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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(RULE 13D-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED
PURSUANT TO RULE 13D-1(A) AND AMENDMENTS THERETO
FILED PURSUANT TO RULE 13D-2(A)
(Amendment No. 3)
TELEWEST COMMUNICATIONS PLC
(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
(CUSIP NUMBER)
FRANK EICHLER, ESQ.
MEDIAONE GROUP, INC.
188 INVERNESS DRIVE WEST
ENGLEWOOD, COLORADO 80112
TEL: (303) 858-3000
WITH A COPY TO:
AKIKO MIKUMO
WEIL, GOTSHAL & MANGES
ONE SOUTH PLACE
LONDON EC2M 2WG
TEL: 011 44 171 903 1000
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSONS
AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS)
OCTOBER 4, 1999
(DATE OF EVENT WHICH REQUIRES FILING OF THIS STATEMENT)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition that is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box [ ].
Note: Schedules filed in paper format shall include a signed
original and five copies of the schedule, including all exhibits. See Rule
13d-7(b) 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.
(Continued on following pages)
(Page 1 of 3 Pages)
77119.0001
<PAGE>
ITEM 1 SECURITY AND ISSUER
This constitutes Amendment No. 3 (the "Amendment") to the Statement
on Schedule 13D (the "Statement"), dated September 21, 1998, as
amended by Amendment No. 1 thereto, dated November 12, 1998, and
Amendment No. 2 thereto, dated August 31, 1999, with respect to the
Ordinary Shares, par value 10 pence per share ("Telewest Ordinary
Shares"), of Telewest Communications plc, a public limited company
incorporated under the laws of England and Wales ("Telewest"). All
capitalized terms used and not otherwise defined herein shall have
the meanings assigned to these terms in the Statement.
ITEM 4 PURPOSE OF TRANSACTION
PROPOSED RIGHTS ISSUE
On October 4, 1999, Telewest announced that it was posting a
circular to its shareholders (the "Circular") containing further
details of its proposed rights issue (the "Rights Issue"), the
proceeds of which will fund the majority of the consideration for
Telewest's acquisition of the outstanding 50 percent interest in
Cable London plc (the "Acquisition").
ACQUISITION OF MEDIAONE INTEREST IN TELEWEST BY MICROSOFT
On October 4, 1999, MediaOne entered into a Merger Agreement (the
"Merger Agreement") with Microsoft Corporation ("Microsoft")
pursuant to which members of the Microsoft group will acquire
MediaOne's existing indirect interest of 638,347,122 Telewest
Ordinary Shares by way of a merger between certain Microsoft and
MediaOne affiliates (the "Merger"). The Merger is conditional, among
other things, on regulatory approval, certain Telewest Ordinary
Shares currently held by MediaOne having been redesignated as
limited voting convertible Telewest ordinary shares of 10p each in
the proportions set forth in the Merger Agreement (the
"Redesignation"), Telewest shareholders approving a proposed new
relationship agreement (which will only become effective once the
Redesignation has been completed), and Microsoft becoming upon the
closing of the transactions contemplated under the Merger Agreement
the indirect beneficial owner of a percentage of Telewest Ordinary
Shares and limited voting convertible ordinary shares of Telewest
(on a fully diluted basis (but ignoring the issuance of Telewest
shares upon the exercise of employee stock options) following the
Rights Issue) that is no less than the percentage of Telewest
Ordinary Shares and limited voting convertible ordinary shares of
Telewest (on a fully diluted basis) beneficially owned by MediaOne
immediately following the Rights Issue assuming for purposes of this
condition that Microsoft has only subscribed for the number of
Telewest Shares not taken up by MediaOne and that MediaOne has not
disposed of any Telewest shares since the date of the Rights Issue.
The foregoing description of the Merger Agreement is a summary
thereof and does not purport to be complete. The full text of the
Merger Agreement is attached hereto as Exhibit (11) and is
incorporated herein by reference.
<PAGE>
UNDERTAKING
In connection with the Rights Issue and the Merger, MediaOne UK
Cable, Inc. ("MUKC") and MediaOne Cable Partnership Holdings Inc.
("MCPH") entered into an Undertaking, dated October 1999, with TW
Holdings LLC ("TW Holdings") and Liberty UK, Inc. ("Liberty")
addressed to Telewest (the "Undertaking"). Pursuant to the terms of
the Undertaking, each of TW Holdings and MUKC agreed, among other
things, (i) not to subscribe for all or any of Telewest's new
ordinary shares of 10p each, as set forth in the Undertaking (the
"New Ordinary Shares"), for which each (and in the case of TW
Holdings, each of the registered holders of the shares beneficially
owned by TW Holdings (the "Registered Holders")) is entitled to
subscribe pursuant to the Rights Issue (the "New Shares"); (ii) not
to (and in the case of TW Holdings, to direct the Registered Holders
not to) renounce, or otherwise deal with, their respective rights to
the New Shares and agreed that such rights shall not be sold in the
market for the benefit of each of them; (iii) to vote their
respective Telewest Ordinary Shares in favor of the resolutions set
out in the Circular and to waive all and any rights (including,
without limitation, veto rights) each of them, or any director of
Telewest appointed by each of them may have under Telewest's
Articles of Association or under any other contractual arrangements
in place with respect to Telewest, so far as such rights relate to
the Rights Issue (and all matters incidental thereto); and (iv) not
(and in the case of TW Holdings, to direct the Registered Holders
not) at any time prior to 3:00 p.m. on the second business day after
the latest time for acceptance and payment under the Rights Issue
(unless in the case of MUKC or its affiliates the following is or
relates, with Liberty's prior written consent, to the Merger): (a)
sell, transfer, charge, encumber, grant any option over or otherwise
dispose of any of their respective Telewest Ordinary Shares, (b)
accept any offer in respect in respect of any of their respective
Telewest Ordinary Shares (whether it is conditional or unconditional
and irrespective of the means by which it is implemented), (c) enter
into any agreement or arrangement or permit any agreement to be
entered into or incur any obligation or permit any obligation to
arise: (aa) to do any of the acts referred to in sub-clause (a) or
(b) above, (bb) in relation to, or operating by reference to, the
Telewest Ordinary Shares in which each is interested (for the
purposes of English law); or (cc) which, in relation to the Telewest
Ordinary Shares in which each is interested (for the purposes of
English law) would or might restrict or impede the Acquisition or
the Rights Issue. MUKC and MCPH also each agreed to act upon the
directions of TW Holdings through which MUKC and MCPH indirectly
hold a certain number of Telewest Ordinary Shares as set forth and
in accordance with the Undertaking. In addition, MUKC and TW
Holdings consented to the Redesignation.
The foregoing description of the Undertaking is a summary thereof
and does not purport to be complete. The full text of the
Undertaking is attached hereto as Exhibit (12) and is incorporated
herein by reference.
<PAGE>
ITEM 6 CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER
The information set forth in Item 4 of this Amendment is
incorporated herein by reference.
ITEM 7 MATERIAL TO BE FILED AS EXHIBITS
EXHIBIT NO. DESCRIPTION
(11) Merger Agreement, dated October 4, 1999, between MediaOne and
Microsoft.
(12) Undertaking, dated 4 October 1999, from MediaOne UK Cable, Inc., TW
Holdings LLC, MediaOne Cable Partnership Holdings Inc. and Liberty
UK, Inc. to Telewest.
<PAGE>
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13D
CUSIP NO. PAGE 3 OF 3 PAGES
36930Q101
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SIGNATURE
After reasonable inquiry and to the best of the knowledge and belief
of the undersigned, the undersigned certifies that the information set forth in
this statement is true, complete and correct.
Dated: October 14, 1999
MEDIAONE GROUP, INC.
By: /s/ Stephen E. Brilz
------------------------------
Name: Stephen E. Brilz
Title: Assistant Secretary
MEDIAONE INTERNATIONAL HOLDINGS, INC.
By: /s/ Stephen E. Brilz
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Name: Stephen E. Brilz
Title: Assistant Secretary
MEDIAONE UK CABLE, INC.
By: /s/ Stephen E. Brilz
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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
(11) Merger Agreement, dated October 4, 1999, between MediaOne and
Microsoft.
(12) Undertaking, dated 4 October 1999, from MediaOne UK Cable, Inc., TW
Holdings LLC, MediaOne Cable Partnership Holdings Inc. and Liberty
UK, Inc. to Telewest.
MICROSOFT CORPORATION
and
MEDIAONE GROUP, INC.
and
MEDIAONE INTERNATIONAL HOLDINGS, INC.
and
MEDIAONE UK CABLE, INC. AND MEDIAONE CABLE PARTNERSHIP HOLDINGS, INC.
Dated: October 4, 1999
MERGER AGREEMENT
<PAGE>
<TABLE>
<CAPTION>
CONTENTS
CLAUSE PAGE NO.
<S> <C>
1. INTERPRETATION...........................................................................................3
2. CONDITIONS...............................................................................................9
3. THE MERGERS.............................................................................................12
4. EFFECT OF MERGERS; CONSIDERATION........................................................................15
5. PRE-CLOSING MATTERS.....................................................................................16
6. CLOSING.................................................................................................20
7. WARRANTIES..............................................................................................21
8. ADDITIONAL INDEMNITIES..................................................................................23
9. CONFIDENTIALITY AND ANNOUNCEMENTS.......................................................................24
10. FURTHER ASSURANCE AND AVAILABILITY OF INFORMATION.......................................................24
11. COSTS...................................................................................................25
12. NOTICES.................................................................................................25
13. SEVERABILITY AND SUSPENSION OF RESTRICTIONS.............................................................27
14. ENTIRE AGREEMENT AND VARIATION..........................................................................27
15. GENERAL PROVISIONS......................................................................................28
16. GOVERNING LAW AND JURISDICTION..........................................................................29
SCHEDULE I.......................................................................................................31
DETAILS OF THE COMPANIES................................................................................31
SCHEDULE II......................................................................................................32
COMPANIES' INTERESTS IN TW HOLDINGS.....................................................................32
SCHEDULE III.....................................................................................................33
WARRANTIES..............................................................................................33
SCHEDULE IV......................................................................................................47
REPRESENTATIONS AND WARRANTIES OF MICROSOFT.............................................................47
SCHEDULE V ......................................................................................................50
TAXES ..................................................................................................50
</TABLE>
<PAGE>
ANNEX 1: FORM OF LIBERTY MEDIA LETTER
ANNEX 2: FORM OF REVISED RELATIONSHIP AGREEMENT
ANNEX 3: FORM OF TELEWEST REGISTRATION RIGHTS AGREEMENT
ANNEX 4: FORM OF TELEWEST ARTICLES OF ASSOCIATION
ANNEX 5: FORM OF MEDIAONE/MICROSOFT REGISTRATION RIGHTS AGREEMENT
ANNEX 6: CONSTITUTIONAL DOCUMENTS OF THE COMPANIES AND TW HOLDINGS
ANNEX 7: REDESIGNATION OF TELEWEST SHARES
<PAGE>
MERGER AGREEMENT
THIS AGREEMENT is made the 4th day of October 1999
BETWEEN:
(1) MICROSOFT CORPORATION, a Washington corporation having its principal
office at One Microsoft Way, Redmond, WA 98052-6399 ("Microsoft");
(2) MEDIAONE UK CABLE, INC. ("MOUK") and MEDIAONE CABLE PARTNERSHIP
HOLDINGS, INC. ("MOCP") each being a Colorado corporation having their
principal offices at 7800 East Orchard Road, Englewood, Colorado 80111,
USA (MOUK and MOCP being collectively referred to as the "Companies");
(3) MEDIAONE INTERNATIONAL HOLDINGS, INC., a Delaware corporation having
its principal office at 7800 East Orchard Road, Englewood, Colorado
80111, USA ("International"); and
(4) MEDIAONE GROUP, INC. a Delaware corporation having its principal office
at 7800 East Orchard Road, Englewood, Colorado 80111, USA ("MediaOne").
RECITALS:
(A) Promptly after the date hereof, Microsoft will form two directly
wholly-owned subsidiaries, one of which shall be formed for the purpose
of effecting the MOUK Merger (as defined below) ("MOUK Merger Sub") and
the other of which shall be formed for the purpose of effecting the
MOCP Merger (as defined below) ("MOCP Merger Sub") (MOUK Merger Sub and
MOCP Merger Sub being collectively referred to as the "Merger Subs").
(B) Immediately after formation, Microsoft will own directly all of the
issued and outstanding shares of common stock of MOUK Merger Sub ("MOUK
Sub Shares") and all of the issued and outstanding shares of common
stock of MOCP Merger Sub ("MOCP Sub Shares").
<PAGE>
(C) International owns all of the issued and outstanding shares of common
stock, without par value, of MOUK (the "MOUK Shares") and all of the
issued and outstanding shares of common stock, without par value, of
MOCP (the "MOCP Shares" and, together with the MOUK Shares, the
"Shares"). Details of the Companies are set out in Schedule I.
(D) The board of directors of MOUK has approved this Agreement and the
merger of MOUK Merger Sub with and into MOUK (the "MOUK Merger") and
approved the MOUK Merger upon the terms and subject to the conditions
set forth in this Agreement and the board of directors of MOCP has
approved this Agreement and the merger of MOCP Merger Sub with and into
MOCP (the "MOCP Merger") and approved the MOCP Merger upon the terms
and subject to the conditions set forth in this Agreement and
International has consented to the adoption of this Agreement as the
sole stockholder of both MOUK and MOCP.
(E) Telewest Communications plc is a public limited company registered in
England under number 2983307 whose registered office is at Genesis
Business Park, Albert Drive, Woking, Surrey GU21 5RW ("Telewest").
(F) MOUK is the beneficial owner of 174,908,162 ordinary shares of 10p each
in the capital of Telewest (the "Telewest Shares"), which shares are
registered in the name of Goldman Sachs Crest Account as nominee, MOUK
is the registered owner of 423,053,758 Telewest Shares, which shares
are beneficially owned by TW Holdings, and MOCP is the registered
holder of 40,385,202 Telewest Shares, which are beneficially owned by
TW Holdings.
(G) TW Holdings, LLC is a Colorado limited liability company whose
registered office is at 5619 DTC Parkway, Englewood, Colorado 80111
("TW Holdings"). At the date hereof the limited liability company
interests in TW Holdings are divided among MOUK, MOCP and Liberty UK.
(H) As at the date hereof TW Holdings is the beneficial holder of
926,877,921 Telewest Shares.
(I) AT&T Corp. (the "Parent") and MediaOne are parties to the Agreement and
Plan of Merger, dated as of May 6, 1999 by and among Parent, Meteor
Acquisition Inc. and MediaOne, pursuant to which at the
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<PAGE>
effective time thereof, a wholly owned subsidiary of the Parent will
merge with and into MediaOne ("AT&T Merger Agreement").
(J) Microsoft and the Parent are parties to an agreement dated May 6, 1999
pursuant to which Microsoft has agreed to purchase certain
international assets on the terms and subject to the conditions thereof
from the Parent ("International Agreement").
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and undertakings contained herein, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. INTERPRETATION
1.1 In this Agreement (including its Recitals and Schedules), the following
words and expressions have the meanings respectively set opposite them:
"Affiliate" shall mean, with respect to any person,
any persons directly or indirectly
controlling, controlled by, or under
common control with such other person at
any time during the period for which the
determination of affiliation is being
made. For purposes of this definition,
the term "control" (including the
correlative meanings of the terms
"controlled by" and "under common
control with"), as used with respect to
any person, shall mean the possession,
directly or indirectly, of the power to
direct or cause the direction of
management policies of such person,
whether through the ownership of voting
securities or by contract or otherwise;
"Affiliated Group" means any "affiliated group" (as defined
in s 1504(a) of the Code) that includes
the Companies;
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<PAGE>
"Antitrust Laws" all laws that are designed or intended
to prohibit, restrict or regulate
actions having the purpose or effect of
monopolisation, restraint of trade or
matters similar thereto:
"AT&T Merger Agreement" the meaning set out in Recital (I);
"Business Day" any day (except any Saturday or Sunday)
on which banks in New York are open for
business;
"Code" the Internal Revenue Code 1986, as
amended;
"Closing" closing of the Mergers pursuant to this
Agreement in accordance with the terms
of this Agreement;
"Closing Date" the date of Closing;
"Consideration Stock" has the meaning given in Section 4.1;
"EC Merger Act" means the European Community's Merger
Control Regulation.
"Governmental Agency" any local, state, federal, national,
supranational, provincial, regional or
other government, governmental agency,
regulatory authority or equivalent body
or agency.
"International Agreement" the meaning set out in Recital (J);
"Laws" any law, statute, ordinance, rule,
regulation, code, order, judgment,
injunction or decree, administrative
order, principle of common law, equity
or admiralty promulgated, issued,
adjudged, or decreed by any Governmental
Agency.
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<PAGE>
"Liberty Media" Liberty Media International, Inc;
"Liberty UK" Liberty UK, Inc., a wholly owned
subsidiary of Liberty Media;
"MediaOne's Group" MediaOne and any member of the group
consisting of MediaOne and its
Affiliates;
"Mergers" means the merger of the Merger Subs with
and into the Companies as contemplated
in this Agreement and "Merger" shall
have a corresponding meaning;
"Microsoft Common Stock" means the common stock, par value
$0.0000125, of Microsoft;
"New Relationship Agreement" the revised relationship agreement
relating to Telewest to be entered into
as referred to in clause 2.1(h);
"Note Agreements" means the (i) Indenture, dated as of
October 3, 1995, between Telewest and
The Bank of New York, pursuant to which
Telewest issued its Senior Debenture due
2006, (ii) the Indenture, dated as of
October 3, 1995, between Telewest and
The Bank of New York, pursuant to which
Telewest issued its Senior Discount
Debentures due 2007, (iii) the
Indenture, dated as of November 9, 1998,
between Telewest and The Bank of New
York, pursuant to which Telewest issued
its Senior Notes due 2008, (iv) the
Indenture, dated as of February 19,
1999, between Telewest and The Bank of
New York, pursuant to which Telewest
issued its Senior Convertible Notes due
2007 and (v) the Indenture, dated as of
April 15, 1999, between Telewest and The
Bank of New York, pursuant to which
Telewest issued its Sterling and Dollar
denominated Senior Discount Notes due
2009, in each case as in effect on
October 1, 1999;
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<PAGE>
"Parent" AT&T Corp., a New York Corporation;
"Regulatory Laws" shall mean all Laws that are required to
be complied with for the purposes of the
Mergers contemplated by this Agreement
having the purpose or effect of
regulating industry including without
limitation the telecommunications or
broadcasting industry;
"Relationship Agreement" the Amended and Restated Relationship
Agreement dated as of May 21, 1999
between Telewest, members of MediaOne's
Group and others;
"Shares" has the meaning given to that term in
the Recitals, such shares being
described more fully in Schedule II;
"Stock Exchange" London Stock Exchange Limited;
"Subscription Agreement" has the meaning given in Section 2.1(n)
"Tax Returns" all reports and returns required to be
filed on or before Closing with respect
to the Taxes of the Companies or the
Affiliated Group including, without
limitation, consolidated federal income
tax returns of the Affiliated Group;
"Taxes" all federal, state, local or foreign
income, gross receipts, windfall
profits, severance, property,
production, sales, use, license, excise,
franchise, employment, withholding or
similar taxes imposed on the income,
properties or operations of the
Companies or the Affiliated Group,
together with any interest, additions or
penalties with respect thereto and any
interest in respect of such additions or
penalties;
"Telewest" has the meaning given in Recital (E);
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<PAGE>
"Transaction" the proposed acquisition of the Shares
under this Agreement;
"TW Holdings" has the meaning in Recital (G);
"TW Holdings Interests" in relation to the Companies, all of the
limited liability company interests
owned by each of them in TW Holdings
(including without limitation, an
interest in the profits and losses,
capital account interest and all other
rights and obligations of the Companies
under the TW Operating Agreement);
"TW Operating Agreement" the Amended and Restated Operating
Agreement of TW Holdings dated as of
September 11, 1998 between Liberty UK
and the Companies; and
"Warranties" the warranties set out in Schedule III
and any other warranties on
representations of MediaOne contained in
this Agreement.
1.2 In this Agreement, unless the context otherwise requires:
(a) references to this Agreement or any other document include
this Agreement or such other document as varied, modified or
supplemented in any manner from time to time;
(b) references to any party shall, where relevant, be deemed to be
references to or to include, as appropriate, their respective
permitted successors, assigns or transferees;
(c) references to recitals, clauses and schedules and
sub-divisions of them are references to the recitals and
clauses of, and schedules to, this Agreement and sub-divisions
of them respectively;
(d) references to any enactment include references to such
enactment as re-enacted, amended or extended on or before the
date of this Agreement and any subordinate legislation made
from time to time under it;
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<PAGE>
(e) references to a "person" include any individual, company,
corporation, firm, partnership, joint venture, association,
limited liability company, organisation, institution, trust or
agency, whether or not having a separate legal personality;
(f) references to the one gender include all genders, and
references to the singular include the plural and vice versa;
(g) any reference to indemnifying any person against any
circumstance includes indemnifying and holding that person,
harmless from all actions, claims, demands and proceedings of
any nature from time to time made against that person, and all
losses, damages, payments, awards, costs or expenses made,
suffered or incurred by that person as a consequence of, or
which would not have arisen but for, that circumstance;
(h) headings are inserted for convenience only and shall be
ignored in construing this Agreement; and
(i) the words "company", "subsidiary", "subsidiary undertaking"
and "holding company" have the meanings given to them by the
Companies Act 1985 as amended by the Companies Act 1989.
1.3 The Recitals and Schedules to this Agreement form part of it.
1.4 Any reference in this Agreement to a document being "in the agreed
terms" is to a document in the terms agreed between the parties and for
identification purposes only signed or initialled by them or on their
behalf on or before the date of this Agreement.
2. CONDITIONS
2.1 Closing is conditional upon:
(a) all filings under EC Merger Act shall have been made and any
required waiting period under such act applicable to the
Mergers shall have expired or been earlier terminated and any
approval,
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<PAGE>
clearance or consent which is required or considered
reasonably desirable by Microsoft and MediaOne under such Act
and is applicable to the Mergers shall have been received on
terms reasonably satisfactory to Microsoft and MediaOne and
all filings under other Antitrust Laws shall have been made
and any required waiting period under such Laws applicable to
the Mergers shall have expired or been earlier terminated and
any approval, clearance or consent which is required, or
without which a risk of divestiture would exist, under such
Laws and is applicable to the Mergers shall have been received
on terms which could not be reasonably said to have a material
adverse effect on the financial and strategic benefits
Microsoft is seeking by investing in Telewest (in each case
which shall include without limitation that such approval,
clearance or consent is binding, final and not capable of
challenge by any person);
(b) all filings under Regulatory Laws shall have been made and any
required waiting periods under such Laws applicable to the
Mergers shall have expired or been earlier terminated and any
approval, clearance or consent which is required under such
Laws applicable to the Mergers shall have been received on
terms which could not be reasonably said to have a material
adverse effect on the financial and strategic benefits
Microsoft is seeking by investing in Telewest (which shall
include without limitation that such approval, clearance or
consent is binding, final and not capable of challenge by any
person);
(c) no Governmental Agency or any trades union or works council
having:
(i) instituted any action, suit, order or investigation
which seeks to restrain, prohibit or otherwise
challenge the Closing by Microsoft of either of the
Mergers; or
(ii) enacted any statute, law, ordinance, court order,
judgment, rule or regulation which would be
reasonably likely to prohibit, materially restrict or
materially delay the Closing or the operations of
Telewest, TW Holdings, the Companies or any of their
subsidiary undertakings after the Closing or
Microsoft's indirect ownership interest in Telewest
Shares.
(d) any necessary authorisations, approvals or consents which are
required to be obtained from MediaOne and its Affiliates and
from Parent and its Affiliates with respect to the Mergers or
any
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<PAGE>
transactions related thereto shall have been received on terms
reasonably satisfactory to Microsoft;
(e) No event has occurred, including the consummation of the
transactions contemplated hereby, which has triggered or would
trigger any rights under the Note Agreements, and Microsoft
shall have been provided with a copy of an opinion from Weil
Gotshal & Manges, counsel to Telewest, addressed to the Board
of Directors of Telewest and dated the date hereof to the
effect that the consummation of the transactions contemplated
hereby shall not cause any rights to be triggered under the
Note Agreements, such opinion to be in a form reasonably
satisfactory to Microsoft;
(f) Liberty Media and Liberty UK having delivered an executed and
binding letter dated the date hereof and attached as Annex 1
hereto;
(g) all the covenants of MediaOne and the Companies herein being
performed in all material respects and MediaOne having
complied in all material respects with the MediaOne
Undertaking (as defined in the Subscription Agreement);
(h) Liberty Media and Liberty UK having entered into a revised
agreement with Microsoft governing TW Holdings on
substantially the same terms as in effect as of the date
hereof, which is to take effect from Closing on terms
reasonably satisfactory to Microsoft and the revised
relationship agreement in the form set out in Annex 2 hereto,
such agreement having been entered into by Telewest and
approved by its shareholders. The revised relationship
agreement and, if applicable, the revised agreement governing
TW Holdings may only be entered into after the condition in
clause 2.1(m) has been satisfied;
(i) the confirmation from the UK Panel on Takeovers and Mergers
that the Mergers or the entering into of this Agreement,
and/or the consummation of the Mergers, shall not give rise to
any obligation of Microsoft or any Affiliates to make an offer
for Telewest under Rule 9 of the UK City Code on Takeovers and
Mergers not having been withdrawn or adversely modified as it
relates to Microsoft;
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<PAGE>
(j) none of the Warranties herein which are qualified by reference
to "knowledge", "materiality", "material adverse effect" or
any variations thereof being untrue, inaccurate or misleading
at the date of this Agreement and at the Effective Time and
none of the Warranties which are not so qualified being
untrue, inaccurate or misleading in any material respect at
the date of this Agreement and at the Effective Time;
(k) Telewest having entered into a revised agreement with
Microsoft, Liberty Media, and the Companies concerning
registration rights in respect of Telewest Shares which is to
take effect from Closing and shall be substantially in the
form attached as Annex 3 hereto;
(l) the articles of association having been adopted by Telewest
and its shareholders in the agreed form attached as Annex 4
hereto and Resolutions (as defined in the Subscription
Agreement) 2, 4 and 5 having been approved by the independent
shareholders of Telewest;
(m) certain Telewest Shares currently held by MOUK having been
redesignated as limited voting convertible ordinary shares of
10p each in the capital of Telewest (as contemplated by the
articles of association in Annex 4) in the proportions set
forth in Annex 7 hereto;
(n) Microsoft becoming upon the Closing the indirect beneficial
owner of a percentage of Telewest Shares and limited voting
convertible ordinary shares of Telewest (on a fully diluted
basis (but ignoring the issuance of Telewest shares upon the
exercise of employee stock options) following the Telewest
Right Issue (the "Telewest Rights Issue"), pursuant to the
Subscription Agreement, dated October 1, 1999, among Telewest,
Liberty Media, Microsoft and Kleinwort Benson Securities
Limited (the "Subscription Agreement")) pursuant to this
Agreement that is no less than the percentage of Telewest
Shares and limited voting convertible ordinary shares of
Telewest (on a fully diluted basis) beneficially owned by
MediaOne immediately following the Telewest Rights Issue
assuming for purposes of this condition that Microsoft has
only subscribed for the number of Telewest Shares not taken up
by MediaOne and that MediaOne has not disposed of any Telewest
shares since the date of the Telewest Rights Issue;
(o) Microsoft shall have delivered a signed counterpart of the
registration rights agreement between Microsoft and MediaOne
to MediaOne in the form attached as Annex 5 hereto;
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(p) no other person having instituted any material action or suit
which would be reasonably likely to prohibit, materially
restrict or materially delay the Closing or the operations of
Telewest, TW Holdings, the Companies or any of their
subsidiary undertakings after the Closing or Microsoft's
indirect ownership interest in Telewest Shares;
(q) no sale or disposal of, or the grant or termination of any
rights in respect of, any part of the undertaking or the
assets of the Companies or TW Holdings shall have occurred,
including, without limitation, the Telewest Shares held or
owned by such entities;
(r) there shall not have occurred any creation or issue of, or
allowed to come into being, any mortgage, charge or other
security interest upon or over any part of the property or
assets or uncalled capital of the Companies or TW Holdings,
including any Telewest Shares owned or held by them, or the
creation or issue by any of them of any debenture or debenture
stock or the obtaining by any of them of any advance or credit
in any form;
(s) the Companies shall not have taken any action as a holder of
limited liability company interests in TW Holdings or failed
to take any action as a holder of limited liability company
interests in TW Holdings other than as required in the TW
Operating Agreement and following consultation with Microsoft;
and
(t) neither MediaOne, International nor the Companies shall (i)
have taken or failed to take any action as a shareholder of
Telewest other than as required in the Relationship Agreement
and following consultation with Microsoft or (ii) have taken
any action that would adversely affect (A) the value of TW
Holdings to Microsoft (unless such action is in the ordinary
course of business of the MediaOne Group, but not including
any such action relating to Telewest or any Telewest Shares;
provided that MediaOne shall notify Microsoft in writing prior
to the taking of any such action), or (B) Microsoft's full and
unencumbered indirect ownership of the Telewest Shares which
are the subject of this Agreement.
2.2 Any of the conditions specified in subclauses 2.1(a), (b) and (c) above
may only be waived with the consent of both Microsoft and MediaOne.
Microsoft alone may waive all or any of the conditions
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specified in subclauses 2.1(d) to (l) and (n) to (u) above; it being
understood that, with respect to the conditions specified in subclause
2.1(j), Microsoft may only waive the conditions of such clause related
to the Warranties made for the benefit of Microsoft. MediaOne alone may
waive the condition specified in subclauses 2.1(j) and (o) above; it
being understood that, with respect to the conditions specified in
subclause (j), MediaOne may only waive the conditions of such clause
related to the Warranties made for the benefit of MediaOne.
2.3 Microsoft, MediaOne, International and the Companies shall use their
respective reasonable best endeavours to ensure that the conditions
specified above are satisfied as soon as practicable subject to the
satisfaction of the conditions herein and each agrees to make all
necessary filings and seek all relevant approvals and consents as soon
as practical and keep the others promptly and fully informed of the
status thereof.
2.4 If the conditions specified in clause 2 above have not been satisfied
or duly waived by April 30, 2000 (provided that if any necessary
approval under the EC Merger Act or any required waiting period
thereunder has not expired on or prior to April 15, 2000, Microsoft may
extend the termination date in this subclause 2.4 to June 30, 2000) (or
such later date as MediaOne and Microsoft may agree); then
notwithstanding the fact that International, as the sole stockholder of
each of MOUK and MOCP has adopted this Agreement:
(a) this Agreement shall terminate and have no further effect
(subject only to clauses 9 (Confidentiality), 11 (Costs) and
16 (Governing law), which shall continue in force; and
(b) subject to any liability which may arise from any breach of
the obligations contained in this clause, the parties shall be
released from all liabilities and obligations hereunder.
3. THE MERGERS
3.1 The MOUK Merger
(a) Upon the terms and subject to the conditions set forth in this
Agreement, at the MOUK Effective Time (as hereinafter
defined), MOUK Merger Sub shall be merged with and into MOUK
and
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the separate corporate existence of MOUK Merger Sub shall
thereupon cease. MOUK shall be the surviving corporation
following the Merger, and the separate corporate existence of
MOUK with all its rights, privileges, immunities, powers and
franchises shall continue unaffected by the Merger. The MOUK
Merger shall have the effects specified in the Colorado
Business Corporation Act, as amended (the "CBCA").
(b) As soon as practicable following the Closing of the MOUK
Merger, MOUK Merger Sub and International will cause a
Certificate of Merger (the "MOUK Certificate of Merger") to be
executed, acknowledged and filed with the Secretary of State
of Colorado as provided in Article 111, Section 105 of the
CBCA. The MOUK Merger shall become effective at the time when
the MOUK Certificate of Merger has been duly filed with the
Secretary of State of Colorado (the "MOUK Effective Time").
(c) The certificate of incorporation of MOUK as in effect
immediately prior to the MOUK Effective Time shall be the
certificate of incorporation of MOUK after the MOUK Merger,
except that such certificate shall be amended as of the MOUK
Effective Time to change the name of the corporation from
MediaOne UK Cable, Inc. to Microsoft UK Cable, Inc.
(d) The by-laws of MOUK in effect at the MOUK Effective Time shall
be the by-laws of MOUK after the MOUK Merger, until thereafter
amended as provided therein or by applicable law.
(e) The directors of MOUK Merger Sub at the MOUK Effective Time
shall, from and after the MOUK Effective Time, be the
directors of MOUK until their successors have been duly
elected or appointed and qualified or until their earlier
death, resignation of removal in accordance with the
organisational documents of MOUK.
(f) The officers of MOUK Merger Sub at the MOUK Effective Time
shall, from and after the MOUK Effective Time, be the officers
of MOUK until their successors have been duly elected or
appointed and qualified or until their earlier death,
resignation of removal in accordance with the organisational
documents of MOUK.
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3.2 The MOCP Merger
(a) Upon the terms and subject to the conditions set forth in this
Agreement, at the MOCP Effective Time (as hereinafter
defined), MOCP Merger Sub shall be merged with and into MOCP
and the separate corporate existence of MOCP Merger Sub shall
thereupon cease. MOCP shall be the surviving corporation in
the Merger, and the separate corporate existence of MOCP with
all its rights, privileges, immunities, powers and franchises
shall continue unaffected by the Merger. The MOCP Merger shall
have the effects specified in the CBCA.
(b) As soon as practicable following the Closing, MOCP Merger Sub
and MediaOne will cause a Certificate of Merger (the "MOCP
Certificate of Merger") to be executed, acknowledged and filed
with the Secretary of State of Colorado as provided in Article
111, Section 105 of the CBCA. The MOCP Merger shall become
effective at the time when the MOCP Certificate of Merger has
been duly filed with the Secretary of State of Colorado (The
"MOCP Effective Time", and the later of the MOCP Effective
Time and the MOUK Effective Time, being the "Effective Time").
(c) The certificate of incorporation of MOCP as in effect
immediately prior to the MOCP Effective Time shall be the
certificate of incorporation of MOCP after the MOCP Merger,
except that such certificate shall be amended as of the MOCP
Effective Time to change the name of the corporation from
MediaOne Cable Partnership Holdings, Inc. to Microsoft Cable
Partnership Holdings, Inc.
(d) The by-laws of MOCP in effect at the MOCP Effective Time shall
be the by-laws of MOCP after the MOCP Merger, until thereafter
amended as provided therein or by applicable law.
(e) The directors of MOCP Merger Sub at the MOCP Effective Time
shall, from and after the MOCP Effective Time, be the
directors of MOCP until their successors have been duly
elected or appointed and qualified or until their earlier
death, resignation or removal in accordance with the
organisational documents of MOCP.
(f) The officers of MOCP Merger Sub at the MOCP Effective Time
shall, from and after the MOCP Effective Time, be the officers
of MOCP until their successors have been duly elected or
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appointed and qualified or until their earlier death,
resignation or removal in accordance with the organisational
documents of MOCP.
4. EFFECT OF MERGERS; CONSIDERATION
4.1 At the Effective Time, as a result of the MOUK Merger and without any
action on the part of MOUK, the MOUK Shares shall be converted into,
and become exchangeable for that number of shares of Microsoft Common
Stock that is equal to .05 multiplied by the number of Telewest Shares
then beneficially owned by MOUK (the "MOUK Share Consideration"). At
the Effective Time, as a result of the MOCP Merger and without any
action on the part of MOCP, the MOCP shares shall be converted into,
and become exchangeable for, that number of shares of Microsoft Common
Stock that is equal to .05 multiplied by the number of Telewest Shares
beneficially owned by MOCP (the "MOCP Share Consideration" and together
with the MOUK Share Consideration, the "Consideration Stock")). At the
Effective Time, all MOUK Shares and MOCP Shares shall no longer be
outstanding and shall be cancelled and retired and shall cease to
exist, and all certificates formerly representing any of such shares
shall thereafter represent only the right in the aggregate to, in the
case of certificates formerly representing MOUK Shares, the MOUK Share
Consideration and, in the case of certificates formerly representing
MOCP Shares, the MOCP Share Consideration.
4.2 At the MOUK Effective Time, each MOUK Sub Shares issued and outstanding
immediately prior to the MOUK Effective Time shall be converted into
one share of common stock of MOUK.
4.3 At the MOCP Effective Time, each MOCP Sub Share issued and outstanding
immediately prior to the MOCP Effective Time shall be converted into
one share of common stock of MOCP.
4.4 Upon surrender of all of the certificates representing all of the
issued and outstanding MOUK Shares and the MOCP Shares for cancellation
to Microsoft, Microsoft shall promptly thereafter cause the
Consideration Stock to be delivered to International.
4.5 The Consideration Stock upon issuance shall be validly issued, fully
paid and non-assessable.
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4.6 MediaOne and International acknowledge that the Consideration Stock is
being offered and sold without registration under the U.S. Securities
Act of 1933, as amended (the "Securities Act"); International is
acquiring the Consideration Stock for its own account for investment
purposes only and not with a view to or for distributing or reselling
such Consideration Stock or any part thereof or interest therein in
contravention of the Securities Act; without prejudice to its rights
under the Registration Rights Agreement, MediaOne agrees that it will
not permit any of the Consideration Stock or any part thereof or
interest therein to be offered, sold or otherwise transferred, except
(i) pursuant to the registration requirements of the Securities Act or
in a transaction exempt from the registration requirements of the
Securities Act or otherwise not subject to the Securities Act, and (ii)
in accordance with applicable securities laws of any state of the
United States or other relevant jurisdiction; MediaOne and
International acknowledge that any certificate evidencing the
Consideration Stock may bear a legend to the foregoing effect.
4.7 Microsoft acknowledges that Shares are being offered and sold without
registration under the Securities Act; Microsoft is acquiring these
securities for its own account for investment purposes only and not
with a view to or for distributing or reselling such securities or any
part thereof or interest therein in contravention of the Securities
Act; Microsoft agrees that it will not sell or otherwise transfer any
of these securities or any part thereof or interest therein, except (i)
pursuant to the registration requirements of the Securities Act or in a
transaction exempt from the registration requirements of the Securities
Act or otherwise not subject to the Securities Act, and (ii) in
accordance with applicable securities laws of any state of the United
States or other relevant jurisdiction.
5. PRE-CLOSING MATTERS
5.1 Pending Closing, MediaOne and the Companies shall ensure or procure
that:
(a) the businesses of the Companies and TW Holdings will be
properly managed, that their respective businesses will be
carried on in the ordinary and usual course and that each of
them will comply, in all material respects, with all
applicable laws and will maintain all licences, consents and
authorisations of any nature whatsoever (public or private)
which are necessary to carry on the businesses of the each of
them from time to time;
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(b) Microsoft will be kept fully and promptly informed of all
material matters relating to businesses, assets and affairs of
the Companies, TW Holdings and Telewest (to the extent known
by MediaOne and other than any matters which any of such
companies shall be required to keep confidential pursuant to a
confidentiality obligation) and, other than as aforesaid,
provided promptly with copies of all notices under the
Relationship Agreement and the TW Operating Agreement and
copies of all documents, notices or correspondence received
from Telewest or TW Holdings;
(c) the Companies and TW Holdings will keep proper accounting
records and in them make true and complete entries of all
dealings and transactions in relation to its and their
businesses and will afford to Microsoft and any representative
of Microsoft full access thereto;
(d) the Companies and TW Holdings will not issue any capital stock
or any security convertible or exchangeable into any capital
stock of the Companies or TW Holdings;
(e) Microsoft will be kept fully and promptly informed of any
proposed issuance ("Telewest Issuance") of Telewest Shares or
of securities convertible into or exchangeable for Telewest
Shares or carrying the right to vote at general meetings of
Telewest's shareholders which would, on a fully diluted basis,
reduce the percentage of Telewest Shares of which the
Companies or TW Holdings are the registered and/or beneficial
holders; and
(f) MediaOne's adoption of this Agreement by written consent shall
not be withdrawn or modified in any manner adverse to
Microsoft and its Affiliates and that if such consent is
required to be renewed in any manner it shall be so renewed.
5.2 Without prejudice to the provision of clause 5.1, pending Closing
MediaOne, International and the Companies shall cause or procure (as
applicable) that none of the following matters (except as contemplated
in this Agreement) will occur or be undertaken without the prior
written consent of Microsoft:
(a) the modification of any of the rights attached to the MOUK
Shares, the MOCP Shares or the TW Holdings Interests or the
creation or issue of any new securities of the Companies or
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TW Holdings or the issue of any options or other instruments
convertible on exchange into securities of the Companies or TW
Holdings in respect thereof;
(b) the capitalisation or repayment of any amount standing to the
credit of any reserve of the Companies or TW Holdings or the
redemption or purchase of any interests or any other
reorganisation of the capital of the Companies or TW Holdings;
(c) the admission of any person (howsoever occurring) as a member
of TW Holdings or the pledge, transfer, encumbrance, lease or
other disposition of any MOUK Shares or MOCP Shares or any
interests in the MOUK Shares or MOCP Shares;
(d) [INTENTIONALLY LEFT BLANK]
(e) the declaration, payment or other making by the Companies or
TW Holdings of any dividend or other distribution;
(f) the giving by the Companies or TW Holdings of any guarantee or
indemnity;
(g) the acquisition by the Companies or TW Holdings of any shares
of any other company or the participation by the Companies or
TW Holdings in any partnership, consortium, association or
joint venture other than as may be required in connection with
the rights issue;
(h) the borrowing of any money or acceptance of any financial
facility by the Companies or TW Holdings or the making or
granting of any loan or any financial facility by any of them;
(i) [INTENTIONALLY LEFT BLANK]
(j) [INTENTIONALLY LEFT BLANK]
(k) [INTENTIONALLY LEFT BLANK]
(l) the appointment of any person as a director of the Companies
or TW Holdings;
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<PAGE>
(m) the entry into, termination, amendment or variation of any
material contract, transaction or arrangement by the Companies
or TW Holdings to which it is a party;
(n) [INTENTIONALLY LEFT BLANK]
(o) the breach of any Warranty.
5.3 If at any time on or before Closing:
(a) MediaOne, International or the Companies fail to comply in any
material respect with all or any of their material obligations
contained in this Agreement, whether to be performed on or
before Closing;
(b) Microsoft becomes aware of any fact or event (not being a fact
or event provided for by this Agreement) which in its
reasonable opinion:
(i) would cause the condition in clause 2.1(j) to become
incapable of satisfaction; or
(ii) is evidence that any Warranty is misleading in any
respect material to Microsoft or that any material
obligation of MediaOne will not be complied with
within the period required by this Agreement; or
(iii) discloses a material adverse effect on the business,
financial condition, properties, operations or
results of operations of the Companies, TW Holdings
or Telewest;
then notwithstanding the adoption of this Agreement by International as
the sole stockholder of MOUK and MOCP Microsoft may, by written notice
given by it to MediaOne, rescind this Agreement without prejudice to
its remedies against MediaOne or the Companies or any of them.
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6. CLOSING
6.1 The Closing shall take place at the offices of Sullivan & Cromwell, 125
Broad Street, New York, New York, at 10:00 am on the third Business Day
after the satisfaction (or due waiver) of the conditions contained in
clause 2.1 or at such other place and/or time and/or on such other date
as may be agreed between the parties in writing.
6.2 At Closing (and Closing shall be subject to) MediaOne shall deliver to
Microsoft a certificate from an executive officer of MediaOne dated the
Closing Date certifying that the condition set forth in Section 2.1(j)
has been complied with and listing any matters which have arisen for
the purposes of clause 7.6 and certifying that MediaOne, International
and the Companies have complied in all material respects with their
obligations hereunder;
6.3 At Closing (and Closing shall be subject to) delivery to MediaOne by
Microsoft of a certificate from an executive officer of Microsoft dated
the Closing Date certifying that there has been no breach of any
representation or warranty made by Microsoft and contained herein and
certifying that Microsoft, MOUK Merger Sub and MOCP Merger Sub have
complied in all material respects with their respective obligations
hereunder.
7. WARRANTIES
7.1 MediaOne and International hereby warrant to Microsoft in the terms of
the Warranties and MediaOne shall indemnify Microsoft in respect of any
breaches thereof.
7.2 The Warranties are given but no other information of which Microsoft
may have knowledge (whether before or after the date hereof and whether
actual or constructive) shall prejudice or affect in any way
Microsoft's ability to make any claim nor to reduce the amount
recoverable, in respect of any claim arising from any breach of a
Warranty or prejudice or affect any other right of Microsoft under this
Agreement.
7.3 Each of the Warranties set out in each paragraph and each paragraph of
Schedule III shall be separate and independent and shall not be limited
by reference to any other paragraph or anything in this Agreement.
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7.4 Where any statement set out in Schedule III is expressed to be given or
made to the best of MediaOne's knowledge or is qualified by reference
to MediaOne's awareness or as qualified in some other manner having
substantially the same effect, such statement shall be deemed to be
qualified by the additional statement that MediaOne has made all
reasonable diligent enquiries of International and the Companies prior
to the date hereof in respect of the subject matter of the relevant
statement and MediaOne shall be deemed to have knowledge of anything of
which International or the Companies have knowledge.
7.5 [INTENTIONALLY LEFT BLANK]
7.6 MediaOne undertakes to Microsoft that, upon it or any member of
MediaOne's Group becoming aware of the actual, impending or threatened
occurrence of any event after the date of this Agreement, both before
and after the Effective Time, which would reasonably be expected to
cause or constitute a breach of any of the Warranties (whether when
repeated at Closing or otherwise) such that a condition to Closing
could not be satisfied, it will immediately give written notice thereof
to Microsoft together with full details of the relevant event.
7.7 Microsoft has entered into this Agreement on the basis of the
Warranties and in reliance on them. Liability under any Warranty shall
not be confined to breaches discovered before the Effective Time nor in
any way be modified or discharged by the Mergers.
7.8 Microsoft hereby warrants to MediaOne in the terms of the
representations and warranties set forth in Schedule IV and shall
indemnify MediaOne in respect of any breaches thereof.
7.9 Each of the representations and warranties set out in each paragraph of
Schedule IV shall be separate and independent and shall not be limited
by reference to any other paragraph or anything in this Agreement.
7.10 The representations and warranties of Microsoft in Schedule IV shall be
deemed to be given at the date of this Agreement and shall be deemed to
be repeated (mutatis mutandis) at Closing as if made at such time (save
that references to any fact, matter or thing existing, occurring or
having occurred at or before the date of this Agreement shall be
construed as references to at or before Closing), PROVIDED that,
without prejudice to the provisions of clause 5 (pre-Closing matters),
no right to damages or
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compensation or otherwise in respect of breach of any representation or
warranty shall arise because of any act or thing done or omitted to be
done at any time after the date of this Agreement at the written
request of or with the written approval of MediaOne, MediaOne having
been fully informed of all relevant matters prior to giving such
approval.
7.11 MediaOne has entered into this Agreement on the basis of the
representations and warranties of Microsoft contained in Schedule IV
and in reliance on them. Liability under any representation and
warranty shall not be confined to breaches discovered before the
Effective Time nor in any way be modified or discharged by the Mergers.
8. ADDITIONAL INDEMNITIES
8.1 MediaOne covenants and undertakes that at the Effective Time the
Companies shall have no liabilities (whether known or unknown or
actual, future or contingent) other than as referred to in, and for
which MediaOne indemnifies Microsoft pursuant to, Section Q.1(a) of
Schedule III and if either Company has any liability it shall pay to
Microsoft an amount equal to the liability within five Business Days of
being notified in writing of the amount of the liability. MediaOne
further agrees to indemnify, defend and hold harmless Microsoft and its
Affiliates and their respective directors, officers, employees,
shareholders and agents against all losses, claims, damages,
liabilities, suits, costs and expenses (collectively, "Damages")
arising out of or relating to (i) any matter which constitutes a breach
of the covenant and undertaking of MediaOne in the foregoing sentence
of this clause 8.1 or (ii) any breach or inaccuracy in the Warranties.
8.2 Microsoft agrees to indemnify, defend and hold harmless MediaOne and
its Affiliates and their respective directors, officers, employees,
shareholders and agents against all damages arising out of or relating
to any breach or inaccuracy in the representations and warranties of
Microsoft set forth in Schedule IV.
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9. CONFIDENTIALITY AND ANNOUNCEMENTS
9.1 MediaOne agrees with Microsoft as a separate and independent agreement
that (save as may be required by law or any regulatory body or agency,
and then only to the extent so required) it will not and it shall
procure that no member of MediaOne's Group shall at any time hereafter
divulge (other than in accordance with clause 9.2 or to the Parent) any
confidential information in relation to the affairs or businesses of
Telewest or TW Holdings or their Affiliates.
9.2 No announcement or statement about this Agreement or the subject matter
of, or any matter referred to in, this Agreement shall be made or
issued before, on or after the Effective Time by or on behalf of any of
the parties without the prior written approval of the other parties
(such approval not to be unreasonably withheld or delayed) PROVIDED
that nothing shall restrict the making by any party (even in the
absence of agreement by the other parties) of any statement which may
be required by law or called for by the requirements of any regulatory
authority (including any stock exchange requirements binding on any of
the parties hereto) but then only to the extent so required.
10. FURTHER ASSURANCE AND AVAILABILITY OF INFORMATION
10.1 MediaOne shall execute and deliver and shall procure that all relevant
members of MediaOne's Group execute and deliver all such instruments
and other documents and take all such actions as Microsoft may from
time to time reasonably require in order to give full effect to the
provisions of this Agreement.
10.2 Following the Effective Time, Microsoft shall execute and deliver and
shall procure that its Affiliates execute and deliver all such
instruments and other documents and take all such actions as MediaOne
shall reasonably require in order to give full effect to the provisions
of this Agreement.
10.3 MediaOne shall cause to be made available to Microsoft all information
in the possession or under control of MediaOne or MediaOne's Group
which Microsoft may from time to time reasonably require (before or
after the Effective Time) relating to the business and affairs of the
Companies or TW Holdings and shall permit Microsoft and its
representatives to have access to all documents containing such
information which are in the possession or under the control of
MediaOne's Group and to take copies thereof and MediaOne agrees and
agrees to cause its Affiliates to keep all of such information
confidential.
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11. COSTS
Each party shall pay its own costs and expenses in relation to the
negotiation, preparation, and implementation of this Agreement (and the
documents referred to herein), including the fees and disbursements of
their respective legal, accountancy and other advisers.
12. NOTICES
12.1 Any notice or other communication to be given under this Agreement
shall be in writing, shall be deemed to have been duly served on, given
to or made in relation to a party if it is left at the authorised
address of that party, posted by registered post addressed to that
party at such address, or sent by facsimile transmission to a machine
situated at such address and shall if:
(a) personally delivered, be deemed to have been received at the
time of delivery;
(b) posted to an inland address in the United Kingdom, be deemed
to have been received on the second Business Day after the
date of posting and if posted to an overseas address, be
deemed to have been received on the fifth Business Day after
the date of posting; or
(c) sent by facsimile transmission, be deemed to have been
received upon receipt by the sender of a facsimile
transmission report (or other appropriate evidence) that the
facsimile has been transmitted to the addressee,
Provided that where, in the case of delivery by hand or facsimile
transmission, delivery transmission occurs after 6 pm on a Business Day
or on a day which is not a Business Day, receipt shall be deemed to
occur at 9 am on the next following Business Day.
12.2 For the purposes of this Agreement the authorised address of each party
shall be the address set out below:
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To: Microsoft c/o Microsoft Corporation
MOUK Merger Sub: One Microsoft Way
MOCP Merger Sub: Redmond, Washington 98052-6399, USA
Telephone: (425) 936-5266
Telecopy: (425) 936-2625
Attn: Gregory B. Maffei
With a copy to: Sullivan & Cromwell
125 Broad Street
New York, New York 10004, USA
Telephone: (212) 558-4000
Telecopy: (212) 558-3588
Attn: Alexandra D. Korry
and to: Sullivan & Cromwell
St. Olave's House
9a Ironmonger Lane
London EC2V 8EY, England
Telephone: (+44) 207.710-6500
Telecopy: (+44) 207.710-6565
Attn: Stewart M. Robertson
and to: Lovell White Durrant
65 Holborn Viaduct
London EC1A 2DY, England
Telephone: (+44) 207.236-0066
Facsimile: (+44) 207.248-4212
Attn: Richard Ufland
To: MediaOne c/o MediaOne Group Inc
International 7800 East Orchard Road
MOUK Englewood, Colorado 80111, USA
MOCP Telephone: (303) 858-5800
Telecopy: (303) 858-5834
Attn: General Counsel
With a copy to: Weil Gotshal & Manges
One South Place
London EC2N 2WG, England
Telephone: (+44) 207.903-1172
Telecopy: (+44) 207.903-0990
Attn: Michael Francies
and to: AT&T Corp.
295 North Maple Avenue
Basking Ridge, New Jersey 07920
Attention: Marilyn J. Wasser
Telecopy: (908) 953-8360
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and to: Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Trevor S. Norwitz
Telecopy: (212) 403-2000
or such other address as that party may notify to the others in writing
from time to time in accordance with the requirements of this clause.
13. SEVERABILITY AND SUSPENSION OF RESTRICTIONS
13.1 The provisions of this Agreement shall be deemed severable and if any
provision of this Agreement is held to be illegal, invalid or
unenforceable in whole or in part in any relevant jurisdiction the
legality, validity and enforceability of the remaining provisions of
this Agreement (or such document) shall not in any way be affected or
impaired thereby. If any provision of this Agreement, or the
application thereof to any person or entity or any circumstance, is
invalid or unenforceable, (a) a suitable and equitable provision shall
be substituted therefor in order to carry out, so far as may be valid
and enforceable, the intent and purpose of such invalid or
unenforceable provision and (b) the remainder of this Agreement and the
application of such provision to other persons, entities or
circumstances shall not be affected by such invalidity or
unenforceability, nor shall such invalidity or unenforceability affect
the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
14. ENTIRE AGREEMENT AND VARIATION
14.1 This Agreement contains the entire agreement and understanding of the
parties and supersedes any prior agreements, understandings or
arrangements (both oral and written) relating to the subject matter of
this Agreement.
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14.2 Each of the parties acknowledges and agrees that:
(a) it does not enter into this Agreement on the basis of and does
not rely, and has not relied, upon any statement or
representation (whether negligent or innocent) or warranty or
other provision (in any case whether oral, written, express or
implied) made, given or agreed to by any person (whether a
party to this Agreement or not) except those expressly set out
or referred to in this Agreement and the only remedy or
remedies available in respect of any misrepresentation or
untrue statement made to it shall be a claim for breach of
contract under this Agreement or the indemnification provided
for in this Agreement; and
(b) this clause 14.2 shall not apply to any statement,
representation or warranty made fraudulently or to any
provision of this Agreement which was induced by, or otherwise
entered into as a result of, fraud, for which the remedies
shall be all those available under the law governing this
Agreement.
14.3 No variation, supplement, deletion or replacement of or from this
Agreement or any of its terms shall be effective unless made in writing
and signed by or on behalf of each party.
15. GENERAL PROVISIONS
15.1 Any right of rescission or termination conferred upon Microsoft under
this Agreement shall be in addition to and without prejudice to all
other rights and remedies available to it by reason of any breach of
any provisions of this Agreement (including the Warranties).
15.2 Any waiver of a breach of any of the terms of this Agreement or of any
default hereunder shall not be deemed to be a waiver of any subsequent
breach or default and shall in no way affect the other terms of this
Agreement.
15.3 No failure to exercise and no delay on the part of any party in
exercising any right, remedy, power or privilege of that party under
this Agreement and no course of dealing between the parties shall be
construed or operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, power or privilege preclude any
other or further exercise thereof or the exercise of any other right,
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remedy, power or privilege. The rights and remedies provided by this
Agreement are cumulative and are not exclusive of any rights or
remedies provided by law.
15.4 Microsoft may assign any or all of its rights and obligations under
this Agreement to any direct wholly owned subsidiary of Microsoft
provided that the consideration to be paid in the Mergers shall remain
the Consideration Stock and Microsoft shall not be relieved from any
liabilities hereunder exactly at the time of such transaction.
15.5 Promptly after each of MOUK Merger Sub and MOCP Merger Sub are
incorporated, the parties hereto shall amend this Agreement to cause
each of such entities to become parties to this Agreement; provided
that the parties hereto agree that such entity shall become parties to
the minimum extent necessary so that the Mergers may be validly
consummated under Article 111, Section 105 of the CBCA and any
approvals of MOUK, MOCP and International necessary for the
consummation of the Mergers shall be made at such time.
16. GOVERNING LAW AND JURISDICTION
16.1 THIS AGREEMENT (TOGETHER WITH ALL DOCUMENTS TO BE ENTERED INTO PURSUANT
TO IT WHICH ARE NOT EXPRESSED TO BE GOVERNED BY ANOTHER LAW) SHALL BE
GOVERNED BY, CONSTRUED AND TAKE EFFECT IN ACCORDANCE WITH NEW YORK LAW
WITHOUT REFERENCE TO ITS PRINCIPLES OF CONFLICTS OF LAW (OTHER THAN
SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW).
16.2 THE FEDERAL COURTS OF THE SOUTHERN DISTRICT OF NEW YORK ("THE CHOSEN
COURTS") SHALL HAVE EXCLUSIVE JURISDICTION TO SETTLE ANY CLAIM, DISPUTE
OR MATTER OF DIFFERENCE WHICH MAY ARISE OUT OF OR IN CONNECTION WITH
THIS AGREEMENT (INCLUDING WITHOUT LIMITATION CLAIMS FOR SET-OFF OR
COUNTERCLAIM) OR THE LEGAL RELATIONSHIPS ESTABLISHED BY THIS AGREEMENT.
EACH PARTY HERETO SOLELY IN CONNECTION WITH CLAIMS ARISING UNDER THIS
AGREEMENT OR THE TRANSACTIONS CONTAINED IN OR CONTEMPLATED BY THIS
AGREEMENT (I) IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE
CHOSEN COURTS, (II) WAIVES ANY OBJECTION TO LAYING VENUE IN ANY SUCH
ACTION
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OR PROCEEDING IN THE CHOSEN COURTS, (III) WAIVES ANY OBJECTION THAT THE
CHOSEN COURTS ARE AN INCONVENIENT FORUM OR DO NOT HAVE JURISDICTION
OVER ANY PARTY HERETO.
16.3 Each of the parties hereto agrees that in the event of any action
between any of the parties hereto being commenced in respect of this
Agreement or any matters arising under it, the process by which it is
commenced, (where consistent with the applicable court rules) may be
served on them in accordance with clause 12.
AS WITNESS the hands of the parties or their duly authorised
representatives the day and year first above written.
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SCHEDULE I
DETAILS OF THE COMPANIES
MEDIAONE UK CABLE, INC.
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State of Incorporation: Colorado
Company number: 19901007126
Date of incorporation: February 7, 1990
Principal office: 188 Inverness Drive West, 6th Floor
Englewood, CO 80112 USA
Authorised share capital: One share of common stock, no par value
Issued share capital: One share of common stock, no par value
Shareholders: MediaOne International Holdings, Inc.
Directors: Richard D. Hegstrom
A. Gary Ames
Secretary: Sharon A. O'Leary
Auditors: Arthur Andersen, LLP
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SCHEDULE I
DETAILS OF THE COMPANIES
MEDIAONE CABLE PARTNERSHIP HOLDINGS, INC.
- -----------------------------------------
State of Incorporation: Colorado
Company number: 19891067512
Date of incorporation: June 13, 1989
Principal office: 188 Inverness Drive West, 6th Floor
Englewood, CO 80112 USA
Authorised share capital: One share of common stock, no par value
Issued share capital: One share of common stock, no par value
Shareholders: MediaOne International Holdings, Inc.
Directors: John K. Frontz
Richard D. Hegstrom
A. Gary Ames
Secretary: Sharon A. O'Leary
Auditors: Arthur Andersen, LLP
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SCHEDULE II
COMPANIES' INTERESTS IN TW HOLDINGS
Ownership Interest
------------------
MediaOne UK Cable, Inc. 45.67%
MediaOne Cable Partnership Holdings, Inc. 4.33%
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SCHEDULE III
WARRANTIES
In this Schedule, "Encumbrance" includes any charge, debenture, mortgage,
pledge, lien, assignment, hypothecation, security interest, title retention or
other security agreement or arrangement.
A. PRELIMINARY
The information set out in the Recitals and in Schedules I and II is
true and accurate in all respects.
B. [INTENTIONALLY LEFT BLANK]
C. BUSINESS OF TW HOLDINGS
TW Holdings has not at any time conducted any business or activity of
any kind or incurred any liability.
D. BUSINESSES OF THE COMPANIES
Neither of the Companies has at any time conducted any business or
activity of any kind or incurred any liabilities other than tax
liabilities for which MediaOne is fully indemnifying Microsoft pursuant
to Section Q.1(a) of this Schedule III.
E. CAPITAL AND CONSTITUTION OF THE COMPANIES AND TW HOLDINGS
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E.1 The authorised capital stock of MOUK consists of one (1) MOUK Share of
which one (1) MOUK Share is issued and outstanding. The issued and
outstanding MOUK Shares have been duly authorised and validly issued,
are fully paid and nonassessable and are owned by International free
and clear of any encumbrances and have never been owned by any person
other than International. There are no preemptive or other outstanding
rights, options, warrants, conversion rights, stock appreciation
rights, redemption rights, agreements, arrangements or commitment to
issue or sell any shares of capital stock or other securities of MOUK
or any securities or obligations convertible or exchangeable into or
exercisable for, or giving any person a right to subscribe for or
acquire, any securities of MOUK, and no securities or obligations
evidencing such rights are authorised, issued or outstanding. MOUK does
not have outstanding any bonds, debentures, notes or other obligations
the holders of which have the right to vote (or which are convertible
into or exercisable for securities having the right to vote) with the
stockholders of MOUK on any matter.
E.2 The authorised capital stock of MOCP consists of one (1) MOCP Share of
which one (1) MOCP Share is issued and outstanding. The issued and
outstanding MOCP shares have been duly authorised and validly issued,
are fully paid and nonassessable and are owned by International free
and clear of any encumbrances and have never been owned by any person
other than International. There are no preemptive or other outstanding
rights, options, warrants, conversion, rights, stock appreciation
rights, redemption rights, agreements, arrangements or commitments to
issue or sell any shares of capital stock or other securities of MOCP
or any securities or obligations convertible or exchangeable into or
exercisable for, or giving an person a right to subscribe for or
acquire, any securities of MOCP, and on securities or obligations
evidencing such rights are authorised, issued or outstanding. MOCP does
not have outstanding any bonds, debentures, notes or other obligations
the holders of which have the right to vote (or which are convertible
into or exercisable for securities having the right to vote) with the
stockholders of MOCP on any matter.
E.3 The registers of members of TW Holdings contain complete and accurate
records of their members from time to time and all issues and transfers
of interests in the capital of TW Holdings have been registered in
accordance with their constitutional documents from time to time in
force.
E.4 There is no option, right of pre-emption, right or obligation to
acquire, redeem or convert or encumbrance on, over or affecting the
capital (whether issued or unissued and whether or not authorised
capital) of TW Holdings and neither has TW Holdings or any member
thereof agreed to give or create
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any of the foregoing and no person has claimed to be entitled to any of
the foregoing.
E.5 The copy of the constitutional documents of the Companies and TW
Holdings attached as Annex 6 hereto is up to date, true and complete.
The Companies and TW Holdings are in possession of all necessary books,
records and papers relating to their respective assets and business and
all such records have been properly and accurately kept and completed.
E.6 The TW Interests are free and clear of all Encumbrances. The TW
Interests comprise 50 percent of the limited liability company
interests in the capital of TW Holdings.
F. ASSETS AND LIABILITIES
F.1 TW Holdings is not the holder or beneficial owner of any shares or
securities of any other person (wherever incorporated) other than the
926,877,921 Telewest Shares (and any Telewest Shares or securities
acquired by the Companies or Liberty UK in a Telewest Issuance after
the date hereof pursuant to their legal or contractual entitlements and
contributed to TW Holdings) which it beneficially owns free and clear
of all encumbrances and has not agreed to acquire any such shares or
securities.
F.2 Neither of the Companies is the registered or beneficial owner of any
shares or securities of any other person (wherever incorporated) other
than the 423,053,758 Telewest Shares that MOUK is the registered holder
of, the 174,908,162 Telewest Shares that MOUK is the beneficial owner
of, free and clear of all encumbrances, and the 40,385,202 Telewest
Shares that MOCP is the registered holder of (and in each case any
Telewest Shares or securities acquired by the Companies in a Telewest
Issuance after the date hereof pursuant to their legal or contractual
entitlements) and the TW Holdings Interests.
F.3 Neither of the Companies or TW Holdings is and has agreed to become a
member of any partnership, joint venture, consortium or other
incorporated or unincorporated association.
F.4 TW Holdings does not have any liabilities or obligations of any nature
whatsoever (whether known or unknown or actual, future or contingent).
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F.5 No member of MediaOne's Group has any obligation to make any capital
contribution or other payment to TW Holdings at any time.
F.6 The capital accounts of each of the members of TW Holdings are set
forth on Schedule F.6.
F.7 All Telewest Shares in which Microsoft is obtaining an indirect
interest pursuant to this Agreement and which are indirectly
beneficially owned by MediaOne are owned indirectly by MediaOne free
and clear of all encumbrances.
F.8 All Telewest Shares indirectly beneficially owned by MediaOne are owned
by the Companies and TW Holdings. At the Effective Time, all Telewest
Shares beneficially owned by MediaOne will be indirectly beneficially
owned by Microsoft.
G. MEDIAONE
No liability has been incurred, directly or indirectly, by the
Companies or TW Holdings to MediaOne or to any officer of the Companies
or TW Holdings (or any person connected with any of them) or by
MediaOne (or other such person) to the Companies or TW Holdings.
H. COMPLIANCE AND LITIGATION
H.1 The Companies and TW Holdings have conducted their respective
businesses in accordance with all applicable laws and regulations and
there is no order, decree or judgment of any Court or any governmental
agency outstanding against the Companies or TW Holdings which would be
reasonably likely to have a material adverse effect upon the assets or
business of the Companies or TW Holdings.
H.2 All necessary licences, registrations, consents, permits and
authorisations (public and private) have been obtained by the Companies
and TW Holdings to enable the Companies and TW Holdings to carry on
their respective business effectively in the places and in the manner
in which such business is now carried on and all such licences,
registrations, consents, permits and authorisations are valid and
subsisting and there are no circumstances known to MediaOne which are
reasonably likely to lead to any of them being suspended, cancelled or
revoked.
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H.3 Neither the Companies nor TW Holdings is now engaged in any material
litigation or arbitration proceedings, there are no material litigation
or arbitration proceedings pending or threatened by or against the
Companies or TW Holdings, no injunction has been granted against the
Companies or TW Holdings, neither the Companies nor TW Holdings has
given any undertaking to any court or to any third party arising out of
any legal proceedings and there is no matter or fact in existence which
would be reasonably likely to give rise to the same or form the basis
of any criminal prosecution against the Companies or TW Holdings.
H.4 All filings made by the Companies or TW Holdings in any public register
(including at the Securities and Exchange Commission) including any
such forms, reports and documents when filed were accurate and did not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances in which they
were made, not misleading.
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I. TELEWEST REPORTS
As of their respective dates, (or, if amended, as of the date of such
amendment) to the actual knowledge of MediaOne or any of its affiliates
(which shall not be deemed to include Telewest) without any duty of
inquiry, each registration statement, report or other document filed by
Telewest with the United States Securities and Exchange Commission (the
"SEC") since December 31, 1998, including Telewest's Annual Report on
Form 20-F for the year ended December 31, 1998 (including in each case
exhibits, annexes and any amendments thereto) (collectively, including
any such reports filed subsequent to the date hereof and as amended,
the "Telewest Reports") did not and any Telewest Reports filed with the
SEC subsequent to the date hereof and on or before the Closing Date
will not, contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances in
which they were made, not misleading. Each of the consolidated balance
sheets included in or incorporated by reference into the Telewest
Reports (including the related notes and schedules) fairly presents or,
as to any Telewest Reports filed with the SEC subsequent to the date
hereof and on or before the Closing Date, will fairly present, to the
actual knowledge of MediaOne or any of its affiliates (which shall not
be deemed to include Telewest) without any duty of inquiry, the
consolidated financial position of Telewest and its Affiliates as of
its date and each of the consolidated statements of income and of
changes in financial position included in or incorporated by reference
into the Telewest Reports (including any related notes and schedules)
fairly presents or, as to any Telewest Reports filed with the SEC
subsequent to the date hereof and on or before the Closing Date, will
fairly present, to the actual knowledge of MediaOne or any of its
affiliates (which shall not be deemed to include Telewest) without any
duty of inquiry, the results of operations, retained earnings and
changes in financial position, as the case may be, of Telewest and its
Affiliates for the periods set forth therein (subject, in the case of
unaudited statements, to notes and normal year-end audit adjustments
that will not be material in amount or effect), in each case in
accordance with United Kingdom generally accepted accounting principles
reconciled to United States general accepted accounting principles
consistently applied during the periods involved.
J. ORGANIZATION AND QUALIFICATION OF MEDIAONE, INTERNATIONAL, THE
COMPANIES AND TW HOLDINGS
Each of MediaOne, International, the Companies and TW Holdings is a
corporation or limited liability company duly organised, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, and has all requisite corporate or
similar power and authority to own and operate its properties and
assets and to carry on its business as currently conducted.
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K. CORPORATE AUTHORIZATION
Each of MediaOne, International and the Companies has full corporate or
similar power and authority to execute and deliver this Agreement and
to perform its obligations hereunder. The execution, delivery and
performance by MediaOne, International and the Companies of this
Agreement has been duly and validly authorised and no additional
corporate authorisation or consent is required in connection with the
execution, delivery and performance by MediaOne, International and the
Companies of this Agreement including the Merger. This Agreement has
been approved by the unanimous written consent of the Boards of
Directors of each of MOUK and MOCP and has been adopted by MediaOne as
the sole stockholder of each of MOUK and MOCP.
L. CONSENTS AND APPROVALS
Except as specifically set forth in this Agreement, no consent,
approval, waiver or authorisation is required to be obtained by
MediaOne, International, TW Holdings or the Companies from, and no
notice or filing is required to be given by MediaOne, International, TW
Holdings or the Companies to, or made by MediaOne, International, TW
Holdings or the Companies with, any governmental entity or other person
in connection with the execution, delivery and performance by MediaOne,
International and the Companies of this Agreement.
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M. NON-CONTRAVENTION
The execution, delivery and performance by MediaOne, International and
the Companies of this Agreement and the consummation by MediaOne,
International and the Companies of the transactions contemplated hereby
do not and will not (i) violate any provision of the certificate of
incorporation, bylaws or other organisational documents of MediaOne,
International, TW Holdings or the Companies, (ii) assuming the
obtaining of the consents referred to in this Agreement to conflict
with, or result in the breach of, or constitute a default under, or
result in the termination, cancellation or acceleration (whether after
the filing of notice or the lapse of time or both) of any right or
obligation of MediaOne, International, TW Holdings or the Companies, or
to a loss of any benefit to which MediaOne, International, TW Holdings
or the Companies are entitled under, any provision of any agreement or
any other instrument binding upon MediaOne, International, TW Holdings
or the Companies or (iii) assuming the obtaining of the consents
referred to in this Agreement violate or result in a breach of or
constitute a default under any Law to which MediaOne, International, TW
Holdings or the Companies are subject.
N. BINDING EFFECT
This Agreement, when executed and delivered by the other parties to the
Agreement, will constitute a valid and legally binding obligation of
MediaOne, International and the Companies enforceable in accordance
with its terms, subject to bankruptcy, insolvency, reorganisation,
moratorium and similar laws of general applicability relating to or
affecting creditors' rights and to general equity principles.
O. [INTENTIONALLY LEFT BLANK]
P. TAXES
P.1 Except as set forth in Schedule V:
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(a) all material Tax Returns that are required to be filed on or
before Closing by or with respect to the Affiliated Group,
including the Companies, have been or will be timely filed on
or before Closing, and all such Tax Returns are or will be
true and complete in all material respects;
(b) all material Taxes due in respect of the Tax Returns referred
to in clause (a) have been or will be timely paid in full;
(c) the Tax Returns referred to in clause (a) have been examined
by the Internal Revenue Services or the appropriate state,
local or foreign taxing authority or the period of assessment
of the Taxes in respect of which such Tax Returns were
required to be filed has expired for all taxable periods
through 1987;
(d) all material deficiencies asserted or assessments made as a
result of such examinations have been paid in full;
(e) no issues relating to MOUK or MOCP that have been raised by
the relevant taxing authority in connection with the
examination of any of the Tax Returns referred to in clause
(a) are currently pending;
(f) no waivers of statutes of limitation have been given by or
requested with respect to any material Taxes of the Affiliated
Group;
(g) the Companies will not be required, as a result of:
(i) a change in accounting method for a Tax period
beginning on or before Closing, to include any
adjustment under s 481(c) of the Code (or any similar
provision of state, local or foreign law) in taxable
income for any Tax period beginning on or after
Closing; or
(ii) any "closing agreement" as described in s 7121 of the
Code (or similar provision of state, local or foreign
Tax law), to include any item of income in or exclude
any item of deduction from any Tax period beginning on
or after Closing;
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(h) there are no liens on any of the assets of the Companies that
arose in connection with any failure (or alleged failure) to
pay any Tax;
(i) neither of the Companies has ever been a member of an
affiliated, combined, consolidated or unitary Tax group for
purposes of filing any Tax Return, other than, for purposes of
filing consolidated US Federal income tax returns, a group of
which MediaOne was the common parent;
(j) other than those certain gain recognition agreements
previously disclosed to Microsoft, no closing arrangements,
private letter rulings, technical advance memoranda or similar
agreement or rulings have been entered into or issued by any
taxing authority with respect to the Companies;
(k) none of MediaOne, any of MediaOne's Group, the Companies or
any predecessor to the Companies has made with respect to the
Companies, or any predecessor of the Companies any consent
under s 341 of the Code; and
(l) as a result of Microsoft's acquisition of the Shares, neither
the Companies nor Microsoft will be obligated to make a
payment to an individual that would be a "parachute payment"
to a "disqualified individual" as those terms are defined in s
280G of the Code without regard to whether such payment is
reasonable compensation for personal services performed or to
be performed in the future.
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Q. TAX MATTERS
Q.1 Liability for Taxes and Related Matters
(a) Liability for Taxes
MediaOne shall be liable for and indemnify Microsoft for all
Taxes (including, without limitation, any obligation to
contribute to the payment of a Tax determined on a
consolidated, combined or unitary basis with respect to a
group of corporations that includes or included the Companies
and Taxes resulting from the Companies ceasing to be members
of the Affiliated Group):
(i) imposed on the Affiliated Group (other than the
Companies) for any taxable year; or
(ii) imposed on the Companies or for which the Companies
may otherwise be liable for any taxable year or
period that ends on or before Closing and, with
respect to any taxable year or period beginning
before and ending after Closing, the portion of such
taxable year ending on and including Closing, in both
instances, taking into account the provisions of
Section Q.1(c) hereof and including, without
limitation, any gain required to be recognized under
those certain gain recognition agreements entered
into with the Internal Revenue Service by each of
MOUK and MOCP (other than any gain recognized under
such gain recognition agreements as a result of
Microsoft, MOUK or MOCP or any Affiliate thereof
taking or failing to take or permitting any person to
take or fail to take an action on or after Closing
and on or before December 31, 1999).
(b) Microsoft shall be liable for and indemnify MediaOne for Taxes
of the Companies for any taxable year or period that begins
after Closing and, with respect to any taxable year or period
beginning before and ending after Closing, the portion of such
taxable year beginning after Closing, in both instances,
taking into account the provisions of Section Q.1(c) hereof.
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(c) Taxes for Short Taxable Year
For the purposes of paragraphs (a) and (b), whenever it is
necessary to determine the liability for Taxes of the
Companies for a portion of a taxable year or period that
begins before and ends after Closing or, for purposes of
determining MediaOne's and Microsoft's respective obligations
under Sections Q.1(a) and (b) hereof, the determination of the
Taxes of the Companies for the portion of the year of period
ending on, and the portion of the year or period beginning
after, Closing shall be determined by assuming that the
Companies and TW Holdings had a taxable year or period which
ended at the close of business on the Closing Date and did not
include any portion of the Closing Date after the time of
Closing except that exemption, allowances or deductions that
are calculated on an annual basis, such as the deduction for
depreciation, shall be apportioned on a time basis.
(d) Adjustment to Purchase Price
Any payment under this Section Q will be an adjustment to the
total consideration due under clause 4.1 of this Agreement.
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(e) Tax Returns
MediaOne shall file or cause to be filed when due all Tax
Returns that are required to be filed by or with respect to
the Companies for taxable years or periods ending on or before
Closing and shall pay any Taxes due in respect of such Tax
Returns, and Microsoft shall file or cause to be filed when
due all Tax Returns that are required to be filed by or with
respect to the Companies for taxable years or periods ending
after Closing and shall remit any Taxes due in respect to such
Tax Returns. MediaOne shall have the right to review, approve
and consent to the filing of any Tax Return that the Companies
are required to file on a single entity basis reflecting a Tax
for which MediaOne is liable pursuant to Section Q.1(a)
(taking into account the provisions of Q.1(c)) and, subject to
such review, approval and consent, which approval and consent
shall not be unreasonably withheld, MediaOne shall pay
Microsoft the Taxes for which MediaOne is liable pursuant to
Section Q.1(a) (taking into account the provisions of Section
Q.1(c)) but which are payable with Tax Returns to be filed by
Microsoft pursuant to the previous sentence within ten days
prior to the due date for the filing of such Tax Returns.
(f) Consent Provisions
Microsoft shall promptly notify MediaOne in writing upon
receipt by Microsoft, any of its affiliates or the Companies
of notice of any pending or threatened federal, state, local
or foreign income or franchise tax audits or assessments which
may affect the tax liabilities of the Companies for which
MediaOne would be required to indemnify Microsoft pursuant to
Section Q.1(a), provided that failure to comply with this
provision shall not effect Microsoft's right to
indemnification hereunder. MediaOne shall have the sole right
to represent the Companies' interests in any tax audit or
administrative or court proceeding relating to taxes of the
Companies for taxable periods ending on or before Closing, and
to employ counsel of its choice at its expense.
Notwithstanding the foregoing, MediaOne shall not be entitled
to settle, either administratively or after the commencement
of litigation, any claim for Taxes which would adversely
affect the liability for Taxes of Microsoft or the Companies
for any period after Closing to any extent (including, but not
limited to, the imposition of income tax deficiencies, the
reduction of asset basis or cost adjustments) without the
prior written consent of Microsoft. Such consent shall not be
unreasonably withheld, and shall not be necessary to the
extent that MediaOne has indemnified Microsoft against the
effects of any such settlement.
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MediaOne and Microsoft shall jointly control at their
respective expense the defence of any claim for Taxes for a
year or period ending after Closing which may be the subject
of indemnification by MediaOne pursuant to Section Q.1(a) and,
with the written consent of Microsoft, and at its sole
expense, may assume the entire defence of such tax claim.
Neither Microsoft nor the Companies may agree to settle any
tax claim for the portion of the year or period ending on
Closing which may be the subject of indemnification by
MediaOne under Section Q.1(a) without the prior written
consent of MediaOne, which consent shall not be unreasonably
withheld.
(g) Termination of Tax Allocation Agreements
Any tax allocation or sharing agreement or arrangement,
whether or not written, that may have been entered into by
MediaOne or any member of MediaOne's Group and the Companies
shall be terminated as to the Companies as of Closing, and no
payments which are owed by or to the Companies pursuant
thereto shall be made thereunder.
(h) Refunds, etc.
Microsoft shall promptly transfer, or cause to be transferred,
to MediaOne the entire amount of any refund or overpayment
(including interest thereon) received or utilized by Microsoft
or its Affiliates of any Taxes that were paid by MediaOne or
its Affiliates or that may be the subject of indemnification
by MediaOne under Section Q.1 hereof and, at the reasonable
request and at the expense of MediaOne, will file or cause to
be filed a claim for any such refund or over-payment.
Microsoft shall cause the Companies to forego the carryback to
a period ending on or before the Closing of any net operating
loss, net capital loss or other deduction or credit incurred
by the Companies in any taxable period ending after the
Closing. Unless required by law or by any agreement entered
into by MOUK or MOCP prior to Closing, Microsoft shall not,
and shall not permit the Companies to, file any amended Tax
Return after Closing with respect to any taxable period ending
on or before Closing.
-47-
<PAGE>
Q.2 Tax Reporting
Neither MediaOne nor any Affiliate thereof will take any
position on any U.S. federal, state, local or foreign tax
return, or take any other tax reporting position, that is
inconsistent with the treatment of each of the Mergers as a
reorganization within the meaning of Section 368 of the Code.
Q.3 Assistance and Cooperation
After the Effective Time, each of MediaOne and Microsoft shall:
(a) assist (and cause their respective affiliates to assist) the
other party in preparing any Tax Returns or reports which such
other party is responsible for preparing and filing in
accordance with Section Q.1;
(b) cooperate fully in preparing for any audits of, or disputes
with taxing authorities regarding, any Tax Returns of the
Companies;
(c) make available to the other and to any taxing authority as
reasonably requested all information, records, and documents
relating to Taxes of the Companies;
(d) provide timely notice to the other in writing of any pending
or threatened tax audits or assessments of the Companies for
taxable period for which the other may have a liability under
this Section Q; and
(e) furnish the other with copies of all correspondence received
from any taxing authority in connection with any tax audit or
information request with respect to any such taxable period.
Q.4 Survival of Obligations
The obligations of the parties set forth in this Section Q shall be
unconditional and absolute and shall remain in effect until the
expiration of the applicable statute of limitations.
-48-
<PAGE>
SCHEDULE IV
REPRESENTATIONS AND WARRANTIES OF MICROSOFT
A. CAPITAL OF MOUK MERGER SUB AND MOCP MERGER SUB
A.1 At Closing all of the outstanding shares of MOUK Merger Sub will be
directly owned by Microsoft and will be duly authorized.
A.2 At Closing all of the outstanding shares of MOCP Merger Sub will be
directly owned by Microsoft and will be duly authorized.
B. ORGANIZATION AND QUALIFICATION OF MICROSOFT, MOUK MERGER SUB AND MOCP
MERGER SUB
Microsoft is, and after incorporating, each of MOUK Merger Sub and MOCP
Merger Sub will be, a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its
incorporation, and has or will have, as the case may be, all requisite
corporate power and authority to own and operate its properties and
assets and to carry on its business as currently conducted.
C. CORPORATE AUTHORIZATION
Microsoft has, and after being incorporated, each of MOUK Merger Sub
and MOCP Merger Sub will have, full corporate power and authority to
execute and deliver this Agreement and to perform its obligations
hereunder, subject to adoption of this Agreement by Microsoft as sole
stockholder of MOUK Merger Sub and MOCP Merger Sub and approval of this
Agreement by the boards of directors of MOUK Merger Sub and MOCP Merger
Sub. The execution, delivery and performance by Microsoft of this
Agreement has been, and after incorporation by MOUK Merger Sub and MOCP
Merger Sub, will be, duly and validly authorized and no additional
corporate authorization or consent will be required in connection with
the execution, delivery and performance by Microsoft and MOUK Merger
Sub and MOCP Merger Sub other than the adoption of this Agreement by
Microsoft as the sole shareholder of MOUK Merger Sub and MOCP Merger
Sub and approval of this Agreement by the boards of directors of MOUK
Merger Sub and MOCP Merger Sub. This Agreement has been approved by the
Board of Directors of Microsoft.
-49-
<PAGE>
D. BINDING EFFECT
This Agreement, when executed and delivered by the other parties to the
Agreement (including for such purposes MOUK Merger Sub and MOCP Merger
Sub), will constitute a valid and legally binding obligation of
Microsoft enforceable in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to
general equity principles.
E. CONSENTS AND APPROVALS
Except for the corporate authorizations relating to MOUK Merger Sub and
MOCP Merger Sub and the EC Antitrust Act, to the knowledge of
Microsoft, no consent, approval, waiver or authorisation is required to
be obtained by Microsoft from, and no notice or filing is required to
be given by Microsoft to, or made by Microsoft with, any governmental
entity or other person in connection with the execution, delivery and
performance by Microsoft of this Agreement.
F. NON-CONTRAVENTION
The execution, delivery and performance by Microsoft and the
consummation by Microsoft of the transactions contemplated hereby do
not and will not (i) violate any provision of the certificate of
incorporation or bylaws of Microsoft , (ii) assuming the obtaining of
the consents referred to in this Agreement, conflict with, or result in
the breach of, or constitute a default under, or result in the
termination, cancellation or acceleration (whether after the filing of
notice or the lapse of time or both) of any right or obligation of
Microsoft, or the loss of any benefit to which Microsoft is entitled
under, any provision of any agreement or any other instrument binding
upon Microsoft or (iii) assuming the obtaining of the consents referred
to in this Agreement, violate or result in a breach of or constitute a
default under any Law to which Microsoft is subject.
-50-
<PAGE>
SCHEDULE V
TAXES
1. The Internal Revenue Service has raised an issue regarding the
valuation of Telewest at the time of its initial public offering in
1994.
2. The MediaOne Affiliated Group is open for all tax periods starting in
1988.
-51-
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized officers of the parties hereto as of the date first
written above.
MICROSOFT CORPORATION
By: /s/ G.B. Maffei
------------------------------------
Name: G.B. Maffei
Title: Chief Financial Officer
MEDIAONE GROUP, INC.
By: /s/ Gary Ames
------------------------------------
Name: Gary Ames
Title:
MEDIAONE INTERNATIONAL HOLDINGS, INC.
By: /s/ Gary Ames
------------------------------------
Name: Gary Ames
Title:
-52-
<PAGE>
MEDIAONE UK CABLE, INC.
By: /s/ Gary Ames
------------------------------------
Name: Gary Ames
Title:
MEDIAONE CABLE PARTNERSHIP
HOLDINGS, INC.
By: /s/ Gary Ames
------------------------------------
Name: Gary Ames
Title:
-53-
<PAGE>
ANNEX 7
REDESIGNATION
<TABLE>
<CAPTION>
LIMITED VOTING
ORDINARY SHARES ORDINARY SHARES TOTALS
<S> <C> <C> <C>
MOCP - 40,385,202 40,385,202
MOUK 57,312,938 540,648,982 597,961,920
------------------------------- -------------------------------- ----------------------------
57,312,938 581,034,184 638,347,122
</TABLE>
-54-
UNDERTAKING
To: Telewest Communications plc
Genesis Business Park
Albert Drive
Surrey GU21 5RW
4 October 1999
Dear Sirs,
We refer to the draft circular to the shareholders of Telewest Communications
plc (the COMPANY) proposed to be dated and despatched on or about 4 October 1999
(the CIRCULAR) relating to the proposed rights issue (the RIGHTS ISSUE) of new
ordinary shares of 10p each in the capital of the Company (the NEW ORDINARY
SHARES).
1. TW Holdings LLC (TWH) hereby irrevocably warrants to the Company that
it is the beneficial owner on today's date of the number of ordinary
shares of 10p each in the capital of the Company (ORDINARY SHARES)
specified under its name in the second column of the Schedule to this
undertaking (the SCHEDULE) (the TWH ORDINARY SHARES). The TWH
Ordinary Shares are registered in the name of the entities referred
to in the first column of the Schedule (the TWH REGISTERED HOLDERS).
All of the TWH Ordinary Shares are held by the TWH Registered Holders
and TWH has not granted or created any liens, charges or encumbrances
over the TWH Ordinary Shares;
2. MediaOne UK Cable Inc. (MUKC) hereby irrevocably warrants and
undertakes to the Company that it is the beneficial owner on today's
date of the number of Ordinary Shares specified under its name in the
second column of the Schedule (the MUKC ORDINARY SHARES). The MUKC
Ordinary Shares are registered in the name of the entity referred to
in the first column of the Schedule (the MUKC REGISTERED HOLDER). All
of the MUKC Ordinary Shares are fully paid and are held by the MUKC
Registered Holder free of all liens, charges or encumbrances;
3. TWH hereby irrevocably undertakes to the Company that:
(i) it shall not, and shall direct the TWH Registered Holders
not to, subscribe for all or any of the New Ordinary
Shares specified against their respective names in the
third column of the Schedule for which
<PAGE>
they are entitled to subscribe pursuant to the Rights
Issue (the TWH NEW SHARES);
(ii) it shall not, and shall direct the TWH Registered Holders
not to, renounce, or otherwise deal with, their rights to
the TWH New Shares and it agrees that such rights shall
not be sold in the market for the benefit of the TWH
Registered Holders;
(iii) (a) it hereby directs the TWH Registered Holders to vote
the TWH Ordinary Shares registered in its name in favour
of the resolutions set out in the notice convening the
Extraordinary General Meeting contained in the Circular
(to the extent permitted under applicable law or under the
rules of the City Code on Takeovers and Mergers or the
Listing Rules of the London Stock Exchange) in respect of
such TWH Ordinary Shares; and (b) it hereby waives all and
any rights (including, without limitation, veto rights)
it, or any director of the Company appointed by it, MUKC
or MUKC's affiliates Liberty Media UK, Inc. (LIBERTY UK)
or Liberty UK's affiliates may have under the Company's
Articles of Association or under any other contractual
arrangements in place with respect to the Company, so far
as such rights relate to, and it hereby gives its consent
to, the Rights Issue (and all matters incidental thereto);
(iv) it shall not, and shall direct the TWH Registered Holders
not to, at any time prior to 3:00 p.m. on the second
business day after the latest time for acceptance and
payment under the Rights Issue (unless in the case of MUKC
or its affiliates the following is or relates, with
Liberty UK's prior written consent, to a transfer or a
disposition by way of merger of MUKC or its affiliates
with newly created merger subsidiaries of Microsoft
Corporation (MICROSOFT)):
(a) sell, transfer, charge, encumber, grant any option over or
otherwise dispose of any TWH Ordinary Shares;
(b) accept any offer in respect of any TWH Ordinary Shares
(whether it is conditional or unconditional and
irrespective of the means by which it is implemented);
(c) enter into any agreement or arrangement or permit any
agreement or arrangement to be entered into or incur any
obligation or permit any obligation to arise:
(aa) to do any of the acts referred to in sub-clause
(a) or (b) above;
2
<PAGE>
(bb) in relation to, or operating by reference to,
TWH Ordinary Shares in which it is interested
(for the purposes of the Companies Act 1985);
or
(cc) which, in relation to TWH Ordinary Shares in
which it is interested (for the purposes of the
Companies Act 1985), would knowingly or might
restrict or impede the acquisition of the
shares in Cable London plc not currently owned
by the Company (the ACQUISITION) or the Rights
Issue;
and, for the avoidance of doubt, references in this paragraph 3 (iv)
to any agreement, arrangement or obligation includes any agreement,
arrangement or obligation whether or not legally binding or subject
to any condition or which is to take effect if the Acquisition or the
Rights Issue closes or lapses or if this undertaking ceases to be
binding or following any other event PROVIDED ALWAYS THAT nothing in
this paragraph shall restrict TWH's right to transfer the beneficial
ownership of the TWH Ordinary Shares registered in the name of MUKC
(or its affiliates) to MUKC (or its affiliates) or (with Liberty UK's
prior written consent) to Microsoft (or its affiliates) or to
transfer the beneficial ownership of the TWH Ordinary Shares
registered in the name of Liberty UK to Liberty UK (or its
affiliates) subject to the transferee giving an undertaking in the
same terms as this paragraph to the Company, whereupon TWH shall be
released from all undertakings hereunder.
4. MUKC and MediaOne Cable Partnership Holdings, Inc. (MCP) hereby
severally undertake to the Company that they will act upon the
directions of TWH in respect of their respective holdings of TWH
Ordinary Shares in accordance with paragraph 3 above.
5. MUKC hereby irrevocably undertakes and the Company that:
(i) it shall not subscribe for all or any of the New Ordinary
Shares specified against its name in the third column of
the Schedule for which it is entitled to subscribe
pursuant to the Rights Issue (the MUKC NEW SHARES);
(ii) it shall not renounce, or otherwise deal with, its rights
to the MUKC New Shares and it agrees that such rights
shall not be sold in the market for the benefit of it;
(iii) (a) it hereby agrees to vote the MUKC Ordinary Shares in
favour of the resolutions set out in the notice convening
the Extraordinary
3
<PAGE>
General Meeting contained in the Circular (to the extent
permitted under applicable law or under the rules of the
City Code on Takeovers and Mergers or the Listing Rules of
the London Stock Exchange) in respect of such MUKC
Ordinary Shares; and (b) it hereby waives all and any
rights (including, without limitation, veto rights) it, or
any director of the Company appointed by it may have under
the Company's Articles of Association or under any other
contractual arrangements in place with respect to the
Company, so far as such rights relate to, and it hereby
gives its consent to, the Rights Issue (and all matters
incidental thereto);
(iv) it shall not at any time prior to 3:00 p.m. on the second
business day after the latest time for acceptance and
payment under the Rights Issue (unless the following is or
relates to a transfer or disposition by way of merger of
MUKC or its affiliates with newly created merger
subsidiaries of Microsoft of all the MUKC Ordinary Shares
to Microsoft):
(a) sell, transfer, charge, encumber, grant any option over or
otherwise dispose of any MUKC Ordinary Shares;
(b) accept any offer in respect of any MUKC Ordinary Shares
(whether it is conditional or unconditional and
irrespective of the means by which it is implemented);
(c) enter into any agreement or arrangement or permit any
agreement or arrangement to be entered into or incur any
obligation or permit any obligation to arise:
(aa) to do any of the acts referred to in sub-clause
(a) or (b) above;
(bb) in relation to, or operating by reference to,
MUKC Ordinary Shares in which it is interested
(for the purposes of the Companies Act 1985);
or
(cc) which, in relation to MUKC Ordinary Shares in
which it is interested (for the purposes of the
Companies Act 1985), would or might restrict or
impede the Acquisition or the Rights Issue;
and, for the avoidance of doubt, references in this paragraph 3 (iv)
to any agreement, arrangement or obligation include any agreement,
arrangement or obligation whether or not legally binding or subject
to any condition or
4
<PAGE>
which is to take effect if the Acquisition or the Rights Issue closes
or lapses or if this undertaking ceases to be binding or following
any other event.
6. MUKC, Liberty UK and TWH hereby consent to the redesignation of
Ordinary Shares provided for in Resolution 2 set out in the Notice of
Extraordinary General Meeting contained in the Circular.
7. We authorise the Company to refer to this undertaking in the Circular
and in any other document or announcement either of them is required
to issue by law, any regulatory body or the rules of any stock
exchange.
8. Any time, date or period mentioned in this undertaking may be
extended by mutual agreement between us and the Company but as
regards any time, date or period originally fixed or so extended as
aforesaid, time shall be of the essence.
9. We (in the case of TWH, at MUKC's and Liberty UK's several cost and
risk) shall, (as several obligors) from time to time on being
required to do so by the Company, now or at any time in the future,
do or procure the doing of all such acts and/or execute or procure
the execution of all such documents in a form reasonably satisfactory
to the other as the other may reasonably consider necessary for
giving full effect to this undertaking and securing to the Company
the full benefit of the rights, powers and remedies conferred upon
them in this undertaking provided that this obligation, as regards
TWH, only extends to acts and things that are within its power.
10. This undertaking shall be governed by and construed in accordance
with English law.
11. Please confirm your acceptance to the above terms by signing and
returning the duplicate copy.
12. TWH hereby irrevocably gives the directions referred to in this
undertaking to Liberty UK, MCP and MUKC. Liberty UK, MUKC and MCP
hereby accept such directions.
13. This undertaking sets out the entire agreement and understanding
between the parties in respect of the subject matter hereof and
supercedes any prior contract, arrangement, understanding or
relationship, , oral or written, among any of the parties relating
hereto.
5
<PAGE>
IN WITNESS whereof this undertaking has been duly executed as a deed on this day
of October 1999.
EXECUTED and DELIVERED as a )
DEED by MEDIAONE UK CABLE, )
INC., a company incorporated in )
Delaware by Gary Ames ) /s/ Gary Ames
being a person who, in accordance with )
the laws of Delaware, is acting )
under the authority of the Company )
EXECUTED and DELIVERED as a ) /s/ Miranda Curtis
DEED by TW HOLDINGS LLC, ) for Liberty UK, Inc.
EXECUTED and DELIVERED as a )
DEED by MEDIAONE CABLE )
PARTNERSHIP HOLDINGS INC, )
a company incorporated in Delaware )
by Gary Ames being a person who, in ) /s/ Gary Ames
accordance with the laws of Delaware, )
is acting under the authority of )
the Company )
EXECUTED and DELIVERED as a )
DEED by LIBERTY UK, INC., )
a company incorporated in )
Colorado by Miranda Curtis ) /s/ Miranda Curtis
being a person who, in accordance with )
the laws of Colorado, is acting )
under the authority of the Company )
6
<PAGE>
We confirm our acceptance to the above terms
For and on behalf of
Telewest Communications plc
/s/ Victoria Hull
...........................
7
<PAGE>
SCHEDULE
TW HOLDINGS, INC.
<TABLE>
<CAPTION>
Registered holder Number of Ordinary Shares Number of New Shares entitled to be
subscribed
<S> <C> <C>
MediaOne Cable Partnership Holdings, Inc. 40,385,202 3,671,382
MediaOne UK Cable Inc. 423,053,758 38,459,432
LIBERTY UK, INC
Registered holder Number of Ordinary Shares Number of New Shares entitled to be
subscribed
Liberty UK, Inc. 463,438,961 42,130,814
MEDIAONE UK CABLE, INC.
Registered holder Number of Ordinary Shares Number of New Shares entitled to be
subscribed
[Goldman Sachs Crest Account] 174,908,162 15,900,742
</TABLE>
8
