Fiscal Year, Profits or Losses of the
Company will be an amount equal to the Company's income or loss determined in
accordance with the accrual method of accounting and U.S. generally accepted
accounting principles consistently applied, except as otherwise provided in the
last sentence of Section 4.2.
5.2 General Allocation Rule. Except as otherwise provided in (or until
changed pursuant to) this Agreement, the Profits or Losses of the Company,
including items of income, gain, loss and deduction for each Fiscal Year, will
be allocated to the Members in proportion to their respective Ownership
Interests.
5.3 Exception. Notwithstanding the general rule on allocation of Losses
stated in Section 5.2, Losses of the Company attributable to any Member
nonrecourse liability (which is nonrecourse to the Company, but for which one or
more Members or a related party bears the economic risk of loss) will be
allocated to the Member or Members bearing the economic risk of loss for the
liability. The determination and allocation of deductions attributable to any
Member nonrecourse liability will be made in accordance with regulations
promulgated under ss. 752 of the Code and regulations promulgated under ss.
704(b) of the Code. Similarly, notwithstanding the general rule on allocation of
Profits, any Profits of the Company will be determined and allocated to the
Members in accordance with the chargeback rules promulgated under ss. 704(b) of
the Code applying to nonrecourse debt minimum gain.
5.4 Tax Allocations. Except as otherwise provided in Section 5.6,
allocation of items of income, gain, loss and deduction of the Company for
federal income tax purposes for a Fiscal Year will be allocated, as nearly as is
practicable, in accordance with the manner in which such items are reflected in
the allocations of Profits and Losses among the Members for such Fiscal Year. To
the extent possible, principles identical to those that apply to allocations for
federal income tax purposes will apply for state and local income tax purposes.
5.5 Transfer. If any Transfer of an Ownership Interest occurs during any
Fiscal Year, the books of the Company will be closed as of the effective date of
the Transfer. The Profits or Losses attributed to the period from the first day
of such Fiscal Year through the effective date of Transfer will be allocated to
the Transferor, and the Profits or Losses attributed to the period commencing on
the effective date of Transfer will be allocated to the Transferee. In lieu of
an interim closing of the books of the Company and with the agreement of the
Transferor and Transferee, the Company may agree to allocate Profits and Losses
for such Fiscal Year between the Transferor and Transferee based on a daily
proration of items for such Fiscal Year or any other reasonable method of
allocation (including an allocation of extraordinary Company items, as
determined by the Company, based on when such items are recognized for federal
income tax purposes).
5.6 Contributed and Revalued Property. All items of income, gain, loss and
deduction with respect to property contributed (or deemed contributed) to the
Company or revalued under Section 4.2 will, solely for tax purposes, be
allocated among the Members so as to take into account the variation between the
tax basis of the property and its Fair Market Value at the time of contribution
or revaluation. For example, if there is built-in gain with respect to
contributed property, upon the Company's sale of that property the
pre-contribution taxable gain (as subsequently adjusted under the ss. 704(c)
Regulations during the period such property was held by the Company) would be
allocated to the contributing Member (and such pre-contribution gain would not
again create a Capital Account adjustment since the property was credited to
Capital Account upon contribution at its Fair Market Value). Except as limited
by the following sentence, the allocation of tax items with respect to ss.
704(c) property to Members not contributing such property will, to the extent
possible, be equal to the allocation of the corresponding book items made to
such noncontributing Members with respect to such property. If book allocations
of cost recovery deductions (such as amortization or depreciation) exceed the
tax allocations of those items so that the ceiling rule of the ss. 704(c)
Regulations applies, the Company will make curative allocations or remedial
allocations of tax items only upon the affirmative Vote of all Members. All tax
allocations made under this Section 5.6 will be made in accordance with ss.
704(c) of the Code and the ss. 704(c) Regulations.
5.7 Tax Credits. To the extent that the federal income tax basis of an
asset is allocated to the Members in accordance with the Regulations promulgated
under ss. 46 of the Code, any tax credit attributable to such tax basis will be
allocated to the Members in the same ratio as such tax basis. With respect to
any other tax credit, to the extent that a Company expenditure gives rise to an
allocation of loss or deduction, any tax credit attributable to such expenditure
will be allocated to the Members in the same ratio as such loss or deduction.
Consistent principles will apply in determining the Members' interests in tax
credits that arise from taxable or non-taxable receipts of the Company. All
allocations of tax credits will be made as of the time such credit arises. Any
recapture of a tax credit will, to the extent
possible, be allocated to the Members in the same manner as the tax credit was
allocated to them.
ARTICLE 6: DISTRIBUTIONS
6.1 Net Cash. Net Cash will be allocated and paid to the Members in
proportion to their Ownership Interests. Distributions of Net Cash will be made
to the Members at such times as the Members by unanimous Vote approve.
6.2 Liquidating Distributions. Upon the Liquidation of the Company
following its Dissolution, liquidating Distributions will be made to the Members
as provided in Article 13.
6.3 Payment. Any Distribution will be made to a Member only if such Person
owns an Ownership Interest on the date of Distribution, as reflected on the
books of the Company.
6.4 Withholding. If required by the Code or by state or local law, the
Company will withhold any required amount from Distributions to a Member for
payment to the appropriate taxing authority. Any amount so withheld from a
Member will be treated as a Distribution by the Company to such Member. Each
Member agrees to timely file any agreement that is required by any taxing
authority in order to avoid any withholding obligation that otherwise would be
imposed on the Company.
6.5 In Kind Distributions. Each Member is entitled to require the Company
to distribute such Member's Pro Rata Shares to it in whole or in part [a] at any
time prior to December 31, 1999 if the U S WEST Member Group and the TCI Member
Group so agree in writing, [b] at any time on or after December 31, 1999 if such
Member so elects, without the consent of any other Person, and [c] at any time
pursuant to a Related Transfer. If the Company distributes Shares to any Member
who contributed Shares to the Company within seven years preceding the date of
such Distribution, the Company will, to the extent of any such Shares then owned
by the Company, distribute to such Member those Shares originally contributed by
such Member. The Company will maintain records relating to contributed Shares in
a manner sufficient to enable the Company to identify the Member who contributed
such Shares.
6.6 Distribution Limitation. Notwithstanding any other provision of this
Agreement, the Company will not make any Distribution to the Members if, after
the Distribution, the liabilities of the Company (other than liabilities to
Members on account of their Ownership Interests) would exceed the Fair Market
Value of the Company's assets. With respect to any property subject to a
liability for which the recourse of creditors is limited to the specific
property, such property will be included in assets only to the extent the
property's Fair Market Value exceeds its
associated liability, and such liability will be excluded from the Company's
liabilities.
ARTICLE 7: MANAGING DIRECTORS
7.1 Annual Meeting. The annual meeting of the Board will be held on the
second Tuesday of April in each year at 9:00 a.m. (local time) or at such other
time as determined by resolution of a majority of the Managing Directors
(without regard to any vacancies). The purpose of the annual meeting is to
review the Company's operations for the preceding Fiscal Year and to transact
such business as may come before the meeting.
7.2 Special Meetings. Special meetings of the Board, for any purpose or
purposes, may be called by any Managing Director.
7.3 Place. Unless otherwise agreed by the Board, or if no designation is
made, the place of meeting will be the Company's registered office in Colorado.
7.4 Notice. Notice of any meeting must be given not less than 5 days nor
more than 30 days before the date of the meeting. Such notice must state the
place, day and hour of the meeting and, in the case of a special meeting, the
purpose for which the meeting is called.
7.5 Waiver of Notice. Any Managing Director may waive, in writing, any
notice required to be given to such Managing Director, whether before or after
the time stated in such notice. Any Managing Director who signs minutes of
action (or written consent or agreement to action) will be deemed to have waived
any required notice with respect to such action.
7.6 Meetings by Telephone. The Managing Directors may participate in a
meeting by means of conference telephone or similar communications equipment by
which all Managing Directors participating in the meeting can hear each other at
the same time. Such participation will constitute presence in person at the
meeting and waiver of any required notice.
7.7 Action Without a Meeting. Any action required or permitted to be taken
at a meeting of the Board may be taken without a meeting if the action is
evidenced by one or more written consents describing the action taken, signed by
at least a majority of all of the Managing Directors (without regard to any
vacancies). Action so taken is effective when sufficient Managing Directors
approving the action have signed the consent, unless the consent specifies a
later effective date.
7.8 Certain Conflicts. If any Member or any Affiliate of a Member has a
conflict of interest with respect to any matter on which the Company is to vote
its Shares, the Shares held by the Company shall be voted as follows: the Pro
Rata Shares
of any Member who has such conflict, or of any Member which is an Affiliate of
such conflicted Person, shall be voted "abstain," and the remainder of the
Shares held by the Company shall be voted as designated by the Managing
Directors nominated by the Member that is not subject to such conflict. In
addition, the Company shall vote all its Shares in favor of candidates for
director of Telewest (or the removal of such director) which any Shareholder
Group is entitled to nominate (or remove) in accordance with Telewest's Articles
of Association or the Relationship Agreement.
7.9 Resolution of Disagreements. All Shares shall be voted as the TCI
Directors and the MediaOne Directors agree. If the TCI Directors and the
MediaOne Directors cannot agree on any matter requiring a vote of the Shares
within a period of 10 days after the matter is first presented for decision, the
matter in dispute shall be referred to the Chief Executive Officers of the
ultimate parent companies of the TCI Shareholders and the MediaOne Shareholders
(or other representatives designated by them) and the Shares shall be voted on
such matter in accordance with the joint decision of such officers. If those
officers cannot agree on any matter presented to them prior to the earlier of
the date the vote is to be taken or five days after the matter is first
submitted to them, the Shares shall be voted in such manner that would be most
likely to continue the status quo, without materially increasing Telewest's
financial obligations or materially deviating from its approved budget and
business plan.
7.10 Termination of Voting Arrangements. If at any time after December 31,
1999 the number of Pro Rata Shares attributable to either the TCI Member Group
or the MediaOne Member Group decreases (other than as a result of a Transfer
permitted by Section 11.3 or by Section 8.3 of the Relationship Agreement or as
a result of a Related Transfer) by a number of Pro Rata Shares that is equal to
or greater than 2% of all outstanding Ordinary Shares, calculated on a fully
diluted basis, immediately after consummation of the transactions contemplated
by the Relationship Agreement, the other Member Group may elect, by notice to
the Member Group whose Pro Rata Shares have been so reduced, to terminate the
provisions of Section 7.9. After any such termination the members of the
MediaOne Member Group and the TCI Member Group may direct the Board as to the
manner in which their respective Pro Rata Shares are to be voted in their sole
discretion, and any Shares owned by the Company that are not Pro Rata Shares of
any Member shall be voted in the same way as the Pro Rata Shares of the Members
are voted, in proportion to the Members' respective Ownership Interests.
ARTICLE 8: LIABILITY OF MEMBERS
8.1 Limited Liability. Except as otherwise provided in the Act, the debts,
obligations and liabilities of the Company (whether arising in contract, tort or
otherwise) will be solely the debts, obligations and liabilities of the Company,
and
no Member of the Company (including any Person who formerly held such status) is
liable or will be obligated personally for any such debt, obligation or
liability of the Company solely by reason of such status.
8.2 Capital Contribution. Each Member is liable to the Company for [a] the
Initial Contribution made under Section 4.3 and any Additional Contribution
required or agreed to be made under Section 4.4 and 11.13 and [b] any Capital
Contribution or Distribution that has been wrongfully or erroneously returned or
made to such Member in violation of the Act, the Articles or this Agreement.
ARTICLE 9: [Intentionally Omitted]
ARTICLE 10: ACCOUNTING AND REPORTING
10.1 Fiscal Year. For income tax and accounting purposes, the Fiscal Year
of the Company will end on December 31 in each year (unless subsequently changed
as provided in the Code).
10.2 Accounting Method. For income tax and accounting purposes, the Company
will use the accrual method of accounting (unless otherwise required by the
Code).
10.3 Tax Returns. The Company will cause the preparation and timely filing
of all tax returns required to be filed by the Company pursuant to the Code, as
well as all other tax returns required in any jurisdiction in which the Company
does business.
10.4 Reports. The Company books will be closed at the end of each Fiscal
Year and statements prepared showing the financial condition of the Company and
its Profits or Losses from operations. Copies of these statements will be given
to each Member. In addition, as soon as is practicable after the close of each
Fiscal Year, and in any event by March 31 following the end of each Fiscal Year,
the Company will provide each Member with all necessary tax reporting
information.
10.5 Banking. The Company may establish one or more bank or financial
accounts and safe deposit boxes. The Company may authorize one or more
individuals to sign checks on and withdraw funds from such bank or financial
accounts and to have access to such safe deposit boxes, and may place such
limitations and restrictions on such authority as the Company deems advisable.
ARTICLE 11: TRANSFER RESTRICTIONS
11.1 General Restriction. No Person may Transfer all or any part of such
Person's Ownership Interest in any manner whatsoever except as permitted by this
Article 11, and in any case only if the requirements of Section 11.7 have been
satisfied. Any other Transfer of all or any part of an Ownership Interest is
null and void. The rights and obligations of any resigning Member or of any
Transferee of an Ownership Interest will be governed by the other provisions of
this Agreement.
11.2 No Member Rights. Except as provided in Section 11.9, no Member has
the right or power to confer upon any Transferee the attributes of a Member in
the Company. Except as provided in Section 11.9, the Transferee of all or any
part of an Ownership Interest by operation of law does not, by virtue of such
Transfer, succeed to any rights as a Member in the Company.
11.3 Permitted Transferees. A Member may Transfer all or any part of such
Member's Ownership Interest at any time:
[a] to an Affiliate of such Member;
[b] to another Member; and
[c] to the Company.
11.4 Transfer Restrictions Lasting Through 1999. No Member shall Transfer
all or a portion of its Ownership Interest on or before December 31, 1999 except
pursuant to Section 11.3 unless (i) the prior written consent of the other
Member Group is obtained, (ii) the other Member Group approves the identity of
the Transferee, which approval may be withheld in the sole discretion of such
other Member Group, and (iii) the Transferee (if such Transferee is an Affiliate
of either MediaOne or TCI) executes a counterpart of the Relationship Agreement
or another document to the same effect.
11.5 Rights of First Refusal.
[a] If a Member proposes to Transfer all or part of its Ownership Interests to
a Third Party or Parties after December 31, 1999 (except pursuant to
Section 11.3), the Member desiring to make the Transfer (for purposes of
this Section 11.5 only, the "Offeror") shall first make a written offer
(for purposes of this Section 11.5 only, the "Offer") to sell such
Ownership Interest to the Members included in the other Member Group (for
purposes of this Section 11.5 only, the "Offerees") on the same terms and
conditions on which the Offeror proposes to Transfer the Ownership Interest
to the Third Party or Parties. Such offer shall state the price and the
other terms and conditions of the proposed Transfer and shall be
accompanied by a copy of the offer from the proposed Transferee. The price
as so determined or stated in the Offeror's notice shall be, for purposes
of this Section 11.5 only, the "Offer Price." The Offeror, for so long as
the Offer shall remain outstanding, shall not request, nor shall the
Company be obligated to make, a distribution of
Shares in an amount in excess of the number of Pro Rata Shares that such
Offeror shall have the right to receive in respect of the Ownership
Interest, if any, to be retained by such Offeror after giving effect to
such proposed Transfer.
[b] The Offerees shall have the right for a period of 30 days after receipt of
the Offer to elect to purchase all, but not less than all, of the Ownership
Interest offered at the Offer Price by giving written notice of acceptance
to the Offeror within that period. If the Offerees do not elect to purchase
all the Ownership Interest offered, the Offeror may Transfer the offered
Ownership Interest pursuant to the terms disclosed under Section 11.5[a].
If the offered Ownership Interest is not Transferred within 90 days after
the Offerees' option period expires, a new offer shall be made to the
Offerees before any such Transfer is made.
[c] If the Third Party's offer involves consideration other than immediate
payment of cash at closing, the Offerees may pay the Fair Market Value of
such other consideration, as determined by agreement between the Offeror
and the Offerees, in cash. If they cannot agree on such cash equivalent
within seven days after the Offerees give notice of the election to
purchase the offered Ownership Interest, the Offerees may, by written
notice to the Offeror, initiate appraisal proceedings under Section 11.5[d]
for determination of the Fair Market Value of such consideration. The Fair
Market Value shall be determined without regard to income tax consequences
to the Offeror as a result of receiving cash in lieu of other
consideration. Once the Fair Market Value is determined, (i) the Offerees,
in their sole discretion, may elect either to purchase the Ownership
Interest in cash by giving notice of such election to the Offeror within 10
days after receipt of the appraiser's decision or to withdraw its
acceptance of the Offer, and (ii) the Offeror may in its sole discretion
withdraw the Offer provided that in such case it may not Transfer such
Ownership Interests pursuant to the proposed Transfer.
[d] Any appraisal of the Fair Market Value of consideration shall be made by an
appraiser jointly appointed by the Members. If the Members fail to agree on
an appraiser within 20 days after receipt of the notice requiring or
permitting an appraisal of Fair Market Value, each Member Group shall
appoint one appraiser, which shall be an investment banking firm of
national repute. The two appraisers so selected shall each make an
appraisal of Fair Market Value within 30 days after their selection. If
such determinations vary by 20% or more of the higher determination, the
two appraisers shall select a third appraiser with similar qualifications
which shall make its determination of such Fair Market Value within 30 days
after its selection. Such third appraiser shall not be informed of or
otherwise consider the appraisals of the other two in reaching its
determination. The Fair Market Value shall be the average of the two
closest values if three
appraisals are made or, if the determinations of the first two appraisers
vary by less than 20% of the higher of such two determinations, the average
of those two determinations. Any Fair Market Value determined pursuant to
this Section 11.5[d] shall be binding and conclusive. If any Member Group
fails to appoint an appraiser as required hereunder, the other Member Group
may refer the matter to the American Arbitration Association, which shall
promptly appoint an appraiser hereunder on behalf of the Member Group
failing to make such appointment.
[e] The closing of the purchase of an Ownership Interest by the Offerees shall
take place within 60 days following the timely delivery to the Offeror of a
written notice of acceptance pursuant to Section 11.5[b] or, if the
provisions of Section 11.5[c] apply, within 60 days following the delivery
to the Offeror of a written notice of election pursuant to clause (i) of
the last sentence of Section 11.5[c]. The Offeror shall give customary
representations and warranties regarding the title of such Ownership
Interests to the Offerees.
[f] The Offerees may rescind their notice of acceptance given pursuant to
Section 11.5[b] at any time on or prior to the 30th day following the date
of such notice of acceptance (but not thereafter) if (i) prior to the date
of such notice of acceptance the Offerees had sought in good faith a waiver
from the City Panel with respect to the application of any provision of
Rule 9 of the City Code on Take-overs and Mergers which absent such waiver
would require the Offerees to offer to purchase all of the outstanding
Ordinary Shares and (ii) such waiver or any shareholder approval required
by the City Panel has been denied (or has not been granted as of the last
day of such rescission period).
11.6 Change in Control of a Shareholder Group.
[a] If at any time there is an involuntary Change in Control with respect to
either the TCI Shareholder Group or the MediaOne Shareholder Group, the
Member Group included in the Shareholder Group experiencing the Change in
Control (the "Subject Group") shall give notice to the other Member Group
promptly after the Subject Group becomes aware of the Change in Control. If
at any time either Shareholder Group experiences a voluntary Change in
Control, the Subject Group shall give notice to the other Member Group
promptly after the terms of the Change in Control are set forth in a
binding agreement. The Member Group not affected by such Change in Control
(the "Responding Group") must within 30 days after its receipt of such
notice give notice to the Subject Group either [a] consenting to the Change
in Control or [b] stating the price per percentage of Ownership Interest at
which the Responding Group is willing to sell all of its Ownership
Interests to the Subject Group or to buy all of the Subject Group's
Ownership Interests (the "Quoted Price"). Failure to give notice of such
election within the time permitted shall be deemed consent to the Change in
Control.
[b] If the Responding Group does not consent to the Change in Control, the
Subject Group must, within 30 days after its receipt of the Responding
Group's notice, give notice to the Responding Group of its election to sell
all of its Ownership Interests to the Responding Group or to buy all of the
Responding Group's Ownership Interests, in either case at the Quoted Price.
Following the giving of notice of a Change in Control pursuant to this
Section 11.6 and prior to (i) receipt by the Subject Group (or deemed
receipt) of consent to such Change of Control or (ii) the closing of the
sale of the Subject Group's or the Responding Group's Ownership Interests,
no Member shall request, nor shall the Company be obligated to make, any
voluntary Distribution of Shares. Any purchase of Ownership Interests
pursuant to this Section 11.6 may be made only by a Member.
11.7 General Conditions on Transfers. No Transfer of an Ownership Interest
will be effective unless all of the conditions set forth below are satisfied:
[a] unless waived by the Company, the Transferor signs and delivers to the
Company an undertaking in form and substance reasonably satisfactory to the
Company to pay all reasonable expenses incurred by the Company in
connection with the Transfer (including, but not limited to, reasonable
fees of counsel and accountants and the costs to be incurred with any
additional accounting required in connection with the Transfer, and the
cost and fees attributable to preparing, filing and recording such
amendments to the Articles or other organizational documents or filings as
may be required by law);
[b] the Transferor signs and delivers to the Company a copy of the assignment
of the Ownership Interest to the Transferee in form and substance
reasonably satisfactory to the Company;
[c] the Transferee signs and delivers to the Company an agreement to be bound
by this Agreement if the Transferee is not a Member or the Company; and
[d] the Transfer is in compliance with the other provisions of this Article 11.
11.8 Rights of Transferees. Except as provided in Section 11.9, any
Transferee of an Ownership Interest will, on the effective date of the Transfer,
have only those rights of an assignee specified in the Act unless and until such
Transferee is admitted as a Member. This provision limiting the rights of a
Transferee will not apply if such Transferee is already a Member; provided that
any Member who resigns or retires from the Company in contravention of Section
3.6 will have only the rights of a Transferee who has not been admitted as a
Member in accordance
with this Agreement. Any Transferee of all or any part of an Ownership Interest
who is not admitted as a Member in accordance with this Agreement has no right
[a] to participate or interfere in the management or administration of the
Company's business or affairs, [b] to vote or agree on any matter affecting the
Company or any Member, [c] to require any information on account of Company
transactions or [d] to inspect the Company's books and records. The only right
of a Transferee of all or any part of an Ownership Interest who is not admitted
as a Member in accordance with this Agreement is to receive the allocations and
Distributions to which the Transferor was entitled (to the extent of the
Ownership Interest Transferred). However, each Transferee of all or any part of
an Ownership Interest (including both immediate and remote Transferees) will be
subject to all of the obligations, restrictions and other terms contained in
this Agreement as if such Transferee were a Member. With respect to any
Ownership Interest Transferred, the Transferor Member shall not possess any
right or power as a Member and may not exercise any such right or power directly
or indirectly on behalf of the Transferee. Neither the Company nor any Member
will owe any fiduciary duty to any Transferee who is not admitted as a Member.
11.9 Admission. A Transferee of an Ownership Interest will become a Member
of the Company only upon the affirmative unanimous Vote of Members, effective
upon a date specified (which must be on or after the effective date of the
Transfer, as determined under Section 11.7). Notwithstanding the foregoing, upon
compliance with Section 11.7, a Transferee which is an Affiliate of a Member
shall automatically become and be admitted as a Member without any action on the
part of the other Members.
11.10 Satisfaction of Legal Requirements. Notwithstanding any other
provision of this Article 11, no Member may Transfer any Shares or Ownership
Interests unless it has complied with all applicable legal requirements,
including without limitation applicable United States federal and state
securities laws. Upon the exercise of any option to acquire Shares or Ownership
Interests hereunder, the Members shall use commercially reasonable efforts to
obtain any necessary consents or approvals of any governmental authorities or
other Third Parties necessary to effect such Transfer.
11.11 Closing. The closing of the purchase of any Ownership Interests by a
Member pursuant to this Article 11 shall take place at the Company's principal
offices on a day specified by the purchaser (other than a Saturday, Sunday or
day on which banking institutions in New York are required by law to be closed)
which is no more than 90 days after the date of exercise of the applicable
purchase option (or within the period of time provided by Section 11.5[e], if
applicable) or, if later, the date on which all necessary consents to such
Transfer by governmental authorities shall have been obtained. At the closing
the selling Member shall deliver a written assignment of Ownership Interests to
be sold free and clear of any lien, charge or encumbrance, and such other
documents as may be
reasonably necessary to effectuate the sale. The purchase price, to the extent
it consists of cash, shall be paid in U.S. dollars in immediately available
funds.
11.12 Events of Withdrawal. An Event of Withdrawal of a Member occurs upon
[a] such Member's resignation from the Company, [b] such Member's Bankruptcy or
[c] the occurrence of any other event which terminates the continued membership
of such Member in the Company (including the dissolution of that Member). Within
10 days after the occurrence of any such event, the Member experiencing the
Event of Withdrawal (or such Member's legal representative or other successor in
interest) will give notice to the Company of the occurrence of the Event of
Withdrawal. Upon the occurrence of an Event of Withdrawal with respect to a
Member, such Member will cease to have any voting and consent rights under
Article 3 and will have only the limited rights of a Transferee who has not been
admitted as a Member in accordance with this Agreement, as set forth in Section
11.8.
11.13 Obligation to Contribute Additional Shares to Company. Each Member
agrees that, if any Shareholder included in its Member Group acquires additional
Shares after the date of this Agreement and before any Pro Rata Shares are
distributed to any Member pursuant to Section 6.5, the beneficial interests in
all of such Shares will be contributed to the Company as an Additional
Contribution, with a corresponding increase in the Ownership Interest of such
Member pursuant to Section 4.4 (or the issuance of an Ownership Interest to such
Shareholder, who shall be admitted as a Member, if such Shareholder is not
already a Member).
11.14 Covenant Relating to Rule 9 of City Code. Each Member covenants to
and agrees with the other Member that, in the event it or any member of the
Shareholder Group in which it is included elects to purchase Shares or Ownership
Interests, or is deemed to have made such an election pursuant to this
Agreement, it shall fulfill all obligations arising pursuant to Rule 9 of the
City Code on Takeovers and Mergers and shall pay all consideration and expenses
attributable to the Shareholders, the Members and the Company (but not Telewest)
in connection therewith.
ARTICLE 12: DISSOLUTION OF THE COMPANY
12.1 Dissolution. Dissolution of the Company will occur upon the happening
of any of the following events: [a] the sale of all or substantially all of the
Company's assets; [b] the unanimous Vote of the Members; [c] April 1, 2045,
unless the Company is continued by the unanimous Vote of the Members; [d] a sale
of all or substantially all the assets of Telewest (other than by merger, share
exchange, scheme of arrangement, recapitalization or similar transaction); [e] a
merger or consolidation of Telewest pursuant to which all the voting securities
of the merged or consolidated entity are held by Persons other than the Company
and the Shareholders; or [f] a reduction in the number of Shares in respect of
which the
Company and the TCI Shareholder Group and the MediaOne Shareholder Group in the
aggregate hold voting rights so that such Shares represent, for a period of 10
consecutive days or longer, less than 50% of the voting power of all of
Telewest's issued and outstanding share capital at that time.
12.2 Exclusive Means of Dissolution. The exclusive means by which the
Company may be dissolved are set forth in Section 12.1. The Company will not be
dissolved upon the death, retirement, resignation, expulsion, Bankruptcy or
dissolution of any Member or upon the occurrence of any other event which
terminates the continued membership of any Member in the Company.
ARTICLE 13: LIQUIDATION
13.1 Liquidation. Upon Dissolution of the Company, the Company promptly
will file a statement of intent to dissolve with the Colorado Secretary of State
as required by the Act and will thereafter wind up its affairs and liquidate.
The Member owning the largest Ownership Interest, or if such Member fails to
act, any Person appointed by unanimous Vote of the Members, will act as
liquidating trustee. The winding up and Liquidation of the Company will be
accomplished in a businesslike manner as determined by the liquidating trustee.
A reasonable time will be allowed for the orderly Liquidation of the Company and
the discharge of liabilities to creditors so as to enable the Company to
minimize any losses attendant upon Liquidation. Any gain or loss on disposition
of any Company assets in Liquidation will be allocated to Members and credited
or charged to Capital Accounts in accordance with the provisions of Articles 4
and 5. Any liquidating trustee is entitled to reasonable compensation for
services actually performed, and may contract for such assistance in the
liquidation process as such Person deems necessary. Until the filing of articles
of dissolution under Section 13.6, the liquidating trustee may settle and close
the Company's business, prosecute and defend suits, dispose of its property,
discharge or make provision for its liabilities, and make distributions in
accordance with the priorities set forth in Section 13.2.
13.2 Priority of Payment. The assets of the Company will be distributed in
Liquidation of the Company in the following order:
[a] Creditors. First, to creditors by the payment or provision for payment of
the debts and liabilities of the Company (other than any loans or advances
made by any Member or any of its Affiliates) and the expenses of
Liquidation.
[b] Reserves. Second, to the setting up of any reserves that are reasonably
necessary for any contingent, conditional or unmatured liabilities or
obligations of the Company.
[c] Loans. Third, to the repayment of any loans or advances made by any Member
or any Affiliate of a Member (proportionately if the amount available for
such repayment is insufficient for payment in full).
[d] Capital Accounts. Fourth, to the payment to the Members of their respective
Capital Account balances as adjusted for their respective shares of
liquidating Profits and Losses.
[e] Balance. Fifth, the balance, if any, to the Members in the ratio of their
Ownership Interests.
13.3 Distribution to Members. Distributions in Liquidation due to the
Members will be made by distributing the Company assets to the Members at their
net Fair Market Value in kind unless all Members unanimously agree in writing to
the sale of the Company's assets and the Distribution of the proceeds thereof.
Any liquidating Distribution in kind to the Members may be made either by a pro
rata Distribution of Shares (pursuant to Section 6.5, if applicable) or, with
respect to other assets, undivided interests in such assets or, if the Members
unanimously agree in writing, by non pro rata Distribution of specific assets at
Fair Market Value on the effective date of Distribution. Any Distribution in
kind may be made subject to, or require assumption of, liabilities to which such
property may be subject, but in the case of any non pro rata Distribution only
upon the express written agreement of the Member receiving the Distribution.
Each Member hereby agrees to save and hold harmless the other Members from such
Member's share of any and all such liabilities which are taken subject to or
assumed. Appropriate and customary prorations and adjustments shall be made
incident to any Distribution in kind.
13.4 Deficit Capital Account. Except as otherwise specifically provided in
Section 4.4, nothing contained in this Agreement imposes on any Member an
obligation to make an Additional Contribution in order to restore a deficit
Capital Account upon Liquidation of the Company. Each Member will look solely to
the assets of the Company for the return of such Member's Capital Contribution.
13.5 Liquidating Reports. A report will be submitted by the liquidating
trustee with each liquidating Distribution to Members showing the collections,
disbursements and distributions during the period which is subsequent to any
previous report. A final report, showing cumulative collections, disbursements
and Distributions, will be submitted by the liquidating trustee upon completion
of the liquidation process.
13.6 Articles of Dissolution. Upon Dissolution of the Company and the
completion of the winding up of its business, the Company will file articles of
dissolution with the Colorado Secretary of State pursuant to the Act. At such
time, the Company also will file an application for withdrawal of its
certificate of authority in any jurisdiction where it is then qualified to do
business.
ARTICLE 14: GENERAL PROVISIONS
14.1 Amendment. This Agreement may be amended only by the unanimous Vote of
the Members. Any amendment will become effective upon such Vote, unless
otherwise provided. Written notice of any proposed amendment must be given at
least 5 days in advance of the meeting at which the amendment will be considered
(unless the Vote is evidenced by duly signed minutes of action). Any amendment
to this Agreement is binding upon, and inures to the benefit of, each Member who
holds an Ownership Interest at or after the time of such amendment, without the
requirement that such Member sign the amendment or any republication or
restatement of this Agreement.
14.2 Unregistered Interests. Each Member [a] acknowledges that the
Ownership Interests in the Company are being offered and sold without
registration under the Securities Act of 1933, as amended, or under similar
provisions of state law, [b] acknowledges that such Member is fully aware of the
economic risks of an investment in the Company, and that such risk must be borne
for an indefinite period of time, [c] represents and warrants that such Member
is acquiring an Ownership Interest for such Member's own account, for
investment, and with no view to the distribution of the Ownership Interest and
[d] agrees not to Transfer, or to attempt to Transfer, all or any part of such
Ownership Interest without registration under the Securities Act of 1933, as
amended, and any applicable state securities laws, unless the Transfer is exempt
from such registration requirements.
14.3 Reliance. Each Member will be fully protected in relying in good faith
upon the records of the Company and upon such information, opinions, reports or
statements by [a] any of the Company's other Members, employees or committees or
[b] any other Person who has been selected with reasonable care as to matters
such Member reasonably believes are within such other Person's professional or
expert competence. Matters as to which such reliance may be made include the
value and amount of assets, liabilities, Profits and Losses of the Company, as
well as other facts pertinent to the existence and amount of assets from which
Distributions to Members may properly be made.
14.4 Equitable Relief. If any Person proposes to Transfer all or any part
of such Person's Ownership Interest in violation of the terms of this Agreement,
the Company or any Member may apply to any court of competent jurisdiction for
an injunctive order prohibiting such proposed Transfer except upon compliance
with the terms of this Agreement, and the Company or any Member may institute
and maintain any action or proceeding against the Person proposing to make such
Transfer to compel the specific performance of this Agreement. Any attempted
Transfer in violation of this Agreement is null and void, and of no force and
effect. The Person against whom such action or proceeding is brought irrevocably
waives the claim or defense that an adequate remedy at law exists, and such
Person will not urge in any such action or proceeding the claim or defense that
an adequate remedy at law exists.
14.5 Specific Performance. The Members agree that each would be irreparably
damaged if any Member failed to perform any obligation under this Agreement, and
that such Member would not have an adequate remedy at law for money damages in
such event. Accordingly, each Member will be entitled to specific performance
and injunctive and other equitable relief to enforce the performance of this
Agreement. This provision is without prejudice to any other rights that such
Member may have under this Agreement, at law or in equity.
14.6 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original and all of which taken
together will constitute one agreement.
14.7 Notices. All notices under this Agreement will be in writing and will
be delivered or mailed addressed [a] if to the Company, at the Company's
principal business office, and [b] if to any Member, at such Person's address as
then appearing on the records of the Company.
14.8 Deemed Notice. All notices given to any Person in accordance with this
Agreement will be deemed to have been duly given [a] on the date of receipt if
personally delivered, [b] three days after being sent by registered or certified
mail, postage prepaid, return receipt requested, [c] when sent by confirmed
electronic facsimile transfer or [d] one business day after having been sent by
a nationally recognized overnight courier service.
14.9 Waivers Generally. No course of dealing will be deemed to amend or
discharge any provision of this Agreement. No delay in the exercise of any right
will operate as a waiver of such right. No single or partial exercise of any
right will preclude its further exercise. A waiver of any right on any one
occasion will not be construed as a bar to, or waiver of, any such right on any
other occasion.
14.10 Partial Invalidity. Wherever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law. However, if for any reason any one or more of the provisions of
this Agreement are held to be invalid, illegal or unenforceable in any respect
by a court of competent jurisdiction, such holding will not affect any other
provision of this Agreement. In such event, this Agreement will continue in
force and will be construed as if such invalid, illegal or unenforceable
provision had never been contained in it.
14.11 Entire Agreement. This Agreement, the Contribution Agreement and the
Relationship Agreement contain the entire agreement and understanding of the
Members with respect to their subject matter, and supersede all prior and
contemporaneous written and oral agreements with respect thereto.
14.12 No Third Party Benefit. The contribution obligations of each Member
will inure solely to the benefit of the other Members and the Company, without
conferring on any other Person any rights of enforcement or other rights.
14.13 Binding Effect. This Agreement is binding upon, and inures to the
benefit of, the Members and their permitted Transferees.
14.14 Further Assurances. Each Member agrees, without further
consideration, to sign and deliver such other documents of further assurance as
may reasonably be necessary to effectuate the provisions of this Agreement.
14.15 Headings. Article and Section titles have been inserted for
convenience of reference only. They are not intended to affect the meaning or
interpretation of this Agreement.
14.16 Terms. Terms used with initial capital letters will have the meanings
specified, applicable to both singular and plural forms, for all purposes of
this Agreement. All pronouns (and any variation) will be deemed to refer to the
masculine, feminine or neuter, as the identity of the Person may require. The
singular or plural include the other, as the context requires or permits. The
word "include" (and any variation) is used in an illustrative sense rather than
a limiting sense. The terms "shall" and "will" both refer to an obligation that
is mandatory.
14.17 Governing Law. This Agreement will be governed by, and construed in
accordance with, the laws of the State of Colorado without considering any
conflicts of law principles. Any conflict or apparent conflict between this
Agreement and the Act will be resolved in favor of this Agreement except as
otherwise required by the Act.
14.18 Restrictive Trade Practices Act. Any provision contained in this
Agreement or in any arrangement of which this Agreement forms part by virtue of
which this Agreement or such arrangement is subject to registration under the
Restrictive Trade Practices Acts 1976 and 1977 of England will not come into
effect until the day following the date on which particulars of this Agreement
and of any such arrangement have been furnished to the Office of the Director
General of Fair Trading in accordance with the requirements of such Acts.
In Witness Whereof, the Members have signed this Amended and Restated
Operating Agreement of TW Holdings, L.L.C. to be effective _________ __, 1998.
UNITED ARTISTS PROGRAMMING-
EUROPE, INC.
______________________________
By:
Its:
U S WEST CABLE PARTNERSHIP
HOLDINGS, INC.
______________________________
By:
Its:
U S WEST UK CABLE, INC.
______________________________
By:
Its:
EXHIBIT A
CAPITAL CONTRIBUTIONS
Initial Additional Ownership
Contribution Contribution Interest
------------ ------------ --------
United Artists 1,000 plus 378,750,000 84,638,960 Shares 50%
Programming-Europe Inc. Shares
MediaOne UK Cable, Inc. $912.90 plus 345,744,800 77,308,958 Shares 45.67%
Shares
MediaOne Cable Partnership $87.10 plus 33,005,200 7,380,002 Shares 4.33%\
Holdings, Inc. Shares
