EXHIBIT 4.04
AT HOME CORPORATION
AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
________________________, 1997
AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
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THIS AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT (this "Agreement")
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is entered into as of this 1st day of August, 1996, by and among AT HOME
CORPORATION, a Delaware corporation (the "Company" or "@Home"), the Stockholders
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of the Company set forth on Schedule I attached hereto and certain affiliates of
the Stockholders which are signatories hereto.
RECITALS
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WHEREAS, the Company, the KPCB Affiliates and TCI Sub are parties to a
Stockholders Agreement, dated as of August 29, 1995 (the "1995 Stockholders
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Agreement").
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WHEREAS, the Company, the KPCB Affiliates, TCI Sub, certain of their
affiliates and certain affiliates of ▇▇▇ Communications, Inc. and Comcast
Corporation have entered into a Letter Agreement and Term Sheet, dated as of
June 4, 1996, which is being amended as of this date pursuant to Section 11.13
below (the "Term Sheet"), which provides for, among other things, certain
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purchases of Company securities by affiliates of ▇▇▇ Communications, Inc. and
Comcast Corporation and certain additional purchases of Company securities by
TCI Sub and the KPCB Affiliates, certain governance rights and transfer
restrictions among the Stockholders, and certain arrangements among certain
affiliates of the Stockholders regarding the distribution of the @Home Services;
WHEREAS, the Term Sheet contemplated that all or a portion of the
rights and obligations of the parties thereto may be superseded by separate
definitive agreements relating to specific aspects of the transactions and
relationships provided for in the Term Sheet;
WHEREAS, TCI Sub and the KPCB Affiliates desire to enter into this
Agreement in order to amend and restate the 1995 Stockholders Agreement and
affiliates of ▇▇▇ Communications, Inc. and Comcast Corporation desire to enter
into this Agreement in connection with their purchase and exchange of Company
securities pursuant to the stock purchase and exchange agreement which is being
entered into by the parties as of the date hereof in order to supersede the
provisions relating to the purchase of Company securities set forth in the Term
Sheet (the "Stock Purchase Agreement");
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NOW THEREFORE, in consideration of the mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
ARTICLE 1
DEFINITIONS AND OTHER GENERAL MATTERS
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1.1 Certain Definitions. As used in this Agreement, the following
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terms shall have the following meanings:
"Affiliate" means, with respect to any Person, any other Person that
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directly or indirectly through one or more intermediaries Controls, is
Controlled by, or is under common Control with such Person; provided that for
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purposes of this Agreement, (i) neither the Company nor any of its Subsidiaries
shall be deemed to be an Affiliate of any member of a Stockholder's Stockholder
Group, and (ii) no member of any Stockholder's Stockholder Group shall be deemed
to be an Affiliate of another Stockholder's Stockholder Group, in each case
solely by reason of any investment in the Company or any rights or obligations
provided for in this Agreement.
"Appraiser" means a nationally recognized investment banking firm that
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is not an Affiliate or Associate of the Company or a member of any Stockholder
Group.
"Associate" shall have the meaning set forth in Rule 405 under the
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Securities Act.
"@Home Services" means the business of providing Internet connectivity
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service and Internet "backbone" service which includes without limitation the
following: (i) direct connectivity to the Internet through the development,
packaging, marketing and distribution of a suite of branded Internet
connectivity services and certain branded applications, including one or more
custom browsers, for use by subscribers and information providers, together with
connections to various on-line hosting services (such as America Online,
Prodigy, CompuServe and The Microsoft Network) and information providers, both
in the United States and internationally (in countries where the Company is
capable of providing such service), (ii) directory services and navigation
services to content created by third parties, provided, however, that it is not
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contemplated that the Company would itself be a creator of content (other than
with respect to content created as part of the Company's navigation services
(such as the "video ▇▇▇▇▇▇" and "templates" for the creation of navigation home
pages), the aggregation and organization of content created by third parties and
technological assistance to such third party creators), and (iii) systems for
(a) "backbone" transmission, (b) network management, and (c) billing and
associated support functions.
"Attributable Shares" means, with respect to any Stockholder Group, a
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number of shares of Series A Common Stock (determined as if all Rights held by
such Stockholder Group, the exercise, exchange or conversion of which does not
require the payment of any additional consideration, had been exercised,
exchanged or converted) equal to the sum of, without duplication,
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(i) the number of shares of Series A Common Stock owned directly by
the Parent of such Stockholder Group, and
(ii) in the event that such Parent owns shares of Series A Common
Stock indirectly through one or more unbroken chains of Subsidiaries,
such Parent's indirect equity economic interest in such shares of
Series A Common Stock determined by multiplying (x) the number of
shares of Series A Common Stock held directly by each Stockholder
which is a member of such Stockholder Group together with any shares
of Series A Common Stock issuable to such Stockholder upon the
conversion, exercise or exchange of any Rights (the exercise, exchange
or conversion of which does not require the payment of any additional
consideration), by (y) the percentage equity economic interest of such
Parent in such Stockholder.
A Parent's percentage equity economic interest in such Stockholder
shall be determined by multiplying the percentage equity economic interest in
such Stockholder owned by each Subsidiary which directly owns equity securities
of such Stockholder by the percentage equity economic interest in such
Subsidiary directly owned by the next most proximate Subsidiary which owns
equity securities of such first Subsidiary, and thereafter multiplying the
product thereof by the percentage equity economic interest directly owned by the
next most proximate Subsidiary in such chain of unbroken Subsidiaries to and
including the Subsidiary in which the Parent directly owns the equity economic
interests (and including the Parent's equity economic interest in such
Subsidiary). Such calculations of percentage equity economic interest shall be
based upon such Person's ownership of the outstanding common equity of such
other Person, after giving effect to the exercise, exchange or conversion of all
Rights to acquire common equity securities (the exercise, exchange or conversion
of which does not require the payment of additional consideration) held by all
Persons holding equity securities in such other Person.
"Average Market Price" means, as of any date, the average of the daily
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closing prices for the Series A Common Stock for the most recent period of
twenty trading days on which such securities trade ending on the trading day
immediately preceding such date, appropriately adjusted to take into account the
actual occurrence, during the period following the first of such twenty trading
days and ending on such date, of any stock dividends, stock splits, reverse
stock splits, recapitalizations and the like. The closing price for each day
shall be the last reported sale price regular way (or if no such reported sale
takes place on such day, the average of the reported closing bid and asked
prices, regular way) on the composite tape, or if the Series A Common Stock is
not quoted on the composite tape, on the principal United States securities
exchange registered under the Exchange Act on which such securities are listed
or admitted to trading or, if the Series A Common Stock is not listed or
admitted to trading on any such exchange, then the closing sale price (or the
average of the quoted closing bid and asked prices if no sale is reported) as
reported by NASDAQ or any comparable system, or if the Series A Common Stock is
not quoted on NASDAQ, or any comparable system, the average of the closing bid
and asked prices
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as furnished by any member of the National Association of Securities Dealers,
Inc. selected by the Board.
"Board" means the Board of Directors of the Company and, unless the
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context indicates otherwise, shall also mean, to the extent permitted by law,
any committee thereof authorized, with respect to any particular matter, to
exercise the power of the Board of Directors of the Company with respect to such
matter; provided, however, that references contained herein to matters
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"approved" by the Board shall be deemed to refer to matters which have been
approved by Board Action.
"Board Action" shall have the meaning assigned to such term in the
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Charter.
"Business Day" means any day other than a Saturday, Sunday or a day on
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which banking institutions in New York, New York are not required to be open.
"Bylaws" means the Bylaws of the Company, as amended to the date in
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question.
".Com Agreement" shall have the meaning set forth in the Charter.
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"Cable Parent" means (i) with respect to TCI Sub, TCI Internet
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Services, Inc. ▇▇▇.▇▇▇ and TCIC (which entities shall collectively be a single
Cable Parent), (ii) with respect to Comcast Sub, Comcast Cable and Comcast On-
Line (which entities shall collectively be a single Cable Parent), and (iii)
with respect to Cox Sub, CCI. In addition, each Parent shall be entitled to
designate one or more members of such Parent's Stockholder Group to be included
within the Cable Parent of such Parent's Stockholder Group. Any such
additional entities shall execute and deliver to the Company and each other
Parent, an instrument, in form and substance reasonably acceptable to the
Company, agreeing to be bound by the provisions of this Agreement applicable to
the other Persons which are included within the Cable Parent of such Parent's
Stockholder Group. Such designation shall not constitute an assignment by or
release of any other Person which is a Cable Parent of such Stockholder Group.
"Cable Parent Exclusivity Provisions" shall have the meaning assigned
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to such term in the Master Distribution Agreement.
"Cable Partner" means any of TCI Sub, Comcast Sub or Cox Sub, as
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applicable.
"CCI" means ▇▇▇ Communications, Inc., a Delaware corporation.
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"CEI" means ▇▇▇ Enterprises, Inc., a Delaware corporation.
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"CEO" means the Person which has been duly elected or appointed by the
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Board in accordance with the Charter and/or the Bylaws, and is then serving as,
the Chief Executive Officer of the Company.
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"Change of Control of a Stockholder" shall be deemed to have occurred
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at such time as the Parent of a Stockholder ceases to own, directly or
indirectly, securities constituting a majority of the outstanding voting power
and equity interests of such Stockholder, other than pursuant to a transaction
which is a Qualified Spin Off Transaction or a transaction which constitutes a
Control Block Sale.
"Charter" means the Certificate of Incorporation of the Company, as
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amended to the date in question.
"Closing" means the consummation of the transactions contemplated by
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the Stock Purchase Agreement.
"Comcast" means Comcast Corporation, a Pennsylvania corporation.
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"Comcast Cable" means Comcast Cable Communications, Inc., a Delaware
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corporation.
"Comcast On-Line" means Comcast On-Line Communications, Inc., a
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Delaware corporation.
"Comcast Stockholder Group" means Comcast, Comcast Cable, Comcast On-
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Line, Comcast Sub and their respective Controlled Affiliates; provided, however,
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that following any Qualified Spin Off Transaction and the related assignment
pursuant to Section 11.1 to the Spin Off Parent, such term shall be deemed to
refer, to the extent applicable, to such Spin Off Parent and its Controlled
Affiliates.
"Comcast Sub" means Comcast PC Investments, Inc., a Delaware
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corporation and an indirect wholly owned Subsidiary of Comcast, and any member
of the Comcast Stockholder Group to which Company Securities are transferred
pursuant to a Permitted Transfer.
"Comcast Ultimate Parent" means Comcast.
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"Commission" means the Securities and Exchange Commission, or any
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other Federal agency at the time administering the Securities Act or the
Exchange Act.
"Common Stock" means any of the Series A Common Stock, the Series B
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Common Stock or the Series K Common Stock
"Common Stock Director" means any member of the Board of Directors of
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the Company who is not elected or appointed solely by the holders of a specified
class or series of Preferred Stock or by the holders of the Series B Common
Stock.
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"Company Securities" means, without duplication, (i) the shares of
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Series AM Preferred Stock, Series AT Preferred Stock, Series AX Preferred Stock,
Series K Preferred Stock, and Series T Preferred Stock held by the Stockholders
as of the Closing, (ii) shares of Series B Common Stock issuable upon conversion
of shares of Series T Preferred Stock, shares of Series A Common Stock issued or
issuable upon conversion of shares of Series B Common Stock or Series K Common
Stock or upon conversion of shares of Series AM Preferred Stock, Series AT
Preferred Stock or Series AX Preferred Stock or shares of Series K Common Stock
issuable upon conversion of shares of Series K Preferred Stock, (iii) any
Stockholder Additional Securities, and (iv) any Company Securities acquired by a
Stockholder or the other members of its Stockholder Group directly from another
Stockholder Group pursuant to Sections 4.3(c), 4.4(c) or (d), 5.2, 6.1, 6.2, or
6.3 hereof, in each case as such number of Company Securities shall be
appropriately adjusted to give effect to any stock splits, reverse stock splits,
stock dividends, recapitalizations and the like occurring after the Closing.
With respect to any allocation of shares purchasable by any Stockholder Group
which is to be made pro rata based upon such Stockholder Group's ownership of
Company Securities, such allocation shall be made based solely upon the
Stockholder Group in question and all other Stockholder Groups' ownership of (i)
outstanding shares of capital stock of the Company and (ii) shares issuable upon
the exercise, exchange or conversion of any Rights, which exercise, exchange or
conversion does not require the payment of additional consideration.
"Control" (including its correlative meanings "Controlled by" and
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"under common Control with") means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract,
management agreement or otherwise.
"Control Block Group" means the members of any Stockholder Group or
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Stockholder Groups and any other Persons that beneficially own securities of the
Company and that are acting in concert in connection with a Control Block Sale.
"Control Block Offer" means an offer from an Unaffiliated Third Party
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to acquire from a Stockholder or group of Stockholders (in one transaction or a
series of related transactions) beneficial ownership of an amount of Voting
Stock which, after giving effect to the consummation of such transaction and
including any Voting Stock theretofore beneficially owned by such Unaffiliated
Third Party, would result in such Unaffiliated Third Party beneficially owning
Voting Stock representing a majority of the outstanding voting power of the
Company. For purposes of this definition, a Person shall be deemed to have
acquired Voting Stock representing a majority of the outstanding voting power of
the Company at such time as such Person beneficially owns Voting Stock which,
assuming the holders of such Voting Stock and all other Voting Stock then
outstanding cast the maximum number of votes the holders of such securities are
entitled to cast generally upon matters with respect to which the holders of the
Common Stock, Convertible Preferred Stock and any series of Series Preferred
Stock are then entitled to vote as a single class (assuming where applicable and
without duplication the conversion, exercise or exchange of any issued and
outstanding securities of the Company (including securities of the Company owned
by
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such Person) which are convertible into or exercisable or exchangeable for
Voting Stock (without the payment of additional consideration in respect of such
conversion, exercise or exchange)), constitute at least a majority of the voting
power of the Company.
"Control Block Sale" means any transaction or a series of related
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transactions involving one or more Stockholders and the other members (if any)
of their respective Stockholder Groups (and any Persons owning Voting Stock who
are acting in concert) and an Unaffiliated Third Party, which, after giving
effect to the consummation of such transaction or series of related transactions
and including any Voting Stock theretofore beneficially owned by such
Unaffiliated Third Party, would result in such Unaffiliated Third Party
acquiring beneficial ownership of Voting Stock representing a majority of the
outstanding voting power of the Company. For purposes of this definition, a
Person shall be deemed to have acquired Voting Stock representing a majority of
the outstanding voting power of the Company at such time as such Person
beneficially owns Voting Stock which, assuming the holders of such Voting Stock
and all other Voting Stock then outstanding cast the maximum number of votes the
holders of such securities are entitled to cast generally upon matters with
respect to which the holders of the Common Stock, Convertible Preferred Stock
and any series of Series Preferred Stock are then entitled to vote as a single
class (assuming where applicable and without duplication the conversion,
exercise or exchange of any issued and outstanding securities of the Company
(including the securities of the Company owned by such Person) which are
convertible into or exercisable or exchangeable for Voting Stock (without the
payment of additional consideration in respect of such conversion, exercise or
exchange)), constitute at least a majority of the voting power of the Company.
"Controlled Affiliate" of any Person shall be any Person which is
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Controlled by such Person; provided, however, that the Company will not be
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deemed to be a Controlled Affiliate of any Parent of a Stockholder or such
Parent's Controlled Affiliates.
"Convertible Preferred Stock" means, collectively, the Series K
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Preferred Stock, the Series T Preferred Stock, the Series AM Preferred Stock,
the Series AT Preferred Stock and the Series AX Preferred Stock.
"Cox Stockholder Group" means CCI, Cox Sub and their respective
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Controlled Affiliates; provided, however, that following any Qualified Spin Off
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Transaction and the related assignment pursuant to Section 11.1 to the Spin Off
Parent, such term shall be deemed to refer, to the extent applicable, to such
Spin Off Parent and its Controlled Affiliates.
"Cox Sub" means Cox Teleport Providence, Inc., a Delaware corporation
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and an indirect wholly owned Subsidiary of CCI, and any member of the Cox
Stockholder Group to which Company Securities are transferred pursuant to a
Permitted Transfer.
"Cox Ultimate Parent" means CEI.
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"Demand Registration" shall have the meaning assigned to such term in
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the Registration Rights Agreement.
"Eligible Stockholder" means a Stockholder whose Stockholder Group
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owns its applicable Eligible Stockholder Amount or, with respect to a
Stockholder whose failure to own such amount has been waived by all other
Stockholders, such Stockholder during the period any such waiver (or any further
waiver) is in effect in accordance with the provisions of Section 2.1(c).
"Eligible Stockholder Amount" means a number of Attributable Shares
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equal to (i) with respect to the TCI Stockholder Group, at least 5,807,500
shares of Series A Common Stock, (ii) with respect to the KPCB Stockholder
Group, at least 1,734,708 shares of Series A Common Stock, (iii) with respect to
the Comcast Stockholder Group, at least 1,819,617 shares of Series A Common
Stock and (iv) with respect to the Cox Stockholder Group, at least 1,819,617
shares of Series A Common Stock, in each case (x) after giving effect to the
exercise, exchange or conversion of any Company Securities which are exercisable
or exchangeable for or convertible into, shares of Series A Common Stock
(without the payment of additional consideration in respect of such conversion,
exercise or exchange) and (y) as such numbers of shares are appropriately
adjusted to give effect to any stock splits, reverse stock splits, stock
dividends, recapitalizations and the like occurring after the Closing.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
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or any successor Federal statute, and the rules and regulations of the
Commission promulgated thereunder, as they each may, from time to time, be in
effect.
"Execution Date" means June 4, 1996.
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"Exclusive Stockholder" means a Stockholder whose Cable Parent has
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complied with at all times since the Execution Date, and remains in compliance
with, the Cable Parent Exclusivity Provisions (without regard to whether the
Restricted Period has ended as to such Cable Parent).
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
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1976, as amended.
"Incidental Registration" shall have the meaning assigned to such term
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in the Registration Rights Agreement.
"Indirect Transfer" means any sale, transfer, assignment, distribution
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(including distributions upon dissolution or liquidation and distributions to
partners of any Stockholder), hypothecation or other disposition of common stock
or other equity interests of a Stockholder or of any Person of which such
Stockholder is a direct or indirect Controlled Affiliate (other than any sale,
transfer, assignment, distribution or hypothecation of the securities of the
Ultimate
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Parent of such Stockholder or any direct or indirect owner of securities of such
Ultimate Parent); provided, however, that the grant of any lien, pledge or
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security interest in connection with a bona fide financing transaction involving
such Stockholder's Stockholder Group will not, prior to any action taken with
respect to any foreclosure upon or exercise of such security interest,
constitute an Indirect Transfer. Notwithstanding the foregoing, upon any action
being taken by the pledgee or secured party with respect to any such lien,
pledge or security interest with respect to the foreclosure thereunder, the
holder of the Company Securities subject (directly or indirectly) to such lien,
pledge or security interest shall be deemed to have proposed the Transfer of
such Company Securities, which Transfer shall be subject to the terms of this
Agreement.
"Internet Services" shall have the meaning assigned to such term in
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the Master Distribution Agreement.
"IPO" means an initial public offering of the Series A Common Stock.
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"KPCB" means KPCB VII Associates, a California partnership.
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"KPCB Affiliates" means KPCB, Kleiner, Perkins, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ VII
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and KPCB Information Sciences Zaibatsu Fund II, each a California limited
partnership of which KPCB is the general partner, and ▇▇▇▇▇ ▇▇▇▇▇.
"KPCB Constituents" means each KPCB Affiliate, any wholly owned
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Subsidiary of a KPCB Affiliate to which such KPCB Affiliate shall have
transferred its Company Securities in accordance with the terms hereof and any
general or limited partners of such KPCB Affiliate or Subsidiary to whom such
KPCB Affiliate or such Subsidiary shall have transferred such Company Securities
in accordance with the terms hereof.
"KPCB Put Period" means (i) in the case of an exercise of the KPCB Put
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which is not in response to a KPCB Put Triggering Event, the sixty-day period
following the fifth anniversary of the Execution Date or, if the KPCB Put or TCI
Call shall not have been previously exercised, the sixty-day period following
each subsequent anniversary thereof, to and including the ninth anniversary of
the Execution Date or (ii) in the case of an exercise of the KPCB Put in
response to a KPCB Put Triggering Event, the 30 day period ending at the close
of business on the date of such KPCB Put Triggering Event.
"KPCB Put Triggering Event" means the approval by the holders of
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shares of the Company's Convertible Preferred Stock, in accordance with Section
C(7)(c) of Article IV of the Charter, of a KPCB Special Voting Matter; provided,
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that on the record date for the determination of stockholders entitled to vote
upon such matter and at the time of the meeting at which such matter is voted
upon, the KPCB Constituents collectively hold not less than 80% of the aggregate
amount of the shares of Series K Preferred Stock held by the KPCB Stockholder
Group upon consummation of the Closing (as appropriately adjusted to give effect
to any stock splits, reverse stock splits, stock dividends, recapitalizations
and the like occurring after the Closing) and shall
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have voted all shares of Series K Preferred Stock held by them "against" (with
any failure to vote or abstention from voting not considered a vote "against")
approval of such transaction. For purposes of this Agreement, the KPCB Put
Triggering Event shall be deemed to occur on the date of the meeting of
stockholders at which any of the foregoing actions is approved.
"KPCB Special Voting Matter" means the matters set forth in Section
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C(7)(c)(iii) of Article IV of the Charter.
"KPCB Stockholder Group" means collectively, KPCB, the KPCB Affiliates
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and the KPCB Constituents.
"LCO Agreement" means the provisions of the LCO Agreement Term Sheet,
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set forth as Exhibit B to the letter agreement dated May ___, 1997, among the
Stockholders and certain of their respective Affiliates and the Company;
provided that if the matters set forth in the LCO Agreement Term Sheet are
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superseded by a form of definitive agreement which is approved in writing by
each of the Cable Parents, such form of definitive agreement will constitute the
LCO Agreement for all purposes hereunder.
"Mandatory Conversion" shall have the meaning assigned to such term in
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the Charter.
"Master Distribution Agreement" means the provisions of the Master
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Distribution Agreement Term Sheet, set forth as Exhibit A to the letter
agreement dated May ___, 1997, among the Stockholders and certain of their
respective Affiliates and the Company; provided that if the matters set forth in
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the Master Distribution Agreement Term Sheet are superseded by a definitive
agreement which is executed by the applicable parties to the Term Sheet, such
definitive agreement will constitute the Master Distribution Agreement for all
purposes hereunder.
"NASDAQ" means the National Association of Securities Dealers, Inc.
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Automated Quotation System.
"New Capital Stock" means shares of Common Stock, Preferred Stock or
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other equity securities of the Company which the Company proposes to offer,
issue or sell following the Closing; provided, however, that the following shall
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be excluded from the definition of "New Capital Stock", (i) shares of Series B
Common Stock issuable upon conversion of shares of Series T Preferred Stock,
shares of Series A Common Stock issued or issuable upon conversion of shares of
Series B Common Stock, Series K Common Stock or upon conversion of shares of
Series AM Preferred Stock, Series AT Preferred Stock or Series AX Preferred
Stock, or shares of Series K Common Stock issued or issuable upon the conversion
of shares of Series K Preferred Stock, or any other securities issuable upon
conversion or exercise of convertible equity securities of the Company
outstanding as of the Closing; (ii) securities to be issued pursuant to any
public offering by the Company registered with the Commission; (iii) securities
to be issued in accordance with the Charter and/or Bylaws pursuant to any
incentive stock or other plan or agreement of the
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Company for the benefit of its employees, directors or consultants, including
any securities issuable pursuant to the exercise of any Rights issued pursuant
to such plans or agreements; (iv) securities to be issued by the Company in
connection with an acquisition (including, without limitation, by way of merger,
consolidation or binding share exchange) by the Company of the capital stock,
other equity interests or assets of another Person in a transaction pursuant to
which all or part of the consideration payable in connection with such
acquisition consists of securities of the Company or Rights to acquire
securities of the Company; (v) securities to be issued in exchange for equity
interests in another entity in connection with a joint venture or other business
combination; (vi) securities to be issued upon any exercise or conversion of
Rights the issuance of which was subject to or exempt from the preemptive rights
set forth in Article 8; or (vii) securities issued by the Company in connection
with any stock split, stock dividend, reverse stock split, recapitalization or
the like occurring after the Closing.
"Parent" means, as to the TCI Stockholder Group, TCI; as to the KPCB
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Stockholder Group, KPCB; as to the Cox Stockholder Group, CCI; and as to the
Comcast Stockholder Group, Comcast, or, in each case any Spin Off Parent of any
of the foregoing following the assignment referred to in Section 11.1 hereof.
"Permitted Disposition" means a Transfer of Company Securities by a
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party to this Agreement in accordance with the provisions of Section 4.3, 4.4,
4.5, 4.6, 5.2, 6.1, 6.2 or 6.3 of this Agreement.
"Permitted Transfer" means:
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(i) a Transfer of Company Securities by a Stockholder Group to
(x) an Unaffiliated Third Party or (y) one or more other Stockholder
Groups, in either case, in accordance with the provisions of Section
4.3;
(ii) an Indirect Transfer of Company Securities; provided, that
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any Indirect Transfer which results in a Change of Control of a
Stockholder shall constitute a Permitted Transfer only if such
Indirect Transfer is made in compliance with the provisions of Section
4.3;
(iii) a Transfer by a Stockholder Group following the first
anniversary of the IPO of all or any portion of the Company Securities
beneficially owned by its Stockholder Group to (x) an Unaffiliated
Third Party pursuant to the exercise of its rights under the
Registration Rights Agreement or in an Exempt Offering or (y) one or
more other Stockholder Groups, in each case in accordance with the
provisions of Section 4.4; provided, however, that in the event TCI
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Sub exercises its Special Demand Registration Right pursuant to the
Registration Rights Agreement, each Stockholder Group shall be
entitled to participate in the Demand Registration made thereunder and
thereafter to sell in an Incidental Registration
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without regard to the requirement that any Transfer resulting
therefrom occur following the first anniversary of the IPO;
(iv) a Transfer of Company Securities by a Stockholder Group to
members of one or more other Stockholder Groups in accordance with the
Deemed Transfer procedure specified in Section 5.2;
(v) a Transfer or Indirect Transfer of Company Securities by
one or more Stockholder Groups to an Unaffiliated Third Party in a
Control Block Sale;
(vi) a Transfer by a Stockholder of all, but not less than all,
of the Company Securities beneficially owned by such Stockholder to
another member of its Stockholder Group;
(vii) in the case of the KPCB Affiliates only, (x) a Transfer of
any or all of the Company Securities beneficially owned by a KPCB
Affiliate or by a KPCB Constituent to any general or limited partner
of such KPCB Affiliate or KPCB Constituent, as the case may be; or if
such general or limited partner is itself a partnership, the
constituent general or limited partners thereof; provided that any
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such Transfer is an interim or liquidating distribution to the
partners of such KPCB Affiliate or KPCB Constituent, as the case may
be, in accordance with the terms of its partnership or other
organizational agreements or (y) a Transfer (including by merger or
other business combination of the KPCB VII Founders Fund or a KPCB
Affiliate into or with another Person before or after the date of this
Agreement) of Company Securities to any partnership or limited
liability company (1) of which KPCB is the general partner or managing
member and (2) whose partnership interests or other equity ownership
interests are subject to restrictions upon transfer similar to (and no
less restrictive than) those restrictions imposed upon the partnership
interests of the original transferor KPCB Affiliate; and, provided,
--------
further, that any transfer by ▇▇▇▇▇ ▇▇▇▇▇ ("▇▇▇▇▇") (x) to his estate
-------
by gift, will or intestate succession, (y) to a member of ▇▇▇▇▇'▇
immediate family by way of gift or pursuant to a bona fide estate
planning purpose, or (z) to a personal trust for the exclusive benefit
of ▇▇▇▇▇ and/or his immediate family and their descendants, shall also
be deemed a Permitted Transfer; or
(viii) a Transfer or Indirect Transfer of Company Securities in
connection with a Qualified Spin Off Transaction, provided, that (x)
--------
the rights and obligations of the Parent and the applicable members of
its Stockholder Group are assigned to the Spin Off Parent pursuant to
Section 11.1 hereof and (y) the Spin Off Parent becomes a party to
this Agreement pursuant to Section 2.1(e) hereof;
provided, however, that in connection with any Transfers pursuant to clauses
-------- -------
(i)(y), (iii)(y), (iv), (vi), (vii) and (viii) above, as a condition to such
Transfer each transferee which is not a party to
-12-
this Agreement shall execute an instrument in form and substance reasonably
satisfactory to the Company and the other Stockholders which are not
Transferring Company Securities, pursuant to which such transferee shall (A)
become a party to this Agreement and subject to the rights and obligations of
its transferor hereunder and (B) agree that if such transferee ceases to be a
member of such Stockholder Group during the period in which Transfers are
restricted by this Agreement, such transferee shall Transfer to the original
Stockholder or another member of the original Stockholder's Stockholder Group,
all Company Securities owned by such transferee immediately prior to the time
such transferee ceases to be a member of such Stockholder Group.
"Permitted Transferee" means any transferee acquiring Company
--------------------
Securities pursuant to a Permitted Transfer which is required to and does become
a party to this Agreement.
"Person" means any individual, corporation, limited liability company,
------
partnership, joint venture, association, joint stock company, trust,
unincorporated organization, government or agency or political subdivision
thereof, or other entity, whether acting in an individual, fiduciary or other
capacity.
"Preferred Stock" means the Preferred Stock of the Company authorized
---------------
for issuance pursuant to the Charter, and shall, unless the context otherwise
requires, include the Series T Preferred Stock, the Series K Preferred Stock,
the Series AM Preferred Stock, the Series AT Preferred Stock and the Series AX
Preferred Stock.
"Promotional Agreement" shall have the meaning set forth in the
---------------------
Charter.
"Public Company" means any Person which has a class or series of its
--------------
equity securities registered under Section 12(b) or 12(g), or which is required
to file reports pursuant to Section 15(d), of the Exchange Act (or any successor
or comparable provisions of the federal securities laws), which class or series
of equity securities are actively traded.
"Qualified Spin Off Transaction" means any transaction or series of
------------------------------
related transactions in which (and after giving effect thereto) (i) a majority
of the outstanding equity interests of a Stockholder are distributed, directly
or indirectly, to the stockholders of its Parent, (ii) any Person or group of
Persons which Controlled the Parent of a Stockholder immediately prior to such
transaction Control such Stockholder (or any successor entity) following such
transaction and (iii) the Persons or group of Persons which Controlled the
Parent of a Stockholder immediately prior to such transaction hold immediately
after such transaction a direct or indirect proportionate equity interest in
such Stockholder of more than 50% of the proportionate equity interest that such
Person or group of Persons held in such Parent on the record date for such
distribution.
"Registration Rights Agreement" means the Registration Rights
-----------------------------
Agreement, dated as of the date hereof, between the Company and the
Stockholders.
-13-
"Related Party Affiliates" shall have the meaning assigned to such
------------------------
term in the Charter.
"Related Party Transaction" shall have the meaning assigned to such
-------------------------
term in the Charter.
"Restricted Business" shall have the meaning assigned to such term in
-------------------
the Master Distribution Agreement.
"Restricted Period" means the period commencing with the Execution
-----------------
Date and terminating upon the first to occur of (w) as to a Cable Parent, the
termination of the Cable Parent Exclusivity Provisions as to such Cable Parent,
(x) the sixth anniversary of the Execution Date and (y) the effectiveness of any
change in law, statute or regulation or the entering of any adverse judicial
decision or injunction or other action, in each case which materially impairs
the enforceability (in accordance with their respective terms) of any of the
"Cable Parent Exclusivity Provisions," "Company Exclusivity Provisions," "MFN
Provisions" or the "Content Tag-Along Right" (each as defined in the Master
Distribution Agreement).
"Rights" means, with respect to any Person, any subscription, option,
------
warrant, right, convertible security or other agreement, instrument or
commitment of any character obligating (contingently or absolutely) such Person
to issue or sell any capital stock or other securities.
"Securities Act" means the Securities Act of 1933, as amended, or any
--------------
successor Federal statute, and the rules and regulations of the Commission
promulgated thereunder, as they each may, from time to time, be in effect.
"Selected Directors" means collectively, the Series AM Director, the
------------------
Series AX Director and the Series T Directors.
"Series A Common Stock" means the Company's Series A Common Stock, par
---------------------
value $.01 per share.
"Series AM Director" means the director elected to the Board by the
------------------
holders of the Series AM Preferred Stock, voting as a separate class or series
of capital stock, in accordance with the Charter.
"Series AT Directors" means the directors elected to the Board by the
-------------------
holders of the Series AT Preferred Stock, voting as a separate class or series
of capital stock, in accordance with the Charter.
-14-
"Series AX Director" means the director elected to the Board by the
------------------
holders of the Series AX Preferred Stock, voting as a separate class or series
of capital stock, in accordance with the Charter.
"Series AM Preferred Stock" means the Company's Series AM Convertible
-------------------------
Participating Preferred Stock, par value $.01 per share.
"Series AT Preferred Stock" means the Company's Series AT Convertible
-------------------------
Participating Preferred Stock, par value $.01 per share.
"Series AX Preferred Stock" means the Company's Series AX Convertible
-------------------------
Participating Preferred Stock, par value $.01 per share.
"Series B Common Directors" means those directors elected to the Board
-------------------------
by the holders of the Series B Common Stock, voting as a separate class or
series of capital stock, in accordance with the Charter.
"Series B Common Stock" means the Company's Series B Common Stock, par
---------------------
value $.01 per share.
"Series K Director" means (i) the Series K Preferred Stock Director
-----------------
(as defined in the Charter) prior to the Mandatory Conversion and (ii) following
the Mandatory Conversion, the Series K Common Stock Director (as defined in the
Charter).
"Series K Common Stock" means the Company's Series K Common Stock, par
---------------------
value $.01 per share.
"Series K Preferred Stock" means the Company's Series K Convertible
------------------------
Participating Preferred Stock, par value $.01 per share.
"Series T Directors" means those directors elected to the Board by the
------------------
holders of the Series T Preferred Stock, voting as a separate class or series of
capital stock, in accordance with the Charter.
"Series T Preferred Stock" means the Company's Series T Convertible
------------------------
Participating Preferred Stock, par value $.01 per share.
"Special Demand Registration Right" shall have the meaning assigned to
---------------------------------
such term in the Registration Rights Agreement.
"Special Directors" shall mean (a) the Selected Directors prior to the
-----------------
Mandatory Conversion and (b) following the Mandatory Conversion, the Series B
Common Directors.
-15-
"Spin Off Parent" means the member of a Stockholder's Stockholder
---------------
Group whose equity securities are distributed to the stockholders of the Parent
of such Stockholder Group in a Qualified Spin Off Transaction. Upon the
assignment to it pursuant to Section 11.1 of this Agreement, such Spin Off
Parent shall succeed to the rights and obligations of its related Parent and
shall become the Parent for all purposes hereunder.
"Stockholder" means each of TCI Sub, Cox Sub, Comcast Sub and the KPCB
-----------
Affiliates, and each other Person who becomes a holder of Company Securities and
a party to this Agreement in accordance with the terms hereof.
"Stockholder Additional Securities" means any New Capital Stock
---------------------------------
acquired by a Stockholder pursuant to the exercise of preemptive rights granted
pursuant to this Agreement.
"Stockholder Designee" means, as applicable, (i) the Series K Director
--------------------
designated and elected by the holders of, as applicable, the Series K Preferred
Stock or the Series K Common Stock, (ii) the Series AM Director designated and
elected by the holders of the Series AM Preferred Stock, (iii) the Series T
Directors designated and elected by the holders of the Series T Preferred Stock,
(iv) the Series AX Director designated and elected by the holders of the Series
AX Preferred Stock and (v) the Series B Common Directors designated and elected
by the holders of the Series B Common Stock.
"Stockholder Group" means, as applicable, the TCI Stockholder Group,
-----------------
the KPCB Stockholder Group, the Cox Stockholder Group or the Comcast Stockholder
Group.
"Subsidiary" when used with respect to any Person, means any other
----------
Person of which an aggregate of 50% or more of the outstanding capital stock or
other securities having ordinary voting power to elect directors, managers,
trustees or other controlling persons, or an equivalent controlling interest
therein, of such Person (irrespective of whether, at the time, capital stock or
other securities of any other class or classes of such entity shall have or
might have voting power by reason of the happening of any contingency) is, and
of which an aggregate of 50% or more of the interests in which are, at the time,
directly or indirectly, owned by such Person and/or one or more Subsidiaries of
such Person.
"Supermajority Vote" shall have the meaning set forth in the Charter.
------------------
"TCI" means Tele-Communications, Inc, a Delaware corporation, or any
---
related Spin Off Parent.
"TCI Sub" means TCI Internet Holdings, Inc., a Colorado corporation
-------
and an indirect wholly owned Subsidiary of TCI and any member of the TCI
Stockholder Group to which Company Securities are Transferred pursuant to a
Permitted Transfer.
-16-
"TCI Stockholder Group" means TCI, TCI Internet Services, Inc. ("TCI
--------------------- ---
Internet Services"), TCI. NET, Inc. ("▇▇▇.▇▇▇"), TCIC, TCI Sub and their
-----------------
respective Controlled Affiliates; provided, however, that following any
-------- -------
Qualified Spin Off Transaction and the related assignment pursuant to Section
11.1 to the Spin Off Parent, such term shall be deemed to refer, to the extent
applicable, to such Spin Off Parent and its Controlled Affiliates.
"TCI Ultimate Parent" means TCI.
-------------------
"TCIC" means, collectively, TCI Communications, Inc., a Delaware
----
corporation and TCI Cable Investments Inc., a Delaware corporation.
"Transfer" means, when used with respect to any Company Securities,
--------
any sale, transfer, assignment, distribution (including distributions upon
dissolution or liquidation and distributions to partners of any Stockholder),
hypothecation, or other disposition of Company Securities; provided, however,
-------- -------
that the grant of any lien, pledge or security interest, direct or indirect,
upon the Company Securities held by a Stockholder Group in connection with a
bona fide financing transaction involving such Stockholder Group will not, prior
to any action being taken with respect to any foreclosure upon or exercise of
such security interest, constitute a Transfer of Company Securities.
Notwithstanding the foregoing, upon any action being taken by the pledgee or
secured party with respect to any such lien, pledge or security interest with
respect to the foreclosure thereunder, the holder of the Company Securities
subject (directly or indirectly) to such lien, pledge or security interest shall
be deemed to have proposed the Transfer of such Company Securities, which
Transfer shall be subject to the terms of this Agreement.
"Ultimate Parent" means, as applicable, the TCI Ultimate Parent, the
---------------
Comcast Ultimate Parent or the Cox Ultimate Parent.
"Unaffiliated Third Party" means any Person or group of Persons which
------------------------
is not a member of any Stockholder Group.
"Unanimous Vote" shall have the meaning assigned to such term in the
--------------
Charter.
"Voting Stock" means those shares of Common Stock, Preferred Stock or
------------
other securities of the Company then entitled to vote in the election of members
of the Board or otherwise, regardless of whether such securities are Company
Securities or have been otherwise acquired by a Stockholder Group.
1.2 Additional Definitions.
----------------------
Defined Term Section
------------ -------
@Home Preamble
1995 Stockholders Agreement Preamble
-17-
Defined Term Section
------------ -------
Agents 10.1(a)
Agreement Preamble
Allocation 4.7(b)
Appraisal Report 7.4
Base Homes Passed 5.1
Cable Put 6.3(a)
Cable Put Notice 6.3(a)
Company Preamble
Confidential Information 10.1(a)
Conversion Notice 4.2(c)
Deemed Transfer 5.2
Deemed Transfer Notice 5.2(a)
Designee 4.7(a)
Drag Notice 4.6(a)
Drag-Along Right 4.6(a)
Drag-Along Stockholder 4.6(a)
Dragged Sale 4.6(c)
Dragged Shares 4.6(a)
Dragging Control Block Group 4.6(a)
Exclusive Homes Passed 5.1
Exempt Offering 4.4(a)
Fair Market Value 7.1
Homes Passed 5.1
Initiating Holders 4.4(a)
IPO Election 6.4(a)
IPO Election Notice 6.4(a)
KPCB Put 6.2(a)
KPCB Put Notice 6.2(a)
Minimum Exclusive Homes Passed 5.1
MSN 9.2(b)(i)
Operator 5.1
Operator Territory 5.1
Original Initiating Holder 4.4(a)
Per Share Value 7.3
Piggyback Stockholder 4.4(a)
Post IPO Electing Stockholder 4.4(b)
Post IPO Offered Shares 4.4(a)
Post IPO Sale Notice 4.4(a)
Post IPO Seller 4.4(a)
Post IPO Stockholders 4.4(a)
Prime Rate 6.4(c)
-18-
Defined Term Section
------------ -------
Proportionate Transferred Shares 5.1
Qualified Tag Stockholder 4.5(a)
Receiving Electing Stockholder 5.2(a)(i)
Receiving Party 10.1(a)
Receiving Stockholders 5.2(a)
Restricted Indirect Transfer 4.3(a)(iii)
Restricted Party 10.1(a)
ROFO Electing Stockholder 4.3(c)(i)
ROFO Notice 4.3(a)(iii)
ROFO Offer Price 4.3(a)(iii)
ROFO Offeror 4.3(a)(iii)
ROFO Shares 4.3(a)(iii)
ROFO Stockholders 4.3(a)(iii)
Sellers 4.7
Selling Holders 6.6(b)
Series B Exchange 4.2(c)
Stock Purchase Agreement Preamble
Tag Notice 4.5(b)
Tag Offerors 4.5(a)
Tag-Along Buyer 4.5(b)
Tag-Along Electing Stockholder 4.5(d)
Tag-Along Offer Period 4.5(b)
Tag-Along Right 4.5(a)
TCI Call 6.1(a)
TCI Call Notice 6.1(a)
Term Sheet Preamble
Third Appraiser 4.7(c)
Total Shares 5.1
Transferring Stockholder 5.2
1.3 Terms of Interpretation Generally. The definitions in Section
---------------------------------
1.1 and elsewhere in this Agreement shall apply equally to both the singular and
plural forms of the terms defined. Whenever the context may require, any
pronoun shall include the corresponding masculine, feminine and neuter forms.
The words "include," "includes" and "including" shall be deemed to be followed
by the phrase "without limitation." The words "herein," "hereof," "hereto" and
"hereunder" and words of similar import refer to this Agreement in its entirety
and not to any part hereof unless the context shall otherwise require. All
references herein to Sections shall be deemed references to Sections of this
Agreement unless the context shall otherwise require. Unless the context shall
otherwise require, any references to any agreement or other instrument or
statute or regulation are to it as amended and supplemented from time to time
(and,
-19-
in the case of a statute or regulation, to any corresponding provisions of
successor statutes or regulations). Any reference in this Agreement to a "day"
or number of "days" (without the explicit qualification of "Business") shall be
interpreted as a reference to a calendar day or number of calendar days. If any
action or notice is to be taken or given on or by a particular calendar day, and
such calendar day is not a Business Day, then such action or notice shall be
deferred until, or may be taken or given on, the next Business Day. The
provisions of Section 1.2 are informational in nature and do not constitute
substantive provisions of this Agreement.
ARTICLE 2
STOCKHOLDER GROUPS
------------------
2.1 Stockholder Groups; Ownership Provisions. (a) All actions and
----------------------------------------
determinations by, and all notices by or to, a Stockholder Group or any member
thereof shall be deemed validly taken or made (in the case of actions or
determinations) or given (in the case of notices) if taken, made or given, as
the case may be, by or to TCI Sub (in the case of the TCI Stockholder Group),
by or to KPCB (in the case of the KPCB Stockholder Group), by or to Cox Sub (in
the case of the Cox Stockholder Group); or by or to Comcast Sub (in the case of
the Comcast Stockholder Group), and shall be binding upon all members of any
such Stockholder Group for all purposes of this Agreement. If any of TCI Sub,
KPCB, Cox Sub or Comcast Sub (or any successor thereto pursuant to this
sentence) is no longer in existence or no longer beneficially owns any Company
Securities, but its Stockholder Group (or a successor or permitted assign
thereof) continues to have rights and/or obligations hereunder, then such
Stockholder shall appoint one such continuing entity as its replacement pursuant
to the immediately preceding sentence; provided, that if no such appointment is
--------
made, such Stockholder's Parent shall be deemed to be such replacement. Each
member of another Stockholder Group may rely upon the notification or advice of
a Stockholder with respect to any matter relating to the members of such
Stockholder's Stockholder Group. To the extent any party to this Agreement is
required to take any action hereunder, it agrees to use its reasonable best
efforts to cause the other members of its Stockholder Group to take such action.
(b) Except as expressly permitted or required by this Agreement,
(i) each Stockholder shall be the record and beneficial owner of the Company
Securities set forth opposite its name on Schedule I, in each case free and
clear of any liens, claims or encumbrances, and (ii) no Stockholder shall enter
into any agreement or arrangement (x) with respect to the exercise of its rights
to designate Stockholder Designees or to request the removal of a Stockholder
Designee pursuant to the Charter or this Agreement or (y) with respect to the
voting by its Stockholder Designees in connection with any of the matters set
forth in SECTION B(4) of Article V of the Charter, other than, with respect to
clauses (x) or (y) of this clause (ii), an agreement or arrangement solely among
Stockholders that are included in the same Stockholder Group.
-20-
(c) If at any time during the term of this Agreement any
Stockholder Group ceases to own its applicable Eligible Stockholder Amount, the
Stockholder that is a member of the Stockholder Group that ceased to own such
amount, on behalf of its associated Stockholder Group, shall promptly notify the
other Stockholders in writing of such fact and, unless each other Stockholder
shall elect by written notice delivered to such Stockholder to waive such
requirement in respect of such Stockholder Group (which waiver shall be binding
and shall remain applicable to the Stockholder Group that ceased to own such
amount so long as the ownership of Company Securities by such Stockholder Group
does not decrease further (subject in the case of each such further decrease, to
giving another such notice and receiving an additional or further waiver)), such
Stockholder and its Stockholder Group shall cease to be an Eligible Stockholder
and shall (x) cease to have any rights granted to or exercisable by an Eligible
Stockholder pursuant to this Agreement, the Master Distribution Agreement or the
LCO Agreement and (y) remain obligated with respect to the performance of its
obligations hereunder and thereunder. Any subsequent acquisition of securities
of the Company by or through any Person which is or becomes a member of a
Stockholder Group which has ceased to be an Eligible Stockholder shall not
entitle any such Stockholder Group to reinstatement as an Eligible Stockholder.
(d) Each Stockholder covenants and agrees that, (i) in the event
that any Ultimate Parent acquires direct or indirect beneficial ownership of
Voting Stock (other than Company Securities) subsequent to the execution of this
Agreement, which ownership is held in or through any Person which is not a party
to this Agreement, such Ultimate Parent shall cause the Person so acquiring such
Voting Stock to become a party to this Agreement solely for the purpose of
committing to vote all shares of Voting Stock held by such Person and its
Controlled Affiliates in accordance with the terms of this Agreement relating
specifically to voting (and such Person shall execute and deliver an appropriate
instrument reflecting such commitment), and (ii each member of a Stockholder
Group that is not a party to this Agreement may not acquire Company Securities
or Voting Stock unless it becomes a party to this Agreement.
(e) In the event of any Indirect Transfer of Company Securities
resulting from a Qualified Spin Off Transaction, each Parent agrees, as a
condition to such Qualified Spin Off Transaction, to cause the Spin Off Parent
resulting therefrom to become a party to this Agreement. In connection with any
such Qualified Spin Off Transaction, such Parent shall assign all of its rights
and obligations hereunder to such Spin Off Parent and provided that such Parent
has not retained any beneficial ownership in the Company Securities (through the
ownership of the equity securities of the applicable Stockholder or a member of
such Stockholder's Stockholder Group or of such Spin Off Parent), such Parent
shall be released from all of its obligations hereunder; provided, however, that
-------- -------
no such assignment shall release any Parent or Ultimate Parent from their
respective obligations pursuant to the Master Distribution Agreement.
-21-
ARTICLE 3
CORPORATE GOVERNANCE
--------------------
3.1 Voting Generally. (a) When any action is required to be taken
----------------
by a Stockholder pursuant to this Agreement, the Charter or the Bylaws, such
Stockholder agrees to take all steps reasonably necessary to implement such
action including, without limitation, voting at any meeting of stockholders all
shares of Voting Stock held by such Stockholder in favor of such action, and/or
executing or causing to be executed, as promptly as practicable, a consent in
writing to the taking of such action. Any agreement by a Stockholder to vote
all Voting Stock held by such Stockholder in a certain manner shall be deemed,
in each instance, to include an agreement by such Stockholder to use its
commercially reasonable efforts to take all actions necessary to call, or to
cause the Company and the appropriate officers and directors of the Company to
call, as promptly as practicable, a special or annual meeting of stockholders to
consider such action (and such Stockholder shall thereafter attend any such
annual or special meeting in person or by proxy), or to cause a written consent
to the taking of such action to be circulated among the stockholders of the
Company (and to execute and deliver any such consent to such action). Except as
expressly provided herein, any provision in this Agreement, the Charter or the
Bylaws requiring a Stockholder to cause the Board to take any action shall
require such Stockholder (i) to instruct each of its Stockholder Designees to
vote in favor of such action or to consent in writing to the taking of such
action and (ii) to take such other actions (including without limitation the
removal and replacement of its Stockholder Designees) as may be reasonably
necessary to cause such action to be taken.
(b) Each Stockholder hereby agrees that the Person or Persons
that it designates and/or elects or appoints as a Stockholder Designee shall be
at the time of such designation and election and so long as such Person remains
a Stockholder Designee, an officer, director, employee or partner of a member of
its Stockholder Group. Each Stockholder agrees to fill promptly any vacancy on
the Board resulting from the death, disability, retirement, resignation, or
removal of its Stockholder Designees.
(c) Except as expressly provided herein, each Stockholder shall
be entitled to vote all of its shares of Voting Stock as it shall determine in
its sole discretion, including, but not limited to, for the election of such
Common Stock Directors as it shall determine in its sole discretion.
(d) In the event that the restrictions of Section 203 of the DGCL
become applicable to the Company, each Stockholder agrees to use its reasonable
best efforts to cause its Stockholder Designees to approve, for purposes of
Section 203 of the DGCL, any Transfers or Indirect Transfers of Company
Securities by or to any Stockholder Group (including its affiliates and
associates) which are otherwise Permitted Transfers hereunder.
-22-
3.2 Election of CEO to the Board. Each Stockholder hereby agrees to
----------------------------
vote all Voting Stock held by such Stockholder to cause the CEO selected in
accordance with the provisions of SECTION B(4)(a)(5) of Article V of the Charter
to be elected to the Board as a Common Stock Director.
3.3 Designation and Election of Series B Common Directors. (a) Upon
-----------------------------------------------------
the Mandatory Conversion, each Stockholder beneficially owning (or having the
right to acquire upon consummation of the conversion thereof) shares of Series B
Common Stock shall vote all such shares of Series B Common Stock in favor of the
election of each of the Selected Directors in office immediately prior to such
Mandatory Conversion (including any Person to be elected or appointed to fill
any vacancy among the Selected Directors resulting from the death, disability,
retirement, resignation, or removal of a Selected Director of a Stockholder
Group, which Stockholder Group was prior to such Mandatory Conversion entitled
to elect such Selected Director, but excluding any Selected Director whose
Stockholder Group has ceased to become entitled to elect such a director, but
who has not resigned or been removed or otherwise ceased to be a director at the
time of such Mandatory Conversion) as Series B Common Directors.
(b) Following the Mandatory Conversion, (i) Comcast Sub shall be
entitled to designate, in its sole discretion, one Series B Common Director so
long as the Comcast Stockholder Group beneficially owns at least 2,500,000
shares of Common Stock (which are Company Securities), (ii) Cox Sub shall be
entitled to designate, in its sole discretion, one Series B Common Director so
long as the Cox Stockholder Group beneficially owns at least 2,500,000 shares of
Common Stock (which are Company Securities) and (iii) TCI Sub shall be entitled
to designate, in its sole discretion: (x) three Series B Common Directors so
long as the TCI Stockholder Group beneficially owns at least 3,850,000 shares of
Series B Common Stock (which are Company Securities); (y) two Series B Common
Directors in the event that the TCI Stockholder Group ceases to beneficially own
at least 3,850,000 shares of Series B Common Stock but owns at least 3,175,000
shares of Series B Common Stock (which are Company Securities); and (z) one
Series B Common Director in the event that the TCI Stockholder Group ceases to
beneficially own at least 3,175,000 shares of Series B Common Stock, but owns at
least 2,500,000 shares of Common Stock (which are Company Securities) (such
number of shares, in each case, as appropriately adjusted to give effect to any
stock splits, reverse stock splits, stock dividends, recapitalizations and the
like occurring after the Closing); provided, however, that in no event shall the
-------- -------
number of Series B Common Directors to be designated by each Stockholder
pursuant to this Section 3.3(b) exceed the number of Stockholder Designees to
which such Stockholder was entitled immediately prior to the Mandatory
Conversion, and the number of Stockholder Designees to which such Stockholder
shall be entitled pursuant to this Section 3.3(b) shall be appropriately
adjusted to reflect such reduction. Each Stockholder shall provide written
notice of its Stockholder Designees to each other Stockholder not less than two
(2) days prior to any meeting of Stockholders of the Company being held for the
purpose of electing Series B Common Directors.
-23-
(c) So long as the holders of the Series B Common Stock are
entitled to elect Series B Common Directors in accordance with the Charter, each
member of a Stockholder Group beneficially owning shares of Series B Common
Stock shall (i) vote all of its shares of Series B Common Stock at any annual or
special meeting of Stockholders at which Series B Common Directors are to be
elected in favor of, or shall duly consent in writing (in accordance with the
Charter) to, the election of the Stockholder Designees, designated in accordance
with paragraph (b) above and (ii) use its best efforts to take all other
necessary actions (including using its best efforts to cause the Company to call
a special meeting of stockholders), in order to give effect to the provisions of
this Section 3.3. The Company agrees that it will take all actions that are
necessary and within its power in order to give effect to the provisions of this
Section 3.3(c).
3.4 Removal of Special Directors and Series K Director. (a)
--------------------------------------------------
Following the Mandatory Conversion, each Stockholder owning Series B Common
Stock shall vote all of its shares of Series B Common Stock in favor of, or
shall duly consent in writing (in accordance with the Charter) to, the removal
(with or without cause) of any Series B Common Director designated by a
Stockholder pursuant to Section 3.3(b) if (i) the Stockholder who designated
such Series B Common Director requests such removal by notice to the other
Stockholders or (ii) the Stockholder Group of the Stockholder which designated
such Series B Common Director ceases to beneficially own the minimum number of
Company Securities as is required in accordance with Section 3.3(b) hereof in
order to entitle such Stockholder to designate the number of its Stockholder
Designees then serving as its designees on the Board pursuant to Section 3.3(b);
provided, that so long as TCI Sub is entitled to elect more than one Series B
--------
Common Director, upon any reduction in the number of Stockholder Designees to
which it is entitled, TCI Sub shall be entitled to select the identity of those
of its Series B Common Directors to be removed.
(b) In the event that any Stockholder ceases to be entitled to
designate a Selected Director or Series K Director, as the case may be, or in
the case of TCI Sub, becomes entitled to elect a lesser number of Selected
Directors, such Stockholder shall immediately cause its Stockholder Designee
then serving as a Selected Director or Series K Director to resign from the
Board (or in the case of TCI Sub, cause such of its Stockholder Designees on the
Board to resign). Upon the occurrence of an event described in clause (ii) of
Section 3.4(a) the applicable Stockholder shall immediately use its best efforts
to cause its Series B Common Director in the case of Comcast Sub or Cox Sub, or
an appropriate number of its Series B Common Directors in the case of TCI Sub,
to resign from the Board of Directors. If such Stockholder Designee does not
promptly resign from the Board, each Stockholder owning Series B Common Stock
agrees to vote all such shares in favor of the removal of such Stockholder
Designee. Upon the occurrence of any event decreasing the number of Series B
Common Directors each Stockholder agrees to take such actions, and to use its
best efforts to cause its Stockholder Designees which are members of the Board
to take such actions, as may be necessary in order to effect a permanent
reduction in the number of such Series B Common Directors, including but not
limited to the voting (or execution of a written consent) of all shares of
Voting Stock beneficially owned by it in favor of an amendment to the Charter so
reducing the number of such Series B Common Directors. Upon
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any such reduction in the total number of Series B Common Directors entitled to
be elected by the Stockholders upon or following the Mandatory Conversion, the
holders of the Series B Common Stock shall then be entitled to elect a total
number of Series B Common Directors equal to the then total authorized number of
Series B Common Directors after giving effect to such reduction.
3.5 Vacancies Among the Series B Common Directors. Following the
---------------------------------------------
Mandatory Conversion, if there shall exist or occur any vacancy among the Series
B Common Directors as a result of death, disability, retirement, resignation,
removal (with or without cause) or otherwise (other than a vacancy caused by the
resignation and/or removal of a Series B Common Director in connection with a
reduction of the total number of Series B Common Directors to be elected by the
holders of the Series B Common Stock), an individual to fill such vacancy shall
be designated by the Stockholder whose Stockholder Designee's death, disability,
retirement, resignation or removal has caused such vacancy to occur. Notice of
such designation shall be given and such individual shall be elected in the
manner provided in Section 3.3(c) above.
3.6 Outside Directors. Following the IPO, the Stockholders agree to
-----------------
take such actions as may be reasonably necessary to cause individuals who will
qualify as Outside Directors (as defined in the Charter) to be elected as Series
A Common Stock Directors (as defined in the Charter) (for so long as the holders
of the Series A Common Stock, voting separately as a class, are entitled to
elect such directors).
3.7 Conflicting Charter and Bylaws. Each Stockholder agrees to vote
------------------------------
all of its shares of Voting Stock entitled to vote, and to take all other
actions necessary, to ensure that the Charter and Bylaws of the Company
facilitate and do not at any time prohibit the actions contemplated by this
Agreement.
3.8 Special Voting Provisions. (a) Each Stockholder agrees that, in
-------------------------
the event that at any time there are less than two Special Directors who have
not been elected by TCI or its Controlled Affiliates, it will use its reasonable
best efforts to cause all of its Stockholder Designees on the Board of Directors
not to vote for or execute a written consent approving the taking of any action
by the Company with respect to (i) any matter identified in SECTION B(4) of
Article V of the Charter as requiring a Supermajority Vote or (ii) following the
IPO any Related Party Transaction, unless in each case, the taking of such
action by the Company is approved by all Special Directors.
(b) In the event that the taking of any action with respect to
the matters set forth in Section C(7)(c) of Article IV of the Charter or SECTION
B(4) of Article V of the Charter requires (in addition to, in the case of
SECTION B(4) of Article V of the Charter, the approval by a Supermajority Vote
or Unanimous Vote of the Special Directors and the Series K Director, as
applicable) the approval of one or more classes or series of the capital stock
of the Company, each Stockholder Group agrees to vote all shares of Voting Stock
owned by such Stockholder Group and entitled to vote thereon in a manner
consistent with the action approved
-25-
by the Board (in the case of Section C(7)(c) of Article IV of the Charter) or
the applicable percentage of the Special Directors and the Series K Director (in
the case of SECTION B(4) of Article V of the Charter).
(c) Notwithstanding anything contained herein to the contrary,
the KPCB Affiliates shall be entitled to vote their shares of Series K Preferred
Stock against any of the KPCB Special Voting Matters.
(d) Each Stockholder Group agrees to vote all shares of Voting
Stock held by it in a manner consistent with the implementation of any unanimous
decision of all of the Special Directors.
3.9 Certain Amendments In Connection with the IPO. Upon the
---------------------------------------------
consummation of the IPO, the parties agree to discuss any amendments to this
Agreement reasonably necessary to reflect the Company's status as a Public
Company.
3.10 .Com Committee. (a) The Company acknowledges and agrees that
--------------
its policy and practices with respect to its willingness to negotiate and enter
into all .Com Agreements and all Promotional Agreements with content providers
that meet the Company's reasonable standards relating to obscene or offensive
material, is one of openness and non-exclusion, regardless of the identity of
such content provider and its relationship with the Company, and that it is in
the best interest of the Company and its stockholders for the Company to enter
into as many such agreements as is practicable. The terms and conditions of
.Com Agreements and Promotional Agreements shall not take into account the
identity of the Affiliates or Associates of such content provider nor shall the
identity of the Affiliates or Associates of any such content provider result in
either the exclusion of such content provider or such content provider gaining
promotion at the expense of others. Therefore, because the Parents and the Cable
Parents each have significant investments in a wide variety of content providers
and do not want such content providers' ability to obtain carriage and promotion
on the @Home Services to be unfairly advantaged or disadvantaged, the parties
have determined that the entering into of .Com and Promotional Agreements shall
not be considered Related Party Transactions regardless of the ownership of such
content provider or its relationship with any Stockholder or such Stockholder's
Related Party Affiliates, but that the entering into of such agreements shall be
governed by the procedure set forth in the Charter.
(b) Except to the extent determined to the contrary by the
unanimous vote (or written consent) of all Special Directors as provided in the
following sentence, each Stockholder agrees that it will use its reasonable best
efforts to cause its Stockholder Designees on the Board to vote against any (i)
amendment, repeal, supplement or other modification of any action or
determination made by the .Com Committee, (ii) removal of any member of the .Com
Committee, (iii) amendment of any of the provisions of the Charter or the Bylaws
with respect to the .Com Committee or (iv) dissolution or termination of the
.Com Committee to the extent such matters are presented to the Board for its
approval, adoption, ratification or confirmation. In the event that the Special
Directors determine, by a unanimous vote (or written consent) to (i)
-26-
rescind, amend, repeal, supplement or otherwise modify any action or
determination made by the .Com Committee, (ii) remove any member of the .Com
Committee, (iii) amend any of the provisions of the Charter or the Bylaws with
respect to the .Com Committee or (iv) dissolve or terminate the .Com Committee,
each Stockholder agrees to use its reasonable best efforts to cause its
Stockholder Designees on the Board to vote in favor of any such unanimous
determination by the Special Directors.
(c) Each Stockholder agrees that (i) immediately upon the
consummation of the transactions contemplated hereby, it will use its reasonable
best efforts to cause its Stockholder Designees on the Board to appoint as the
initial members of the .Com Committee: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, L. ▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, (ii) upon the appointment of any
successor to the current CEO and such person's election as a director, it will
use it reasonable best efforts to cause its Stockholder Designees to appoint
such successor CEO as a member of the .Com Committee, and (iii) it will use its
reasonable best efforts to cause its Stockholder Designees to appoint any
additional director unanimously selected by the Special Directors as a member of
the .Com Committee. Notwithstanding the foregoing, following the initial
appointment of the members of the .Com Committee pursuant to this Section
3.10(c), nothing herein contained will be deemed to require any Stockholder or
its Stockholder Group to vote its shares of Voting Stock in favor of the
continued election as a director of any incumbent member of the .Com Committee.
ARTICLE 4
TRANSFERS AND CONVERSIONS
-------------------------
4.1 General Restrictions on Transfer. (a) Prior to the earliest to
--------------------------------
occur of (i) the tenth anniversary of the Execution Date, (ii the fifth
anniversary of the termination of the Restricted Period as to any Cable Parent
and (ii the sixth anniversary of the IPO, no Stockholder shall voluntarily or
involuntarily Transfer any Company Securities or make an Indirect Transfer of
Company Securities, except for a Permitted Transfer or a Permitted Disposition;
provided, however, notwithstanding anything to the contrary contained herein,
-------- -------
that following the IPO, all restrictions upon Transfer set forth in this
Agreement (other than the restrictions relating to the conversion of Company
Securities set forth in Section 4.2) shall terminate and cease to be effective
as to any KPCB Constituents which have received or receive Company Securities
in a Transfer permitted by and in accordance with clause (vii) of the definition
of "Permitted Transfer" and as to ▇▇▇ ▇▇▇▇▇. The provisions of this Section 4.1
shall apply to each proposed Permitted Transfer or Permitted Disposition, and no
Stockholder shall consummate any Permitted Transfer or Permitted Disposition in
violation of the provisions of this Agreement. Any purported Transfer of
Company Securities in violation of this Agreement shall be null and void and of
no force or effect, and the Company shall not record any such Transfer on its
stock transfer books.
-27-
(b) During the period that Transfers are restricted pursuant to
Section 4.1(a), and without limiting any other requirements set forth elsewhere
herein, (i) in connection with any Permitted Transfer of any Company Securities
by any party hereto pursuant to clause (i)(y), (iii)(y), (vi), (vii) or (viii)
of the definition of "Permitted Transfer", such party shall (x) have complied
with the conversion requirements set forth in Section 4.2 (to the extent
applicable) prior to such Transfer and (y) give written notice to the Company
and each other Stockholder of such party's intention to effect such Transfer at
least five (5) Business Days prior to such Transfer and (ii) in connection with
any Indirect Transfer, such party shall give written notice at least two (2)
Business Days prior to such Indirect Transfer to the Company and each other
Stockholder. Each such notice shall describe the manner and circumstances of the
proposed Transfer in sufficient detail, and include any other information
required by the provisions of this Agreement applicable to such proposed
Transfer, and in the case of an Indirect Transfer pursuant to clause (ii), shall
include a certification by the transferor that such Transfer does not constitute
a Change of Control of a Stockholder. In addition, in the event requested by
the Company (such requests not to be made more than once per calender year),
each Stockholder agrees to furnish to the Company and each other Stockholder a
certificate of such Stockholder certifying as to the number of Attributable
Shares owned by its Stockholder Group, the members of its Stockholder Group
having a direct or indirect interest in the Company Securities and the ownership
structure of such members of its Stockholder Group, the number and type of
shares of Voting Stock which are not Company Securities held by the members of
its Stockholder Group and such other matters related to its equity interest in
the Company as the Company shall reasonably request.
(c) Each certificate evidencing Company Securities (i)
Transferred to a Permitted Transferee shall bear the restrictive legends set
forth in Section 5(a) and (b) of the Stock Purchase Agreement (unless such
legend may then be removed in accordance with the Registration Rights Agreement)
and (ii held by a party to this Agreement or transferred to a Permitted
Transferee who acquires Company Securities through a Transfer pursuant to
clauses (i)(y), (iii)(y), (iv), (vi), (vii) or (viii) of the definition of
"Permitted Transfer," shall also bear the restrictive legend set forth in
Section 5(c) of the Stock Purchase Agreement.
(d) Notwithstanding anything to the contrary set forth in this
Agreement, provided that a Control Block Group complies with the provisions of
Sections 4.5 and 4.6, a Control Block Sale shall not be subject to the
restrictions set forth in Section 4.1(a), and any Unaffiliated Third Party
purchasing Company Securities in a Control Block Sale shall acquire such
securities free and clear of any obligations, and shall have no rights, under
this Agreement.
4.2 Conversion of the Convertible Preferred Stock, the Series B
-----------------------------------------------------------
Common Stock and the Series K Common Stock.
------------------------------------------
(a) Except (i) as otherwise provided in this Section 4.2 and (ii
for any Transfer or Indirect Transfer in connection with a Control Block Sale or
Qualified Spin Off Transaction, no Stockholder shall Transfer any shares of
Convertible Preferred Stock, Series B Common Stock or Series K Common Stock
unless prior to the consummation of such Transfer it
-28-
shall have converted any such shares into shares of Series A Common Stock;
provided, however, that no holder of Series B Common Stock shall convert any
-------- -------
shares of Series B Common Stock into Series A Common Stock without first
complying with the provisions of clause (c) of this Section.
(b) The provisions of subsection (a) above shall not be
applicable to any Transfer which is a Permitted Transfer in accordance with the
provisions of clauses (i)(y), (iii)(y), (iv), (v), (vi), (vii) or (viii) of the
definition of Permitted Transfer.
(c) Prior to converting any shares of Series B Common Stock which
are Company Securities into shares of Series A Common Stock, any Stockholder
which owns Series B Common Stock shall deliver to the Cable Partners (other than
any Cable Partner which is proposing to convert shares of Series B Common Stock)
a written notice (a "Conversion Notice") of its intention to so convert such
-----------------
shares of Series B Common Stock, which notice shall set forth the number of
shares of Series B Common Stock it intends to convert and shall serve as an
offer by such Stockholder to exchange (the "Series B Exchange") with the
-----------------
remaining Cable Partners such shares of Series B Common Stock proposed to be
converted for an equal number of shares of Series A Common Stock. If any Cable
Partners wish to accept such offer for the Series B Exchange, such Cable
Partners shall deliver written notice of such acceptance to the Stockholder
desiring to convert, within two Business Days of receipt of the Conversion
Notice which notice shall set forth the number of shares of Series A Common
Stock such Cable Partners wish to exchange for shares of Series B Common Stock.
If the Cable Partners electing to participate in the Series B Exchange wish to
exchange in the aggregate a number shares of Series A Common Stock which exceeds
the number of shares of Series B Common Stock offered in the Conversion Notice,
then each Stockholder electing to participate shall be entitled to exchange a
number of shares of Series A Common Stock equal to the product of (x) a
fraction, the numerator of which is the number of shares of Series A Common
Stock (which are Company Securities) offered for exchange by such Cable Partner
and the denominator of which is the number of shares of Series A Common Stock
(which are Company Securities) offered for exchange by all Cable Partners
electing to participate and (y) the number of shares of Series B Common Stock
offered for exchange (in each case, determined on an as converted into Common
Stock basis). In the event that the Cable Partners desiring to make the Series
B Exchange have not accepted such offer as to all shares of Series B Common
Stock so offered for exchange, any remaining Stockholder which is not a Cable
Partner shall be entitled to accept such offer as to any remaining shares of
Series B Common Stock and thereby participate in the Series B Exchange. In the
event any holder of Series K Common Stock so elects to participate, such holder
shall, simultaneously with the Series B Exchange, convert into shares of Series
A Common Stock a number of shares of Series K Common Stock equal to the number
of shares of Series A Common Stock to be so exchanged. Such exchange shall be
consummated in accordance with the provisions of Section 11.9, as if it were a
purchase and sale of Company Securities and as if each Stockholder exchanging
securities were a seller, except that the provisions therein with respect to the
payment and delivery of a purchase price shall not be applicable.
-29-
(d) Each Stockholder owning shares of Series AM Preferred Stock,
Series AT Preferred Stock or Series AX Preferred Stock may convert such shares
into shares of Series A Common Stock; each Stockholder owning shares of Series K
Preferred Stock may convert such shares into shares of Series K Common Stock;
and each Stockholder owning shares of Series T Preferred Stock may convert such
shares into shares of Series B Common Stock, in each case, at such Stockholder's
option and without the consent of the other Stockholders.
(e) In connection with the consummation of a Control Block Sale,
each Stockholder Group agrees to use its reasonable best efforts to (i) cause
its Stockholder Designees to take such action as may be necessary in order to
and (ii) vote all shares of Voting Stock beneficially owned by it in favor of,
an amendment to the Charter providing that upon consummation of such Control
Block Sale the shares of Series K Preferred Stock would become convertible into
shares of Series A Common Stock (on the same basis as such shares were
convertible into Series K Common Stock) and deleting all provisions of the
Charter relating to the Series K Common Stock. In addition, any Stockholder
Group holding shares of Series K Common Stock agrees to convert any such shares
of Series K Common Stock into shares of Series A Common Stock upon consummation
of such Control Block Sale. Notwithstanding the foregoing provisions of this
subsection (e), in the event that a holder of Series K Preferred Stock or Series
K Common Stock is participating in the Control Block Sale, the amendments to the
Charter referenced above and the conversion of shares of Series K Common Stock
shall not be effected to the extent that the purchaser in such Control Block
Sale has requested in writing that such amendment and/or conversion not be
effected.
4.3 Right of First Offer. (a) Following the earliest to occur of
--------------------
(i) the fifth anniversary of the Execution Date, (ii the first anniversary of
the IPO, and (ii the termination of the Restricted Period as to any Cable
Parent, and provided that it shall have complied with the provisions of this
Section 4.3, a Stockholder Group will be entitled to dispose of all but not less
than all of its equity interest in the Company pursuant to (x) a Transfer of its
Company Securities to an Unaffiliated Third Party or (y) an Indirect Transfer of
such Company Securities to an Unaffiliated Third Party which Indirect Transfer
results in a Change of Control of a Stockholder (a "Restricted Indirect
-------------------
Transfer"); provided, however, that the provisions of this Section 4.3 shall not
-------- -------
be applicable to any Transfer which is to be made in accordance with Section
4.4. In the event that a Stockholder Group desires to Transfer its Company
Securities or enter into a transaction for such a Restricted Indirect Transfer,
the Stockholder of such Stockholder Group shall notify each other Stockholder of
its desire to enter into such a transaction (such notice, a "ROFO Notice"). In
-----------
the case of a ROFO Notice with respect to a Restricted Indirect Transfer, such
notice shall set forth the terms and conditions upon which such Restricted
Indirect Transfer is proposed to be made. Each ROFO Notice shall constitute an
offer by such Stockholder Group (the "ROFO Offeror") to sell all of the Company
------------
Securities held by such Stockholder Group (the "ROFO Shares") to the other
-----------
Stockholders (the "ROFO Stockholders"). Each ROFO Notice shall set forth the
-----------------
type and amount of the ROFO Shares and shall specify the price per share
(determined on an as converted into Series A Common Stock basis) at which such
ROFO Offeror will Transfer such Company Securities (the "ROFO Offer Price"). In
----------------
the event that any ROFO
-30-
Notice contemplates a Restricted Indirect Transfer, the ROFO Offer Price
applicable to the Company Securities to be transferred shall be the Per Share
Value. Unless otherwise agreed by the ROFO Offeror and a ROFO Stockholder
accepting such offer, the price for the ROFO Shares shall be payable in cash.
(b) Simultaneous with the delivery of a ROFO Notice contemplating
an Indirect Transfer, the ROFO Offeror shall deliver to each other Stockholder a
notice identifying an Appraiser who has been retained by the ROFO Offeror to
determine the Per Share Value of the ROFO Shares pursuant to Article 7. Within
ten Business Days after its receipt of the Offeror's notice pursuant to the
preceding sentence, the Stockholder (other than the ROFO Offeror) that, together
with the members of its Stockholder Group, owns the greatest number of shares of
Company Securities (determined on an as converted into Series A Common Stock
basis), shall send a notice to the ROFO Offeror and the other Stockholders
identifying a second Appraiser who shall be retained by the other Stockholders
to conduct such appraisal in accordance with the Appraisal Procedures set forth
in Article 7. In the event that two Stockholders qualify to appoint the second
Appraiser because such Stockholders own an equal number of Company Securities,
such Stockholders shall agree upon and give notice of the identity of the second
Appraiser within such ten Business Day period referred to in the preceding
sentence.
(c) (i) If a ROFO Stockholder desires to accept the offer set
forth in a ROFO Notice as to any part of the ROFO Shares, such ROFO Stockholder
(a "ROFO Electing Stockholder") shall, within ten Business Days of receipt of
-------------------------
such ROFO Notice or, in the event the ROFO Offer Price is to be the Per Share
Value, the tenth Business Day following the determination of the Per Share
Value, notify the ROFO Offeror of its agreement to acquire ROFO Shares and the
number of such shares it agrees to acquire, and deliver a copy of such notice to
each other Stockholder.
(ii) If the ROFO Electing Stockholders elect to acquire, in
the aggregate, all of the ROFO Shares, then the ROFO Electing Stockholders shall
have the right and obligation to acquire, on the applicable closing date and in
accordance with the provisions of Section 11.9, all of the ROFO Shares,
allocated among them as follows (or in such other manner as the ROFO Electing
Stockholders may agree):
(A) the ROFO Shares shall be allocated among the ROFO
Electing Stockholders pro rata (based on the number of Company Securities owned
by such Stockholders' respective Stockholder Groups determined on an as
converted into Series A Common Stock basis) until all of the ROFO Shares have
been allocated or any ROFO Electing Stockholder has been allocated the number of
ROFO Shares that it desires to acquire, as specified in its notice to the ROFO
Offeror, as it may have been amended pursuant to Section 4.3(c)(iii);
(B) if all ROFO Shares are not allocated pursuant to
paragraph (A) or any prior application of this paragraph (B), any ROFO Shares
that were not allocated pursuant to paragraph (A) or any prior application of
this paragraph (B) shall be
-31-
allocated among the ROFO Electing Stockholders (other than any ROFO Electing
Stockholder that has been allocated the number of ROFO Shares that it desires to
acquire, as specified in its notice to the ROFO Offeror, as it may have been
amended pursuant to Section 4.3(c)(iii)) pro rata (based on the number of
Company Securities owned by such Stockholders' respective Stockholder Groups
determined on an as converted into Series A Common Stock basis); and
(C) if all ROFO Shares are not allocated pursuant to
paragraph (A) and any prior application of paragraph (B), any ROFO Shares that
were not allocated pursuant to paragraph (A) and any prior application of
paragraph (B) shall be allocated by continuing to apply paragraph (B) as
required.
(ii) If the ROFO Electing Stockholders desire to acquire, in
the aggregate, less than all of the ROFO Shares, then the ROFO Offeror shall so
notify the ROFO Electing Stockholders and:
(A) each ROFO Electing Stockholder shall have the
right, by written notice sent to the ROFO Offeror (with a copy of such notice to
each other Stockholder) within five days after its receipt of the notice from
the ROFO Offeror pursuant to this Section 4.3(c)(iii) to amend its notice to
increase the number of ROFO Shares that it desires to purchase;
(B) if, after giving effect to any amendment to any
ROFO Electing Stockholder's notice pursuant to this Section 4.3(c)(iii), the
ROFO Electing Stockholders desire to acquire, in the aggregate, all of the ROFO
Shares, then the ROFO Electing Stockholders shall have the right and obligation
to acquire, on the applicable closing date and in accordance with the provisions
of Section 11.9, all the ROFO Shares, allocated among them in accordance with
Section 4.3(c)(ii); and
(C) if, after giving effect to any amendment to any
ROFO Electing Stockholder's notice pursuant to this Section 4.3(c)(iii), the
ROFO Electing Stockholders desire to acquire, in the aggregate, less than all of
the ROFO Shares, then the ROFO Offeror's offer of the ROFO Shares shall be
deemed rejected as of the last day for a ROFO Electing Stockholder to amend its
notice pursuant to this Section 4.3(c)(iii).
(d) If (i) the ROFO Offeror's offer of the ROFO Shares is
rejected as provided in Section 4.3(c)(iii)(C), or (ii the purchase of the ROFO
Shares is not consummated within the period set forth in Section 11.9(c) for any
reason other than a breach by the ROFO Offeror of any of its covenants,
representations or warranties that are a condition to consummation of such
purchase, then the ROFO Offeror shall have the right, at any time during the
sixty-day period beginning on the date that the ROFO Offeror's offer of the ROFO
Shares is deemed rejected or the day following the last day of the period set
forth in Section 11.9(c), as applicable, to enter into a binding agreement to
sell all of the ROFO Shares to a third party, or to enter into a binding
agreement to effect an Indirect Transfer contemplated by the ROFO Notice, as
applicable, in either case on terms and conditions no less favorable in the
aggregate to the ROFO
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Offeror than those set forth in the ROFO Notice, and thereafter (within the
period specified below in this Section 4.3(d)) to sell all of the ROFO Shares to
such third party or effect the Indirect Transfer, as applicable, pursuant to
such agreement. If the ROFO Offeror does not enter into such an agreement during
such sixty-day period, or does not close the sale thereunder within 120 days
from the date the ROFO Offeror's offer of the ROFO Shares is deemed rejected or
the day following the last day of the period set forth in Section 11.9(c), as
applicable (subject to extension for a maximum of 60 additional days to the
extent required to obtain all required governmental, regulatory and other third
party consents and approvals, provided the ROFO Offeror and the third party
purchaser are each using commercially reasonable efforts to obtain such consents
and approvals), the procedure set forth above with respect to the ROFO Notice
shall be repeated with respect to any subsequent proposed Transfer of Company
Securities or proposed Indirect Transfer by the ROFO Offeror.
(e) The ROFO Offeror shall, prior to transferring the ROFO Shares
to the third party purchaser or effecting the Indirect Transfer, as applicable,
convert all shares of Company Securities included in the ROFO Shares to Series A
Common Stock subject, however, in the case of any holder of Series B Common
Stock, to the obligation to offer to make the Series B Exchange in accordance
with Section 4.2(c).
(f) An Unaffiliated Third Party purchaser acquiring shares of
Series A Common Stock in accordance with the foregoing procedures shall acquire
such shares free and clear of any obligations, and shall have no rights, under
this Agreement.
4.4 Right of First Offer Following an IPO. In addition to any
-------------------------------------
Transfer permitted pursuant to Section 4.3 or Section 4.4(f), following the
first anniversary of the IPO, each Stockholder will be entitled to Transfer all
or a portion of the shares of Series A Common Stock owned by its Stockholder
Group pursuant to the exercise of its registration rights granted under the
Registration Rights Agreement or pursuant to an exemption from registration
under the Securities Act; provided that, except as provided in Section 4.4(f),
--------
such Stockholder on behalf of its Stockholder Group shall first have offered to
sell all of the shares of Series A Common Stock it proposes to so Transfer to
the other Stockholders in accordance with the following procedures:
(a) In the event that following the first anniversary of the IPO
(i) a Stockholder (the "Original Initiating Holder") elects to exercise its
--------------------------
demand registration right, (ii) another Stockholder (an "Initiating Holder" and,
-----------------
together with the Original Initiating Holder, the "Initiating Holders") elects
------------------
to exercise its registration rights in connection with such Original Initiating
Holder's demand registration, (iii) a Stockholder (a "Piggyback Stockholder")
---------------------
elects to exercise its piggyback registration rights with respect to a primary
or secondary registration under the Securities Act of equity securities of the
Company (other than any "shelf registration" or registrations on Forms S-8 or S-
4 or a registration initiated pursuant to clause (i) or (ii) above), or (iv) a
Stockholder seeks to sell shares of Series A Common Stock pursuant to Rule 144
of the Securities Act or any similar exemption from registration for sales of
shares into a public market (an "Exempt Offering"), each such Stockholder
---------------
exercising its registration rights or seeking to sell
-33-
shares in an Exempt Offering (each a "Post IPO Seller") shall, simultaneously
---------------
with the delivery of its notice to the Company requesting such registration or
notifying the Company of such Exempt Offering, as applicable, deliver to each
other Stockholder not seeking to sell shares of the Series A Common Stock (the
"Post IPO Stockholders") a notice (a "Post IPO Sale Notice") setting forth the
--------------------- --------------------
number of Company Securities it proposes to register or proposes to sell in an
Exempt Offering, as applicable (the "Post IPO Offered Shares") which notice
-----------------------
shall constitute an offer by such Post IPO Seller to sell the Post IPO Offered
Shares to the Post IPO Stockholders at a price per share payable in cash, equal
to the closing market price of a share of Series A Common Stock (less, in the
case of a registered offer or sale pursuant to Rule 144, an amount per share
equal to the good faith estimated amount of any anticipated underwriting
discounts or commissions or brokerage charges applicable to each share to be
sold) on the following applicable date: (i) in the case of a demand registration
by any Initiating Holder, on the date prior to the date the Original Initiating
Holder notifies the Company of its intention to exercise such demand
registration right, (ii) in the case of a piggyback registration by a Piggyback
Stockholder, on the date prior to the date that such Piggyback Stockholder
notifies the Company of its intention to exercise its piggyback registration
right, or (iii) in the case of an Exempt Offering, on the date prior to the date
such Stockholder notifies the Company of its intention to effect an Exempt
Offering.
(b) If a Post IPO Stockholder desires to accept the offer set
forth in a Post IPO Sale Notice as to any part of the Post IPO Offered Shares,
such Post IPO Stockholder (a "Post IPO Electing Stockholder") shall deliver
-----------------------------
written notice to the Post IPO Seller of its agreement to acquire Post IPO
Offered Shares and the number of such shares it agrees to acquire, and deliver a
copy of such notice to each other Post IPO Stockholder which notice shall be
delivered (i) in the case of a notice responding to a Post IPO Seller's
intention to effect a demand or piggyback registration, within three Business
Days following delivery of such Post IPO Sale Notice or (ii in the case of a
notice responding to a Post IPO Seller's intention to effect an Exempt Offering,
by 4:00 p.m. New York time on the Business Day following delivery of such Post
IPO Sale Notice; provided that if the Post IPO Sale Notice is delivered after
4:00 p.m. New York time, such notice shall be deemed to have been delivered on
the following Business Day.
(c) If the Post IPO Electing Stockholders elect to acquire, in
the aggregate, all of the Post IPO Offered Shares, then the Post IPO Electing
Stockholders shall have the right and obligation to acquire, on the applicable
closing date and in accordance with the provisions of Section 11.9, all the Post
IPO Offered Shares, allocated among them as follows (or in such other manner as
the Post IPO Electing Stockholders may agree):
(i) the Post IPO Offered Shares shall be allocated among the
Post IPO Electing Stockholders pro rata (based on the number of Company
Securities owned by such Stockholders' respective Stockholder Groups determined
on an as converted into Series A Common Stock basis) until all of the Post IPO
Offered Shares have been allocated or any Post IPO Electing Stockholder has been
allocated the number of Post IPO Offered Shares that it desires to
-34-
acquire, as specified in its notice to the Post IPO Seller, as it may have been
amended pursuant to Section 4.4(d);
(ii) if all Post IPO Offered Shares are not allocated
pursuant to paragraph (i) or any prior application of this paragraph (ii), any
Post IPO Offered Shares that were not allocated pursuant to paragraph (i) or any
prior application of this paragraph (ii) shall be allocated among the Post IPO
Electing Stockholders (other than any Post IPO Electing Stockholder that has
been allocated the number of Post IPO Offered Shares that it desires to acquire,
as specified in its notice to the Post IPO Seller, as it may have been amended
pursuant to Section 4.4(d)) pro rata (based on the number of Company Securities
owned by such Stockholders' respective Stockholder Groups determined on an as
converted into Series A Common Stock basis); and
(iii) if all Post IPO Offered Shares are not allocated
pursuant to paragraph (i) and any prior application of paragraph (ii), any Post
IPO Offered Shares that were not allocated pursuant to paragraph (i) and any
prior application of paragraph (ii) shall be allocated by continuing to apply
paragraph (ii) as required.
(d) If the Post IPO Electing Stockholders desire to acquire
pursuant to paragraph (c) above, in the aggregate, less than all of the Post IPO
Offered Shares, then the Post IPO Seller shall so notify the Post IPO Electing
Stockholders and (x) in the case of an Exempt Offering, the Post IPO Seller's
Offer of the Post IPO Offered Shares shall be deemed rejected as of the last day
upon which notice of acceptance of such Post IPO Seller's offer may be delivered
pursuant to Section 4.4(b)(ii) and (y) in the case of all other offers by Post
IPO Sellers, the following procedure shall apply:
(i) each Post IPO Electing Stockholder shall have the
right, by written notice sent to the Post IPO Seller (with a copy of such notice
to each other Stockholder) by 5:00 p.m. New York time on the Business Day
following receipt of such notice from the Post IPO Seller pursuant to this
Section 4.4(d), to amend its notice to increase the number of Post IPO Offered
Shares that it desires to purchase;
(ii) if, after giving effect to any amendment to any Post
IPO Electing Stockholder's notice pursuant to this Section 4.4(d), the Post IPO
Electing Stockholders desire to acquire, in the aggregate, all of the Post IPO
Offered Shares, then the Post IPO Electing Stockholders shall have the right and
obligation to acquire, on the applicable closing date and in accordance with the
provisions of Section 11.9, all of the Post IPO Offered Shares, allocated among
them in accordance with Section 4.4(c); and
(iii) if, after giving effect to any amendment to any Post
IPO Electing Stockholder's notice pursuant to this Section 4.4(d), the Post IPO
Electing Stockholders desire to acquire, in the aggregate, less than all of the
Post IPO Offered Shares, then the Post IPO
Seller's offer of the Post IPO Offered Shares shall be deemed rejected as of the
last day for a Post IPO Electing Stockholder to amend its notice pursuant to
this Section 4.4(d).
(e) If (i) the Post IPO Seller's offer of the Post IPO Offered
Shares is rejected as provided in Section 4.4(d), or (ii the purchase of the
Post IPO Offered Shares is not consummated within the period set forth in
Section 11.9(c) for any reason other than a breach by the Post IPO Seller of any
of its covenants, representations or warranties that are a condition to
consummation of such purchase, then the Post IPO Seller shall have the right (x)
in the case of a demand registration or piggyback registration, to proceed with
such registration and upon the effectiveness of such registration consummate
such sale without regard to the actual sale price of such Post IPO Offered
Shares, provided that such sale takes place prior to the end of the period
during which the Company is required to keep the applicable registration
statement effective pursuant to the Registration Rights Agreement (y) in the
case of an Exempt Offering, to sell the Post IPO Offered Shares in the Exempt
Offering without regard to the actual sale price of such Post IPO Offered
Shares, provided that such Exempt Offering takes place within five business days
of the date the Post IPO Stockholders fail to accept such offer to purchase. Any
shares sold to an Unaffiliated Third Party in such a registered offering or
Exempt Offering in accordance with the foregoing procedures shall be sold free
and clear of any obligations and without any rights under this Agreement.
(f) In the event that TCI Sub makes the IPO Election and
thereafter elects to exercise its Special Demand Registration Right pursuant to
and in accordance with the terms of the Registration Rights Agreement, then (i)
each Stockholder Group, if it so elects, shall be entitled to participate in and
sell shares pursuant to such Demand Registration, notwithstanding the limitation
set forth in this Section 4.4 that no such registered sales are to take place
prior to the first anniversary of the IPO, (ii) sales of shares in the Demand
Registration pursuant to the Special Demand Registration Right shall not be
subject to the Right of First Offer procedures set forth in this Section 4.4,
and (iii) following the IPO, but without regard to the one year restricted
period set forth in the first sentence of this Section 4.4, a Stockholder may
exercise its Incidental Registration rights and sell such shares in accordance
with the provisions of Section 3 of the Registration Rights Agreement, but
subject to the other limitations set forth in this Section 4.4.
4.5 Tag-Along Rights.
----------------
(a) In the event that any Control Block Group proposes to sell
Company Securities in a transaction that would constitute a Control Block Sale,
the Stockholders which are members of the Control Block Group (the "Tag
---
Offerors") shall be required, as a condition to such sale, to offer to each
--------
other Stockholder that is an Exclusive Stockholder or an Eligible Stockholder
(such Stockholder, a "Qualified Tag Stockholder") the right to participate in
-------------------------
such Control Block Sale (the "Tag-Along Right") in accordance with the following
---------------
procedures.
(b) The Tag Offerors shall provide prompt written notice of the
proposed Control Block Sale to each Qualified Tag Stockholder (the "Tag-Along
---------
Notice"). The
------
Tag-Along Notice shall set forth the terms and conditions of the Control Block
Offer, including the name and address of the proposed Unaffiliated Third Party
purchaser (the "Tag-Along Buyer"), the number and type of Company Securities to
---------------
be sold in the Control Block Sale, the amount and type of direct and indirect
consideration to be paid per share to the Control Block Group, the form of
proposed acquisition agreement and all other material terms and conditions of
the proposed transaction. The Tag-Along Notice shall constitute an offer by the
Tag Offerors to each Qualified Tag Stockholder, which offer may be accepted by
the Qualified Tag Stockholders for a period of 20 Business Days following the
date the original Tag-Along Notice is received (the "Tag-Along Offer Period"),
----------------------
to include in the Control Block Sale an amount of Company Securities equal to
(x) the maximum number of Company Securities proposed to be purchased in the
Control Block Sale, multiplied by (y) a fraction, the numerator of which shall
be the number of Company Securities beneficially owned by such Qualified Tag
Stockholder's Stockholder Group and the denominator of which shall be the sum of
(i) the number of Company Securities beneficially owned by the Control Block
Group plus (ii) the number of Company Securities beneficially owned by the
Stockholder Groups of each Tag-Along Electing Stockholder (as defined below), in
each case determined prior to such Control Block Sale and determined on an as
converted into shares of Series A Common Stock basis. The Tag Offerors shall
update such notice by promptly providing each Qualified Tag Stockholder with
notice of any material changes to the information contained therein. Upon
receipt of each such updated notice (i) a Qualified Tag Stockholder who has
elected to exercise its Tag-Along Rights shall have the right to withdraw such
election by written notice delivered to each Tag Offeror within 5 Business Days
of receipt of such updated notice, provided that such Qualified Tag Stockholder,
--------
in its reasonable good faith judgment, has determined that the offer as modified
constitutes a materially adverse change from the terms and conditions of the
offer described in the original Tag-Along Notice or, if applicable, the previous
updated notice and (ii) a Qualified Tag Stockholder who has not yet elected to
exercise its Tag-Along Right may elect to so exercise by written notice
delivered to each Tag Offeror on or before the later of (x) 10 Business Days
following receipt of such updated notice and (y) the expiration of the 20
Business Day acceptance period referred to above in this clause (b).
Notwithstanding the foregoing, in the event that the Tag-Along Notice is updated
following the conclusion of such 20 Business Day acceptance period, a Qualified
Tag Stockholder which has not theretofore elected to exercise its Tag-Along
Right will be entitled to participate in such revised offer only in the event
the terms and conditions of such revised Tag-Along Notice are more favorable to
the sellers of Company Securities than the terms and conditions of the original
Tag-Along Notice or, if applicable, the previous updated notice. The foregoing
calculation with respect to the number of Company Securities which a Qualified
Tag Stockholder may include in the Control Block Sale shall be recalculated each
time another Qualified Tag Stockholder elects to participate or withdraws from
participation in the Control Block Sale following receipt of an updated notice
as provided above. Notice of such recalculated amounts shall be given to each
Stockholder by the Tag Offeror promptly following any such change in
participation by Qualified Tag Stockholders.
(c) (i) If in connection with such Control Block Sale, assets,
properties or other securities, in addition to the Company Securities (or
interest therein), are to be transferred, then prior to submitting a Tag-Along
Notice pursuant to this Section 4.5, the Tag
-37-
Offerors and the other Stockholders shall cause the total consideration
specified in the Control Block Sale to be allocated between the Company
Securities and such other assets, properties and securities in proportion with
their respective fair market values pursuant to Section 4.7.
(ii) Subject to Section 4.8, the Tag Offerors and the Tag-
Along Electing Stockholders agree to use their respective commercially
reasonable efforts to consummate any such Control Block Sale in a tax-free
transaction or, if not available, the most tax efficient method available.
(d) If any Qualified Tag Stockholder elects to exercise the Tag-
Along Right (a "Tag-Along Electing Stockholder"), such election shall be made by
------------------------------
such Tag-Along Electing Stockholder by written notice to that effect delivered
to each Tag Offeror prior to the expiration of the Tag-Along Offer Period. Such
notice shall (i) state that such Tag-Along Electing Stockholder is exercising
its Tag-Along Right and (ii) set forth the aggregate number of Company
Securities (specifying the number of shares of each series of Common Stock and
Preferred Stock) beneficially owned by its Stockholder Group and the number and
type of Company Securities includable in the Control Block Sale. Promptly
following the delivery of any such notice, such Tag-Along Electing Stockholder's
Stockholder Group shall agree to become a party to or otherwise become bound by
the applicable terms and conditions of the contract, agreement or instrument
pursuant to which the Control Block Group has agreed to consummate such Control
Block Sale, which terms and conditions shall be no less favorable to the Tag-
Along Electing Stockholder's Stockholder Group than the terms and conditions
applicable to the Control Block Group. The Tag-Along Electing Stockholder's
exercise of the Tag-Along Right shall be conditioned upon each member of its
Stockholder Group electing to sell Company Securities pursuant to such Tag-Along
Right becoming a party to such acquisition agreement.
(e) If any Qualified Tag Stockholder fails to exercise the Tag-
Along Right, or otherwise fails to comply with the requirements set forth in
Section 4.5(d), the Control Block Group (including any other Tag-Along Electing
Stockholder) shall have the right to consummate the Control Block Sale in
accordance with the terms and conditions set forth in the Tag-Along Notice (as
updated pursuant to Section 4.5(b)); provided, however, that if the Control
-------- -------
Block Group does not consummate the Control Block Sale within 120 days following
the expiration of the Tag-Along Offer Period, the Control Block Group shall not
consummate any Control Block Sale without repeating the procedures set forth in
this Section 4.5; provided, however, that (x) any amendments, modifications or
-------- -------
waivers of the agreement regarding such Control Block Sale occurring subsequent
to the conclusion of the Tag-Along Offer Period shall not be deemed to require
that such transaction be re-offered to such Qualified Tag Stockholders unless
the effect of such amendment, modification or waiver is to make the terms of
such Control Block Sale more favorable to the members of the Control Block Group
than the terms set forth in the last Tag-Along Notice prior to the conclusion of
the Tag-Along Offer Period and (y) any increase in the market value of the
consideration offered in any such Control Block Sale shall not constitute an
amendment, modification or waiver of any provision of such Control Block Sale
requiring further compliance with the provisions of this Section 4.5.
Notwithstanding the foregoing, if the Control Block Sale is subject to the
receipt of any regulatory approval or
-38-
expiration of any waiting period, the time period during which such Control
Block Sale may be consummated shall be extended until the expiration of five
Business Days after all such approvals have been received or waiting periods
expired, but in no event shall such time period exceed 180 days following
expiration of such 120 day period referred to above.
(f) Subject to the terms and conditions contained in any
agreement entered into with the Tag-Along Buyer, in the event that any members
of a Tag-Along Electing Stockholder's Stockholder Group seeking to sell Company
Securities pursuant to such Tag-Along Right fail to satisfy any condition to
consummation of such Control Block Sale such that the conditions to the Tag-
Along Buyer's obligation to purchase such shares are not timely satisfied, then
the Company Securities proposed to be sold by the members of such Tag-Along
Electing Stockholder's Stockholder Group shall be excluded from such sale, and
each other member of the Control Block Group (including each other Tag-Along
Electing Stockholder) shall be entitled to substitute Company Securities owned
by them in place of such excluded Company Securities on a pro rata basis (based
on the number of Company Securities owned by such Stockholders' respective
Stockholder Groups determined on an as converted into Series A Common Stock
basis).
4.6 Drag-Along Right.
----------------
(a) If any group of Stockholders composed of TCI Sub and any
other two Stockholders (which may include any Tag-Along Electing Stockholders)
(so long as such Stockholders are Eligible Stockholders and neither of such
Stockholders is a member of the same Stockholder Group as the other such
Stockholder or as TCI Sub) (a "Dragging Control Block Group") proposes to effect
----------------------------
a Control Block Sale, such Control Block Group shall have the right (the "Drag-
-----
Along Right") to require each remaining Stockholder (a "Drag-Along Stockholder")
----------- ----------------------
to sell in such transaction an amount of Company Securities beneficially owned
by such Drag-Along Stockholder's Stockholder Group equal to (x) the maximum
number of Company Securities proposed to be purchased in the Control Block Sale
multiplied by (y) a fraction, the numerator of which shall be the number of
Company Securities beneficially owned by such Drag-Along Stockholder's
Stockholder Group and the denominator of which shall be the sum of (i) the
number of Company Securities beneficially owned by the Dragging Control Block
Group plus (ii) the number of Company Securities beneficially owned by the
Stockholder Groups of each Drag-Along Stockholder (as defined below), in each
case determined prior to such Control Block Sale and determined on an as
converted into shares of Series A Common Stock basis (such number of shares
which is the product of the immediately preceding clauses (x) and (y), the
"Dragged Shares"), subject to the provisions of this Section 4.6. If the
--------------
Dragging Control Block Group elects to exercise its right to require the Drag-
Along Stockholders to participate in such a Control Block Sale as provided in
this Section 4.6, then the Dragging Control Block Group shall provide written
notice thereof to each Drag-Along Stockholder (the "Drag-Along Notice"), which
-----------------
notice shall include the amount and type of the direct and indirect
consideration to be paid to the Dragging Control Block Group (which, to the
extent applicable, shall be determined in accordance with the procedures
specified in Section 4.6(b)), the form of acquisition agreement the Dragging
-39-
Control Block Group is prepared to enter into in connection with such Control
Block Sale and all other material terms thereof.
(b) If in connection with such Control Block Sale assets,
properties or other securities, in addition to the Company Securities (or
interest therein) are to be transferred, then prior to submitting a Drag-Along
Notice pursuant to this Section 4.6, the Dragging Control Block Group and the
other Stockholders shall cause the total consideration specified in the Control
Block Sale to be allocated between the Company Securities and such other assets,
properties and securities in proportion to their respective fair market values
pursuant to Section 4.7.
(c) Each member of a Drag-Along Stockholder's Stockholder Group
shall be required to sell (the "Dragged Sale") the Dragged Shares upon the same
------------
terms and conditions as the Dragging Control Block Group has proposed or agreed
to sell Company Securities to the purchaser in such Control Block Sale.
(d) Subject to the terms of this Agreement, upon delivery to it
of the Drag-Along Notice, each Drag-Along Stockholder and each member of its
Stockholder Group shall agree to become a party to or otherwise become bound by
the applicable terms and conditions of the contract, agreement or instrument
pursuant to which the Dragging Control Block Group has agreed to sell Company
Securities in the Control Block Sale, which terms and conditions shall be no
less favorable to the members of each Drag-Along Stockholder's Stockholder Group
than the terms and conditions applicable to the Dragging Control Block Group.
4.7 Determination of Consideration Payable with Respect to Certain
--------------------------------------------------------------
Tag-Along Rights and Drag-Along Rights. Before submitting a Tag-Along Notice or
--------------------------------------
a Drag-Along Notice pursuant to Section 4.5 or 4.6, respectively, in response to
a Control Block Offer that contemplates a sale of Company Securities in
conjunction with other assets, properties or securities, the Tag Offerors or the
Dragging Control Block Group, as applicable (each of which shall be referred to
in this Section as the "Sellers") and the other Stockholders shall cause the
-------
total consideration specified in the Control Block Offer to be allocated between
the Company Securities and such other assets, properties or securities in
proportion to their respective fair market values to be determined as follows:
(a) The Sellers shall mutually agree upon a designee (the
"Designee") to execute such group's responsibilities pursuant to this Section
--------
4.7. The Designee shall deliver to each Stockholder which is not a Seller, a
notice stating that the Sellers intend to deliver a Tag-Along Notice or Drag-
Along Notice, as applicable, to which this Section 4.7 applies and identifying
an Appraiser who has been retained by the Designee to allocate the total
consideration specified in the Control Block Offer between the Company
Securities and such other assets, properties or securities pursuant to this
Section 4.7. Within ten Business Days after its receipt of the Designee's notice
pursuant to the preceding sentence, the Qualified Tag Stockholder, in the case
of a Tag-Along Right, or the Stockholder, in the case of a Drag-Along Right
(other than any such Stockholder that is a Seller) that, together with its
Controlled Affiliates, owns the greatest
-40-
number of shares of Company Securities (determined on an as converted into
Series A Common Stock basis), shall send a notice to the Designee and the other
Stockholders identifying a second Appraiser who shall be retained by the
Designee to determine such allocation or conduct such appraisal, as applicable,
pursuant to this Section 4.7. In the event that two Stockholders qualify to
appoint the second Appraiser because such Stockholders own an equal number of
Company Securities, such Stockholders shall agree upon and give notice of the
identity of the second Appraiser within such ten Business Day period referred to
in the preceding sentence.
(b) The Appraisers shall submit their independent determinations
of the amount of consideration allocable to the Company Securities to be sold in
the Control Block Sale (the "Allocation") (which determination shall be made
----------
giving equal consideration to the amount of consideration allocable to the other
assets, properties or securities to be sold in conjunction with such Control
Block Sale) within thirty days after the date on which the second Appraiser is
retained. If the higher determination does not exceed the lower determination
by an amount in excess of 10% of such lower determination, then the Allocation
shall be the average of the two determinations for purposes of this Section 4.7.
(c) If the higher determination exceeds the lower determination
by an amount in excess of 10% of such lower determination, then such two
Appraisers shall promptly jointly select a third Appraiser (the "Third
-----
Appraiser"), who shall be retained by the Designee to make an allocation or
---------
conduct an appraisal pursuant to this Section 4.7. If the first two Appraisers
are unable to agree on a Third Appraiser within thirty days, any Stockholder may
cause the American Arbitration Association of New York to appoint such Third
Appraiser. The first two Appraisers shall furnish such Third Appraiser with the
work product used by each of them in determining their respective allocations or
appraisals, as applicable. The Third Appraiser shall submit its determination of
the Allocation (which determination shall be made giving equal consideration to
the amount of consideration allocable to the other assets to be sold in
conjunction with such Control Block Sale) within thirty days after the date on
which the Third Appraiser is retained. If a Third Appraiser is retained, the
Allocation or the fair market value for purposes of Section 4.7 shall be equal
to the average of the two closest determinations; provided, however, that if the
-------- -------
difference between the highest and middle determinations is no more than 105%
and no less than 95% of the difference between the middle and lowest
determinations, the Allocation for purposes of this Section 4.7 shall be equal
to such middle determination.
(d) All fees and expenses of any Appraiser retained pursuant to
this Section 4.7 shall be paid by the Sellers, in proportion to their pro rata
portion of the Company Securities to be sold in the Control Block Sale
(determined on an as converted into Series A Common Stock basis).
(e) In allocating the total consideration specified in the
Control Block Offer between the Company Securities and such other assets,
properties and securities, each Appraiser retained pursuant to this Section 4.7
shall use valuation techniques then prevailing in the relevant industry and
assume that the fair market value of the applicable asset is the price at
-41-
which the asset would change hands between a willing buyer and a willing seller,
neither being under any compulsion to buy or sell and each having reasonable
knowledge of all relevant facts.
4.8 Allocation of Consideration. Each item of consideration payable
---------------------------
to the sellers of Company Securities in a transaction subject to Sections 4.5 or
4.6 shall be allocated in proportion to the number of Company Securities (as
determined on an as-converted into Series A Common Stock basis) sold by each
such seller (subject to adjustment in accordance with the second sentence of
Section 11.9(d)).
ARTICLE 5
DEEMED TRANSFER
---------------
5.1 Definitions. For purposes of this Article 5, the following
-----------
capitalized terms shall have the following meanings.
"Base Homes Passed" means the number of Homes Passed of the applicable
-----------------
Cable Parent and its Controlled Affiliates as of the Execution Date as set forth
on Schedule II.
"Exclusive Homes Passed" means as of the date of determination, the
----------------------
sum of (A) the number of Homes Passed in cable systems of such Cable Parent or
its Controlled Affiliates which are subject to the Cable Parent Exclusivity
Provisions or which are subject to any agreement requiring that the Operator (or
any other entity of which such Operator is a Controlled Affiliate) thereof
operate such cable system in accordance with such Cable Parent Exclusivity
Provisions during the Restricted Period and (B) any Homes Passed of such Cable
Parent or its Controlled Affiliate located in an Operator Territory (or portion
thereof) which has been released from the Cable Parent Exclusivity Provisions or
which is then entitled to be released from such provisions pursuant to the terms
of any LCO Agreement, other than any such release pursuant to the Master
Distribution Agreement resulting from the sale or transfer by the applicable
Cable Parent of cable systems in the applicable Operator Territory.
Notwithstanding the foregoing, the number of Exclusive Homes Passed of a Cable
Parent which is effecting an exchange of one or more cable systems shall be
calculated on the basis of netting the Exclusive Homes Passed relating to cable
systems transferred in such exchange against Homes Passed relating to cable
systems acquired in such exchange as of the completion of all exchanges and
transfers of cable systems related to such exchange, provided that Homes Passed
to be acquired in any such exchange shall not be included in the calculation of
Exclusive Homes Passed (x) if such Homes Passed are not acquired within 24
calendar months of the first transfer included in such exchange or (y) to the
extent such Homes Passed are not subject to the Cable Parent Exclusivity
Provisions within 180 days after the completion of such exchange.
-42-
"Homes Passed" means the number of residential homes that can be
------------
connected to a cable distribution system (provided, that each residential unit
in a multiple dwelling unit shall be counted as one Home Passed).
"Minimum Exclusive Homes Passed" means a number of Homes Passed which
------------------------------
is equal to 80% of the Base Homes Passed.
"Operator" means the Person which owns and operates a cable television
--------
system that agrees to distribute the @Home Services in accordance with the terms
of an LCO Agreement.
"Operator Territory" means the portion of the geographic area covered
------------------
by an LCO Agreement where an Operator is providing cable television service
through such Operator's distribution facilities.
"Proportionate Transferred Shares" means, with respect to any Cable
--------------------------------
Parent which is determined to have made a Deemed Transfer, a number of shares of
Series A Common Stock which is equal to (A) such Stockholder's number of Total
Shares, multiplied by (B) a fraction, the numerator of which is the difference
between the Base Homes Passed and the Exclusive Homes Passed, and the
denominator of which is the Base Homes Passed, less (C) any Total Shares of such
Stockholder which have previously been Proportionate Transferred Shares (whether
such shares were purchased by another Stockholder or released from the
provisions hereof).
"Total Shares" shall mean, with respect to any Stockholder determined
------------
to have made a Deemed Transfer, the number of Company Securities (determined on
an as converted into Series A Common Stock basis) acquired by such Stockholder's
Stockholder Group from the Company pursuant to the Stock Purchase Agreement or
otherwise held by such Stockholder Group on the date of the Closing, together
with all Company Securities purchased pursuant to the exercise of such
Stockholder Group's preemptive rights with respect thereto.
5.2 Deemed Transfer. In the event that at any time during the
---------------
Restricted Period the number of Exclusive Homes Passed of a Cable Parent fails
to equal or exceed such Cable Parent's Minimum Exclusive Homes Passed, then such
Cable Parent shall be deemed to have made a Transfer (the "Deemed Transfer") of
---------------
a number of Company Securities equal to the Proportionate Transferred Shares.
Upon the occurrence of a Deemed Transfer, the Cable Parent of such Stockholder
shall be required to cause such Stockholder (the "Transferring Stockholder") to
------------------------
offer to sell to the other Stockholders (on a pro rata basis, based on the
number of Company Securities owned by such other Stockholders' respective
Stockholder Groups determined on an as converted into Series A Common Stock
basis) a number of shares equal to the Proportionate Transferred Shares in
accordance with the procedure set forth below. Nothing herein contained
(including but not limited to, the failure of such Transferring Stockholder to
own an amount of Company Securities sufficient to meet its obligation to sell
the Proportionate Transferred Shares to the other Stockholders hereunder) shall
be deemed to diminish or modify each Transferring Stockholder's obligations
hereunder.
-43-
(a) A Transferring Stockholder required to sell the Proportionate
Transferred Shares shall deliver to the other Stockholders a notice (a "Deemed
------
Transfer Notice") which shall constitute such Stockholder's offer to Transfer
---------------
the Proportionate Transferred Shares to the other Stockholders (the "Receiving
---------
Stockholders") at a price per share of Series A Common Stock, payable in cash,
------------
equal to (i) if such offer occurs prior to the IPO, the Per Share Value thereof
determined in accordance with clause (d) hereof or (ii) if such offer occurs
subsequent to the IPO, the Average Market Price thereof as of the date of the
occurrence of such Deemed Transfer.
(i) If a Receiving Stockholder desires to accept the offer set
forth in a Deemed Transfer Notice as to any part of the Proportionate
Transferred Shares, such Receiving Stockholder (a "Receiving Electing
------------------
Stockholder") shall, within ten Business Days of receipt of such Deemed Transfer
-----------
Notice, notify the Transferring Stockholder of its acceptance of such offer to
acquire Proportionate Transferred Shares and the number of such shares it
desires to acquire, and deliver a copy of such notice to each other Stockholder.
(ii) If the Receiving Electing Stockholders desire to acquire, in
the aggregate, all of the Proportionate Transferred Shares, then the Receiving
Electing Stockholders shall have the right and obligation to acquire, on the
applicable closing date and in accordance with the provisions of Section 11.9,
all of the Proportionate Transferred Shares, allocated among them as follows (or
in such other manner as the Receiving Electing Stockholders may agree):
(A) the Proportionate Transferred Shares shall be allocated
among the Receiving Electing Stockholders pro rata (based on the number of
Company Securities owned by such Receiving Electing Stockholders' respective
Stockholder Groups determined on an as converted into Series A Common Stock
basis) until all of the Proportionate Transferred Shares have been allocated or
each Receiving Electing Stockholder has been allocated the number of
Proportionate Transferred Shares that it desires to acquire, as specified in its
notice to the Receiving Stockholder, as it may have been amended pursuant to
Section 5.2(a)(iii);
(B) if all Proportionate Transferred Shares are not
allocated pursuant to paragraph (A) or any prior application of this paragraph
(B), any Proportionate Transferred Shares that were not allocated pursuant to
paragraph (A) or any prior application of this paragraph (B) shall be allocated
among the Receiving Electing Stockholders (other than any Receiving Electing
Stockholder that has been allocated the number of Proportionate Transferred
Shares that it desires to acquire, as specified in its notice to the
Transferring Stockholder, as it may have been amended pursuant to Section
5.2(a)(iii)) pro rata (based on the number of Company Securities owned by such
Stockholders' respective Stockholder Groups determined on an as converted into
Series A Common Stock basis); and
(C) if all Proportionate Transferred Shares are not
allocated pursuant to paragraph (A) and any prior application of paragraph (B),
any Proportionate
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Transferred Shares that were not allocated pursuant to paragraph (A) and any
prior application of paragraph (B) shall be allocated by continuing to apply
paragraph (B) as required.
(iii) If the Receiving Electing Stockholders desire to acquire,
in the aggregate, less than all of the Proportionate Transferred Shares, then
the Transferring Stockholder shall so notify the Receiving Electing Stockholders
and:
(A) each Receiving Electing Stockholder shall have the
right, by written notice sent to the Transferring Stockholder (with a copy of
such notice to each other Stockholder) within five days after its receipt of the
notice from the Transferring Stockholder pursuant to this Section 5.2(a)(iii) to
amend its notice to increase the number of Proportionate Transferred Shares that
it desires to purchase;
(B) if, after giving effect to any amendment to any
Receiving Electing Stockholder's notice pursuant to this Section 5.2(a)(iii),
the Receiving Electing Stockholders desire to acquire, in the aggregate, all of
the Proportionate Transferred Shares, then the Receiving Electing Stockholders
shall have the right and obligation to acquire, on the applicable closing date
and in accordance with the provisions of Section 11.9, all of the Proportionate
Transferred Shares, allocated among them in accordance with Section 5.2(a)(ii);
and
(C) if, after giving effect to any amendment to any
Receiving Electing Stockholder's notice pursuant to this Section 5.2(a)(iii),
the Receiving Electing Stockholders desire to acquire, in the aggregate, less
than all of the Proportionate Transferred Shares, then (x) the Receiving
Electing Stockholders shall have the right and obligation to acquire, on the
applicable closing date and in accordance with the provisions of Section 11.9,
all of the Proportionate Transferred Shares which they have elected to acquire,
allocated among them in accordance with Section 5.2(a)(ii) and (y) the
Proportionate Transferred Shares which are not purchased by the Receiving
Stockholders pursuant to this Section 5.2 shall thereafter cease to be
Proportionate Transferred Shares for this and any subsequent Deemed Transfer.
(b) If the purchase of any of the Proportionate Transferred Shares is
not consummated within the period set forth in Section 11.9(c) for any reason
other than a breach by the Transferring Stockholder of any of its covenants,
representations or warranties that are a condition to consummation of such
purchase, then such Proportionate Transferred Shares shall thereafter cease to
be Proportionate Transferred Shares for this and any subsequent Deemed Transfer.
(c) The procedure with respect to the Deemed Transfer Notice shall be
repeated at any time during the Restricted Period that the number of Exclusive
Homes Passed of a Cable Parent falls below such Cable Parent's Base Homes Passed
such that the number of Proportionate Transferred Shares of such Cable Parent's
Stockholder Group is equal to or greater than 1% of the number of Total Shares
of such Stockholder's Stockholder Group; provided, that any such Proportionate
--------
Transferred Shares which are not then required to be offered to the
-45-
Receiving Stockholders as a result of this clause (c) shall be cumulated until
such time as such accumulated number of Proportionate Transferred Shares equals
or exceeds such 1% minimum threshold or the Transferring Stockholder is
otherwise required to offer shares in a Deemed Transfer.
(d) If the Deemed Transfer occurs prior to the IPO, then the
Deemed Transfer Notice shall identify an Appraiser who has been retained by the
Transferring Stockholder to conduct an appraisal of the Company for purposes of
determining the Per Share Value of the Proportionate Transferred Shares,
pursuant to this Section 5.2(d). Within ten Business Days after its receipt of
such a Deemed Transfer Notice, the Stockholder (other than the Transferring
Stockholder) that, together with the members of its Stockholder Group, owns the
greatest number of shares of Company Securities (determined on an as converted
into Series A Common Stock basis), shall send a notice to the Transferring
Stockholder and the other Stockholders identifying a second Appraiser who shall
be retained by the Transferring Stockholder to conduct such appraisal in
accordance with the Appraisal Procedures set forth in Article 7. In the event
that two Stockholders qualify to appoint the second Appraiser because such
Stockholders own an equal number of Company Securities, such Stockholders shall
agree upon and give notice of the identity of the second Appraiser within such
ten Business Day period referred to in the preceding sentence, and if such
Stockholders cannot agree upon the identity of such second appraiser, such
appraiser shall, upon application of either such Stockholder, be selected by the
American Arbitration Association of New York.
ARTICLE 6
PUT/CALL PROVISIONS
-------------------
6.1 TCI Call.
--------
(a) TCI Sub shall have the right (the "TCI Call"), exercisable
--------
by the delivery of written notice thereof (the "TCI Call Notice") to KPCB and to
---------------
the other Stockholders at any time during the sixty-day period following the
fifth anniversary of the Execution Date or, if not previously exercised, during
the sixty-day period following each subsequent anniversary thereof, to and
including the ninth anniversary of the Execution Date, to require all of the
KPCB Constituents to sell to TCI Sub (or its designee), at the Per Share Value
thereof (determined in accordance with Section 6.6 as of the date of the TCI
Call Notice), all, but not less than all, of the Company Securities beneficially
owned by the KPCB Constituents. The remaining Eligible Stockholders (other than
any Cable Partner exercising the Cable Put in connection with the applicable TCI
Call Notice) shall have the right (but not the obligation) to participate with
TCI Sub (on a pro rata basis, based on the number of Company Securities owned by
each purchasing Stockholder's Stockholder Group determined on an as converted
into Series A Common Stock basis) in the purchase of shares pursuant to the TCI
Call by delivery of written notice to such
-46-
effect to TCI Sub and to the other Stockholders during the twenty (20) day
period following delivery of the TCI Call Notice, as applicable.
(b) Upon exercise of the TCI Call, the KPCB Constituents shall be
obligated to sell to TCI Sub (or its designee) and to any Eligible Stockholders
exercising their right to participate with TCI Sub in the TCI Call, on the
applicable closing date and in accordance with the provisions of Section 11.9,
all Company Securities beneficially owned by the KPCB Constituents as of the
applicable closing date.
6.2 KPCB Put.
--------
(a) KPCB shall have the right (the "KPCB Put"), exercisable by
--------
the delivery of written notice thereof (the "KPCB Put Notice") to TCI Sub and to
---------------
the other Stockholders at any time during the KPCB Put Period to require TCI Sub
to purchase all, but not less than all, of the Company Securities beneficially
owned by the KPCB Constituents at the Per Share Value thereof determined in
accordance with Section 6.6. The date of determination of such Per Share Value
shall be (x) in the case of an exercise pursuant to clause (i) of the definition
of "KPCB Put Period," as of the date on which the KPCB Put Notice is delivered
to TCI Sub, or (y) in the case of an exercise in response to a KPCB Put
Triggering Event, as of the date on which the KPCB Put Triggering Event occurs.
(b) Subject to TCI Sub's right to make an IPO Election pursuant
to Section 6.4 hereof, upon exercise of the KPCB Put, TCI Sub (or its designee)
shall be obligated to purchase from the KPCB Constituents on the applicable
closing date and in accordance with the provisions of Section 11.9, all Company
Securities beneficially owned by the KPCB Constituents as of the applicable
closing date.
(c) In the event TCI Sub elects to purchase (or to cause its
designee to purchase) shares pursuant to the KPCB Put rather than making an IPO
Election, the remaining Eligible Stockholders (other than any Cable Partner
exercising the Cable Put in connection with the applicable KPCB Put Notice)
shall have the right (but not the obligation) to participate with TCI Sub (on a
pro rata basis, based on the number of Company Securities owned by each
purchasing Stockholder's Stockholder Group determined on an as converted into
Series A Common Stock basis) in the purchase of shares pursuant to the KPCB Put
by delivery of written notice to such effect to TCI Sub and to the other
Stockholders during the twenty (20) day period following delivery of the KPCB
Put Notice; provided, however, that no exercise of such right of participation
-------- -------
shall have the effect of extending any of the periods set forth in this Section
6.2.
(d) The KPCB Put Notice shall (i) state that KPCB is exercising
the KPCB Put and (ii) set forth the aggregate number of and type of Company
Securities beneficially owned by the KPCB Constituents as of the date of the
KPCB Put Notice.
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(e) For purposes of this Section 6.2, the obligation to purchase
Company Securities pursuant to an exercise of the KPCB Put shall be the joint
and several obligation of TCI Sub and any member of the TCI Stockholder Group
acquiring Company Securities from TCI Sub, and except as provided in Section
6.7, no Transfer of Company Securities by TCI Sub to another member of the TCI
Stockholder Group shall relieve TCI Sub of its obligations pursuant to this
Section 6.2 unless specifically consented to in writing by KPCB.
6.3 Cable Put
---------
(a) In connection with the exercise of the TCI Call or the KPCB
Put (other than any exercise of the KPCB Put in connection with a KPCB Put
Triggering Event), Comcast Sub and Cox Sub shall have the right, but not the
obligation (the "Cable Put"), to require TCI Sub to purchase all, but not less
---------
than all, of the Company Securities held by such Cable Partner's Stockholder
Group simultaneously with TCI Sub's purchase of Company Securities from the KPCB
Constituents pursuant to the KPCB Put or the TCI Call at the Per Share Value
thereof determined in accordance with Section 6.6. The date of determination of
such Per Share Value shall be the date of the TCI Call Notice or the KPCB Put
Notice, as applicable. Except as otherwise provided herein, Comcast Sub and Cox
Sub shall have the right to exercise the Cable Put in the manner, upon the same
terms and conditions, and under the circumstances described in Section 6.1 (in
the case of the TCI Call) or Section 6.2 (in the case of the KPCB Put) by giving
written notice to such effect (the "Cable Put Notice") to TCI Sub and to each
----------------
other Stockholder during the ten (10) day period following delivery of the KPCB
Put Notice or the TCI Call Notice, as applicable.
(b) In the event that a Cable Partner exercises its right to
participate with TCI Sub (or its designee) in the purchase of Company Securities
pursuant to the TCI Call or the KPCB Put, such Cable Partner shall also be
obligated to purchase its proportionate interest in any Company Securities which
TCI Sub (or its designee) becomes obligated to purchase from another Cable
Partner pursuant to the Cable Put. The number of Company Securities such Cable
Partner shall be obligated to purchase shall be determined by multiplying the
aggregate number of Company Securities which TCI Sub (or its designee) and any
participating Cable Partner are obligated to purchase pursuant to Section 6.1,
6.2 or 6.3 hereof by a fraction, the numerator of which shall be the number of
Company Securities beneficially owned by such Cable Parent and the denominator
shall be the number of Company Securities beneficially owned by TCI Sub and such
Cable Parent and their respective Stockholder Groups. Any Cable Partner which
elects to exercise the Cable Put shall not be entitled to participate in any
purchase of Company Securities pursuant to the TCI Call or the KPCB Put.
(c) Subject to TCI Sub's right to make an IPO Election pursuant
to Section 6.4 hereof, upon exercise of the Cable Put, TCI Sub (or its designee)
and any Cable Partner electing to participate in such purchase pursuant to
subsection (b) above shall be obligated to purchase from each Cable Partner
exercising the Cable Put (or member of such Cable Partner's Stockholder Group)
on the closing date of the consummation of the TCI Call or the KPCB Put and
-48-
in accordance with the provisions of Section 11.9, all Company Securities
beneficially owned by such Cable Partner (or member of such Cable Partner's
Stockholder Group) as of the applicable closing date.
(d) The Cable Put Notice shall (i) state that the applicable
Cable Partner is exercising the Cable Put and (ii set forth the aggregate number
of and type of Company Securities beneficially owned by such Cable Partner and
the members of such Cable Partner's Stockholder Group as of the date of the
Cable Put Notice.
(e) For purposes of this Section 6.3, the obligation to purchase
Company Securities pursuant to an exercise of the Cable Put shall be the joint
and several obligation of TCI Sub and any member of the TCI Stockholder Group
acquiring Company Securities from TCI Sub, and except as provided in Section
6.7, no Transfer of Company Securities by TCI Sub to a member of the TCI
Stockholder Group shall relieve TCI Sub of its obligations pursuant to this
Section 6.3 unless specifically consented to in writing by the Cable Partner or
Cable Partners exercising the Cable Put. In addition, an election by a Cable
Partner to participate in the purchase of Company Securities pursuant to the TCI
Call, the KPCB Put or the Cable Put shall constitute, as between such Cable
Partner and TCI Sub, such Cable Partner's agreement to acquire pursuant to the
TCI Call, KPCB Put and Cable Put, as applicable, not less than the number of
Company Securities determined pursuant to subsection (b) of this Section 6.3.
6.4 IPO Election.
------------
(a) In the event of the exercise of the KPCB Put and, if
applicable, the Cable Put, TCI Sub shall have the right, exercisable by written
notice (the "IPO Election Notice") to KPCB, the Company, and each other
-------------------
Stockholder delivered not later than 20 Business Days following the
determination of the Per Share Value, to elect (an "IPO Election") to cause the
------------
Company to make an initial public offering of its Series A Common Stock in lieu
of TCI Sub's obligation to purchase Company Securities pursuant to the exercise
of such KPCB Put and, if applicable, the Cable Put or to exercise its Special
Demand Registration Right. Upon making an IPO Election, subject to Section
6.4(c) below, TCI Sub's obligation to purchase the Company Securities pursuant
to the exercise of such KPCB Put and, if applicable, the Cable Put shall be
suspended and shall terminate upon the consummation of an initial public
offering of the Company's Series A Common Stock in accordance with Section
6.4(b) below.
(b) The Company shall as soon as reasonably practicable after the
date on which the IPO Election Notice is given, file with the Commission and use
its best efforts to cause to become effective a registration statement in
respect of the offering and sale under the Securities Act of a number of shares
of Series A Common Stock that, in the opinion of the managing underwriter of any
such offering (or if none, of any nationally recognized investment banking firm
experienced in initial public offerings of securities), is sufficient to create
a bona fide trading market for the Series A Common Stock. In addition, the
Company shall file and use its best efforts to become effective not later than
the second Business Day following the effectiveness
-49-
of such registration statement under the Securities Act, a registration
statement registering the Series A Common Stock under the Exchange Act and
thereafter taking such other steps as may be reasonably necessary to cause such
shares to be listed for trading or quotation on a national securities exchange
or over the counter trading system. Each Stockholder agrees to use its
commercially reasonable efforts to cause the Company to fulfill its obligations
hereunder and shall cooperate in all respects with the preparation and filing of
such registration statement with the Commission and causing such registration
statement to become and remain effective during the time periods specified
herein.
(c) Following TCI Sub's making of an IPO Election, (x) if such
registration of the Series A Common Stock is subsequently abandoned by the
Company before it is declared effective, (y) if a registration statement has not
been filed on or before the 90th day after the date of the IPO Election Notice,
or (z) if such registration statement has been filed, but the IPO has not been
consummated on or before the 183rd day following the date of the IPO Election
Notice, then such IPO Election shall terminate, the KPCB Put Notice and if
applicable, the Cable Put Notice shall be deemed to have been reinstated as of
such date of termination, and TCI Sub and any Cable Partner which had elected to
participate in the KPCB Put and the Cable Put shall thereafter be obligated to
purchase all of the Company Securities beneficially owned (i) by the KPCB
Constituents in accordance with the provisions of Section 6.2 and (ii) by any
Cable Partners (or member of their Stockholder Group) exercising the Cable Put
in accordance with the provisions of Section 6.3; provided, however, that
-------- -------
notwithstanding the provisions of Section 11.9(c)(i) hereof, the minimum period
in which such sale shall be required to be consummated shall be 60 days from the
date such KPCB Put Notice and any Cable Put Notice is deemed reinstated. In the
event a KPCB Put Notice and any Cable Put Notice is deemed reinstated pursuant
to this subsection (c), then in addition to the payment of the aggregate Per
Share Value in respect of such purchase of Company Securities, TCI Sub and any
Cable Partner electing to participate in such purchase shall pay to KPCB and to
any Cable Partners which exercise the Cable Put, interest at the Prime Rate (as
defined below) on the aggregate Per Share Value of the Company Securities to be
purchased pursuant to the KPCB Put and, if applicable, the Cable Put. Such
interest shall accrue from the date of reinstatement of the KPCB Put Notice to
and including the date immediately preceding the date of consummation of such
sale, and shall be payable upon consummation of such sale. The term "Prime
-----
Rate" shall mean a rate per annum equal to the commercial lending rate per annum
----
publicly announced from time to time by The Bank of New York as its prime rate
(such rate of interest to change as of the close of business on each date such
prime rate changes).
6.5 Payment of Consideration in Respect of TCI Call, KPCB Put, and
--------------------------------------------------------------
Cable Put.
---------
(a) The purchase price for any Company Securities to be purchased
pursuant to the TCI Call, the KPCB Put or the Cable Put shall be payable, at the
option of each purchaser, in cash or in equity securities of (or securities
convertible into or exercisable or exchangeable for), as applicable, TCI, in the
case of TCI Sub, Comcast, in the case of Comcast
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Sub or CCI, in the case of Cox Sub, or any Subsidiary of TCI, Comcast or CCI, as
applicable, which is a Public Company; provided that securities of the same
--------
class or series as the class or series of equity securities to be so issued, or
the class or series of securities which such security is convertible into or
exercisable or exchangeable for, are publicly traded on the Nasdaq National
Market or a national securities exchange at the time of such delivery. Such
equity securities shall be valued at the Average Market Price thereof on the
applicable closing date. The purchase price for such equity securities to be
purchased by a designee of TCI Sub shall be payable only in cash. In the event
that the equity securities to be purchased by a Stockholder pursuant to the TCI
Call, the KPCB Put or the Cable Put include options, warrants or other Rights to
acquire Company Securities which require the payment of additional consideration
in respect of the exercise thereof, the purchase price of such options,
warrants, or other Rights shall equal the Per Share Value thereof, less the
additional consideration payable in respect of the exercise of such option,
warrant or other Right.
(b) In the event that a Stockholder shall elect to pay such
purchase price by delivering equity securities, (i) the parties shall endeavor
to consummate such transaction on a tax-free basis and (ii) such Stockholder
shall cause the issuer of such publicly traded securities to grant to KPCB, for
the benefit of the KPCB Constituents, and to the members of the Stockholder
Group of any Cable Partner exercising the Cable Put and receiving such equity
securities, customary rights with respect to the registration of such securities
under the Securities Act. Such registration rights shall provide the KPCB
Constituents and if applicable, such Cable Partner's Stockholder Group with two
demand registrations, one of which shall be exercisable such that such
registration statement would be effective no later than the tenth day following
the date of delivery of such equity securities and each of which shall be (i) at
the expense of the applicable issuer and (ii) exercisable by the KPCB
Constituents and if applicable, the members of the Stockholder Group of such
Cable Partner, with respect to the registration of not less than 20% of the
aggregate amount of equity securities of such issuer issued to KPCB and, if
applicable, the Stockholder Group of such Cable Partner, in payment of such
purchase price; provided, however, that in lieu of causing such shares to be
-------- -------
registered pursuant to such demand registration, the Stockholder or applicable
issuer which has granted such registration rights shall have the option to
purchase all, but not less than all, of the shares for which registration is
requested, at a price per share equal to the Average Market Price thereof (less
any estimated underwriter or broker discounts or commissions) determined as of
the date of delivery of a demand notice.
6.6 Determination of Fair Market Value and Per Share Value in
---------------------------------------------------------
connection with TCI Call, KPCB Put and Cable Put.
------------------------------------------------
(a) The Stockholders electing to sell Company Securities and the
Stockholders electing to purchase Company Securities pursuant to Section 6.1,
6.2 and 6.3, as applicable, shall seek in good faith to agree upon the Fair
Market Value of the Company and the related Per Share Value in accordance with
Section 7.1 promptly following the twenty-day period during which a Cable
Partner may elect to participate in such purchase. If such parties are unable
to agree upon such Fair Market Value and Per Share Value within thirty (30) days
following the
-51-
conclusion of such twenty day period, then such Fair Market Value and Per Share
Value shall be determined as provided in clause (b).
(b) The Stockholders who are selling Company Securities pursuant
to the TCI Call, the KPCB Put or the Cable Put (collectively, the "Selling
-------
Holders"), on the one hand, and TCI Sub on the other hand, shall, within 15 days
-------
after the expiration of such 30-day period, either (i) jointly select and
appoint an Appraiser or (ii) if the Selling Holders and TCI Sub are unable to
agree upon an Appraiser, each retain an Appraiser, for the purpose of
determining the Fair Market Value of the Company as of the applicable date;
provided, that if either group shall fail to select such an Appraiser within
--------
such period, the determination of the Fair Market Value of the Company shall be
made by the Appraiser selected by the other group. The Appraiser, or if two
Appraisers are appointed, the Appraisers shall determine the Fair Market Value
of the Company and the related Per Share Value in accordance with the appraisal
procedures set forth in Article 7.
6.7 Termination or Amendment to the TCI Call, the KPCB Put and the
--------------------------------------------------------------
Cable Put. The TCI Call, the KPCB Put and the Cable Put shall terminate upon
---------
the first to occur of, (x) the date on which the IPO is consummated, (y) the
termination of this Stockholders Agreement, or (z) the consummation of a Control
Block Sale in which all Qualified Tag Stockholders were offered the opportunity
to participate as to all Company Securities owned by such Qualified Tag
Stockholders; provided, however, that in the event that such Qualified Tag
-------- -------
Stockholders were offered the opportunity to include less than all their Company
Securities in any such Control Block Sale, then the number of shares of Company
Securities which TCI Sub shall be obligated to purchase from (i) the KPCB
Constituents pursuant to an exercise of the KPCB Put upon the exercise of the
KPCB Put at any time following the consummation of such Control Block Sale or
(ii) any Cable Partner (or the members of its Stockholder Group) electing to
exercise the Cable Put pursuant to Section 6.3 hereof following an exercise of
the KPCB Put following such Control Block Sale, will in each case be reduced by
the number of Company Securities which such KPCB Constituents or Cable Partner
(and the members of its Stockholder Group), as the case may be, were offered the
opportunity to include in such Control Block Sale pursuant to Section 4.5
hereof. The TCI Call will be deemed to have terminated upon the consummation of
any Control Block Sale.
6.8 Status of Designee. A designee of TCI Sub acquiring Company
------------------
Securities in any transaction contemplated by Sections 6.1, 6.2 or 6.3 shall
acquire such securities free and clear of any obligations, and shall have no
rights, under this Agreement.
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ARTICLE 7
APPRAISAL PROCEDURES
--------------------
7.1 Fair Market Value. For purposes of an appraisal pursuant to this
-----------------
Article 7 or Section 6.6, the "Fair Market Value" of the Company, as of the
-----------------
applicable date of determination, shall mean the price at which a willing seller
would sell and a willing buyer would buy a comparable business as an ongoing
business in an arm's-length transaction (as a sale of all of the stock of the
business or, if applicable, other equity interests). In determining the Fair
Market Value of the Company, the Stockholders, or in the event an appraisal is
required, each Appraiser, (i) shall assume for purposes of making its
determination that all of the outstanding stock or, if applicable, other equity
interests are to be sold in a single transaction and that the Company is a
Public Company and the Series A Common Stock is publicly traded and widely held,
as if a public offering of the Series A Common Stock had been successfully
consummated, (ii) shall not discount the value of the shares due to any lack of
liquidity in such shares because of any absence of a significant public market
or due to a minority ownership position in the Company represented by such
shares, (iii) shall not add any premium to the value of such shares due to a
majority or control ownership position in the Company represented by such shares
and (iv) shall not give consideration to any restrictions, encumbrances or
contractual rights relating to such shares.
7.2 Appraisal Procedure for Fair Market Value. If there is only one
-----------------------------------------
Appraiser, the Fair Market Value of the Company shall be as determined by such
Appraiser. If there are two Appraisers, then if the higher determination does
not exceed the lower determination by an amount in excess of 10% of such lower
determination, then the Fair Market Value shall be equal to the average of such
two determinations; however, if the higher determination exceeds the lower
determination by an amount in excess of 10% of such lower determination, then
such two Appraisers shall jointly select a third Appraiser within five days
after the date on which the later of such two Appraisal Reports (as defined
below) was delivered, and each shall furnish such third Appraiser with the work
product used by each of such Appraisers in preparing their respective Appraisal
Reports; provided, however, that in the event the first two Appraisers are
-------- -------
unable to agree on a third appraiser within thirty days, any Stockholder may
cause the American Arbitration Association of New York to appoint such third
appraiser. Such third Appraiser shall deliver its Appraisal Report of its good
faith determination of the Fair Market Value of the Company as of the applicable
date within 20 days of such appointment, and in such case the Fair Market Value
shall be equal to the average of the two closest determinations; provided,
--------
however, that if the difference between the highest and middle determinations is
-------
no more than 105% and no less than 95% of the difference between the middle and
lowest determinations, then the Fair Market Value of the Company shall be equal
to such middle determination.
7.3 Determination of Per Share Value. Following the determination of
--------------------------------
the Fair Market Value, the Stockholders, or if an appraisal is required, the
Appraisers whose determinations were used in the calculation of the Fair Market
Value, shall determine the number
-53-
of shares of Common Stock outstanding together with any further appropriate
adjustments to the Fair Market Value resulting from such determination. The
number of shares of Common Stock outstanding shall mean a number, as determined
by such Stockholders, or if an appraisal is required, such Appraisers as of the
applicable date, equal to (without duplication) the sum of (x) the number of
shares of Series A Common Stock and Series B Common Stock outstanding, (y) the
number of shares of Series A Common Stock, Series B Common Stock and Series K
Common Stock issuable upon the conversion of the Convertible Preferred Stock and
(z) the number of shares of Series A Common Stock, Series B Common Stock and
Series K Common Stock issuable upon conversion, exercise or exchange of those
Rights the holders of which would derive an economic benefit from conversion,
exercise or exchange of such Rights which exceeds the economic benefit of not
converting, exercising or exchanging such Rights. The "Per Share Value" shall
---------------
mean the quotient obtained by dividing the Fair Market Value of the Company by
the number of shares of Common Stock outstanding or deemed outstanding (less, in
the case of any Rights included pursuant to clause (z) above, the exercise price
thereof); provided that if an appraisal is required and the Appraisers do not
--------
agree on the determinations provided for in this paragraph, the Per Share Value
shall be the average of the quotients so obtained on the basis of the respective
determinations of such firms.
7.4 Delivery of Appraisal Report. Each Appraiser shall deliver a
----------------------------
written report (the "Appraisal Report") to the Company and each Stockholder
----------------
setting forth such Appraiser's good faith determination of the Fair Market Value
of the Company and Per Share Value as of the applicable date. Each Stockholder
shall use its commercially reasonable efforts to cause its designated Appraiser
to deliver its Appraisal Report within 30 days of its selection. If, pursuant
to the immediately preceding paragraph, a third determination is required, each
Stockholder shall use reasonable efforts to cause its designated Appraiser to
promptly take all actions necessary for the joint selection by such two
Appraisers of the third Appraiser and to promptly make available to such third
Appraiser the work product of such other Appraisers relating to its
determination of the Fair Market Value of the Company, and shall also take all
reasonable actions which are necessary in order to cause such third Appraiser to
deliver its Appraisal Report as early as possible and in any event within 20
days after its selection. The Company agrees to cooperate with the Stockholders
and the Appraisers in the determination of the Fair Market Value of the Company.
7.5 Fees and Expenses of Appraisers. All fees and expenses of any
-------------------------------
Appraiser conducting an appraisal in accordance with this Article 7 and retained
on behalf of any Stockholders who are potential sellers of Company Securities
shall be paid by all such potential sellers, in proportion to the number of
Company Securities held by a potential seller and the number of Company
Securities held by all such potential purchasers (determined on an as converted
into Series A Common Stock basis) and all fees and expenses of any Appraiser
conducting an appraisal in accordance with this Article 7 and retained on behalf
of any Stockholders who are potential purchasers of Company Securities shall be
paid by all such potential purchasers, in proportion to the number of Company
Securities held by a potential purchaser and the number of Company Securities
held by all such potential sellers (determined on an as converted into Series A
Common Stock basis).
-54-
If a third Appraiser is retained pursuant to this Article 7, the fees and
expenses of such Appraiser shall be split equally between the group of
Stockholders who are potential sellers of Company Securities and the group of
Stockholders who are potential purchasers of Company Securities, and such fees
and expenses shall be apportioned among the Stockholders in each such group in
proportion to their respective number of Company Securities (determined on an as
converted into Series A Common Stock basis).
7.6 Value Determination is Conclusive. Each determination of Per
---------------------------------
Share Value and Fair Market Value of the Company in accordance with the
provisions of this Article 7 or pursuant to Section 6.6 shall be final, binding
and conclusive.
ARTICLE 8
PREEMPTIVE RIGHTS
-----------------
8.1 Preemptive Rights.
-----------------
(a) If at any time after the Closing, the Company at any time or
from time to time makes any public or non-public offering of New Capital Stock
or any Rights to acquire New Capital Stock, each Eligible Stockholder shall
first be offered the opportunity to acquire from the Company for the same price
and on the same terms as such securities are proposed to be offered to others,
up to the amount of New Capital Stock (or Rights in respect thereof) as is
required to enable it to maintain its proportionate interest in the Company. The
amount of New Capital Stock each Eligible Stockholder shall be entitled to
purchase (or, in the case of Rights, Rights to acquire a number of shares of New
Capital Stock) shall be determined by multiplying (x) the total number of such
offered shares or, in the case of Rights, the total number or such shares
covered by Rights, by (y) a fraction, the numerator of which is the number of
shares of Company Securities (determined on an as converted into Series A Common
Stock basis) held by such Eligible Stockholder, and the denominator of which is
the number of shares of Common Stock then outstanding; provided, however, that
-------- -------
for purposes of determining the number of shares of Common Stock outstanding,
such amount shall include, without duplication, shares of Common Stock issuable
upon the conversion of outstanding shares of Preferred Stock or other
outstanding convertible equity securities of the Company and shares of Common
Stock issuable upon the exercise of outstanding options or warrants to purchase
Common Stock (or other securities of the Company).
(b) Notwithstanding the foregoing, no Person shall be entitled to
any preemptive rights in respect of the issuance of shares of New Capital Stock
issued to satisfy Rights theretofore issued and as to which such Person
theretofore had the opportunity to exercise preemptive rights pursuant to this
Article 8.
-55-
(c) In the event the Company proposes to offer New Capital Stock,
it shall give each Eligible Stockholder written notice of its intention,
describing the type of New Capital Stock to be offered, and the price and other
terms upon which the Company proposes to offer the same. Each Eligible
Stockholder shall have twenty (20) days from the date of receipt of any such
notice to notify the Company in writing that it intends to exercise such
preemptive rights and as to the amount of New Capital Stock such Eligible
Stockholder desires to purchase, up to the maximum amount calculated pursuant to
subsection (a). Such notice shall constitute an agreement of such Eligible
Stockholder to purchase the amount of New Capital Stock so specified upon the
price and other terms set forth in the Company's notice to it.
(d) If any Eligible Stockholder exercises its preemptive right
hereunder, the closing of the purchase of the New Capital Stock with respect to
which such right has been exercised shall take place within 45 calendar days
after the giving of notice of such exercise, which period of time shall be
extended for a maximum of 135 days in order to comply with applicable laws and
regulations. Each of the Company and any Eligible Stockholder which has agreed
to purchase New Capital Stock or Rights agrees to use its commercially
reasonable efforts to secure any regulatory approvals or other consents, and to
comply with any law or regulation necessary in connection with the offer, sale
and purchase of, such New Capital Stock.
(e) In the event any Eligible Stockholder fails to exercise its
preemptive rights provided in this Section 8.1 within said twenty (20) day
period or, if so exercised, such Eligible Stockholder is unable to consummate
such purchase within the time period specified in paragraph (d) above because of
its failure to obtain any required regulatory consent or approval, the Company
shall thereafter be entitled during the period of ninety (90) days following the
conclusion of the applicable period to sell or enter into an agreement (pursuant
to which the sale of New Capital Stock covered thereby shall be consummated, if
at all, within thirty (30) days from the date of said agreement) to sell the New
Capital Stock or Rights not elected to be purchased pursuant to this Section 8.1
or which such electing Eligible Stockholder is unable to purchase because of
such failure to obtain any such consent or approval, at a price and upon terms
no more favorable to the purchasers of such securities than were specified in
the Company's notice to the Eligible Stockholders. Notwithstanding the
foregoing, if such sale is subject to the receipt of any regulatory approval or
expiration of any waiting period, the time period during which such sale may be
consummated shall be extended until the expiration of five Business Days after
all such approvals have been obtained or waiting periods expired, but in no
event shall such time period exceed 180 days from the date of the applicable
agreement with respect to such sale. In the event the Company has not sold the
New Capital Stock or entered into an agreement to sell the New Capital Stock
within said ninety (90) day period (or sold and issued New Capital Stock in
accordance with the foregoing within thirty (30) days from the date of said
agreement (as such period may be extended in the manner described above for a
period not to exceed 180 days from the date of said agreement)), the Company
shall not thereafter offer, issue or sell such New Capital Stock without first
offering such securities to the Eligible Stockholders in the manner provided
above.
-56-
8.2 Termination of Preemptive Rights.
--------------------------------
The rights granted to the Eligible Stockholders pursuant to Section
8.1 shall terminate as to a Stockholder, upon the earlier to occur of (i) such
time as such Stockholder ceases to be an Eligible Stockholder or (ii) the
termination of this Agreement.
ARTICLE 9
REPRESENTATIONS, WARRANTIES AND COVENANTS
-----------------------------------------
9.1 General Representations and Warranties. (i) As of the date
--------------------------------------
hereof, each party hereto and (ii) as of the date a Person executes an
instrument becoming a party to this Agreement, each Person that becomes a party
to this Agreement after the date hereof, hereby makes the following
representations, warranties and covenants to each of the other parties hereto:
(a) Such party has the legal right and requisite power and
authority to make and enter into this Agreement and to perform its obligations
hereunder and to comply with the provisions hereof. The execution, delivery and
performance of this Agreement by such party has been duly authorized by all
necessary action on its part. This Agreement has been duly executed and
delivered by such party and constitutes the valid and binding obligation of such
party enforceable against it in accordance with its terms, except as such
enforcement may be limited by applicable bankruptcy, insolvency, moratorium or
other similar laws affecting the rights of creditors generally and except that
the availability of equitable remedies, including specific performance, is
subject to the discretion of the court before which any proceeding therefor may
be brought.
(b) The execution, delivery and performance of this Agreement by
such party, and the compliance by such party with the provisions hereof, do not
and will not (with or without notice or lapse of time, or both) conflict with,
or result in any violation of, or default under, or give rise to any right of
termination, cancellation or acceleration of any obligation or the loss of a
material benefit under, any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to such party or any of its properties or assets, other than any such
conflicts, violations, defaults, or other effects which, individually or in the
aggregate, do not and will not prevent, restrict or impede such party's
performance of its obligations under and compliance with the provisions of this
Agreement. If such party is an entity or association, the execution, delivery
and performance of this Agreement by such party does not and will not contravene
the charter, bylaws or other organizational documents of such party.
-57-
(c) Other than with respect to the expiration or termination of
any applicable waiting period under the HSR Act in connection with any
conversion of the Convertible Preferred Stock, no consent, approval, order or
authorization of, or registration, declaration or filing with, any governmental
or regulatory authority or any other Person (other than any of the foregoing
which have been obtained and, at the date in question, are then in effect) is
required under existing laws as a condition to the execution, delivery or
performance of this Agreement by such party.
(d) As to a Stockholder which is an original party to this
Agreement, such Stockholder is the owner of the Company Securities set forth on
Schedule I and, with respect to any Person executing an instrument and becoming
a party hereto after the date of this Agreement, such Person owns the Company
Securities specified in such instrument, in each case, free and clear of all
liens, claims or encumbrances except as otherwise provided herein and except for
restrictions on resales under applicable securities laws. No other member of
such party's Stockholder Group and no other Controlled Affiliate of such party's
Ultimate Parent owns beneficially or has the right to acquire (whether such
right is immediately exercisable or exercisable with the passage of time, upon
the occurrence of an event or events or otherwise) any securities of the
Company, directly or indirectly.
(e) Each member of such party's Stockholder Group and each
Ultimate Parent and any Controlled Affiliate thereof, in each case which owns
securities of the Company, is a signatory hereto.
9.2 Restricted Business.
-------------------
(a) Each Cable Parent hereby represents and warrants that except
as set forth on Schedule III attached hereto, since the Execution Date, neither
such Cable Parent nor its Controlled Affiliates has engaged or is currently
engaging in any Restricted Business.
(b) TCI Internet Services hereby represents and warrants that (i)
to its knowledge, the Microsoft Network, L.L.C. ("MSN") is not engaging in a
---
Restricted Business as of the date hereof and (ii TCI acquired beneficial
ownership of a 20% interest in MSN in September 1994, and since that date has
not been notified by MSN of, and has not otherwise acquired actual knowledge of
any change in its percentage ownership of MSN. TCI Sub hereby covenants to
inform the other Stockholders within 30 days of notice to TCI of any material
change in TCI's ownership percentage in MSN.
-58-
ARTICLE 10
CONFIDENTIALITY
---------------
10.1 Confidentiality.
---------------
(a) Maintenance of Confidentiality. Each Ultimate Parent and its
------------------------------
Controlled Affiliates and the Company (each a "Restricted Party"), shall cause
----------------
their respective officers and directors (in their capacity as such) to, and
shall take all reasonable measures to cause their respective employees,
attorneys, accountants, consultants and other agents and advisors (collectively,
and together with their respective officers and directors, "Agents") to, keep
------
secret and maintain in confidence all confidential and proprietary information
and data of the Restricted Parties disclosed to it (in each case, a "Receiving
---------
Party") in connection with the conduct of the Company's business and in
-----
connection with the transactions contemplated by the Term Sheet (the
"Confidential Information") and shall not, shall cause their respective officers
------------------------
and directors not to, and shall take all reasonable measures to cause their
respective other Agents not to, disclose Confidential Information to any Person
other than the Ultimate Parents, their Controlled Affiliates and their
respective Agents that need to know such Confidential Information, or the
Company. Each Ultimate Parent and its Controlled Affiliates further agrees that
it shall not use the Confidential Information for any purpose other than
monitoring and evaluating its investment, determining and performing its
obligations and exercising its rights under this Agreement and in connection
with the transactions contemplated by the Term Sheet. The Company and each
Ultimate Parent shall take all reasonable measures necessary to prevent any
unauthorized disclosure of the Confidential Information by any of their
respective Controlled Affiliates or any of their respective Agents. The
measures taken by a Restricted Party to protect Confidential Information shall
not be deemed unreasonable if the measures taken are at least as strong as the
measures taken by the disclosing party to protect such Confidential Information.
For purposes of this Section 10.1, Confidential Information may take the form of
documentation, drawings, specifications, software, technical or engineering
data, business information, and other forms, and may be communicated orally, in
writing, by electronic or magnetic media, by visual observation, or by other
means. Such Confidential Information may include, but is not limited to,
information concerning the transactions contemplated by the Term Sheet; the
facilities of the Company, of each Ultimate Parent and its Controlled
Affiliates; the Company's requirements; the Company's network; the identity,
location, characteristics and requirements of the customers of the Company or
the members of the Stockholder Groups; and financial, accounting or marketing
reports, business plans, analyses, forecasts, predictions or projections
relating to the transactions contemplated by the Term Sheet or the business of
the Company or the members of the Stockholder Groups generally. Confidential
Information includes any notes, reports, analyses, studies or other materials,
whether prepared by the Receiving Party or otherwise, that contain or are based
upon Confidential Information delivered or made available pursuant to this
Agreement.
(b) Permitted Disclosures. Nothing contained in this Agreement
---------------------
is intended to restrict any party or its Agents from discussing with any other
party or its Agents the
-59-
Confidential Information disclosed by a party to any other party, except that
information disclosed by a Restricted Party (other than the Company) or its
Agents to the Company that is clearly marked "@Home Eyes Only Confidential
Information" may be disclosed by the Company to other parties and their Agents
only to the extent that such Confidential Information is reasonably required to
be reflected in the capital structure or business plans of the Company. In
addition, nothing herein shall prevent any Restricted Party or its Agents from
using, disclosing, or authorizing the disclosure of Confidential Information it
receives in the course of the business of the Company which:
(i) has been published or is in the public domain, or
which subsequently comes into the public domain, through no fault of the
Receiving Party;
(ii) prior to receipt hereunder (or under that certain
Agreement for Use and Non-Disclosure of Proprietary Information, effective as of
June 1, 1995, among the Company, TCI, CEI, Comcast and Continental Cablevision,
Inc.) was properly within the legitimate possession of the Receiving Party or,
subsequent to receipt hereunder (or under such agreement), is lawfully received
from a third party having rights therein without restriction of the third
party's right to disseminate the Confidential Information and without notice of
any restriction against its further disclosure;
(iii) is independently developed by the Receiving Party
through Persons who have not had, either directly or indirectly, access to or
knowledge of such Confidential Information;
(iv) is disclosed to a third party, without restriction on
further disclosure, with the written approval of the party originally disclosing
such information, provided that such Confidential Information shall cease to be
--------
confidential and proprietary information covered by this Agreement only to the
extent of the disclosure so consented to;
(v) subject to the Receiving Party's compliance with
paragraph (d) below, is required to be produced under order of a court of
competent jurisdiction or other similar requirements of a governmental agency;
provided that such Confidential Information to the extent covered by a
--------
protective order or its equivalent shall otherwise continue to be Confidential
Information required to be held confidential for purposes of this Agreement; or
(vi) subject to the Receiving Party's compliance with
paragraph (d) below, is required to be disclosed by applicable law or a stock
exchange or association on which such Receiving Party's securities (or those of
its Affiliate) are listed or quoted.
(c) Notwithstanding this Section 10.1, any Ultimate Parent or
its Controlled Affiliate may provide Confidential Information (i) to other
Persons considering the acquisition (whether directly or indirectly) of all or a
portion of the Company Securities owned by such Ultimate Parent's Stockholder
Group pursuant to a Permitted Transfer or a Permitted
-60-
Disposition or (ii) to any financial institution in connection with borrowings
from such financial institution by such Ultimate Parent or any of its Controlled
Affiliates, so long as prior to any such disclosure such other Person or
financial institution executes a confidentiality agreement that provides
protection substantially equivalent to the protection provided each Ultimate
Parent, its Controlled Affiliates and the Company in this Section 10.1.
(d) In the event that any Receiving Party (i) must disclose
Confidential Information in order to comply with applicable law or the
requirements of a stock exchange or association on which such Receiving Party's
securities or those of its Affiliates are listed or quoted or (ii becomes
legally compelled (by oral questions, interrogatories, requests for information
or documents, subpoenas, civil investigative demands or otherwise) to disclose
any Confidential Information, the Receiving Party shall provide the disclosing
party with prompt written notice so that in the case of clause (i), the
disclosing party can work with the Receiving Party to limit the disclosure to
the greatest extent possible consistent with legal obligations, or in the case
of clause (ii), the disclosing party may seek a protective order or other
appropriate remedy or waive compliance with the provisions of this Agreement.
In the case of clause (ii), (A) if the disclosing party is unable to obtain a
protective order or other appropriate remedy at the disclosing party's
reasonable expense, and (B) failing the entry of a protective order or other
appropriate remedy or receipt of a waiver hereunder, the Receiving Party shall
furnish only that portion of the Confidential Information which it is advised by
opinion of its counsel is legally required to be furnished and shall exercise
all commercially reasonable efforts to obtain reliable assurance that
confidential treatment shall be accorded such Confidential Information, it being
understood that such commercially reasonable efforts shall be at the cost and
expense of the disclosing party whose Confidential Information has been sought.
(e) The obligations under this Section 10.1 shall survive for a
period of two (2) years from (i) as to all Ultimate Parents and their respective
Controlled Affiliates and the Company, the termination of this Agreement, (ii)
as to any Ultimate Parent and its Controlled Affiliates, such time as the
Stockholder Group of such Ultimate Parent ceases to own any Company Securities
and (iii) as to the Company only with respect to information received by the
Company from an Ultimate Parent and its Controlled Affiliates whose Stockholder
Group has ceased to own any Company Securities, such time as the Stockholder
Group of such Ultimate Parent ceases to own any Company Securities; provided
--------
that such obligations shall continue indefinitely with respect to any trade
secret or similar information which is proprietary to the Company and provides
the Company with an advantage over its competitors.
(f) All references in this Section 10.1 to the Company shall,
unless the context otherwise requires, be deemed to refer also to each
Subsidiary and Controlled Affiliate of the Company.
-61-
ARTICLE 11
MISCELLANEOUS
-------------
11.1 Successors and Assigns. Except as otherwise expressly provided
----------------------
herein, neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto (whether by operation
of law or otherwise) without the prior written consent of each of the other
parties; provided, however, that (x) this Agreement and the rights, interests
-------- -------
and obligations of a Stockholder may be assigned to any member of its
Stockholder Group in connection with a Transfer of Company Securities (provided,
that no such assignment shall release such Stockholder from its obligations
hereunder unless consented to in writing by all other parties hereto) and (y) in
connection with any Qualified Spin Off Transaction the Parent of the Stockholder
Group involved in such Qualified Spinoff Transaction shall be entitled to assign
the rights and obligations of the applicable Stockholder Group (including such
Parent and any Ultimate Parent) hereunder to the Spin Off Parent which as a
result of such Qualified Spin Off Transaction, becomes the beneficial owner of a
majority of the equity interests and voting power of a Stockholder; provided,
--------
however, that no such assignment shall affect any party's obligations under
-------
Article 10 hereof or under the Master Distribution Agreement. Any assignment or
delegation in contravention of this Agreement shall be void and shall not
relieve the assigning or delegating party of any obligation hereunder. Subject
to the foregoing provisions of this Section 11.1 this Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns.
11.2 Third Parties. Nothing in this Agreement, whether express or
-------------
implied, shall be construed to give any Person, other than the parties hereto,
any legal or equitable right, remedy or claim under or in respect of this
Agreement.
11.3 Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the State of Delaware, without regard
to the conflicts of law rules of such State.
11.4 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
11.5 Notices. All notices and other communications required or
-------
permitted to be given by any provision of this Agreement shall be in writing and
mailed (certified or registered mail, postage prepaid, return receipt requested)
or sent by hand or overnight courier, or by facsimile transmission (with
acknowledgment received), charges prepaid and addressed to the intended
recipient as follows, or to such other address or number as may be specified
from time to time by like notice to the parties:
-62-
(a) If to TCI Sub or a member of the TCI Stockholder Group:
------------------------------------------------------
TCI Internet Holdings, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President
with copies to:
▇▇▇▇▇ & ▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
(b) If to the KPCB Affiliates or a member of the KPCB Stockholder
-------------------------------------------------------------
Group:
-----
Kleiner, Perkins, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: L. ▇▇▇▇ ▇▇▇▇▇
with copies to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
(c) If to Comcast Sub or a member of the Comcast Stockholder Group:
--------------------------------------------------------------
Comcast Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. Pick
Vice President
with copies to:
-▇▇-
▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇ and ▇▇▇▇▇-▇▇▇▇▇
Packard Building, 7th Floor
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
(d) If to Cox Sub or a member of the Cox Stockholder Group:
------------------------------------------------------
▇▇▇ Communications, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Senior Vice President
with copies to:
Dow ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ P.L.L.C.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
(e) If to the Company:
-----------------
At Home Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
with copies to:
Fenwick & West LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
-64-
Any party may from time to time specify a different address for notices by like
notice to the other parties. All notices and other communications given in
accordance with the provisions of this Agreement shall be deemed to have been
given and received (i) four (4) Business Days after the same are sent by
certified or registered mail, postage prepaid, return receipt requested, (ii)
when delivered by hand or transmitted by facsimile (with acknowledgment received
and, in the case of a facsimile only, a copy of such notice is sent no later
than the next Business Day by a reliable overnight courier service, with
acknowledgment or receipt) or (iii) one (1) Business Day after the same are sent
by a reliable overnight courier service, with acknowledgment of receipt.
11.6 Severability. If one or more provisions of this Agreement are
------------
held to be unenforceable under applicable law, portions of such provisions, or
such provisions in their entirety, to the extent necessary, shall be severed
from this Agreement, and the balance of this Agreement shall be enforceable in
accordance with its terms.
11.7 Headings. The section headings used in this Agreement are for
--------
reference purposes only and shall not affect the meaning or interpretation of
any term or provision of this Agreement.
11.8 Delays or Omissions. No delay or omission to exercise any right,
-------------------
power or remedy accruing to any party to this Agreement, upon any breach or
default of the other party, shall impair any such right, power or remedy of such
non-breaching party nor shall it be construed to be a waiver of any such breach
or default, or an acquiescence therein, or of or in any similar breach or
default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any party of any breach or default under this
Agreement, or any waiver on the part of any party of any provisions or
conditions of this Agreement, must be made in writing and shall be effective
only to the extent specifically set forth in such writing. All remedies, either
under this Agreement or otherwise afforded to any party, shall be cumulative and
not alternative.
11.9 Purchases and Sales of Company Securities between Stockholders.
--------------------------------------------------------------
(a) In connection with any purchase and sale of Company
Securities between any members of one Stockholder Group, on the one hand, and
any members of another Stockholder Group, on the other, each seller of Company
Securities shall deliver to each purchaser thereof a certificate, executed by or
on behalf of such seller, in which such seller shall represent and warrant to
such purchaser as of the closing date of such transaction that:
(i) (A) If an entity, such seller is such an entity duly
organized, validly existing, and in good standing under the laws of the state of
its organization and (B) such seller has good title to, and the full power and
authority to sell, transfer and assign to the purchaser all of its right, title
and interest in and to, such Company Securities;
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(ii) there are no consents, approvals or authorizations
required under any law, rule, regulation, agreement or instrument applicable to
the seller (other than such as have previously been obtained and are in full
force and effect as of such closing date) required in order to consummate its
sale of such Company Securities to the purchaser (other than any consents,
approvals or authorizations required to be obtained by the purchaser in
connection with such purchase); and
(iii) immediately after the sale, transfer and assignment
thereof, such purchaser will have good title to such Company Securities free and
clear of all liens, claims or encumbrances (other than any arising pursuant to
this Agreement or under state or federal securities laws or created by the
purchaser or arising by reason of its purchase or ownership of such Company
Securities).
(b) In connection with any purchase and sale of Company
Securities hereunder between any members of one Stockholder Group, on the one
hand, and any members of another Stockholder Group, on the other, each purchaser
of Company Securities shall deliver to each seller thereof a certificate,
executed by or on behalf of such purchaser, in which such purchaser shall
represent and warrant to such seller as of the closing date of such transaction
that:
(i) (A) If an entity, such purchaser is such an entity duly
organized, validly existing, and in good standing under the laws of the state of
its organization and (B) such purchaser has the full power and authority to
purchase, acquire and accept from the seller all of its right, title and
interest in and to such Company Securities;
(ii) there are no consents, approvals or authorizations
required under any law, rule, regulation, agreement or instrument applicable to
such purchaser (other than such as have previously been obtained and are in full
force and effect as of such closing date) required in order to consummate its
purchase of such Company Securities from such seller (other than any consents,
approvals or authorizations required to be obtained by such seller in connection
with such sale).
(c) (i) Unless otherwise provided herein, the closing of the
purchase and sale of such Company Securities shall be held on the fifth Business
Day following satisfaction of all conditions (including any financing condition)
to such closing, but in no event later than 120 days following the date that the
total amount of Company Securities such Person is obligated to purchase is
finally determined; provided, however, that such 120-day period shall be
-------- -------
extended for up to an additional 60 days in order to obtain any consent,
approval, or authorization or any expiration of a waiting period, which consent,
approval, authorization or expiration is a condition to the closing of such
purchase and sale. The obligation of each Stockholder to effect such purchase
and sale shall be conditioned (satisfaction of which may not be waived by any
party thereto without the consent of the other parties thereto) upon the receipt
of any and all consents, approvals or authorizations of any governmental or
regulatory entities or other third parties, and the expiration or termination of
any waiting periods under the HSR Act applicable to the
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consummation of such purchase and sale contemplated. Each Stockholder that is a
party to such transaction shall use its commercially reasonable efforts to cause
the satisfaction of such condition. The obligation of each Stockholder
purchasing Company Securities pursuant to this Section 11.9 shall be several and
not joint and shall not be conditioned upon the consummation by any other
Stockholder purchasing Company Securities hereunder of its purchase of Company
Securities in connection with any sale of Company Securities pursuant to Section
4.3. In the event that a selling Stockholder shall become obligated to
consummate the sale of Company Securities to one or more but not all
Stockholders which have agreed to purchase Company Securities in accordance with
the terms hereof, then such selling Stockholder shall be obligated to consummate
such sale with those purchasing Stockholders who are obligated to close, and as
to any Company Securities remaining following the purchase of the Company
Securities that the purchasing Stockholders had agreed (collectively) to
purchase, each non-defaulting purchasing Stockholders shall, pursuant to written
notice to all other Stockholders delivered not later than 10 days following such
purchase default, have the option to elect to purchase such remaining shares,
which remaining shares shall be allocated among such electing Stockholders on a
pro rata basis or as they may otherwise agree, such purchase to be on the same
terms and conditions as such previous purchase; the closing of such subsequent
purchase to occur not later than 90 days following the conclusion of such 10 day
period. If any shares remain following such purchase, the selling Stockholder
shall be entitled to sell such shares to an Unaffiliated Third Party during the
period of 120 days following the conclusion of such 10 day period, provided that
the terms and conditions of such sale are no more favorable to such Unaffiliated
Third Party than the terms and conditions offered to the purchasing
Stockholders. The foregoing shall not be deemed to limit in any way any rights a
selling Stockholder may have against a defaulting Stockholder.
(d) At the applicable closing, each purchaser of Company
Securities shall deliver to each seller thereof (i) in cash, or by certified
check or wire transfer of immediately available funds to the account specified
by such seller or (ii) in such other form of consideration as may be provided
for herein, an amount equal to the purchase price of the Company Securities to
be purchased by such purchaser from such seller. In the event that the purchase
price for Company Securities is stated in terms of a purchase price per share of
Common Stock but the Company Securities to be purchased consist of shares of
convertible Preferred Stock or options, warrants or other rights to acquire
shares of Common Stock, the purchase price with respect to each such Company
Security shall, (x) in the case of a purchase of shares of Convertible Preferred
Stock, equal the purchase price per share of Common Stock multiplied by the
number of shares of Common Stock then issuable upon the conversion of such
shares of Convertible Preferred Stock, and (y) in the case of any Right to
acquire shares of Common Stock, equal the purchase price per share of Common
Stock less the applicable exercise price of such Right. Concurrently therewith,
each seller shall deliver to each purchaser a stock certificate or certificates
representing the Company Securities to be sold by such seller to such purchaser,
duly endorsed for transfer or accompanied by duly executed stock powers, with
all requisite transfer tax stamps affixed, and such shares shall be free and
clear of all liens, claims and encumbrances (except as otherwise provided herein
and except for restrictions or resales under applicable securities laws) and all
title to, and all rights and privileges of ownership in, all such shares shall
immediately vest in such
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purchaser. At the applicable closing, each seller shall also deliver to each
purchaser, and each purchaser shall deliver to each seller, the certificates
required pursuant to Sections 11.9(a) and (b), and each seller shall deliver to
each purchaser such other certificates and documents as such purchaser may
reasonably request.
(e) In connection with the allocation of Company Securities
among the Stockholders purchasing such securities in connection with (i) a right
of first offer procedure pursuant to Sections 4.3 or 4.4 or (ii) the exercise of
the TCI Call, the KPCB Put or the Cable Put and the election by Comcast Sub or
Cox Sub to participate with TCI Sub in the purchase of Company Securities
pursuant to the TCI Call, the KPCB Put or the Cable Put, any Rights included in
such Company Securities shall be allocated pro rata (both in respect of the
number of Rights and the exercise price or other price related thereto) among
each Stockholder participating in such purchase, based on the number of Company
Securities held by such participating Stockholder and the number of Company
Securities held by all participating Stockholders (determined on an as converted
into Series A Common Stock basis).
11.10 Entire Agreement. Except as otherwise provided in this
----------------
Agreement, this Agreement contains the entire understanding of the parties with
respect to the subject matter hereof and supersedes all prior agreements and
understandings among the parties with respect to the subject matter hereof,
including without limitation, (i) Article V of the Term Sheet and (ii) the
Stockholders Agreement, dated as of August 29, 1995, among, inter alia, the
----- ----
Company, KPCB, certain KPCB Affiliates, and TCI Internet Services.
11.11 Additional Agreements. Each Stockholder and its Cable Parent
---------------------
agrees to negotiate in good faith with the Company and the other Stockholders
and their respective Cable Parents in connection with the execution and delivery
of a Master Distribution Agreement and a form of LCO Agreement incorporating
therein (and thereby superseding) the applicable provisions set forth in the
letter agreement, dated May 15, 1997, among the Stockholders and certain of
their respective Affiliates and the Company, including the exhibits thereto.
The parties acknowledge and agree that the Term Sheet is hereby terminated and
shall have no further force or effect.
11.12 Termination. This Agreement (other than any provision for
-----------
which a different term is specified) shall terminate on the earliest to occur of
(w) the twenty-fifth anniversary of the Execution Date, (x) such date as there
are no Eligible Stockholders or Exclusive Stockholders, (y) a merger or
consolidation of the Company with or into any other Person and in which the
Company is not the surviving or resulting corporation and (z) there are no
shares of Common Stock or Convertible Preferred Stock issued and outstanding.
11.13 Legends. Any and all certificates evidencing the Company
-------
Securities that are subject to this Agreement shall be endorsed with a
conspicuously noted legend in substantially the following form:
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"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THAT
CERTAIN STOCKHOLDERS' AGREEMENT, DATED AS OF JULY __, 1997 AND AS THEREAFTER
AMENDED, AMONG THE COMPANY AND THE OTHER PARTIES THERETO CONTAINING, AMONG OTHER
THINGS, RESTRICTIONS, ON THE SALE, TRANSFER OR OTHER DISPOSITION OF SUCH
SECURITIES AND RESTRICTIONS UPON AND COMMITMENTS TO VOTE ON CERTAIN MATTERS. A
COUNTERPART OF EACH SUCH AGREEMENT HAS BEEN DEPOSITED WITH THE COMPANY AT ITS
PRINCIPAL PLACE OF BUSINESS, AND THE COMPANY SHALL FURNISH A COPY OF EACH SUCH
AGREEMENT TO THE RECORD HOLDER HEREOF WITHOUT CHARGE UPON WRITTEN REQUEST."
The Company shall make a notation on its stock books regarding the
restrictions on transfer of the Company Securities subject to this Agreement and
will transfer securities on the books of the Company only to the extent not
inconsistent therewith.
11.14 Specific Performance. Without intending to limit the remedies
--------------------
available to any of the parties hereto, each of the parties hereto acknowledges
and agrees that a breach by such party of any provision of Article 2, Article 3,
Article 4, Section 5.2, Article 6, Article 7, Article 8, Article 10 and Section
11.11 of this Agreement will cause the other parties hereto irreparable injury
for which an adequate remedy at law is not available. Therefore, the parties
hereto agree that in the event of any such breach each such party shall be
entitled to an injunction, restraining order or other form of equitable relief
from any court of competent jurisdiction restraining any other party hereto from
committing any breach or threatened breach of, or otherwise specifically to
enforce, any such provision of this Agreement, in addition to any other remedies
that such parties may have at law or in equity.
11.15 Amendments. Any amendment to this Agreement must be in writing
----------
and must be signed by the Company and the member of each Stockholder Group
appointed to take actions on behalf of such Stockholder Group pursuant to
Section 2.1(a) as of the date of such amendment, whereupon such amendment shall
be effective against the Company and each member of all Stockholder Groups.
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IN WITNESS WHEREOF, the parties have executed this Amended and
Restated Stockholders' Agreement as of the date first above written.
AT HOME CORPORATION
By:___________________________________
Name:
Title:
TCI INTERNET HOLDINGS, INC. COX TELEPORT PROVIDENCE, INC.
By:____________________________________ By:___________________________________
Name: Name:
Title: Title:
COMCAST PC INVESTMENTS, INC. KLEINER, PERKINS, ▇▇▇▇▇▇▇▇
& ▇▇▇▇▇ VII
By: KPCB VII Associates, its General
Partner
By:____________________________________ By:___________________________________
Name: Name:
Title: Title:
KPCB INFORMATION SCIENCES
ZAIBATSU FUND II
By: KPCB VII Associates, its
General Partner
By:____________________________________ ______________________________________
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title:
Each of the following executes this Amended and Restated Stockholders'
Agreement only in its capacity as a Cable Parent:
TCI INTERNET SERVICES, INC. TCI COMMUNICATIONS, INC.
By:____________________________________ By:___________________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President and Chief Executive Title: President and Chief Executive
Officer Officer
TCI CABLE INVESTMENTS INC. COMCAST CABLE COMMUNICATIONS, INC.
By:____________________________________ By:___________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President Title: Vice Chairman
▇▇▇ COMMUNICATIONS, INC. COMCAST ON-LINE COMMUNICATIONS, INC.
By:____________________________________ By:___________________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Name:
Title: Senior Vice President Title:
Each of the following executes this Amended and Restated Stockholders'
Agreement only in its capacity as a Parent:
TELE-COMMUNICATIONS, INC. COMCAST CORPORATION
By:____________________________________ By:___________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇ Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and Chief Executive Title: President
Officer
KPCB VII ASSOCIATES ▇▇▇ COMMUNICATIONS, INC.
By:____________________________________ By:___________________________________
Name: L. ▇▇▇▇ ▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Title: Partner Title: Vice President
Each of the following executes this Amended and Restated Stockholders'
Agreement only in its capacity as an Ultimate Parent:
TELE-COMMUNICATIONS, INC. COMCAST CORPORATION
By:____________________________________ By:___________________________________
Name: Name:
Title: Title:
▇▇▇ ENTERPRISES, INC.
By:____________________________________
Name:
Title:
SCHEDULE I
----------
@HOME EQUITY
Investor Series T Series K Series AM Series AT Series AX
Preferred Preferred Preferred Preferred Preferred
-------------------- --------------- ------------ ----------- ---------- ----------
TCI Sub 770,000 1,553,000
KPCB Affiliates 693,883
Comcast Sub 727,865
Cox Sub 727,865
Management Pool
Total Shares 770,000 693,883 727,865 1,553,000 727,865
Shares of Con. Common
Pref. Equivalent
--------------- ------------
TCI Sub 2,323,000 23,230,000
KPCB Affiliates 693,883 6,938,830
Comcast Sub 727,865 7,278,650
Cox Sub 727,865 7,278,650
Total Shares 4,472,613 44,726,130
SCHEDULE II
-----------
Base Homes Passed
-----------------
Number of
Base Homes Passed
-----------------
TCI Cable Parent and Controlled Affiliates 24,000,000
▇▇▇ Communications, Inc. and Controlled Affiliates 5,250,000
Comcast Cable Parent and Controlled Affiliates 5,953,890; provided that
--------
upon consummation of
Comcast's acquisition of
the Scripps-▇▇▇▇▇▇ ▇▇▇▇▇
systems, such number shall
be increased to 7,210,724
Base Homes Passed
SCHEDULE III
------------
Restricted Businesses
---------------------
▇. ▇▇▇ Restricted Businesses
-------------------------
High Speed Internet Access operations in Phoenix, AZ
B. TCI Restricted Businesses
-------------------------
The TCI cable system in East Lansing, Michigan is offering consumer
Internet services on a commercial basis. This system has been providing these
services since April of 1995 and currently has a subscriber count of almost
400; 65% of whom are residential users. The service is priced in two tiers; tier
1 is $44.95 per month on Zenith cable modems and tier 2 is $69.95 on LANcity
cable modems.
C. Comcast Restricted Businesses
-----------------------------
Trials in Philadelphia, PA
Sarasota on-line in Sarasota, Florida
Work at home trial in Northern New Jersey.
Netline Communications, Inc.
(purchased subsequent to June 4, 1996)
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE 1
DEFINITIONS AND OTHER GENERAL MATTERS
1.1 Certain Definitions............................................................. 2
1.2 Additional Definitions.......................................................... 18
1.3 Terms of Interpretation Generally............................................... 19
ARTICLE 2
STOCKHOLDER GROUPS
2.1 Stockholder Groups; Ownership Provisions........................................ 20
ARTICLE 3
CORPORATE GOVERNANCE
3.1 Voting Generally................................................................ 22
3.2 Election of CEO to the Board.................................................... 23
3.3 Designation and Election of Series B Common Directors........................... 23
3.4 Removal of Special Directors and Series K Director.............................. 24
3.5 Vacancies Among the Series B Common Directors................................... 25
3.6 Outside Directors............................................................... 25
3.7 Conflicting Charter and Bylaws.................................................. 25
3.8 Special Voting Provisions....................................................... 25
3.9 Certain Amendments In Connection with the IPO................................... 26
3.10 .Com Committee.................................................................. 26
ARTICLE 4
TRANSFERS AND CONVERSIONS
4.1 General Restrictions on Transfer................................................ 27
4.2 Conversion of the Convertible Preferred Stock, the Series B Common Stock and
the Series K Common Stock....................................................... 28
4.3 Right of First Offer............................................................ 30
4.4 Right of First Offer Following an IPO........................................... 33
4.5 Tag-Along Rights................................................................ 36
4.6 Drag-Along Right................................................................ 39
4.7 Determination of Consideration Payable with Respect to Certain Tag-Along
Rights and Drag-Along Rights.................................................... 40
4.8 Allocation of Consideration..................................................... 41
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TABLE OF CONTENTS
-----------------
continued
---------
Page
----
ARTICLE 5
DEEMED TRANSFER
5.1 Definitions..................................................................... 42
5.2 Deemed Transfer................................................................. 43
ARTICLE 6
PUT/CALL PROVISIONS
6.1 TCI Call........................................................................ 46
6.2 KPCB Put........................................................................ 47
6.3 Cable Put....................................................................... 48
6.4 IPO Election.................................................................... 49
6.5 Payment of Consideration in Respect of TCI Call, KPCB Put, and Cable Put........ 50
6.6 Determination of Fair Market Value and Per Share Value in connection with
TCI Call, KPCB Put and Cable Put................................................ 51
6.7 Termination or Amendment to the TCI Call, the KPCB Put and the Cable Put........ 52
6.8 Status of Designee.............................................................. 52
ARTICLE 7
APPRAISAL PROCEDURES
7.1 Fair Market Value............................................................... 52
7.2 Appraisal Procedure for Fair Market Value....................................... 53
7.3 Determination of Per Share Value................................................ 53
7.4 Delivery of Appraisal Report.................................................... 54
7.5 Fees and Expenses of Appraisers................................................. 54
7.6 Value Determination is Conclusive............................................... 54
ARTICLE 8
PREEMPTIVE RIGHTS
8.1 Preemptive Rights............................................................... 55
8.2 Termination of Preemptive Rights................................................ 56
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ARTICLE 9
REPRESENTATIONS, WARRANTIES AND COVENANTS
9.1 General Representations and Warranties.......................................... 57
9.2 Restricted Business............................................................. 58
ARTICLE 10
CONFIDENTIALITY
10.1 Confidentiality................................................................. 58
(a) Maintenance of Confidentiality............................................. 58
(b) Permitted Disclosures...................................................... 59
ARTICLE 11
MISCELLANEOUS
11.1 Successors and Assigns.......................................................... 61
11.2 Third Parties................................................................... 62
11.3 Governing Law................................................................... 62
11.4 Counterparts.................................................................... 62
11.5 Notices......................................................................... 62
11.6 Severability.................................................................... 65
11.7 Headings........................................................................ 65
11.8 Delays or Omissions............................................................. 65
11.9 Purchases and Sales of Company Securities between Stockholders.................. 65
11.10 Entire Agreement................................................................ 68
11.11 Additional Agreements........................................................... 68
11.12 Termination..................................................................... 68
11.13 Amendment to Term Sheet......................................................... 68
11.14 Specific Performance............................................................ 68
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