AMENDED AND RESTATED LIMITED LIABILITY
COMPANY AGREEMENT of TIME WARNER TELECOM L.L.C. (the
"Company") dated as of [ ], by and among TIME WARNER
ENTERTAINMENT COMPANY, L.P., a Delaware limited
partnership ("TWE"), TIME WARNER
ENTERTAINMENT-ADVANCE/XXXXXXXX PARTNERSHIP, a New
York general partnership ("TWE-A/N"), 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"), FIBERCOMM HOLDINGS
L.P., a Delaware limited partnership ("TW/KBLCOM"),
PARAGON COMMUNICATIONS, a New York general
partnership ("Paragon", and, together with TWX, ATC,
WCI, TWI/TAE and TW/KBLCOM, the "TW Stockholders"),
MEDIAONE GROUP, INC. (formerly U S WEST Multimedia
Communications, Inc.), a Colorado corporation (the
"MediaOne Stockholder"), and ADVANCE/XXXXXXXX
PARTNERSHIP, a New York general partnership ("A/N").
Preliminary Statement
WHEREAS, TWE heretofore formed the Company as a limited
liability company under the Delaware Act (as defined below) pursuant to the
Original LLC Agreement (as defined below).
WHEREAS, certain of the parties hereto are parties to a
Reorganization Agreement of even date herewith (the "Reorganization Agreement")
pursuant to which the Company is being continued and certain parties are being
admitted as members, and in connection therewith, the Original LLC Agreement is
being hereby amended and restated.
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS AND USAGE
SECTION 1.01. Definitions. Capitalized terms used herein but
not defined herein shall have the respective
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meanings assigned thereto in the Stockholders' Agreement attached hereto as
Exhibit C (the "Stockholders' Agreement"). The following terms shall have the
following meanings for the purposes of this Agreement:
"Additional Member" means any Person admitted as a member of
the Company pursuant to Section 3.02 in connection with the new issuance of an
Interest to such Person.
"Agreement" means this Limited Liability Company Agreement, as
the same may be amended or restated from time to time.
"Business Day" means any day other than a Saturday, a Sunday
or a Federal holiday.
"By-laws" means the By-laws attached as Exhibit B hereto.
"Capital Account" means the capital account established and
maintained for each Member pursuant to Section 6.01(a).
"CEO" means the President and Chief Executive Officer of the
Company.
"Chairman" is defined in Section 8.02(c).
"Charter" means the Certificate of Incorporation attached as
Exhibit A hereto.
"Class A Interest" means a Class A limited liability company
interest in the Company.
"Class B Interest" means a Class B limited liability company
interest in the Company.
"Class A Member" means any Member that is a holder of a Class
A Interest.
"Class B Member" means any Member that is a holder of a Class
B Interest.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means Time Warner Telecom L.L.C., a Delaware limited
liability company.
"Company Indebtedness" is defined in the Reorganization
Agreement.
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"Contribution" is defined in the Reorganization Agreement.
"Covered Person" means (i) each Member, (ii) each officer,
director, shareholder, partner, employee, representative, agent or trustee of a
Member and (iii) each Representative.
"Delaware Act" means the Delaware Limited Liability Company
Act, 6 Del. C. 'SS' 'SS'18-101 et seq., as amended from time to time.
"Distributee Member" means any of the Persons named on
Schedule B hereto, and any Person to whom all or any part of the Interest of any
such named Person is Transferred pursuant to Section 9.01(a).
"Effective Time" means the time at which the Contribution
occurs.
"Fiscal Year" means each fiscal year referred to in Section
6.06.
"Interest" means a Class A Interest, a Class B Interest, or
any other limited liability company interest in the Company.
"Initial Member" means any of the Persons named on Schedule A
hereto.
"IPO Registration Statement" is defined in Section 10.01(a).
"IPO Transaction" is defined in Section 10.01(a).
"Majority Vote" is defined in Section 8.03(a).
"Management Committee" is defined in Section 8.01.
"Member" means any Person named as a member of the Company on
Schedule A or B hereto (as applicable) and/or on the books and records of the
Company and includes any Person admitted as an Additional Member or a Substitute
Member, in each case for so long as such Person continues to be a member of the
Company.
"Net Profits and Net Losses" shall be the taxable income and tax loss
of the Company as determined for Federal income tax purposes for a given taxable
year, calculated using the accrual method taking into account any separately
stated items, increased by the amount of any tax exempt
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income of the Company during such taxable year and decreased by the amount of
the Code Section 705(a))(2)(B) expenditures (within the meaning of Treasury
Regulation 'SS'1.704-1(b)(2)(iv)(i)) of the Company during such taxable year;
provided, however, that (i) items of income, gain, loss and deduction
attributable to Section 704(c) Property shall be determined in accordance with
the principles of Treasury Regulation 'SS'1-704-1(b)(2)(iv)(g) and (ii) any
items of income, gain, loss or deduction that are specially allocated pursuant
to Sections 6.02(b), (c) and (d) shall not be taken into account.
"Newco" is defined in Section 10.01(b).
"Original LLC Agreement" means the limited liability company agreement
of Time Warner Telecom L.L.C. dated as of June [ ], 1998.
"Participation Percentage" is defined in Section 5.01(a).
"Reconstitution" is defined in Section 10.01(b).
"Reorganization Distribution" means the Distribution pursuant to (and
as defined in) the Reorganization Agreement.
"Representative" means a member of the Management Committee.
"Restricted Period" means the period from the Effective Time until the
[ ] anniversary of the Effective Time.
"Section 704(c) Property" means "Section 704(c) property" as defined
in Treasury Regulation 'SS'1.704-3(a)(3).
"Substitute Member" means any Person admitted as a member of the
Company pursuant to Section 3.02 in connection with the Transfer of
then-existing Interest to such Person.
SECTION 1.02. Other Definitional Provisions. The provisions of Section
1.2 of the Stockholders' Agreement are hereby incorporated by reference herein.
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ARTICLE II
THE COMPANY
SECTION 2.01. Effectiveness of This Agreement. Notwithstanding
anything to the contrary contained herein, this Agreement shall become effective
at the Effective Time.
SECTION 2.02. Continuation. The Members hereby agree to continue the
Company as a limited liability company pursuant to the Delaware Act, upon the
terms and subject to the conditions set forth in this Agreement, and hereby
ratify the execution and filing of the Certificate of Formation of the Company
with the Secretary of State of the State of Delaware on June 18, 1998. The
authorized officer or representative shall file and record any amendments or
restatements of the certificate of formation of the Company and such other
documents as may be required or appropriate under the laws of the State of
Delaware and of any other jurisdiction in which the Company may conduct
business. The authorized officer or representative shall, on request, provide
any Member with copies of each such document as filed and recorded.
SECTION 2.03. Name. The name of the Company shall be Time Warner
Telecom L.L.C. The Management Committee by Majority Vote may change the name of
the Company or adopt such trade or fictitious names as they may determine.
SECTION 2.04. Term. The term of the Company shall begin on the date
the certificate of formation of the Company is filed, and the Company shall have
perpetual existence unless sooner dissolved as provided in Article XII.
SECTION 2.05. Registered Agent and Registered Office. The name of the
registered agent for service of process shall be National Registered Agents,
Inc., and the address of the registered agent and the address of the registered
office in the State of Delaware shall be 0 Xxxx Xxxxxxxxxx Xxxxxx, Xxxx xx
Xxxxx, Xxxxxx of Kent. Such office and such agent may be changed from time to
time by Majority Vote of the Management Committee.
SECTION 2.06. Purposes. The Company has been formed for the object and
purpose of, and the nature of the business to be conducted and promoted by the
Company is, engaging in any lawful act or activity for which limited liability
companies may be formed under the Delaware Act.
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ARTICLE III
MEMBERS; BOOKS AND RECORDS;
BUDGETS AND BUSINESS PLANS; REPORTS
SECTION 3.01. Admission of Members. (a) At the Effective Time, without
the need for any further action of any Person, the Initial Members who have
executed this Agreement shall be admitted as Members, and each such Person shall
be shown as such in the books and records of the Company. Following the
Reorganization Distribution, the Distributee Members who have executed this
Agreement shall be admitted as Substitute Members, and those Initial Members
which are not also Distributee Members shall cease to be Members. Following the
Effective Time, except as set forth in the preceding sentence, no Person shall
be admitted as a Member and no additional Interest shall be issued except as
expressly provided herein.
(b) At the Effective Time, there shall be two classes of limited
liability interests in the Company, designated as Class A and Class B. At the
Effective Time, the limited liability company interests of the Company issued
pursuant to the Original LLC Agreement and held by TWE shall be converted into a
Class B Interest having a Participation Percentage equal to that set forth for
TWE on Schedule A hereto. All of the Interests issued to the Initial Members and
distributed to the Distributee Members pursuant to the Reorganization
Distribution shall be Class B Interests. At any time following the Restricted
Period, all or any part of a Class B Interest may be converted, at the option of
the Class B Member holding such Interest, into a Class A Interest having a
Participation Percentage equivalent to that of the portion converted. Such right
shall be exercised by the delivery of written notice to the Company making such
election and setting forth the amount to be converted. Upon receipt of such
election, the Company shall deliver notice to the Members thereof, and shall
deliver a revised Schedule C to this Agreement setting forth the revised
Participation Percentages of the Class A Interests and the Class B Interests.
SECTION 3.02. Substitute Members and Additional Members. (a) No
Transferee of an Interest or Person to whom an Interest is issued pursuant to
this Agreement shall be admitted as a Member hereunder or acquire any rights
hereunder, including any voting rights or the right to receive distributions and
allocations in respect of the Transferred or issued Interest, as applicable,
unless (i) such Interest is Transferred or issued in compliance with the
provisions of this Agreement and (ii) such
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Transferee or recipient shall have executed and delivered to the Company an
instrument effectuating the admission of such Transferee or recipient as a
Member and confirming the agreement of such Transferee or recipient to be bound
by all the terms and provisions of this Agreement. Upon complying with clauses
(i) and (ii) above, without the need for any further action of any Person, a
Transferee or recipient shall be deemed admitted to the Company as a Member. A
Substitute Member shall enjoy the same rights, and be subject to the same
obligations, as the Transferor; provided that such Transferor shall not be
relieved of any obligation or liability hereunder arising prior to the
consummation of such Transfer but shall be relieved of all future obligations
with respect to the Interest so Transferred. As promptly as practicable after
the admission of any Person as a Member, the books and records of the Company
shall be changed to reflect such admission of a Substitute Member or Additional
Member. In the event of any admission of a Substitute Member or Additional
Member pursuant to this Section 3.02(a), this Agreement shall be deemed amended
to reflect such admission, and any formal amendment of this Agreement (including
Schedules A and B attached hereto) in connection therewith shall only require
execution by the such Substitute Member or Additional Member, as applicable, to
be effective.
(b) If a Member shall Transfer all (but not less than all) its
Interest, the Member shall thereupon cease to be a Member of the Company.
Section 3.03. Tax Information. (a) The Company shall timely cause to
be prepared all Federal, state, local and foreign tax returns (including
information returns) of the Company and its subsidiaries, which may be required
by a jurisdiction in which the Company and its subsidiaries operate or conduct
business for each year or period for which such returns are required to be filed
and, after review and approval of such returns by the Majority Vote of the
Management Committee, shall cause such returns to be timely filed and shall
provide the Members with copies thereof promptly after such filings are made.
(b) The Tax Matters Partner shall use reasonable efforts to submit a
draft of any such tax return contemplated in Section 3.03(a) to each Member for
review, and to the Management Committee for approval, no later than the earlier
of (i) 30 days prior to the required filing date (as such date may be extended)
and (ii) June 30 of each year, unless otherwise agreed to by the Members.
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(c) The Tax Matters Partner shall provide to each Member preliminary
and estimated information concerning the Company's taxable income or loss and
each class of income, gain, loss, deduction or credit which is relevant to
reporting a Member's share of Company income, gain, loss, deduction or credit
for purposes of federal or state income tax. Such information shall be furnished
to the Members as soon as possible after the close of the Company's fiscal year
and, in any event, no later than the earlier of (i) March 31 of each year and
(ii) the date on which the income tax return for such fiscal year is submitted
to the Members for review pursuant to Section 3.03(b).
ARTICLE IV
CAPITAL CONTRIBUTIONS
SECTION 4.01. Initial Capital Contributions. At the Effective Time,
each Initial Member shall make its respective Contribution as set forth in
Section 2.1 of the Reorganization Agreement.
SECTION 4.02. No Additional Capital Contributions. After the Effective
Time, no Member shall be obligated to make any additional capital contributions.
ARTICLE V
PARTICIPATION PERCENTAGES
SECTION 5.01. General. (a) At the Effective Time, the participation
percentage (the "Participation Percentage") of each Initial Member's Interest
shall be as set forth in Section 2.1(c) of the Reorganization Agreement.
Immediately following the Reorganization Distribution, the Participation
Percentage of each Member's Interest shall be as set forth on Schedule C hereto.
(b) Such initial Participation Percentages shall be subject to
adjustment as provided in this Article V. The aggregate outstanding
Participation Percentages at all times shall equal 100%.
SECTION 5.02. Issuances of Interests After the Effective Time. Upon
the issuance of an Interest to a Member after the Effective Time, the Management
Committee by unanimous vote shall specify the Participation Percentage
associated with such issuance. Thereafter, the Participation Percentages of all
Interests outstanding immediately before such issuance shall be reduced in the
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aggregate by an amount equal to the Participation Percentage so designated, in
proportion to their relative Participation Percentages immediately before such
issuance.
SECTION 5.03. Repurchases of Interests. If the Company shall
repurchase any Interest, then upon such repurchase, the Participation
Percentages of all remaining Interests shall be increased in the aggregate by an
amount equal to the Participation Percentage of such repurchased Interest, in
proportion to their relative Participation Percentages immediately before such
repurchase.
ARTICLE VI
CAPITAL ACCOUNTS, ALLOCATIONS OF
PROFIT AND LOSS AND TAX MATTERS
SECTION 6.01. Capital Accounts. (a) The Company shall establish a
capital account (a "Capital Account") for each Member on the books of the
Company. The opening balance of each Member's Capital Account on the
Restructuring Date shall be equal to such Member's initial Contribution as set
forth on Schedule D hereto. The Capital Account of a Member shall be increased
by (i) the amount of money contributed by that Member to the Company, (ii) the
fair market value of property contributed by that Member to the Company (net of
liabilities related to such contributed property that the Company is considered
to assume or take subject to under Section 752 of the Code) and (iii)
allocations to that Member pursuant to Section 6.02 of profit, income and gain
(or items thereof). The Capital Account of a Member shall be decreased by (i)
the amount of money distributed to that Member by the Company, (ii) the fair
market value of property distributed to that Member by the Company (net of
liabilities related to such distributed property that such Member is considered
to assume or take subject to under Section 752 of the Code), (iii) allocations
to that Member pursuant to Section 6.02 of expenditures described in Section
705(a)(2)(B) of the Code and (iv) allocations to that Member pursuant to Section
6.02 of loss, expense and deduction (or items thereof).
(b) In the event that a Member Transfers any Interest in accordance
with the provisions of this Agreement, the Transferee of such Interest shall
succeed to the Capital Account of the Transferor attributable to such Interest.
(c) Upon the occurrence of any event specified in Treasury Regulation
'SS'1.704-1(b)(2)(iv)(f), if the Management
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Committee so elects by unanimous vote, the Capital Accounts of the Members shall
be adjusted to reflect the fair market value of the Company's property at such
time and in such manner as provided in such Regulation.
(d) No Member shall be entitled to withdraw capital or receive
distributions except as specifically provided herein. No Member shall have any
obligation to the Company, to any other Member or to any creditor of the Company
to restore any negative balance in the Capital Account of such Member. No
interest will be paid on the balance in any Member's Capital Account.
SECTION 6.02. Allocations of Book Profits and Losses. (a) Net Profits
of the Company for each taxable period shall be allocated among the Members pro
rata, in accordance with the respective Participation Percentages of their
Interests for such period. Net Losses of the Company for each taxable period
shall be allocated among the Members in accordance with the respective
Participation Percentages of their Interests for such period, provided that any
allocation of Net Losses pursuant to this Section 6.02(a) that would cause a
Member's Capital Account to be reduced below zero shall instead be allocated to
the remaining Members in proportion to such Members' positive Capital Account
balances.
(b) Minimum Gain Chargeback. The Company shall allocate items of
profit among the Members at such times and in such amounts as necessary to
satisfy the minimum gain chargeback requirements of Treasury Regulation
'SS' 'SS'1.704-2(f) and 1.704-2(i)(4).
(c) Allocation of Deductions Attributable to Member Nonrecourse
Liabilities. Any nonrecourse deductions attributable to a Member Nonrecourse
Liability shall be allocated among the Members that bear the economic risk of
loss for such Member Nonrecourse Liability in accordance with the ratios in
which such Members share such economic risk of loss and in a manner consistent
with the requirements of Treasury Regulation 'SS' 'SS'1.704-2(c), 1.704-2(i)(2)
and 1.704-2(j)(1).
(d) Qualified Income Offset. The Company shall specially allocate
items of profit and loss when and to the extent required to satisfy the
"qualified income offset" requirement within the meaning of Treasury Regulation
'SS'1.704-1(b)(2)(ii)(d).
(e) To the extent that any item of Partnership income, gain, loss or
deduction has been specially allocated
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pursuant to Sections 6.02(b), (c) or (d), and such allocation is inconsistent
with the way in which the same item amount otherwise would have been allocated
under Section 6.02(a), subsequent allocations under Section 6.02(a) shall be
made, in a manner consistent with Sections 6.02(b), (c) and (d), which negate as
rapidly as possible the effect of all such inconsistent allocations under
Sections 6.02(b), (c) or (d).
(f) Allocations in Liquidation. Upon a dissolution of the Company in
accordance with Article XII, items of the Company's profit or loss attributable
to a hypothetical Company sale of all its assets remaining on the date of
dissolution, subject to its liabilities, on that date for their respective fair
market values) shall be allocated to the Members in accordance with the
provisions of Section 6.02(a).
SECTION 6.03. Allocations of Taxable Income and Loss. Except as
provided in the following sentence, profit, income, gain, loss, deduction and
expense as determined for Federal income tax purposes shall be allocated among
the Members in the same proportions as the corresponding items of "book" profit,
income, gain, loss, deduction and expense are allocated pursuant to Section 6.02
among such Members. Notwithstanding the foregoing sentence, Federal income tax
items relating to any Section 704(c) Property shall be allocated among the
Members in accordance with Section 704(c) of the Code and Treasury Regulation
'SS'1.704-3(c) using curative allocations to take into account the difference
between the fair market value and the tax basis of such Section 704(c) Property
as of the date of its contribution to the Company or its revaluation pursuant to
Section 6.01(c). Items described in this Section 6.03 shall neither be credited
nor charged to the Members' Capital Accounts.
SECTION 6.04. Allocation Between Transferor and Transferee Members. If
any Interest is Transferred as permitted by this Agreement during a taxable
year, then the Transferor and Transferee shall each be allocated profit and loss
based upon the number of days each Person holds such Interest during such year,
subject to applicable Treasury Regulations. Similar apportionments shall be made
to account for varying Participation Percentages attributable to any Interest
during a taxable year.
SECTION 6.05. Elections. Except as otherwise expressly provided
herein, all elections required or permitted to be made by the Company under the
Code or other applicable tax law, and all material decisions with respect
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to the calculation of its taxable income or tax loss for tax purposes under the
Code or other applicable tax law, shall be made in such manner as may be
determined by the Management Committee by Majority Vote. Notwithstanding the
foregoing, the Company shall, if so requested by any Member, make the election
described in Section 754 of the Code, unless the Management Committee determines
by Majority Vote that making such election would be likely to result in a tax
detriment to the other Members that is in the aggregate greater than the benefit
likely to result to such requesting Member.
SECTION 6.06. Fiscal Year. The Fiscal Year of the Company for tax and
accounting purposes shall be the 12-month (or shorter) period ending on December
31 of each year.
SECTION 6.07. Withholding Requirements. In the event that the Company
withholds or pays tax in respect of any Member for any period in excess of the
amount otherwise distributable to such Member for such period (or there is a
determination by any taxing authority that the Company should have withheld or
paid any tax for any period in excess of the tax, if any, that it actually
withheld or paid for such period), such excess amount (or such additional
amount) shall be treated as a recourse loan to such Member that shall bear
interest at a variable rate equal to Chase Manhattan Bank's prime lending rate
per annum (but in no event more than the highest lawful rate) and be payable on
demand.
SECTION 6.08. Tax Matters Partner. TWX shall act as the "tax matters
partner" of the Company within the meaning of Section 6231(a)(7) of the Code and
in any similar capacity under applicable state or local tax law. All reasonable
out-of-pocket expenses incurred by TWX while acting in such capacity shall be
paid or reimbursed by the Company.
SECTION 6.09. Partnership Status. The Members intend that the Company
shall be treated as a partnership for all relevant tax purposes and agree to
take all reasonable actions, including the amendment of this Agreement (so long
as such amendment does not materially adversely affect any Member) and the
execution of other documents, as may be reasonably required to qualify for and
receive such treatment.
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ARTICLE VII
DISTRIBUTIONS
SECTION 7.01. General. Except as provided in Section 7.02, all cash
distributions by the Company will be made, if, as and when declared by the
Management Committee, in respect of each Interest in proportion to the
Participation Percentage of such Interest.
SECTION 7.02. Liquidation. Upon the dissolution of the Company, cash
and non-cash assets shall be distributed in accordance with the priorities
described in Section 12.02(b).
SECTION 7.03. Distributions in Kind. Subject to Section 12.03, the
Company shall not distribute any assets in kind unless unanimously approved by
the Management Committee. Such property distributions shall be distributed based
on their fair market value in the same proportions as if cash were distributed.
If cash and property are to be distributed in kind simultaneously, the Company
shall distribute such cash and property in kind in the same proportion to each
Member, unless otherwise agreed by each Member.
ARTICLE VIII
VOTING RIGHTS AND MANAGEMENT OF THE COMPANY
SECTION 8.01. Powers of Members. (a) The Members hereby designate a
management committee comprised of the Representatives described in Section
8.02(a) (the "Management Committee"). The Representatives shall be managers
(within the meaning of the Delaware Act) of the Company. Except as expressly
provided in this Agreement or the Delaware Act, the business and affairs of the
Company shall be managed exclusively by the Management Committee in accordance
with the terms of this Agreement. The Management Committee shall have the power
to do any and all acts necessary or convenient to or for the furtherance of the
purposes described herein, including all powers, statutory or otherwise,
possessed by managers under the laws of the State of Delaware. Without limiting
the generality of the foregoing, the Management Committee shall have the
exclusive power and authority, on behalf of the Company, to collect and
distribute funds and make allocations and adjustments in accordance with
Articles IV, V, and VI, to determine the terms of any Interest issued in
accordance with Article III and to take such other actions not inconsistent with
this
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Agreement as the Management Committee deems necessary or appropriate to carry on
the business and purposes of the Company. The Management Committee is, to the
extent of its rights and powers set forth in this Agreement, an agent of the
Company for the purpose of the Company's business, and the actions of the
Management Committee taken in accordance with such rights and powers shall bind
the Company (and no individual Member or group of Members shall have such
right). The Management Committee shall be responsible for the establishment of
policy and operating procedures with respect to the business and affairs of the
Company and shall be entitled to appoint agents or employees, with such titles
as the Management Committee may select by Majority Vote, as officers of the
Company to act on behalf of the Company, with such power and authority as the
Management Committee may delegate from time to time to any such Person. Such
officers shall report to the Management Committee (or to other officers who
report to the Management Committee).
(b) The Class B Interests shall have the approval rights expressly set
forth in this Agreement and the Class A Interests shall have no voting, approval
or consent rights, including with respect to the IPO Transaction (or any changes
to the forms of Charter, By-laws and Stockholders Agreement relating thereto) or
any merger, consolidation or conversion of the Company; provided, however, that
at all times the approval of the holders of a majority (in Participation
Percentages) of the Class A Interests shall be required for any amendment to
this Agreement that would have an adverse effect on the rights of such class.
(c) The Company shall not, directly or indirectly (through a
subsidiary or affiliate of the Company or any other Person or otherwise), for
its own account or that of another, engage in the business of providing,
offering, promoting or branding any Residential Services (as defined in the
Charter) or engage in the business of producing, packaging, distributing,
marketing, hosting, offering, promoting, branding or otherwise providing Content
Services (as defined in the Charter), unless such action shall be approved in
advance by the affirmative vote of one hundred percent (100%) of the Class B
Members, voting separately as a class.
(d) The affirmative vote of one hundred percent (100%) of the Class B
Members, voting separately as a class, shall be required:
(i) to amend any provision of this Agreement or any Exhibit hereto;
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(ii) for (x) the disposition, directly or indirectly, by the Company
(or by one or more direct or indirect subsidiaries thereof) by sale,
merger, consolidation, conversion, new issuances or otherwise, to a Person
(other than the Company or a direct or indirect wholly owned subsidiary of
the Company), in any transaction or series of related transactions, of
shares of the capital stock of one or more direct or indirect Subsidiaries
(as defined in the Charter) of the Company which, in the aggregate, hold
assets of the Company and its Subsidiaries on a consolidated basis having a
fair market value of $100 million or more or (y) the disposition, directly
or indirectly, by the Company (or by one or more direct or indirect
subsidiaries thereof) by sale, merger, consolidation, conversion or
otherwise, (other than to the Company or a direct or indirect wholly owned
subsidiary of the Company) in any transaction or series of related
transactions outside the ordinary course of the business of the Company, of
assets of the Company and its Subsidiaries on a consolidated basis having a
fair market value of $100 million or more, except, in each case referred to
in the foregoing clauses (x) and (y), for pledges, grants of security
interests, security deeds, mortgages or similar encumbrances securing bona
fide indebtedness, and any foreclosure in respect thereof;
(iii) for the acquisition, directly or indirectly, by the Company (or
by one or more direct or indirect subsidiaries thereof), in any transaction
or series of related transactions, of assets having an aggregate purchase
price of $100 million or more; and
(iv) for the issuance of any Interest after the
Effective Time.
(e) In the event the Company proposes to take any action which,
pursuant to the terms of this Agreement requires the approval of a class of
Members, voting separately as a class, the Company shall call a meeting of such
class of Members for the purpose of a vote thereon. Telephonic or other notice
of any such meeting shall be given by the Company to each Member within such
class at least seven days prior thereto (unless waived by such Member), which
notice shall include a brief description of the action or actions to be
considered by such class of Members. Any such approval by a class of Members may
be given by the requisite vote required hereunder pursuant to (i) resolution at
a meeting of such class of Members or (ii) written consent of such Members.
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SECTION 8.02. Management Committee Representatives; Chairman. (a) It
is the intent of the Members that appointments of Representatives to the
Management Committee shall be made in the same manner that directors will be
appointed to the Board following the Reconstitution pursuant to the
Stockholders' Agreement. Accordingly, and in furtherance of the foregoing, the
provisions of Article II of the Stockholders' Agreement are hereby incorporated
by reference herein; provided, that:
(A) (i) references therein to "directors" shall be deemed to be
references to "Representatives", (ii) references therein to the "Board"
shall be deemed to be references to the "Management Committee", (iii)
references therein to shares of Common Stock shall be deemed to be
references to "Interests", and (iv) references therein to the "Ownership
Percentage" of a Principal Stockholder Group shall be deemed to be
references to the aggregate Participation Percentages of the Interests held
by such Principal Stockholder Group; and
(B) notwithstanding any references in such Article II to stockholder
meetings or voting, designations of Representatives by the applicable
Principal Stockholder Group or Nominating Committee shall be made by
written notice to the Members and the Company.
(b) Each Representative designated by a Member (or group of Members)
shall serve at the pleasure of its designating Member (or group of Members).
[Each Member's designee Representative shall be drawn from the then-current
officers, directors or full-time employees of such Member (or group of
Members)]. Any Member may remove or replace its Representative at any time or
from time to time, with or without cause, by written notice to the other Members
and to such Representative. In addition, the CEO and any Representatives
designated by the Nominating Committee may be removed, with or without cause, by
the written consent of the Members holding Interests representing a majority of
the Participation Percentages of all the Interests. Except as provided in the
preceding sentence, no Representative may be removed.
(c) On an annual basis, the Management Committee shall elect one
Representative to serve as Chairman of the Management Committee meetings (the
"Chairman"). The Chairman shall be responsible for soliciting from the
Representatives items for the agendas, giving notices, and presiding at
Management Committee meetings. The Chairman, or a person designated by him or
her shall keep minutes of
17
all Management Committee meetings, including telephonic meetings, and shall
distribute copies thereof to all Representatives for approval and adoption.
Other than as set forth in the two immediately preceding sentences, the Chairman
shall have no other or additional powers, rights or responsibilities and the
Chairman shall have no additional voting or "tie-breaking" powers.
(d) Management Committee meetings shall take place (whether in person
or by telephone) at least quarterly to consider the financial condition and
performance of and other matters pertaining to the Company and to take such
other actions as are authorized to take place at Management Committee meetings
under this Agreement. Representatives shall be entitled to access to such
information respecting the Company on the same basis and to the same extent as a
director of a corporation under Delaware law would be entitled. The Chairman
shall provide each Representative with at least seven days prior notice of each
regular Management Committee meeting and each Representative will use its
reasonable efforts to attend such meeting in person. The Chairman or any other
Representative shall be entitled to call a special Management Committee meeting
by providing at least ten days prior notice (unless such prior notice is waived
by the applicable Representative, including constructive waiver through
attendance, unless attendance is coupled with an immediate objection at the
start of the meeting) thereof (including a brief description of the action or
actions to be considered thereat) to each Representative.
(e) Subject to Section 8.02(f), no action may be taken by the
Representatives except at a duly convened Management Committee meeting at which
a quorum, consisting of a majority of the entire Management Committee, is
present (in person or by telephone). Each Representative shall be entitled to
vote on all matters presented at the Management Committee meetings, and a vote
will be taken on each such matter. As used herein, the term "entire Management
Committee" means the total number of Representatives there would be if there
were no vacancies.
(f) The Management Committee may act by written consent, as set forth
in a written instrument signed by all the Representatives.
(g) No Representative shall be entitled to any fee, remuneration,
compensation or expense reimbursement in connection with their service at
Management Committee meetings.
18
SECTION 8.03. Requisite Vote. (a) Except as otherwise expressly
provided in this Agreement, all matters presented to the Management Committee
shall be approved by the affirmative vote of a majority of the Representatives
present at any meeting of the Management Committee at which there is a quorum
(the foregoing is referred to herein as a "Majority Vote").
(b) The day to day management and operation of the Company shall be
the responsibility of the CEO, who shall be appointed by the Management
Committee as provided in Section 8.01, and who shall have the same type of
authority as is incident to the office of a chief executive officer of a
Delaware corporation.
ARTICLE IX
TRANSFERS OF INTERESTS
SECTION 9.01. Restrictions on Transfers. (a) During the Restricted
Period, except as provided in the next sentence, no Member may make any Transfer
or Indirect Transfer of all or any part of its Interests. At any time and from
time to time during the Restricted Period, a Member may Transfer all or any part
of its Interest in accordance with Section 3.3 of the Stockholders' Agreement,
and in furtherance of the foregoing, such Section 3.3 is hereby incorporated by
reference herein; provided, that references therein to shares of "Class B Common
Stock" shall be deemed to be references to "Class B Interests".
(b) Following the Restricted Period, it is the intent of the Members
that Transfers and Indirect Transfers of Interests shall be made in the same
manner that Transfers and Indirect Transfers of Common Stock will be made
pursuant to the Stockholders' Agreement. Accordingly, and in furtherance of the
foregoing, the provisions of Article III of the Stockholders' Agreement are
hereby incorporated by reference herein, and shall be applicable following the
Restricted Period; provided, that:
(A) (i) references therein to shares of "Class A Common Stock" and
"Class B Common Stock" shall be deemed to be references to "Class A
Interests" and "Class B Interests", respectively, (ii) the Interests shall
not be certificated or legended, (iii) allocations pursuant to Section
3.4(c) of the Stockholders' Agreement based on numbers of shares of Class B
Common Stock owned shall instead be based on Participation Percentages of
Class B Interests owned,
19
(iv) the reference in clause (ii) of Section 3.5(a) of the Stockholders'
Agreement to "greater than 33% of the issued and outstanding shares of
Common Stock" shall be deemed to be a reference to "Interests having an
aggregate Participation Percentage greater than 33%", and (v) the fraction
described in clause (y) of Section 3.5(a) of the Stockholders' Agreement
shall be deemed to have a numerator equal to the aggregate Participation
Percentage of the TW Shares, and a denominator equal to the aggregate
Participation Percentage of all the Interests owned by the TW Principal
Stockholder Group.
(c) It shall be a condition to any Transfer otherwise permitted
pursuant to this Article IX that such Transfer shall comply with the provisions
of the Securities Act and applicable state securities laws. Until any Interest
has been registered under the Securities Act, such Interest may not be offered
or sold except pursuant to an exemption from, or in a transaction not subject
to, the registration requirements of the Securities Act and applicable state
securities laws.
ARTICLE X
IPO TRANSACTION
SECTION 10.01. Public Offering. (a) The Members agree that it is their
intention, at the earliest reasonable opportunity based upon the successful
performance of the Company and equity market conditions prevailing from time to
time, to reconstitute the Company as a corporation in the manner set forth in
Section 10.01(b) in order to effect immediately thereafter an initial public
offering of the common stock of such corporation (an "IPO Transaction"). The
decision to effect the IPO Transaction, and the terms of the IPO Transaction,
including, without limitation, the terms of the underwriting arrangements and
the pricing of any securities offered, shall be subject to the approval of 100%
of those Distributee Members who are, at the time of such approval, entitled to
designate Representatives pursuant to Section 8.02, but shall not require the
approval of any other Member (including any vote that, but for this provision,
would be required pursuant to Section 8.01(d)(ii)). By acquiring an Interest,
each Member hereby agrees to take the actions described in this Section 10.01
(including, without limitation, exchanging its Interest as described below, if
applicable) if the foregoing approval of the Distributee Members is obtained.
The form and substance of the final version of the Registration Statement on
Form S-1 with respect to the IPO Transaction (the "IPO
20
Registration Statement") shall be subject to the approval of the Management
Committee.
(b) Immediately prior to the effectiveness of the IPO Registration
Statement, the Members agree to take such action as is necessary to cause the
Company to be reconstituted as a corporation organized under the laws of the
State of Delaware (the "Reconstitution"). The Reconstitution shall be effected
by the merger of the Company into a newly formed Delaware corporation ("Newco"),
or by a contribution by the Members of their Interests to Newco, in either case
pursuant to which (i) all the Class A Interests will be exchanged for such
number of shares of Class A Common Stock as represent, in the aggregate, a
percentage of the total outstanding shares of Common Stock that is equivalent to
the aggregate Participation Percentages of the Class A Interests so exchanged
and (ii) all the Class B Interests will be exchanged for such number of shares
of Class B Common Stock as represent, in the aggregate, a percentage of the
total outstanding shares of Common Stock that is equivalent to the aggregate
Participation Percentages of the Class B Interests so exchanged. The certificate
of incorporation of Newco shall be in the form of the Charter and the by-laws of
Newco shall be in the form of the By-laws. Pursuant to the Charter, the
authorized capital stock of Newco shall include shares of Class A Common Stock
and Class B Common Stock. Shares of the Class A Common Stock shall have one vote
per share and shares of the Class B Common Stock shall have ten votes per share.
Shares of Class A Common Stock shall be sold by Newco in the IPO Transaction.
(c) In connection with the Reconstitution, each Distributee Member and
each Class B Member shall execute the Stockholders' Agreement.
Section 10.02. Repayment of Company Indebtedness. A portion of the
proceeds received by Newco pursuant to the IPO Transaction shall be used to
repay the Company Indebtedness.
ARTICLE XI
LIMITATION ON LIABILITY, EXCULPATION
AND INDEMNIFICATION
SECTION 11.01. Limitation on Liability. The debts, obligations and
liabilities of the Company, whether arising in contract, tort or otherwise,
shall be solely the debts, obligations and liabilities of the Company, and no
Covered Person shall be obligated personally for any such
21
debt, obligation or liability of the Company; provided, however, that the
foregoing shall not alter each Member's obligation, to the extent required by
applicable law, to return funds wrongfully distributed to it.
SECTION 11.02. Exculpation; Inapplicability of Certain Doctrines. (a)
No Covered Person shall be liable, including under any legal or equitable theory
of fiduciary duty or other theory of liability, to the Company or to any other
Covered Person for any losses, claims, damages or liabilities incurred by reason
of any act or omission performed or omitted by such Covered Person in good faith
on behalf of the Company. Whenever in this Agreement a Covered Person is
permitted or required to make decisions such Covered Person shall make such
decisions in good faith and shall not be subject to any other or different
standard (including any legal or equitable standard of fiduciary or other duty)
imposed by this Agreement or any relevant provisions of law or in equity or
otherwise.
(b) A Covered Person shall be fully protected in relying in good faith
upon the records of the Company and upon such information, opinions, reports or
statements presented to the Company by any Person as to matters the Covered
Person reasonably believes are within such Person's professional or expert
competence.
(c) To the fullest extent permitted by applicable law (including
Section 18-1101(c) of the Delaware Act), no Member shall have any fiduciary or
similar duty, at law or in equity, or any liability relating thereto, to the
Company or any Member, with respect to or in connection with the Company or the
Company's business or affairs. Without limiting the generality of the foregoing,
to the fullest extent permitted by applicable law (including Section 18-1101(c)
of the Delaware Act), the doctrine of corporate opportunity, and any other
analogous doctrine, shall not apply with respect to the Company. To the extent
that the doctrine of corporate opportunity, or any other analogous doctrine, is
applicable to the Company under applicable law, the provisions of Article VII of
the Charter are hereby incorporated by reference herein; provided, that (i)
references therein to the "Corporation" shall be deemed to be references to the
"Company", (ii) references therein to the "DGCL" shall be deemed to be
references to the "Delaware Act", (iii) references therein to directors of the
Corporation shall be deemed to be references to Representatives, (iv) the
reference in Section 4 thereof to Article II of the Charter shall be deemed to
be a reference to the restriction set forth in Section 8.01(c) hereof, and (v)
the reference in Section 5 thereof to ownership of 5% of
22
the number of outstanding shares of Common Stock of the Corporation shall be
deemed to be a reference to ownership of an Interest having a Participation
Percentage of 5%.
SECTION 11.03. Indemnification. (a) Each Member (the "Indemnifying
Member") shall indemnify, defend and hold harmless, to the fullest extent
permitted by applicable law, each other Covered Person and the Company against
any losses, claims, damages, liabilities, expenses (including all reasonable
fees and expenses of counsel), judgments, fines, settlements and other amounts
(collectively "Losses") resulting from the breach by the Indemnifying Member of
any provision of this Agreement.
(b) The Company shall indemnify, defend and hold harmless, to the
fullest extent permitted by applicable law, each Covered Person against any
Losses arising out of or in connection with the Company's business or affairs or
this Agreement, unless such Loss is as a result of such Covered Person's fraud,
bad faith, gross negligence or willful misconduct; provided, that an
Indemnifying Member's obligations pursuant to Section 11.03(a) shall not
constitute a "Loss" for purposes of this Section 11.03(b), and such Indemnifying
Member shall not be entitled to indemnification under this Section 11.03(b) to
the extent it (or any related Covered Person) suffers a Loss as a result of any
matter referred to in Section 11.03(a).
If any Covered Person becomes involved in any capacity in any action,
suit, proceeding or investigation in connection with any matter arising out of
or in connection with the Company's business or affairs, or this Agreement or
any related document, other than by reason of any act or omission performed or
omitted by such Covered Person that was not in good faith on behalf of the
Company, the Company shall reimburse such Covered Person for its reasonable
legal and other reasonable out-of-pocket expenses (including the cost of any
investigation and preparation) as they are incurred in connection therewith;
provided that such Covered Person shall promptly repay to the Company the amount
of any such reimbursed expenses paid to it if it shall be finally determined (by
arbitration in accordance with Section 13.05) that such Covered Person was not
entitled to be indemnified by the Company in connection with such action, suit,
proceeding or investigation. If for any reason (other than the bad faith of a
Covered Person) the foregoing indemnification is unavailable to such Covered
Person, or insufficient to hold it harmless, then the Company shall contribute
to the amount paid or payable by such Covered Person as a result of such loss,
claim, damage, liability, expense, judgment, fine, settlement or other amount in
such
23
proportion as is appropriate to reflect any relevant equitable considerations.
The obligations of the Company under this Section 11.03(b) shall be satisfied
solely out of and to the extent of the Company's assets, and no Covered Person
shall have any personal liability on account thereof.
SECTION 11.04. Special Indemnification. (a) The Company shall
indemnify, defend and hold harmless, to the fullest extent permitted by
applicable law, any Person that was or is made or is threatened to be made a
party or is otherwise involved in any action, suit or proceeding, by reason of
the fact that such Person is or was an officer of the Company or, while an
officer of the Company, is or was serving at the request of the Company as an
officer, employee or agent of another company or of a partnership, joint
venture, trust, enterprise or nonprofit entity, including service with respect
to employee benefit plans, against all Losses reasonably incurred by such
Person. Subject to the second sentence of Section 11.04(b), the Company shall be
required to indemnify or make advances (pursuant to the following paragraph) to
a Person in connection with such a proceeding (or part thereof) initiated by
such Person only if the initiation of such proceeding (or part thereof) was
authorized by the Management Committee by Majority Vote.
(b) The Company shall pay the reasonable expenses (including
reasonable attorneys' fees) incurred by any Person that is or was an officer of
the Company or, while an officer of the Company, is or was serving at the
request of the Company as a director, officer, employee or agent of another
company or of a partnership, joint venture, trust, enterprise or nonprofit
entity, in defending any proceeding of the type referred to above in advance of
its final disposition; provided, however, that the payment of expenses incurred
by such a Person in advance of the final disposition of such proceeding shall be
made only upon receipt of an undertaking by or on behalf of such Person to repay
all amounts advanced if it should be finally determined that such Person is not
entitled to be indemnified under this Section 11.04 or otherwise. If a claim for
indemnification or advancement of expenses under this Section 11.04 is not paid
in full within sixty (60) calendar days after a written claim therefor has been
received by the Company, the claimant may file suit to recover the unpaid amount
of such claim and, if successful in whole or in part, shall be entitled to be
paid the expense of prosecuting such claim. In any such action, the Company
shall have the burden of proving that the claimant was not entitled to the
requested indemnification or payment of expenses under applicable law.
24
(c) The Company's obligation, if any, to indemnify any Person that was
or is serving at its request as a director, officer, employee or agent of
another company, partnership, joint venture, trust, enterprise or nonprofit
entity shall be reduced by any amount such Person may collect as indemnification
from such other company, partnership, joint venture, trust, enterprise or
nonprofit entity, as applicable.
(d) The indemnification and advancement of expenses provided by or
granted pursuant to this Section 11.04 shall, unless otherwise provided when
authorized or ratified, continue as to a Person who has ceased to be an officer,
employee or agent of the Company or other Person indemnified hereunder and shall
inure to the benefit of the heirs, executors and administrators of such Person.
ARTICLE XII
DISSOLUTION AND TERMINATION
SECTION 12.01. Dissolution. (a) The Company shall not be dissolved by
the admission of Additional Members or Substitute Members pursuant to Section
3.02.
(b) No Member shall resign from the Company or take any action to
dissolve, terminate or liquidate the Company or to require apportionment,
appraisal or partition of the Company or any of its assets, or to file a xxxx
for an accounting, except as specifically provided in this Agreement, and each
Member, to the fullest extent permitted by applicable law, hereby waives any
rights to take any such actions under applicable law, including any right to
petition a court for judicial dissolution under Section 18-802 of the Delaware
Act.
(c) The Company shall be dissolved and its business wound up upon the
earliest to occur of any one of the following events:
(i) the written agreement of all the Class B Members;
[(ii) the bankruptcy or insolvency of any Member, unless within 90
days after such event, Members of a majority in interest of the capital and
profits of the Company (to the extent there is then more than one such
Member) elect in writing to continue the business of the Company] [the last
remaining Member ceasing to be a Member unless otherwise continued in
accordance with the Delaware Act]]; or
25
(iii) the entry of a decree of judicial dissolution under Section
18-802 of the Delaware Act, in contravention of this Agreement.
(d) The resignation, expulsion, bankruptcy, insolvency or dissolution
of a Member or the occurrence of any other event that terminates the continued
membership of a Member of the Company shall not in and of itself cause a
dissolution of the Company.
SECTION 12.02. Winding Up of the Company. (a) Upon dissolution, the
Company's business shall be liquidated in an orderly manner. The Class B Members
shall unanimously appoint a liquidating trustee to wind up the affairs of the
Company pursuant to this Agreement. In performing its duties, the liquidating
trustee is authorized to sell, distribute, exchange or otherwise dispose of the
assets of the Company in accordance with the Delaware Act and in any reasonable
manner that the liquidating trustee shall determine to be in the best interest
of the Members.
(b) The proceeds of the liquidation of the Company shall be
distributed in the following order and priority:
(i) first, to the creditors (including any Members or their respective
Affiliates that are creditors) of the Company, to the fullest extent
permitted by applicable law, in satisfaction of all of the Company's
liabilities (whether by payment or by making reasonable provision for
payment thereof, including the setting up of any reserves which are, in the
judgment of the liquidating trustee, reasonably necessary therefor); and
(ii) second, to the Members pro rata in accordance with the respective
Participation Percentages of their Interests.
SECTION 12.03. Distribution of Property. In the event it becomes
necessary in connection with the liquidation of the Company to make a
distribution of property in kind, subject to the priority set forth in Section
12.02, the liquidating trustee shall have the right to compel each Member to
accept a distribution of any asset in kind to the extent that the percentage of
the asset distributed to such Member differs from a percentage of that asset
which is equal to the Participation Percentage of such Member's Interests, with
such distribution being based upon the amount of cash that would be distributed
to such Members if such property were sold for an amount of cash equal to
26
the fair market value of such property, as determined by the liquidating trustee
in good faith.
SECTION 12.04. Claims of Members. The Members shall look solely to the
Company's assets for the return of their capital contributions, and if the
assets of the Company remaining after payment of or reasonable provision for the
payment of all liabilities of the Company are insufficient to return such
capital contributions, the Members shall have no recourse against the Company or
any Covered Person.
SECTION 12.05. Termination. The Company shall terminate when all of
the assets of the Company, after payment of or reasonable provision for the
payment of all debts and liabilities of the Company, shall have been distributed
to the Members in the manner provided for in this Article XII, and the
certificate of formation of the Company shall have been canceled in the manner
required by the Delaware Act.
ARTICLE XIII
MISCELLANEOUS
SECTION 13.01. No Third Party Beneficiaries. This Agreement is not
intended to confer any rights or remedies hereunder upon, and shall not be
enforceable by, any Person other than the parties hereto and, with respect to
the provisions of Article XI, each Covered Person.
SECTION 13.02. Amendment and Waiver. The provisions of Section 6.2 of
the Stockholders' Agreement are hereby incorporated by reference herein.
SECTION 13.03. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware without
reference to choice of law principles, including all matters of construction,
validity and performance. To the extent that a document, the provisions of which
are incorporated by reference herein, states that it is to be governed by and
construed in accordance with the laws of another jurisdiction, it shall, when
incorporated by reference herein, be governed by, and construed in accordance
with, the laws of the State of Delaware as set forth above.
SECTION 13.04. Notices. The provisions of Section 6.4 of the
Stockholders' Agreement are hereby incorporated by reference herein.
27
SECTION 13.05. Entire Agreement. This Agreement (including the
Schedules and Exhibits attached hereto, all of which are a part hereof) and the
Reorganization Agreement contains the entire understanding of the parties hereto
with respect to the subject matter contained herein and supersedes and cancels
all prior agreements, negotiations, correspondence, undertakings and
communications of the parties, oral or written, respecting such subject matter.
SECTION 13.06. Headings; References. The provisions of Section 6.6 of
the Stockholders' Agreement are hereby incorporated by reference herein.
SECTION 13.07. Counterparts. The provisions of Section 6.7 of the
Stockholders' Agreement are hereby incorporated by reference herein.
SECTION 13.08. Parties in Interest; Assignment. The provisions of
Section 6.8 of the Stockholders' Agreement are hereby incorporated by reference
herein.
SECTION 13.09. Severability; Enforcement. The provisions of Section
6.9 of the Stockholders' Agreement are hereby incorporated by reference herein.
SECTION 13.10. Specific Performance. The provisions of Section 6.10 of
the Stockholders' Agreement are hereby incorporated by reference herein.
SECTION 13.11. Arbitration. The provisions of Section 6.11 of the
Stockholders' Agreement are hereby incorporated by reference herein.
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties as of the day and year first above written.
Initial Members:
TIME WARNER COMPANIES, INC.,
By ___________________________________
Name:
Title:
28
MEDIAONE GROUP, INC.,
By ___________________________________
Name:
Title:
ADVANCE/XXXXXXXX PARTNERSHIP,
By ADVANCE COMMUNICATIONS
CORP., General Partner
By ___________________________________
Name:
Title:
By XXXXXXXX BROADCASTING
CORPORATION, General Partner
By ___________________________________
Name:
Title:
TIME WARNER ENTERTAINMENT
COMPANY, L.P.,
By ___________________________________
Name:
Title:
TIME WARNER ENTERTAINMENT --
ADVANCE/XXXXXXXX PARTNERSHIP,
By TIME WARNER ENTERTAINMENT
COMPANY, L.P., General
Partner
By ___________________________________
Name:
Title:
29
Distributee Members:
TIME WARNER COMPANIES, INC.
By ___________________________________
Name:
Title:
AMERICAN TELEVISION AND
COMMUNICATIONS CORPORATION,
By ___________________________________
Name:
Title:
WARNER COMMUNICATIONS, INC.,
By ___________________________________
Name:
Title:
TW/TAE INC.,
By ___________________________________
Name:
Title:
FIBERCOMM HOLDINGS L.P.,
By ___________________________________
Name:
Title:
30
PARAGON COMMUNICATIONS,
By ___________________________________
Name:
Title:
MEDIAONE GROUP, INC.,
By ___________________________________
Name:
Title:
ADVANCE/XXXXXXXX PARTNERSHIP,
By ADVANCE COMMUNICATIONS
CORP., General Partner,
By ___________________________________
Name:
Title:
By XXXXXXXX BROADCASTING
CORPORATION, General
Partner,
By ___________________________________
Name:
Title:
Exhibit A
RESTATED CERTIFICATE OF INCORPORATION
OF
TIME WARNER TELECOM INC.
The undersigned officers of Time Warner Telecom Inc., a
Delaware corporation (the "Corporation"), do hereby certify as follows:
(1) The present name of the Corporation is Time Warner Telecom
Inc. The Corporation was originally incorporated under the same name, and its
original certificate of incorporation was filed with the office of the Secretary
of State of the State of Delaware on February 5, 1998.
(2) This Restated Certificate of Incorporation was duly
adopted in accordance with Sections 242 and 245 of the General Corporation Law
of the State of Delaware and by unanimous written consent of stockholders in
accordance with Section 228 of the General Corporation Law of the State of
Delaware.
(3) This Restated Certificate of Incorporation restates and
integrates and further amends the certificate of incorporation of the
Corporation.
(4) The text of the certificate of incorporation of the
Corporation is amended and restated so as to read in its entirety as follows:
ARTICLE I
NAME
The name of this corporation (hereinafter the "Corporation")
is TIME WARNER TELECOM INC.
ARTICLE II
ADDRESS; REGISTERED AGENT
The address of the Corporation's registered office in the
State of Delaware is 0 Xxxx Xxxxxxxxxx Xxxxxx, Xxxx xx Xxxxx, Xxxxxx of Kent.
The name of the Corporation's registered agent at such address is National
Registered Agents, Inc.
2
ARTICLE III
PURPOSE
The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware (the "DGCL"); provided, however, that
until the earlier of (i) the date that is five years after the date of filing of
this Restated Certificate of Incorporation and (ii) the date on which the
outstanding shares of Class B Stock (as defined herein) no longer represent at
least fifty percent (50%) of the total voting power in the election of directors
of the Corporation ("Voting Power") of all outstanding shares of all classes and
series of capital stock of the Corporation entitled generally to vote in such
election ("Voting Stock") (the earlier of (i) and (ii) being called the
"Termination Date"), the Corporation shall not, directly or indirectly (through
a subsidiary or affiliate of the Corporation or any other person or otherwise),
for its own account or that of another, engage in the business of providing,
offering, promoting or branding any Residential Services or engage in the
business of producing, packaging, distributing, marketing, hosting, offering,
promoting, branding or otherwise providing Content Services, unless such action
shall be approved in advance by the affirmative vote of the holders of one
hundred percent (100%) of the Voting Power of the outstanding shares of Class B
Stock, voting separately as a class.
"Residential Services" shall mean wireline telecommunications services
or other services (including, without limitation, data services) of any
nature provided, directly or indirectly, to third party end-users at
address locations other than Business Locations. "Business Locations"
shall mean (i) address locations that are used solely for business
purposes, including, without limitation, public spaces within business
locations and governmental offices and (ii) hotels, hospitals, jails
and the business offices of residential facilities within educational
institutions and within nursing and assisted living complexes.
"Content Services" means entertainment, information or other content
services, whether fixed or interactive, or any services incidental
thereto; provided, however, that Content Services shall not include
acting solely as a carrier of video, audio or data of unaffiliated
third parties by providing transport services, so long as the
Corporation has no other direct or indirect
3
pecuniary interest in the transmitted information or content.
ARTICLE IV
CAPITAL STOCK
SECTION 1. Authorized Capital Stock. The total number of
shares of all classes of capital stock that the Corporation shall have authority
to issue is [ ] shares, consisting of (i) [ ] shares of Common
Stock, par value of $0.01 per share ("Common Stock"), and (ii) [ ] shares
of Preferred Stock, par value of $0.01 per share ("Preferred Stock"). The Common
Stock shall be divided into classes as follows: [ ] shares of Class A
Common Stock ("Class A Stock") and [ ] shares of Class B Common Stock
("Class B Stock").
SECTION 2. Common Stock. (a) Except as otherwise provided in
this Restated Certificate of Incorporation, the Class A Stock and the Class B
Stock shall have the same rights and privileges and shall rank equally, share
ratably and be identical in all respects as to all matters.
(b) Subject to provisions of law and the terms of any
outstanding Preferred Stock, the holders of the Class A Stock and the Class B
Stock shall be entitled to receive dividends or other distributions with respect
to such stock, in an equal amount per share, at such times and in such amounts
as may be determined by the Board and declared out of any funds lawfully
available therefor, and shares of Preferred Stock of any series shall not be
entitled to share therein except as otherwise expressly provided in the
resolution or resolutions of the Board providing for the issue of such series.
Dividends and other distributions with respect to the Class A Stock and the
Class B Stock shall be payable only when, as and if declared by the Board.
(c) Subject to the provisions of law and the terms of any
outstanding Preferred Stock, if at any time a dividend or other distribution
with respect to the Class A Stock or Class B Stock is to be paid in shares of
Class A Stock, Class B Stock or any other securities of the Corporation or any
other corporation, partnership, limited liability company, trust or legal entity
("Person") (hereinafter sometimes called a "share distribution"), such share
distribution shall be declared and paid only as follows, and share distributions
declared and paid as follows shall be deemed to be equal distributions for
purposes of the preceding paragraph:
4
(i) a share distribution (A) consisting of Class A
Stock (or Convertible Securities that are
convertible into, exchangeable for, or evidence
the right to purchase, shares of Class A Stock) to
holders of Class A Stock and Class B Stock, on an
equal per share basis; or (B) consisting of shares
of Class B Stock (or Convertible Securities that
are convertible into, exchangeable for or evidence
the right to purchase shares of Class B Stock) to
holders of Class A Stock and Class B Stock, on an
equal per share basis; or (C) consisting of shares
of Class A Stock (or Convertible Securities that
are convertible into, exchangeable for or evidence
the right to purchase shares of Class A Stock) to
holders of Class A Stock and, on an equal per
share basis, shares of Class B Stock (or
Convertible Securities that are convertible into,
exchangeable for or evidence the right to purchase
shares of Class B Stock) to holders of Class B
Stock; and
(ii) a share distribution consisting of shares of any class or
series of securities of the Corporation or any other Person
other than Class A Stock or Class B Stock (and other than
Convertible Securities that are convertible into, exchangeable
for or evidence the right to purchase shares of Class A Stock
or Class B Stock), either on the basis of a distribution of
identical securities, on an equal per share basis, to holders
of Class A Stock and Class B Stock or on the basis of a
distribution of one class or series of securities to holders
of Class A Stock and another class or series of securities to
holders of Class B Stock, provided that the securities so
distributed (and, if applicable, the securities into which the
distributed securities are convertible, or for which they are
exchangeable, or which the distributed securities evidence the
right to purchase) do not differ in any respect other than
their relative voting rights and related differences in
conversion and share distribution provisions, with holders of
shares of Class B Stock receiving the class or series having
the higher relative voting rights (without regard to whether
such rights differ to a greater or lesser extent than the
corresponding differences in voting rights and related
differences in conversion and share distribution provisions
between the Class A Stock and the Class B Stock), provided
that if the securities so distributed
5
constitute capital stock of a Subsidiary of the Corporation,
such rights shall not differ to a greater extent than the
corresponding differences in voting rights, conversion and
share distribution provisions between the Class A Stock and
Class B Stock, and provided in each case that such
distribution is otherwise made on an equal per share basis.
As used herein, the term "Subsidiary" means, when used with
respect to any Person, (i) a corporation in which such Person and/or one or more
Subsidiaries of such Person, directly or indirectly, owns capital stock having a
majority of the Voting Power of such corporation's Voting Stock; and (ii) any
other Person (other than a corporation) in which such Person and/or one or more
Subsidiaries of such Person, directly or indirectly, has (x) a majority
ownership interest or (y) the power to elect or direct the election of a
majority of the members of the governing body of such first-named Person.
As used herein, the term "Convertible Securities" shall mean
any securities of the Corporation (other than any class of Common Stock) that
are convertible into, exchangeable for, or evidence the right to purchase any
class of Common Stock, whether upon conversion, exercise or exchange, pursuant
to anti-dilution provisions of such securities or otherwise.
(d) If the Corporation shall in any manner reclassify,
subdivide or combine the outstanding shares of Class A Stock or Class B Stock,
the outstanding shares of the other class of Common Stock shall be
proportionally reclassified, subdivided or combined in the same manner and on
the same basis as the outstanding shares of Class A Stock or Class B Stock, as
the case may be, that have been reclassified, subdivided or combined so as to
preserve the relative Voting Power of each class and the relative proportion of
the equity of the Corporation represented by each class immediately prior to the
transaction giving rise to an adjustment pursuant to this paragraph.
(e)
(i) Each share of Class B Stock may at any time be converted
into one fully paid and nonassessable share of Class A Stock. Such
right shall be exercised by the surrender of the certificate
representing such share of Class B Stock to be converted to the
Corporation at any time during normal business hours at the principal
executive offices of the Corporation, or
6
if an agent for the registration of transfer of shares of Class B Stock
is then duly appointed and acting (said agent being hereinafter called
the "Transfer Agent"), then at the office of the Transfer Agent,
accompanied by a written notice of the election by the holder thereof
to convert and (if so required by the Corporation or the Transfer
Agent) by instruments of transfer, in form satisfactory to the
Corporation and to the Transfer Agent, duly executed by such holder or
such holder's duly authorized attorney, and together with any necessary
transfer tax stamps or funds therefor, if required pursuant to
subparagraph (v) of this subsection (e).
(ii) As promptly as practicable after the surrender for
conversion of a certificate representing shares of Class B Stock in the
manner provided in paragraph (i) of this subsection (e) and the payment
in cash of any amount required by the provisions of paragraphs (i) and
(v) of this subsection (e), the Corporation will deliver or cause to be
delivered at the office of the Transfer Agent to or upon the written
order of the holder of such certificate, a certificate or certificates
representing the number of full shares of Class A Stock issuable upon
such conversion, issued in such name or names as such holder may
direct. Such conversion shall be deemed to have been made immediately
prior to the close of business on the date of the surrender of the
certificates representing shares of Class B Stock, and all rights of
the holder of such shares as such holder shall cease at such time and
the person or persons in whose name or names the certificate or
certificates representing the shares of Class A Stock are to be issued
shall be treated for all purposes as having become the record holder or
holders of such shares of Class A Stock at such time; provided,
however, if any such surrender and payment is made on any date when the
stock transfer books of the Corporation shall be closed, the person or
persons in whose name or names the certificate or certificates
representing shares of Class A Stock are to be issued as the record
holder or holders thereof shall be treated for all purposes as having
become the record holder or holders of such shares immediately prior to
the close of business on the next succeeding day on which such stock
transfer books are open.
(iii) No adjustments in respect of dividends shall be made
upon the conversion of any share of Class B Stock; provided, however,
that if a share shall be converted subsequent to the record date for
the payment
7
of a dividend or other distribution on shares of Class B Stock but
prior to such payment, the registered holder of such share at the close
of business on such record date shall be entitled to receive the
dividend or other distribution payable on such share upon the date set
for payment of such dividend or other distribution notwithstanding the
conversion thereof or the Corporation's default in payment of the
dividend due on such date.
(iv) The Corporation will at all times reserve and keep
available, solely for the purpose of issuance upon conversion of the
outstanding shares of Class B Stock, such number of shares of Class A
Stock as shall be issuable upon the conversion of all such outstanding
shares; provided, however, that nothing contained herein shall be
construed to preclude the Corporation from satisfying its obligations
in respect of the conversion of the outstanding shares of Class B Stock
by delivery of purchased shares of Class A Stock which are held in the
treasury of the Corporation. If any shares of Class A Stock required to
be reserved for purposes of conversion hereunder require registration
with or approval of any governmental authority under any Federal or
state law before such shares of Class A Stock may be issued upon
conversion, the Corporation will cause such shares to be duly
registered or approved, as the case may be. All shares of Class A Stock
which shall be issued upon conversion of the shares of Class B Stock
will, upon issue, be fully paid and nonassessable and not subject to
any preemptive rights.
(v) The issuance of certificates for shares of Class A Stock
upon conversion of shares of Class B Stock shall be made without charge
for any stamp or other similar tax in respect of such issuance.
However, if any such certificate is to be issued in a name other than
that of the holder of the share or shares of Class B Stock converted,
the person or persons requesting the issuance thereof shall pay to the
Corporation the amount of any tax which may be payable in respect of
any transfer involved in such issuance or shall establish to the
satisfaction of the Corporation that such tax has been paid.
(vi) Any shares of Class B Stock which shall have been
converted into Class A Stock at any time pursuant to the provisions of
this subsection (e) of this Section 2 shall, after such conversion,
have the status of authorized but unissued shares of Class B Stock.
8
(f) Upon the liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, subject to any preferential or
other amounts to be distributed to the holders of the Preferred Stock and any
other class or series of stock then outstanding, the holders of Class A Stock
and Class B Stock shall be entitled to receive all the assets of the Corporation
available for distribution to its stockholders ratably as a single class in
proportion to the number of shares held by them.
(g) The Class A Stock and the Class B Stock are subject to all
the powers, rights, privileges, preferences and priorities of any series of
Preferred Stock as shall be stated and expressed in any resolution or
resolutions adopted by the Board, pursuant to authority expressly granted to and
vested in it by the provisions of this Article IV.
SECTION 3. Preferred Stock. The Board is hereby expressly
authorized, by resolution or resolutions, to provide, out of the unissued shares
of Preferred Stock, for series of Preferred Stock and, with respect to each such
series, to fix the number of shares constituting such series and the designation
of such series, the voting powers (if any) of the shares of such series, and the
preferences and relative, participating, optional or other special rights, if
any, and any qualifications, limitations or restrictions thereof, of the shares
of such series. The powers, preferences and relative, participating, optional
and other special rights of each series of Preferred Stock, and the
qualifications, limitations or restrictions thereof, if any, may differ from
those of any and all other series at any time outstanding.
SECTION 4. Redemption of Capital Stock. Notwithstanding any
other provision of this Restated Certificate of Incorporation to the contrary,
but subject to the provisions of any resolution or resolutions of the Board of
Directors adopted pursuant to this Article IV creating any series of Preferred
Stock, outstanding shares of Class A Common Stock, Preferred Stock or any other
class or series of stock of the Corporation, other than Class B Stock, shall
always be subject to redemption by the Corporation, by action of the Board, if
in the judgment of the Board such action should be taken, pursuant to Section
151(b) of the DGCL (or any other applicable provision of law), to the extent
necessary to prevent the loss or secure the reinstatement of any license or
franchise from any governmental agency held by the Corporation or any Subsidiary
to conduct any portion of the business of the Corporation or such Subsidiary,
which license or franchise
9
is conditioned upon some or all of the holders of the Corporation's stock of any
class or series possessing prescribed qualifications. The terms and conditions
of such redemption shall be as follows:
(a) the redemption price of the shares to be redeemed pursuant
to this Section 4 shall be equal to the Fair Market Value of such
shares;
(b) the redemption price of such shares may be paid in cash,
Redemption Securities or any combination thereof;
(c) if less than all the shares held by Disqualified Holders
are to be redeemed, the shares to be redeemed shall be selected in such
manner as shall be determined by the Board, which may include selection
first of the most recently purchased shares thereof, selection by lot
or selection in any other manner determined by the Board of Directors;
(d) at least 30 days' written notice of the Redemption Date
shall be given to the record holders of the shares selected to be
redeemed (unless waived in writing by such holder), provided that the
Redemption Date may be the date on which written notice shall be given
to record holders if the cash or Redemption Securities necessary to
effect the redemption shall have been deposited in trust for the
benefit of such record holders and subject to immediate withdrawal by
them upon surrender of the stock certificates for their shares to be
redeemed;
(e) from and after the Redemption Date, any and all rights of
whatever nature, which may be held by the owners of shares selected for
redemption (including without limitation any rights to vote or
participate in dividends declared on stock of the same class or series
as such shares), shall cease and terminate and they shall thenceforth
be entitled only to receive the cash or Redemption Securities payable
upon redemption; and
(f) such other terms and conditions as the Board shall
determine.
For purposes of this Section 4:
(i) "Disqualified Holder" shall mean any holder of shares of
stock of the Corporation of any class or series whose holding of such
stock may result in the loss of any license or franchise from any
governmental
10
agency held by the Corporation or any Subsidiary to conduct any portion
of the business of the Corporation or any Subsidiary.
(ii) "Fair Market Value" of a share of the Corporation's stock
of any class or series shall mean the average (unweighted) Closing
Price for such a share for each of the 45 most recent days on which
shares of stock of such class or series shall have been traded
preceding the day on which notice of redemption shall be given pursuant
to paragraph (d) of this Section 4; provided, however, that if shares
of stock of such class or series are not traded on any securities
exchange or in the over-the-counter market, "Fair Market Value" shall
be determined by the Board of Directors in good faith; and provided
further, however, that "Fair Market Value" as to any stockholder who
purchases his stock within 120 days of a Redemption Date need not
(unless otherwise determined by the Board of Directors) exceed the
purchase price paid by him. "Closing Price" on any day means the
reported last sales price regular way or, in case no such sale takes
place, the average of the reported closing bid and asked prices regular
way on the New York Stock Exchange Composite Tape, or, if stock of the
class or series in question is not quoted on such Composite Tape, on
the New York Stock Exchange, or, if such stock is not listed on such
exchange, on the principal United States registered securities exchange
on which such stock is listed, or, if such stock is not listed on any
such exchange, the highest closing sales price or bid quotation for
such stock on The Nasdaq Stock Market or any system then in use, or if
no such prices or quotations are available, the fair market value on
the day in question as determined by the Board of Directors in good
faith.
(iii) "Redemption Date" shall mean the date fixed by the Board
of Directors for the redemption of any shares of stock of the
Corporation pursuant to this Section 4.
(iv) "Redemption Securities" shall mean any debt or equity
securities of the Corporation, any Subsidiary or any other corporation,
or any combination thereof, having such terms and conditions as shall
be approved by the Board of Directors and which, together with any cash
to be paid as part of the redemption price, in the opinion of any
nationally recognized investment banking firm selected by the Board of
Directors (which may be a firm which provides other investment banking,
brokerage or other services to the Corporation or its
11
affiliates), has a value, at the time notice of redemption is given
pursuant to paragraph (d) of this Section 4, at least equal to the Fair
Market Value of the shares to be redeemed pursuant to this Section 4
(assuming, in the case of Redemption Securities to be publicly traded,
such Redemption Securities were fully distributed and subject only to
normal trading activity).
SECTION 5. Stockholder Voting. (a) Except as otherwise
provided in this Restated Certificate of Incorporation or required by law, with
respect to all matters upon which stockholders are entitled to vote or to which
stockholders are entitled to give consent, the holders of any outstanding shares
of Class A Stock and the holders of any outstanding shares of Class B Stock
shall vote together without regard to class, and every holder of the outstanding
shares of Class A Stock shall be entitled to cast thereon one (1) vote in person
or by proxy for each share of Class A Stock standing in such holder's name, and
every holder of the outstanding shares of Class B Stock shall be entitled to
cast thereon ten (10) votes in person or by proxy for each share of Class B
Stock standing in such holder's name.
(b) Until such time as the outstanding shares of Class B Stock
no longer represent at least fifty percent (50%) of the Voting Power of the
Voting Stock, in addition to any other vote required hereunder or by applicable
law (and notwithstanding the fact that a lesser percentage may be specified by
law or this Restated Certificate of Incorporation), the affirmative vote of the
holders of one hundred percent (100%) of the Voting Power of all outstanding
shares of Class B Stock, voting separately as a class, shall be required:
(i) to amend, alter or repeal any provision of this Restated
Certificate of Incorporation, other than an amendment to Article II to
change the registered office or registered agent of the Corporation,
and other than an amendment effected pursuant to Section 151(g) of the
DGCL (or any successor provision thereto); or
(ii) for (x) the disposition, directly or indirectly, by the
Corporation (or by one or more direct or indirect subsidiaries thereof)
by sale, merger, new issuances or otherwise, to a Person (other than
the Corporation or a direct or indirect wholly owned subsidiary of the
Corporation), in any transaction or series of related transactions, of
12
shares of the capital stock of one or more direct or indirect
Subsidiaries of the Corporation which, in the aggregate, hold all or
substantially all of the assets of the Corporation and its Subsidiaries
on a consolidated basis or (y) the disposition, directly or indirectly,
by the Corporation (or by one or more direct or indirect subsidiaries
thereof) by sale, merger or otherwise, (other than to the Corporation
or a direct or indirect wholly owned subsidiary of the Corporation) in
any transaction or series of related transactions outside the ordinary
course of the business of the Corporation, of all or substantially all
of the assets of the Corporation and its Subsidiaries on a consolidated
basis, except, in each case referred to in the foregoing clauses (x)
and (y), for pledges, grants of security interests, security deeds,
mortgages or similar encumbrances securing bona fide indebtedness, and
any foreclosure in respect thereof.
(c) In addition to any other vote required hereunder or by
applicable law, the affirmative vote of the holders of a majority of the
combined Voting Power of the Voting Stock, voting together as a single class,
shall be required for (x) the disposition, directly or indirectly, by the
Corporation (or by one or more direct or indirect subsidiaries thereof) by sale,
merger, new issuances or otherwise, to a Person (other than the Corporation or a
direct or indirect wholly owned subsidiary of the Corporation), in any
transaction or series of related transactions, of shares of the capital stock of
one or more direct or indirect Subsidiaries of the Corporation which, in the
aggregate, hold all or substantially all of the assets of the Corporation and
its Subsidiaries on a consolidated basis or (y) the disposition, directly or
indirectly, by the Corporation (or by one or more direct or indirect
subsidiaries thereof) by sale, merger or otherwise, (other than to the
Corporation or a direct or indirect wholly owned subsidiary of the Corporation)
in any transaction or series of related transactions outside the ordinary course
of the business of the Corporation, of all or substantially all of the assets of
the Corporation and its Subsidiaries on a consolidated basis, except, in each
case referred to in the foregoing clauses (x) and (y), for pledges, grants of
security interests, security deeds, mortgages or similar encumbrances securing
bona fide indebtedness, and any foreclosure in respect thereof.
(d) Until such time as the outstanding shares of Class B Stock
no longer represent at least fifty (50%) percent of the Voting Power of the
Voting Stock, in addition
13
to any other vote required hereunder or by applicable law, the affirmative vote
of the holders of a majority of the Voting Power of all outstanding shares of
Class A Stock, voting separately as a class, shall be required to amend the
definition of Termination Date as specified in Article III so as to extend the
date specified in clause (i) thereof or to reduce the percentage specified in
clause (ii) thereof.
ARTICLE V
DGCL SECTION 203
The Company hereby expressly elects not to be governed by the
provisions of Section 203 of the DGCL, and the restrictions and limitations set
forth therein.
ARTICLE VI
DIRECTORS
SECTION 1. Election of Directors. Directors shall be elected
at the annual meeting of stockholders, and each director elected shall hold
office until such director's successor has been elected and qualified. Directors
need not be stockholders of the Corporation.
SECTION 2. Advance Notice of Nominations. Advance notice of
nominations for the election of directors shall be given in the manner and to
the extent permitted provided in the By-laws of the Corporation.
SECTION 3. Number of Directors. Subject to any rights of the
holders of any series of Preferred Stock outstanding at any time to elect
additional directors to the Board, the number of directors that shall constitute
the whole Board of the Corporation shall be determined from time to time
pursuant to the Stockholders' Agreement dated as of [ ], among [TW], [USW],
[A/N] (and their successors and permitted assigns) and the Corporation, as
amended from time to time, or, if such agreement is no longer in effect, as
specified in the By-laws of the Corporation, as the same may be amended from
time to time. In the absence of such a provision in such Stockholders' Agreement
or the By-laws of the Corporation, the number of directors that shall constitute
the whole Board of the Corporation shall be three.
SECTION 4. Limitation on Director Liability. To the fullest
extent that the DGCL or any other law of the
14
State of Delaware as it exists or as it may hereafter be amended permits the
limitation or elimination of the liability of directors, no director of the
Corporation shall be liable to the Corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director. No amendment to or repeal of
this Article VI shall apply to or have any effect on the liability or alleged
liability of any director of the Corporation for or with respect to any acts or
omissions of such director occurring prior to such amendment or repeal.
SECTION 5. Removal of Directors; Filling of Newly Created
Directorships and Vacancies. (a) Subject to the rights of the holders of any
series of Preferred Stock outstanding at any time, directors may be removed from
office with or without cause, but only upon the affirmative vote of the holders
of a majority of the combined Voting Power of the Voting Stock, voting together
as a single class.
(b) Subject to the rights of holders of any series of
Preferred Stock outstanding at any time, any newly created directorship or
vacancy in the office of a director shall be filled only by (A) during the 20
day period following the date such newly created directorship or vacancy comes
into existence, the affirmative vote of the remaining directors or the sole
remaining director, as the case may be, or (B) if not so filled within such 20
day period, either (i) the affirmative vote of the holders of a majority of the
combined Voting Power of the Voting Stock, voting together as a single class, or
(ii) the affirmative vote of the remaining directors or the sole remaining
director, as the case may be.
ARTICLE VII
PROVISIONS RELATING TO FOUNDING STOCKHOLDERS
SECTION 1. Founding Stockholders. In anticipation that the
capital stock of Corporation will cease to be owned exclusively, directly or
indirectly, by affiliates of Time Warner Inc. ("TW"), U S West Media Group, Inc.
and Advance/Xxxxxxxx Partnership (collectively and as further defined in Section
4 below, the "Founding Stockholders"), but that the Founding Stockholders will
remain, directly or indirectly, stockholders of the Corporation, and in
anticipation that the Corporation and the Founding Stockholders may engage in
the same or similar activities or lines of business and have an interest in the
same areas of corporate opportunities, and in recognition of
15
the benefits to be derived by the Corporation through its continued contractual,
corporate and business relations with the Founding Stockholders (including
service of officers, directors or employees of the Founding Stockholders as
directors of the Corporation), the provisions of this Article VII are set forth
to regulate, define and guide, to the fullest extent permitted by the DGCL, the
conduct of certain affairs of the Corporation as they may involve the Founding
Stockholders and their respective officers and directors, and the powers, rights
and duties of the Corporation and the Founding Stockholders and their respective
officers and directors in connection therewith.
SECTION 2. Competition and Corporate Opportunities. None of
the Founding Stockholders shall have any duty to refrain from engaging directly
or indirectly in the same or similar business activities or lines of business as
the Corporation. In the event that any of the Founding Stockholders acquires
knowledge of a potential transaction or matter that may be a corporate
opportunity for any of the Founding Stockholders and the Corporation, subject to
Section 3 of this Article VIII, none of the Founding Stockholders shall have any
duty to communicate or offer such corporate opportunity to the Corporation and
any other Founding Stockholders as applicable shall be entitled to pursue or
acquire such corporate opportunity for itself or to direct such corporate
opportunity to another person or entity. In addition, the fact that a Founding
Stockholder shall engage in a particular business activity shall not, of itself,
provide a basis for determining that there has been a violation of Section 3 of
this Article.
SECTION 3. Allocation of Corporate Opportunities. The
following provisions shall be applicable to the maximum extent consistent with,
and permitted by, applicable Delaware law. In the event that a director, officer
or employee of the Corporation who is also a director, officer or employee of
any of the Founding Stockholders acquires knowledge of a potential transaction
or matter that may be a corporate opportunity for both the Corporation and any
of the Founding Stockholders, such director, officer or employee of the
Corporation shall act in good faith in a manner consistent with the following:
(a) a corporate opportunity offered to any person who is an
officer or employee (whether or not a director) of the Corporation and
who is also a director but not an officer or employee of a Founding
Stockholder shall belong to the Corporation, unless such opportunity is
expressly offered to such person primarily in his or her capacity as a
director of a
16
Founding Stockholder, in which case such opportunity shall belong to
the relevant Founding Stockholder;
(b) a corporate opportunity offered to any person who is a
director but not an officer or employee of the Corporation and who is
also an officer or employee (whether or not a director) of a Founding
Stockholder shall belong to the relevant Founding Stockholder, unless
such opportunity is expressly offered to such person in his or her
capacity as a director of the Corporation, in which case such
opportunity shall belong to the Corporation; and
(c) a corporate opportunity:
(i) offered to any other person who is either (A) an
officer or employee of both the Corporation and a Founding
Stockholder or (B) a director of both the Corporation and a
Founding Stockholder (but not an officer or employee of the
Corporation or any Founding Stockholder), and
(ii) that is expressly offered to such person
(A) in his or her capacity as an officer, employee or
director of the Corporation shall belong to the
Corporation; and
(B) in his or her capacity as an officer, employee or director of a
Founding Stockholder shall belong to the relevant Founding Stockholder.
SECTION 4. Certain Matters Deemed Not Corporate Opportunities.
(a) In addition to and notwithstanding the foregoing provisions of this Article
VII, a corporate opportunity shall not be deemed to belong to the Corporation if
it is a business opportunity that the Corporation is not permitted to undertake
under the terms of Article II or that the Corporation is not financially able or
contractually permitted or legally able to undertake, or that is, from its
nature, not in the line of the Corporation's business or is of no practical
advantage to it or that is one in which the Corporation has no interest or
reasonable expectancy.
(b) For purposes of this Article VII only, (i) the term
"Corporation" shall mean the Corporation and all corporations, limited liability
companies, partnerships, joint ventures, associations and other entities in
which the Corporation beneficially owns (directly or indirectly) 50% or more of
the outstanding voting stock, voting power or similar voting interests, except
that for purposes of
17
determining those persons who are directors of the Corporation, such term shall
mean the Corporation without regard to any other entities in which it may hold
an interest and (ii) the term "Founding Stockholder" shall mean a Founding
Stockholder and all corporations, limited liability companies, partnerships,
joint ventures, associations and other entities (other than the Corporation) in
which such Founding Stockholder beneficially owns (directly or indirectly) 50
percent or more of the outstanding voting stock, voting power or similar
interests and, if a Founding Stockholder is a partnership, shall also include
those entities which constitute its corporate general partners, except that for
purposes of determining those persons who are directors of Founding
Stockholders, such term shall mean Time Warner Inc., U S West Media Group, Inc.
and, in the case of Advance/Xxxxxxxx Partnership, Advance Communication Corp.
and Xxxxxxxx Broadcasting Corporation, its general partners.
SECTION 5. Expiration of Certain Provisions. Notwithstanding
anything in this Restated Certificate of Incorporation to the contrary, the
provisions of this Article VII shall expire as to any Founding Stockholder on
the date that both (i) such Founding Stockholder ceases to own beneficially
Common Stock representing at least 5% of the number of outstanding shares of
Common Stock of the Corporation and (ii) no person who is a director or officer
of the Corporation is also a director or officer of such Founding Stockholder.
Neither the alteration, amendment, change or repeal of any provision of this
Article VII nor the adoption of any provision of this Restated Certificate of
Incorporation inconsistent with any provision of this Article VII shall
eliminate or reduce the effect of this Article VII in respect of any matter
occurring, or any cause of action, suit or claim that, but for this Article VII,
would accrue or arise, prior to such alteration, amendment, repeal or adoption.
SECTION 6. Deemed Notice. Any person or entity purchasing or
otherwise acquiring any interest in any shares of the Corporation shall be
deemed to have notice of and to have consented to the provisions of this Article
VII.
ARTICLE VIII
STOCKHOLDER MEETINGS
SECTION 1. Meetings Generally. Meetings of stockholders may be
held within or without the State of Delaware, as the By-laws of the Corporation
may provide.
18
The books of the Corporation may be kept (subject to any provision of Delaware
law) outside the State of Delaware at such place or places as may be designated
from time to time by the Board or in the By-laws of the Corporation. Elections
of directors need not be by written ballot unless the By-laws of the Corporation
shall so provide.
SECTION 2. Special Meetings. Special meetings of the
stockholders shall be called only (i) upon written request of the holders of not
less than a majority of the total voting power of the outstanding capital stock
of the Corporation entitled to vote at such meeting or (ii) upon request of any
director. Special meetings of the stockholders may be held at such time and
place as may be stated in the notice of meeting.
ARTICLE IX
BY-LAWS
In furtherance and not in limitation of the powers conferred
upon it by law, the Board of Directors is expressly authorized to adopt, repeal,
alter or amend the By-laws of the Corporation by the vote of a majority of the
entire Board of Directors. In addition to any requirements of law and any other
provision of this Restated Certificate of Incorporation or any resolution or
resolutions of the Board of Directors adopted pursuant to Article IV of this
Restated Certificate of Incorporation (and notwithstanding the fact that a
lesser percentage may be specified by law, this Restated Certificate of
Incorporation or any such resolution or resolutions), the affirmative vote of
the holders of a majority of the combined Voting Power of the Voting Stock,
voting together as a single class, shall be required for stockholders to adopt,
amend, alter or repeal any provision of the By-laws.
IN WITNESS WHEREOF, the Corporation has caused this Restated
Certificate of Incorporation to be duly executed this day of [ ], 1998.
TIME WARNER TELECOM INC.,
a Delaware corporation,
_________________________
Name:
Title:
Exhibit B
BY-LAWS
OF
TIME WARNER TELECOM INC.
(hereinafter called the "Corporation")
ARTICLE I
OFFICES AND AGENT
SECTION 1. Registered Office and Agent. The address of the registered
office of the Corporation in the State of Delaware is 0 Xxxx Xxxxxxxxxx Xxxxxx,
Xxxx xx Xxxxx, Xxxxxx of Kent. The name of its registered agent at such address
is National Registered Agents, Inc.
SECTION 2. Other Offices. The Corporation may also have offices at
other places, either within or without the State of Delaware, as the Board of
Directors of the Corporation (the "Board") may from time to time determine or as
the business of the Corporation shall require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. Place of Meetings. Meetings of the stockholders for the
election of directors or for any other purpose shall be held at any place,
either within or without the State of Delaware, as shall be designated from time
to time by the Board and stated in the notice of meeting or in a duly executed
waiver of notice thereof. Adjournments of meetings may be held at the place at
which the meeting adjourned is being held, or at any other place determined by
the Board, whether or not a quorum shall have been present at such meeting.
SECTION 2. Annual Meetings. To the extent required by applicable law
or the Restated Certificate of Incorporation of the Corporation, an annual
meeting of the stockholders for the election of directors and the transaction of
such other business as may properly come before the meeting shall be held at
such time and on such date as shall be determined by the Board and stated in the
notice of the meeting.
2
SECTION 3. Special Meetings. Except as otherwise provided by
applicable law, special meetings of the stockholders shall be called only in
accordance with the provisions of the Restated Certificate of Incorporation of
the Corporation.
SECTION 4. Notice of Meetings. Written notice of stockholder meetings,
stating the time, place and date, and, in the case of a special meeting, the
purpose or purposes for which the meeting is called, shall be given by the
Chairman of the Board, the President, any Vice President, the Secretary or an
Assistant Secretary to each stockholder entitled to vote at such meeting, at
least ten days but not more than sixty days before the date of the meeting,
unless a different period is prescribed by applicable law.
SECTION 5. Quorum. Except as otherwise provided by applicable law or
by the Restated Certificate of Incorporation of the Corporation, the holders of
a majority in total voting power of the outstanding capital stock of the
Corporation entitled to vote at a meeting of the stockholders, present in person
or represented by proxy, shall constitute a quorum for the transaction of
business at any annual or special meeting of the stockholders; provided, that
where a separate vote by a class or series of capital stock is required, the
holders of a majority in total voting power of the outstanding capital stock of
such class or series, present in person or represented by proxy, shall
constitute a quorum entitled to take action with respect to such vote on such
matter. In the absence of a quorum, the Chairman of the meeting or the holders
of a majority in voting power of the capital stock entitled to vote thereat that
are present in person or represented by proxy, shall have the power to adjourn
the meeting from time to time, without notice other than announcement at the
meeting of the time and place of the adjourned meeting, until a quorum shall be
present or represented. At such adjourned meeting, any business may be
transacted which may have been transacted at the original meeting. If the
adjournment is for more than thirty days, or if after the adjournment a new
record date is fixed for the adjourned meeting, a written notice of the
adjourned meeting shall be given to each stockholder entitled to vote at the
meeting not less than ten nor more than sixty days before the date of the
meeting, unless a different period is prescribed by applicable law.
SECTION 6. Proxies. Any stockholder entitled to vote at a meeting of
the stockholders may do so in person or by proxy appointed by such stockholder
or by such stockholder's attorney thereto authorized, and bearing a date not
more than three years prior to such meeting, unless
3
such instrument provides for a longer period. All proxies must be filed with the
Secretary of the Corporation at the beginning of the applicable meeting in order
to be counted in any vote at such meeting.
SECTION 7. Voting. Except as otherwise provided by applicable law, the
Restated Certificate of Incorporation of the Corporation or these By-laws, and
except for the election of directors, any question brought before any meeting of
the stockholders at which a quorum is present shall be decided by the
affirmative vote of the holders of a majority of the total number of votes of
the capital stock present in person or represented by proxy and entitled to vote
on the applicable subject matter.
SECTION 8. Organization; Order of Business. (a) At every meeting of
stockholders, the Chairman of the Board, or in such person's absence, the
President, or in the absence of both of them, any Vice President, shall act as
Chairman of the meeting. In the absence of the Chairman of the Board, the
President, and all Vice Presidents, the Board, or if the Board fails to act, the
stockholders may appoint any stockholder, director or officer of the Corporation
to act as Chairman of any meeting. The Secretary of the Corporation shall act as
Secretary of the meeting, but in the absence of the Secretary, the Chairman of
the meeting may appoint any person to act as Secretary of the meeting.
(b) (1) Nominations of persons for election to the Board of Directors
of the Corporation and the proposal of business to be considered by the
stockholders may be made at any annual meeting of the stockholders, only (i)
pursuant to the Corporation's notice of meeting, (ii) by or at the direction of
the Board of Directors of the Corporation or (iii) by any stockholder who is a
holder of record at the time of the giving of the notice provided for in this
Section 8, who is entitled to vote at the meeting and who complies with the
procedures set forth in this Section 8.
(2) For nominations or business properly to be brought before an
annual meeting by a stockholder, the stockholder must have given timely notice
thereof in proper written form to the Secretary of the Corporation. To be
timely, a stockholder's notice must be delivered to or mailed and received at
the principal executive offices of the Corporation not less than 70 days nor
more than 120 days prior to the anniversary date of the immediately preceding
annual meeting; provided, however, that in the event that the date of the annual
meeting is more than 30 days earlier or more than 60 days later than such
anniversary date,
4
notice by the stockholder to be timely must be so delivered or received not
earlier than the 120th day prior to such annual meeting and not later than the
close of business on the later of the 70th day prior to such annual meeting or
the 10th day following the day on which public announcement of the date of such
meeting is first made. To be in proper written form, a stockholder's notice to
the Secretary of the Corporation shall set forth in writing as to each matter
the stockholder proposes to bring before the annual meeting: (i) as to each
person whom the stockholder proposes to nominate for election or re-election as
a director, all information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors in an election
contest, or is otherwise required pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and Rule 14a-11
thereunder (including such person's written consent to being named in the proxy
statement as a nominee and to serving as a director if elected); (ii) as to any
other business that the stockholder proposes to bring before the meeting, a
brief description of the business desired to be brought before the annual
meeting and the reasons for conducting such business at the annual meeting and
in the event that such business includes a proposal to amend the by-laws of the
Corporation, the language of the proposed amendment; (iii) the name and address,
as they appear on the Corporation's books, of the stockholder proposing such
business; (iv) the class or series and number of shares of the Corporation which
are beneficially owned by the stockholder; (v) any material interest of the
stockholder in such business; (vi) a representation that the stockholder is a
holder of record of stock of the Corporation entitled to vote at such annual
meeting and intends to appear in person or by proxy at such meeting to propose
such business; and (vii) if the stockholder intends to solicit proxies in
support of such stockholder's proposal, a representation to that effect. The
foregoing notice requirements shall be deemed satisfied by a stockholder if the
stockholder has notified the Corporation of his or her intention to make a
nomination or present a proposal at an annual meeting and such stockholder's
nominee or proposal has been included in a proxy statement that has been
prepared by management of the Corporation to solicit proxies for such annual
meeting; provided, however, that if such stockholder does not appear or send a
qualified representative to present such nominee or proposal at such annual
meeting, the Corporation need not present such nominee or proposal for a vote at
such meeting notwithstanding that proxies in respect of such vote may have been
received by the Corporation.
5
(c) Only such business shall be conducted at a special meeting of
stockholders as shall have been brought before the meeting pursuant to the
Corporation's notice of meeting. Nominations of persons for election to the
Board of Directors of the Corporation may be made at a special meeting of
stockholders at which directors are to be elected pursuant to the Corporation's
notice of meeting (i) by or at the direction of the Board of Directors or (ii)
provided that the Board of Directors has determined that directors shall be
elected at such meeting, by any stockholder who is a holder of record at the
time of the giving of notice provided for in this Section 8, who is entitled to
vote at the meeting and who complies with the procedures set forth in this
Section 8. In the event the Corporation calls a special meeting of stockholders
for the purpose of electing one or more directors to the Board of Directors of
the Corporation, any such stockholder may nominate a person or persons (as the
case may be), for election to such position(s) as specified in the Corporation's
notice of meeting, if the stockholder has given timely notice thereof in proper
written form to the Secretary of the Corporation. To be timely, a stockholder's
notice must be delivered to or mailed and received at the principal executive
offices of the Corporation not earlier than the 120th day prior to such special
meeting and not later than the close of business on the later of the 70th day
prior to such annual meeting or the 10th day following the day on which public
announcement of the date of such meeting is first made. To be in proper written
form, such notice must meet the requirements of either of the last two sentences
of paragraph (b)(2) above.
(d) Only such persons who are nominated in accordance with this
Section 8 (including, for avoidance of doubt, pursuant to the last sentence of
paragraph (b)(2) above) shall be eligible to serve as directors of the
Corporation and only such business shall be conducted at a meeting of
stockholders as shall have been brought before the meeting in accordance with
the procedures set forth in this Section 8 (including, for avoidance of doubt,
pursuant to the last sentence of paragraph (b)(2) above). The Chairman of a
meeting shall refuse to permit any business to be brought before the meeting
which fails to comply with the foregoing or if a stockholder solicits proxies in
support of such stockholder's nominee or proposal without such stockholder
having made the representation required by clause (vii) of paragraph (b)(2)
above.
SECTION 9. Action by Written Consent. Except as otherwise provided by
applicable law or by the Restated Certificate of Incorporation of the
Corporation, any action required or permitted to be taken at any annual or
special
6
meeting of the stockholders may be taken without a meeting, without prior notice
and without a vote if a consent or consents in writing, setting forth the action
so taken, shall be signed by the holders of outstanding stock of the Corporation
having not less than the minimum number of votes that would be necessary to
authorize or take such action at a meeting at which all shares of stock of the
Corporation entitled to vote thereon were present and voted.
SECTION 10. Voting List. The officer of the Corporation who has charge
of the stock ledger of the Corporation shall prepare and make, at least ten days
before every meeting of the stockholders, a complete list of the stockholders
entitled to vote at the meeting, arranged in alphabetical order, and showing the
address of each stockholder and the number of shares registered in the name of
each stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten days prior to the meeting, either at a place within the
city where the meeting is to be held, which place shall be specified in the
notice of the meeting, or, if not so specified, at the place where the meeting
is to be held. The list shall also be produced and kept at the time and place of
the meeting during the whole time thereof and may be inspected by any
stockholder of the Corporation who is present.
SECTION 11. Stock Ledger. The stock ledger of the Corporation shall be
the only evidence as to the identity of the stockholders entitled to examine the
stock ledger, the list required by Section 10 of this Article II or the books of
the Corporation, or to vote in person or by proxy at any meeting of
stockholders.
SECTION 12. Record Date. In order that the Corporation may determine
the stockholders entitled to (i) notice of or to vote at any meeting of the
stockholders or any adjournment thereof, (ii) unless otherwise provided in the
Restated Certificate of Incorporation of the Corporation, express consent to
corporate action by written consent without a meeting or (iii) receive payment
of any dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion, or exchange of stock,
or (iv) for the purpose of any other lawful action, the Board may fix a record
date, which shall not precede the date upon which the resolution fixing the
record date is adopted by the Board and which record date shall, unless
otherwise required by law, not be: (a) in the case of clause (i) above, more
than sixty nor less than ten days before the date of such meeting, (b) in
7
the case of clause (ii) above, more than ten days after the date upon which the
resolution fixing the record date was adopted by the Board, and (c) in the case
of any other action, more than sixty days prior to such other action. If no
record date is fixed: (a) the record date for determining stockholders entitled
to notice of or to vote at a meeting of the stockholders shall be at the close
of business on the day next preceding the day on which notice is given, or if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held; (b) the record date for determining stockholders
entitled to express consent to corporate action in writing without a meeting
(unless otherwise provided in the Restated Certificate of Incorporation of the
Corporation), when no prior action by the Board is required under the General
Corporation Law of the State of Delaware, as amended from time to time (the
"General Corporation Law"), shall be the first day on which a signed written
consent setting forth the action taken or proposed to be taken is delivered to
the Corporation by delivery to its registered office in the State of Delaware,
its principal place of business, or an officer or agent of the Corporation
having custody of the book in which proceedings of meetings of stockholders are
recorded; and when prior action by the Board is required under the General
Corporation Law, the record date for determining stockholders entitled to
consent to corporate action in writing without a meeting shall be at the close
of business on the date on which the Board adopts the resolution taking such
prior action; and (c) the record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the Board adopts
the resolution relating thereto. A determination of stockholders of record
entitled to notice of or to vote at a meeting of the stockholders shall apply to
any adjournment of the meeting; provided, however, that the Board may fix a new
record date for the adjourned meeting.
SECTION 13. Inspectors of Election. The Corporation may, and at the
request of any stockholder or if required by law shall, before or at each
meeting of stockholders, appoint one or more inspectors of elections to act at
the meeting and make a written report thereof. The Corporation may designate one
or more persons as alternate inspectors to replace any inspector who fails to
act. If no inspector or alternate is able to act at a meeting of the
stockholders, the Chairman of the meeting may, and at the request of any
stockholder or if required by law shall, appoint one or more inspectors to act
at the meeting. Unless otherwise required by law, inspectors may be officers,
employees or agents of the Corporation. Each inspector, before entering upon the
discharge of his or her
8
duties, shall take and sign an oath faithfully to execute the duties of
inspector with strict impartiality and according to the best of his or her
ability. The inspector or inspectors so appointed or designated shall (i)
ascertain the number of outstanding shares of capital stock of the Corporation
and the voting power of each such share, (ii) determine the shares of capital
stock of the Corporation represented at the meeting and the validity of proxies
and ballots, (iii) count all votes and ballots, (iv) determine and retain for a
reasonable period a record of the disposition of any challenges made to any
determination by the inspectors and (v) certify their determination of the
number of shares of capital stock of the Corporation represented at the meeting
and such inspectors' count of all votes and ballots. Such certification and
report shall specify such other information as may be required by law. In
determining the validity and counting of proxies and ballots cast at any meeting
of the stockholders of the Corporation, the inspectors may consider such
information as is permitted by applicable law. No person who is a candidate for
an office at an election may serve as an inspector at such election.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. General Powers. The business of the Corporation shall be
managed by or under the direction of the Board. In addition to the powers and
authority herein or by statute expressly conferred upon them, the directors are
hereby empowered to exercise all such powers and do all such acts and things as
may be exercised or done by the Corporation, subject, nevertheless, to the
provisions of applicable law, the Restated Certificate of Incorporation of the
Corporation and these By-laws; provided, however, that no By-laws hereafter
adopted by the stockholders shall invalidate any prior act of the directors
which would have been valid if such By-laws had not been adopted.
SECTION 2. Number of Directors. Subject to any rights of the holders
of any series of Preferred Stock of the Corporation outstanding at any time to
elect additional directors to the Board, the number of directors that shall
constitute the entire Board of the Corporation shall be determined from time to
time pursuant to the Stockholders' Agreement dated as of [ ], among [TW], [USW],
[A/N] (and their successors and permitted assigns) and the Corporation, as
amended from time to time, or, if such agreement is no longer in effect, the
number of directors that shall constitute the entire Board of the Corporation
shall be not
9
less than three members, the exact number of which shall from time to time be
determined by resolution of the Board.
SECTION 3. Election of Directors. (a) Except as otherwise required by
statute or by the Restated Certificate of Incorporation of the Corporation,
directors shall be elected by a plurality of the votes cast at a meeting of
stockholders by the holders of shares of Class A Common Stock of the Corporation
and Class B Common Stock of the Corporation, voting together as a single class.
(b) Subject to the provisions of the Restated Certificate of
Incorporation of the Corporation and to this Article III, each director shall
serve until the next succeeding annual meeting of stockholders and until his or
her respective successor has been duly elected and qualified.
SECTION 4. Independent Directors. For so long as any class of capital
stock of the Corporation is traded on a national securities exchange or
authorized for quotation on any nationally recognized over-the-counter quotation
system, the Board shall have at least two independent directors in compliance
with the requirements of any such national securities exchange or quotation
system then applicable to the Corporation. The Board's nominees for election as
independent directors shall be approved by a committee of the Board comprised of
all of the directors other than the Chief Executive Officer and the independent
directors.
SECTION 5. Resignations. Any director of the Corporation may resign at
any time, by giving written notice to the Board, the Chairman of the Board, the
President or the Secretary of the Corporation. Such resignation shall take
effect after receipt of the applicable written notice of resignation by the
Board, the Chairman of the Board, the President or the Secretary of the
Corporation at the time specified in such written notice or, if no time is
specified, immediately upon receipt of such written notice by the Board, the
Chairman of the Board, the President or the Secretary of the Corporation. Unless
otherwise specified in such notice, the acceptance of such resignation shall not
be necessary to make it effective.
SECTION 6. Removal of Directors. Directors may
only be removed as provided in Section 5 of Article VI of
the Restated Certificate of Incorporation of the
Corporation.
SECTION 7. Newly Created Directorships and Vacancies. Newly created
directorships resulting from an
10
increase in the number of directors and any vacancy on the Board occurring for
any other reason shall be filled in accordance with Section 5 of Article VI of
the Restated Certificate of Incorporation of the Corporation.
SECTION 8. Chairman of the Board. The directors shall elect one of
their members to be Chairman of the Board. The Chairman of the Board shall
perform such duties as may from time to time be assigned by the Board. The
Chairman of the Board shall be subject to the control of and may be removed from
such office by the Board.
SECTION 9. Annual Meetings. The Board shall meet for the election of
officers and the transaction of other business as soon as practicable after each
annual meeting of the stockholders, and no notice of such meeting shall be
necessary in order legally to constitute the meeting, provided a quorum is
present. Such meeting may be held at any other time or place specified in a
notice given as hereinafter provided for regular meetings of the Board.
SECTION 10. Regular Meetings. The Board may hold meetings, both
regular and special, either within or without the State of Delaware. Regular
meetings of the Board may be held at such time and at such place as may from
time to time be determined by the Board. Notice of each regular meeting shall be
furnished in writing to each member of the Board not less than five days in
advance of such meeting, unless such notice requirement is waived in writing by
each such member.
SECTION 11. Special Meetings. Special meetings of the Board may be
called by the Chairman of the Board, and shall be called by the President or the
Secretary of the Corporation upon the written request of not less than a
majority of the members of the Board then in office. Special meetings of the
Board shall be held at such time and place as shall be designated in the notice
of the meeting. The Secretary, or in his or her absence any other officer of the
Corporation, shall give each director notice of the time and place of holding of
special meetings of the Board by mail at least ten days before the meeting, or
by facsimile, telegram, cable or personal service at least three days before the
meeting, unless such notice requirement is waived in writing by each director.
Unless otherwise stated in the notice thereof, any and all business shall be
transacted at any meeting without specification of such business in the notice.
SECTION 12. Quorum. Except as otherwise required by applicable law,
the Restated Certificate of Incorporation
11
of the Corporation or these By-laws, at all meetings of the Board, a majority of
the entire Board shall constitute a quorum for the transaction of business. If a
quorum shall not be present at any meeting of the Board, a majority of those
present may adjourn the meeting from time to time, without notice other than
announcement at the meeting of the time and place of the adjourned meeting,
until a quorum shall be present. For purposes of these By-laws, "the entire
Board" means the total number of directors which the Corporation would have if
there were no vacancies or unfilled newly created directorships.
SECTION 13. Manner of Acting. (a) Except as otherwise provided by
applicable law, the Restated Certificate of Incorporation of the Corporation or
these By-laws, and except for those matters that may be specified in the
Restated Certificate of Incorporation of the Corporation as requiring
stockholder approval, all matters presented to the Board (or a committee
thereof) shall be approved by the affirmative vote of a majority of the
directors present at any meeting of the Board (or such committee) at which there
is a quorum (the foregoing is referred to herein as a "simple majority").
(b) Except as otherwise provided by applicable law, the Restated
Certificate of Incorporation of the Corporation or these By-laws, the Board may
from time to time, by resolution of a simple majority of the Board, specify,
amend, supplement, substitute, remove or add matters that may not be effected by
the Corporation without the affirmative vote of a simple majority of the Board.
SECTION 14. Organization. Meetings shall be presided over by the
Chairman of the Board, or in the absence of the Chairman of the Board, by such
other person as the directors may select. The Board shall keep written minutes
of its meetings. The Secretary of the Corporation shall act as Secretary of the
meeting, but in the absence of the Secretary, the Chairman of the meeting may
appoint any person to act as Secretary of the meeting.
SECTION 15. Action by Written Consent. Unless otherwise required by
the Restated Certificate of Incorporation of the Corporation or these By-laws,
any action required or permitted to be taken at any meeting of the Board or of
any committee thereof may be taken without a meeting, if all the members of the
Board or committee, as the case may be, consent thereto in writing, and the
writing or writings are filed with the minutes of proceedings of the Board or
committee thereof.
12
SECTION 16. Meetings by Means of Conference Telephone. Unless
otherwise required by the Restated Certificate of Incorporation of the
Corporation or these By-laws, members of the Board, or any committee thereof,
may participate in a meeting of the Board or such committee by means of a
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other. Participation in a
meeting pursuant to this Section 16 shall constitute presence in person at such
meeting.
SECTION 17. Compensation. The directors shall receive such
compensation for attendance at any meetings of the Board and any expenses
incidental to performance of their duties as the Board shall from time to time
determine by resolution. No such payment shall preclude any director from
serving the Corporation in any other capacity and receiving compensation
therefor.
ARTICLE IV
COMMITTEES
SECTION 1. Constitution and Powers. Except as provided by applicable
law, the Restated Certificate of Incorporation of the Corporation or these
By-laws, the Board may, by resolution of a simple majority of its members,
designate one or more committees. Except as provided in these By-laws, each
committee shall consist of one or more directors of the Corporation. Except as
provided by applicable law, the Restated Certificate of Incorporation of the
Corporation or these By-laws, the Board, by a simple majority vote of its
members, shall have the right from time to time to delegate to or to remove from
any board committee the authority to approve any matters which would not
otherwise require a higher vote than a simple majority vote of the Board. Except
as required by applicable law, the Restated Certificate of Incorporation of the
Corporation or these By-laws, for those matters that require a higher vote of
the Board than a simple majority vote, the Board, by such requisite higher vote,
shall have the right from time to time to delegate to or to remove from any
board committee the authority to approve any such matters requiring such
requisite higher vote.
SECTION 2. Organization of Committees. The Board may designate one or
more directors as alternate members of
13
any committee, who may replace any absent or disqualified member at any meeting
of such committee. In the absence or disqualification of a member of a
committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not they constitute a quorum, may
unanimously appoint another member of the Board to act at the meeting in place
of any such absent or disqualified member. Each committee that may be
established by the Board may fix its own rules and procedures. All committees so
appointed shall keep regular minutes of the transactions of their meetings and
shall be responsible to the Board for the conduct of the enterprises and affairs
entrusted to them. Notice of meetings of committees, other than of regular
meetings provided for by such rules, shall be given to committee members.
SECTION 3. Executive Committee. The Board, by the affirmative vote of
all the members of the entire Board may designate an executive committee of the
Board to manage and operate the affairs of the Corporation. Except as provided
by applicable law, the Restated Certificate of Incorporation of the Corporation
or these By-laws, such executive committee shall exercise all powers and
authority of the Board in the management of the business and affairs of the
Corporation; provided, however, that an executive committee shall not have the
authority to approve any matters which (pursuant to applicable law, the Restated
Certificate of Incorporation of the Corporation or these By-laws) require a
higher vote than a simple majority vote of the Board, unless the resolution
establishing such executive committee (or vesting such executive committee with
such authority) states otherwise and such resolution is approved by such
requisite higher vote. The executive committee shall report to the Board not
less often than quarterly.
ARTICLE V
OFFICERS
SECTION 1. Officers. The Board shall elect a Chairman of the Board, a
Chief Executive Officer, a President, one or more Vice Presidents, a Chief
Financial Officer, a Treasurer and a Secretary. The Chairman of the Board and
the Chief Executive Officer shall be chosen from the Board. The Board may elect
from time to time such other officers as, in the opinion of the Board, are
desirable for the conduct of the business of the Corporation. Any two or more
offices may be held by the same person, provided, however, that the President
shall not hold any other office except that of Chairman of the Board and/or
Chief Executive Officer.
14
SECTION 2. Chairman of the Board. The Chairman of the Board, if
present, shall preside at all meetings of the stockholders and of the Board. The
Chairman of the Board may enter into and execute in the name of the Corporation
powers of attorney, contracts, bonds and other obligations which implement
policies established by the Board. The Chairman of the Board shall be a senior
officer of the Corporation and in case of the inability or failure of the
President to perform his or her duties, the Chairman of the Board shall perform
the duties of the President. In addition, the Chairman of the Board shall
perform such other duties as may from time to time be assigned to such officer
by the Board.
SECTION 3. Chief Executive Officer. The Chief Executive Officer shall
have supervisory authority over the business, affairs and property of the
Corporation, and over the activities of the President and other executive
officers of the Corporation (excluding the Chairman of the Board). In general,
the Chief Executive Officer shall have all authority incident to the office of
Chief Executive Officer and shall have such other authority and perform such
other duties as may from time to time be assigned by the Board. If the Board
shall not have elected another person to such office, the President shall be the
Chief Executive Officer. If so elected by the Board, the Chairman of the Board
may be the Chief Executive Officer.
SECTION 4. President. The President shall be the chief operating
officer of the Corporation and shall have general supervision of the daily
business, affairs and property of the Corporation. The President shall have the
power to appoint and terminate the appointment or election of officers, agents
or employees other than those appointed or elected by the Board. The President
may enter into and execute in the name of the Corporation powers of attorney,
contracts, bonds and other obligations which implement policies established by
the Board. In general, the President shall have all authority incident to the
office of President and chief operating officer and shall have such other
authority and perform such other duties as may from time to time be assigned by
the Board. The President shall, at the request or in the absence or disability
of the Chairman of the Board or the Chief Executive Officer, perform the duties
and exercise the powers of such officer.
SECTION 5. Vice Presidents. The Vice Presidents shall have such powers
and shall perform such duties as may from time to time be assigned to them by
the Chairman of the Board, the President, the executive committee, if any, or
the Board. Without limiting the generality of the
15
foregoing, Vice Presidents may enter into and execute in the name of the
Corporation contracts and other obligations pertaining to the regular course of
their duties which implement policies established by the Board.
SECTION 6. Chief Financial Officer. The Chief Financial Officer shall
be the principal financial officer of the Corporation and shall have such powers
and perform such duties as may be assigned by the Chairman of the Board, the
President, the executive committee, if any, or the Board. Without limiting the
generality of the foregoing, the Chief Financial Officer may sign and execute
contracts and other obligations pertaining to the regular course of his or her
duties which implement policies established by the Board.
SECTION 7. Treasurer. The Treasurer shall, if required by the Chairman
of the Board, the President, the executive committee, if any, the Board or any
other officer to whom the Treasurer reports, give a bond for the faithful
discharge of duties, in such sum and with such sureties as may be so required.
Unless the Board otherwise declares by resolution, the Treasurer shall have
custody of, and be responsible for, all funds and securities of the Corporation;
receive and give receipts for money due and payable to the Corporation from any
source whatsoever; deposit all such money in the name of the Corporation in such
banks, trust companies, or other depositories as the Board may designate;
against proper vouchers, cause such funds to be disbursed by check or draft on
the authorized depositories of the Corporation signed in such manner as shall be
determined by the Board, and be responsible for the accuracy of the amounts of
all funds so disbursed; regularly enter or cause to be entered in books to be
kept by the Treasurer or under the Treasurer's direction, full and adequate
accounts of all money received and paid by the Treasurer for the account of the
Corporation; render to the Board, any duly authorized committee of directors,
the Chairman of the Board, the President or any officer to whom the Treasurer
reports, whenever they or any of them, respectively, shall require the Treasurer
to do so, an account of the financial condition of the Corporation and of all
transactions of the Treasurer; and, in general, have all authority incident to
the office of Treasurer and such other authority and perform such other duties
as from time to time may be assigned by the Board. Any Assistant Treasurer
shall, in the absence or disability of the Treasurer, perform the duties and
exercise the powers of the Treasurer and shall have such other duties and have
such other powers as the Board may from time to time prescribe.
16
SECTION 8. Secretary. The Secretary shall act as Secretary of all
meetings of the stockholders and of the Board; shall keep the minutes thereof in
the proper book or books to be provided for that purpose; shall see that all
notices required to be given by the Corporation in connection with meetings of
stockholders and of the Board are duly given; shall be the custodian of the seal
of the Corporation and shall affix the seal or cause it or a facsimile thereof
to be affixed to all certificates for stock of the Corporation and to all
documents or instruments requiring the same, the execution of which on behalf of
the Corporation is duly authorized in accordance with the provisions of these
By-laws; shall have charge of the stock records and also of the other books,
records and papers of the Corporation relating to its organization and acts as a
corporation, and shall see that the reports, statements and other documents
related thereto required by law are properly kept and filed, all of which shall,
at all reasonable times, be open to the examination of any director; and shall,
in general, have all authority incident to the office of Secretary and such
other authority and perform such other duties as from time to time may be
assigned by the Board.
SECTION 9. Removal. Any officer may be terminated or removed from
office, either with or without cause, by the Board at any meeting thereof or by
written consent, provided, however, that such removal shall be without prejudice
to the contract rights, if any, of the person so removed.
SECTION 10. Resignation. Any officer may resign at any time by giving
written notice to the Board, the Chairman of the Board, the President or the
Secretary of the Corporation. Any such resignation shall take effect at the time
therein specified or if no time is specified, immediately. Unless otherwise
specified in such notice, the acceptance of such resignation shall not be
necessary to make it effective.
SECTION 11. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or any other cause may be filled at any
time by the Board, or if such officer was appointed by the Chairman of the Board
or the President, then by the Chairman of the Board or the President, as
applicable.
SECTION 12. Bank Accounts. In addition to such bank accounts as may be
authorized in the usual manner by resolution of the Board, the Treasurer, with
approval of the Chairman of the Board or the President, may authorize such bank
accounts to be opened or maintained in the name and on
17
behalf of the Corporation as the Treasurer shall deem necessary or appropriate,
provided that payments from such bank accounts are to be made upon and according
to the check of the Corporation as shall be specified in the written
instructions of the Treasurer or Assistant Treasurer of the Corporation with the
approval of the Chairman of the Board or the President of the Corporation.
SECTION 13. Voting of Stock Held. Unless otherwise provided in the
Restated Certificate of Incorporation of the Corporation or directed by the
Board, the Chairman of the Board and the President may from time to time
personally or by an attorney or attorneys or agent or agents of the Corporation,
in the name and on behalf of the Corporation, cast the votes which the
Corporation may be entitled to cast as a stockholder or otherwise in any other
corporation, limited liability company, partnership, trust or legal entity
("Person") any of the stock or securities of which may be held by the
Corporation, at meetings of the holders of the stock or other securities of such
Person, or consent in writing to any action by any such Person, and may instruct
any person or persons so appointed as to the manner of casting such votes or
giving such consent, and may execute or cause to be executed on behalf of the
Corporation and under its corporate seal, or otherwise, such written proxies,
consents, waivers or other instruments as the Secretary may deem necessary or
proper in the premises; or may attend any meeting of the holders of stock or
other securities of any such Person and thereat vote or exercise any or all
other powers of the Corporation as the holder of such stock or other securities
of such Person.
ARTICLE VI
CAPITAL STOCK
SECTION 1. Form of Certificates. (a) Every holder of stock in the
Corporation shall be entitled to have a certificate signed, in the name of the
Corporation (i) by the Chairman of the Board, the President or any of the Vice
Presidents and (ii) by the Treasurer or an Assistant Treasurer, or the Secretary
or an Assistant Secretary of the Corporation, certifying the number of shares
owned by him or her in the Corporation.
(b) For each class or series of stock that the Corporation shall be
authorized to issue, the powers, designations, preferences and relative,
participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
or rights shall be set
18
forth in full or summarized on the face or back of the certificate which the
Corporation shall issue to represent each class or series of stock, provided
that, except as otherwise required by Section 202 of the GCL, in lieu of the
foregoing requirements, there may be set forth on the face or back of the
certificate which the Corporation shall issue to represent such class or series
of stock, a statement that the Corporation will furnish without charge to each
stockholder that so requests the powers, designations, preferences and relative,
participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
or rights.
SECTION 2. Signatures. Any or all signatures on the certificate may be
a facsimile. In case an officer, transfer agent or registrar that has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the Corporation with the same effect as if he or she
were such officer, transfer agent or registrar at the date of issue.
SECTION 3. Lost Certificates. The Board may direct a new certificate
to be issued in place of any certificate theretofore issued by the Corporation
alleged to have been lost, stolen or destroyed, upon the making of an affidavit
of the fact by the person claiming the certificate of stock to be lost, stolen
or destroyed. When authorizing such issue of a new certificate the Board may, in
its discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate, or his or her legal
representative, to advertise the same in such manner as the Board shall require
and/or to give the Corporation a bond in such sum as it may direct as indemnity
against any claim that may be made against the Corporation and its transfer
agents and registrars with respect to the certificate alleged to have been lost,
stolen or destroyed or the issuance of such new certificate.
SECTION 4. Transfers. Except as otherwise prescribed by applicable law
or by the Restated Certificate of Incorporation of the Corporation, and subject
to any transfer restrictions applicable thereto and conspicuously noted on the
stock certificate, stock of the Corporation shall be transferable in the manner
prescribed in these By-laws. Transfers of stock shall be made on the books of
the Corporation only by the person named in the certificate or by such person's
duly authorized attorney appointed by a power of attorney duly executed and
filed with the Secretary
19
of the Corporation or a transfer agent of the Corporation, and upon surrender of
the certificate or certificates for such stock properly endorsed. Every
certificate exchanged, returned or surrendered shall be marked "Canceled," with
the date of cancelation, by the Secretary or an Assistant Secretary of the
Corporation or the transfer agent thereof. No transfer of stock shall be valid
as against the Corporation, its stockholders or creditors for any purpose until
it shall have been entered in the stock records of the Corporation by an entry
showing from and to whom transferred.
SECTION 5. Transfer Agent and Registrar. The Board may appoint one or
more transfer agents and one or more registrars and may require all certificates
for shares to bear the manual or facsimile signature or signatures of any of
them.
SECTION 6. Beneficial Owners. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise required by
law.
SECTION 7. Regulations. Except as otherwise provided by applicable law
or in the Restated Certificate of Incorporation of the Corporation, the Board
shall have the power and authority to make all such rules and regulations as it
may deem expedient concerning the issue, transfer, registration, cancelation and
replacement of certificates representing stock of the Corporation.
SECTION 8. Dividends. Dividends upon the capital stock of the
Corporation, subject to the provisions in the Restated Certificate of
Incorporation of the Corporation, may be declared by the Board at any regular or
special meeting, and may be paid in cash, in property, or in securities of the
Corporation. Before payment of any dividend, there may be set aside out of any
funds of the Corporation available for dividends such sum or sums as the Board
from time to time, in its absolute discretion, deems proper as a reserve or
reserves to meet contingencies, or for purchasing any of the shares of capital
stock, warrants, rights, options, bonds, debentures, notes, scrip or other
securities or evidences of indebtedness of the Corporation, or for equalizing
dividends, or for repairing or maintaining
20
any property of the Corporation, or for any proper purpose, and the Board may
modify or abolish any such reserve.
ARTICLE VII
INDEMNIFICATION
SECTION 1. Directors' Indemnification. The Corporation shall indemnify
and hold harmless, to the fullest extent permitted by applicable law as it
presently exists or may hereafter be amended, any person that was or is made or
is threatened to be made a party or is otherwise involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(collectively, a "Proceeding"), by reason of the fact that such person is or was
a director or officer of the Corporation or, while a director or officer of the
Corporation, is or was serving at the request of the Corporation as a director,
officer, employee or agent of another corporation or of a partnership, joint
venture, trust, enterprise or nonprofit entity, including service with respect
to employee benefit plans, against all liability and loss suffered and expenses
(including attorneys' fees) reasonably incurred by such person in connection
with such proceeding or any claim made in connection therewith. Such right of
indemnification shall inure whether or not the claim asserted is based on
matters which antedate the adoption of this Section 1 of Article VII. Subject to
the second sentence of the next paragraph, the Corporation shall be required to
indemnify or make advances to a person in connection with a Proceeding (or part
thereof) initiated by such person only if the initiation of such Proceeding (or
part thereof) was authorized by the Board.
The Corporation shall pay the expenses (including attorneys' fees)
incurred by any person that is or was a director or officer of the Corporation
or, while a director or officer of the Corporation, is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation or of a partnership, joint venture, trust, enterprise or nonprofit
entity, in defending any Proceeding in advance of its final disposition;
provided, however, that the payment of expenses incurred by such a person in
defending any Proceeding in advance of its final disposition shall be made only
upon receipt of an undertaking by such person to repay all amounts advanced if
it should be ultimately determined that such person is not entitled to be
indemnified under this Section 1 of Article VII or otherwise. If a claim for
indemnification or payment of expenses under this Section 1 of Article VII is
not paid
21
in full within sixty (60) calendar days after a written claim therefor has been
received by the Corporation, the claimant may file suit to recover the unpaid
amount of such claim and, if successful in whole or in part, shall be entitled
to be paid the expense of prosecuting such claim. In any such action, the
Corporation shall have the burden of proving that the claimant was not entitled
to the requested indemnification or payment of expenses under applicable law.
The rights conferred on any person by this Section 1 of Article VII
shall not be exclusive of any other rights which such person may have or
hereafter acquire under any statute, the Restated Certificate of Incorporation,
these By-laws, agreement, vote of stockholders or resolution of disinterested
directors or otherwise. The Corporation's obligation, if any, to indemnify any
person that was or is serving at its request as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust, enterprise or
nonprofit entity shall be reduced by any amount such person may collect as
indemnification from such other corporation, partnership, joint venture, trust,
enterprise or nonprofit entity, as applicable.
Any amendment, modification or repeal of the foregoing provisions of
this Section 1 of Article VII shall not adversely affect any right or protection
hereunder of any person in respect of any act or omission occurring prior to the
time of such amendment, modification or repeal.
SECTION 2. Survival of Indemnification and Advancement of Expenses.
The indemnification and advancement of expenses provided by or granted pursuant
to this Article VII shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director, officer,
employee or agent of the Corporation or other person indemnified hereunder and
shall inure to the benefit of the heirs, executors and administrators of such
person.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 1. Books and Records. The books and record of the Corporation
may be kept at such places within or without the State of Delaware as the Board
may from time to time determine.
SECTION 2. Seal. The Board shall approve a corporate seal which shall
be in the form of a circle and shall bear the name of the Corporation, the year
of its
22
incorporation and the word "Delaware". The seal may be used by causing it
or a facsimile thereof to be impressed or affixed or reproduced or otherwise.
SECTION 3. Fiscal Year. The fiscal year of the Corporation shall be
determined and may be changed by resolution of the Board.
SECTION 4. Notices and Waivers Thereof. (a) Whenever written notice is
required by applicable law, the Restated Certificate of Incorporation of the
Corporation or these By-laws to be given to any director, member of a committee
or stockholder, such notice may be given personally, or by mail, or in the case
of directors or officers, by facsimile transmission, addressed to such address
as appears on the books of the Corporation. Any notice given by facsimile
transmission shall be deemed to have been given upon confirmation of receipt by
the addressee.
(b) Whenever any notice is required by applicable law, the Restated
Certificate of Incorporation of the Corporation, or these By-laws, to be given
to any director, member of a committee or stockholder, a waiver thereof in
writing, signed by the person or persons entitled to said notice, whether before
or after the time stated therein, shall be deemed equivalent to notice.
Attendance of a person at a meeting, present in person or represented by proxy,
shall constitute a waiver of notice of such meeting, except where the person
attends the meeting for the express purpose of objecting at the beginning of the
meeting to the transaction of any business because the meeting is not lawfully
called or convened. Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the stockholders, directors, or members of
a committee of directors needs to be specified in any written waiver of notice
unless so required by applicable law, the Restated Certificate of Incorporation
of the Corporation or these By-laws.
SECTION 5. Amendments. These By-laws may be amended only as set forth
in Article IX of the Restated Certificate of Incorporation of the Corporation.
SECTION 6. Saving Clause. These By-laws are subject to the provisions
of the Restated Certificate of Incorporation of the Corporation and applicable
law. If any provision of these By-laws is inconsistent with the Restated
Certificate of Incorporation of the Corporation or the General Corporation Law,
such provision shall be invalid only to the extent of such conflict, and such
conflict shall
23
not affect the validity of any other provision of these By-laws.
Exhibit C
STOCKHOLDERS' AGREEMENT
AGREEMENT, dated as of _____ __, 1998, 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"), FIBERCOMM HOLDINGS
L.P., a Delaware limited partnership that is owned by TW/KBLCOM INC., a Delaware
corporation ("TW/KBLCOM"), PARAGON COMMUNICATIONS, a New York general
partnership ("Paragon" and, together with TWX, ATC, WCI, TWI/TAE and TW/KBLCOM,
the "TW Stockholders"), MEDIAONE GROUP, INC. (formerly U S WEST Multimedia
Communications, Inc.), a Colorado corporation (the "MediaOne Stockholder"), and
ADVANCE/XXXXXXXX PARTNERSHIP, a New York general partnership ("A/N").
W I T N E S S E T H:
WHEREAS, the TW Stockholders, the MediaOne Stockholder and A/N own all
of the issued and outstanding shares of Class B Common Stock of the Company; and
WHEREAS, the parties hereto desire to set forth herein their agreement
concerning the composition of the Board of Directors of the Company, the
ownership and transfer of the Common Stock of the Company and such other matters
as are set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1. Definitions. For purposes of this Agreement, the following terms
shall have the meanings set forth below:
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control with
such other Person and shall include, with respect to A/N, any Xxxxxxxx
Family Member. For purposes of this Agreement, neither the Company, nor any
Person controlled by the Company, shall be deemed to be an Affiliate of a
Principal Stockholder.
"Agreement" shall mean this Stockholders' Agreement, as it may be
amended, restated, modified or supplemented from time to time in accordance with
its terms.
"beneficially own" (and beneficial ownership, owned beneficially and
other correlative terms) is defined in Rule 13d-3 promulgated under the Exchange
Act; provided, however, that a party shall not be deemed to beneficially own
securities merely as a result of the voting agreements set forth in this
Agreement.
"A/N Stockholder Group" shall mean A/N and any other Affiliates of A/N
that become parties to this Agreement pursuant to Section 3.3.
"Board" shall mean the Board of Directors of the Company.
"Business Day" shall mean any day (other than a day which is a Saturday
or Sunday) on which banks are permitted to be open for business in the City of
New York.
"CEO" shall mean the officer elected by the Board as the chief executive
officer of the Company.
"Certificate of Incorporation" shall mean, as of any date, the Restated
Certificate of Incorporation of the Company as in effect on such date.
"Class A Common Stock" shall mean the Class A Common Stock, par value
$0.01 per share, of the Company.
"Class B Common Stock" shall mean the Class B Common Stock, par value
$0.01 per share, of the Company.
"Common Stock" shall mean the Class A Common Stock and the Class B
Common Stock.
"control" shall mean possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person whether
through the ownership of equity securities or voting securities, by contract or
otherwise.
2
"Controlled Affiliate" shall mean, with respect to any Person as of any
relevant date, shall mean the Parent of such Person and each Subsidiary of such
Parent.
"Distribution" shall mean the distribution by a Parent to its
stockholders (whether by divided, redemption, exchange, merger or otherwise) of
the capital stock of a Subsidiary of such Parent the assets of which include all
of the shares of Common Stock beneficially owned by such Parent.
"Equity Securities" shall have the meaning ascribed to such term in Rule
405 promulgated under the Securities Act, and in any event includes any security
having the attendant right to vote for directors or similar representatives.
"Exchange Act" shall mean the Securities and Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Independent Director" shall mean a director who is neither employed by
nor affiliated with the Company or any Principal Stockholder.
"Indirect Transfer" shall mean a Transfer of common stock or other
equity interests of a Principal Stockholder or of a Person (other than the
Parent of such Principal Stockholder) of which such Principal Stockholder is a
direct or indirect Subsidiary to any Person after giving effect to which such
Principal Stockholder is no longer a Subsidiary of the Person that was its
Parent prior to such Transfer; provided, however, that a Distribution shall not
constitute an "Indirect Transfer."
"MediaOne" shall mean MediaOne Group, Inc. (formerly U S WEST, Inc.), a
Delaware corporation.
"MediaOne Stockholder Group" shall mean the MediaOne Stockholder and any
other Affiliates of MediaOne that become parties to this Agreement pursuant to
Section 3.3.
"Monetizing Securities" shall mean any security which is convertible
into or exchangeable for Class A Common Stock. Asused herein, "Monetizing
Securities" offered by an Eligible Holder or its Parent shall include securities
3
offered by an independent trust established at the request of such Eligible
Holder or its Parent.
"NASD" shall mean the National Association of Securities Dealers.
"Xxxxxxxx Family Member" shall mean any Person who is a lineal
descendant (including adoptees) of Xxxxx and Xxxx Xxxxxxxx, or any Person which
is wholly-owned directly or indirectly by one or more of such lineal
descendants, or the trustee of any trust, or a custodian under the Uniform Gift
to Minors Act or similar fiduciary, the primary beneficiaries of which (or the
primary income beneficiaries of which, in the case of a charitable remainder or
similar trust) include only one or more of such lineal descendants (provided
that such trust may grant a general or special power of appointment to any such
Person and may permit trust assets to be used to pay taxes, legacies and other
obligations of the trust or the estate of any such Person, payable by reason of
the death of such Person, as applicable) or the executor, administrator,
guardian or personal representative of the estate of any such lineal descendant.
"Nominating Committee" shall mean (i) so long as the Principal
Stockholder Groups have the right to designate a total of at least three Agreed
Nominees pursuant to Section 2.1(c), a committee of the Board comprised of all
of the members of the Board other than the CEO and the Independent Directors and
(ii) if the Principal Stockholder Groups have the right to designate a total of
less than three Agreed Nominees pursuant to Section 2.1(c), a committee of three
members of the Board comprised of all Agreed Nominees designated by the
Principal Stockholder Groups and such other director or directors as shall be
determined by majority vote of the Board.
"Ownership Percentage" shall mean, with respect to any Principal
Stockholder Group as of any date, the percentage determined by multiplying 100
by a fraction (x) the numerator of which is the number of shares of Common Stock
beneficially owned by the members of such Principal Stockholder Group as of such
date and (y) the denominator of which is the aggregate issued and outstanding
shares of Common Stock as of such date (rounded to the nearest one-hundredth (or
if there shall not be a nearest one-hundredth, to the next highest
one-hundredth).
4
"Parent" shall mean, with respect to any Person as of any relevant date,
such Person (i) if it is its own ultimate parent entity (within the meaning of
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, and the
rules and regulations promulgated thereunder, as in effect on the date hereof)
or (ii) if it has no ultimate parent entity that is a corporation or
partnership; otherwise, "Parent" shall mean such ultimate (corporate or
partnership) parent entity of such Person as so defined.
"Person" shall mean an individual, corporation, limited liability
company, partnership, trust or unincorporated organization or a government or
any agency or political subdivision thereof.
"Principal Stockholder" shall mean each of the TW Stockholders, the
MediaOne Stockholder, A/N and any other Person that becomes a party to this
Agreement pursuant to Section 3.3, Section 3.4 or Section 3.5.
"Principal Stockholder Group" shall mean (i) the TW Stockholder Group,
(ii) the MediaOne Stockholder Group, (iii) the A/N Stockholder Group or (iv) any
ther Principal Stockholder that becomes a party to this Agreement pursuant to
Section 3.4 or 3.5, together with any transferees of such Principal Stockholder
that become parties to this Agreement pursuant to Section 3.3.
"Public Offering" shall mean an offering of Class A Common Stock in
compliance with Section 5 of the Securities Act pursuant to a registration
statement on a form applicable to the sale of securities to the general public.
"Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
"SEC" shall mean the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
"Subsidiary" of any Parent shall mean a Person (a)(i) more than fifty
percent of the voting power of the outstanding shares or securities of which
(representing the right to vote for the election of directors or other managing
authority) are owned or controlled, directly or indirectly through one or more
Subsidiaries, by such Parent
5
or (ii) which does not have outstanding shares or securities, but more than
fifty percent of the ownership interests of which representing the right to make
the decisions for such Person are owned or controlled, directly or indirectly
through one or more Subsidiaries, by such Parent and (b) that in either case is
controlled by such Parent; provided, however, that in each case, such Person
shall be deemed to be a Subsidiary of such Parent only for so long as the
foregoing requirements remain satisfied.
"Transfer" shall mean to directly offer for sale, sell, transfer,
tender, pledge, encumber, assign or otherwise dispose of, or enter into any
contract, option, or other arrangement or understanding (other than this
Agreement) with respect to or consent to the direct offer for sale, sale,
transfer, tender, pledge, encumbrance, assignment or other disposition of.
Without limiting the foregoing, any redemption, purchase or other acquisition in
any manner (whether or not for consideration) by the Company of any Common Stock
shall be deemed to be a Transfer of such security. The terms "Transferred,"
"Transferee" and similar variations shall have correlative meanings.
"TWE" shall mean Time Warner Entertainment Company, L.P., a Delaware
limited partnership.
"TWE-A/N" shall mean Time Warner Entertainment-Advance/Xxxxxxxx
Partnership, a New York general partnership.
"TW Stockholder Group" shall mean the TW Stockholders and any other
Affiliates of TWX that become parties to this Agreement pursuant to Section 3.3.
1.2 Terms Defined Elsewhere in the Agreement . For purposes of this
Agreement, the following terms shall have the meanings set forth in the sections
indicated:
Term Section
---- -------
A/N ........................................ recitals
Agreed Nominee ............................. 2.1(b)
Company Notice ............................. 4.1(a)
Demand Notice .............................. 4.1(a)
Demand Registrations ....................... 4.1(a)
Eligible Holder ............................ 4.1(a)
First Refusal Electing Stockholder ........ 3.4(b)
6
First Refusal Notice of Sale ............... 3.4(a)
First Refusal Rejection Date ............... 3.4(d)
First Refusal Shares ....................... 3.4(a)
First Refusal Stockholders ................. 3.4(a)
First Refusal Termination Date ............. 3.4(f)
Incidental Registration ................... 4.2(a)
Indemnified Party .......................... 4.6(c)
Indemnifying Party ......................... 4.6(c)
Inspectors ................................. 4.4(g)
Maximum Amount ............................. 4.1(e)
MediaOne Stockholder ....................... recitals
Minimum Condition .......................... 4.1(a)
Qualifying First Offer Amount .............. 3.4(a)
Records .................................... 4.4(g)
Reorganization Agreement ................... recitals
Selling Stockholders ....................... 3.4(a)
Tag Notice of Sale ......................... 3.5(e)
Tag Offer .................................. 3.5(a)
Tag Offeror ................................ 3.5(a)
Tag Shares ................................. 3.5(a)
Tag Stockholders ........................... 3.5(a)
Third Party Offer .......................... 3.4(a)
Third Party Offeror ........................ 3.4(a)
TW Selling Stockholders .................... 3.5(a)
TW Stockholders ............................ recitals
TW Shares ................................... 3.5(a)
1.2. Other Definitional Provisions. (a) The words "hereof", "herein",
and "hereunder" and words of similar import, when used in this Agreement, shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement.
(b) The terms defined in the singular shall have a comparable meaning
when used in the plural, and vice versa.
(c) The terms "dollars" and "$" shall mean United States dollars.
7
ARTICLE II
BOARD OF DIRECTORS AND STOCKHOLDERS
2.1. Composition of the Board. (a) The Board shall initially consist of
10 directors. In the event the right of any Principal Stockholder Group to
designate one or more Agreed Nominees pursuant to Section 2.1(c)(i) terminates,
the size of the Board shall be reduced by a number of directors equal to the
number of Agreed Nominees as to which such right to nominate has terminated;
provided, however, that in no circumstances shall the Board consist of less than
six directors. Individuals to serve on the Board shall be nominated in
accordance with this Agreement and nomination procedures established by the
Board, the Company's By-Laws and the rules and regulations of the SEC and the
principal stock exchange or association, if any, on which the Common Stock is
listed. Directors shall be elected in accordance with the Certificate of
Incorporation, the Company's By-Laws and the General Corporation Law of
Delaware.
(b) For purposes of this Agreement, an individual designated as a
director in accordance with Section 2.1(c) or Section 2.3 is referred to as an
"Agreed Nominee." No Principal Stockholder shall nominate any individual to
serve as a director of the Company except an individual designated as an Agreed
Nominee pursuant to the provisions of Section 2.1(c) or Section 2.3. A Principal
Stockholder may nominate for election as a director any individual designated by
its Principal Stockholder Group as an Agreed Nominee pursuant to Section
2.1(c)(i) or Section 2.3 or any individual designated as Agreed Nominee pursuant
to Section 2.1(c)(ii) if, in any such case, such individual was not duly
nominated in connection with such election by the Board or a nominating
committee of the Board pursuant to the Company's nomination procedures. Each
Principal Stockholder hereby agrees to vote (x) all shares of Common Stock held
of record or owned beneficially by such Principal Stockholder at the time of
such vote or action by written consent and (y) all shares of Common Stock as to
which such Principal Stockholder at the time of such vote or action by written
consent has voting control, in each case (A) in favor of the election to the
Board of the Agreed Nominees designated in accordance with Section 2.1(c) and
Section 2.3 and (B) against any other individual nominated to serve as a
director of the Company.
8
(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 18.88% (as adjusted from time to time pursuant
to Section 2.5), the TW Stockholder Group shall have the right to designate
three Agreed Nominees. If the TW Stockholder Group has an Ownership Percentage
which is less than 18.88% (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
-------------------- ---------------
14.16% to 18.87% 2
9.44% to 14.15% 1
less than 9.44% 0
(B) So long as the TW Stockholder Group has an Ownership Percentage
which is greater than or equal to 18.88% (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).
MediaOne
Stockholder Group Number of
Ownership Percentage Agreed Nominees
-------------------- ---------------
9.44% or greater 3
less than 9.44% 0
If the TW Stockholder Group has an Ownership Percentage which is less than
18.88% (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).
9
MediaOne
Stockholder Group Number of
Ownership Percentage Agreed Nominees
-------------------- ---------------
18.88% or greater 3
14.16% to 18.87]% 2
9.44% to 14.15% 1
less than 9.44% 0
(C) So long as the A/N Stockholder Group has an Ownership Percentage
which is greater than or equal to 9.44% (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 9.44% (as adjusted from time to time pursuant to Section 2.5), the A/N
Stockholder Group shall not have the right to designate any Agreed Nominees.
(D) Except as set forth below, the members of a Principal Stockholder
Group shall not have the right to Transfer or effect an Indirect Transfer of the
rights of such Principal Stockholder Group to designate Agreed Nominees (and any
Indirect Transfer shall result in the termination of the rights of such
Principal Stockholder Group to designate Agreed Nominees). The members of a
Principal Stockholder Group shall have the right to Transfer (or effect an
Indirect Transfer of) all, but not less than all, of the rights of such
Principal Stockholder Group to designate Agreed Nominees pursuant to this
Section 2.1(c)(i) in connection with the Transfer (or Indirect Transfer) by such
Principal Stockholders of all of the shares of Class B Common Stock owned by
them pursuant to the provisions of Section 3.4 or 3.5. In such event, the
acquiring Principal Stockholder Group (and any future Principal Stockholder
Group to which such Principal Stockholder Group transfers its shares of Class B
Common Stock in accordance with the provisions of Section 3.4 or 3.5) shall have
the right to designate Agreed Nominees in the same circumstances as the
transferring Principal Stockholder Group had the right to designate Agreed
Nominees as set forth in Section 2.1(c)(i). It is acknowledged and agreed that
the Transfer of all or a portion of the capital stock of a Parent of a Principal
Stockholder Group (or the consummation of any other indirect transaction which
does not constitute an Indirect Transfer) shall not result in the termination of
the rights of such Principal Stockholder Group to designate Agreed Nominees.
10
(ii) The CEO shall be an Agreed Nominee.
(iii) Two 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.
(iv) If the Principal Stockholder Groups do not have the right to
designate at least three Agreed Nominees pursuant to this Section 2.1(c), the
Nominating Committee shall have the right to designate a number of Agreed
Nominees equal to the difference between (x) three and (y) the number of Agreed
Nominees which the Principal Stockholder Groups have the right to designate at
such time (such Agreed Nominees being "Other Directors").
(d) The Principal Stockholder Groups agree that the initial Board shall
consist of the Agreed Nominees listed on Annex A hereto and shall cause such
Agreed Nominees to be elected as directors promptly following the date hereof to
serve until the next annual meeting of the stockholders of the Company.
Thereafter, Agreed Nominees shall be designated as described in this Section 2.1
prior to each annual meeting of the stockholders of the Company in a manner that
is consistent with the rules and regulations of the SEC and the principal stock
exchange or association, if any, on which the Common Stock is listed.
2.2 Removal of Directors. (a) Each Principal Stockholder hereby agrees
to vote or act by written consent with respect to (or cause to be voted or acted
upon by written consent) all shares of Common Stock held of record or
beneficially owned by it at the time of such vote or action by written consent
or as to which such Principal Stockholder has voting control at the time of such
vote or action by written consent to remove or cause the removal from office of
any director who was an Agreed Nominee designated by a Principal Stockholder
Group pursuant to Section 2.1(c)(i) or Section 2.3(c) if the Principal
Stockholder Group that so designated such Agreed Nominee requests such removal
by notice to the other Principal Stockholders.
(b) In the event the right of any Principal Stockholder Group to
designate one or more Agreed Nominees pursuant to Section 2.1(c)(i) terminates
or if the number of Agreed Nominees such Principal Stockholder Group has the
11
right to designate pursuant to Section 2.1(c)(i) decreases, the members of such
Principal Stockholder Group shall use their reasonable best efforts to cause
specified individual(s) comprising a corresponding number of Agreed Nominees
previously designated by such Principal Stockholder Group to resign from the
Board. In the event that such Principal Stockholder Group is unable to cause
such Agreed Nominees to promptly resign, each Principal Stockholder hereby
agrees to vote or act by written consent with respect to (or cause to be voted
or acted upon by written consent) all shares of Common Stock held of record or
beneficially owned by it at the time of such vote or action by written consent
or as to which such Principal Stockholder has voting control at the time of such
vote or action by written consent for the removal of such Agreed Nominees.
(c) Each Principal Stockholder hereby agrees to vote or act by written
consent with respect to (or cause to be voted or acted upon by written consent)
all shares of Common Stock held of record or beneficially owned by it at the
time of such vote or action by written consent or as to which such Principal
Stockholder has voting control at the time of such vote or action by written
consent for the removal of an individual designated as an Agreed Nominee
pursuant to Section 2.1(c)(ii) and thereafter elected as a director if such
individual ceases to serve as CEO for any reason. An Independent Director and
any Other Director may be removed in accordance with the Certificate of
Incorporation and the Company's By-laws.
2.3. Vacancies. If, as a result of death, disability, retirement,
resignation, removal (with or without cause) or otherwise there shall exist or
occur any vacancies on the Board, individuals to fill such vacancies shall be
nominated and elected in the manner provided in this Agreement and in the
Certificate of Incorporation and the Company's By-laws including at a special
meeting of the stockholders called by any one director. Agreed Nominees with
respect to an election to fill any such vacancies shall be designated as
follows:
(a) In the case of the CEO, the successor CEO shall be an Agreed
Nominee.
(b) In the case of an Independent Director, an individual nominated in
the manner described in Section 2.1(c)(iii) shall be an Agreed Nominee.
12
(c) In the case of an Other Director, an individual nominated in the
manner described in Section 2.1(c)(iv) shall be an Agreed Nominee.
(d) In all other cases, the Principal Stockholder Group or Principal
Stockholder Groups that, under Section 2.1(c), are then entitled to designate a
greater number of Agreed Nominees than the number of directors currently sitting
on the Board who are Agreed Nominees designated by such Principal Stockholder
Group or Principal Stockholder Groups shall designate Agreed Nominees for such
vacancies (with each such Principal Stockholder Group designating the number of
additional Agreed Nominees that each such Principal Stockholder Group is so
entitled to designate).
(e) In the event that such vacancies are not promptly filled by the
Board of Directors in the manner provided herein, each Principal Stockholder
hereby agrees to vote or act by written consent with respect to (or cause to be
voted or acted by written consent) all shares of Common Stock held of record or
beneficially owned by it at the time of such vote or action by written consent
or as to which such Principal Stockholder has voting control at the time of such
vote or action by written consent for the election of such Agreed Nominees
designated in accordance with the above provisions and for the removal of any
directors whose election is inconsistent with such provisions.
2.4. Conflicting Charter or By-law Provisions. Each Principal
Stockholder shall vote its shares of Common Stock, and shall take all other
actions necessary, to ensure that the Certificate of Incorporation and the
Company's By-laws facilitate and do not at any time conflict with the provisions
of this Agreement.
2.5. Certain Adjustments. In the event the Company from time to time
takes any action which affects the number of issued and outstanding shares of
Common Stock, including, without limitation, (i) primary issuances of shares of
Common Stock (including pursuant to the initial Public Offering of the Company),
(ii) repurchases or redemptions of shares of Common Stock and (iii) stock
splits, reverse stock splits, stock dividends of Common Stock (or any other
class or series of common stock) or similar subdivisions, reclassifications or
recapitalizations, then the percentages used in Section 2.1(c) immediately prior
to such action shall be appropriately adjusted to reflect the percentages that
would
13
have been in effect on the date of this Agreement had such action been taken on
the date of this Agreement prior to the computation of such percentages.
ARTICLE III
TRANSFERS AND CONVERSIONS
3.1 Transfers; Conversion. (a) Except as permitted by Section 3.3, 3.4
or 3.5, prior to any Transfer or Indirect Transfer by a Principal Stockholder of
shares of Class B Common Stock, such Principal Stockholder shall be required to
convert such shares of Class B Common Stock into shares of Class A Common Stock
in accordance with the procedures set forth in the Certificate of Incorporation.
There shall be no restrictions on the ability of a Principal Stockholder to (i)
convert shares of Class B Common Stock into shares of Class A Common Stock or
(ii) transfer shares of Class A Common Stock (including shares of Class A Common
Stock received upon conversion of shares of Class B Common Stock). Nothing set
forth in this Agreement shall prevent the transfer of all or a portion of the
capital stock of a Parent of a Principal Stockholder (or any other indirect
transaction which does not constitute an Indirect Transfer) or require the
conversion of the Class B Common Stock of such Principal Stockholder into Class
A Common Stock in connection therewith.
(b) Except as expressly permitted or required by this Agreement, (i)
each Principal Stockholder shall be the record and beneficial owner of such
shares of Class B Common Stock indicated in the Company's records as being owned
by such Principal Stockholder and (ii) no Principal Stockholder shall enter into
any agreement or arrangement, grant any proxies or powers of attorney or deposit
into a voting trust with or otherwise directly or indirectly transfer voting
power, with respect to the exercise of its rights to designate Agreed Nominees
or to request the removal of a director pursuant to this Agreement (other than
an agreement or arrangement solely among Principal Stockholders that are
included in the same Principal Stockholder Group); provided, however, that the
foregoing shall not be construed to limit the ability of a Principal Stockholder
to enter into agreements with respect to the voting of its shares of Common
Stock pending a sale of such stock permitted by Section 3.1(a).
14
(c) The Company agrees not to record any transfer of Class B Common
Stock by any Principal Stockholder in the stock transfer books of the Company
unless the transfer complies with the provisions of this Article III.
3.2. Legend. Each certificate evidencing outstanding shares of Class B
Common Stock held by a Principal Stockholder shall bear the following legends:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO, AND
TRANSFERABLE ONLY UPON COMPLIANCE WITH, THE PROVISIONS OF A
STOCKHOLDERS' AGREEMENT, DATED AS OF _____________, 1998, AMONG TIME
WARNER TELECOM INC. AND CERTAIN STOCKHOLDERS THEREOF. A COPY OF THIS
AGREEMENT IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICE OF TIME WARNER
TELECOM INC. AT 0000 X. XXXXXX XXXXXX, XXXXXXXXX XXXXXXX, XXXXXXXX
00000.
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND ACCORDINGLY MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO
THE REQUIREMENTS OF THE SECURITIES ACT OR AN EXEMPTION THEREFROM.
All certificates evidencing shares of Class B Common Stock hereafter issued by
the Company to a Principal Stockholder shall bear the legends set forth above.
Upon termination of this Agreement and surrender to the Company for such purpose
of any certificates bearing the first legend set forth above, the Company shall
reissue such certificates to the owner thereof without such legend. The Company
shall reissue certificates without the second legend set forth above upon the
delivery to the Company of an opinion of counsel to the effect that such legend
is no longer required.
3.3. Transfers to Affiliates. Subject to applicable law, (i) any
Principal Stockholder other than A/N shall have the right to Transfer shares of
Class B Common Stock to its Parent or to any direct or indirect Subsidiary of
its Parent if the transferee assumes the obligations of the transferor under
this Agreement with respect to such shares and becomes a party to this Agreement
and (ii) A/N (and any member of the A/N Stockholder Group which is a transferee
of shares of Class B Common Stock pursuant to this Section 3.3(ii)) shall have
the right to Transfer
15
shares of Class B Common Stock to a Xxxxxxxx Family Member or to an Affiliate of
A/N so long as at least 80% of the equity of such Affiliate is owned directly or
indirectly by one or more Xxxxxxxx Family Members and the transferee assumes the
obligations of the transferor under this Agreement with respect to such shares
and becomes a party to this Agreement. A Principal Stockholder shall be
permitted to Transfer shares of Class B Common Stock pursuant to this Section
3.3 without converting such shares into Class A Common Stock. Notwithstanding
any Transfer permitted by this Section 3.3, the transferor shall remain liable
for the performance by any transferee of its obligations hereunder if the
transferee owns no material assets other than the shares of Common Stock
transferred.
3.4. Right of First Refusal. (a)If, other than pursuant to Section 3.3,
all of the members of a Principal Stockholder Group (the "Selling Stockholders")
shall propose to sell to an unaffiliated third party (the "Third Party Offeror")
all but not less than all of the shares of Class B Common Stock beneficially
owned by the Selling Stockholders at such time (the "First Refusal Shares") or
to effect an Indirect Transfer of such shares (in which case the "First Refusal
Shares" shall be the shares of Class B Common Stock beneficially owned by the
Selling Stockholders) (such proposal being the "Third Party Offer"), the Selling
Stockholders shall deliver to each other Principal Stockholder (the "First
Refusal Stockholders") a notice (a "First Refusal Notice of Sale") containing a
copy of the Third Party Offer, the identity of the Third Party Offeror and an
offer to sell all but not less than all of the First Refusal Shares to the First
Refusal Stockholders on the following terms: (i) if the Third Party Offer
contemplates a purchase of the First Refusal Shares by the Third Party Offeror
for consideration consisting solely of cash, then the Selling Stockholders'
offer shall be to sell the First Refusal Shares for cash in an amount equal to
the purchase price specified in, and otherwise on the terms and conditions
contained in, the Third Party Offer, and (ii) if the Third Party Offer
contemplates an acquisition of the First Refusal Shares by the Third Party
Offeror for consideration any portion of which is not cash or if the Third Party
Offer contemplates an Indirect Transfer, then the Selling Stockholder's offer
shall be to sell the First Refusal Shares for cash in an amount equal to the
cash consideration plus the fair market value of the non-cash consideration (as
determined pursuant to Section 3.6) and otherwise on the terms and conditions
contained in the Third
16
Party Offer. The First Refusal Notice of Sale shall specify the price at which
the First Refusal Shares are offered, as provided in the preceding sentence, as
well as other material terms of the Third Party Offer. The First Refusal
Stockholders shall enter into an appropriate confidentiality agreement relating
to the Third Party Offer on customary terms if reasonably requested by the
Selling Stockholders with respect to the Third Party Offer.
(b) If a First Refusal Stockholder desires to accept all or any portion
of the offer set forth in a First Refusal Notice of Sale as to any part of the
First Refusal Shares, such First Refusal Stockholder (a "First Refusal Electing
Stockholder") shall, within 45 days of receipt of such First Refusal Notice of
Sale, notify the Selling Stockholders of its intention to acquire First Refusal
Shares and the number of such shares it desires to acquire, and deliver a copy
of such notice to each other First Refusal Stockholder.
(c) If the First Refusal Electing Stockholders desire to acquire, in the
aggregate, all of the First Refusal Shares, then the First Refusal Electing
Stockholders shall have the right to acquire all of the First Refusal Shares,
allocated among them as follows (or in such other manner as the First Refusal
Electing Stockholders may agree):
(i) The First Refusal Shares shall be allocated among the First Refusal
Electing Stockholders pro rata (based on the number of shares of Class B Common
Stock owned by each of them) until all of the First Refusal Shares have been
allocated or any First Refusal Electing Stockholder has been allocated the
number of First Refusal Shares that it desires to acquire, as specified in its
notice to the Selling Stockholders, as it may have been amended pursuant to
Section 3.4(d).
(ii) If all First Refusal Shares are not allocated pursuant to
paragraph (i) or any prior application of this paragraph (ii), any First Refusal
Shares that were not allocated pursuant to paragraph (i) or any prior
application of this paragraph (ii) shall be allocated among the First Refusal
Electing Stockholders (other than any First Refusal Electing Stockholder that
has been allocated the number of First Refusal Shares that it desires to
acquire), as specified in its notice to the Selling Stockholders, as it may have
been amended pursuant to
17
Section 3.4(d), pro rata (based on the number of shares of Class B Common Stock
owned by each of them). If all First Refusal Shares are not allocated pursuant
to paragraph (i) and any prior application of this paragraph (ii), any First
Refusal Shares that were not allocated pursuant to paragraph (i) and any prior
application of this paragraph (ii) shall be allocated by continuing to apply
this paragraph (ii) as required.
(d) If the First Refusal Electing Stockholders desire to acquire, in the
aggregate, less than all of the First Refusal Shares, then the Selling
Stockholders shall so notify the First Refusal Electing Stockholders. Each First
Refusal Electing Stockholder shall have the right, by written notice sent to the
Selling Stockholder (with a copy of such notice to each other Principal
Stockholder) within 10 days after its receipt of the notice from the Selling
Stockholders pursuant to this Section 3.4(d) to amend its notice to increase the
number of First Refusal Shares that it desires to purchase. If, after giving
effect to any amendment to any First Refusal Electing Stockholder's notice
pursuant to this Section 3.4(d), the First Refusal Electing Stockholders desire
to acquire, in the aggregate, all of the First Refusal Shares, then the First
Refusal Electing Stockholders shall have the right to acquire all the First
Refusal Shares, allocated among them in accordance with Section 3.4(c). If,
after giving effect to any amendment to any First Refusal Electing Stockholder's
notice pursuant to this Section 3.4(d), the First Refusal Electing Stockholders
desire to acquire, in the aggregate, less than all of the First Refusal Shares,
then the Selling Stockholders' offer of the First Refusal Shares shall be deemed
rejected as of the last day for a First Refusal Electing Stockholder to amend
its notice pursuant to this Section 3.4(d) (the "First Refusal Rejection Date").
(e) Any purchase of First Refusal Shares by the First Refusal Electing
Stockholders pursuant to this Section 3.4 shall be subject to the following
terms and conditions:
(i) The Selling Stockholders shall represent and warrant that the First
Refusal Electing Stockholders will receive good and valid title to the First
Refusal Shares to be purchased by them, free and clear of all security
interests, liens, claims, pledges, options, rights of first refusal, limitations
on voting rights, charges and other encumbrances of any nature whatsoever except
as set forth in this Agreement and except for governmental,
18
regulatory and other third party consents and approvals required for transfers
of shares of Common Stock generally.
(ii) The closing of the purchase of First Refusal Shares by the First
Refusal Electing Stockholders shall be subject to the satisfaction of following
conditions:
(A) All applicable waiting periods under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, and the rules and regulations promulgated
thereunder, shall have expired or been terminated.
(B) All governmental approvals and other third party consents expressly
required with respect to the transactions to be consummated at such closing
shall have been obtained, to the extent the failure to obtain such approvals or
consents would prevent the Selling Stockholders from performing any of their
material obligations under the transaction documents or would result in any
materially adverse change in, or materially adverse effect on, the business,
assets, results of operations, financial condition or prospects of the Company
and the Persons controlled by the Company taken as a whole.
(C) There shall be no preliminary or permanent injunction or other order
by any court of competent jurisdiction restricting, preventing or prohibiting
the consummation of the transactions to be consummated at such closing.
(D) The representation and warranty of the Selling Stockholders
contemplated by clause (i) of this sentence shall be true and correct at the
closing of such sale with the same force and effect as if then made.
(iii) The closing of any purchase of First Refusal Shares by the First
Refusal Electing Stockholders pursuant to this Section 3.4 shall take place on
the date and at the place and time determined by the Selling Stockholders and
communicated to the First Refusal Electing Stockholders in writing, at least
seven days prior to such closing, but in any event within sixty days after the
acceptance by the First Refusal Electing Stockholders of the offer, subject to
extension for a maximum of one hundred eighty additional days to the extent
required to obtain all required governmental, regulatory and other third party
consents and approvals.
19
(f) If (i) the Selling Stockholders' offer of the First Refusal
Shares is rejected as provided in Section 3.4(d) or (ii) the purchase by the
First Refusal Stockholders of the First Refusal Shares is not consummated within
the period set forth in Section 3.4(e)(iii) for any reason other than an action
by the Selling Stockholders, then the Selling Stockholders shall have the right,
at any time during the 90-day period beginning on the First Refusal Rejection
Date or the day following the last day of the period set forth in Section
3.4(e)(iii) (the "First Refusal Termination Date"), as applicable, to enter into
a binding agreement to sell all of the First Refusal Shares to the Third Party
Offeror, or to effect the Indirect Transfer contemplated by the Third Party
Offer, as applicable, in either case on terms and conditions no less favorable
in the aggregate to the Selling Stockholders (and, in the case of an Indirect
Transfer, the Person receiving the consideration) than those set forth in the
Third Party Offer, and thereafter to sell all of the First Refusal Shares to the
Third Party Offeror or effect the Indirect Transfer, as applicable, pursuant to
such agreement. If the Selling Stockholders do not enter into such an agreement
during such 90-day period, or do not close the sale thereunder within sixty days
after the execution of such agreement (subject to extension for a maximum of one
hundred eighty additional days to the extent required to obtain all required
governmental, regulatory and other third party consents and approvals), the
procedure set forth above with respect to the First Refusal Notice of Sale shall
be repeated with respect to the Third Party Offer or any subsequent proposed
transfer of Class B Common Stock by the Selling Stockholders which is subject to
the provisions of this Section 3.4.
(g) In connection with a sale or Indirect Transfer of shares of
Class B Common Stock to a Third Party Offeror permitted by Section 3.4(f), (i)
the Selling Stockholders shall have the right to sell to the Third Party Offeror
all, but not less than all, of their shares of Class B Common Stock or permit
the Indirect Transfer, as applicable, without converting such shares to Class A
Common Stock, (ii) the Selling Stockholders shall have the right to transfer to
the Third Party Offeror all, but not less than all, of their rights to designate
Agreed Nominees pursuant to Section 2.1(c)(i) and (iii) (A) in the case of a
sale of the First Refusal Shares, the Third Party Offeror shall be required to
assume the obligations of the Selling Stockholders under this Agreement with
respect to such
20
shares and become a party to this Agreement and (B) in the case of an Indirect
Transfer, the Third Party Offeror, upon taking control of the Selling
Stockholders, shall be required to cause the Selling Stockholders to confirm in
writing the continuing validity and effectiveness of their obligations under
this Agreement.
(h) In furtherance of the rights set forth in this Section 3.4, the
Company agrees that, on reasonable notice following the delivery of a First
Refusal Notice of Sale, at reasonable times and without interfering with the
business or operations of the Company, it will assist the Selling Stockholders
in obtaining all necessary consents to any disposition of the shares to be sold.
3.5 Tag-Along Rights. (a) If the members of the TW Stockholder Group
(the "TW Selling Stockholders") propose to sell to an unaffiliated third party
(the "Tag Offeror") (i) all but not less than all of the shares of Class B
Common Stock and (ii) shares of Class A Common Stock beneficially owned by them
which collectively represent greater than 33% of the issued and outstanding
shares of Common Stock (the "TW Shares") or to effect an Indirect Transfer of
such shares (in which case the "TW Shares" shall be all the shares of Common
Stock owned by the TW Selling Stockholders) (such proposed sale being a "Tag
Offer"), then, as a condition to effecting such sale or Indirect Transfer, the
TW Selling Stockholders shall cause proper provisions to be made so that each
other Principal Stockholder (each, a "Tag Stockholder") shall have the right to
participate in such Tag Offer and sell to the Tag Offeror a number of shares of
Common Stock owned by it equal to the product of (x) the number of shares of
Common Stock owned by such Tag Stockholder multiplied by (y) a fraction, the
numerator of which is the number of TW Shares and the denominator of which is
the number of issued and outstanding shares of Common Stock owned by the TW
Principal Stockholder Group (collectively, with respect to all Tag Stockholders,
the "Tag Shares"); provided, however, that if a Tag Stockholder owns both shares
of Class B Common Stock and Class A Common Stock, the shares of Class B Common
Stock owned by such Tag Stockholder shall be included in the Tag Shares prior to
the inclusion of any shares of Class A Common Stock owned by such Tag
Stockholder. In connection with a Tag Offer, the TW Selling Stockholders shall
cause the Tag Offeror to deliver to each Tag Stockholder a notice (a "Tag Notice
of Sale") containing a copy of the Tag Offer, the identity of the Tag Offeror
and an offer to purchase all
21
of the Tag Shares owned by such Tag Stockholder on the same terms and conditions
(including as to price and form of consideration) as the terms and conditions
contained in the Tag Offer. The Tag Notice of Sale shall specify the price at
which the Tag Shares are to be purchased, as provided in the preceding sentence.
If the Tag Offer also constitutes a Third Party Offer pursuant to Section 3.4,
the TW Selling Stockholders shall deliver the Tag Notice of Sale at the same
time that the First Refusal Notice of Sale is delivered. The Tag Stockholders
shall enter into an appropriate confidentiality agreement relating to the Tag
Offer on customary terms if reasonably requested by the TW Selling Stockholders
with respect to the Tag Offer. If the Tag Offer contemplates an Indirect
Transfer, the Tag Offeror shall offer the Tag Stockholders the option of selling
the Tag Shares pursuant to an Indirect Transfer.
(b) If a Tag Stockholder desires to accept the offer set forth in a Tag
Notice of Sale as to all of the Tag Shares beneficially owned by such Tag
Stockholder, such Tag Stockholder shall, within 45 days of receipt of such Tag
Notice of Sale, notify the Tag Offeror and the TW Selling Stockholders of its
intention to sell all but not less than all of its Tag Shares to the Tag
Offeror, and deliver a copy of such notice to each other Tag Stockholder. If a
Tag Stockholder desires to sell its Tag Shares, then the Tag Offeror shall
purchase all of such Tag Shares together with the TW Shares pursuant to Section
3.5(c).
(c) The TW Selling Stockholders shall have the right, at any time
during the 90-day period beginning on the day following the end of the 45-day
period referred to in Section 3.5(b), to enter into a binding agreement to sell
all but not less than all of the TW Shares to the Tag Offeror, or to effect the
Indirect Transfer contemplated by the Tag Offer, as applicable, in either case
on terms and conditions no less favorable in the aggregate to the TW Selling
Stockholders (and, in the case of an Indirect Transfer, the Person receiving the
consideration) than those set forth in the Tag Offer. The Tag Stockholders
electing to sell their Tag Shares pursuant to Section 3.5(b) shall become party
to such agreement and agree to sell all but not less than all of their Tag
Shares to the Tag Offeror (or to effect an Indirect Transfer, as applicable)
pursuant thereto on the terms and conditions set forth therein. In connection
with such agreement, each Tag Stockholder which is a member of a Principal
Stockholder Group which has the right to designate Agreed Nominees pursuant to
Section
22
2.1(c) at such time shall be required to make the same representations,
warranties and agreements, including as to indemnification, as the TW Selling
Stockholders and each Tag Stockholder which is a member of a Principal
Stockholder Group which does not have the right to designate Agreed Nominees
pursuant to Section 2.1(c) at such time shall not be required to make any
representations or warranties and agreements, including as to indemnification,
other than representations and warranties (and related indemnification) as to
title to the Tag Shares to be transferred and as to organization and due
execution and delivery and enforceability of the transfer agreements (and, in
the case of an Indirect Transfer, such other representations and warranties
regarding the entity the equity of which is being sold as are comparable to the
foregoing representations). The TW Stockholders and Tag Stockholders shall
thereafter have the right to sell such TW Shares and Tag Shares to the Tag
Offeror and/or effect the Indirect Transfers, as applicable, pursuant to such
agreement. If the TW Selling Stockholders do not enter into such an agreement
during such 90-day period, or do not close the sale thereunder within sixty days
after the execution of such agreement (subject to extension for delays caused by
actions by the Tag Stockholders and to extension for a maximum of one hundred
eighty additional days to the extent required to obtain all required
governmental, regulatory and other third party consents and approvals), the
procedure set forth above with respect to the Tag Notice of Sale shall be
repeated with respect to the Tag Offer or any subsequent proposed transfer of
Common Stock by the TW Selling Stockholders which is subject to the provisions
of this Section 3.5.
(d) In connection with a sale or Indirect Transfers of shares of
Class B Common Stock to a Tag Offeror pursuant to Section 3.5(d), (i) the TW
Selling Stockholders and the Tag Stockholders shall have the right to sell to
the Tag Offeror all but not less than all of their shares of Class B Common
Stock or permit the Indirect Transfers, as applicable, without converting such
shares to Class A Common Stock, (ii) (A) when the TW Selling Stockholders sell
all of the shares of Class B Common Stock owned by them to the Tag Offeror, the
TW Selling Stockholders shall have the right to transfer to the Tag Offeror
their rights to designate Agreed Nominees pursuant to Section 2.1(c)(i) and (B)
when all of the members of any Principal Stockholder Group other than the TW
Stockholder Group sell all of the shares of Class B Common Stock owned by them
to the Tag Offeror, such Tag Stockholders shall have the right to transfer to
the Tag
23
Offeror their rights to designate Agreed Nominees pursuant to Section 2.1(c)(i)
and (iii) (A) in the case of a sale of the TW Shares or Tag Shares, the Third
Party Offeror shall be required to assume the obligations of the TW Selling
Stockholders and the Tag Stockholders under this Agreement with respect to such
shares and become a party to this Agreement and (B) in the case of an Indirect
Transfer, the Tag Offeror, upon taking control of the TW Selling Stockholders or
Tag Stockholders, as applicable, shall be required to cause the TW Selling
Stockholders or Tag Stockholders to confirm in writing the continuing validity
and effectiveness of their obligations under this Agreement.
(e) In furtherance of the rights set forth in this Section 3.5, the
Company agrees that, on reasonable notice following the delivery of a Tag Notice
of Sale, at reasonable times and without interfering with the business or
operations of the Company, it will assist the TW Selling Stockholders and the
Tag Stockholders in obtaining all necessary consents to any disposition of the
shares to be sold. In the event the TW Selling Stockholders transfer the TW
Shares to the Tag Offeror, the provisions of this Section 3.5 shall apply to any
subsequent transfer by the Tag Offeror and/or any of its future transferees of
shares of Class B Common Stock which represent greater than 33% of the voting
power of the outstanding Common Stock as if any such transferors were TW Selling
Stockholders.
3.6. Valuation of Consideration. Before submitting a First Refusal
Notice of Sale pursuant to Section 3.4(a) in response to a Third Party Offer
that contemplates (i) an acquisition of the First Refusal Shares by the Third
Party Offeror for consideration any portion of which is not cash or (ii) an
Indirect Transfer, the Selling Stockholders and the other Principal Stockholders
shall cause the fair market value of the non-cash consideration to be determined
by an investment banking firm in the following manner. The Selling Stockholders
shall deliver to each other Principal Stockholder a notice stating that the
Selling Stockholders intend to deliver a First Refusal Notice of Sale. The
Selling Stockholders and the Principal Stockholder (other than the Selling
Stockholders) that, together with its Controlled Affiliates, owns the greatest
number of shares of Class B Common Stock, shall each select an investment
banking firm and shall instruct the investment banking firms so selected to
select a third investment banking firm within 30 days following the delivery of
such notice by the Selling Stockholders. The investment banking
24
firm selected in accordance with the foregoing procedure shall submit a written
report setting forth its determination of its appraisal of the First Refusal
Shares no later than 45 days after the date of its selection. The fees, costs
and expenses of the investment banking firms so selected shall be borne by the
Selling Stockholders. In determining the fair market value of the non-cash
consideration, if applicable, the investment banking firm retained pursuant to
this Section 3.6 shall: (A) assume that the fair market value of the applicable
non-cash consideration asset is the price at which such 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; (B)
assume that the applicable non-cash consideration asset would be sold for cash;
(C) take into account any applicable control premium relating to the shares to
be sold; and (D) use valuation techniques then prevailing in the relevant
industry. If the Third Party Offer contemplates a sale of First Refusal Shares
or an Indirect Transfer in exchange for tax-deferred consideration, the fair
market value of the First Refusal Shares shall not be grossed-up to the extent
of any taxes which shall be payable by the Selling Stockholders as a result of a
sale of the First Refusal Shares to the First Refusal Electing Stockholders;
provided, however, that the parties agree to negotiate in good faith to
structure any such transaction in a tax-efficient manner.
3.7. Transferee Principal Stockholders; Other Parties to Agreement. A
Principal Stockholder shall remain a Principal Stockholder for so long as it
owns any Class B Common Stock regardless of the percentage of Class B Common
Stock it may own from time to time. Any transferee of a Principal Stockholder
required to become a party to this Agreement pursuant to Section 3.3, Section
3.4(g) or Section 3.5(d) shall become a Principal Stockholder by delivering to
the Company (which shall promptly send notice thereof to the Principal
Stockholders) a counterpart signature page to this Agreement. No further action
by the Company or the Principal Stockholders shall be required for such person
to become a party to this Agreement. Following any Indirect Transfer permitted
by this Agreement, the Principal Stockholder with respect to which such Indirect
Transfer has occurred shall confirm to the other Principal Stockholders in
writing the continuing validity and effectiveness of its obligations under this
Agreement.
25
(b) If any Principal Stockholder Group transfers to any Person shares of
Class A Common Stock which represent at least 5% of the shares of Common Stock
then outstanding, such Person shall have the right to become a party to this
Agreement with respect to the registration rights granted under Article IV only.
3.8. Cooperation. (a) The Company shall use commercially reasonable
efforts to cooperate with any transferring Principal Stockholder in connection
with its efforts to Transfer any interest in its Common Stock in accordance with
the provisions of this Article III, including making qualified personnel
available for attending hearings and meetings respecting any consents, approvals
and authorizations required for such Transfer and, at the request of the
transferring Principal Stockholder, making all filings with, and giving all
notices to, third parties and governmental authorities that may be necessary or
reasonably required to be made or given by the Company in order to effect the
contemplated Transfers. Each Principal Stockholder also agrees to use
commercially reasonable efforts to cooperate with any transferring Principal
Stockholder by making any filings with, and giving notices to, third parties and
governmental authorities that may be necessary or reasonably required to be made
or given by such Principal Stockholder in connection with such contemplated
Transfer. Subject to the other provisions of this Section, no Principal
Stockholder or the Company shall take any action to delay, impair or impede the
receipt of any required consents, approvals or authorizations. "Commercially
reasonable efforts" as used in this Section shall not require any party to
undertake extraordinary or unreasonable measures to obtain any consents,
approvals or other authorizations, including requiring such party to make any
material expenditures (other than normal filing fees or the like) or to accept
any material changes in the terms of the contract, license or other instrument
for which a consent, approval or authorization is sought.
(b) Without limiting the foregoing and notwithstanding anything to the
contrary in this Agreement, no party to this Agreement shall be required to
agree to any prohibition, limitation or other requirements, including but not
limited to (i) any prohibition or limitation on the ownership or operation by
such party or any of its Subsidiaries or Affiliates of any portion of the
business or assets of such party or any of its Subsidiaries or Affiliates, or
any prohibition or limitation that would
26
compel such party or any of its Subsidiaries or Affiliates to dispose of or hold
separate any portion of the business or assets of such party or any of its
Subsidiaries or Affiliates, (ii) any prohibition or limitation on the rights of
such party to acquire, own or enter into any businesses or lines of businesses,
(iii) any prohibition or limitation on the ability of such party to acquire or
hold, or exercise full rights of ownership of, any shares of capital stock of
the Company, including the right to vote the capital stock of the Company
acquired by it on all matters properly presented to the stockholders of the
Company, (iv) any prohibition or limitation on such party or any of its
Subsidiaries or Affiliates from effectively controlling in any material respect
the business or operations of such party or any of its Subsidiaries or
Affiliates or (v) any change in any respect the governance of the Company from
that set forth in the Certificate of Incorporation, the Company's By-Laws and
this Agreement, any change in such party's rights under this Agreement or any
limitations on the ability of such party to exercise any such rights.
ARTICLE IV
REGISTRATION RIGHTS
4.1 Demand Registration. (a) At any time after the date which is 180
days after the closing of the Company's initial Public Offering, any stockholder
of the Company which is a party to this Agreement (an "Eligible Holder") may
request that the Company effect the registration under the Securities Act of all
or part of its shares of Class A Common Stock (including shares of Class A
Common Stock issuable upon conversion of shares of Class B Common Stock held by
it) for sale in the manner specified in such request. A stockholder that
previously owned shares of Class B Common Stock but ceased to be a Principal
Stockholder upon the conversion of its shares of Class B Common Stock to shares
of Class A Common Stock shall continue to be a party to this Agreement so long
as it owns any shares of Class A Common Stock and therefore shall be an Eligible
Holder. Such request shall be made by furnishing written notice thereof (a
"Demand Notice") to the Company, setting forth the number of shares of Class A
Common Stock requested to be registered and such Eligible Holder's intended
method of distribution. Within ten days after receipt of any Demand Notice, the
Company shall give written notice of such Demand Notice to all other Eligible
Holders.
27
Following receipt of such notice from the Company (the "Company Notice"), each
such other Eligible Holder shall have the right to give the Company a written
request to register any or all of such Eligible Holder's Class A Common Stock
(including shares of Class A Common Stock issuable upon conversion of shares of
Class B Common Stock held by it) in the registration described in the Company
Notice, provided that such written request is given within fifteen days after
the date on which the Company Notice is given (with such request stating (i) the
number of shares of Class A Common Stock to be so included, (ii) such other
Eligible Holder's intended method of distribution of such shares and (iii) any
other information that the Company Notice reasonably requests be included in
such notice from such Eligible Holder). All registrations requested pursuant to
this Section 4.1(a) are referred to herein as "Demand Registrations." The
Company shall not be required to effect a Demand Registration unless the
aggregate number of shares of Class A Common Stock demanded to be so registered
is at least one percent of the number of shares of Class A Common Stock then
outstanding (the "Minimum Condition"). If the Minimum Condition is met, then,
subject to Sections 4.1(c), 4.1(e) and 4.1(f) below, the Company shall, as soon
as practicable, file with the SEC and use its best efforts to cause to become
effective as promptly as practicable, a Registration Statement which shall cover
the shares of Class A Common Stock requested to be registered pursuant to such
Demand Notice and Company Notices.
(b) Once a Demand Registration has been effected, the Company shall not
be obligated to register Class A Common Stock pursuant to another Demand
Registration prior to the expiration of 180 days from the date on which the
previous Demand Registration was declared effective; provided, however, that a
registration will not count as a Demand Registration unless it has become
effective, and such effectiveness has been maintained under the Securities Act
(and not subject to any stop order, injunction or other order or requirement of
the SEC or other governmental agency or court for any reason) for the period
specified in Section 4.4(a).
(c) The Company may postpone for a reasonable period (not to exceed two
months) after its receipt of a Demand Notice the filing of a Registration
Statement for a Demand Registration if the Board reasonably believes that such
Demand Registration would have a material adverse effect on any proposal or plan
by the Company or any of its
28
Subsidiaries to engage in any financing, acquisition of assets (other than in
the ordinary course of business) or any merger, consolidation, tender offer or
other significant transaction and notifies the Eligible Holders in writing of
such postponement; provided however, that the Company shall have the right to so
postpone a filing only one time during any period of twelve consecutive months.
(d) In the event that the Demand Notice and the notices in response to
the Company Notices for a Demand Registration contemplate more than one intended
method of distribution by the Eligible Holders, then the Company will use its
best efforts to include in the Registration Statement for such Demand
Registration multiple prospectuses and/or plans of distributions covering each
intended method of distribution. The Company acknowledges and agrees that an
intended method of distribution of an Eligible Holder may include the
registration of shares of Class A Common Stock in connection with an
underwritten offering of Monetizing Securities of such Eligible Holder or its
Parent. If, in the event of such an underwritten offering of Monetizing
Securities, the other Eligible Holders desire to offer their own Monetizing
Securities or to sell shares of Class A Common Stock for cash as part of such
underwritten offering, the Eligible Holders will negotiate in good faith, in
consultation with the managing underwriter for the offering, to include such
securities to the extent practicable.
(e) If a Demand Registration involves an underwriting of shares of Class
A Common Stock for cash (or, to the extent permitted by Section 4.1(d), an
underwriting of Monetizing Securities of one or more Eligible Holders or their
Parents or shares of Class A Common Stock for cash and Monetizing Securities of
one or more Eligible Holders or their Parents) and the managing underwriter
advises the Company and the Eligible Holders in writing that marketing factors
require a limitation of the number of shares of Class A Common Stock (and/or
Monetizing Securities) to be underwritten, then the managing underwriter may
exclude shares (and/or Monetizing Securities) requested to be included in such
Demand Registration from such underwriting. If the managing underwriter imposes
a limit on the number of shares of Class A Common Stock (and/or Monetizing
Securities) to be included in such underwriting, then each Eligible Holder shall
have the right to include in such underwriting up to its pro rata share (based
on the ratio that the number of shares of Class A Common Stock (and/or
Monetizing Securities) proposed to be sold by each Eligible
29
Holder bears to the total numbers of shares of Class A Common Stock (and/or
Monetizing Securities) proposed to be sold by all Eligible Holders who have
elected to participate in the Demand Registration) of the maximum number of
shares (and/or Monetizing Securities) permitted by the managing underwriter to
be included in the Demand Registration (the "Maximum Amount").
(f) If, in connection with an underwriting involving the offering of
shares of Class A Common Stock for cash, the managing underwriter has not
limited the number of shares of Class A Common Stock (and/or Monetizing
Securities) to be underwritten or if the number of shares (and/or Monetizing
Securities) which the Eligible Holders have requested to be registered is less
than the Maximum Amount, then the Company may include shares of Class A Common
Stock for its own account or for the account of others in such underwriting if
the managing underwriter so agrees and if the number of shares of Class A Common
Stock (and/or Monetizing Securities) which would otherwise have been included in
such underwriting by Eligible Holders will not thereby be limited. The inclusion
of such shares shall be on the same terms as the offering for cash of shares of
Class A Common Stock by the Eligible Holders. In the event that the managing
underwriter excludes some of the securities to be registered, the securities to
be sold for the account of the Company and any other holders shall be excluded
in their entirety prior to the exclusion of any shares of Class A Common Stock
(and/or Monetizing Securities) of the Eligible Holders.
4.2. Incidental Registration. (a) If the Company proposes to register
any shares of Class A Common Stock under the Securities Act (other than a
registration (i) on Form S-8 or S-4 or any successor or similar forms, (ii)
relating to shares of Common Stock issuable upon exercise of employee share
options or in connection with any employee benefit or similar plan of the
Company or (iii) in connection with a direct or indirect acquisition by the
Company of another Person or any transaction with respect to which Rule 145 (or
any successor provision) under the Securities Act applies), whether or not for
sale for its own account, it will each such time, subject to the provisions of
Section 4.2(b) hereof, give prompt written notice at least 20 days prior to the
anticipated filing date of the Registration Statement relating to such
registration to each Eligible Holder, which notice shall set forth such Eligible
Holder's rights under this Section 4.2 and shall offer all
30
Eligible Holders the opportunity to include in such Registration Statement such
number of shares of Class A Common Stock as each such Eligible Holder may
request (an "Incidental Registration"); provided, however, that the provisions
of Section 4.1 hereof and not this Section 4.2 shall apply to the ability of any
Eligible Holder to participate in any registration being effected pursuant to a
Demand Registration contemplated by Section 4.1 hereof. Upon the written request
of any such Eligible Holder made within ten days after the receipt of notice
from the Company (which request shall specify the number of shares of Class A
Common Stock intended to be disposed of by such Eligible Holder), the Company
will use its best efforts to effect the registration under the Securities Act of
all of the Class A Common Stock that the Company has been so requested to
register by such Eligible Holders; provided, however, that (A) if such
registration involves an underwriting, all such Eligible Holders requesting to
be included in the Company's registration must sell their shares of Class A
Common Stock to the underwriters selected as provided in Section 4.4(f) hereof
on the same terms and conditions as apply to the Company and (B) if, at any time
after giving written notice of its intention to register any shares pursuant to
this Section 4.2(a) and prior to the effective date of the Registration
Statement filed in connection with such registration, the Company shall
determine for any reason not to register such shares, the Company shall give
written notice to all such Eligible Holders and, thereupon, shall be relieved of
its obligation to register any shares of Class A Common Stock owned by the
Eligible Holders (without prejudice, however, to rights of any of the Eligible
Holders under Section 4.1 hereof). No registration effected under this Section
4.2 shall relieve the Company of its obligations to effect a Demand Registration
to the extent required by Section 4.1 hereof.
(b) If an Incidental Registration pursuant to this Section 4.2 involves
an underwriting and the managing underwriter thereof advises the Company and the
Eligible Holders in writing that marketing factors require a limitation of the
number of shares to be underwritten, then the managing underwriter may exclude
shares requested to be included in such Incidental Registration from such
underwriting. If the managing underwriter imposes a limit on the number of
shares of Common Stock to be included in such underwriting, then there shall be
included in the offering, (i) first, all shares of Common Stock proposed by the
Company to be sold for its account or the account of any
31
other party not covered by this Agreement that triggers registration rights and
(ii) second, that number of shares of Class A Common Stock requested to be
included in such underwriting by the Eligible Holders, on a pro rata basis
(based on the ratio that the number of shares of Class A Common Stock proposed
to be sold by each Eligible Holder bears to the total numbers of shares of Class
A Common Stock proposed to be sold by all Eligible Holders who have elected to
participate in the Incidental Registration).
4.3. Lockup Agreements. In the event of an underwritten offering
pursuant to Section 4.1 or Section 4.2, each Eligible Holder agrees not to
effect any public sale or other distribution of Class A Common Stock during the
seven days prior to the effective date of such registration or during the
ninety-day period (or such lesser period as is agreed upon in connection with
such underwritten offering) beginning on such effective date (except in either
case as part of such underwriting), unless the managing underwriter otherwise
agrees. The Company agrees not to effect any public sale or other distribution
of Class A Common Stock during the seven days prior to the effective date of any
registration or during the ninety-day period beginning on such effective date
(except in either case as part of such underwriting or pursuant to registrations
on Form S-8 or any successor form), unless the managing underwriter otherwise
agrees.
4.4. Registration Procedures. Whenever Eligible Holders request that any
shares of Class A Common Stock be registered pursuant to Section 4.1 or 4.2
hereof, the Company will, subject to the provisions of such Sections, use its
best efforts to effect the registration and the sale of such shares in
accordance with the intended method of distribution thereof and the applicable
provisions of Section 4.1 or 4.2, as appropriate, as promptly as practicable,
and in connection with any such request:
(a) The Company will as expeditiously as possible prepare and file with
the SEC a registration statement on any form for which the Company then
qualifies or which counsel for the Company shall deem appropriate and which form
shall be available for the distribution of the shares of Class A Common Stock to
be registered thereunder in accordance with the intended method of distribution
thereof, and use its best efforts to cause such filed registration statement to
become and remain effective for a period of not less than 120 days. In the event
that an Eligible Holder is
32
to effect an offering of Monetizing Securities which requires an effective
Registration Statement to cover shares of Class A Common Stock which may be
transferred by such Eligible Holder or its Parent to holders of such Monetizing
Securities upon the exchange or conversion of such Monetizing Securities during
the term of such Monetizing Securities, then the Company shall use its best
efforts to cause the Registration Statement filed in connection with such
offering to remain effective until the maturity of such Monetizing Securities;
provided, however, that the Company shall have the right to suspend the
effectiveness of such Registration Statement for a reasonable period (not to
exceed two months) during such period if the Board reasonably believes that the
continued effectiveness of such Registration Statement would have a material
adverse effect on any proposal or plan by the Company or any of its Subsidiaries
to engage in any merger, consolidation, tender offer or other significant
transaction (other than in the ordinary course of business) and notifies the
Eligible Holders in writing of such suspension (provided that the Company shall
have the right to so suspend such effectiveness only one time during any period
of twelve consecutive months).
(b) The Company will, if requested, prior to filing a Registration
Statement or prospectus or any amendment or supplement thereto, furnish to each
Eligible Holder and each underwriter, if any, of the shares of Class A Common
Stock covered by such Registration Statement copies of such Registration
Statement as proposed to be filed, and thereafter the Company will furnish to
such Eligible Holder and underwriter, if any, such number of copies of such
Registration Statement, each amendment and supplement thereto (in each case
including all exhibits thereto and documents incorporated by reference therein),
the prospectus included in such Registration Statement (including each
preliminary prospectus) and such other documents as such Eligible Holder or
underwriter may reasonably request in order to facilitate the disposition of the
Class A Common Stock owned by such Eligible Holder.
(c) After the filing of the Registration Statement, the Company will
promptly notify each Eligible Holder holding Class A Common Stock covered by
such Registration Statement of any stop order, injunction or other order or
requirement of the SEC and take all reasonable actions required to prevent the
entry of such
33
stop order, injunction or other order or requirement or to remove or revoke it
if entered.
(d) The Company will use its best efforts to (i) register or qualify the
Class A Common Stock covered by such registration statement under such other
securities or blue sky laws of such jurisdictions in the United States as any
Eligible Holder holding such Class A Common Stock reasonably (in light of such
Eligible Holders's intended method of distribution) requests and (ii) cause such
shares of Class A Common Stock to be registered with or approved by such other
governmental agencies or authorities as may be necessary by virtue of the
business and operations of the Company and do any and all other acts and things
that may be reasonably necessary or advisable to enable such Eligible Holder to
consummate the disposition of the Class A Common Stock owned by such Eligible
Holder; provided that the Company will not be required to (A) qualify generally
to do business in any jurisdiction where it would not otherwise be required to
qualify but for this paragraph (d), (B) subject itself to taxation in any such
jurisdiction or (C) consent to general service of process in any such
jurisdiction.
(e) The Company will immediately notify each Eligible Holder holding
such shares of Class A Common Stock, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, of the occurrence
of an event requiring the preparation of a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of such Class A
Common Stock, such prospectus will contain full, true and plain disclosure of
all material facts relating to the securities covered thereby and will not
contain an untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances in which they were made and
promptly prepare and make available to each such Eligible Holder any such
supplement or amendment.
(f) In connection with any underwritten offering pursuant to a Demand
Registration, (i) the Principal Stockholder Group holding the largest number of
the shares of Class A Common Stock to be included in such offering by all
Principal Stockholder Groups shall have the right to select the lead managing
underwriter for such offering, so long as such lead managing underwriter shall
be reasonably satisfactory to the Company, (ii) the Principal Stockholder
34
Group holding the second largest number of the shares of Class A Common Stock to
be included in such offering by all Principal Stockholder Groups shall have the
right to select the co-lead managing underwriter for such offering, so long as
such co-lead managing underwriter shall be reasonably satisfactory to the
Company, (iii) each other Principal Stockholder Group participating in the
offering shall have the right to select one co-managing underwriter for such
offering, so long as each such co-managing underwriter shall be reasonably
satisfactory to the Company and (iv) the Company shall have the right to select
one co-managing underwriter for such offering, so long as such co-managing
underwriter shall be reasonably satisfactory to Eligible Holders holding a
majority of the shares of Class A Common Stock to be included in such offering
by Eligible Holders. In connection with any underwritten offering pursuant to an
Incidental Registration, (i) the Company shall have the right to select the lead
managing underwriter for such offering, so long as such managing underwriter
shall be reasonably satisfactory to Eligible Holders holding a majority of the
shares of Class A Common Stock to be included in such offering by Eligible
Holders and (ii) each Principal Stockholder Group participating in such offering
shall have the right to select one co-managing underwriter for such offering, so
long as each such co-managing underwriter shall be reasonably satisfactory to
the Company. The Company will enter into customary agreements (including an
underwriting agreement or indemnity agreement in customary form) and take such
other actions as are reasonably required in order to expedite or facilitate the
disposition of shares in any such underwriting.
(g) Upon the execution of confidentiality agreements in form and
substance satisfactory to the Company, the Company will make available for
inspection by any Eligible Holder and any underwriter participating in any
disposition pursuant to a Registration Statement being filed by the Company
pursuant to this Article IV and any attorney, accountant or other professional
retained by any such Eligible Holder or underwriter (collectively, the
"Inspectors"), all financial and other records, pertinent corporate documents
and properties of the Company (collectively, the "Records") as shall be
reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers, directors and employees to
supply all information reasonably requested by any Inspectors in connection with
such Registration Statement. Records that the Company determines, in good
35
faith, to be confidential and that it notifies the Inspectors are confidential
shall not be disclosed by the Inspectors unless (i) the disclosure of such
Records is necessary to avoid or correct a misstatement or omission in such
Registration Statement or (ii) the release of such Records is ordered pursuant
to a subpoena or other order from a court of competent jurisdiction. Each
Eligible Holder agrees that information obtained by it as a result of such
inspections shall be deemed confidential and shall not be used by it as the
basis for any market transactions in the securities of the Company unless and
until such is made generally available to the public. Each Eligible Holder
further agrees that it will, upon learning that disclosure of such Records is
sought in a court of competent jurisdiction, give notice to the Company and
allow the Company, at its own expense, to undertake appropriate action to
prevent disclosure of the Records deemed confidential.
(h) The Company will furnish to each such Eligible Holder and to each
such underwriter, if any, a signed counterpart, addressed to such underwriter,
of (i) an opinion or opinions of counsel to the Company and (ii) a comfort
letter or comfort letters from the Company's independent public or chartered
accountants, each in customary form and covering such matters of the type
customarily covered by opinions or comfort letters, as the case may be, as the
Eligible Holders or the managing underwriter, if any, reasonably request.
(i) The Company shall use its best efforts to cause all the Class A
Common Stock to be included in any registration under this Article IV to be
listed on the principal securities exchange or included in the over-the-counter
market on which similar securities issued by the Company are then listed or
quoted, as the case may be, or eligible for listing or quotation, or on The
Nasdaq National Market or such other national securities exchange as the Board
may designate.
(j) The Company will otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC including, without limitation,
making available to its security holders, as soon as reasonably practicable, an
earnings statement covering a period of 12 months, beginning within three months
after the effective date of the Registration Statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the Securities Act.
36
(k) The Company shall make available its executive officers for a
reasonable period of time to participate in road show or other investor
presentations in connection with any underwritten offering of Class A Common
Stock or Monetizing Securities by Eligible Holders.
(l) The Company may require, as a condition to including any Eligible
Holder's Class A Common Stock in any registration under this Article IV, each
such Eligible Holder to promptly furnish in writing to the Company such
information regarding such Eligible Holder, the distribution of the Class A
Common Stock and such other information as the Company may from time to time
reasonably request in connection with such registration in order to comply with
applicable disclosure requirements. The Company shall permit any Eligible
Holder, which holder, in its sole judgment, exercised in good faith, and upon
advice of counsel, might be deemed to be an underwriter or a controlling person
of the Company, to participate in the preparation of such Registration Statement
and to require the insertion therein of material, furnished to the Company in
writing, which in the reasonable judgment of such holder and its counsel should
be included.
(m) Each such Eligible Holder agrees that, upon receipt of any notice
from the Company of the happening of any event of the kind described in Section
4.4(e), such Eligible Holder will forthwith discontinue disposition of shares of
Class A Common Stock pursuant to the registration statement covering such Class
A Common Stock until such Eligible Holder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 4.4(e) (provided that
such discontinuance shall not be required for a period in excess of two months
and may not occur more than once in any 365 day period), and, if so directed by
the Company, such Eligible Holder will deliver to the Company all copies, other
than any permanent file copies then in such Eligible Holder's possession, of the
most recent prospectus covering such Class A Common Stock at the time of receipt
of such notice. In the event that the Company shall give such notice, the
Company shall extend the period during which such Registration Statement shall
be maintained effective (including the period referred to in Section 4.4(a)) by
the number of days during the period from and including the date of the giving
of notice pursuant to Section 4.4(e) to the date when the Company shall make
available to such Eligible Holder a prospectus supplemented
37
or amended to conform with the requirements of Section 4.4(e).
4.5. Expenses. Each Eligible Holder that participates in a Demand
Registration or an Incidental Registration shall pay all underwriting discounts
and commissions and any transfer taxes attributable to the sale of such Eligible
Holder's shares, the fees and expenses of counsel for such Eligible Holder
(other than the fees and expenses for one counsel for the Eligible Holders as
set forth below) and any other out-of-pocket expenses of such Eligible Holder
incurred in connection with its participation in such Demand Registration or
Incidental Registration. The Company shall pay any and all other expenses in
connection with a Demand Registration or an Incidental Registration, including,
without limitation, (i) all SEC, NASD and securities exchange registration and
filing fees, (ii) all fees and expenses of complying with state securities or
blue sky laws (including fees and disbursements of counsel for any underwriters
in connection with blue sky qualifications), (iii) all processing, printing,
copying, messenger and delivery expenses, (iv) all fees and expenses incurred in
connection with the listing of the shares being sold on any securities exchange,
(v) the fees and disbursements of counsel for the Company and of its independent
public accountants and (vi) the reasonable fees and expenses of any special
experts retained in connection with the requested registration and one counsel
representing Eligible Holders and acting as Inspector.
4.6. Indemnification. (a) The Company agrees to indemnify and hold
harmless each Eligible Holder holding shares of Class A Common Stock covered by
a Registration Statement, its officers, directors and agents, and each Person,
if any, who controls such Eligible Holder within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act from and against any and
all losses, claims, damages and liabilities (including those resulting from any
order made or any inquiry, investigation or proceeding commenced or threatened
by any securities regulatory authority, stock exchange or by any other competent
authority) caused by any untrue statement or alleged untrue statement of a
material fact contained in any Registration Statement or prospectus relating to
the shares of Class A Common Stock (as amended or supplemented if the Company
shall have furnished any amendments or supplements thereto) or any preliminary
prospectus, or caused by any omission or alleged omission to state therein a
material
38
fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances under which they were made,
except insofar as such losses, claims, damages or liabilities are caused by any
such untrue statement or omission or alleged untrue statement or omission based
upon information furnished in writing to the Company by such Eligible Holder or
on such Eligible Holder's behalf expressly for use therein; provided however,
that the Company shall not be liable for any untrue statement or omission
contained in a preliminary prospectus, which untrue statement or omission was
corrected in a final prospectus or supplement that was furnished to such
Eligible Holder. The Company also agrees to indemnify any underwriters of the
Eligible Holders, their officers, directors, employees and agents, and each
Person, if any, who controls such underwriters (other than in respect of loss of
profit or information relating solely to the underwriters) on substantially the
same basis as that of the indemnification of the Eligible Holders provided in
this Section 4.6(a).
(b) Each Eligible Holder holding shares of Class A Common Stock included
in any Registration Statement agrees, severally but not jointly, to indemnify
and hold harmless the Company, its officers, directors and agents and each
Person, if any, who controls the Company within the meaning of either Section 15
of the Securities Act or Section 20 of the Exchange Act to the same extent as
the foregoing indemnity from the Company to such Eligible Holder, but only with
respect to information furnished in writing by such Eligible Holder or on such
Eligible Holder's behalf expressly for use in any Registration Statement or
prospectus relating to the Class A Common Stock, or any amendment or supplement
thereto, or any preliminary prospectus, and only up to an amount equal to the
aggregate purchase price received by such Eligible Holder from the sale of such
Eligible Holder's Class A Common Stock in such registration or from Monetizing
Securities in connection with such registration. As a condition to including
shares of Class A Common Stock in any Registration Statement filed in accordance
with Article IV hereof, the Company may require that it shall have received an
undertaking reasonably satisfactory to it from any underwriter to indemnify and
hold it harmless to the extent customarily provided by underwriters with respect
to similar securities.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving
39
any Person in respect of which indemnity may be sought pursuant to this Section
4.6, such Person (an "Indemnified Party") shall promptly notify the Person
against whom such indemnity may be sought (the "Indemnifying Party") in writing
and the Indemnifying Party shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to such Indemnified Party, and
shall assume the payment of all fees and expenses; provided, however, that the
failure of any Indemnified Party so to notify the Indemnifying Party shall not
relieve the Indemnifying Party of his or its obligations hereunder except to the
extent that the Indemnifying Party is materially prejudiced by such failure to
notify. In any such proceeding, any Indemnified Party shall have the right to
retain his or its own counsel, but the fees and expenses of such counsel shall
be at the expense of such Indemnified Party unless (i) the Indemnifying Party
and the Indemnified Party shall have mutually agreed to the retention of such
counsel, (ii) the Indemnifying Party shall have failed to assume the defense and
employ counsel or (iii) in the reasonable judgment of such Indemnified Party,
representation of both parties by the same counsel would be inappropriate due to
actual or potential differing interests between them or differing legal defenses
available to them. It is understood that the Indemnifying Party shall not, in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the reasonable fees and expenses of more than one separate firm of
attorneys (in addition to any local counsel) at any time for all such
Indemnified Parties, and that all such fees and expenses shall be reimbursed as
they are incurred. In the case of any such separate firm for the Indemnified
Parties, such firm shall be designated in writing by the Indemnified Parties.
The Indemnifying Party shall not be liable for any settlement of any proceeding
effected without his or its written consent (not to be unreasonably withheld),
but if settled with such consent, or if there be a final judgment for the
plaintiff, the Indemnifying Party shall indemnify and hold harmless such
Indemnified Parties from and against any loss or liability (to the extent stated
above) by reason of such settlement or judgment; provided, however, that, if any
case where the fees and expenses of counsel are at the expense of the
Indemnifying Party in accordance with this Section 4.6 and an Indemnified Party
shall have requested the Indemnifying Party to reimburse the Indemnified Party
for such fees and expenses of counsel as incurred, such Indemnifying Party
agrees that it shall be liable for any settlement of any action effected without
its written consent if (i) such
40
settlement is entered into more than ten (10) Business Days after the receipt by
such Indemnifying Party of the aforesaid request and (ii) such Indemnifying
Party shall have failed to reimburse the Indemnified Party in accordance with
such request for reimbursement prior to the date of such settlement. No
Indemnifying Party shall, without the prior written consent of the Indemnified
Party (not to be unreasonably withheld), effect any settlement of any pending or
threatened proceeding in respect of which any Indemnified Party is or could have
been a party and indemnity could have been sought hereunder by such Indemnified
Party, unless such settlement includes an unconditional release of such
Indemnified Party from all liability arising out of such proceeding.
(d) If the indemnification provided for in this Section 4.6 is
unavailable to the Indemnified Parties in respect of any losses, claims, damages
or liabilities referred to herein, then each such Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such losses, claims, damages or
liabilities (i) as between the Company and the Eligible Holder holding shares of
Class A Common Stock covered by a registration statement on the one hand and the
underwriters on the other, in such proportion as is appropriate to reflect the
relative benefits received by the Company and such Eligible Holders on the one
hand and the underwriters on the other, from the offering of the Class A Common
Stock or Monetizing Securities, or if such allocation is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits but also the relative fault of the Company and such Eligible
Holders on the one hand and of such underwriters on the other in connection with
the statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations and (ii) as
between the Company on the one hand and each such Eligible Holder on the other,
in such proportion as is appropriate to reflect the relative fault of the
Company and of each such Eligible Holder in connection with such statements or
omissions, as well as any other relevant equitable considerations. The relative
benefits received by the Company and such Eligible Holders on the one hand and
such underwriters on the other shall be deemed to be in the same proportion as
the total proceeds from the offering of the Class A Common Stock or Monetizing
Securities (net of underwriting discounts and commissions but before deducting
41
expenses) received by the Company and such Eligible Holders bear to the total
underwriting discounts and commissions received by such underwriters, in each
case as set forth in the table on the cover page of the applicable prospectus.
The relative fault of the Company and such Eligible Holders on the one hand and
of such underwriters on the other shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company and such Eligible Holders or by such
underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The relative
fault of the Company on the one hand and of each such Eligible Holder on the
other shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied in writing by
such party, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
The Company and the Eligible Holders agree that it would not be just and
equitable if contribution pursuant to this Section 4.6(d) were determined by pro
rata allocation (even if the underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an Indemnified Party as a result of the losses,
claims, damages or liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such Indemnified Party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 4.6(d), no underwriter shall be
required to contribute any amount in excess of the amount of the total fees,
discounts and commissions received by it, and no Eligible Holder shall be
required to contribute any amount in excess of the amount of the proceeds
received by such Eligible Holder in respect of a sale of its shares of Class A
Common Stock or Monetizing Securities. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. Each such Eligible Holder's
42
obligation to contribute pursuant to this Section 4.6(d) is several in the
proportion that the proceeds of the offering received by such Eligible Holder
bears to the total proceeds of the offering received by all such Eligible
Holders and not joint.
4.7. Unregistered Offerings. In connection with any offering by an
Eligible Holder of Monetizing Securities which do not require the registration
by the Company of the shares of Class A Common Stock issuable upon the
conversion or exchange thereof, the Company shall (i) at the request of such
Eligible Holder, provide reasonable cooperation to such Eligible Holder and its
advisors in connection with such offering, (ii) to the extent relevant, comply
with the other covenants specified in Section 4.4 and provide the Indemnity
specified in Section 4.6 with respect to any unregistered offering and (iii) at
the request of such Eligible Holder, make available its executive officers for a
reasonable period of time to participate in road show or other investor
presentations in connection with such offering.
4.8. Rule 144. The Company agrees that it shall timely file the reports
required to be filed by it under the Securities Act or the Exchange Act
(including, without limitation, the reports under sections 13 and 15 (d) of the
Exchange Act referred to in paragraph (c)(1) of Rule 144 under the Securities
Act), and shall take such further actions as any Eligible Holder may reasonably
request, all to the extent required to enable Eligible Holders to sell Class A
Common Stock, from time to time, pursuant to the resale limitations of (a) Rule
144 under the Securities Act, as such rule may be hereafter amended, or (b) any
similar rules or regulations hereafter adopted by the SEC. Upon the written
request of any Eligible Holder, the Company shall deliver to such Eligible
Holder a written statement verifying that it has complied with such
requirements.
ARTICLE V
OTHER AGREEMENTS
5.1. Confidentiality. Each Principal Stockholder agrees that it will
not, directly or indirectly, without the prior written consent of the Company,
use or disclose to any person, firm or corporation, any information, trade
secrets, confidential customer information, technical data or know-how relating
to the products, processes, methods, equipment
43
or business practices of the Company or any of its Subsidiaries, except (a) to
the extent any of the foregoing is or becomes available to the public other than
as a result of disclosure by such Principal Stockholder or any of its Affiliates
or the directors, officers, employees, agents, advisors and controlling persons
of it or any of its Affiliates, (b) as necessary to effect a transaction under
and in compliance with Article III or IV, (c) as may be required by law and (d)
as a Principal Stockholder may disclose to its lenders, rating agencies and
business, legal and financial advisors. In the event any Principal Stockholder
is required by applicable law or regulation or by legal process to disclose any
of the foregoing, it will provide the Company and other Principal Stockholders
with prompt notice thereof to enable them to seek an appropriate protective
order. The covenants made by a Principal Stockholder in this Section 5.1 shall
continue to apply for a period of two years after such Principal Stockholder
ceases to be a Principal Stockholder.
5.2. Issuance of Additional Class B Common Stock. Without the consent of
each Principal Stockholder which has the right to designate Agreed Nominees
pursuant to Article II, the Company shall not issue any additional shares of
Class B Common Stock other than shares of Class B Common Stock issued: in
connection with a stock split; or as a stock dividend with respect to issued and
outstanding shares of Class B Common Stock (in which event any dividend to a
holder of Class B Common Stock shall only be in shares of Class B Common Stock).
5.3 Voting; Written Consent. (a) Any agreement by a Principal
Stockholder herein to vote its shares of Common Stock in a certain manner shall
be deemed, in each instance, to include an agreement by that Principal
Stockholder to use its best efforts to take all actions necessary to call, or
cause the Company and the appropriate officers and directors of the Company to
call, as promptly as practicable, a special meeting of stockholders or to act by
written consent.
(b) When any action is required to be taken by a Principal
Stockholder pursuant to this Agreement, such Principal Stockholder shall take
all steps necessary to implement such action, including executing or causing to
be executed, as promptly as practicable, a consent in writing in lieu of an
annual or special meeting of the stockholders pursuant to Section 228 of the
General Corporation Law of
44
Delaware or any successor statute thereto to effect such stockholder action.
ARTICLE VI
GENERAL PROVISIONS
6.1. Expiration and Termination. This Agreement (other than any
provision for which a different term is specified) shall terminate (i) with
respect to the applicability of any voting agreements outlined in Article II to
a particular Principal Stockholder, if and when such Principal Stockholder no
longer holds a number of shares of Class B Common Stock equal to at least two
percent of the number of shares of Common Stock then issued and outstanding;
(ii) with respect to the applicability of any transfer restrictions outlined in
Article III to a particular Principal Stockholder, if and when such Principal
Stockholder no longer holds any shares of Class B Common Stock; and (iii) with
respect to the applicability of any registration rights outlined in Article IV
to a particular Eligible Holder, if and when such Eligible Holder no longer
holds a number of shares of Common Stock equal to at least one percent of the
number of shares of Class A Common Stock then issued and outstanding.
6.2. Amendment and Waiver. Subject to Section 3.7, this Agreement may
not be amended or modified in any respect except by an instrument in writing
signed by all of the parties hereto; provided, however, that the Company need
only be a party to such modifications or amendments the result of which is a
change in the Company's obligations hereunder. Any failure of any party hereto
to comply with any obligation, covenant, agreement or condition contained herein
may be waived by the party or parties entitled to the benefits thereof, but such
waiver or failure to insist upon strict compliance with such obligation,
covenant, agreement or condition shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure.
6.3. Governing Law. This 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.
45
6.4. Notices. Notices, requests, permissions, waivers, and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if signed by the respective persons giving them (in the case of any
corporation the signature shall be by an officer thereof) and delivered by hand,
mailed by United States mail (registered, return receipt requested) or reputable
overnight courier service, properly addressed and postage prepaid, or delivered
by telecopy:
If to the Company, to:
TIME WARNER TELECOM INC.
0000 X. Xxxxxx Xxxxxx
Xxxxxxxxx Xxxxxxx, Xxxxxxxx 00000
Telephone: (303)
Telecopy: (303)
Attention: General Counsel
with a copy to:
Cravath, Swaine & Xxxxx
Worldwide Plaza
000 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Xx.
and to each of the Principal Stockholders at the
address provided below or to such other address
provided in accordance with this Section 6.4.
If to the TW Stockholders, to:
TIME WARNER COMPANIES, INC.
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: General Counsel
46
with a copy to:
Cravath, Swaine & Xxxxx
Worldwide Plaza
000 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Xx.
If to the MediaOne Stockholder, to:
MEDIAONE GROUP, INC.
000 Xxxxxxxxx Xxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Vice President-Law
with a copy to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxxx Xxxxxx, Esq.
If to A/N, to:
ADVANCE/XXXXXXXX PARTNERSHIP
0000 Xxxxxxxxxx Xxxxx
Xxxx Xxxxxxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Xxxxx
with a copy to:
Xxxxx, Xxxxxxx & Xxxxx LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxxxx
Such names and addresses may be changed by notice given in accordance with this
Section 6.4.
47
6.5. Entire Agreement. This Agreement (including the Schedules and
Exhibits attached hereto, all of which are a part hereof) contains the entire
understanding of the parties hereto with respect to the subject matter contained
herein and supersedes and cancels all prior agreements, negotiations,
correspondence, undertakings and communications of the parties, oral or written,
respecting such subject matter.
6. 6. Headings; References. The article, section and paragraph
headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of
this Agreement. All references herein to "Articles",
"Sections," or "Exhibits" shall be deemed to be references to
Articles or Sections hereof or Exhibits hereto unless otherwise
indicated.
6.7. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be an original, but all of which taken
together shall constitute one and the same agreement.
6.8. Parties in Interest; Assignment. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors or assigns. Nothing in this Agreement, express or implied, is
intended to confer upon any Person not a party to this Agreement any rights or
remedies under or by reason of this Agreement. Except as permitted herein, no
party to this Agreement may assign or delegate all or any portion of its rights,
obligations or liabilities under this Agreement without the prior written
consent of the other parties to this Agreement.
6.9. Severability; Enforcement. The invalidity of any portion hereof
shall not affect the validity, force or effect of the remaining portions hereof.
If any term or other provision of this Agreement is invalid, illegal or
incapable or being enforced by any rule of law or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner adverse to any party. Upon
such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible in an
48
acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the greatest extent possible.
6.10. 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 violation by such party of any term 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 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 provision of this Agreement.
6.11. Arbitration. Any controversy arising under, out of, in connection
with, or relating to, this Agreement, and any amendment hereof, or the breach
hereof or thereof, shall be determined and settled by arbitration in New York,
New York, by a person or persons mutually agreed upon, or in the event of a
disagreement as to the selection of the arbitrator or arbitrators, in accordance
with the rules of the American Arbitration Association. Any award rendered
therein shall specify the findings of fact of the arbitrator or arbitrators and
the reasons of such award, with the reference to and reliance on relevant law.
Any such award shall be final and binding on each and all of the paries thereto
and their personal representatives, and judgment may be entered thereon in any
court having jurisdiction thereof.
49
IN WITNESS WHEREOF, the parties have executed this Stockholders'
Agreement as of the date and year first above written.
TIME WARNER TELECOM INC.
By:
------------------------------------------
Name:
Title:
TIME WARNER COMPANIES, INC.
By:
------------------------------------------
Name:
Title:
AMERICAN TELEVISION AND
COMMUNICATIONS CORPORATION
By:
------------------------------------------
Name:
Title:
WARNER COMMUNICATIONS INC.
By:
-----------------------------------------
Name:
Title:
TW/TAE INC.
By:
-----------------------------------------
Name:
Title:
50
TW/KBLCOM INC.
By:
----------------------------------------
Name:
Title:
MEDIAONE GROUP, INC.
(a Colorado corporation)
By:
----------------------------------------
Name:
Title:
ADVANCE/XXXXXXXX PARTNERSHIP
By: ADVANCE COMMUNICATIONS CORP.,
General Partner
By:___________________________
Name:
Title:
By: XXXXXXXX BROADCASTING
CORPORATION, General Partner
By:___________________________
Name:
Title:
51
