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EXHIBIT 4.2
AMENDMENT NO. 1 TO STOCKHOLDERS' AGREEMENT
This is Amendment No. 1 (this "Amendment"), dated as of July 19,
2000, to the Stockholders Agreement dated as of May 10, 1999 (the "Stockholders
Agreement"), among Time Warner Telecom Inc., a Delaware corporation (the
"Company"), Time Warner Companies, Inc., a Delaware corporation ("TWX"),
American Television and Communications Corporation, a Delaware corporation
("ATC"), Warner Communications Inc., a Delaware corporation ("WCI"), TW/TAE,
Inc., a Delaware corporation ("TW/TAE"), FibrCOM Holdings, L.P., a Delaware
limited partnership that is owned by TW/KBLCOM Inc., a Delaware corporation
("TW/KBLCOM"), Paragon Communications, a Colorado general partnership ("Paragon"
and, together with TWX, ATC, WCI, TWI/TAE and TW/KBLCOM, the "TW Stockholders"),
MediaOne of Colorado, Inc., a Colorado corporation (the "MediaOne Stockholder"),
and Advance/Xxxxxxxx Partnership, a New York general partnership ("A/N").
Capitalized terms used in this Amendment and not otherwise defined herein shall
have the meaning assigned thereto in the Stockholders Agreement.
WHEREAS, the parties to the Stockholders Agreement desire to
amend certain provisions of the Stockholders Agreement;
WHEREAS, all of the shares of Common Stock of the Company held by
the MediaOne Stockholder were transferred to MediaOne Holdings II, Inc. pursuant
to an Assignment and Assumption Agreement dated February 11, 2000;
WHEREAS, Section 2.5 of the Stockholders Agreement provides that
in the event the Company takes any action which changes the number of shares of
Common Stock of the Company outstanding the ownership thresholds for nominations
of directors must be adjusted, and such ownership thresholds have been and will
continue to be adjusted from time to time;
WHEREAS, the number of shares of Common Stock of the Company
outstanding has increased due to the issuance of Class A Common Stock, par value
$.01 per share ("Class A Common Stock") (i) in connection with the acquisition
of Internet Connect, Inc.; (ii) in connection with the acquisition of MetroComm,
Inc.; (iii) in an initial public
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offering pursuant to the Underwriting Agreement dated as of May 11, 1999 and
(iv) in connection with the exercise of stock options;
WHEREAS, as of June 30, 2000, the Company had 33,177,815 shares
of Class A Common Stock and 72,226,500 shares of Class B Common Stock, par value
$.01 per share outstanding;
WHEREAS, Annex A attached hereto sets forth the calculation of
the Ownership Percentages required for nominations of directors as provided in
the Stockholders Agreement;
NOW, THEREFORE, in consideration of the premises and other good
and valuable consideration, the adequacy and receipt of which is hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
1. Amendment to Sections 2.1(c)(i)(A) through (C) of the
Stockholders Agreement. Sections 2.1(c)(i)(A) through (C) of the Stockholders
Agreement are hereby amended and restated in their entirety to read as follows:
"(c) The Agreed Nominees shall be designated as follows:
(i) (A) So long as the TW Stockholder Group has an Ownership
Percentage which is greater than or equal to 14.55% (as adjusted from
time to time pursuant to Section 2.5), the TW Stockholder Group shall
have the right to designate four Agreed Nominees. If the TW Stockholder
Group has an Ownership Percentage which is less than 14.55% (as adjusted
from time to time pursuant to Section 2.5), the TW Stockholder Group
shall have the right to designate a number of Agreed Nominees determined
in accordance with the following table (with the percentages set forth
in such table being adjusted from time to time pursuant to Section 2.5).
TW Stockholder Group Number of
Ownership Percentage Agreed Nominees
-------------------- ---------------
14.55% or greater 4
12.12% to 14.54% 3
9.70% to 12.11% 2
7.28% to 9.69% 1
less than 7.28% 0
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(B) So long as the TW Stockholder Group has an Ownership
Percentage which is greater than or equal to 14.55% (as adjusted from
time to time pursuant to Section 2.5), the MediaOne Stockholder Group
shall have the right to designate a number of Agreed Nominees determined
in accordance with the following table (with the percentages set forth
in such table being adjusted from time to time pursuant to Section 2.5).
Media One
Stockholder Group Number of
Ownership Percentage Agreed Nominees
-------------------- ---------------
7.28% or greater 3
less than 7.28% 0
If the TW Stockholder Group has an Ownership Percentage which is less
than 18.77% (as adjusted from time to time pursuant to Section 2.5), the
MediaOne Stockholder Group shall have the right to designate a number of
Agreed Nominees determined in accordance with the following table (with
the percentages set forth in such table being adjusted from time to time
pursuant to Section 2.5).
Media One
Stockholder Group Number of
Ownership Percentage Agreed Nominees
-------------------- ---------------
14.55% or greater 3
10.91% to 14.54% 2
7.28% to 10.90% 1
less than 7.28% 0
(C) So long as the A/N Stockholder Group has an Ownership
Percentage which is greater than or equal to 7.28% (as adjusted from
time to time pursuant to Section 2.5), the A/N Stockholder Group shall
have the right to designate one Agreed Nominee. If the A/N Stockholder
Group has an Ownership Percentage of less than 7.28% (as adjusted from
time to time pursuant to
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Section 2.5), the A/N Stockholder Group shall not have the right to
designate any Agreed Nominees."
2. Amendment to Section 2.1(c)(iii) of the Stockholders
Agreement. Section 2.1(c)(iii) of the Stockholders Agreement is hereby
amended and restated in its entirety to read as follows:
"(iii) Three individuals nominated by the Nominating Committee
shall be Agreed Nominees if such individuals would be Independent
Directors at the time of their election and are approved by a majority
of the members of the Nominating Committee."
3. Effectiveness. The amendments set forth in Sections 1 and 2
hereof shall become effective upon execution of a counterpart of this
Amendment by each of the undersigned parties. Upon such effectiveness:
(i) all references in any document to the Stockholders Agreement
shall be deemed to be references to the Stockholders Agreement as
amended hereby; and
(ii) except as specifically amended hereby, the Stockholders
Agreement shall continue in full force and effect in accordance with the
provisions thereof, and as used therein, respectively, the terms
"Agreement", "herein", "hereof", and words of similar import shall,
unless the context otherwise requires, refer to the Stockholders
Agreement as amended hereby.
4. Further Assurances. From time to time upon the request of any
party, each party hereto shall execute, deliver and acknowledge any and all such
further documents and instruments and do such further acts and things as the
other party hereto may reasonably request to evidence or effectuate more
effectively the terms of and intent of the parties contemplated by this
Amendment.
This Amendment, which may be executed in two or more
counterparts, all of which shall be considered one and the same agreement, shall
be governed by, and construed in accordance with, the law of the State of New
York without reference to choice of law principles, including all matters of
construction, validity and performance except to the extent the laws of Delaware
are mandatorily applicable.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment
No. 1 to be duly executed as of the date and year first written above.
TIME WARNER COMPANIES, INC.
By:/s/ Xxxxxxx X. Xxxx
--------------------------
Name: Xxxxxxx X. Xxxx
Title: Vice President
AMERICAN TELEVISION AND
COMMUNICATIONS CORPORATION
By:/s/ Xxxxxxx X. Xxxx
--------------------------
Name: Xxxxxxx X. Xxxx
Title: Vice President
WARNER COMMUNICATIONS INC.
By:/s/ Xxxxxxx X. Xxxx
--------------------------
Name: Xxxxxxx X. Xxxx
Title: Vice President
TW/TAE, INC.
By:/s/ Xxxxxxx X. Xxxx
--------------------------
Name: Xxxxxxx X. Xxxx
Title: Vice President
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FIBRCOM HOLDINGS, L.P.
By: FIBRCOM INCORPORATED,
General Partner
By: /s/ Xxxxxxx X. Xxxx
---------------------
Name: Xxxxxxx X. Xxxx
Title: Vice President
PARAGON COMMUNICATIONS
By: KBL COMMUNICATIONS, INC.,
Managing General Partner
By:/s/ Xxxxxxx X. Xxxx
----------------------
Name: Xxxxxxx X. Xxxx
Title: Vice President
MEDIAONE HOLDINGS II, INC.
By:/s/ Xxxxxxx X. Xxxxxxxxx
---------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Secretary
ADVANCE/XXXXXXXX PARTNERSHIP
By: ADVANCE COMMUNICATION CORP.
General Partner
By:/s/ Xxxxxx X. Xxxxx
----------------------
Name: Xxxxxx X. Xxxxx
Title: President
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ANNEX A
CALCULATION OF OWNERSHIP PERCENTAGES
This Annex A sets forth the calculation of the Ownership
Percentages required for nominations of directors as provided in Section
2.1(c)(i)(A) through (C) of the Stockholders Agreement. Reference is made to the
letter notice dated March 10, 2000 (the "Letter"), attached hereto, which served
as the initial notice of adjustment of the Ownership Percentages contained in
the Stockholders Agreement.
As of March 10, 2000, the Company had 23,507,707 shares of Class
A Common Stock and 81,250,000 shares of Class B Common Stock outstanding. As of
June 30, 2000, the Company had 33,177,815 shares of Class A Common Stock and
72,226,500 shares of Class B Common Stock outstanding. Accordingly, the current
adjusted Ownership Percentages in Section 2.1(c) of the Amendment are adjusted
to account for the change in the number of shares of Common Stock outstanding by
multiplying the Ownership Percentages set forth in the Letter by 99.39% (the
ratio of the number of shares outstanding as of March 10, 2000 over the number
of shares outstanding as of June 30, 2000).
