SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Telewest Communications plc
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(Name of Issuer)
Ordinary Shares, par value 10 pence per share,
represented by American Depositary Shares, each of which
represents ten Ordinary Shares
- --------------------------------------------------------------------------------
(Title of Class of Securities)
87956P 10 5*
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(CUSIP Number)
Frank Eichler, Esq.
MediaOne Group, Inc.
188 Inverness Drive West
Englewood, Colorado 80112
Telecopy: (303) 858-5834
with a copy to:
Dennis J. Block
Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, NY 10038
(212) 504-5555
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
September 10, 1998
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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 which 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
|_|.
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-7 for other parties
to whom copies are to be sent.
CUSIP NO. 87956P 10 5.
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*CUSIP No. 87956 10 5 relates to the American Depositary Shares.
<PAGE>
SCHEDULE 13D
CUSIP No. 87956P 10 5
- ----------------------
1 NAME OF REPORTING PERSON
MEDIAONE GROUP, INC.
(FORMERLY "U S WEST, INC.")
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
54-0926774
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(See Instructions)(a) |_| (b) |X|
1
- ------ -------------------------------------------------------------------------
3 SEC USE ONLY
- ------ -------------------------------------------------------------------------
4 SOURCE OF FUNDS (See Instructions)
WC
- ------ -------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e): |_|
Not Applicable
- ------ -------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------- -------- -------------------------------------------------
7 SOLE VOTING POWER
463,438,960*
NUMBER OF
SHARES -------- --------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 926,877,921**
EACH
REPORTING -------- -------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 463,438,960*
-------- -------------------------------------------------
10 SHARED DISPOSITIVE POWER
926,877,921**
- -------- -----------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
926,877,921*
- -------- -----------------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(See Instructions) |_|
Not Applicable
- -------- -----------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
43.20% **
- -------- -----------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (See Instructions)
CO
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* Excludes up to a maximum of 180,000,000 Ordinary Shares of Telewest
Communications plc ("Telewest") which, pursuant to certain conditions, may be
acquired by MediaOne International Holdings, Inc. ("International"), a
wholly-owned subsidiary of MediaOne Group, Inc., pursuant to a letter agreement
(the "Letter Agreement") with Southwestern Bell International Holdings (UK-1)
Corporation.
** All of the subject shares (including those which may be acquired pursuant to
the Letter Agreement) may be deemed to be beneficially owned, for the purposes
of Section 13(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") by MediaOne Group, Inc. by virtue of the Relationship Agreement
and Operating Agreement referred to below. The filing of this Schedule 13D shall
not be construed as an admission by MediaOne Group, Inc. that it is, for the
purposes of Section 13(d) of the Exchange Act, the beneficial owner of the
subject shares as to which it does not have sole voting and dispositive power.
<PAGE>
SCHEDULE 13D
CUSIP No. 87956P 10 5
- ---------------------
1 NAME OF REPORTING PERSON
MEDIAONE INTERNATIONAL HOLDINGS, INC.
(FORMERLY "U S WEST INTERNATIONAL HOLDINGS, INC.")
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
84-1083131
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(See Instructions)(a) |_| (b) |_|
- ------ -------------------------------------------------------------------------
3 SEC USE ONLY
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4 SOURCE OF FUNDS (See Instructions)
WC
- ------ -------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e): |_|
Not Applicable
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------- -------- -------------------------------------------------
7 SOLE VOTING POWER
463,438,960*
NUMBER OF
SHARES -------- -------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 926,877,921**
EACH
REPORTING -------- -------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 463,438,960 *
---------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
926,877,921**
- -------- -----------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
926,877,921**
- -------- -----------------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(See Instructions) |_|
Not Applicable
- -------- -----------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
43.20% **
- -------- -----------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (See Instructions)
CO
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* Pursuant to the Letter Agreement and subject to the certain conditions
therein, International may acquire up to 180,000,000 Ordinary Shares of
Telewest.
** All of the subject shares (including those which may be acquired pursuant to
the Letter Agreement) may be deemed to be beneficially owned, for the purposes
of Section 13(d) of the Exchange Act by International by virtue of the
Relationship Agreement and Operating Agreement referred to below. The filing of
this Schedule 13D shall not be construed as an admission by International that
it is, for the purposes of Section 13(d) of the Exchange Act, the beneficial
owner of the subject shares as to which it does not have sole voting and
dispositive power.
<PAGE>
SCHEDULE 13D
CUSIP No. 87956P 10 5
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1 NAME OF REPORTING PERSON
MEDIAONE UK CABLE, INC.
(FORMERLY "U S WEST UK CABLE, INC.")
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
81-1145944
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(See Instructions)(a) |_| (b) |X|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS (See Instructions)
WC
- ------ -------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e): |_|
Not Applicable
- ------ -------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Colorado
- --------------------- -------- -------------------------------------------------
7 SOLE VOTING POWER
423,053,758
NUMBER OF
SHARES
BENEFICIALLY -------- --------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 926,877,921*
REPORTING
PERSON -------- --------------------------------------------------
WITH 9 SOLE DISPOSITIVE POWER
423,053,758
-------- --------------------------------------------------
10 SHARED DISPOSITIVE POWER
926,877,921*
- -------- -----------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
926,877,921*
- -------- -----------------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(See Instructions) |_|
Not Applicable
- -------- -----------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
43.20%
- -------- -----------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (See Instructions)
CO
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* All of the subject shares (including those which may be acquired pursuant to
the Letter Agreement) may be deemed to be beneficially owned, for the purposes
of Section 13(d) of the Exchange Act by MediaOne UK Cable, Inc. by virtue of the
Relationship Agreement and Operating Agreement referred to below. The filing of
this Schedule 13D shall not be construed as an admission by MediaOne UK Cable,
Inc. that it is, for the purposes of Section 13(d) of the Exchange Act, the
beneficial owner of the subject shares as to which it does not have sole voting
and dispositive power.
<PAGE>
SCHEDULE 13D
CUSIP No. 87956P 10 5
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12 NAME OF REPORTING PERSON
MEDIAONE CABLE PARTNERSHIP HOLDINGS, INC.
(FORMERLY "U S WEST CABLE PARTNERSHIP HOLDINGS, INC.")
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
84-1126521
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(See Instructions)(a) |_| (b) |_|
- ------ -------------------------------------------------------------------------
3 SEC USE ONLY
- ------ -------------------------------------------------------------------------
4 SOURCE OF FUNDS (See Instructions)
WC
- ------ -------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e): |_|
Not Applicable
- ------ -------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Colorado
- --------------------- -------- -------------------------------------------------
7 SOLE VOTING POWER
40,385,202
NUMBER OF
SHARES
BENEFICIALLY -------- -------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 926,877,921*
REPORTING
PERSON
WITH -------- -------------------------------------------------
9 SOLE DISPOSITIVE POWER
40,385,202
-------- -------------------------------------------------
10 SHARED DISPOSITIVE POWER
926,877,921*
- -------- -----------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
926,877,921*
- -------- -----------------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(See Instructions) |_|
Not Applicable
- -------- -----------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
43.20% *
- -------- -----------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (See Instructions)
CO
- ----------
* All of the subject shares (including those which may be acquired pursuant to
the Letter Agreement) may be deemed to be beneficially owned, for the purposes
of Section 13(d) of the Exchange Act by MediaOne Cable Partnership Holdings,
Inc. by virtue of the Relationship Agreement and Operating Agreement referred to
below. The filing of this Schedule 13D shall not be construed as an admission by
MediaOne Cable Partnership Holdings, Inc. that it is, for the purposes of
Section 13(d) of the Exchange Act, the beneficial owner of the subject shares as
to which it does not have sole voting and dispositive power.
<PAGE>
Item 1. Security and Issuer
This Statement relates to the ordinary shares, par value 10 pence per share
(the "Telewest Ordinary Shares"), of Telewest Communications plc, a public
limited company incorporated under the laws of England and Wales ("Telewest").
The address of the principal executive offices of Telewest is Genesis Business
Park, Albert Drive, Woking, Surrey, GU21 5RW, United Kingdom.
Item 2. Identity and Background.
This statement is filed on behalf of MediaOne Group, Inc., a Delaware
corporation ("MediaOne Group"), MediaOne International Holdings, Inc.,
a Delaware corporation ("International"), MediaOne UK Cable, Inc., a
Colorado corporation ("UK Cable"), and MediaOne Cable Partnership
Holdings, Inc., a Colorado corporation ("Cable Partnership"). UK Cable
and Cable Partnership are wholly-owned subsidiaries of International
which is in turn a wholly-owned subsidiary of MediaOne Group. As used
herein, "MediaOne" is a collective reference to MediaOne Group,
International, UK Cable and Cable Partnership.
Except for such shares that may be acquired under the Letter Agreement
(as defined below), all shares issued by Telewest described herein as
beneficially owned by MediaOne are beneficially owned by TW Holdings
L.L.C., a Colorado limited liability company ("TW Holdings"). Fifty
percent of TW Holdings is beneficially owned by MediaOne
(approximately 45.6% by UK Cable and 4.4% by Cable Partnership) and
50% by United Artists Programming-Europe, Inc. ("UAP," an affiliate of
Tele-Communications, Inc., together with its affiliates, including
Tele-Communications International, Inc., "TINTA").
On September 10, 1998, International entered into the Letter Agreement
(defined below) with Southwestern Bell International Holdings (UK-1)
Corporation ("SBUK"), an affiliate of SBC Communications Inc.,
pursuant to which International agreed to acquire up to 180,000,000
Telewest Ordinary Shares, subject to certain conditions more fully
described below.
The name, business address, present principal occupation or
employment, citizenship and the material occupation, position, offices
or employments during the last five years of each current director and
executive officer of MediaOne Group is set forth in "Section
Seven--Additional Information--Directors and Executive Officers of
MediaOne Group, Inc." in Part I of the Disclosure Document, dated June
29, 1998, of Telewest (the "Disclosure Document") a copy of which is
filed as Exhibit (1) hereto and which is incorporated herein by
reference.
(a) NAME:
(1) MediaOne Group, Inc.
(2) MediaOne International Holdings, Inc.
(3) MediaOne UK Cable, Inc.
(4) MediaOne Cable Partnership Holdings, Inc.
(b) PLACE OF ORGANIZATION:
(1) MediaOne Group, Inc. -- Delaware
(2) MediaOne International Holdings, Inc. -- Delaware
(3) MediaOne UK Cable, Inc. -- Colorado
(4) MediaOne Cable Partnership Holdings, Inc. -- Colorado
(c) PRINCIPAL BUSINESS:
MediaOne is a diversified global media and broadband
communications company engaged in domestic and international
broadband communications and international wireless
communications businesses.
(d) BUSINESS ADDRESS:
(1) MediaOne Group, Inc.
188 Inverness Drive West
Englewood, Colorado 80112
(2) MediaOne International Holdings, Inc.
9785 Maroon Circle
Englewood, Colorado 80112
(3) MediaOne UK Cable, Inc.
9785 Maroon Circle
Englewood, Colorado 80112
(4) MediaOne Cable Partnership Holdings, Inc.
9785 Maroon Circle
Englewood, Colorado 80112
(e) CONVICTION IN A CRIMINAL PROCEEDING:
(f) PARTY IN AN ADMINISTRATIVE PROCEEDING:
During the last five years, neither MediaOne nor, to
MediaOne's knowledge, any current director or executive
officer of MediaOne listed in "Section Seven--Additional
Information--Directors and Executive Officers of MediaOne
Group, Inc." in Part I of the Disclosure Document has been
(a) convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or (b) a party to a
civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting activities
subject to, Federal or State securities laws or finding any
violation of such laws.
Item 3. Source and Amount of Funds or Other Consideration.
The source of funds for MediaOne in connection with all transactions
described herein is and will be working capital.
Item 4. Purpose of the Transaction.
BACKGROUND
The Merger Offer.
On April 15, 1998, the boards of Telewest and General Cable PLC, a public
limited company incorporated under the laws of England and Wales ("General
Cable"), announced that they agreed to the terms of a proposed merger. Subject
to the satisfaction of certain pre-conditions, Telewest made an offer (the
"Merger Offer") to holders of General Cable Ordinary Shares, par value (pound)1
per share (the "General Cable Ordinary Shares"), including holders of American
Depositary Shares, each representing five General Cable Ordinary Shares (the
"General Cable ADSs"), pursuant to the Offer to Purchase/Prospectus, dated June
29, 1998 of Telewest (the "Offer to Purchase") (a copy of which is filed as
Exhibit (2) to this Schedule 13D) on the following basis:
For every General Cable 1.243 new Telewest Ordinary Shares and
Ordinary Share 65 pence in cash
For every General Cable ADS 6.215 new Telewest Ordinary Shares and
325 pence in cash
The terms of the Merger Offer (including the pre-conditions and conditions with
respect thereto) are set forth in the Offer to Purchase, which is included as
Exhibit (2) to this Schedule 13D and which is incorporated herein in its
entirety by reference.
On June 28, 1998, Telewest, in order to fund the cash element of the Merger
Offer, offered to issue approximately 261 million new Telewest Ordinary Shares,
at a price of 92.5 pence per Telewest Ordinary Share (the "Pre-emptive Issue"),
to Telewest shareholders (except for certain non-US overseas shareholders) and
the holders of convertible preference shares of Telewest (which preference
shares (the "Convertible Preference Shares") were owned by MediaOne and certain
other significant shareholders of Telewest and which were each convertible into
one Telewest Ordinary Share).
In connection with the Offer to Purchase and as disclosed therein, each of
MediaOne, TINTA and Cox (as defined below) undertook to take up their full
entitlement for new Telewest Ordinary Shares under the Pre-emptive Issue and
also undertook to subscribe for any remaining new Telewest Ordinary Shares not
taken up under the Pre-emptive Issue in accordance with the terms of a
subscription agreement entered into by MediaOne and such other shareholders. The
Merger Offer and the Pre-emptive Issue, together with various matters relating
thereto, were approved by Telewest shareholders on July 28, 1998 and the Merger
Offer became unconditional on September 1, 1998. Pursuant to the Operating
Agreement and the Contribution Agreement, dated April 15, 1998 (the
"Contribution Agreement") among MediaOne, TINTA and TW Holdings, TW Holdings
agreed to acquire an additional 15,340,370 Telewest Ordinary Shares which were
not taken up in the Pre-emptive Issue on behalf of each of MediaOne and TINTA
(30,680,740 Telewest Ordinary Shares in total).
Also, as stated in the Offer to Purchase, each of MediaOne, TINTA, Cox and
SBC agreed to convert their entire respective holdings of Convertible Preference
Shares into Telewest Ordinary Shares upon the Merger Offer becoming
unconditional (September 1, 1998). This conversion occurred on September 8,
1998.
As of the closing of the Pre-emptive Issue, the conversion of Convertible
Preference Shares referenced above, and the allotment of Telewest Ordinary
Shares in the Merger Offer, MediaOne and TW Holdings beneficially own such
number of Telewest Ordinary Shares as are described herein as being owned prior
to the consummation of the transactions contemplated by the Letter Agreement.
The Relationship Agreement, the Operating Agreement and Related Matters.
As of April 15, 1998, in connection with the Merger Offer, MediaOne, UK
Cable, Cable Partnership, TINTA, Cox Communications, Inc. and certain of its
affiliates (collectively, "Cox"), certain affiliates of SBC Communications Inc.
(collectively, "SBC") and Telewest entered into an Amended and Restated
Relationship Agreement (the "Relationship Agreement"). The Relationship
Agreement became effective as of September 1, 1998. The Relationship Agreement
broadly reflects the arrangements which were already in place among Telewest,
MediaOne, TINTA, Cox and SBC under the various agreements entered into at the
time of flotation of Telewest in 1994 and its merger with SBC CableComms UK in
1995.
As of September 11, 1998, UK Cable, Cable Partnership and UAP (a TINTA
affiliate) entered into an Amended and Restated Operating Agreement for TW
Holdings (the "Operating Agreement"). Under the Operating Agreement beneficial
ownership of 448,098,590 and 448,098,591 Telewest Ordinary Shares were
transferred from MediaOne and TINTA, respectively, to TW Holdings. Pursuant to
the terms of the Operating Agreement, the managing directors of TW Holdings will
consist of four persons, two appointed by MediaOne and two appointed by TINTA,
the managing directors will act by majority vote subject to certain exceptions
requiring unanimous vote. In addition, TW Holdings is not permitted to transfer
its Telewest shares, subject to certain exceptions, without unanimous vote of
the managing directors. Furthermore, TW Holdings agrees to vote all its Telewest
shares in favor of any candidate for director of Telewest which either MediaOne
or TINTA is entitled to nominate in accordance with Telewest's Articles of
Association or the Relationship Agreement.
Pursuant to the Relationship Agreement and the Operating Agreement, TINTA
and MediaOne have agreed that, on any matter requiring shareholder approval,
they will vote their Telewest shares together in such manner as may be agreed by
them or, in the absence of such agreement, will vote their Telewest shares
together in the manner that would most likely continue the status quo without
materially increasing Telewest's financial obligations or materially deviating
from its approved budget and business plan. If TINTA or MediaOne, as the case
may be, have a conflict of interest in any matter, they shall abstain from
voting (or the Telewest shares owned by TW Holdings and attributable to them
shall not be voted) and the members of the other affiliate group may vote the
Telewest shares attributable to them on such matter as they deem appropriate.
These voting restrictions will lapse after December 31, 1999 if TINTA or
MediaOne so notifies the other party following the disposal by such other party
of more than 43 million of its Telewest shares other than to an affiliate or
pursuant to a Permitted Demerger (defined as certain distributions which result
in an affiliate of the transferor owning 80% or more of the transferor's shares
in Telewest) or with the first party's consent.
The Relationship Agreement also provides that for so long as either TINTA
or MediaOne holds 15% or more of the Telewest shares in issue assuming
conversion of all Telewest Convertible Preference Shares then in issue and
ignoring all Telewest shares issued pursuant to or for the purposes of share
options (a "Qualifying Interest"), the consent of TINTA and/or MediaOne (as
appropriate) must be obtained by Telewest before: (a) making any material
acquisition or disposal out of the ordinary course of business; (b) incurring
any borrowings or indebtedness in the nature of borrowings or granting any
security interests in excess of (pound) 50 million in aggregate (excluding
borrowings under facilities in place at the date the Relationship Agreement
became effective and any borrowings or security interests consented to after
that date); (c) allotting or issuing shares or securities convertible into
shares or granting options other than pursuant to the Pre-emptive Rights
described on page I-75 of the Disclosure Document, the Pre-emptive Issue or the
conversion of Preference Shares (as defined below) or pursuant to options
(depending on their terms), convertibles or similar securities granted or issued
before the date of the Relationship Agreement or with the necessary consents
after the date on which the Relationship Agreement becomes unconditional and
certain other exceptions; (d) appointing or removing the chief executive officer
of Telewest; or (e) increasing the number of directors holding office beyond 14.
The Relationship Agreement provides that Telewest and the shareholder
groups party to the Relationship Agreement will accept a number of restrictions
on their ability to extend the scope of their business.
For the purpose of these restrictions, the following definitions set forth
in the Relationship Agreement apply:
"Cable Telephony" means any voice or data telecommunications
service which operates in whole or in part by cable links to
subscribers' premises, is interconnected at some point to a public
switching network and is intended to serve customers in the UK.
"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
services and other interactive services and other entertainment,
telecommunications and information services.
Pursuant to the Relationship Agreement, each of TINTA and MediaOne has
accepted certain non-compete obligations for so long as TINTA or MediaOne (as
appropriate) has a Qualifying Interest and for one year thereafter. Equivalent
restrictions apply to SBC and Cox for so long as they have a Lesser Qualifying
Interest (as defined in the Relationship Agreement) and for one year thereafter.
The provisions restrict direct ownership of UK Cable Television and Cable
Telephony assets and the acquisition of equity interests in companies with such
assets subject to certain de minimis and other exceptions, and allow TINTA,
MediaOne, SBC or Cox (as appropriate) to take up an otherwise restricted
opportunity in Cable Television or Cable Telephony in the United Kingdom
provided that they first offer the opportunity to Telewest.
Affiliates of TINTA, MediaOne, SBC and Cox have entered into "gain
recognition agreements" (the "GRAs") with the US Internal Revenue Service in
connection with the transfer of stock to Telewest upon its formation by merger
in 1995. GRAs provide that for a specified number of years (generally, 10 years)
a US person who transfers stock to a foreign corporation will be required to
recognize gain, for US tax purposes, attributable to the transferred stock in
the event the transferee foreign corporation disposes of the transferred stock
(or all or a substantial portion of the assets of the corporation whose stock
was transferred). To ensure that gain will not be triggered under the GRAs,
Telewest has made certain covenants under the Relationship Agreement,
restricting its ability to dispose of its assets, in favor of TINTA, MediaOne,
SBC and Cox to the extent any group individually holds, or MediaOne and TINTA or
SBC and Cox collectively hold, 7.5% or more of the Telewest shares.
TINTA and MediaOne have agreed amongst themselves pursuant to the
Relationship Agreement that no transfers are permitted by members of the TINTA
Group (as defined in the Relationship Agreement) or the MediaOne Group (as
defined in the Relationship Agreement) before December 31, 1999 other than (a)
to an "Affiliate" (defined as a person controlled by, controlling or under joint
control with the relevant member of the TINTA Group or the MediaOne Group) or
(b) with the written consent of the other and approval of the identity of the
transferee and (if the transferee becomes a member of the TINTA Group or the
MediaOne Group) the transferee agreeing to adhere to the Relationship Agreement
or (c) pursuant to a Permitted Demerger.
After December 31, 1999, any proposed transfers by a member of the MediaOne
Group or the TINTA Group will be subject to rights of first refusal in favor of
the other of TINTA or MediaOne. These provisions will not apply to (a) transfers
to an Affiliate of TINTA or MediaOne or (b) a transfer pursuant to a Permitted
Demerger, provided that any transferee which becomes a member of the relevant
group executes a deed of adherence to the Relationship Agreement.
The Relationship Agreement also contains buy-sell provisions as between the
MediaOne Group and the TINTA Group in the event of certain changes of control.
Where the MediaOne Group or the TINTA Group is subject to a change of control
for these purposes, the group which is unaffected by the change of control may
offer to buy the shares of the affected group (or to sell its shares to the
affected group) specifying a price at which it is prepared to buy or sell for
these purposes or to consent to the change of control. If the unaffected group
does not consent, the affected group has the right to choose whether to buy or
sell at that price.
All transfers by SBC or Cox are subject to rights of first offer in favor
of TINTA and MediaOne other than in respect of: (a) Public Transfers (as defined
in the Relationship Agreement); (b) transfers where the shares remain controlled
by SBC or Cox; (c) transfers to members of the same group or from SBC to Cox or
vice versa, provided the transferee agrees to be bound by the Relationship
Agreement; or (d) transfers following a general takeover offer for Telewest
(whether by a third party or by SBC or Cox).
The Operating Agreement further provides that neither MediaOne nor TINTA
will transfer all or a portion of its ownership interest in TW Holdings on or
before December 31, 1999 (except to affiliates and certain other exceptions)
unless (a) the prior written consent of the other party is obtained, (b) the
other party approves, in its sole discretion, the identity of the transferee,
and (c) the transferee executes a counterpart to the Relationship Agreement.
Furthermore, under the Operating Agreement, if either MediaOne or TINTA desires
to transfer its ownership interest in TW Holdings to a third-party it must give
a right of first refusal to the other party. In the event of a change of control
of either MediaOne or TINTA, such party must give notice thereof to the other
party and provide the other party with an opportunity to either consent to the
change of control or offer a price at which the responding party is either
willing to sell to the notifying party the responding party's ownership interest
in TW Holdings or purchase all of the notifying party's such ownership interest.
Each party to the Operating Agreement also agrees that if such party acquires
additional shares of Telewest, the beneficial interest in such shares will be
contributed to TW Holdings with a corresponding increase in such party's
ownership interest in TW Holdings.
Furthermore, as contemplated in the Merger Offer and in accordance with the
Relationship Agreement, Telewest adopted revised Articles of Association (the
"Articles of Association") which provide, among other things, that, (a) for so
long as MediaOne or TINTA holds a Qualifying Interest, such entity will be
entitled to appoint two persons to the board of directors; (b) for so long as
MediaOne or TINTA holds at least a Lesser Qualifying Interest, such entity will
be entitled to appoint one person to the board of directors; and (c) for so long
as SBC, Cox or Vivendi (as defined below) holds at least a Lesser Qualifying
Interest, such entity will be entitled to appoint one person to the board of
directors. The Articles of Association further provide that each committee of
the board of directors of Telewest must include at least one director designated
by MediaOne and one director designated by TINTA; provided that the majority of
members of each committee and the chairman thereof shall be independent of
MediaOne and TINTA. Furthermore, for so long as Cox, SBC and Vivendi own a
Lesser Qualifying Interest, they may appoint a non-voting observer to any
committee.
Telewest has also agreed under the Relationship Agreement that the
directors it appoints shall be individuals that are reasonably acceptable to
MediaOne and TINTA. The agreement of MediaOne and TINTA in relation to the above
matters will only be required so long as that shareholder retains a Qualifying
Interest.
Also, in connection with the Merger Offer and pursuant to a Registration
Rights Agreement, dated October 3, 1995, as amended by Amendment No. 1 to
Registration Rights Agreement, dated June 29, 1998 (the "Registration Rights
Agreement"), Telewest has agreed that TINTA, MediaOne, SBC, Cox and Vivendi S.A.
(the principal stockholder of General Cable prior to the Merger Offer,
"Vivendi") will have the right, subject to certain limited exceptions, to
require Telewest to include all or any portion of their Telewest shares
(including those arising from a conversion of Telewest Preference Shares) in any
registered offering by Telewest of Telewest shares under the US Securities Act
of 1933, as amended (the "Securities Act"), or in a public offering under UK
law. In addition, TINTA, MediaOne, SBC, Cox and Vivendi will have the right to
cause Telewest on up to ten separate occasions (two exercisable by each of
TINTA, MediaOne, SBC, Cox and Vivendi) to offer all or any part of their
Telewest shares for sale in a registered offering under the Securities Act or in
a public offering under UK law.
The foregoing descriptions of the Relationship Agreement, the Operating
Agreement, the Registration Rights Agreement, the Articles of Association, and
the Contribution Agreement are summaries thereof and do not purport to be
complete and are qualified in their entirety to the full text of the
Relationship Agreement, the Operating Agreement, the Registration Rights
Agreement, the Amendment No. 1 thereto, Articles of Association, and the
Contribution Agreement, copies of which have been attached hereto as Exhibits
(4), (5), (6), (7), (8) and (9) and are incorporated by reference herein.
LETTER AGREEMENT
On September 10, 1998, International entered into a letter agreement (the
"Letter Agreement") with SBUK pursuant to which, within five business days of
the satisfaction of certain conditions set forth in the Letter Agreement,
International (or its designee) agreed to purchase from SBUK up to 180,000,000
Telewest Ordinary Shares, subject to a minimum number (the "Minimum Share
Number") equal to the lesser of (a) 170,000,000 Telewest Ordinary Shares and (b)
the number of Telewest Ordinary Shares as shall be available for SBUK to sell to
International following any exercise by TINTA of its right of first refusal
contained in the Relationship Agreement. The Letter Agreement further provides
that the number of Telewest Ordinary Shares that SBUK will sell to International
shall be equal to (a) the lesser of such number of Telewest Ordinary Shares as
when aggregated with those held by MediaOne (including its concert parties)
would represent 29.9% of the voting rights of Telewest (but in no event less
than the Minimum Share Number) or (b) all of the 180,000,000 Telewest Ordinary
Shares or any lesser number of Telewest Ordinary Shares as shall be available
for SBUK to sell following any exercise by TINTA of its right of first offer
contained in the Relationship Agreement. The Telewest Ordinary Shares which
International will acquire (subject to the provisions described above) are
referred to as the "SBC Sale Shares." According to the provisional figures
produced in connection with the Merger Offer by J. Henry Schroder & Co., Ltd.
London ("Schroders"), dated September 7, 1998, and aggregating the number of
shares already treated as held by MediaOne, the number of SBC Sale Shares that
International believes that it will be entitled to acquire will be 178,077,333.
The purchase of the SBC Sale Shares by International is conditioned upon, among
other things:
a. (subject to Schroders first confirming to MediaOne the number of SBC
Sale Shares which MediaOne is entitled to acquire and MediaOne
notifying SBC of that number) either SBC providing a waiver from TINTA
in respect of the SBC Sale Shares regarding the rights of first offer
under clause 9.1 of the Relationship Agreement or SBC providing
written notice to commence the procedures prescribed by clause 9.1 in
respect of the SBC Sale Shares and once completed SBC being free to
sell the SBC Sale Shares to International Holdings upon the terms set
forth in the Letter Agreement;
b. the London Takeover and Mergers Panel (the "Panel") confirming by
Friday, September 25, 1998 that should International not acquire the
whole of SBC's shareholdings in Telewest, it will not treat SBC as
acting in concert with International (such that SBC's residual
shareholding would be aggregated with the shareholdings of
International and its other concert parties so as to trigger a
mandatory offer requirement under Rule 9 of the City Code on Takeovers
and Mergers);
c. the Panel confirming by Friday, September 25, 1998 that International
will not be entitled or obliged to acquire any shares in the capital
of Telewest the acquisition of which would trigger a mandatory offer
requirement under Rule 9 of the City Code on Takeovers and Mergers;
d. compliance by Friday, September 25, 1998 by International with all
applicable US legal requirements including, without limitation,
applicable United States Federal and State securities laws.
Assuming the acquisition by MediaOne of 178,077,333 SBC Sale Shares, upon
consummation of such transaction MediaOne will indirectly own 641,516,293
Telewest Ordinary Shares or 29.96% of the issued and outstanding Telewest
Ordinary Shares.
The foregoing description of the Letter Agreement is a summary thereof and
does not purport to be complete. The full text of the Letter Agreement is
attached hereto as Exhibit (10) and in incorporated herein by reference.
Subject to the restrictions contained in the Operating Agreement, the
Relationship Agreement and the Articles of Association, MediaOne may acquire
additional Telewest Ordinary Shares or dispose of Telewest Ordinary Shares at
any time and from time to time through open market transactions, privately
negotiated transactions or otherwise, the effect of which could have one or more
of the results described in subparagraphs (a) through (j) of Item 4 of Schedule
13D. It should be noted that there are no assurances that MediaOne would engage
in any such transaction.
Item 5. Interest in Securities of the Issuer.
(a)-(b) As of consummation of the Pre-emptive Issue, the conversion
referred to above and the Merger Offer, MediaOne beneficially owns 463,438,960
Ordinary Shares or 20.06% of the outstanding Telewest Ordinary Shares. Of those
463,438,960 shares, 409,009,895 shares and 39,088,695 shares are held of record
by UK Cable and Cable Partnership, respectively, and 15,340,370 shares are held
of record by TW Holdings. The 15,340,370 shares held of record by TW Holdings
are attributed to MediaOne due to its 50% interest in TW Holdings, its right to
have those shares distributed to MediaOne and certain other voting arrangements
discussed above with respect thereto. As of consummation of the Pre-emptive
Issue, the conversion referred to above and the Merger Offer, TINTA and its
affiliates beneficially owned 463,438,961 Telewest Ordinary Shares or 20.06% of
the outstanding Telewest Ordinary Shares. All of the shares beneficially owned
by both MediaOne and TINTA are beneficially owned by TW Holdings, which in turn
is owned 50% by MediaOne and 50% by TINTA. The filing of this Schedule 13D shall
not be construed as an admission by MediaOne. that it is, for the purposes of
Section 13(d) of the Exchange Act, the beneficial owner of the Telewest Ordinary
Shares beneficially owned by TINTA.
Upon consummation of the transactions contemplated by the Letter Agreement
(and based upon the information provided by Schroders as referenced above),
MediaOne will beneficially own up to 641,516,293 Telewest Ordinary Shares
(representing up to 29.96% of the issued and outstanding Telewest Ordinary
Shares) depending upon the number of Telewest Ordinary Shares purchased by TINTA
pursuant to its right of first refusal contained in the Relationship Agreement.
To the best knowledge of MediaOne, no Telewest Ordinary Shares are
beneficially owned by any of the persons set forth in "Section Seven --
Additional Information -- Directors and Executive Officers of MediaOne Group,
Inc." in Section Seven of Part I of the Disclosure Document, except for such
beneficial ownership, if any, arising solely from the Relationship Agreement and
Operating Agreement or in such person's capacity as an officer or director of
MediaOne.
(c) Neither MediaOne nor, to the best knowledge of MediaOne, any person set
forth in "Section Seven -- Additional Information -- Directors and Executive
Officers of MediaOne Group, Inc." in Part I of the Disclosure Document, has
effected any transaction in Telewest Ordinary Shares during the past 60 days,
except as disclosed herein.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to
Securities of the Issuer.
Other than as described in Items 4 and 5 above, to the best knowledge of
MediaOne, there are no contracts, arrangements, understandings or relationships
(legal or otherwise) among the persons named in Item 2 and between such persons
and any person with respect to any securities of Telewest, including, but not
limited to, transfer or voting of any securities, finder's fees, joint ventures,
loan or option arrangements, puts or calls, guarantees of profits, division of
profits or loss, of the giving or withholding of proxies.
Item 7. Material to be Filed as Exhibits.
Exhibit No. Description
(1) Disclosure Document of Telewest, dated June 29, 1998. (A)
(2) Offer to Purchase/Prospectus of Telewest, dated June 29, 1998. (A)
(3) Prospectus Supplement issued by Telewest dated August 20, 1998. (B)
(4) Amended and Restated Relationship Agreement, made as of April 15,
1998, between MediaOne International Holdings, Inc., MediaOne UK
Cable, Inc., MediaOne Cable Partnership Holdings, Inc.,
Tele-Communications International, Inc., United Artists
Programming-Europe, Inc., Cox Communications, Inc., Cox U.K.
Communications, L.P., SBC International, Inc., Southwestern Bell
International Holdings (UK-1) Corporation and Telewest Communications
plc. (A)
(5) Form of Amended and Restated Operating Agreement of TW Holdings,
L.L.C. (C)
(6) Registration Rights Agreement, dated October 3, 1995, among Telewest
and the other parties references therein. (Incorporated by reference
to Telewest's Annual Report on Form 10-K filed with the Securities and
Exchange Commission on April 1, 1996.)
(7) Form of Amendment No. 1 to the Registration Rights Agreement, dated as
of June 29, 1998, among Telewest and the other parties referenced
therein. (A)
(8) Form of amended and restated Articles of Association of Telewest. (A)
(9) Form of Contribution Agreement among MediaOne Cable Partnership
Holdings, Inc. and the other parties thereto. (C)
(10) Letter Agreement, dated September 10, 1998, between MediaOne
International Holdings, Inc. and Southwestern Bell International
Holdings (UK-1) Corporation. (C)
- -------------------------
(A) Incorporated by reference to the Registration Statement on form S-4 of
Telewest (File No. 333-50201).
(B) Incorporated by reference to Amendment No. 4 to the Schedule 14D-1 filed by
Telewest and MediaOne (among others) with respect to General Cable on
August 21, 1998.
(C) Filed herewith.
<PAGE>
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: September 21, 1998
MEDIAONE GROUP, INC.
By: /s/ Stephen E. Brilz
--------------------
Name: Stephen E. Brilz
Title Assistant Secretary
MEDIAONE INTERNATIONAL HOLDINGS, INC.
By: /s/ Stephen E. Brilz
--------------------
Name: Stephen E. Brilz
Title Assistant Secretary
MEDIAONE UK CABLE, INC.
By: /s/ Stephen E. Brilz
--------------------
Name: Stephen E. Brilz
Title Assistant Secretary
MEDIAONE CABLE PARTNERSHIP HOLDINGS, INC.
By: /s/ Stephen E. Brilz
--------------------
Name: Stephen E. Brilz
Title Assistant Secretary
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
(1) Disclosure Document of Telewest, dated June 29, 1998. (A)
(2) Offer to Purchase/Prospectus of Telewest, dated June 29, 1998. (A)
(3) Prospectus Supplement issued by Telewest dated August 20, 1998. (B)
(4) Amended and Restated Relationship Agreement, made as of April 15,
1998, between MediaOne International Holdings, Inc., MediaOne UK
Cable, Inc., MediaOne Cable Partnership Holdings, Inc.,
Tele-Communications International, Inc., United Artists
Programming-Europe, Inc., Cox Communications, Inc., Cox U.K.
Communications, L.P., SBC International, Inc., Southwestern Bell
International Holdings (UK-1) Corporation and Telewest Communications
plc. (A)
(5) Form of Amended and Restated Operating Agreement of TW Holdings,
L.L.C. (C)
(6) Registration Rights Agreement, dated October 3, 1995, among Telewest
and the other parties references therein. (Incorporated by reference
to Telewest's Annual Report on Form 10-K filed with the Securities and
Exchange Commission on April 1, 1996.)
(7) Form of Amendment No. 1 to the Registration Rights Agreement, dated as
of June 29, 1998, among Telewest and the other parties referenced
therein. (A)
(8) Form of amended and restated Articles of Association of Telewest. (A)
(9) Form of Contribution Agreement among MediaOne Cable Partnership
Holdings, Inc. and the other parties thereto. (C)
(10) Letter Agreement, dated September 10, 1998, between MediaOne
International Holdings, Inc. and Southwestern Bell International
Holdings (UK-1) Corporation. (C)
- -------------------------
(A) Incorporated by reference to the Registration Statement on form S-4 of
Telewest (File No. 333-90201).
(B) Incorporated by reference to Amendment No. 4 to the Schedule 14D-1 filed by
Telewest and MediaOne (among others) with respect to General Cable on
August 21, 1998.
(C) Filed herewith.
EXHIBIT (5)
AMENDED AND RESTATED
OPERATING AGREEMENT
OF
TW HOLDINGS, L.L.C.
This Amended and Restated Operating Agreement is made as of _________ __,
1998 by the members of TW Holdings, L.L.C., a Colorado limited liability company
(the "Company").
RECITALS
WHEREAS, United Artists Programming-Europe, Inc. ("UAPE"), U S WEST UK
Cable, Inc. ("USW-UK") and U S WEST Cable Partnership Holdings, Inc. ("USW
Holdings"), the members of the Company (collectively, the "Members"), entered
into an Operating Agreement for the Company dated as of June 16, 1995 (the
"Original Agreement");
WHEREAS, on the date of this Agreement [a] Cox U.K. Communications, L.P.
(the "Cox Shareholder") will sell and assign to the Company certain ordinary
shares of Telewest Communications plc owned by it (other than the economic
benefits associated with such shares, which will be retained by the Cox
Shareholder), [b] the Members will make cash contributions to the Company to
fund the purchase of additional ordinary shares of Telewest Communications plc
and [c] the Members will purchase additional ordinary shares of Telewest
Communications plc, the beneficial interests in which they will contribute to
the Company; and
WHEREAS, the Members have determined that it is in their best interests to
amend and restate the Original Agreement as set forth herein.
NOW, THEREFORE, in consideration of their mutual promises, the Members
agree as follows:
ARTICLE 1: FORMATION AND DEFINITIONS
1.1 Formation. The Company was formed on June 16, 1995 by filing Articles
with the Colorado Secretary of State pursuant to the Act.
<PAGE>
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 5619 DTC Parkway, Englewood, Colorado 80111, and its registered agent is
Stephen M. Brett. The Company may subsequently change its registered office or
registered agent in Colorado in accordance with the Act.
1.4 Foreign Qualification. The Company will apply for a certificate of
authority to do business in any other jurisdiction where such authority is
required.
1.5 Term. The Company began on the date its Articles were filed with the
Colorado Secretary of State and will continue until its Dissolution.
1.6 Definitions. The following capitalized terms, when used in this
Agreement, have the meanings set forth below:
Act: the Colorado Limited Liability Company Act, as amended from time to
time.
Additional Contribution: a capital contribution (other than the Initial
Contributions) that a Member makes to the Company, as described in Section 4.4.
Affiliate: with respect to any Person, any other Person directly or
indirectly Controlling, directly or indirectly Controlled by or under direct or
indirect common Control with such Person.
Agreement: this Amended and Restated Operating Agreement, as amended from
time to time.
Articles: the articles of organization of the Company filed under the Act,
as amended from time to time.
Bankruptcy: of a Member will be deemed to occur when such Member [a] files
a voluntary petition in bankruptcy, [b] is adjudged bankrupt or insolvent or has
entered against such Member an order for relief in any bankruptcy or insolvency
proceeding, [c] files a petition or answer seeking for such Member any
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any statute, law or regulation, [d] files an answer or
other pleading admitting or failing to contest the material allegations of a
petition filed against such Member in any proceeding of that nature or [e]
seeks, consents to or acquiesces in the appointment of a trustee, receiver or
liquidator of all or any substantial part of such Member's property.
Board: as defined in Section 3.2.
<PAGE>
Capital Account: the book capital account to be established and maintained
for each Member in accordance with this Agreement.
Capital Contribution: any contribution by a Member to the Company which is
either an Initial Contribution or an Additional Contribution.
Change in Control: with respect to U S WEST International Holdings, Inc.
("USWIH") and its Affiliates (other than MediaOne) or TINTA and its Affiliates
(other than TCI), the acquisition (whether by merger, consolidation, sale,
assignment, lease, transfer or otherwise, in one transaction or any related
series of transactions) of beneficial ownership by any Person (other than
pursuant to a distribution in specie, spin off, share dividend, demerger or
similar transaction and other than, with respect to beneficial ownership of
equity interests in TINTA or any of its Affiliates, by TINTA or any of its
Affiliates and, with respect to beneficial ownership of equity interests in
USWIH or any of its Affiliates, by USWIH or any of its Affiliates) of equity
interests in USWIH and/or any of its Affiliates (other than MediaOne) or TINTA
and/or any of its Affiliates (other than TCI), as the case may be, as a result
of which such Person has the power, directly or indirectly, to direct the voting
and disposition of Ordinary Shares held by TINTA and its Affiliates or USWIH and
its Affiliates, as the case may be, representing at least 15% of the outstanding
Ordinary Shares of Telewest. For purposes of this definition, a Member shall be
deemed to control the voting and disposition of such Member's Pro Rata Shares. A
Change in Control shall be deemed voluntary if it is the result of a transaction
agreed to by TINTA or any of its Affiliates or USWIH or any of its Affiliates,
as the case may be. A Change in Control shall be deemed involuntary if it is the
result of actions by Persons (other than TINTA or any of its Affiliates or USWIH
or any of its Affiliates, as the case may be) taken without the agreement or
consent of TINTA or any of its Affiliates or USWIH or any of its Affiliates, as
the case may be.
Closing Price: [a] with respect to Ordinary Shares to be offered on the
London Stock Exchange, will be the sale price which appears on the relevant
Reuters Screen No. for Telewest as of 11:00 a.m. (London time) on a Trading Day,
provided that if such Ordinary Shares do not appear on such Reuters Screen or
such Reuters Screen is temporarily unavailable, the sale price with respect to
the Ordinary Shares will be the last reported sale price which appears in the
Official List of the London Stock Exchange on a Trading Day and [b] with respect
to Ordinary Shares to be offered on the New York Stock Exchange or another U.S.
national securities exchange in the form of ADSs, will be the last reported sale
price on a Trading Day on such exchange or, if no such sale takes place on such
day, the average of the high and low sales prices for such day as reported on
the New York Stock Exchange Composite Tape, or, if no such sales are reported,
the
<PAGE>
reported last sale price (or, if no such sale takes place on such day, the
average of the reported closing bid and asked prices), on the Nasdaq National
Market, or if the ADSs are not quoted on such National Market, the average of
the closing bid and asked prices in the over-the-counter market as furnished by
any New York Stock Exchange member firm selected by the Board for that purpose.
Code: the Internal Revenue Code of 1986, as amended from time to time
(including corresponding provisions of subsequent revenue laws).
Contribution Agreement: the Contribution Agreement dated as of April 15,
1998 among the Members and the Company.
Control: with respect to any Person, the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of the Controlled Person, whether through equity ownership, by contract
or otherwise, but a Person shall not be deemed to Control another Person solely
by virtue of any veto rights granted to it as a minority equity owner or by
virtue of super majority voting rights.
Dissolution: the change in the relationship of the Members caused by the
occurrence of an event described in Section 12.1.
Distribution: a distribution of money or other property made by the Company
with respect to an Ownership Interest.
Event of Withdrawal: the occurrence of an event which terminates a Member's
membership in the Company, as provided in Section 11.12.
Fair Market Value: as to any property, the price at which a willing seller
would sell and a willing buyer would buy such property having full knowledge of
the facts, in an arm's-length transaction without time constraints, and without
being under any compulsion to buy or sell.
Fiscal Year: the fiscal and taxable year of the Company as determined under
this Agreement, including both 12-month and short taxable years.
Initial Contribution: the initial capital contribution made by each Member
to the Company, as set forth on Exhibit A.
Liquidation: the process of terminating the Company and winding up its
business under Article 13 after its Dissolution.
Losses: the Company's net loss (including deductions) for any Fiscal Year,
determined under Section 5.1.
Managing Director: as defined in Section 3.2.
<PAGE>
MediaOne: U S WEST, Inc., a Delaware corporation to be renamed MediaOne
Group, Inc., and its successors, whether by merger or otherwise.
MediaOne Directors: as defined in Section 3.2.
MediaOne Shareholder: USW-UK or USW Holdings.
MediaOneShareholder Group: each MediaOne Shareholder and any member of the
group consisting of MediaOne and its Affiliates to whom Ownership Interests or
Shares originally issued to a MediaOne Shareholder are Transferred in accordance
with this Agreement or the Relationship Agreement.
Member: a Person who is a Member on the date of this Agreement or who is
subsequently admitted as a Member as provided in this Agreement.
Member Group: all of the Members included in any Shareholder Group.
Net Cash: cash receipts of the Company less payment of, or reasonable
reserves for, operating expenses, capital requirements, improvements, debt
service, and other cash requirements of the Company as determined by the Board.
Ordinary Share: an ordinary share, 10p par value (including ordinary shares
represented by American Depository Shares), in the capital of Telewest, or any
other shares of capital stock issued in substitution or replacement thereof in
any merger, share exchange, recapitalization or other similar transaction.
Ownership Interest: with respect to each Person owning an interest in the
Company, all of the interests of such Person in the Company (including, without
limitation, an interest in the Profits and Losses, a Capital Account interest
and all other rights and obligations of such Person under this Agreement) in the
percentages set forth on Exhibit A, as the same may be amended from time to time
in accordance with this Agreement.
Permitted Transferee: a Person described in Section 11.3 to whom an
Ownership Interest may be Transferred without the Transferor offering the other
Member Group a right of first refusal under this Agreement.
Person: an individual, corporation, trust, partnership, limited liability
company, unincorporated organization, association or other entity.
Pro Rata Shares: with respect to any Member, a portion of the number of
Shares owned by the Company attributable to such Member's Ownership Interest,
which will equal the product of [x] the aggregate number of Shares owned
<PAGE>
by the Company (except those Shares in which the Cox Shareholder owns an
economic interest pursuant to the Co-Ownership Deed between the Company and the
Cox Shareholder dated as of the date of this Agreement) multiplied by [y] such
Member's percentage Ownership Interest in the Company, expressed as a decimal.
Profits: the Company's net profit (including income and gains) for any
Fiscal Year, determined under Section 5.1.
Related Transfer: a Transfer by means of a distribution, spin-off, stock
dividend or other transaction as a result of which one or more Affiliates of the
transferor beneficially own 80% or more of the Pro Rata Shares that immediately
prior to such Transfer were beneficially owned by the Shareholder Group of which
the transferor is a member.
Relationship Agreement: the Relationship Agreement dated as of April 15,
1998 among Telewest, the TCI Shareholder, the MediaOne Shareholders and other
parties.
Shareholder: the TCI Shareholder, each MediaOne Shareholder and any other
Person who acquires Shares in accordance with this Agreement or the Relationship
Agreement and becomes a party to, or otherwise agrees to be bound by, the
Relationship Agreement subsequent to the date hereof by signing a counterpart of
the Relationship Agreement or another document to the same effect.
Shareholder Group: the TCI Shareholder Group or the MediaOne Shareholder
Group.
Shares: [a] Ordinary Shares and [b] convertible preference shares, 10p par
value per share, of Telewest (or any other shares of capital stock issued in
substitution or replacement thereof in any merger, share exchange,
recapitalization, scheme of arrangement or other similar transaction). In
calculating the percentage ownership of Shares for purposes of this Agreement, a
holder of Shares will be deemed to own the number of Ordinary Shares into which
its convertible preference shares are then convertible, without regard to any
prohibition or restriction on conversion.
TCI: Tele-Communications, Inc., a Delaware corporation, and its successors,
whether by merger or otherwise.
TCI Directors: as defined in Section 3.2.
TCI Shareholder: United Artists Programming - Europe, Inc.
<PAGE>
TCI Shareholder Group: the TCI Shareholder and any member of the group
consisting of TCI and its Affiliates to whom Ownership Interests or Shares
originally issued to the TCI Shareholder are Transferred in accordance with this
Agreement or the Relationship Agreement.
Telewest: Telewest Communications plc, a public limited company organized
under the laws of England and Wales, and its successors and assigns, whether by
merger, scheme of arrangement or otherwise.
Third Party: with respect to any Member, a Person other than an Affiliate
of such Member.
Third Party Offer: a bona fide, non-collusive, binding, arms'-length
written offer to purchase from a Third Party with the purchase price stated in
terms of U.S. dollars or English pounds sterling.
Trading Day: each Monday, Tuesday, Wednesday, Thursday and Friday, other
than any day on which securities are not traded on the applicable exchange or
market.
Transfer: a sale, exchange, assignment, transfer, pledge or other
disposition, whether voluntary or by operation of law.
Transferee: a Person to whom an Ownership Interest is Transferred in
compliance with this Agreement.
Transferor: a Person who Transfers an Ownership Interest in compliance with
this Agreement.
Vote: the action of the Company by its Members or the Board, either in
meeting assembled or by written consent without a meeting.
ARTICLE 2: PURPOSES AND POWERS
2.1 Purpose. The purpose of the Company shall be to own the Shares
contributed to it by the Members, to acquire further Shares in accordance with
the terms of this Agreement and the Contribution Agreement and to vote, dispose
and otherwise take actions in respect of the Shares owned by the Company in
accordance with the terms of this Agreement. The Company shall be permitted to
conduct such lawful business [a] as may be necessary or appropriate to give full
effect to the foregoing purpose and to all of the provisions of this Agreement
and [b] as may be consented to by the unanimous Vote of the Members.
2.2 Powers. The Company shall have any and all powers necessary or
desirable to carry out the purpose and business of the Company to the extent the
same may be legally exercised by limited liability companies under the Act.
Without limiting the foregoing, and subject to the other provisions of this
Agreement, the purposes of the Company may be accomplished through the following
powers (which are not exclusive):
[a] to acquire, hold, transfer, distribute, or otherwise dispose of Company
assets (or rights or interests in such property);
[b] to enter into any contracts or agreements concerning the assets of the
Company;
[c] to execute and deliver all instruments, including proxies, assignments, and
other documents of transfer, as may be necessary or advisable for the
administration of the Company;
[d] to hold the assets of the Company in the name of a nominee;
[e] to vote securities, exercise rights, and pay calls and assessments;
[f] to settle claims and take or defend judicial and administrative
proceedings:
[g] to employ agents and independent contractors as may be necessary or
advisable for the administration of the Company;
[h] to establish reserves for taxes, assessments, insurance premiums, repairs,
maintenance, improvements, depreciation, depletion and obsolescence out of
the rents, profits or other income received;
[i] to pay all expenses reasonably incurred in the administration of the
Company; and
[j] to do such other things and engage in such other activities related
directly or indirectly to the foregoing as may be necessary, convenient or
advisable to the conduct of the business of the Company.
ARTICLE 3: MEMBERS; MANAGEMENT; VOTING
3.1 Admission of Transferees as Members. A Transferee shall be admitted as
a Member of the Company only upon the affirmative unanimous Vote of Members,
except that a Transferee which is an Affiliate of a Member shall automatically
be admitted as a Member, subject to compliance with Section 11.7, without any
action on the part of the other Members.
3.2 Managing Directors. Except as specifically set forth in Section 3.4,
the management and policy-making functions of the Company shall reside in a
board (the "Board") composed of four individuals (each, a "Managing Director")
to be
<PAGE>
elected annually and who shall serve until their successors are elected and
qualified. Such Managing Directors shall be elected by unanimous Vote of the
Members. Members included in the TCI Shareholder Group shall be entitled to
nominate two Managing Directors ("TCI Directors") and Members included in the
MediaOne Shareholder Group shall be entitled to nominate the other two Managing
Directors ("MediaOne Directors"). Each Member agrees to Vote all of its
Ownership Interest in any election of Managing Directors in favor of the Persons
nominated in accordance with the preceding sentence. Upon the occurrence of a
vacancy in the Board, the Member who nominated the Managing Director in respect
of whom such vacancy exists may nominate a replacement, and the Members shall
Vote in favor of such replacement, who shall serve until such replacement
Managing Director's successor is elected.
3.3 Board Vote. Except as set forth in Section 7.9 and except as provided
in Section 3.4 relating to a unanimous Vote of Members, all decisions by the
Company (including the incurrence of any liabilities by the Company other than
those related solely to the ownership of the Shares) will be made by the
affirmative Vote of a majority of the Managing Directors without regard to
vacancies.
3.4 Unanimous Vote. The following decisions or actions will require the
unanimous Vote of the Members: [a] the payment of compensation to any Member or
any Affiliate of a Member for services rendered to the Company, other than such
Member's share of Profits; [b] the approval of any voluntary Additional
Contribution as provided in Section 4.4 (except those required by the
Contribution Agreement or Section 11.13); [c] the making of any curative or
remedial ss. 704(c) allocation under Section 5.6; [d] the voluntary Dissolution
of the Company under Section 12.1; [e] any amendment of this Agreement; [f] the
sale, exchange or other disposition of any of the Shares, other than (i) a
Transfer permitted under Article 11 or a distribution of Pro Rata Shares to a
Member on or after December 31, 1999 as permitted by Section 6.5 and (ii) any
Transfer to the Cox Shareholder pursuant to the Co-Ownership Deed among Cox
Communications, Inc., the Cox Shareholder, U S WEST International Holdings,
Inc., Tele-Communications International, Inc. and the Company dated April 15,
1998; [g] any Distribution to a Member of its Pro Rata Shares prior to December
31, 1999 pursuant to Section 6.5; and [h] the admission of any new or substitute
Member except pursuant to the last sentence of Section 11.9.
3.5 Expense Reimbursement; Indemnification. Except as otherwise provided in
this Agreement, upon compliance with such policies and procedures as the Company
may from time to time adopt, the Members and the Managing Directors will be
reimbursed by the Company for all reasonable expenses incurred on behalf of the
Company in connection with its business. The Company will indemnify its Managing
Directors against liability incurred in any proceeding in which such Managing
Director is made a party because he or she is or was a manager of the Company to
the maximum extent permitted by the Act.
<PAGE>
3.6 No Resignation or Retirement. Each Member agrees not to voluntarily
resign or retire from the Company, except for permissible Transfers as provided
in Article 11 and in connection with Pro Rata Share Distributions permitted by
Section 6.5. However, if such voluntary resignation or retirement occurs in
contravention of this Agreement, the withdrawing Member will, without further
act, become a Transferee of its entire Ownership Interest with the limited
rights of a Transferee who has not been admitted as a Member in accordance with
this Agreement, as set forth in Section 11.8.
ARTICLE 4: CAPITAL AND CAPITAL ACCOUNTS
4.1 Maintenance. A Capital Account will be maintained for each Member and
credited, charged and otherwise adjusted as follows:
[a] Credited with [i] the amount of money contributed by the Member as an
Initial Contribution or Additional Contribution, [ii] the Fair Market Value
of Shares and other property contributed by the Member as an Initial
Contribution or Additional Contribution (net of liabilities secured by such
property that the Company takes subject to or assumes), [iii] the Member's
allocable share of Profits and [iv] all other items properly credited to
its Capital Account in accordance with U.S. generally accepted accounting
principles consistently applied; and
[b] Charged with [i] the amount of money distributed to the Member by the
Company, [ii] the Fair Market Value of Shares and other property
distributed to the Member by the Company (net of liabilities secured by
such property that the Member takes subject to or assumes), [iii] the
Member's allocable share of Losses and [iv] all other items properly
charged to its Capital Account in accordance with U. S. generally accepted
accounting principles consistently applied.
Any unrealized appreciation or depreciation with respect to any asset
distributed in kind will be allocated among the Members in accordance with the
provisions of Article 5 as though such asset had been sold for its Fair Market
Value on the date of Distribution, and the Members' Capital Accounts will be
adjusted to reflect both the deemed realization of such appreciation or
depreciation and the Distribution of such property.
4.2 Revaluation. Upon a contribution of money, Shares or other property to
the Company by a new or continuing Member as consideration for an Ownership
Interest in the Company, and upon a Distribution of money, Shares or other
property to a retiring or existing Member in consideration of an Ownership
Interest in the Company that is being redeemed by the Company, the Capital
Accounts of the Members will be increased or decreased to reflect the Fair
Market Value of the assets of the Company as of the date of such contribution or
Distribution. Adjustments made pursuant to the preceding sentence will reflect
the manner in which any unrealized appreciation or depreciation with respect to
the assets of the Company (which appreciation or depreciation is not reflected
in the Capital
<PAGE>
Accounts as of the adjustment date) would be allocated among the Members if such
assets were sold at Fair Market Value on the adjustment date. Following any
adjustment under this Section 4.2, for purposes of computing Profits or Losses
of the Company, items of depreciation, amortization, depletion, gain or loss
relating to revalued property will be determined based upon the Fair Market
Value of such property at the adjustment date. For purposes of making any
adjustment pursuant to this Section 4.2, Fair Market Value shall be determined
by agreement of the Members or, if they cannot so agree within 7 days following
the date on which a contribution or Distribution is made, by following the
procedure set forth in Section 11.5[d].
4.3 Contributions; Ownership Interests. Each Member has made the Initial
Contribution to the Company as set forth opposite such Member's name on the
attached Exhibit A, and on the date of this Agreement is making the Additional
Contribution set forth opposite its name on Exhibit A. The Ownership Interests
of the Members as of the date of this Agreement are as set forth on Exhibit A.
4.4 Additional Contributions. Except as required by Section 11.13 or the
Contribution Agreement or upon the unanimous Vote of the Members, no Additional
Contribution by any Member will be required or permitted unless otherwise
required by law. If any Additional Contribution is made after the date of this
Agreement, Exhibit A will be amended to reflect the Additional Contribution and
any resulting change in the Ownership Interests of the Members. Upon the making
of an Additional Contribution by any Member or Members, the percentage Ownership
Interest of each Member will be adjusted (or, in the case of a Shareholder
admitted as a new Member under Section 11.13, determined) to equal the
percentage obtained by dividing the sum of [a] the Fair Market Value of the
assets of the Company less the liabilities of the Company immediately prior to
the Additional Contribution(s) ("Pre-Contribution Company Value"), multiplied by
that Member's percentage Ownership Interest in the Company immediately prior to
the Additional Contribution(s), plus [b] the Fair Market Value of that Member's
Additional Contribution, if any, on that date, by the sum of [y] the
Pre-Contribution Company Value plus [z] the Fair Market Value of all Members'
Additional Contributions on that date. For purposes of this Section 4.4, any
Shares contributed by a Shareholder admitted as a new Member under Section 11.13
shall be treated as an Additional Contribution by such Shareholder. In adjusting
or determining Ownership Interests pursuant to this Section 4.4, Fair Market
Value shall be determined by agreement of the Members or, if they cannot so
agree within 7 days following the date on which an Additional Contribution is
made to the Company, by following the procedure set forth in Section 11.5[d].
4.5 No Withdrawal of Capital. Except as specifically provided in Section
6.5, no Member will be entitled to withdraw all or any part of such Member's
capital from the Company or, when such withdrawal of capital is permitted, to
demand a Distribution of property other than money.
<PAGE>
4.6 No Interest on Capital. No Member will be entitled to receive interest
on such Member's Capital Contributions or Capital Account.
4.7 No Drawing Accounts. The Company will not maintain a drawing account
for any Member. All Distributions to Members will be governed by Article 6
(relating to Distributions) and by Article 13 (relating to Liquidation).
4.8 Transfers of Capital Accounts. If all or any part of an Ownership
Interest is Transferred in accordance with this Agreement, the Capital Account
of the Transferor that is attributable to the Transferred Ownership Interest
will carry over to the Transferee.
ARTICLE 5: ALLOCATION OF PROFITS AND LOSSES
5.1 Profits and Losses. For each Fiscal Year, Profits or Losses of the
Company will be an amount equal to the Company's income or loss determined in
accordance with the accrual method of accounting and U.S. generally accepted
accounting principles consistently applied, except as otherwise provided in the
last sentence of Section 4.2.
5.2 General Allocation Rule. Except as otherwise provided in (or until
changed pursuant to) this Agreement, the Profits or Losses of the Company,
including items of income, gain, loss and deduction for each Fiscal Year, will
be allocated to the Members in proportion to their respective Ownership
Interests.
5.3 Exception. Notwithstanding the general rule on allocation of Losses
stated in Section 5.2, Losses of the Company attributable to any Member
nonrecourse liability (which is nonrecourse to the Company, but for which one or
more Members or a related party bears the economic risk of loss) will be
allocated to the Member or Members bearing the economic risk of loss for the
liability. The determination and allocation of deductions attributable to any
Member nonrecourse liability will be made in accordance with regulations
promulgated under ss. 752 of the Code and regulations promulgated under ss.
704(b) of the Code. Similarly, notwithstanding the general rule on allocation of
Profits, any Profits of the Company will be determined and allocated to the
Members in accordance with the chargeback rules promulgated under ss. 704(b) of
the Code applying to nonrecourse debt minimum gain.
5.4 Tax Allocations. Except as otherwise provided in Section 5.6,
allocation of items of income, gain, loss and deduction of the Company for
federal income tax purposes for a Fiscal Year will be allocated, as nearly as is
practicable, in accordance with the manner in which such items are reflected in
the allocations of Profits and Losses among the Members for such Fiscal Year. To
the extent possible, principles identical to those that apply to allocations for
federal income tax purposes will apply for state and local income tax purposes.
<PAGE>
5.5 Transfer. If any Transfer of an Ownership Interest occurs during any
Fiscal Year, the books of the Company will be closed as of the effective date of
the Transfer. The Profits or Losses attributed to the period from the first day
of such Fiscal Year through the effective date of Transfer will be allocated to
the Transferor, and the Profits or Losses attributed to the period commencing on
the effective date of Transfer will be allocated to the Transferee. In lieu of
an interim closing of the books of the Company and with the agreement of the
Transferor and Transferee, the Company may agree to allocate Profits and Losses
for such Fiscal Year between the Transferor and Transferee based on a daily
proration of items for such Fiscal Year or any other reasonable method of
allocation (including an allocation of extraordinary Company items, as
determined by the Company, based on when such items are recognized for federal
income tax purposes).
5.6 Contributed and Revalued Property. All items of income, gain, loss and
deduction with respect to property contributed (or deemed contributed) to the
Company or revalued under Section 4.2 will, solely for tax purposes, be
allocated among the Members so as to take into account the variation between the
tax basis of the property and its Fair Market Value at the time of contribution
or revaluation. For example, if there is built-in gain with respect to
contributed property, upon the Company's sale of that property the
pre-contribution taxable gain (as subsequently adjusted under the ss. 704(c)
Regulations during the period such property was held by the Company) would be
allocated to the contributing Member (and such pre-contribution gain would not
again create a Capital Account adjustment since the property was credited to
Capital Account upon contribution at its Fair Market Value). Except as limited
by the following sentence, the allocation of tax items with respect to ss.
704(c) property to Members not contributing such property will, to the extent
possible, be equal to the allocation of the corresponding book items made to
such noncontributing Members with respect to such property. If book allocations
of cost recovery deductions (such as amortization or depreciation) exceed the
tax allocations of those items so that the ceiling rule of the ss. 704(c)
Regulations applies, the Company will make curative allocations or remedial
allocations of tax items only upon the affirmative Vote of all Members. All tax
allocations made under this Section 5.6 will be made in accordance with ss.
704(c) of the Code and the ss. 704(c) Regulations.
5.7 Tax Credits. To the extent that the federal income tax basis of an
asset is allocated to the Members in accordance with the Regulations promulgated
under ss. 46 of the Code, any tax credit attributable to such tax basis will be
allocated to the Members in the same ratio as such tax basis. With respect to
any other tax credit, to the extent that a Company expenditure gives rise to an
allocation of loss or deduction, any tax credit attributable to such expenditure
will be allocated to the Members in the same ratio as such loss or deduction.
Consistent principles will apply in determining the Members' interests in tax
credits that arise from taxable or non-taxable receipts of the Company. All
allocations of tax credits will be made as of the time such credit arises. Any
recapture of a tax credit will, to the extent
<PAGE>
possible, be allocated to the Members in the same manner as the tax credit was
allocated to them.
ARTICLE 6: DISTRIBUTIONS
6.1 Net Cash. Net Cash will be allocated and paid to the Members in
proportion to their Ownership Interests. Distributions of Net Cash will be made
to the Members at such times as the Members by unanimous Vote approve.
6.2 Liquidating Distributions. Upon the Liquidation of the Company
following its Dissolution, liquidating Distributions will be made to the Members
as provided in Article 13.
6.3 Payment. Any Distribution will be made to a Member only if such Person
owns an Ownership Interest on the date of Distribution, as reflected on the
books of the Company.
6.4 Withholding. If required by the Code or by state or local law, the
Company will withhold any required amount from Distributions to a Member for
payment to the appropriate taxing authority. Any amount so withheld from a
Member will be treated as a Distribution by the Company to such Member. Each
Member agrees to timely file any agreement that is required by any taxing
authority in order to avoid any withholding obligation that otherwise would be
imposed on the Company.
6.5 In Kind Distributions. Each Member is entitled to require the Company
to distribute such Member's Pro Rata Shares to it in whole or in part [a] at any
time prior to December 31, 1999 if the U S WEST Member Group and the TCI Member
Group so agree in writing, [b] at any time on or after December 31, 1999 if such
Member so elects, without the consent of any other Person, and [c] at any time
pursuant to a Related Transfer. If the Company distributes Shares to any Member
who contributed Shares to the Company within seven years preceding the date of
such Distribution, the Company will, to the extent of any such Shares then owned
by the Company, distribute to such Member those Shares originally contributed by
such Member. The Company will maintain records relating to contributed Shares in
a manner sufficient to enable the Company to identify the Member who contributed
such Shares.
6.6 Distribution Limitation. Notwithstanding any other provision of this
Agreement, the Company will not make any Distribution to the Members if, after
the Distribution, the liabilities of the Company (other than liabilities to
Members on account of their Ownership Interests) would exceed the Fair Market
Value of the Company's assets. With respect to any property subject to a
liability for which the recourse of creditors is limited to the specific
property, such property will be included in assets only to the extent the
property's Fair Market Value exceeds its
<PAGE>
associated liability, and such liability will be excluded from the Company's
liabilities.
ARTICLE 7: MANAGING DIRECTORS
7.1 Annual Meeting. The annual meeting of the Board will be held on the
second Tuesday of April in each year at 9:00 a.m. (local time) or at such other
time as determined by resolution of a majority of the Managing Directors
(without regard to any vacancies). The purpose of the annual meeting is to
review the Company's operations for the preceding Fiscal Year and to transact
such business as may come before the meeting.
7.2 Special Meetings. Special meetings of the Board, for any purpose or
purposes, may be called by any Managing Director.
7.3 Place. Unless otherwise agreed by the Board, or if no designation is
made, the place of meeting will be the Company's registered office in Colorado.
7.4 Notice. Notice of any meeting must be given not less than 5 days nor
more than 30 days before the date of the meeting. Such notice must state the
place, day and hour of the meeting and, in the case of a special meeting, the
purpose for which the meeting is called.
7.5 Waiver of Notice. Any Managing Director may waive, in writing, any
notice required to be given to such Managing Director, whether before or after
the time stated in such notice. Any Managing Director who signs minutes of
action (or written consent or agreement to action) will be deemed to have waived
any required notice with respect to such action.
7.6 Meetings by Telephone. The Managing Directors may participate in a
meeting by means of conference telephone or similar communications equipment by
which all Managing Directors participating in the meeting can hear each other at
the same time. Such participation will constitute presence in person at the
meeting and waiver of any required notice.
7.7 Action Without a Meeting. Any action required or permitted to be taken
at a meeting of the Board may be taken without a meeting if the action is
evidenced by one or more written consents describing the action taken, signed by
at least a majority of all of the Managing Directors (without regard to any
vacancies). Action so taken is effective when sufficient Managing Directors
approving the action have signed the consent, unless the consent specifies a
later effective date.
7.8 Certain Conflicts. If any Member or any Affiliate of a Member has a
conflict of interest with respect to any matter on which the Company is to vote
its Shares, the Shares held by the Company shall be voted as follows: the Pro
Rata Shares
<PAGE>
of any Member who has such conflict, or of any Member which is an Affiliate of
such conflicted Person, shall be voted "abstain," and the remainder of the
Shares held by the Company shall be voted as designated by the Managing
Directors nominated by the Member that is not subject to such conflict. In
addition, the Company shall vote all its Shares in favor of candidates for
director of Telewest (or the removal of such director) which any Shareholder
Group is entitled to nominate (or remove) in accordance with Telewest's Articles
of Association or the Relationship Agreement.
7.9 Resolution of Disagreements. All Shares shall be voted as the TCI
Directors and the MediaOne Directors agree. If the TCI Directors and the
MediaOne Directors cannot agree on any matter requiring a vote of the Shares
within a period of 10 days after the matter is first presented for decision, the
matter in dispute shall be referred to the Chief Executive Officers of the
ultimate parent companies of the TCI Shareholders and the MediaOne Shareholders
(or other representatives designated by them) and the Shares shall be voted on
such matter in accordance with the joint decision of such officers. If those
officers cannot agree on any matter presented to them prior to the earlier of
the date the vote is to be taken or five days after the matter is first
submitted to them, the Shares shall be voted in such manner that would be most
likely to continue the status quo, without materially increasing Telewest's
financial obligations or materially deviating from its approved budget and
business plan.
7.10 Termination of Voting Arrangements. If at any time after December 31,
1999 the number of Pro Rata Shares attributable to either the TCI Member Group
or the MediaOne Member Group decreases (other than as a result of a Transfer
permitted by Section 11.3 or by Section 8.3 of the Relationship Agreement or as
a result of a Related Transfer) by a number of Pro Rata Shares that is equal to
or greater than 2% of all outstanding Ordinary Shares, calculated on a fully
diluted basis, immediately after consummation of the transactions contemplated
by the Relationship Agreement, the other Member Group may elect, by notice to
the Member Group whose Pro Rata Shares have been so reduced, to terminate the
provisions of Section 7.9. After any such termination the members of the
MediaOne Member Group and the TCI Member Group may direct the Board as to the
manner in which their respective Pro Rata Shares are to be voted in their sole
discretion, and any Shares owned by the Company that are not Pro Rata Shares of
any Member shall be voted in the same way as the Pro Rata Shares of the Members
are voted, in proportion to the Members' respective Ownership Interests.
ARTICLE 8: LIABILITY OF MEMBERS
8.1 Limited Liability. Except as otherwise provided in the Act, the debts,
obligations and liabilities of the Company (whether arising in contract, tort or
otherwise) will be solely the debts, obligations and liabilities of the Company,
and
<PAGE>
no Member of the Company (including any Person who formerly held such status) is
liable or will be obligated personally for any such debt, obligation or
liability of the Company solely by reason of such status.
8.2 Capital Contribution. Each Member is liable to the Company for [a] the
Initial Contribution made under Section 4.3 and any Additional Contribution
required or agreed to be made under Section 4.4 and 11.13 and [b] any Capital
Contribution or Distribution that has been wrongfully or erroneously returned or
made to such Member in violation of the Act, the Articles or this Agreement.
ARTICLE 9: [Intentionally Omitted]
ARTICLE 10: ACCOUNTING AND REPORTING
10.1 Fiscal Year. For income tax and accounting purposes, the Fiscal Year
of the Company will end on December 31 in each year (unless subsequently changed
as provided in the Code).
10.2 Accounting Method. For income tax and accounting purposes, the Company
will use the accrual method of accounting (unless otherwise required by the
Code).
10.3 Tax Returns. The Company will cause the preparation and timely filing
of all tax returns required to be filed by the Company pursuant to the Code, as
well as all other tax returns required in any jurisdiction in which the Company
does business.
10.4 Reports. The Company books will be closed at the end of each Fiscal
Year and statements prepared showing the financial condition of the Company and
its Profits or Losses from operations. Copies of these statements will be given
to each Member. In addition, as soon as is practicable after the close of each
Fiscal Year, and in any event by March 31 following the end of each Fiscal Year,
the Company will provide each Member with all necessary tax reporting
information.
10.5 Banking. The Company may establish one or more bank or financial
accounts and safe deposit boxes. The Company may authorize one or more
individuals to sign checks on and withdraw funds from such bank or financial
accounts and to have access to such safe deposit boxes, and may place such
limitations and restrictions on such authority as the Company deems advisable.
ARTICLE 11: TRANSFER RESTRICTIONS
<PAGE>
11.1 General Restriction. No Person may Transfer all or any part of such
Person's Ownership Interest in any manner whatsoever except as permitted by this
Article 11, and in any case only if the requirements of Section 11.7 have been
satisfied. Any other Transfer of all or any part of an Ownership Interest is
null and void. The rights and obligations of any resigning Member or of any
Transferee of an Ownership Interest will be governed by the other provisions of
this Agreement.
11.2 No Member Rights. Except as provided in Section 11.9, no Member has
the right or power to confer upon any Transferee the attributes of a Member in
the Company. Except as provided in Section 11.9, the Transferee of all or any
part of an Ownership Interest by operation of law does not, by virtue of such
Transfer, succeed to any rights as a Member in the Company.
11.3 Permitted Transferees. A Member may Transfer all or any part of such
Member's Ownership Interest at any time:
[a] to an Affiliate of such Member;
[b] to another Member; and
[c] to the Company.
11.4 Transfer Restrictions Lasting Through 1999. No Member shall Transfer
all or a portion of its Ownership Interest on or before December 31, 1999 except
pursuant to Section 11.3 unless (i) the prior written consent of the other
Member Group is obtained, (ii) the other Member Group approves the identity of
the Transferee, which approval may be withheld in the sole discretion of such
other Member Group, and (iii) the Transferee (if such Transferee is an Affiliate
of either MediaOne or TCI) executes a counterpart of the Relationship Agreement
or another document to the same effect.
11.5 Rights of First Refusal.
[a] If a Member proposes to Transfer all or part of its Ownership Interests to
a Third Party or Parties after December 31, 1999 (except pursuant to
Section 11.3), the Member desiring to make the Transfer (for purposes of
this Section 11.5 only, the "Offeror") shall first make a written offer
(for purposes of this Section 11.5 only, the "Offer") to sell such
Ownership Interest to the Members included in the other Member Group (for
purposes of this Section 11.5 only, the "Offerees") on the same terms and
conditions on which the Offeror proposes to Transfer the Ownership Interest
to the Third Party or Parties. Such offer shall state the price and the
other terms and conditions of the proposed Transfer and shall be
accompanied by a copy of the offer from the proposed Transferee. The price
as so determined or stated in the Offeror's notice shall be, for purposes
of this Section 11.5 only, the "Offer Price." The Offeror, for so long as
the Offer shall remain outstanding, shall not request, nor shall the
Company be obligated to make, a distribution of
<PAGE>
Shares in an amount in excess of the number of Pro Rata Shares that such
Offeror shall have the right to receive in respect of the Ownership
Interest, if any, to be retained by such Offeror after giving effect to
such proposed Transfer.
[b] The Offerees shall have the right for a period of 30 days after receipt of
the Offer to elect to purchase all, but not less than all, of the Ownership
Interest offered at the Offer Price by giving written notice of acceptance
to the Offeror within that period. If the Offerees do not elect to purchase
all the Ownership Interest offered, the Offeror may Transfer the offered
Ownership Interest pursuant to the terms disclosed under Section 11.5[a].
If the offered Ownership Interest is not Transferred within 90 days after
the Offerees' option period expires, a new offer shall be made to the
Offerees before any such Transfer is made.
[c] If the Third Party's offer involves consideration other than immediate
payment of cash at closing, the Offerees may pay the Fair Market Value of
such other consideration, as determined by agreement between the Offeror
and the Offerees, in cash. If they cannot agree on such cash equivalent
within seven days after the Offerees give notice of the election to
purchase the offered Ownership Interest, the Offerees may, by written
notice to the Offeror, initiate appraisal proceedings under Section 11.5[d]
for determination of the Fair Market Value of such consideration. The Fair
Market Value shall be determined without regard to income tax consequences
to the Offeror as a result of receiving cash in lieu of other
consideration. Once the Fair Market Value is determined, (i) the Offerees,
in their sole discretion, may elect either to purchase the Ownership
Interest in cash by giving notice of such election to the Offeror within 10
days after receipt of the appraiser's decision or to withdraw its
acceptance of the Offer, and (ii) the Offeror may in its sole discretion
withdraw the Offer provided that in such case it may not Transfer such
Ownership Interests pursuant to the proposed Transfer.
[d] Any appraisal of the Fair Market Value of consideration shall be made by an
appraiser jointly appointed by the Members. If the Members fail to agree on
an appraiser within 20 days after receipt of the notice requiring or
permitting an appraisal of Fair Market Value, each Member Group shall
appoint one appraiser, which shall be an investment banking firm of
national repute. The two appraisers so selected shall each make an
appraisal of Fair Market Value within 30 days after their selection. If
such determinations vary by 20% or more of the higher determination, the
two appraisers shall select a third appraiser with similar qualifications
which shall make its determination of such Fair Market Value within 30 days
after its selection. Such third appraiser shall not be informed of or
otherwise consider the appraisals of the other two in reaching its
determination. The Fair Market Value shall be the average of the two
closest values if three
appraisals are made or, if the determinations of the first two appraisers
vary by less than 20% of the higher of such two determinations, the average
of those two determinations. Any Fair Market Value determined pursuant to
this Section 11.5[d] shall be binding and conclusive. If any Member Group
fails to appoint an appraiser as required hereunder, the other Member Group
may refer the matter to the American Arbitration Association, which shall
promptly appoint an appraiser hereunder on behalf of the Member Group
failing to make such appointment.
[e] The closing of the purchase of an Ownership Interest by the Offerees shall
take place within 60 days following the timely delivery to the Offeror of a
written notice of acceptance pursuant to Section 11.5[b] or, if the
provisions of Section 11.5[c] apply, within 60 days following the delivery
to the Offeror of a written notice of election pursuant to clause (i) of
the last sentence of Section 11.5[c]. The Offeror shall give customary
representations and warranties regarding the title of such Ownership
Interests to the Offerees.
[f] The Offerees may rescind their notice of acceptance given pursuant to
Section 11.5[b] at any time on or prior to the 30th day following the date
of such notice of acceptance (but not thereafter) if (i) prior to the date
of such notice of acceptance the Offerees had sought in good faith a waiver
from the City Panel with respect to the application of any provision of
Rule 9 of the City Code on Take-overs and Mergers which absent such waiver
would require the Offerees to offer to purchase all of the outstanding
Ordinary Shares and (ii) such waiver or any shareholder approval required
by the City Panel has been denied (or has not been granted as of the last
day of such rescission period).
11.6 Change in Control of a Shareholder Group.
[a] If at any time there is an involuntary Change in Control with respect to
either the TCI Shareholder Group or the MediaOne Shareholder Group, the
Member Group included in the Shareholder Group experiencing the Change in
Control (the "Subject Group") shall give notice to the other Member Group
promptly after the Subject Group becomes aware of the Change in Control. If
at any time either Shareholder Group experiences a voluntary Change in
Control, the Subject Group shall give notice to the other Member Group
promptly after the terms of the Change in Control are set forth in a
binding agreement. The Member Group not affected by such Change in Control
(the "Responding Group") must within 30 days after its receipt of such
notice give notice to the Subject Group either [a] consenting to the Change
in Control or [b] stating the price per percentage of Ownership Interest at
which the Responding Group is willing to sell all of its Ownership
Interests to the Subject Group or to buy all of the Subject Group's
Ownership Interests (the "Quoted Price"). Failure to give notice of such
election within the time permitted shall be deemed consent to the Change in
Control.
[b] If the Responding Group does not consent to the Change in Control, the
Subject Group must, within 30 days after its receipt of the Responding
Group's notice, give notice to the Responding Group of its election to sell
all of its Ownership Interests to the Responding Group or to buy all of the
Responding Group's Ownership Interests, in either case at the Quoted Price.
Following the giving of notice of a Change in Control pursuant to this
Section 11.6 and prior to (i) receipt by the Subject Group (or deemed
receipt) of consent to such Change of Control or (ii) the closing of the
sale of the Subject Group's or the Responding Group's Ownership Interests,
no Member shall request, nor shall the Company be obligated to make, any
voluntary Distribution of Shares. Any purchase of Ownership Interests
pursuant to this Section 11.6 may be made only by a Member.
11.7 General Conditions on Transfers. No Transfer of an Ownership Interest
will be effective unless all of the conditions set forth below are satisfied:
[a] unless waived by the Company, the Transferor signs and delivers to the
Company an undertaking in form and substance reasonably satisfactory to the
Company to pay all reasonable expenses incurred by the Company in
connection with the Transfer (including, but not limited to, reasonable
fees of counsel and accountants and the costs to be incurred with any
additional accounting required in connection with the Transfer, and the
cost and fees attributable to preparing, filing and recording such
amendments to the Articles or other organizational documents or filings as
may be required by law);
[b] the Transferor signs and delivers to the Company a copy of the assignment
of the Ownership Interest to the Transferee in form and substance
reasonably satisfactory to the Company;
[c] the Transferee signs and delivers to the Company an agreement to be bound
by this Agreement if the Transferee is not a Member or the Company; and
[d] the Transfer is in compliance with the other provisions of this Article 11.
11.8 Rights of Transferees. Except as provided in Section 11.9, any
Transferee of an Ownership Interest will, on the effective date of the Transfer,
have only those rights of an assignee specified in the Act unless and until such
Transferee is admitted as a Member. This provision limiting the rights of a
Transferee will not apply if such Transferee is already a Member; provided that
any Member who resigns or retires from the Company in contravention of Section
3.6 will have only the rights of a Transferee who has not been admitted as a
Member in accordance
<PAGE>
with this Agreement. Any Transferee of all or any part of an Ownership Interest
who is not admitted as a Member in accordance with this Agreement has no right
[a] to participate or interfere in the management or administration of the
Company's business or affairs, [b] to vote or agree on any matter affecting the
Company or any Member, [c] to require any information on account of Company
transactions or [d] to inspect the Company's books and records. The only right
of a Transferee of all or any part of an Ownership Interest who is not admitted
as a Member in accordance with this Agreement is to receive the allocations and
Distributions to which the Transferor was entitled (to the extent of the
Ownership Interest Transferred). However, each Transferee of all or any part of
an Ownership Interest (including both immediate and remote Transferees) will be
subject to all of the obligations, restrictions and other terms contained in
this Agreement as if such Transferee were a Member. With respect to any
Ownership Interest Transferred, the Transferor Member shall not possess any
right or power as a Member and may not exercise any such right or power directly
or indirectly on behalf of the Transferee. Neither the Company nor any Member
will owe any fiduciary duty to any Transferee who is not admitted as a Member.
11.9 Admission. A Transferee of an Ownership Interest will become a Member
of the Company only upon the affirmative unanimous Vote of Members, effective
upon a date specified (which must be on or after the effective date of the
Transfer, as determined under Section 11.7). Notwithstanding the foregoing, upon
compliance with Section 11.7, a Transferee which is an Affiliate of a Member
shall automatically become and be admitted as a Member without any action on the
part of the other Members.
11.10 Satisfaction of Legal Requirements. Notwithstanding any other
provision of this Article 11, no Member may Transfer any Shares or Ownership
Interests unless it has complied with all applicable legal requirements,
including without limitation applicable United States federal and state
securities laws. Upon the exercise of any option to acquire Shares or Ownership
Interests hereunder, the Members shall use commercially reasonable efforts to
obtain any necessary consents or approvals of any governmental authorities or
other Third Parties necessary to effect such Transfer.
11.11 Closing. The closing of the purchase of any Ownership Interests by a
Member pursuant to this Article 11 shall take place at the Company's principal
offices on a day specified by the purchaser (other than a Saturday, Sunday or
day on which banking institutions in New York are required by law to be closed)
which is no more than 90 days after the date of exercise of the applicable
purchase option (or within the period of time provided by Section 11.5[e], if
applicable) or, if later, the date on which all necessary consents to such
Transfer by governmental authorities shall have been obtained. At the closing
the selling Member shall deliver a written assignment of Ownership Interests to
be sold free and clear of any lien, charge or encumbrance, and such other
documents as may be
<PAGE>
reasonably necessary to effectuate the sale. The purchase price, to the extent
it consists of cash, shall be paid in U.S. dollars in immediately available
funds.
11.12 Events of Withdrawal. An Event of Withdrawal of a Member occurs upon
[a] such Member's resignation from the Company, [b] such Member's Bankruptcy or
[c] the occurrence of any other event which terminates the continued membership
of such Member in the Company (including the dissolution of that Member). Within
10 days after the occurrence of any such event, the Member experiencing the
Event of Withdrawal (or such Member's legal representative or other successor in
interest) will give notice to the Company of the occurrence of the Event of
Withdrawal. Upon the occurrence of an Event of Withdrawal with respect to a
Member, such Member will cease to have any voting and consent rights under
Article 3 and will have only the limited rights of a Transferee who has not been
admitted as a Member in accordance with this Agreement, as set forth in Section
11.8.
11.13 Obligation to Contribute Additional Shares to Company. Each Member
agrees that, if any Shareholder included in its Member Group acquires additional
Shares after the date of this Agreement and before any Pro Rata Shares are
distributed to any Member pursuant to Section 6.5, the beneficial interests in
all of such Shares will be contributed to the Company as an Additional
Contribution, with a corresponding increase in the Ownership Interest of such
Member pursuant to Section 4.4 (or the issuance of an Ownership Interest to such
Shareholder, who shall be admitted as a Member, if such Shareholder is not
already a Member).
11.14 Covenant Relating to Rule 9 of City Code. Each Member covenants to
and agrees with the other Member that, in the event it or any member of the
Shareholder Group in which it is included elects to purchase Shares or Ownership
Interests, or is deemed to have made such an election pursuant to this
Agreement, it shall fulfill all obligations arising pursuant to Rule 9 of the
City Code on Takeovers and Mergers and shall pay all consideration and expenses
attributable to the Shareholders, the Members and the Company (but not Telewest)
in connection therewith.
ARTICLE 12: DISSOLUTION OF THE COMPANY
12.1 Dissolution. Dissolution of the Company will occur upon the happening
of any of the following events: [a] the sale of all or substantially all of the
Company's assets; [b] the unanimous Vote of the Members; [c] April 1, 2045,
unless the Company is continued by the unanimous Vote of the Members; [d] a sale
of all or substantially all the assets of Telewest (other than by merger, share
exchange, scheme of arrangement, recapitalization or similar transaction); [e] a
merger or consolidation of Telewest pursuant to which all the voting securities
of the merged or consolidated entity are held by Persons other than the Company
and the Shareholders; or [f] a reduction in the number of Shares in respect of
which the
<PAGE>
Company and the TCI Shareholder Group and the MediaOne Shareholder Group in the
aggregate hold voting rights so that such Shares represent, for a period of 10
consecutive days or longer, less than 50% of the voting power of all of
Telewest's issued and outstanding share capital at that time.
12.2 Exclusive Means of Dissolution. The exclusive means by which the
Company may be dissolved are set forth in Section 12.1. The Company will not be
dissolved upon the death, retirement, resignation, expulsion, Bankruptcy or
dissolution of any Member or upon the occurrence of any other event which
terminates the continued membership of any Member in the Company.
ARTICLE 13: LIQUIDATION
13.1 Liquidation. Upon Dissolution of the Company, the Company promptly
will file a statement of intent to dissolve with the Colorado Secretary of State
as required by the Act and will thereafter wind up its affairs and liquidate.
The Member owning the largest Ownership Interest, or if such Member fails to
act, any Person appointed by unanimous Vote of the Members, will act as
liquidating trustee. The winding up and Liquidation of the Company will be
accomplished in a businesslike manner as determined by the liquidating trustee.
A reasonable time will be allowed for the orderly Liquidation of the Company and
the discharge of liabilities to creditors so as to enable the Company to
minimize any losses attendant upon Liquidation. Any gain or loss on disposition
of any Company assets in Liquidation will be allocated to Members and credited
or charged to Capital Accounts in accordance with the provisions of Articles 4
and 5. Any liquidating trustee is entitled to reasonable compensation for
services actually performed, and may contract for such assistance in the
liquidation process as such Person deems necessary. Until the filing of articles
of dissolution under Section 13.6, the liquidating trustee may settle and close
the Company's business, prosecute and defend suits, dispose of its property,
discharge or make provision for its liabilities, and make distributions in
accordance with the priorities set forth in Section 13.2.
13.2 Priority of Payment. The assets of the Company will be distributed in
Liquidation of the Company in the following order:
[a] Creditors. First, to creditors by the payment or provision for payment of
the debts and liabilities of the Company (other than any loans or advances
made by any Member or any of its Affiliates) and the expenses of
Liquidation.
[b] Reserves. Second, to the setting up of any reserves that are reasonably
necessary for any contingent, conditional or unmatured liabilities or
obligations of the Company.
<PAGE>
[c] Loans. Third, to the repayment of any loans or advances made by any Member
or any Affiliate of a Member (proportionately if the amount available for
such repayment is insufficient for payment in full).
[d] Capital Accounts. Fourth, to the payment to the Members of their respective
Capital Account balances as adjusted for their respective shares of
liquidating Profits and Losses.
[e] Balance. Fifth, the balance, if any, to the Members in the ratio of their
Ownership Interests.
13.3 Distribution to Members. Distributions in Liquidation due to the
Members will be made by distributing the Company assets to the Members at their
net Fair Market Value in kind unless all Members unanimously agree in writing to
the sale of the Company's assets and the Distribution of the proceeds thereof.
Any liquidating Distribution in kind to the Members may be made either by a pro
rata Distribution of Shares (pursuant to Section 6.5, if applicable) or, with
respect to other assets, undivided interests in such assets or, if the Members
unanimously agree in writing, by non pro rata Distribution of specific assets at
Fair Market Value on the effective date of Distribution. Any Distribution in
kind may be made subject to, or require assumption of, liabilities to which such
property may be subject, but in the case of any non pro rata Distribution only
upon the express written agreement of the Member receiving the Distribution.
Each Member hereby agrees to save and hold harmless the other Members from such
Member's share of any and all such liabilities which are taken subject to or
assumed. Appropriate and customary prorations and adjustments shall be made
incident to any Distribution in kind.
13.4 Deficit Capital Account. Except as otherwise specifically provided in
Section 4.4, nothing contained in this Agreement imposes on any Member an
obligation to make an Additional Contribution in order to restore a deficit
Capital Account upon Liquidation of the Company. Each Member will look solely to
the assets of the Company for the return of such Member's Capital Contribution.
13.5 Liquidating Reports. A report will be submitted by the liquidating
trustee with each liquidating Distribution to Members showing the collections,
disbursements and distributions during the period which is subsequent to any
previous report. A final report, showing cumulative collections, disbursements
and Distributions, will be submitted by the liquidating trustee upon completion
of the liquidation process.
13.6 Articles of Dissolution. Upon Dissolution of the Company and the
completion of the winding up of its business, the Company will file articles of
dissolution with the Colorado Secretary of State pursuant to the Act. At such
time, the Company also will file an application for withdrawal of its
certificate of authority in any jurisdiction where it is then qualified to do
business.
<PAGE>
ARTICLE 14: GENERAL PROVISIONS
14.1 Amendment. This Agreement may be amended only by the unanimous Vote of
the Members. Any amendment will become effective upon such Vote, unless
otherwise provided. Written notice of any proposed amendment must be given at
least 5 days in advance of the meeting at which the amendment will be considered
(unless the Vote is evidenced by duly signed minutes of action). Any amendment
to this Agreement is binding upon, and inures to the benefit of, each Member who
holds an Ownership Interest at or after the time of such amendment, without the
requirement that such Member sign the amendment or any republication or
restatement of this Agreement.
14.2 Unregistered Interests. Each Member [a] acknowledges that the
Ownership Interests in the Company are being offered and sold without
registration under the Securities Act of 1933, as amended, or under similar
provisions of state law, [b] acknowledges that such Member is fully aware of the
economic risks of an investment in the Company, and that such risk must be borne
for an indefinite period of time, [c] represents and warrants that such Member
is acquiring an Ownership Interest for such Member's own account, for
investment, and with no view to the distribution of the Ownership Interest and
[d] agrees not to Transfer, or to attempt to Transfer, all or any part of such
Ownership Interest without registration under the Securities Act of 1933, as
amended, and any applicable state securities laws, unless the Transfer is exempt
from such registration requirements.
14.3 Reliance. Each Member will be fully protected in relying in good faith
upon the records of the Company and upon such information, opinions, reports or
statements by [a] any of the Company's other Members, employees or committees or
[b] any other Person who has been selected with reasonable care as to matters
such Member reasonably believes are within such other Person's professional or
expert competence. Matters as to which such reliance may be made include the
value and amount of assets, liabilities, Profits and Losses of the Company, as
well as other facts pertinent to the existence and amount of assets from which
Distributions to Members may properly be made.
14.4 Equitable Relief. If any Person proposes to Transfer all or any part
of such Person's Ownership Interest in violation of the terms of this Agreement,
the Company or any Member may apply to any court of competent jurisdiction for
an injunctive order prohibiting such proposed Transfer except upon compliance
with the terms of this Agreement, and the Company or any Member may institute
and maintain any action or proceeding against the Person proposing to make such
Transfer to compel the specific performance of this Agreement. Any attempted
Transfer in violation of this Agreement is null and void, and of no force and
effect. The Person against whom such action or proceeding is brought irrevocably
<PAGE>
waives the claim or defense that an adequate remedy at law exists, and such
Person will not urge in any such action or proceeding the claim or defense that
an adequate remedy at law exists.
14.5 Specific Performance. The Members agree that each would be irreparably
damaged if any Member failed to perform any obligation under this Agreement, and
that such Member would not have an adequate remedy at law for money damages in
such event. Accordingly, each Member will be entitled to specific performance
and injunctive and other equitable relief to enforce the performance of this
Agreement. This provision is without prejudice to any other rights that such
Member may have under this Agreement, at law or in equity.
14.6 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original and all of which taken
together will constitute one agreement.
14.7 Notices. All notices under this Agreement will be in writing and will
be delivered or mailed addressed [a] if to the Company, at the Company's
principal business office, and [b] if to any Member, at such Person's address as
then appearing on the records of the Company.
14.8 Deemed Notice. All notices given to any Person in accordance with this
Agreement will be deemed to have been duly given [a] on the date of receipt if
personally delivered, [b] three days after being sent by registered or certified
mail, postage prepaid, return receipt requested, [c] when sent by confirmed
electronic facsimile transfer or [d] one business day after having been sent by
a nationally recognized overnight courier service.
14.9 Waivers Generally. No course of dealing will be deemed to amend or
discharge any provision of this Agreement. No delay in the exercise of any right
will operate as a waiver of such right. No single or partial exercise of any
right will preclude its further exercise. A waiver of any right on any one
occasion will not be construed as a bar to, or waiver of, any such right on any
other occasion.
14.10 Partial Invalidity. Wherever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law. However, if for any reason any one or more of the provisions of
this Agreement are held to be invalid, illegal or unenforceable in any respect
by a court of competent jurisdiction, such holding will not affect any other
provision of this Agreement. In such event, this Agreement will continue in
force and will be construed as if such invalid, illegal or unenforceable
provision had never been contained in it.
14.11 Entire Agreement. This Agreement, the Contribution Agreement and the
Relationship Agreement contain the entire agreement and understanding of the
<PAGE>
Members with respect to their subject matter, and supersede all prior and
contemporaneous written and oral agreements with respect thereto.
14.12 No Third Party Benefit. The contribution obligations of each Member
will inure solely to the benefit of the other Members and the Company, without
conferring on any other Person any rights of enforcement or other rights.
14.13 Binding Effect. This Agreement is binding upon, and inures to the
benefit of, the Members and their permitted Transferees.
14.14 Further Assurances. Each Member agrees, without further
consideration, to sign and deliver such other documents of further assurance as
may reasonably be necessary to effectuate the provisions of this Agreement.
14.15 Headings. Article and Section titles have been inserted for
convenience of reference only. They are not intended to affect the meaning or
interpretation of this Agreement.
14.16 Terms. Terms used with initial capital letters will have the meanings
specified, applicable to both singular and plural forms, for all purposes of
this Agreement. All pronouns (and any variation) will be deemed to refer to the
masculine, feminine or neuter, as the identity of the Person may require. The
singular or plural include the other, as the context requires or permits. The
word "include" (and any variation) is used in an illustrative sense rather than
a limiting sense. The terms "shall" and "will" both refer to an obligation that
is mandatory.
14.17 Governing Law. This Agreement will be governed by, and construed in
accordance with, the laws of the State of Colorado without considering any
conflicts of law principles. Any conflict or apparent conflict between this
Agreement and the Act will be resolved in favor of this Agreement except as
otherwise required by the Act.
14.18 Restrictive Trade Practices Act. Any provision contained in this
Agreement or in any arrangement of which this Agreement forms part by virtue of
which this Agreement or such arrangement is subject to registration under the
Restrictive Trade Practices Acts 1976 and 1977 of England will not come into
effect until the day following the date on which particulars of this Agreement
and of any such arrangement have been furnished to the Office of the Director
General of Fair Trading in accordance with the requirements of such Acts.
<PAGE>
In Witness Whereof, the Members have signed this Amended and Restated
Operating Agreement of TW Holdings, L.L.C. to be effective _________ __, 1998.
UNITED ARTISTS PROGRAMMING-
EUROPE, INC.
______________________________
By:
Its:
U S WEST CABLE PARTNERSHIP
HOLDINGS, INC.
______________________________
By:
Its:
U S WEST UK CABLE, INC.
______________________________
By:
Its:
<PAGE>
EXHIBIT A
CAPITAL CONTRIBUTIONS
<TABLE>
<CAPTION>
Initial Additional Ownership
Contribution Contribution Interest
------------ ------------ --------
<S> <C> <C> <C>
United Artists 1,000 plus 378,750,000 84,638,960 Shares 50%
Programming-Europe Inc. Shares
MediaOne UK Cable, Inc. $912.90 plus 345,744,800 77,308,958 Shares 45.67%
Shares
MediaOne Cable Partnership $87.10 plus 33,005,200 7,380,002 Shares 4.33%\
Holdings, Inc. Shares
</TABLE>
EXHIBIT (9)
CONTRIBUTION AGREEMENT
This Contribution Agreement (this "Agreement") is made as of ________, 1998
among MediaOne Cable Partnership Holdings, Inc., formerly named U S WEST Cable
Partnership Holdings, Inc. ("U S WEST Holdings"), and MediaOne UK Cable, Inc.,
formerly named U S WEST UK Cable, Inc. ("U S WEST-UK") (collectively, the
"MediaOne Members"), United Artists Programming-Europe, Inc. (the "TINTA
Member") and TW Holdings, L.L.C., a Colorado limited liability company (the
"Company").
RECITALS
The MediaOne Members and the TINTA Member (collectively, the "Members") are
all of the members of the Company. The Company beneficially owns ordinary and
convertible preference shares of Telewest Communications plc ("Telewest") that
were previously contributed to it by the Members. The Members wish to provide
for additional contributions to the Company as required by the Subscription
Agreement dated April 15, 1998 among Telewest, U S WEST, Inc.,
Tele-Communications International, Inc. and Cox Communications, Inc., as amended
and restated by the Subscription Agreement among those parties dated _______ __,
1998 (together, the "Subscription Agreement") and to amend and restate the
Company's operating agreement in connection therewith. Capitalized terms used
but not defined in this Agreement will have the meanings given them in the
Subscription Agreement.
In consideration of the mutual promises and covenants contained in this
Agreement, the parties agree as follows:
I. CONTRIBUTIONS; OTHER AGREEMENTS
1.1 Contributions to the Company. Subject to the terms and conditions set
forth in the Subscription Agreement, promptly after they have received notice
from Telewest of the number of Primary Subscription Shares taken up by Public
Telewest Shareholders, (a) the TINTA Member will contribute to the Company cash
in the amount required to permit the Company to subscribe for and purchase the
Primary Subscription Shares that were not taken up by the Public Telewest
Shareholders, to the extent of the TINTA Member's Proportionate Commitment, plus
an amount equal to the aggregate Open Offer Price of the TINTA Committed Shares
and (b) the MediaOne Members will contribute to the Company cash in the amount
required to permit the Company to subscribe for and purchase the Primary
Subscription Shares that were not taken up by the Public Telewest Shareholders,
to the extent of the MediaOne Members' Proportionate Commitment, and the
Secondary Subscription Shares that were not taken up by the Public Telewest
Shareholders plus an amount equal to the aggregate Open Offer Price of the U S
WEST Committed Shares.
<PAGE>
1.2 Company Subscription for Primary and Secondary Subscription Shares. The
Company will subscribe for (a) the Primary Subscription Shares that are not
taken up by the Public Telewest Shareholders to the extent of the TINTA Member's
and the U S WEST Members' Proportionate Commitments pursuant to Section 5.3 of
the Subscription Agreement and (b) the Secondary Subscription Shares (to the
extent not taken up by the Public Telewest Shareholders) pursuant to Section 5.4
of the Subscription Agreement, and when such shares are allotted to the Company
by Telewest the Company will purchase such shares with the cash contributed to
it by the Members pursuant to Section 1.1.
1.3 Subscription for Committed Shares. Prior to the Latest Application Time
(a) the TINTA Member will subscribe for the TINTA Committed Shares and (b) the
MediaOne Members will subscribe for the U S WEST Committed Shares pursuant to
Section 4.1 of the Subscription Agreement, and when such shares are allotted to
the Members by Telewest the Members will purchase such shares with cash provided
by the Company.
1.4 Other Agreements. At the time the transactions contemplated by this
Agreement are consummated (the "Closing"), each Member will execute and deliver:
(a) an Amended and Restated Operating Agreement for the Company in the
form of Exhibit A;
(b) a Nominee Agreement in the form of Exhibit B in respect of the
TINTA Committed Shares or the U S WEST Committed Shares, as applicable; and
(c) a Declaration of Trust in the form of Exhibit C for the TINTA
Committed Shares or the U S WEST Committed Shares, as applicable.
II. REPRESENTATIONS AND WARRANTIES OF THE MEMBERS
Each Member represents and warrants to the other Members and the Company
that:
2.1 Organization, Good Standing and Authority. It is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its formation and has all requisite corporate power and
authority to carry on its business as it is now being conducted and to enter
into and to perform its obligations under this Agreement, the Operating
Agreement and the other agreements to be executed and delivered by it pursuant
to this Agreement.
2.2 Authorization and Validity; No Conflicts. The execution and delivery by
such Member of, and the performance by it of its obligations under, this
Agreement, the Operating Agreement and the other agreements to be executed and
delivered by it pursuant to this Agreement have been duly authorized by all
requisite corporate action. This Agreement constitutes, and when executed and
delivered by such Member, the Operating Agreement and the other agreements to be
executed and delivered by it pursuant to this Agreement will constitute,
<PAGE>
its legal, valid and binding obligations, enforceable in accordance with their
respective terms, except as such enforceability may be affected by applicable
bankruptcy, reorganization, insolvency, moratorium or other similar laws
affecting creditors' rights generally or by general equitable principles. The
execution and delivery by such Member of, and the performance by it of its
obligations under, this Agreement, the Operating Agreement and the other
agreements to be executed and delivered by it pursuant to this Agreement will
not violate its articles or certificate of incorporation or bylaws or, subject
to the Subscription Agreement becoming unconditional, any material agreement to
which it is a party or by which it is bound or affected or any applicable law,
regulation or rule.
2.3 Consents. Except as required for the Subscription Agreement to become
unconditional, no consent or approval of, notice to or filing with, any other
Person is required in connection with the execution, delivery and performance by
such Member of this Agreement, the Operating Agreement and the other agreements
to be executed and delivered by it pursuant to this Agreement or the
consummation by it of the transactions contemplated hereby or thereby.
2.4 No Liens on Telewest Shares. Except with respect to the rights and
obligations of the parties set forth in the Nominee Agreements, the Declarations
of Trust and the Operating Agreement to be executed and delivered pursuant to
this Agreement, when delivered by such Member at the Closing the ordinary shares
of Telewest to be contributed by such Member to the Company will be owned by the
Company free and clear of any lien, charge, encumbrance, security interest or
any other right of any third party whatsoever, except those imposed by the
Articles of Association of Telewest, the Nominee Agreements and Declarations of
Trust required by this Agreement or applicable law.
III. CONDITION TO OBLIGATIONS OF PARTIES
No party will have any obligation to consummate the transactions
contemplated by this Agreement unless the Subscription Agreement becomes
unconditional in accordance with its terms.
IV. INTENTIONALLY OMITTED
V. MISCELLANEOUS
5.1 Notices. All notices, requests, demands and other communications called
for or contemplated hereunder will be in writing and will be deemed to have been
duly given if delivered in person or by certified or registered mail, prepaid,
or sent by courier or confirmed telecopy. Notices will be addressed to the
Company at its registered address and to the Members at their addresses set
forth on the books of the Company. Any party may change the address to which
notices are required to be sent by giving notice of such change in the manner
provided in
<PAGE>
this Section. All notices will be deemed to have been received on the date of
delivery or on the third Business Day after the mailing thereof.
5.2 Confidentiality. Whether or not the transactions contemplated hereby
are consummated, each party will keep confidential any non-public information
obtained from the other in connection with the transactions contemplated by this
Agreement, will not utilize such information for any purpose and will return to
the other party all documents, work papers and other materials obtained by it in
connection with the transactions contemplated hereby.
5.3 Modification; Waiver. This Agreement may be modified only by a writing
signed by all parties, and no provision or condition herein may be waived other
than by a writing signed by the party waiving such provision or condition.
5.4 Headings. Article and Section headings in this Agreement are for the
sole purpose of convenient reference and in no way define, limit or prescribe
the scope or intent of this Agreement or any part hereof, and such headings will
not be considered in interpreting or construing this Agreement.
5.5 Assignment. No party will assign any of its rights under this Agreement
or delegate its duties hereunder unless it obtains the prior written consent of
the other parties, which consent may be withheld at each such party's absolute
discretion.
5.6 Counterparts. This Agreement may be executed in counterparts, each of
which will be deemed to be an original and all of which taken together will
constitute one instrument.
5.7 Additional Documents. At the Closing and from time to time after the
Closing, at any party's request and without further consideration, the other
parties will execute and deliver such other instruments of conveyance and
transfer and take such other action as may reasonably be required to effectively
carry out the transactions contemplated by this Agreement.
5.8 Other Provisions. This Agreement together with its exhibits and the
Operating Agreement constitute the entire agreement of the parties regarding the
subject matter hereof and thereof, and all prior or contemporaneous agreements,
understandings, representations and statements, oral or written, are hereby
merged into this Agreement and the Operating Agreement. This Agreement will be
binding upon and inure to the benefit of the parties and, subject to the
limitations set forth in Section 5.5, their respective successors and assigns.
The provisions of this Agreement are for the exclusive benefit of the parties
and their permitted successors and assigns, and no other person or entity is
intended to be a third party beneficiary or to have any rights by virtue of this
Agreement.
5.9 Governing Law. This Agreement will be governed by the laws of the State
of Colorado, without regard to any conflicts of laws principles.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
MEDIAONE CABLE PARTNERSHIP
HOLDINGS, INC.
By:
Name:
Title:
MEDIAONE UK CABLE, INC.
By:
Name:
Title:
UNITED ARTISTS PROGRAMMING-
EUROPE, INC.
By:
Name:
Title:
TW HOLDINGS, L.L.C.
By:
Name:
Title:
TW HOLDINGS, L.L.C.
By:
Name:
Title:
Exhibit (10)
Mr. Rick Moore
Southwestern Bell International Holdings (UK-1) Corporation ("SBC")
175 East Houston
Room 11 B80
San Antonio, TX 78205
PRIVATE & CONFIDENTIAL
Dear Rick,
TELEWEST COMMUNICATIONS PLC ("TELEWEST")
Further to our discussions over the weekend, I want to confirm with you the
agreement we have reached:
1. Subject to the matters outlined in paragraph 3 below, SBC agrees to sell
and MediaOne International Holdings, Inc. ("MEDIAONE HOLDINGS") agrees to
buy as soon as reasonably practical, but in any event within five business
days from satisfaction of the conditions set out in paragraph 3, up to
180,000,000 ordinary shares of 10p each in the capital of TeleWest
("TELEWEST SHARES") subject to a minimum number ("MINIMUM") equal to the
lesser of (a) 170,000,000 of such ordinary shares and (b) the number of
TeleWest Shares as shall be available for SBC to sell following any
exercise by Tele-Communications International, Inc. ("TINTA") in regard to
its right of first offer referred to in 3(a) below at a price of US $2.25
per share.
2. Within five business days of satisfaction of the conditions in paragraph 3
below, MediaOne Holdings shall acquire and SBC shall sell the lesser of (a)
such number of the Telewest Shares as when aggregated with those then held
by MediaOne Holdings and persons treated as acting in concert with MediaOne
Holdings for the purposes of the City Code on Takeovers and Mergers, would
represent 29.9% of the voting rights of TeleWest (but in no event less than
the Minimum) or (b) all of the TeleWest Shares or any lesser number of
TeleWest Shares as shall be available for SBC to sell following any
exercise by TINTA in regard to its right of first offer referred to in 3(a)
below ("SALE SHARES"). SBC will be under no obligation to sell and MediaOne
Holdings will be under no obligation to buy any TeleWest Shares from SBC
other than the Sale Shares. MediaOne Holdings confirms that based on the
provisional figures produced in connection with the merger of TeleWest and
General Cable by J. Henry Schroder & Co. Ltd., London ("SCHRODERS") dated 7
September 1998 and aggregating the number of shares held by MediaOne
Holdings and persons treated as acting in concert with it for the purposes
of the City Code on Takeovers and Mergers, the number of Sale Shares that
it will be entitled to acquire will be 178,077,333. However, the precise
number of Sale Shares to be acquired by MediaOne is subject to confirmation
by
<PAGE>
Schroders, which confirmation is expected to be given by Tuesday 15
September. At completion MediaOne Holdings will pay to SBC in same day
funds of US $2.25 per share by electronic transfer to an account notified
by SBC against delivery to MediaOne Holdings of duly executed stock
transfer forms in respect of the Sale Shares in favor of MediaOne Holdings
(or its designee) and the relative share certificates. Completion shall
take place at MediaOne Holdings' offices in London. SBC and MediaOne will
defer to the opinion if Schroders in the event of a dispute over level or
calculation of shareholdings.
3. This agreement and completion of the sale and purchase is conditional an
the following:
a. (subject to Schroders first confirming to MediaOne the number of Sale
Shares which MediaOne is entitled to acquire and MediaOne notifying
SBC of that number) either SBC providing a waiver from TINTA in
respect of the Sale Shares regarding the rights of first offer under
clause 9.1 of the Amended and Restated Relationship Agreement dated as
of 15 April 1998 relating to Telewest or SBC providing written notice
to commence the procedures prescribed by clause 9.1 in respect of the
Sale Shares and once completed SBC being free to sell the Sale Shares
to MediaOne Holdings or its designee at US $2.25 per share;
b. the Panel confirming by Friday 25 September 1998 that should MediaOne
Holdings not acquire the whole of SBC's shareholdings in TeleWest, it
will not treat SBC as acting in concert with MediaOne Holdings (such
that SBC's residual shareholding would be aggregated with the
shareholdings of MediaOne Holdings and its other concert parties so as
to trigger a mandatory offer requirement under Rule 9 of the City Code
on Takeovers and Mergers);
c. the Panel confirming by Friday 25 September 1998 that MediaOne
Holdings will not be entitled or obliged to acquire any shares in the
capital of Telewest the acquisition of which would trigger a mandatory
offer requirement under Rule 9 of the City Code on Takeovers and
Mergers;
d. compliance by Friday 25 September 1998 by MediaOne Holdings with all
applicable US legal requirements including, without limitation,
applicable United States Federal and State securities laws.
4. MediaOne Holdings shall use commercially reasonable efforts to satisfy the
conditions in 3b, 3c and 3d above and SBC shall use commercially reasonable
efforts to satisfy the condition in 3a above. Each party shall promptly
notify the other of the satisfaction of any condition referred to in
paragraph 3 above for which it is responsible and shall provide evidence
reasonably satisfactory to the other party of the fulfillment of the
relevant condition.
5. MediaOne Holdings undertakes that it shall not, and that it shall use all
its rights and powers to procure that no other person acting in concert
with it shall not, take any
<PAGE>
action which would reduce the number of Sale Shares which it would
otherwise be obliged to buy pursuant to this Agreement.
6. MediaOne Holdings agrees that it will not resell any Sale Shares required
by it under this Agreement except pursuant to an effective registration
statement covering those Sale Shares or pursuant to an exemption from
registration under the US Securities Act of 1933.
7. Both parties shall first approve any public announcement regarding this
Agreement save to the extent that any announcement is required by law or
the rules of any applicable stock exchange.
8. Each party represents to the other that it has due authority to execute
this Agreement.
This is intended to represent a legally binding agreement between SBC and
MediaOne Holdings and I suggest that it be governed by English law. I should be
grateful if you would confirm your agreement to the above terms on behalf of SBC
by signing and returning the enclosed copy of this letter.
Yours sincerely,
/s/ Robert J. Ford
For and on behalf of
MediaOne International Holdings, Inc.
Dated: 9/10/98
Agreed and Accepted:
/s/ James Kahan
For and on behalf of
SBC International Holdings (UK-1) Corporation
