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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED
PURSUANT TO RULE 13d-1(a) AND AMENDMENTS THERETO
FILED PURSUANT TO RULE 13d-2(a)
(Amendment No. 1)
Telewest Communications plc
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(Name of Issuer)
Ordinary Shares of 10p each
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(Title of Class of Securities)
*
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(CUSIP Number)
Limited Voting Shares of 10p each
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(Title of Class of Securities)
G8742C 10 2
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(CUSIP Number)
Robert A. Eshelman
General Counsel,
Finance and Operations
One Microsoft Way
Redmond, Washington 98052-6399
(425) 882-8080
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
July 7, 2000
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box
[ ].
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 or otherwise subject to the liabilities of that section of the Act but
shall be subject to all other provisions of the Act (however, see the Notes).
- ----------
* CUSIP number for the American Depository Shares, each representing 10
Ordinary Shares of 10p each of Telewest Communications plc, is 879956P 10
5.
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CUSIP NO. G87956P 105 Page 2 of 4 Pages
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Item 1. Security and Issuer
This constitutes Amendment No. 1 (the "Amendment") to the Statement on Schedule
13D (the "Statement"), dated July 17, 2000, with respect to the ordinary shares,
par value 10 pence per share, and the Limited Voting Shares, par value 10 pence
per share, of Telewest Communications plc, a public limited company incorporated
under the laws of England and Wales. This Amendment contains Exhibits 1 through
4 to the Statement.
Item 7. Material to be Filed as Exhibits.
Exhibit 1 -- Articles of Association of Telewest Communications plc
Exhibit 2 -- Revised New Relationship Agreement, dated March 3, 2000,
between Microsoft Corporation, Liberty Media
International, Inc., Liberty UK, Inc. and Telewest
Communications plc
Exhibit 3 -- Amended and Restated Operating Agreement of TW Holdings,
L.L.C., as of July 7, 2000, among Liberty UK, Inc.,
Microsoft U.K. Cable, Inc. and Microsoft Cable
Partnership Holdings, Inc.
Exhibit 4 -- Amendment No. 2, made as of October 4, 1999, by and among
Microsoft Corporation, Telewest Communications plc,
Liberty UK, Inc., MediaOne U.K. Cable, Inc. and MediaOne
Cable Partnership Holdings, Inc. to the Registration
Rights Agreement, dated October 3, 1995, by and among the
above mentioned parties (with the exception of Microsoft
Corporation)
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CUSIP NO. G87956P 105 Page 3 of 4 Pages
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SIGNATURE
After reasonable inquiry and to the best knowledge and belief of the
undersigned, the undersigned certifies that the information set forth in this
statement is true, complete and correct.
Date: July 18, 2000
MICROSOFT CORPORATION
By: /s/ Robert A. Eshelman
---------------------------------
Name: Robert A. Eshelman
Title: General Counsel,
Finance and Operations;
Assistant Secretary
MICROSOFT UK CABLE, INC.
By: /s/ Robert A. Eshelman
---------------------------------
Name: Robert A. Eshelman
Title: Secretary
MICROSOFT CABLE PARTNERSHIP
HOLDINGS, INC.
By: /s/ Robert A. Eshelman
---------------------------------
Name: Robert A. Eshelman
Title: Secretary
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CUSIP NO. G87956P 105 Page 4 of 4 Pages
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EXHIBIT INDEX
Exhibit 1 -- Articles of Association of Telewest Communications plc
Exhibit 2 -- Revised New Relationship Agreement, dated July 7, 2000, between
Microsoft Corporation, Liberty Media International, Inc., Liberty
UK, Inc. and Telewest Communications plc
Exhibit 3 -- Amended and Restated Operating Agreement of TW Holdings, L.L.C.,
dated July 7, 2000, among Liberty UK, Inc., Microsoft U.K. Cable,
Inc. and Microsoft Cable Partnership Holdings, Inc.
Exhibit 4 -- Amendment No. 2, made as of October 4, 1996, by and among
Microsoft Corporation, Telewest Communications plc, Liberty UK,
Inc., MediaOne U.K. Cable, Inc. and MediaOne Cable Partnership
Holdings, Inc. to the Registration Rights Agreement, dated October
3, 1995, by and among the above mentioned parties (with the
exception of Microsoft Corporation)
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COMPANY NUMBER 2983307
THE COMPANIES ACT 1985 AND 1989
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PUBLIC COMPANY LIMITED BY SHARES
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ARTICLES OF ASSOCIATION
OF
TELEWEST COMMUNICATIONS PLC(1)
(Effective as of 7 July 2000)
PRELIMINARY
INTERPRETATION
1.1 In the articles:
ACT means, unless the context otherwise requires, the Companies Act 1985,
including any statutory modification or re-enactment for the time being in
force;
ACTS means the Companies Acts 1985 and 1989 and all statutes and subordinate
legislation for the time being in force concerning companies so far as they
apply to the Company;
APPROVED DEPOSITARY means a custodian or other person (or a nominee for such
custodian or other person) appointed under contractual arrangements with the
Company or other arrangements approved by the board whereby such custodian or
other person or nominee holds or is interested in shares of the Company or
rights or interests in shares of the Company and issues securities or other
documents of title or otherwise evidencing the entitlement of the holder thereof
to or to receive such shares, rights or interests, provided and to the extent
that such arrangements have been approved by the board for the purposes of the
articles and shall include, where approved by the board, the trustees (acting in
their capacity as such) of any employees' share scheme established by the
Company or any other scheme or arrangements principally for the benefit of
employees of the Company and/or its subsidiaries which have been approved by the
Company in general meeting;
ARTICLES means these articles of association as amended from time to time;
AUDITORS means the auditors of the Company;
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1 The Company was incorporated as a public company limited by shares with the
name Amberfrost plc on 20 January 1994. Its name was changed to TeleWest
plc on 7 June 1995 pursuant to a special resolution passed on 7 June 1995,
and to Telewest Communications plc on 16 May 1996 pursuant to a special
resolution passed on 16 May 1996.
BOARD means the board of directors of the Company or the directors present or
deemed to be present at a duly convened meeting of the directors at which a
quorum is present;
BUSINESS DAY means a day (not being a Saturday or Sunday) on which clearing
banks are open for business in London;
CLEAR DAYS means, in relation to a period of notice, that period excluding the
day when the notice is given or deemed to be given and the day for which it is
given or on which it is to take effect;
COMPANY includes any body corporate (not being a corporation sole) or
association of persons, whether or not a company within the meaning of the Act;
DILUTIVE ISSUE means any issue of Shares or other securities (including
securities convertible into or exchangeable for Shares or other securities
carrying the right to vote at general meetings of the Company's Shareholders) in
the capital of the Company in respect of which the Liberty Group or the
Microsoft Group (as relevant) was not entitled by the terms of such issue to
participate on a pro-rata basis;
DIRECTOR means, unless the context otherwise requires, a director of the
Company;
DIVIDEND includes bonus;
ENTITLED BY TRANSMISSION means, in relation to a share, entitled as a
consequence of the death or bankruptcy of a member or of another event giving
rise to a transmission of entitlement by operation of law;
EXECUTED includes, in relation to a document, execution under hand or under seal
or by another method permitted by law;
HOLDER means, in relation to a share, the member whose name is entered in the
register as the holder of that share;
INDEPENDENT DIRECTOR means any director who is not designated by the Microsoft
Group or the Liberty Group in accordance with article 72 and is not a partner,
officer, employee of, or an individual having a material consultancy with, the
Liberty Group or the Microsoft Group;
LESSER QUALIFYING INTEREST means:
(a) 7.5% or more of the ordinary shares in issue for the time being; or
(b) following any Dilutive Issue, 5% or more of the ordinary shares in issue
for the time being provided immediately prior to such Dilutive Issue the
Liberty Group or the Microsoft Group (as relevant) held 7.5% or more of the
ordinary shares in issue for the time being;
For the foregoing purposes the percentage of ordinary shares held shall be
calculated on the assumption that all ordinary shares issued after 15 April 1998
pursuant to or for the purposes of employee share options shall be ignored;
Page 2
LIBERTY means Liberty Media International, Inc., a corporation incorporated
under the laws of the State of Delaware, USA;
LIBERTY DESIGNATED DIRECTOR means any director who may be appointed from time to
time by a member of the Liberty Group pursuant to article 72.1 provided that a
Liberty Designated Director shall automatically cease so to be in the following
circumstances:
(a) upon members of the Liberty Group ceasing to hold a Qualifying Interest and
the right to appoint two directors pursuant to article 72, but retaining a
Lesser Qualifying Interest and the right to appoint one director, the
Liberty Designated Director last appointed to the board shall cease so to
be;
(b) upon members of the Liberty Group ceasing to hold a Qualifying Interest or
a Lesser Qualifying Interest and to have the right to appoint a director or
two directors pursuant to article 72, all Liberty Designated Directors
shall cease so to be;
LIBERTY GROUP means at any time TCI and/or Liberty Media Corporation and/or
Liberty and/or either of their holding companies, and/or either of their
subsidiary undertakings and/or any subsidiary undertakings of either of their
holding companies for the time being, and a MEMBER OF THE LIBERTY GROUP shall
mean any registered holder of shares beneficially owned by a person within such
group, provided always that (save in respect of TW Holdings) no person or group
of undertakings within the Liberty Group shall also be within the Microsoft
Group. TW Holdings shall be deemed to be a member of the Liberty Group but only
to the extent of the number of Pro Rata Shares of Liberty Group. Wherever the
articles require or permit the calculation of a number or percentage of ordinary
shares held by the Liberty Group such number or percentage shall include the Pro
Rata Shares of the Liberty Group;
LIMITED VOTING SHARES mean the limited voting convertible ordinary shares having
the rights set out in article 3A;
LONDON STOCK EXCHANGE means the International Stock Exchange of the United
Kingdom and the Republic of Ireland Limited;
MICROSOFT means Microsoft Corporation, a corporation incorporated under the laws
of Washington;
MICROSOFT DESIGNATED DIRECTOR means any director who may be appointed from time
to time by a member of the Microsoft Group pursuant to article 71.2 provided
that a Microsoft Designated Director shall automatically cease so to be in the
following circumstances:
(a) upon members of the Microsoft Group ceasing to hold a Qualifying Interest
and to have the right to appoint two directors pursuant to article 71, but
retaining a Lesser Qualifying Interest and the right to appoint one
director, the Microsoft Designated Director last appointed to the board
shall cease so to be; and
(b) upon members of the Microsoft Group ceasing to hold a Qualifying Interest
or a Lesser Qualifying Interest and to have the right to appoint a director
or two
Page 3
directors pursuant to article 71, all Microsoft Designated Directors shall
cease so to be;
MICROSOFT GROUP means at any time Microsoft and any holding company of
Microsoft, and its subsidiary undertakings and any subsidiary undertaking of any
such holding company for the time being, and a MEMBER OF THE MICROSOFT GROUP
shall mean any registered holder of shares beneficially owned by a person within
such group, provided always that (save in respect of TW Holdings) no person or
group of undertakings within the Microsoft Group shall also be within the
Liberty Group. TW Holdings shall be deemed to be a member of the Microsoft Group
but only to the extent of the number of Pro Rata Shares of the Microsoft Group.
Wherever the articles require or permit the calculation of a number or
percentage of ordinary shares held by the Microsoft Group such number or
percentage shall include the Pro Rata Shares of the Microsoft Group;
MEMBER means, unless the context otherwise requires, a member of the Company;
OFFICE means the registered office of the Company;
ORDINARY SHARES means ordinary shares in the capital of the Company (excluding,
for the avoidance of doubt, the limited voting shares);
PAID, PAID UP and PAID-UP include credited as paid or paid up;
PRO RATA SHARES means, with respect to any Shareholder Group at any time, the
number of ordinary shares held by TW Holdings attributable to such Shareholder
Group being the product rounded to the nearest whole number of (x) the sum of
the number of ordinary shares held by TW Holdings multiplied by (y) the
aggregate percentage ownership interest in TW Holdings, expressed as a decimal,
held by members of such Shareholder Group as of such date;
QUALIFYING INTEREST means:
(a) 15% or more of the ordinary shares in issue for the time being; or
(b) following any Dilutive Issue, 12.5% or more of the ordinary shares in issue
for the time being provided that immediately prior to such Dilutive Issue
the Liberty Group or the Microsoft Group (as relevant) held 15% or more of
the ordinary shares in issue for the time being;
For the foregoing purposes the percentage of ordinary shares held shall be
calculated on the assumption that all ordinary shares issued after 15 April 1998
pursuant to or for the purposes of employee share options shall be ignored;
RECOGNISED PERSON means a recognised clearing house or a nominee of a recognised
clearing house or of a recognised investment exchange which is designated for
the purposes of section 185(4) of the Act;
REGISTER means, unless the context otherwise requires, the register of members
kept pursuant to section 352 of the Act;
Page 4
SEAL means, unless the context otherwise requires, the common seal of the
Company or any official or securities seal that the Company may have or may be
permitted to have under the Acts;
SECRETARY means the secretary of the Company and includes any assistant or
deputy secretary and a person appointed by the board to perform the duties of
the secretary;
SHAREHOLDER GROUP means any of the Liberty Group or the Microsoft Group;
SHARES means ordinary shares and limited voting shares;
TCI means Tele-Communications, Inc., a corporation incorporated under the laws
of the State of Delaware, USA;
TW HOLDINGS means TW Holdings, L.L.C., a Colorado limited liability company.
1.2 Words and expressions contained in the articles which are not defined in
article 1.1 have, unless the contrary is indicated, the same meaning as in the
Act, but excluding any statutory modification to the Act not in force at the
date of adoption of the articles.
1.3 Where an ordinary resolution of the Company is expressed to be required for
any purpose, a special or extraordinary resolution is also effective for that
purpose, and where an extraordinary resolution is expressed to be required for
any purpose, a special resolution is also effective for that purpose.
1.4 The headings in the articles do not affect the interpretation of the
articles.
TABLE A NOT TO APPLY
2. No regulations contained in any statute or subordinate legislation, including
the regulations contained in Table A in the schedule to the Companies (Tables A
to F) Regulations 1985 (as amended), apply as the regulations or articles of
association of the Company.
AUTHORISED CAPITAL
SHARE CAPITAL
3. The authorised share capital of the Company at the date of adoption of the
articles is (pound) o divided into o ordinary shares of 10p each and 300,000,000
limited voting convertible ordinary shares of 10p each. The special rights and
restrictions attaching to the limited voting convertible ordinary shares are set
out in Article 3A.
LIMITED VOTING SHARES
3.A For the purposes of this article 3A:
3.1A CONVERSION NOTICE means the written notice to convert served by the Company
under article 3.3A or by a holder of limited voting convertible ordinary shares
under article 3.4A;
Page 5
CONVERSION RATE means at the rate of one ordinary share for every one limited
voting convertible ordinary share; and
CONVERSION DATE means the date on which a conversion notice is received by the
registrars for the time being of the Company (the REGISTRARS) together with, in
the case of such a notice served by a holder of limited voting convertible
ordinary shares, those items referred to in article 3.4A; and
DEBENTURE CHANGE OF CONTROL means a Change of Control as defined in any of (i)
the Indenture, dated as of October 3, 1995, between the Company and The Bank of
New York, pursuant to which the Company issued its Senior Debentures due 2006,
(ii) the Indenture, dated as of October 3, 1995, between the Company and The
Bank of New York pursuant to which the Company issued its Senior Discount
Debentures due 2007, (iii) the Indenture dated as of November 9, 1998 between
the Company and The Bank of New York, pursuant to which the Company issued its
Senior Notes due 2008, (iv) the Indenture dated as of February 19, 1999, between
the Company and The Bank of New York pursuant to which the Company issued its
Senior Convertible Notes due 2007, (v) the Indenture dated as of 15 April, 1999,
between the Company and The Bank of New York, pursuant to which the Company
issued its Sterling and Dollar Senior Discount Notes due 2009, in each case as
in effect at 1 October 1999, and (vi) a document governing any other
indebtedness of the Company as agreed in writing in advance by Microsoft and
Liberty (the INDENTURES), provided that there shall not be deemed to be any such
Change of Control if all of the notes which have been issued pursuant to the
Indentures referred to in (i) to (v) prior to 30 September 1999 or pursuant to
any document referred to in (vi), have been redeemed, repaid, cancelled or
purchased by the Company.
3.2A The ordinary shares and the limited voting shares shall rank pari passu in
all respects save that the limited voting shares shall not confer the right to
speak or vote on any resolution for the removal, election, appointment or
re-appointment of directors and so that save as aforesaid the limited voting
shares shall at all times carry the same rights as and be treated as forming one
uniform class with the ordinary shares (provided that such shares shall be
treated as a separate class in relation to any variation of the rights attached
thereto).
3.3A The Company may at any time, upon approval by the board by written notice
to all or any of the holders of the limited voting shares convert such holder's
or holders' limited voting shares (on a pro-rata basis) into ordinary shares at
the conversion rate and, notwithstanding any other provisions of the articles,
no Microsoft Designated Director (while a member of the Microsoft Group holds or
is interested in limited voting shares) and no Liberty Designated Director
(while a member of the Liberty Group holds or is interested in limited voting
shares) shall be entitled to vote on any resolution of the board relating to
such approval.
3.4A No limited voting shares shall be converted into ordinary shares if such a
conversion would result in a debenture change of control. A holder of limited
voting shares shall be entitled upon approval by the board to convert all or any
of its limited voting shares into fully paid ordinary shares at the conversion
rate only if the conditions set out below are satisfied. The holder shall
complete a notice of conversion in such form as may from time to time be
prescribed by the directors and reasonably acceptable to the holder (which
notice may require representations by the holder as to its beneficial
Page 6
ownership of ordinary shares and the absence of other arrangements or conditions
that might cause such conversion to result in a debenture change of control).
Further, the holder shall deliver the same to the Company and the registrars
together with (i) such other evidence, if any, as the directors may reasonably
require to prove the title of the person exercising such right, and (ii) an
opinion reasonably satisfactory to the directors from leading external New York
counsel of at least 10 years standing addressed to the Company (at the expense
of the Company) stating that such conversion will not result in a debenture
change of control. A conversion notice, once given, may not be withdrawn without
the consent in writing of the Company. The directors shall approve the
conversion of the relevant limited voting shares unless the opinion referred to
in (ii) above is not reasonably satisfactory to them in which case they shall
notify the holder setting out the reasons for the determination. In connection
with any approval under this article 3.4A no Microsoft Designated Director
(while a member of the Microsoft Group holds or is interested in limited voting
shares) or Liberty Designated Director (while a member of the Liberty Group
holds or is interested in limited voting shares) shall be entitled to vote on
any resolution of the board relating to such conversion.
3.5A The ordinary shares arising on conversion in accordance with this article
3A shall be credited as fully paid and rank pari passu in all respects with the
ordinary shares then in issue and shall entitle the holder to all dividends and
other distributions payable on the ordinary shares after the conversion date.
Any dividend due but not paid on the relevant conversion date shall instead be
payable to the holder of the relevant limited voting share so converted.
3.6A Within 14 days after the relevant conversion date, the Company shall
forward to each holder, free of charge, the definitive certificate for the
appropriate amount of fully paid ordinary shares and a new certificate for any
unconverted limited voting shares comprised in the certificate surrendered by
him. In the meantime, transfers will be certified against the register.
3.7A The Company shall use all reasonable efforts to ensure that all the
ordinary shares arising from conversion are admitted to the Official List of the
London Stock Exchange.
3.8A Conversion of such limited voting shares from time to time may be effected,
subject to the articles, by their redesignation and conversion into ordinary
shares.
3.9A The Company shall procure that at all times there shall be sufficient
unissued ordinary share capital available for the purposes of effecting
conversion of all outstanding limited voting shares.
3.10A If any date specified for the conversion of any limited voting shares
pursuant to this article 3A would otherwise fall on a day which is not a
business day, such date shall be the next following business day.
3.11A The quorum for any meeting of the holders of the limited voting shares
shall be two holders of limited voting shares present in person or by proxy or
one holder if there be only one such holder. A resolution in writing executed by
each member who would have been entitled to vote upon it if it had been proposed
at a class meeting at which he was present shall be as effectual as if it had
been passed at a class meeting duly
Page 7
convened and held and may consist of several instruments in the like form
executed by each member.
3.12A On a transfer by any member of the Microsoft Group or any member of the
Liberty Group of any limited voting shares to a third party, the shares so
transferred shall be converted upon approval by the board into ordinary shares
at the conversion rate in accordance with Article 3.8A. The board shall approve
any such conversion unless the directors shall have determined to their
reasonable satisfaction (including through appropriate representations made by
the transferor and/or the third party) that (i) such transferor shall,
individually or as part of a group, remain the "beneficial owner" (as defined in
the Indentures) of such ordinary shares following the transfer to such third
party and (ii) such conversion upon the transfer to such party shall result in a
debenture change of control. In making such determination, no Microsoft
Designated Director (while a member of the Microsoft Group holds or is
interested in limited voting shares) or Liberty Designated Director (while a
member of the Liberty Group holds or is interested in limited voting shares)
shall be entitled to participate in such board decision.
AUTHORITY TO ALLOT
4.1 Subject to the Acts and relevant authority of the Company in general meeting
required by the Acts, the board has general and unconditional authority to allot
(with or without conferring rights of renunciation), grant options over, offer
or otherwise deal with or dispose of unissued shares (whether forming part of
the original or any increased capital), or rights to subscribe for or convert
any security into shares, to such persons, at such times and on such terms and
conditions as the board may decide but no share may be issued at a discount.
4.2 The board may at any time after the allotment of a share but before a person
has been entered in the register as the holder of the share recognise a
renunciation of the share by the allottee in favour of another person and may
grant to an allottee a right to effect a renunciation on the terms and
conditions the board thinks fit.
POWER TO ATTACH RIGHTS
5. Subject to the Acts and to the rights attached to existing shares, new shares
may be allotted or issued with or have attached to them such special rights or
restrictions as the Company may by ordinary resolution decide, or, if no
resolution is passed, as the board may decide.
REDEEMABLE SHARES
6. Subject to the Acts and to the rights attached to existing shares, shares may
be issued on terms that they are to be redeemed or, at the option of the Company
or the holder, are liable to be redeemed.
VARIATION OF RIGHTS
7.1 Subject to the Acts, the rights attached to a class of shares may be varied
whether or not the Company is being wound up (i) in such manner (if any) as may
be provided by those rights, or (ii) in the absence of any such provision,
either with the consent in writing of the holders of at least three-fourths of
the nominal amount of the
Page 8
issued shares of that class or with the sanction of an extraordinary resolution
passed at a separate meeting of the holders of the issued shares of that class
validly held in accordance with the articles, but not otherwise. Any variation
of the rights attaching to the limited voting shares shall be deemed to be a
variation of the class rights attaching to the ordinary shares and will require
a special resolution of the Company (requiring at least three-fourths of the
nominal amount of the limited voting shares and ordinary shares then in issue to
vote in favour of such resolution).
7.2 The rights attached to a class of shares are not, unless otherwise expressly
provided in the rights attaching to those shares, deemed to be varied by the
creation or issue of further shares ranking pari passu with or subsequent to
them or by the purchase or redemption by the Company of its own shares in
accordance with the Acts and article 38.
COMMISSION
8. The Company may exercise all powers conferred or permitted by the Acts of
paying commission or brokerage. Subject to the Acts, commission or brokerage may
be satisfied by the payment of cash or the allotment of fully- or partly-paid
shares or the grant of an option to call for an allotment of shares or by any
combination of these methods.
TRUSTS NOT RECOGNISED
9. Except as ordered by a court of competent jurisdiction or as required by law,
the Company shall not recognise a person as holding a share on trust and is not
bound by or otherwise compelled to recognise (even if it has notice of it) an
equitable, contingent, future, partial or other claim to or interest in a share
other than an absolute right in the holder to the whole of the share.
SHARE CERTIFICATES
RIGHT TO CERTIFICATE
10.1 Subject to the Acts and the requirements of the London Stock Exchange, a
person (except a recognised person in respect of whom the Company is not
required by law to complete and have ready for delivery a certificate) on
becoming the holder of a share is entitled without charge, to one certificate
for all the shares of a class registered in his name or, in the case of shares
of more than one class being registered in his name, to a separate certificate
for each class of shares.
10.2 Where a member (other than a recognised person) transfers part of his
shares comprised in a certificate he is entitled, without charge, to one
certificate for the balance of shares retained by him.
10.3 The Company is not bound to issue more than one certificate for shares held
jointly by two or more persons and delivery of a certificate to one joint holder
is sufficient delivery to all joint holders.
10.4 A certificate shall specify the number and class and the distinguishing
numbers (if any) of the shares in respect of which it is issued and the amount
paid up on the
Page 9
shares. It shall be issued under a seal, which may be affixed to or printed on
it, or in such other manner as the board may approve, having regard to the terms
of issue and the requirements of the London Stock Exchange.
REPLACEMENT CERTIFICATES
11.1 Where a member holds two or more certificates for shares of one class, the
board may at his request, on surrender of the original certificates and without
charge, cancel the certificates and issue a single replacement certificate.
11.2 At the request of a member, the board may cancel a certificate and issue
two or more in its place (representing shares in such proportions as the member
may specify), on surrender of the original certificate and on payment of such
reasonable sum as the board may decide.
11.3 Where a certificate is worn out, defaced, lost or destroyed, the board may
cancel it and issue a replacement certificate on such terms as to provision of
evidence and indemnity and to payment of any exceptional out-of-pocket expenses
incurred by the Company in the investigation of that evidence and the
preparation of that indemnity as the board may decide, and on surrender of the
original certificate (where it is worn out or defaced).
LIEN
COMPANY'S LIEN ON SHARES NOT FULLY PAID
12.1 The Company has a first and paramount lien on every share (other than a
fully-paid share) registered in the name of a member (whether solely or jointly
with another person) for an amount payable in respect of the share, whether the
due date for payment has arrived or not. The lien applies to all dividends from
time to time declared or other amounts payable in respect of the share.
12.2 The board may either generally or in a particular case declare a share to
be wholly or partly exempt from the provisions of this article 12. Unless
otherwise agreed with the transferee, the registration of a transfer of a share
operates as a waiver of the Company's lien (if any) on that share.
ENFORCEMENT OF LIEN BY SALE
13.1 For the purpose of enforcing the lien, the board may sell shares subject to
the lien in such manner as it may decide, if the due date for payment of the
relevant amounts has arrived and payment is not made within 14 clear days after
the service of a notice in writing (stating, and demanding payment of, the
amounts and giving notice of the intention to sell in default of payment) on the
member concerned (or to a person entitled by transmission to the shares).
13.2 To give effect to a sale, the board may authorise a person to execute an
instrument of transfer of shares in the name and on behalf of the holder of or
the person entitled by transmission to the shares to the purchaser or his
nominee. The purchaser is not bound to see to the application of the purchase
money and the title of the transferee
Page 10
is not affected by an irregularity in or invalidity of the proceedings connected
with the sale.
APPLICATION OF PROCEEDS OF SALE
14. The net proceeds of a sale effected under article 13, after payment of the
costs of the sale, shall be applied by the Company in or towards satisfaction of
the amount in respect of which the lien exists. Any residue shall (on surrender
to the Company for cancellation of the certificate for the shares sold, or the
provision of an indemnity (with or without security) as to any lost or destroyed
certificate required by the board and subject to a like lien for amounts not
presently payable as existed on the shares before the sale) be paid to the
member or a person entitled by transmission to the shares immediately before the
sale.
CALLS ON SHARES
CALLS
15. Subject to the terms of issue, the board may make calls on members in
respect of amounts unpaid on the shares or a class of shares held by them
respectively (whether in respect of nominal value or a premium) and not payable
on a date fixed by or in accordance with the terms of issue. Each member shall
(on receiving at least 14 clear days' notice specifying when and where payment
is to be made) pay to the Company the amount called as required by the notice. A
call may be made payable by installments and may, at any time before receipt by
the Company of an amount due, be revoked or postponed in whole or in part as the
board may decide. A call is deemed made at the time when the resolution of the
board authorising it is passed. A person on whom a call is made remains liable
to pay the amount called despite the subsequent transfer of the share in respect
of which the call is made. The joint holders of a share are jointly and
severally liable for payment of a call in respect of that share.
POWER TO DIFFERENTIATE
16. The board may make arrangements on the allotment or issue of shares for a
difference between the allottees or holders in the amounts and times of payment
of a call on their shares.
INTEREST ON CALLS
17. If the whole of the amount called is not paid on or before the date fixed
for payment, the person by whom it is payable shall pay interest on the unpaid
amount at such rate as may be fixed by the terms of allotment of the share or,
if no rate is fixed, at such rate (not exceeding, without the sanction of the
Company given by ordinary resolution, 20 per cent. per annum) as the board may
decide, from and including the date fixed for payment until but excluding the
date of actual payment and all costs, charges and expenses incurred by the
Company by reason of the non-payment. The board may waive payment of the
interest in whole or in part.
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PAYMENT IN ADVANCE
18. The board may, if it thinks fit, receive from a member all or part of the
amounts uncalled and unpaid on shares held by him. A payment in advance of calls
extinguishes to the extent of the payment the liability of the member on the
shares in respect of which it is made. The Company may pay interest on the
amount paid in advance, or on so much of it as from time to time exceeds the
amount called on the shares in respect of which the payment in advance has been
made, at such rate (not exceeding, without the sanction of the Company given by
ordinary resolution, 20 per cent. per annum) as the board may decide.
AMOUNTS DUE ON ALLOTMENT TREATED AS CALLS
19. An amount which becomes payable in respect of a share on allotment or on a
date fixed pursuant to the terms of allotment (whether in respect of nominal
value or a premium) or as an installment of a call is deemed to be a call. In
case of non-payment, the provisions of the articles as to payment of interest
and costs, charges and expenses, forfeiture or otherwise apply as if that amount
has become payable by virtue of a call.
FORFEITURE
NOTICE IF CALL NOT PAID
20. If a member fails to pay the whole of a call or an installment of a call on
or before the date fixed for payment, the board may serve notice on the member
or on a person entitled by transmission to the share in respect of which the
call was made demanding payment, on a date not less than 14 clear days from the
date of the notice, of the amount of the call outstanding and any interest that
may have accrued on it and all costs, charges and expenses incurred by the
Company by reason of the non-payment. The notice shall state (i) the place where
payment is to be made, and (ii) that if the notice is not complied with the
share in respect of which the call was made will be liable to be forfeited.
FORFEITURE FOR NON-COMPLIANCE
21. If the notice referred to in article 20 is not complied with, a share in
respect of which it is given may, at any time before payment required by the
notice has been made, be forfeited by a resolution of the board. The forfeiture
includes all dividends declared or other amounts payable in respect of the
forfeited share and not paid before the forfeiture.
NOTICE AFTER FORFEITURE
22. When a share has been forfeited, the Company shall serve notice of the
forfeiture on the person who was before forfeiture the holder of the share or
the person entitled by transmission to the share but no forfeiture is
invalidated by an omission to give notice. An entry of the fact and date of
forfeiture shall be made in the register.
DISPOSAL OF FORFEITED SHARES
23.1 Until canceled in accordance with the Acts, a forfeited share and all
rights attaching to it are deemed to be the property of the Company and may be
sold, re-
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allotted or otherwise disposed of either to the person who was before the
forfeiture the holder or to another person, on such terms and in such manner as
the board may decide. Where for this purpose a forfeited share is to be
transferred, the board may authorise a person to execute an instrument of
transfer of the share to the transferee. The Company may receive the
consideration (if any) for the share on its disposal and may register the
transferee as the holder of the share.
23.2 The board may before a forfeited share has been canceled, sold, re-allotted
or otherwise disposed of annul the forfeiture on such conditions as it thinks
fit.
23.3 A statutory declaration by a director or the secretary that a share has
been forfeited on the date stated in the declaration is conclusive evidence of
the facts stated in the declaration against all persons claiming to be entitled
to the share. The declaration (subject if necessary to the execution of an
instrument of transfer) constitutes good title to the share and the person to
whom the share is disposed of is not bound to see to the application of the
consideration (if any). His title to the share is not affected by an
irregularity in or invalidity of the proceedings connected with the forfeiture
or disposal.
ARREARS TO BE PAID NOTWITHSTANDING FORFEITURE
24. A person whose share has been forfeited ceases on forfeiture to be a member
in respect of it and shall surrender to the Company for cancellation the
certificate for the forfeited share or shares. He remains liable to pay, and
shall immediately pay to the Company, all calls, interest, costs, charges and
expenses owing in respect of the share at the time of forfeiture, with interest,
from the time of forfeiture until payment, at such rate as may be fixed by the
terms of allotment of the share or, if no rate is fixed, at the rate (not
exceeding, without the sanction of the Company given by ordinary resolution, 20
per cent. per annum) as the board may decide. The board may if it thinks fit
enforce payment without allowance for the value of the share at the time of
forfeiture or for consideration received on disposal.
SURRENDER
25. The board may accept the surrender of a share liable to be forfeited and in
that case references in the articles to forfeiture include surrender.
UNTRACED SHAREHOLDERS
POWER OF SALE
26.1 The Company is entitled to sell a share if:
(a) during a period of not less than 12 years before the date of publication of
the advertisements referred to in article 26.1(c) (or, if published on two
different dates, the first date) (the RELEVANT PERIOD) the Company has paid
at least three cash dividends (whether interim or final);
(b) throughout the relevant period no cheque, order or warrant sent by the
Company by post in a pre-paid envelope addressed to the holder of the
share, or to the person entitled by transmission to the share, at his
address on the register or other last-known address given by the member or
other person has
Page 13
been cashed, and no communication has been received by the Company from the
member or person entitled by transmission (in his capacity as member or
person entitled by transmission);
(c) on expiry of the relevant period the Company has given notice of its
intention to sell the share by advertisement in a leading daily newspaper
and in a newspaper circulating in the area of the address referred to in
article 26.1(b);
(d) the Company has not during a further period of three months after the date
of the advertisements referred to in article 26.1(c) (or the later
advertisement if the advertisements are published on different dates) and
before the exercise of the power of sale received a communication from the
member or person entitled by transmission (in his capacity as member or
person entitled by transmission); and
(e) the Company has first given notice in writing to the London Stock Exchange
of its intention to sell the share.
26.2 In addition to the power of sale conferred by article 26.1, if during the
relevant period or a further period ending on the date when all the requirements
of article 26.1(a) to (e) have been satisfied an additional share has been
issued in right of that held at the beginning of, or previously so issued
during, those periods and all the requirements of article 27.1(a) to (e) have
been satisfied in respect of the additional share, the Company is entitled to
sell the additional share.
26.3 To give effect to a sale pursuant to article 26.1 or 26.2, the board may
authorise a person to execute an instrument of transfer of the share in the name
and on behalf of the holder of, or the person entitled by transmission to, the
share to the purchaser or his nominee. The purchaser is not bound to see to the
application of the purchase money and the title of the transferee is not
affected by an irregularity or invalidity in the proceedings connected with the
sale of the share.
APPLICATION OF PROCEEDS OF SALE
27. The Company shall account to the member or other person entitled by
transmission to the share for the net proceeds of sale by carrying all amounts
received on sale to a separate account. The Company is deemed to be a debtor and
not a trustee in respect of those amounts for the member or other person.
Amounts carried to the separate account may either be employed in the business
of the Company or invested as the board may think fit. No interest is payable on
those amounts and the Company is not required to account for money earned on
them.
TRANSFER OF SHARES
FORM OF TRANSFER
28. A member may transfer all or any of his shares by instrument of transfer in
writing in any usual form or in another form approved by the board, and the
instrument shall be executed by or on behalf of the transferor and (in the case
of a transfer of a share which is not fully paid) by or on behalf of the
transferee. The transferor is deemed
Page 14
to remain the holder of the share until the name of the transferee is entered in
the register in respect of it.
RIGHT TO REFUSE REGISTRATION
29.1 Subject to articles 67 and 68, the board may, in its absolute discretion
and (except where the reason (or one of the reasons) for refusal is that the
transfer will give rise to a Notifiable Situation within the meaning of article
68.1, in which circumstances notice shall be given to the transferor containing
a statement of the kind described in article 68.4) without giving a reason,
refuse to register the transfer of a share or renunciation of a renounceable
letter of allotment unless all of the following conditions are satisfied:
(a) it is in respect of a share on which the Company has no lien;
(b) it is in respect of only one class of shares;
(c) it is in favour of a single transferee or renouncee or not more than four
joint transferees or renouncees;
(d) it is duly stamped (if required);
(e) it is delivered for registration to the office or such other place as the
board may decide, accompanied by the certificate for the shares to which it
relates (except in the case of a transfer by a recognised person where a
certificate has not been issued, or in the case of a renunciation) and such
other evidence as the board may reasonably require to prove the title of
the transferor or person renouncing and the due execution by him of the
transfer or renunciation or, if the transfer or renunciation is executed by
some other person on his behalf, the authority of that person to do so;
(f) it is not a transfer which is not to be registered pursuant to article
67.1(b)(ii)(B);
(g) it will not give rise to a Notifiable Situation within the meaning of
article 68.1; and
(h) a Disposal Notice within the meaning of article 68.6 has not been served in
respect of that share or has been served but has been withdrawn (unless the
transfer in question is to complete a Required Disposal of that share
within the meaning of article 68.1).
29.2 The board may, in its absolute discretion and without giving any reason,
refuse to register the transfer of a share which is not fully paid, provided
that the refusal does not prevent dealings in shares in the Company from taking
place on an open and proper basis.
29.3 If the board refuses to register the transfer of a share it shall, within
two months after the date on which the transfer was lodged with the Company,
send notice of the refusal to the transferee. An instrument of transfer which
the board refuses to register shall (except in the case of suspected fraud) be
returned to the person depositing it. All
Page 15
instruments of transfer which are registered may, subject to article 141, be
retained by the Company.
FEES ON REGISTRATION
30. No fee may be charged by the Company for registering the transfer of a share
or the renunciation of a renounceable letter of allotment or other document
relating to or affecting the title to a share or the right to transfer it or for
making any other entry in the register.
SUSPENSION OF REGISTRATION AND CLOSING OF REGISTER
31. The registration of transfers may be suspended at such times and for such
period (not exceeding 30 days in any year) as the board may decide and either
generally or in respect of a particular class of shares.
TRANSMISSION OF SHARES
ON DEATH
32.1 The Company may recognise only the personal representatives of a deceased
member as having title to a share held by that member alone or to which he alone
was entitled. In the case of a share held jointly by more than one person, the
Company may recognise only the survivor or survivors as being entitled to it.
32.2 Nothing in the articles releases the estate of a deceased member from
liability in respect of a share which has been solely or jointly held by him.
ELECTION OF PERSON ENTITLED BY TRANSMISSION
33.1 A person becoming entitled by transmission to a share may, on production of
any evidence the board may require, elect either to be registered as a member or
to have a person nominated by him registered as a member.
33.2 If he elects to be registered himself, he shall give notice to the Company
to that effect. If he elects to have another person registered, he shall execute
an instrument of transfer of the share to that person. All the provisions of the
articles relating to the transfer of shares apply to the notice or instrument of
transfer (as the case may be) as if it were an instrument of transfer executed
by the member and his death, bankruptcy or other event giving rise to a
transmission of entitlement had not occurred.
33.3 The board may give notice requiring a person to make the election referred
to in article 33.1. If that notice is not complied with within 60 days, the
board may withhold payment of all dividends and other amounts payable in respect
of the share until notice of election has been made.
RIGHTS ON TRANSMISSION
34. Where a person becomes entitled by transmission to a share, the rights of
the holder in relation to that share cease. The person entitled by transmission
may, however, give a good discharge for dividends and other amounts payable in
respect of the share and, subject to articles 33 and 124, has the rights to
which he would be entitled
Page 16
if he were the holder of the share. The person entitled by transmission is not,
however, before he is registered as the holder of the share, entitled in respect
of it to receive notice of or exercise rights conferred by membership in
relation to meetings of the Company or a separate meeting of the holders of a
class of shares.
ALTERATION OF SHARE CAPITAL
INCREASE, CONSOLIDATION, SUB-DIVISION AND CANCELLATION
35. The Company may by ordinary resolution:
(a) increase its share capital by a sum to be divided into shares of an amount
prescribed by the resolution;
(b) consolidate and divide all or any of its share capital into shares of a
larger amount than its existing shares;
(c) subject to the Acts, sub-divide all or any of its shares into shares of a
smaller amount and may by the resolution decide that the shares resulting
from the sub-division have amongst themselves a preference or other
advantage or be subject to a restriction; and
(d) cancel shares which, at the date of the passing of the resolution, have not
been taken or agreed to be taken by a person and diminish the amount of its
share capital by the amount of the shares so canceled.
REDESIGNATION
35A. The Company may by special resolution passed at the extraordinary general
meeting of the Company convened on 27 October 1999 (or any adjournment thereof)
(i) redesignate and convert 57,312,938 ordinary shares registered in the name of
MediaOne UK Cable, Inc. into limited voting shares, and (ii) grant power and
authority to members of the Microsoft Group and/or the Liberty Group to
redesignate any or all of their holding of ordinary shares into limited voting
shares, in each case having the class rights ascribed to them in article 3A.
FRACTIONS
36. If, as the result of consolidation and division or sub-division of shares,
members become entitled to fractions of a share, the board may on behalf of the
members deal with the fractions as it thinks fit. In particular, the board may:
(a) sell fractions of a share to a person (including, subject to the Acts, to
the Company) for the best price reasonably obtainable and distribute the
net proceeds of sale in due proportion amongst the persons entitled (except
that if the amount due to a person is less than (pound)3, or such other sum
as the board may decide, the sum may be retained for the benefit of the
Company). To give effect to a sale the board may authorise a person to
execute an instrument of transfer of shares to the purchaser or his nominee
and may cause the name of the purchaser or his nominee to be entered in the
register as the holder of the shares. The purchaser is not bound to see to
the application of the purchase
Page 17
money and the title of the transferee to the shares is not affected by an
irregularity or invalidity in the proceedings connected with the sale; or
(b) subject to the Acts, issue to a member credited as fully paid by way of
capitalisation the minimum number of shares required to round up his
holding of shares to a number which, following consolidation and division
or sub-division, leaves a whole number of shares (such issue being deemed
to have been effected immediately before consolidation or sub-division, as
the case may be). The amount required to pay up those shares may be
capitalised as the board thinks fit out of amounts standing to the credit
of reserves (including a share premium account, capital redemption reserve
and profit and loss account), whether or not available for distribution,
and applied in paying up in full the appropriate number of shares. A
resolution of the board capitalising part of the reserves has the same
effect as if the capitalisation had been declared by ordinary resolution of
the Company pursuant to article 131. In relation to the capitalisation the
board may exercise all the powers conferred on it by article 131 without an
ordinary resolution of the Company.
REDUCTION OF CAPITAL
37. Subject to the Acts and article 3A and to the rights attached to existing
shares, the Company may by special resolution reduce its share capital, capital
redemption reserve, share premium account or other undistributable reserve in
any way.
PURCHASE OF OWN SHARES
38. Subject to the Acts and article 3A, the Company may purchase shares of any
class (including redeemable shares) in its own capital in any way. If at the
date proposed for approval of the proposed purchase there are in issue shares of
a class entitling the holders to convert into shares of another class, no
purchase may take place unless either:
(a) it has been sanctioned by an extraordinary resolution passed at a separate
meeting (or meetings if there are two or more classes) of the holders of
that class of convertible shares; or
(b) the terms of issue of such convertible shares include provisions permitting
the Company to purchase its own shares.
GENERAL MEETINGS
ANNUAL GENERAL MEETING
39. The Company shall hold annual general meetings, which shall be convened by
the board, in accordance with the Acts.
EXTRAORDINARY GENERAL MEETING
40. All general meetings of the Company other than annual general meetings are
called extraordinary general meetings.
Page 18
CONVENING OF EXTRAORDINARY GENERAL MEETINGS
41. The board may convene an extraordinary general meeting whenever it thinks
fit. The board must convene an extraordinary general meeting immediately on
receipt of a requisition from members in accordance with the Acts and in default
a meeting may be convened by requisitionists as provided in the Acts. At a
meeting convened on a requisition or by requisitionists no business may be
transacted except that stated by the requisition or proposed by the board. An
extraordinary general meeting may also be convened in accordance with article
94.
LENGTH AND FORM OF NOTICE
42.1 An annual general meeting and an extraordinary general meeting called for
the passing of a special resolution shall be called by not less than 21 clear
days' notice. All other extraordinary general meetings shall be called by not
less than 14 clear days' notice.
42.2 Subject to the Acts, and although called by shorter notice than that
specified in article 42.1, a general meeting is deemed to have been duly called
if it is so agreed:
(a) in the case of an annual general meeting, by all the members entitled to
attend and vote at the meeting; and
(b) in the case of another meeting, by a majority in number of the members
having a right to attend and vote at the meeting, being a majority together
holding not less than 95 per cent. in nominal value of the shares giving
that right.
42.3 The notice of meeting shall specify:
(a) whether the meeting is an annual general meeting or an extraordinary
general meeting;
(b) the place, the date and the time of the meeting;
(c) in the case of special business, the general nature of that business;
(d) if the meeting is convened to consider a special or an extraordinary
resolution, the intention to propose the resolution as such; and
(e) with reasonable prominence, that a member entitled to attend and vote may
appoint one or more proxies to attend and, on a poll, vote instead of him
and that a proxy need not also be a member.
42.4 The notice of meeting shall be given to the members (other than any who,
under the provisions of the articles or the terms of issue of shares, are not
entitled to receive notice), to the directors and to the auditors.
Page 19
OMISSION TO SEND NOTICE
43. The accidental omission to send a notice of meeting or, in cases where it is
sent out with the notice, an instrument of proxy to, or the non-receipt of
either by, a person entitled to receive it does not invalidate the proceedings
at a general meeting.
SPECIAL BUSINESS
44. All business transacted at a general meeting is deemed special except the
following business at an annual general meeting:
(a) the receipt and consideration of the annual accounts, the directors' report
and auditors' report on those accounts;
(b) the appointment of directors and other officers in place of those retiring
by rotation or otherwise ceasing to hold office;
(c) the declaration of dividends;
(d) the appointment of the auditors (when special notice of the resolution for
appointment is not required by the Acts) and the fixing, or determination
of the manner of the fixing, of their remuneration; and
(e) the renewal of the authorities of the Company in general meeting required
by the Acts and the articles in relation to the allotment of shares.
PROCEEDINGS AT GENERAL MEETINGS
QUORUM
45.1 No business may be transacted at a general meeting unless a quorum is
present at the start of the meeting. The absence of a quorum does not prevent
the appointment of a chairman in accordance with the articles, which is not
treated as part of the business of the meeting.
45.2 The quorum for a general meeting is for all purposes two members present in
person or by proxy and entitled to vote.
PROCEDURE IF QUORUM NOT PRESENT
46.1 If a quorum is not present within five minutes (or such longer period as
the chairman in his absolute discretion may decide) from the time fixed for the
start of the meeting or if during the meeting a quorum ceases to be present, the
meeting, if convened by or on the requisition of members, is dissolved. In any
other case it stands adjourned to such time (being not less than 14 days nor
more than 28 days later) and place as the chairman (or, in default, the board)
decides.
46.2 At an adjourned meeting the quorum is two members present in person or by
proxy and entitled to vote. If a quorum is not present within five minutes (or
such longer period as the chairman in his absolute discretion may decide) from
the time fixed for the start of the meeting or if during the meeting a quorum
ceases to be present, the adjourned meeting is dissolved.
Page 20
46.3 The Company shall give not less than seven clear days' notice of any
meeting adjourned for the lack of a quorum and the notice shall state the quorum
requirement.
CHAIRMAN
47. The chairman (if any) of the board or, in his absence, the deputy chairman
(if any) shall preside as chairman at a general meeting. If there is no chairman
or deputy chairman, or if at a meeting neither is present within five minutes
after the time fixed for the start of the meeting, or neither is willing to act,
the directors present shall select one of their number to be chairman. If only
one director is present and willing to act, he shall be chairman. In default,
the members present in person and entitled to vote shall choose one of their
number to be chairman.
DIRECTOR'S RIGHT TO ATTEND AND SPEAK
48. A director is entitled to attend and speak at a general meeting and at a
separate meeting of the holders of a class of shares or debentures whether or
not he is a member.
POWER TO ADJOURN
49.1 The chairman may, with the consent of a meeting at which a quorum is
present (and shall, if so directed by the meeting) adjourn a meeting from time
to time and from place to place or for an indefinite period.
49.2 Without prejudice to any other power which he may have under the provisions
of the articles or at common law, the chairman may, without the consent of the
meeting, interrupt or adjourn a meeting from time to time and from place to
place or for an indefinite period if he decides that it has become necessary to
do so in order to (i) secure the proper and orderly conduct of the meeting, or
(ii) give all persons entitled to do so a reasonable opportunity of speaking and
voting at the meeting, or (iii) ensure that the business of the meeting is
properly disposed of.
NOTICE OF ADJOURNED MEETING
50. Without prejudice to article 46.3, whenever a meeting is adjourned for 28
days or more or for an indefinite period, at least seven clear days' notice
specifying the place, date and time of the adjourned meeting and the general
nature of the business to be transacted shall be given to the members (other
than any who, under the provisions of the articles or the terms of issue of the
shares, are not entitled to receive notice), the directors and the auditors.
Except in these circumstances, and subject to article 46.3, it is not necessary
to give notice of an adjourned meeting or of the business to be transacted at
the adjourned meeting.
BUSINESS AT ADJOURNED MEETING
51. No business may be transacted at an adjourned meeting other than the
business which might properly have been transacted at the meeting from which the
adjournment took place.
Page 21
ACCOMMODATION OF MEMBERS AT MEETING
52. If it appears to the chairman that the meeting place specified in the notice
convening the meeting is inadequate to accommodate all members entitled and
wishing to attend, the meeting is duly constituted and its proceedings valid if
the chairman is satisfied that adequate facilities are available to ensure that
a member who is unable to be accommodated is able to (i) participate in the
business for which the meeting has been convened, and (ii) hear and see all
persons present who speak (whether by the use of microphones, loud-speakers,
audio-visual communications equipment or otherwise), whether in the meeting
place or elsewhere, and (iii) be heard and seen by all other persons present in
the same way.
SECURITY
53. The board may make any arrangement and impose any restriction it considers
appropriate to ensure the security of a meeting including, without limitation,
the searching of a person attending the meeting and the restriction of the items
of personal property that may be taken into the meeting place. The board is
entitled to refuse entry to a meeting to a person who refuses to comply with
these arrangements or restrictions.
VOTING
METHOD OF VOTING
54.1 At a general meeting, a resolution put to the vote of the meeting is
decided by a show of hands unless (before or on the declaration of the result of
the show of hands) a poll is duly demanded.
54.2 Subject to the Acts, a poll may be demanded on any question by:
(a) the chairman of the meeting;
(b) not less than five members present in person or by proxy and entitled to
vote;
(c) a member or members present in person or by proxy representing in aggregate
not less than one-tenth of the total voting rights of all the members
having the right to vote at the meeting; or
(d) a member or members present in person or by proxy holding shares conferring
a right to vote at the meeting, being shares on which an aggregate sum has
been paid up equal to not less than one-tenth of the total sum paid up on
all the shares conferring that right.
54.3 A demand by a proxy is deemed to be a demand by the member appointing the
proxy.
54.4 Unless a poll is demanded and the demand is not withdrawn, a declaration by
the chairman that the resolution has been carried, or carried by a particular
majority, or lost or not carried by a particular majority, and an entry to that
effect in the book containing the minutes of proceedings, is conclusive evidence
of the fact without proof of the number or proportion of the votes recorded in
favour of or against the resolution.
Page 22
PROCEDURE ON A POLL
55.1 If a poll is properly demanded, it shall be taken in such manner as the
chairman directs. He may appoint scrutineers, who need not be members, and may
fix a time and place for declaring the result of the poll. The result of the
poll is deemed to be the resolution of the meeting at which the poll is
demanded.
55.2 A poll demanded on the election of a chairman or on any question of
adjournment shall be taken at the meeting and without adjournment. A poll
demanded on another question shall be taken at such time and place as the
chairman decides, either at once or after an interval or adjournment (but not
more than 30 clear days after the date of the demand).
55.3 No notice need be given of a poll not taken immediately if the time and
place at which it is to be taken are announced at the meeting at which it is
demanded. In any other case at least seven clear days' notice shall be given
specifying the time and place at which the poll is to be taken.
55.4 The demand for a poll may be withdrawn but only with the consent of the
chairman. A demand withdrawn in this way validates the result of a show of hands
declared before the demand is made. In the case of a poll demanded before the
declaration of the result of a show of hands, the meeting shall continue as if
the demand has not been made.
55.5 The demand for a poll (other than on the election of the chairman or on a
question of adjournment) does not prevent the meeting continuing for the
transaction of business other than the question on which a poll has been
demanded.
55.6 On a poll, votes may be given in person or by proxy and a member entitled
to more than one vote need not, if he votes, use all his votes or cast all the
votes he uses in the same way.
VOTES OF MEMBERS
56.1 Subject to article 71 and to special terms as to voting on which shares
have been issued (including in article 3A), or a suspension or abrogation of
voting rights pursuant to the articles, at a general meeting every member
present in person has on a show of hands one vote and every member present in
person or by proxy has on a poll one vote for every share of which he is the
holder.
56.2 In the case of joint holders of a share, the vote of the senior who tenders
a vote, whether in person or by proxy, shall be accepted to the exclusion of the
votes of the other joint holders, and seniority is determined by the order in
which the names of the holders stand in the register.
56.3 A member in respect of whom an order has been made by a court or official
having jurisdiction (whether in the United Kingdom or elsewhere) that he is or
may be suffering from mental disorder or is otherwise incapable of running his
affairs may vote, whether on a show of hands or on a poll, by his guardian,
receiver, curator bonis or other person authorised for that purpose and
appointed by the court. A guardian, receiver, curator bonis or other person may,
on a poll, vote by proxy if evidence (to the
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satisfaction of the board) of the authority of the person claiming to exercise
the right to vote is deposited at the office (or at another place specified in
accordance with the articles for the deposit of instruments of proxy) within the
time limits prescribed by the articles for the deposit of instruments of proxy
for use at the meeting, adjourned meeting or poll at which the right to vote is
to be exercised.
NO CASTING VOTE
57. In the case of an equality of votes the chairman shall not have, whether on
a show of hands or on a poll, a casting vote in addition to a vote to which he
is entitled as a member.
RESTRICTION ON VOTING RIGHTS FOR UNPAID CALLS ETC.
58. Unless the board otherwise decides, no member is entitled in respect of a
share held by him to be present or to vote, either in person or by proxy, at a
general meeting or at a separate meeting of the holders of a class of shares or
on a poll, or to exercise other rights conferred by membership in relation to
the meeting or poll, if a call or other amount due and payable in respect of the
share is unpaid. This restriction ceases on payment of the amount outstanding
and all costs, charges and expenses incurred by the Company by reason of the
non-payment.
VOTING BY PROXY
59.1 An instrument appointing a proxy shall be in writing in any usual form (or
in another form approved by the board) executed by the appointor or his duly
constituted attorney or, if the appointor is a company, under its seal or under
the hand of its duly authorised officer or attorney or other person authorised
to sign.
59.2 An instrument of proxy is deemed (unless the contrary is stated in it) to
confer authority to demand or join in demanding a poll and to vote on a
resolution or amendment of a resolution put to, or other business which may
properly come before, the meeting or meetings for which it is given, as the
proxy thinks fit.
59.3 A proxy need not be a member.
59.4 A member may appoint more than one proxy to attend on the same occasion.
When two or more valid but differing instruments of proxy are delivered for the
same share for use at the same meeting, the one which is last validly delivered
(regardless of its date or the date of its execution) shall be treated as
replacing and revoking the other or others as regards that share.
59.5 Deposit of an instrument of proxy does not prevent a member attending and
voting in person at the meeting or an adjournment of the meeting or on a poll.
59.6 An instrument of proxy is (unless the contrary is stated in it) valid for
an adjournment of the meeting as well as for the meeting or meetings to which it
relates. An instrument of proxy is valid for 12 months from the date of
execution.
59.7 Subject to the Acts, the Company may send an instrument of proxy to all or
none of the persons entitled to receive notice of and to vote at a meeting. If
sent the instrument shall provide for two-way voting (without prejudice to a
right to abstain) on all resolutions set out in the notice of meeting.
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DEPOSIT OF PROXY
60.1 An instrument of proxy, and (if required by the board) a power of attorney
or other authority under which it is executed or a copy of it notarially
certified or certified in some other way approved by the board, shall be:
(a) deposited at the office, or another place in the United Kingdom specified
in the notice convening the meeting or in an instrument of proxy or other
accompanying document sent by the Company in relation to the meeting, not
less than 48 hours before the time for holding the meeting or adjourned
meeting or the taking of a poll at which the person named in the instrument
proposes to vote;
(b) in the case of a meeting adjourned for less than 28 days but more than 48
hours or in the case of a poll taken more than 48 hours after it is
demanded, deposited as required by article 60.1(a) not less than 24 hours
before the time appointed for the holding of the adjourned meeting or the
taking of the poll; or
(c) in the case of a meeting adjourned for less than 48 hours or in the case of
a poll not taken immediately but taken not more than 48 hours after it was
demanded, delivered at the adjourned meeting or at the meeting at which the
poll was demanded to the chairman or to the secretary or to a director.
60.2 An instrument of proxy not deposited or delivered in accordance with
article 6.0 is invalid.
WHEN VOTES BY PROXY VALID THOUGH AUTHORITY REVOKED
61. A vote given or poll demanded by a proxy or authorised representative of a
company is valid despite termination of his authority unless notice of
termination is received by the Company at the office (or other place specified
for depositing the instrument of proxy) at least one hour before the time for
holding the meeting or adjourned meeting at which the vote is given or (in the
case of a poll taken otherwise than at or on the same day as the meeting or
adjourned meeting) the time appointed for the taking of the poll at which the
vote is cast.
MISCELLANEOUS
CORPORATE REPRESENTATIVE
62. A company which is a member may, by resolution of its directors or other
governing body, authorise a person (or, if such company is an Approved
Depositary acting in its capacity as such, persons) to act as its representative
(or, as the case may be, representatives) at a meeting or at a separate meeting,
or at all meetings or separate meetings, of the holders of a class of shares
(each a REPRESENTATIVE). A representative is entitled to exercise on behalf of
the company (in respect of that part of the company's holding of shares to which
the authorisation relates) those powers that the company could exercise if it
were an individual member. The company is for the purposes of the
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articles deemed to be present in person at a meeting if a representative is
present. All references to attendance and voting in person shall be construed
accordingly. A director, the secretary or other person authorised for the
purpose by the secretary may require a representative to produce a certified
copy of the resolution of authorisation before permitting him to exercise his
powers.
OBJECTIONS TO AND ERROR IN VOTING
63. No objection may be made to the qualification of a voter or to the counting
of, or failure to count, a vote, except at the meeting or adjourned meeting at
which the vote objected to is tendered or at which the error occurs. An
objection properly made shall be referred to the chairman and only invalidates
the result of the voting if, in the opinion of the chairman, it is of sufficient
magnitude to affect the decision of the meeting. The decision of the chairman is
conclusive and binding on all concerned.
AMENDMENTS TO RESOLUTIONS
64. If an amendment proposed to a resolution under consideration is ruled out of
order by the chairman the proceedings on the substantive resolution are not
invalidated by an error in his ruling.
MEMBERS' WRITTEN RESOLUTIONS
65. A resolution in writing executed by or on behalf of each member who would
have been entitled to vote upon it if it had been proposed at a general meeting
at which he was present is as effective as if it had been passed at a general
meeting duly convened and held. The resolution in writing may consist of several
instruments in the same form each duly executed by or on behalf of one or more
members. If the resolution in writing is described as a special resolution or as
an extraordinary resolution, it has effect accordingly.
CLASS MEETINGS
66. A separate meeting for the holders of a class of shares shall be convened
and conducted as nearly as possible in the same way as an extraordinary general
meeting, except that:
(a) no member, other than a director, is entitled to notice of it or to attend
unless he is a holder of shares of that class;
(b) no vote may be given except in respect of a share of that class;
(c) the quorum at the meeting is two persons present in person holding or
representing by proxy at least one-third in nominal value of the issued
shares of that class;
(d) the quorum at an adjourned meeting is two persons holding shares of that
class who are present in person or by proxy; and
(e) a poll may be demanded in writing by a member present in person or by proxy
and entitled to vote at the meeting and on a poll each member has one vote
for every share of that class of which he is the holder.
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FAILURE TO DISCLOSE INTERESTS IN SHARES
67.1 Subject to article 67.5, where notice is served by the Company under
section 212 of the Act (a SECTION 212 NOTICE) on a member, or another person
appearing to be interested in shares held by that member, and the member or
other person has failed in relation to any shares (the DEFAULT SHARES, which
expression includes any shares issued after the date of the section 212 notice
in right of those shares) to give the Company the information required within
the prescribed period from the date of the section 212 notice, the following
sanctions apply, unless the board otherwise decides:
(a) the member is not entitled in respect of the default shares to be present
or to vote (either in person or by proxy) at a general meeting or at a
separate meeting of the holders of a class of shares or on a poll, or to
exercise other rights conferred by membership in relation to the meeting or
poll; and
(b) where the default shares represent at least 0.25 per cent. in nominal value
of the issued shares of their class:
(i) a dividend (or any part of a dividend) or other amount payable in
respect of the default shares shall be withheld by the Company, which
has no obligation to pay interest on it, and the member is not
entitled to elect, pursuant to article 131, to receive shares instead
of a dividend; and
(ii) no transfer of any of the default shares shall be registered unless
the transfer is an excepted transfer or:
(A) the member is not himself in default in supplying the information
required; and
(B) the member proves to the satisfaction of the board that no person
in default in supplying the information required is interested in
any of the shares the subject of the transfer.
67.2 The sanctions under article 67.1 shall cease to apply seven days after the
earlier of:
(a) receipt by the Company of notice of an excepted transfer, but only in
relation to the shares transferred; and
(b) receipt by the Company, in a form satisfactory to the board, of all the
information required by the section 212 notice.
68.3 Where, on the basis of information obtained from a member in respect of a
share held by him, the Company issues a section 212 notice to another person, it
shall at the same time send a copy of the section 212 notice to the member, but
the accidental omission to do so, or the non-receipt by the member of the copy,
does not invalidate or otherwise affect the application of article 67.1.
68.4 For the purposes of this article 67:
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(a) a person, other than the member holding a share, is treated as appearing to
be interested in that share if the member has informed the Company that the
person is or may be interested, or if the Company (after taking account of
information obtained from the member or, pursuant to a section 212 notice,
from anyone else) knows or has reasonable cause to believe that the person
is or may be so interested;
(b) INTERESTED is construed as it is for the purpose of section 212 of the Act;
(c) reference to a person having failed to give the Company the information
required by a section 212 notice, or being in default in supplying such
information, includes (a) reference to his having failed or refused to give
all or any part of it, and (b) reference to his having given information
which he knows to be false in a material particular or having recklessly
given information which is false in a material particular;
(d) the PRESCRIBED PERIOD means 14 days;
(e) an EXCEPTED TRANSFER means, in relation to shares held by a member:
(i) a transfer pursuant to acceptance of a takeover offer for the Company
(within the meaning of section 428(1) of the Act); or
(ii) a transfer in consequence of a sale made through a recognised
investment exchange (as defined in the Financial Services Act 1986) or
another stock exchange outside the United Kingdom on which shares in
the capital of the Company are normally traded; or
(iii)a transfer which is shown to the satisfaction of the board to be made
in consequence of a sale of the whole of the beneficial interest in
the shares to a person who is unconnected with the member and with any
other person appearing to be interested in the shares.
67.5(a) Where any person appearing to be interested in shares has been duly
served with a section 212 notice and the shares in which he appears to be
interested are held by an Approved Depositary, the provisions of article
67.1 shall be treated as applying only to those shares held by the Approved
Depositary in which such person appears to be interested and not (insofar
as such person's apparent interest is concerned) to any other shares held
by the Approved Depositary.
(b) Subject to article 67.5(a), where the member on which a section 212 notice
is duly served is an Approved Depositary acting in its capacity as such,
the obligations of the Approved Depositary as a member shall be limited to
disclosing to the Company such information relating to any person appearing
to be interested in the shares held by it as has been recorded by it
pursuant to the arrangements entered into by the Company or approved by the
board pursuant to which it was appointed as an Approved Depositary.
67.6 The provisions of this article are in addition and without prejudice to the
provisions of the Acts.
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PROTECTION OF LICENCES UNDER THE BROADCASTING ACT 1990 AND THE
TELECOMMUNICATIONS ACT 1984
68.1 In this article 68:
(a) LICENCE means any licence under the Broadcasting Act 1990 and/or the
Telecommunications Act 1984 (and any statutory modifications or
reenactments of the same together with all orders made thereunder for the
time being in force) awarded or granted to the Company or any of its
subsidiary undertakings (as the case may be) and any other licence or
permit used or intended to be used which in any case is material to its
business, granted by any other authority or body or any governmental
department under any other legislation or regulations in force for the time
being in any jurisdiction;
(b) NOTIFIABLE SITUATION means circumstances in which the holding of shares of
any class of any member when either taken alone or when taken together with
the holding of shares by one or more other members is or may be, in the
reasonable opinion of the board, prejudicial to:
(i) the grant of any Licence or the renewal or extension of any Licence
for which an application is or is intended to be made; or
(ii) the continued holding of any Licence;
(c) RELEVANT PERSON means any member whose holding of shares in the Company
when either taken alone or when taken together with the holding of shares
by one or more other members gives rise to a Notifiable Situation;
(d) RELEVANT SHARES means the shares of a Relevant Person which are, or which
in the reasonable opinion of the board may be, causing a Notifiable
Situation to occur in relation to that Relevant Person; and
(e) REQUIRED DISPOSAL means a disposal or disposals of such a number of
Relevant Shares as will cause, or which in the reasonable opinion of the
board will cause, a Relevant Person to cease to be a Relevant Person and
will not cause any other person to be a Relevant Person and/or the holding
of shares by a Relevant Person to cease to give rise to a Notifiable
Situation, not being a disposal to another Relevant Person.
68.2 The board may at any time by notice require from a member such information
(to the extent that information is required in relation to a person other than
such member, so far as such information lies within the knowledge of such
member) supported by a declaration and by such other evidence (if any) in
support as the board may require, for the purposes of determining whether such
member or any person who has an interest in shares held by such member or an
associate of any such member or person or any person in which any such member or
person is a participant with more than a five per cent. interest has an interest
in any shares of the Company which, in the reasonable opinion of the board, may
be relevant to the determination of whether a Notifiable Situation exists in
relation to such member or person and the member or person shall supply the
information and evidence so specified to the board as soon as reasonably
practicable but, in any event, within seven days of receipt of such notice. If
Page 29
such information and evidence is not furnished within the time prescribed by the
notice or the information and evidence provided is, in the opinion of the board,
unsatisfactory for the purposes of so determining, the board may serve on such
member a further notice calling upon him, within seven days after the service of
such further notice, to furnish the board with such information and evidence or
further information and evidence as shall (in their opinion) enable them to so
determine.
68.3 The board may, following such consultation with and the provision of such
information to the Independent Television Commission, the Department of Trade
and Industry, the Office of Telecommunications and/or such other authorities as
the board considers appropriate, notify any member that his holding of Relevant
Shares gives rise to a Notifiable Situation.
68.4 Any notice served pursuant to article 68.3 shall contain a statement by the
board of the reasons for the giving of such notice and include any communication
from the relevant authorities in support of those reasons. The notice shall set
out the restrictions that may apply in relation to the Relevant Shares of the
member on whom such notice is served as referred to in article 68.5.
68.5 If on the expiry of 14 days after service of notice pursuant to articles
68.2 or 68.3, the member upon whom the notice has been served shall have failed
to supply the required information or the Notifiable Situation still remains, as
the case may be, the board may treat such number of the Relevant Shares held by
such member as may be necessary to end the Notifiable Situation as non-voting
shares, by removal of the right to vote, but all other rights attaching to the
Relevant Shares (in particular the right to receive dividends and receive notice
of and attend all general meetings of the Company) shall not be affected.
68.6 If, following action taken by the board pursuant to article 68.5, a
Notifiable Situation nevertheless still remains, the board may serve a written
notice (a DISPOSAL NOTICE) on the member concerned calling for a Required
Disposal of the Relevant Shares of such member or of such lesser number of
Relevant Shares as shall be specified in the said notice, to be made within such
period as the board considers reasonable. Where the member concerned is a member
of the Liberty Group or the Microsoft Group, a copy of the Disposal Notice shall
be served also on a member of the other group. The board may extend the period
in which a Disposal Notice is required to be complied with and may withdraw a
Disposal Notice (whether before or after the expiration of the period referred
to) in their absolute discretion if it appears to it that a Notifiable Situation
has ceased to exist in relation to the Relevant Shares concerned. After the
giving of a Disposal Notice, and save for the purpose of a Required Disposal
under this article 68.6 or article 68.7, no transfer of any of the Relevant
Shares concerned may be registered until either the Disposal Notice is withdrawn
or a Required Disposal has been made to the satisfaction of the board and
registered. Where more than one holder (treating joint holders as a single
holder) is required to dispose of shares pursuant to a Disposal Notice, the said
Notice shall specify the number of shares to be disposed of by each such holder
(which shall be in the discretion of the directors and need not be pro rata
amongst the members being called upon to dispose of shares).
68.7 If a Disposal Notice given under article 68.6 has not been complied with in
all respects to the satisfaction of the board by the end of the period (as
extended if applicable) specified in the Disposal Notice and has not been
withdrawn, the board
Page 30
shall, so far as it is able, within thirty days, make a Required Disposal (or
procure that a Required Disposal is made) of the Relevant Shares concerned and
shall give notice of the disposal to those persons on whom the Disposal Notice
is served. The holder(s) of the shares duly disposed of shall be deemed
irrevocably and unconditionally to have authorised the board to make such
Required Disposal. The manner, timing and terms of any such Required Disposal
made or sought to be made by the board (including, but not limited to the price
or prices at which the same is made and the extent to which assurance is
obtained that no transferee would become a Relevant Person) shall be such as the
board determine (provided that the board shall use its reasonable efforts to
obtain the best price reasonably obtainable in the circumstances), based on
advice from bankers, brokers, or other persons as the board considers
appropriate consulted by it for the purpose, to be reasonably practicable having
regard to all the circumstances, including, but not limited to, the number of
shares to be disposed of and the requirement that the disposal be made within
thirty days from expiry of the Disposal Notice; and the board shall not be
liable, and any such persons giving any such advice to the board shall not be
liable, to any person (whether or not a Relevant Person) for any of the
consequences of reliance on such advice (including, without limitation, for
failing to obtain the best price reasonably obtainable in the circumstances
provided the board acted in good faith throughout the relevant period), provided
always that, where the registered holder(s) of the Relevant Shares concerned is
a member of the Liberty Group or the Microsoft Group, the board shall use its
reasonable endeavors to give the members of each of the other such groups the
first right to purchase such Relevant Shares (subject to such member itself not
being a Relevant Person or to such purchase itself not giving rise to a
Notifiable Situation) in accordance with such arrangements as may then be in
place between the members of the Liberty Group and the Microsoft Group in
relation to their holdings of shares of the Company and as may have been
notified to the Company by any member of the Liberty Group and/or the Microsoft
Group and the preceding provisions of this article 68.7 shall be amended
accordingly to take account of such arrangements but so that the board shall not
be liable to any member of the Liberty Group or of the Microsoft Group for
failing to ensure that any such arrangements are complied with fully or at all.
68.8 For the purpose of effecting any Required Disposal, the board may authorise
in writing any officer or employee of the Company to execute any necessary
transfer on behalf of any holder and may enter the name of the transferee in the
register in respect of the transferred shares notwithstanding the absence of any
share certificate and may issue a new certificate to the transferee and an
instrument of transfer executed by such person shall be as effective as if it
had been executed by the holder of the transferred shares and the title of the
transferee shall not be affected by any irregularity or invalidity in the
proceedings relating thereto. The net proceeds of the disposal shall be received
by the Company whose receipt shall be a good discharge for the purchase money,
and shall be paid (without any interest being payable in respect of it and after
deduction of any expenses incurred by the Company in the sale) to the former
holder (or in the case of joint holders, the first of them named in the
register) together with, if appropriate a new certificate in respect of the
balance of the Relevant Shares to which he is entitled upon surrender by him or
on his behalf of any certificate in respect of the Relevant Shares sold and
formerly held by him.
68.9 A holder of a Relevant Share on whom a Disposal Notice has been given under
(and complying with) article 68.6 shall not in respect of that share be
entitled, until such
Page 31
time as the Disposal Notice has been complied with to the satisfaction of the
board or withdrawn, to receive notice of or to attend or vote at any general
meeting of the Company or meeting of the holders of any class of share capital,
or to exercise any other right conferred by membership in relation to any such
meeting; and the rights to attend (whether in person or by representative or
proxy), to speak and to demand and vote on a poll which would have attached to
the Relevant Share had it not been a Relevant Share shall vest in the chairman
of any such meeting. The manner in which the chairman exercises or refrains from
exercising any such rights shall be entirely at his discretion. The chairman of
any such meeting shall be informed by the board of any share becoming or being
deemed to be a Relevant Share.
68.10 Save as otherwise provided in this article 68.10, the provisions of the
articles applying to the giving of notice of meetings to members shall apply to
the giving to a member of any notice required by this article 68. Any notice
required by this article 68 to be given to a member (or in the case of joint
holders, who is the person first named in the register) whose registered address
is not within the United Kingdom and who has not given to the Company an address
within the United Kingdom at which notices may be given to him, shall be deemed
validly served if it is sent through the post in a prepaid envelope addressed to
that person at the address (or if more than one, at one of the addresses) if
any, at which the board believes him to be resident or carrying on business or
to his last known address as shown on the register. The notice shall in such a
case be deemed to have been given on the day following that on which the
envelope containing the same is posted, unless it was sent by second class post
or there is only one class of post, in which case it shall be deemed to have
been given on the day next but one after it was posted, Proof that the envelope
was properly addressed prepaid and posted shall be conclusive evidence that the
notice was given.
68.11 Any resolution or determination of, or decision or exercise of any
discretion or power by, the board or any director or by the chairman of any
meeting under or pursuant to the provisions of this article 68 (including,
without prejudice to the generality of the foregoing, as to what constitutes
reasonable enquiry or as to the manner, timing and terms of any Required
Disposal made by the board under article 68.7) shall be final and conclusive;
and any disposal or transfer made, or other thing done, by or on behalf of, or
on the authority of, the board or any director pursuant to the foregoing
provisions of this article 68 shall be conclusive and binding on all persons
concerned and shall not be open to challenge, whether as to its validity or
otherwise on any ground whatsoever. The board shall not be required to give any
reasons for any decision, determination or declaration taken or made in
accordance with this article 68. The fact that the board has assumed that a
Notifiable Situation does not exist in relation to any member shall not affect
their discretion to subsequently determine that a Notifiable Situation does
exist in relation to such member.
APPOINTMENT, RETIREMENT AND REMOVAL OF DIRECTORS
NUMBER OF DIRECTORS
69. Unless and until otherwise decided by the Company by ordinary resolution the
number of directors shall be not less than two, and shall not be subject to any
maximum.
Page 32
POWER OF THE COMPANY TO APPOINT DIRECTORS
70. Subject to the articles and to the power of members of the Liberty Group and
the Microsoft Group to appoint directors pursuant to article 71, the Company may
by ordinary resolution (on which, for the avoidance of doubt, limited voting
shares will not carry the right to vote) appoint a person who is willing to act
to be a director, either to fill a vacancy or as an addition to the board, but
the total number of directors may not exceed any maximum number which may be
fixed in accordance with the articles.
POWER OF MEMBERS OF THE LIBERTY GROUP AND THE MICROSOFT GROUP TO APPOINT, REMOVE
AND REPLACE DIRECTORS
71.1 For so long as members of the Liberty Group hold not less than a Qualifying
Interest the members of the Liberty Group shall have the right to appoint three
persons, who are willing so to act, as directors and to remove and replace any
director so appointed by them. For so long as the members of the Liberty Group
hold not less than a Lesser Qualifying Interest the members of the Liberty Group
shall have the right to appoint two persons, who are willing so to act, as
directors and to remove and replace any directors so appointed by them.
71.2 For so long as members of the Microsoft Group hold not less than a
Qualifying Interest, the members of the Microsoft Group shall have the right to
appoint three persons, who are willing so to act, as directors and to remove and
replace any director so appointed by them. For so long as the members of the
Microsoft Group hold not less than a Lesser Qualifying Interest the members of
the Microsoft Group shall have the right to appoint two persons, who are willing
so to act, as directors and to remove and replace any directors so appointed by
them.
71.3 Any appointment, removal and/or replacement of a director pursuant to
article 71.1 or 71.2 shall be effected by notice to the Company signed by or on
behalf of a member of the Liberty Group or the Microsoft Group, as the case may
be. The notice shall be left at or sent by post or facsimile transmission to the
office or such other place designated by the board for the purpose. The
appointment or removal and/or replacement shall take effect immediately on
deposit of the notice in accordance with the articles or on such later date (if
any) specified in the notice.
71.4 On any vote or resolution of the Company to remove any director appointed
pursuant to or to amend article 71.1 or 71.2, the members of the Liberty Group
or the Microsoft Group (as appropriate) entitled to appoint, remove and/or
replace him or any director pursuant to article 71.1 or 71.2 as the case may be
shall have in aggregate twice the number of votes cast (on a show of hands or by
proxy) in favour of such vote or resolution by or on behalf of all the other
members.
POWER OF THE BOARD TO APPOINT DIRECTORS
72. Without prejudice to the power of the Company to appoint a person to be a
director pursuant to the articles and to the power of members of the Liberty
Group and the Microsoft Group to appoint directors pursuant to article 71, the
board may appoint a person who is willing to act as a director, either to fill a
vacancy or as an addition to the board. A director appointed in this way may
hold office only until the dissolution of the
Page 33
next annual general meeting after his appointment unless he is reappointed
during the meeting. He is not required, and is not taken into account in
determining the number of directors who are, to retire by rotation at the
meeting.
APPOINTMENT OF EXECUTIVE DIRECTORS
73. Subject to the Acts and to article 69, the board may appoint one or more of
its body to hold employment or executive office (including that of chief
executive officer or managing director) with the Company for such term (subject
to the Acts) and on any other conditions the board thinks fit. The board may
revoke or terminate an appointment, without prejudice to a claim for damages for
breach of contract.
INDEPENDENCE OF DIRECTORS
74. For so long as members of the Liberty Group hold not less than a Qualifying
Interest or for so long as members of the Microsoft Group hold not less than a
Qualifying Interest, such members of the Liberty Group or of the Microsoft
Group, as the case may be, shall each exercise their voting rights as members of
the Company, and shall each request that the Liberty Designated Directors or, as
the case may be, the Microsoft Designated Directors appointed by them exercise
their voting rights as members of the board (subject always to such Designated
Director's fiduciary and other duties as a director) to ensure that, to the
extent that they are able to do so through the exercise of their votes, the
majority of the directors are Independent Directors.
ELIGIBILITY OF NEW DIRECTORS
75.1 Subject to article 70 no person other than a director retiring (by rotation
or otherwise) may be appointed or reappointed a director at a general meeting
unless:
(a) he is recommended by the board; or
(b) not less than seven nor more than 42 days before the date fixed for the
meeting, notice has been given to the Company by a member (other than the
person to be proposed) qualified to vote at the meeting of the intention to
propose that person for appointment or reappointment. The notice shall (a)
state the particulars which would, if the proposed director were appointed
or reappointed, be required to be included in the Company's register of
directors, (b) be accompanied by notice given by the proposed director of
his willingness to be appointed or reappointed, and (c) be lodged at the
office.
75.2 A director need not be a member.
VOTING ON RESOLUTION FOR APPOINTMENT
76. A resolution for the appointment of two or more persons as directors by a
single resolution is void unless an ordinary resolution that the resolution for
appointment is proposed in this way has first been agreed to by the meeting
without a vote being given against it.
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RETIREMENT AT ANNUAL GENERAL MEETING
77. At each annual general meeting all of the directors shall retire from
office.
POSITION OF RETIRING DIRECTOR
78. A director who retires at an annual general meeting may, if willing to act,
be reappointed. If he is not reappointed or deemed reappointed, he may retain
office until the meeting (or, in the case of a Liberty Designated Director, a
member of the Liberty Group or, in the case of a Microsoft Designated Director,
a member of the Microsoft Group) appoints someone in his place or, if it does
not do so, until the end of the meeting.
DEEMED REAPPOINTMENT
79. At an annual general meeting at which a director retires (other than in the
case of a Liberty Designated Director or a Microsoft Designated Director) the
Company or (in the case of a Liberty Designated Director) a member of the
Liberty Group or (in the case of a Microsoft Designated Director) a member of
the Microsoft Group may fill the vacancy and, if it does not do so, the retiring
director is, if willing, deemed reappointed unless (other than in the case of a
Liberty Designated Director or a Microsoft Designated Director) it is expressly
resolved not to fill the vacancy or (in the case of a Liberty Designated
Director) a member of the Liberty Group notifies the Company of the removal of
such director as a Liberty Designated Director pursuant to article 71.1 or (in
the case of a Microsoft Designated Director) a member of the Microsoft Group
notifies the Company of the removal of such director as a Microsoft Designated
Director pursuant to article 71.2 or (other than in the case of a Liberty
Designated Director or a Microsoft Designated Director) a resolution for the
reappointment of the director is put to the meeting and lost.
NO RETIREMENT ON ACCOUNT OF AGE
80. No person is incapable of being appointed a director by reason of his having
reached the age of 70 or another age. Special notice is not required in
connection with the appointment or the approval of the appointment of such
person. No director is required to vacate his office because he has reached the
age of 70 or another age and section 293 of the Act does not apply to the
Company. Where a general meeting is convened at which, to the knowledge of the
board, a director is to be proposed for appointment or reappointment who is at
the date of the meeting 70 or more, the board shall give notice of his age in
the notice convening the meeting or in a document accompanying the notice, but
the accidental omission to do so does not invalidate proceedings or an
appointment or reappointment of that director at that meeting.
REMOVAL BY ORDINARY RESOLUTION
81. Subject to article 71, in addition to any power of removal conferred by the
Acts, the Company may by ordinary resolution (on which, for the avoidance of
doubt, limited voting shares will not carry the right to vote) remove a director
before the expiration of his period of office (without prejudice to a claim for
damages for breach of contract) and may (subject to the articles) by ordinary
resolution appoint another person who is willing to act to be a director in his
place. A person appointed in this way is treated, for
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the purposes of determining the time at which he or another director is to
retire, as if he had become a director on the date on which the person in whose
place he is appointed was last appointed or reappointed a director.
VACATION OF OFFICE BY DIRECTOR
82.1 Without prejudice to the provisions for retirement contained in the
articles, the office of a director is vacated if:
(a) he resigns by notice delivered to the secretary at the office or tendered
at a board meeting;
(b) he ceases to be a director by virtue of a provision of the Acts, is removed
from office pursuant to the articles or becomes prohibited by law from
being a director;
(c) he becomes bankrupt, has an interim receiving order made against him, makes
an arrangement or compounds with his creditors generally or applies to the
court for an interim order under section 253 of the Insolvency Act 1986 in
connection with a voluntary arrangement under that Act;
(d) an order is made by a court of competent jurisdiction on the ground
(however formulated) of mental disorder for his detention or for the
appointment of a guardian, receiver, curator bonis or other person to
exercise powers with respect to his affairs or he is admitted to hospital
in pursuance of an application for admission for treatment under the Mental
Health Act 1983 or, in Scotland, under the Mental Health (Scotland) Act
1984 and the board resolves that his office be vacated;
(e) both he and his alternate director appointed pursuant to the provisions of
the articles (if any) are absent, without the permission of the board, from
board meetings for six consecutive months and the board resolves that his
office be vacated;
(f) (other than in the case of a Liberty Designated Director or a Microsoft
Designated Director) he is removed from office by notice addressed to him
at his last-known address and signed by all his co-directors (without
prejudice to a claim for damages for breach of contract); or
(g) (in the case of a Liberty Designated Director or a Microsoft Designated
Director) he is removed as a director pursuant to article 71.1 or 71.2 or
71.3 or 71.4 or 71.5 as the case may be.
82.2 A resolution of the board declaring a director to have vacated office under
the terms of article 82.1 is conclusive as to the fact and grounds of vacation
stated in the resolution.
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ALTERNATE DIRECTORS
APPOINTMENT
83.1 A director (other than an alternate director) may by notice delivered to
the secretary at the office, or in any other manner approved by the board,
appoint as his alternate director:
(a) another director, or
(b) another person approved by the board (or, in the case of a Liberty
Designated Director, nominated by a member of the Liberty Group or, in the
case of the Microsoft Designated Director, nominated by a member of the
Microsoft Group) and willing to act.
83.2 No appointment of an alternate director who is not already a director is
effective until his consent to act as a director in the form prescribed by the
Acts has been received at the office.
83.3 An alternate director need not be a member and is not counted in reckoning
the number of directors for the purpose of article 70.
REVOCATION OF APPOINTMENT
84. A director may by notice delivered to the secretary at the office revoke the
appointment of his alternate director and, subject to the provisions of article
84, appoint another person in his place. If a director ceases to hold the office
of director or if he dies, the appointment of his alternate director
automatically ceases. If a director retires but is reappointed at the meeting at
which his retirement takes effect, a valid appointment of an alternate director
which was in force immediately before his retirement continues to operate after
his reappointment as if he has not retired. The appointment of an alternate
director ceases on the happening of an event which, if he were a director
otherwise appointed, would cause him to vacate office.
PARTICIPATION IN BOARD MEETINGS
85. An alternate director is, if he gives the Company an address in the United
Kingdom or the United States of America at which notices may be served on him,
entitled to receive notice of all meetings of the board and all committees of
the board of which his appointor is a member and, in the absence from those
meetings of his appointor, to attend and vote at the meetings and to exercise
all the powers, rights, duties and authorities of his appointor. A director
acting as alternate director has a separate vote at meetings of the board and
committees of the board for each director for whom he acts as alternate director
but he counts as only one for the purpose of determining whether a quorum is
present.
RESPONSIBILITY
86. A person acting as an alternate director is an officer of the Company, is
alone responsible to the Company for his acts and defaults, and is not deemed to
be the agent of his appointor.
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REMUNERATION, EXPENSES AND PENSIONS
DIRECTORS' FEES
87. Unless otherwise decided by the Company by ordinary resolution, the Company
shall pay to the directors (but not alternate directors) for their services as
directors such amount of aggregate fees as the board decides (not exceeding
(pound)500,000 per annum or such larger amount as the Company may by ordinary
resolution decide). The aggregate fees shall be divided among the directors in
such proportions as the board decides or, if no decision is made, equally. A fee
payable to a director pursuant to this article is distinct from any salary,
remuneration or other amount payable to him pursuant to other provisions of the
articles and accrues from day to day.
ADDITIONAL REMUNERATION
88. A director who, at the request of the board, goes or resides abroad, makes a
special journey or performs a special service on behalf of the Company may be
paid such reasonable additional remuneration (whether by way of salary,
percentage of profits or otherwise) and expenses as the board may decide.
EXPENSES
89. A director is entitled to be repaid all reasonable traveling, hotel and
other expenses properly incurred by him in the performance of his duties as
director, including expenses incurred in attending meetings of the board or of
committees of the board or general meetings or separate meetings of the holders
of a class of shares or debentures.
REMUNERATION AND EXPENSES OF ALTERNATE DIRECTORS
90. An alternate director is not entitled to a fee from the Company for his
services as an alternate director. The fee payable to an alternate director is
payable out of the fee payable to his appointor and consists of such portion (if
any) of the fee as he agrees with his appointor. The Company shall, however,
repay to an alternate director expenses incurred by him in the performance of
his duties if the Company would have been required to repay the expenses to him
under article 89 had he been a director.
DIRECTORS' PENSIONS AND OTHER BENEFITS
91.1 The board may exercise all the powers of the Company to provide pensions or
other retirement or superannuation benefits and to provide death or disability
benefits or other allowances or gratuities (by insurance or otherwise) for a
person who is or has at any time been a director of (i) the Company, or (ii) a
company which is or was a subsidiary undertaking of the Company, or (iii) a
company which is or was allied to or associated with the Company or a subsidiary
undertaking of the Company, or (iv) a predecessor in business of the Company or
of a subsidiary undertaking of the Company (and for any member of his family,
including a spouse or former spouse, or a person who is or was dependent on
him). For this purpose the board may establish, maintain, subscribe and
contribute to any scheme, trust or fund and pay premiums. The board may arrange
for this to be done by the Company alone or in conjunction with another person.
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91.2 A director or former director is entitled to receive and retain for his own
benefit a pension or other benefit provided under article 91.1 and is not
obliged to account for it to the Company.
REMUNERATION OF EXECUTIVE DIRECTOR
92. The salary or remuneration of a director appointed to hold employment or
executive office in accordance with the articles may be a fixed sum of money, or
wholly or in part governed by business done or profits made, or as otherwise
decided by the board, and may be in addition to or instead of a fee payable to
him for his services as director pursuant to the articles.
POWERS AND DUTIES OF THE BOARD
POWERS OF THE BOARD
93. Subject to the Acts, the memorandum of association of the Company and the
articles and to directions given by special resolution of the Company, the
business of the Company is managed by the board which may exercise all the
powers of the Company whether relating to the management of the business or not.
No alteration of the memorandum of association or of the articles and no
direction given by the Company shall invalidate a prior act of the board which
would have been valid if the alteration had not been made or the direction had
not been given. The provisions of the articles giving specific powers to the
board do not limit the general powers given by this article.
POWERS OF DIRECTORS BEING LESS THAN MINIMUM REQUIRED NUMBER
94. Subject to article 71, if the number of directors is less than the minimum
prescribed by the articles or decided by the Company by ordinary resolution, the
remaining director or directors may act only for the purposes of appointing an
additional director or directors to make up that minimum or convening a general
meeting of the Company for the purpose of making such appointment. If no
director or directors is or are able or willing to act, two members may convene
a general meeting for the purpose of appointing directors. An additional
director appointed in this way holds office (subject to the articles) only until
the dissolution of the next annual general meeting after his appointment unless
he is reappointed during the meeting.
POWERS OF EXECUTIVE DIRECTORS
95. The board may delegate to a director holding executive office (including a
chief executive officer or managing director) any of its powers, authorities and
discretions for such time and on such terms and conditions as it thinks fit. In
particular, the board may grant the power to sub-delegate, and may retain or
exclude the right of the board to exercise the delegated powers, authorities or
discretions collaterally with the director. The board may at any time revoke the
delegation or alter its terms and conditions.
DELEGATION TO COMMITTEES
96. The board may delegate any of its powers, authorities and discretions for
such time and on such terms and conditions as it thinks fit to a committee
consisting of one or more directors (save that in relation to any committee, at
least one member must be a
Page 39
Liberty Designated Director, provided there is at the relevant time such a
director holding office as such, and one member must be a Microsoft Designated
Director, provided there is at the relevant time such a director holding office
as such), and (if thought fit) one or more other persons, but only if a majority
of the members of the committee are directors or alternate directors. Any such
committee shall be chaired by an Independent Director and shall comprise a
majority of members independent of Liberty and Microsoft. No resolution of a
committee is effective unless a majority of those present when it is passed are
directors or alternate directors. In particular, the board may grant the power
to sub-delegate, and may retain or exclude the right of the board to exercise
the delegated powers, authorities or discretions collaterally with the
committee. The board may at any time revoke the delegation or alter its terms
and conditions or discharge the committee in whole or in part. Where a provision
of the articles refers to the exercise of a power, authority or discretion by
the board and that power, authority or discretion has been delegated by the
board to a committee, the provision shall be construed as permitting the
exercise of the power, authority or discretion by the committee. Provided that
the right of a Liberty Designated Director and/or a Microsoft Designated
Director to attend such committee meetings may be waived on a general or
specific basis by Liberty or by a Liberty Designated Director (in respect of all
Liberty Designated Directors) or by Microsoft or a Microsoft Designated Director
(in respect of all Microsoft Designated Directors), as the case may be.
LOCAL MANAGEMENT
97. The board may establish local or divisional boards or agencies for managing
the affairs of the Company in a specified locality, either in the United Kingdom
or elsewhere, and may appoint persons to be members of a local or divisional
board or agency, and may fix their remuneration. The board may delegate to a
local or divisional board or agency any of its powers, authorities and
discretions for such time and on such terms and conditions as it thinks fit. In
particular, the board may grant the power to sub-delegate, may retain or exclude
the right of the board to exercise the delegated powers, authorities or
discretions collaterally with the local or divisional board or agency and may
authorise the members of a local or divisional board or agency (or any of them)
to fill a vacancy or to act despite a vacancy. The board may at any time revoke
or alter the terms and conditions of the appointment or delegation. Subject to
terms and conditions imposed by the board, the proceedings of a local or
divisional board or agency with two or more members are governed by those
articles that regulate the proceedings of the board, so far as applicable.
POWER OF ATTORNEY
98. The board may by power of attorney or otherwise appoint a person to be the
agent of the Company and may delegate to that person any of its powers,
authorities and discretions for such purposes, for such time and on such terms
and conditions (including as to remuneration) as it thinks fit. In particular,
the board may grant the power to sub-delegate and may retain or exclude the
right of the board to exercise the delegated powers, authorities or discretions
collaterally with the agent. The board may at any time revoke or alter the terms
and conditions of the appointment or delegation.
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ASSOCIATE DIRECTORS
99. The board may appoint a person (not being a director) to an office or
employment having a designation or title including the word director or attach
to an existing office or employment that designation or title and may terminate
the appointment or use of that designation or title. The inclusion of the word
director in the designation or title of an office or employment does not imply
that the person is, or is deemed to be, or is empowered to act as, a director
for any of the purposes of the Acts or the articles.
EXERCISE OF VOTING POWERS
100. Subject to article 103, the board may exercise or cause to be exercised the
voting powers conferred by shares in the capital of another company held or
owned by the Company, or a power of appointment to be exercised by the Company,
in any manner it thinks fit (including the exercise of the voting power or power
of appointment in favour of the appointment of a director as an officer or
employee of that company or in favour of the payment of remuneration to the
officers or employees of that company).
PROVISION FOR EMPLOYEES
101. The board may exercise the powers conferred on the Company by the Acts to
make provision for the benefit of a person employed or formerly employed by the
Company or any of its subsidiary undertakings (or any member of his family,
including a spouse or former spouse, or any person who is or was dependent on
him) in connection with the cessation or the transfer to a person of the whole
or part of the undertaking of the Company or the subsidiary undertaking.
REGISTERS
102. Subject to the Acts, the board may exercise the powers conferred on the
Company with regard to the keeping of an overseas, local or other register and
may make and vary regulations as it thinks fit concerning the keeping of a
register.
BORROWING POWERS
103.1 Subject to the following provisions of this article 103, the board may
exercise all the powers of the Company to borrow money and to mortgage or charge
all or part of the undertaking, property and assets (present or future) and
uncalled capital of the Company and, subject to the Acts, to issue debentures
and other securities, whether outright or as collateral security for a debt,
liability or obligation of the Company or of a third party.
103.2 The board shall restrict the borrowings of the Company and shall exercise
all voting and other rights or powers of control exercisable by the Company in
relation to its subsidiary undertakings so as to procure (as regards subsidiary
undertakings, to the extent that it can procure by such exercise) that the
aggregate principal amount outstanding in respect of moneys borrowed by the
group does not at any time, without the previous sanction of an ordinary
resolution of the Company, exceed a sum equal to the greater of:
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(a) (pound)6,000,000,000; and
(b) five times the adjusted capital and reserves.
103.3 In this article 103:
(a) ADJUSTED CAPITAL AND RESERVES means a sum equal to the aggregate of:
(i) the amount paid up on the allotted or issued share capital of the
Company; and
(ii) the amount standing to the credit or debit of the consolidated
reserves;
all as shown in the relevant balance sheet but after:
(aa) making appropriate adjustments in respect of:
(1) a variation in the amounts referred to in article 102.3(a)
and (b) since the date of the relevant balance sheet; for
this purpose (aa) if a proposed allotment of shares by the
Company for cash has been underwritten, those shares are
deemed to have been allotted and the amount (including a
premium) of the subscription moneys payable in respect of
those shares (not being moneys payable later than six months
after the date of allotment) are deemed to have been paid up
to the extent so underwritten on the date on which the issue
of those shares was underwritten (or, if the underwriting
was conditional, the date on which it became unconditional),
and (bb) where the Company is under an obligation (whether
immediately or at a future date) to issue shares on
conversion (however effected) of other securities of a group
undertaking and the obligation to effect conversion is not
conditional on any act, omission or event (other than lapse
of time), the share capital of the Company and the
consolidated reserves shall be calculated as if the
securities had been converted;
(2) an undertaking which has become a group undertaking since
the date of the relevant balance sheet;
(3) an undertaking which has ceased to be a group undertaking
since the date of the relevant balance sheet;
(bb) excluding (so far as not already excluded) amounts attributable
to minority interests;
(cc) deducting (so far as not already deducted):
(A) sums equivalent to the book values of goodwill and other
intangible assets shown in the relevant balance sheet (as
adjusted pursuant to the preceding provisions of this
article 102) but adding back the amount of goodwill that
would have remained on the relevant balance sheet (as
adjusted) if all goodwill arising on acquisitions of group
undertakings after 22 November 1994 and
Page 42
which has been written off against reserves in accordance
with generally accepted accounting practice in the United
Kingdom had been carried on the balance sheet as an asset
and amortised on a straight-line basis over 20 years (or
such longer period, as decided by the Company, as may be in
accordance with generally accepted accounting practice in
the United Kingdom), this amount to be certified by the
auditors; and
(B) the amount of a distribution declared, recommended, paid or
made by a group undertaking to a person other than a group
undertaking out of profits accrued up to and including the
date of, but not provided for in, the relevant balance
sheet; and
(C) making such other adjustments (if any) as the auditors
consider appropriate or necessary to reflect changes in
circumstances since the date of the relevant balance sheet;
(b) EXTERNAL INTEREST means, in relation to a group undertaking that is not
wholly owned, that part of the issued and paid-up equity share capital of
the group undertaking that is not beneficially owned, directly or
indirectly, by another group undertaking;
(c) EXTERNAL INTEREST PERCENTAGE means, in relation to a group undertaking that
is not wholly owned, the percentage that the external interest forms of the
whole of the issued and paid-up equity share capital of the group
undertaking;
(d) GROUP means (aa) the Company, and (bb) all undertakings which are included
in the group accounts in which the relevant balance sheet is comprised and
which would be so included if group accounts were prepared at the relevant
time (and as if that time were the end of the Company's financial year),
and (cc) all undertakings which are not included in the group accounts in
which the relevant balance sheet is comprised but which would be so
included if group accounts were prepared at the relevant time (and as if
that time were the end of the Company's financial year);
(e) GROUP UNDERTAKING means the Company or another undertaking in the group;
(f) MONEYS BORROWED include the following:
(i) the nominal amount of and the amount of any premium paid in respect
of any allotted or issued share capital (not being equity share
capital) of a group undertaking not beneficially owned, directly or
indirectly, by another group undertaking;
(ii) the principal amount of any loan capital (whether secured or
unsecured) of a group undertaking not beneficially owned, directly
or indirectly, by another group undertaking;
(iii) the principal amount of any borrowings by a person other than a
group undertaking, the repayment of which is the subject of a
guarantee or
Page 43
indemnity by a group undertaking or is secured on the assets of a
group undertaking;
(iv) the outstanding amount raised by acceptances under an acceptance
credit opened on behalf of and in favour of a group undertaking by
a bank or accepting house (except for acceptances of, or acceptance
credits in relation to, trade bills for purchases of goods or
services in the ordinary course of business and outstanding for six
months or less);
(v) a fixed or minimum premium payable on repayment or redemption of
borrowings that constitute moneys borrowed for the purposes of this
article 103; and
(vi) amounts raised under a transaction (including, without limitation,
forward sale or purchase agreements and outstanding obligations
under finance leases and hire purchase contracts classified as
finance leases, but excluding operating leases (within the meanings
given to those terms by Statement of Standard Accounting Practice
21)) having the commercial effect of borrowings entered into to
enable the finance of operations or capital requirements;
but exclude:
(vii) borrowings by one group undertaking from another, including the
principal amount of any loan capital (whether secured or unsecured)
and the nominal amount of any allotted or issued share capital (not
being equity share capital) of a group undertaking beneficially
owned, directly or indirectly, by another group undertaking, except
that, where the group undertaking from which such borrowings are
made is not wholly owned, a percentage of the borrowings equal to
the external interest percentage are not excluded;
(viii) borrowings made for the purpose of, and applied within six months
of being made in, repaying the whole or part of borrowings that
constitute moneys borrowed for the purposes of this article 104;
(ix) borrowings for the purpose of financing a contract to the extent
that part of the price receivable under the contract is guaranteed
or insured by the Export Credit Guarantee Department of the
Department of Trade and Industry or by another institution
fulfilling a similar function;
(x) where a group undertaking is not wholly owned, a percentage of its
borrowings that constitute moneys borrowed for the purposes of this
article 104 equal to the external interest percentage;
(xi) an amount equal to the borrowings of an undertaking outstanding
immediately before and repaid within 90 days after it becomes a
group undertaking;
Page 44
(xii) the amount of moneys borrowed which are for the time being
deposited with a governmental authority in any part of the world in
connection with import deposits or a similar governmental scheme to
the extent that the group undertaking making the deposit retains
its interest in the deposit;
(xiii) a sum advanced or paid to a group undertaking (or its agents or
nominees) by a customer of a group undertaking as an unexpended
customer receipt or progress payment pursuant to a contract between
the customer and a group undertaking; and
(xiv) amounts treated as amounts due to trade creditors in the
consolidated group accounts of the Company in which the relevant
balance sheet is comprised;
and deducting:
(xv) an amount equal to the aggregate outstanding of:
(1) all cash deposits or credit balances on a current account of a
group undertaking with a bank (not itself being a group
undertaking) except for those held by banks as collateral for
borrowings;
(2) the realisable value of certificates of deposit and securities of
governments and companies; and
(3) other readily realisable deposits or credit balances (whether
made with a bank or otherwise);
in each case beneficially owned, directly or indirectly, by a group
undertaking, but excluding (aa) in the case of any such items
beneficially owned, directly or indirectly, by a group undertaking
that is not wholly owned, a percentage of those items equal to the
external interest percentage and (bb) any sum advanced or paid to a
group undertaking (or its agents or nominees) by a customer of a group
undertaking as an unexpended customer receipt or progress payment
pursuant to a contract between the customer and a group undertaking;
(g) RELEVANT BALANCE SHEET means the consolidated balance sheet dealing with
the state of affairs of the Company and its subsidiary undertakings
comprised in the latest group accounts prepared and approved by the board
and on which the auditors have made their report pursuant to the Acts; and
(h) WHOLLY OWNED means, in relation to a group undertaking, that it has no
member that is not itself a group undertaking or a person acting on behalf
of a group undertaking.
103.4 When the amount of moneys borrowed to be taken into account for the
purposes of this article 103 on a particular day is being ascertained, moneys
denominated or repayable in a currency other than sterling shall be converted
for the purpose of calculating the sterling equivalent either:
Page 45
(a) at the rate of exchange specified in a forward purchase contract, currency
option, back-to-back loan, swap or other arrangement taken out or entered
into to reduce the risk associated with fluctuations in rates of exchange
in respect of repayment of those moneys (a HEDGING AGREEMENT); or
(b) if repayment of those moneys has not been covered by a hedging agreement,
at the more favourable to the Company of:
(i) the rate of exchange used for the conversion of that currency in the
relevant balance sheet, or
(ii) if no rate was used, the middle-market rate of exchange quoted by
Barclays Bank PLC at the close of business in London on the date of
the relevant balance sheet, or
(iii) the middle-market rate of exchange quoted by Barclays Bank PLC at the
close of business in London on the business day immediately preceding
the day on which the calculation falls to be made.
103.5 A report or certificate of the auditors as to the amount of the adjusted
total of capital and reserves or the aggregate amount of moneys borrowed for the
purposes of this article 103 is conclusive and binding on all concerned.
Nevertheless the board may at any time act in reliance on a bona fide estimate
of the amount of the adjusted total of capital and reserves or the aggregate
amount of moneys borrowed and if in consequence the limit on moneys borrowed set
out in this article 103 is inadvertently exceeded, the amount of moneys borrowed
equal to the excess may be disregarded for 90 days after the date on which by
reason of a determination of the auditors or otherwise the board becomes aware
that this situation has or may have arisen.
103.6 No debt incurred or security given in respect of moneys borrowed in excess
of the limit imposed by this article 103 is invalid or ineffectual except where
express notice that the limit has been or will be exceeded has been given to the
lender or recipient of the security at the time when the debt is incurred or
security given. No lender or other person dealing with the Company is concerned
to see or enquire whether the limit is observed.
REGISTER OF CHARGES
104. The Company shall keep a register of charges in accordance with the Acts
and the fee to be paid by a person other than a creditor or member for each
inspection of the register of charges is the maximum sum prescribed by the Acts
or, failing which, decided by the board.
DIRECTORS' INTERESTS
105.1 Subject to the Acts and article 105.2, a director, notwithstanding his
office:
(a) may enter into or otherwise be interested in a contract, arrangement,
transaction or proposal with the Company or in which the Company is
otherwise interested either in connection with his tenure of an office or
place of profit or as seller, buyer or otherwise;
Page 46
(b) may hold another office or place of profit with the Company (except that of
auditor or auditor of a subsidiary of the Company) in conjunction with the
office of director and may act by himself or through his firm in a
professional capacity to the Company, and in that case on such terms as to
remuneration and otherwise as the board may decide either in addition to or
instead of remuneration provided for by another article;
(c) may be a director or other officer of, or employed by, or a party to a
contract, transaction, arrangement or proposal with or otherwise interested
in, a company promoted by the Company or in which the Company is otherwise
interested or as regards which the Company has a power of appointment; and
(d) is not liable to account to the Company for a profit, remuneration or other
benefit realised by such office, employment, contract, arrangement,
transaction or proposal and no such contract, arrangement, transaction or
proposal is avoided on the grounds of any such interest or benefit.
105.2 A director who, to his knowledge, is in any way (directly or indirectly)
interested in a contract, arrangement, transaction or proposal with the Company
shall declare the nature of his interest at the meeting of the board at which
the question of entering into the contract, arrangement, transaction or proposal
is first considered, if he knows his interest then exists or, in any other case,
at the first meeting of the board after he knows that he is or has become
interested. For the purposes of this article 105:
(a) a general notice given to the board by a director that he is to be regarded
as having an interest (of the nature and extent specified in the notice) in
a contract, transaction, arrangement or proposal in which a specified
person or class of persons is interested is a sufficient disclosure under
this article 105 in relation to that contract, transaction, arrangement or
proposal; and
(b) an interest of which a director has no knowledge and of which it is
unreasonable to expect him to have knowledge is not treated as his
interest.
105.3 Except as provided in this article 105, a director may not vote on a
resolution of the board or of a committee of the board concerning a contract,
arrangement, transaction or proposal to which the Company is or is to be a party
and in which he is or is to be, to his knowledge, (together with any interest of
any person connected with him) materially interested (otherwise than by virtue
of his interest in shares or debentures or other securities of or otherwise in
or through the Company), but this prohibition does not apply to a resolution
concerning any of the following matters:
(a) the giving to him of a guarantee, security or indemnity in respect of money
lent or obligations incurred by him or any other person at the request of
or for the benefit of the Company or any of its subsidiary undertakings;
(b) the giving to a third party of a guarantee, security or indemnity in
respect of a debt or obligation of the Company or any of its subsidiary
undertakings for which he himself has assumed responsibility in whole or in
part, either alone or jointly with others, under a guarantee or indemnity
or by the giving of security;
Page 47
(c) a contract, arrangement, transaction or proposal concerning an offer of
shares, debentures or other securities of the Company or any of its
subsidiary undertakings for subscription or purchase, in which offer he is
or may be entitled to participate as a holder of securities or in the
underwriting or sub-underwriting of which he is to participate;
(d) a contract, arrangement, transaction or proposal to which the Company is or
is to be a party concerning another company (including a subsidiary
undertaking of the Company) in which he is interested (directly or
indirectly) (a RELEVANT COMPANY) and whether as an officer, shareholder,
creditor or otherwise, if he is not the holder of or beneficially
interested in one per cent. or more of the capital of the relevant company.
For the purposes of this paragraph (d):
(i) a director is deemed to have an interest in one per cent. or more of
the capital of a relevant company if he (together with any interest
of any person connected with him) is the holder of or beneficially
interested (as that term is used in sections 198 to 211 of the Act)
in one per cent. or more of a class of equity share capital of the
relevant company or of the voting rights available to members of the
relevant company (or any other body corporate through which his
interest is derived) or if he can cause one per cent. or more of
those voting rights to be cast at his direction (any such interest
being deemed for the purpose of this Article to be a material
interest in all circumstances); and
(ii) where a director is deemed for the purposes of this paragraph (d) to
be interested in one per cent. or more in the capital of a relevant
company and that relevant company is materially interested in a
contract, the director is also deemed to be materially interested in
that contract;
(e) a contract, arrangement, transaction or proposal concerning the adoption,
modification or operation of a pension, superannuation or similar scheme or
retirement, death or disability benefits scheme or personal pension plan or
employees' share scheme under which he may benefit and which either (a) has
been approved by or is subject to and conditional on approval by the Inland
Revenue for taxation purposes, or (b) relates to both employees and
directors of the Company (or any of its subsidiary undertakings) and does
not accord to a director as such a privilege or advantage not accorded to
the employees to whom the scheme or fund relates;
(f) a contract, arrangement, transaction or proposal for the benefit of
employees of the Company or any of its subsidiary undertakings under which
the director benefits in a similar manner to employees and which does not
accord to a director as such a privilege or advantage not accorded to the
employees to whom it relates; and
(g) a contract, arrangement, transaction or proposal concerning the purchase or
maintenance of any insurance policy under which he may benefit.
105.4 A director may not vote or be counted in the quorum on a resolution of the
board or committee of the board concerning his own appointment (including fixing
or varying the terms of his appointment or its termination) as the holder of an
office or
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place of profit with the Company or any company in which the Company
is interested. Where proposals are under consideration concerning the
appointment (including fixing or varying the terms of appointment or its
termination) of two or more directors to offices or places of profit with the
Company or a company in which the Company is interested, such proposals shall be
divided and a separate resolution considered in relation to each director. In
such case each of the directors concerned (if not otherwise debarred from voting
under this article 105) is entitled to vote (and be counted in the quorum) in
respect of each resolution except that concerning his own appointment.
105.5 If a question arises at a meeting as to the materiality of a director's
interest (other than the interest of the chairman of the meeting) or as to the
entitlement of a director (other than the chairman) to vote or be counted in a
quorum and the question is not resolved by his voluntarily agreeing to abstain
from voting or being counted in the quorum, the question shall be referred to
the chairman and his ruling in relation to the director concerned is conclusive
and binding on all concerned.
105.6 If a question arises at a meeting as to the materiality of the interest of
the chairman of the meeting or as to the entitlement of the chairman to vote or
be counted in a quorum and the question is not resolved by his voluntarily
agreeing to abstain from voting or being counted in the quorum, the question
shall be decided by resolution of the directors or committee members present at
the meeting (excluding the chairman) whose majority vote is conclusive and
binding on all concerned.
105.7 For the purposes of this article 105, the interest of a person who is for
the purposes of the Acts connected with (within the meaning of section 346 of
the Act) a director is treated as the interest of the director and, in relation
to an alternate director, the interest of his appointor shall be treated as the
interest of the alternate director in addition to an interest which the
alternate director otherwise has. This article 105 applies to an alternate
director as if he were a director otherwise appointed.
105.8 For the avoidance of doubt, any Liberty Designated Director or Microsoft
Designated Director shall be deemed, for all purposes (and not only for the
purposes of the articles), not to have an interest in any contract, arrangement,
transaction or proposal in which Liberty or Microsoft respectively and the
members of their respective groups or associates have an interest.
PROCEEDINGS OF DIRECTORS AND COMMITTEES
BOARD MEETINGS
106. Subject to the articles, the board may meet for the despatch of business,
adjourn and otherwise regulate its proceedings as it thinks fit.
NOTICE OF BOARD MEETINGS
107. A director may, and the secretary at the request of a director shall,
summon a board meeting at any time. Notice of a board meeting is deemed to be
duly given to a director if it is given to him personally or by word of mouth or
sent in writing to him at his last-known address or another address given by him
to the Company for that purpose at least 24 hours in advance of a meeting. A
director may waive the requirement that
Page 49
notice be given to him of a board meeting, either prospectively or
retrospectively. A director absent or intending to be absent from the United
Kingdom or the United States of America may request that notices of board
meetings during his absence be sent in writing to him at an address given by him
to the Company for that purpose. If no request is made it is not necessary to
give notice of a board meeting to a director who is absent from the United
Kingdom or the United States of America.
QUORUM
108. The quorum necessary for the transaction of business is a majority of the
directors present in person or by alternate director. A duly convened meeting of
the board at which a quorum is present is competent to exercise all or any of
the authorities, powers and discretions vested in or exercisable by the board.
CHAIRMAN OF BOARD
109. The board may appoint one of its body as chairman to preside at every board
meeting at which he is present and one or more deputy chairmen and decide the
period for which he is or they are to hold office (and may at any time remove
him or them from office). If no chairman or deputy chairman is elected, or if at
a meeting neither the chairman nor a deputy chairman is present within five
minutes of the time fixed for the start of the meeting, the directors and
alternate directors (in the absence of their appointors) present shall choose
one of their number to be chairman. If two or more deputy chairmen are present,
the senior of them shall act as chairman, seniority being determined by length
of office since their last appointment or reappointment. As between two or more
who have held office for an equal length of time, the deputy chairman to act as
chairman shall be decided by those directors and alternate directors (in the
absence of their appointors) present. A chairman or deputy chairman may hold
executive office or employment with the Company.
VOTING
110. Questions arising at a meeting of the board are determined by a majority of
votes. In case of an equality of votes the chairman shall not have a second or
casting vote.
PARTICIPATION BY TELEPHONE
111. A director or his alternate director may participate in a meeting of the
board or a committee of the board through the medium of conference telephone or
similar form of communication equipment if all persons participating in the
meeting are able to hear and speak to each other throughout the meeting. A
person participating in this way is deemed to be present in person at the
meeting and is counted in a quorum and entitled to vote. Subject to the Acts,
all business transacted in this way by the board or a committee of the board is
for the purposes of the articles deemed to be validly and effectively transacted
at a meeting of the board or a committee of the board although fewer than two
directors or alternate directors are physically present at the same place. The
meeting is deemed to take place where the largest group of those participating
is assembled or, if there is no such group, where the chairman of the meeting
then is.
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RESOLUTION IN WRITING
112. A resolution in writing executed by all directors for the time being
entitled to receive notice of a board meeting and not being less than a quorum
or by all members of a committee of the board is as valid and effective for all
purposes as a resolution passed at a meeting of the board (or committee, as the
case may be). The resolution in writing may consist of several documents in the
same form each executed by one or more of the directors or members of the
relevant committee. The resolution in writing need not be signed by an alternate
director if it is signed by his appointor and a resolution signed by an
alternate director need not be signed by his appointor.
PROCEEDINGS OF COMMITTEES
113.1 Proceedings of committees of the board shall be conducted in accordance
with regulations prescribed by the board (if any). Subject to those regulations
and articles 113.2 and 113.3, proceedings shall be conducted in accordance with
applicable provisions of the articles regulating the proceedings of the board.
113.2 Where the board resolves to delegate any of its powers, authorities and
discretions to a committee and that resolution states that the committee shall
consist of any one or more unnamed directors, it is not necessary to give notice
of a meeting of that committee to directors other than the director or directors
who form the committee.
113.3 The quorum necessary for the transaction of business of any committee
shall be a majority of the members of such committee who are directors present
in person or by an alternate director.
MINUTES OF PROCEEDINGS
114.1 The board shall cause minutes to be made in books kept for the purpose of:
(a) all appointments of officers and committees made by the board and of any
remuneration fixed by the board; and
(b) the names of directors present at every meeting of the board, committees of
the board, the Company or the holders of a class of shares or debentures,
and all orders, resolutions and proceedings of such meetings.
114.2 If purporting to be signed by the chairman of the meeting at which the
proceedings were held or by the chairman of the next succeeding meeting, minutes
are receivable as prima facie evidence of the matters stated in them.
VALIDITY OF PROCEEDINGS OF BOARD OR COMMITTEE
115. All acts done by a meeting of the board, or of a committee of the board, or
by a person acting as a director, alternate director or member of a committee
are, notwithstanding that it is afterwards discovered that there was a defect in
the appointment of a person or persons acting, or that they or any of them were
or was disqualified from holding office or not entitled to vote, or had in any
way vacated their or his office, as valid as if every such person had been duly
appointed, and was duly qualified and had continued to be a director, alternate
director or member of a committee and entitled to vote.
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SECRETARY AND AUTHENTICATION OF DOCUMENTS
SECRETARY
116.1 Subject to the Acts, the board shall appoint a secretary or joint
secretaries and may appoint one or more persons to be an assistant or deputy
secretary on such terms and conditions (including remuneration) as it thinks
fit. The board may remove a person appointed pursuant to this article from
office and appoint another or others in his place.
116.2 Any provision of the Acts or of the articles requiring or authorising a
thing to be done by or to a director and the secretary is not satisfied by its
being done by or to the same person acting both as director and as, or in the
place of, the secretary.
AUTHENTICATION OF DOCUMENTS
117. A director or the secretary or another person appointed by the board for
the purpose may authenticate documents affecting the constitution of the Company
(including the memorandum of association and the articles) and resolutions
passed by the Company or holders of a class of shares or the board or a
committee of the board and books, records, documents and accounts relating to
the business of the Company, and to certify copies or extracts as true copies or
extracts.
SEALS
SAFE CUSTODY
118. The board shall provide for the safe custody of every seal.
APPLICATION OF SEALS
119. A seal may be used only by the authority of a resolution of the board or of
a committee of the board. The board may decide who will sign an instrument to
which a seal is affixed (or, in the case of a share certificate, on which the
seal may be printed) either generally or in relation to a particular instrument
or type of instrument. The board may also decide, either generally or in a
particular case, that a signature may be dispensed with or affixed by mechanical
means. Unless otherwise decided by the board:
(a) share certificates and certificates issued in respect of debentures or
other securities (subject to the provisions of the relevant instrument)
need not be signed or, if signed, a signature may be applied by mechanical
or other means or may be printed; and
(b) every other instrument to which a seal is affixed shall be signed by one
director and by the secretary or a second director.
OFFICIAL SEAL FOR USE ABROAD
120. The Company may exercise the powers conferred by the Acts with regard to
having an official seal for use abroad, and those powers shall be vested in the
board.
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DIVIDENDS AND OTHER PAYMENTS
DECLARATION OF DIVIDENDS
121. Subject to the Acts and the articles, the Company may by ordinary
resolution declare a dividend to be paid to the members according to their
respective rights and interests, but no dividend may exceed the amount
recommended by the board.
INTERIM DIVIDENDS
122. Subject to the Acts, the board may declare and pay such interim dividends
(including a dividend payable at a fixed rate) as appear to it to be justified
by the profits of the Company available for distribution. If the share capital
is divided into different classes, the board may pay interim dividends on shares
which rank after shares conferring preferred rights with regard to dividend as
well as on shares with preferred rights, unless at the time of payment a
preferential dividend is in arrear. If the board acts in good faith, it does not
incur any liability to the holders of shares conferring preferred rights for a
loss they may suffer by the lawful payment of an interim dividend on shares
ranking after those with preferred rights.
ENTITLEMENT TO DIVIDENDS
123. Except as otherwise provided by the rights attached to shares, a dividend
shall be declared and paid according to the amounts paid up on the shares in
respect of which the dividend is declared and paid, but no amount paid up on a
share in advance of a call may be treated for the purpose of this article as
paid up on the share. Dividends shall be apportioned and paid proportionately to
the amounts paid up on the shares during any portion or portions of the period
in respect of which the dividend is paid.
METHOD OF PAYMENT
124.1 The Company may pay a dividend, interest or another amount payable in
respect of a share in cash or by cheque, dividend warrant or money order, or by
a bank or other funds transfer system, or by such other method as the holder or
joint holders of the share in respect of which the payment is made (or the
person or persons entitled by transmission to the share) may in writing direct.
Any joint holder or other person jointly entitled to a share may give an
effective receipt for a dividend, interest or other amount paid in respect of
the share.
124.2 The Company may send a cheque, warrant or order by post (i) in the case of
a sole holder, to his registered address, or (ii) in the case of joint holders,
to the registered address of the person whose name stands first in the register,
or (iii) in the case of a person or persons entitled by transmission to a share,
as if it were a notice given in accordance with article 139, or (iv) in any
case, to a person and address that the person or persons entitled to the payment
may in writing direct.
124.3 Every cheque, warrant or order is sent at the risk of the person entitled
to the payment and shall be made payable to the order of the person or persons
entitled. The payment of the cheque, warrant or order is a good discharge to the
Company. If payment is made by a bank or other funds transfer, or by another
method at the direction of the holder or holders or other person or persons
entitled, the Company is not
Page 53
responsible for amounts lost or delayed in the course of the transfer or in
carrying out these directions.
124.4 Without prejudice to article 67, the board may withhold payment of a
dividend (or part of a dividend) payable to a person entitled by transmission to
a share until he has provided any evidence of his right that the board may
reasonably require.
124.5 Where an Approved Depositary (approved by the board for the purposes of
this article 124.5) has requested to receive dividends in a currency other than
pounds sterling, the board may in its absolute discretion approve the entering
into of arrangements with such Approved Depositary to enable payment of any
dividend to be made to such Approved Depositary in such other currency for value
on the date on which the relevant dividend is paid, or such later date as the
board may determine.
DIVIDENDS NOT TO BEAR INTEREST
125. No dividend or other amount payable by the Company in respect of a share
bears interest as against the Company unless otherwise provided by the rights
attached to the share.
CALLS OR DEBTS MAY BE DEDUCTED FROM DIVIDENDS ETC.
126. The board may deduct from a dividend or other amounts payable to a person
in respect of a share amounts due from him to the Company on account of a call
or otherwise in relation to a share.
UNCLAIMED DIVIDENDS ETC.
127. All unclaimed dividends, interest or other amounts payable by the Company
in respect of a share may be invested or otherwise made use of by the board for
the benefit of the Company until claimed. Dividends unclaimed for a period of 12
years from the date they became due for payment are forfeited and cease to
remain owing by the Company. The payment of an unclaimed dividend, interest or
other amount payable by the Company in respect of a share into a separate
account does not constitute the Company a trustee in respect of it.
UNCASHED DIVIDENDS
128. If, in respect of a dividend or other amount payable in respect of a share,
on any one occasion:
(a) a cheque, warrant or order is returned undelivered or left uncashed, or
(b) a transfer made by a bank or other funds transfer system is not accepted,
and reasonable enquiries have failed to establish another address or account of
the person entitled to the payment, the Company is not obliged to send or
transfer a dividend or other amount payable in respect of that share to that
person until he notifies the Company of an address or account to be used for
that purpose. If the cheque, warrant or order is returned undelivered or left
uncashed or transfer not accepted on two consecutive occasions, the Company may
exercise this power without making any such enquiries.
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PAYMENT OF DIVIDENDS IN SPECIE
129. Without prejudice to article 123, the board may, with the prior authority
of an ordinary resolution of the Company, direct that payment of a dividend may
be satisfied wholly or in part by the distribution of specific assets and in
particular of paid-up shares or debentures of another company. Where a
difficulty arises in connection with the distribution, the board may settle it
as it thinks fit and in particular may issue fractional certificates (or ignore
fractions), may fix the value for distribution of the specific assets (or any
part of them), may decide that a cash payment be made to a member on the basis
of the value so fixed, in order to secure equality of distribution, and may vest
assets in trustees on trust for the persons entitled to the dividend as may seem
expedient to the board.
PAYMENT OF SCRIP DIVIDENDS
130.1 Subject to the Acts, but without prejudice to article 123, the board may,
with the prior authority of an ordinary resolution of the Company, allot to
those holders of a particular class of shares who have elected to receive them
further shares of that class or ordinary shares, in either case credited as
fully paid, (NEW SHARES) instead of cash in respect of all or part of a dividend
or dividends specified by the resolution, subject to any exclusions,
restrictions or other arrangements the board may in its absolute discretion deem
necessary or expedient to deal with legal or practical problems under the laws
of, or the requirements of a recognised regulatory body or a stock exchange in,
any territory.
130.2 Where a resolution under article 130.1 is to be proposed at a general
meeting and the resolution relates in whole or in part to a dividend to be
declared at that meeting, then the resolution declaring the dividend is deemed
to take effect at the end of that meeting.
130.3 A resolution under article 130.1 may relate to a particular dividend or to
all or any dividends declared or paid within a specified period, but that period
may not end later than the beginning of the fifth annual general meeting
following the date of the meeting at which the resolution is passed.
130.4 The board shall determine the basis of allotment of new shares so that, as
nearly as may be considered convenient without involving rounding up of
fractions, the value of the new shares (including a fractional entitlement) to
be allotted (calculated by reference to the average quotation, or the nominal
value of the new shares, if greater) equals (disregarding an associated tax
credit) the amount of the dividend which would otherwise have been received by
the holder (the RELEVANT DIVIDEND). For this purpose the AVERAGE QUOTATION of
each of the new shares is the average of the middle-market quotations for a
fully-paid share of the Company of that class derived from the Daily Official
List of the London Stock Exchange on the business day on which the relevant
class of shares is first quoted ex the relevant dividend (or such other date as
the board may deem appropriate to take account of any subsequent issue of shares
by the Company) and the four subsequent business days or shall be as determined
by or in accordance with the ordinary resolution.
130.5 The board may make any provision it considers appropriate in relation to
an allotment made pursuant to this article, including but not limited to:
Page 55
(a) the giving of notice to holders of the right of election offered to them;
(b) the provision of forms of election (whether in respect of a particular
dividend or dividends generally);
(c) determination of the procedure for making and revoking elections;
(d) the place at which, and the latest time by which, forms of election and
other relevant documents must be lodged in order to be effective; and
(e) the disregarding or rounding up or down or carrying forward of fractional
entitlements, in whole or in part, or the accrual of the benefit of
fractional entitlements to the Company (rather than to the holders
concerned).
130.6 The dividend (or that part of the dividend in respect of which a right of
election has been offered) is not declared or payable on shares in respect of
which an election has been duly made (the ELECTED SHARES); instead new shares
are allotted to the holders of the elected shares on the basis of allotment
calculated as in article 130.4. For that purpose, the board may resolve to
capitalise out of amounts standing to the credit of reserves (including a share
premium account, capital redemption reserve and profit and loss account),
whether or not available for distribution, a sum equal to the aggregate nominal
amount of the new shares to be allotted and apply it in paying up in full the
appropriate number of new shares for allotment and distribution to the holders
of the elected shares. A resolution of the board capitalising part of the
reserves has the same effect as if the capitalisation had been declared by
ordinary resolution of the Company pursuant to article 131. In relation to the
capitalisation the board may exercise all the powers conferred on it by article
131 without an ordinary resolution of the Company.
130.7 The new shares rank pari passu in all respects with each other and with
the fully-paid shares of the same class in issue on the record date for the
dividend in respect of which the right of election has been offered, but they
will not rank for a dividend or other distribution or entitlement which has been
declared or paid by reference to that record date.
CAPITALISATION OF PROFITS
131. Subject to the Acts, the board may, with the authority of an ordinary
resolution of the Company:
(a) resolve to capitalise an amount standing to the credit of reserves
(including a share premium account, capital redemption reserve and profit
and loss account), whether or not available for distribution;
(b) appropriate the sum resolved to be capitalised to the members in proportion
to the nominal amount of ordinary shares and limited voting shares (whether
or not fully paid) held by them respectively and apply that sum on their
behalf in or towards:
(i) paying up the amounts (if any) for the time being unpaid on shares
held by them respectively, or
Page 56
(i) paying up in full unissued shares or debentures of a nominal amount
equal to that sum,
and allot the shares or debentures, credited as fully paid, to the members
(or as they may direct) in those proportions, or partly in one way and
partly in the other, but the share premium account, the capital redemption
reserve and profits which are not available for distribution may, for the
purposes of this article 131, only be applied in paying up unissued shares
to be allotted to members credited as fully paid;
(c) make any arrangements it thinks fit to resolve a difficulty arising in the
distribution of a capitalised reserve and in particular, where shares or
debentures become distributable in fractions, the board may deal with the
fractions as it thinks fit, including issuing fractional certificates,
disregarding fractions or selling shares or debentures representing the
fractions to a person for the best price reasonably obtainable and
distributing the net proceeds of the sale in due proportion amongst the
members (except that if the amount due to a member is less than (pound)3,
or such other sum as the board may decide, the sum may be retained for the
benefit of the Company);
(d) authorise a person to enter (on behalf of all the members concerned) into
an agreement with the Company providing for either:
(i) the allotment to the members respectively, credited as fully paid, of
shares or debentures to which they may be entitled on the
capitalisation, or
(ii) the payment by the Company on behalf of the members (by the
application of their respective proportions of the reserves resolved
to be capitalised) of the amounts or part of the amounts remaining
unpaid on their existing shares,
an agreement made under such authority being effective and binding on all
those members; and
(e) generally do all acts and things required to give effect to the resolution.
RECORD DATES
132. Notwithstanding any other provision of the articles, but subject to the
Acts and rights attached to shares, the Company or the board may fix any date as
the record date for a dividend, distribution, allotment or issue. The record
date may be on or at any time before or after a date on which the dividend,
distribution, allotment or issue is declared, made or paid.
ACCOUNTS
INSPECTION OF ACCOUNTS
133.1 The board shall ensure that accounting records are kept in accordance with
the Acts.
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133.2 The accounting records shall be kept at the office or, subject to the
Acts, at another place decided by the board and shall be available during
business hours for the inspection of the directors and other officers. No member
(other than a director or other officer) has the right to inspect an accounting
record or other document except if a right is conferred by the Acts or he is
authorised by the board.
ACCOUNTS TO BE SENT TO MEMBERS ETC.
134.1 In respect of each financial year, a copy of the Company's annual
accounts, directors' report and auditors' report on those accounts shall be sent
by post or delivered to:
(a) every member (whether or not entitled to receive notices of general
meetings),
(b) every holder of debentures (whether or not entitled to receive notices of
general meetings), and
(c) every other person who is entitled to receive notices of general meetings,
not less than 21 clear days before the date of the meeting at which copies of
those documents are to be laid in accordance with the Acts. This article 134
does not require copies of the documents to which it applies to be sent or
delivered to:
(i) a member or holder of debentures of whose address the Company is unaware,
or
(ii) more than one of the joint holders of shares or debentures.
134.2 Where permitted by the Acts, a summary financial statement derived from
the Company's annual accounts and the directors' report in the form and
containing the information prescribed by the Acts may be sent or delivered to a
person in place of the documents required to be sent or delivered by article
135.1.
NOTICES
135. A notice to be given to or by a person pursuant to the articles shall be in
writing except that a notice convening a meeting of the board or of a committee
of the board need not be in writing.
SERVICE OF NOTICES AND OTHER DOCUMENTS ON MEMBERS
136.1 A notice or other document may be given to a member by the Company either
personally or by sending it by post in a pre-paid envelope addressed to the
member at his registered address, or by leaving it at that address (or at
another address notified for the purpose) in an envelope addressed to the
member.
136.2 In the case of joint holders of a share, a notice or other document shall
be given to whichever of them is named first in the register in respect of the
joint holding and notice given in this way is sufficient notice to all joint
holders.
136.3 If a member (or, in the case of joint holders, the person first named in
the register) has a registered address outside the United Kingdom or the United
States of
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America but has notified the Company of an address in the United Kingdom or the
United States of America at which notices or other documents may be given to
him, he is entitled to have notices given to him at that address, but otherwise
no such member or person is entitled to receive a notice or other document from
the Company.
NOTICE BY ADVERTISEMENT
137. If by reason of the suspension or curtailment of postal services in the
United Kingdom or the United States of America the Company is unable effectively
to convene a general meeting by notices sent by post, the board may, in its
absolute discretion and as an alternative to any other method of service
permitted by the articles, resolve to convene a general meeting by a notice
advertised in at least, in the case of the suspension or curtailment of postal
services in the United Kingdom, one leading United Kingdom national daily
newspaper and, in the case of the suspension or curtailment of postal services
in the United States of America, the Wall Street Journal and the New York Times,
(but, if any such newspaper shall by reason of industrial action or otherwise
not be published on the date on which the advertisement is due to appear,
publication in such other newspaper(s) as the board shall consider appropriate
shall be sufficient). In this case the Company shall send confirmatory copies of
the notice by post if at least seven clear days before the meeting the posting
of notices to addresses throughout the United Kingdom and/or the United States
of America again becomes practicable.
EVIDENCE OF SERVICE
138.1 A notice or other document addressed to a member at his registered address
or address for service in the United Kingdom or the United States of America is,
if sent by post (by airmail if posted from outside the United Kingdom to an
address within the United Kingdom or from outside the United States of America
to an address within the United States of America), deemed to be given within 24
hours if pre-paid as first class post and within 48 hours if pre-paid as second
class post after it has been posted, and in proving service it is sufficient to
prove that the envelope containing the notice or document was properly
addressed, pre-paid and posted.
138.2 A notice or document not sent by post but left at a registered address or
address for service in the United Kingdom or the United States of America is
deemed to be given on the day it is left.
138.3 Where notice is given by newspaper advertisements, the notice is deemed to
be given to all members and other persons entitled to receive it at noon on the
day when the advertisements appear or, if they appear on different days, at noon
on the last of the days when the advertisements appear.
138.4 A member present in person or by proxy at a meeting or of the holders of a
class of shares is deemed to have received due notice of the meeting and, where
required, of the purposes for which it was called.
NOTICE BINDING ON TRANSFEREES ETC.
139. A person who becomes entitled to a share by transmission, transfer or
otherwise is bound by a notice in respect of that share (other than a notice
served by
Page 59
the Company under section 212 of the Act) which, before his name is entered in
the register, has been properly served on a person from whom he derives his
title.
NOTICE IN CASE OF ENTITLEMENT BY TRANSMISSION
140. Where a person is entitled by transmission to a share, the Company may give
a notice or other document to that person as if he were the holder of a share by
addressing it to him by name or by the title of representative of the deceased
or trustee of the bankrupt member (or by similar designation) at an address in
the United Kingdom or the United States of America supplied for that purpose by
the person claiming to be entitled by transmission. Until an address has been
supplied, a notice or other document may be given in any manner in which it
might have been given if the death or bankruptcy or other event had not
occurred. The giving of notice in accordance with this article is sufficient
notice to all other persons interested in the share.
MISCELLANEOUS
DESTRUCTION OF DOCUMENTS
141.1 The Company may destroy:
(a) a share certificate which has been cancelled at any time after one year
from the date of cancellation;
(b) a mandate for the payment of dividends or other amounts or a variation or
cancellation of a mandate or a notification of change of name or address at
any time after two years from the date the mandate, variation, cancellation
or notification was recorded by the Company;
(c) an instrument of transfer of shares (including a document constituting the
renunciation of an allotment of shares) which has been registered at any
time after six years from the date of registration; and
(d) any other document on the basis of which any entry in the register is made
at any time after six years from the date an entry in the register was
first made in respect of it.
141.2 It is presumed conclusively in favour of the Company that every share
certificate destroyed was a valid certificate validly cancelled, that every
instrument of transfer destroyed was a valid and effective instrument duly and
properly registered and that every other document destroyed was a valid and
effective document in accordance with the recorded particulars in the books or
records of the Company, but:
(a) the provisions of this article 141 apply only to the destruction of a
document in good faith and without express notice to the Company that the
preservation of the document is relevant to a claim;
(b) nothing contained in this article 141 imposes on the Company liability in
respect of the destruction of a document earlier than provided for in this
article 141 or in any case where the conditions of this article are not
fulfilled; and
Page 60
(c) references in this article 141 to the destruction of a document include
reference to its disposal in any manner.
WINDING UP
142. On a voluntary winding up of the Company the liquidator may, on obtaining
any sanction required by law, divide among the members in kind the whole or any
part of the assets of the Company, whether or not the assets consist of property
of one kind or of different kinds. For this purpose the liquidator may set the
value he deems fair on a class or classes of property, and may determine on the
basis of that valuation and in accordance with the then existing rights of
members how the division is to be carried out between members or classes of
members. The liquidator may not, however, distribute to a member without his
consent an asset to which there is attached a liability or potential liability
for the owner.
INDEMNITY
143.1 Subject to the Acts, but without prejudice to an indemnity to which he may
otherwise be entitled, every officer of the Company shall be indemnified out of
the assets of the Company against all costs, charges, losses and liabilities
incurred by him in the execution of his duties or the exercise of his powers,
authorities and discretions including (without prejudice to the generality of
the foregoing) a liability incurred:
(a) defending proceedings (whether civil or criminal) in which judgment is
given in his favour or in which he is acquitted, or which are otherwise
disposed of without a finding or admission of material breach of duty on
his part, or
(b) in connection with any application in which relief is granted to him by the
court from liability for negligence, default, breach of duty or breach of
trust in relation to the affairs of the Company.
143.2 The board may exercise all the powers of the Company to purchase and
maintain insurance for the benefit of a person who is an officer or employee, or
former officer or employee, of the Company or of a company which is a subsidiary
undertaking of the Company or in which the Company has an interest (whether
direct or indirect), or who is or was trustee of a retirement benefits scheme or
another trust in which an officer or employee or former officer or employee is
or has been interested, indemnifying him against liability for negligence,
default, breach of duty or breach of trust or another liability which may
lawfully be insured against by the Company.
Page 61
CONFORMED COPY As of 3 MARCH 2000 MICROSOFT CORPORATION LIBERTY MEDIA INTERNATIONAL, INC. LIBERTY UK HOLDINGS, INC. LIBERTY UK, INC. TELEWEST COMMUNICATIONS PLC ================================================================================ THE REVISED NEW RELATIONSHIP AGREEMENT ================================================================================ CONTENTS CLAUSE PAGE 1. INTERPRETATION.............................................................2 2. CONDITIONS.................................................................9 3. REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS...............................9 4. DIRECTORS.................................................................11 5. MATTERS REQUIRING CONSENT.................................................11 6. VOTING AGREEMENT AMONG LIBERTY GROUP AND MICROSOFT GROUP..................12 7. RESTRICTIONS ON TRANSFERS BY LIBERTY GROUP AND MICROSOFT GROUP............14 8. RIGHTS OF FIRST REFUSAL AND CHANGE OF CONTROL.............................14 9. SPECIFIC RIGHTS OF SHAREHOLDER GROUPS TO MAINTAIN OWNERSHIP LEVEL.........18 10. GENERAL RIGHTS OF SHAREHOLDER GROUPS TO MAINTAIN OWNERSHIP LEVEL..........26 11. SCOPE OF BUSINESS.........................................................26 12. CONTRACTUAL RESTRICTIONS..................................................26 13. GAIN RECOGNITION CONSENT REQUIREMENTS AND CONVERSION......................27 14. CITY CODE ON TAKEOVERS AND MERGERS........................................27 15. CONFIDENTIALITY...........................................................28 16. JOINT AND SEVERAL LIABILITY FOR CONTROLLED AFFILIATES.....................28 17. TERM......................................................................28 18. TERMINATION OF 2000 FIRST RELATIONSHIP AGREEMENT..........................28 19. COSTS.....................................................................29 20. FURTHER ASSURANCE.........................................................29 21. GENERAL...................................................................29 (i) 22. ASSIGNMENT................................................................30 23. NOTICES...................................................................30 24. GOVERNING LAW AND JURISDICTION............................................31 25. COUNTERPARTS..............................................................32 Schedule 1....................................................................33 SCHEDULE 2....................................................................34 DEED OF ADHERENCE.......................................................34 SCHEDULE 3....................................................................35 PROVISIONS PRESERVED FROM THE OLD RELATIONSHIP AGREEMENT................35 (ii) THIS REVISED NEW RELATIONSHIP AGREEMENT is dated as of 3 March 2000 BETWEEN: (1) MICROSOFT CORPORATION, a company incorporated in Washington, whose principal place of business is at One Microsoft Way, Redmond, WA 98052 6399 (MICROSOFT); (2) LIBERTY MEDIA INTERNATIONAL, INC., a company incorporated in Delaware, USA whose principal place of business is 9197 South Peoria Street, Englewood, Colorado 80112 USA (LIBERTY INTERNATIONAL) (formerly known as Tele-Communications International, Inc.); (3) LIBERTY UK HOLDINGS, INC., a company incorporated in Delaware, USA whose principal place of business is 9197 South Peoria Street, Englewood, Colorado 80112 USA (LIBERTY UK HOLDINGS); (4) LIBERTY UK, INC., a company incorporated in Colorado, USA whose principal place of business is 9197 South Peoria Street, Englewood, Colorado, 80112 USA (formerly known as United Artists Programming - Europe, Inc.) (LIBERTY UK); and (5) TELEWEST COMMUNICATIONS PLC, a company incorporated in England and Wales (registered no. 2983307), whose registered office is at Genesis Business Park, Albert Drive, Woking, Surrey GU21 5RW, England (the COMPANY). WHEREAS: (A) Certain parties to this Agreement, together with (i) MediaOne International Holdings, Inc., (MEDIAONE); and (ii) MediaOne UK Cable, Inc. and MediaOne Cable Partnership Holdings, Inc. (together, the MEDIAONE SHAREHOLDERS), are parties to a relationship agreement dated 21 May 1999 (the 1999 FIRST RELATIONSHIP AGREEMENT). The parties to this Agreement together with the MediaOne Shareholders are parties to a Revised Existing Relationship Agreement dated as of 3 March 2000 which replaces, to the extent provided in that agreement, the 1999 First Relationship Agreement (the 2000 FIRST RELATIONSHIP AGREEMENT) (B) Microsoft has agreed, pursuant to the Microsoft MediaOne Purchase Agreement, to acquire or merge certain of its Affiliates with the MediaOne Shareholders (the Shares registered in the names of such shareholders, together with the Shares beneficially owned by them, being the MEDIAONE SHARES). (C) The parties have agreed that this Agreement will, to the extent provided in this Agreement, replace the 2000 First Relationship Agreement in all respects from satisfaction of the conditions set out in Clause 2. (D) As a condition to the closing of the Microsoft MediaOne Purchase Agreement certain of the Ordinary Shares held by an Affiliate of MediaOne Group, Inc. have been redesignated as Limited Voting Shares pursuant to resolutions passed at an Extraordinary General Meeting of the Company held on 27 October 1999. THE PARTIES AGREE as follows: INTERPRETATION 1.1 In this Agreement, unless indicated to the contrary: ACT means the Companies Act 1985 (as amended); AFFILIATE means with respect to any Person, any other Person directly or indirectly Controlling, directly or indirectly Controlled by or under direct or indirect common Control with such Person; ADS means an American Depositary Share representing 10 Ordinary Shares; BOARD means the board of directors of the Company; BUSINESS DAY means any day other than a Saturday or Sunday or a public holiday in the State of Colorado, the State of Delaware or England and Wales; CABLE TELEPHONY means any voice or data telecommunications transmission service which operates in whole or in part by cable links to subscribers' premises, is interconnected at some point to a public switched network and is intended to serve customers in the United Kingdom; CABLE TELEVISION means any service provided to customers on a subscription or pay-per-view basis which sends sounds or visual images or both by means of cable, radio or microwave transmission systems for television reception at two or more locations, whether sent for simultaneous reception or at different times in response to subscribers' requests, including without limitation video on demand and other interactive services and other entertainment, telecommunications and information services proposed to be offered by the Company, as described in the Disclosure Documents; CHANGE IN CONTROL means (a) with respect to Microsoft and its Affiliates, the acquisition (whether by merger, consolidation, sale, assignment, lease, transfer or otherwise, in Page 2 one transaction or any related series of transactions) of beneficial ownership of equity interests in Microsoft or any of its Affiliates by any Person (except pursuant to a distribution in specie, spin off, share dividend, demerger or similar transaction and other than any acquisition of beneficial ownership by Microsoft or any of its Affiliates) as a result of which such Person has the power, directly or indirectly, to direct the voting and disposition of Shares held by Microsoft and its Affiliates representing at least 15 per cent. of the outstanding Shares of the Company provided that any change in the Control of Microsoft shall not be deemed a Change in Control for the purposes of this Agreement; and (b) with respect to Liberty International and its Affiliates, the acquisition (whether by merger, consolidation, sale, assignment, lease, transfer or otherwise, in one transaction or any related series of transactions) of beneficial ownership of equity interests in Liberty International or any of its Affiliates by any Person (except pursuant to a distribution in specie, spinoff, share dividend, demerger or similar transaction and other than any acquisition of beneficial ownership by Liberty International or any of its Affiliates) as a result of which such Person has the power, directly or indirectly, to direct the voting and disposition of Shares held by Liberty International and its Affiliates representing at least 15 per cent. of the outstanding Shares of the Company, provided that any change in the Control of TCI, Liberty Media Corporation, Liberty International or AT&T Corporation shall not be deemed a Change in Control for purposes of this Agreement. A Change in Control shall be deemed voluntary if it is the result of a transaction agreed to by Liberty International or any of its Affiliates or by Microsoft or any of its Affiliates, as the case may be. A Change in Control shall be deemed involuntary if it is the result of actions by Persons other than Liberty or any of its Affiliates or Microsoft or any of its Affiliates, as the case may be, taken without the agreement or consent of Liberty International or any of its Affiliates or of Microsoft or any of its Affiliates, as the case may be; CLOSING PRICE means the sale price for Ordinary Shares (i) with respect to Ordinary Shares to be offered on the London Stock Exchange, the sale price which appears on the relevant Reuters Screen for the Company as of 11:00 a.m. (London time) on a Trading Day, provided that if such Ordinary Shares do not appear on such Reuters Screen or such Reuters Screen is temporarily unavailable, the sale price with respect to the Ordinary Shares will be the last reported sale price which appears in the Official List of the London Stock Exchange on a Trading Day and (ii) with respect to Ordinary Shares to be offered on the New York Stock Exchange in the form of ADSs the last reported sale price on a Trading Day or, in case no such sale takes place on such day, the Page 3 average of the reported closing bid and asked prices as reported on the New York Stock Exchange Composite Tape, or, if such sales are not so reported, the reported last sale price or, if no such sale takes place on such day, the average of the reported closing bid and asked prices on the principal national securities exchange on which the ADSs are listed or admitted to trading, or if not listed or admitted to trading on any national securities exchange, on the NASDAQ National Market System (NASDAQ), or if the ADSs are not quoted on such National Market System, the average of the closing bid and asked prices in the over-the-counter market as furnished by any New York Stock Exchange member firm selected by the Board for that purpose; CONTROL means with respect to any Person, the possession, directly or indirectly, by another Person of the power to direct or cause the direction of the management or policies of such Person, whether through equity ownership, by contract or otherwise, but a Person shall not be deemed to Control another Person solely by virtue of any veto rights granted to it as a minority equity owner or by virtue of super majority voting rights and the words CONTROLLED and CONTROLLING shall be construed accordingly; CONTROLLED AFFILIATE means with respect to any Person, any Affiliate of such Person which is under the Control of such Person provided that each of Flextech plc, At Home Corporation and Princes Holdings Limited shall not be treated as a Controlled Affiliate of the Liberty Group; CONTROLLING SHAREHOLDER has the same meaning as in paragraph 3.13 of Chapter 3 of the Listing Rules; DEBENTURE CHANGE OF CONTROL means a Change of Control as defined in any of (i) the Indenture, dated as of October 3, 1995, between the Company and The Bank of New York, pursuant to which the Company issued its Senior Debentures due 2006, (ii) the Indenture, dated as of October 3, 1995, between the Company and The Bank of New York pursuant to which the Company issued its Senior Discount Debentures due 2007, (iii) the Indenture dated as of November 9, 1998 between the Company and The Bank of New York, pursuant to which the Company issued its Senior Notes due 2008, (iv) the Indenture, dated as of February 19, 1999 between the Company and The Bank of New York, pursuant to which the Company issued its Senior Convertible Notes due 2007 (v) the Indenture, dated as of 15 April 1999, between the Company and The Bank of New York, pursuant to which the Company issued its Sterling and Dollar denominated Senior Discount Notes due 2009 in each case as in effect as at 1 October 1999 and (vi) a document governing any other indebtedness of the Company as agreed in writing in advance by Microsoft and Liberty International (the INDENTURES), provided that there shall not be deemed to be any such Change of Control if all the notes which have been issued pursuant to the Indentures referred to in (i) to (v) prior to 30 September 1999 or pursuant to Page 4 any document referred to in (vi) shall have been redeemed, repaid, cancelled or purchased by the Company; DIRECTOR means a director of the Company; DISCLOSURE DOCUMENTS means the prospectus, registration statement and listing particulars filed, distributed or used in connection with Old Telewest's initial public offering of Ordinary Shares in 1994 or in connection with the Company's acquisition of SBC CableComms and Old Telewest in 1995 or in connection with the Company's acquisition of General Cable PLC in 1998; FAIR MARKET VALUE means as to any property, the price at which a willing seller would sell and a willing buyer would buy such property having full knowledge of the facts, in an arm's length transaction without time constraints, and without being under any compulsion to buy or sell; FLEXTECH OFFER means the offer by the Company for all of the issued and to be issued ordinary shares in Flextech plc made on 7 March 2000; FULLY DILUTED ORDINARY SHARES means, at any time, the Ordinary Shares in issue at such time and the Ordinary Shares which would be in issue if all options and rights outstanding for the time being to subscribe for Ordinary Shares or securities convertible into or exchangeable for Ordinary Shares (including the Limited Voting Shares) were exercisable and had been exercised and the relevant Ordinary Shares and securities issued and all securities convertible into or exchangeable for Ordinary Shares in issue (or assumed to be in issue) at such time were convertible or exchangeable and had been converted or exchanged and the relevant Ordinary Shares issued; INDEPENDENT DIRECTORS means those Directors who are not designated by the Liberty Group or the Microsoft Group in accordance with Article 71 of the 2000 Articles and are not partners, officers or employees of, and do not have a material consultancy with, the Liberty Group or the Microsoft Group; IPO DOCUMENTS means the prospectus, registration statement and listing particulars filed, distributed or used in connection with Old Telewest's initial public offering of Ordinary Shares in 1994; LIBERTY MEDIA CORPORATION, a Delaware corporation; LIBERTY GROUP means Liberty International and its Affiliates from time to time or any Person or group of Persons within the meaning given to the expression "Liberty Group" in the 2000 Articles; Page 5 LIBERTY SHAREHOLDERS means Liberty UK Holdings and Liberty UK (whilst each is a member of the Liberty Group and a Shareholder) and/or any Shareholder who is a member of the Liberty Group for the time being; LIMITED VOTING SHARES means the limited voting convertible ordinary shares of the Company having the rights set out in the 2000 Articles; MICROSOFT MEDIAONE PURCHASE AGREEMENT means the merger agreement between Microsoft, MediaOne UK Cable, Inc., MediaOne Cable Partnership Holdings, Inc., MediaOne Group, Inc. and MediaOne International Inc. dated 4 October 1999; MICROSOFT GROUP means Microsoft and its Affiliates from time to time or any Person or group of Persons within the meaning given to the expression "Microsoft Group" in the 2000 Articles; MICROSOFT SHAREHOLDER means Microsoft and/or any Shareholder who is a member of the Microsoft Group for the time being; 2000 ARTICLES means the articles of association adopted by the Company (conditional upon Affiliates of Microsoft merging with the MediaOne Shareholders) in the agreed form pursuant to resolution 7 at the Company's Extraordinary General Meeting held on 31 March 2000 (and any adjournment thereof); 2000 FIRST RELATIONSHIP AGREEMENT has the meaning given to that expression in Recital A; OLD RELATIONSHIP AGREEMENT means the relationship agreement entered into as of 22 November 1994 by and among Old Telewest, Liberty, MediaOne and the parties to the Old Shareholders' Agreement as amended by an agreement between the same parties as of 19 June 1995 and as further supplemented by an agreement between the same parties and the Company dated 3 October 1995; OLD SHAREHOLDERS' AGREEMENT means the shareholders' agreement dated as of 22 November 1994 by and between United Artists Cable Television UK Holdings, Inc., Liberty UK, and the MediaOne Shareholders as amended by an agreement between the same parties dated 19 June 1995 and supplemented by a further agreement between the same parties, Old Telewest and the Company dated 3 October 1995; OLD TELEWEST means Telewest Communications Cable Limited, a company incorporated in England and Wales (registered no. 2883742) whose registered office is at Genesis Business Park, Albert Drive, Woking, Surrey GU21 5RW, England; Page 6 ORDINARY SHARE means an ordinary share, 10p par value, of the Company, including any such share represented by an ADS; OWNERSHIP INTEREST means, with respect to each Person owning an interest in TW Holdings, all of the interests of such Person in TW Holdings (including, without limitation, an interest in the profits and losses of TW Holdings, a capital account interest in TW Holdings and all other rights and obligations of such Person under the TW Holdings Operating Agreement); PERCENTAGE OWNERSHIP has the meaning given to that expression in clause 9.1; PERMITTED DEMERGER means a distribution in specie, share dividend, spin off, demerger or similar transaction resulting in one or more Affiliates of the transferor owning 80 per cent. or more of the Shares owned by the transferor's group (for such purposes meaning the Microsoft Group if a member or members of such group is or are the transferor(s) or the Liberty Group if a member or members of the Liberty Group is or are the transferor(s)) immediately prior to such transaction; PERSON means an individual, corporation, general or limited partnership, limited or unlimited liability company, trust, association, unincorporated organisation, government or any authority, agency or body thereof, or other entity; PRIVATE TRANSFER means the Transfer of Shares by a Shareholder in a negotiated transaction, rather than through a brokerage transaction effected on a national securities exchange, NASDAQ or the London Stock Exchange; PRO RATA SHARES means, with respect to any Shareholder Group at any time, the number of Shares held by TW Holdings attributable to such Shareholder Group being the product rounded to the nearest whole number of (x) the sum of the number of Shares owned by TW Holdings multiplied by (y) the aggregate percentage Ownership Interest in TW Holdings, expressed as a decimal, held by members of such Shareholder Group as at such time; PUBLIC TRANSFER means the Transfer of Shares by a Shareholder through a brokerage transaction effected on a national securities exchange, NASDAQ or the London Stock Exchange, including a Private Transfer to a broker in anticipation of a Public Transfer to be effected by that broker; QUALIFYING GROUP has the meaning given to that expression in clause 9.1; RELEVANT PERSON means a director, officer or employee of any of Liberty International, Microsoft or their respective Affiliates; REQUIRED CONSENT has the meaning given to that expression in clause 5.2; Page 7 SHAREHOLDERS means each of Microsoft, Liberty UK, Liberty UK Holdings and each Person who acquires Shares and becomes a party to this Agreement by completing, executing and delivering a deed of adherence in accordance with clause 22.2, for so long as it holds any Shares or owns any Shares and remains a party to this Agreement; SHAREHOLDER GROUP means any of the Liberty Group or the Microsoft Group; SHARES means the Ordinary Shares and the Limited Voting Shares; TCI means Tele-Communications, Inc., a Delaware corporation; TELEWEST GROUP means the Company and every Person Controlled by the Company; TRADING DAY means each Monday, Tuesday, Wednesday, Thursday and Friday other than a day on which securities are not traded on the applicable exchange or market; TRANSFER means, in relation to any Shares, to sell, assign, pledge, grant a security interest in, or otherwise dispose of such shares or any legal or beneficial interest therein or agree to do any of the foregoing; TW HOLDINGS means TW Holdings, L.L.C., a Colorado limited liability company; TW HOLDINGS OPERATING AGREEMENT means the amended and restated operating agreement of TW Holdings dated 1 September 1998, as amended and restated from time to time or any other agreement entered into between the Liberty Group and the Microsoft Group (or any member or members of such Groups) concerning the operation of TW Holdings; UNITED KINGDOM OR UK means England, Wales, Scotland and Northern Ireland, as their territories and boundaries exist on 1 September 1998; and WIRELESS TELEPHONY means any voice or data telecommunications transmission service which operates by means of radiowave, microwave, cellular or other similar technology as part of a licensed mobile communications system or personal communications network; 1.2 In this Agreement unless indicated to the contrary, a reference to: 1.2.1 a statutory provision includes a reference to the statutory provision as modified or re-enacted or both from time to time whether before or after the date of this Agreement and any subordinate legislation made under the statutory provision whether before or after the date of this Agreement; Page 8 1.2.2 a Person includes a reference to that Person's legal personal representatives, successors and lawful assigns; 1.2.3 a clause or schedule, unless the context otherwise requires, is a reference to a clause of or schedule to this Agreement; and 1.2.4 a document is a reference to that document as from time to time supplemented or varied. 1.3 The headings in this Agreement do not affect its interpretation. 1.4 Wherever this Agreement requires or permits the calculation of a number or percentage of Shares in issue held by any Shareholder or Shareholder Group such number or percentage shall include the Pro Rata Shares of that Shareholder or Shareholder Group. CONDITIONS 2. The provisions of this Agreement are conditional upon: (a) this Agreement being approved by shareholders independent of MediaOne, Liberty International and Microsoft at the Company's Extraordinary General Meeting convened in connection with the approval of the Flextech Offer (or any adjournment of that meeting); (b) Affiliates of Microsoft merging with the MediaOne Shareholders pursuant to the Microsoft MediaOne Purchase Agreement; and (c) the Flextech Offer becoming unconditional in all respects, and on satisfaction of such conditions, this Agreement shall, to the extent provided herein, replace the 2000 First Relationship Agreement. REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS 3.1 Each party represents, warrants and undertakes to each other party (other than a member of the same Shareholder Group), as of the date of execution of this Agreement, as follows: (a) it is duly organised or formed, validly existing and in good standing under the laws of its jurisdiction of incorporation or formation; (b) it has full power and authority to conduct its business as currently conducted, to execute and deliver this Agreement and to carry out the transactions contemplated by this Agreement and the execution, delivery and performance by it of this Agreement and the consummation by it of Page 9 the transactions contemplated by this Agreement have been duly authorised by all necessary corporate or partnership action; (c) the obligations expressed to be undertaken by it under this Agreement are legal, valid and binding upon it except that the validity, binding effect and the enforceability may be subject to or limited by bankruptcy, insolvency, reorganisation, moratorium and other similar laws relating to or affecting the rights of creditors generally, and subject to general principles of equity, regardless of whether considered in a proceeding at law or in equity; (d) the execution and delivery of this Agreement by it and compliance by it with the provisions of this Agreement will not violate, result in any breach of, constitute a default under or require a consent or waiver under its certificate of incorporation, articles of incorporation, bylaws, memorandum and articles of association, operating agreement or partnership agreement, as the case may be, or any indenture, lease, agreement or instrument to which it is a party or by which it or any of its property may be bound, or under any decree, judgement, order, statute, legal principle, rule or regulation applicable to it, other than any violation, breach or default that would not have an adverse effect on the performance by it of the terms of this Agreement; and (e) it has obtained, made or given all material authorisations, orders, approvals, consents, registrations, filings and notices required to be obtained, made or given by it from, with or to any Person with respect to entering into this Agreement. 3.2 The Company undertakes to Microsoft and Liberty International to use its best endeavours to establish as soon as reasonably practicable a block listing for such number of Ordinary Shares as may fall to be issued pursuant to the conversion of the Limited Voting Shares. 3.3 It is expressly agreed and acknowledged by the Company that nothing in this Agreement prevents Liberty International, Microsoft or their respective Affiliates from making a general offer for the Shares. 3.4 Each of Liberty International and Microsoft severally undertakes to the Company that, prior to Microsoft, Liberty International or any of their respective Affiliates purchasing any Ordinary Shares from any third party, Microsoft or Liberty International, as the case may be (on behalf of themselves and their respective Affiliates), shall notify the Company of such proposed purchase and, prior to such purchase, redesignate a sufficient number of their existing Ordinary Shares as Limited Voting Shares in accordance with the 2000 Articles to ensure that such purchase, in conjunction with such redesignation, Page 10 will not amount to a Debenture Change of Control. Any such notice shall be accompanied by an opinion from leading New York counsel of at least 10 years standing (such opinion to be at the Company's expense and addressed to the Company) stating that such purchase, in conjunction with such redesignation, will not amount to a Debenture Change of Control. DIRECTORS 4. The Directors other than the Microsoft Designated Directors or the Liberty Designated Directors (each as defined in the 2000 Articles) shall be appointed by the Board or the Company in general meeting provided that each such appointee shall be a person reasonably acceptable to the Microsoft Designated Directors for so long as the Microsoft Group is a Qualifying Group and the Liberty Designated Directors for so long as the Liberty Group is a Qualifying Group provided that, the holding of Limited Voting Shares shall not be taken into account in determining whether the Microsoft Group or the Liberty Group is a Qualifying Group for the purposes of this clause 4. MATTERS REQUIRING CONSENT 5.1 For so long as the Microsoft Group or the Liberty Group is a 15 Per Cent. Group (as defined in clause 9.1), the Company shall not and shall procure that none of its subsidiary undertakings will do, or agree to do, any of the following things without the Required Consent and no Shareholder shall knowingly acquiesce in the doing thereof without the Required Consent: 5.1.1 any material acquisition or disposal outside the ordinary course of the business of the Telewest Group, and for these purposes an acquisition or disposal shall be deemed material and outside the ordinary course of the business of the Telewest Group if it represents a class 2 transaction under the Listing Rules of the London Stock Exchange or the Company intends in any event, or is required, to announce the acquisition or disposal; 5.1.2 incur any borrowings or indebtedness in the nature of borrowings (otherwise than under a facility or agreement entered into before 1 September 1998) which when aggregated with any borrowings or indebtedness in the nature of borrowings of the Telewest Group so incurred and outstanding at the time being (ignoring intra-group borrowings and indebtedness and borrowings or indebtedness under any facility or agreement for which the Required Consent has already been obtained) exceeds (pound)50 million or, grant any security interests in any assets which, when aggregated with other assets of the Telewest Group over which security interests are granted after this Agreement becomes unconditional (ignoring any security interests for which the Required Consent has already been obtained), together have a Fair Market Value of (pound)50 million or more, or agree to any material amendment, supplement or variation of the terms Page 11 of any borrowings, indebtedness in the nature of borrowings or security interests; 5.1.3 allot or issue any shares or securities convertible into or exchangeable for shares or grant any options or rights to subscribe for shares or any such securities (other than the issue of securities to Microsoft/Liberty Media Shareholders pursuant to clause 9 and pursuant to the exercise of any option (to the extent required under its terms to be met by an issue of new shares rather than a transfer of existing shares) or the conversion or exchange of any security granted or issued prior to 15 April 1998 or with the Required Consent or the conversion of Limited Voting Shares into Ordinary Shares); 5.1.4 appoint or remove the Chief Executive Officer of the Company; or 5.1.5 increase the number of Directors holding office for the time being beyond 16. 5.2 For the purposes of clause 5.1, REQUIRED CONSENT means prior written consent by notice to the Company from: 5.2.1 the Microsoft Group, for so long as the Microsoft Group holds or owns in aggregate 15 per cent. or more of the Shares (or, in the case of 5.1.5 only, Ordinary Shares) in issue for the time being; and 5.2.2 the Liberty Group, for so long as the Liberty Group holds or owns in aggregate 15 per cent. or more of the Shares in issue for the time being. VOTING AGREEMENT AMONG LIBERTY GROUP AND MICROSOFT GROUP 6.1 Subject to clause 6.3 the Microsoft Shareholders and the Liberty Shareholders undertake to one another that they shall exercise the voting rights attached to the Shares owned by them and shall cause the Directors nominated by them to vote (subject to their fiduciary duties as Directors of the Company) in all matters in such manner as shall be agreed upon by the Liberty Shareholders and the Microsoft Shareholders provided that if the Liberty Shareholders or the Microsoft Shareholders (or the directors nominated by them respectively) have a conflict of interest in any matter, the particular party affected shall abstain and the others may vote on such matter as they deem appropriate. 6.2 If the Liberty Shareholders and the Microsoft Shareholders cannot agree on any matter within a period of 10 days after the matter is first presented for decision, the matter in dispute shall be referred to the Chief Executive Officers of Liberty International and of Microsoft (or other representatives designated by each of such Shareholder Groups) and the decision of such officers shall be final and binding. If those officers cannot agree on any matter presented to Page 12 them prior to the earlier of the date the vote is to be taken or five days after the matter is first submitted to them, voting shall occur in such manner that would be most likely to continue the status quo, without materially increasing the Company's financial obligations or materially deviating from its approved budget and business plan. 6.3 Clauses 6.1 and 6.2 shall cease to apply if the Liberty Group or the Microsoft Group so elect by notice given to the other following the disposal by the other after the date hereof of more than 59 million Ordinary Shares (through one or more transactions) otherwise than to an Affiliate or pursuant to a Permitted Demerger. 6.4 Subject to clause 6.8, each Liberty Shareholder and Microsoft Shareholder shall exercise its voting rights attached to the Shares owned by it (and its rights under the TW Holdings Operating Agreement in respect of the voting rights attached to the Shares held by TW Holdings) and shall make reasonable efforts to ensure that (subject to their fiduciary duties) its appointees on the Board conduct themselves in such a way that: 6.4.1 the terms of this Agreement are implemented in full; 6.4.2 no amendments to the 2000 Articles shall be effected which would be contrary to the maintenance of the Company's independence from the Liberty Group and the Microsoft Group; and 6.4.3 to the extent required by the Listing Rules of the London Stock Exchange, the Company is capable at all times of carrying on its business independently of any Controlling Shareholder. 6.5 Subject to clause 6.8, each Liberty Shareholder and Microsoft Shareholder agrees with the Company not to use its voting rights attached to the Ordinary Shares owned by it or a member of the Liberty Group or the Microsoft Group (as the case may be) other than its rights arising under article 71 of the 2000 Articles (and to exercise its rights under the TW Holdings Operating Agreement in respect of the voting rights attached to the Ordinary Shares held by TW Holdings) to vote in favour of the appointment of a person to the Board who is an employee, partner or officer of, or has a material consultancy with, any member of the Liberty Group or the Microsoft Group. 6.6 Subject to clause 6.8, if any transaction, arrangement or agreement (or amendment thereto) to which the Telewest Group is a party or proposes to be a party gives rise to a conflict between the interests of the Liberty Group or the Microsoft Group and the interests of the Telewest Group, the prior approval of the Board consisting solely of the Independent Directors and the Directors appointed by the Microsoft Group (in the case of an arrangement with the Page 13 Liberty Group) or by the Liberty Group (in the case of an arrangement with the Microsoft Group) shall be required before the Telewest Group can proceed with the transaction, arrangement or agreement (or amendment thereto), as the case may be. 6.7 Subject to clause 6.8, any transactions, agreements or arrangements (including trading arrangements) between any member of the Liberty Group or the Microsoft Group and the Telewest Group shall be at arm's length on a normal commercial basis and will be subject to the prior approval of the Board consisting solely of Independent Directors and the Directors appointed by the Microsoft Group (in the case of an arrangement with the Liberty Group) or by the Liberty Group (in the case of an arrangement with the Microsoft Group). 6.8 Clauses 6.4, 6.5, 6.6 and 6.7 shall only apply for so long as the Microsoft Group and the Liberty Group taken together continue to be a Controlling Shareholder of the Company. RESTRICTIONS ON TRANSFERS BY LIBERTY GROUP AND MICROSOFT GROUP 7. DELIBERATELY BLANK RIGHTS OF FIRST REFUSAL AND CHANGE OF CONTROL 8.1 RIGHTS OF FIRST REFUSAL BETWEEN THE LIBERTY GROUP AND THE MICROSOFT GROUP 8.1.1 Clauses 8.1.2 to 8.1.5 shall not apply to any Transfer by a Shareholder to an Affiliate of that Shareholder or to any Transfers pursuant to a Permitted Demerger (provided that any transferee who is or becomes a member of the same Shareholder Group as the transferor first duly completes, executes and delivers to the Company a deed of adherence in the form set out in Schedule 2). 8.1.2 Subject to clause 8.1.1, a Liberty Shareholder or Microsoft Shareholder desiring to make a Transfer of Shares (the SELLER) shall prior to the entry into of an agreement for the transfer of Shares (save for an agreement conditional upon the non-transferring shareholder not exercising its right to purchase such Shares under this clause) first make a written offer (the OFFER) to sell such Shares to the Microsoft Group or the Liberty Group (as the case may be) (the RELEVANT PURCHASER) on the same or materially similar terms and conditions on which the Seller proposes to Transfer the Shares. If the proposed Transfer is a Public Transfer, the Seller shall give notice to the Relevant Purchaser stating the number of Shares it proposes to Transfer and that such Shares will be sold to the Relevant Purchaser at a price per Share equal to the average of the Closing Prices for six Trading Days comprising the three Trading Days prior to and including the date that any notice is sent pursuant to clause 8.1.3 and the three Page 14 Trading Days following the date of such notice. If the proposed Transfer is a Private Transfer, such offer shall state the price and the other terms and conditions of the proposed Transfer and shall be accompanied by a copy of the offer from the proposed transferee. The price as so determined or stated in the Seller's notice shall be the OFFER PRICE. The foregoing notwithstanding, the Seller may withdraw the Offer without liability to the Relevant Purchaser hereunder if the Offer Price, determined with respect to any Public Transfer, is less than 90 per cent. of the Closing Price on the date of the Offer (or if such date is not a Trading Day, on the immediately preceding Trading Day). 8.1.3 The Relevant Purchaser shall have the right for a period of 30 days after receipt of the Offer to elect to purchase all, but not less than all, of the Shares offered at the Offer Price (less, in case of a proposed Public Transfer, any underwriting or sales commission or discount that would have been paid in the proposed Public Transfer) by giving written notice of acceptance to the Seller within that period. If the Relevant Purchaser does not elect to purchase all the Shares offered, the Seller may Transfer the offered Shares pursuant to the terms disclosed under clause 8.1.2 which, in the case of a Private Transfer, shall be at a price equal to or greater than the Offer Price. If the offered Shares are not Transferred within 90 days after the Relevant Purchaser's option period expires, a new offer shall be made to the Relevant Purchaser before any Transfer is made. 8.1.4 If in the case of a Private Transfer, a third party's offer involves consideration other than immediate payment of cash at closing, the Relevant Purchaser may pay the Fair Market Value of such other consideration, as determined by agreement between the Seller and the Relevant Purchaser, in cash. If they cannot agree on such cash equivalent within seven days after the Relevant Purchaser gives notice of its election to purchase the offered Shares, the Relevant Purchaser may, by written notice to the Seller, initiate appraisal proceedings under clause 8.1.5 for determination of the Fair Market Value of such consideration. The Fair Market Value shall be determined without regard to income tax consequences to the Seller as a result of receiving cash in lieu of other consideration. Once the Fair Market Value is determined, (i) the Relevant Purchaser, in its sole discretion, may elect either to purchase the Shares in cash by giving notice of such election to the Seller within 10 days after receipt of the appraiser's decision or to withdraw its acceptance of the Offer, and (ii) the Seller may in its sole discretion withdraw the Offer provided that in such case it may not Transfer such Shares pursuant to the proposed Private Transfer. 8.1.5 Any appraisal of the Fair Market Value of consideration shall be made by an appraiser jointly appointed by the Liberty Group and the Microsoft Group to make such determination. If the parties fail to agree on an appraiser within 20 days after receipt of the notice requiring or permitting an appraisal of Fair Page 15 Market Value, each of the Liberty Group and the Microsoft Group shall appoint one appraiser, which shall be an investment banking firm of national repute. The two appraisers so selected shall each make an appraisal of Fair Market Value within 30 days after their selection. If such determinations vary by 20 per cent. or more of the higher determination, the two appraisers shall select a third appraiser with similar qualifications which shall make its determination of such Fair Market Value within 30 days after its selection. Such third appraiser shall not be informed of or otherwise consider the appraisals of the other two in reaching its determination. The Fair Market Value shall be the average of the two closest values if three appraisals are made or, if the determinations of the first two appraisers vary by 20 per cent. or less of the higher of such two determinations, the average of those two determinations. If any Shareholder Group fails to appoint an appraiser as required hereunder, the other Shareholder Group may refer the matter to the American Arbitration Association, which shall promptly (and, in any case, within 10 days) appoint an appraiser hereunder on behalf of the Shareholder Group failing to make such appointment. Appraisers appointed under this clause 8.1.5 shall act as experts and not as arbitrators and, absent fraud or manifest error, the determination of an appraiser or appraisers hereunder shall be binding on the parties. 8.2 CHANGE IN CONTROL OF LIBERTY INTERNATIONAL OR MICROSOFT If at any time there is an involuntary Change in Control with respect to Microsoft and its Affiliates or Liberty International and its Affiliates, Microsoft and its Affiliates or Liberty International and its Affiliates, as the case may be, experiencing the Change in Control (the SUBJECT GROUP) shall give notice to the other group (the RESPONDING GROUP) promptly after the Subject Group becomes aware of the Change in Control. If at any time a Subject Group experiences a voluntary Change in Control, the Subject Group shall give notice to the Responding Group promptly after the terms of the Change in Control are set forth in a binding agreement. The Responding Group must within 30 days after its receipt of such notice give notice to the Subject Group either (a) consenting to the Change in Control or (b) stating the price at which the Responding Group is willing to sell all of its Shares to the Subject Group or to buy all of the Subject Group's Shares (the QUOTED PRICE). Failure to give notice of such election within the time permitted shall be deemed consent to the Change in Control. If the Responding Group notifies the Subject Group that it does not consent to the Change in Control, the Subject Group must, within 30 days after its receipt of the Responding Group's notice, give notice to the Responding Group of its election to sell all of its Shares to the Responding Group or to buy all of the Responding Group's Shares, in either case at the Quoted Price. Page 16 8.3 GENERAL TRANSFER PROVISIONS 8.3.1 The closing of the purchase of any Shares by the Liberty Group or the Microsoft Group pursuant to clause 8.1 or 8.2 shall take place at the Company's principal offices: (a) in the case of clause 8.1, within 60 days after agreement of the price and proportions in which the Sale Shares can be transferred by the Seller pursuant to clause 8.1.2 or within 30 days after acceptance by the Seller of the offer contained in any Offer pursuant to clause 8.1.3; and (b) in the case of clause 8.2 on a day specified by the purchaser (other than a Saturday, Sunday or day on which banking institutions in New York are required by law to be closed) which is no more than 90 days after the day of exercise of the relevant purchase option, or, if later, the date on which all necessary consents or approvals to such Transfer by governmental authorities or shareholders (where relevant) shall have been obtained. At the closing the Seller shall deliver certificates representing the Shares to be sold free and clear of any lien, charge or encumbrance, duly endorsed or accompanied by stock transfers executed in blank, and such other documents as may be reasonably necessary to effectuate the sale. The Seller shall give customary representations and warranties regarding the title of such shares to the Relevant Purchaser(s). The purchase price (to the extent payable in cash) shall be paid in cash in immediately available funds. 8.3.2 The Relevant Purchaser may rescind its notice of acceptance given pursuant to clause 8.1.3 at any time on or prior to the thirtieth day following the date on which such notice is given (but not thereafter) if (i) prior to the date of such notice of acceptance the Relevant Purchaser had sought in good faith a waiver from the Panel with respect to the application of any provision of Rule 9 of the City Code on Take-overs and Mergers which absent such waiver would require the Relevant Purchaser to offer to purchase all of the outstanding Shares, and (ii) such waiver or any shareholder approval required by the Panel has been denied (or has not been granted as of the last day of such rescission period) provided that if the Relevant Purchaser so rescinds its acceptance, the 90 day period referred to in clause 8.3.1(b) shall be extended by the number of days between the date of such acceptance and the date of rescission. 8.3.3 Notwithstanding any other provision of this clause 8, no Person may Transfer any Shares unless it has complied with all applicable legal requirements, including without limitation applicable United States federal and state securities laws. Upon the exercise by a Person of any right to acquire Shares hereunder, the parties shall use commercially reasonable efforts to Page 17 obtain any necessary consents or approvals of any governmental authorities or other third parties necessary to promptly effect such Transfer. SPECIFIC RIGHTS OF SHAREHOLDER GROUPS TO MAINTAIN OWNERSHIP LEVEL 9.1 The following definitions are used in this clause 9: 15 PER CENT. GROUP means each of the following Shareholder Groups: (a) the Liberty Group, for so long as the Liberty Group holds 15 per cent. or more of the Shares in issue for the time being and from time to time (ignoring any Shares issued after 15 April 1998 pursuant to or for the purposes of employee share options); and (b) the Microsoft Group, for so long as the Microsoft Group holds 15 per cent. or more of the Shares in issue for the time being and from time to time (ignoring any Shares issued after 15 April 1998 pursuant to or for the purposes of employee share options); PERCENTAGE OWNERSHIP means: (a) in relation to each 15 Per Cent. Group, issued Shares representing 15 per cent. of the Fully Diluted Ordinary Shares; and (b) in relation to each 7.5 Per Cent. Group, issued Shares representing 7.5 per cent. of the Fully Diluted Ordinary Shares; QUALIFYING GROUP means a 15 Per Cent. Group or a 7.5 Per Cent. Group; QUALIFYING SHAREHOLDER means a Shareholder within a Qualifying Group; RIGHTS ISSUE means an offering of Shares or securities convertible into Ordinary Shares (and, for the avoidance of doubt, Limited Voting Shares constitute such securities) or carrying the right to vote at general meetings of the Company's shareholders (whether by way of a rights issue, open offer or otherwise) to holders of Shares in the capital of the Company in proportion (as nearly as may be) to their existing holdings of Shares but subject to the Directors having a right to make such exclusions or other arrangements in connection with the offer as they deem necessary or expedient: (a) to deal with equity securities representing fractional entitlements; and (b) provided that such exclusions or arrangements do not affect any Shareholder Group, to deal with legal or practical problems under the laws of, or the requirements of any recognised regulatory body or any stock exchange in, any territory; Page 18 7.5 PER CENT. GROUP means each of the following Shareholder Groups: (a) the Liberty Group for so long as the Liberty Group holds 7.5 per cent. or more but less than 15 per cent. of the Shares in issue for the time being and from time to time (ignoring any Shares issued after 15 April 1998 pursuant to or for the purposes of employee share options); and (b) the Microsoft Group, for so long as the Microsoft Group holds 7.5 per cent. or more but less than 15 per cent. of the Shares in issue for the time being and from time to time (ignoring any Shares issued after 15 April 1998 pursuant to or for the purposes of employee share options). 9.2 Subject to clause 5.1.3, the Company shall give notice to each Qualifying Shareholder of any proposed issuance (other than a Rights Issue for which such Qualifying Shareholder shall receive notice to be received by the shareholders generally) of Ordinary Shares or of securities convertible into or exchangeable for Ordinary Shares (and, for the avoidance of doubt, Limited Voting Shares constitute such securities) or carrying the right to vote at general meetings of the Company's shareholders which would (assuming the conversion or exchange of any such convertible securities and of the securities referred to in clause 9.3(ii)(BB)) reduce (A) the percentage of Shares owned by (i) a Qualifying Group below its Percentage Ownership, or (ii) TW Holdings and/or the Microsoft Group and/or the Liberty Group together below 50.1 per cent. of the Shares in issue for the time being (by reference to the nominal value of all Shares in issue) or (B) the percentage of votes at a general meeting of the Company exercisable by (i) a Qualifying Group below the number of votes it has based on its Percentage Ownership, or (ii) TW Holdings and/or the Microsoft Group and/or the Liberty Group together below 50.1 per cent of the total exercisable votes for the time being (a DILUTIVE ISSUE). 9.3 Without prejudice to clause 9.5, while (a) TW Holdings holds, owns or votes 50.1 per cent. or more of the Shares in issue for the time being and from time to time, or (b) TW Holdings, the Microsoft Group and the Liberty Group together hold, own or vote 50.1 per cent. or more of the Shares in issue (by reference to the nominal value of all Shares in issue) for the time being and from time to time the Microsoft Shareholders and the Liberty Shareholders (the MICROSOFT/LIBERTY SHAREHOLDERS) shall: (i) on an issue of Ordinary Shares by the Company that would cause such holding, ownership or voting to fall below 50.1%, have the option to subscribe for that number of Ordinary Shares necessary to permit TW Holdings (in the case of (a) above) or TW Holdings and the Microsoft/Liberty Shareholders (in the case of (b) above) to maintain ownership of sufficient issued Shares in aggregate as will represent 50.1 per cent. of the Fully Diluted Ordinary Shares immediately following Page 19 such issue and provided that, if in the opinion of leading external New York counsel of at least 10 years standing (such opinion to be obtained at the Company's expense and to be addressed to the Company) such subscription would result in a Debenture Change of Control then such option shall be an option to subscribe for Ordinary Shares to the maximum extent possible without, in the opinion of such leading New York counsel, causing such a Debenture Change of Control, with the balance of such option being a right to subscribe for Limited Voting Shares; and (ii) on an issue of securities by the Company that are convertible into or exchangeable for Ordinary Shares or which carry the right to vote at general meetings of the Company's shareholders (and for the avoidance of doubt Limited Voting Shares constitute such securities) (each an EQUIVALENT SECURITY) that would, assuming conversion or exchange of any such Equivalent Securities, cause such holding, ownership or voting to fall below 50.1%, have the option to either: (AA) subscribe for that number of Equivalent Securities necessary to permit TW Holdings (in the case of (a) above) or TW Holdings and the Microsoft/Liberty Shareholders (in the case of (b) above) to maintain ownership of Shares or sufficient voting rights in aggregate as will represent 50.1 per cent. of the Fully Diluted Ordinary Shares immediately following such issue and provided that, if in the opinion of leading external New York counsel of at least 10 years standing (such opinion to be obtained at the Company's expense and to be addressed to the Company) such subscription would result in a Debenture Change of Control (either upon subscription for such Equivalent Securities or upon their conversion or exchange by TW Holdings or the Microsoft/Liberty Shareholders, as the case may be) then such option shall be an option to subscribe for such Equivalent Securities to the maximum extent possible without, in the opinion of such leading New York counsel, causing such a Debenture Change of Control, with the balance of such option being an option to subscribe for a security identical to such Equivalent Security save that on conversion or exchange, such security converts or exchanges into Limited Voting Shares rather than Ordinary Shares (such security being a LIMITED VOTING EQUIVALENT SECURITY); or (BB) immediately prior to the conversion or exchange of the Equivalent Securities held by Persons other than TW Holdings or the Microsoft/Liberty Shareholders, subscribe for that number of Page 20 Ordinary Shares necessary to permit TW Holdings (in the case of (a) above) or TW Holdings and the Microsoft/Liberty Shareholders (in the case of (b) above) to maintain ownership or voting of sufficient issued Shares in aggregate as will represent 50.1 per cent. of the Fully Diluted Ordinary Shares immediately following such conversion or exchange and provided that, if in the opinion of leading external New York counsel of at least 10 years standing (such opinion to be obtained at the Company's expense and to be addressed to the Company) such subscription would result in a Debenture Change of Control then such option shall be an option to subscribe for Ordinary Shares to the maximum extent possible without, in the opinion of such leading New York counsel, causing such a Debenture Change of Control, with the balance of such option being a right to subscribe for Limited Voting Shares; The Company agrees to give each of Microsoft and Liberty International 8 Trading Days' written notice of the issue of shares or securities which give rise to any option under this clause 9.3. Each of TW Holdings and/or the Microsoft/Liberty Shareholder shall, within 4 Trading Days after receipt of such notice by Microsoft and Liberty International notify the Company in writing whether, and to what extent, it wishes to exercise such option and whether it would like to subscribe any surplus Ordinary Shares, Equivalent Securities or, to the extent applicable, Limited Voting Shares or Limited Voting Equivalent Securities (as the case may be) under option but not taken up in accordance with this clause. If any Ordinary Shares, Equivalent Securities or, to the extent applicable, Limited Voting Shares or Limited Voting Equivalent Securities (as the case may be) under option under this clause in respect of a particular Dilutive Issue are not taken up in accordance with this clause the Company shall allocate such excess Ordinary Shares, Equivalent Securities or, to the extent applicable, Limited Voting Shares or Limited Voting Equivalent Securities (as the case may be) to those Microsoft/Liberty Shareholders who requested additional Ordinary Shares, Limited Voting Shares or Limited Voting Equivalent Securities or Equivalent Securities (as the case may be) and, in case of competition for such shares, pro rata to their existing holdings of Shares. 9.4 DELIBERATELY BLANK 9.5 The Qualifying Shareholders within each Qualifying Group shall: (i) on an issue of Ordinary Shares have the option to subscribe for that number of new Ordinary Shares (in such proportions as they may agree and otherwise among them pro rata according to their respective shareholdings) necessary to permit their Qualifying Group to have Page 21 ownership of sufficient issued Shares so as to maintain its Percentage Ownership immediately following a Dilutive Issue and provided that, if in the opinion of leading external New York counsel of at least 10 years standing (such opinion to be obtained at the Company's expense and to be addressed to the Company) such subscription would result in a Debenture Change of Control then such option shall be an option to subscribe for Ordinary Shares to the maximum extent possible without, in the opinion of such leading New York counsel, causing such a Debenture Change of Control, with the balance of such option being a right to subscribe for Limited Voting Shares; and (ii) on an issue of securities by the Company that are convertible into or exchangeable for Ordinary Shares or which carry the right to vote at general meetings of the Company that would, assuming conversion or exchange of such Equivalent Securities, cause their ownership of issued Shares to fall below its Percentage Ownership, have the option to either: (i) subscribe for that number of Equivalent Securities (in such proportions as they may agree and otherwise among them pro rata according to their respective shareholdings) necessary to permit their Qualifying Group to have ownership of sufficient issued Shares so as to maintain its Percentage Ownership immediately following such issue assuming that the options under clause 9.3 are exercised in full and provided that, if in the opinion of leading external New York counsel of at least 10 years standing (such opinion to be obtained at the Company's expense and to be addressed to the Company) such subscription would result in a Debenture Change of Control then such option shall be an option to subscribe for Equivalent Securities to the maximum extent possible without, in the opinion of such leading New York counsel, causing such a Debenture Change of Control, with the balance of such option being a right to subscribe for Limited Voting Equivalent Securities; or (ii) on the conversion or exchange of the Equivalent Securities held by persons other than the Qualifying Shareholders, subscribe for that number of Ordinary Shares necessary to permit the Qualifying Shareholders to have ownership of sufficient issued Shares in aggregate so as to maintain its Percentage Ownership immediately following such conversion or exchange provided that, if in the opinion of leading external New York counsel of at least 10 years standing (such opinion to be obtained at the Company's expense and to be addressed to the Company) such subscription would result in a Debenture Change of Control then Page 22 such option shall be an option to subscribe for Ordinary Shares to the maximum extent possible without, in the opinion of such leading New York counsel, causing such a Debenture Change of Control, with the balance of such option being a right to subscribe for Limited Voting Shares. The Company agrees to give each Qualifying Shareholder 8 Trading Days' written notice of the issue of shares or securities which give rise to any option under this clause 9.5. Each Qualifying Shareholder shall, within 4 Trading Days after receipt of such notice, notify the Company in writing whether, and to what extent, it wishes to exercise such option, which may be exercised in full or in part. 9.6 Prior to exercising their rights under clauses 9.3 or 9.5 the Microsoft Group and the Liberty Group agree with each other to consult each other and, if the exercise of their rights to the desired extent may have implications under Rule 9 of the City Code on Takeovers and Mergers, to consult the Panel. If within 7 Trading Days of receipt of notice from the Company of the proposed issue of such securities the Panel has not granted or has denied a waiver of all requirements under Rule 9 for the Liberty Group or the Microsoft Group to make a mandatory offer as a result of the exercise of their rights under clauses 9.3, or 9.5 or any shareholder approval required by the Panel has not been granted or has been denied and both the Microsoft Group and the Liberty Group wish to exercise their rights under clauses 9.3 or 9.5 to an extent which in aggregate would trigger the requirement for a mandatory offer under Rule 9, unless Liberty International and Microsoft otherwise agree, the Liberty Group and the Microsoft Group shall exercise their rights under clauses 9.3 or 9.5 only to the maximum extent practicable without triggering any requirement under Rule 9 for a mandatory offer and, in case of competition, pro rata to their then existing holdings of Shares. 9.7 Any Shares subscribed for by a Qualifying Shareholder, TW Holdings and/or the Microsoft/Liberty Shareholders pursuant to clause 9.3(i) or 9.5(i) shall be subscribed for in cash at a price per Share equal to the average Closing Price for the 10 consecutive Trading Days ending on the Trading Day on which TW Holdings and/or the Microsoft/Liberty Shareholders give notice to the Company as to their intentions under clause 9.3 or 9.5, as applicable. Such Shares shall be issued immediately before the issue of Ordinary Shares which gave rise to the option described in this clause 9. 9.8 Any Shares subscribed for by TW Holdings and/or the Microsoft/Liberty Shareholders pursuant to clause 9.3(ii)(BB) or 9.5(ii)(ii) shall be subscribed in cash at a price per Share equal to the average Closing Price for the 10 consecutive Trading Days ending on the Trading Day falling two Trading Days prior to the date of issue of the Ordinary Shares arising from the Page 23 conversion/exchange of the Equivalent Securities that gave rise to TW Holdings' and/or the Microsoft/Liberty Shareholders' right to subscribe. Such Shares shall be issued immediately before the issue of the Ordinary Shares which gave rise to the option arising on conversion/exchange of the Equivalent Securities. 9.9 Any Equivalent Securities or Limited Voting Equivalent Securities subscribed for by TW Holdings and/or the Microsoft/Liberty Shareholders pursuant to clause 9.3(ii)(AA) or 9.5(ii)(i) shall be subscribed in cash at a price per Equivalent Security or Limited Voting Equivalent Security equal to the subscription price of the Equivalent Securities to third party investors at the time of their issue. 9.10 The Company will seek statutory authority to allot Shares (pursuant to section 80 of the Act) and for the disapplication of the statutory pre-emption rights (pursuant to section 95 of the Act) in accordance with existing ABI guidelines and hereby agrees to use its reasonable endeavours to renew any and every such statutory authority to allot and for the disapplication of the pre-emption rights thereafter for so long as the Company is obligated by the anti-dilution provisions of this clause 9. The Company further undertakes that it shall only increase the Fully Diluted Ordinary Shares if thereafter there is sufficient authorised but unissued share capital for the Company to comply with its obligations pursuant to this clause 9 and also only if there are outstanding and valid a statutory authority to allot (pursuant to section 80 of the Act) and a disapplication of the statutory pre-emption rights (pursuant to section 95 of the Act) in respect of sufficient Shares for the Company to comply with its obligations under this clause. The Shareholders undertake to each other and to the Company to vote in favour of any such proposed resolutions. 9.11 The Company shall use all reasonable efforts to ensure that all Ordinary Shares issued pursuant to this clause 9 are admitted to the Official List by the London Stock Exchange. 9.12 Microsoft, Liberty International and TW Holdings agree that, if as a result of the conversion of the Company's outstanding 5.4% senior convertible notes due 2007, TW Holdings and/or the Microsoft/Liberty Shareholders become entitled to exercise their option to subscribe for Shares under clause 9.3(ii) (in relation to the threshold referred to in that clause), they shall seek to satisfy their right to subscribe for such shares by purchasing Ordinary Shares in the market and shall only exercise such option to the extent that such purchases are not possible either (i) at or close to the price per share that would be payable on exercise of their options in clause 9, (ii) without incurring an obligation to make a mandatory cash offer for the Company under Rule 9 or (iii) because in the opinion of leading New York counsel of at least 10 years Page 24 standing (such opinion to be obtained at the Company's expense and to be addressed to the Company and to the parties exercising such option) such purchase would result in a Debenture Change of Control, provided always that this clause 9.12 shall not apply to a conversion of such notes that would cause a Qualifying Shareholder's Qualifying Group to cease being a 15 Per Cent. Group or a 7.5 Per Cent. Group, as applicable. 9.13 The parties agree that if the Flextech Offer becomes unconditional in all respects each of TW Holdings, the Microsoft Group and the Liberty Group shall be entitled to exercise their rights under clause 9.3 on the same day on which Telewest issues Ordinary Shares by way of consideration under the Flextech Offer and any Dilutive Issue in connection with the Flextech Offer shall be deemed to take place at each time when Telewest so issues Ordinary Shares under the Flextech Offer. 9.14 In the event that TW Holdings and/or the Microsoft/Liberty Shareholders do not exercise their rights arising from the Flextech Offer under Clause 9.3 so as to maintain their ownership of sufficient issued Shares in aggregate as represent 50.1 per cent. of the Fully Diluted Ordinary Shares following the issue of all Shares pursuant to the Flextech Offer or in the event that this Agreement is entered into or becomes unconditional after such Dilutive Issue(s) has or have taken place, solely for the purpose of determining the rights of the Microsoft Group and the Microsoft Shareholders under this clause 9, then this clause 9 shall, following such event, be deemed to have been amended so that the figure of 50.1 per cent. wherever referred to in this clause 9 shall be the percentage which the Shares that TW Holdings, the Microsoft Group and the Liberty Group shall hold or own as at the date the Flextech Offer becomes unconditional in all respects (assuming completion of the MediaOne Merger Agreement and after taking into account any Shares which the Liberty Group may acquire pursuant to the Flextech Offer and any Ordinary Shares (acquired by MediaOne under the Flextech Offer) which Microsoft may acquire from MediaOne and any Shares which Microsoft may acquire by virtue of exercising anti-dilution rights under the 2000 First Relationship Agreement) represent to the Fully Diluted Ordinary Shares as enlarged by the number of Ordinary Shares which may from time to time be issued pursuant to the Flextech Offer (and the provisions of Part XIII A of the Act in consequence of the Flextech Offer) and any other Dilutive Issue occurring after 16 December 1999 and prior to the date the Flextech Offer becomes or is declared unconditional in all respects (or, if later, but subject to the Rules of the City Code, prior to the date when this Agreement becomes unconditional). Neither the Liberty Group nor the Liberty Shareholders nor TW Holdings shall be deemed to acquire any rights as a result of this clause 9.14. Page 25 9.15 Microsoft or Liberty International, as the case may be, shall remit the subscription moneys due to the Company in respect of any Shares, Equivalent Securities or Limited Voting Equivalent Securities subscribed by it pursuant to this clause against the issue to it of the relevant securities or, as the case may be, the crediting thereof to a relevant CREST account. GENERAL RIGHTS OF SHAREHOLDER GROUPS TO MAINTAIN OWNERSHIP LEVEL 10. The Company agrees to use its best efforts, consistent with the interests of shareholders generally, to ensure that any issuance of Shares is done in a manner that provides each Shareholder Group with an opportunity to acquire additional Shares of the same class in amounts necessary from time to time to enable them to maintain their percentage Share ownership in the Company. The Company shall apply for all such Ordinary Shares to be admitted to the Official List by the London Stock Exchange. SCOPE OF BUSINESS 11. The Company agrees with each of the Microsoft Group and the Liberty Group, for so long as it is a Qualifying Group, that the business of the Company and its Controlled Affiliates shall be limited to providing Cable Television, Cable Telephony, Wireless Telephony and any voice, video, internet or data services provided or able to be provided over a broadband cable network and (except as limited below with respect to television programming) all services or matters relevant or complementary thereto, in each case, in the United Kingdom, including television programming in the United Kingdom incidental to the Company's Cable Television business in the United Kingdom together with any business carried on by Flextech plc as at the date of this Agreement together with all matters incidental thereto (collectively, COMPANY BUSINESS), and such other businesses as such Shareholder Group shall approve by written consent. The Company shall not own or acquire an equity interest in any person that engages in a business other than those in which the Company is permitted to engage pursuant to this clause 11. The Liberty Shareholders, the Microsoft Shareholders and their respective Affiliates shall not use the "Telewest" mark (or any mark confusingly similar to it) within the UK except with the prior written agreement of the Company. CONTRACTUAL RESTRICTIONS 12. The Company undertakes to the Liberty Group that so long as the Liberty Shareholders own more than 5 per cent. of the Company's issued Ordinary Shares and so long as the contractual restrictions described in Schedule 1 remain in effect, that the Company will not knowingly take or omit Page 26 to take (and will not permit its Controlled Affiliates to take or omit to take) any action that could cause a breach or violation of the contractual restrictions (as such exist on the date hereof) described in Schedule 1 save that the restriction in paragraph (a) of Schedule 1 shall cease to apply 14 days after the date on which the Flextech Offer is declared unconditional in all respects. GAIN RECOGNITION CONSENT REQUIREMENTS AND CONVERSION 13.1 The Company covenants to each of the Microsoft Group and the Liberty Group that for so long as (i) they each own or (ii) the Microsoft Group and the Liberty Group in aggregate own at least 7.5 per cent. of the Shares in issue the Company will not and will procure that no member of the Telewest Group will, (i) without the written consent of such Shareholder Group, dispose of assets (including securities of an Affiliate of the Company) in one transaction or a series of related transactions within any 18 month period having a Fair Market Value of (pound)20,000,000 or more if, in the judgement of such Shareholder Group, the disposition could require it to recognise gain under the Gain Recognition Agreements between it and the US Internal Revenue Service or (ii) in the case of the Microsoft and the Liberty Group dispose of or reorganise any interest in or Control of any member of the Telewest Group intra-group or acquire any equity interest in a Person not Affiliated with the Company immediately prior to such acquisition if the effect of any such disposition, reorganisation or acquisition would be to create an intermediate holding Person within the Telewest Group. The Company shall be entitled to conclusively rely on notice from either of Microsoft or Liberty International (as the case may be) as to any consent given by their respective Shareholder Groups. 13.2 Unless otherwise agreed in writing between Microsoft and Liberty International, in the event that the holders of Limited Voting Shares are entitled to convert any of the same into Ordinary Shares in accordance with the 2000 Articles, each such Group shall only be entitled to convert such proportion of the maximum number of Limited Voting Shares as can be converted at such time as the number of Limited Voting Shares held by their respective Groups bears to the aggregate number of Limited Voting Shares held by both Groups together at the relevant time. CITY CODE ON TAKEOVERS AND MERGERS 14. If any Shareholder Group takes any action which causes another Shareholder Group or Groups to be under an obligation pursuant to Rule 9 of the City Code on Takeovers and Mergers (the CODE), the Shareholder Group which takes such action shall fulfil all the obligations of such other Shareholder Group or Groups (but not the Company) thereunder and shall pay all consideration and expenses attributable to such Shareholder Group or Groups in connection therewith. Page 27 CONFIDENTIALITY 15. Save as required by law or any regulatory authority, each Shareholder shall keep confidential, and shall procure that all members of its Shareholder Group will keep confidential, any confidential information of the Telewest Group which is or has been given to it by or on behalf of the Telewest Group unless the information is already in the public domain other than through the default of the Shareholder or a member of its Shareholder Group in complying with this clause. JOINT AND SEVERAL LIABILITY FOR CONTROLLED AFFILIATES 16.1 Liberty International shall be jointly and severally liable with its Controlled Affiliates for any and all of the obligations and liabilities of such Controlled Affiliates under this Agreement. 16.2 Microsoft shall procure that promptly upon, and in any event within 5 days of, any of its Affiliates (from time to time) becoming, acquiring or merging with the registered shareholder of any Shares, such Affiliate(s) shall execute a deed of adherence in the form of Schedule 2 and on execution such Affiliates will take the benefit of the rights of a Shareholder (subject to the burden of the obligations of a Shareholder). 16.3 Microsoft shall be jointly and severally liable with its Affiliates for any and all obligations and liabilities of such Affiliates under this Agreement. TERM 17. This Agreement shall continue whilst any party hereto retains any rights and/or obligations hereunder and shall terminate forthwith (in relation to a party no longer having any rights and/or obligations) upon that ceasing to be the case. TERMINATION OF 2000 FIRST RELATIONSHIP AGREEMENT 18. As between Liberty, Liberty UK, Liberty UK Holdings and the Company this Agreement supersedes the 1999 First Relationship Agreement and the 2000 First Relationship Agreement (except for the provisions of clauses 15.1 and 15.2 of the 1999 First Relationship Agreement to the extent such clauses govern rights and obligations of the Company and Liberty to each other) and the rights and obligations thereunder of Liberty, Liberty UK, Liberty UK Holdings and the Company against and to one another shall cease upon this Agreement becoming unconditional provided that such rights and obligations accrued thereunder prior to such time (including, without limitation, all rights and claims under clause 15 of that agreement whether or not such a claim has been made or crystallised) shall not be affected. For the avoidance of doubt, the rights and obligations of such parties under the 1999 First Relationship Page 28 Agreement and the 2000 First Relationship Agreement against and to MediaOne and the MediaOne Shareholders shall not be affected by this Agreement. COSTS 19. Each party shall pay its own costs relating to the negotiation, preparation, execution and performance by it of this Agreement and of each document referred to in it. FURTHER ASSURANCE 20. The parties agree that they shall execute and deliver any other documents and instruments, and take any other actions reasonably requested by another party necessary or appropriate to give effect to this Agreement. GENERAL 21.1 Whenever in this Agreement action by a Shareholder Group is required or permitted, that action shall be deemed taken if approved by members of that Shareholder Group owning a majority of the total number of Shares (entitled to vote on the action required or permitted to be taken hereunder) owned by all the members of that Shareholder Group. 21.2 A variation of this Agreement is valid only if it is in writing and signed by or on behalf of each party. 21.3 The parties agree that each party would be irreparably damaged if any party failed to perform any obligation under this Agreement, and that such party would not have an adequate remedy at law for money damages in such event. Accordingly, each party hereto will be entitled to specific performance and injunctive and other equitable relief to enforce the performance of this Agreement. This provision is without prejudice to any other rights that such party may have under this Agreement, at law or in equity. 21.4 The failure to exercise or delay in exercising a right or remedy provided by this Agreement or by law does not constitute a waiver of the right or remedy or a waiver of other rights or remedies. No single or partial exercise of a right or remedy provided by this Agreement or by law prevents further exercise of the right or remedy or the exercise of another right or remedy. 21.5 The rights and remedies contained in this Agreement are cumulative and not exclusive of rights or remedies provided by law. 21.6 The invalidity or unenforceability of any provision of this Agreement in any jurisdiction shall not affect the validity or enforceability of the remainder of Page 29 this Agreement in that jurisdiction or the validity or enforceability of this Agreement, including such provision, in any other jurisdiction. 21.7 Each date, time or period referred to in this Agreement is of the essence. If the parties agree in writing to vary a date, time or period, the varied date, time or period is of the essence. 21.8 Subject to the provisions hereof, this Agreement sets out the entire agreement and understanding between the parties with respect to the subject matter hereof and supersedes any prior contract, arrangement, understanding or relationship, oral or written, among the parties relating hereto save for the provisions of a letter agreement amongst certain of the parties dated 16 December 1999 (as amended) other than sections 4(a)(iii), (iv) and (v) of that letter agreement (which are expressly superseded by this Agreement). ASSIGNMENT 22.1 Subject to clause 22.2, a party may not assign or transfer or purport to assign a right or obligation under this Agreement without having first obtained the written consent of the other parties. 22.2 The benefit of the rights of a Shareholder (subject to the burden of the obligations of a Shareholder) under this Agreement shall be afforded to an assignee or transferee who is or becomes a member of the same Shareholders Group as the assignor or transferor provided that the assignee or transferee duly completes, executes and delivers to the Company a deed of adherence in the form set out in Schedule 2 and for this purpose Microsoft and Liberty International shall each be deemed to be a Shareholder. NOTICES 23.1 Any notice under this Agreement shall be in writing and signed by or on behalf of the party giving it and may be served by leaving it or sending it by fax, prepaid recorded delivery or registered post (and air mail if overseas) to the address and for the attention of the party receiving it set out in clause 23.2 or as otherwise notified under this Agreement. In the absence of evidence of earlier receipt, any notice so served shall be deemed to have been received: (a) if delivered personally, when left at the relevant address; (b) if sent by first class mail to an address in the United Kingdom, 48 hours after posting it; (c) if sent by air mail to an address outside the United Kingdom, 72 hours after posting it; Page 30 (d) if sent by fax, on receipt of confirmation of its transmission. 23.2 The current addresses of the parties for the purpose of clause 23.1 are set out below. These may be altered by the parties by notice to the other parties at any time: Microsoft: One Microsoft Way, Redmond WA 98052-6379 For the attention of: Bob Eshelman Fax: 001 425 936 7329 Liberty International, 9197 South Peoria Street Liberty UK and Liberty UK Englewood Holdings: Colorado 80112 USA For the attention of: Charles Tanabe Fax: 1 720 875 5382 and For the attention of: Robert Bennett Fax: 00 1 720 875 5434 Company: Genesis Business Park Albert Drive Woking Surrey GU21 5RW For the attention of: Victoria Hull Fax: 01483 295165 GOVERNING LAW AND JURISDICTION 24.1 This Agreement is governed by and shall be construed in accordance with English law. 24.2 The courts of England have exclusive jurisdiction to hear and decide any suit, action or proceedings, and to settle any disputes, which may arise out of or in connection with this Agreement (respectively, PROCEEDINGS and DISPUTES) and, for these purposes, each party irrevocably submits to the jurisdiction of the courts of England. 24.3 Each party irrevocably waives any objection which it might at any time have to the courts of England being nominated as the forum to hear and decide any Proceedings and to settle any Disputes and agrees not to claim that the courts of England are not a convenient or appropriate forum. Page 31 24.4 Process by which any Proceedings are begun in England may be served on any party by being delivered in accordance with clause 23 or may be served on the parties without addresses in England (as set out in clause 23.2 above) by being delivered to the agents at the addresses indicated below (or such other agent or address as the party in question may notify to the other parties): Microsoft: Sisec Limited, 21 Holborn Viaduct, London EC1A 2DY For the attention of: Richard Ufland Fax: 0207 296 2001 Liberty International, Liberty UK Grays Inn Secretaries Limited and Liberty UK Holdings: 5 Chancery Lane London EC4 1BU For the attention of Philip Goodwin/ Simon Brown Fax: 0207 404 0087 Nothing contained in this clause 24.4 affects the right to serve process in another manner permitted by law. COUNTERPARTS 25. This Agreement may be executed in any number of counterparts each of which when executed and delivered is an original, but all the counterparts together constitute the same document. Page 32 SCHEDULE 1 (a) Flextech plc has a right of first refusal with respect to participation in English language programming business in the United Kingdom and Europe under certain circumstances described in the IPO Documents. (b) In an agreement relating to the establishment of a joint venture between BBC Worldwide and Flextech plc for the establishment and broadcast of television programme services in the United Kingdom, Liberty International has agreed that it will not itself, and that it will procure that no company of which it has voting control will, acquire an interest in excess of 20 per cent. of the issued share capital of a company which owns a commercial broadcast television channel which competes with one or more of the channels to be established under such joint venture. Page 33 SCHEDULE 2 DEED OF ADHERENCE THIS DEED OF ADHERENCE is made on [ ] 199[ ] BY[_____ _____ ] of [_____ _____] (the COVENANTOR) in favour of the persons whose names are set out in the schedule to this Deed and is supplemental to the Revised New Relationship Agreement dated [_____ _____] 2000 made by (1) Microsoft Corporation (2) Liberty Media International, Inc., (3) Liberty UK, Inc., (4) Liberty UK Holdings, Inc., and (5) Telewest Communications plc (the RELATIONSHIP AGREEMENT). THIS DEED WITNESSES as follows: 1. The Covenantor confirms that it has been given and read a copy of the Relationship Agreement and covenants with each person named in the schedule to this Deed to perform and be bound by all the terms of the Relationship Agreement as if the Covenantor were a party to the Relationship Agreement as a Shareholder. 2. This Deed is governed by English law. IN WITNESS WHEREOF this Deed has been executed by the Covenantor and is intended to be and is hereby delivered on the date first above written. SCHEDULE [Parties to Relationship Agreement including those who have executed earlier deeds of adherence.] Page 34 SCHEDULE 3 PROVISIONS PRESERVED FROM THE OLD RELATIONSHIP AGREEMENT 1. COSTS RELATING TO TELEWEST INTERESTS The Company undertakes to reimburse Liberty International (for itself and on behalf of TCI and its Affiliates) for all losses, damages, costs, liabilities, deficiencies, claims, suits, proceedings, demands, judgements, assessments, fines, interest, penalties, costs and expenses (including, without limitation, settlement costs and legal, accounting, experts' and other fees, costs and expenses) (but excluding taxes) based upon, arising out of or associated with (i) the ownership of the Telewest Interests prior to, on or following the Public Offering, (ii) the dissolution and liquidation of the UCs and obligations and liabilities of the UCs arising prior to, upon or subsequent to their dissolution relating to the ownership and operation of the Telewest Interests and (iii) the TCI Investors having been members of the UCs. 2. TAXATION COSTS RELATING TO TELEWEST INTERESTS The Company undertakes to reimburse Liberty International (for itself and on behalf of TCI and its Affiliates) for all liabilities for taxes which they incur and which arise in respect of the operation of the businesses carried on by the Telewest Interests prior to or following the Public Offering including (but not limited to) Value Added Tax, income tax levied pursuant to the Pay As You Earn Regulations and income tax levied pursuant to the Income Tax (Sub-Contractors in the Construction Industry) Regulations and excluding (for the avoidance of doubt) any tax liabilities in respect of which Liberty International have agreed to indemnify Old Telewest under the Tax Deed. 3. LIMITATIONS ON REIMBURSEMENT AND PAYMENT OBLIGATIONS No reimbursement or payment due pursuant to clause 1, 2 or 4 or arising out of any breach or violation of the Old Relationship Agreement or the Related Agreements shall be made unless the aggregate amount payable by that party on account of all such matters exceeds (pound)10,000, and if such amount is exceeded all payments and reimbursements shall be paid by that party in full. 4. INDEMNIFICATIONS (a) The Company undertakes to indemnify and hold harmless Liberty International (for itself and on behalf of TCI and its Affiliates) from and against any costs, damages, liabilities and obligations (including but not limited to attorneys' fees and payment of any settlement or judgment) arising out of any claim, action or proceeding relating to the IPO Page 35 Documents and the Contemplated Transactions, except those matters as to which the Investors specifically made a representation or warranty to Old Telewest or agreed specifically to reimburse Old Telewest. If the indemnification provided in this clause 4(a) is at any time legally or procedurally unavailable to any Person, the Company shall contribute to the amount paid or payable by such Person on account of such claim, action or proceeding an amount equal to the amount the Company otherwise would be required to pay that Person as indemnification under this clause 4(a). (b) Liberty International and Liberty UK undertake to indemnify and hold harmless the Company from and against any costs, damages, liabilities and obligations (including but not limited to attorneys' fees and payment of any settlement or judgment) arising out of any claim, action or proceeding relating to any portion of the IPO Documents provided by the TCI Investors in writing for use in the IPO Documents. If the indemnification provided in this clause 4(b) is at any time legally or procedurally unavailable to any Person, Liberty International and Liberty UK shall contribute to the amount paid or payable by such Person on account of such claim, action or proceeding an amount equal to the amount Liberty International and Liberty UK otherwise would be required to pay that Person as indemnification under this clause 4(b). 5. DEFINITIONS Set out below are the definitions of the defined terms which are only used in this Agreement in Schedule 3 above (which are accurate as at 22 November 1994 being the date of the Old Relationship Agreement): CONTEMPLATED TRANSACTIONS means the transactions contemplated by the Old Relationship Agreement and the Related Agreements, including the transfer by the TCI Investors of the Telewest Interests to the UCs; PUBLIC OFFERING means the public offering in 1994 of Ordinary Shares for sale to the public; RELATED AGREEMENTS means the following agreements entered into on the date of the Old Relationship Agreement (22 November 1994): (a) Technology Licensing Agreements between (i) Old Telewest and Liberty, and (ii) Old Telewest and MediaOne Holdings; (b) Trademark Licensing Agreements between (i) Old Telewest and MediaOne, and (ii) Old Telewest and TCI; Page 36 (c) Secondment Agreements between (i) Old Telewest and TCI, and (ii) Old Telewest and an Affiliate of the MediaOne Investors; (d) Tax Deed between Old Telewest, Liberty International and MediaOne Holdings; and (e) Registration Rights Agreements between (i) Old Telewest and the TCI Investors and (ii) Old Telewest and the MediaOne Investors; TAX DEED means deed of indemnity against taxation entered into by Old Telewest, Liberty and MediaOne Holdings dated 22 November 1994; TCI INVESTORS means Liberty UK and United Artists Cable Television UK Holdings, Inc.; TELEWEST INTERESTS means the interests owned by the TCI Investors and the MediaOne Investors in the following partnerships, which were engaged in the Cable Television and Cable Telephony businesses in the UK on the date of the Old Relationship Agreement: (a) TCI/U S WEST Cable Communications Group; (b) Avon Cable Limited Partnership; (c) Edinburgh Cable Limited Partnership; (d) Estuaries Cable Limited Partnership; (e) United Cable (London South) Limited Partnership; (f) Tyneside Cable Limited Partnership; and (g) Cotswolds Cable Limited Partnership; UCS means Theseus No. 1 (to whom the TCI Investors contributed their Telewest Interests on 21 November 1994) and Theseus No. 2 (to whom the MediaOne Investors contributed their Telewest Interests on 21 November 1994). Page 37 AS WITNESS this Agreement has been executed by the duly authorised representatives of the parties the day and year first before written. SIGNED by JOHN CONNORS ) for and on behalf of MICROSOFT ) J. CONNORS CORPORATION ) SIGNED by GRAHAM HOLLIS ) for and on behalf of ) G. HOLLIS LIBERTY MEDIA ) INTERNATIONAL, INC. ) SIGNED by GRAHAM HOLLIS ) for and on behalf of ) G. HOLLIS LIBERTY UK, INC. ) SIGNED by GRAHAM HOLLIS ) for and on behalf of ) G. HOLLIS LIBERTY UK HOLDINGS, ) INC. ) SIGNED by VICTORIA HULL ) for and on behalf of ) VICTORIA HULL TELEWEST COMMUNICATIONS ) PLC ) Page 38
2000 AMENDED AND RESTATED
OPERATING AGREEMENT
OF
TW HOLDINGS, L.L.C.
-i-
TABLE OF CONTENTS
Page
ARTICLE 1: FORMATION AND DEFINITIONS......................................2
1.1 Formation....................................................2
1.2 Company Name.................................................2
1.3 Office and Agent.............................................2
1.4 Foreign Qualification........................................2
1.5 Term.........................................................2
1.6 Definitions..................................................2
ARTICLE 2: PURPOSES AND POWERS.............................................10
2.1 Purpose.....................................................10
2.2 Powers......................................................10
ARTICLE 3: MEMBERS; MANAGEMENT; VOTING.....................................11
3.1 Admission of Transferees as Members.........................11
3.2 Managing Directors..........................................12
3.3 Board Vote..................................................12
3.4 Unanimous Vote..............................................12
3.5 Expense Reimbursement; Indemnification......................12
3.6 No Resignation or Retirement................................13
ARTICLE 4: CAPITAL AND CAPITAL ACCOUNTS..................................13
4.1 Maintenance.................................................13
4.2 Revaluation.................................................14
4.3 Contributions; Ownership Interests..........................14
4.4 Additional Contributions....................................14
4.5 No Withdrawal of Capital....................................15
4.6 No Interest on Capital......................................15
4.7 No Drawing Accounts.........................................15
4.8 Transfers of Capital Accounts...............................15
ARTICLE 5: ALLOCATION OF PROFITS AND LOSSES............................15
5.1 Profits and Losses..........................................15
5.2 General Allocation Rule.....................................15
5.3 Exception...................................................16
5.4 Tax Allocations.............................................16
5.5 Transfer....................................................16
5.6 Contributed and Revalued Property...........................16
5.7 Tax Credits.................................................17
-ii-
ARTICLE 6: DISTRIBUTIONS...................................................17
6.1 Net Cash....................................................17
6.2 Liquidating Distributions...................................17
6.3 Payment.....................................................18
6.4 Withholding.................................................18
6.5 In Kind Distributions.......................................18
6.6 Distribution Limitation.....................................18
ARTICLE 7: MANAGING DIRECTORS..............................................18
7.1 Annual Meeting..............................................18
7.2 Special Meetings............................................19
7.3 Place.......................................................19
7.4 Notice......................................................19
7.5 Waiver of Notice............................................19
7.6 Meetings by Telephone.......................................19
7.7 Action Without a Meeting....................................19
7.8 Certain Conflicts...........................................19
7.9 Resolution of Disagreements.................................20
7.10 Termination of Voting Arrangements..........................20
ARTICLE 8: LIABILITY OF MEMBERS..........................................20
8.1 Limited Liability...........................................20
8.2 Capital Contribution........................................20
ARTICLE 9: Intentionally Omitted...........................................21
ARTICLE 10: ACCOUNTING AND REPORTING.....................................21
10.1 Fiscal Year.................................................21
10.2 Accounting Method...........................................21
10.3 Tax Returns.................................................21
10.4 Reports.....................................................21
10.5 Banking.....................................................21
ARTICLE 11: TRANSFER RESTRICTIONS..........................................21
11.1 General Restriction.........................................22
11.2 No Member Rights............................................22
11.3 Permitted Transferees.......................................22
11.4 Rights of First Refusal.....................................22
11.5 Change in Control of a Shareholder Group....................24
11.6 General Conditions on Transfers.............................25
11.7 Rights of Transferees.......................................26
11.8 Admission...................................................26
-iii-
11.9 Satisfaction of Legal Requirements..........................26
11.10 Closing.....................................................27
11.11 Events of Withdrawal........................................27
11.12 Obligation to Contribute Additional Shares to Company.......27
11.13 Covenant Relating to Rule 9 of City Code....................27
ARTICLE 12: DISSOLUTION OF THE COMPANY..................................28
12.1 Dissolution.................................................28
12.2 Exclusive Means of Dissolution..............................28
ARTICLE 13: LIQUIDATION....................................................28
13.1 Liquidation.................................................28
13.2 Priority of Payment.........................................29
13.3 Distribution to Members.....................................29
13.4 Deficit Capital Account.....................................30
13.5 Liquidating Reports.........................................30
13.6 Articles of Dissolution.....................................30
ARTICLE 14: GENERAL PROVISIONS............................................30
14.1 Amendment...................................................30
14.2 Unregistered Interests......................................31
14.3 Reliance....................................................31
14.4 Equitable Relief............................................31
14.5 Specific Performance........................................31
14.6 Counterparts................................................32
14.7 Notices.....................................................32
14.8 Deemed Notice...............................................32
14.9 Waivers Generally...........................................32
14.10 Partial Invalidity..........................................32
14.11 Entire Agreement............................................32
14.12 No Third Party Benefit......................................33
14.13 Binding Effect..............................................33
14.14 Further Assurances..........................................33
14.15 Headings....................................................33
14.16 Terms.......................................................33
14.17 Governing Law...............................................33
14.18 Restrictive Trade Practices Act.............................33
-iv-
2000 AMENDED AND RESTATED
OPERATING AGREEMENT
OF
TW HOLDINGS, L.L.C.
This 2000 AMENDED AND RESTATED OPERATING AGREEMENT is made as of July 7, 2000 by
the members of TW HOLDINGS, L.L.C., a Colorado limited liability company (the
"Company").
RECITALS
WHEREAS, Liberty UK, Inc., formerly named United Artists
Programming-Europe, Inc., MediaOne UK Cable, Inc., formerly named U S WEST UK
Cable, Inc. ("MediaOne UK"), and MediaOne Cable Partnership Holdings, Inc.,
formerly named U S WEST Cable Partnership Holdings, Inc. ("MediaOne Cable"), the
members of the Company (collectively, the "Members"), entered into an Operating
Agreement for the Company dated as of June 16, 1995 (the "Original Agreement");
WHEREAS, in September 1998 the Members made cash contributions to the
Company to fund the purchase by the Company of additional ordinary shares of
Telewest Communications plc ("Telewest"), purchased additional ordinary shares
of Telewest, the beneficial interests in which they contributed to the Company,
and entered into an Amended and Restated Operating Agreement dated as of
September 11, 1998 (the "Amended Agreement");
WHEREAS, on July 7, 2000 MediaOne Cable (renamed Microsoft Cable
Partnership Holdings, Inc.) and MediaOne UK (renamed Microsoft UK Cable, Inc.)
became wholly owned indirect subsidiaries of Microsoft Corporation pursuant to a
Merger Agreement, dated October 4, 1999, as amended (the "Microsoft/MediaOne
Merger Agreement"), between Microsoft Corporation, MediaOne UK, MediaOne Cable,
MediaOne Group, Inc. and the other parties thereto;
WHEREAS, Microsoft Corporation has entered into a Revised New
Relationship Agreement dated as of March 3, 2000 with Liberty UK Inc., Liberty
UK Holdings, Inc., Liberty Media International, Inc. and Telewest, which became
effective upon the occurrence of certain conditions, including the merging of
subsidiaries of Microsoft with MediaOne UK and MediaOne Cable pursuant to the
Microsoft/MediaOne Merger Agreement; and
- 1 -
WHEREAS, the Members have determined that it is in their best interests
to amend and restate the Amended Agreement as set forth herein.
NOW, THEREFORE, in consideration of their mutual promises, the Members
agree as follows:
ARTICLE 1: FORMATION AND DEFINITIONS
1.1 FORMATION. The Company was formed on June 16, 1995 by filing Articles with
the Colorado Secretary of State pursuant to the Act.
1.2 COMPANY NAME. The business of the Company will be conducted under the name
"TW Holdings, L.L.C." or any other name determined from time to time by the
Board in accordance with applicable law.
1.3 OFFICE AND AGENT. The registered office of the Company in Colorado is at
1560 Broadway, Suite 2090, Denver, Colorado 80202, and its registered agent is
The Prentice-Hall Corporation System, Inc. The Company may subsequently change
its registered office or registered agent in Colorado in accordance with the
Act.
1.4 FOREIGN QUALIFICATION. The Company will apply for a certificate of authority
to do business in any other jurisdiction where such authority is required.
1.5 TERM. The Company began on the date its Articles were filed with the
Colorado Secretary of State and will continue until its Dissolution.
1.6 DEFINITIONS. The following capitalized terms, when used in this Agreement,
have the meanings set forth below:
Act: the Colorado Limited Liability Company Act, as
amended from time to time.
Additional Contribution: a capital contribution (other than the Initial
Contributions) that a Member makes to the Company,
as described in Section 4.4.
Affiliate: with respect to any Person, any other Person
directly or indirectly Controlling, directly or
indirectly Controlled by or under direct or
indirect common Control with such Person.
- 2 -
Agreement: this 2000 Amended and Restated Operating
Agreement, as amended from time to time.
Articles: the articles of organization of the Company filed
under the Act, as amended from time to time.
Bankruptcy: of a Member will be deemed to occur when such
Member [a] files a voluntary petition in
bankruptcy, [b] is adjudged bankrupt or insolvent
or has entered against such Member an order for
relief in any bankruptcy or insolvency proceeding,
[c] files a petition or answer seeking for such
Member any reorganization, arrangement,
composition, readjustment, liquidation,
dissolution or similar relief under any statute,
law or regulation, [d] files an answer or other
pleading admitting or failing to contest the
material allegations of a petition filed against
such Member in any proceeding of that nature or
[e] seeks, consents to or acquiesces in the
appointment of a trustee, receiver or liquidator
of all or any substantial part of such Member's
property.
Board: as defined in Section 3.2.
Capital Account: the book capital account to be established and
maintained for each Member in accordance with this
Agreement.
Capital Contribution: any contribution by a Member to the Company which
is either an Initial Contribution or an Additional
Contribution.
Change in Control: [a] with respect to the Microsoft Shareholder
Group, the acquisition (whether by merger,
consolidation, sale, assignment, lease, transfer
or otherwise, in one transaction or any related
series of transactions) of beneficial ownership of
equity interests in Microsoft or any of its
Affiliates by any Person (except pursuant to a
distribution in specie, spinoff, share dividend,
demerger or similar transaction and other than any
acquisition of beneficial ownership by Microsoft
or
- 3 -
any of its Affiliates) as a result of which such
Person has the power, directly or indirectly, to
direct the voting and disposition of Shares held
by Microsoft and its Affiliates representing at
least 15 percent of the outstanding Shares of
Telewest; provided that any change in the Control
of Microsoft will not be deemed a Change in
Control for purposes of this Agreement; and
[b] with respect to the Liberty Shareholder Group,
the acquisition (whether by merger, consolidation,
sale, assignment, lease, transfer or otherwise, in
one transaction or any related series of
transactions) of beneficial ownership of equity
interests in Liberty International or any of its
Affiliates by any Person (except pursuant to a
distribution in specie, spinoff, share dividend,
demerger or similar transaction and other than any
acquisition of beneficial ownership by Liberty
International or any of its Affiliates) as a
result of which such Person has the power,
directly or indirectly, to direct the voting and
disposition of Shares held by Liberty
International and its Affiliates representing at
least 15 percent of the outstanding Shares of
Telewest, provided that any change in the Control
of AT&T Corp., TCI, Liberty Media Corporation or
Liberty International will not be deemed a Change
in Control for purposes of this Agreement.
A Change in Control will be deemed voluntary if it
is the result of a transaction agreed to by
Liberty International or any of its Affiliates or
Microsoft or any of its Affiliates, as the case
may be. A Change in Control will be deemed
involuntary if it is the result of actions by
Persons other than Liberty International or any of
its Affiliates or Microsoft or any of its
Affiliates, as the case may be, taken without the
agreement or consent of Liberty International or
any of its Affiliates or of Microsoft or any of
its Affiliates, as the case may be.
- 4 -
Closing Price: [a] with respect to Ordinary Shares to be offered
on the London Stock Exchange, will be the sale
price which appears on the relevant Reuters Screen
No. for Telewest as of 11:00 a.m. (London time) on
a Trading Day, provided that if such Ordinary
Shares do not appear on such Reuters Screen or
such Reuters Screen is temporarily unavailable,
the sale price with respect to the Ordinary Shares
will be the last reported sale price which appears
in the Official List of the London Stock Exchange
on a Trading Day and [b] with respect to Ordinary
Shares to be offered on the New York Stock
Exchange or another U.S. national securities
exchange in the form of ADSs, will be the last
reported sale price on a Trading Day on such
exchange or, if no such sale takes place on such
day, the average of the high and low sales prices
for such day as reported on the New York Stock
Exchange Composite Tape, or, if no such sales are
reported, the reported last sale price (or, if no
such sale takes place on such day, the average of
the reported closing bid and asked prices), on the
Nasdaq National Market, or if the ADSs are not
quoted on such National Market, the average of the
closing bid and asked prices in the
over-the-counter market as furnished by any New
York Stock Exchange member firm selected by the
Board for that purpose.
Code: the Internal Revenue Code of 1986, as amended from
time to time (including corresponding provisions
of subsequent revenue laws).
Control: with respect to any Person, the possession,
directly or indirectly, of the power to direct or
cause the direction of the management or policies
of the Controlled Person, whether through equity
ownership, by contract or otherwise, but a Person
shall not be deemed to Control another Person
solely by virtue of any veto rights granted to it
as a minority equity owner or by virtue of
super-majority voting rights.
- 5 -
Dissolution: the change in the relationship of the Members
caused by the occurrence of an event described in
Section 12.1.
Distribution: a distribution of money or other property made by
the Company with respect to an Ownership Interest.
Event of Withdrawal: the occurrence of an event which terminates a
Member's membership in the Company, as provided in
Section 11.11.
Fair Market Value: as to any property, the price at which a willing
seller would sell and a willing buyer would buy
such property having full knowledge of the facts,
in an arm's-length transaction without time
constraints, and without being under any
compulsion to buy or sell.
Fiscal Year: the fiscal and taxable year of the Company as
determined under this Agreement, including both
12-month and short taxable years.
Initial Contribution: the initial capital contribution made by each
Member to the Company, as set forth on EXHIBIT A.
Liberty Directors: as defined in Section 3.2.
Liberty International: Liberty Media International, Inc., a Delaware
company, and its successors, whether by merger or
otherwise.
Liberty Shareholders: Liberty UK, Inc., formerly named United Artists
Programming - Europe, Inc., Liberty UK Holdings,
Inc. and Liberty Flex Holdings Ltd.
Liberty Shareholder Group: each Liberty Shareholder and any member of the
group consisting of Liberty International and its
Affiliates to whom Ownership Interests or Shares
originally issued to a Liberty Shareholder are
Transferred in accordance with this Agreement or
the Relationship Agreement.
- 6 -
Limited Voting Share: a limited voting convertible ordinary share, 10p
par value, in the capital of Telewest, or any
other shares of capital stock issued in
substitution or replacement thereof in any merger,
share exchange, conversion, recapitalization or
other similar transaction.
Liquidation: the process of terminating the Company and winding
up its business under Article 13 after its
Dissolution.
Losses: the Company's net loss (including deductions) for
any Fiscal Year, determined under Section 5.1.
Managing Director: as defined in Section 3.2.
MediaOne: MediaOne Group, Inc., a Delaware corporation
formerly named U S WEST, Inc.
Member: a Person who is a Member on the date of this
Agreement or who is subsequently admitted as a
Member as provided in this Agreement.
Member Group: all of the Members included in any Shareholder
Group.
Microsoft: Microsoft Corporation, a Washington corporation,
and its successors, by merger or otherwise.
Microsoft Directors: as defined in Section 3.2.
Microsoft Shareholders: MediaOne UK, MediaOne Cable, Microsoft and any
other Affiliate of Microsoft that holds Shares as
of the date of this Agreement.
Microsoft Shareholder Group: each Microsoft Shareholder and any member of the
group consisting of Microsoft and its Affiliates
to whom Ownership Interests or Shares originally
issued to a Microsoft Shareholder are Transferred
in accordance with this Agreement or the
Relationship Agreement.
Net Cash: cash receipts of the Company less payment of, or
reasonable reserves for, operating expenses,
capital requirements, improvements, debt service,
and other
- 7 -
cash requirements of the Company as determined by
the Board.
Ordinary Share: an ordinary share, 10p par value (including
ordinary shares represented by American Depository
Shares), in the capital of Telewest, or any other
shares of capital stock issued in substitution or
replacement thereof in any merger, share exchange,
recapitalization or other similar transaction.
Ownership Interest: with respect to each Person owning an interest in
the Company, all of the interests of such Person
in the Company (including, without limitation, an
interest in the Profits and Losses, a Capital
Account interest and all other rights and
obligations of such Person under this Agreement)
in the percentages set forth on EXHIBIT A, as the
same may be amended from time to time in
accordance with this Agreement.
Permitted Transferee: a Person described in Section 11.3 to whom an
Ownership Interest may be Transferred without the
Transferor offering the other Member Group a right
of first refusal under this Agreement.
Person: an individual, corporation, trust, partnership,
limited liability company, unincorporated
organization, association or other entity.
Pro Rata Shares: with respect to any Member, a portion of the
number of Shares owned by the Company attributable
to such Member's Ownership Interest, which will
equal the product of [x] the aggregate number of
Shares owned by the Company multiplied by [y] such
Member's percentage Ownership Interest in the
Company, expressed as a decimal. If any Member
contributes Limited Voting Shares to the Company,
all of such Shares shall be attributed to that
Member as part of its Pro Rata Shares.
Profits: the Company's net profit (including income and
gains) for any Fiscal Year, determined under
Section 5.1.
- 8 -
Related Transfer: a Transfer by means of a distribution, spin-off,
stock dividend or other transaction as a result of
which one or more Affiliates of the transferor
beneficially own 80% or more of the Pro Rata
Shares that immediately prior to such Transfer
were beneficially owned by the Shareholder Group
of which the transferor is a member.
Relationship Agreement: the Revised New Relationship Agreement dated as of
March 3, 2000 among Telewest, Liberty Media
International, Inc., the Liberty Shareholders and
Microsoft.
Shareholder: each Liberty Shareholder, each Microsoft
Shareholder and any other Person who acquires
Shares in accordance with this Agreement or the
Relationship Agreement and becomes a party to, or
otherwise agrees to be bound by, the Relationship
Agreement subsequent to the date hereof by signing
a counterpart of the Relationship Agreement or
another document to the same effect.
Shareholder Group: the Liberty Shareholder Group or the Microsoft
Shareholder Group.
Shares: Ordinary Shares or Limited Voting Shares of
Telewest (or any other shares of capital stock
issued in substitution or replacement thereof in
any merger, share exchange, recapitalization,
scheme of arrangement or other similar
transaction).
TCI: AT&T Broadband LLC, formerly Tele-Communications,
Inc., a Delaware corporation.
Telewest: Telewest Communications plc, a public limited
company organized under the laws of England and
Wales, and its successors and assigns, whether by
merger, scheme of arrangement or otherwise.
Third Party: with respect to any Member, a Person other than an
Affiliate of such Member.
- 9 -
Trading Day: each Monday, Tuesday, Wednesday, Thursday and
Friday, other than any day on which securities are
not traded on the applicable exchange or market.
Transfer: a sale, exchange, assignment, transfer, pledge or
other disposition, whether voluntary or by
operation of law.
Transferee: a Person to whom an Ownership Interest is
Transferred in compliance with this Agreement.
Transferor: a Person who Transfers an Ownership Interest in
compliance with this Agreement.
Vote: the action of the Company by its Members or the
Board, either in meeting assembled or by written
consent without a meeting.
ARTICLE 2: PURPOSES AND POWERS
2.1 PURPOSE. The purpose of the Company shall be to own the Shares contributed
to it by the Members, to acquire further Shares in accordance with the terms of
this Agreement and to vote, dispose and otherwise take actions in respect of the
Shares owned by the Company in accordance with the terms of this Agreement. The
Company shall be permitted to conduct such lawful business [a] as may be
necessary or appropriate to give full effect to the foregoing purpose and to all
of the provisions of this Agreement and [b] as may be consented to by the
unanimous Vote of the Members.
2.2 POWERS. The Company shall have any and all powers necessary or desirable to
carry out the purpose and business of the Company to the extent the same may be
legally exercised by limited liability companies under the Act. Without limiting
the foregoing, and subject to the other provisions of this Agreement, the
purposes of the Company may be accomplished through the following powers (which
are not exclusive):
[a] to acquire, hold, transfer, distribute, or otherwise dispose of Company
assets (or rights or interests in such property);
[b] to enter into any contracts or agreements concerning the assets of the
Company;
- 10 -
[c] to execute and deliver all instruments, including proxies, assignments, and
other documents of transfer, as may be necessary or advisable for the
administration of the Company;
[d] to hold the assets of the Company in the name of a nominee;
[e] to vote securities, exercise rights, and pay calls and assessments;
[f] to settle claims and take or defend judicial and administrative
proceedings:
[g] to employ agents and independent contractors as may be necessary or
advisable for the administration of the Company;
[h] to establish reserves for taxes, assessments, insurance premiums, repairs,
maintenance, improvements, depreciation, depletion and obsolescence out of
the rents, profits or other income received;
[i] to pay all expenses reasonably incurred in the administration of the
Company; and
[j] to do such other things and engage in such other activities related
directly or indirectly to the foregoing as may be necessary, convenient or
advisable to the conduct of the business of the Company.
ARTICLE 3: MEMBERS; MANAGEMENT; VOTING
3.1 ADMISSION OF TRANSFEREES AS MEMBERS. A Transferee shall be admitted as a
Member of the Company only upon the affirmative unanimous Vote of Members,
except that a Transferee which is an Affiliate of a Member shall automatically
be admitted as a Member, subject to compliance with Section 11.6, without any
action on the part of the other Members.
3.2 MANAGING DIRECTORS. Except as specifically set forth in Section 3.4, the
management and policy-making functions of the Company shall reside in a board
(the "Board") composed of four individuals (each, a "Managing Director") to be
elected annually and who shall serve until their successors are elected and
qualified. Such Managing Directors shall be elected by unanimous Vote of the
Members. Members included in the Liberty Shareholder Group shall be entitled to
nominate two Managing Directors ("Liberty Directors") and Members included in
the Microsoft Shareholder Group shall be entitled to nominate the other two
Managing Directors ("Microsoft Directors"). Each Member agrees to Vote all of
its Ownership Interest in any election
- 11 -
of Managing Directors in favor of the Persons nominated in accordance with the
preceding sentence. Upon the occurrence of a vacancy in the Board, the Member
who nominated the Managing Director in respect of whom such vacancy exists may
nominate a replacement, and the Members shall Vote in favor of such replacement,
who shall serve until such replacement Managing Director's successor is elected.
3.3 BOARD VOTE. Except as set forth in Section 7.9 and except as provided in
Section 3.4 relating to a unanimous Vote of Members, all decisions by the
Company (including the incurrence of any liabilities by the Company other than
those related solely to the ownership of the Shares) will be made by the
affirmative Vote of a majority of the Managing Directors without regard to
vacancies.
3.4 UNANIMOUS VOTE. The following decisions or actions will require the
unanimous Vote of the Members: [a] the payment of compensation to any Member or
any Affiliate of a Member for services rendered to the Company, other than such
Member's share of Profits; [b] the approval of any voluntary Additional
Contribution as provided in Section 4.4 (except those required by Section
11.12); [c] the making of any curative or remedial ss. 704(c) allocation under
Section 5.6; [d] the voluntary Dissolution of the Company under Section 12.1;
[e] any amendment of this Agreement; [f] the sale, exchange or other disposition
of any of the Shares, other than a Transfer permitted under Article 11 or a
distribution of Pro Rata Shares to a Member as permitted by Section 6.5 and [g]
the admission of any new or substitute Member except pursuant to the last
sentence of Section 11.8.
3.5 EXPENSE REIMBURSEMENT; INDEMNIFICATION. Except as otherwise provided in this
Agreement, upon compliance with such policies and procedures as the Company may
from time to time adopt, the Members and the Managing Directors will be
reimbursed by the Company for all reasonable expenses incurred on behalf of the
Company in connection with its business. The Company will indemnify its Managing
Directors against liability incurred in any proceeding in which such Managing
Director is made a party because he or she is or was a manager of the Company to
the maximum extent permitted by the Act.
3.6 NO RESIGNATION OR RETIREMENT. Each Member agrees not to voluntarily resign
or retire from the Company, except for permissible Transfers as provided in
Article 11 and in connection with Pro Rata Share Distributions permitted by
Section 6.5. However, if such voluntary resignation or retirement occurs in
contravention of this Agreement, the withdrawing Member will, without further
act, become a Transferee of its entire Ownership Interest with the limited
rights of a Transferee who has not been admitted as a Member in accordance with
this Agreement, as set forth in Section 11.7.
- 12 -
ARTICLE 4: CAPITAL AND CAPITAL ACCOUNTS
4.1 MAINTENANCE. A Capital Account will be maintained for each Member and
credited, charged and otherwise adjusted as follows:
[a] Credited with [i] the amount of money contributed by the Member as an
Initial Contribution or Additional Contribution, [ii] the Fair Market Value
of Shares and other property contributed by the Member as an Initial
Contribution or Additional Contribution (net of liabilities secured by such
property that the Company takes subject to or assumes), [iii] the Member's
allocable share of Profits and [iv] all other items properly credited to
its Capital Account in accordance with U.S. generally accepted accounting
principles consistently applied; and
[b] Charged with [i] the amount of money distributed to the Member by the
Company, [ii] the Fair Market Value of Shares and other property
distributed to the Member by the Company (net of liabilities secured by
such property that the Member takes subject to or assumes), [iii] the
Member's allocable share of Losses and [iv] all other items properly
charged to its Capital Account in accordance with U. S. generally accepted
accounting principles consistently applied.
Any unrealized appreciation or depreciation with respect to any asset
distributed in kind will be allocated among the Members in accordance with the
provisions of Article 5 as though such asset had been sold for its Fair Market
Value on the date of Distribution, and the Members' Capital Accounts will be
adjusted to reflect both the deemed realization of such appreciation or
depreciation and the Distribution of such property.
4.2 REVALUATION. Upon a contribution of money, Shares or other property to the
Company by a new or continuing Member as consideration for an Ownership Interest
in the Company, and upon a Distribution of money, Shares or other property to a
retiring or existing Member in consideration of an Ownership Interest in the
Company that is being redeemed by the Company, the Capital Accounts of the
Members will be increased or decreased to reflect the Fair Market Value of the
assets of the Company as of the date of such contribution or Distribution.
Adjustments made pursuant to the preceding sentence will reflect the manner in
which any unrealized appreciation or depreciation with respect to the assets of
the Company (which appreciation or depreciation is not reflected in the Capital
Accounts as of the adjustment date) would be allocated among the Members if such
assets were sold at Fair Market Value on the adjustment date. Following any
adjustment under this Section 4.2, for purposes of computing Profits or Losses
of the Company, items of depreciation, amortization, depletion, gain or loss
relating to revalued property will be determined based upon the Fair Market
Value of
- 13 -
such property at the adjustment date. For purposes of making any adjustment
pursuant to this Section 4.2, Fair Market Value shall be determined by agreement
of the Members or, if they cannot so agree within 7 days following the date on
which a contribution or Distribution is made, by following the procedure set
forth in Section 11.5[d].
4.3 CONTRIBUTIONS; OWNERSHIP INTERESTS. Each Member has made the Initial
Contribution and the Additional Contributions to the Company as set forth
opposite such Member's name on the attached EXHIBIT A. The Ownership Interests
of the Members as of the date of this Agreement are as set forth on EXHIBIT A.
4.4 ADDITIONAL CONTRIBUTIONS. Except as required by Section 11.12 or upon the
unanimous Vote of the Members, no Additional Contribution by any Member will be
required or permitted unless otherwise required by law. If any Additional
Contribution is made after the date of this Agreement, EXHIBIT A will be amended
to reflect the Additional Contribution and any resulting change in the Ownership
Interests of the Members. Upon the making of an Additional Contribution by any
Member or Members, the percentage Ownership Interest of each Member will be
adjusted (or, in the case of a Shareholder admitted as a new Member under
Section 11.12, determined) to equal the percentage obtained by dividing the sum
of [a] the Fair Market Value of the assets of the Company less the liabilities
of the Company immediately prior to the Additional Contribution(s)
("Pre-Contribution Company Value"), multiplied by that Member's percentage
Ownership Interest in the Company immediately prior to the Additional
Contribution(s), plus [b] the Fair Market Value of that Member's Additional
Contribution, if any, on that date, by the sum of [y] the Pre-Contribution
Company Value plus [z] the Fair Market Value of all Members' Additional
Contributions on that date. For purposes of this Section 4.4, any Shares
contributed by a Shareholder admitted as a new Member under Section 11.12 shall
be treated as an Additional Contribution by such Shareholder. In adjusting or
determining Ownership Interests pursuant to this Section 4.4, Fair Market Value
shall be determined by agreement of the Members or, if they cannot so agree
within 7 days following the date on which an Additional Contribution is made to
the Company, by following the procedure set forth in Section 11.5[d].
4.5 NO WITHDRAWAL OF CAPITAL. Except as specifically provided in Section 6.5, no
Member will be entitled to withdraw all or any part of such Member's capital
from the Company or, when such withdrawal of capital is permitted, to demand a
Distribution of property other than money.
4.6 NO INTEREST ON CAPITAL. No Member will be entitled to receive interest on
such Member's Capital Contributions or Capital Account.
- 14 -
4.7 NO DRAWING ACCOUNTS. The Company will not maintain a drawing account for any
Member. All Distributions to Members will be governed by Article 6 (relating to
Distributions) and by Article 13 (relating to Liquidation).
4.8 TRANSFERS OF CAPITAL ACCOUNTS. If all or any part of an Ownership Interest
is Transferred in accordance with this Agreement, the Capital Account of the
Transferor that is attributable to the Transferred Ownership Interest will carry
over to the Transferee.
ARTICLE 5: ALLOCATION OF PROFITS AND LOSSES
5.1 PROFITS AND LOSSES. For each Fiscal Year, Profits or Losses of the Company
will be an amount equal to the Company's income or loss determined in accordance
with the accrual method of accounting and U.S. generally accepted accounting
principles consistently applied, except as otherwise provided in the last
sentence of Section 4.2.
5.2 GENERAL ALLOCATION RULE. Except as otherwise provided in (or until changed
pursuant to) this Agreement, the Profits or Losses of the Company, including
items of income, gain, loss and deduction for each Fiscal Year, will be
allocated to the Members in proportion to their respective Ownership Interests.
5.3 EXCEPTION. Notwithstanding the general rule on allocation of Losses stated
in Section 5.2, Losses of the Company attributable to any Member nonrecourse
liability (which is nonrecourse to the Company, but for which one or more
Members or a related party bears the economic risk of loss) will be allocated to
the Member or Members bearing the economic risk of loss for the liability. The
determination and allocation of deductions attributable to any Member
nonrecourse liability will be made in accordance with regulations promulgated
under ss. 752 of the Code and regulations promulgated under ss. 704(b) of the
Code. Similarly, notwithstanding the general rule on allocation of Profits, any
Profits of the Company will be determined and allocated to the Members in
accordance with the chargeback rules promulgated under ss. 704(b) of the Code
applying to nonrecourse debt minimum gain.
5.4 TAX ALLOCATIONS. Except as otherwise provided in Section 5.6, allocation of
items of income, gain, loss and deduction of the Company for federal income tax
purposes for a Fiscal Year will be allocated, as nearly as is practicable, in
accordance with the manner in which such items are reflected in the allocations
of Profits and Losses among the Members for such Fiscal Year. To the extent
possible, principles identical to those that apply to allocations for federal
income tax purposes will apply for state and local income tax purposes.
- 15 -
5.5 TRANSFER. If any Transfer of an Ownership Interest occurs during any Fiscal
Year, the books of the Company will be closed as of the effective date of the
Transfer. The Profits or Losses attributed to the period from the first day of
such Fiscal Year through the effective date of Transfer will be allocated to the
Transferor, and the Profits or Losses attributed to the period commencing on the
effective date of Transfer will be allocated to the Transferee. In lieu of an
interim closing of the books of the Company and with the agreement of the
Transferor and Transferee, the Company may agree to allocate Profits and Losses
for such Fiscal Year between the Transferor and Transferee based on a daily
proration of items for such Fiscal Year or any other reasonable method of
allocation (including an allocation of extraordinary Company items, as
determined by the Company, based on when such items are recognized for federal
income tax purposes).
5.6 CONTRIBUTED AND REVALUED PROPERTY. All items of income, gain, loss and
deduction with respect to property contributed (or deemed contributed) to the
Company or revalued under Section 4.2 will, solely for tax purposes, be
allocated among the Members so as to take into account the variation between the
tax basis of the property and its Fair Market Value at the time of contribution
or revaluation. For example, if there is built-in gain with respect to
contributed property, upon the Company's sale of that property the
pre-contribution taxable gain (as subsequently adjusted under the ss. 704(c)
Regulations during the period such property was held by the Company) would be
allocated to the contributing Member (and such pre-contribution gain would not
again create a Capital Account adjustment since the property was credited to
Capital Account upon contribution at its Fair Market Value). Except as limited
by the following sentence, the allocation of tax items with respect to ss.
704(c) property to Members not contributing such property will, to the extent
possible, be equal to the allocation of the corresponding book items made to
such noncontributing Members with respect to such property. If book allocations
of cost recovery deductions (such as amortization or depreciation) exceed the
tax allocations of those items so that the ceiling rule of the ss. 704(c)
Regulations applies, the Company will make curative allocations or remedial
allocations of tax items only upon the affirmative Vote of all Members. All tax
allocations made under this Section 5.6 will be made in accordance with ss.
704(c) of the Code and the ss. 704(c) Regulations.
5.7 TAX CREDITS. To the extent that the federal income tax basis of an asset is
allocated to the Members in accordance with the Regulations promulgated under
ss. 46 of the Code, any tax credit attributable to such tax basis will be
allocated to the Members in the same ratio as such tax basis. With respect to
any other tax credit, to the extent that a Company expenditure gives rise to an
allocation of loss or deduction, any tax credit attributable to such expenditure
will be allocated to the Members in the same ratio as such loss or deduction.
Consistent principles will apply in determining the Members' interests in tax
credits that arise from taxable or non-taxable receipts of the Company. All
allocations
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of tax credits will be made as of the time such credit arises. Any recapture of
a tax credit will, to the extent possible, be allocated to the Members in the
same manner as the tax credit was allocated to them.
ARTICLE 6: DISTRIBUTIONS
6.1 NET CASH. Net Cash will be allocated and paid to the Members in proportion
to their Ownership Interests. Distributions of Net Cash will be made to the
Members at such times as the Members by unanimous Vote approve.
6.2 LIQUIDATING DISTRIBUTIONS. Upon the Liquidation of the Company following its
Dissolution, liquidating Distributions will be made to the Members as provided
in Article 13.
6.3 PAYMENT. Any Distribution will be made to a Member only if such Person owns
an Ownership Interest on the date of Distribution, as reflected on the books of
the Company.
6.4 WITHHOLDING. If required by the Code or by state or local law, the Company
will withhold any required amount from Distributions to a Member for payment to
the appropriate taxing authority. Any amount so withheld from a Member will be
treated as a Distribution by the Company to such Member. Each Member agrees to
timely file any agreement that is required by any taxing authority in order to
avoid any withholding obligation that otherwise would be imposed on the Company.
6.5 IN KIND DISTRIBUTIONS. Each Member is entitled to require the Company to
distribute such Member's Pro Rata Shares to it in whole or in part at any time
if such Member so elects, without the consent of any other Person. If the
Company distributes Shares to any Member who contributed Shares to the Company
within seven years preceding the date of such Distribution, the Company will, to
the extent of any such Shares then owned by the Company, distribute to such
Member those Shares originally contributed by such Member. The Company will
maintain records relating to contributed Shares in a manner sufficient to enable
the Company to identify the Member who contributed such Shares.
6.6 DISTRIBUTION LIMITATION. Notwithstanding any other provision of this
Agreement, the Company will not make any Distribution to the Members if, after
the Distribution, the liabilities of the Company (other than liabilities to
Members on account of their Ownership Interests) would exceed the Fair Market
Value of the Company's assets. With respect to any property subject to a
liability for which the recourse of creditors is limited to the specific
property, such property will be included in assets only to the extent
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the property's Fair Market Value exceeds its associated liability, and such
liability will be excluded from the Company's liabilities.
ARTICLE 7: MANAGING DIRECTORS
7.1 ANNUAL MEETING. The annual meeting of the Board will be held on the second
Tuesday of April in each year at 9:00 a.m. (local time) or at such other time as
determined by resolution of a majority of the Managing Directors (without regard
to any vacancies). The purpose of the annual meeting is to review the Company's
operations for the preceding Fiscal Year and to transact such business as may
come before the meeting.
7.2 SPECIAL MEETINGS. Special meetings of the Board, for any purpose or
purposes, may be called by any Managing Director.
7.3 PLACE. Unless otherwise agreed by the Board, or if no designation is made,
the place of meeting will be the Company's registered office in Colorado.
7.4 NOTICE. Notice of any meeting must be given not less than 5 days nor more
than 30 days before the date of the meeting. Such notice must state the place,
day and hour of the meeting and, in the case of a special meeting, the purpose
for which the meeting is called.
7.5 WAIVER OF NOTICE. Any Managing Director may waive, in writing, any notice
required to be given to such Managing Director, whether before or after the time
stated in such notice. Any Managing Director who signs minutes of action (or
written consent or agreement to action) will be deemed to have waived any
required notice with respect to such action.
7.6 MEETINGS BY TELEPHONE. The Managing Directors may participate in a meeting
by means of conference telephone or similar communications equipment by which
all Managing Directors participating in the meeting can hear each other at the
same time. Such participation will constitute presence in person at the meeting
and waiver of any required notice.
7.7 ACTION WITHOUT A MEETING. Any action required or permitted to be taken at a
meeting of the Board may be taken without a meeting if the action is evidenced
by one or more written consents describing the action taken, signed by at least
a majority of all of the Managing Directors (without regard to any vacancies).
Action so taken is effective when sufficient Managing Directors approving the
action have signed the consent, unless the consent specifies a later effective
date.
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7.8 CERTAIN CONFLICTS. If any Member or any Affiliate of a Member has a conflict
of interest with respect to any matter on which the Company is to vote its
Shares, the Shares held by the Company shall be voted as follows: the Pro Rata
Shares of any Member who has such conflict, or of any Member which is an
Affiliate of such conflicted Person, shall be voted "abstain," and the remainder
of the Shares held by the Company shall be voted as designated by the Managing
Directors nominated by the Member that is not subject to such conflict. In
addition, the Company shall vote all its Shares in favor of candidates for
director of Telewest (or the removal of such director) which any Shareholder
Group is entitled to nominate (or remove) in accordance with Telewest's Articles
of Association or the Relationship Agreement.
7.9 RESOLUTION OF DISAGREEMENTS. All Shares shall be voted as the Liberty
Directors and the Microsoft Directors agree. If the Liberty Directors and the
Microsoft Directors cannot agree on any matter requiring a vote of the Shares
within a period of 10 days after the matter is first presented for decision, the
matter in dispute shall be referred to the Chief Executive Officers of Liberty
International and of Microsoft (or other representatives designated by the
Liberty Shareholders and the Microsoft Shareholders, respectively) and the
Shares shall be voted on such matter in accordance with the joint decision of
such officers. If those officers cannot agree on any matter presented to them
prior to the earlier of the date the vote is to be taken or five days after the
matter is first submitted to them, the Shares shall be voted in such manner that
would be most likely to continue the status quo, without materially increasing
Telewest's financial obligations or materially deviating from its approved
budget and business plan.
7.10 TERMINATION OF VOTING ARRANGEMENTS. If after March 3, 2000, the Liberty
Member Group or the Microsoft Member Group Transfers, in one or more
transactions (other than as a result of a Transfer permitted by Section 11.3 or
as a result of a Related Transfer), more than 59,000,000 Ordinary Shares, the
other Member Group may elect, by notice to the Member Group whose Pro Rata
Shares have been so Transferred, to terminate the provisions of Section 7.9.
After any such termination the members of the Microsoft Member Group and the
Liberty Member Group may direct the Board as to the manner in which their
respective Pro Rata Shares are to be voted in their sole discretion, and any
Shares owned by the Company that are not Pro Rata Shares of any Member shall be
voted in the same way as the Pro Rata Shares of the Members are voted, in
proportion to the Members' respective Ownership Interests.
ARTICLE 8: LIABILITY OF MEMBERS
8.1 LIMITED LIABILITY. Except as otherwise provided in the Act, the debts,
obligations and liabilities of the Company (whether arising in contract, tort or
otherwise) will be
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solely the debts, obligations and liabilities of the Company, and no Member of
the Company (including any Person who formerly held such status) is liable or
will be obligated personally for any such debt, obligation or liability of the
Company solely by reason of such status.
8.2 CAPITAL CONTRIBUTION. Each Member is liable to the Company for [a] the
Initial Contribution made under Section 4.3 and any Additional Contribution
required or agreed to be made under Section 4.4 and 11.12 and [b] any Capital
Contribution or Distribution that has been wrongfully or erroneously returned or
made to such Member in violation of the Act, the Articles or this Agreement.
ARTICLE 9: INTENTIONALLY OMITTED
ARTICLE 10: ACCOUNTING AND REPORTING
10.1 FISCAL YEAR. For income tax and accounting purposes, the Fiscal Year of the
Company will end on December 31 in each year (unless subsequently changed as
provided in the Code).
10.2 ACCOUNTING METHOD. For income tax and accounting purposes, the Company will
use the accrual method of accounting (unless otherwise required by the Code).
10.3 TAX RETURNS. The Company will cause the preparation and timely filing of
all tax returns required to be filed by the Company pursuant to the Code, as
well as all other tax returns required in any jurisdiction in which the Company
does business.
10.4 REPORTS. The Company books will be closed at the end of each Fiscal Year
and statements prepared showing the financial condition of the Company and its
Profits or Losses from operations. Copies of these statements will be given to
each Member. In addition, as soon as is practicable after the close of each
Fiscal Year, and in any event by March 31 following the end of each Fiscal Year,
the Company will provide each Member with all necessary tax reporting
information.
10.5 BANKING. The Company may establish one or more bank or financial accounts
and safe deposit boxes. The Company may authorize one or more individuals to
sign checks on and withdraw funds from such bank or financial accounts and to
have access to such safe deposit boxes, and may place such limitations and
restrictions on such authority as the Company deems advisable.
- 20 -
ARTICLE 11: TRANSFER RESTRICTIONS
11.1 GENERAL RESTRICTION. No Person may Transfer all or any part of such
Person's Ownership Interest in any manner whatsoever except as permitted by this
Article 11, and in any case only if the requirements of Section 11.6 have been
satisfied. Any other Transfer of all or any part of an Ownership Interest is
null and void. The rights and obligations of any resigning Member or of any
Transferee of an Ownership Interest will be governed by the other provisions of
this Agreement.
11.2 NO MEMBER RIGHTS. Except as provided in Section 11.8, no Member has the
right or power to confer upon any Transferee the attributes of a Member in the
Company. Except as provided in Section 11.8, the Transferee of all or any part
of an Ownership Interest by operation of law does not, by virtue of such
Transfer, succeed to any rights as a Member in the Company.
11.3 PERMITTED TRANSFEREES. A Member may Transfer all or any part of such
Member's Ownership Interest at any time:
[a] to an Affiliate of such Member;
[b] to another Member; and
[c] to the Company.
11.4 RIGHTS OF FIRST REFUSAL.
[a] If a Member proposes to Transfer all or part of its Ownership Interests to
a Third Party or Parties (except pursuant to Section 11.3), the Member
desiring to make the Transfer (for purposes of this Section 11.4 only, the
"Offeror") shall prior to the entry into of an agreement for the transfer
of shares (except for an agreement conditional upon the non-transferring
party not exercising its right to purchase such shares under this Section
11.4) first make a written offer (for purposes of this Section 11.4 only,
the "Offer") to sell such Ownership Interest to the Members included in the
other Member Group (for purposes of this Section 11.4 only, the "Offerees")
on the same or materially similar terms and conditions on which the Offeror
proposes to Transfer the Ownership Interest to the Third Party or Parties.
Such offer shall state the price and the other terms and conditions of the
proposed Transfer and shall be accompanied by a copy of the offer from the
proposed Transferee. The price as so determined or stated in the Offeror's
notice shall be, for purposes of this Section 11.4 only, the "Offer Price."
The Offeror, for so long as the Offer shall remain outstanding, shall not
request, nor shall the Company be obligated to make, a distribution of
Shares in an amount in excess of the number
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of Pro Rata Shares that such Offeror shall have the right to receive in
respect of the Ownership Interest, if any, to be retained by such Offeror
after giving effect to such proposed Transfer.
[b] The Offerees shall have the right for a period of 30 days after receipt of
the Offer to elect to purchase all, but not less than all, of the Ownership
Interest offered at the Offer Price by giving written notice of acceptance
to the Offeror within that period. If the Offerees do not elect to purchase
all the Ownership Interest offered, the Offeror may Transfer the offered
Ownership Interest pursuant to the terms disclosed under Section 11.4[a].
If the offered Ownership Interest is not Transferred within 90 days after
the Offerees' option period expires, a new offer shall be made to the
Offerees before any such Transfer is made.
[c] If the Third Party's offer involves consideration other than immediate
payment of cash at closing, the Offerees may pay the Fair Market Value of
such other consideration, as determined by agreement between the Offeror
and the Offerees, in cash. If they cannot agree on such cash equivalent
within seven days after the Offerees give notice of the election to
purchase the offered Ownership Interest, the Offerees may, by written
notice to the Offeror, initiate appraisal proceedings under Section 11.4[d]
for determination of the Fair Market Value of such consideration. The Fair
Market Value shall be determined without regard to income tax consequences
to the Offeror as a result of receiving cash in lieu of other
consideration. Once the Fair Market Value is determined, (i) the Offerees,
in their sole discretion, may elect either to purchase the Ownership
Interest in cash by giving notice of such election to the Offeror within 10
days after receipt of the appraiser's decision or to withdraw its
acceptance of the Offer, and (ii) the Offeror may in its sole discretion
withdraw the Offer provided that in such case it may not Transfer such
Ownership Interests pursuant to the proposed Transfer.
[d] Any appraisal of the Fair Market Value of consideration shall be made by an
appraiser jointly appointed by the Members. If the Members fail to agree on
an appraiser within 20 days after receipt of the notice requiring or
permitting an appraisal of Fair Market Value, each Member Group shall
appoint one appraiser, which shall be an investment banking firm of
national repute. The two appraisers so selected shall each make an
appraisal of Fair Market Value within 30 days after their selection. If
such determinations vary by 20% or more of the higher determination, the
two appraisers shall select a third appraiser with similar qualifications
which shall make its determination of such Fair Market Value within 30 days
after its selection. Such third appraiser shall not be informed of or
otherwise consider the appraisals of the other two in reaching its
determination. The Fair Market Value shall be the average of the two
closest values if three appraisals are made or, if the determinations of
the first two appraisers vary by less
- 22 -
than 20% of the higher of such two determinations, the average of those two
determinations. If any Member Group fails to appoint an appraiser as
required hereunder, the other Member Group may refer the matter to the
American Arbitration Association, which shall promptly (and in any case
within 10 days) appoint an appraiser hereunder on behalf of the Member
Group failing to make such appointment. Appraisers appointed under this
Section 11.5[d] shall act as experts and not as arbitrators and absent
fraud or manifest error, the determination of an appraiser or appraisers
hereunder shall be binding on the parties.
[e] The closing of the purchase of an Ownership Interest by the Offerees shall
take place within 60 days following the timely delivery to the Offeror of a
written notice of acceptance pursuant to Section 11.4[b] or, if the
provisions of Section 11.4[c] apply, within 60 days following the delivery
to the Offeror of a written notice of election pursuant to clause (i) of
the last sentence of Section 11.4[c]. The Offeror shall give customary
representations and warranties regarding the title of such Ownership
Interests to the Offerees.
[f] The Offerees may rescind their notice of acceptance given pursuant to
Section 11.4[b] at any time on or prior to the 30th day following the date
of such notice of acceptance (but not thereafter) if (i) prior to the date
of such notice of acceptance the Offerees had sought in good faith a waiver
from the City Panel with respect to the application of any provision of
Rule 9 of the City Code on Takeovers and Mergers which absent such waiver
would require the Offerees to offer to purchase all of the outstanding
Ordinary Shares and (ii) such waiver or any shareholder approval required
by the City Panel has been denied (or has not been granted as of the last
day of such rescission period).
11.5 CHANGE IN CONTROL OF A SHAREHOLDER GROUP.
[a] If at any time there is an involuntary Change in Control with respect to
either the Liberty Shareholder Group or the Microsoft Shareholder Group,
the Member Group included in the Shareholder Group experiencing the Change
in Control (the "Subject Group") shall give notice to the other Member
Group promptly after the Subject Group becomes aware of the Change in
Control. If at any time either Shareholder Group experiences a voluntary
Change in Control, the Subject Group shall give notice to the other Member
Group promptly after the terms of the Change in Control are set forth in a
binding agreement. The Member Group not affected by such Change in Control
(the "Responding Group") must within 30 days after its receipt of such
notice give notice to the Subject Group either [a] consenting to the Change
in Control or [b] stating the price per percentage of Ownership Interest at
which the Responding Group is willing to sell all of its Ownership
Interests to the Subject Group or to buy all of the Subject Group's
- 23 -
Ownership Interests (the "Quoted Price"). Failure to give notice of such
election within the time permitted shall be deemed consent to the Change in
Control.
[b] If the Responding Group does not consent to the Change in Control, the
Subject Group must, within 30 days after its receipt of the Responding
Group's notice, give notice to the Responding Group of its election to sell
all of its Ownership Interests to the Responding Group or to buy all of the
Responding Group's Ownership Interests, in either case at the Quoted Price.
Following the giving of notice of a Change in Control pursuant to this
Section 11.5 and prior to (i) receipt by the Subject Group (or deemed
receipt) of consent to such Change of Control or (ii) the closing of the
sale of the Subject Group's or the Responding Group's Ownership Interests,
no Member shall request, nor shall the Company be obligated to make, any
voluntary Distribution of Shares. Any purchase of Ownership Interests
pursuant to this Section 11.5 may be made only by a Member.
11.6 GENERAL CONDITIONS ON TRANSFERS. No Transfer of an Ownership Interest will
be effective unless all of the conditions set forth below are satisfied:
[a] unless waived by the Company, the Transferor signs and delivers to the
Company an undertaking in form and substance reasonably satisfactory to the
Company to pay all reasonable expenses incurred by the Company in
connection with the Transfer (including, but not limited to, reasonable
fees of counsel and accountants and the costs to be incurred with any
additional accounting required in connection with the Transfer, and the
cost and fees attributable to preparing, filing and recording such
amendments to the Articles or other organizational documents or filings as
may be required by law);
[b] the Transferor signs and delivers to the Company a copy of the assignment
of the Ownership Interest to the Transferee in form and substance
reasonably satisfactory to the Company;
[c] the Transferee signs and delivers to the Company an agreement to be bound
by this Agreement if the Transferee is not a Member or the Company; and
[d] the Transfer is in compliance with the other provisions of this Article 11.
11.7 RIGHTS OF TRANSFEREES. Except as provided in Section 11.8, any Transferee
of an Ownership Interest will, on the effective date of the Transfer, have only
those rights of an assignee specified in the Act unless and until such
Transferee is admitted as a Member. This provision limiting the rights of a
Transferee will not apply if such Transferee is already a Member; provided that
any Member who resigns or retires from the Company in contravention of Section
3.6 will have only the rights of a Transferee
- 24 -
who has not been admitted as a Member in accordance with this Agreement. Any
Transferee of all or any part of an Ownership Interest who is not admitted as a
Member in accordance with this Agreement has no right [a] to participate or
interfere in the management or administration of the Company's business or
affairs, [b] to vote or agree on any matter affecting the Company or any Member,
[c] to require any information on account of Company transactions or [d] to
inspect the Company's books and records. The only right of a Transferee of all
or any part of an Ownership Interest who is not admitted as a Member in
accordance with this Agreement is to receive the allocations and Distributions
to which the Transferor was entitled (to the extent of the Ownership Interest
Transferred). However, each Transferee of all or any part of an Ownership
Interest (including both immediate and remote Transferees) will be subject to
all of the obligations, restrictions and other terms contained in this Agreement
as if such Transferee were a Member. With respect to any Ownership Interest
Transferred, the Transferor Member shall not possess any right or power as a
Member and may not exercise any such right or power directly or indirectly on
behalf of the Transferee. Neither the Company nor any Member will owe any
fiduciary duty to any Transferee who is not admitted as a Member.
11.8 ADMISSION. A Transferee of an Ownership Interest will become a Member of
the Company only upon the affirmative unanimous Vote of Members, effective upon
a date specified (which must be on or after the effective date of the Transfer,
as determined under Section 11.6). Notwithstanding the foregoing, upon
compliance with Section 11.6, a Transferee which is an Affiliate of a Member
shall automatically become and be admitted as a Member without any action on the
part of the other Members.
11.9 SATISFACTION OF LEGAL REQUIREMENTS. Notwithstanding any other provision of
this Article 11, no Member may Transfer any Shares or Ownership Interests unless
it has complied with all applicable legal requirements, including without
limitation applicable United States federal and state securities laws. Upon the
exercise of any option to acquire Shares or Ownership Interests hereunder, the
Members shall use commercially reasonable efforts to obtain any necessary
consents or approvals of any governmental authorities or other Third Parties
necessary to effect such Transfer.
11.10 CLOSING. The closing of the purchase of any Ownership Interests by a
Member pursuant to this Article 11 shall take place at the Company's principal
offices on a day specified by the purchaser (other than a Saturday, Sunday or
day on which banking institutions in New York are required by law to be closed)
which is no more than 90 days after the date of exercise of the applicable
purchase option (or within the period of time provided by Section 11.4[e], if
applicable) or, if later, the date on which all necessary consents to such
Transfer by governmental authorities shall have been obtained. At the closing
the selling Member shall deliver a written assignment of Ownership Interests to
be sold free and clear of any lien, charge or encumbrance, and such other
documents as
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may be reasonably necessary to effectuate the sale. The purchase price, to the
extent it consists of cash, shall be paid in U.S. dollars in immediately
available funds.
11.11 EVENTS OF WITHDRAWAL. An Event of Withdrawal of a Member occurs upon [a]
such Member's resignation from the Company, [b] such Member's Bankruptcy or [c]
the occurrence of any other event which terminates the continued membership of
such Member in the Company (including the dissolution of that Member). Within 10
days after the occurrence of any such event, the Member experiencing the Event
of Withdrawal (or such Member's legal representative or other successor in
interest) will give notice to the Company of the occurrence of the Event of
Withdrawal. Upon the occurrence of an Event of Withdrawal with respect to a
Member, such Member will cease to have any voting and consent rights under
Article 3 and will have only the limited rights of a Transferee who has not been
admitted as a Member in accordance with this Agreement, as set forth in Section
11.7.
11.12 OBLIGATION TO CONTRIBUTE ADDITIONAL SHARES TO COMPANY. Each Member agrees
that, unless waived by the other Member Group, if any Shareholder included in
its Member Group acquires additional Shares after the date of this Agreement and
before any Pro Rata Shares are distributed to any Member pursuant to Section
6.5, the beneficial interests in all of such Shares will be contributed to the
Company as an Additional Contribution, with a corresponding increase in the
Ownership Interest of such Member pursuant to Section 4.4 (or the issuance of an
Ownership Interest to such Shareholder, who shall be admitted as a Member, if
such Shareholder is not already a Member).
11.13 COVENANT RELATING TO RULE 9 OF CITY CODE. Each Member covenants to and
agrees with the other Member that, in the event it or any member of the
Shareholder Group in which it is included elects to purchase Shares or Ownership
Interests, or is deemed to have made such an election pursuant to this
Agreement, it shall fulfill all obligations arising pursuant to Rule 9 of the
City Code on Takeovers and Mergers and shall pay all consideration and expenses
attributable to the Shareholders, the Members and the Company (but not Telewest)
in connection therewith.
ARTICLE 12: DISSOLUTION OF THE COMPANY
12.1 DISSOLUTION. Dissolution of the Company will occur upon the happening of
any of the following events: [a] the sale or Distribution of all or
substantially all of the Company's assets; [b] the unanimous Vote of the
Members; [c] April 1, 2045, unless the Company is continued by the unanimous
Vote of the Members; [d] a sale of all or substantially all the assets of
Telewest (other than by merger, share exchange, scheme of arrangement,
recapitalization or similar transaction); [e] a merger or consolidation of
Telewest pursuant to which all the voting securities of the merged or
consolidated entity
- 26 -
are held by Persons other than the Company and the Shareholders; or [f] a
reduction in the number of Shares in respect of which the Company and the
Liberty Shareholder Group and the Microsoft Shareholder Group in the aggregate
hold voting rights so that such Shares represent, for a period of 10 consecutive
days or longer, less than 50% of the voting power of all of Telewest's issued
and outstanding share capital at that time (for this purpose only treating
Limited Voting Shares as Ordinary Shares), unless the Members unanimously Vote
to continue the Company.
12.2 EXCLUSIVE MEANS OF DISSOLUTION. The exclusive means by which the Company
may be dissolved are set forth in Section 12.1. The Company will not be
dissolved upon the death, retirement, resignation, expulsion, Bankruptcy or
dissolution of any Member or upon the occurrence of any other event which
terminates the continued membership of any Member in the Company.
ARTICLE 13: LIQUIDATION
13.1 LIQUIDATION. Upon Dissolution of the Company, the Company promptly will
file a statement of intent to dissolve with the Colorado Secretary of State as
required by the Act and will thereafter wind up its affairs and liquidate. The
Member owning the largest Ownership Interest, or if such Member fails to act,
any Person appointed by unanimous Vote of the Members, will act as liquidating
trustee. The winding up and Liquidation of the Company will be accomplished in a
businesslike manner as determined by the liquidating trustee. A reasonable time
will be allowed for the orderly Liquidation of the Company and the discharge of
liabilities to creditors so as to enable the Company to minimize any losses
attendant upon Liquidation. Any gain or loss on disposition of any Company
assets in Liquidation will be allocated to Members and credited or charged to
Capital Accounts in accordance with the provisions of Articles 4 and 5. Any
liquidating trustee is entitled to reasonable compensation for services actually
performed, and may contract for such assistance in the liquidation process as
such Person deems necessary. Until the filing of articles of dissolution under
Section 13.6, the liquidating trustee may settle and close the Company's
business, prosecute and defend suits, dispose of its property, discharge or make
provision for its liabilities, and make distributions in accordance with the
priorities set forth in Section 13.2.
13.2 PRIORITY OF PAYMENT. The assets of the Company will be distributed in
Liquidation of the Company in the following order:
[a] Creditors. First, to creditors by the payment or provision for payment of
the debts and liabilities of the Company (other than any loans or advances
made by any Member or any of its Affiliates) and the expenses of
Liquidation.
- 27 -
[b] Reserves. Second, to the setting up of any reserves that are reasonably
necessary for any contingent, conditional or unmatured liabilities or
obligations of the Company.
[c] Loans. Third, to the repayment of any loans or advances made by any Member
or any Affiliate of a Member (proportionately if the amount available for
such repayment is insufficient for payment in full).
[d] Capital Accounts. Fourth, to the payment to the Members of their respective
Capital Account balances as adjusted for their respective shares of
liquidating Profits and Losses.
[e] Balance. Fifth, the balance, if any, to the Members in the ratio of their
Ownership Interests.
13.3 DISTRIBUTION TO MEMBERS. Distributions in Liquidation due to the Members
will be made by distributing the Company assets to the Members at their net Fair
Market Value in kind unless all Members unanimously agree in writing to the sale
of the Company's assets and the Distribution of the proceeds thereof. Any
liquidating Distribution in kind to the Members may be made either by a pro rata
Distribution of Shares (pursuant to Section 6.5, if applicable) or, with respect
to other assets, undivided interests in such assets or, if the Members
unanimously agree in writing, by non-pro rata Distribution of specific assets at
Fair Market Value on the effective date of Distribution. Any Distribution in
kind may be made subject to, or require assumption of, liabilities to which such
property may be subject, but in the case of any non-pro rata Distribution only
upon the express written agreement of the Member receiving the Distribution.
Each Member hereby agrees to save and hold harmless the other Members from such
Member's share of any and all such liabilities which are taken subject to or
assumed. Appropriate and customary prorations and adjustments shall be made
incident to any Distribution in kind.
13.4 DEFICIT CAPITAL ACCOUNT. Except as otherwise specifically provided in
Section 4.4, nothing contained in this Agreement imposes on any Member an
obligation to make an Additional Contribution in order to restore a deficit
Capital Account upon Liquidation of the Company. Each Member will look solely to
the assets of the Company for the return of such Member's Capital Contribution.
13.5 LIQUIDATING REPORTS. A report will be submitted by the liquidating trustee
with each liquidating Distribution to Members showing the collections,
disbursements and distributions during the period which is subsequent to any
previous report. A final report, showing cumulative collections, disbursements
and Distributions, will be submitted by the liquidating trustee upon completion
of the liquidation process.
- 28 -
13.6 ARTICLES OF DISSOLUTION. Upon Dissolution of the Company and the completion
of the winding up of its business, the Company will file articles of dissolution
with the Colorado Secretary of State pursuant to the Act. At such time, the
Company also will file an application for withdrawal of its certificate of
authority in any jurisdiction where it is then qualified to do business.
ARTICLE 14: GENERAL PROVISIONS
14.1 AMENDMENT. This Agreement may be amended only by the unanimous Vote of the
Members. Any amendment will become effective upon such Vote, unless otherwise
provided. Written notice of any proposed amendment must be given at least 5 days
in advance of the meeting at which the amendment will be considered (unless the
Vote is evidenced by duly signed minutes of action). Any amendment to this
Agreement is binding upon, and inures to the benefit of, each Member who holds
an Ownership Interest at or after the time of such amendment, without the
requirement that such Member sign the amendment or any republication or
restatement of this Agreement.
14.2 UNREGISTERED INTERESTS. Each Member [a] acknowledges that the Ownership
Interests in the Company are being offered and sold without registration under
the Securities Act of 1933, as amended, or under similar provisions of state
law, [b] acknowledges that such Member is fully aware of the economic risks of
an investment in the Company, and that such risk must be borne for an indefinite
period of time, [c] represents and warrants that such Member is acquiring an
Ownership Interest for such Member's own account, for investment, and with no
view to the distribution of the Ownership Interest and [d] agrees not to
Transfer, or to attempt to Transfer, all or any part of such Ownership Interest
without registration under the Securities Act of 1933, as amended, and any
applicable state securities laws, unless the Transfer is exempt from such
registration requirements.
14.3 RELIANCE. Each Member will be fully protected in relying in good faith upon
the records of the Company and upon such information, opinions, reports or
statements by [a] any of the Company's other Members, employees or committees or
[b] any other Person who has been selected with reasonable care as to matters
such Member reasonably believes are within such other Person's professional or
expert competence. Matters as to which such reliance may be made include the
value and amount of assets, liabilities, Profits and Losses of the Company, as
well as other facts pertinent to the existence and amount of assets from which
Distributions to Members may properly be made.
- 29 -
14.4 EQUITABLE RELIEF. If any Person proposes to Transfer all or any part of
such Person's Ownership Interest in violation of the terms of this Agreement,
the Company or any Member may apply to any court of competent jurisdiction for
an injunctive order prohibiting such proposed Transfer except upon compliance
with the terms of this Agreement, and the Company or any Member may institute
and maintain any action or proceeding against the Person proposing to make such
Transfer to compel the specific performance of this Agreement. Any attempted
Transfer in violation of this Agreement is null and void, and of no force and
effect. The Person against whom such action or proceeding is brought irrevocably
waives the claim or defense that an adequate remedy at law exists, and such
Person will not urge in any such action or proceeding the claim or defense that
an adequate remedy at law exists.
14.5 SPECIFIC PERFORMANCE. The Members agree that each would be irreparably
damaged if any Member failed to perform any obligation under this Agreement, and
that such Member would not have an adequate remedy at law for money damages in
such event. Accordingly, each Member will be entitled to specific performance
and injunctive and other equitable relief to enforce the performance of this
Agreement. This provision is without prejudice to any other rights that such
Member may have under this Agreement, at law or in equity.
14.6 COUNTERPARTS. This Agreement may be executed in one or more counterparts,
each of which shall constitute an original and all of which taken together will
constitute one agreement.
14.7 NOTICES. All notices under this Agreement will be in writing and will be
delivered or mailed addressed [a] if to the Company, at the Company's principal
business office, and [b] if to any Member, at such Person's address as then
appearing on the records of the Company.
14.8 DEEMED NOTICE. All notices given to any Person in accordance with this
Agreement will be deemed to have been duly given [a] on the date of receipt if
personally delivered, [b] three days after being sent by registered or certified
mail, postage prepaid, return receipt requested, [c] when sent by confirmed
electronic facsimile transfer or [d] one business day after having been sent by
a nationally recognized overnight courier service.
14.9 WAIVERS GENERALLY. No course of dealing will be deemed to amend or
discharge any provision of this Agreement. No delay in the exercise of any right
will operate as a waiver of such right. No single or partial exercise of any
right will preclude its further exercise. A waiver of any right on any one
occasion will not be construed as a bar to, or waiver of, any such right on any
other occasion.
- 30 -
14.10 PARTIAL INVALIDITY. Wherever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law. However, if for any reason any one or more of the provisions of this
Agreement are held to be invalid, illegal or unenforceable in any respect by a
court of competent jurisdiction, such holding will not affect any other
provision of this Agreement. In such event, this Agreement will continue in
force and will be construed as if such invalid, illegal or unenforceable
provision had never been contained in it.
14.11 ENTIRE AGREEMENT. This Agreement and the Relationship Agreement contain
the entire agreement and understanding of the Members with respect to their
subject matter, and supersede all prior and contemporaneous written and oral
agreements with respect thereto.
14.12 NO THIRD PARTY BENEFIT. The contribution obligations of each Member will
inure solely to the benefit of the other Members and the Company, without
conferring on any other Person any rights of enforcement or other rights.
14.13 BINDING EFFECT. This Agreement is binding upon, and inures to the benefit
of, the Members and their permitted Transferees.
14.14 FURTHER ASSURANCES. Each Member agrees, without further consideration, to
sign and deliver such other documents of further assurance as may reasonably be
necessary to effectuate the provisions of this Agreement.
14.15 HEADINGS. Article and Section titles have been inserted for convenience of
reference only. They are not intended to affect the meaning or interpretation of
this Agreement.
14.16 TERMS. Terms used with initial capital letters will have the meanings
specified, applicable to both singular and plural forms, for all purposes of
this Agreement. All pronouns (and any variation) will be deemed to refer to the
masculine, feminine or neuter, as the identity of the Person may require. The
singular or plural include the other, as the context requires or permits. The
word "include" (and any variation) is used in an illustrative sense rather than
a limiting sense. The terms "shall" and "will" both refer to an obligation that
is mandatory.
14.17 GOVERNING LAW. This Agreement will be governed by, and construed in
accordance with, the laws of the State of Colorado without considering any
conflicts of law principles. Any conflict or apparent conflict between this
Agreement and the Act will be resolved in favor of this Agreement except as
otherwise required by the Act.
- 31 -
14.18 RESTRICTIVE TRADE PRACTICES ACT. Any provision contained in this Agreement
or in any arrangement of which this Agreement forms part by virtue of which this
Agreement or such arrangement is subject to registration under the Restrictive
Trade Practices Acts 1976 and 1977 of England will not come into effect until
the day following the date on which particulars of this Agreement and of any
such arrangement have been furnished to the Office of the Director General of
Fair Trading in accordance with the requirements of such Acts.
- 32 -
In Witness Whereof, the Members have signed this 2000 AMENDED AND RESTATED
OPERATING AGREEMENT OF TW HOLDINGS, L.L.C. to be effective July 7, 2000.
LIBERTY UK, INC.
By:
--------------------------------
Its:
-------------------------------
MICROSOFT CABLE PARTNERSHIP
HOLDINGS, INC.
By:
--------------------------------
Its:
-------------------------------
MICROSOFT UK CABLE, INC.
By:
--------------------------------
Its:
-------------------------------
- 33 -
EXHIBIT A
CAPITAL CONTRIBUTIONS
Initial Additional Ownership
Contribution Contributions Interest
------------ ------------- --------
Liberty UK, Inc. $1,000 plus
378,750,000 Shares 84,688,961 50%
Shares
Microsoft UK Cable, Inc. $912.90 plus
345,744,800 Shares 77,308,958 45.6%
Shares
Microsoft Cable
Partnership Holdings, Inc. $87.10 plus
33,005,200 Shares 7,380,002 4.4%
Shares
AMENDMENT NO. 2
TO
REGISTRATION RIGHTS AGREEMENT
This Amendment No. 2 to Registration Rights Agreement (this "Amendment
No. 2") is made and entered into as of the 4th day of October 1999, by and among
the following persons:
1. Microsoft Corporation ("Microsoft");
2. Telewest Communications plc (formerly known as Telewest plc)
("Telewest");
3. Liberty UK, Inc. (formerly named United Artists Programming -
Europe , Inc.) (the "Liberty Media Affiliate"); and
4. MediaOne UK Cable, Inc. (formerly known as U S WEST UK Cable,
Inc.) and MediaOne Cable Partnership Holdings, Inc. (formerly
known as U S WEST Cable Partnership Holdings, Inc.)
(collectively, the "MediaOne Affiliates").
RECITALS
WHEREAS, Telewest, the Liberty Media Affiliate and the MediaOne
Affiliates are parties to a Registration Rights Agreement, dated October 3,
1995, as amended pursuant to Amendment No. 1 thereto dated as of June 29, 1998
(the "Registration Rights Agreement");
WHEREAS, Microsoft, MediaOne Group, Inc. ("MediaOne"), MediaOne
International Holdings, Inc. and the MediaOne Affiliates are parties to that
certain agreement dated October 4, 1999 (the "Merger Agreement") pursuant to
which Microsoft has conditionally agreed to acquire via mergers the MediaOne
Affiliates, and MediaOne has conditionally agreed to such mergers, upon the
terms and conditions set forth therein;
WHEREAS, prior to Microsoft's acquisition via mergers of the MediaOne
Affiliates, Telewest proposes to offer ordinary shares of 10 pence each
("Telewest Ordinary Shares") at a price of 213 pence per share by way of rights
to qualifying shareholders, including the Liberty Media Affiliate and the
MediaOne Affiliates (the "Rights Issue");
WHEREAS, pursuant to a subscription agreement (the "Subscription
Agreement"), dated October 4, 1999, Microsoft has irrevocably undertaken to
subscribe for such number of Telewest Ordinary Shares as represent the MediaOne
Affiliates' full entitlements under the Rights Issue, Liberty Media
International, Inc. has irrevocably undertaken to procure the subscription by
the Liberty Media Affiliate of such number of Telewest Ordinary Shares as
represent its full entitlement under the Rights Issue, and Microsoft and Liberty
Media International, Inc. have undertaken to subscribe (or to procure
subscription) to any further Telewest Ordinary Shares (in proportions and in the
manner detailed in the Subscription Agreement) not otherwise subscribed to in
the Rights Issue;
WHEREAS, Telewest and the MediaOne Affiliates have agreed that some of
the MediaOne Affiliates' interest in Telewest should be redesignated as limited
voting shares ("Limited Voting Shares") prior to Microsoft's acquisition via
mergers of the MediaOne Affiliates;
WHEREAS, the parties hereto wish to amend the Registration Rights
Agreement to provide that Microsoft and any affiliate thereof that holds
Registrable Securities will constitute an "Investor" thereunder and,
accordingly, will be entitled to the rights (including registration rights
in respect of the Telewest Ordinary Shares and Limited Voting Shares subscribed
to pursuant to the Rights Issue), and be subject to the obligations, of an
Investor thereunder;
NOW, THEREFORE, for valuable consideration, the sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:
5. Amendment. The Registration Rights Agreement shall be amended as
follows:
a. the term "Registrable Securities" will include (i) the Telewest
Ordinary Shares and Telewest Ordinary Shares issuable upon
conversion of the Limited Voting Shares acquired by Microsoft or
any affiliate thereof upon the consummation of its or its
affiliates' acquisition via mergers of the MediaOne Affiliates,
(ii) the Telewest Ordinary Shares and Telewest Ordinary Shares
issuable upon conversion of the Limited Voting Shares subscribed
to by the Liberty Media Affiliate or by Microsoft or any of its
affiliates pursuant to the Rights Issue and (iii) any other
Telewest Ordinary Shares or Telewest Ordinary Shares issuable
upon conversion of Limited Voting Shares issued to, or otherwise
acquired by, Microsoft or by the Liberty Media Affiliate at any
time (including any securities issued by Telewest in exchange
for, or in respect or upon conversion of, any such Telewest
Ordinary Shares or Limited Voting Shares, whether upon a share
dividend, share split, scrip issue, bonus issue, reclassification
or otherwise);
b. upon the earlier of (a) consummation of Microsoft's or its
affiliates' acquisition via mergers of the MediaOne Affiliates
pursuant to the Merger Agreement and (b) the purchase by
Microsoft or any of its affiliates of any Telewest Ordinary
Shares or Limited Voting Shares subscribed to pursuant to the
Rights Issue, Microsoft and any affiliate thereof that holds
Registrable Securities will constitute an "Investor" as defined
in the Registration Rights Agreement and will have the rights
(including Piggy-Back Registration and Demand Registration rights
(as such terms are defined in the Registration Rights
Agreement)), and be subject to the obligations, of an Investor
under the Registration Rights Agreement as of the date this
Agreement becomes effective, provided that for purposes of
exercising the registration rights granted hereunder Microsoft
and any affiliate thereof that holds Registrable Securities shall
be treated as one entity; and
c. The Liberty Media Affiliates, Microsoft and any affiliate of
Microsoft that holds Limited Voting Shares will convert its
Limited Voting Shares to Telewest Ordinary Shares prior to any
sale to a third party to the extent it is permitted to do so
unless such conversion causes a Debenture Change of Control (as
defined in the articles of association of Telewest). To the
extent any such third party transferee acquires Limited Voting
Shares, the Liberty Media Affiliate, Microsoft or such affiliate
of Microsoft may, notwithstanding any other provision of this
agreement, assign to such transferee all or part of its
registration rights with respect to the Telewest Ordinary Shares
issuable upon conversion of such Limited Voting Shares, provided
that the aggregate number of demand and piggyback registration
rights held by the Liberty Media Affiliate or Microsoft and its
affiliates (as the case may be) and such transferee does not
exceed the number held by the Liberty Media Affiliate or
Microsoft (as the case may be) and its affiliates immediately
prior to such transfer.
6. Effectiveness. This Amendment No. 2 shall become effective upon
the earlier of (a) the consummation of Microsoft's or its
affiliates' acquisition via mergers of the MediaOne Affiliates
pursuant to the Merger Agreement and (b) the purchase by
Microsoft or any of its affiliates of any Telewest Ordinary
Shares or Limited Voting Shares subscribed to pursuant to the
Rights Issue.
7. Governing Law. This Amendment No. 2 shall be governed by Delaware
law, and interpreted in accordance with the laws of Delaware,
without reference to its conflicts of laws principles.
8. Superseding Effect. This Amendment No. 2, together with the
Registration Rights Agreement, supersedes all prior agreements
among the parties hereto relating to the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Amendment No. 2 as of the date first above written.
MICROSOFT CORPORATION
By: /s/Greg Maffei
-----------------------------
Name: Greg Maffei
Title: Chief Financial Officer
TELEWEST COMMUNICATIONS PLC
By: /s/ Victoria Hull
-----------------------------
Name: Victoria Hull
Title: Company Secretary
LIBERTY UK, INC.
By: /s/ Miranda Curtis
-----------------------------
Name: Miranda Curtis
Title: President
MEDIAONE UK CABLE, INC.
By: /s/ Gary Ames
-----------------------------
Name: Gary Ames
Title: Attorney-in-Fact
MEDIAONE CABLE PARTNERSHIP
HOLDINGS, INC.
By: /s/ Gary Ames
-----------------------------
Name: Gary Ames
Title: Attorney-in-Fact