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8-K
CHARTER COMMUNICATIONS, INC. /MO/ filed this Form 8-K on 05/19/2016
Entire Document
 
Form 8-K

 

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 18, 2016

 

 

CHARTER COMMUNICATIONS, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-33664   84-1496755

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification Number)

 

400 Atlantic Street, Stamford, Connecticut   06901
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code: (203) 905-7801

Not Applicable

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


Introduction

Pursuant to that certain Agreement and Plan of Mergers, dated as of May 23, 2015 (the “Merger Agreement”), by and among Time Warner Cable Inc. ( “TWC”), Charter Communications, Inc. (“Legacy Charter”), CCH I, LLC (“New Charter”), then a wholly owned subsidiary of Legacy Charter, Nina Corporation I, Inc. (“Merger Subsidiary One”), Nina Company II, LLC (“Merger Subsidiary Two”), a wholly owned subsidiary of New Charter, and Nina Company III, LLC (“Merger Subsidiary Three”), a wholly owned subsidiary of New Charter, on May 18, 2016, the parties completed a series of transactions pursuant to which, among other things, (i) Merger Subsidiary One merged with and into TWC, with TWC continuing as the surviving corporation (the “First Company Merger”), (ii) immediately thereafter, TWC merged with and into Merger Subsidiary Two, with Merger Subsidiary Two continuing as the surviving entity (the “Second Company Merger”), and (iii) immediately thereafter, Legacy Charter merged with and into Merger Subsidiary Three, with Merger Subsidiary Three continuing as the surviving entity and a wholly owned subsidiary of New Charter (the “Third Merger” and collectively, the “Mergers”), which resulted in Legacy Charter and TWC becoming wholly owned subsidiaries of New Charter. The Mergers were approved by the stockholders of TWC at a special meeting of TWC stockholders on September 21, 2015 and by stockholders of Legacy Charter at a special meeting of Legacy Charter stockholders on September 21, 2015.

Following the consummation of the Mergers, New Charter became the new public company parent that holds the operations of the combined companies. New Charter is now named “Charter Communications, Inc.” and trades under the same ticker symbol “CHTR” on NASDAQ.

In addition, on May 18, 2016, New Charter and Advance/Newhouse Partnership (“A/N”), the former parent of Bright House Networks, LLC (“Bright House”), completed their previously announced transaction in which New Charter acquired Bright House.

 

Item 1.01. Entry into a Material Definitive Agreement.

On May 18, 2016, in connection with New Charter’s acquisition of Bright House and in accordance with the Contribution Agreement, dated as of March 31, 2015, by and among New Charter, A/N, Charter Holdings and certain other parties thereto, as amended on May 23, 2015 (the “Contribution Agreement”), New Charter, A/N and Charter Communications Holdings, LLC (“Charter Holdings”), which is New Charter’s primary operating subsidiary that holds substantially all of New Charter’s assets and into which A/N contributed the Bright House business, entered into an Amended and Restated Limited Liability Company Agreement of Charter Holdings (the “Operating Agreement”), an Exchange Agreement (the “Exchange Agreement”) and a Tax Receivables Agreement (the “Tax Receivables Agreement”, and together with the Operating Agreement and the Exchange Agreement, the “Closing Agreements”). In connection with the closing and as provided in the Closing Agreements and the Contribution Agreement, A/N received (i) approximately $2.021 billion in cash, (ii) approximately 31.0 million exchangeable common units of Charter Holdings, (iii) 25.0 million convertible preferred units of Charter Holdings with a face amount of $2.5 billion and which will pay a 6% annual preferential dividend and (iv) one share of New Charter’s Class B Common Stock, which will have a number of votes reflecting the voting power of the Charter Holdings common units (other than those owned by New Charter or Charter) and the convertible preferred units of Charter Holdings held by A/N and certain related parties as of the applicable record date on an as-converted, as-exchanged basis, which voting rights are generally intended to reflect A/N’s economic interests in New Charter and Charter Holdings.

The Charter Holdings common units are generally non-transferable by A/N. The Charter Holdings common units are exchangeable at any time into either, at New Charter’s option, New Charter’s Class A Common Stock on a one-to-one basis or cash based on a recent market price of New Charter’s Class A Common Stock. The Charter Holdings convertible preferred units are generally transferable by A/N, subject to certain restrictions on transfer contained in the Operating Agreement and the Second Amended and


Restated Stockholders Agreement, dated as of May 23, 2015, as amended (the “Stockholders Agreement”), by and among Liberty Broadband Corporation (“Liberty Broadband”), A/N, New Charter and Legacy Charter, including certain rights of New Charter to buy the convertible preferred units before they are transferred contained in the Operating Agreement. Each Charter Holdings convertible preferred unit is convertible into either 0.37334 of a Charter Holdings common unit (if then held by A/N) or 0.37334 of a share of New Charter Class A Common Stock (if then held by a third party), representing a conversion price of $267.85, subject to customary anti-dilution adjustments. The 6% annual preferential dividend on the convertible preferred units will be paid quarterly in cash if, as and when declared, provided that, if dividends are suspended at any time, the dividends will accrue until they are paid, with all accrued and unpaid dividends to accrue additional penalty interest at the rate of 6% per annum if not paid in the subsequent quarter. After the 5th anniversary of the closing, New Charter may redeem the convertible preferred units if the price of the New Charter Class A Common Stock exceeds 130% of the conversion price (initially $348.21).

In addition, in connection with the consummation of the Mergers, the acquisition of Bright House and the investments by Liberty Broadband, on May 18, 2016, New Charter, A/N and Liberty Broadband entered into a Registration Rights Agreement (the “Registration Rights Agreement”), which provides, among other things, that A/N and Liberty Broadband may require that Charter register for resale the New Charter Class A Common Stock received by Liberty Broadband in the transactions and New Charter Class A Common Stock issuable upon the conversion/exchange of preferred and common units of Charter Holdings, in certain circumstances and subject to certain thresholds and exceptions.

Copies of the Operating Agreement, the Exchange Agreement, the Registration Rights Agreement and the Tax Receivables Agreement are filed herewith as Exhibits 10.1, 10.2, 10.3 and 10.4, respectively, and are each incorporated herein by reference. The foregoing descriptions of the Operating Agreement, the Exchange Agreement, the Registration Rights Agreement and the Tax Receivables Agreement do not purport to be complete and are qualified in their entirety by reference to the full text of those documents.

Copies of the Contribution Agreement and the Stockholders Agreement were included as part of New Charter’s Registration Statement on Form S-4 filed by CCH I, LLC on June 26, 2015 with the Securities and Exchange Commission (the “SEC”) and declared effective on August 20, 2015 (the “Registration Statement”). The foregoing descriptions of the Contribution Agreement and the Stockholders Agreement do not purport to be complete and are qualified in their entirety by reference to the full text of those documents, which are incorporated herein by reference.

 

Item 2.01. Completion of Acquisition or Disposition of Assets.

The information provided in the Introduction section and Item 1.01 of this Current Report on Form 8-K is incorporated by reference herein.

Pursuant to the terms and conditions of the Merger Agreement, on May 18, 2016, the Mergers were completed and each share of TWC’s common stock outstanding immediately prior to the effective time of the First Company Merger (other than as described below and any shares of TWC’s common stock owned by stockholders who neither voted in favor of the mergers nor consented thereto in writing and who demanded properly in writing appraisal for such shares in accordance with Section 262 of the General Corporation Law of the State of Delaware) was canceled and converted into the right to receive either $100.00 in cash and 0.48908178 shares of New Charter Class A Common Stock or, at the election of a stockholder who had made a valid and timely election, $115.00 in cash and 0.41249604 shares of New Charter Class A Common Stock. Upon the consummation of the Mergers, shares held by TWC as treasury stock or owned by Merger Subsidiary One immediately prior to the effective time of the First Company Merger were canceled without the right to receive any payment with respect thereto. Shares of TWC’s common stock held by Liberty Broadband and Liberty Interactive Corporation (together, the “Liberty Parties”) immediately prior to the effective time of the First Company Merger converted only into the right to receive shares of New Charter Common Stock. As a result of the Mergers, each share of TWC common stock owned by the Liberty Parties was converted into the right to receive one share of New Charter Class A Common Stock.


In addition, as a result of the Third Merger, each share of Legacy Charter Class A Common Stock outstanding immediately prior to the completion of the Third Merger was converted into the right to receive 0.9042 shares of New Charter Class A Common Stock.

As of the close of business of May 18, 2016, New Charter had approximately 270.4 million shares of Class A Common Stock outstanding, of which approximately 140.7 million shares were issued to former TWC stockholders (excluding Liberty Broadband), approximately 75.6 million shares were issued to former Legacy Charter stockholders (excluding Liberty Broadband) and approximately 54.1 million shares were issued to Liberty Broadband. In addition, as of the close of business of May 18, 2016, convertible preferred units and common units held by A/N could be exchanged/converted into approximately 40.3 million shares of New Charter Class A Common Stock as described in Item 1.01 of this Current Report on Form 8-K.

The issuance of the New Charter Class A Common Stock in connection with the Mergers, as described above, was registered under the Securities Act of 1933, as amended (the “Securities Act”), pursuant to the Registration Statement.

As a result of the Mergers and by operation of Rule 12g-3(c) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), New Charter is the successor issuer to Legacy Charter and succeeds to the attributes of Legacy Charter as the registrant. The Class A Common Stock of New Charter is deemed to be registered under Section 12(b) of the Exchange Act, and New Charter is subject to the Exchange Act to the same extent as Legacy Charter.

In addition, on May 18, 2016, pursuant to the Contribution Agreement, New Charter completed its acquisition of Bright House, as described in Item 1.01 of this Current Report on Form 8-K and incorporated by reference herein.

Copies of the Merger Agreement and the Contribution Agreement were included as part of the Registration Statement. The foregoing descriptions of the Merger Agreement, the Merger and the Contribution Agreement do not purport to be complete and are qualified in their entirety by reference to the full text of those documents, which are incorporated herein by reference. Copies of the Merger Agreement and the Contribution Agreement are also filed herewith as Exhibits 2.1 and 2.2, respectively, and are each incorporated herein by reference.

 

Item 3.02. Unregistered Sales of Equity Securities.

The information provided in the Introduction section and Items 1.01 and 2.01 of this Current Report on Form 8-K is incorporated by reference herein.

On May 18, 2016 and immediately after the effectiveness of the Mergers, New Charter and Liberty Broadband also consummated the stock issuances to Liberty Broadband contemplated by the (i) the Investment Agreement, dated as of May 23, 2015, by and among Legacy Charter, New Charter and Liberty Broadband (the “Liberty Investment Agreement”) and (ii) the Stockholders Agreement. Pursuant to the Liberty Investment Agreement, New Charter issued to Liberty Broadband approximately 21.97 million shares of New Charter Class A Common Stock for an aggregate purchase price of $4.3 billion (the “Liberty Investment Issuance”). Pursuant to the Stockholders Agreement, New Charter issued to Liberty Broadband approximately 3.66 million shares of New Charter Class A Common Stock for an aggregate purchase price of $700 million (the “Liberty Stockholders Issuance” and together with the Liberty Investment Issuance, the “Liberty Issuances”).

The Liberty Issuances and the issuance of one share of New Charter Class B Common Stock to A/N in connection with the closing of the Bright House acquisition have not been registered under the Securities Act, in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act and rules and regulations of the SEC promulgated thereunder.


Copies of the Liberty Investment Agreement, the Stockholders Agreement and the Contribution Agreement were included as part of the Registration Statement. The foregoing descriptions of the Investment Agreement, the Stockholders Agreement and the Contribution Agreement do not purport to be complete and are qualified in their entirety by reference to the full text of those documents, which are incorporated herein by reference.

 

Item 3.03. Material Modification to the Rights of Security Holders.

The information provided in the Introduction section and Items 1.01, 2.01 and 5.03 of this Current Report on Form 8-K is incorporated by reference herein.

 

Item 5.01. Changes in Control of Registrant.

The information provided in the Introduction section and Items 1.01 and 2.01 of this Current Report on Form 8-K is incorporated by reference herein.

 

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Each of the directors of Legacy Charter immediately prior to the Mergers, except Michael P. Huseby, who resigned pursuant to the terms of the Stockholders Agreement, was appointed as a director of New Charter, and each of Mauricio Ramos, Steven Miron and Michael Newhouse were also appointed as directors of New Charter. Thomas M. Rutledge was appointed Chairman of the Board of Directors of New Charter (the “New Charter Board”) and Eric L. Zinterhofer was designated as Lead Independent Director of the New Charter Board. Each of the directors of Legacy Charter was appointed to serve on the same committee(s) of the New Charter Board as such director had served on as a member of the Board of Directors of Legacy Charter immediately prior to the Mergers. In addition, Mr. Ramos and Mr. Miron were appointed to the Compensation and Benefits Committee. Mr. Newhouse was appointed to the Finance Committee and the Nominating and Corporate Governance Committee. Mr. Miron and Mr. Newhouse have been designated for appointment to the New Charter Board by A/N pursuant to the Stockholders Agreement, and John C. Malone, Gregory B. Maffei and Balan Nair have been designated for appointment to the New Charter Board by Liberty Broadband pursuant to the Stockholders Agreement. Each non-employee director of New Charter (including Messrs. Malone and Maffei) will be entitled to compensation on substantially the same terms as was provided to non-employee directors of Legacy Charter, other than Messrs. Malone and Maffei, prior to the Mergers, as described in Legacy Charter’s 2016 Annual Meeting Proxy Statement, filed with the SEC on March 17, 2016, which description is incorporated herein by reference. Mr. Rutledge will not receive compensation for his service on the New Charter Board.

The New Charter Board designated the following individuals as Section 16 executive officers, who all held the same position with Legacy Charter: Mr. Rutledge, Christopher L. Winfrey, John Bickham, Richard R. Dykhouse, Jonathan Hargis and Kevin D. Howard. Information about these executive officers was described in Legacy Charter’s 2016 Annual Meeting Proxy Statement, filed with the SEC on March 17, 2016, which description is incorporated herein by reference.

On May 17, 2016, Mr. Rutledge and Legacy Charter executed an amended and restated employment agreement (the “Amended and Restated Employment Agreement”), which was assigned to New Charter in connection with the closing of the Mergers and the Bright House transaction. The Amended and Restated Employment Agreement has a term of five years from May 17, 2016, and provides that Mr. Rutledge will serve as the Chairman of the New Charter Board and President and Chief Executive Officer of New Charter and will have duties commensurate with such positions. Except as noted, the Amended and Restated


Employment Agreement is materially consistent with the terms of the prior employment agreement between Mr. Rutledge and Legacy Charter, which are described in Legacy Charter’s 2016 Annual Meeting Proxy Statement, filed with the SEC on March 17, 2016.

The foregoing description of the Amended and Restated Employment Agreement does not purport to be complete and is qualified in its entirety by reference to the full text thereof, which is filed as Exhibit 10.5 hereto and incorporated herein by reference.

On May 18, 2016, New Charter assumed the Charter Communications, Inc. Amended and Restated 2009 Stock Incentive Plan (the “Charter Stock Plan”). In connection with its assumption, the Charter Stock Plan was amended and restated to provide for the issuance of New Charter Class A Common Stock (in replacement of Legacy Charter Class A Common Stock), and the share limits set forth in the Charter Stock Plan were multiplied by 0.9042, which is the exchange ratio that will be used to determine the number of shares of New Charter Class A Common Stock that Legacy Charter stockholders are entitled to receive per share of Legacy Charter Class A Common Stock in the Third Merger and the number of shares of New Charter Class A Common Stock subject to equity-based awards of Legacy Charter that were converted into equity-based awards of New Charter in the Third Merger. Accordingly, the amended and restated Charter Stock Plan provides for the grant of awards in respect of up to 21,426,633 shares of New Charter Class A Common Stock (all of which could be granted in respect of incentive stock options within the meaning of Section 422 of the Internal Revenue Code), and a participant may receive during any calendar year options and stock appreciation rights thereunder in respect of up to 2,260,500 shares of New Charter Class A Common Stock and performance shares and share-denominated performance units in respect of up to 2,260,500 shares of New Charter Class A Common Stock. Except as noted, the terms of the Charter Stock Plan were not amended.

The foregoing description of the amended and restated Charter Stock Plan does not purport to be complete and is qualified in its entirety by reference to the full text thereof, which is filed as Exhibit 10.6 hereto and incorporated herein by reference.

 

Item 5.03. Amendment to Articles of Incorporation or Bylaws; Change in Fiscal Year.

Certificate of Incorporation

Prior to the completion of the Mergers, Legacy Charter, as the sole stockholder of New Charter, approved New Charter’s amended and restated certificate of incorporation (the “Certificate of Incorporation”), which became effective immediately thereafter.

A copy of the Certificate of Incorporation is filed herewith as Exhibit 3.1 hereto and incorporated herein by reference. A detailed description of the Certificate of Incorporation was previously reported in the Registration Statement, which description is incorporated by reference herein.

Bylaws

Immediately prior to the Mergers, New Charter’s bylaws (the “Bylaws”) became effective.

A copy of the Bylaws is filed herewith as Exhibit 3.2 hereto and incorporated herein by reference. A detailed description of the Bylaws was previously reported in the Registration Statement, which description is incorporated by reference herein.


Item 5.07. Submission of Matters to a Vote of Security Holders.

The information set forth in Items 5.02 and 5.03 with respect to the election of directors and other matters prior to the Mergers is hereby incorporated by reference.

 

Item 9.01. Financial Statements and Exhibits.

(a) Financial Statements of Business Acquired.

To be filed by amendment not later than 71 calendar days after the date this Current Report is required to be filed.

(b) Pro Forma Financial Information.

To be filed by amendment not later than 71 calendar days after the date this Current Report is required to be filed.

(d) Exhibits.

 

Exhibit
No.

  

Description

2.1    Merger Agreement, dated as of May 23, 2015, by and among Legacy Charter, New Charter, TWC and certain other parties thereto (incorporated by reference to Exhibit 2.1 to the Registration Statement on Form S-4 filed by New Charter on June 26, 2015, as amended).
2.2    Contribution Agreement, dated as of March 31, 2015, as amended on May 23, 2015, by and among Legacy Charter, New Charter, A/N and certain other parties thereto (incorporated by reference to Exhibits 2.2 and 2.3 to the Registration Statement on Form S-4 filed by CCH I, LLC on June 26, 2015, as amended).
3.1    Amended and Restated Certificate of Incorporation of New Charter.
3.2    Bylaws of New Charter.
10.1    Operating Agreement of Charter Holdings, dated as of May 18, 2016, by and among Charter Holdings, New Charter, A/N and the other party or parties thereto.
10.2    Exchange Agreement, dated as of May 18, 2016, by and among Charter Holdings, New Charter, A/N and the other party or parties thereto.
10.3    Registration Rights Agreement, dated as of May 18, 2016, by and among New Charter, A/N and Liberty Broadband.
10.4    Tax Receivables Agreement, dated as of May 18, 2016, by and among New Charter, A/N and the other party or parties thereto.
10.5    Amended and Restated Employment Agreement, dated as of May 17, 2016, between New Charter and Thomas M. Rutledge.
10.6    New Charter Amended and Restated 2009 Stock Incentive Plan, as amended through May 18, 2016.


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    CHARTER COMMUNICATIONS, INC.
Date: May 19, 2016     By:   /s/ Kevin D. Howard
    Name:   Kevin D. Howard
    Title:   Senior Vice President - Finance, Controller and Chief Accounting Officer


EXHIBIT INDEX

 

Exhibit
No.

  

Description

2.1    Merger Agreement, dated as of May 23, 2015, by and among Legacy Charter, New Charter, TWC and certain other parties thereto (incorporated by reference to Exhibit 2.1 to the Registration Statement on Form S-4 filed by New Charter on June 26, 2015, as amended).
2.2    Contribution Agreement, dated as of March 31, 2015, as amended on May 23, 2015, by and among Legacy Charter, New Charter, A/N and certain other parties thereto (incorporated by reference to Exhibits 2.2 and 2.3 to the Registration Statement on Form S-4 filed by CCH I, LLC on June 26, 2015, as amended).
3.1    Amended and Restated Certificate of Incorporation of New Charter.
3.2    Bylaws of New Charter.
10.1    Operating Agreement of Charter Holdings, dated as of May 18, 2016, by and among Charter Holdings, New Charter, A/N and the other party or parties thereto.
10.2    Exchange Agreement, dated as of May 18, 2016, by and among Charter Holdings, New Charter, A/N and the other party or parties thereto.
10.3    Registration Rights Agreement, dated as of May 18, 2016, by and among New Charter, A/N and Liberty Broadband.
10.4    Tax Receivables Agreement, dated as of May 18, 2016, by and among New Charter, A/N and the other party or parties thereto.
10.5    Amended and Restated Employment Agreement, dated as of May 17, 2016, between New Charter and Thomas M. Rutledge.
10.6    New Charter Amended and Restated 2009 Stock Incentive Plan, as amended through May 18, 2016.
EX-3.1

Exhibit 3.1

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

OF

CHARTER COMMUNICATIONS, INC.

Charter Communications, Inc., a corporation organized and existing under the laws of the State of Delaware (the “Corporation”), pursuant to Sections 242 and 245 of the General Corporation Law of the State of Delaware, as the same may be amended and supplemented (the “DGCL”), hereby certifies that:

 

  1. The name of the corporation is Charter Communications, Inc. The original certificate of incorporation of the Corporation was filed with the Secretary of State of the State of Delaware on May 18, 2016.

 

  2. This Amended and Restated Certificate of Incorporation amends and, as amended, restates in its entirety the certificate of incorporation of the Corporation and has been duly adopted in accordance with Sections 242 and 245 of the DGCL.

 

  3. This Amended and Restated Certificate of Incorporation shall become effective in accordance with Section 103(d) of the DGCL at 8:19 a.m., Eastern Time, on May 18, 2016.

 

  4. The text of the certificate of incorporation of the Corporation is hereby amended and restated to read in its entirety as follows:


AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

OF

CHARTER COMMUNICATIONS, INC.

ARTICLE FIRST

NAME OF THE CORPORATION

The name of the corporation is Charter Communications, Inc. (the “Corporation”).

ARTICLE SECOND

REGISTERED OFFICE; REGISTERED AGENT

The registered office of the Corporation is located at 2711 Centerville Road, Suite 400, City of Wilmington, New Castle County, State of Delaware 19808. The name of its registered agent at such address is Corporation Service Company.

ARTICLE THIRD

PURPOSE

The purpose of the Corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of the State of Delaware as set forth in Title 8 of the Delaware Code (the “DGCL”).

ARTICLE FOURTH

STOCK

A. Authorized Capital Stock.

1. The total number of shares of stock that the Corporation shall have authority to issue is 1,150,001,000 shares, consisting of: (a) 900,000,000 shares of Class A Common Stock, par value $0.001 per share (“Class A Common Stock”); (b) 1,000 shares of Class B Common Stock, par value $0.001 per share (“Class B Common Stock”); and (c) 250,000,000 shares of Preferred Stock, par value $0.001 per share (“Preferred Stock”), issuable in one or more series as hereinafter provided. Except as otherwise provided in this amended and restated certificate of incorporation (this “Certificate of Incorporation”), Class A Common Stock and Class B Common Stock shall be identical in all respects and shall have equal rights and privileges. Class A Common Stock and Class B Common Stock are herein sometimes collectively referred to as the “Common Stock.” The Corporation shall not have the power to issue shares of Class B Common Stock to any person other than an A/N Party (as hereinafter defined) pursuant to the Contribution Agreement (as hereinafter defined). In the event that the Contribution Agreement is terminated, the Corporation shall not have the power to issue shares of Class B Common Stock.

 

1


2. The number of authorized shares of Common Stock or Preferred Stock may be increased or decreased (but (i) the number of authorized shares of Class A Common Stock may not be decreased below (a) the number of shares thereof then outstanding plus (b) the number of shares of Class A Common Stock issuable upon the exercise of outstanding options, warrants, exchange rights, conversion rights or similar rights for Class A Common Stock, (ii) the number of authorized shares of Class B Common Stock may not be decreased below the number of shares thereof then outstanding and (iii) the number of authorized shares of Preferred Stock may not be decreased below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the voting power of the Common Stock (voting together as a single class) together with any other class of capital stock of the Corporation entitled to vote generally in the election of directors irrespective of the provisions of Section 242(b)(2) of the DGCL or any corresponding provision hereinafter enacted.

B. Common Stock Voting Rights.

1. The holders of shares of Common Stock shall have the following voting rights and powers:

a. Each holder of Class A Common Stock shall be entitled, with respect to each share of Class A Common Stock held by such holder on the applicable record date, to one (1) vote in person or by proxy on all matters submitted to a vote of the holders of Class A Common Stock, whether voting separately as a class or otherwise; and

b. Subject to Clause B.3 of this Article FOURTH, each A/N Party shall be entitled, with respect to each share of Class B Common Stock held by such A/N Party on the applicable record date, to such number of votes in person or by proxy on all matters submitted to a vote of the holders of Class B Common Stock such that the number of votes to which all A/N Parties shall be entitled with respect to the Class B Common Stock held by them on the applicable record date, in the aggregate, is equal to the number of votes which would attach, in the aggregate but without duplication, to (i) the Class A Common Stock into which all Charter Holdings Class B Common Units (as hereinafter defined) held by the A/N Parties as of the applicable record date are exchangeable and (ii) the Class A Common Stock into which all Charter Holdings Preferred Units (as hereinafter defined) held by the A/N Parties as of the applicable record date (assuming the prior conversion of such Charter Holdings Preferred Units into Charter Holdings Class B Common Units) are exchangeable; in each case, without regard to any restrictions on effecting such exchange, and in accordance with the terms of this Certificate of Incorporation, the LLC Agreement (as hereinafter defined) and the Exchange Agreement (as hereinafter defined). For the avoidance of doubt, each cancellation, retirement or repurchase, including by means of conversion or exchange, of Charter Holdings Class B Common Units and/or Charter Holdings Preferred Units shall automatically reduce the voting power of the Class B Common Stock held by the applicable A/N Party or A/N Parties hereunder as necessary to accord with the provisions of the foregoing sentence. Any holder of Class B Common Stock who is not an A/N Party shall not be entitled to any vote on any matter with respect to any share of Class B Common Stock held by such holder (other than as required by law). Notwithstanding anything herein to the contrary, following the conversion and/or exchange or repurchase,

 

2


directly or indirectly, by the Corporation of all Charter Holdings Class B Common Units and Charter Holdings Preferred Units held by the A/N Parties, the Class B Common Stock shall automatically be cancelled and shall cease to be authorized hereunder.

2. Except as otherwise required by applicable law, the holders of shares of Class A Common Stock and Class B Common Stock shall vote together as one class on all matters submitted to a vote of stockholders of the Corporation (or if any holders of shares of any series of Preferred Stock are entitled to vote together with the holders of Common Stock, as one class with such holders of such series of Preferred Stock).

3. Without limiting the restrictions in Sections 4.2 and 4.4 of the Second Amended and Restated Stockholders Agreement (as hereinafter defined), the Class B Common Stock will not have voting rights on any matter to the extent that any A/N Party, or any group including one or more A/N Parties, has Beneficial Ownership (as hereinafter defined) of more than 49.5% of the outstanding Class A Common Stock as of the date of record in respect of such matter.

4. From and after the Closing of the A/N Contribution (as hereinafter defined), each Liberty Party (as hereinafter defined) and each A/N Party (except with respect to any Excluded Matter (as hereinafter defined) with respect to such Investor Party (as hereinafter defined)) shall vote, and exercise rights to consent with respect to, all Voting Securities (as hereinafter defined) Beneficially Owned by such Liberty Party or A/N Party, as applicable, or over which such Liberty Party or A/N Party, as applicable, otherwise has voting discretion or control that are in excess of the applicable Investor Party’s Voting Cap (as hereinafter defined) in the same proportion as all other votes cast with respect to the applicable matter (such proportion determined without inclusion of the votes cast by (i) the A/N Parties or the Liberty Parties, respectively (but only if A/N (as hereinafter defined) or Liberty (as hereinafter defined), respectively, has the right to nominate one or more directors of the Corporation under the Second Amended and Restated Stockholders Agreement) or (ii) any other person or group (as such term is used in Sections 13(d) and 14(d) of the Exchange Act (as hereinafter defined)) that Beneficially Owns Voting Securities representing ten percent (10%) or more of the Total Voting Power (as hereinafter defined) (other than any such person or group that reports its holdings of Corporation securities on a statement on Schedule 13G filed with the SEC (as hereinafter defined) and is not required under Section 13(d) of the Exchange Act to file a statement on Schedule 13D with the SEC in respect thereof)).

C. Dividends and Distributions; Splits; Options; Mergers; Liquidation; Preemptive Rights.

1. Dividends and Distributions.

a. Subject to the preferences applicable to any series of Preferred Stock outstanding at any time, the holders of shares of Common Stock shall be entitled to receive such dividends and other distributions in cash, property or shares of stock of the Corporation as may be declared thereon by the Board of Directors of the Corporation (the “Board of Directors”) from time to time out of the assets or funds of the Corporation legally available therefor; provided, however, that, subject to the provisions of this

 

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Clause C.1.a of this Article FOURTH, the Corporation shall not pay dividends or make distributions to any holders of any class of Common Stock unless simultaneously with such dividend or distribution, as the case may be, the Corporation makes the same dividend or distribution with respect to each outstanding share of Common Stock regardless of class.

b. In the case of dividends or other distributions on Common Stock payable in Class A Common Stock or Class B Common Stock, including without limitation distributions pursuant to stock splits or divisions of Class A Common Stock or Class B Common Stock, only shares of Class A Common Stock shall be distributed with respect to Class A Common Stock and only shares of Class B Common Stock shall be distributed with respect to Class B Common Stock. In the case of any such dividend or distribution payable in shares of Class A Common Stock or Class B Common Stock, each class of Common Stock shall receive a dividend or distribution in shares of its class of Common Stock and the number of shares of each class of Common Stock payable per share of such class of Common Stock shall be equal in number.

2. Stock Splits.

The Corporation shall not in any manner subdivide (by any stock split, stock dividend, reclassification, recapitalization or otherwise) or combine (by reverse stock split, reclassification, recapitalization or otherwise) the outstanding shares of one class of Common Stock unless the outstanding shares of all classes of Common Stock shall be proportionately subdivided or combined.

3. Options, Rights or Warrants.

The Corporation shall have the power to create and issue, whether or not in connection with the issue and sale of any shares of stock or other securities of the Corporation, options, exchange rights, warrants, convertible rights, and similar rights permitting the holders thereof to purchase from the Corporation any shares of its capital stock of any class or classes at the time authorized, such options, exchange rights, warrants, convertible rights and similar rights to have such terms and conditions, and to be evidenced by or in such instrument or instruments, consistent with the terms and provisions of this Certificate of Incorporation and as shall be approved by the Board of Directors.

4. Mergers, Consolidation, Etc.

In the event that the Corporation shall enter into any consolidation, merger, combination or other transaction in which shares of Common Stock are exchanged for or converted into other stock or securities, cash and/or any other property, then, and in such event, the shares of each class of Common Stock shall be exchanged for or converted into the same kind and amount of stock, securities, cash and/or any other property, as the case may be, into which or for which each share of any other class of Common Stock is exchanged or converted; provided, however, that, if shares of Common Stock are exchanged for or converted into shares of capital stock, such shares received upon such exchange or conversion may differ, but only in a manner substantially similar to the manner in which Class A Common Stock and Class B

 

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Common Stock differ, and, in any event, and without limitation, the voting rights and obligations of the holders of Class B Common Stock and the other relative rights and treatment accorded to the Class A Common Stock and Class B Common Stock in Clause B and this Clause C of this Article FOURTH shall be preserved. To the fullest extent permitted by law, any construction, calculation or interpretation made by the Board of Directors in determining the application of the provisions of this Clause C.4 of this Article FOURTH in good faith shall be conclusive and binding on the Corporation and its stockholders.

5. Liquidation Rights.

In the event of any dissolution, liquidation or winding-up of the affairs of the Corporation, whether voluntary or involuntary, after payment or provision for payment of the debts and other liabilities of the Corporation and after making provision for the holders of any series of Preferred Stock entitled thereto, the remaining assets and funds of the Corporation, if any, shall be divided among and paid ratably to the holders of the shares of Class A Common Stock and Class B Common Stock treated as a single class.

6. No Preemptive Rights.

The holders of shares of Common Stock are not entitled to any preemptive right under this Certificate of Incorporation to subscribe for, purchase or receive any part of any new or additional issue of stock of any class, whether now or hereafter authorized, or of bonds, debentures or other securities convertible into or exchangeable for stock; provided that the foregoing shall not be deemed to override any contractual preemptive right that an Investor Party may be entitled to pursuant to the provisions of the Second Amended and Restated Stockholders Agreement.

D. Preferred Stock.

Subject to the provisions of this Certificate of Incorporation, including Article FIFTH, the Board of Directors is hereby expressly granted authority from time to time to issue Preferred Stock in one or more series and with respect to any such series, subject to the terms and conditions of this Certificate of Incorporation, to fix by resolution or resolutions the numbers of shares, designations, powers, preferences and relative, participating, optional or other special rights of such series and any qualifications, limitations or restrictions thereof, including, but without limiting the generality of the foregoing, the following:

1. entitling the holders thereof to cumulative, non-cumulative or partially cumulative dividends, or to no dividends;

2. entitling the holders thereof to receive dividends payable on a parity with, junior to, or in preference to, the dividends payable on any other class or series of capital stock of the Corporation;

3. entitling the holders thereof to rights upon the voluntary or involuntary liquidation, dissolution or winding up of, or upon any other distribution of the assets of, the Corporation, on a parity with, junior to or in preference to, the rights of any other class or series of capital stock of the Corporation;

 

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4. providing for the conversion or exchange, at the option of the holder or of the Corporation or both, or upon the happening of a specified event, of the shares of Preferred Stock into shares of any other class or classes or series of capital stock of the Corporation or of any series of the same or any other class or classes, including provision for adjustment of the conversion or exchange rate in such events as the Board of Directors shall determine, or providing for no conversion;

5. providing for the redemption, in whole or in part, of the shares of Preferred Stock at the option of the Corporation or the holder thereof, or upon the happening of a specified event, in cash, bonds or other property, at such price or prices (which amount may vary under different conditions and at different redemption dates), within such period or periods, and under such conditions as the Board of Directors shall so provide, including provisions for the creation of a sinking fund for the redemption thereof, or providing for no redemption;

6. providing for voting rights or having limited voting rights or enjoying general, special or multiple voting rights; and

7. specifying the number of shares constituting that series and the distinctive designation of that series.

ARTICLE FIFTH

BOARD OF DIRECTORS

A. Size of the Board of Directors.

From and after the Closing of the A/N Contribution, the number of directors which shall constitute the whole Board of Directors shall be fixed at thirteen (13). In the event the Closing of the A/N Contribution has not occurred or does not occur, the number of directors which shall constitute the whole Board of Directors shall be fixed by, or in the manner provided in, the Bylaws of the Corporation.

B. Investor Nominees.

1. From and after the Closing of the A/N Contribution, in connection with each annual or special meeting of stockholders of the Corporation at which directors are to be elected (each such annual or special meeting, an “Election Meeting”), each Investor Party shall have the right to designate for nomination (it being understood that such nomination may include any nomination of any incumbent Investor Director (as hereinafter defined) (or a Replacement (as defined in the Second Amended and Restated Stockholders Agreement)) by the Board of Directors (upon the recommendation of the Nominating and Corporate Governance Committee of the Board of Directors)) a number of Investor Designees (as defined in the Second Amended and Restated Stockholders Agreement) as follows, in each case subject to Section 3.8(a) of, and the other limitations set forth in, the Second Amended and Restated Stockholders Agreement:

a. three (3) Investor Designees, if such Investor Party’s Equity Interest (as hereinafter defined) or Voting Interest (as hereinafter defined) is greater than or equal to 20%;

 

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b. two (2) Investor Designees, if such Investor Party’s Equity Interest and Voting Interest are both less than 20% but such Investor Party’s Equity Interest or Voting Interest is greater than or equal to 15%;

c. one (1) Investor Designee, if such Investor Party’s Equity Interest and Voting Interest are both less than 15% but such Investor Party’s Equity Interest or Voting Interest is greater than or equal to 5%; and

d. no Investor Designees, if the Investor Party’s Equity Interest and Voting Interest are both less than 5%;

provided, that notwithstanding the foregoing, A/N shall be entitled to designate two (2) Investor Designees if A/N owns an Equity Interest or Voting Interest of 11% or more

C. Board Action. From and after the Closing of the A/N Contribution:

1. Any action of the Board of Directors other than those described in Clauses C.2, C.3, and C.4 of this Article FIFTH below shall require the approval of the majority of the members of the full Board of Directors.

2. For so long as either A/N or Liberty has a Voting Interest or Equity Interest equal to or greater than 20%, subject to the following Clause C.3 of this Article FIFTH, any Change of Control (as hereinafter defined) shall require the approval of (1) a majority of the full Board of Directors and (2) a majority of the Unaffiliated Directors (as hereinafter defined).

3. Any transaction involving either A/N and/or Liberty (or any of their respective Affiliates (as hereinafter defined) or Associates (as hereinafter defined) and the Corporation, other than a “Preemptive Shares Purchase” (as defined in the Second Amended and Restated Stockholders Agreement) or the exercise by the Corporation of the rights pursuant to Section 4.8 of the Second Amended and Restated Stockholders Agreement, or any transaction in which A/N and/or Liberty (or any of their respective Affiliates or Associates) will be treated differently from the holders of Class A Common Stock or Class B Common Stock, shall require the approval of (1) a majority of the Unaffiliated Directors plus (2) a majority of the directors of the Corporation designated by the Investor Party without such a conflicting interest (provided, that the approval requirement referred to in this sub-clause (2) shall not apply to ordinary course programming and distribution agreements and related ancillary agreements (for example, advertising and promotions) entered into on an arm’s length basis).

4. Any amendment to this Certificate of Incorporation, including the filing of a Certificate of Designations relating to the issuance of any series of Preferred Stock, shall require the approval of (1) a majority of the members of the full Board of Directors and (2) a majority of the Unaffiliated Directors.

5. Decisions of the Unaffiliated Directors shall exclude any who are not Independent (as hereinafter defined) of the Corporation, Liberty and A/N.

6. Any decision with respect to a shareholders rights plan (as such term is commonly understood in connection with corporate transactions) (a “Rights Plan”), including whether to implement a Rights Plan, shall (subject to Section 4.7 of the Second Amended and Restated Stockholders Agreement) be made by a majority of the Unaffiliated Directors.

 

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D. Vacancies.

Subject to the applicable provisions of Section 3.2 of the Second Amended and Restated Stockholders Agreement or, in the event of the termination of the Contribution Agreement prior to the Closing of the A/N Contribution, the Existing Stockholders Agreement (as hereinafter defined), any vacancy on the Board of Directors resulting from death, resignation, disqualification, removal from office or other cause, and newly created directorships resulting from any increase in the authorized number of directors, may be filled only by a majority vote of the directors remaining in office, other than any directors elected or appointed by any class or series of Preferred Stock, voting as a separate class, even if less than a quorum, and in the event that there is only one director remaining in office, by such sole remaining director.

E. Removal.

Any director of the Corporation may be removed from office with or without cause by the affirmative vote of a majority of the voting power of the outstanding shares of Common Stock (and any series of Preferred Stock then entitled to vote generally in an election of directors), voting together as a single class. In the event that any director so removed was an Investor Designee and the applicable Investor Party continues to have the right to nominate a Replacement for the vacancies created by the removal, each such vacancy shall be filled in accordance with the provisions of the Second Amended and Restated Stockholders Agreement. In the event of the termination of the Contribution Agreement prior to the Closing of the A/N Contribution, if any director so removed was a Liberty Director and the Investor (as such term is defined in the Existing Stockholders Agreement) continues to have the right to nominate a Replacement (as such term is defined in the Existing Stockholders Agreement) for the vacancy created by the removal, each such vacancy shall be filled in accordance with the provisions of the Existing Stockholders Agreement.

F. Election by Written Ballot Not Required.

Unless and except to the extent that the Bylaws of the Corporation shall so require, the election of directors of the Corporation need not be by written ballot.

G. Contribution Agreement.

If the Contribution Agreement is terminated in accordance with its terms prior to the Closing of the A/N Contribution, the provisions of Clauses B and C of this Article FIFTH shall be deemed to be void and of no force and effect.

ARTICLE SIXTH

BYLAWS

The Board of Directors may from time to time adopt, make, amend, supplement or repeal the Bylaws, except as provided in this Certificate of Incorporation, the Bylaws or Section 8.2 of the Second Amended and Restated Stockholders Agreement.

 

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ARTICLE SEVENTH

DIRECTOR EXCULPATION

No director of the Corporation shall have any personal liability to the Corporation or its stockholders for monetary damages for any breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the DGCL as the same exists or hereafter may be amended. No amendment, alteration or repeal of this Article SEVENTH shall eliminate or reduce the effect thereof in respect of any matter occurring, or any cause of action, suit or claim that, but for this Article SEVENTH would accrue or arise, prior to such amendment, alteration or repeal.

ARTICLE EIGHTH

CERTAIN BUSINESS COMBINATIONS

A. Requirements to Effect Certain Business Combinations.

In addition to any affirmative vote required by law or this Certificate of Incorporation or the Bylaws, a Business Combination (as hereinafter defined) involving as a party, or proposed by or on behalf of, an Interested Stockholder (as hereinafter defined) or an Affiliate (as hereinafter defined) or Associate (as hereinafter defined) of an Interested Stockholder or a person who upon consummation of such Business Combination would become an Affiliate or Associate of an Interested Stockholder shall, except as otherwise prohibited by applicable law, as in effect from time to time, require both of the following conditions to be satisfied:

1. a majority of the Continuing Directors (as hereinafter defined) shall have determined (after consultation with their outside legal and financial advisors) that such Business Combination, including without limitation, the consideration to be received in connection therewith, is fair to the Corporation and its stockholders (other than any stockholder that is an Interested Stockholder in respect of such Business Combination and the Affiliates and Associates (if any) of such Interested Stockholder); and

2. holders of not less than a majority of the votes entitled to be cast by the holders of all of the then outstanding shares of Voting Securities (voting together as a single class), excluding Voting Securities Beneficially Owned (as hereinafter defined) by any Interested Stockholder or any Affiliate or Associate of such Interested Stockholder, shall have approved such transaction. Such affirmative vote shall be required notwithstanding the fact that no vote may be required, or that a lesser percentage affirmative vote, or the vote of any other class of stockholders, may otherwise be required, by law or otherwise.

B. Certain Defined Terms.

For purposes of this Article EIGHTH, the following definitions shall apply:

1. “Business Combination” shall mean:

a. any merger or consolidation of the Corporation or any Subsidiary (as hereinafter defined) with (i) any Interested Stockholder or (ii) any other company (whether or not itself an Interested Stockholder) which is, or after such merger or consolidation would be, an Affiliate or Associate of an Interested Stockholder; or

 

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b. any (i) sale, lease, exchange, mortgage, pledge, transfer or other disposition or hypothecation of assets of the Corporation or of any Subsidiary (whether or not in connection with the dissolution of the Corporation) to or for the benefit of, or (ii) purchase by the Corporation or any Subsidiary from, or (iii) issuance by the Corporation or any Subsidiary of securities to, or (iv) investment, loan, advance, guarantee, participation or other extension of credit by the Corporation or any Subsidiary to, from, in or with or (v) establishment of a partnership, joint venture or other joint enterprise with or for the benefit of, in each case, any Interested Stockholder or any Affiliate or Associate of any Interested Stockholder, which transaction, alone or taken together with any related transaction or transactions, has an aggregate fair market value and/or involves aggregate commitments of $50,000,000 or more or any arrangement, whether as an employee, consultant or otherwise (other than service as a director), pursuant to which any Interested Stockholder or any Affiliate or Associate thereof shall, directly or indirectly, attain any control over or responsibility for the management of any aspect of the business or affairs of the Corporation or any Subsidiary which involves assets which have an aggregate fair market value of $50,000,000 or more; or

c. any (i) reclassification of securities (including any reverse stock split), or (ii) recapitalization of the Corporation (including any change to or exchange of securities of the Corporation), or (iii) merger or consolidation of the Corporation with any of its Subsidiaries or (iv) other transaction (whether or not with or otherwise involving as a party an Interested Stockholder) that, in each case, has the effect, directly or indirectly, of increasing the proportionate share of any class or series of capital stock, or any securities convertible into or exchangeable for capital stock or other equity securities, of the Corporation or any Subsidiary Beneficially Owned by any Interested Stockholder or any Affiliate or Associate of any Interested Stockholder; or

d. any agreement, contract or other arrangement providing for any one or more of the actions specified in the foregoing clauses of this Clause B.1 of this Article EIGHTH.

2. “Affiliate” in respect of a person shall mean any person (other than an Exempt Person) controlling, controlled by or under common control with such person.

3. “Associate” in respect of an individual shall mean (A) any corporation or other organization of which such person is an officer or partner or otherwise participates in a material way in the management or policy-making thereof or is the Beneficial Owner of ten percent (10%) or more of any class of voting equity security, (B) any trust or other estate in which such person has a substantial beneficial interest or as to which such person serves as a trustee or in a similar fiduciary capacity and (C) any parent or lineal descendant of such person or the spouse of such person or any relative of such person who has the same home as such person or who is a director, officer, partner, limited liability company member, trustee or other fiduciary of any organization of which such person is also a director, officer, partner, limited liability company member, trustee or other fiduciary or substantial beneficiary. The term

 

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“Associate” in respect of any company means (A) any director, officer or trustee of such company or in the case of a limited liability company any manager or managing member or in the case of a partnership any general partner, (B) any other person who participates in a material way in the management or policy-making of such company and (C) any person who is the Beneficial Owner of ten percent (10%) or more of any class of equity security of such company. In no event shall an “Associate” include an Exempt Person.

4. A person shall be a “Beneficial Owner” of any capital stock or other securities of the Corporation: (A) which such person or any of its Affiliates or Associates owns or has the economic benefit of ownership of, directly or indirectly; (B) which such person or any of its Affiliates or Associates has, directly or indirectly, (1) the right to acquire (whether such right is exercisable immediately or subject only to the passage of time), pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise, or (2) the right to vote pursuant to any agreement, arrangement or understanding; or (C) which any other person with which such person or any of its Affiliates or Associates has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of any shares of capital stock, owns or has the economic benefit of ownership of. For the purposes of determining whether a person is an “Interested Stockholder”, the number of shares of capital stock of the Corporation deemed to be outstanding shall include shares deemed Beneficially Owned by such person through application of this Clause B.4 of this Article EIGHTH, but shall not include any other shares of capital stock that may be issuable pursuant to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants or options, or otherwise.

5. “Continuing Director” with respect to an Interested Stockholder shall mean any member of the Board of Directors (while such person is a member of the Board of Directors) who is not an Affiliate or Associate or representative of such Interested Stockholder (including any person nominated to the Board of Directors by such Interested Stockholder or an Affiliate or Associate of such Interested Stockholder).

6. “Interested Stockholder” shall mean any person (other than (i) the Corporation or any Subsidiary, (ii) any profit-sharing, employee stock ownership or other employee benefit plan of the Corporation or any Subsidiary or (iii) any trustee or fiduciary with respect to any such plan or holding Voting Securities for the purpose of funding any such plan or funding other employee benefits for employees of the Corporation or any Subsidiary when acting in such capacity (the persons and entities described in the foregoing sub-clauses (i) through (iii) being referred to herein as “Exempt Persons”)) who is, or has announced or publicly disclosed a plan or intention to become, the Beneficial Owner of Voting Securities representing ten percent (10%) or more of the votes entitled to be cast by the holders of all then outstanding shares of Voting Securities.

7. “Subsidiary” shall mean any corporation, partnership, joint venture or other legal entity of which the Corporation (either alone or through or together with any other Subsidiary), owns, directly or indirectly, more than fifty percent (50%) of the stock or other equity interests, has the power to elect a majority of the members of the board of directors or similar governing body, or has the power to direct the business and policies.

8. “Voting Securities” means the shares of Class A Common Stock and shares of Class B Common Stock, and any securities of the Corporation entitled to vote generally for the election of the directors of the Corporation.

 

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C. Certain Determinations.

A majority of the Continuing Directors shall have the power and duty to determine for the purposes of this Article EIGHTH, on the basis of information known to them after reasonable inquiry, all questions arising under this Article EIGHTH, including without limitation,

1. whether a person is an Interested Stockholder;

2. the number of shares of capital stock or other securities Beneficially Owned by any person;

3. whether a person is an Affiliate or Associate of another person;

4. whether a Business Combination is proposed by or on behalf of an Interested Stockholder or an Affiliate or Associate of an Interested Stockholder or a person who upon consummation of such Business Combination would become an Affiliate or Associate of such Interested Stockholder;

5. whether the assets that are the subject of any Business Combination have, or the consideration to be received for the issuance or transfer of securities by the Corporation or any Subsidiary in any Business Combination has, an aggregate fair market value of $50,000,000 or more; and

6. the application of any other term used in this Article EIGHTH.

Any such determination made in good faith shall be binding and conclusive on the Corporation, all of its stockholders and all other parties.

D. Effectiveness and Exceptions.

The provisions of this Article EIGHTH (other than this Clause D, which shall be effective immediately) (i) will be effective if and only if the Contribution Agreement is terminated in accordance with its terms prior to the Closing of the A/N Contribution, in which case all of this Article EIGHTH shall become effective upon such termination, and (ii) shall not apply to any transaction agreed to, entered into or consummated prior to such time. Any non-compliance with this Article EIGHTH or any comparable provision in the Corporation’s or any of its subsidiaries’ organizational documents is waived with respect to any transaction occurring at or prior to the earlier of the Closing of the A/N Contribution and the termination of the Contribution Agreement in accordance with its terms prior to the Closing of the A/N Contribution.

 

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E. Amendment of this Article.

Notwithstanding anything to the contrary in this Certificate of Incorporation (other than Clause D of this Article EIGHTH), any proposal to alter, amend or repeal, or to adopt any provision inconsistent with, this Article EIGHTH, including in each case by merger, consolidation or otherwise, shall require the affirmative vote of the holders of not less than a majority of the votes entitled to be cast by the holders of all of the then outstanding shares of Voting Securities (voting together as a single class), excluding shares of Voting Securities beneficially owned by any Interested Stockholder.

ARTICLE NINTH

AMENDMENT, ETC.

Subject to Clause C.4 of Article FIFTH and, if and when effective, Article EIGHTH, the Corporation reserves the right at any time, and from time to time, to amend, alter, change or repeal any provision contained in this Certificate of Incorporation in the manner now or hereafter authorized by the laws of the State of Delaware. All rights, preferences and privileges herein conferred are granted subject to this reservation.

ARTICLE TENTH

FORUM

Unless the Corporation consents in writing to the selection of an alternative forum (an “Alternative Forum Consent”), the sole and exclusive forum for (a) any derivative action or proceeding brought on behalf of the Corporation, (b) any action asserting a claim of breach of a fiduciary duty owed by any director or officer or other employee of the Corporation to the Corporation or the Corporation’s stockholders, (c) any action asserting a claim against the Corporation or any director or officer or other employee of the Corporation arising pursuant to any provision of the DGCL or this Certificate of Incorporation or the Bylaws (as either may be amended from time to time), or (d) any action asserting a claim against the Corporation or any director or officer or other employee of the Corporation governed by the internal affairs doctrine shall be a state court located within the State of Delaware (or, if no state court located within the State of Delaware has jurisdiction, the federal district court for the District of Delaware) in all cases to the fullest extent permitted by law and subject to the court’s having personal jurisdiction over the indispensable parties named as defendants. The existence of any prior Alternative Forum Consent shall not act as a waiver of the Corporation’s ongoing consent right as set forth above in this Article TENTH with respect to any current or future action or claim.

ARTICLE ELEVENTH

CERTAIN DEFINITIONS

For purposes of this Certificate of Incorporation, other than Article EIGHTH, the following definitions shall apply:

A. “Affiliate” of a Person has the meaning set forth in Rule 12b-2 under the Exchange Act, and “Affiliated” shall have a correlative meaning; provided that (i) the Corporation and Liberty and their respective Affiliates shall not be deemed to be

 

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Affiliates of A/N; (ii) the Corporation and A/N and their respective Affiliates shall not be deemed to be Affiliates of Liberty; and (iii) Liberty and A/N and their respective Affiliates shall not be deemed to be Affiliates of the Corporation or Charter Holdings. 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, means the possession, directly or indirectly, of the power to direct or cause the direction of the management policies of such Person, whether through the ownership of voting securities or by contract or otherwise.

B. “A/N” means Advance/Newhouse Partnership, a New York general partnership.

C. “A/N Director” means a director of the Corporation designated for nomination by A/N pursuant to Clause B of Article FIFTH of this Certificate of Incorporation and Section 3.2(a) of the Second Amended and Restated Stockholders Agreement or any other director of the Corporation designated for nomination by A/N and elected or appointed pursuant to the provisions of Section 3.1(c) or Section 3.2 of the Second Amended and Restated Stockholders Agreement.

D. “A/N Parties” or “A/N Party” have the respective meanings set forth in the Second Amended and Restated Stockholders Agreement.

E. “A/N Proxy” means the proxy to be granted by A/N to Liberty at the Closing of the A/N Contribution, pursuant to the Proxy Agreement (as defined in the Second Amended and Restated Stockholders Agreement).

F. “A/N Voting Cap Increase Amount” means the lesser of (a) the amount of any Permanent Reduction in Liberty’s Equity Interest below 15%, and (b) 11.5%.

G. “Associate” of a person has the meaning set forth in Rule 12b-2 under the Exchange Act, and “Associated” shall have a correlative meaning; provided that (i) the Corporation and Liberty and their respective Associates shall not be deemed to be Associates of A/N, (ii) the Corporation and A/N and their respective Associates shall not be deemed to be Associates of Liberty and (iii) Liberty and A/N and their respective Associates shall not be deemed to be Associates of the Corporation.

H. “Beneficially Own” with respect to any securities means having “beneficial ownership” of such securities (as determined pursuant to Rule 13d-3 under the Exchange Act without limitation by the sixty (60)-day provision in paragraph (d)(1)(i) thereof), and the terms “Beneficial Ownership” and “Beneficial Owner” shall have correlative meanings. Without limiting Section 4.4 of the Second Amended and Restated Stockholders Agreement, any Beneficial Ownership by a person that is jointly owned by A/N and Liberty shall be considered Beneficial Ownership by each such owner to the extent of such owner’s equity ownership in such jointly owned person.

I. “Change of Control” means a transaction or series of related transactions which would result in (i) the then-existing stockholders of the Corporation (on an as-converted or as-exchanged basis) prior to the transaction, or prior to the first transaction if a series of related transactions, no longer having, directly or indirectly, a Voting Interest of 50% or more of the Corporation or any successor company or (ii) any change in the composition of

 

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the Board of Directors resulting in the persons constituting the Board of Directors prior to the transaction, or prior to the first transaction if a series of related transactions, ceasing to constitute a majority of the Board of Directors or any successor board of directors (or comparable governing body).

J. “Charter Holdings” means Charter Communications Holdings, LLC, a Delaware limited liability company.

K. “Charter Holdings Class B Common Units” means the Class B Common Units of Charter Holdings.

L. “Charter Holdings Common Units” means the Common Units of Charter Holdings.

M. “Charter Holdings Preferred Units” means the Preferred Units of Charter Holdings.

N. “Charter Holdings Units” means the Charter Holdings Common Units, the Charter Holdings Class B Common Units and the Charter Holdings Preferred Units.

O. “Closing of the A/N Contribution” means the Closing (as defined in the Contribution Agreement).

P. “Contribution Agreement” means the Contribution Agreement, dated and as in effect as of March 31, 2015, by and among Charter Communications, Inc., CCH I, LLC, A/N, A/NPC Holdings LLC and Charter Holdings, as amended on May 23, 2015.

Q. “Equity Interest” means, with respect to either Investor Party, as of any date of determination, the percentage represented by the quotient of, without duplication, (i) the number of shares of Class A Common Stock owned (whether of record or book-entry through a brokerage account held in the name of such Investor Party) by such Investor Party and that would be owned (whether of record or book-entry through a brokerage account held in the name of such Investor Party) by such person on a Fully Exchanged Basis (provided that so long as the A/N Proxy is in effect, the calculation pursuant to this sub-clause (i) shall include the Proxy Shares with respect to A/N and shall exclude the Proxy Shares with respect to Liberty) divided by (ii) the number of shares of Class A Common Stock that would be outstanding on a Fully Exchanged Basis and fully diluted basis.

R. “Equity Securities” means any equity securities of the Corporation or securities convertible into or exercisable or exchangeable for equity securities of the Corporation.

S. “Exchange Act” means the Securities Exchange Act of 1934, as amended, including the rules and regulations promulgated thereunder.

T. “Exchange Agreement” has the meaning set forth in the Contribution Agreement.

U. “Excluded Matter” includes each of the following: (i) any vote of the Corporation’s stockholders on a Change of Control or a sale of all or substantially all of the

 

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Corporation’s assets; (ii) any vote of the Corporation’s stockholders to approve any bankruptcy plan or pre-arranged financial restructuring with the creditors of the Corporation or of Charter Holdings; (iii) any vote of the Corporation’s stockholders to approve the creation of a new class of shares of the Corporation or a new class of units of Charter Holdings; (iv) with respect to each Investor Party, any vote of the Corporation’s stockholders to approve any matter not in the ordinary course and relating to a transaction involving the other Investor Party or any of its Affiliates; and (v) any vote of the Corporation’s stockholders in respect of any resolution that would in any way diminish the voting power of the Class B Common Stock compared to the voting power of the Class A Common Stock (provided, that any such vote shall be an Excluded Matter with respect to Liberty only if such resolution would also in any way diminish the voting power of the Proxy Shares).

V. “Existing Stockholders Agreement” means the Stockholders Agreement, dated as of March 19, 2013, by and between Liberty Media Corporation (and subsequently assigned to Liberty Broadband Corporation) and Charter Communications, Inc., as amended through May 23, 2015, including any amendments contemplated by Section 4.4 of the Investment Agreement, dated May 23, 2015, by and among Charter Communications, Inc., CCH I, LLC and Liberty Broadband Corporation.

W. “Fully Exchanged Basis” means assuming that all Charter Holdings Class B Common Units were exchanged into shares of Class A Common Stock, and all Charter Holdings Preferred Units were converted into Charter Holdings Class B Common Units and subsequently exchanged into shares of Class A Common Stock, in each case in accordance with the terms of this Certificate of Incorporation, the LLC Agreement and the Exchange Agreement, such that the Corporation was the sole holder of Charter Holdings Units.

X. “Independent” means, with respect to any person, independent within the meaning of SEC and stock exchange rules and under the applicable person’s corporate governance guidelines, and with no material affiliation or other material business, professional or investment relationship with the A/N Parties or the Liberty Parties other than by virtue of his or her relationship with Charter Communications, Inc. (in the case of independent directors of Charter Communications, Inc. as of May 23, 2015, considering only matters originating after May 23, 2015).

Y. “Investor Director” means any of the A/N Directors or the Liberty Directors, as applicable; and “Investor Directors” means all of the A/N Directors and Liberty Directors, collectively.

Z. “Investor Party” means either of A/N or Liberty, as applicable; and “Investor Parties” means A/N and Liberty, collectively.

AA. “Liberty” means Liberty Broadband Corporation, a Delaware corporation; provided, that from and after any Distribution Transaction (as defined in the Second Amended and Restated Stockholders Agreement), the term “Liberty” shall refer solely to the Qualified Distribution Transferee (as defined in the Second Amended and Restated Stockholders Agreement); and provided, further, that in no event shall more than one entity be Liberty for the purposes of this Certificate of Incorporation at any one time.

 

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BB. “Liberty Director” means a director of the Corporation designated for nomination by Liberty pursuant to Clause B of Article FIFTH of this Certificate of Incorporation and Section 3.2(a) of the Second Amended and Restated Stockholders Agreement or any other director of the Corporation designated for nomination by Liberty and elected or appointed pursuant to the provisions of Section 3.2 of the Second Amended and Restated Stockholders Agreement or pursuant to the Existing Stockholders Agreement.

CC. “Liberty Parties” or “Liberty Party” have the meanings set forth in the Second Amended and Restated Stockholders Agreement.

DD. “Liberty Voting Cap Increase Amount” means the lesser of (a) the amount of any Permanent Reduction in A/N’s Equity Interest below fifteen percent (15%), and (b) 11.5%.

EE. “LLC Agreement” has the meaning set forth in the Contribution Agreement.

FF. “Permanent Reduction” of an Investor Party’s Equity Interest shall be deemed to have occurred with respect to a specified percentage of such Investor Party’s Equity Interest following the delivery by such Investor Party of a written notice to the other parties to the Second Amended and Restated Stockholders Agreement that such Investor Party agrees not to acquire Beneficial Ownership of additional Equity Securities within the one year period following such notice (which notice shall be delivered by the applicable Investor Party promptly following the good faith determination by such Investor Party that it intends not to make any such acquisitions); provided, however, that once any Investor Party has an Equity Interest equal to or less than 5%, such Investor Party will be deemed to have Permanently Reduced its Equity Interest to 5% (including for purposes of the determination of the A/N Voting Cap Increase Amount or Liberty Voting Cap Increase Amount, as applicable).

GG. “person” shall mean any natural person, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, foundation, unincorporated organization or government or other agency or political subdivision thereof.

HH. “Proxy Shares” means the shares of Class A Common Stock and Class B Common Stock to the extent that Liberty has the right to vote such shares pursuant to the A/N Proxy.

II. “SEC” means the U.S. Securities and Exchange Commission.

JJ. “Second Amended and Restated Stockholders Agreement” means the Second Amended and Restated Stockholders Agreement, dated as of May 23, 2015 (without giving effect to any amendments after May 23, 2015), by and among Charter Communications, Inc., CCH I, LLC, Liberty and A/N.

KK. “Total Voting Power” means the total number of votes that may be cast generally in the election of directors of the Corporation if all outstanding Voting Securities were present and voted at a meeting held for such purpose (provided that this calculation shall take into account the number of votes represented by the shares of Class B Common Stock outstanding).

 

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LL. “Unaffiliated Director” means a member of the Board of Directors who is not an Investor Director.

MM. “Voting Cap” means (i) in the case of Liberty, the greater of (A) the greater of 25.01% and 0.01% above the highest Voting Interest of any other person or group (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) (which, for the avoidance of doubt, shall not exceed 23.5% in the case of A/N), and (B) the sum of (x) 23.5% plus (y) the Liberty Voting Cap Increase Amount; and (ii) in the case of A/N, the sum of 23.5% and the A/N Voting Cap Increase Amount.

NN. “Voting Interest” means, with respect to any person, as of any date of determination, the percentage equal to the quotient of (a) the total number of votes that may be cast generally in the election of directors of the Corporation by such person at a meeting held for such purpose (provided that (i) with respect to determining the Voting Interest of A/N and Liberty, so long as the A/N Proxy is in effect, the calculation pursuant to this clause (a) shall include the votes represented by the Proxy Shares with respect to Liberty and shall exclude the votes represented by the Proxy Shares with respect to A/N and (ii) the calculation pursuant to this clause (a) shall take into account the number of votes represented by the shares of Class B Common Stock outstanding) divided by (b) the Total Voting Power.

OO. “Voting Securities” means the shares of Class A Common Stock and shares of Class B Common Stock, and any securities of the Corporation entitled to vote generally for the election of directors of the Corporation.

[Remainder of this Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, this Amended and Restated Certificate of Incorporation, which restates, integrates and further amends the provisions of the Amended and Restated Certificate of Incorporation, and which was duly made, executed and acknowledged in accordance with Sections 242 and 245 of the General Corporation Law of the State of Delaware, has been signed on May 18, 2016.

 

CHARTER COMMUNICATIONS, INC.
By:  

/s/ Richard R. Dykhouse

Name:   Richard R. Dykhouse
Title:   Executive Vice President, General
  Counsel and Corporate Secretary

 

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EX-3.2

Exhibit 3.2

BYLAWS

OF

CHARTER COMMUNICATIONS, INC.

(As adopted and in effect on May 18, 2016)

ARTICLE I

OFFICES

SECTION 1.1 Delaware Office. The office of Charter Communications, Inc. (the “Corporation”) within the State of Delaware shall be in the City of Wilmington, County of New Castle.

SECTION 1.2 Other Offices. The Corporation may also have an office or offices and keep the books and records of the Corporation, except as otherwise may be required by law, in such other place or places, either within or without the State of Delaware, as the Board of Directors of the Corporation (the “Board”) may from time to time determine or the business of the Corporation may require.

ARTICLE II

MEETINGS OF STOCKHOLDERS

SECTION 2.1 Place of Meetings. All meetings of holders of shares of capital stock of the Corporation shall be held at the office of the Corporation in the State of Delaware or at such other place, within or without the State of Delaware, as may from time to time be fixed by the Board or specified or fixed in the respective notices or waivers of notice thereof.

SECTION 2.2 Annual Meetings. An annual meeting of stockholders of the Corporation for the election of directors and for the transaction of such other business as may properly come before the meeting (an “Annual Meeting”) shall, if required by law, be held at such place, on such date, and at such time as the Board shall each year fix.

SECTION 2.3 Special Meetings. Except as required by law and subject to the rights of holders of any series of Preferred Stock (as defined below), special meetings of stockholders may be called at any time only by the Chairman of the Board, the Chief Executive Officer or by the Board pursuant to a resolution approved by a majority of the then authorized number of directors. Any such call must specify the matter or matters to be acted upon at such meeting and only such matter or matters shall be acted upon thereat.

SECTION 2.4 Notice of Meetings. Except as otherwise required by law, notice of each meeting of stockholders, whether an Annual Meeting or a special meeting, shall state the purpose or purposes of the meeting, the place, date and hour of the meeting and, unless it is an Annual


Meeting, shall indicate that the notice is being issued by or at the direction of the person or persons calling the meeting and shall be given not less than ten (10) or more than sixty (60) days before the date of said meeting, to each stockholder entitled to vote at such meeting. If mailed, notice is given when deposited in the United States mail, postage prepaid, directed to each stockholder at such stockholder’s address as it appears on the stock records of the Corporation. Notice of an adjourned meeting need not be given if the date, time and place to which the meeting is to be adjourned was announced at the meeting at which the adjournment was taken, unless (i) the adjournment is for more than thirty (30) days, or (ii) the Board shall fix a new record date for such adjourned meeting after the adjournment.

SECTION 2.5 Quorum. At each meeting of stockholders of the Corporation, the holders of shares having a majority of the voting power of the capital stock of the Corporation issued and outstanding and entitled to vote thereat shall be present or represented by proxy to constitute a quorum for the transaction of business, except as otherwise provided by law. Where a separate vote by a class or classes or series is required, a majority of the voting power of the shares of such class or classes or series in person or represented by proxy shall constitute a quorum entitled to take action with respect to that vote on that matter.

SECTION 2.6 Adjournments. Any meeting of the stockholders may be adjourned from time to time to reconvene at the same or some other place, and notice need not be given of any such adjourned meeting if the time and place, if any, thereof and the means of remote communications, if any, by which holders of shares having a majority of the voting power of the capital stock of the Corporation may be deemed to be present or represented by proxy and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken. A meeting of the stockholders may be adjourned only by the Chairman of the Board or holders of shares having a majority of the voting power of the capital stock of the Corporation present or represented by proxy at such meeting. At the adjourned meeting, the Corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, notice of the adjourned meeting in accordance with the requirements of Section 2.4 hereof shall be given to each stockholder of record entitled to notice of and to vote at the meeting.

SECTION 2.7 Notice of Stockholder Business and Director Nomination. (a) Annual Meetings of Stockholders. (1) Nominations of persons for election to the Board and the proposal of business to be considered by the stockholders may be made at an Annual Meeting only (A) pursuant to the Corporation’s notice of meeting (or any supplement thereto), (B) by or at the direction of the Board or (C) by any stockholder of the Corporation who was a stockholder of record of the Corporation at the time the notice provided for in this Section 2.7 is delivered to the Secretary of the Corporation, who is entitled to vote at the meeting for such director and who complies with the notice and delivery procedures set forth in this Section 2.7.

(2) For nominations or other business to be properly brought before an Annual Meeting by a stockholder pursuant to clause (C) of paragraph (a)(1) of this Section 2.7, (A) the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation, (B) any such proposed business other than nominations of persons for election to

 

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the Board must constitute a proper matter for stockholder action, (C) if the stockholder, or beneficial owner on whose behalf any such proposal or nomination is made, has provided the Corporation with a Solicitation Notice, as that term is defined in subclause III of this paragraph (a)(2) of Section 2.7, such stockholder or beneficial owner must, in the case of a proposal, have delivered a proxy statement and form of proxy to the holders of at least the percentage of the Corporation’s voting shares required under applicable law to carry such proposal, or, in the case of a nomination or nominations, have delivered a proxy statement and form of proxy to holders of at least the percentage of the Corporation’s voting shares reasonably believed by such stockholder or beneficial owner to be sufficient to elect the nominee or nominees proposed to be nominated by such stockholder and (D) if no Solicitation Notice relating thereto has been timely provided pursuant to this section, the stockholder or beneficial owner proposing such business or nomination must not have solicited a number of proxies sufficient to have required the delivery of a Solicitation Notice under this section. To be timely, a stockholder’s notice shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the forty-fifth (45th) day nor earlier than the close of business on the seventieth (70th) day prior to the first anniversary (the “Mailing Anniversary”) of the date on which the Corporation first mailed proxy materials for the preceding year’s Annual Meeting (provided, however, that in the event that the date of the Annual Meeting is more than thirty (30) days before or more than thirty (30) days after the anniversary date of the preceding year’s Annual Meeting, notice by the stockholder must be so delivered not earlier than the close of business on the one hundred twentieth (120th) day prior to such Annual Meeting and not later than the close of business on the later of the ninetieth (90th) day prior to such Annual Meeting or the tenth (10th) day following the day on which public announcement of the date of such meeting is first made by the Corporation). In no event shall the public announcement of an adjournment or postponement of an Annual Meeting commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above. Such stockholder’s notice shall set forth: (I) as to each person whom the stockholder proposes to nominate for election as a director all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Rule 14a-11 thereunder (and such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected); (II) as to any other business that the stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the text of the proposal or business (including the text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend the Bylaws of the Corporation, the language of the proposed amendment), the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made; and (III) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (i) the name and address of such stockholder, as they appear on the Corporation’s books, and of such beneficial owner, if any, (ii) the class and number of shares of capital stock of the Corporation which are owned beneficially and of record by such stockholder and such beneficial owner, (iii) a representation that the stockholder is a holder of record of stock of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to propose such business or nomination and (iv) a representation whether the stockholder or the beneficial owner, if any, intends or is part of a

 

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group which intends to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Corporation’s outstanding capital stock required to approve or adopt the proposal or elect the nominee (an affirmative statement of such intent, a “Solicitation Notice”). The Corporation may require any proposed nominee to furnish such other information as it may reasonably require to determine the eligibility of such proposed nominee to serve as a director of the Corporation.

(3) Notwithstanding anything in the second sentence of paragraph (a)(2) of this Section 2.7 to the contrary, in the event that the number of directors to be elected to the Board at an Annual Meeting is increased and there is no public announcement by the Corporation naming the nominees for the additional directorships at least fifty-five (55) days prior to the Mailing Anniversary, a stockholder’s notice required by this Section 2.7 shall also be considered timely, but only with respect to nominees for the additional directorships, if it shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the tenth day following the day on which such public announcement is first made by the Corporation.

(b) Special Meetings of Stockholders. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation’s notice of meeting. Nominations of persons for election to the Board may be made at a special meeting of stockholders at which directors are to be elected pursuant to the Corporation’s notice of meeting (1) by or at the direction of the Board or (2) provided that the Board has determined that directors shall be elected at such meeting, by any stockholder of the Corporation who is a stockholder of record at the time the notice provided for in this Section 2.7 is delivered to the Secretary of the Corporation, who is entitled to vote at the meeting upon such election of such director and who complies with the notice and delivery procedures set forth in this Section 2.7. In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more directors to the Board, any such stockholder entitled to vote in such election of such directors may nominate a person or persons (as the case may be) for election to such position(s) as specified in the Corporation’s notice of meeting, if the stockholder’s notice required by paragraph (a)(2) of this Section 2.7 shall be delivered to the Secretary at the principal executive offices of the Corporation not earlier than the close of business on the one hundred twentieth (120th) day prior to such special meeting and not later than the close of business on the later of the ninetieth (90th) day prior to such special meeting or the tenth (10th) day following the day on which the public announcement is first made of the date of the special meeting and of the nominees proposed by the Board to be elected at such meeting. In no event shall the public announcement of an adjournment or postponement of a special meeting commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above.

(c) General. (1) Only such persons who are nominated in accordance with the procedures set forth in this Section 2.7 shall be eligible to be elected at an Annual Meeting or special meeting of stockholders of the Corporation to serve as directors and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in

 

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accordance with the procedures set forth in this Section 2.7. Except as otherwise provided by law, the chairman of the meeting shall have the power and duty (A) to determine whether a nomination or any business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with the procedures set forth in this Section 2.7 (including whether the stockholder or beneficial owner, if any, on whose behalf the nomination or proposal is made solicited (or is part of a group which solicited) or did not so solicit, as the case may be, proxies in support of such stockholder’s nominee or proposal in compliance with such stockholder’s representation as required by clause (a)(2)(III)(iv) of this Section 2.7) and (B) if any proposed nomination or business was not made or proposed in compliance with this Section 2.7, to declare that such nomination shall be disregarded or that such proposed business shall not be transacted.

(2) For purposes of this Section 2.7, “public announcement” shall include disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Sections 13, 14 or 15(d) of the Exchange Act.

(3) Notwithstanding the foregoing provisions of this Section 2.7, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 2.7. Nothing in this Section 2.7 shall be deemed to affect any rights (A) of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act or (B) of the holders of any series of Preferred Stock to elect directors pursuant to any applicable provisions of the Certificate of Incorporation of the Corporation (the “Certificate of Incorporation”).

SECTION 2.8 Proxies and Voting. At each meeting of stockholders, all matters (except in cases where a larger vote is required by law or by the Certificate of Incorporation or these Bylaws) shall be decided by a majority of the votes cast at such meeting by the holders of shares of capital stock present or represented by proxy and entitled to vote thereon, a quorum being present. At any meeting of the stockholders, every stockholder entitled to vote may vote in person or by proxy authorized by an instrument in writing or by a transmission permitted by law filed in accordance with the procedure established for the meeting. Any copy, facsimile telecommunication or other reliable reproduction of the writing or transmission created pursuant to this Section 2.8 may be substituted or used in lieu of the original writing or transmission for any and all purposes for which the original writing or transmission could be used, provided that such copy, facsimile telecommunication or other reproduction shall be a complete reproduction of the entire original writing or transmission.

SECTION 2.9 Inspectors. In advance of any meeting of stockholders, the Board may, and shall if required by law, appoint an inspector or inspectors. If, for any election of directors or the voting upon any other matter, any inspector appointed by the Board shall be unwilling or unable to serve, the chairman of the meeting shall appoint the necessary inspector or inspectors. The inspectors so appointed, before entering upon the discharge of their duties, shall be sworn faithfully to execute the duties of inspectors with strict impartiality, and according to the best of

 

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their ability, and the oath so taken shall be subscribed by them. Such inspectors shall determine the number of shares of capital stock of the Corporation outstanding and the voting power of each of the shares represented at the meeting, the existence of a quorum, and the validity and effect of proxies, and shall receive votes, ballots or consents, hear and determine all challenges and questions arising in connection with the right to vote, count and tabulate all votes, ballots or consents, determine the result, and do such acts as are proper to conduct the election or vote with fairness to all stockholders. The inspectors shall make a report in writing of any challenge, question or matter determined by them and shall execute a certificate of any fact found by them. No director or candidate for the office of director shall act as an inspector of election of directors. Inspectors need not be stockholders.

SECTION 2.10 Consent of Stockholders in Lieu of Meeting. Any action required to be taken at any Annual Meeting or special meeting of stockholders of the Corporation, or any action which may be taken at any Annual Meeting or special meeting of the stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the Corporation by delivery to its registered office in Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the books in which proceedings of meetings of stockholders are recorded. Delivery made to the Corporation’s registered office shall be made by hand or by certified or registered mail, return receipt requested.

Every written consent shall bear the date of signature of each stockholder who signs the consent and no written consent shall be effective to take the corporate action referred to therein unless, within sixty (60) days of the earliest dated consent delivered to the Corporation in the manner prescribed in the first paragraph of this Section, a written consent or consents signed by a sufficient number of holders to take action are delivered to the Corporation in the manner prescribed in the first paragraph of this Section.

ARTICLE III

DIRECTORS

SECTION 3.1 Powers. The business of the Corporation shall be managed by or under the direction of the Board. The Board may, except as otherwise required by law, exercise all such powers and do all such acts and things as may be exercised or done by the Corporation.

SECTION 3.2 Number; Terms and Vacancies. The number of directors, which shall constitute the whole Board, shall be fixed at thirteen (13) persons. In the event the Contribution Agreement (as defined in the Certificate of Incorporation) is terminated prior to the Closing of the A/N Contribution (as defined in the Certificate of Incorporation), the number of directors which shall constitute the whole Board shall be fixed at eleven (11). The directors of the Corporation shall be elected by majority vote of the holders of Class A Common Stock and Class B Common Stock voting together as one class (or if any holders of shares of Preferred Stock are

 

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entitled to vote thereon together with the holders of Class A Common Stock and Class B Common Stock, as one class with such holders of shares of Preferred Stock). Any vacancies on the Board resulting from death, resignation, disqualification, removal from office or other cause shall be filled in the manner provided in the Certificate of Incorporation and, if and to the extent applicable, the Second Amended and Restated Stockholders Agreement (as defined in the Certificate of Incorporation) or the Existing Stockholders Agreement (as defined in the Certificate of Incorporation).

SECTION 3.3 Place of Meetings. Meetings of the Board shall be held at the Corporation’s office in the State of Delaware or at such other places, within or without such State, as the Board may from time to time determine or as shall be specified or fixed in the notice or waiver of notice of any such meeting.

SECTION 3.4 Regular Meetings. Regular meetings of the Board shall be held in accordance with a yearly meeting schedule as determined by the Board; or such meetings may be held on such other days and at such other times as the Board may from time to time determine. Regular meetings of the Board shall be held not less frequently than quarterly.

SECTION 3.5 Special Meetings. Special meetings of the Board may be called by a majority of the directors then in office (rounded up to the nearest whole number) or by the Chairman of the Board and shall be held at such place, on such date, and at such time as they or he shall fix.

SECTION 3.6 Notice of Meetings. Notice of each special meeting of the Board stating the time, place and purposes thereof, shall be (i) mailed to each director not less than five (5) days prior to the meeting, addressed to such director at his or her residence or usual place of business, or (ii) shall be sent to him by facsimile or other means of electronic transmission, or shall be given personally or by telephone, on not less than twenty four (24) hours notice.

SECTION 3.7 Quorum and Manner of Acting. The presence of at least a majority of the authorized number of directors shall be necessary and sufficient to constitute a quorum for the transaction of business at any meeting of the Board. If a quorum shall not be present at any meeting of the Board, a majority of the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Except where a different vote is required or permitted by law, the Certificate of Incorporation or these Bylaws, the act of a majority of the directors present at any meeting at which a quorum shall be present shall be the act of the Board. Any action required or permitted to be taken by the Board may be taken without a meeting if all the directors consent in writing or by electronic transmission to the adoption of a resolution authorizing the action. The resolution and the written consents or copies of electronic consents thereto by the directors shall be filed with the minutes of the proceedings of the Board. Any one or more directors may participate in any meeting of the Board by means of a conference telephone or similar communications equipment allowing all persons participating in the meeting to hear each other at the same time. Participation by such means shall be deemed to constitute presence in person at a meeting of the Board.

 

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SECTION 3.8 Resignation. Any director may resign at any time by giving written notice to the Corporation; provided, however, that written notice to the Board, the Chairman of the Board, the Chief Executive Officer of the Corporation or the Secretary of the Corporation shall be deemed to constitute notice to the Corporation. Such resignation shall take effect upon receipt of such notice or at any later time specified therein and, unless otherwise specified therein, acceptance of such resignation shall not be necessary to make it effective.

SECTION 3.9 Removal of Directors. Directors may be removed as provided by law and in the Certificate of Incorporation.

SECTION 3.10 Compensation of Directors. The Board may provide for the payment to any of the directors, other than officers or employees of the Corporation, of a specified amount for services as director or member of a committee of the Board, or of a specified amount for attendance at each regular or special Board meeting or committee meeting, or of both, and all directors shall be reimbursed for expenses of attendance at any such meeting; provided, however, that nothing herein contained shall be construed to preclude any director from serving the Corporation in any other capacity and receiving compensation therefor.

ARTICLE IV

COMMITTEES OF THE BOARD

SECTION 4.1 Committees. The Board may designate one or more committees, each committee to consist of one or more of the directors of the Corporation. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided herein or in the resolution of the Board designating such committee, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to the following matters: (i) approving or adopting, or recommending to the stockholders, any action or matter expressly required by the Certificate of Incorporation or Delaware law to be submitted to stockholders for approval or (ii) adopting, amending or repealing any Bylaws of the Corporation.

SECTION 4.2 Audit Committee. Subject to Section 4.1, the Board may designate an Audit Committee of the Board, which shall consist of such number of members as the Board shall determine. The Audit Committee shall: (i) make recommendations to the Board as to the independent accountants to be appointed by the Board; (ii) review with the independent accountants the scope of their examinations; (iii) receive the reports of the independent accountants and meet with representatives of such accountants for the purpose of reviewing and considering questions relating to their examination and such reports; (iv) review, either directly or through the independent accountants, the internal accounting and auditing procedures of the

 

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Corporation; (v) review related party transactions; and (vi) perform such other functions as may be assigned to it from time to time by the Board. The Audit Committee may determine its manner of acting, and fix the time and place of its meetings, unless the Board shall otherwise provide.

SECTION 4.3 Compensation Committee. Subject to Section 4.1, the Board may designate members of the Board to constitute a Compensation Committee which shall consist of such number of directors as the Board may determine. The Compensation Committee may determine its manner of acting and fix the time and place of its meetings, unless the Board shall otherwise provide.

SECTION 4.4 Action by Consent; Participation by Telephone or Similar Equipment. Unless the Board shall otherwise provide, any action required or permitted to be taken by any committee may be taken without a meeting if all the members of the committee consent in writing to the adoption of a resolution authorizing the action. The resolution and the written consents thereto by the members of the committee shall be filed with the minutes of the proceedings of the committee. Unless the Board shall otherwise provide, any one or more members of any such committee may participate in any meeting of the committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other. Participation by such means shall constitute presence in person at a meeting of the committee.

SECTION 4.5 Resignations; Removals. Any member of any committee may resign at any time by giving notice to the Corporation; provided, however, that notice to the Board, the Chairman of the Board, the Chief Executive Officer of the Corporation, the chairman of such committee or the Secretary of the Corporation shall be deemed to constitute notice to the Corporation. Such resignation shall take effect upon receipt of such notice or at any later time specified therein; and, unless otherwise specified therein, acceptance of such resignation shall not be necessary to make it effective. Subject to Section 4.6, any member of any such committee may be removed at any time, either with or without cause, by the affirmative vote of a majority of the authorized number of directors at any meeting of the Board called for that purpose.

ARTICLE V

OFFICERS

SECTION 5.1 Number, Titles and Qualification. The Corporation shall have such officers as may be necessary or desirable for the business of the Corporation. The officers of the Corporation may include a Chairman of the Board, a Chief Executive Officer, a President, one or more Vice Presidents, a Chief Financial Officer, a Secretary, one or more Assistant Secretaries, a Treasurer, and one or more Assistant Treasurers. The Chairman of the Board, Chief Executive Officer, President, Executive Vice Presidents, and Chief Financial Officer shall be elected by the Board, which shall consider that subject at its first meeting after every Annual Meeting of stockholders. The Corporation shall have such other officers as may from time to time be appointed by the Board or the Chief Executive Officer. Each officer shall hold office until his or her successor is elected or appointed, as the case may be, and qualified or until his or her earlier resignation or removal. Any number of offices may be held by the same person.

 

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SECTION 5.2 Chairman of the Board. The Chairman of the Board shall be elected from among the directors, and the Chairman of the Board, or at the election of the Chairman of the Board, the Chief Executive Officer shall preside at all meetings of the stockholders and directors and shall have such other powers and perform such other duties as may be prescribed by the Board or provided in these By-laws. The Chief Executive Officer shall report to the Chairman of the Board. The Chairman of the Board shall be a non-executive officer position unless the Chairman of the Board also is serving as the Chief Executive Officer.

SECTION 5.3 Chief Executive Officer. The Chief Executive Officer shall have general and active responsibility for the management of the business of the Corporation, shall be responsible for implementing all orders and resolutions of the Board, shall supervise the daily operations of the business of the Corporation, and shall report to the Chairman of the Board. Subject to the provisions of these Bylaws and to the direction of the Chairman of the Board or the Board, he or she shall perform all duties which are commonly incident to the office of Chief Executive Officer or which are delegated to him or her by the Chairman of the Board or the Board. To the fullest extent permitted by law, he or she shall have power to sign all contracts and other instruments of the Corporation which are authorized and shall have general supervision and direction of all of the other officers, employees and agents of the Corporation. The Chief Executive Officer shall perform the duties and exercise the powers of the Chairman of the Board in the event of the Chairman of the Board’s absence or disability.

SECTION 5.4 President. The President shall have such powers and duties as may be delegated to him or her by the Chairman of the Board, the Board, or the Chief Executive Officer. The President shall perform the duties and exercise the powers of the Chief Executive Officer in the event of the Chief Executive Officer’s absence or disability.

SECTION 5.5 Vice President. Each Vice President shall have such powers and duties as may be delegated to him or her by the Board or the Chief Executive Officer.

SECTION 5.6 Chief Financial Officer. The Chief Financial Officer shall have responsibility for maintaining the financial records of the Corporation. He or she shall render from time to time an account of all such transactions and of the financial condition of the Corporation. The Chief Financial Officer shall also perform such other duties as the Board or the Chief Executive Officer may from time to time prescribe.

SECTION 5.7 Treasurer. The Treasurer shall have the responsibility for investments and disbursements of the funds of the Corporation as are authorized and shall render from time to time an account of all such transactions. The Treasurer shall also perform such other duties as the Board or the Chief Executive Officer may from time to time prescribe.

SECTION 5.8 Secretary. The Secretary shall issue all authorized notices for, and shall keep minutes of, all meetings of the stockholders and the Board. He or she shall have charge of the corporate books and shall perform such other duties as the Board or the Chief Executive Officer may from time to time prescribe.

 

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SECTION 5.9 Delegation of Authority. The Chairman of the Board, the Board, or the Chief Executive Officer may from time to time delegate the powers or duties of any officer to any other officers or agents, notwithstanding any provision hereof.

SECTION 5.10 Removal. Any officer of the Corporation may be removed at any time, with or without cause, by the Chairman of the Board, by the Board, or, except as to the Chairman of the Board, by the Chief Executive Officer.

SECTION 5.11 Resignations. Any officer may resign at any time by giving written notice to the Corporation; provided, however, that notice to the Chairman of the Board, the Chief Executive Officer or the Secretary shall be deemed to constitute notice to the Corporation. Such resignation shall take effect upon receipt of such notice or at any later time specified therein; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

SECTION 5.12 Vacancies. Any vacancy among the officers, whether caused by death, resignation, removal or any other cause, shall be filled in the manner prescribed for election or appointment to such office.

SECTION 5.13 Action with Respect to Securities of Other Corporations. Unless otherwise directed by the Board, the Chairman of the Board, the Chief Executive Officer or any other officer of the Corporation authorized by the Chairman of the Board or the Chief Executive Officer shall have power to vote and otherwise act on behalf of the Corporation, in person or by proxy, at any meeting of stockholders of or with respect to any action of stockholders of any other corporation in which this Corporation may hold securities and otherwise to exercise any and all rights and powers which this Corporation may possess by reason of its ownership of securities in such other corporation.

SECTION 5.14 Bonds of Officers. If required by the Chairman of the Board, the Board, or the Chief Executive Officer, any officer of the Corporation shall give a bond for the faithful discharge of his or her duties in such amount and with such surety or sureties as the Chairman of the Board, the Board or the Chief Executive Officer may require.

SECTION 5.15 Officers of Operating Companies, Regions or Divisions. The Chief Executive Officer shall have the power to appoint, remove and prescribe the terms of office, responsibilities and duties of the officers of the operating companies, regions or divisions, other than those who are officers of the Corporation appointed by the Board.

ARTICLE VI

CONTRACTS, CHECKS, LOANS, DEPOSITS, ETC.

SECTION 6.1 Contracts. The Board may authorize any officer or officers, agent or agents, in the name and on behalf of the Corporation, to enter into any contract or to execute and deliver any instrument, which authorization may be general or confined to specific instances; and, unless so authorized by the Board, no officer, agent or employee shall have any power or authority to bind the Corporation by any contract or engagement or to pledge its credit or to render it liable pecuniarily for any purpose or for any amount.

 

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SECTION 6.2 Checks, etc. All checks, drafts, bills of exchange or other orders for the payment of money out of the funds of the Corporation, and all notes or other evidences of indebtedness of the Corporation, shall be signed in the name and on behalf of the Corporation in such manner as shall from time to time be authorized by the Board or the Chief Executive Officer, which authorization may be general or confined to specific instances.

SECTION 6.3 Loans. No loan shall be contracted on behalf of the Corporation, and no negotiable paper shall be issued in its name, unless authorized by the Board, which authorization may be general or confined to specific instances, and bonds, debentures, notes and other obligations or evidences of indebtedness of the Corporation issued for such loans shall be made, executed and delivered as the Board shall authorize.

SECTION 6.4 Deposits. All funds of the Corporation not otherwise employed shall be deposited from time to time to the credit of the Corporation in such banks, trust companies or other depositories as may be selected by or in the manner designated by the Board, the Chief Executive Officer or the Chief Financial Officer. The Board or its designees may make such special rules and regulations with respect to such bank accounts, not inconsistent with the provisions of the Certificate of Incorporation or these Bylaws, as they may deem advisable.

ARTICLE VII

CAPITAL STOCK

SECTION 7.1 Certificates of Stock. The shares of the capital stock of the Corporation shall be represented by certificates, provided that the Board by resolution or resolutions may provide that some or all of any or all classes or series of capital stock of the Corporation shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation. Notwithstanding the adoption of such a resolution by the Board, every holder of stock represented by certificates and upon request every holder of uncertificated shares shall be entitled to have a certificate signed by, or in the name of the Corporation by, the Chairman of the Board, President or a Vice President, and by the Secretary or an Assistant Secretary, or the Treasurer or an Assistant Treasurer, certifying the number of shares owned by him or her. Any or all of the signatures on the certificate may be by facsimile.

SECTION 7.2 Transfers of Stock. Transfers of stock shall be made only upon the transfer books of the Corporation kept at an office of the Corporation or by transfer agents designated to transfer shares of the stock of the Corporation. Except where a certificate is issued in accordance with Section 7.4 of these Bylaws, an outstanding certificate for the number of shares involved, if certificated, shall be surrendered for cancellation before a new certificate is issued therefor.

SECTION 7.3 Record Date. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders, or to receive payment

 

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of any dividend or other distribution or allotment of any rights or to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board may fix a record date, which record date shall not precede the date on which the resolution fixing the record date is adopted and which record date, except as set forth in the Certificate of Incorporation, shall not be more than sixty (60) nor less than ten (10) days before the date of any meeting of stockholders, nor more than sixty (60) days prior to the time for such other action as hereinbefore described; provided, however, that if no record date is fixed by the Board, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held, and, for determining stockholders entitled to receive payment of any dividend or other distribution or allotment of rights or to exercise any rights of change, conversion or exchange of stock or for any other purpose, the record date shall be at the close of business on the day on which the Board adopts a resolution relating thereto.

A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board may fix a new record date for the adjourned meeting.

In order that the Corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the Board may fix a record date, which shall not precede the date upon which the resolution fixing the record date is adopted by the Board, and which record date shall be not more than ten (10) days after the date upon which the resolution fixing the record date is adopted. Any stockholder of record seeking to have the stockholders authorize or take corporate action by written consent shall, by written notice to the Secretary of the Corporation, request the Board to fix a record date. The Board shall promptly, but in all events within ten (10) days after the date on which such a request is received, adopt a resolution fixing the record date. If no record date has been fixed by the Board and no prior action by the Board is required by the Delaware General Corporation Law, the record date shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation in the manner prescribed by Section 2.10 hereof. If no record date has been fixed by the Board and prior action by the Board is required by the Delaware General Corporation Law with respect to the proposed action by written consent of the stockholders, the record date for determining stockholders entitled to consent to corporate action in writing shall be at the close of business on the day on which the Board adopts the resolution taking such prior action.

SECTION 7.4 Lost, Stolen or Destroyed Certificates. In the event of the loss, theft or destruction of any certificate of stock, another may be issued in its place pursuant to such regulations as the Board may establish concerning proof of such loss, theft or destruction and concerning the giving of satisfactory bond or bonds of indemnity.

SECTION 7.5 Regulations. The issue, transfer, conversion and registration of certificates of stock shall be governed by such other regulations as the Board may establish.

 

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ARTICLE VIII

NOTICES

SECTION 8.1 Notices. Except as otherwise specifically provided herein or required by law, all notices required to be given to any stockholder, director, officer, employee or agent may in every instance be effectively given by hand delivery to the recipient thereof, by depositing such notice in the mails, postage-paid, or with a recognized overnight-delivery service or by sending such notice by facsimile or other means of electronic transmission, or such other means as is provided by law. Any such notice shall be addressed to such stockholder, director, officer, employee or agent at such person’s last known address as the same appears on the books of the Corporation. The time when such notice is received, if hand delivered, or dispatched, if delivered through the mails or by overnight delivery service, or by telegram, mailgram or facsimile, shall be the time of the giving of the notice.

SECTION 8.2 Waivers. A written waiver of any notice, signed by a stockholder, director, officer, employee or agent, whether before or after the time of the event for which notice is to be given, shall be deemed equivalent to the notice required to be given to such stockholder, director, officer, employee, agent. Neither the business nor the purpose of any meeting need be specified in such a waiver.

ARTICLE IX

MISCELLANEOUS

SECTION 9.1 Facsimile Signatures. In addition to the provisions for use of facsimile signatures elsewhere specifically authorized in these Bylaws, facsimile signatures of any officer or officers of the Corporation may be used whenever and as authorized by the Board or a committee thereof.

SECTION 9.2 Corporate Seal. The Board may provide a suitable seal, containing the name of the Corporation, which seal shall be in the charge of the Secretary of the Corporation. If and when so directed by the Board or a committee thereof, duplicates of the seal may be kept and used by the Corporation’s Treasurer or by an Assistant Secretary or Assistant Treasurer.

SECTION 9.3 Reliance Upon Books, Reports and Records. Each director, each member of any committee designated by the Board, and each officer of the Corporation shall, in the performance of his or her duties, be fully protected in relying in good faith upon the books of account or other records of the Corporation and upon such information, opinions, reports or statements presented to the Corporation by any of its officers or employees, or committees of the Board so designated, or by any other person as to matters which such director or committee member reasonably believes are within such other person’s professional or expert competence and who has been selected with reasonable care or on behalf of the Corporation.

SECTION 9.4 Fiscal Year. The fiscal year of the Corporation shall be as fixed by the Board.

SECTION 9.5 Time Periods. In applying any provision of these Bylaws which requires that an act be done or not be done a specified number of days prior to an event or that an act be done during a period of a specified number of days prior to an event, calendar days shall be used, the day of the doing of the act shall be excluded, and the day of the event shall be included.

 

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ARTICLE X

INDEMNIFICATION OF DIRECTORS AND OFFICERS

SECTION 10.1 Right to Indemnification. Each person who was or is made a party or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter, a “proceeding”), by reason of the fact that he or she is or was a director or an officer of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to an employee benefit plan (hereinafter, a “Covered Person”), whether the basis of such proceeding is alleged action in an official capacity as a director, officer, employee or agent or in any other capacity while serving as a director, officer, employee or agent, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the Delaware General Corporation Law, as the same exists or may hereafter be amended, against all expense, liability and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts paid in settlement) reasonably incurred or suffered by such Covered Person in connection therewith; provided, however, that, except as provided in Section 10.3 hereof with respect to proceedings to enforce rights to indemnification, the Corporation shall indemnify any such Covered Person in connection with a proceeding (or part thereof) initiated by such Covered Person only if such proceeding (or part thereof) was authorized by the Board.

SECTION 10.2 Right to Advancement of Expenses. The Corporation shall pay the expenses (including attorneys’ fees) incurred by a Covered Person in defending any such proceeding in advance of its final disposition (hereinafter, an “advancement of expenses”), provided, however, that, if the Delaware General Corporation Law so requires, an advancement of expenses incurred by a Covered Person in his or her capacity as such shall be made only upon delivery to the Corporation of an undertaking (hereinafter, an “undertaking”), by or on behalf of such Covered Person, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal (hereinafter, a “final adjudication”) that such Covered Person is not entitled to be indemnified for such expenses under this Section 10.2 or otherwise. The rights to indemnification and to the advancement of expenses conferred in Sections 10.1 and 10.2 hereof shall be contract rights and such rights shall continue as to a Covered Person who has ceased to be such and shall inure to the benefit of the Covered Person’s heirs, executors and administrators.

SECTION 10.3 Right of Covered Person to Bring Suit. If a claim under Section 10.1 or 10.2 hereof is not paid in full by the Corporation within sixty (60) days after a written claim therefor has been received by the Corporation, except in the case of a claim for an advancement of expenses, in which case the applicable period shall be twenty (20) days, the Covered Person may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the

 

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claim. If successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the Covered Person shall be entitled to be paid also the expense of prosecuting or defending such suit. In (i) any suit brought by the Covered Person to enforce a right to indemnification hereunder (but not in a suit brought by the Covered Person to enforce a right to an advancement of expenses) it shall be a defense that, and (ii) any suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking the Corporation shall be entitled to recover such expenses upon a final adjudication that, the Covered Person has not met the applicable standard for indemnification set forth in the Delaware General Corporation Law. To the fullest extent permitted by law, neither the failure of the Corporation (including its disinterested directors, committee thereof, independent legal counsel or its stockholders) to have made a determination prior to the commencement of such suit that indemnification of the Covered Person is proper in the circumstances because the Covered Person has met the applicable standard of conduct set forth in the Delaware General Corporation Law, nor an actual determination by the Corporation (including its disinterested directors, committee thereof, independent legal counsel or its stockholders) that the Covered Person has not met such applicable standard of conduct, shall create a presumption that the Covered Person has not met the applicable standard of conduct or, in the case of such a suit brought by the Covered Person, be a defense to such suit. In any suit brought by the Covered Person to enforce a right to indemnification or to an advancement of expenses hereunder, or brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the Covered Person is not entitled to be indemnified, or to such advancement of expenses, under this Article X or otherwise shall, to the extent permitted by law, be on the Corporation.

SECTION 10.4 Non-Exclusivity of Rights. The rights to indemnification and to the advancement of expenses conferred in this Article X shall not be exclusive of any other right which any person may have or hereafter acquire by any statute, the Corporation’s Certificate of Incorporation or Bylaws, agreement, vote of stockholders or disinterested directors or otherwise.

SECTION 10.5 Insurance. The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the Delaware General Corporation Law.

SECTION 10.6 Indemnification of Employees and Agents of the Corporation. The Corporation may, to the extent authorized from time to time by the Board, grant rights to indemnification and to the advancement of expenses to any employee or agent of the Corporation to the fullest extent of the provisions of this Article X with respect to the indemnification and advancement of expenses of directors and officers of the Corporation.

SECTION 10.7 Amendment or Repeal.

Any repeal or modification of the provisions of this Article X shall not adversely affect any right or protection hereunder of any Covered Person in respect of any proceeding (regardless of when such proceeding is first threatened, commenced or completed) arising out of, or related to, any act or omission occurring prior to the time of such repeal or modification.

 

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ARTICLE XI

AMENDMENTS

The Board may from time to time adopt, make, amend, supplement or repeal these Bylaws by vote of a majority of the Board, subject to Section 8.2 of the Second Amended and Restated Stockholders Agreement.

 

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EX-10.1

Exhibit 10.1

AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT

OF

CHARTER COMMUNICATIONS HOLDINGS, LLC

a Delaware Limited Liability Company

Dated as of May 18, 2016


IMPORTANT NOTE

THE UNITS REPRESENTED BY THIS LIMITED LIABILITY COMPANY AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY OTHER APPLICABLE SECURITIES LAWS. SUCH UNITS MAY NOT BE SOLD, ASSIGNED, PLEDGED OR OTHERWISE TRANSFERRED AT ANY TIME WITHOUT EFFECTIVE REGISTRATION UNDER SUCH ACT AND LAWS OR AN EXEMPTION THEREFROM.

THE UNITS REPRESENTED BY THIS LIMITED LIABILITY COMPANY AGREEMENT ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER SPECIFIED HEREIN, AND THE COMPANY RESERVES THE RIGHT TO REFUSE THE TRANSFER OF SUCH UNITS UNTIL SUCH TRANSFER IS IN COMPLIANCE HEREWITH.

 

 

 


TABLE OF CONTENTS

 

          Page  

Article I - DEFINITIONS

     2   

SECTION 1.1

   Definitions      2   

SECTION 1.2

   Terms Generally      19   

Article II - GENERAL PROVISIONS

     20   

SECTION 2.1

   Formation      20   

SECTION 2.2

   Name      20   

SECTION 2.3

   Term      20   

SECTION 2.4

   Purpose; Powers      21   

SECTION 2.5

   Registered Office; Registered Agent; Principal Office; Other Offices      21   

SECTION 2.6

   No State-Law Partnership      21   

Article III - UNITS

     21   

SECTION 3.1

   Authorized Units; Certificates      21   

SECTION 3.2

   Capital Structure of the Company and New Charter      23   

SECTION 3.3

   Optional Conversion of Convertible Preferred Units      25   

SECTION 3.4

   Other Conversion or Redemption of Convertible Preferred Units      38   

SECTION 3.5

   Automatic Exchange/Conversion of Units Pursuant to a Foreclosure.      41   

SECTION 3.6

   General      42   

SECTION 3.7

   Voting      42   

Article IV - MANAGEMENT

     42   

SECTION 4.1

   Manager      42   

SECTION 4.2

   Members      43   

SECTION 4.3

   Officers      43   

SECTION 4.4

   Management Matters      45   

SECTION 4.5

   Liability of Members      45   

SECTION 4.6

   Exculpation; Indemnification by the Company      46   

SECTION 4.7

   Manager Expenses      48   

SECTION 4.8

   Exclusivity of Business      48   

 

-i-


Article V - ALLOCATIONS; DISTRIBUTIONS

     50   

SECTION 5.1

   Capital Account Creation      50   

SECTION 5.2

   Capital Account Negative Balance      50   

SECTION 5.3

   Allocations of Net Income and Net Loss      50   

SECTION 5.4

   Distributions      56   

Article VI - RESIGNATION; DISSOLUTION; TRANSFER OF MEMBERSHIP INTERESTS; ADMISSION OF NEW MEMBERS

     60   

SECTION 6.1

   Member Withdrawal      60   

SECTION 6.2

   Dissolution      61   

SECTION 6.3

   Transfer by Members      62   

SECTION 6.4

   Admission or Substitution of New Members      63   

SECTION 6.5

   Right of First Refusal; Right of First Offer and Matching Right.      64   

Article VII - REPORTS TO MEMBERS; TAX MATTERS

     68   

SECTION 7.1

   Books of Account      68   

SECTION 7.2

   Reports      68   

SECTION 7.3

   Fiscal Year      69   

SECTION 7.4

   Certain Tax Matters      69   

SECTION 7.5

   Certain Business Combinations      74   

Article VIII - MISCELLANEOUS

     74   

SECTION 8.1

   Exhibits      74   

SECTION 8.2

   Governing Law; Severability; Selection of Forum; Waiver of Trial by Jury      74   

SECTION 8.3

   Successors and Assigns; No Third-Person Beneficiaries      75   

SECTION 8.4

   Confidentiality      75   

SECTION 8.5

   Amendments      75   

SECTION 8.6

   Notices      76   

SECTION 8.7

   Counterparts      76   

SECTION 8.8

   Non-Circumvention      76   

SECTION 8.9

   Entire Agreement      76   

SECTION 8.10

   Specific Performance      76   

SECTION 8.11

   Control of Subsidiaries      77   

 

-ii-


Exhibits and Schedules

 

Schedule I    Members
Exhibit A    Example Calculation of Assumed Tax Rate
Exhibit B    Form of Convertible Preferred Unit Certificate
Exhibit C    Form of Joinder Agreement
Exhibit D    Form of Conversion Notice
Exhibit E    Structure Plan
Exhibit F    Common Tax Distribution and Tax Loan Calculation Example
Exhibit G    Transferee Tax Representations
Exhibit H    Make-Whole Table
Exhibit I    Preferred Unit Valuation Assumptions

 

-iii-


 

CHARTER COMMUNICATIONS HOLDINGS, LLC

A Delaware Limited Liability Company

 

 

AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT

Dated as of May 18, 2016

This AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (as amended from time to time in accordance with its terms, this “Agreement”) of Charter Communications Holdings, LLC, a Delaware limited liability company (the “Company”), is made as of the date first written above, by and among:

 

  (i) Charter Communications, Inc., a Delaware corporation (formerly known as CCH I, LLC) (“New Charter”);

 

  (ii) CCH II, LLC, a Delaware limited liability company (together with any Person or Persons in the Charter Group to whom CCH II, LLC transfers any Units or who otherwise holds any Units, the “Charter Member”);

 

  (iii) Advance/Newhouse Partnership, a New York partnership (“A/N”);

 

  (iv) the Company; and

 

  (v) each other Person who at any time after the date hereof becomes a Member in accordance with the terms of this Agreement and the Act.

Any reference in this Agreement to the Charter Member, A/N or any other Member shall be deemed to include such Member’s successors in interest to the extent such successors in interest have become Members in accordance with the provisions of this Agreement.

All capitalized terms used in this Agreement are defined in Article I.

R E C I T A L S

WHEREAS, (i) the Company was formed as a limited liability company under the Delaware Limited Liability Company Act, Title 6, Sections 18-101 et seq. (as amended from time to time, the “Act”), by the filing of a Certificate of Formation with the Secretary of State of the State of Delaware on May 25, 1999 (the “Filing Date”);

WHEREAS, the then-Members of the Company set forth certain agreements governing the relations among the members in a Limited Liability Company Agreement originally entered


into and made effective as of May 25, 1999, as amended and restated thereafter, most recently by that certain Amended and Restated Limited Liability Company Agreement dated as of December 31, 2013 (as amended and restated, the “Original Agreement”);

WHEREAS, prior to the Contribution (as defined in the Contribution Agreement), in connection with the acquisition of certain assets and entities (including Time Warner Cable, Inc.), New Charter intends to cause certain assets (including the assets of Time Warner Cable, Inc. and assets of New Charter) to be acquired by or transferred to the Company, as outlined in more detail in the structure plan attached as Exhibit E to this Agreement;

WHEREAS, in connection with the Contribution (as defined in the Contribution Agreement) pursuant to the terms, and subject to the conditions of, the Contribution Agreement, the Company, the Charter Member and A/N desire to amend and restate the Original Agreement in its entirety as set forth herein; and

WHEREAS, the Company, New Charter, Liberty Broadband Corporation, a Delaware corporation (“Liberty Broadband”), and A/N have entered into the Stockholders Agreement and, coincident herewith, are entering into the Registration Rights Agreement and the Company, New Charter, the Charter Member and A/N are entering into the Exchange Agreement, and such agreements are integral and critical to the willingness of the Company, the Charter Member and A/N to enter into this Agreement.

NOW THEREFORE, in consideration of the mutual covenants and agreements contained in this Agreement, the sufficiency of which is hereby acknowledged, the parties agree that the Original Agreement is hereby amended and restated in its entirety as follows:

ARTICLE I - DEFINITIONS

SECTION 1.1 Definitions.

The following terms shall have the following meanings for purposes of this Agreement:

A/N Contributed Property” has the meaning set forth in Section 7.4(d)(ii).

A/N Party” has the meaning set forth in the Stockholders Agreement.

Acquisition Loan” has the meaning set forth in Section 4.8(b)(i).

Act” has the meaning set forth in the recitals.

Adjusted Capital Account” means, with respect to any Member, such Member’s Capital Account after giving effect to the following adjustments:

(a) Credit to such Capital Account any amounts which such Member is obligated to restore pursuant to any provision of this Agreement or under applicable Law or is deemed obligated to restore pursuant to the penultimate sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5); and

(b) Debit to such Capital Account the items described in Regulations Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), and 1.704-1(b)(2)(ii)(d)(6).

 

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The foregoing definition of “Adjusted Capital Account” is intended to comply with the provisions of Section 1.704-1(b)(2)(ii)(d) of the Regulations and shall be interpreted and applied by the Manager consistently therewith.

Adjusted Capital Account Deficit” means, with respect to any Member, the deficit balance, if any, in such Member’s Adjusted Capital Account as of the end of the relevant Fiscal Year.

Affiliate” means, with respect to any Person, any other Person, directly or indirectly, through one or more intermediaries, controlling, controlled by, or under common control with, such Person; it being understood that “control” or any correlative version thereof in this Agreement shall have the meaning ascribed thereto in Rule 12b-2 under the Exchange Act. Notwithstanding anything to the contrary set forth in this Agreement, New Charter and its Subsidiaries shall not be deemed to be Affiliates of A/N or any of its Affiliates.

Agreement” has the meaning set forth in the preamble.

A/N” has the meaning set forth in the preamble.

A/N ROFO Acceptance Notice” has the meaning set forth in Section 6.5(d)(iii).

Applicable Rate” means, at any date of determination, the rate per annum (rounded upwards, if necessary, to the next higher one hundred-thousandth of a percentage point) equal to New Charter’s interest rate for Eurodollar loans under New Charter’s primary revolving credit facility, applied in a manner consistent with market practice, which, as of the date of this Agreement is 2.0% plus the London Interbank Offered Rate as published on the applicable Bloomberg screen page (or such other page as may replace that page on that service or such other commercially available source providing such quotations as may be designated by New Charter from time to time in its reasonable discretion) for deposits in dollars for a period equal to three months as of 11:00 a.m. (New York time) on the day of determination; provided, that if New Charter’s interest rate for Eurodollar loans under New Charter’s primary revolving credit facility is changed, the Applicable Rate shall be changed to such rate.

Assumed Tax Rate” means, for each Fiscal Year (or portion thereof), the highest effective marginal income tax rate for a New York City resident individual or corporation (who is not materially participating in the operations of the Company within the meaning of Section 469 of the Code), as applicable, for such Fiscal Year (giving effect to the deductibility of state and local taxes), in each case applicable to the character of the net taxable income (e.g., capital gains, dividends and/or ordinary income) allocable to the relevant Member. The Assumed Tax Rate shall, for the avoidance of doubt, be determined, in the case of a Member that is a partnership, an “S corporation,” or a partnership which has an “S corporation as a partner,” at the highest rate applicable to any partner of such partnership or shareholder in such “S corporation” and shall be determined by the Manager, in the case of a Member that is a partnership, an “S corporation,” or a partnership which has an “S corporation as a partner,” by applying the highest effective marginal income tax rate for a New York City resident individual that is a

 

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partner of such partnership or shareholder in such “S corporation” (who is not materially participating in the operations of the Company within the meaning of Section 469 of the Code) and only one such Assumed Tax Rate shall be applicable for all Members with respect to each character of net taxable income. An example calculation of the Assumed Tax Rate (as applicable to ordinary income of an individual Member) is attached as Exhibit A.

Board of Directors” means the Board of Directors of New Charter.

Borrowing” has the meaning set forth in Section 7.4(d)(i).

Business Day” means a day, other than Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by Law to close.

Cap” has the meaning set forth in the Stockholders Agreement.

Capital Account” means, with respect to any Member, the Capital Account maintained for such Member in accordance with the following provisions:

(a) The Capital Account of each Member will be increased by:

 

  (i) any Capital Contributions made by such Member;

 

  (ii) allocations to such Member of Net Income (or items of income or gain) pursuant to Section 5.3(a) and any items in the nature of income or gain that are specially allocated to such Member pursuant to Section 5.3(c); and

 

  (iii) the amount of any Company liabilities assumed by such Member as provided in Regulations Section 1.704-1(b)(2)(iv)(c)(1).

(b) The Capital Account of each Member will be decreased by:

 

  (i) the amount of money and the Gross Asset Value of any property distributed to such Member by the Company in respect of such Member’s Membership Interest;

 

  (ii) allocations to the Member of any Net Loss (or items of loss or deduction) pursuant to Section 5.3(a) and any items in the nature of loss or deduction that are specially allocated to such Member pursuant to Section 5.3(c); and

 

  (iii) the amount of any liabilities of such Member assumed by the Company as provided in Regulations Section 1.704-1(b)(2)(iv)(c)(2).

The foregoing definition and other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Code Section 704(b) and the Regulations promulgated thereunder and shall be interpreted and applied by the Company and the

 

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Manager in a manner consistent with such Regulations. The initial Capital Account of each Member as of the date of this Agreement is as set forth on Schedule I, and shall be adjusted from time to time in accordance with this definition.

Capital Contribution” means, with respect to any Person, the amount of cash and the initial Gross Asset Value of any property (other than cash) contributed to the Company (determined in the aggregate with respect to the Contribution (as defined in the Contribution Agreement) and the contribution of the assets of the Charter Member no later than fifteen (15) Business Days after the Contribution and the contribution of the assets of the Charter Member) or any of its Subsidiaries by such Person (or its predecessors in interest) in respect of a Membership Interest. If any Member pays any amount which gives rise to a tax deduction of the Company, such payment shall be treated as a Capital Contribution by the Member.

Capital Stock” shall mean any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (in each case however designated) stock issued by New Charter.

Certificate” has the meaning set forth in Section 2.1.

Cash Exchange Payment” has the meaning set forth in the Exchange Agreement.

Change of Control” means any (i) merger, consolidation or other business combination of New Charter or the Company (or any of their respective Subsidiaries that alone or together represent all or substantially all of New Charter’s or the Company’s consolidated business at that time) or any successor or other entity owning or holding substantially all of the assets of New Charter or the Company and their respective Subsidiaries that results in the holders of Class A Common Stock (in the case of New Charter) or the holders of Common Units (in the case of the Company) immediately before the consummation of such transaction, or a series of related transactions, holding, directly or indirectly, less than 50% of the equity or voting power of New Charter or the Company (or any such Subsidiary or Subsidiaries) or any successor or other entity owning or holding substantially all of the assets of New Charter or the Company and their respective Subsidiaries or the surviving entity thereof, as applicable, immediately following the consummation of such transaction or series of related transactions; it being understood that such ownership shall be evaluated on a combined basis (i.e., on an as-converted, as-exchanged basis and without regard to any voting power or ownership limitation on A/N, Liberty Broadband or their respective Affiliates) so that any ownership interest in the Charter Member shall be aggregated (without duplication) with any ownership interest in the Company or any such Subsidiary of New Charter, any other member of the Charter Group or any such successor; (ii) transfer, in one or a series of related transactions, equity interests representing 50% or more of the equity or voting power of the Company or New Charter (or any of their respective Subsidiaries that alone or together represent all or substantially all of New Charter’s or the Company’s consolidated assets at that time) or any successor or other entity owning or holding substantially all of the consolidated assets of New Charter and the Company and their respective Subsidiaries, taken as a whole, to a Person or Group (other than New Charter or any of its Subsidiaries), or entitling such Person or Group to elect a majority of the board of directors or similar governing body of New Charter or the Company (or such

 

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Subsidiary or Subsidiaries) or any such successor or other entity; it being understood that such ownership shall be evaluated on a combined basis (i.e., on an as-converted, as-exchanged basis and without regard to any voting power or ownership limitation on A/N, Liberty Broadband or their respective Affiliates) so that any ownership interest in the Charter Member shall be aggregated (without duplication) with any ownership interest in the Company or any such Subsidiary of New Charter or any such successor; or (iii) sale or other disposition in one or a series of related transactions of all or substantially all of the consolidated assets of New Charter and the Company and their respective Subsidiaries. Notwithstanding anything to the contrary contained herein, for purposes of determining whether a Change of Control has occurred, it shall be assumed that all Class B Common Units have been exchanged for shares of Class A Common Stock (or equity interests of any successor or other entity owning or holding substantially all of the assets of New Charter and its Subsidiaries) immediately prior to any such merger, consolidation, other business combination or transfer and there is no limitation on the voting power or ownership limitation on A/N and its Affiliates or on Liberty Broadband or its Affiliates.

Change of Control Class A Common Stock Price” means, in connection with any Change of Control (i) the cash amount paid per share of Class A Common Stock if the holders of Class A Common Stock receive only cash in such Change of Control; or (ii) in any other situation, the VWAP of the Class A Common Stock over the three (3) Trading Days immediately preceding, but excluding, the effective date of a Change of Control.

Charter Group” means New Charter and all Subsidiaries of New Charter other than the Company and its Subsidiaries.

Charter Member” has the meaning set forth in the preamble.

Chief Financial Officer” has the meaning set forth in Section 4.3(e).

Class A Common Stock” means the Class A common stock, par value $0.001 per share, of New Charter, or the common stock or other equity securities of a successor corporation or entity for which such common stock has been converted or exchanged.

Class A Common Units” has the meaning set forth in Section 3.1(a).

Class B Common Units” has the meaning set forth in Section 3.1(a).

Close of Business” shall mean 5:00 p.m., Eastern Time, on any Business Day.

Closing Date” has the meaning set forth in the Contribution Agreement.

Closing Price” means, with respect to any Trading Day, the price per share of the final trade of the Class A Common Stock on such day (but not including any “after hours” trading) on the principal national securities exchange on which the Class A Common Stock is listed or admitted to trading.

Code” means the Internal Revenue Code of 1986, as amended.

 

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Commission” means the U.S. Securities and Exchange Commission and any successor thereto.

Common Annual Adjusted Taxable Income” means, with respect to each Member holding Common Units for each Fiscal Year (or portion thereof), the difference (but not below zero) of (a) the total U.S. federal taxable income allocated to such Member with respect to its Common Units for such Fiscal Year (or portion thereof), minus (b) the cumulative U.S. federal taxable losses allocated on IRS Schedule K-1s (or as otherwise finally determined) to the Member with respect to such Common Units to the extent such prior losses are of a character that would permit such losses to be deducted against the U.S. federal taxable income of the Members for the current Fiscal Year and are not taken into account in a prior Fiscal Year pursuant to this clause (b); provided, that for the avoidance of doubt, such U.S. federal taxable income shall be computed taking into account any allocations of items of income, gain, loss or deduction under Section 704(c) of the Code (excluding adjustments to the amount of depreciation or amortization allocable to the Members under Section 704(c)(1)(C) resulting from a contribution to the Company), but without taking into account any special basis adjustment under Section 743 of the Code.

Common Cumulative Assumed Tax Liability” means, with respect to each Member at any given time, the sum, over all Fiscal Years (or the portion of the Fiscal Year) up to such time, of the product of (a) the Common Annual Adjusted Taxable Income for such Fiscal Year or portion thereof, multiplied by (b) the Assumed Tax Rate for such Fiscal Year or portion thereof (applying, in each case, the tax rate applicable to the character of the net taxable income). Each Member’s Common Cumulative Assumed Tax Liability shall be appropriately adjusted by the Manager (1) if at any time there is an audit adjustment or an amended return is filed by the Company, to reflect any adjustment to assumed taxes due, based on the Assumed Tax Rate for the affected periods, and (2) to reflect any change in the number of Common Units held by such Member based on the number of Common Units held by such Member in each relevant Fiscal Year (or portion thereof).

Common Excess Cumulative Tax Liability” means, with respect to each Member holding Common Units at any given time, the difference (but not below zero) of (a) such Member’s Common Cumulative Assumed Tax Liability as of such time, minus (b) the total amount of all prior Common Tax Distributions made to such Member in respect of such Common Units, and minus (c) the total amount of all prior Tax Loans made to such Member and still outstanding resulting from the waiver by the Manager of Common Tax Distributions.

Common Per Unit Excess Cumulative Tax Liability” means, with respect to each Member holding Common Units at any given time, the quotient of (a) such Member’s Common Excess Cumulative Tax Liability, divided by (b) the number of Common Units held by such Member at such time.

Common Per Unit Tax Distribution Amount” means, for each Fiscal Year (or portion thereof), the highest Common Per Unit Excess Cumulative Tax Liability of any Member holding Common Units, as of the end of such Fiscal Year (or portion thereof).

Common Tax Distribution” means the aggregate amount of any distribution made to any Member in respect of such Member’s Common Units, pursuant to Section 5.4(b)(i).

 

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Common Units” means the Class A Common Units and the Class B Common Units.

Company” has the meaning set forth in the preamble.

Company Minimum Gain” has the same meaning as “partnership minimum gain” set forth in Regulations Sections 1.704-2(b)(2) and 1.704-2(d). A Member’s share of Company Minimum Gain shall be computed in accordance with the provisions of Regulations Section 1.704-2(g).

Company ROFO Offer Notice” has the meaning set forth in Section 6.5(d)(ii).

Company ROFR Acceptance Notice” has the meaning set forth in Section 6.5(b)(ii).

Contribution Agreement” means the Contribution Agreement, dated as of May 23, 2015, by and among the Company, New Charter, Old Charter and A/N (as amended from time to time in accordance with its terms).

Conversion Date” means, with respect to any Convertible Preferred Units to be converted pursuant to Section 3.3(a), Section 3.4(a) or automatically converted pursuant to Section 3.5(b), the date on which such Convertible Preferred Units and a duly signed and completed Conversion Notice is received by the Company or a Conversion Notice is deemed given by the holder of the Convertible Preferred Units.

Conversion Notice” has the meaning set forth in Section 3.3(a).

Conversion Price” means, as of any given time, the quotient of $100 divided by the Conversion Rate.

Conversion Rate” means 0.37334, subject to adjustment as set forth in Section 3.3(c).

Conversion Rate Adjustment Event” has the meaning set forth in Section 3.3(c)(xi).

Convertible Preferred Unallocated Yield” means, for any Taxable Period and with respect to any Convertible Preferred Unit, the amount equal to (a) the aggregate Convertible Preferred Yield accrued on such Convertible Preferred Unit through the last day of such Taxable Period, less (b) the cumulative amount of items of Company income or gain previously allocated by the Company pursuant to Section 5.3(c)(i)(H) with respect to such Convertible Preferred Unit.

Convertible Preferred Unit” has the meaning set forth in Section 3.1(a).

Convertible Preferred Unitholders” means the holders of record of the Convertible Preferred Units.

Convertible Preferred Unit Certificate” means a certificate representing Convertible Preferred Units substantially in the form set forth in Exhibit B.

Convertible Preferred Unit Distribution Payment Date” has the meaning set forth in Section 5.4(a)(i)(A).

 

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Convertible Preferred Yield” means, with respect to any Convertible Preferred Unit, an amount equal to 6.0% per annum on an amount equal to the Liquidation Preference of such Convertible Preferred Unit (equivalent to $6.00 per annum). Such amount shall be determined on a daily basis computed on the basis of a 360-day year of twelve 30-day months (or actual days elapsed in a month in which a calculation is made if such calculation is made prior to the last day of such month), cumulative from the date hereof to the extent not distributed for any given distribution period pursuant to Section 5.4. Notwithstanding the foregoing, distributions on the Convertible Preferred Units will accrue whether or not the terms and provisions of any agreement of the Company at any time prohibit the current payment of distributions, whether or not the Company has earnings, whether or not there are funds legally available for the payment of such distributions and whether or not such distributions are authorized or otherwise declared. Accrued but unpaid distributions on the Convertible Preferred Units will accumulate as of the Convertible Preferred Unit Distribution Payment Date on which they first become payable or shall have been deemed to become due pursuant to Section 5.4(a)(i)(A).

Covered Claim” has the meaning set forth in Section 4.6(a).

Covered Person” means any past, present or future officer, director or employee of the Charter Member, the Company or its Subsidiaries or the Manager, Tax Matters Member, or any Affiliate of any of the foregoing (each, in their capacity as such).

Covered Proceeding” has the meaning set forth in Section 4.6(b).

Creditor” has the meaning set forth in Section 4.8(b)(iii).

Demand Registration” has the meaning set forth in the Registration Rights Agreement.

Depreciation” means, for each Fiscal Year or other period for tax purposes, an amount equal to the depreciation, amortization or other cost recovery deduction allowable with respect to an asset for such Fiscal Year or other period, except that (i) if the Gross Asset Value of an asset differs from its adjusted basis for federal income tax purposes at the beginning of such Fiscal Year or other period, and which difference is being eliminated by use of the “remedial allocation method” defined by Regulations Section 1.704-3(d), Depreciation with respect to such asset or portion thereof subject to such method for such Fiscal Year or other period shall be the amount of book basis recovered for such Fiscal Year or other period under the rules prescribed by Regulations Section 1.704-3(d)(2), and (ii) with respect to any other asset whose Gross Asset Value differs from its adjusted basis for federal income tax purposes at the beginning of such Fiscal Year or other period, Depreciation shall be an amount which bears the same ratio to such beginning Gross Asset Value as the federal income tax depreciation, amortization or other cost recovery deduction for such year or other period bears to such beginning adjusted tax basis; provided, however, that, in the case of clause (ii) above, if the federal income tax depreciation, amortization or other cost recovery deduction for such year is zero, Depreciation shall be calculated with reference to such beginning Gross Asset Value using any reasonable method selected by the Manager.

Distributed Property” has the meaning set forth in Section 3.3(c)(v).

 

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Eligible Market” means NASDAQ, NASDAQ Global Market or NYSE.

Equity Interest” has the meaning set forth in the Stockholders Agreement.

Equity Linked Financing” has the meaning set forth in the Stockholders Agreement.

Ex-Dividend Date” means the first date on which the shares of Class A Common Stock trade on the applicable exchange or in the applicable market, regular way, without the right to receive the dividend or distribution in question from New Charter, or, if applicable, from the seller of the Class A Common Stock on such exchange or market as determined by such exchange or market.

Exchange” has the meaning set forth in the Exchange Agreement.

Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, as amended, or any successor federal statute, and the rules and regulations of the Commission thereunder, all as the same shall be in effect from time to time.

Exchange Agreement” means the Exchange Agreement, dated as of the date hereof, among New Charter, CCH II, LLC, the Company, A/N, and such other holders of Class B Common Units of the Company from time to time party thereto, as such agreement may be amended from time to time in accordance with its terms.

Expenses” has the meaning set forth in Section 4.6(a).

Filing Date” has the meaning set forth in the recitals.

Fiscal Quarter” means any fiscal quarter of a Fiscal Year.

Fiscal Year” has the meaning set forth in Section 7.3.

Government Entity” means any federal, state, local or foreign government, governmental subdivision, administrative body or other governmental or quasi-governmental agency, tribunal, court or other entity of competent jurisdiction.

Gross Asset Value” means, with respect to any asset, the asset’s adjusted basis for federal income tax purposes, except as follows:

(a) The initial Gross Asset Value of any asset contributed by a Member to the Company shall be the gross fair market value of such asset on the date of the contribution, as reasonably determined by the Manager.

(b) The Gross Asset Values of all Company assets shall be adjusted to equal their respective gross fair market values, as reasonably determined by the Manager, as of the following times:

(i) the acquisition of an additional Membership Interest in the Company after the date of this Agreement by an existing Member or new Member in

 

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exchange for more than a de minimis Capital Contribution, if the Manager reasonably determines that such adjustment is necessary or appropriate to reflect the relative economic interests of the Members in the Company;

(ii) the distribution by the Company to a Member of more than a de minimis amount of Company property as consideration for a Membership Interest in the Company, if the Manager reasonably determines that such adjustment is necessary or appropriate to reflect the relative economic interests of the Members in the Company;

(iii) the liquidation of the Company within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g);

(iv) the grant of an interest in the Company (other than a de minimis interest) as consideration for the provision of services to or for the benefit of the Company by an existing Member acting in a Member capacity, or by a new Member acting in a Member capacity or in anticipation of being a Member if the Manager reasonably determines that such adjustment is necessary or appropriate to reflect the relative economic interests of the Members in the Company;

(v) upon the conversion of Convertible Preferred Units pursuant to Section 3.3, applying Regulations Section 1.704-1(b)(2)(iv)(f), taking into account Regulations Section 1.704-1(b)(2)(iv)(s); and

(vi) such other times as the Manager shall reasonably determine necessary or advisable in order to comply with Regulations Sections 1.704-1(b) and 1.704-2.

(c) The Gross Asset Value of any Company asset distributed to a Member shall be the gross fair market value of such asset on the date of distribution, as reasonably determined by the Manager.

(d) The Gross Asset Values of Company assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m); provided, however, that Gross Asset Values shall not be adjusted pursuant to this subparagraph (d) to the extent that the Manager reasonably determines that an adjustment pursuant to subparagraph (b) of this definition of Gross Asset Value is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this subparagraph (d).

(e) The Gross Asset Value of a Company asset shall be adjusted by the Depreciation, if any, taken into account by the Company with respect to computing Net Income or Net Loss.

For the purposes of this definition of “Gross Asset Value,” a determination by the Manager with respect to property contributed on the date hereof shall only be considered

 

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reasonable if (a) the Manager provides the determination in draft form and in sufficient detail (including any supporting documentation) to A/N reasonably in advance of any applicable filing or reporting due date (taking into account any applicable extensions) for A/N’s review; and (b) the Manager considers in good faith any of A/N’s or its tax advisor’s comments thereon; it being understood that if the Manager and A/N are unable to reach agreement with respect to such determination, the Manager’s determination shall control.

Group” means “group” within the meaning of Section 13(d)(3) of the Exchange Act.

IRS” means the United States Internal Revenue Service.

Joinder Agreement” means a Joinder Agreement in the form attached as Exhibit C.

Law” means any applicable law, statute, ordinance, rule, regulation, code, Order, judgment, injunction or decree enacted, issued, promulgated, enforced or entered by a Government Entity or Self-Regulatory Organization (including, for the sake of clarity, any policy statement or interpretation that has the force of law with respect to any of the foregoing, and including common law).

Liberty Broadband” has the meaning set forth in the recitals.

Liquidating Distribution” has the meaning set forth in Section 3.3(c)(v).

Liquidation Preference” means $100 per Convertible Preferred Unit.

Make-Whole Amount” means a number of shares of Class A Common Stock determined by reference to the table in Exhibit H, based upon the effective date of the Change of Control and the Change of Control Class A Common Stock Price.

If the exact Change of Control Class A Common Stock Price and effective date is not set forth in the table in Exhibit H, then:

(a) if the Change of Control Class A Common Stock Price is between two Change of Control Class A Common Stock Prices in the table in Exhibit H and/or the effective date of the Change of Control is between two effective dates set forth in the table in Exhibit H, the Make-Whole Amount shall be determined by straight-line interpolation between the Make-Whole Amounts set forth for the higher and lower Change of Control Class A Common Stock Price and/or the earlier and later effective dates set forth in the table, as applicable, based on a 365-day year.

(b) If the Change of Control Class A Common Stock Price is in excess of $1,000.00 (subject to adjustment at the same time and in the same manner as the Change of Control Class A Common Stock Prices pursuant to clause (d) of this definition of Make-Whole Amount) the Make-Whole Amount shall be zero.

(c) If the Change of Control Class A Common Stock Price is less than $191.33 (subject to adjustment at the same time and in the same manner as the Change of Control Class A Common Stock Prices pursuant to clause (d) of this definition of Make-Whole Amount) the Make-Whole Amount shall be zero.

(d) The Change of Control Class A Common Stock Prices set forth in the table in Exhibit H shall be adjusted as of any date on which the Conversion Rate is adjusted pursuant to Section 3.3(c). The adjusted Change of Control Class A Common Stock Prices shall equal the Change of Control Class A Common Stock Prices applicable immediately prior to such adjustment multiplied by a fraction, the numerator of which is the Conversion Rate immediately before the adjustment and the denominator of which is the adjusted Conversion Rate. Each Make-Whole Amount set forth in the table shall be adjusted at the same time, in the same manner in which and for the same events for which the Conversion Rate is adjusted pursuant to Section 3.3(c).

 

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Manager” means New Charter or any of its successors or permitted assigns, or any subsequent successor or permitted assign, in its capacity as the Manager.

Member” means the Charter Member, A/N, and each other Person who is admitted hereafter as a Member in accordance with the terms of this Agreement, but only to the extent such Person has not ceased to be a Member pursuant to Section 6.1. The Members shall comprise the “members” (as that term is defined and used in the Act) of the Company. The Members shall constitute a single class or group of members for purposes of the Act.

Member Minimum Gain” means an amount, with respect to each Member Nonrecourse Debt, equal to the Company Minimum Gain that would result if such Member Nonrecourse Debt were treated as a Nonrecourse Liability, determined in accordance with Regulations Section 1.704-2(i)(3).

Member Nonrecourse Debt” has the same meaning as the term “partner nonrecourse debt” set forth in Regulations Section 1.704-2(b)(4).

Member Nonrecourse Deductions” has the same meaning as the term “partner nonrecourse deductions” set forth in Regulations Sections 1.704-2(i)(1) and 1.704-2(i)(2).

Membership Interest” means a Member’s ownership interest in the Company at the relevant time.

NASDAQ” means the NASDAQ Global Select Market or any successor thereto.

NASDAQ Global Market” means NASDAQ Global Market or any successor thereto.

 

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Net Income” and “Net Loss” means, for each Fiscal Year or other period, an amount equal to the Company’s taxable income or loss for such Fiscal Year or period, determined in accordance with Code Section 703(a) (for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Code Section 703(a)(1) shall be included in taxable income or loss) with the following adjustments:

(a) Any income of the Company that is exempt from federal income tax and to the extent not otherwise taken into account in computing Net Income or Net Loss pursuant to this definition of Net Income or Net Loss, shall be added to such income or loss;

(b) Any expenditures of the Company described in Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and to the extent not otherwise taken into account in computing Net Income or Net Loss pursuant to this definition of Net Income or Net Loss, shall be subtracted from such taxable income or loss;

(c) In the event the Gross Asset Value of any Company asset is adjusted pursuant to subparagraph (b) or (c) of the definition of Gross Asset Value in this Agreement, the amount of such adjustment shall be taken into account as gain (if the adjustment increases the Gross Asset Value of the asset) or loss (if the adjustment decreases the Gross Asset Value of the asset) from the disposition of such asset for purposes of computing Net Income or Net Loss;

(d) Gain or loss resulting from any disposition of Company property with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Gross Asset Value of the property disposed of, notwithstanding that the adjusted tax basis of such property differs from its Gross Asset Value;

(e) In lieu of depreciation, amortization, and other cost recovery deductions taken into account in computing such taxable income or loss, there shall be taken into account Depreciation for such Fiscal Year;

(f) To the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Code Section 734(b) or 743(b) is required pursuant to Regulations Section 1.704-1(b)(2)(iv)(m) to be taken into account in determining Capital Accounts as a result of a distribution other than in liquidation of a Member’s interest in the Company, the amount of such adjustment shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases the basis of the asset) from the disposition of the asset and shall be taken into account for purposes of computing Net Income or Net Loss; and

(g) Any items that are specially allocated pursuant to the provisions of Section 5.3(c) shall not be taken into account in computing Net Income or Net Loss.

New Charter” has the meaning set forth in the preamble.

New Charter Certificate” means the Amended and Restated Certificate of Incorporation of New Charter, as it may be amended from time to time in accordance with its terms.

Nonrecourse Deductions” has the meaning set forth in Regulations Section 1.704-2(b)(1) and 1.704-2(c).

Nonrecourse Liability” has the meaning set forth in Regulations Section 1.752-1(a)(2).

 

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Notice of Foreclosure” means a notice of foreclosure in a form agreed among the Company, A/N and the applicable lender to whom Class B Common Units or Convertible Preferred Units have been pledged in accordance with Section 4.6(c) or 4.6(d) of the Stockholders Agreement.

NYSE” means The New York Stock Exchange and any successor thereto.

Offered Preferred Units” has the meaning set forth in Section 6.5(b)(i).

Officer” means each Person designated as an officer of the Company or of any of its Subsidiaries pursuant to and in accordance with the provisions of Section 4.3, subject to the determination of the Manager appointing such Person as an officer or relating to such appointment.

Old Charter” means Former Charter Communications Parent, Inc., a Delaware corporation (formerly known as Charter Communications, Inc.).

Order” means any order, injunction, judgment, decree, writ or other enforcement action of a Government Entity.

Original Agreement” has the meaning set forth in the recitals.

Percentage Interest” means, with respect to any Member, the percentage obtained by dividing (a) the number of Common Units held by such Member by (b) the total number of Common Units of all classes then outstanding. The initial Percentage Interest of each Member as of the date of this Agreement is as set forth on Schedule I, which may be amended from time to time.

Per Unit Amount” has the meaning set forth in Section 3.3(b).

Person” means an individual, a corporation, a partnership, an association, a limited liability company, a joint venture, a Government Entity, a trust or other entity or organization.

Preferred Accrued Distribution Amount” means, with respect to each Convertible Preferred Unit, the sum of: (i) the amount of the Convertible Preferred Yield on such Convertible Preferred Unit that has accumulated as described in the definition of Convertible Preferred Yield but has not yet been paid, plus (ii) with respect to each distribution to be paid or deemed to have become due pursuant to Section 5.4 on each Convertible Preferred Unit Distribution Payment Date, if such distribution is not paid by the next following Convertible Preferred Unit Distribution Payment Date, additional interest accruing at 6.0% per annum on the amount of such distribution for the period from and after such following Convertible Preferred Unit Distribution Payment Date until such time as such distribution has been paid.

Preferred Annual Adjusted Taxable Income” means, with respect to each Member holding Convertible Preferred Units for each Fiscal Year (or portion thereof), the difference (but not below zero) of (a) the total U.S. federal taxable income allocated to such Member with respect to its Convertible Preferred Units for such Fiscal Year (or portion thereof), minus (b) the cumulative U.S. federal taxable losses allocated on IRS Schedule K-1s (or as otherwise finally determined) to the Member with respect to such Convertible Preferred Units to the extent such

 

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prior losses are of a character that would permit such losses to be deducted against the U.S. federal taxable income of the Members for the current Fiscal Year and are not taken into account in a prior Fiscal Year pursuant to this clause (b); provided, that for the avoidance of doubt, such U.S. federal taxable income shall be computed taking into account any allocations of items of income, gain, loss or deduction under Section 704(c) of the Code (excluding adjustments to the amount of depreciation or amortization allocable to the Members under Section 704(c)(1)(C) resulting from a contribution to the Company), but without taking into account any special basis adjustment under Section 743 of the Code.

Preferred Cumulative Assumed Tax Liability” means, with respect to each Member holding Convertible Preferred Units at any given time, the sum, over all Fiscal Years (or the portion of the Fiscal Year) up to such time, of the product of (a) the Preferred Annual Adjusted Taxable Income for such Fiscal Year or portion thereof, multiplied by (b) the Assumed Tax Rate for such Fiscal Year or portion thereof (applying, in each case, the tax rate applicable to the character of the net taxable income). Each Member’s Preferred Cumulative Assumed Tax Liability shall be appropriately adjusted by the Manager (1) if at any time there is an audit adjustment or an amended return is filed by the Company, to reflect any adjustment to assumed taxes due, based on the Assumed Tax Rate for the affected periods, and (2) to reflect any change in the number of Convertible Preferred Units held by such Member based on the number of Convertible Preferred Units held by such Member in each relevant Fiscal Year (or portion thereof).

Preferred Excess Cumulative Tax Liability” means, with respect to each Member holding Convertible Preferred Units at any given time, the difference (but not below zero) of (a) such Member’s Preferred Cumulative Assumed Tax Liability as of such time, minus (b) the total amount of all prior distributions made to such Member in respect of such Convertible Preferred Units (including Preferred Tax Distributions).

Preferred Per Unit Excess Cumulative Tax Liability” means, with respect to each Member holding Convertible Preferred Units at any given time, the quotient of (a) such Member’s Preferred Excess Cumulative Tax Liability, divided by (b) the number of Convertible Preferred Units held by such Member at such time.

Preferred Per Unit Tax Distribution Amount” means, for each Fiscal Year (or portion thereof), the highest Preferred Per Unit Excess Cumulative Tax Liability of any Member holding Convertible Preferred Units, as of the end of such Fiscal Year (or portion thereof).

Preferred Private Placement Notice” has the meaning set forth in Section 6.5(c)(i).

Preferred Private Placement Offering” means any widely distributed private placement offering of Convertible Preferred Units permitted by the Stockholders Agreement to qualified institutional buyers, including any such offering that includes a Shelf Registration requested by A/N of the shares of Class A Common Stock into which such Convertible Preferred Units are convertible following their Transfer to a third party.

Preferred Private Placement Offering Period” has the meaning set forth in Section 6.5(c)(ii).

Preferred Private Placement ROFO Period” has the meaning set forth in Section 6.5(c)(ii).

 

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Preferred ROFR” has the meaning set forth in Section 6.5(a).

Preferred ROFR Notice” has the meaning set forth in Section 6.5(b)(i).

Preferred Tax Distribution” means any Tax Distribution made to any Member in respect of such Member’s Convertible Preferred Units, pursuant to Section 5.4(b)(i).

Preferred Transferor” has the meaning set forth in Section 6.5(a).

Preferred Updated Valuation” has the meaning set forth in Section 6.5(c)(ii).

President” has the meaning set forth in Section 4.3(d).

Private Placement Preferred Units” has the meaning set forth in Section 6.5(c)(i).

Proceeding” has the meaning set forth in Section 4.6(b).

Recapitalization” has the meaning set forth in Section 3.3(c)(xiii).

Recapitalization Amendment” has the meaning set forth in Section 3.3(c)(xiii).

Record Date” shall mean, with respect to any dividend, distribution or other transaction or event in which the holders of Class A Common Stock have the right to receive any cash, securities or other property or in which the Class A Common Stock (or other applicable security) is exchanged for or converted into any combination of cash, securities or other property, the date fixed for determination of stockholders entitled to receive such cash, securities or other property (whether such date is fixed by the Board of Directors or by statute, contract or otherwise).

Reference Property” has the meaning set forth in Section 3.3(c)(xiii).

Registration Rights Agreement” means the Registration Rights Agreement, dated as of the date hereof, by and among New Charter, A/N, Liberty Broadband and the other parties from time to time party thereto, as such agreement may be amended from time to time in accordance with its terms.

Regulations” means the Income Tax Regulations, including temporary Regulations, promulgated under the Code, as such Regulations may be amended from time to time (including corresponding provisions of succeeding regulations).

Regulatory Allocations” has the meaning set forth in Section 5.3(c)(ii).

ROFR Closing” has the meaning set forth in Section 6.5(b)(iii).

ROFR Covered Transfer” has the meaning set forth in Section 6.5(a).

ROFR Specified Price” has the meaning set forth in Section 6.5(b)(i).

 

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Secretary” has the meaning set forth in Section 4.3(g).

Self-Regulatory Organization” means NASDAQ, the NYSE, any national securities exchange (as defined in the Exchange Act), any other securities exchange, futures exchange, contract market, or other exchange or similar self-regulatory body or organization.

Specified Documents” means this Agreement, the Exchange Agreement, the Stockholders Agreement, the Registration Rights Agreement, the Tax Receivables Agreement and the New Charter Certificate.

Stand Alone Margin Loan” has the meaning set forth in the Stockholders Agreement.

Spin-Off” has the meaning set forth in Section 3.3(c)(iii).

Stockholders Agreement” means the Second Amended and Restated Stockholders Agreement, dated as of May 23, 2015, by and among New Charter, Old Charter, A/N and Liberty Broadband, as such agreement may be amended from time to time in accordance with its terms.

Subsidiary” means, with respect to any Person, any other Person of which (i) a majority of the outstanding share capital, voting securities or other equity interests are owned, directly or indirectly, by such first Person and/or any other Subsidiary of such first Person or (ii) such first Person and/or any other Subsidiary of such first Person is entitled, directly or indirectly, to appoint a majority of the board of directors or comparable body of such Person.

Target Capital Account” means, for each Member, the amount that would be distributed to such Member if, on the last day of the Taxable Period, (a) the assets of the Company, including cash, were sold for cash equal to their respective Gross Asset Values, taking into account any adjustments thereto for such Taxable Period, (b) all Company liabilities were satisfied according to their terms (limited, with respect to any nonrecourse liability, to the Gross Asset Value of the property securing such nonrecourse liability), (c) the Company were to distribute the remaining proceeds from the sale pursuant to Section 6.2(c)(ii) and (iii), minus the sum of (1) the Member’s share of Company Minimum Gain and Member Minimum Gain, and (2) the amount, if any, that such Member is obligated (or deemed obligated) to contribute, in its capacity as a Member, to the Company; computed immediately prior to the hypothetical sale of assets.

Taxable Period” means (i) the period commencing on the date of this Agreement and ending on December 31, 2016, (ii) any Fiscal Year commencing after December 31, 2016, or (iii) any portion of the period described in clauses (i) or (ii) for which the Company is required to allocate Net Income, Net Losses and other items of Company income, gain, loss or deduction pursuant to Section 5.3.

Tax Distribution” means the aggregate amount of any distribution made to any Member pursuant to Section 5.4(b)(i).

Tax Loan” has the meaning set forth in Section 5.4(b)(ii).

Tax Matters Member” has the meaning set forth in Section 7.4(c)(i).

 

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Tax Receivables Agreement” means the Tax Receivables Agreement, dated as of the date hereof, by and among A/N, New Charter and CCH II, LLC, as such agreement may be amended from time to time in accordance with its terms.

Trading Day” shall mean any Business Day on which the Class A Common Stock is traded, or able to be traded, on the principal national securities exchange on which the Class A Common Stock is listed or admitted to trading.

Transfer” means, with respect to any Units, (i) when used as a verb, to sell, assign, dispose of, exchange, pledge, encumber, hypothecate or otherwise transfer such Units or any participation or interest therein, whether directly or indirectly, or, when used in Section 6.5, enter into any binding agreement to do any of the foregoing and (ii) when used as a noun, a direct or indirect sale, assignment, disposition, exchange, pledge, encumbrance, hypothecation or other transfer of such Units or any participation or interest therein, or, when used in Section 6.5 hereof, any binding agreement to do any of the foregoing, including in each case through the Transfer of any interest in any Person holding such Units or any interest in such Person. Notwithstanding anything to the contrary in this Agreement, no Transfer of Class A Common Stock or any other interest in New Charter shall be deemed to constitute a Transfer of Class A Common Units.

Transfer Agent” means the bank, trust company or other Person that may be appointed from time to time by the Company to act as registrar and transfer agent for the Convertible Preferred Units.

Trigger Event” has the meaning set forth in Section 3.3(c)(vii).

Units” has the meaning set forth in Section 3.1(a).

VWAP” means, for any specified period, with respect to any class of stock, a price per share equal to the volume-weighted average of the trading prices of such class of stock, as reported by Bloomberg L.P. (with respect to the Class A Common Stock, on the screen entitled “CHTR <EQUITY> AQR SEC” or its equivalent successor if such page is not available) for such period (without regard to pre-open or after hours trading outside of any regular trading session during such period).

SECTION 1.2 Terms Generally.

(a) Numbers. The definitions in Section 1.1 shall apply equally to both the singular and plural forms of the terms defined.

(b) Gender. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.

(c) Including. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.”

(d) Calculation of Time Period. When calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this

 

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Agreement, the date that is the reference date in calculating such period shall be excluded. If the last day of such period is a non-Business Day, the period in question shall end on the next succeeding Business Day.

(e) Dollars. Any reference in this Agreement to “dollars” or “$” shall mean the lawful currency of the United States of America.

(f) Headings. The provision of a Table of Contents, the division of this Agreement into Articles, Sections and other subdivisions and the insertion of headings are for convenience of reference only and shall not affect or be utilized in construing or interpreting this Agreement. All references to “Sections” and “Articles” shall refer to Sections and Articles of this Agreement unless otherwise specified.

(g) Exhibits. The exhibits to this Agreement are hereby incorporated and made a part of this Agreement and are an integral part of this Agreement. All exhibits annexed hereto or referred to in this Agreement are hereby incorporated in and made a part of this Agreement as if set forth in full in this Agreement. Any capitalized terms used in any exhibit but not otherwise defined therein shall be defined as set forth in this Agreement.

(h) Negotiation. The parties hereto have participated jointly in the negotiation and drafting of this Agreement and, in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as jointly drafted by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement.

ARTICLE II - GENERAL PROVISIONS

SECTION 2.1 Formation. The Company was organized as a Delaware limited liability company by the execution and filing of a Certificate of Formation on the Filing Date with the Secretary of State of the State of Delaware (as amended from time to time, the “Certificate”), under and pursuant to the Act by an “authorized person” within the meaning of the Act, which filing is hereby authorized, approved, ratified and confirmed in all respects. The rights, powers, duties, obligations and liabilities of the Members shall be determined pursuant to the Act and this Agreement. To the extent that the rights, powers, duties, obligations and liabilities of any Member are different by reason of any provision of this Agreement than they would be in the absence of such provision, this Agreement shall, to the extent permitted by the Act, control.

SECTION 2.2 Name. The name of the Company is “Charter Communications Holdings, LLC,” and all Company business shall be conducted in that name or in such other names that comply with applicable Law as the Manager may select from time to time.

SECTION 2.3 Term. The term of the Company commenced on the Filing Date and shall continue in existence perpetually until termination or dissolution in accordance with the provisions of Section 6.2.

 

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SECTION 2.4 Purpose; Powers.

(a) General Powers. The nature of the business or purposes to be conducted or promoted by the Company is to engage in any act or activity which may be lawfully conducted by a limited liability company under the Act. The Company may engage in any and all activities necessary, desirable or incidental to the accomplishment of the foregoing, subject to the foregoing. Notwithstanding anything in this Agreement to the contrary, nothing set forth in this Agreement shall be construed as authorizing the Company to possess any purpose or power, or to do any act or thing, forbidden by Law to a limited liability company organized under the Laws of the State of Delaware.

(b) Company Action. Subject to the provisions of this Agreement, except as prohibited by applicable Law, (i) the Company may, with the approval of the Manager, enter into and perform any and all documents, agreements and instruments contemplated by such approval, all without any further act, vote or approval of any other Member and (ii) the Manager may authorize any Person (including any other Member or Officer) to enter into and perform any document on behalf of the Company.

SECTION 2.5 Registered Office; Registered Agent; Principal Office; Other Offices. The registered office of the Company required by the Act to be maintained in the State of Delaware shall be the office of the initial registered agent named in the Certificate or such other office (which need not be a place of business of the Company) as the Manager may designate from time to time in the manner provided by Law. The registered agent of the Company in the State of Delaware shall be the initial registered agent named in the Certificate or such other Person or Persons as the Manager may designate from time to time in the manner provided by Law. The principal office of the Company shall be at such place as the Manager may designate from time to time, which need not be in the State of Delaware, and the Company shall maintain records at such place. The Company may have such other offices as the Manager may designate from time to time.

SECTION 2.6 No State-Law Partnership. The Members intend that the Company shall not be a partnership (including a limited partnership) or joint venture, and that no Member or Officer shall be a partner or joint venturer of any other Member or Officer by virtue of this Agreement, for any purposes other than as set forth in the following sentence, and this Agreement shall not be construed to the contrary. The Members intend that, effective as of the date of the Contribution (as defined in the Contribution Agreement), the Company shall be treated as a partnership for federal, state or local income tax purposes, and each Member and the Company shall file all tax returns and shall otherwise take all tax and financial reporting positions in a manner consistent with such treatment.

ARTICLE III - UNITS

SECTION 3.1 Authorized Units; Certificates.

(a) Authorized Units. The only interests in the Company shall be units (“Units”). The total number of Units that the Company shall have authority to issue shall be determined by the Manager. The Units shall be initially designated as (a) Class A Common

 

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Units having the rights, preferences, privileges and restrictions set forth in this Agreement (each, a “Class A Common Unit,” and collectively, the “Class A Common Units”), (b) Class B Common Units having the rights, preferences, privileges and restrictions set forth in this Agreement (each, a “Class B Common Unit,” and collectively, the “Class B Common Units”), and (c) Convertible Preferred Units having the rights, preferences, privileges and restrictions (which, subject to Section 4.2(b) and without prejudice to A/N’s rights under the Stockholders Agreement, may be junior to, equivalent to or senior to any existing or future class or series of Units) set forth in this Agreement (each, a “Convertible Preferred Unit,” and collectively, the “Convertible Preferred Units”). In addition to the foregoing, but subject to the third sentence of Section 4.2(b) of this Agreement and, subject to Section 4.8, Section 2.3(a) of the Exchange Agreement and without prejudice to A/N’s rights under the Stockholders Agreement, the Manager is hereby expressly authorized to take any action to create any class of Units that was not previously outstanding, designated or authorized, each having such relative rights, preferences, privileges, restrictions, and interests in profits, losses, allocations and distributions of the Company, including Units to be issued to directors and/or employees of New Charter, the Company or their respective Subsidiaries for compensation purposes, as may be determined by the Manager with no further action required by the Members. This Agreement shall be amended by the Manager in order to document such new classes of Units and their rights, preferences, privileges and restrictions and interests in profits, losses, allocations and distributions of the Company, in each case, with no further action required by the Members. Class B Common Units automatically shall be convertible only into Class A Common Units on a one-for-one basis as specified in Section 3.2. The Company may only issue Class A Common Units to members of the Charter Group. The initial holdings of Units shall be as set forth on Schedule I.

(b) Convertible Preferred Unit Certificates.

(i) At the request of a Convertible Preferred Unitholder, the Company shall issue or cause to be issued to such Convertible Preferred Unitholder one or more duly executed Convertible Preferred Unit Certificates duly countersigned by and registered on the books of the Company, in the form attached hereto as Exhibit B in the name of and in such denominations requested by the requesting Convertible Preferred Unitholder evidencing the Convertible Preferred Units held by such Convertible Preferred Unitholder.

(ii) If any mutilated original Convertible Preferred Unit Certificate is surrendered to the Transfer Agent, the appropriate Officers on behalf of the Company shall execute, and the Transfer Agent shall countersign and deliver in exchange therefor, a new Convertible Preferred Unit Certificate evidencing the same number of such Convertible Preferred Units so surrendered. In addition, the Transfer Agent and the appropriate Officers on behalf of the Company shall execute and the Transfer Agent shall countersign and deliver, a new Convertible Preferred Unit Certificate in place of any Convertible Preferred Unit Certificate previously issued if the record holder of the Units evidenced by the Convertible Preferred Unit Certificate (i) provides proof by affidavit, in form and substance satisfactory to the Company and the Transfer Agent (if any), that a previously issued Convertible Preferred Unit Certificate has been lost,

 

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destroyed or stolen; (ii) requests the issuance of a new Convertible Preferred Unit Certificate before the Company has notice that the Convertible Preferred Unit Certificate has been acquired by a purchaser for value in good faith and without notice of an adverse claim; (iii) if requested by the Company or the Transfer Agent (if any), delivers to the Company a bond, in form and substance satisfactory to the Company and the Transfer Agent (if any) with surety or sureties and with fixed or open penalty as the Company may direct to indemnify the Company and the Transfer Agent against any claim that may be made on account of the alleged loss, destruction or theft of Convertible Preferred Unit Certificate; and (iv) satisfies any other reasonable requirements imposed by the Company or the Transfer Agent (if any). If a transfer of Convertible Preferred Units evidenced by a lost, stolen or destroyed Convertible Preferred Unit Certificate is registered before the Transfer Agent receives notification in writing from the record holder of such loss, destruction or theft, the record holder shall be precluded from making any claim against the Company or the Transfer Agent for such transfer or for a new Convertible Preferred Unit Certificate.

SECTION 3.2 Capital Structure of the Company and New Charter.

(a) Issuance of Class A Common Units. If upon the issuance by New Charter of any shares of Class A Common Stock, New Charter and a Member agree that New Charter shall transfer the net proceeds of such issuance directly to a Member in exchange for a number of Class B Common Units equal to the number of shares of Class A Common Stock to which such net proceeds relate, as provided in Section 2.3(b) of the Exchange Agreement, the Class B Common Units so acquired by New Charter automatically shall be converted, without any action on the part of any Person, including the holder thereof, into an equal number of Class A Common Units, and the Class B Common Units so exchanged shall thereby cease to exist. In such event, subject to Section 4.8, New Charter shall take such other action as is necessary to preserve the 1:1 Up-C structure between New Charter and the Company.

(b) Redemption of Common Units. Notwithstanding anything to the contrary herein or in the Exchange Agreement:

(i) Subject to Section 4.8, the Manager, in its sole discretion, may cause the Company to distribute to any member of the Charter Group all of the stock of any wholly owned Subsidiary of the Company in redemption of Class A Common Units held by the Charter Member, provided, that, as soon as reasonably practicable following such transfer, such member of the Charter Group shall contribute all of the assets and liabilities of such Subsidiary to the Company in consideration of the issuance of an equal number of Class A Common Units to the Charter Member. Subject to Section 4.8, New Charter shall, in addition, take such other action as is necessary to preserve the 1:1 Up-C structure between New Charter and the Company.

(ii) Subject to Section 3.2(b)(iii) and Section 4.8(a), in connection with any repurchase, redemption or other acquisition of shares of Class A Common Stock by any member of the Charter Group, the Manager shall cause the Company to make a distribution to the Charter Member in redemption of a number of Class A Common

 

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Units held by such member of the Charter Group equal to the number of shares of Class A Common Stock to be repurchased, redeemed or otherwise acquired and at the price per Class A Common Unit equal to the price that will be or is required to be paid per share of Class A Common Stock in such repurchase, redemption or other acquisition; provided, that immediately following repurchase, redemption or other acquisition, A/N’s Equity Interest shall not exceed its Cap. In such event, subject to Section 4.8, New Charter shall, in addition, take such other action as is necessary to preserve the 1:1 Up-C structure between New Charter and the Company.

(iii) To the extent A/N’s Equity Interest equals or exceeds its Cap, in connection with any repurchase of shares of Class A Common Stock by any member of the Charter Group, the Manager shall cause the Company to make a distribution to the Charter Member and a distribution to A/N, pro rata according to the number of Common Units held by the Charter Member and the number of Common Units held by A/N (including any Common Units into which Convertible Preferred Units held by A/N are convertible), respectively, in each case in redemption of a number of Common Units held by such Person (or Convertible Preferred Units convertible into a number of Common Units) such that the number of Class A Common Units so redeemed from the Charter Member is equal to the number of shares of Class A Common Stock to be repurchased and at the price per Class A Common Unit equal to the price that will be or is required to be paid per share of Class A Common Stock in such repurchase(s). In the event that A/N participates in such distribution in accordance with this Section 3.2(b)(iii), A/N shall be entitled to elect to surrender its pro rata amount for redemption in the form of Class B Common Units, Convertible Preferred Units or a combination of the two that it determines in its sole discretion. Any Convertible Preferred Units so surrendered by A/N shall be converted into Class B Common Units immediately prior to the redemption at the applicable Per Unit Amount. In such event, subject to Section 4.8, New Charter shall, in addition, take such other action as is necessary to preserve the 1:1 Up-C structure between New Charter and the Company.

(iv) Notwithstanding and without limiting the foregoing, New Charter may repurchase shares of Class A Common Stock using proceeds received from any Common Tax Distribution, in which case the Common Tax Distributions made to each Member shall be in redemption of Common Units, pro rata according to the number of Common Units held by each Member, such that the number of Class A Common Units redeemed from the Charter Member is equal to the number of shares of Class A Common Stock to be repurchased, and at the price per Class A Common Unit equal to the price that is actually paid per share of Class A Common Stock in such repurchase(s). In such event, subject to Section 4.8, New Charter shall, in addition, take such other action as is necessary to preserve the 1:1 Up-C structure between New Charter and the Company.

(v) Notice of every redemption pursuant to Section 3.2(b) shall be given in writing in accordance with Section 8.6 and addressed to the holders of record of the Units to be redeemed at their respective last addresses appearing on the books of the Company. Any such notice given in accordance with Section 8.6 shall be

 

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conclusively presumed to have been duly given, whether or not the holder receives such notice. Each notice of redemption given to a holder shall state: (i) the redemption date; (ii) the amount of the Class B Common Units to be redeemed and (iii) the redemption price.

(c) Guiding Principles.

(i) In furtherance and not in limitation of the foregoing, but without prejudice to A/N’s rights under the Stockholders Agreement, it is the intent of the parties hereto that the Company shall be a dynamic institution, and, subject to Sections 3.3(c)(xiv) and 4.2(b) of this Agreement and Section 2.2(b) of the Exchange Agreement, nothing herein shall prevent the Company from participating in the capital markets at such times and upon such terms as the Manager shall reasonably determine.

(ii) Subject to Section 4.8, it is the intent of the parties hereto that New Charter and the Company shall maintain a 1:1 Up-C structure (except with respect to Class B Common Units and Convertible Preferred Units), as set forth in Section 2.3(a) of the Exchange Agreement.

SECTION 3.3 Optional Conversion of Convertible Preferred Units.

(a) Conversion Mechanics. Subject to any restrictions on the acquisition of Common Units or shares of Class A Common Stock set forth in the Specified Documents and subject to the Exchange Agreement, the right of conversion attaching to any Convertible Preferred Units may be exercised at any time, from time to time, at the option of the holders thereof by delivering to the office of the General Counsel of the Company a duly signed and completed notice of conversion (a “Conversion Notice”) substantially in the form attached hereto as Exhibit D, together with the Convertible Preferred Unit Certificates (if any such Convertible Preferred Unit Certificates have been issued) representing the Convertible Preferred Units to be converted. The Person entitled to receive the Class B Common Units or shares of Class A Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such Class B Common Units or shares of Class A Common Stock, as applicable, as of the Conversion Date and such Person or Persons shall cease to be a record holder of the Convertible Preferred Units so converted on such date. As promptly as practicable on or after the Conversion Date (and in any event no later than three (3) Business Days thereafter), the Company shall issue the number of Class B Common Units or New Charter shall issue the number of shares of Class A Common Stock, as applicable, issuable upon conversion, with any fractional shares (after aggregating all Convertible Preferred Units being converted on such date) rounded down to the nearest whole number, or the Company or New Charter shall deliver or cause to be delivered such other consideration as the converting Convertible Preferred Unitholder is entitled to hereunder. The delivery of Class B Common Units or Class A Common Stock shall be made, at the option of the Company or New Charter, in certificated form or by book-entry. Any such certificate or certificates shall be delivered by the Company or New Charter, as applicable, to the appropriate holder on a book-entry basis or by mailing certificates evidencing the shares to the holders at their respective addresses as set forth in the Conversion Notice (or, with respect to a deemed Conversion Notice pursuant to

 

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Section 3.4(a), to the last address for such holder appearing on the books of the Company). Upon each conversion of Convertible Preferred Units held by a Person other than A/N, as of the effective date of such conversion, the Company shall issue to the Charter Member that number of Class A Common Units equal to the number of shares of Class A Common Stock to be issued to such Person in such conversion and, in such event, subject to Section 4.8, New Charter shall take such other steps as may be necessary to preserve the 1:1 Up-C structure as set forth in Section 2.3(a) of the Exchange Agreement. In the event that the Class A Common Stock or Class B Common Units issuable upon a conversion of Convertible Preferred Units are not delivered or the other consideration payable upon a conversion of Convertible Preferred Units is not paid to (or as directed by) the converting Convertible Preferred Unitholder within three (3) Business Days of the Conversion Date as provided herein, in addition to any other remedies provided herein or available at law or in equity, the converting Convertible Preferred Unitholder shall be entitled to receive the Convertible Preferred Yield as if such holder still held the Convertible Preferred Units surrendered for conversion and shall have the right to rescind such Conversion Notice until the date that the shares of Class A Common Stock and Class B Common Units are delivered and other consideration payable upon a conversion of Convertible Preferred Units is paid in the manner set forth herein.

(b) Number of Class B Common Units or Shares of Class A Common Stock. In connection with any conversion pursuant to Section 3.3(a), Section 3.4(a) or Section 3.5, each Convertible Preferred Unit held by A/N or any A/N Party shall be convertible into that number of Class B Common Units, and each Convertible Preferred Unit held by a Person other than A/N (including in connection with a foreclosure to which Section 3.5 applies) shall be convertible into that number of shares of Class A Common Stock (as applicable, the “Per Unit Amount”) equal to the product of (i) the Conversion Rate in effect at such time, multiplied by (ii) the quotient of (A) the sum of (I) the Liquidation Preference plus (II) an amount per share equal to the Preferred Accrued Distribution Amount on such Convertible Preferred Unit up to but excluding the Conversion Date divided by (B) the Liquidation Preference.

(c) Adjustments to Conversion Rate.

(i) If New Charter shall, at any time or from time to time while any of the Convertible Preferred Units are outstanding, issue shares of Class A Common Stock as a dividend or distribution on shares of the Class A Common Stock, or if New Charter effects a share split or share combination in respect of the Class A Common Stock, then the Conversion Rate shall be adjusted based on the following formula:

 

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where:

 

CR0    =    the Conversion Rate in effect immediately prior to the Close of Business on the Record Date for such dividend or distribution, or immediately prior to the effectiveness of such share split or combination, as applicable;

 

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CR1    =    the new Conversion Rate in effect immediately after the Close of Business on the Record Date for such dividend or distribution, or immediately after the effectiveness of such share split or combination, as applicable;
OS0    =    the number of shares of Class A Common Stock outstanding at the Close of Business on the Record Date for such dividend or distribution, or at the effectiveness of such share split or share combination, as applicable, without giving effect to such dividend, distribution, share split or combination; and
OS1    =    the number of shares of Class A Common Stock outstanding at the Close of Business on the Record Date for such dividend or distribution, or at the effectiveness of such share split or share combination, as applicable, after giving effect to such dividend, distribution, share split or combination.

Any adjustment made under this Section 3.3(c)(i) shall become effective immediately after the Close of Business on the Record Date for such dividend or distribution, or immediately after the effectiveness of such share split or share combination, as applicable. If any adjustment is made under this Section 3.3(c)(i) due to a dividend or distribution that is declared but not so paid or made, the Conversion Rate shall be immediately readjusted, effective as of the date the Board of Directors determines not to pay such dividend or distribution, to the Conversion Rate that would then be in effect if such dividend or distribution had not been declared.

(ii) If New Charter shall, at any time or from time to time while any of the Convertible Preferred Units are outstanding, distribute to all or substantially all holders of the outstanding shares of Class A Common Stock any options, rights or warrants entitling them for a period of not more than 60 calendar days from the Record Date of such distribution to subscribe for or purchase shares of Class A Common Stock at a price per share less than the VWAP for the Class A Common Stock for the ten (10) consecutive Trading Days ending on and including the date immediately preceding the Record Date of such distribution, the Conversion Rate shall be adjusted based on the following formula:

 

LOGO

where:

 

CR0    =    the Conversion Rate in effect immediately prior to the Close of Business on the Record Date for such distribution;
CR1    =    the new Conversion Rate in effect immediately after the Close of Business on the Record Date for such distribution;
OS0    =    the number of shares of Class A Common Stock outstanding immediately prior to the Close of Business on the Record Date for such distribution;

 

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X    =    the total number of shares of Class A Common Stock issuable pursuant to such options, rights or warrants; and
Y    =    the number of shares of Class A Common Stock equal to the quotient of (a) the aggregate price payable to exercise such options, rights or warrants divided by (b) the VWAP for the Class A Common Stock for the ten (10) consecutive Trading Days ending on and including the Trading Day preceding the Record Date of such distribution.

Any increase made under this Section 3.3(c)(ii) shall be made successively whenever any such rights, options or warrants are issued and shall become effective immediately after the Close of Business on the Record Date for such distribution. To the extent that shares of Class A Common Stock are not delivered pursuant to any such options, rights or warrants prior to the expiration or termination of such options, rights or warrants, the Conversion Rate shall be readjusted to the Conversion Rate which would then be in effect had the adjustments made upon the distribution of such options, rights or warrants been made on the basis of the delivery of only the number of shares of Class A Common Stock actually delivered. In determining the aggregate price payable to exercise such options, rights or warrants, there shall be taken into account any amount payable on exercise thereof, with the value of such consideration, if other than cash, to be determined by the Board of Directors in good faith.

(iii) If New Charter, at any time or from time to time while any of the Convertible Preferred Units are outstanding, shall pay or make a dividend or other distribution on the Class A Common Stock consisting of shares of Capital Stock of any class or series, or similar equity interest, of or relating to a Subsidiary or other business unit of the Company that are, or when issued will be, listed or admitted for trading on a U.S. national securities exchange (a “Spin-Off”), the Conversion Rate shall be increased based on the following formula:

 

LOGO

where:

 

CR0    =    the Conversion Rate in effect immediately prior to the Close of Business on the tenth (10th) Trading Day immediately following, and including, the Trading Day following the effective date of the Spin-Off;
CR1    =    the new Conversion Rate in effect immediately after the Close of Business on the tenth (10th) Trading Day immediately following, and including, the Trading Day following the effective date of the Spin-Off;
FMV    =    the VWAP of the Capital Stock or similar equity interest distributed to holders of Class A Common Stock for the ten (10) consecutive Trading Days commencing on and including the Trading Day following the effective date of the Spin-Off, multiplied by the number of shares of such Capital Stock or similar equity interest applicable to one such of Class A Common Stock; and
SP1    =    the VWAP of the Class A Common Stock for the ten (10) consecutive Trading Days commencing on and including the Trading Day following the effective date of the Spin-Off.

 

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The adjustment to the Conversion Rate under the preceding paragraph shall occur on the 10th Trading Day immediately following, and including, the Trading Day following the effective date of the Spin-Off; provided, that in respect of any conversion of Convertible Preferred Units between the effective date of the Spin-Off and the date of adjustment, references in this Section 3.3(c)(iii) to ten (10) consecutive Trading Days shall be deemed replaced with such lesser number of Trading Days as have elapsed from, and including, the Trading Day following the effective date of the Spin-Off to, and including, the relevant Conversion Date.

(iv) If New Charter, at any time or from time to time while any of the Convertible Preferred Units are outstanding, shall distribute to all or substantially all holders of Class A Common Stock any dividends payable exclusively in cash (other than dividends distributed in connection with any Common Tax Distributions), the Conversion Rate shall be adjusted based on the following formula:

 

LOGO

where:

 

CR0    =    the Conversion Rate in effect immediately prior to the Close of Business on the Record Date for such distribution;
CR1    =    the new Conversion Rate in effect immediately after the Close of Business on the Record Date for such distribution;
SP0    =    the VWAP of the Class A Common Stock for the ten (10) consecutive Trading Days ending on and including the Trading Day immediately preceding the Record Date for such distribution; and
C    =    the amount in cash per share of Class A Common Stock that New Charter distributes to holders of the Class A Common Stock.

Any adjustment made under this Section 3.3(c)(iv) shall become effective immediately after the Close of Business on the Record Date for such dividend or distribution. If any dividend or distribution of the type described in this Section 3.3(c)(iv) is declared but not so paid or made, the Conversion Rate shall be immediately readjusted, effective as of the date the Board of Directors determines not to pay such dividend or distribution, to the Conversion Rate that would then be in effect if such dividend or distribution had not been declared. Notwithstanding the foregoing, if C as set forth above is equal to or

 

29


greater than SP0 as set forth above, then in lieu of the foregoing adjustment, the Company shall distribute to each holder of Convertible Preferred Units, in respect of each Convertible Preferred Unit held by such holder, on the date cash is distributed to holders of Class A Common Stock, but without requiring such holder to convert its Convertible Preferred Units, the amount of cash such holder would have received had such holder owned a number of shares of Class A Common Stock equal to the Per Unit Amount on the Record Date fixed for determination for stockholders entitled to receive such cash distribution.

(v) If New Charter, at any time or from time to time while any of the Convertible Preferred Units are outstanding, shall distribute to all or substantially all holders of the Class A Common Stock shares of any class of Capital Stock of New Charter, evidences of its indebtedness, assets, property or rights or warrants to acquire Capital Stock or other securities, but excluding (A) dividends or distributions as to which an adjustment under Section 3.3(c)(i) or Section 3.3(c)(ii) shall apply, (B) dividends or distributions paid exclusively in cash (as to which the provisions set forth in Section 3.3(c)(iv) shall apply), (C) Spin-Offs (as to which the provisions set forth in Section 3.3(c)(iii) shall apply) and (D) dividends distributed in connection with any Common Tax Distributions (any of such shares of Capital Stock, indebtedness, assets, property or rights or warrants to acquire Capital Stock or other securities, hereinafter in this Section 3.3(c)(v) called the “Distributed Property”), then, in each such case the Conversion Rate shall be adjusted based on the following formula:

 

LOGO

where:

 

CR0    =    the Conversion Rate in effect immediately prior to the Close of Business on the Record Date for such distribution;
CR1    =    the new Conversion Rate in effect immediately after the Close of Business on the Record Date for such distribution;
SP0    =    the VWAP of the Class A Common Stock for the ten (10) consecutive Trading Days ending on and including the date preceding the Record Date for such distribution; and
FMV    =    (I) for cash dividends or distributions, the amount of cash distributed and (II) for other Distributed Property, the fair market value (as determined by the Board of Directors in good faith) of the portion of Distributed Property, in each case, with respect to each outstanding share of Class A Common Stock on the Record Date for such distribution.

Any increase made under the portion of this Section 3.3(c)(v) shall become effective immediately after the close of business on the Record Date for such distribution. If such distribution is not so paid or made, the Conversion Rate shall be decreased to the

 

30


Conversion Rate that would then be in effect if such distribution had not been declared. Notwithstanding the foregoing, if FMV as set forth above is equal to or greater than SP0 as set forth above (a “Liquidating Distribution”), then in lieu of the foregoing adjustment, the Company shall distribute to each holder of Convertible Preferred Units, in respect of each Convertible Preferred Unit held by such holder, on the date such Distributed Property is distributed to holders of Class A Common Stock, but without requiring such holder to convert its Convertible Preferred Units, the amount of Distributed Property such holder would have received had such holder owned a number of shares of Class A Common Stock equal to the Per Unit Amount on the Record Date fixed for determination for stockholders entitled to receive such Liquidating Distribution. If the Board of Directors determines the fair market value of any distribution for purposes of this Section 3.3(c)(v) by reference to the actual or when issued trading market for any securities, it shall in doing so consider the prices in such market over the same period used in calculating SP0 in the formula in this Section 3.3(c)(v).

Any dividend or distribution to which this Section 3.3(c)(v) is applicable that also includes shares of Class A Common Stock, or options, rights or warrants to subscribe for or purchase shares of Class A Common Stock to which Section 3.3(c)(i) or Section 3.3(c)(ii) applies (or both) shall be deemed instead to be (A) a dividend or distribution of the evidences of indebtedness, assets or shares of Capital Stock other than such shares of Class A Common Stock or options, rights or warrants to which Section 3.3(c)(i) or Section 3.3(c)(ii) applies (and any Conversion Rate adjustment required by this Section 3.3(c)(v) with respect to such dividend or distribution shall then be made) immediately followed by (B) a dividend or distribution of such shares of Class A Common Stock or such options, rights or warrants to which Section 3.3(c)(i) or Section 3.3(c)(ii) applies (and any further Conversion Rate adjustment required by Section 3.3(c)(i) or Section 3.3(c)(ii) with respect to such dividend or distribution shall then be made), except (I) the Close of Business on the Record Date for the distribution under this Section 3.3(c)(v) shall be substituted for “the Close of Business on the Record Date for such dividend or distribution, or immediately prior to the effectiveness of such share split or share combination,” “the Close of Business on the Record Date for such dividend or distribution, or immediately after the effectiveness of such share split or share combination” and “the Close of Business on the Record Date for such distribution” within the meaning of Section 3.3(c)(i) and Section 3.3(c)(ii) hereof, respectively, and (II) any shares of Class A Common Stock included in such dividend or distribution shall not be deemed “outstanding immediately prior to the Close of Business on the Record Date for such dividend or distribution, or immediately prior to the effectiveness of such share split or combination” within the meaning of Section 3.3(c)(i) or “outstanding immediately prior to the Close of Business on the Record Date for such distribution” within the meaning of Section 3.3(c)(ii).

(vi) If New Charter or any of its Subsidiaries, at any time or from time to time while any of the Convertible Preferred Units are outstanding, shall make a payment to holders of Class A Common Stock in respect of a tender or exchange offer by New Charter for shares of Class A Common Stock, to the extent that the cash and value

 

31


(as determined by the Board of Directors in good faith) of any other consideration included in the payment per share of Class A Common Stock exceeds the VWAP of the Class A Common Stock for the ten (10) consecutive Trading Days commencing on the Trading Day immediately following the last date on which tenders or exchanges could be validly made pursuant to such tender or exchange offer (such last date, the “Expiration Date”), the Conversion Rate shall be adjusted based on the following formula:

 

LOGO

where:

 

CR0    =    the Conversion Rate in effect immediately prior to the Close of Business on the last Trading Day of the ten (10) consecutive Trading Day period commencing on, and including, the Trading Day immediately following the Expiration Date;
CR1    =    the new Conversion Rate in effect immediately after the Close of Business on the last Trading Day of the ten (10) consecutive Trading Day period commencing on, and including, the Trading Day immediately following the Expiration Date;
FMV    =    the fair market value (as determined by the Board of Directors in good faith) of the aggregate consideration paid or payable in such tender or exchange offer (up to any maximum amount specified in the terms of the tender or exchange offer) for all shares of Class A Common Stock that New Charter purchases in such tender or exchange offer, such fair market value to be measured as of the expiration time of the tender or exchange offer (“Expiration Time”);
OS0    =    the number of shares of Class A Common Stock outstanding immediately prior to the Expiration Time;
OS1    =    the number of shares of Class A Common Stock outstanding immediately after the Expiration Time (after giving effect to such tender offer or exchange offer); and
SP1    =    the VWAP of the Class A Common Stock for the ten (10) consecutive Trading Days commencing on and including the Trading Day immediately following the Expiration Date.

The adjustment to the Conversion Rate under this Section 3.3(c)(vi) shall occur at the Close of Business on the last Trading Day of the ten (10) consecutive Trading Day period commencing on, and including, the Trading Day immediately following the Expiration Date; provided, that, for purposes of determining the Conversion Rate, in respect of any conversion during the ten (10) Trading Days immediately following, but excluding, the

 

32


Expiration Date, references in this Section 3.3(c)(vi) to ten (10) consecutive Trading Days shall be deemed to be replaced with such lesser number of consecutive Trading Days as have elapsed between the date from and immediately following the Expiration Date and the relevant Conversion Date. Except as set forth in the following sentence, no adjustment to the Conversion Rate under this Section 3.3(c)(vi) shall be made if such adjustment would decrease the Conversion Rate. If the Company or one of its Subsidiaries is obligated to purchase the Class A Common Stock pursuant to any such tender or exchange offer but the Company or such Subsidiary is permanently prevented by applicable law from effecting any such purchase or all such purchases are rescinded, the Conversion Rate shall be immediately readjusted to the Conversion Rate that would be in effect if such tender or exchange offer had not been made.

(vii) If New Charter shall, at any time or from time to time while any of the Convertible Preferred Units are outstanding, distribute options, rights or warrants to all or substantially all holders of Class A Common Stock entitling the holders thereof to subscribe for, purchase or convert into shares of Capital Stock (either initially or under certain circumstances), only upon or after the occurrence of a specified event or events (“Trigger Event”) and (i) such options, rights or warrants are deemed to be transferred with such Class A Common Stock, (ii) are not exercisable and (iii) are also issued in respect of future issuances of Class A Common Stock, then such options, rights or warrants shall be deemed not to have been distributed for purposes of Section 3.3(c)(i), Section 3.3(c)(ii), Section 3.3(c)(iii) or Section 3.3(c)(v) (and no adjustment to the Conversion Rate under Section 3.3(c)(i), Section 3.3(c)(ii), Section 3.3(c)(iii) or Section 3.3(c)(v) shall be required) until the occurrence of the earliest Trigger Event and a distribution or deemed distribution under the terms of such options, rights or warrants at which time an appropriate adjustment (if any is required) to the Conversion Rate shall be made in the same manner as provided for under Section 3.3(c)(i), Section 3.3(c)(ii), Section 3.3(c)(iii) or Section 3.3(c)(v), as applicable; provided, that notwithstanding anything herein to the contrary, no adjustment to the Conversion Rate shall be made with respect to a Trigger Event that relates to the separation of rights pursuant to a rights plan of New Charter if A/N or any of its Affiliates (including any of its or their lenders to which any Units have been pledged) is an “acquiring person” or similar person for which such rights would not be exercisable pursuant to such rights plan. If any such options, rights or warrants, including any existing rights, options or warrants distributed prior to the date of this Agreement, are subject to events, upon the occurrence of which such options, rights or warrants become exercisable to purchase different securities, evidences of indebtedness or other assets, then the date of the occurrence of any and each such event shall be deemed to be the date of distribution and Record Date with respect to new options, rights or warrants for purposes of Section 3.3(c)(i), Section 3.3(c)(ii), Section 3.3(c)(iii) or Section 3.3(c)(v), as applicable (and shall be deemed to be the date of termination or expiration of the existing rights or warrants without exercise by any of the holders thereof). In addition, in the event of any distribution (or deemed distribution) of options, rights or warrants or any Trigger Event or other event (of the type described in the preceding sentence) with respect thereto that was counted for purposes of calculating a distribution amount for which an adjustment to the Conversion Rate under Section 3.3(c)(i), Section 3.3(c)(ii), Section 3.3(c)(iii) or

 

33


Section 3.3(c)(v) was made, (I) in the case of any such options, rights or warrants that shall all have been redeemed or repurchased without exercise by any holders thereof, upon such final redemption or repurchase (x) the Conversion Rate shall be readjusted as if such rights, options or warrants had not been issued and (y) the Conversion Rate shall then be readjusted upon such final redemption or repurchase to give effect to such distribution, deemed distribution or Trigger Event, as the case may be, as though it were a distribution under Section 3.3(c)(i), Section 3.3(c)(ii), Section 3.3(c)(iii) or Section 3.3(c)(v), equal to the per share redemption or repurchase price received by a holder or holders of Class A Common Stock with respect to such options, rights or warrants (assuming such holder had retained such options, rights or warrants), made to all holders of Class A Common Stock as of the date of such redemption or repurchase, and (II) in the case of such options, rights or warrants that shall have expired or been terminated without exercise by any holders thereof, the Conversion Rate shall be readjusted as if such options, rights or warrants had not been issued.

(viii) Whenever the Conversion Rate is adjusted as provided in this Section 3.3(c), the Manager shall promptly prepare a notice of such adjustment, signed by a duly authorized officer of Manager, setting forth the reason for the adjustment, the adjusted Conversion Rate, the calculation thereof and the date on which the adjustment becomes effective and shall provide such notice of adjustment to the Convertible Preferred Unitholders in accordance with Section 8.6.

(ix) To the extent that New Charter has a rights plan in effect upon any conversion of Convertible Preferred Units, each share of Class A Common Stock delivered upon conversion shall be entitled to receive the appropriate number of rights, if any, and the certificates (if any) representing the Class A Common Stock delivered upon such conversion shall bear such legends, if any, in each case as may be provided by the terms of any such stockholder rights plan, as the same may be amended form time to time.

(x) For the purposes of this Section 3.3(c), the number of Class A Common Stock outstanding shall not include Class A Common Stock held in the treasury of New Charter so long as New Charter does not pay any dividend or make any distribution to the Class A Common Stock held in the treasury of New Charter, but shall include Class A Common Stock in respect of scrip certificates (if any) issued in lieu of fractions of such shares.

(xi) If a Conversion Date occurs before the effective time of a Conversion Rate adjustment under this Section 3.3(c) and (A) in the case that such Conversion Date relates to a conversion into Class A Common Stock, the Class A Common Stock received in such conversion would not be entitled to participate in the dividend, distribution, split, combination, tender offer, exchange offer, or other event that gave rise to such Conversion Rate adjustment (each such event, a “Conversion Rate Adjustment Event”), or (B) in the case that such Conversion Date relates to a conversion into Class B Common Units, the Class B Common Units received in such conversion would be not be entitled to participate in any pro rata distribution or dividend or other

 

34


event to be made with respect to the Common Units in connection with such Conversion Rate Adjustment Event, then notwithstanding the provisions of subsections (i) through (vi) of Section 3.3(c), the effective time of such Conversion Rate Adjustment shall be accelerated to immediately prior to the Conversion Date. For the avoidance of doubt, if a Conversion Date occurs before the effective time of a Conversion Rate adjustment under this Section 3.3(c) and the conditions set forth in clause (A) or (B) above, as applicable, are not met, the Conversion Rate in effect for purposes of calculating the Per Unit Amount under Section 3.3(b) shall not give effect to such Conversion Rate Adjustment Event.

(xii) If a Conversion Date occurs after the effective time (as may be modified by operation of Section 3.3(c)(xi)) of a Conversion Rate increase under this Section 3.3(c) that is subject to readjustment, then notwithstanding Sections 3.3(a) and 3.3(b), the Company shall issue (A) as promptly as practicable on or after the Conversion Date (and in any event no later than three (3) Business Days thereafter) such number of Class B Common Units or shares of Class A Common Stock, as applicable, as would have been issued under Section 3.3(a) if such Conversion Rate adjustment had not been given effect, and (B) as promptly as practicable on or after the final readjustment or first date on which the adjustment is no longer subject to readjustment (and in any event no later than three (3) Business Days thereafter) a number of Class B Common Units or shares of Class A Common Stock, as applicable, equal to the excess of (1) the amount that would be issued under Section 3.3(a) after giving effect to such Conversion Rate adjustment and any readjustments less (2) the amount issued pursuant to clause (A).

(xiii) Recapitalizations, Reclassifications and other Transactions

(A) In the case of any recapitalization, reclassification or similar change of the Class A Common Stock or Class B Common Units (other than changes resulting from a share split or share combination described in Section 3.3(c)(i) or any other event for which an adjustment to the Conversion Rate is required pursuant to the other provisions of this Section 3.3(c)), a consolidation, merger or combination involving New Charter or the Company, a sale, lease or other transfer to a third party of all or substantially all of the assets of New Charter or the Company (or New Charter or the Company and their respective Subsidiaries on a consolidated basis), or any statutory share exchange, in each case, as a result of which the Class A Common Stock or Class B Common Units would be converted into, or exchanged for, stock, other securities or other property or assets (including cash or a combination thereof) (but, in each case, excluding a Change of Control (to which Section 3.4(b) will apply) (any of the foregoing, a “Recapitalization”), then, prior to the effective time of such Recapitalization, the Manager (or the successor or purchasing Person, as the case may be) shall effect an amendment to this Agreement (a “Recapitalization Amendment”) providing that at the effective time of the Recapitalization, the right to convert each Convertible Preferred Unit will be changed into a right to convert such Convertible Preferred Unit into the kind and amount of shares of stock, other securities or other property or assets (including cash or a

 

35


combination thereof) (the “Reference Property”) that a holder would have received in respect of the shares of Class A Common Stock or Class B Common Units, as applicable, issuable upon conversion of such Convertible Preferred Units immediately prior to the consummation of such Recapitalization. In the event that holders of Class A Common Stock or Class B Common Units, as applicable, have the opportunity to elect the form of consideration to be received in the Recapitalization, then the Reference Property into which the Convertible Preferred Units shall be convertible shall be deemed to be the weighted average of the types and amounts of consideration received by the holders of Class A Common Stock or Class B Common Units, as applicable. The Company shall provide written notice to the Convertible Preferred Unitholders of such weighted average as soon as practicable after such determination is made.

(B) Any Recapitalization Amendment shall provide for anti-dilution and other adjustments that shall be as nearly equivalent as is practicable to the adjustments provided for in this Section 3.3(c), it being understood that no such adjustments shall be required with respect to any portion of the Reference Property that does not consist of equity interests, partnership interests or membership units.

(C) If, in the case of any Recapitalization, the Reference Property includes shares of stock, other securities or other property or assets (including cash or a combination thereof) of a Person other than New Charter, the Company or the successor or purchasing Person, as the case may be, then such Recapitalization Amendment shall contain additional provisions as nearly equivalent as is practicable to the provisions of this Agreement to protect the interests of the Convertible Preferred Unitholders, including those set forth in Section 3.4(b).

(D) If, as a result of any Recapitalization, the Company is dissolved or otherwise ceases to continue in existence, then the term “Recapitalization Amendment” shall refer to such documentation as is necessary to provide Convertible Preferred Unitholders with a convertible preferred security that is substantially equivalent in all respects to the Convertible Preferred Units, including with respect to coupon, penalty interest, make-whole upon a Change of Control and consent rights over the issuance of pari passu and senior equity interests in addition to the other rights to be provided for in such Recapitalization Amendment set forth in this Section 3.3(c)(xiii).

(E) The provisions of this Section 3.3(c)(xiii) shall apply to successive Recapitalizations and neither New Charter nor the Company shall become a party to any Recapitalization unless its terms are consistent with the foregoing. Nothing in this Section 3.3(c)(xiii) shall affect the ability of a Convertible Preferred Unitholder to convert a Convertible Preferred Unit prior to the effective date of a Recapitalization.

 

36


(xiv) New Charter shall at all times reserve and keep available out of its authorized but unissued Class A Common Stock such number of shares of Class A Common Stock necessary to satisfy its obligations under Section 3.3(a). New Charter shall be permitted to take any and all actions necessary or desirable to give effect to the foregoing.

(xv) The Company shall bear its and the Charter Group’s expenses and each converting holder, or, in the event of an automatic conversion of Convertible Preferred Units pursuant to Section 3.5, the applicable lender(s) shall bear its own expenses in connection with the consummation of any conversion of Convertible Preferred Units, whether or not any such conversion is ultimately consummated, except that the Company shall bear any transfer taxes, stamp taxes or duties or other similar taxes in connection with, or arising by reason of, any conversion; provided, that if any shares of Class A Common Stock or Class B Common Units are to be delivered in a name other than that of the Convertible Preferred Unitholder that requested the conversion, then such converting holder or the Person in whose name such shares or Units are to be delivered shall pay to the Company the amount of any transfer taxes, stamp taxes or duties or other similar taxes in connection with, or arising by reason of, such conversion (to the extent the amount of any such taxes are in excess of what would be required to be paid by New Charter or the Company in connection with, or arising by reason of, such conversion if the shares of Class A Common Stock or Class B Common Units were to be delivered in the name of the Convertible Preferred Unitholder that requested the conversion) or shall establish to the reasonable satisfaction of New Charter and the Company that such tax has been paid or is not payable. For the avoidance of doubt, each converting Convertible Preferred Unitholder shall bear any and all income or gains taxes imposed on gain realized by such converting Convertible Preferred Unitholder as a result of any such conversion.

(xvi) Any shares of Class A Common Stock and/or Class B Common Units, as applicable, issued upon conversion of Convertible Preferred Units shall be validly issued, fully paid and non-assessable, free and clear of all liens, encumbrances, rights of first refusal and similar restrictions and all taxes and charges with respect to the issue thereof, in each case subject to the Specified Documents. New Charter, the Company and each converting holder of Convertible Preferred Units shall use their respective reasonable best efforts to obtain the approval of any Government Entity required under any Law prior to and comply with all federal and state securities laws in connection with the issuance of the shares of Class A Common Stock and/or Class B Common Units upon conversion of Convertible Preferred Units as provided herein. In addition, New Charter shall use its reasonable best efforts to have authorized for listing the shares of Class A Common Stock issuable upon conversion of the Convertible Preferred Units on NASDAQ (or such other national securities exchange upon which the Class A Common Stock of New Charter may be listed at such the time, if any) prior to the delivery thereof to the converting holder.

 

37


SECTION 3.4 Other Conversion or Redemption of Convertible Preferred Units.

(a) Optional Conversion by the Company. From and after the fifth anniversary of the date hereof, if the Closing Price exceeds an amount equal to 1.3 times the then-applicable Conversion Price for at least twenty (20) days (which need not be consecutive) during any thirty (30) consecutive-day period, the Manager may elect, in its sole discretion, to require that the Convertible Preferred Units held by any or all A/N Parties be converted into Class B Common Units and/or the Convertible Preferred Units held by a Person other than an A/N Party be converted into Class A Common Stock, in each case in whole or in part, by notice of forced conversion at any time within ten (10) Business Days after the last day of such thirty (30) consecutive-day period. Such forced conversion notice shall be deemed to be, and shall have the same effect as, a Conversion Notice; provided, however, that any accrued and unpaid Preferred Accrued Distribution Amounts on all Convertible Preferred Units being so converted shall be paid in cash simultaneously with, and as a condition to, the effectiveness of such forced conversion.

(b) Make-Whole Redemption in Connection with a Change of Control. On the effective date of a Change of Control, unless otherwise agreed in writing by the Charter Member and A/N, each Convertible Preferred Unit shall be redeemed for the consideration that would have been payable in respect of a number of shares of Class A Common Stock equal to the greater of (i) the sum of (A) the Per Unit Amount determined as if the conversion occurred immediately prior to the effective date of the Change of Control plus (B) the Make-Whole Amount and (ii) $100 divided by the greater of (A) the Change of Control Class A Common Stock Price and (B) $95.66 per share, subject to adjustment at the times of, and in a manner inverse to, adjustments to the Conversion Rate, plus, in the case of clause (ii), all accrued and unpaid Preferred Accrued Distribution Amounts on the Units being redeemed. Any such redemption pursuant to this Section 3.4(b) shall be effective as of the consummation of the Change of Control (and, for the avoidance of doubt, shall not be effective if such Change of Control is not consummated).

(c) Notice for Certain Actions.

(i) Forced Conversion or Redemption. Notice of every forced conversion or redemption of Convertible Preferred Units pursuant to Section 3.4(a) or Section 3.4(b) shall be given by first class mail, postage prepaid, addressed to the holders of record of the Units to be converted or redeemed at their respective last addresses appearing on the books of the Company and a copy of such notice shall be sent by e-mail on the date of mailing to the respective e-mail addresses of such holders. Any such notice in connection with a redemption pursuant to Section 3.4(b) shall be given as provided above at least 15 calendar days prior to the effective date of such Change of Control. Each notice of a forced conversion of Convertible Preferred Units pursuant to Section 3.4(a) shall state (A) the number of Convertible Preferred Units to be converted and, if less than all the Convertible Preferred Units held by such holder are to be converted, the number of such Convertible Preferred Units to be converted that are held by such holder; and (B) the place or places where certificates for such Convertible Preferred Units are to be surrendered for conversion. Each notice of redemption of

 

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Convertible Preferred Units pursuant to Section 3.4(b) shall state (A) the events constituting the Change of Control, (B) the anticipated effective date of the Change of Control, (C) the Conversion Rate, and, if applicable, the Make-Whole Amount, (D) the consideration to be received upon conversion of Convertible Preferred Units in connection with such Change of Control, and (E) the name and address of the paying agent and the conversion agent.

(ii) Other Events. Notice of every event that would require an adjustment to the Conversion Rate pursuant to Section 3.3(c), a Recapitalization or a voluntary or involuntary dissolution, liquidation or winding-up of New Charter or the Company (each, an “Other Event”) shall be given by first class mail, postage prepaid, addressed to the holders of record of the Convertible Preferred Units at their respective last addresses appearing on the books of the Company at least fifteen (15) calendar days prior to the date of the consummation of such event, or, if later, the date of the first public disclosure by New Charter or the Company of such event and a copy of such notice shall be sent by e-mail on the date of mailing to the respective e-mail addresses of such holders. Each notice delivered pursuant to this Section 3.4(c)(i) shall state (A) the events giving rise to the Other Event, (B) the anticipated Record Date or effective date, as applicable, of the Other Event, (C) the Conversion Rate following adjustment (if any) for the Other Event, and (D) if the Other Event constitutes a Recapitalization, whether any Reference Property will be received in connection therewith, and if so, specifying such Reference Property.

(iii) Any notice mailed and e-mailed as provided in this Section 3.4(c) shall be conclusively presumed to have been duly given, whether or not the holder receives such notice, but failure to give such notice by mail or e-mail, or any defect in such notice or in the mailing or e-mailing thereof, to any holder of Convertible Preferred Units designated for conversion or redemption shall not affect the validity of the proceedings for the conversion or redemption of Convertible Preferred Units of any other holder. Failure to deliver notice as provided in this Section 3.4(c) shall not affect the legality or validity of the corporate event which required notice pursuant to this Section 3.4(c). The Company shall provide to any Convertible Preferred Unitholder such additional information as such Convertible Preferred Unitholder may reasonably request in connection with the circumstances giving rise to an obligation for the Company to provide notice pursuant to this Section 3.4(c).

(d) Partial Conversion. In case of any conversion pursuant to Section 3.4(a) of part of the Convertible Preferred Units at the time outstanding, the units to be converted shall be selected by the Company in its sole discretion. In all other cases of conversion of part of the Convertible Preferred Units at the time outstanding, the Convertible Preferred Unitholder shall be entitled to select the Convertible Preferred Units held by such Convertible Preferred Unitholder which shall be converted by making the appropriate indication in its Conversion Notice.

(e) Effectiveness of Redemption. If notice of redemption of Convertible Preferred Units pursuant to Section 3.4(b) has been duly given pursuant to Section 3.4(c) and if

 

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on or before the redemption date all funds necessary for the redemption have been deposited by the Company, in trust for the pro rata benefit of the holders of the Convertible Preferred Units called for redemption, with a bank or trust company doing business in the Borough of Manhattan, The City of New York, and having a capital and surplus of at least $100 million and selected by the Board of Directors, so as to be and continue to be available solely therefor, then, notwithstanding that any certificate for any Convertible Preferred Unit so called for redemption has not been surrendered for cancellation, on and after the date of redemption dividends shall cease to accrue on all Convertible Preferred Units so called for redemption, all Convertible Preferred Units so called for redemption shall no longer be deemed outstanding and all rights with respect to such Convertible Preferred Units shall forthwith on such date of redemption cease and terminate, except only the right of the holders thereof to receive the amount payable on such redemption from such bank or trust company, without interest. Any funds unclaimed at the end of three years from the date of redemption shall, to the extent permitted by law, be released to the Company, after which time the holders of the Convertible Preferred Units so called for redemption shall look only to the Company for payment of the redemption price of such Convertible Preferred Units.

(f) Effectiveness of Conversion. If notice of forced conversion of Convertible Preferred Units has been given by the Company, then, notwithstanding that any certificate for any Convertible Preferred Unit so called for conversion has not been surrendered for conversion, on and after the Conversion Date dividends shall cease to accrue on all Convertible Preferred Units so called for conversion, all Convertible Preferred Units so called for conversion shall no longer be deemed outstanding and all rights with respect to such Convertible Preferred Units shall forthwith on such Conversion Date cease and terminate, except only the right of the holders thereof to receive Class B Common Units or Class A Common Stock, as applicable.

 

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SECTION 3.5 Automatic Exchange/Conversion of Units Pursuant to a Foreclosure.

(a) Notwithstanding any other provision of this Agreement or the Exchange Agreement, in the event of a foreclosure by a lender on any Class B Common Units or Convertible Preferred Units pledged by A/N under a Stand Alone Margin Loan pursuant to Section 4.6(c) of the Stockholders Agreement or in connection with an Equity Linked Financing pursuant to Section 4.6(d) of the Stockholders Agreement, then, whether or not a Notice of Foreclosure is received by New Charter or the Company, (i) any Class B Common Units underlying such pledge shall be deemed to be automatically surrendered in exchange for the Cash Exchange Payment or, at New Charter’s election, shares of Class A Common Stock, as set forth in Section 2.1(a)(ii) of the Exchange Agreement, and (ii) any Convertible Preferred Units underlying such pledge shall be deemed to be automatically converted into shares of Class A Common Stock of New Charter. New Charter shall deliver such cash or shares of Class A Common Stock to the applicable lender(s) as soon as reasonably practicable, but in any event within five (5) Business Days following the date of receipt of the applicable Notice of Foreclosure. For the avoidance of doubt, no such lender(s) shall be deemed to have received Class B Common Units or Convertible Preferred Units or to become a Member through the act of foreclosure.

(b) In the event of an automatic conversion of Convertible Preferred Units as set forth in Section 3.5(a), the applicable lender(s) entitled to receive the shares of Class A Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Class A Common Stock as of the time of foreclosure and the Convertible Preferred Units so converted shall be automatically deemed cancelled as of such time. Within three Business Days of the Conversion Date, New Charter shall issue shares of Class A Common Stock issuable upon conversion (together with any dividend or distribution to which such lender(s) may be entitled as a holder of Class A Common Stock at such time). The delivery of Class A Common Stock pursuant to this Section 3.5 shall be made by book-entry pursuant to instructions received from the applicable lender(s).

(c) New Charter and the Company shall be entitled to conclusively rely on, and are authorized and protected in acting upon, any executed Notice of Foreclosure received pursuant to this Section 3.5 or the absence of any Notice of Foreclosure, and none of New Charter, the Manager or the Company shall have any duty to investigate or otherwise determine the authenticity, validity, enforceability or legality of any Notice of Foreclosure, including any signatory thereto, or whether any foreclosure is valid, binding, proper, enforceable or otherwise; provided, however, notwithstanding anything herein to the contrary, following A/N’s written notice to the Company, which is received by the Company within one (1) Business Day after receiving such Notice of Foreclosure, that the Company should disregard such Notice of Foreclosure, the Company, New Charter and the Manager shall not be required to take any action hereunder or under the Exchange Agreement with respect to such Notice of Foreclosure or any foreclosure related thereto and such Notice of Foreclosure shall be deemed to never have been delivered for all purposes of this Agreement and the Exchange Agreement. The A/N Parties, each lender that exercises any rights upon a foreclosure and each holder of Convertible Preferred Units hereby releases and discharges all claims, liabilities or other

 

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obligations arising out of New Charter’s or the Company’s compliance with this Section 3.5 or the Exchange Agreement as a result of any foreclosure or in response to any Notice of Foreclosure.

SECTION 3.6 General. Except as otherwise expressly provided in this Agreement, all Common Units shall have identical rights and privileges in every respect.

SECTION 3.7 Voting. Holders of Units shall not be entitled to vote or consent with respect to any matter except as expressly provided in Section 4.2(b) notwithstanding any provisions in the Act. Each Member shall be entitled to one vote per Class A Common Unit and one vote per Class B Common Unit that it holds with respect to any matter as to which the Members holding such Units are entitled to vote.

ARTICLE IV - MANAGEMENT

SECTION 4.1 Manager.

(a) Management of the Company. The business and affairs of the Company shall be managed by the Manager consistent with the Specified Documents. Subject to the express limitations contained in any provision of the Specified Documents, the Manager shall have complete and absolute control of the affairs and business of the Company, and shall possess all powers necessary, convenient or appropriate to carrying out the purposes and business of the Company, including, without limitation, doing all things and taking all actions necessary to carry out the terms and provisions of this Agreement. Subject to the rights and powers of the Manager and the limitations thereon contained in the Specified Documents, the Manager may delegate to any Person any or all of its powers, rights and obligations under this Agreement and may appoint, contract or otherwise deal with any Person to perform any acts or services for the Company as the Manager may reasonably determine. The Manager is specifically authorized to execute, sign, seal and deliver in the name of and on behalf of the Company any and all agreements, certificates, instruments or other documents requisite to carrying out the intentions and purposes of this Agreement and of the Company.

(b) Necessary Approvals. Any action taken by the Manager pursuant to this Agreement shall be subject to the necessary approval of the Board of Directors as and to the extent required by the Specified Documents. All matters material to the affairs and business of the Company shall be determined by the Board of Directors. Notwithstanding anything in this Agreement to the contrary, but subject to Section 4.2(b), the Company and the Manager are expressly permitted to take any action in furtherance of, or to give effect to, any action or transaction that is duly approved by the Board of Directors or the stockholders of New Charter, and this Agreement may be amended to give effect to any such action or transaction by a writing executed by the Manager on behalf of the Company, with no further action required by the Members.

(c) Fiduciary Duties. This Agreement is not intended to, and does not, create or impose any fiduciary duty on any Covered Person. Furthermore, each of the Members and the Company hereby waives, to the fullest extent permitted by Law, any and all fiduciary duties that, absent such waiver, may be implied by the Act or other applicable Law, and in doing so,

 

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acknowledges and agrees that the duties and obligation of each Covered Person and each Member to each other and to the Company are only as expressly set forth in this Agreement. The provisions of this Agreement, to the extent that they restrict or eliminate the duties (including fiduciary duties) and liabilities of a Covered Person otherwise existing at law or in equity, are agreed by the Members to replace such other duties and liabilities of such Covered Person. Whenever in this Agreement a Covered Person is permitted or required to make a decision (including a decision that is in such Covered Person’s “discretion” or under a grant of similar authority or latitude), the Covered Person shall be entitled to consider only such interests and factors as such Covered Person desires, including its own interests, and shall have no duty or obligation to give any consideration to any interest of or factors affecting the Company or any other Person. For the avoidance of doubt, this Agreement neither creates nor limits any fiduciary duties of New Charter’s directors or officers to its stockholders in their respective capacities as such.

SECTION 4.2 Members.

(a) Meetings. No meetings of the Members shall be held.

(b) Actions Requiring Certain Member Approval. The prior written consent of New Charter and A/N shall be required for any amendment to this Agreement that adversely affects the rights of the Class B Common Units as compared to the Class A Common Units. The prior written consent of the holders of Convertible Preferred Units holding a majority of the Convertible Preferred Units then outstanding shall be required for any amendment to this Section 4.2 and Sections 3.3, 3.4, 3.5, 4.5, 5.4 and 6.2 that adversely affects the rights of the Convertible Preferred Units. So long as the A/N Parties maintain sixty-six and two-thirds percent (66 2/3%) of the Convertible Preferred Units issued to A/N on the Closing Date, the prior written consent of A/N shall be required for any issuance of Units that have a liquidation preference senior to, or pari passu with, the Convertible Preferred Units. Notwithstanding anything herein to the contrary, no consent of any Person shall be required for the issuance of Units (including Units that have a liquidation preference senior to, or pari passu with, the Convertible Preferred Units), if such Units are issued to a member of the Charter Group with an aggregate liquidation preference and dividend rate approximately equal to, and intended to provide funds to service, indebtedness incurred by the Charter Group; provided, that any such Units shall not be transferrable to any party that is not a member of the Charter Group and any member of the Charter Group that holds such Units shall transfer such Units to a member of the Charter Group prior to such entity’s ceasing to be a member of the Charter Group.

SECTION 4.3 Officers.

(a) Designation and Appointment. The Manager may, from time to time, employ and retain Persons as may be necessary or appropriate for the conduct of the Company’s and its Subsidiaries’ business (subject to the supervision and control of the Manager), including employees, agents and other Persons (any of whom may be a Member or any of its Affiliates, or any of their respective employees, directors or officers) who may be designated as Officers of the Company or of one or more of the Company’s Subsidiaries, with

 

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titles as and to the extent authorized by the Manager. Any number of offices may be held by the same Person. In its discretion, the Manager may choose not to fill any office for any period as it may deem advisable. Officers need not be residents of the State of Delaware or Members. Any Officers so designated shall have such authority and perform such duties as the Manager may, from time to time, delegate to them. The Manager may assign titles to particular Officers. Each Officer shall hold office at the pleasure of the Manager.

(b) Resignation/Removal. Any Officer may resign his or her office at any time. Such resignation shall be made in writing and shall take effect at the time specified therein, or if no time is specified, at the time of its receipt by the Manager. The acceptance of a resignation shall not be necessary to make it effective, unless expressly so provided in the resignation. Any Officer may be removed as such, either with or without cause at any time by the Manager. Designation of an Officer shall not of itself create any contractual or employment rights.

(c) Chief Executive Officer. The Manager shall appoint a Chief Executive Officer of the Company and its Subsidiaries (the “CEO”). The CEO (i) shall be in general and active charge of the entire business and affairs of the Company and (ii) shall, subject to the powers of the Manager, have the power and authority to cause the Company to enter into and perform contracts and agreements in the ordinary course of business without action of the Manager.

(d) President. If at any time a president of the Company (the “President”) is appointed, the President shall, subject to the powers of the Manager and the limitations set forth in Section 4.1 and, in the event that the President and the CEO are not the same person, the CEO, have responsibility for the general and active management of the business of the Company, and shall see that all orders and resolutions of the Manager are carried into effect. The President shall have such other powers and perform such other duties as may be prescribed by the Manager and, in the event that the President and the CEO are not the same person, the CEO.

(e) Chief Financial Officer. The chief financial officer of the Company (the “Chief Financial Officer”) shall have responsibility for keeping and maintaining, or for causing to be kept and maintained, adequate and correct books and records of accounts of the properties and business transactions of the Company, including accounts of its assets, liabilities, receipts, disbursements, gains, losses and capital. The Chief Financial Officer shall have the custody of the funds and securities of the Company, and shall have responsibility for keeping full and accurate accounts of receipts and disbursements in books belonging to the Company, and for depositing all moneys and other valuable effects in the name and to the credit of the Company in such depositories as may be designated by the Manager. The Chief Financial Officer shall have such other powers and perform such other duties as may from time to time be prescribed by the CEO or the Manager.

(f) Vice President(s). The vice president(s) of the Company shall have such duties and such other powers as the Manager may from time to time prescribe.

 

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(g) Secretary.

(i) The secretary of the Company (the “Secretary”) shall have responsibility for keeping all documents described in Article VII and such other documents as may be required under the Act. The Secretary shall have such other duties and such other authority as may be prescribed elsewhere in this Agreement or from time to time by the CEO or the Manager. The Secretary shall have the general duties, powers and responsibilities of a secretary of a corporation.

(ii) If the Manager chooses to appoint an assistant secretary or assistant secretaries, the assistant secretaries, in the order of their seniority, in the absence, disability or inability to act of the Secretary, shall have the duties and the powers of the Secretary, and shall have such other duties as the CEO or the Manager may from time to time prescribe.

(h) Treasurer. The Treasurer shall have custody of the Company funds and securities and shall have responsibility for keeping or causing to be kept full and accurate accounts of receipts and disbursements in books of the Company to be maintained for such purpose; depositing all moneys and other valuable effects of the Company in the name and to the credit of the Company in depositories designated by the Manager or the CEO; and disbursing the funds of the Company as may be ordered by the Manager or the CEO.

SECTION 4.4 Management Matters. The Manager shall take all action which may be necessary or appropriate for the continuation of the Company’s valid existence as a limited liability company under the Laws of the State of Delaware (and of each other jurisdiction in which such existence is necessary to enable the Company to conduct the business in which it is engaged) in accordance with the provisions of this Agreement and the Exchange Agreement and applicable Laws and regulations. The Manager shall file or cause to be filed for recordation in the office of the appropriate authorities of the State of Delaware, and in the proper office or offices in each other jurisdiction in which the Company or any Subsidiary of the Company is formed or qualified, such certificates (including certificates of limited liability companies and fictitious name certificates) and other documents as are required by the applicable Laws of any such jurisdiction or as are required to reflect the identity of the Members and the amounts of their respective Capital Accounts.

SECTION 4.5 Liability of Members.

(a) No Liability. Except as otherwise required by applicable Law or as expressly set forth in this Agreement, no Member or Manager shall have any liability whatsoever in such Person’s capacity as a Member or Manager (as applicable), whether to the Company, to any of the other Members, to the creditors of the Company or any Subsidiary of the Company or to any other third party, for the debts, liabilities, commitments or any other obligations of the Company or any Subsidiary of the Company or for any losses of the Company or any Subsidiary of the Company; provided, that nothing contained in this Section 4.5(a) is intended to release or limit a Member’s liability for a breach by a Member or the Manager of its obligations hereunder.

 

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(b) Limited Liability of the Member. Without limiting Section 4.5(a), the liability of each Member, in its capacity as such, cannot exceed (i) the amount of its Capital Contributions, if any, (ii) its share of any assets and undistributed profits of the Company and (iii) the amount of any distributions wrongfully distributed to it to the extent set forth in the Act, except to the extent such Member has breached this Agreement.

(c) Return of Distributions. In accordance with the Act and the Laws of the State of Delaware, a member of a limited liability company may, under certain circumstances, be required to return amounts previously distributed to such member. It is the intent of the Members that no distribution to any Member pursuant to Article V of this Agreement shall be deemed a return of money or other property paid or distributed in violation of the Act. The payment of any such money or distribution of any such property to a Member shall be deemed to be a compromise within the meaning of the Act, and the Member receiving any such money or property shall not be required to return to any Person any such money or property, except to the extent such Member has breached this Agreement. However, if any court of competent jurisdiction holds that, notwithstanding the provisions of this Agreement, any Member is obligated to make any such payment, such obligation shall be the obligation of such Member and not of any other Member.

SECTION 4.6 Exculpation; Indemnification by the Company.

(a) Exculpation. To the fullest extent permitted by Law, no Covered Person shall be liable to the Company or its Subsidiaries or any other Person who is bound by this Agreement for any or all losses, damages, claims, judgments, penalties (including excise and similar taxes and punitive damages), fines, settlements and reasonable expenses (including reasonable attorneys’ fees and expenses) (collectively, “Expenses”) actually incurred by reason of any act or omission performed or omitted by such Covered Person on behalf of the Company or its Subsidiaries and in a manner reasonably believed to be within the scope of the authority conferred on such Covered Person in accordance with this Agreement, except to the extent such Expenses are due to the gross negligence or willful misconduct of, or bad faith breach of this Agreement by, such Covered Person (each, a “Covered Claim”). The provisions of this Agreement, to the extent that they restrict, limit or eliminate the duties and liabilities of a Covered Person to the Company or any Subsidiary of the Company or the Members otherwise existing at law or in equity, are agreed by the parties hereto to replace such other duties and liabilities at law or in equity of such Covered Person, and each Member to the fullest extent permitted by applicable Law, hereby waives any right to make any claim, bring any action or seek any recovery based on such other duties or liabilities for breach thereof.

(b) Indemnification. Subject to the limitations and conditions provided in this Section 4.6, each Covered Person who was or is made a party or is threatened to be made a party to, or is involved in, any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or arbitrative, with respect to a Covered Claim (a “Proceeding”), or any appeal in such a Proceeding or any inquiry or investigation that could lead to such a Proceeding (a “Covered Proceeding”), by reason of the fact that he, she or it, or a Person of which he, she or it is or was a Covered Person shall be indemnified by the Company or to the extent applicable a Subsidiary of the Company to the fullest extent permitted by

 

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applicable Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Company to provide broader indemnification rights than such Law permitted the Company to provide prior to such amendment) against all Expenses actually incurred by such Person in connection with such Covered Proceeding, and indemnification under this Section 4.6 shall continue as to a Covered Person who has ceased to serve in the capacity which initially entitled such Covered Person to indemnity under this Agreement. The indemnification provided in this Section 4.6 is recoverable only out of the assets of the Company and/or its Subsidiaries, and no Member, director or Officer or employee of the Company or any of its Subsidiaries has any personal liability, or obligation to make a capital contribution, on account thereof.

(c) Reliance. A Covered Person shall be fully protected in relying in good faith upon the records of the Company and its Subsidiaries and upon such information, opinions, reports or statements presented to the Company or its Subsidiaries by any person as to matters the Covered Person reasonably believes are within such other person’s professional or expert competence, including information, opinions, reports or statements as to the value and amount of the assets, liabilities, Net Income or Net Losses of the Company and its Subsidiaries, or the value and amount of assets or reserves or contracts, agreements or other undertakings that would be sufficient to pay claims and obligations of the Company and its Subsidiaries or to make reasonable provision to pay such claims and obligations, or any other facts pertinent to the existence and amount of assets from which distributions to the Members or creditors of the Company and its Subsidiaries might properly be paid.

(d) Advancement of Expenses. The Company shall advance reasonable expenses (including reasonable attorneys’ fees) incurred by or on behalf of a Covered Person in connection with a Covered Proceeding (ignoring for purposes of this clause (d) the exception contained therein relating to gross negligence or willful misconduct or bad faith breach of this Agreement) within twenty (20) days after receipt by the Company from such Covered Person of a statement requesting such advances from time to time; provided such statement provides reasonable documentary evidence of such expenses and provides a written undertaking by the Covered Person to repay any and all advanced expenses in the event such Covered Person is ultimately determined not to be entitled hereunder to indemnification by the Company.

(e) Indemnification Agreements and D&O Insurance. The Company may enter into agreements with the Manager or any Officer to provide for indemnification consistent with the terms and conditions set forth in this Section 4.6. New Charter, the Company and/or its Subsidiaries, as deemed appropriate by the Manager, will purchase and maintain director and officer liability insurance at appropriate levels of coverage as determined by the Manager. New Charter, the Company and/or its Subsidiaries may, as deemed appropriate by the Manager, in lieu of or in addition to the policy referred to in the prior sentence, purchase a tail insurance policy with respect to its director and officer liability insurance with appropriate levels of coverage (as determined by the Manager) for past periods.

(f) Nature of Rights. The rights granted pursuant to this Section 4.6 shall be deemed contract rights, and no amendment, modification or repeal of this Section 4.6 shall have the effect of limiting or denying any such rights with respect to actions taken or Covered Proceedings arising prior to any amendment, modification or repeal.

 

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(g) Third-Party Beneficiaries. Notwithstanding anything to the contrary in this Agreement, each of the Members and the Company acknowledges and agrees that the Covered Persons have relied on this Section 4.6 and are express third-party beneficiaries of Section 4.6 with the express right and ability to enforce the Company’s obligations under Section 4.6 directly against the Company to the full extent of such obligations. The Company and each Member shall not in any way hinder, compromise or delay the rights and ability of the Covered Persons to enforce any of the Company’s obligations under this Section 4.6 directly against the Company to the full extent of such obligations. Notwithstanding anything to the contrary in this Agreement, (a) this Section 4.6 may not be amended, modified, supplemented or waived in any manner, and (b) the other provisions of this Agreement may not be amended, modified, supplemented or waived in any manner that adversely affects any Covered Person’s rights to enforce any of the Company’s obligations under this Section 4.6 directly against the Company without the prior written consent of each of the Members, which consent may be withheld, conditioned or delayed for any reason in their sole discretion.

(h) Survival. This Section 4.6 shall survive any termination or restatement of this Agreement. It is expressly acknowledged that the indemnification provided in this Section 4.6 could involve indemnification for negligence or under theories of strict liability.

SECTION 4.7 Manager Expenses. All liabilities, costs and expenses incurred by New Charter in connection with or relating to its activities as the Manager hereunder, incurred by the Charter Group in connection with the management of its business or the maintenance and continuity of its continued corporate existence, or incurred or suffered by the Charter Group shall be paid (or reimbursed to the Charter Group, if paid by the Charter Group) by the Company, and the Company shall indemnify, defend and hold harmless the Charter Group (and their respective directors, officers, personnel, advisors, agents and other representatives) for the same to the fullest extent permitted by Law; the foregoing shall include for the avoidance of doubt the costs and expenses of compensation for the directors, officers, personnel, advisors, agents and other representatives of the Charter Group.

SECTION 4.8 Exclusivity of Business.

(a) For so long as the Exchange Agreement is in effect, New Charter may not hold assets or liabilities outside of the Company and its Subsidiaries, other than any assets and liabilities that the Manager reasonably determines should be held outside the Company and its Subsidiaries for financing, tax, regulatory or similar or related reasons, and only if (i) such assets and liabilities, in the aggregate, together with all other assets and liabilities held outside of the Company and its Subsidiaries have a combined value less than or equal to 3% of the total consolidated assets of New Charter and its Subsidiaries at the time of such determination and (ii) the amount of cash and cash equivalents held outside of the Company and its Subsidiaries does not exceed the amount of cash and cash equivalents reasonably necessary to satisfy the ordinary needs of the business associated with the assets and liabilities held outside of the Company and its Subsidiaries or to comply with applicable Law, in each case, excluding cash or

 

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cash equivalents funded (or previously funded) by a Common Tax Distribution or other pro rata distribution by the Company on the Common Units. The Manager shall promptly prepare a notice of any assets or liabilities to be held outside the Company and its Subsidiaries and shall provide such notice to A/N at least five (5) Business Days prior to the completion thereof. For the avoidance of doubt, the fact that assets or liabilities are held by New Charter outside of the Company and its Subsidiaries shall not affect the number of shares of Class A Common Stock to be delivered to any A/N Party under the Exchange Agreement.

(b) Notwithstanding anything in this Agreement to the contrary, but subject to Section 4.2(b), and without prejudice to A/N’s rights under the Stockholders Agreement, it is the intent of the parties hereto that the Company shall be a dynamic institution and may engage in such transactions as the Manager shall reasonably determine are advisable to and in the best interests of the Company. In furtherance and not in limitation of the foregoing, but subject to Section 4.2(b):

(i) The Manager may, in its sole discretion, cause the Company to lend cash to any member of the Charter Group to finance the acquisition, by merger, consolidation, acquisition of stock or assets, or otherwise, of any Person or business (an “Acquisition Loan”); provided, that (A) the interest rate on any Acquisition Loan shall not be less than that which would apply to any concurrent Tax Loan and (B) as soon as reasonably practicable following such acquisition, such member of the Charter Group shall contribute all of the assets and liabilities of such Person or business to the Company, such contribution to be deemed in full satisfaction of such Acquisition Loan.

(ii) The Charter Group may issue shares of capital stock in consideration of the acquisition, by merger, consolidation, acquisition of stock or assets, or otherwise, of any Person or business; provided, that as soon as reasonably practicable following such acquisition, the Charter Group shall contribute all of the assets and liabilities of such Person or business to the Company in exchange for the Charter Member’s receipt of an equivalent number of Class A Common Units. In such event, subject to Section 4.8, New Charter shall, in addition, take such other action as is necessary to preserve the 1:1 Up-C structure between New Charter and the Company.

(iii) The Charter Group may issue debt to any Person (a “Creditor”); provided, that as soon as reasonably practicable following such debt issuance, the Charter Group shall either (1) contribute all of the net proceeds of such debt issuance to the Company, which contribution may be in exchange for units of a new class of Units with such rights, preferences, privileges and restrictions as the Manager shall designate in order that the obligations of the Company to the Charter Group resulting from the Charter Group’s ownership of such Units shall match, to the extent reasonably practicable, the obligations of the Charter Group to the Creditor resulting from such debt issuance, or (2) lend the net proceeds of such debt issuance to any member of the Charter Group on terms designed to mirror such debt.

(iv) Notwithstanding clauses (i)-(iii) above, but subject to the requirements of Section 4.8(a), the Manager may withhold from contribution to the

 

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Company any assets and liabilities that the Manager reasonably determines should be withheld for financing, tax, regulatory or similar or related reasons. The Manager shall promptly prepare and provide to A/N a notice of any such withheld contribution in accordance with the requirements of Section 4.8(a).

(v) In furtherance and not in limitation of the foregoing, and subject to this Section 4.8, it is the intent of the parties hereto that New Charter and the Company shall maintain a 1:1 Up-C structure (except with respect to Class B Common Units and Convertible Preferred Units), as set forth in Section 2.3(a) of the Exchange Agreement.

ARTICLE V - ALLOCATIONS; DISTRIBUTIONS

SECTION 5.1 Capital Account Creation. There shall be established for each Member on the books of the Company a Capital Account, which shall be increased or decreased in the manner set forth in this Agreement. Each Member’s Capital Account shall be divided into components corresponding with such Member’s Common Units and Convertible Preferred Units, respectively, and all adjustments hereunder to Capital Accounts shall be made to the appropriate component, as the case may be.

SECTION 5.2 Capital Account Negative Balance. A Member shall not have any obligation to the Company or to any other Member to restore any negative balance in the Capital Account of such Member. The Company shall not request any additional capital contribution from A/N or its Affiliates or their transferees in its or their capacity as a Member.

SECTION 5.3 Allocations of Net Income and Net Loss.

(a) Allocations of Net Income and Net Loss. After giving effect to the special allocations set forth in Section 5.3(c) for the Taxable Period and all capital contributions by and distributions to the Members for the Taxable Period, the Company shall allocate Net Income and Net Loss (and, if necessary, individual items of gross income or gross deduction) for the Taxable Period to the Members in a manner such that, after such allocations have been made, the balance of each Member’s Capital Account shall, to the extent possible, be equal to each Member’s Target Capital Account.

(b) Tax Allocations.

(i) In accordance with Section 704(c) of the Code and the Regulations promulgated thereunder, each item of income, gain, loss and deduction with respect to any property contributed to the capital of the Company shall, solely for tax purposes, be allocated among the Members so as to take account of any variation between the adjusted basis of such property to the Company for U.S. federal income tax purposes and its initial Gross Asset Value using the “traditional method” pursuant to Regulations Section 1.704-3(b), provided, that to the extent permitted under the Code and Regulations, with respect to any Company asset that was contributed to the Company by the Charter Member or A/N on the date hereof, the remaining amount of contributed tax basis in such asset shall be allocated entirely to the forward Section 704(c) layer, if

 

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any, that is attributable to such contributed asset and no portion of such tax basis shall be allocated to any reverse Section 704(c) layer that is attributable to such contributed asset in the event the Gross Asset Value of such Company asset is subsequently adjusted pursuant to Sections 5.3(b)(ii) and 5.3(b)(iii).

(ii) In the event the Gross Asset Value of any Company asset is adjusted pursuant to clause (b) of the definition of “Gross Asset Value,” subsequent allocations of income, gain, loss and deduction with respect to such asset shall take account of any variation between the adjusted basis of such asset for United States federal income tax purposes and its Gross Asset Value in the same manner as under Section 704(c) of the Code and the Regulations promulgated thereunder using any method permitted under Regulations Section 1.704-3 as reasonably determined by the Manager.

(iii) In the event of the exercise of the conversion right of any Convertible Preferred Units pursuant to Section 3.3(a) by any Member and if and to the extent of a corresponding re-allocation of the Members’ Capital Account balances under Regulations Section 1.704-1(b)(2)(iv)(s)(3), the Company shall, beginning with the Taxable Period in which the conversion right is exercised and in all succeeding Taxable Periods until the required allocations are fully taken into account, make corrective allocations of items of income, gain, loss, deduction and credit solely for tax purposes to adjust for such capital account re-allocation, as required under Regulations Section 1.704-1(b)(4)(x).

(iv) Subject to the provisions of Section 5.3(b)(i), (ii) and (iii), items of Company income, gain, loss, deduction and credit to be allocated for tax purposes shall, for each Taxable Period, be allocated among the Members in the same manner and in the same proportion as such items are allocated among the Members’ respective Adjusted Capital Accounts.

(v) Allocations pursuant to this Section 5.3(b) are solely for U.S. federal, state and local income tax purposes, and shall not affect, or in any way be taken into account in computing, any Member’s Capital Account or share of Net Income, Net Loss, other items, or distributions pursuant to any provision of this Agreement.

(c) Special Allocations.

(i) Certain Special Allocations. Notwithstanding anything to the contrary set forth in this Agreement, the following special allocations, if applicable, shall be made in the order set forth below.

(A) Company Minimum Gain Chargeback. Except as otherwise provided in Regulations Section 1.704-2(f), notwithstanding any other provision of this Section 5.3, if there is a net decrease in Company Minimum Gain during any Taxable Period, each Member shall be specially allocated items of Company income and gain for such Taxable Period (and, if necessary, subsequent Taxable Periods) in an amount equal to such Member’s share of such

 

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net decrease in Company Minimum Gain during such Taxable Period, determined in accordance with Regulations Section 1.704-2(g). Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Member pursuant thereto. The items to be so allocated shall be determined in accordance with Regulations Sections 1.704-2(f)(6) and 1.704-2(j)(2). This Section 5.3(c)(i)(A) is intended to comply with the minimum gain chargeback requirements set forth in Regulations Section 1.704-2(f) and shall be interpreted consistently therewith.

(B) Member Minimum Gain Chargeback. Except as otherwise provided in Regulations Section 1.704-2(i)(4), notwithstanding any other provision of this Section 5.3, if there is a net decrease in Member Minimum Gain attributable to a Member Nonrecourse Debt during any Taxable Period, each Member that has a share of the Member Minimum Gain attributable to such Member Nonrecourse Debt, determined in accordance with Regulations Section 1.704-2(i)(5), shall be specially allocated items of Company income and gain for such Taxable Period (and, if necessary, subsequent Taxable Periods) in an amount equal to such Member’s share of such net decrease in Member Minimum Gain attributable to such Member Nonrecourse Debt during such Taxable Period, determined in accordance with Regulations Section 1.704-2(i)(4). Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Member pursuant thereto. The items to be so allocated shall be determined in accordance with Regulations Sections 1.704-2(i)(4) and 1.704-2(j)(2). This Section 5.3(c)(i)(B) is intended to comply with the minimum gain chargeback requirement set forth in Regulations Section 1.704-2(i)(4) and shall be interpreted consistently therewith.

(C) Qualified Income Offset. In the event any Member unexpectedly receives any adjustments, allocations or distributions described in subparagraphs (4), (5) or (6) of Regulations Section 1.704-1(b)(2)(ii)(d), items of Company income and gain shall be specially allocated to such Member in an amount and manner sufficient to eliminate, to the extent required by such Regulations, such Member’s Adjusted Capital Account Deficit as possible; provided, that an allocation pursuant to this Section 5.3(c)(i)(C) shall be made only if and to the extent that such Member would have an Adjusted Capital Account Deficit after all other allocations provided for in this Section 5.3 have been tentatively made as if this Section 5.3(c)(i)(C) were not in this Agreement. This Section 5.3(c)(i)(C) is intended to comply with the “qualified income offset” requirements set forth in Regulations Section 1.704-1(b)(2)(ii)(d)(3) and shall be interpreted consistently therewith.

(D) Gross Income Allocation. In the event any Member has a deficit Capital Account at the end of any Taxable Period that is in excess of the sum of (i) the amount such Member is obligated to restore, if any, pursuant to any provision of this Agreement, and (ii) the amount such Member is obligated to restore pursuant to the penultimate sentences of Regulations Sections 1.704-2(g)(1)

 

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and 1.704-2(i)(5), each such Member shall be specially allocated items of Company income and gain in the amount of such excess, as quickly as possible; provided, that an allocation pursuant to this Section 5.3(c)(i)(D) shall be made only if and to the extent that such Member would have a deficit Capital Account in excess of such sum after all other allocations provided for in this Section 5.3 have been tentatively made as if Section 5.3(c)(i)(C) and this Section 5.3(c)(i)(D) were not in this Agreement.

(E) Nonrecourse Deductions. Nonrecourse Deductions for any Taxable Period shall be specially allocated among the Members in accordance with a Member’s share of Company profits under Regulations Section 1.752-3(a)(3).

(F) Member Nonrecourse Deductions. Any Member Nonrecourse Deductions for any Taxable Period shall be specially allocated to the Member that bears the economic risk of loss with respect to the Member Nonrecourse Debt to which such Member Nonrecourse Deductions are attributable in accordance with Regulations Section 1.704-2(i)(1).

(G) Section 754 Adjustments. To the extent an adjustment to the adjusted tax basis for U.S. federal income tax purposes of any Company asset pursuant to Section 734(b) or 743(b) of the Code is required, pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(2) or 1.704-1(b)(2)(iv)(m)(4), to be taken into account in determining Capital Accounts as the result of a distribution to a Member in complete liquidation of such Member’s Membership Interest, the amount of such adjustment to Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis), and such gain or loss shall be specially allocated to the Members pro rata in accordance with the manner in which it would be allocated under Section 5.3(a) in the event Regulations Section 1.704-1(b)(2)(iv)(m)(2) applies, or to the Member to whom such distribution was made, in the event Regulations Section 1.704-1(b)(2)(iv)(m)(4) applies.

(H) For each Taxable Period, items of Company gross income and gain shall be allocated to the Members holding Convertible Preferred Units at the beginning of such Taxable Period in an amount equal to the aggregate Convertible Preferred Unallocated Yield with respect to all Convertible Preferred Units held by such Member during the Taxable Period, pro rata in proportion to the aggregate Convertible Preferred Unallocated Yield with respect to the Convertible Preferred Units held by each such Member during the Taxable Period. For the avoidance of doubt, any Member who exercises its conversion right in respect of Convertible Preferred Units pursuant to Section 3.3(a) during the current Taxable Period will be allocated gross income and gain in the current Taxable Period pursuant to the prior sentence with respect to the Convertible Preferred Units so converted.

 

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(I) In the event of the exercise of the conversion right of any Convertible Preferred Units pursuant to Section 3.3(a) by any Member during the current Taxable Period (“Current Period Converted Units”), after giving effect to the allocations in Section 5.3(c)(i)(A)-(H), the Company shall make allocations in respect of the Current Period Converted Units in accordance with the principles outlined in Regulations Section 1.704-1(b)(2)(iv)(s). For the avoidance of doubt, the portion of a Member’s Capital Account that is attributable to such Member’s Current Period Converted Units will be increased or decreased under this Section 5.3(c)(i)(I) to an amount that represents such Member’s rights to partnership capital in respect of the Units received by such Member in respect of the Current Period Converted Units. If a Member’s Capital Account is to be increased under this Section 5.3(c)(i)(I), such Member shall be specially allocated a pro-rata share of all items of gain attributable to increases in the Gross Asset Values of Company property resulting from adjustments to the Gross Asset Value of Company property for the current Taxable Period in an amount equal to such increase. If a Member’s Capital Account is to be reduced under this Section 5.3(c)(i)(I), such Member shall be specially allocated a pro-rata share of all items of loss attributable to decreases in the Gross Asset Values of Company property resulting from adjustments to the Gross Asset Value of Company property for the current Taxable Period in an amount equal to such decrease. To the extent that there are insufficient items of gain or loss to make the allocations required by this Section 5.3(c)(i)(I), the Company will re-allocate amounts among the Capital Accounts of the Members in the manner outlined in Regulations Section 1.704-1(b)(2)(iv)(s)(3).

(ii) Curative Allocations. The allocations set forth in Section 5.3(c)(i)(A)–(G) (the “Regulatory Allocations”) are intended to comply with certain requirements of the Regulations. It is the intent of the Members that, to the extent possible, all Regulatory Allocations shall be offset either with other Regulatory Allocations or with special allocations of other items of Company income, gain, loss or deduction pursuant to this Section 5.3(c)(ii). Therefore, notwithstanding any other provision of this Section 5.3 (other than the Regulatory Allocations), the Company shall make such offsetting special allocations of Company income, gain, loss or deduction in whatever manner it determines appropriate so that, after such offsetting allocations are made, each Member’s Capital Account balance is, to the extent possible, equal to the Capital Account balance such Member would have had if the Regulatory Allocations were not part of this Agreement and all Company items were allocated pursuant to Section 5.3(a) and Section 5.3(d) of this Agreement. For the avoidance of doubt, in making allocations pursuant to this Section 5.3(c)(ii), the Company shall take into account future Regulatory Allocations under Section 5.3(c)(i)(A) and Section 5.3(c)(i)(B) that, although not yet made, are likely to offset other Regulatory Allocations previously made under Section 5.3(c)(i)(E) and Section 5.3(c)(i)(F) of this Agreement.

 

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(d) Other Allocation Rules.

(i) The allocation provisions set forth in this Section 5.3 and other provisions of this Agreement relating to maintenance of Capital Accounts are intended to comply with Regulations Section 1.704-1(b) and shall be interpreted and applied in a manner consistent with such Regulations.

(ii) For purposes of determining the Net Income, Net Loss or any other items allocable to any period, Net Income, Net Loss and any such other items shall be determined on a daily, monthly or other basis, as determined by the Tax Matters Member using any permissible method under Section 706 of the Code and the Regulations thereunder.

(iii) If the Percentage Interest of any one or more Members changes during the Fiscal Year, all items of Company income, loss, deduction and credit shall be allocated among the Members for such Fiscal Year in a reasonable manner, as determined by the Manager, that takes into account the varying Percentage Interests of the Members in the Company during such Fiscal year in accordance with Section 706 of the Code.

(iv) The Members are aware of the income tax consequences of the allocations made hereby and hereby agree to be bound by the provisions of this Agreement in reporting their shares of Company income and loss for income tax purposes.

(v) The Manager shall determine, in its reasonable discretion, the methodology for determining the allocation of “excess nonrecourse liabilities” of the Company (within the meaning of Regulations Section 1.752-3(a)(3)) among the Members and the methodology for allocating “nonrecourse liabilities” among assets of the Company for purposes of Regulations Section 1.752-3(b); provided, however, that in exercising its discretion, the Manager shall seek to minimize, to the extent possible, (A) the amount of any Section 731(a) of the Code gains recognized by a Member due to deemed distributions under Section 752(b) of the Code, and (B) any limitation on the allowance of Company losses under Section 704(d) of the Code due to a Member having insufficient basis in its Units to claim its distributive share of losses of the Company. Consistent with the foregoing, if a Member transfers less than all of its Units, the Manager shall use its discretion in determining methodologies for the year of the transfer so that, to the greatest extent reasonably possible, (X) the transferring Member’s share of Company liabilities under Section 752 of the Code immediately after such transfer, divided by such Member’s share of Company liabilities under Section 752 of the Code immediately prior to such transfer, equals (Y) the proportion of the transferring Member’s Capital Account immediately prior to such transfer (determined as if the Members’ Capital Accounts were revalued pursuant to Regulations Section 1.704-1(b)(2)(iv)(f) immediately prior to such transfer) that is attributable to the Units retained by the transferring Member.

 

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SECTION 5.4 Distributions.

(a) Distributions Generally.

(i) Subject to and in accordance with this Section 5.4 (including, for the avoidance of doubt, subject to and in accordance with the limitations set forth in Section 5.4(c)), the Company shall make distributions to the Members as follows:

(A) to the Members holding Convertible Preferred Units, when, as and if declared by the Manager, cumulative preferential cash distributions in an amount equal to the Convertible Preferred Yield per Convertible Preferred Unit. If declared, such distributions will be payable quarterly in arrears, and, if not declared, shall be deemed to have become due quarterly and in arrears, on the last calendar day of March, June, September and December of each year (each a “Convertible Preferred Unit Distribution Payment Date”), commencing on the first of such payment dates to occur following the original date of issuance each such Convertible Preferred Unit. If any date on which distributions are to be made on the Convertible Preferred Units is not a Business Day, then payment of the distribution to be made on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay) except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date. The Members holding Convertible Preferred Units shall not be entitled to any distributions in respect of such Convertible Preferred Units, whether payable in cash, other property or otherwise, in excess of the full cumulative distributions described in this Section 5.4(a)(i)(A), which full cumulative distributions include any unpaid Preferred Accrued Distribution Amounts. For the avoidance of doubt, all Preferred Tax Distributions shall be considered distributions paid pursuant to this Section 5.4(a)(i)(A) for purposes of this Agreement. Any distribution payment made on the Convertible Preferred Units shall first be credited against the earliest accrued but unpaid Preferred Accrued Distribution Amount due with respect to such Convertible Preferred Units which remain payable, and

(B) to the Members holding Common Units, pro rata in accordance with their respective Percentage Interests, at the times and in the aggregate amounts determined by the Manager; provided, that so long as any Convertible Preferred Units are outstanding, no distribution of cash or other property shall be authorized, declared, paid or set apart for payment on or with respect to the Common Units, nor shall any Common Units be redeemed, purchased or otherwise acquired for any consideration (or any monies be paid to or made available for a sinking fund for the redemption of any such Common Units) by the Company (except for the exchange of Class B Common Units for shares of Class A Common Stock pursuant to the Exchange Agreement) unless, in each case, all unpaid Preferred Accrued Distribution Amounts have been or contemporaneously are authorized and paid. The foregoing sentence will not prohibit the payment of Tax Distributions pursuant to Section 5.4(b).

 

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(ii) The Company may offset damages for a judicially and finally determined breach of this Agreement by a Member whose Membership Interest is liquidated (either upon the resignation of the Member or the liquidation of the Company) against any amount otherwise distributable to the Member.

(iii) Distributions made upon liquidation of the Company shall be made as provided in Section 6.2(c).

(b) Tax Distributions.

(i) Anything to the contrary in this Agreement notwithstanding, subject, in each case, to Section 5.4(c):

(A) At least five (5) days prior to the due date prescribed by the Code for corporations to pay quarterly installments of estimated tax, the Company shall distribute in cash (1) to each Member holding Common Units, for each Common Unit held at such time, the estimated Common Per Unit Tax Distribution Amount for the Fiscal Quarter with respect to which such quarterly installments of estimated tax are due, and (2) to each Member holding Convertible Preferred Units, for each Convertible Preferred Unit held at such time, the estimated Preferred Per Unit Tax Distribution Amount for the Fiscal Quarter with respect to which such quarterly installments of estimated tax are due.

(B) As promptly as practicable after the end of each Fiscal Year, but in no event later than five (5) days prior to the estimated tax due date of the succeeding fiscal quarter (or, if earlier, any date on which taxes are due in connection with an application for an extension of time to file any tax returns) the Company shall distribute in cash (1) to each Member holding Common Units, for each Common Unit held at such time, the Common Per Unit Tax Distribution Amount for such Fiscal Year, and (2) to each Member holding Convertible Preferred Units, for each Convertible Preferred Unit held at such time, the Preferred Per Unit Tax Distribution Amount for such Fiscal Year.

(ii) Notwithstanding anything in this Section 5.4(b) to the contrary, the Manager may waive, in whole or in part, any or all Common Tax Distributions to which the Charter Member is entitled, provided such waiver shall be allowed solely to the extent a Common Tax Distribution to the Charter Member would exceed the tax payable in respect of the Charter Member’s Common Units for the applicable estimated, extension, tax return or other tax liability (taking into account cash or cash equivalents available for the paying of any such taxes in accordance with Section 4.8(a) and net operating loss carryforwards, tax credits, or other tax attributes available to offset such tax liability). To the extent that the Manager elects to waive Common Tax Distributions pursuant to this Section 5.4(b)(ii):

(A) Such waiver shall reduce the total Common Tax Distribution to the Charter Member, under Section 5.4(b)(i) and shall reduce Common Tax Distributions made to all other Members in the same amount per Common Unit.

 

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(B) Each Member that is not a member of the Charter Group shall receive an advance (a Tax Loan”) from the Company equal to the lesser of (1) the amount by which such Member’s Common Tax Distribution is decreased in the aggregate under this Section 5.4(b)(ii), and (2) such Member’s Common Excess Cumulative Tax Liability. All Tax Loans shall accrue interest at the Applicable Rate (calculated as of the first day of each Fiscal Quarter or, for the Fiscal Quarter during which a Tax Loan is made, the day on which such Tax Loan is made). All accrued and unpaid interest on Tax Loans shall be capitalized and added to the unpaid principal amount of such Tax Loans on the last day of each Fiscal Quarter. Tax Loans may be repaid at any time and from time to time without premium or penalty. Tax Loans shall be recourse to the Class B Common Units, Convertible Preferred Units and Class A Common Stock held by such Member.

(C) Without limiting the last sentece of Section 5.4(b)(ii)(B), to the extent that any Member owes any Tax Loans (or accrued and unpaid interest thereon) either (x) at the time that such Member exchanges Class B Common Units for shares of Class A Common Stock or cash, or (y) as of the effective date of a dissolution pursuant to Section 6.2, then, subject to Section 5.4(b)(ii)(D), immediately prior to such exchange or the distribution of the Company’s assets pursuant to such dissolution, as applicable, an amount of Common Units owned by such Member equal to the lesser of (1) the quotient of (A) the product of (i) the outstanding amount of such Member’s Tax Loans (including accrued and unpaid interest thereon) multiplied by (ii) (x) in the case of an exchange, a fraction, the numerator of which is the amount of such Member’s Class B Common Units being exchanged and the denominator of which is the number of Class B Common Units held by such Member immediately prior to the applicable Date of Exchange or (y) in the case of a dissolution, 1, divided by (B) in the event of a dissolution, the VWAP of the Class A Common Stock for the twenty (20) consecutive Trading Days ending on the date preceding the date of the dissolution, or, in the event of an Exchange, the two-day VWAP as set forth in the definition of Cash Exchange Payment, as applicable, and (2) the amount of Class B Common Units that such Member holds, shall be automatically cancelled in satisfaction of an amount of such Member’s Tax Loans (including accrued and unpaid interest thereon) equal to (x) (i) the number of Common Units so cancelled multiplied by (ii) in the event of a dissolution, the VWAP of the Class A Common Stock for the twenty (20) consecutive Trading Days ending on the date preceding the date of the dissolution, or, in the event of an Exchange, the two-day VWAP as set forth in the definition of Cash Exchange Payment, as applicable. Any deemed payment pursuant to this Section 5.4(b)(ii)(C) shall be applied first to the amount of a Member’s Tax Loans and second to the accrued interest thereon. Such cancellation shall not require any action on the part of any Person, including New Charter or the Company.

 

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(D) In the event a Member to which Section 5.4(b)(ii)(C) would otherwise be applicable, exchanges Class B Common Units for shares of Class A Common Stock or cash in connection with an Exchange in connection with, and immediately prior to, a Change of Control, then “the VWAP of the Class A Common Stock for the twenty (20) consecutive Trading Days ending on the date preceding the date of the dissolution” or “the two-day VWAP as set forth in the definition of Cash Exchange Payment”, as applicable, shall be replaced with “the fair market value, as determined by the Board of Directors in good faith, of the per share consideration to be received by the holders of the Class A Common Stock in connection with the Change of Control.”

(E) To the extent that any holder of Class B Common Units owes any Tax Loans (or accrued and unpaid interest thereon), such holder shall keep available, free and clear of all liens, encumbrances, rights of first refusal and similar restrictions such number of its Class B Common Units as would be required to repay such Tax Loans (including accrued and unpaid interest thereon) in an exchange of such Class B Common Units for cash under the Exchange Agreement, provided, however, that such obligation shall not arise with respect to any given Tax Loan until the fifth (5th) Business Day following the date such Tax Loan is made. To the extent that, at the close of business on any Trading Day, the amount of Tax Loans (including accrued and unpaid interest thereon) owed by a Member exceeds the amount of cash that such Class B Common Units would be exchanged for in an exchange for cash under the Exchange Agreement, then, such Member shall be required to pay down such excess portion of its Tax Loans in cash within five (5) Business Days.

(iii) In the event that the Company pays any Preferred Tax Distribution, the amount treated as distributed shall be deducted from the next succeeding distribution payable pursuant to Section 5.4(a)(i)(A) with respect to such Member’s Convertible Preferred Units (and, if necessary, from any succeeding distributions thereafter), until such amounts have been fully deducted from such distribution(s) pursuant to Section 5.4(a)(i)(A). All Preferred Tax Distributions shall be treated for purposes of this Agreement as having been distributed pursuant to Section 5.4(a)(i)(A), whether or not deducted from a succeeding distribution pursuant to this Section 5.4(b)(iii).

(iv) Common Tax Distributions shall have priority over (and shall be made before) any distributions under Section 5.4(a). For the avoidance of doubt, rights to Tax Distributions shall apply to all Members holding Units and with respect to all Units.

An example of the Common Tax Distribution and Tax Loan calculation is attached as Exhibit F.

 

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(c) Limitations on Distributions. Notwithstanding any provision to the contrary contained in this Agreement, the Company shall not make a distribution to any Member on account of its interest in the Company if such distribution would violate the Act or other applicable law. A Member that receives a distribution (i) in violation of this Agreement or (ii) that is required to be returned to the Company under the Act shall return such distribution immediately upon demand therefor by the Manager or the Board of Directors.

(d) Form of Distributions. Except as otherwise set forth in this Agreement, distributions to the Members may be made in cash or in kind, or partly in cash and partly in kind, as determined by the Manager, provided that the form of any distribution shall be identical for all Common Unitholders.

(e) Withholding of Certain Amounts. The Company may withhold from any distributions otherwise payable to a Member under this Agreement any amount sufficient to satisfy any current or estimated future federal, state, local and foreign withholding tax requirements relating thereto; and any amounts so withheld, and any payment made by the Company or credit received by the Company resulting in items that the Member may use to satisfy the Member’s current or estimated future federal state, local and foreign tax liability, shall be treated as if an amount equal to such withheld amounts or items had been distributed to such Member. If such amount is not withheld and the Company is required to pay an amount to any taxing authority, each Member agrees to promptly remit such amount to the Company upon request.

(f) Distributions Made Solely With Respect to Membership Interests. Nothing in this Section 5.4 shall be applied to release any Member from its obligations pursuant to any relationship between the Company and such Member acting in a capacity other than as a Member.

(g) Successors. For purposes of determining the amount of distributions under this Section 5.4, each Member shall be treated as having received amounts received by its predecessors in respect of any of such Member’s Units. Notwithstanding anything in this Agreement to the contrary, any transferee that receives Common Units shall be treated as if such transferee had received any Tax Loans previously advanced and currently outstanding with respect to such Common Units, including for purposes of Section 5.4(b)(ii)(C).

ARTICLE VI - RESIGNATION; DISSOLUTION; TRANSFER OF MEMBERSHIP INTERESTS; ADMISSION OF NEW MEMBERS

SECTION 6.1 Member Withdrawal. No Member shall have the power or right to withdraw, otherwise resign, or require the repayment of its Capital Contribution (if any) or the redemption of its Units, prior to the dissolution and winding up of the Company, except pursuant to a Transfer of Units permitted under this Agreement as provided in Section 6.3. Notwithstanding the foregoing, the Manager shall not have the power or right to withdraw or otherwise resign without the consent the holders of a majority of the Class B Common Units.

 

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SECTION 6.2 Dissolution.

(a) Events. To the fullest extent permitted by Law, so long as the Exchange Agreement is in effect, the Company shall not be dissolved. Following such time, the Company shall be dissolved and its affairs shall be wound up on the first to occur of the following:

(i) the termination of the legal existence or the membership in the Company of the last remaining Member (unless within ninety (90) days, (x) such Member’s personal representative or nominee agrees in writing to continue the Company and to be admitted as a Member, or (y) a Member is otherwise admitted in accordance with this Agreement, in each case, effective as of the occurrence of the event that terminated the continued membership of such Member);

(ii) any event that makes it unlawful for all or substantially all of the business of the Company and its Subsidiaries to continue; and

(iii) the entry of a decree of judicial dissolution of the Company under Section 18-802 of the Act, provided, however, that no Member or its Affiliates or agents shall apply for entry of a decree of judicial dissolution of the Company under Section 18-802 of the Act at any time that the Exchange Agreement is in effect.

Except as provided in Section 6.2(a), the death, retirement, resignation, expulsion, bankruptcy or dissolution of a Member or the occurrence of any other event that terminates the continued membership of a Member in the Company shall not cause a dissolution of the Company, and the Company shall continue in existence subject to the terms and conditions of this Agreement.

(b) Actions Upon Dissolution. When the Company is dissolved, the business and property of the Company and its Subsidiaries shall be wound up and liquidated by the Manager or, in the event of the unavailability of the Manager, such other Member or other liquidating trustee as shall be named by the Manager. In such event, the Manager (or such other Member or liquidating trustee, as applicable) shall have the full right and discretion to manage such process, including the power to prosecute and defend suits, collect debts, dispose of property, settle and close the business of the Company and its Subsidiaries, discharge the liabilities of the Company and its Subsidiaries, pay reasonable costs and expenses incurred in the winding up, distribute remaining assets to Members in accordance with this Agreement and execute and file a certificate of cancellation under the Act.

(c) Priority. After the effective date of dissolution of the Company, the assets of the Company shall be distributed in the following manner and order:

(i) first, to the satisfaction (whether by payment or the reasonable provision for payment) of the liabilities of the Company to creditors, in the order of priority established by the instruments creating or governing such obligations and to the extent otherwise permitted by Law, including to the establishment of reserves which the Manager or other liquidating trustee as may be selected considers necessary for the reasonable provision for payment for (A) any known contingent, conditional or unmatured contractual claims against the Company, (B) any claim against the Company

 

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that is the subject of a pending action, suit or proceeding to which the Company is a party and (C) any claim that is not known to the Company or has not arising but that, based on the facts known to the Company, are likely to arise or to become known to the Company within ten (10) years after the date of dissolution, which reserves shall be held by the Manager (or other liquidating trustee if applicable) for the purpose of disbursing such reserves in payment in respect of any of the aforementioned claims (provided that at the expiration of such period as the Manager (or other liquidating trustee, if applicable) shall deem advisable, any balance of any such reserves not required to discharge such liabilities or obligations shall be distributed as provided in Section 6.2(c)(ii));

(ii) second, to the holders of Convertible Preferred Units pro rata according to the number of Convertible Preferred Units held by each such holder until such holder has received the aggregate Liquidation Preference of such Convertible Preferred Units and any unpaid Preferred Accrued Distribution Amounts, after giving effect to all contributions, distributions and allocations for all periods (through the time of such distribution); and

(iii) third, to the Members pro rata in accordance with their respective Percentage Interests as of the effective date of such dissolution.

(d) No Recourse. Each Member shall look solely to the assets of the Company for all distributions with respect to the Company and shall have no recourse therefor, upon dissolution or otherwise, against any Member or the Manager, except to the extent otherwise provided in the Act, the Exchange Agreement or in this Agreement, including in the event of the breach of this Agreement by the Manager. No Member shall have any right to demand or receive property other than cash upon dissolution of the Company; provided that, for the sake of clarity, the Manager shall have the right to cause the Company to make distributions of property other than cash upon dissolution of the Company based upon the fair market value of such property on the date of distribution, as reasonably determined by the Manager.

(e) Cancellation of Certificate. On completion of the distribution of the Company assets as provided in this Agreement, the Company shall file a certificate of cancellation with the Secretary of State of the State of Delaware and take such other actions as may be necessary to terminate the Company, and the Company shall at such time be terminated.

SECTION 6.3 Transfer by Members.

(a) No Member may Transfer any Units (or any part of its Membership Interest), except as expressly provided in this Section 6.3. A/N may Transfer Units if and to the extent such Transfer is (i) made in compliance with the Stockholders Agreement and Section 6.3(c), Section 6.3(d) and Section 6.5 of this Agreement or (ii) in the case of Common Units, required under the Exchange Agreement. Any member of the Charter Group may Transfer any Class A Common Units to any other member of the Charter Group. All Transfers required by the Exchange Agreement shall be permitted Transfers hereunder.

 

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(b) Any Member who Transfers any Units in accordance with this Section 6.3 shall cease to be a Member with respect to the Units so Transferred and shall no longer have any rights or privileges of a Member with respect to the Units so Transferred.

(c) Except with respect to Transfers of Units required pursuant to the Exchange Agreement, any Person who acquires any Units in accordance with this Section 6.3 that is not an existing Member of the Company shall agree to be subject to, and bound by, all of the terms and conditions of this Agreement to which the predecessor in such Units was subject, and by which such predecessor was bound by executing the Joinder Agreement in the form set forth in Exhibit C. In the event that such Person fails to do so entirely or fails to do so in a timely manner, such Person shall be deemed by its acceptance of the benefits of the acquisition of such Units to have agreed to be subject to, and bound by, all of the terms and conditions of this Agreement to which the predecessor in such Units was subject, and by which such predecessor was bound, and, only with respect to a Transfer to another A/N Party, for all purposes shall be deemed to be a Member.

(d) Except with respect to Transfers of Units required pursuant to the Exchange Agreement or Transfers of Units allowed under the second sentence of Section 6.3(a) above, no Transfer shall be given effect and no Member may Transfer any of such Member’s Units unless (in addition to such Transfer being otherwise permitted under this Section 6.3) the transferee delivers to the Company the representations set forth in Exhibit G, and the Manager determines, in its reasonable discretion (including obtaining an opinion of counsel, if deemed appropriate by the Manager), that such Transfer or attempted Transfer would not cause the Company to be treated as a “publicly traded partnership” within the meaning of Code Section 7704; it being understood that such determination shall be made reasonably promptly.

(e) Notwithstanding any provision of this Agreement to the contrary, no Transfer of Units may be made (i) except in compliance with all federal, state and other applicable Laws, including federal and state securities Laws and “blue sky” Laws (other than Transfers to the Company or New Charter as required by the Exchange Agreement), (ii) if such Transfer would cause the Company to become subject to the reporting obligations under the Exchange Act, or (iii) other than with the prior written consent of the Manager, if such Transfer would result in a termination of the Company for purposes of Section 708(b) of the Code.

(f) Any attempted Transfer of Units by any Member not permitted by or made in accordance with this Section 6.3 and Section 6.5 shall, to the fullest extent permitted by Law, be ineffective, null and void.

SECTION 6.4 Admission or Substitution of New Members.

(a) Admission. The Manager shall have the right, but not the obligation, to admit as a new Member, any Person who acquires Units from a Member or from the Company, respectively. Concurrently with the admission of a new Member, the Manager shall forthwith cause any necessary papers to be filed and recorded and notice to be given wherever and to the extent required showing the substitution of a transferee as a Member in place of the transferring Member, or the admission of an new Member, all at the expense, including payment of any professional and filing fees incurred, of the new Member.

 

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(b) Registration of Transfer. In furtherance of the foregoing, with respect to the Convertible Preferred Units, the Company shall maintain a register which, subject to such reasonable regulations as the Manager may prescribe, will provide for the registration and Transfer of Convertible Preferred Units Transferred in accordance with Section 6.3. The Manager may appoint the Transfer Agent to be the registrar and transfer agent for the purposes of registration of the Convertible Preferred Units and Transfers of such Convertible Preferred Units as provided herein. In the absence of manifest error, the register kept by or on behalf of the Company shall be conclusive as to the identity of the holders of the Convertible Preferred Units. Upon surrender of any Convertible Preferred Unit Certificate for registration of Transfer of any Convertible Preferred Units evidenced by Convertible Preferred Unit Certificate in accordance with Section 6.3, the Company shall deliver or cause to be delivered, in the name of the holder of record thereof (or the designated transferee or transferees) one or more new Convertible Preferred Unit Certificate(s) evidencing the same aggregate number of Convertible Preferred Units evidenced by the Convertible Preferred Unit Certificate so surrendered. In the case of any Transfer of Convertible Preferred Units permitted pursuant to Section 6.3, the transferor shall provide the address and other contact information for each transferee as contemplated by Section 8.6. No charge shall be imposed by the Company for such Transfer; provided, that as a condition to the issuance of any new Convertible Preferred Unit Certificate or the registration of any such Transfer, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed with respect thereto.

(c) Conditions. Subject to Section 6.3(c), the admission of any Person as a new Member shall be conditioned upon such Person’s written acceptance of and adoption of all of the terms and provisions of this Agreement by execution and delivery of the Joinder Agreement to this Agreement in the form set forth in Exhibit C.

SECTION 6.5 Right of First Refusal; Right of First Offer and Matching Right.

(a) Grant of Right of First Refusal. For as long as any Convertible Preferred Units remain outstanding, and subject to the terms and procedures set forth in Section 6.5(b) below, each A/N Party (as applicable, the “Preferred Transferor”) hereby grants to the Company a right of first refusal (the “Preferred ROFR”) over any Transfer of Convertible Preferred Units proposed to be Transferred (including to any Liberty Party (as defined in the Stockholders Agreement)) by any A/N Party (other than (i) a Transfer to any other A/N Party, (ii) a Transfer (or deemed Transfer) effected by an A/N Party in compliance with Section 4.6(c) or Section 4.6(d) of the Stockholders Agreement, or (iii) a Preferred Private Placement Offering that is conducted in compliance with this Section 6.5) (a “ROFR Covered Transfer”).

(b) Terms and Procedures. For as long as any Convertible Preferred Units remain outstanding, the Preferred Transferor shall not effect a ROFR Covered Transfer, unless it shall first comply with the following provisions:

(i) If at any time a Preferred Transferor proposes to effect, or receives an offer to effect, a ROFR Covered Transfer, then such Preferred Transferor shall promptly give the Company written notice of the Preferred Transferor’s intention

 

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to make a ROFR Covered Transfer (the “Preferred ROFR Notice”). The Preferred ROFR Notice shall specify (i) the number of Convertible Preferred Units to be Transferred (“Offered Preferred Units”), (ii) the name(s) and address(es) of the prospective transferee(s), (iii) the consideration per each Offered Preferred Unit, which shall include the cash reasonable fair market value of any non-cash consideration (the “ROFR Specified Price”), and (iv) the other material terms and conditions upon which the proposed Transfer is to be made. The Preferred ROFR Notice shall certify that the Preferred Transferor has received a bona fide firm offer from the prospective transferee(s) and in good faith believes a binding agreement for the Transfer is obtainable on the terms set forth in the Preferred ROFR Notice. The Preferred ROFR Notice shall also include a copy of any written proposal, term sheet or letter of intent or other agreement relating to the proposed Transfer. The Preferred Transferor may also enter into a definitive agreement for the proposed Transfer that is conditioned on the Company not exercising its Preferred ROFR with respect to such Transfer, and in such case the Preferred ROFR Notice shall include a copy of such definitive agreement.

(ii) Within ten (10) Business Days following the Company’s receipt of a Preferred ROFR Notice, the Company may irrevocably accept, by written notice to the Preferred Transferor (the “Company ROFR Acceptance Notice”), to acquire all or any portion of the Offered Preferred Units specified in the Preferred ROFR Notice at the ROFR Specified Price and on the other terms and conditions set forth in the Preferred ROFR Notice. If a Company ROFR Acceptance Notice is not delivered by the Company to the Preferred Transferor within such ten (10) Business Day period, then the Company will be deemed to have waived the Preferred ROFR with respect to the Offered Preferred Units to the extent set forth in Section 6.5(b)(iv). For the avoidance of doubt, during such ten (10) Business Day period, the Preferred Transferor may not effect a ROFR Covered Transfer (unless prior to the expiration thereof, the Company provides written notice to the Preferred Transferor that it is expressly waiving the Preferred ROFR with respect to the Offered Preferred Units).

(iii) Upon delivery of a Company ROFR Acceptance Notice, the Company will be obligated to buy, and the Preferred Transferor will be obligated to sell, the Offered Preferred Units specified in the Preferred ROFR Notice at the ROFR Specified Price. The closing of such sale and purchase (the “ROFR Closing”) shall occur at such time and place as the parties thereto may agree, but in any event no later than the tenth (10th) Business Day after the Company ROFR Acceptance Notice is delivered to the Preferred Transferor, or, if later, five (5) Business Days after receipt of all material required governmental and regulatory approvals for such sale and purchase. For the avoidance of doubt, during such period, the Preferred Transferor may not effect a ROFR Covered Transfer to anyone except for the Company. If any ROFR Closing does not occur within the time limits set forth in this Section 6.5(b)(iii) as a result of bad faith actions or inactions of the Company, New Charter or any of their respective Subsidiaries, or the receipt of any such governmental or regulatory approval, if any, is materially delayed due to the failure by the Company, New Charter or any of their respective Subsidiaries to use reasonable best efforts to obtain such approvals, then the Preferred Transferor shall be free to effect a ROFR Covered Transfer of any or all of the

 

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Offered Preferred Units subject to the associated Company ROFR Acceptance Notice at any price and clauses (a) and (b) of this Section 6.5 will terminate and be of no force or effect with respect to any future Transfer of Convertible Preferred Units by any A/N Party.

(iv) If the Company has waived, or is deemed to have waived, the Preferred ROFR, the Preferred Transferor shall be free to effect a ROFR Covered Transfer of all of the Offered Preferred Units with respect to which the Company has, or is deemed to have, waived the Preferred ROFR during the period of thirty (30) Business Days following the expiration of the ten (10) Business Day period specified in clause (ii) above for a price that is equal to or greater than the ROFR Specified Price. Any such Offered Preferred Units in respect of which the Preferred Transferor has not effected a ROFR Covered Transfer prior to the expiration of such thirty (30) Business Day period shall thereafter again be subject to all of the terms and conditions of this Section 6.5 with respect to any ROFR Covered Transfer.

(c) If at any time a Preferred Transferor proposes to effect a Preferred Private Placement Offering:

(i) Such Preferred Transferor shall promptly give the Company written notice of the Preferred Transferor’s intention to do so (the “Preferred Private Placement Notice”), specifying the number of Convertible Preferred Units to be Transferred in the Preferred Private Placement Offering (the “Private Placement Preferred Units”).

(ii) For ten (10) Business Days following the Company’s receipt of a Preferred Private Placement Notice (the “Preferred Private Placement ROFO Period”), the Company and the Preferred Transferor(s) will cooperate in good faith and use their respective reasonable best efforts to agree on updated assumptions in the categories set out on Exhibit I for the calculation of a then-current per-unit value of a Convertible Preferred Unit, based on market conditions as of the applicable time (the “Preferred Updated Valuation”). Other than the agreed updates to such assumptions set out on Exhibit I, the Preferred Updated Valuation will be calculated based on the same Black-Scholes methodology used to produce the valuation that determined the table set forth in Exhibit H.

(iii) Prior to the Expiration of the Preferred Private Placement Offer Period, the Company may, but is not obligated to, make a binding, irrevocable offer to purchase the Private Placement Preferred Units entirely for cash, without any financing or other contingency other than receipt of all material required governmental and regulatory approvals for such purchase, either (A) in an amount per unit greater than or equal to the Preferred Updated Valuation (a “Preferred At the Market Offer”), or (B) in an amount per unit less than the Preferred Updated Valuation or in any amount if no Preferred Updated Valuation is agreed (a “Preferred Other Offer”). The amount per unit set forth in any Preferred Other Offer shall be determined by the Company in good faith, and the Preferred Other Offer shall include the Company’s reasoning for the amount offered.

 

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(iv) Upon delivery of a Preferred At the Market Offer, the Company will be obligated to buy, and the Preferred Transferor(s) will be obligated to sell, the Preferred Private Placement Units at the price specified in such Preferred At the Market Offer.

(v) Following delivery of a Preferred Other Offer, the Preferred Transferor(s) shall be permitted to pursue a Preferred Private Placement Offering of the Preferred Private Placement Units that would provide the Preferred Transferor(s) with net proceeds per unit greater than the amount per unit set forth in the Preferred Other Offer for a period of 21 Business Days following such delivery (the “Preferred Private Placement Offering Period”). Throughout the Preferred Private Placement Offering Period, the Preferred Transferor(s) shall keep the Company apprised on a current basis of the progress of the Preferred Private Placement Offering, including the anticipated time of pricing, and permit the Company to participate as a potential buyer in the Preferred Private Placement Offering. At any time prior to 28 hours prior to the anticipated pricing of the Preferred Private Placement Offering, the Company may, but shall not be obligated to, deliver an updated Preferred Other Offer on the same terms as the then-existing Preferred Other Offer except setting forth an all cash amount per unit higher than the then-existing Preferred Other Offer. If, at the pricing of the Preferred Private Placement Offering, proceeds (net of any underwriters’ discounts or commissions) per unit to the Preferred Transferor(s) would be less than or equal to the amount per unit set forth in the Preferred Other Offer (taking into account any updates made prior to 28 hours prior to such pricing), then the Preferred Transferor(s) will be obligated to sell, and the Company will be obligated to buy, the Preferred Private Placement Units at the price specified in the Preferred Other Offer (taking into account any updates made prior to 28 hours prior to such pricing). If, at the pricing of the Preferred Private Placement Offering, proceeds (net of any underwriters’ discounts or commissions) per unit to the Preferred Transferor(s) would be greater than the amount per unit set forth in the Preferred Other Offer (taking into account any updates made prior to 28 hours prior to such pricing), then the Preferred Transferor(s) shall be permitted to consummate the Preferred Private Placement Offering at a price (net of underwriters’ discounts and commissions) that is at or above the price set forth in the Preferred Other Offer. At any time during the Preferred Private Placement Offering, the Preferred Transferor(s) may, but are not obligated to, abandon the Preferred Private Placement Offering and accept the then-existing Preferred Other Offer. If the Company updates its Other Offer in accordance with this paragraph, the Company will also pay the reasonable fees and expenses of the advisors of the Preferred Transferor(s) in the marketing process of the Preferred Private Placement Offering.

(vi) If the Company does not make any Preferred At the Market Offer or Preferred Other Offer before the expiration of the Preferred Private Placement ROFO Period, the Preferred Transferors shall be free to pursue and consummate a Preferred Private Placement Offering for a period of 21 Business Days following the expiration of

 

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the Preferred Private Placement ROFO Period without any restraint as to pricing. The Preferred Transferor(s) shall permit the Company to participate as a potential buyer in the Preferred Private Placement Offering.

(vii) The closing of any sale by Preferred Transferor(s) and purchase by the Company in accordance with clauses (iv) and (v) of this Section 6.5(c) shall occur at such time and place as the parties thereto may agree, but as promptly as reasonably practicable and in any event no later than the tenth (10th) Business Day after the obligation to purchase and sell becomes effective, or, if later, five (5) Business Days after receipt of all material required governmental and regulatory approvals for such sale and purchase. For the avoidance of doubt, during such period, the Preferred Transferor may not effect a Preferred Private Placement Offering. If (A) any such purchase and sale does not occur within the time limits set forth in this Section 6.5(c)(vii) as a result of bad faith actions or inactions of the Company, New Charter or any of their respective Subsidiaries, or (B) the receipt of any such governmental or regulatory approval, if any, is materially delayed due to the failure by the Company, New Charter or any of their respective Subsidiaries to use reasonable best efforts to obtain such approvals, then the Preferred Transferor shall be free to pursue and consummate a Preferred Private Placement Offering of any or all of the Private Placement Preferred Units that were to be so purchased and sold without any restraint as to pricing and, in the case of clause (A), this Section 6.5(c) will terminate and be of no force or effect with respect to any future Transfer of Convertible Preferred units by any A/N Party.

ARTICLE VII - REPORTS TO MEMBERS; TAX MATTERS

SECTION 7.1 Books of Account. Appropriate books of account shall be kept by the Company and its Subsidiaries, in accordance with the generally accepted accounting principles of the United States, at the principal place of business of the Company, and each Member shall have access to all books, records and accounts of the Company and its Subsidiaries and the right to make copies thereof for any purpose reasonably related to the Member’s interest as a member of the Company, in each case, under such conditions and restrictions as the Manager may reasonably prescribe.

SECTION 7.2 Reports. All references to Members in this Section 7.2 refer to only those Members holding at least one percent (1%) of the Common Units then held by all Members.

(a) Quarterly Tax Reports. As promptly as possible, but in no event later than fifteen (15) days prior to the estimated tax due date of each fiscal quarter (i.e., no later than March 31, May 31, August 31 and November 30) the Manager shall cause to be prepared and delivered to each Member statements of the Common Per Unit Tax Distribution Amount and the Preferred Per Unit Tax Distribution Amount for such fiscal quarter, as applicable, as well as a calculation of the Assumed Tax Rate.

(b) Schedules K-1. Within sixty (60) days after the close of each taxable year, the Manager shall cause to be provided to each Member an estimate of taxable income for such

 

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taxable year. Within two hundred and ten (210) days after the close of each taxable year, the Manager shall cause to be provided any completed IRS Schedule K-1 and such other financial, tax or other information as reasonably requested by a Member at such times as may be required to comply with any applicable public disclosure, external financial reporting, federal, state or local tax filings or any other legal requirements to which such Member is subject.

(c) Members’ Tax Filings. To the extent permitted by the Code, each Member agrees to file all tax returns consistently with the treatment of the Company as a partnership with respect to the determination of the taxable income of the Company.

(d) Access to Information. The Manager shall not have the authority to withhold any confidential information from the Members. Any Member shall have the right to access any information of the Company on a reasonable basis so long as the Member keeps such information confidential pursuant to Section 8.4.

(e) Determinations. All determinations, valuations and other matters of judgment required to be made for non-tax accounting purposes under this Agreement shall be made in the Manager’s sole discretion.

SECTION 7.3 Fiscal Year. The fiscal year of the Company (the “Fiscal Year”) shall end on December 31 of each calendar year unless otherwise determined by the Manager in accordance with Section 706 of the Code.

SECTION 7.4 Certain Tax Matters.

(a) Certain Tax Elections.

(i) Partnership Treatment. The Company shall not file any election pursuant to Regulations Section 301.7701-3(c) to be treated as an entity other than a partnership. The Company shall not elect, pursuant to Section 761(a) of the Code, to be excluded from the provisions of subchapter K of the Code. If requested by the Manager, each Member agrees to provide the Company with such assistance as would be required (including signing any election forms) to cause any new direct or indirect Subsidiaries acquired by the Company or any of its Subsidiaries or organized by the Company or any of its Subsidiaries to elect to be treated as a partnership or disregarded entity for U.S. federal tax purposes, such election to be effective on or before the date such new Subsidiary is acquired or organized.

(ii) Elections by the Company. Except as provided in Section 7.4(a)(i), relating to the tax classification of the Company, and Section 7.4(a)(v) relating to Section 754 elections, the Manager may make, but shall not be obligated to make, any tax election provided under the Code, or any provision of state, local or foreign tax Law. All decisions and other matters concerning the computation and allocation of items of income, gain, loss, deduction and credit among the Members, and accounting procedures not specifically and expressly provided for by the terms of this Agreement, shall be determined by the Manager. Any determination made pursuant to this Section 7.4(a)(ii) by the Manager shall be conclusive and binding on all Members.

 

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(iii) Elections by Members. Without the consent of the Manager, no Member shall make the election provided by Section 732(d) of the Code, relating to the basis of property distributed by a Company to certain Members. In the event any Member makes any tax election that requires the Company to furnish information to such Member to enable such Member to compute its own tax liability, or requires the Company to file any tax return or report with any tax authority, or adjust the basis of Company property, in any case that would not be required in the absence of such election made by such Member, the Manager may, as a condition to furnishing such information, or filing such return or report, or making such basis adjustment, require such member to pay to the Company any incremental expenses incurred in connection therewith.

(iv) Member Obligations. Promptly upon request, each Member shall provide the Manager with any information related to such Member necessary to allow the Company to comply with any tax reporting, tax withholding or tax payment obligations of the Company.

(v) Section 754 Elections. The Members recognize and agree that a valid election pursuant to Section 754 of the Code will be made for the first relevant taxable year during which a distribution of partnership property or transfer of a partnership interest occurs and shall be in full effect in respect of the Company, and that no Member shall take any action to affect the effectiveness or validity of such election. In addition:

(A) the Manager shall make such adjustments to the definition of Gross Asset Value and Net Income and Net Loss, and to the Regulatory Allocations required by Section 5.3(c) as are necessary to carry out the provisions of Regulations Section 1.704-1(b)(2)(iv)(m)(2) and 1.704-1(b)(2)(iv)(m)(4); and

(B) a Member who acquires any Units shall furnish to the Manager such information as the Manager shall reasonably require to enable it to compute the adjustments required by Sections 743 and 755 of the Code and the Regulations thereunder.

(vi) Notice 2015-54. The Charter Group and the Manager shall ensure that (i) the Company is not treated as a 721(c) partnership and (ii) no foreign person related to any member of the Charter Group is a direct or indirect partner in the Company, each within the meaning of IRS Notice 2015-54.

(b) Preparation of Returns. The Manager shall cause to be prepared all federal, state, and local tax returns of the Company for each year for which such returns are required to be filed and shall cause such returns to be timely filed. Except to the extent otherwise expressly provided in this Agreement, the Manager shall determine the appropriate treatment of each item of income, gain, loss, deduction and credit of the Company and the accounting methods and conventions under the tax Laws of the United States, the several states and other relevant jurisdictions as to the treatment of any such item or any other method or procedure related to the preparation of such tax returns. Notwithstanding the foregoing, with

 

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respect to any allocation under Section 704(c) of the Code, (a) the Manager shall provide the draft allocation and supporting calculations in sufficient detail to A/N reasonably in advance of any applicable filing due date (taking into account any applicable extensions) for A/N’s review; and (b) the Manager shall consider in good faith any of A/N’s comments thereon; it being understood that if the Manager and A/N are unable to reach an agreement with respect to any allocation under Section 704(c) of the Code, the Manager’s determination shall control.

(c) Tax Matters Member.

(i) Designation and Powers. The partnership representative within the meaning of Section 6223(a) of the Code, and the tax matters partner within the meaning of Section 6231(a)(7) of the Code prior to the amendment by the Bipartisan Budget Act of 2015 (the “Pre-Amendment Code”), shall be, in each case, the Manager or the Manager’s designee (the “Tax Matters Member”). The Tax Matters Member shall have all of the rights, authority and power, and shall be subject to all of the obligations, as applicable, of a tax matters partner to the extent provided in the Pre-Amendment Code and the Regulations relating to the Pre-Amendment Code, and of a partnership representative to the extent provided in the Code and Regulations. The Tax Matters Member shall take such action as may be reasonably necessary to cause each other eligible Member to become a “notice partner” within the meaning of Section 6231(a)(8) of the Pre-Amendment Code. To the extent and in the manner provided by applicable Code sections and Regulations thereunder, the Tax Matters Member (i) shall furnish the name, address, profits interest and taxpayer identification number of each Member to the IRS and (ii) shall keep the Members informed of all administrative and judicial proceedings for the adjustment of Company items required to be taken into account by a Member for income tax purposes. The Tax Matters Member shall notify the other Members within forty-five (45) Business Days after it receives notice from the IRS (or any state and local tax authority), of any administrative proceeding with respect to an examination of, or proposed adjustment to, any Company tax items.

(ii) Member Retained Rights. The Tax Matters Member shall notify the other Members, within ten (10) Business Days after it receives notice from the IRS, of any administrative proceeding with respect to an examination of, or proposed adjustment to, any Company tax items. The Tax Matters Member shall provide the other Members with notice of its intention to extend the statute of limitations or file a tax claim in any court at least twenty (20) days before taking such action. In the event that the other Members notify the Tax Matters Member of their intention to represent themselves, or to obtain independent counsel and other advisors to represent them, in connection with any such examination, proceeding or proposed adjustment, the Tax Matters Member agrees to supply the other Members and their counsel and other advisors, as the case may be, with copies of all written communications received by the Tax Matters Member with respect thereto, together with such other information as they may reasonably request in connection therewith. The Tax Matters Member further agrees, in that event, to cooperate with the other Members and their counsel and other advisors, as the case may be, in connection with their separate representation, to the extent reasonably practicable and at the sole cost and expense of such other Members.

 

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In addition to the foregoing, the Tax Matters Member shall notify the other Members at least twenty (20) days prior to submitting a request for administrative adjustment on behalf of the Company.

(iii) State and Local Tax Law. If any state or local tax Law provides for a tax matters partner, partnership representative or person having similar rights, powers, authority or obligations, the Tax Matters Member shall also serve in such capacity. In all other cases, the Tax Matters Member shall represent the Company in all tax matters to the extent allowed by Law.

(iv) Expenses of the Tax Matters Member. All reasonable out-of-pocket expenses incurred by the Tax Matters Member in its capacity as such shall be borne by the Company as an ordinary expense of its business. Such expenses shall include fees of attorneys and other tax professionals, accountants, appraisers and experts, filing fees and reasonable out-of-pocket costs.

(v) Inconsistent Return Positions. No Member shall file a notice with the IRS under Section 6222(b) of the Pre-Amendment Code in connection with such Member’s intention to treat an item on such Member’s federal income tax return in a manner that is inconsistent with the treatment of such item on the Company’s federal income tax return, unless such Member has, not less than thirty (30) days prior to the filing of such notice, provided the Tax Matters Member with a copy of the notice and thereafter in a timely manner provides such other information related thereto as the Tax Matters Member shall reasonably request.

(vi) Election into TEFRA. In the event that the Company is not subject to the consolidated audit rules of Sections 6221 through 6234 of the Pre-Amendment Code, during any Fiscal Year, then so long as such rules remain in effect, each Person who was a Member at any time during such Fiscal Year hereby agrees to sign an election pursuant to Section 6231(a)(1)(B)(ii) of the Pre-Amendment Code and Section 301.6231(a)(1)-1(b)(2) of the Regulations thereunder, to be filed with the Company’s federal income tax return for such Fiscal Year to have such consolidated audit rules apply to the Company.

(vii) Bipartisan Budget Act of 2015 Elections. The Company will not elect into the partnership audit procedures enacted under Section 1101 of the Bipartisan Budget Act of 2015 (the “BBA Procedures”) for any tax year beginning before January 1, 2018, and, to the extent permitted by applicable law and regulations, the Company will annually elect out of the BBA Procedures for tax years beginning on or after January 1, 2018. For any year in which A/N (or any Affiliate of A/N) is a member and for which applicable law and regulations do not permit the Company to elect out of the BBA Procedures, then within forty-five (45) days of any notice of final partnership adjustment, the Company will elect the alternative procedure under Section 6226 of the Internal Revenue Code of 1986, as amended by Section 1101 of the Bipartisan Budget Act of 2015, and furnish to the Internal Revenue Service and each partner of the Company during the year or years to which the notice of final partnership adjustment relates a statement of the partner’s share of any adjustment set forth in the notice of final partnership adjustment.

 

72


(d) Treatment of the Contribution.

(i) The Members agree that the contribution of property by A/N to the Company pursuant to Section 2.2(a) of the Contribution Agreement and the issuance of Convertible Preferred Units and Class B Common Units to A/N pursuant to Section 2.3(a)(i) of the Contribution Agreement shall be deemed to occur on the Closing Date (the “Effective Time”) in accordance with the sequence as set forth in Exhibit E, and after such Effective Time on the Closing Date, the Company will incur a new and separate nonrecourse borrowing which shall be considered a nonrecourse liability pursuant to Section 752 (which may be in the form of senior debt, a new term loan or any combination thereof), in an amount of at least $2,021,497,036 (the “Borrowing”) in a manner such that, for purposes of Regulations Section 1.707-5(b)(1), $2,021,497,036 of the Cash Consideration (as defined in the Contribution Agreement and subsequently revised) paid pursuant to Section 2.3(a)(i) of the Contribution Agreement is allocable to the proceeds of such borrowing pursuant to Regulations Section 1.163-8T.

(ii) The Members acknowledge that Bright House Networks, LLC is a disregarded entity pursuant to Regulations Section 301.7701-3, and that for income tax purposes, the contribution by A/N of its interest in the TWEAN Partnership (as defined in the Contribution Agreement) to the Company in satisfaction of its obligation to contribute all of the issued and outstanding limited liability company membership interests of Bright House Networks, LLC to the Company shall be treated as a contribution of the Bright House Networks, LLC assets, subject to the Bright House Networks, LLC liabilities (the “A/N Contributed Property”).

(iii) The Members acknowledge that, for income tax purposes, the receipt of the Cash Consideration (as defined in the Contribution Agreement and subsequently revised) by A/N shall be treated (A) as a “debt-financed transfer” to A/N under Regulations Section 1.707-5(b)(1) to the extent the “debt-financed transfer” is traceable to A/N’s allocable share, determined under Regulations Section 1.707-5(b)(2), of the Borrowing, and (B) to the extent not otherwise treated as a “debt-financed transfer” pursuant to the preceding clause, as a reimbursement of A/N’s capital expenditures within the meaning of Regulations Section 1.707-4(d) to the extent of the A/N capital expenditures with respect to the A/N Contributed Property within the two-year period preceding the transfer of such property to the Company, but only to the extent that A/N provides information reasonably satisfactory to the Manager (or the Manager’s accountants) with respect to such expenditures.

(iv) The Members acknowledge that, for income tax purposes, transfers of money or other consideration by the Company to members of the Charter Group (including distributions and deemed distributions) shall be treated as reimbursement for capital expenditures to the extent permitted by Regulations Section 1.707-4(d) but only to the extent that the Charter Group provides information reasonably satisfactory to the Manager (or the Manager’s accountants) with respect to such expenditures.

 

73


SECTION 7.5 Certain Business Combinations. Any business combination involving New Charter, Charter Holdings or any other member of the Charter Group entered into prior to the fifth anniversary of the date of this Agreement that results in the imposition of any tax on any A/N Party shall be structured so that any consideration paid to any A/N Party in respect of such A/N Party’s Class B Common Units or Convertible Preferred Units shall be at least forty-percent (40%) cash.

ARTICLE VIII - MISCELLANEOUS

SECTION 8.1 Exhibits. Without in any way limiting the provisions of Section 7.2, the Manager may from time to time execute on behalf of the Company and deliver to the Members exhibits which set forth the then-current Capital Account balances of each Member and any other matters deemed appropriate by the Manager or required by applicable Law. Such exhibits shall be for information purposes only and shall not be deemed to be part of this Agreement for any purpose whatsoever.

SECTION 8.2 Governing Law; Severability; Selection of Forum; Waiver of Trial by Jury. THIS AGREEMENT IS GOVERNED BY AND SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, EXCLUDING ANY CONFLICT-OF-LAWS RULE OR PRINCIPLE THAT MIGHT REFER THE GOVERNANCE OR THE CONSTRUCTION OF THIS AGREEMENT TO THE LAW OF ANOTHER JURISDICTION. In the event of a direct conflict between the provisions of this Agreement and any provision of the Certificate, this Agreement shall control; in the event of a direct conflict between the provisions of this Agreement and any mandatory provision of the Act, the applicable provision of the Act shall control. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. If any provision of this Agreement, or the application thereof to any Person or circumstance, is invalid or unenforceable to any extent, (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 or circumstances shall not be affected by such invalidity or unenforceability, and such invalidity or unenforceability shall not affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction. Each party agrees that it shall bring any action, suit, demand or proceeding (including counterclaims) in respect of any claim arising out of or related to this Agreement or the transactions contemplated hereby, exclusively in the Court of Chancery of the State of Delaware or, solely if that court does not have subject matter jurisdiction, any federal court sitting in the State of Delaware (the “Chosen Courts”), and solely in connection with claims arising under this Agreement or the transactions contemplated hereby (i) irrevocably submits to the exclusive jurisdiction of the Chosen Courts, (ii) waives any objection to laying venue in any such action, suit, demand 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 and (iv) agrees that service of process upon such party in any such

 

74


action, suit, demand or proceeding shall be effective if notice is given in accordance with Section 8.6. Each party irrevocably waives any and all right to trial by jury in any action, suit, demand or proceeding (including counterclaims) arising out of or related to this Agreement or the transactions contemplated hereby.

SECTION 8.3 Successors and Assigns; No Third-Person Beneficiaries. This Agreement is binding upon the parties to this Agreement and their respective permitted successors and assigns. This Agreement shall not be construed so as to confer any right or benefit upon any Person other than the parties to this Agreement and each of their respective permitted successors and assigns and other than the Covered Persons with respect to Section 4.6.

SECTION 8.4 Confidentiality. The Company shall use reasonable best efforts to preserve the confidentiality of the confidential information of the Company and its Subsidiaries. By executing this Agreement, for the period during which a Member is a party to this Agreement and for two (2) years thereafter, each Member expressly agrees to maintain the confidentiality of, and not to disclose to any Person other than the Company or its Subsidiaries, another Member or any of their respective financial advisors, accountants, attorneys or other advisors, without the consent of Manager but subject to the first sentence of this Section 8.4, any information relating to the business, financial structure, financial position or financial results, customers, suppliers or affairs of the Company and its Subsidiaries, except (i) as otherwise required by Law or by any Government Entity or Self-Regulatory Organization having jurisdiction over such Members; provided, that the disclosing Member will exercise reasonable best efforts to minimize disclosure of such information that is confidential or proprietary and to seek confidential treatment for any such information to the maximum extent permissible, (ii) the delivery by a Member of financial statements of the Company and its Subsidiaries to its direct or indirect partners, stockholders or members, provided that such parties are bound by appropriate confidentiality provisions, including in their ability to use such information, (iii) the disclosure of any information that was or becomes available to such Member on a non-confidential basis from a source other than the Company or its representatives, financial advisors, accountants, attorneys or other advisors provided such other source is not known by such Member, after reasonable inquiry, to be bound by a confidentiality obligation with respect to such information, or (iv) the disclosure of any information that was or becomes generally available to the public (other than as a result of a breach by such Member of this Agreement). This provision shall survive any termination of this Agreement either generally or in regard to any Member. Each Member agrees that monetary damages may not be an adequate remedy for a breach of this Section 8.4, and that, in addition to any other remedies, each Member shall be entitled to seek injunctive relief to restrain any such breach, whether threatened or actual, without the necessity of proving the inadequacy of monetary damages as a remedy.

SECTION 8.5 Amendments. No amendment of any provision of this Agreement shall be effective against the Company or the Members unless such amendment is approved by the Manager or holders of a majority of the outstanding Common Units, except as otherwise expressly provided herein and without limiting Section 4.2(b). This Agreement and any provision hereof may only be waived by a writing signed by the party against whom the waiver is to be effective. The failure of any party to enforce any of the provisions of this Agreement

 

75


shall in no way be construed as a waiver of such provisions and shall not affect the right of such party thereafter to enforce each and every provision of this Agreement in accordance with its terms.

SECTION 8.6 Notices. Whenever notice is required or permitted by this Agreement to be given, such notice shall be in writing and shall be given to any Member at its address, telecopy number or email address shown in the Company’s books and records, or, if given to the Company, at the addresses listed on Schedule I or such other address as may be designated by the parties from time to time. Each proper notice shall be effective upon any of the following: (i) personal delivery to the recipient, (ii) when telecopied or emailed to the recipient if the telecopy is promptly confirmed by automated or telephone confirmation thereof or if the email is promptly confirmed by email or telephone confirmation thereof, or (iii) one (1) Business Day after being sent to the recipient by reputable overnight courier service (charges prepaid), provided, that, unless the Company has not been provided with an email address of the applicable party, no notice telecopied or sent via reputable overnight courier service (charges prepaid), shall be effective unless the Company shall also send a copy of such notice by e-mail to the e-mail address shown in the Company’s books and records, or, if given to the Company, the e-mail addresses listed on Schedule I or such other e-mail address as may be designated by the parties from time to time.

SECTION 8.7 Counterparts. This Agreement may be executed in any number of counterparts (including by means of telecopied signature pages), each of which shall be deemed an original, and all of which together shall constitute one and the same agreement.

SECTION 8.8 Non-Circumvention. Nothing in this Agreement shall abridge or alter any rights provided for in the Stockholders Agreement. The Company agrees not take any action (or omit to take any action) that is prohibited by, or inconsistent with, the Exchange Agreement.

SECTION 8.9 Entire Agreement. This Agreement, including the Exhibits and Schedules to this Agreement, the Specified Documents and the Contribution Agreement embody the entire agreement and understanding of the parties hereto in respect of the subject matter contained in this Agreement. This Agreement supersedes all prior agreements and understandings between the parties with respect to the subject matter hereof and thereof, other than the Specified Documents.

SECTION 8.10 Specific Performance. Each party hereto acknowledges that the remedies at law of the other parties for a breach or threatened breach of this Agreement would be inadequate and, in recognition of this fact, any party to this Agreement, without posting any bond or furnishing other security, and in addition to all other remedies that may be available, shall be entitled to equitable relief in the form of specific performance, a temporary restraining order, a temporary or permanent injunction or any other equitable remedy that may then be available and no party shall oppose the granting of such relief on the basis that money damages would be sufficient.

 

76


SECTION 8.11 Control of Subsidiaries. To the extent that this Agreement obligates the Company or any member of the Charter Group other than New Charter, New Charter shall take all action necessary to ensure that such party fulfills its obligations hereunder.

[THE REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY — SIGNATURE PAGES FOLLOW]

 

77


IN WITNESS WHEREOF, the parties have executed this Amended and Restated Limited Liability Company Agreement as of the day and year first above written.

 

  THE COMPANY:
  CHARTER COMMUNICATIONS HOLDINGS, LLC
By:  

/s/ Charles Fisher

  Name:   Charles Fisher
  Title:   Senior Vice President, Corporate Finance
  NEW CHARTER:
  CHARTER COMMUNICATIONS, INC.
By:  

/s/ Charles Fisher

  Name:   Charles Fisher
  Title:   Senior Vice President, Corporate Finance
  THE MEMBERS:
  CCH II, LLC
By:  

/s/ Charles Fisher

  Name:   Charles Fisher
  Title:   Senior Vice President, Corporate Finance
  ADVANCE/NEWHOUSE PARTNERSHIP
By:  

/s/ Steven A. Miron

  Name:   Steven A. Miron
  Title:   Chief Executive Officer

 

Signature Page to the Amended and Restated

Limited Liability Company Agreement of Charter Communications Holdings, LLC


SCHEDULE I

Members

 

Members

  

Notice Address

   No. of
Class A
Common
Units Held
    No. of
Class B
Common
Units Held
     No. of
Convertible
Preferred
Units Held
 

CCH II, LLC

  

400 Atlantic Street, 10th Floor

Stamford, Connecticut 06901

Attn: General Counsel

Facsimile: (203) 564-1377

Email: rick.dykhouse@chartercom.com

           0         0   

Advance/Newhouse Partnership

  

Advance/Newhouse Partnership

c/o Sabin Bermant & Gould LLP

One World Trade Center, 44th Floor

New York, NY 10007

Attn: Managing Partner

Facsimile: (212) 381-7232

E-Mail: rhuber@sabinfirm.com

     0        30,995,834         25,000,000   

Total

   N/A            30,995,834         25,000,000   
     

 

 

   

 

 

    

 

 

 

 

* To be equal to the number of shares of Class A Common Stock outstanding at the Close of Business on the Closing Date. Currently estimated at 270.4 million.

 

Schedule I to the Amended and Restated

Limited Liability Company Agreement of Charter Communications Holdings, LLC


EXHIBIT A

EXAMPLE CALCULATION OF ASSUMED TAX RATE FOR ORDINARY INCOME OF INDIVIDUAL MEMBER

 

Federal Income Tax Rate

     39.60

Net Investment Income Tax Rate

     3.80

New York State Income Tax Rate

     8.82

New York City Income Tax Rate

     3.88

Itemized Deduction Benefit

     -4.21 %a 
  

 

 

 

Total Tax Rate

     51.89
  

 

 

 

 

a. Itemized Deduction Tax Benefit on New York State/City Income Tax

 

New York State Income Tax Rate

     8.82

New York City Income Tax Rate

     3.9
  

 

 

 

Combined New York State and City Income Tax Rate

     12.70

Less : 3% Reduction in Itemized Deductions

     -3.0
  

 

 

 

Net State/City Income Tax Deduction

     9.70

Combined Federal Income and Net Investment Income Tax Rate

     -x43.40
  

 

 

 

Itemized Deduction Benefit

     -4.21 %a 
  

 

 

 

 

A-1


EXHIBIT B

FORM OF CONVERTIBLE PREFERRED UNIT CERTIFICATE

Certificate Evidencing Convertible Preferred Units

in

Charter Communications Holdings, LLC

 

No. Convertible Preferred Units-[            ]    [            ] Units

In accordance with the Amended and Restated Limited Liability Company Agreement, dated as of May 18, 2016 (as amended, supplemented or restated from time to time, the “Agreement”) of Charter Communications Holdings, LLC, a Delaware limited liability company (the “Company”), the Company hereby certifies that [            ] (the “Holder”) is the registered owner of [            ] Convertible Preferred Unit(s) in the Company (the “Convertible Preferred Units”) transferable on the books of the Company, in person or by duly authorized attorney, upon surrender of this Certificate properly endorsed. The rights, preferences and limitations of the Convertible Preferred Units are set forth in, and this Certificate and the Convertible Preferred Units represented hereby are issued and shall in all respects be subject to the terms and provisions of, the Agreement. The Agreement is on file at, and a copy will be furnished without charge on delivery of written request to the Company, the principal office of the Company located at [●], or such other address as may be specified by notice under the Agreement. Capitalized terms used herein but not defined shall have the meanings given them in the Agreement.

The holder of this Certificate, by acceptance of this Certificate, shall be deemed to have to have agreed to be subject to and bound by all of the terms and conditions of the Agreement. Any attempted transfer of this Certificate or the Convertible Preferred Units not in accordance with the Agreement shall be null and void ab initio.

This Certificate is governed by and shall be construed in accordance with the laws of the State of Delaware, excluding any conflict-of-laws rule or principle that might refer the governance or the construction of this Agreement to the law of another jurisdiction.

This Certificate shall not be valid for any purpose unless it has been countersigned and registered by the Transfer Agent.

 

Dated:
Charter Communications Holdings, LLC
By:  

 

  Name:
  Title:
Countersigned and Registered by:

 

as Transfer Agent

 

B-1


(reverse side of certificate)

THE CONVERTIBLE PREFERRED UNITS REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY OTHER APPLICABLE SECURITIES LAWS. SUCH UNITS MAY NOT BE SOLD, ASSIGNED, PLEDGED OR OTHERWISE TRANSFERRED AT ANY TIME WITHOUT EFFECTIVE REGISTRATION UNDER SUCH ACT AND LAWS OR AN EXEMPTION THEREFROM.

THE CONVERTIBLE PREFERRED UNITS REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER SPECIFIED IN THE AGREEMENT, INCLUDING THE CONDITION THAT SUCH TRANSFER NOT CAUSE THE COMPANY TO BE TREATED AS A “PUBLICLY TRADED PARTNERSHIP” WITHIN THE MEANING OF SECTION 7704 OF THE CODE. ANY TRANSFER IN VIOLATION OF SUCH RESTRICTIONS SHALL BE NULL AND VOID.

The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations:

 

TEN COM                    Custodian
    as tenants in common    UNIF GIFT MIN ACT –   
TEN ENT           (Cust)
    as tenants by the entireties       (Minor)
JT TEN    

as joint tenants with right of

survivorship and not as tenants in common

     

under Uniform Transfers/Gifts to Minors Act             

        (State)

Additional abbreviations may also be used though not in the above list.

FOR VALUE RECEIVED,              hereby sell, assign and transfer unto

Please insert Social Security or other identifying number of Assignee

 

 

 

(Please print or typewrite name and address, including zip code, of Assignee)

            units represented by the Certificate, and do hereby irrevocably constitute and appoint             Attorney to transfer the said units on the books of the Company with full power of substitution in the premises.

Dated                     .

 

NOTE: The signature to any endorsement hereon must correspond with the name as written upon the face of this Certificate in every particular, without alteration, enlargement or change.

 

B-2


SIGNATURE(S) MUST BE GUARANTEED BY A MEMBER FIRM OF THE NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC. OR BY A COMMERCIAL BANK OR TRUST COMPANY    

 

(Signature)

SIGNATURE(S) GUARANTEED    
   

 

    (Signature)

No transfer of the Convertible Preferred Units evidenced hereby will be registered on the books of the Company unless the Certificate evidencing the Convertible Preferred Units to be transferred is surrendered for registration of transfer. No transfer of the Convertible Preferred Units evidenced hereby will be registered on the books of the Company unless the transferee executes and delivers a Joinder Agreement in the form set forth in Exhibit C to the Agreement, as such form of Joinder Agreement may be amended from time to time.

 

B-3


EXHIBIT C

JOINDER AGREEMENT

The undersigned is executing and delivering this Joinder Agreement pursuant to Section 6.4(c) of the Amended and Restated Limited Liability Company Agreement, dated as of May 18, 2016 (as amended, supplemented or restated from time to time, the “Agreement”) of Charter Communications Holdings, LLC, a Delaware limited liability company (the “Company”). Capitalized terms used herein but not otherwise defined herein have the meanings ascribed to them in the Agreement.

By executing and delivering this Joinder Agreement to the Agreement, the undersigned hereby agrees to be bound by, and to comply with the provisions of the Agreement in the same manner as if the undersigned were an original signatory to the Agreement and agrees, pursuant to Section 6.3(c) of the Agreement, to assume the responsibility of the Transferring Member in respect of the Units Transferred by such Transferring Member.

[Notwithstanding anything to the contrary herein or in the Agreement, the undersigned shall not become a Member of the Company unless and until agreed to in writing by the Manager.] [applicable for non-A/N Parties]

[By executing and delivering this Joinder Agreement to the Agreement, the undersigned hereby agrees to become a Member of the Company.] [only for A/N Parties]

This Joinder Agreement is governed by and shall be construed in accordance with the laws of the State of Delaware, excluding any conflict-of-laws rule or principle that might refer the governance or the construction of this Agreement to the law of another jurisdiction.

Accordingly, the undersigned has executed and delivered this Joinder Agreement as of the      day of             , 2        .

 

 

Signature of Unitholder

 

Print Name of Unitholder

 

C-1


EXHIBIT D

FORM OF CONVERSION NOTICE

The undersigned holder(s) of Convertible Preferred Units of Charter Communications Holdings, LLC, a Delaware limited liability company (the “Company”, such units, the “Convertible Preferred Units” and the holder(s) thereof, the “Holder(s)”) hereby tenders for conversion [            ] Convertible Preferred Units [represented by certificate no(s). [    ] which [has/have] been enclosed with this Conversion Notice] in accordance with the terms of Section 3.3(a) of the Amended and Restated Limited Liability Company Agreement, dated as of May 18, 2016 (as amended, supplemented or restated from time to time, the “Agreement”) of the Company. The undersigned Holder surrenders such Convertible Preferred Units as of the Conversion Date set forth below. Capitalized terms used but not otherwise defined herein shall have the meaning ascribed to them in the Agreement.

 

Name(s) and Address(es) of Registered Holders1

 

 
Total number of Convertible Preferred Units owned prior to the Conversion:

 

 
Number of Convertible Preferred Units to be converted:

 

 
Conversion Rate:

 

 
Conversion Date:

 

 
[Class A Common Stock/Class B Common Units]2 to be [issued by][Charter/the Company]:

 

 
Total number of Convertible Preferred Units Owned following the Conversion:

 

 

 

1  [Name must be exactly as it appears in on the books and records of the Company.]
2  [Where the Holder is A/N or any A/N Party, only Class B Common Units may be designated. Where the Holder is any Person other than A/N or any A/N Party, only Class A Common Stock may be selected.]

 

D-1


The undersigned Holder(s):

(i) directs that the [shares of Class A Common Stock/ Common Units/other consideration] deliverable pursuant to this Conversion Notice be delivered in accordance with the following instructions:

[                                         ]

(ii) represents, warrants, certifies and agrees that: (A) it has, and on the Conversion Date will have, good, valid and marketable title to the Convertible Preferred Units to be converted pursuant to this Conversion Notice, free and clear of all liens, encumbrances, rights of first refusal and similar restrictions; (B) it has, and on the Conversion Date will have, the full right, power and authority to tender and surrender such Convertible Preferred Units.

[Remainder of Page Intentionally Left Blank]

 

D-2


IN WITNESS WHEREOF, the undersigned Holder has caused this Notice of Conversion to be executed as of the date first written above.

 

[Holder]
as Holder of the Convertible Preferred Units subject to this Notice of Conversion
By:  

 

  Name:
  Title:

 

D-3


EXHIBIT E

STRUCTURE PLAN

[Attached]

 

E-1


EXHIBIT F

COMMON TAX DISTRIBUTION AND TAX LOAN CALCULATION EXAMPLE

 

F-1


Exhibit

Section 5.4(b) Tax Distributions - Illustration of Tax Distributions/Tax Loan Mechanics

Assumptions for illustrative purposes only

 

1. Charter Communications Holdings LLC (“CCH LLC”) is formed on January 1, 20X1 with two members,

Charter Communications Inc. (“Charter”) and Advance/Newhouse Partnership (“A/N”),  and

CCH LLC issues 9,000 common units to Charter and 1,000 common units to A/N.

 

2. Total U.S. federal taxable income post §704 (c) allocated to Charter is $2,000MM and A/N is $(200)MM in fiscal year 20X1.

Total U.S. federal taxable income post §704 (c) allocated to Charter is $4,000MM and A/N is $500MM in fiscal year 20X2.

Total U.S. federal taxable income post §704 (c) allocated to Charter is $6,000MM and A/N is $800MM in fiscal year 20X3.

All taxable income and loss is ordinary in character.

 

3. Assumed Tax Rate for each fiscal year 20X1, 20X2, and 20X3 is 52%

 

4. Manager elects to waive Common Tax Distributions up to the amount of Charter’s tax liability.

Assume Charter has §382 limited NOLs of $2,000MM available in fiscal year 20X1 and 20X2, and its effective tax rate is 40%.

Assume Charter has no NOLs available in fiscal year 20X3, and its effective tax rate is 40%.

Computation of Common Per Unit Tax Distribution Amount (In $MM)

 

Step 1

   Fiscal Year 20x1     Fiscal Year 20x2     Fiscal Year 20x3  
Compute Common Annual Adjusted Taxable Income    Charter     A/N     Charter     A/N     Charter     A/N  

U.S. federal taxable income allocated to each member

     2,000        (200     4,000        500        6,000        800  

Less: Cumulative U.S. federal taxable losses allocated to the member

     0        0        0        (200     0     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Common Annual Adjusted Taxable Income (not below zero)

     2,000        —         4,000        300       6,000       800   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Step 2                                     
Compute Common Cumulative Assumed Tax Liability    Charter     A/N     Charter     A/N     Charter     A/N  

Common Annual Adjusted Taxable Income

     2,000        —          4,000        300        6,000        800  

Multiplied by Assumed Tax Rate

     52     52     52     52     52     52
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Common Annual Assumed Tax Liability

     1,040        0        2,080        156        3,120        416  

Prior Fiscal Years Assumed Tax Liability

     0        0        1,040        0        3,120        156   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Common Cumulative Assumed Tax Liability

     1,040        —          3,120        156       6,240       572   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Step 3    Fiscal Year 20x1     Fiscal Year 20x2     Fiscal Year 20x3  

Compute Common Excess Cumulative Tax Liability

and Common Per Unit Excess Cumulative Tax Liability

   Charter     A/N     Charter     A/N     Charter     A/N  

Common Cumulative Assumed Tax Liability

     1,040        0        3,120        156        6,240        572  

Minus all prior Common Tax Distributions

     0        0        0        0        (800     (89

Minus all prior Tax Loans made resulting from the waiver

     0        0        0        0        —          (67
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Common Excess Cumulative Tax Liability (not below zero)

     1,040        —          3,120        156       5,440       416   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Divided by the number of Common Units Held by each member

     9,000        1,000       9,000        1,000        9,000        1,000   

Common Per Unit Excess Cumulative Tax Liability

     0.1156        0.0000        0.3467        0.1560        0.6044        0.4160   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

F-2


Step 4

  Fiscal Year 20x1     Fiscal Year 20x2     Fiscal Year 20x3  
Compute Common per Unit Tax Distribution Amount and Common Tax Distributions before the waiver   Charter     A/N     Charter     A/N     Charter     A/N  

Common Per Unit Tax Distribution Amount

    0.1156        0.1156        0.3467        0.3467        0.6044        0.6044   

(Highest Common Per Unit Excess Cumulative Tax Liability of any member)

           

Multiply by the number of Common Units held by each member

    9,000       1,000       9,000       1,000       9,000       1,000  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Common Tax Distribution before the waiver

    1,040        116       3,120        347       5,440       604   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Step 5

                                   
Compute the amount of waiver   Charter           Charter           Charter        

Charter Taxable Income

    2,000         4,000         6,000    

Net Operating Loss Utilization

    (2,000       (2,000       0     
 

 

 

     

 

 

     

 

 

   

Charter Taxable Income after NOL

    —           2,000         6,000    

Multiply by Charter Tax Rate

    40       40       40  
 

 

 

     

 

 

     

 

 

   

Charter’s Tax Liability

    0          800          2,400    

Charter’s Annual Common Tax Distribution - Before Waiver

    1,040          3,120          5,440     

Less: Charter’s Tax Liability

    0          (800       (2,400  
 

 

 

     

 

 

     

 

 

   

Waiver (Amount Decreased)

    1,040          2,320          3,040     

Divided by the number of Common Units held by Charter

    9,000          9,000          9,000     

Charter’s Common Per Unit Waiver (Amount Decreased)

    0.1156          0.2578          0.3378     

Step 6

                                   
Compute Common Tax Distribution Amount After Waiver   Charter     A/N     Charter     A/N     Charter     A/N  

Charter’s Common Per Unit Waiver (Before Waiver)

    0.1156          0.3467          0.6044     

Less Charter’s Common Per Unit Waiver (Amount Decreased)

    (0.1156       (0.2578       (0.3378  
 

 

 

     

 

 

     

 

 

   

Common Per Unit Tax Distribution Amount After Waiver

    0.0000        0.0000        0.0889        0.0889        0.2667        0.2667   

Multiplied by the number of Common Units

    9,000        1000        9,000        1000        9,000        1000   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Common Tax Distribution Amount After Waiver

    —          —          800        89        2,400       267   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Step 7

                                   
Compute Tax Loan to A/N         A/N           A/N           A/N  

A/N’s Common Tax Distribution Before Waiver

      116         347          604  

Less: A/N’s Annual Common Distribution After Waiver

      —            (89       (267
   

 

 

     

 

 

     

 

 

 

(1) A/N’s Decrease in Tax Distribution

      116         258         337   

A/N’s Common Excess Cumulative Tax Liability Before Waiver

      —            156          416  

Less: A/N’s Annual Common Distribution After Waiver

      —            (89       (267
   

 

 

     

 

 

     

 

 

 

(2) A/N’s Common Excess Cumulative Tax Liability After Common Distribution

      —            67          149   

Tax Loan to A/N - Lesser of (1) or (2)

      —            67          149   

 

F-3


EXHIBIT G

TRANSFEREE TAX REPRESENTATIONS

Either:

 

  a. Such transferee (i) is not a flow-through entity within the meaning of Regulations Section 1.7704-1(h)(3), and (ii) is and will at all times continue to be, the sole beneficial owner of the interest to be registered in its name (which shall be interpreted to mean that the transferee is not and will not be treated as a nominee for, or agent of, another party or as anything other than the real owner of such interest for federal income tax purposes, at any time); or

 

  b. (i) Such transferee is a flow-through entity within the meaning of Regulations Section 1.7704-1(h)(3) and (ii) there is no person (a “Beneficial Owner”) that owns an interest in such transferee such that (x) substantially all of the value of the Beneficial Owner’s interest in such transferee will be attributable to such transferee’s interest (direct or indirect) in the Company; and (y) a principal purpose of the use of the tiered arrangement is to permit the Company to satisfy the 100-partner limitation in Regulations Section 1.7704-1(h)(1)(ii);

Such transferee did not purchase, and will not sell, its interest through (a) a national, foreign, regional, local or other Securities exchange, (b) PORTAL or (c) over the counter market (including an interdealer quotation system that regularly disseminates firm buy or sell quotations by identified brokers or dealers by electronic means or otherwise);

Such transferee did not purchase, and will not sell, its interest from, to or through (a) a person, such as a broker or dealer, that makes a market in, or regularly quotes prices for, such interests or (b) a person that regularly makes available to the public (including customers or subscribers) bid or offer quotes with respect to the Interest and stands ready to effect, buy or sell transactions at the quoted prices for itself or on behalf of others; and

Such transferee will only sell its interest to a buyer who provides the representations similar to these.

The representations set forth above are intended to ensure that the Company will not be treated as a corporation for federal income tax purposes as a result of any transfer. The Manager may waive any or all of the representations set forth above on the advice of counsel that the transfer of an interest to such transferee will not cause the Company to be treated as a corporation for federal income tax purposes, and shall endeavor in good faith to do so if so advised by counsel to the Company upon request for waiver by a Member proposing to transfer, or upon receipt of an opinion from legal counsel to the transferee (provided such legal counsel is of national reputation and specializes in the legal matters involved in such determination) that such transfer will not cause the Company to be treated as a publicly traded partnership within the meaning of Section 7704 of the Code. These representations may from time to time be revised by the Manager on the advice of counsel to the extent necessary to ensure that a transfer will not cause the Company to be treated as a corporation for federal income tax purposes.

 

G-1


EXHIBIT H

MAKE-WHOLE TABLE

 

    Change of Control Class A Common Stock Price  

Effective Date

  $ 191.33      $ 225.00      $ 241.07      $ 267.85      $ 275.00      $ 313.39      $ 348.21      $ 400.00      $ 450.00      $ 500.00      $ 600.00      $ 700.00      $ 800.00      $ 900.00      $ 1,000.00   

May 18, 2016

    0.14933        0.14933        0.14235        0.12045        0.11556        0.09438        0.08058        0.06598        0.05612        0.04884        0.03878        0.03211        0.02732        0.02367        0.02079   

June 30, 2017

    0.14933        0.14492        0.12829        0.10650        0.10168        0.08112        0.06808        0.05473        0.04604        0.03981        0.03146        0.02604        0.02218        0.01924        0.01692   

June 30, 2018

    0.14933        0.13296        0.11588        0.09371        0.08885        0.06847        0.05598        0.04376        0.03622        0.03105        0.02441        0.02022        0.01725        0.01499        0.01320   

June 30, 2019

    0.14933        0.12187        0.10385        0.08053        0.07548        0.05465        0.04251        0.03149        0.02533        0.02144        0.01679        0.01395        0.01194        0.01040        0.00917   

June 30, 2020

    0.14933        0.11339        0.09365        0.06766        0.06200        0.03913        0.02678        0.01724        0.01305        0.01091        0.00864        0.00724        0.00622        0.00542        0.00479   

June 30, 2021 and thereafter

    0.14933        0.11031        0.08952        0.06031        0.05344        0.02188        —          —          —          —          —          —          —          —          —     

 

H-1


EXHIBIT I

PREFERRED UNIT VALUATION ASSUMPTIONS

 

  A Black Scholes-based convertible model was used to project the value of the Convertible Preferred Units at future CHTR share prices and points in time based on the terms and conditions of the Convertible Preferred Units and certain current market-based assumptions listed below.

 

  The projected value of the Convertible Preferred Units was used to determine the make whole table that is set forth on Exhibit H.

 

  Market-based assumptions as of the date hereof to be updated in accordance with Section 6.5(c)(1):

 

    30-year reference LIBOR: 2.11%

 

    Credit spread: 610 bps

 

    Volatility: 23%

 

    Borrow Cost: 25bps per annum

 

I-1

EX-10.2

Exhibit 10.2

EXCHANGE AGREEMENT

EXCHANGE AGREEMENT (as amended from time to time in accordance with its terms, this “Agreement”), dated as of May 18, 2016 and effective as of the Effective Date (as herein defined) among Charter Communications, Inc., a Delaware corporation (formerly known as CCH I, LLC) (“New Charter”), CCH II, LLC, a Delaware limited liability company (together with any Person or Persons in the Charter Group (as defined below) to whom CCH II, LLC transfers any Units (as defined below) or who otherwise holds any Units, the “Charter Member”), Charter Communications Holdings, LLC, a Delaware limited liability company (“Charter Holdings”), Advance/Newhouse Partnership, a New York partnership (“A/N”), and such other permitted holders of Class B Common Units (as defined herein) from time to time party hereto.

WHEREAS, the parties hereto desire to establish economic equivalency between Common Units (as defined herein) and Class A Common Stock (as defined herein); and

WHEREAS, the parties hereto desire to provide for the exchange from time to time of Class B Common Units for cash or for shares of Class A Common Stock on the terms and subject to the conditions set forth herein;

NOW, THEREFORE, in consideration of the mutual covenants and undertakings contained herein and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

SECTION 1.1 Definitions. The following definitions shall for all purposes, unless the context otherwise clearly indicates, apply to the capitalized terms used in this Agreement.

Affiliate” means, with respect to any Person, any other Person, directly or indirectly, through one or more intermediaries, controlling, controlled by, or under common control with, such Person; it being understood that “control” or any correlative version thereof in this Agreement shall have the meaning ascribed thereto in Rule 12b-2 under the Exchange Act. Notwithstanding anything to the contrary set forth in this Agreement, New Charter and its Subsidiaries shall not be deemed to be Affiliates of A/N or any of its Affiliates.

Agreement” has the meaning set forth in the preamble hereto.

A/N” has the meaning set forth in the preamble hereto.

A/N Party” has the meaning set forth in the LLC Agreement.

Board of Directors” means the Board of Directors of New Charter.

Business Day” means a day, other than Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by Law to close.


Calendar Quarter” means each January 1 through March 31, April 1 through June 30, July 1 through September 30 and October 1 through December 31.

Cash Exchange Payment” means an amount in cash equal to the product of (x) the number of Class B Common Units Exchanged and (y) the VWAP of the Class A Common Stock for the two consecutive Trading Days ending on and including the Trading Day immediately prior to the date of delivery of the relevant Exchange Notice or Notice of Foreclosure; provided that in calculating such average, (i) the Closing Price for any Trading Day during the two Trading Day period prior to the Ex-Dividend Date of any extraordinary distributions made on the Class A Common Stock during the two Trading Day period shall be reduced by the value of such distribution per share of Class A Common Stock, and (ii) the Closing Price for any Trading Day during the two Trading Day period prior to the date of a Subdivision or Combination of Class A Common Stock occurring during the two Trading Day period shall automatically be adjusted in inverse proportion to such Subdivision or Combination; and provided, further, that in connection with any Exchange (other than pursuant to Section 2.1(b)) in connection with, and immediately prior to, a Change of Control, the Cash Exchange Payment shall be the fair market value, as determined by the Board of Directors in good faith, of the per share consideration to be received by the holders of the Class A Common Stock in connection with the Change of Control.

Change of Control” means any (i) merger, consolidation or other business combination of New Charter or Charter Holdings (or any of their respective Subsidiaries that alone or together represent all or substantially all of New Charter’s or Charter Holdings’ consolidated business at that time) or any successor or other entity owning or holding substantially all of the assets of New Charter or Charter Holdings and their respective Subsidiaries that results in the holders of Class A Common Stock (in the case of New Charter) or the holders of Common Units (in the case of Charter Holdings) immediately before the consummation of such transaction, or a series of related transactions, holding, directly or indirectly, less than 50% of the equity or voting power of New Charter or Charter Holdings (or any such Subsidiary or Subsidiaries) or any successor or other entity owning or holding substantially all of the assets of New Charter or Charter Holdings and their respective Subsidiaries or the surviving entity thereof, as applicable, immediately following the consummation of such transaction or series of related transactions; it being understood that such ownership shall be evaluated on a combined basis (i.e., on an as-converted, as-exchanged basis and without regard to any voting power or ownership limitation on A/N, Liberty Broadband or their respective Affiliates) so that any ownership interest in the Charter Member shall be aggregated (without duplication) with any ownership interest in Charter Holdings or any such Subsidiary of New Charter, any other member of the Charter Group or any such successor; (ii) transfer, in one or a series of related transactions, equity interests representing 50% or more of the equity or voting power of Charter Holdings or New Charter (or any of their respective Subsidiaries that alone or together represent all or substantially all of New Charter’s or Charter Holdings’ consolidated assets at that time) or any successor or other entity owning or holding substantially all of the consolidated assets of New Charter and Charter Holdings and their respective Subsidiaries, taken as a whole, to a Person or Group (other than New Charter or any of its Subsidiaries), or entitling such Person or Group to elect a majority of the board of directors or similar governing body of New Charter or Charter

 

-2-


Holdings (or such Subsidiary or Subsidiaries) or any such successor or other entity; it being understood that such ownership shall be evaluated on a combined basis (i.e., on an as-converted, as-exchanged basis and without regard to any voting power or ownership limitation on A/N, Liberty Broadband or their respective Affiliates) so that any ownership interest in the Charter Member shall be aggregated (without duplication) with any ownership interest in Charter Holdings or any such Subsidiary of New Charter or any such successor; or (iii) sale or other disposition in one or a series of related transactions of all or substantially all of the consolidated assets of New Charter or Charter Holdings and their respective Subsidiaries. Notwithstanding anything to the contrary contained herein, for purposes of determining whether a Change of Control has occurred, it shall be assumed that all Class B Common Units have been exchanged for shares of Class A Common Stock (or equity interests of any successor or other entity owning or holding substantially all of the assets of New Charter and its Subsidiaries) immediately prior to any such merger, consolidation, other business combination or transfer and there is no limitation on the voting power or ownership limitation on A/N and its Affiliates or on Liberty Broadband or its Affiliates.

Charter Group” has the meaning set forth in the LLC Agreement.

Charter Holdings” has the meaning set forth in the preamble hereto, and shall include any successor thereto.

Class A Common Stock” means the Class A Common Stock, par value $0.001 per share, of New Charter.

Class A Common Unit” means (i) a Class A Common Unit of Charter Holdings, or (ii) the common stock or other equity securities of a successor corporation or entity for which a Class A Common Unit has been converted or exchanged.

Class B Common Stock” means the Class B Common Stock, par value $0.001, of New Charter.

Class B Common Unit” means (i) a Class B Common Unit of Charter Holdings, or (ii) the common stock or other equity securities of a successor corporation or entity for which a Class B Common Unit has been converted or exchanged.

Class B Unitholder” means each holder of one or more Class B Common Units party hereto as of the date hereof or which, following the date hereof, executes a joinder pursuant to Section 4.1 hereof.

Closing Price” means, with respect to any Trading Day, the price per share of the final trade of the Class A Common Stock on such day (but not including any “after hours” trading) on the principal national securities exchange on which the Class A Common Stock is listed or admitted to trading.

Code” means the Internal Revenue Code of 1986, as amended.

 

-3-


Combination” means any combination of stock or units, as the case may be, by reverse split, reclassification, recapitalization or otherwise.

Common Units” means the Class A Common Units and the Class B Common Units.

Commission” means the U.S. Securities and Exchange Commission and any successor thereto.

Convertible Preferred Unit” means a Convertible Preferred Unit of Charter Holdings.

Convertible Preferred Unitholder” means each holder of one or more Convertible Preferred Units party hereto as of the date hereof or which, following the date hereof, executes a joinder pursuant to Section 4.1 hereof.

Date of Exchange” means (a) in the case of an exchange pursuant to an Exchange Notice, the later of (i) the date identified in such Exchange Notice or (ii) two (2) Business Days following the date of delivery of an Election Notice (or two (2) Business Days following the date on which the Manager shall have been deemed not to have made an election for Class A Common Stock to be provided in the applicable Exchange) and (b) in the case of an exchange pursuant to Section 3.5 of the LLC Agreement, five (5) Business Days following the date of the applicable Notice of Foreclosure if received by the Company.

Effective Date” means the date hereof, following the effectiveness of the LLC Agreement and the New Charter Certificate and the admission of A/N to Charter Holdings as a Member.

Election Notice” has the meaning set forth in Section 2.1(c).

Exchange” means the surrender or exchange of Class B Common Units for cash or, at the option of the Manager, shares of Class A Common Stock.

Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, as amended, or any successor federal statute, and the rules and regulations of the Commission thereunder, all as the same shall be in effect from time to time.

Exchange Notice” means a written election of Exchange substantially in the form of Exhibit A, duly executed by the applicable Class B Unitholder.

Ex-Dividend Date” means the first date on which the shares of Class A Common Stock trade on the applicable exchange or in the applicable market regular way, without the right to receive the dividend or distribution in question from New Charter, or, if applicable, from the seller of the Class A Common Stock on such exchange or market as determined by such exchange or market.

Government Entity” means any federal, state, local or foreign government, governmental subdivision, administrative body or other governmental or quasi-governmental agency, tribunal, court or other entity of competent jurisdiction.

 

-4-


Group” means “group” within the meaning of Rule 13d-3 under the Exchange Act.

Law” means any applicable law, statute, ordinance, rule, regulation, code, Order, judgment, injunction or decree enacted, issued, promulgated, enforced or entered by a Government Entity or Self-Regulatory Organization (including, for the sake of clarity, any policy statement or interpretation that has the force of law with respect to any of the foregoing, and including common law).

LLC Agreement” means the Amended and Restated Limited Liability Company Agreement of Charter Holdings, by and among New Charter, CCH II, LLC, A/N and Charter Holdings, dated as of the date hereof, as such agreement may be amended from time to time in accordance with its terms.

Manager” has the meaning set forth in the LLC Agreement.

NASDAQ” means the NASDAQ Global Select Market or any successor thereto.

New Charter” has the meaning set forth in the preamble hereto, and shall include any successor thereto.

New Charter Certificate” means the Amended and Restated Certificate of Incorporation of New Charter, as the same may be amended from time to time in accordance with its terms.

Notice of Foreclosure” has the meaning set forth in the LLC Agreement.

Order” means any order, injunction, judgment, decree, writ or other enforcement action.

Permitted Exchange Event” means one of the following events, as of the applicable Date of Exchange:

(A) the Exchange by a Class B Unitholder representing in the aggregate 2% or less of all outstanding Common Units, provided that no Date of Exchange pursuant to this clause (A) has previously occurred (or will occur pursuant to a prior, unrevoked Exchange Notice pursuant to this clause (A)) in the same Calendar Quarter as such Date of Exchange;

(B) the Exchange by a Class B Unitholder representing in the aggregate more than 2% of all outstanding Common Units; or

(C) the Exchange by a Class B Unitholder in connection with a Change of Control to the extent Common Units are not exchanged under Section 2.1(b).

Permitted Transferee” has the meaning set forth in Section 4.1.

Person” means an individual, a corporation, a partnership, an association, a limited liability company, a joint venture, a Government Entity, a trust or other entity or organization.

 

-5-


Preferred Stock” means one or more series of Preferred Stock, par value $0.001 per share, issued from time to time by New Charter.

Registration Rights Agreement” means the Registration Rights Agreement, dated as of the date hereof, by and among New Charter, A/N, Liberty Broadband and the other parties from time to time party thereto, as such agreement may be amended from time to time in accordance with its terms.

SEC” means the Securities and Exchange Commission.

Securities Act” means the Securities Act of 1933, as amended.

Self-Regulatory Organization” means NASDAQ, the New York Stock Exchange, any national securities exchange (as defined in the Exchange Act), any other securities exchange, futures exchange, contract market or other exchange or similar regulatory body or organization.

Specified Documents” means this Agreement, the LLC Agreement, the Stockholders Agreement, the Registration Rights Agreement, the Tax Receivables Agreement and the New Charter Certificate.

Stockholders Agreement” means the Second Amended and Restated Stockholders Agreement, dated as of May 23, 2015, by and among New Charter, Old Charter (as defined in the LLC Agreement), A/N and Liberty Broadband, as such agreement may be amended from time to time in accordance with its terms.

Subdivision” means any subdivision of stock or units, as the case may be, by any split, dividend, reclassification, recapitalization or otherwise.

Subsidiary” means, with respect to any Person, any other Person of which (i) a majority of the outstanding share capital, voting securities or other equity interests are owned, directly or indirectly, by such first Person and/or any other Subsidiary of such first Person or (ii) such first Person and/or any other Subsidiary of such first Person is entitled, directly or indirectly, to appoint a majority of the board of directors or comparable body of such Person.

Tax Distribution” has the meaning set forth in the LLC Agreement.

Tax Receivables Agreement” means the Tax Receivables Agreement, by and among A/N and New Charter, dated as of the date hereof, as such agreement may be amended from time to time in accordance with its terms.

Trading Day” shall mean any Business Day on which the Class A Common Stock is traded, or able to be traded, on the principal national securities exchange on which the Class A Common Stock is listed or admitted to trading.

Unitholder” means a Class B Unitholder or a Convertible Preferred Unitholder.

 

-6-


Units” has the meaning set forth in the LLC Agreement.

VWAP” means, for any specified period, with respect to any class of stock, a price per share equal to the volume-weighted average of the trading prices of such stock, as reported by Bloomberg L.P. (with respect to the Class A Common Stock, on the screen entitled “CHTR <EQUITY> AQR SEC” or its equivalent successor if such page is not available) for such period (without regard to pre-open or after hours trading outside of any regular trading session during such period).

SECTION 1.2 Interpretation. In this Agreement and in the Exhibits hereto, except to the extent that the context otherwise clearly requires:

(a) the headings are for convenience of reference only and shall not affect the interpretation of this Agreement;

(b) defined terms include the plural as well as the singular and vice versa;

(c) words importing gender include all genders;

(d) a reference to any statute, regulation or statutory or regulatory provision shall be construed as a reference to the same as it may have been or may from time to time be amended, extended, re-enacted or consolidated and to all statutory and regulatory instruments or orders made under it;

(e) references to Articles, Sections, subsections, clauses and Exhibits are references to Articles, Sections, subsections and clauses of, and Exhibits to, this Agreement;

(f) references in this Agreement to “dollars” or “$” shall mean the lawful currency of the United States of America;

(g) the words “including” and “include” and other words of similar import shall be deemed to be followed by the phrase “without limitation”; and

(h) unless otherwise specified, references to any party to this Agreement or any other document or agreement shall include its successors and permitted assigns.

The parties have participated jointly in negotiating and drafting this Agreement. If an ambiguity or a question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement.

 

-7-


SECTION 2.1 Exchange of Class B Common Units.

(a) Elective or Automatic Exchanges of Class B Common Units.

(i) In the event a Class B Unitholder wishes to effect a Permitted Exchange Event, such Class B Unitholder shall (i) deliver to Charter Holdings an Exchange Notice and (ii) surrender or, in the absence of such surrender, be deemed to have surrendered, all Class B Common Units to Charter Holdings (free and clear of all liens, encumbrances, rights of first refusal and similar restrictions) to be surrendered pursuant to such Exchange Notice.

(ii) The consideration for the Class B Common Units to be surrendered pursuant to Section 2.1(a)(i) or automatically exchanged pursuant to Section 3.5 of the LLC Agreement shall be a Cash Exchange Payment by Charter Holdings; provided, however, at the option of the Manager (on behalf of Charter Holdings), the consideration for the Class B Common Units to be surrendered pursuant to Section 2.1(a)(i) or automatically exchanged pursuant to Section 3.5 of the LLC Agreement shall be a number of shares of Class A Common Stock equal to the number of Class B Common Units surrendered or automatically exchanged. If the Manager elects, on behalf of Charter Holdings, for shares of Class A Common Stock to be provided in an Exchange, whether pursuant to Section 2.1(a)(i) or Section 3.5 of the LLC Agreement, (i) New Charter shall issue and contribute, directly or indirectly, to Charter Holdings, the number of shares of Class A Common Stock equal to the number of Class B Common Units surrendered or automatically exchanged, (ii) in consideration for the issuance and contribution described in clause (i), Charter Holdings shall issue to the Charter Member the number of Class A Common Units equal to the number of shares of Class A Common Stock issued and contributed to Charter Holdings, (iii) subject to Section 4.8 of the LLC Agreement, New Charter shall take such other actions as are necessary to preserve the 1:1 Up-C structure between New Charter and Charter Holdings as set forth in Section 2.3(a), and (iv) Charter Holdings shall (A) deliver or cause to be delivered at the offices of the then-acting registrar and transfer agent of the Class A Common Stock (or, if there is no then-acting registrar and transfer agent of the Class A Common Stock, at the principal executive offices of New Charter) the number of shares of Class A Common Stock deliverable upon such Exchange, registered in the name of the relevant surrendering Unitholder (or in such other name as is requested in writing by such Unitholder), or, in the case of an automatic exchange of Class B Common Units pursuant to Section 3.5 of the LLC Agreement, in the name of the applicable lender(s) in certificated or uncertificated form in the sole discretion of Charter Holdings, or (B) if the Class A Common Stock is settled through the facilities of The Depository Trust Company, upon the written instruction of the surrendering Unitholder set forth in the Exchange Notice or, in the case of an automatic exchange of Class B Common Units pursuant to Section 3.5 of the LLC Agreement, at the direction of the applicable lender(s) set forth in the Notice of Foreclosure, use its reasonable best efforts to deliver, or cause to be delivered, the shares of Class A Common Stock deliverable to such surrendering Unitholder or, in the case of an automatic exchange of Class B Common Units pursuant to Section 3.5 of the LLC Agreement, the applicable lender(s), in the Exchange through the facilities of The Depository Trust Company, to the account of the participant of The Depository Trust Company designated by such surrendering Unitholder in the Exchange Notice or, in the case of an automatic exchange of Class B Common Units pursuant to Section 3.5 of the LLC Agreement, at the direction of the applicable lender(s) in the Notice of Foreclosure. An Exchange of Class B Common Units pursuant to Section 2.1(a)(i) will be deemed to have been effected immediately prior to the close of business on the Date of Exchange, and an automatic exchange of Class B Common Units pursuant to Section 3.5 of the

 

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LLC Agreement shall be deemed to have been effected immediately upon foreclosure as set forth in Section 3.5 of the LLC Agreement, in each case, at which time the exchanged Class B Common Units shall be deemed cancelled (and thereby cease to exist) without any action required on the part of any Person, including New Charter or Charter Holdings; provided, however, that in the event of an Exchange hereunder in connection with, and immediately prior to, a Change of Control, other than in connection with a foreclosure, the exchange of Class B Common Units shall be deemed to be effective immediately prior to the consummation of the Change of Control. If any shares of Class A Common Stock are issued pursuant to this Section 2.1(a)(ii), the recipient will be treated as a holder of record of Class A Common Stock as of the close of business on such Date of Exchange or, in the event of an automatic exchange of Class B Common Units pursuant to Section 3.5 of the LLC Agreement, immediately upon foreclosure. Charter Holdings shall deliver (or cause to be delivered) to the exchanging Class B Unitholder or applicable lender(s) the cash consideration or certificates, if any, representing the Class A Common Stock deliverable pursuant to Section 2.1(a)(i) on or before the date that is three (3) Business Days following the Date of Exchange or, in the case of an automatic exchange of Class B Common Units pursuant to Section 3.5 of the LLC Agreement, as soon as reasonably practicable, and in any event on or before the Date of Exchange.

(b) Mandatory Exchanges. In connection with a Change of Control, and subject to any approval of the Change of Control by the holders of Class A Common Stock and Class B Common Stock required under the New Charter Certificate or applicable law, New Charter or Charter Holdings shall have the right to require each Class B Unitholder to Exchange some or all of the Class B Common Units owned by such Class B Unitholder (free and clear of all liens, encumbrances, rights of first refusal and similar restrictions), in consideration for the delivery by Charter Holdings to such Class B Unitholder of a number of shares of Class A Common Stock equal to the number of Class B Common Units required to be exchanged. Any such Exchange pursuant to this Section 2.1(b) shall be effected by the surrender or deemed surrender of the Class B Common Units to be exchanged and shall be effective immediately prior to the consummation of the Change of Control (and, for the avoidance of doubt, shall not be effective if such Change of Control is not consummated), at which time the exchanged Class B Common Units shall be deemed cancelled without any action required on the part of any Person, including New Charter or Charter Holdings. To effect the delivery of such shares of Class A Common Stock, (i) New Charter shall issue and contribute, directly or indirectly, to Charter Holdings, the number of shares of Class A Common Stock equal to the number of Class B Common Units surrendered, (ii) in consideration for the issuance and contribution described in clause (i), Charter Holdings shall issue to the Charter Member the number of Class A Common Units equal to the number of shares of Class A Common Stock issued and contributed to Charter Holdings, (iii) subject to Section 4.8 of the LLC Agreement, New Charter shall take such other actions as are necessary to preserve the 1:1 Up-C structure between New Charter and Charter Holdings as set forth in Section 2.3(a), and (iv) Charter Holdings shall (A) deliver or cause to be delivered at the offices of the then-acting registrar and transfer agent of the Class A Common Stock (or, if there is no then-acting registrar and transfer agent of the Class A Common Stock, at the principal executive offices of New Charter) the number of shares of Class A Common Stock deliverable upon such Exchange, registered in the name of the relevant surrendering Unitholder (or in such other name as is requested in writing by such Unitholder),

 

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in certificated or uncertificated form, in the sole discretion of Charter Holdings, or (B) if the Class A Common Stock is settled through the facilities of The Depository Trust Company, upon the written instruction of the surrendering Unitholder, use its reasonable best efforts to deliver, or cause to be delivered, the shares of Class A Common Stock deliverable to such surrendering Unitholder in the Exchange through the facilities of The Depository Trust Company, to the account of the participant of The Depository Trust Company designated by such surrendering Unitholder. If any shares of Class A Common Stock are issued pursuant to this Section 2.1(b), the recipient will be treated as a holder of record of Class A Common Stock as of immediately prior to the consummation of the Change of Control. New Charter shall provide written notice of an expected Change of Control to all Class B Unitholders within the earlier of (x) five (5) days following the execution of the agreement with respect to such Change of Control and (y) ten (10) days before the proposed date upon which the contemplated Change of Control is to be effected, indicating in such notice such information as may reasonably describe the Change of Control transaction, subject to applicable law. New Charter shall update such notice from time to time to reflect any material changes to such notice. New Charter may satisfy any such notice and update requirements described in the preceding two sentences by providing such information on a Form 8-K, Schedule TO, Schedule 14D-9 or similar form filed with the SEC or a press release posted on its website.

(c) Election. After receipt of an Exchange Notice, the Manager, on behalf of Charter Holdings, shall deliver a notice of election (an “Election Notice”) within three (3) Business Days of Charter Holdings’ receipt of such Exchange Notice, in which the Manager, on behalf of Charter Holdings, may elect for Class A Common Stock to be provided in an elective Exchange pursuant to Section 2.1(a)(i). If no Election Notice is given within such three (3) Business Day period, the Manager shall be deemed not to have made an election for Class A Common Stock to be provided in the applicable Exchange.

(d) As set forth in Section 2.1(a)(ii), an exchanging Class B Unitholder or, in the case of an automatic exchange of Class B Common Units pursuant to Section 3.5 of the LLC Agreement, the applicable lender(s), shall be treated as a holder of record of Class A Common Stock as of the close of business on such Date of Exchange. Such exchanging Class B Unitholder or, in the case of an automatic exchange of Class B Common Units pursuant to Section 3.5 of the LLC Agreement, such applicable lender(s) shall be entitled to receive all the benefits to which a holder of record of Class A Common Stock is entitled to receive as of such time. New Charter and Charter Holdings agree that any record date for a dividend or distribution with respect to the Class A Common Stock will occur on the same date as or following the record date for any corresponding pro rata dividend or distribution or other event with respect to the Common Units.

(e) Cancellation of Class B Common Stock. All voting rights of the Class B Common Stock with respect to any exchanged Class B Common Unit shall automatically be reduced as provided in the New Charter Certificate as of the close of business on the applicable Date of Exchange without any action required on the part of any Person.

 

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(f) Expenses. Charter Holdings shall bear its and the Charter Group’s expenses and each exchanging Class B Unitholder or, in the case of an automatic exchange of Class B Common Units pursuant to Section 3.5 of the LLC Agreement, the applicable lender(s), shall bear its own expenses in connection with the consummation of any Exchange, whether or not any such Exchange is ultimately consummated, except that Charter Holdings shall bear any transfer taxes, stamp taxes or duties, or other similar taxes in connection with, or arising by reason of, any Exchange; provided, that if any shares of Class A Common Stock are to be delivered in a name other than that of the Class B Unitholder that requested the Exchange or applicable lender(s), then such Class B Unitholder, applicable lender(s) or the Person in whose name such shares are to be delivered shall pay to Charter Holdings the amount of any transfer taxes, stamp taxes or duties, or other similar taxes in connection with, or arising by reason of, such Exchange (to the extent the amount of any such taxes are in excess of what would be required to be paid by New Charter or Charter Holdings in connection with, or arising by reason of, such Exchange if the shares of Class A Common Stock were to be delivered in the name of the Class B Unitholder that requested the Exchange or applicable lender(s)) or shall establish to the reasonable satisfaction of New Charter and Charter Holdings that such tax has been paid or is not payable. For the avoidance of doubt, each exchanging Class B Unitholder shall bear any and all income or gains taxes imposed on gain realized by such exchanging Class B Unitholder as a result of any such Exchange.

(g) Treatment for U.S. Federal Income Tax Purposes. For U.S. Federal income tax purposes, the parties agree to treat an Exchange for cash that is not directly traceable to cash received from New Charter as a distribution under Section 731 of the Code and to treat any other Exchange as a “disguised sale” of Class B Common Units from A/N to a member of the Charter Group, and each of the parties shall file all tax returns in a manner consistent with such treatment.

SECTION 2.2 Common Stock to be Issued.

(a) In connection with any Exchange, whether pursuant to Section 2(a)(i), Section 2(b) or Section 3.5 of the LLC Agreement, or other transaction described herein, New Charter and Charter Holdings reserve the right to provide shares of Class A Common Stock that are registered pursuant to the Securities Act, unregistered shares of Class A Common Stock or any combination thereof, as each of them may determine in its sole discretion.

(b) New Charter shall at all times reserve and keep available out of its authorized but unissued Class A Common Stock such number of shares of Class A Common Stock necessary to satisfy its obligations hereunder. New Charter, Charter Holdings and the exchanging Class B Unitholder(s) shall use their respective reasonable best efforts to obtain the approval of any Government Entity required under any Law prior to and comply with all federal and state securities laws in connection with the issuance of Class A Common Stock in any Exchange. New Charter shall use its reasonable best efforts to list the shares of Class A Common Stock issued in any Exchange on NASDAQ (or such other national securities exchange upon which the Class A Common Stock of New Charter may be listed on the Date of Exchange) prior to the delivery thereof to the exchanging Class B Unitholder.

(c) Any Class A Common Stock to be issued by New Charter in accordance with this Agreement shall be validly issued, fully paid and non-assessable.

 

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SECTION 2.3 Capital Structure of New Charter and Charter Holdings.

(a) New Charter shall, and shall cause Charter Holdings to, take all actions necessary so that, at all times for as long as this Agreement is in effect (i) each Class B Common Unit has the same economic rights as each Class A Common Unit; (ii) the number of Class A Common Units outstanding equals the number of shares of Class A Common Stock outstanding; and (iii) subject to Section 4.8 of the LLC Agreement, New Charter and Charter Holdings shall otherwise maintain a 1:1 Up-C structure (except with respect to the Class B Common Units and Convertible Preferred Units).

(b) As promptly as practicable following the issuance by New Charter of any shares of Class A Common Stock other than pursuant to an Exchange (including any issuance in connection with a business acquisition by New Charter or its Subsidiaries, an equity incentive program or upon the conversion, exercise or exchange of any security or other instrument convertible into or exercisable or exchangeable for shares of Class A Common Stock), New Charter shall contribute, directly or indirectly, the proceeds of such issuance (including the exercise price or other proceeds or property received in connection with any issuance in connection with the exercise of options, warrants or other rights to purchase shares of Class A Common Stock), if any (net of any selling or underwriting discounts or commissions) to Charter Holdings, and Charter Holdings shall issue Class A Common Units to the Charter Member equal to the number of shares of Class A Common Stock issued; provided, that in lieu of such contribution and issuance, New Charter may agree with a Class B Unitholder to transfer such net proceeds to such Class B Unitholder in exchange for the receipt by the Charter Member of a number of Class B Common Units equal to the number of shares of Class A Common Stock to which such net proceeds relate. Any agreement by such Class B Unitholder shall be in such Class B Unitholder’s sole discretion. Any Class B Common Unit so acquired by the Charter Member shall be converted into a Class A Common Unit held by the Charter Member automatically and without any further action by Charter Holdings or the Charter Member. In such event, subject to Section 4.8 of the LLC Agreement, New Charter shall, in addition, take such other action as is necessary to preserve the 1:1 Up-C structure between New Charter and Charter Holdings as set forth in Section 2.3(a).

(c) New Charter shall not in any manner effect any Subdivision or Combination of Class A Common Stock unless Charter Holdings simultaneously effects a Subdivision or Combination, as the case may be, of Common Units with an identical ratio as the Subdivision or Combination of Class A Common Stock. Charter Holdings shall not in any manner effect any Subdivision or Combination of Common Units unless New Charter simultaneously effects a Subdivision or Combination, as the case may be, of Class A Common Stock with an identical ratio as the Subdivision or Combination of Common Units.

(d) New Charter shall not issue any class of equity securities other than its Class A Common Stock or the Class B Common Stock issued to A/N unless (i) Charter Holdings issues

 

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or agrees to issue, as the case may be, to the Charter Member a number of units, with designations, preferences and other rights and terms that are substantially the same as such shares of equity securities, equal to the number of such shares of equity securities issued by New Charter, (ii) New Charter transfers to Charter Holdings the proceeds (net of any selling or underwriting discounts or commissions) of the issuance of such shares of equity securities (and agrees to transfer to Charter Holdings any amounts paid by the holders of securities or instruments exercisable or exchangeable therefor upon their exercise or exchange, if applicable), and (iii) subject to Section 4.8 of the LLC Agreement, New Charter takes such other action as is necessary to preserve the 1:1 Up-C structure between New Charter and Charter Holdings as set forth in Section 2.3(a); provided that, notwithstanding the foregoing, New Charter shall not be required to comply with this sentence in the adoption or implementation of a Rights Plan (as defined in the New Charter Certificate) in compliance with the Stockholders Agreement, but shall be required to comply with this sentence in connection with any separation of the rights under such rights plan, provided that neither A/N nor any of its Affiliates (including any of its or their lenders to which any Class B Common Units have been pledged) is an acquiring person or similar person for which the rights would not be exercisable.

(e) If New Charter makes a dividend or other distribution of Class A Common Stock on its Class A Common Stock, then Charter Holdings shall issue to (i) the Charter Member for each Class A Common Unit held by the Charter Member a number of Class A Common Units equal to the number of shares of Class A Common Stock that was distributed on one share of Class A Common Stock and (ii) each Class B Unitholder for each Class B Common Unit held by such holder a number of Class B Common Units equal to the number of shares of Class A Common Stock that was distributed on one share of Class A Common Stock. In such event, subject to Section 4.8 of the LLC Agreement, New Charter shall, in addition, take such other action as is necessary to preserve the 1:1 Up-C structure between New Charter and Charter Holdings as set forth in Section 2.3(a).

(f) If New Charter pays a cash dividend on the Class A Common Stock not funded (or previously funded) by a Tax Distribution (including cash accumulated as a result of a prior Tax Distribution) or other pro rata distribution by Charter Holdings on the Common Units, then each Class B Unitholder holding Class B Common Units shall be entitled to receive from Charter Holdings a cash amount equal to the amount of the per-share cash dividend paid on one share of Class A Common Stock with respect to each Class B Common Unit held by such Class B Unitholder or, if such Class B Unitholder agrees, that number of Class B Common Units equal to the per-share value of such cash dividend, calculated by dividing (i) the amount of the per-share cash dividend paid on one share of Class A Common Stock, by (ii) the VWAP of the Class A Common Stock for the ten (10) consecutive Trading Days ending on and including the record date for such dividend, in each case, with respect to each Class B Common Unit held by such Class B Unitholder.

(g) If New Charter makes a distribution of evidence of indebtedness, assets or property (in each case other than cash or New Charter stock) on the Class A Common Stock that the Charter Member did not receive (or previously receive) through a pro rata distribution of such evidence of indebtedness, assets or property on Common Units by Charter Holdings, then

 

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each Class B Unitholder holding Class B Common Units shall be entitled to receive from New Charter a cash amount equal to the fair market value of the per-share distribution on one share of Class A Common Stock, as determined by the Board of Directors in good faith, or, if such Class B Unitholder agrees, that number of Class B Common Units equal to the per-share value of such distribution, calculated by dividing (i) the fair market value of the per-share distribution on one share of Class A Common Stock, as determined by the Board of Directors in good faith, by (ii) the VWAP of the Class A Common Stock for the ten (10) consecutive Trading Days ending on and including the record date for such dividend, in each case, with respect to each Class B Common Unit held by such Class B Unitholder.

SECTION 3.1 Representations and Warranties of New Charter. New Charter represents and warrants that (i) it is a corporation duly incorporated and is validly existing under the laws of the State of Delaware, (ii) it has all requisite corporate power and authority to enter into and perform this Agreement and to consummate the transactions contemplated hereby, including the issuance of Class A Common Stock in accordance with the terms hereof, (iii) the execution and delivery of this Agreement by New Charter and the consummation by it of the transactions contemplated hereby, including the issuance of the Class A Common Stock, have been duly authorized by all necessary corporate action on the part of New Charter, and (iv) this Agreement constitutes a legal, valid and binding obligation of New Charter enforceable against New Charter in accordance with its terms, except as enforcement may be limited by equitable principles or by bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or limiting creditors’ rights generally.

SECTION 3.2 Representations and Warranties of Charter Holdings and CCH II, LLC. Charter Holdings and CCH II, LLC each represent and warrant with respect to itself that (i) it is a limited liability company duly incorporated and is validly existing under the laws of the State of Delaware, (ii) it has all requisite limited liability power and authority to enter into and perform this Agreement and to consummate the transactions contemplated hereby in accordance with the terms hereof, (iii) the execution and delivery of this Agreement by Charter Holdings or CCH II, LLC, as applicable, and the consummation by it of the transactions contemplated hereby have been duly authorized by all necessary limited liability action on the part of Charter Holdings or CCH II, LLC, as applicable, and (iv) this Agreement constitutes a legal, valid and binding obligation of Charter Holdings or CCH II, as applicable, enforceable against Charter Holdings or CCH II, LLC, as applicable in accordance with its terms, except as enforcement may be limited by equitable principles or by bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or limiting creditors’ rights generally.

SECTION 3.3 Representations and Warranties of the Class B Unitholders. Each Class B Unitholder, severally and not jointly, represents and warrants that (i) if such Class B Unitholder is an entity, it is duly incorporated or formed and validly existing under the laws of such jurisdiction, (ii) if such Class B Unitholder is an entity, it has all requisite corporate or other entity power and authority to enter into and perform this Agreement and to consummate the transactions contemplated hereby and if such Class B Unitholder is an individual, it has all

 

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requisite capacity and authority to enter into and perform this Agreement and the transactions contemplated hereby, (iii) if such Class B Unitholder is an entity, the execution and delivery of this Agreement by it and consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate or other entity action on the part of such Class B Unitholder, and (iv) this Agreement constitutes a legal, valid and binding obligation of such Class B Unitholder enforceable against it in accordance with its terms, except as enforcement may be limited by equitable principles or by bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or limiting creditors’ rights generally.

SECTION 4.1 Additional Class B Unitholders. To the extent any Class B Common Units are transferred to another Person in full compliance with the Specified Documents, then such transferee (each, a “Permitted Transferee”) shall execute and deliver a joinder to this Agreement, substantially in the form of Exhibit B, whereupon such Permitted Transferee shall become a Class B Unitholder hereunder.

SECTION 4.2 Addresses and Notices. All notices, requests, consents and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by courier service, by fax, by electronic mail (delivery receipt requested) or by certified or registered mail (postage prepaid, return receipt requested) to the respective parties at the following addresses (or at such other address for a party as shall be as specified in a notice given in accordance with this Section 4.2):

 

  (a) If to New Charter, the Charter Member or Charter Holdings, to:

Charter Communications, Inc.

400 Atlantic Street, 10th Floor

Stamford, Connecticut 06901

Attention:

  General Counsel

Facsimile:

  (203) 564-1377

E-mail:

  rick.dykhouse@chartercom.com

with a copy to:

Wachtell, Lipton, Rosen & Katz

51 West 52nd Street

New York, New York 10019

Attention:   Steven A. Cohen
  DongJu Song
Facsimile:   (212) 203-2000
E-mail:   SACohen@wlrk.com
  DSong@wlrk.com

 

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  (b) If to A/N, to:

Advance/Newhouse Partnership

c/o Sabin Bermant & Gould LLP

One World Trade Center, 44th Floor

Attention:   Managing Partner
Facsimile:   (212) 381-7232
E-mail:   rhuber@sabinfirm.com

with a copy to:

Sullivan & Cromwell LLP

125 Broad Street

New York, New York 10004

Attention:   Brian Hamilton
  Scott Crofton
Facsimile:   212-558-3588
E-mail:   hamiltonb@sullcrom.com
  croftons@sullcrom.com

 

  (c) If to any other Class B Unitholder, to the address and other contact information set forth in the records of Charter Holdings from time to time.

SECTION 4.3 Further Assurances. The parties shall execute, deliver, acknowledge and file such further agreements and instruments and take such other actions as may be reasonably necessary from time to time to make effective this Agreement and the transactions contemplated herein.

SECTION 4.4 Termination. This Agreement shall terminate and be of no further force or effect only at such time as no Class B Common Units or Convertible Preferred Units remain outstanding.

SECTION 4.5 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of all of the parties and their respective successors and permitted assigns, including, for the avoidance of doubt, any successor or assign of New Charter or Charter Holdings by operation of law. Neither New Charter nor Charter Holdings may assign their obligations under this Agreement except by operation of law in connection with a Change of Control.

SECTION 4.6 No Third Party Beneficiaries. Neither this Agreement nor any provision hereof is intended to confer upon any Person (other than the parties hereto) any rights or remedies hereunder.

SECTION 4.7 Severability. The provisions of this Agreement shall be deemed not to be severable.

 

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SECTION 4.8 Amendment; Waivers.

(a) No provision of this Agreement may be waived except by an instrument in writing executed by the party against whom the waiver is to be effective. No provision of this Agreement may be amended except by an instrument in writing executed by New Charter, Charter Holdings, and A/N (if A/N or its Affiliates at that time hold any Class B Common Units).

(b) No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.

SECTION 4.9 Consent to Jurisdiction. Each party agrees that it shall bring any action, suit, demand or proceeding (including counterclaims) in respect of any claim arising out of or related to this Agreement or the transactions contemplated hereby, exclusively in the Delaware Court of Chancery or, if unavailable, the United States District Court for the District of Delaware, in each case, sitting in the City of Wilmington, Delaware (the “Chosen Courts”), and solely in connection with claims arising under this Agreement or the transactions contemplated hereby (i) irrevocably submits to the exclusive jurisdiction of the Chosen Courts, (ii) waives any objection to laying venue in any such action, suit, demand 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 and (iv) agrees that service of process upon such party in any such action, suit, demand or proceeding shall be effective if notice is given in accordance with Section 4.2.

SECTION 4.10 Waiver of Jury Trial. Each of the parties hereto hereby irrevocably waives any and all right to trial by jury in any legal proceeding arising out of or related to this Agreement or the transactions contemplated hereby.

SECTION 4.11 Tax Treatment. For purposes of the Code and the Treasury Regulations promulgated thereunder, this Agreement shall be treated as part of the LLC Agreement of Charter Holdings as described in Section 761(c) of the Code and Sections 1.704-1(b)(2)(ii)(h) and 1.761-1(c) of the Treasury Regulations promulgated thereunder.

SECTION 4.12 Entire Agreement. This Agreement, including the Exhibits to this Agreement, the Specified Documents and the Contribution Agreement embody the entire agreement and understanding of the parties hereto in respect of the subject matter contained in this Agreement. This Agreement supersedes all prior agreements and understandings between the parties with respect to the subject matter hereof and thereof, other than the Specified Documents.

SECTION 4.13 Specific Performance. Each party hereto acknowledges that the remedies at law of the other parties for a breach or threatened breach of this Agreement would

 

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be inadequate and, in recognition of this fact, any party to this Agreement, without posting any bond or furnishing other security, and in addition to all other remedies that may be available, shall be entitled to seek equitable relief in the form of specific performance, a temporary restraining order, a temporary or permanent injunction or any other equitable remedy that may then be available and no party shall oppose the granting of such relief on the basis that money damages would be sufficient.

SECTION 4.14 Independent Nature of Class B Unitholders’ Rights and Obligations. The obligations of each Class B Unitholder hereunder are several and not joint with the obligations of any other Class B Unitholder, and no Class B Unitholder shall be responsible in any way for the performance of the obligations of any other Class B Unitholder hereunder.

SECTION 4.15 Control of Subsidiaries. To the extent that this Agreement obligates Charter Holdings or any other member of the Charter Group other than New Charter, New Charter shall take all action necessary to ensure that such party fulfills its obligations hereunder.

SECTION 4.16 Governing Law. This Agreement (and all claims, controversies and causes of action, whether in contract, tort or otherwise) and the rights and obligations of the parties hereunder shall be governed by, and construed, interpreted and enforced in accordance with, the laws of the State of Delaware.

 

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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered, all as of the date first set forth above.

 

CHARTER COMMUNICATIONS, INC.
By:  

/s/ Charles Fisher

  Name:   Charles Fisher
  Title:   Senior Vice President, Corporate Finance
CCH II, LLC
By:  

/s/ Charles Fisher

  Name:   Charles Fisher
  Title:   Senior Vice President, Corporate Finance
CHARTER COMMUNICATIONS HOLDINGS, LLC
By:  

/s/ Charles Fisher

  Name:   Charles Fisher
  Title:   Senior Vice President, Corporate Finance
ADVANCE/NEWHOUSE PARTNERSHIP
By:  

/s/ Steven A. Miron

  Name:   Steven A. Miron
  Title:   Chief Executive Officer

[SIGNATURE PAGE TO EXCHANGE AGREEMENT]


EXHIBIT A

[FORM OF]

EXCHANGE NOTICE

Charter Communications Holdings, LLC

[●]

Attention: General Counsel

Reference is hereby made to the Exchange Agreement, dated as of May 18, 2016 (as amended from time to time in accordance with its terms, the “Exchange Agreement”), among Charter Communications, Inc., Charter Communications Holdings, LLC, A/N, CCH II, LLC and such other holders of Class B Common Units (as defined therein) from time to time party thereto. Capitalized terms used but not defined herein shall have the meanings given to them in the Exchange Agreement.

Effective as of the Date of Exchange, but subject to the undersigned’s right to withdraw this Exchange Notice as set forth below, the undersigned Class B Unitholder hereby transfers to Charter Holdings the number of Class B Common Units set forth below in Exchange for a Cash Exchange Payment to the account set forth below or, at the option of the Manager, for shares of Class A Common Stock to be issued in its name as set forth below, as set forth in the Exchange Agreement. The undersigned hereby acknowledges that if the Class B Common Units to be exchanged hereby represent in the aggregate 2% or less of all outstanding Common Units, this Exchange Notice is revocable (without the consent of Charter Holdings) only by a written notice of revocation delivered to Charter Holdings at least two Business Days prior to the Date of Exchange; provided that this Exchange Notice shall not be revocable if Charter Holdings notifies the undersigned in writing that it will deliver a Cash Exchange Payment in respect of the Class B Common Units that are subject to this Exchange Notice.

Legal Name of Class B Unitholder:

Address:

Number of Class B Common Units to be Exchanged:

Date of Exchange:

The undersigned hereby represents and warrants that (i) the undersigned has requisite corporate or other entity power and authority to execute and deliver this Exchange Notice and to perform the undersigned’s obligations hereunder; (ii) this Exchange Notice has been duly executed and delivered by the undersigned and is the legal, valid and binding obligation of the undersigned enforceable against it in accordance with the terms thereof or hereof, as the case may be, subject to applicable bankruptcy, insolvency and similar laws now or hereafter in effect affecting creditors’ rights generally and the availability of equitable remedies; (iii) the undersigned has good and marketable title to its Class B Common Units that are subject to this Exchange Notice, and such Class B Common Units are being transferred to Charter Holdings free and clear of any pledge, lien, security interest, right of first refusal or other encumbrance; and (iv) no consent, approval, authorization, order, registration or qualification of, or any notice to or filing with, any third party or any court or governmental agency or body having jurisdiction over the undersigned or the Class B Common Units subject to this Exchange Notice is required to be obtained or made by the undersigned for the transfer of such Class B Common Units.

 

A-1


Subject to the undersigned’s right to withdraw this Exchange Notice as set forth in the Exchange Agreement, the undersigned hereby irrevocably constitutes and appoints any officer of New Charter or Charter Holdings, as applicable, as the attorney of the undersigned, with full power of substitution and resubstitution in the premises, solely to do any and all things and to take any and all actions necessary to effect the Exchange elected hereby, including to transfer to Charter Holdings or New Charter the Class B Common Units subject to this Exchange Notice and to deliver to the undersigned the cash or the shares of Class A Common Stock to be delivered in Exchange therefor.

 

A-2


IN WITNESS WHEREOF, the undersigned, by authority duly given, has caused this Exchange Notice to be executed and delivered by the undersigned or by its duly authorized attorney.

 

By:

 

 

 

Name:

 

Title:

 

A-3


EXHIBIT B

[FORM OF]

JOINDER AGREEMENT

This Joinder Agreement (“Joinder Agreement”) is a joinder to the Exchange Agreement, dated as of May 18, 2016 (the “Agreement”), among Charter Communications, Inc. (“New Charter”), Charter Communications Holdings, LLC (“Charter Holdings”), Advance/Newhouse Partnership (“A/N”), CCH II, LLC and each of the other Class B Unitholders from time to time party thereto. Capitalized terms used but not defined in this Joinder Agreement shall have the meanings given to them in the Agreement. This Joinder Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware. In the event of any conflict between this Joinder Agreement and the Agreement, the terms of this Joinder Agreement shall control.

The undersigned hereby joins and enters into the Agreement having acquired Class B Common Units. By signing and returning this Joinder Agreement to New Charter and Charter Holdings, the undersigned (i) accepts and agrees to be bound by and subject to all of the terms and conditions of and agreements of a Class B Unitholder in the Agreement, with all attendant rights, duties and obligations of a Class B Unitholder thereunder and (ii) makes, as of the date hereof, each of the representations and warranties of a Class B Unitholder in Section 3.3 of the Agreement as fully as if such representations and warranties were set forth herein. The parties to the Agreement shall treat the execution and delivery hereof by the undersigned as the execution and delivery of the Agreement by the undersigned and, upon receipt of this Joinder Agreement by New Charter and Charter Holdings, the signature of the undersigned set forth below shall constitute a counterpart signature to the signature page of the Agreement.

 

Name:

 

Address for Notices:

 

With copies to:

Attention:

 

 

B-1


IN WITNESS WHEREOF, the undersigned, by authority duly given, has caused this Joinder Agreement to be executed and delivered by the undersigned or by its duly authorized attorney.

 

By:

 

 

 

Name:

 

Title:

 

Acknowledged as of             , 20    :

CHARTER COMMUNICATIONS, INC.

By:

 

 

 

Name:

 

Title:

CHARTER COMMUNICATIONS HOLDINGS, LLC

By:

 

 

 

Name:

 

Title:

 

B-2

EX-10.3

Exhibit 10.3

REGISTRATION RIGHTS AGREEMENT

by and among

CHARTER COMMUNICATIONS, INC.,

LIBERTY BROADBAND CORPORATION

and

ADVANCE/NEWHOUSE PARTNERSHIP

 

 

Dated as of May 18, 2016

 

 


TABLE OF CONTENTS

 

         Page  

Section 1.

 

Definitions

     1   

Section 2.

 

Demand Registrations; Shelf Registrations; Exchangeable Private Placement

     7   

Section 3.

 

Inclusion of Other Securities; Priority

     12   

Section 4.

 

Piggyback Registrations

     13   

Section 5.

 

Holdback Agreements

     15   

Section 6.

 

Suspensions

     15   

Section 7.

 

Registration Procedures

     16   

Section 8.

 

Participation in Registrations and Underwritten Offerings

     21   

Section 9.

 

Registration Expenses

     22   

Section 10.

 

Indemnification; Contribution

     23   

Section 11.

 

Rule 144 Compliance

     26   

Section 12.

 

Miscellaneous

     26   

Exhibit A

 

Form of Counterpart

  

Exhibit B

 

List of Underwriters

  


THIS REGISTRATION RIGHTS AGREEMENT is made and entered into as of May 18, 2016, by and among Charter Communications, Inc., a Delaware corporation (formerly known as CCH I, LLC) (the “Company”), Liberty Broadband Corporation, a Delaware corporation (“Liberty”), Advance/Newhouse Partnership, a New York general partnership (“A/N”), and any other A/N Party or Liberty Party that has become a party to this Agreement by executing and delivering a counterpart to this Agreement in the form attached hereto as Exhibit A.

RECITALS

WHEREAS, the Company, Former Charter Communications Parent, Inc. (formerly known as Charter Communications, Inc.) (“Old Charter”) and A/N, among others, are parties to that certain Contribution Agreement, dated as of March 31, 2015 and as amended on May 23, 2015 (the “Contribution Agreement”), pursuant to which A/N has received, at the closing of the transactions contemplated by the Contribution Agreement, (i) one share of Class B Common Stock, (ii) 30,992,406 Class B Common Units and (iii) 25,000,000 Preferred Units;

WHEREAS, the Company, Old Charter, Liberty and A/N are parties to that certain Second Amended and Restated Stockholders Agreement, dated as of May 23, 2015 (the “Stockholders Agreement”), pursuant to which Liberty has purchased, substantially concurrently with the closing of the transactions contemplated by the Contribution Agreement, from the Company, and the Company issued to Liberty, 3,658,691 shares of Class A Common Stock;

WHEREAS, the Company, Old Charter and Liberty are parties to that certain Investment Agreement, dated as of May 23, 2015 (the “Investment Agreement”), pursuant to which Liberty has purchased, substantially concurrently with the closing of the transactions contemplated by the Mergers Agreement (as defined therein), from the Company, and the Company issued to Liberty, 21,972,648 shares of Class A Common Stock;

WHEREAS, in connection with the consummation of the transactions contemplated by the Investment Agreement, the Contribution Agreement, the Stockholders Agreement and the Mergers Agreement, the parties hereto desire to enter into this Agreement in order to grant certain registration rights to the Holders of Registrable Securities as set forth below.

AGREEMENT

NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and other good and valid consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement hereby agree as follows:

Section 1. Definitions.

(a) As used in this Agreement, the following terms shall have the following meanings:

Additional Liberty Demand Registration” has the meaning set forth in Section 2(c)(iv).


Affiliate” of a Person has the meaning set forth in Rule 12b-2 under the Exchange Act, and “Affiliated” shall have a correlative meaning. 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, means the possession, directly or indirectly, of the power to direct or cause the direction of the management policies of such Person, whether through the ownership of voting securities or by contract or otherwise. Notwithstanding anything to the contrary set forth in this Agreement: (a) the Company and Liberty and their respective Affiliates shall not be deemed to be Affiliates of A/N; (b) the Company and A/N and their respective Affiliates shall not be deemed to be Affiliates of Liberty; (c) Liberty and A/N and their respective Affiliates shall not be deemed to be Affiliates of the Company or Charter Holdings; and (d) Charter Holdings shall not be deemed to be an Affiliate of Liberty or A/N or their respective Affiliates.

Agreement” means this Registration Rights Agreement, as amended, modified or supplemented from time to time, in accordance with the terms hereof, together with any exhibits, schedules or other attachments hereto.

A/N” has the meaning set forth in the Preamble.

A/N Holder” means any A/N Party that has become a party to this Agreement by executing and delivering a counterpart to this Agreement in the form attached hereto as Exhibit A, in each case to the extent such A/N Party is a holder of record or beneficial owner of Registrable Securities.

A/N Party” has the meaning set forth in the Stockholders Agreement.

Charter Holdings” means Charter Communications Holdings, LLC.

Class A Common Stock” means the Class A common stock, par value $0.001 per share, of the Company (and shall be deemed to include any publicly traded common stock of a successor to the Company).

Class B Common Units” means the Class B common units of Charter Holdings.

Closing” has the meaning set forth in the Contribution Agreement.

Closing Date” has the meaning set forth in the Contribution Agreement.

Company” has the meaning set forth in the Preamble, and includes the Company’s successors by merger, acquisition, consolidation or reorganization, so long as such successor has publicly traded common stock as of the effective date of any such merger, acquisition, consolidation or reorganization.

Company Controlling Person” has the meaning set forth in Section 10(b).

Company Equity” means each of the Class A Common Stock, the Class B Common Units and the Preferred Units.

Contribution Agreement” has the meaning set forth in the Recitals.

 

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Covered Person” has the meaning set forth in Section 10(a).

Demand Period” has the meaning set forth in Section 2(c)(iii).

Demand Registration” has the meaning set forth in Section 2(a)(i).

Demand Registration Request” has the meaning set forth in Section 2(a)(i).

Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

Exchange Holder” means a holder of record or beneficial owner of Exchangeable Securities.

Exchangeable Private Placement” means any sale of exchangeable notes or debentures made pursuant to Rule 144A under the Securities Act and in compliance with Sections 4.6(b)(ix) and 4.6(e) of the Stockholders Agreement, which notes or debentures are exchangeable for consideration that includes Registrable Securities.

Exchangeable Private Placement Request” has the meaning set forth in Section 2(f).

Exchangeable Security Shelf Period” has the meaning set forth in Section 2(b)(i).

Exchangeable Security Shelf Registration Request” has the meaning set forth in Section 2(b)(i).

Exchangeable Securities” means exchangeable notes or debentures issued by an Investor Holder in an Exchangeable Private Placement.

Fully Exchanged Basis” has the meaning set forth in the Stockholders Agreement.

Governmental Entity” means any United States or foreign (i) federal, state, local, municipal or other government, (ii) governmental or quasi-governmental entity of any nature (including any governmental agency, branch, department, official or entity and any court or other tribunal) or (iii) body exercising or entitled to exercise any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power of any nature, including any arbitral tribunal.

Hedging Counterparty” means a broker-dealer registered under Section 15(b) of the Exchange Act or an Affiliate thereof or any other financial institution, in each case that is a qualified institutional buyer (within the meaning of the Securities Act) and that routinely engages in Hedging Transactions in the ordinary course of its business.

Hedging Transaction” means any transaction by an Investor Holder in compliance with Section 4.6(d) of the Stockholders Agreement involving a security linked to Registrable Securities or any security that would be deemed to be a “derivative security” (as defined in Rule 16a-1(c) under the Exchange Act) with respect to Registrable Securities or any transaction (even if not a security) which would (were it a security) be considered such a derivative security, or which transfers some or all of the economic risk of ownership of Registrable Securities, including any forward contract, equity swap, put or call, put or call equivalent position, collar, non-recourse loan, sale of exchangeable security or similar transaction. For the avoidance of doubt, the parties

 

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acknowledge that in connection with a Hedging Transaction, a Hedging Counterparty may engage in short sales of Class A Common Stock pursuant to a Prospectus and the Hedging Counterparty may use Registrable Securities to close out its short position.

Holdback Period” has the meaning set forth in Section 5(a).

Holder” means an Investor Holder or a Selling Holder.

Holder Controlling Person” has the meaning set forth in Section 10(a).

Investment Agreement” has the meaning set forth in the Recitals.

Investor Holder” means an A/N Holder or a Liberty Holder.

Liberty” has the meaning set forth in the Preamble.

Liberty Holder” means any Liberty Party that has become a party to this Agreement by executing and delivering a counterpart to this Agreement in the form attached hereto as Exhibit A, in each case to the extent such Liberty Party is a holder of record or beneficial owner of Registrable Securities.

Liberty Party” has the meaning set forth in the Stockholders Agreement.

LLC Agreement” means the Amended and Restated Limited Liability Company Agreement of Charter Holdings, by and among the Company, CCH II, LLC, A/N and Charter Holdings, dated as of the date hereof, as such agreement may be amended from time to time in accordance with its terms.

Old Charter” has the meaning set forth in Recitals.

Permitted Transferee” means any A/N Party or Liberty Party who has become a holder of record or beneficial owner of Company Equity in accordance with the provisions of Section 4.5 or Section 4.6 of the Stockholders Agreement or the LLC Agreement, as applicable.

Person” means any natural person, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, foundation, unincorporated organization or government or other agency or political subdivision thereof.

Piggyback Registration” has the meaning set forth in Section 4(a).

Piggyback Shelf Registration Statement” has the meaning set forth in Section 4(a).

Piggyback Shelf Takedown” has the meaning set forth in Section 4(a).

Pledge” means (i) a pledge of Registrable Securities to a Hedging Counterparty or (ii) a pledge of Registrable Securities, Class B Common Units or Preferred Units issued on the date hereof to a lender in connection with a secured loan, in each case in accordance with Section 4.6(c) of the Stockholders Agreement.

 

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Preferred Transferee” means a holder of record of Transferred Preferred Units.

Preferred Units” means the convertible preferred units of Charter Holdings to be issued to A/N at the Closing.

Prospectus” means the prospectus or prospectuses (whether preliminary or final) included in any Registration Statement and relating to Registrable Securities or Shelf Registrable Securities, as amended or supplemented, and including all material incorporated by reference in such prospectus or prospectuses.

Registrable Securities” means, at any time, any shares of Class A Common Stock (i) held of record or beneficially by any Investor Holder which were issued to any Liberty Holder on the date hereof, (ii) issued or issuable to any Investor Holder upon the conversion and/or exchange, as applicable, of any Preferred Units or Class B Common Units issued to any A/N Holder on the date hereof or (iii) issued or issuable by way of a stock dividend or stock split or in exchange for or upon conversion of shares or units referred to in clause (i) or (ii); provided, however, that as to any particular Registrable Securities, such securities shall cease to constitute Registrable Securities when (x) such securities are sold pursuant to an effective Registration Statement or pursuant to Rule 144, (y) such securities cease to be outstanding or (z) such securities shall have been otherwise transferred and, following such transfer, such securities may be sold pursuant to Rule 144 without any volume limitations.

Registration” means any Demand Registration, Exchangeable Security Shelf Registration, Shelf Registration or Piggyback Registration.

Registration Expenses” has the meaning set forth in Section 9(a).

Registration Request” means a Demand Registration Request, an Exchangeable Security Shelf Registration Request or a Shelf Registration Request.

Registration Statement” means any registration statement of the Company under the Securities Act which covers any of the Registrable Securities or Shelf Registrable Securities pursuant to the provisions of this Agreement, including any Prospectus, all amendments and supplements to such Registration Statement or Prospectus, including post-effective amendments, all exhibits and all documents incorporated by reference in such Registration Statement.

Requesting Holder” has the meaning set forth in Section 4(c).

Rule 144” means Rule 144 under the Securities Act or any successor rule thereto.

SEC” means the Securities and Exchange Commission or any successor agency administering the Securities Act and the Exchange Act at the time.

Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

Selling Expenses” means all underwriting discounts, commissions and transfer taxes applicable to the sale of Registrable Securities.

 

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Selling Holder Questionnaire” means a selling stockholder questionnaire, in form and content reasonably acceptable to the Company, completed and signed by a Selling Holder.

Selling Holders” means, following and with respect to any Shelf Registration Trigger Event, (a) if the applicable Shelf Underlying Transaction is an Exchangeable Private Placement, the Exchangeable Holders of the Exchangeable Securities sold in such Exchangeable Private Placement, (b) if the applicable Shelf Underlying Transaction is a Pledge, the lenders or Hedging Counterparty in favor of whom the Pledge is made, (c) if the applicable Shelf Underlying Transaction is a Hedging Transaction, the Hedging Counterparty to such Hedging Transaction, and (d) if the applicable Shelf Underlying Transaction is a private placement of Preferred Units, the record and beneficial holders of Preferred Units sold in such private placement.

Selling Holders Information” has the meaning set forth in Section 2(b)(i).

Shelf Period” has the meaning set forth in Section 2(b)(ii).

Shelf Registrable Securities” means, at any time, any shares of Class A Common Stock (a) delivered or deliverable to an Exchange Holder upon the exchange of Exchangeable Securities, (b) delivered or deliverable to a lender or Hedging Counterparty upon foreclosure of a Pledge, (c) delivered to a Hedging Counterparty upon settlement or unwinding of a Hedging Transaction, (d) sold short by a Hedging Counterparty to establish its hedge under a Hedging Transaction or (e) to a Preferred Transferee upon conversion of Preferred Units by such Preferred Transferee, in each case of clauses (a), (b) and (c), which shares are Registrable Securities immediately prior to such delivery, and in case of clause (d), the shares used to close out the Hedging Counterparty’s stock borrowing may be Registrable Securities.

Shelf Registration” has the meaning set forth in Section 2(b)(i).

Shelf Registration Request” has the meaning set forth in Section 2(b)(ii).

Shelf Registration Statement” means a registration statement of the Company under the Securities Act filed with the SEC on Form S-3 (or the then-appropriate form or any successor form under the Securities Act) providing for an offering of Shelf Registrable Securities to be made on a delayed or continuous basis pursuant to Rule 415 under the Securities Act (or any similar rule that may be adopted by the SEC).

Shelf Registration Trigger Event” means the occurrence of any of the following during the term of this Agreement: (a) the first date on which any Preferred Units are converted into Class A Common Stock by a Preferred Transferee, (b) 30 days prior to the expected entrance by an Investor Holder into a loan or Hedging Transaction that is secured by a Pledge, (c) thirty (30) days prior to the first date on which any Exchangeable Securities become eligible to be exchanged for Registrable Securities, (d) 30 days prior to the expected settlement or unwinding of a Hedging Transaction in which the Hedging Counterparty is expected to receive Registrable Securities from an Investor Holder or (e) 30 days prior to the expected entrance by an Investor Holder into a Hedging Transaction pursuant to which it is expected that the Hedging Counterparty will need to sell short an amount of shares of Class A Common Stock to establish its hedge which is in excess of the amount permitted under Rule 144.

 

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Shelf Underlying Transaction” means, with respect to any Shelf Registration Trigger Event, the Exchangeable Private Placement, the Pledge (including any loan or Hedging Transaction that is secured by a Pledge), the Hedging Transaction or the offering of Preferred Units to which such Shelf Registration Trigger Event relates.

Specified Documents” has the meaning set forth in the LLC Agreement.

Stockholders Agreement” has the meaning set forth in the Recitals.

Suspension” has the meaning set forth in Section 6.

Transfer” means, when used as a noun, any direct or indirect, voluntary or involuntary, sale, disposition, hypothecation, mortgage, gift, pledge, assignment, attachment or other transfer (including the creation of any derivative or synthetic interest, including a participation or other similar interest) and, when used as a verb, voluntarily to directly or indirectly sell, dispose, hypothecate, mortgage, gift, pledge, assign, attach or otherwise transfer, in any case, whether by operation of law or otherwise.

Transferred Preferred Units” means any Preferred Units Transferred (other than by means of an Exchangeable Private Placement, Pledge or Hedging Transaction) by an A/N Holder to a non-A/N Holder in accordance with Section 4.6 of the Stockholders Agreement and the LLC Agreement.

underwritten offering” means a registered offering of securities conducted by one or more underwriters pursuant to the terms of an underwriting agreement.

(b) In addition to the above definitions, unless the context requires otherwise:

(i) any reference to any statute, regulation, rule or form as of any time shall mean such statute, regulation, rule or form as amended or modified and shall also include any successor statute, regulation, rule or form, as amended, from time to time;

(ii) the words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”, in each case notwithstanding the absence of any express statement to such effect, or the presence of such express statement in some contexts and not in others;

(iii) references to “Section” are references to Sections of this Agreement;

(iv) words such as “herein”, “hereof”, “hereinafter” and “hereby” when used in this Agreement refer to this Agreement as a whole; and

(v) references to “dollars” and “$” mean U.S. dollars.

Section 2. Demand Registrations; Shelf Registrations; Exchangeable Private Placement.

 

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(a) Right to Demand Registrations. Subject to the provisions of this Agreement, at any time after the first anniversary of the Closing Date in the case of an A/N Holder and at any time after the Closing Date in the case of a Liberty Holder, any A/N Holder or any Liberty Holder may, by providing written notice to the Company, request to sell all or part of its Registrable Securities pursuant to a Registration Statement (a “Demand Registration”). Each request for a Demand Registration (a “Demand Registration Request”) shall specify the number of Registrable Securities intended to be offered and sold by such Investor Holder pursuant to the Demand Registration and the intended method of distribution thereof, including whether it is intended to be an underwritten offering. Promptly (but in any event within three (3) business days) after receipt of a Demand Registration Request, the Company shall give written notice of the Demand Registration Request to the other Investor Holders. Subject to the provisions of this Agreement, after receipt of a Demand Registration Request, the Company shall, to the extent permitted by applicable law, cause to be included in a Registration Statement, which shall be filed with the SEC as promptly as practicable and no later than (I) twenty (20) business days after receipt of a Demand Registration Request if the Company is eligible to file a Registration Statement on Form S-3 (or any similar short form or any successor form under the Securities Act) or (II) forty (40) business days after receipt of a Demand Registration Request if the Company is not eligible to file a Registration Statement on Form S-3 (or any similar short form or any successor form under the Securities Act), all Registrable Securities that (i) have been requested to be registered in the Demand Registration Request and (ii) are subject to Section 4, with respect to which the Company has received a written request for inclusion in the Demand Registration from an Investor Holder no later than five (5) business days after the date on which the Company has given notice to the other Investor Holders of the Demand Registration Request. The Company shall use its reasonable best efforts to cause the Registration Statement filed pursuant to this Section 2(a) to be declared effective by the SEC or otherwise become effective under the Securities Act as promptly as reasonably practicable after the filing thereof. A Demand Registration shall be effected by way of a Registration Statement on Form S-3 or any similar short-form or successor form to the extent the Company is permitted to use such form at such time, and may be effected through an existing registration statement that is already effective under the Securities Act, or through a post-effective amendment or supplement to any such Registration Statement or other registration statement.

(b) Right to Shelf Registrations

(i) In Connection with an Exchangeable Private Placement. After the first anniversary of the Closing Date in the case of an A/N Holder and after August 31, 2016 in the case of a Liberty Holder, at any time following the occurrence of a Shelf Registration Trigger Event relating to an Exchangeable Private Placement, the Investor Holder that effected the Exchangeable Private Placement may, by providing written notice to the Company, request that the corresponding Selling Holders be able to sell all or part of their Shelf Registrable Securities delivered or deliverable under the terms of such Exchangeable Private Placement pursuant to a Shelf Registration Statement (an “Exchangeable Security Shelf Registration Request”) for a secondary offering to be made on a delayed or continuous basis pursuant to Rule 415 under the Securities Act or any successor rule thereto (a “Shelf Registration”). Each Exchangeable Security Shelf Registration Request shall specify the number of Shelf Registrable Securities to be registered on the Shelf Registration Statement. A Selling Holder shall not be named in such Shelf Registration

 

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Statement unless and until the Company has received a fully completed and executed Selling Holder Questionnaire for such Selling Holder. Subject to the provisions of this Agreement, after receipt of an Exchangeable Security Shelf Registration Request, if the Company is then eligible to file a Shelf Registration Statement, the Company shall, to the extent permitted by applicable law, as promptly as practicable and no later than twenty (20) business days after receipt of such Exchangeable Security Shelf Registration Request file with the SEC a new Shelf Registration Statement or amend or renew an existing or expiring shelf registration statement, at the Company’s option, to effectuate such Shelf Registration. If permitted under the Securities Act, such Shelf Registration Statement shall be an “automatic shelf registration statement” as defined in Rule 405 under the Securities Act. The Company shall use its reasonable best efforts to cause such Shelf Registration Statement to be declared effective by the SEC or otherwise become effective under the Securities Act as promptly as practicable after the filing thereof. The Company shall use its reasonable best efforts to keep such Shelf Registration Statement continuously effective under the Securities Act in order to permit the Prospectus forming a part thereof to be usable by such Selling Holders until the earlier of (A) one (1) year after the Shelf Registration Statement is first declared effective, (B) the date as of which all of the Registrable Securities covered by such Shelf Registration Statement shall have been sold pursuant to such Shelf Registration Statement and (C) the date as of which each of the Selling Holders is permitted to sell its Registrable Securities without registration pursuant to Rule 144 under the Securities Act without volume limitations or other restrictions on transfer thereunder (such period of effectiveness, an “Exchangeable Security Shelf Period”). An Exchangeable Security Shelf Period shall be extended by the number of days of any Suspension that occurs during such Exchangeable Security Shelf Period. A Shelf Registration pursuant to this Section 2(b)(i) shall not be an underwritten offering. As a condition to being named as a selling stockholder in the Prospectus included in a Shelf Registration Statement, each Selling Holder will be required to agree to be bound by the obligations applicable to a Holder set forth in Section 8 and Sections 10(b) through (e). All actions on behalf of the Selling Holders shall be coordinated and communicated to the Company by, and proceed through, the applicable Investor Holder.

(ii) In Connection with Other Shelf Underlying Transactions. After the first anniversary of the Closing Date in the case of an A/N Holder and after August 31, 2016 in the case of a Liberty Holder, at any time following the occurrence of a Shelf Registration Trigger Event (other than an Exchangeable Private Placement), the Investor Holder that effected the Shelf Underlying Transaction related to such Shelf Registration Trigger Event may, by providing written notice to the Company, request that the corresponding Selling Holders be able to sell all or part of their Shelf Registrable Securities delivered or deliverable under the terms of such Shelf Underlying Transaction pursuant to a Shelf Registration Statement (a “Shelf Registration Request”) for a secondary offering to be made on a delayed or continuous basis pursuant to a Shelf Registration. Each Shelf Registration Request shall specify the number of Shelf Registrable Securities to be registered and the names of each such Selling Holders and shall be accompanied by fully completed and executed Selling Holder Questionnaires for each such Selling Holders (such information and Selling Holder Questionnaires, the “Selling Holders Information”). Subject to the provisions of this Agreement, after receipt of a Shelf Registration Request and all of the Selling Holders Information, if the Company is then eligible to file a Shelf Registration

 

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Statement, the Company shall, to the extent permitted by applicable law, as promptly as practicable and no later than twenty (20) business days after receipt of such Shelf Registration Request and all of the Selling Holders Information file, with the SEC a new Shelf Registration Statement or amend or renew an existing or expiring shelf registration statement, at the Company’s option, to effectuate such Shelf Registration. If permitted under the Securities Act, such Shelf Registration Statement shall be an “automatic shelf registration statement” as defined in Rule 405 under the Securities Act. The Company shall use its reasonable best efforts to cause such Shelf Registration Statement to be declared effective by the SEC or otherwise become effective under the Securities Act as promptly as practicable after the filing thereof. The Company shall use its reasonable best efforts to keep such Shelf Registration Statement continuously effective under the Securities Act in order to permit the Prospectus forming a part thereof to be usable by such Selling Holders until the earlier of (A) (x) in the case of a Shelf Registration under which Registrable Securities are Subject to a Pledge, the date that is one (1) year after all of the Shelf Registrable Securities covered by such Shelf Registration Statement have been foreclosed upon or, if earlier, the date the applicable Pledge (and any replacement thereof) has terminated, (y) in the case of a Shelf Registration covering Shelf Registrable Securities described in clause (d) of the definition thereof, the date that is sixty (60) days after the Shelf Registration Statement is first deemed effective, and (z) in the case of any other Shelf Registration Statement the date that is one (1) year after the Shelf Registration is first deemed effective, (B) the date as of which all of the Registrable Securities covered by such Shelf Registration Statement shall have been sold pursuant to such Shelf Registration Statement and (C) the date as of which each of the Selling Holders is permitted to sell its Registrable Securities without registration pursuant to Rule 144 under the Securities Act without volume limitations or other restrictions on transfer thereunder (such period of effectiveness, a “Shelf Period”). A Shelf Period shall be extended by the number of days of any Suspension that occurs during such Shelf Period. A Shelf Registration pursuant to this Section 2(b)(ii) shall not be an underwritten offering (although Selling Holders may be described as “underwriters” in the Shelf Registration Statement to the extent required by applicable law). As a condition to being named as a selling stockholder in the Prospectus included in a Shelf Registration Statement, each Selling Holder will be required to agree to be bound by the obligations applicable to a Holder set forth in Section 8 and Sections 10(b) through (e). All actions on behalf of the Selling Holders shall be coordinated and communicated to the Company by, and proceed through, the applicable Investor Holder.

(ii) Reimbursement. Notwithstanding anything herein to the contrary, if the Company is requested to effect a Shelf Registration following a Shelf Registration Trigger Event, but the expected event in anticipation of which the Shelf Registration Triggering Event was triggered does not occur, the Investor Holder that made such request shall promptly reimburse the Company for all Registration Expenses incurred by the Company in relation thereto.

(c) Number of Registrations and Other Requirements.

(i) Notwithstanding anything herein to the contrary, but subject to clause (iv) below, each of (x) the A/N Holders and (y) the Liberty Holders shall only be entitled to

 

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request up to two (2) Registrations per Investor Holder during any twelve (12) month period (it being understood that the number of Registrations during any twelve-month period that each Investor Holder is entitled to shall be reduced by one for each Exchangeable Private Placement by such Investor Holder that occurs in such twelve (12) month period).

(ii) Notwithstanding anything herein to the contrary, the Company shall not be required to effect a Registration unless the expected aggregate gross proceeds from the offering of the Registrable Securities to be registered in connection with such Registration are at least $500 million, in the case of a Registration initiated by a Liberty Holder prior to the first anniversary of the Closing Date, or at least $250 million otherwise.

(iii) The Company shall be deemed to have effected a Demand Registration if the related Registration Statement is or has become effective and remains effective for not less than (A) one hundred twenty (120) days plus (B) such additional number of days, if any, equal to the number of days in any Suspension (or such shorter period as shall terminate when 80% of the Registrable Securities covered by such Registration Statement have been sold, or a majority of such Registrable Securities have been withdrawn, by the applicable Investor Holder(s)) (the applicable period, the “Demand Period”). No Demand Registration shall be deemed to have been effected if during the Demand Period such Registration is interfered with by any stop order, injunction or other order or requirement of the SEC or other governmental agency or court.

(iv) The Company acknowledges that a Liberty Holder may seek to enter into one or more Hedging Transactions with a Hedging Counterparty during the first twelve (12) months after the Closing Date, in each case to the extent permitted by the Stockholders Agreement. Only in connection with such a permitted Hedging Transaction, a Liberty Holder shall be entitled to request one (1) additional Registration, on the terms set forth in Section 2(b), during the first six (6) month period commencing on the Closing Date (or during the first twelve (12) month period commencing on the Closing Date if the Company is not then in compliance with the current public information requirements of Rule 144(c)) for registration of the Shelf Registrable Securities related to such Hedging Transaction to the extent permitted by applicable law (the “Additional Liberty Registration”); provided, that (A) the offering and sale pursuant to the Additional Liberty Registration shall not be effected by way of an underwritten offering; (B) the Company shall not be obliged to participate in, pay for or make management of the Company available for any “road show” presentation or other marketing activities in connection with any offer and sale of securities pursuant to the Additional Liberty Registration and (C) the Company shall not be required to effect the Additional Liberty Registration unless the expected aggregate gross proceeds to the Liberty Holder from the permitted Hedging Transaction is at least $500 million.

(d) Withdrawal. A Holder may, by written notice to the Company, withdraw its Registrable Securities from a Demand Registration or Shelf Registrable Securities from a Shelf Registration at any time prior to the effectiveness of the applicable Registration Statement. Upon receipt of notices from all applicable Holders to such effect, the Company shall cease all efforts to seek effectiveness of the applicable Registration Statement, unless the Company intends to effect a primary offering of securities pursuant to such Registration Statement.

 

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(e) Selection of Underwriters. If a Demand Registration is an underwritten offering, the Investor Holder requesting such Demand Registration shall have the right to select one or more of the investment banking firm(s) set forth on Exhibit B hereto to act as the managing underwriter(s) in connection with such offering, subject to the written approval of (i) the other Investor Holders if such other Investor Holders have requested to participate in such Demand Registration (which approval shall not be unreasonably withheld, conditioned or delayed) and (ii) the Company (which approval shall not be unreasonably withheld, conditioned or delayed).

(f) Exchangeable Private Placement. In connection with an Exchangeable Private Placement in which the aggregate gross proceeds from such private placement to the Investor Holder are at least $500 million prior to the first anniversary of the Closing Date ($250 million after the first anniversary of the Closing Date) , the Company shall make senior management of the Company available, to the extent requested by such Investor Holder and the initial purchasers (an “Exchangeable Private Placement Request”), to reasonably assist in the marketing of the Exchangeable Securities to be sold in such Exchangeable Private Placement, to the same extent as would be required under Section 7(k) in connection with a Demand Registration; provided that the Investor Holder may request that the Company make senior management available for participation in “road show” presentations pursuant to Section 7(s).

Section 3. Inclusion of Other Securities; Priority. The Company shall not include in any Demand Registration any securities which are not Registrable Securities without the prior written consent of the Investor Holder(s) of the Registrable Securities participating in such Demand Registration (such consent not to be unreasonably withheld, conditioned or delayed). If a Demand Registration involves an underwritten offering and the managing underwriters of such offering advise the Company and the Investor Holders in writing that, in their opinion, the number of shares of Class A Common Stock proposed to be included in such Demand Registration, including all Registrable Securities and all other shares of Class A Common Stock proposed to be included in such offering, exceeds the number of shares of Class A Common Stock which can reasonably be expected to be sold in such offering without adversely affecting the success of the offering (including the price, timing or distribution of the securities to be sold in such offering), the Company shall include in such Demand Registration: (i) first, the shares of Class A Common Stock proposed to be sold by the Investor Holders of Registrable Securities in such offering; and (ii) second, the shares of Class A Common Stock proposed to be included therein by any other Persons (including shares of Class A Common Stock to be sold for the account of the Company and/or other holders of Class A Common Stock), allocated among such Persons in such manner as the Company may determine. If more than one Investor Holder is participating in such Demand Registration and the managing underwriters of such offering determine that less than all of the Registrable Securities proposed to be sold by the participating Investor Holders can be included in such offering without reasonably being expected to adversely affect the success of the offering (including the price, timing or distribution of the securities to be sold in such offering), then the Registrable Securities that are included in such offering shall be allocated pro rata among the participating Investor Holders on the basis of the number of Registrable Securities initially requested to be sold by each such Investor Holder.

 

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Section 4. Piggyback Registrations.

(a) Whenever the Company proposes to register the offering or sale of any shares of Class A Common Stock under the Securities Act (other than a registration (i) pursuant to a registration statement on Form S-8 (or other registration solely relating to an offering or sale to employees or directors of the Company pursuant to any employee stock plan or other employee benefit arrangement), (ii) pursuant to a registration statement on Form S-4 (or similar form that relates to a transaction subject to Rule 145 under the Securities Act or any successor rule thereto), (iii) pursuant to a registration in which the Company is offering to exchange its own securities for other securities, (iv) pursuant to a registration statement for an offering to be made on a delayed or continuous basis pursuant to Rule 415 under the Securities Act or any successor rule thereto without an actual concurrent sale thereunder or (v) a registration in connection with any dividend or distribution reinvestment or similar plan), whether for its own account or for the account of one or more stockholders of the Company (a “Piggyback Registration”), the Company shall give prompt written notice to each Investor Holder of its intention to effect such a registration (but in any event within ten (10) days after the date the applicable registration statement is initially filed) and, subject to Section 4(b) and Section 4(c), shall include in such registration statement and in any offering of shares of Class A Common Stock to be made pursuant to such registration statement that number of Registrable Securities requested to be sold in such offering by such Investor Holder for the account of such Investor Holder; provided that the Company has received a written request for inclusion therein from such Investor Holder no later than five (5) business days after the date on which the Company has given notice of the Piggyback Registration to such Investor Holder; provided, further, that the Company shall be obligated to include an Investor Holder’s Registrable Securities pursuant to a Piggyback Registration only to the extent that the expected aggregate gross proceeds from the offering of such Registrable Securities constitute at least $100 million. The Company may terminate, delay or withdraw a Piggyback Registration prior to the effectiveness of such registration at any time in its sole discretion and, thereupon, (x) in the case of a determination to terminate or withdraw any registration, the Company shall be relieved of its obligation to register any Registrable Securities under this Section 4 in connection with such registration and (y) in the case of a determination to delay registration, the Company shall be permitted to delay registering any Registrable Securities under this Section 4 for the same period as the delay in registering the other equity securities covered by such registration. If a registration is effected by the Company pursuant to a registration statement on Form S-3 or the then-appropriate form, for an offering to be made on a delayed or continuous basis pursuant to Rule 415 under the Securities Act or any successor rule thereto (a “Piggyback Shelf Registration Statement”), the Investor Holders shall be notified by the Company of and shall have the right, but not the obligation, to participate in any offering pursuant to such Piggyback Shelf Registration Statement (a “Piggyback Shelf Takedown”), subject to the same limitations that are applicable to any Piggyback Registration as set forth above.

(b) Priority on Primary Piggyback Registrations. If a Piggyback Registration or Piggyback Shelf Takedown is initiated as a primary underwritten offering on behalf of the Company and the managing underwriters of the offering advise the Company that, in their opinion, the number of shares of Class A Common Stock proposed to be included in such offering, including all Registrable Securities and all other shares of Class A Common Stock proposed to be included in such offering, exceeds the number of shares of Class A Common Stock which can reasonably be expected to be sold in such offering without adversely affecting the success of the offering

 

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(including the price, timing or distribution of the shares to be sold in such offering), the Company shall include in such Piggyback Registration or Piggyback Shelf Takedown: (i) first, the shares of Class A Common Stock that the Company proposes to sell in such offering; and (ii) second, the shares of Class A Common Stock proposed to be included in such offering by any other Person (including any Registrable Securities requested to be included therein by the Investor Holders), allocated pro rata among such Persons on the basis of the number of shares of Class A Common Stock (or other Registrable Securities) initially requested to be sold by each such Person in such offering, up to the number, if any, that the managing underwriters determine can be included in the offering without reasonably being expected to adversely affect the success of the offering (including the price, timing or distribution of the shares to be offered in such offering).

(c) Priority on Secondary Piggyback Registrations. If a Piggyback Registration or a Piggyback Shelf Takedown is initiated as an underwritten offering on behalf of a holder of shares of Class A Common Stock to whom the Company has a contractual obligation to facilitate such offering, and the managing underwriters of the offering advise the Company that, in their opinion, the number of shares of Class A Common Stock proposed to be included in such offering, including all Registrable Securities and all other shares of Class A Common Stock requested to be included in such offering, exceeds the number of shares of Class A Common Stock which can reasonably be expected to be sold in such offering without adversely affecting the success of the offering (including the price, timing or distribution of the shares to be sold in such offering), the Company shall include in such Piggyback Registration or Piggyback Shelf Takedown: (i) first, the shares of Class A Common Stock requested to be included therein by each holder thereof having such right that has requested such registration (a “Requesting Holder”) up to the number that the managing underwriters determine can be included in the offering without reasonably being expected to adversely affect the success of the offering (including the price, timing or distribution of the shares to be offered in such offering), allocated pro rata among the Requesting Holders on the basis of the number of Registrable Securities initially requested to be sold by each Requesting Holder and (ii) second, any shares of Class A Common Stock to be included in such offering by stockholders other than the Requesting Holders and any shares of Class A Common Stock proposed to be sold for the account of the Company in such offering up to the number, if any, that the managing underwriters determine can be included in the offering without reasonably being expected to adversely affect the success of the offering (including the price, timing or distribution of the shares to be offered in such offering), allocated pro rata among such holders and the Company on the basis of the number of shares of Class A Common Stock initially requested or proposed to be included in such offering by such holders and the Company (as applicable).

(d) Selection of Underwriters. In any Piggyback Registration or Piggyback Shelf Takedown (other than one that is also a Demand Registration), including if initiated as a primary underwritten offering on behalf of the Company, the Company shall have the right to select the investment banking firm(s) to act as the underwriters (including managing underwriter(s)) in connection with such offering.

 

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Section 5. Holdback Agreements.

(a) Holders of Registrable Securities. Each Investor Holder agrees that in connection with any registered underwritten offering of Class A Common Stock for the account of the Company or any other Investor Holder(s), and upon request from the managing underwriter(s) for such offering, such Investor Holder shall not, without the prior written consent of such managing underwriter(s), during such period as is reasonably requested by the managing underwriter(s) (which period shall in no event be longer than ten (10) days prior to and ninety (90) days after the launch of such offering (such period, the “Holdback Period”)), Transfer any Registrable Securities. The foregoing provisions of this Section 5(a) shall not apply to (i) offers or sales of Registrable Securities that are included in such underwritten offering, (ii) a Transfer of Registrable Securities pursuant to the terms of an agreement, contract, security or other instrument entered into or issued by an Investor Holder prior to the Holdback Period; provided that the Company and the managing underwriter(s) for such offering have received a copy of such agreement, contract, security or other instrument at least ten (10) days prior to the launch of such offering, and such agreement, contract, security or other instrument is described in, or included as an exhibit to, the corresponding Registration Statement as and to the extent appropriate or (iii) a pledge of Registrable Securities to secure a loan, and shall in each case be applicable to the Investor Holder only if, for so long as and to the extent that the Company, the directors and executive officers of the Company and each selling stockholder included in such offering are subject to the same restrictions. Each Investor Holder agrees to execute and deliver such customary agreements as may be reasonably requested by the managing underwriter(s) that are consistent with the foregoing provisions of this Section 5(a) and are necessary to give further effect thereto. For the avoidance of doubt, none of the restrictions set forth in this Section 5(a) shall apply to a conversion or exchange of any Class B Common Units or Preferred Units in accordance with their respective terms (it being understood that such restrictions shall apply with respect to the underlying shares of Class A Common Stock that may be issued upon such conversion or exchange).

(b) The Company. The Company shall not effect any sale registered under the Securities Act or other public distribution of its equity securities, or of any securities convertible into, exercisable for or exchangeable for its equity securities, during the period commencing ten (10) days prior to and ending ninety (90) days after the launch of an underwritten offering pursuant to Section 2, other than a sale and/or registration (i) pursuant to a Registration Statement on Form S-8 (or other registration solely relating to an offering or sale to employees or directors of the Company pursuant to any employee stock plan or other employee benefit arrangement), (ii) pursuant to a Registration Statement on Form S-4 (or similar form that relates to a transaction subject to Rule 145 under the Securities Act or any successor rule thereto), (iii) pursuant to a registration in which the Company is offering to exchange its own securities for other securities or (iv) in connection with any dividend or distribution reinvestment or similar plan. The Company agrees to execute and deliver such customary agreements as may be reasonably requested by the managing underwriter(s) that are consistent with the foregoing provisions of this Section 5(a) and are necessary to give further effect thereto.

Section 6. Suspensions. Upon giving no less than three (3) days’ prior written notice to A/N and Liberty (such notice shall be deemed given to any and all Investor Holders and Selling Holders), the Company shall be entitled to delay or suspend the preparation, furnishing, filing, effectiveness or use of a Registration Statement or Prospectus or any offer or sale pursuant thereto (a “Suspension”) if the board of directors of the Company (excluding any director who

 

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was designated for nomination by A/N, if any A/N Holder is initiating or initiated the registration or offering that is proposed to be delayed or suspended, and excluding any director who was designated for nomination by Liberty, if any Liberty Holder is initiating or initiated the registration or offering that is proposed to be delayed or suspended) determines in its good faith judgment that (i) proceeding with the filing, effectiveness or use of such Registration Statement or Prospectus would reasonably be expected to require the Company to disclose any information, the disclosure of which would have an adverse effect on the Company, and that the Company would not otherwise be required to disclose at such time or (ii) the registration or offering proposed to be delayed or suspended would reasonably be expected to, if not delayed or suspended, have an adverse effect on any transaction, negotiation or plan of the Company to effect a merger, acquisition, disposition, financing, reorganization, recapitalization or other similar transaction. Each Investor Holder who is notified by the Company of a Suspension pursuant to this Section 6, and each other Holder who is deemed notified or notified by the applicable Investor Holder of a Suspension pursuant to this Section 6, shall keep the existence of such Suspension confidential and shall immediately discontinue (and direct any other Person making offers or sales of Registrable Securities on behalf of such Holder to immediately discontinue) offers and sales of Registrable Securities pursuant to such Prospectus until such time as it is advised in writing by the Company that the use of the Prospectus may be resumed and, if applicable, is furnished by the Company with a supplemented or amended Prospectus as contemplated by Section 7(g). If the Company delays or suspends a Registration, the Investor Holder that initiated such Registration shall be entitled, prior to the time of the effectiveness of the related Registration Statement, to withdraw its Registration Request and, if it does so, such Registration Request shall not count against the limitation on the number of such Investor Holder’s Registrations set forth in Section 2(b). Without limiting the foregoing, the Investor Holders shall give notice of a Suspension to the applicable Selling Holders as promptly as practicable after receiving notice of a Suspension from the Company.

Section 7. Registration Procedures. Subject to the terms of this Agreement, if and whenever the Company is required to effect the registration of any Registrable Securities or Shelf Registrable Securities pursuant to this Agreement, the Company shall use its reasonable best efforts to effect the registration to permit the offering and sale of such Registrable Securities or Shelf Registrable Securities in accordance with the intended method of disposition thereof as promptly as is reasonably practicable and, pursuant thereto, the Company shall:

(a) prepare and file with the SEC a Registration Statement with respect to such Registrable Securities or Shelf Registrable Securities, make all required filings required in connection therewith and (if the Registration Statement is not automatically effective upon filing) use its reasonable best efforts to cause such Registration Statement to become effective; provided that before filing a Registration Statement or any amendments or supplements thereto, the Company shall furnish to counsel to the Investor Holders participating in such registration copies of all such documents proposed to be filed, and give the Investor Holders participating in such registration an opportunity to comment on such documents and keep such Investor Holders reasonably informed as to the registration process;

(b) use its reasonable best efforts to prepare and file with the SEC such amendments and supplements to any Registration Statement and the Prospectus used in connection therewith as may be necessary to keep such Registration Statement effective in order to permit the offering and sale of such Registrable Securities or Shelf Registrable Securities in accordance with the intended method of disposition thereof;

 

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(c) furnish to each Investor Holder participating in the registration, without charge, such number of copies of the Prospectus included in such Registration Statement (including each preliminary Prospectus) and any supplement thereto (in each case including all exhibits thereto and all documents incorporated by reference therein) and such other documents as such Investor Holder may reasonably request, including in order to facilitate the disposition of the Registrable Securities or Shelf Registrable Securities owned by such Investor Holder or Selling Holders;

(d) use its reasonable best efforts to register or qualify such Registrable Securities or Shelf Registrable Securities under such other securities or blue sky laws of such jurisdiction(s) as any Investor Holder participating in the registration or any managing underwriter reasonably requests and do any and all other acts and things that may be necessary or reasonably advisable to enable such Holder and each underwriter, if any, to consummate the disposition of such Holder’s Registrable Securities or Shelf Registrable Securities in such jurisdiction(s); provided that the Company shall not be required to qualify generally to do business, subject itself to taxation or consent to general service of process in any jurisdiction where it would not otherwise be required to do so but for its obligations pursuant to this Section 7(d);

(e) use its reasonable best efforts to cause all Registrable Securities or Shelf Registrable Securities covered by any Registration Statement to be registered with or approved by such other Governmental Entities or self-regulatory bodies as may be necessary in light of the business and operations of the Company to enable each Holder participating in the registration to consummate the disposition of such Registrable Securities or Shelf Registrable Securities in accordance with the intended method or methods of disposition thereof;

(f) promptly notify each Investor Holder that initiated or is participating in the registration and the managing underwriters of any underwritten offering:

(i) each time when the Registration Statement, any pre-effective amendment thereto, the Prospectus or any Prospectus supplement or any post-effective amendment to the Registration Statement has been filed and, with respect to the Registration Statement or any post-effective amendment thereto, when the same has become effective;

(ii) of any oral or written comments by the SEC or of any request by the SEC for amendments or supplements to the Registration Statement or the Prospectus or for any additional information regarding such Holder or any Selling Holder;

(iii) of the issuance by the SEC of any stop order suspending the effectiveness of such Registration Statement or the initiation or threatening of any proceedings for any such purpose; and

(iv) of the receipt by the Company of any notification with respect to the suspension of the qualification of any Registrable Securities or Shelf Registrable Securities for sale under the applicable securities or blue sky laws of any jurisdiction;

 

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(g) notify each Investor Holder that initiated or is participating in such Registration, at any time when a Prospectus relating thereto is required to be delivered under the Securities Act, of the occurrence of any event that would cause the Prospectus included in such Registration Statement to contain an untrue statement of a material fact or to omit any fact necessary to make the statements made therein not misleading in light of the circumstances under which they were made, and, as promptly as practicable, prepare, file with the SEC and furnish to such Investor Holder a reasonable number of copies of a supplement or amendment to such Prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities or Shelf Registrable Securities, such Prospectus will not contain any untrue statement of a material fact or omit to state any fact necessary to make the statements therein not misleading in light of the circumstances under which they were made; provided that any Investor Holder receiving information pursuant to this Section 7(g) shall protect the confidentiality of, and not disclose, any information regarding the Company which the Company determines in good faith to be confidential and of which determination such Person is notified, unless such information (A) is or becomes known to the public without a breach of this Agreement or any other agreement to which such Person is a party, (B) is or becomes available to such Person on a non-confidential basis from a source other than the Company, (C) is independently developed by such Person, (D) is requested or required by a deposition, interrogatory, request for information or documents by a Governmental Entity, subpoena or similar process, or (E) is otherwise required to be disclosed by applicable law (other than securities laws);

(h) in the event of the issuance of any stop order suspending the effectiveness of a Registration Statement, of any order suspending or preventing the use of any related Prospectus or of any suspension of the qualification or exemption from qualification of any Registrable Securities or Shelf Registrable Securities for sale in any jurisdiction, use its reasonable best efforts to promptly obtain the withdrawal or lifting of any such order or suspension;

(i) cause such Registrable Securities or Shelf Registrable Securities to be listed on each securities exchange on which the Class A Common Stock is then listed;

(j) provide a transfer agent and registrar (which may be the same entity) for all Registrable Securities or Shelf Registrable Securities covered by the applicable Registration Statement not later than the effective date of such Registration Statement;

(k) make available upon reasonable notice at reasonable times and for reasonable periods for inspection by any Investor Holder that initiated or is participating in the Registration, any underwriter participating in any underwritten offering pursuant to such Registration Statement, and any attorney, accountant or other agent retained by any such Investor Holder or underwriter, all pertinent corporate documents, financial and other records relating to the Company and its business reasonably requested by such Investor Holder or underwriter, and make senior management of the Company and request the Company’s independent accountants to make themselves available for customary due diligence sessions; provided that any Person receiving access to information or personnel pursuant to this Section 7(k) shall (i) reasonably cooperate with the Company to limit any resulting disruption to the Company’s business and (ii) protect the confidentiality of, and not disclose, any information regarding the Company which the Company determines in good faith to be confidential and of which determination such Person is notified, unless such information (A) is or becomes known to the public without a breach of this Agreement

 

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or any other agreement to which such Person is a party, (B) is or becomes available to such Person on a non-confidential basis from a source other than the Company, (C) is independently developed by such Person, (D) is requested or required by a deposition, interrogatory, request for information or documents by a Governmental Entity, subpoena or similar process, or (E) is otherwise required to be disclosed by applicable law (other than securities laws);

(l) otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the SEC, and make available to its stockholders, as soon as reasonably practicable, an earnings statement (in a form that satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 under the Securities Act or any successor rule thereto), which requirement shall be deemed satisfied if the Company timely files complete and accurate information on Forms 10-K, 10-Q and 8-K under the Exchange Act and otherwise complies with Rule 158 under the Securities Act or any successor rule thereto;

(m) in the case of an underwritten offering of Registrable Securities in connection with a Demand Registration, promptly incorporate in a supplement to the Prospectus or a post-effective amendment to the Registration Statement such information as is reasonably requested by the managing underwriter(s) and the Investor Holders participating in such underwritten offering to be included therein relating to the plan of distribution with respect to such Registrable Securities and the purchase price for the securities to be paid by the underwriters, and promptly make all required filings of such supplement or post-effective amendment after being notified of the matters to be incorporated in such supplement or post-effective amendment;

(n) in the case of an offering of Shelf Registrable Securities in connection with an Exchangeable Security Private Placement, promptly incorporate in a supplement to the Prospectus, a filing incorporated by reference into the Prospectus or a post-effective amendment to the Registration Statement the information for each Selling Holder set forth in its fully completed and executed Selling Holder Questionnaire delivered to the Company, and promptly make all required filings of such supplement, filing or post-effective amendment after receipt of such Selling Holder Questionnaire;

(o) in the case of an underwritten offering of Registrable Securities, enter into such customary agreements (including underwriting agreements in customary form) and take all such other customary actions as any Investor Holder participating in such offering or the managing underwriter(s) of such offering reasonably requests in order to expedite or facilitate the disposition of such Registrable Securities;

(p) use reasonable best efforts to make available to a Hedging Counterparty participating in an offering of Shelf Registrable Securities pursuant to such Registration Statement, upon reasonable notice, senior management of the Company, and request the Company’s independent accountants to make themselves available, for customary due diligence sessions involving questions and answers regarding the Company’s business and financial condition; provided that such Hedging Counterparty shall (i) cooperate with the Company to limit any resulting disruption to the Company’s business and (ii) protect the confidentiality of, and not disclose, any information regarding the Company that are provided by the Company or its independent accountants, unless such information (A) is or becomes known to the public without a breach of this Agreement or any other agreement to which such Hedging Counterparty is a party, (B) is or becomes

 

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available to such Person on a non-confidential basis from a source other than the Company, (C) is independently developed by such Hedging Counterparty, (D) is requested or required by a deposition, interrogatory, request for information or documents by a Governmental Entity, subpoena or similar process, or (E) is otherwise required to be disclosed by applicable law (other than securities laws);

(q) in the case of an offering of Shelf Registrable Securities in connection with a Hedging Transaction, enter into an agreement, customary for the type of such Hedging Transaction, with the Hedging Counterparty, in form and substance reasonably acceptable to the Company; provided, that any representations and warranties, covenants and indemnities shall be no more onerous to the Company than those customarily included in underwriting agreements for secondary offerings of common stock by selling stockholders of the Company (or, if the Company has never entered into such an underwriting agreement, than in underwriting agreements entered into with issuers of similar size and stature as the Company), and such agreement shall not require the delivery of opinions of counsel or cold comfort letters except to the extent set forth in Section 7(r);

(r) use reasonable best efforts to (i) furnish to each Investor Holder, each underwriter, if any, and each Hedging Counterparty in each case participating in an offering of Registrable Securities or Shelf Registrable Securities: (A) an opinion or opinions from counsel for the Company dated the effective date of the Registration Statement or, in the event of an underwritten offering, the date of the closing under the underwriting agreement, in each case in customary form, scope and substance, (B) in the case of an underwritten offering of Registrable Securities, a cold comfort letter from the Company’s independent certified public accountants in customary form covering such matters of the type customarily covered by cold comfort letters as the managing underwriter reasonably requests, dated the date of execution of the underwriting agreement and brought down to the closing under the underwriting agreement and (C) in the case of an offering of Shelf Registrable Securities in connection with a Hedging Transaction, a cold comfort letter from the Company’s independent certified public accountants in form and contented permitted by the applicable rules of the AICPA and reasonably requested by the Hedging Counterparty, as of such date or dates as may be reasonably requested by such Hedging Counterparty and permitted by the rules of the AICPA and (ii) obtain all consents of the Company’s independent certified public accountants required to be included in the Registration Statement;

(s) in the case of an underwritten offering of Registrable Securities or an Exchangeable Private Placement, make senior management of the Company available, to the extent requested by the managing underwriter(s) or the applicable Investor Holder, respectively, to participate in “road show” presentations in connection with the marketing of the Registrable Securities to be sold in such underwritten offering; provided, that the Company shall only be obligated to make senior management available for participation in “road show” presentations for no more than two (2) such offerings initiated by the Holders during any twelve-month period and the Investor Holder who requested the first “road show” presentation during any twelve-month period cannot request the second “road show” presentation without the prior written consent of the other Investor Holder; provided, further, that the Company shall only be required to make senior management available for participation in the second “road show” during any such twelve (12) month period if the expected aggregate gross proceeds from the underwritten offering in connection with the second “road show” are at least $500 million;

 

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(t) if the Registrable Securities or Shelf Registrable Securities are in certificated form, cooperate with the Investor Holders of the Registrable Securities to facilitate the timely preparation and delivery of certificates representing the Registrable Securities or Shelf Registrable Securities to be sold pursuant to such Registration Statement free of any restrictive legends and representing such number of shares of Class A Common Stock and registered in such names as the Investor Holders of the Registrable Securities or Shelf Registrable Securities may reasonably request a reasonable period of time prior to sales of Registrable Securities or Shelf Registrable Securities pursuant to such Registration Statement; provided, that the Company may satisfy its obligations hereunder without issuing physical stock certificates through the use of The Depository Trust Company’s Direct Registration System or other customary book-entry system;

(u) not later than the effective date of such Registration Statement, provide a CUSIP number for all Registrable Securities or Shelf Registrable Securities covered thereby and, if the Registrable Securities are in certificated form, provide the applicable transfer agent with printed certificates for the Registrable Securities in a form eligible for deposit with The Depository Trust Company; provided that the Company may satisfy its obligations hereunder without issuing physical stock certificates through the use of The Depository Trust Company’s Direct Registration System or other customary book-entry system; and

(v) otherwise use its reasonable best efforts to take or cause to be taken all other actions necessary or reasonably advisable to effect the registration of such Registrable Securities or Shelf Registrable Securities contemplated by this Agreement. Except as expressly set forth in this Agreement, the Company shall not be required to communicate or otherwise interact with any Selling Holders, and all communications between the Company and the Selling Holders shall be facilitated by the applicable Investor Holders.

Section 8. Participation in Registrations and Underwritten Offerings. The Company may require each Holder to furnish to the Company such information regarding the distribution of such Registrable Securities or Shelf Registrable Securities by such Holder and such other information relating to such Holder and its ownership of Registrable Securities or Shelf Registrable Securities as the Company may from time to time reasonably request in writing and the Company may exclude from such registration the Registrable Securities or Shelf Registrable Securities of any Holder who fails to furnish such information within a reasonable time after receiving such request. Each Investor Holder agrees to furnish, or cause to be furnished (including by causing each Selling Holder participating in a Registration initiated by such Investor Holder to furnish), such information to the Company and to cooperate with the Company as reasonably necessary to enable the Company to comply with the provisions of this Agreement. Each Investor Holder agrees (i) to notify the Company as promptly as practicable and (ii) to require that any Selling Holder participating in a Registration initiated by such Investor Holder to notify such Investor Holder, and upon notification such Investor Holder will as promptly as practicable notify the Company, of any inaccuracy or change in information previously furnished to the Company by such Holder or of the occurrence of any event that would cause the Prospectus included in such Registration Statement to contain an untrue statement of a material fact regarding such Holder or the distribution of such Registrable Securities or Shelf Registrable Securities or to omit to state any material fact regarding such Holder or the distribution of such Registrable Securities or Shelf Registrable Securities required to be stated therein or necessary to make the statements made therein not misleading in light of the circumstances under which they were made and to

 

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furnish to the Company, as promptly as practicable, any additional information required to correct and update the information previously furnished by such Holder such that such Prospectus shall not contain any untrue statement of a material fact regarding such Holder or the distribution of such Registrable Securities or Shelf Registrable Securities or omit to state a material fact regarding such Holder or the distribution of such Registrable Securities or Shelf Registrable Securities necessary to make the statements therein not misleading in light of the circumstances under which they were made. No Selling Holder may be named as a selling holder in any Registration Statement unless such Person agrees, upon the Company’s request, to be bound the preceding sentence as though it was an Investor Holder. No Person may participate in any underwritten offering pursuant to this Agreement unless such Person (i) agrees to sell such Person’s securities on the basis provided in any underwriting arrangements in customary form approved by the Company and other Persons entitled under this Agreement to approve such arrangements and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements; provided that no Holder included in any underwritten offering shall be required to make any representations or warranties to the Company or the underwriters (other than representations and warranties regarding (A) such Holder’s ownership of its Registrable Securities to be sold in such offering, (B) such Holder’s power and authority to effect such Transfer and (C) such matters pertaining to such Holder’s compliance with securities laws as may be reasonably requested by the managing underwriter(s)) or to undertake any indemnification obligations to the Company with respect thereto, except to the extent otherwise provided in Section 10 hereof.

Section 9. Registration Expenses.

(a) The Company shall pay directly or promptly reimburse all costs, fees and expenses incident to the Company’s performance of or compliance with this Agreement, including (i) all SEC, FINRA and other registration and filing fees; (ii) all fees and expenses associated with filings to be made with, or the listing of any Registrable Securities on, any securities exchange or over-the-counter trading market on which the Registrable Securities are to be listed or quoted; (iii) all fees and expenses of complying with any securities and blue sky laws (including fees and disbursements of counsel for the Company in connection therewith); (iv) all printing, messenger, telephone and delivery expenses (including the cost of distributing Prospectuses in preliminary and final form as well as any supplements thereto); (v) all expenses incurred in connection with any “road show” presentations that are required by this Agreement for underwritten offerings, including all costs of travel, lodging and meals; (vi) all fees of the Company’s transfer agent and registrar; (vii) all fees and expenses of counsel to the Company; (viii) all fees and expenses of the Company’s independent public accountants (including any fees and expenses arising from any special audits or “comfort letters”) and any other Persons retained by the Company in connection with or incident to any registration of Registrable Securities pursuant to this Agreement; and (ix) all reasonable fees and disbursements of underwriters customarily paid by the issuers or sellers of securities (all such costs, fees and expenses, “Registration Expenses”). Notwithstanding anything in this Agreement to the contrary, Registration Expenses shall exclude any and all Selling Expenses and the expenses and fees of any counsel engaged by any Holder or underwriter, except that Registration Expenses shall include the reasonable counsel fees and costs of one (1) counsel for all underwriters, which counsel shall be selected by the Company and reasonably acceptable to such underwriters. Each Holder shall pay the fees and expenses of any counsel engaged by such Holder and shall bear its respective Selling Expenses associated with any sale of its Registrable Securities pursuant to this Agreement.

 

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(b) The obligation of the Company to bear and pay the Registration Expenses shall apply irrespective of whether a registration, once properly demanded or requested, becomes effective or is withdrawn or suspended; provided, that the Registration Expenses for any Registration Statement withdrawn solely at the request of one or more Holder(s) (unless withdrawn following commencement of a Suspension) shall be borne by such Holder(s).

Section 10. Indemnification; Contribution.

(a) The Company shall indemnify and hold harmless, to the fullest extent permitted by law, each Holder, in its capacity as a holder of Registrable Securities or Shelf Registrable Securities, any Person who is or might be deemed to be a “controlling person” of a Holder or any of its subsidiaries within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (each such Person, a “Holder Controlling Person”), their respective direct and indirect general and limited partners, advisory board members, directors, officers, trustees, managers, members, employees, agents, Affiliates and shareholders, and each other Person, if any, who acts on behalf of or controls any such Holder or Holder Controlling Person (each of the foregoing, a “Covered Person”) against any losses, claims, actions, damages, liabilities and expenses, joint or several, to which such Covered Person may become subject under the Securities Act, the Exchange Act, any state blue sky securities laws, or any equivalent non-U.S. securities laws, insofar as such losses, claims, actions, damages, liabilities or expenses arise out of or are based upon (i) any untrue or alleged untrue statement of a material fact contained in or incorporated by reference in any Registration Statement, Prospectus, preliminary Prospectus, issuer free writing prospectus (as defined in Rule 405 under the Securities Act or any successor rule thereto) or any amendment thereof or supplement thereto or any document incorporated by reference therein, (ii) any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of a Prospectus, preliminary Prospectus, or any issuer free writing Prospectus in light of the circumstances under which they were made) not misleading or (iii) any violation or alleged violation by the Company of the Securities Act or any other similar federal or state securities laws or any rule or regulation promulgated thereunder applicable to the Company and relating to any action or inaction required of the Company in connection with any registration of securities, and the Company shall reimburse each Covered Person for any legal or other expenses reasonably incurred by such Covered Person in connection with investigating or defending any such loss, claim, action, damage or liability; provided that the Company shall not be so liable in any such case to the extent that (i) any loss, claim, action, damage, liability or expense arises out of or is based upon any such untrue statement or alleged untrue statement, or omission or alleged omission, made or incorporated by reference in any such Registration Statement, Prospectus, preliminary Prospectus, free writing prospectus (as defined in Rule 405 under the Securities Act or any successor rule thereto) or any amendment thereof or supplement thereto or any document incorporated by reference therein in reliance upon, and in conformity with, written information furnished to the Company by or on behalf of such Covered Person (including by any Investor Holder with respect to information about the Selling Holders) expressly for use therein, or (ii) with respect to any liability of Selling Holders under Section 12 of the Securities Act, such Covered Person knew of such untruth or omission. This indemnity shall be in addition to any liability the Company may otherwise have.

 

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(b) In connection with any registration in which a Holder is participating, each such Holder shall furnish to the Company in writing such information as the Company reasonably requests for use in connection with any such Registration Statement or Prospectus and shall indemnify and hold harmless, to the fullest extent permitted by law, the Company, its directors, officers, employees, agents and any Person who is or might be deemed to be a “controlling person” of the Company or any of its subsidiaries within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (each such Person, a “Company Controlling Person”) against any losses, claims, actions, damages, liabilities and expenses, joint or several, to which they or any of them may become subject under the Securities Act, the Exchange Act, any state blue sky securities laws or any equivalent non-U.S. securities laws, insofar as such losses, claims, actions, damages, liabilities or expenses arise out of or are based upon (i) any untrue or alleged untrue statement of a material fact contained in the Registration Statement, Prospectus, preliminary Prospectus, free writing prospectus (as defined in Rule 405 under the Securities Act or any successor rule thereto) or any amendment thereof or supplement thereto, (ii) any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of a Prospectus, preliminary Prospectus, or any free writing prospectus, in light of the circumstances under which they were made) not misleading or (iii) the failure of such Holder to deliver a prospectus in accordance with the requirements of the Securities Act or Exchange Act, but, in the case of each of clauses (i) and (ii), only to the extent that such untrue statement or alleged untrue statement, or omission or alleged omission, is made in such Registration Statement, Prospectus, preliminary Prospectus, free writing prospectus (as defined in Rule 405 under the Securities Act or any successor rule thereto) or any amendment thereof or supplement thereto in reliance upon, and in conformity with, written information furnished to the Company by or on behalf of such Holder expressly for use therein, and such Holder shall reimburse the Company, its directors, officers, employees, agents and any Company Controlling Person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, action, damage or liability; provided that the obligation to indemnify pursuant to this Section 10(b) shall be individual and several, not joint and several, for each Holder and shall not exceed an amount equal to the gross proceeds (after deducting Selling Expenses) actually received by such Holder in the sale of Registrable Securities to which such Registration Statement or Prospectus relates. This indemnity shall be in addition to any liability which such Holder may otherwise have.

(c) Any Person entitled to indemnification hereunder shall give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification; provided that any failure or delay to so notify the indemnifying party shall not relieve the indemnifying party of its obligations hereunder, except to the extent that the indemnifying party is actually and materially prejudiced by reason of such failure or delay. In case a claim or an action that is subject or potentially subject to indemnification hereunder is brought against an indemnified party, the indemnifying party shall be entitled to participate in and shall have the right, exercisable by giving written notice to the indemnified party as promptly as practicable after receipt of written notice from such indemnified party of such claim or action, to assume, at the indemnifying party’s expense, the defense of any such claim or action, with counsel reasonably acceptable to the indemnified party; provided, that any indemnified party shall continue to be entitled to participate in the defense of such claim or action, with counsel of its own choice, but the indemnifying party shall not be obligated to reimburse the indemnified party for any fees, costs and expenses subsequently incurred by the indemnified party in connection with such defense unless (A) the

 

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indemnified party has agreed in writing to pay such fees, costs and expenses, (B) the indemnifying party has failed to assume the defense of such claim or action within a reasonable time after receipt of notice of such claim or action, (C) having assumed the defense of such claim or action, the indemnifying party fails to employ counsel reasonably acceptable to the indemnified party after a reasonable time after notice of the institution of such action, (D) the use of counsel chosen by the indemnifying party to represent the indemnified party would present such counsel with a conflict of interest or (E) the indemnified party has reasonably concluded that there are one or more legal or equitable defenses available to it and/or other any other indemnified party which are different from or additional to those available to the indemnifying party. Subject to clauses (D) and (E) of the foregoing sentence, no indemnifying party shall, in connection with any one claim or action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general circumstances or allegations, be liable for the fees, costs and expenses of more than one firm of attorneys (in addition to any local counsel) for all indemnified parties. The indemnifying party shall not have the right to settle a claim or action for which any indemnified party is entitled to indemnification hereunder without the consent of the indemnified party, and the indemnifying party shall not consent to the entry of any judgment or enter into or agree to any settlement relating to such claim or action, in each case unless such judgment or settlement does not impose any admission of wrongdoing or ongoing obligations on any indemnified party and includes as an unconditional term thereof the giving by the claimant or plaintiff therein to such indemnified party, in form and substance reasonably satisfactory to such indemnified party, of a full and final release from all liability in respect of such claim or action. The indemnifying party shall not be liable hereunder for any amount paid or payable or incurred pursuant to or in connection with any judgment entered or settlement effected with the consent of an indemnified party unless the indemnifying party has also consented to such judgment or settlement (such consent not to be unreasonably withheld, conditioned or delayed).

(d) If the indemnification provided for in this Section 10 is held by a court of competent jurisdiction to be unavailable to, or unenforceable by, an indemnified party in respect of any loss, claim, action, damage, liability or expense for which this Agreement purports to provide for indemnification, then the applicable indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, action, damage, liability or expense in such proportion as is appropriate to reflect the relative fault of the indemnifying party, on the one hand, and of the indemnified party, on the other hand, in connection with the statements or omissions which resulted in such loss, claim, action, damage, liability or expense as well as any other relevant equitable considerations. The relative fault of the indemnifying party, on the one hand, and of the indemnified party, on the other hand, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party, whether the violation of the Securities Act or any other federal or state securities law or rule or regulation promulgated thereunder applicable to the Company and relating to any action or inaction required of the Company in connection with any registration of securities was perpetrated by the indemnifying party or the indemnified party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties agree that it would not be just and equitable if contribution pursuant hereto were determined by pro rata allocation or by any other method or allocation that does not take into account the equitable considerations referred to in this Section 10(d). In no event shall the

 

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amount which a Holder may be obligated to contribute pursuant to this Section 10(d) exceed an amount equal to the net proceeds (after deducting Selling Expenses) actually received by such Holder in the sale of Registrable Securities that gives rise to such obligation to contribute. No indemnified party guilty or liable of fraudulent misrepresentation within the meaning of Section 11(f) of the Securities Act shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.

(e) The provisions of this Section 10 shall remain in full force and effect regardless of any investigation made by or on behalf of any indemnified party or any officer, director or controlling person of such indemnified party and shall survive the Transfer of any Registrable Securities by any Holder.

Section 11. Rule 144 Compliance. With a view to making available to the Holders the benefits of Rule 144 and any other rule or regulation of the SEC that may at any time permit a Holder to sell securities of the Company to the public without registration, the Company shall use its reasonable best efforts to:

(a) make and keep public information available, as those terms are understood and defined in Rule 144;

(b) file with the SEC in a timely manner all reports and other documents required of the Company to be filed under the Securities Act and the Exchange Act; and

(c) furnish to any Investor Holder, promptly upon request, a written statement by the Company as to its compliance with the reporting requirements of Rule 144 and of the Securities Act and the Exchange Act.

Section 12. Miscellaneous.

(a) No Inconsistent Agreements. Other than agreements with any A/N Party and/or any Liberty Party, the Company represents and warrants that it has not entered into, and agrees that it will not enter into, any agreement with respect to its securities that is inconsistent with the rights granted to the Investor Holders under this Agreement.

(b) Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. Neither this Agreement nor any right, benefit, remedy, obligation or liability arising hereunder may be assigned by any party without the prior written consent of the other parties, and any attempted assignment without such consent shall be null and void and of no effect, except that (i) the Company may assign this Agreement at any time in connection with a sale or acquisition of the Company, whether by merger, consolidation, sale of all or substantially all of the Company’s assets, or similar transaction, without the consent of any other party or Holders; provided, that if the successor or acquiring Person has publicly traded common stock, such Person shall agree in writing to assume all of the Company’s rights and obligations under this Agreement and (ii) an Investor Holder may assign its rights under this Agreement to a Permitted Transferee without the consent of the Company or any other Holder, in which case such Permitted Transferee shall, upon executing and delivering a counterpart to this Agreement in the form attached hereto as Exhibit A to the Company and each other Investor Holder, have the rights and benefits of, and shall be subject to the restrictions contained in, this Agreement as if such Permitted Transferee had originally been a party to this Agreement as an Investor Holder.

 

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(c) No Third-Party Beneficiaries. This Agreement is for the sole benefit of the parties hereto and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever, under or by reason of this Agreement; provided, however, that the parties hereto hereby acknowledge that the Persons set forth in Section 10 shall be express third-party beneficiaries of the obligations of the parties hereto set forth in Section 10.

(d) Remedies; Specific Performance. In the event of a breach or a threatened breach by any party to this Agreement of its obligations under this Agreement, any party injured or to be injured by such breach shall be entitled to specific performance of its rights under this Agreement or to injunctive relief, in addition to being entitled to exercise all rights provided in this Agreement and granted by law, it being agreed by the parties that the remedy at law, including monetary damages, for breach of any such provision will be inadequate compensation for any loss and that any defense or objection in any action for specific performance or injunctive relief for which a remedy at law would be adequate is hereby waived.

(e) No Waivers. No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.

(f) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the law of any jurisdiction other than the State of Delaware.

(g) Jurisdiction and Venue. The parties hereto hereby irrevocably submit to the jurisdiction of the Delaware Court of Chancery or, in the event (but only in the event) that such court does not have subject matter jurisdiction over such action or proceeding, in the United States District Court for the District of Delaware in respect of the interpretation and enforcement of the provisions of this Agreement and of the documents referred to in this Agreement, and in respect of the transactions contemplated hereby, and hereby waive, and agree not to assert, as a defense in any action, suit or proceeding for the interpretation or enforcement hereof or of any such document, that it is not subject thereto or that such action, suit or proceeding may not be brought or is not maintainable in the Delaware Court of Chancery, or in the event (but only in the event) that such court does not have subject matter jurisdiction over such action or proceeding, in the United States District Court for the District of Delaware, or that this Agreement or any such document may not be enforced in or by such courts, and the parties hereto irrevocably agree that all claims with respect to such action or proceeding shall be heard and determined in the Delaware Court of Chancery, or in the event (but only in the event) that such court does not have subject matter jurisdiction over such action or proceeding, in the United States District Court for the District of Delaware. The parties hereto hereby consent to and grant the Delaware Court of Chancery, or in the event (but only in the event) that such court does not have subject matter jurisdiction over such action or proceeding, the United States District Court for the District of Delaware,

 

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jurisdiction over the person of such parties and, to the extent permitted by law, over the subject matter of such dispute and agree that mailing of process or other papers in connection with any such action or proceeding in the manner provided in Section 12(h) or in such other manner as may be permitted by law shall be valid and sufficient service thereof. EACH OF THE PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHTS TO TRIAL BY JURY IN CONNECTION WITH ANY PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

(h) Notices. Any notice, demand, request, waiver, or other communication under this Agreement shall be in writing and shall be deemed to have been duly given on the date of service, if personally served or sent by facsimile; on the business day after such communication is delivered to a courier or mailed by express mail, if sent by courier delivery service or express mail for next day delivery; and on the third day after mailing, if mailed to the party to whom notice is to be given by first class mail, registered, return receipt requested, postage prepaid and addressed as follows:

 

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If to the Company:
Charter Communications, Inc.
400 Atlantic Street