EXHIBIT 99.(c)
AMENDED AND RESTATED TRANSACTION AGREEMENT
AMENDED AND RESTATED TRANSACTION AGREEMENT, dated as of
October 27, 1997 (this "Agreement"), among ADVANCE PUBLICATIONS, INC., a
New York corporation ("Advance"), XXXXXXXX BROADCASTING CORPORATION, a
New York corporation ("Xxxxxxxx"), ADVANCE/XXXXXXXX PARTNERSHIP, a New
York general partnership ("Advance/Xxxxxxxx"), TIME WARNER ENTERTAINMENT
COMPANY, L.P., a Delaware limited partnership ("TWE"), TW HOLDING CO., a
New York general partnership ("TW Holding Co."), and TIME WARNER
ENTERTAINMENT-ADVANCE/XXXXXXXX PARTNERSHIP, a New York general
partnership (the "Partnership").
WHEREAS, Advance/Xxxxxxxx and TWE entered into a Partnership
Agreement, dated as of September 9, 1994, as amended, pursuant to which
they formed the Partnership (the "Partnership Agreement");
WHEREAS, Advance, Xxxxxxxx, Advance/Xxxxxxxx, TWE and the
Partnership entered into a Contribution Agreement, dated as of
September 9, 1994, as amended (the "Contribution Agreement"), pursuant
to which each of Advance/Xxxxxxxx and TWE contributed certain specified
assets to the Partnership;
WHEREAS, the Partnership Agreement provides that if TWE or
any of its Affiliates acquires or invests in any System Opportunity (as
defined in the Partnership Agreement), TWE or such Affiliate shall use
reasonable best efforts to transfer or assign to the Partnership as
promptly as practicable the economic benefits of those cable television
systems comprising such System Opportunity that are within a Preferred
Cluster Area (as defined in the Partnership Agreement) (in a manner and
at a time intended to preserve any deferral of tax on such acquisition
and otherwise minimize the taxes payable in connection with such
transaction) at a price, payable in tax efficient consideration equal to
the fair market value of the System Opportunity transferred or assigned
to the Partnership;
WHEREAS, Time Warner Inc., a Delaware corporation and an
affiliate of TWE ("TWX"), has acquired several such System
Opportunities;
WHEREAS, prior to the Closing (as defined below) certain of
such System Opportunities (or portions thereof) will be transferred by
subsidiaries of TWX to TW Holding Co.;
WHEREAS, the parties hereto executed a Transaction
Agreement, dated as of August 15, 1996 (the "Original Transaction
Agreement"), setting forth the terms on which such System Opportunities
(or portions thereof) were to be transferred by TW Holding Co. to the
Partnership;
WHEREAS, the Original Transaction Agreement also provided
for the transfer by TWE to the Partnership of certain cable television
systems and related assets (i) in satisfaction of its obligations to
the Partnership in respect of the Designated Paragon Interest (as
defined in the Contribution Agreement) and (ii) in satisfaction of
certain of its outstanding obligations to the Partnership under Section
2 of the Letter Agreement, dated April 1, 1995, among Advance, Xxxxxxxx,
Advance/Xxxxxxxx and TWE (the "April 1995 Letter"); and
WHEREAS, the parties now wish to amend and restate the
Original Transaction Agreement in its entirety.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein and for other good and valuable
consideration, the receipt and adequacy of which are hereby
acknowledged, the parties agree as follows:
1. Contribution of Designated CVI Systems.
(a) Subject to the conditions set forth in Section
4, at the Closing (as defined below), (i) TW Holding Co. shall
contribute, assign, convey, transfer and deliver to the Partnership its
right, title and interest in and to the cable television systems
described on Schedule 1 hereto (the "Designated CVI Systems"), and (ii)
the Partnership shall assume, and agree to pay and discharge, as and
when they become due, or otherwise take subject to, the indebtedness and
other liabilities associated with the Designated CVI Systems that are
described on Schedule 2 hereto (the "Assumed CVI Liabilities").
(b) At the Closing, (i) TW Holding Co. shall deliver
instruments executed by it and in form and substance reasonably
satisfactory to the Partnership contributing, assigning, conveying,
transferring and delivering to the Partnership its right, title and
interest in and to the Designated CVI Systems and (ii) the Partnership
shall deliver instruments executed by it and in form and substance
reasonably satisfactory to TW Holding Co. by which it shall assume and
agree to pay and discharge the Assumed CVI Liabilities.
(c) In exchange for the contributions contemplated
by Section 1(a), TW Holding Co. shall receive (i) Common Partnership
Units (as defined in the Partnership Agreement) having a value equal to
50% of the Net CVI Contribution and (ii) TW Holding Co. Preferred
Partnership Units (as defined in the Partnership Agreement, as amended
by the First Amendment (as defined below)) having a value equal to 50%
of the Net CVI Contribution. For purposes of the foregoing, "Net CVI
Contribution" means the excess of (i) the Designated CVI System Value
determined in accordance with Section 9 over (ii) the Assumed CVI
Indebtedness.
2. Contribution of Designated Paragon Systems.
(a) Subject to the conditions set forth in Section
4, at the Closing, TWE shall contribute, assign, convey, transfer and
deliver to the Partnership (i) an undivided percentage interest
(determined in the manner described below) in its right, title and
interest in and to the cable television systems described on Schedule 3
hereto (the "Designated Paragon Systems") free of any indebtedness for
money borrowed and (ii) its right, title and interest in and to 8,832
Primestar subscribers in the localities described on Schedule 4 hereto
(the "Designated Primestar Subscribers"). The undivided percentage
interest in the Designated Paragon Systems to be contributed to the
Partnership by TWE pursuant to this paragraph shall equal a fraction,
the numerator of which shall be the excess of (x) the TWE Pre-Existing
Subscriber Obligation (as defined below) as of June 30, 1996 over (y)
one-half the number of Designated Primestar Subscribers contributed to
the Partnership pursuant to clause (ii) of this Section 2(a), and the
denominator of which shall be the total number of subscribers served by
all Designated Paragon Systems as of June 30, 1996. "TWE Pre-Existing
Subscriber Obligation" means, as of any date, a number of cable tele-
vision subscribers equal to the sum of (1) 25% of the total number of
subscribers served by cable television systems owned by Paragon as of
such date and (2) 238,500 subscribers, increased (in the case of this
clause (2) only) by the average rate of subscriber growth applicable to
TWE's cable television systems (other than Partnership cable television
systems) from July 1, 1994 through such date (without giving effect to
acquisitions, dispositions, trades and other extraordinary transactions
during such period). The equivalent number of subscribers represented
by the undivided interest in the Designated Paragon Systems contributed
to the Partnership by TWE pursuant to this Section 2(a) is referred to
herein as the "TWE Paragon Subscribers."
(b) Subject to the conditions set forth in Section
4, at the Closing, TW Holding Co. shall contribute, assign, convey,
transfer and deliver to the Partnership an undivided percentage interest
(determined in the manner described below) in its right, title and
interest in and to the Designated Paragon Systems, and the Partnership
shall assume, and agree to pay and discharge, as and when they become
due, or otherwise take subject to, the indebtedness and other
liabilities associated with the Designated Paragon Systems that are
described on Schedule 5 hereto (the "Assumed Paragon Liabilities"). The
undivided percentage interest in the Designated Paragon Systems to be
contributed to the Partnership by TW Holding Co. shall equal 100% less
the undivided percentage interest in the Designated Paragon Systems
contributed to the Partnership by TWE pursuant to Section 2(a). The
equivalent number of subscribers represented by the undivided interest
in the Designated Paragon Systems contributed to the Partnership by TW
Holding Co. pursuant to this Section 2(b) is referred to herein as the
"Excess Paragon Subscribers."
(c) At the Closing, (i) TWE shall deliver
instruments executed by it and in form and substance reasonably
satisfactory to the Partnership contributing, assigning, conveying,
transferring and delivering to the Partnership its right, title and
interest in and to the TWE Paragon Subscribers and the Designated
Primestar Subscribers in accordance with Section 2(a), (ii) TW Holding
Co. shall deliver instruments executed by it and in form and substance
reasonably satisfactory to the Partnership contributing, assigning,
conveying, transferring and delivering its right, title and interest in
and to the Excess Paragon Subscribers in accordance with Section 2(b)
and (iii) the Partnership shall deliver instruments executed by it and
in form and substance reasonably satisfactory to TW Holding Co. by which
it shall assume and agree to pay and discharge the Assumed Paragon
Liabilities.
(d) The Contribution to the Partnership by TWE of
its right, title and interest in and to the TWE Paragon Subscribers and
the Designated Primestar Subscribers pursuant to Section 2(a) shall be
made in full satisfaction of (i) all of its obligations in respect of
the Designated Paragon Interest under the (x) Contribution Agreement,
(y) the Letter Agreement, dated September 9, 1994, relating thereto and
(z) paragraph 17 of the April 1995 Letter and (ii) all of its
obligations under paragraph 2 of the April 1995 Letter with respect to
the assets described in paragraph 1 of Schedule A thereto, in each case
from and after July 1, 1996. In exchange for contributing to the
Partnership its right, title and interest in and to the Excess Paragon
Subscribers pursuant to Section 2(b), TW Holding Co. shall receive (i)
Common Partnership Units having a value equal to 50% of the Net Paragon
Contribution and (ii) TW Holding Co. Preferred Partnership Units having
a value equal to 50% of the Net Paragon Contribution. For purposes of
the foregoing, "Net Paragon Contribution" means the excess of (i) the
Excess Paragon Subscriber Value determined in accordance with Section 9
over (ii) the Assumed Paragon Indebtedness.
3. Beneficial Assets and Subsidiary Beneficial Assets.
If any consent or approval is required in connection with the
contribution to the Partnership pursuant to this Agreement of any cable
television system (or the franchise pursuant to which such cable
television system is operated) and such consent or approval is not
obtained prior to the Closing, then in lieu of contributing (and pending
the actual contribution of) such cable television systems to the
Partnership, TW Holding Co. or TWE, as applicable, will hold such cable
television systems (or cause such cable television systems to be held)
for the use and benefit of the Partnership. Such cable television
systems shall be treated as Beneficial Assets (as defined in the
Contribution Agreement) or Subsidiary Beneficial Assets (as defined in
the Contribution Agreement) in either case in accordance with Section
5.8 of the Partnership Agreement and Section 6.7 of the Contribution
Agreement. In accordance with Section 6.7 of the Contribution
Agreement, following the Effective Date, TW Holding Co. and TWE shall
continue to use their reasonable best efforts to obtain any consent or
approval necessary to effectuate the contribution to the Partnership of
any Beneficial Asset or Subsidiary Beneficial Asset not contributed to
the Partnership on the Effective Date, and shall take all reasonable
actions to effectuate the contribution
of such Beneficial Asset or Subsidiary Beneficial Asset after such
consent or approval is obtained; provided, however, that no cable
television franchise comprising a Beneficial Asset or Subsidiary
Beneficial Asset shall be required to be contributed to the Partnership
until consents or approvals shall have been obtained with respect to the
contribution of all cable television franchises in the same cable
television system as such franchise. The parties acknowledge and agree
that with respect to those Designated Paragon Systems that are proposed
to be contributed to a joint venture with TeleCommunications, Inc. (or
one of its affiliates) in accordance with the Letter of Intent, dated
September 2, 1997, TW Holding Co. and/or TWE may seek to obtain
necessary consents and approvals for the transfers contemplated by such
Letter of Intent at the same time as the transfers contemplated hereby.
4. Closing Conditions. The obligations of TW Holding
Co., TWE and the Partnership to effect the transactions contemplated by
this Agreement, shall be subject to the satisfaction at or prior to the
Closing of the following conditions, the imposition of which are solely
for the benefit of such parties and any one or more of which may be
waived by such parties in their discretion:
(a) each of TWE, Advance/Xxxxxxxx and TW Holding Co.
shall have executed and delivered an amendment to the Partnership
Agreement substantially in the form of Exhibit A (the "First
Amendment");
(b) the waiting periods (and any extensions
thereof), if any, applicable to the transactions contemplated by this
Agreement under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 0000
(xxx "XXX Xxx") shall have been terminated or shall have expired (it
being understood that as soon as practicable after the execution of this
Agreement, the parties will complete and file, or cause to be completed
and filed, any notification and report required to be filed under the
HSR Act and each such filing shall request early termination of the
waiting period imposed by the HSR Act); and
(c) no temporary restraining order, preliminary or
permanent injunction or other order issued by any court of competent
jurisdiction or other legal restraint or prohibition preventing the
consummation of the transactions contemplated hereby shall be in effect.
5. Advance/Xxxxxxxx Contribution. Subject to the
consummation of the transfer or beneficial assignment of the Designated
CVI Systems and the Excess Paragon Subscribers to the Partnership, on or
prior to the fourth anniversary of the Effective Date (but in no event
prior to the date that is six months following the Effective Date),
Advance/Xxxxxxxx shall contribute to the Partnership cash in an amount
equal to the Advance/Xxxxxxxx Contribution Amount, plus interest thereon
at the Interest Rate compounded (to the extent not paid) on a quarterly
basis, from July 1, 1996 until the date such contribution is made in
full. For the purposes of the foregoing, (i) "Advance/Xxxxxxxx
Contribution Amount" means an amount equal to
50% of the value of the Common Partnership Units received by TW Holding
Co. in exchange for its contribution of the Designated CVI Systems and
the Excess Paragon Subscribers and (ii) "Interest Rate" shall mean the
average interest rate applicable from time to time to borrowings by the
Partnership under the senior revolving credit facility of the
Partnership. At the Closing, Advance/Xxxxxxxx shall execute and deliver
to the Partnership a promissory note (the "Advance/Xxxxxxxx Note")
substantially in the form of Exhibit B hereto having a principal amount
equal to the Advance/Xxxxxxxx Contribution Amount, as security for its
obligation to contribute to the Partnership the Advance/Xxxxxxxx
Contribution Amount, plus interest as provided in this Section 5.
Advance/Xxxxxxxx shall take any and all actions and execute and deliver
all documents or agreements reasonably requested by the Partnership to
enable the Partnership to perfect its security interest in the
Advance/Xxxxxxxx Note. Advance/Xxxxxxxx and the Partnership acknowledge
and agree that the Advance/Xxxxxxxx Note shall not be deemed an asset of
the Partnership unless and until the Partnership seeks to realize upon
its security interest therein. In exchange for its agreement to
contribute the Advance/Xxxxxxxx Contribution Amount, Advance/Xxxxxxxx
shall receive Common Partnership Units having a value equal to the
Advance/Xxxxxxxx Contribution Amount.
6. Time and Place of Closing. Subject to the
satisfaction (or waiver) of each of the conditions set forth in Section
4, the closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of Xxxx, Weiss, Rifkind,
Xxxxxxx & Xxxxxxxx, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx
00000 (or such other place as the parties may mutually agree), at 10:00
a.m. (New York City time) on February 12, 1998 or such earlier date as
TWE may determine (upon 2 business days' notice to Advance/Xxxxxxxx), or
such later date as the parties may mutually agree in writing. The date
on which the Closing occurs is referred to herein as the "Effective
Date".
7. Effect of Contributions. Upon the consummation of the
contribution or beneficial assignment to the Partnership of the
Designated CVI Systems and the Designated Paragon Systems in accordance
with the terms and conditions of this Agreement, each of TWE (and its
Affiliates) and the Partnership shall be deemed to have satisfied all of
its obligations pursuant to Section 10.1 of the Partnership Agreement
with respect to the businesses and assets of TWI Cable Inc. (formerly
known as Cablevision Industries Corporation) and its affiliated
companies and KBLCOM Incorporated and its affiliated companies.
8. Representations and Warranties; Indemnification.
Subject to the Closing having occurred, each of TWX and TW Holding Co.
(i) shall use commercially reasonable efforts, at the Partnership's
expense, to enforce its rights with respect to the representations and
warranties set forth in the CVI Supplemental Agreement (as defined
below) as such representations and warranties relate to the Designated
CVI Systems, including by way of seeking indemnification in accordance
with the terms of the CVI Supplemental Agreement, and (ii) shall grant
to the
Partnership the benefits, if any, obtained as a result of the
enforcement of such rights. For the purposes of the foregoing, "CVI
Supplemental Agreement" shall mean the Supplemental Agreement, dated as
of February 6, 1995, among Cablevision Industries Corporation,
Cablevision Management Corporation of Philadelphia, Cablevision
Properties, Inc., Cablevision Industries Limited Partnership,
Cablevision Industries of Saratoga Associates, Cablevision Industries of
Tennessee L.P., Cablevision of Fairhaven/Acushnet, Cablevision
Industries of Middle Florida, Inc., Cablevision Industries of Florida,
Inc., Cablevision Industries of Delaware, Inc., ARA Cablevision, Inc.,
Xxxx Xxxxx, TWX and TW CVI Acquisition Corp.
9. Valuation of Designated CVI Systems and Excess Paragon
Subscribers.
(a) Designated CVI Systems. The gross value of the
Designated CVI Systems (the "Designated CVI System Value") shall equal
(i) the Annualized Operating Cash Flow (as defined below) of the
Designated CVI Systems multiplied by the CVI Multiple (as defined
below), plus (ii) all capital expenditures made in respect of the
Designated CVI Systems between January 4, 1996 and June 30, 1996, minus
(iii) $25,629,000. The Designated CVI System Value shall be subject to
adjustment pursuant to Section 10(a).
(b) Excess Paragon Subscribers. The gross value of
the Excess Paragon Subscribers (the "Excess Paragon Subscriber Value")
shall equal (i) the Annualized Operating Cash Flow of the Designated
Paragon Systems, multiplied by (ii) the Paragon Multiple (as defined
below), multiplied by (iii) a fraction, the numerator of which shall be
the number of subscribers comprising the Excess Paragon Subscribers and
the denominator of which shall be the total number of subscribers served
by all Designated Paragon Systems, in each case as of June 30, 1996.
(c) Valuation Terms. As used in this Section 9, the
following terms shall have the meanings set forth below:
"Annualized Operating Cash Flow" means, with respect
to any cable television systems, an amount equal to two times the
Operating Cash Flow for such cable television systems for the six months
ended June 30, 1996.
"CVI Multiple" means the Total Adjusted CVI
Acquisition Price divided by the Annualized Operating Cash Flow for all
of the cable television systems owned by CVI and its wholly owned
subsidiaries.
"Operating Cash Flow" means total revenues less total
operating, selling, general and administrative expenses, determined in
accordance with generally accepted accounting principles, generated at
the cable system level, exclusive of any corporate or divisional
overhead costs. For this purpose, divisional overhead costs shall
include the cost of regional offices to the extent that such offices
perform divisional functions.
"Paragon Multiple" means (i) the sum of (x) the Total
Adjusted CVI Acquisition Price, plus (y) the Total Adjusted Summit
Acquisition Price, divided by (ii) the sum of (x) the Annualized
Operating Cash Flow for all of the cable television systems owned by CVI
and its wholly owned subsidiaries, plus (y) the Annualized Operating
Cash Flow for the cable television systems owned by Summit
Communications Group, Inc. and its wholly owned subsidiaries.
"Total Adjusted CVI Acquisition Price" shall equal
$2,670,636,000.
"Total Adjusted Summit Acquisition Price" shall equal
$379,385,000.
(d) Procedure; Dispute Resolution. Within 60 days
following the Effective Date, TW Holding Co. shall deliver to the
Partnership, Advance/Xxxxxxxx and TWE a certificate (the "Valuation
Certificate"), signed by an appropriate officer of TW Holding Co. after
due inquiry by such officer, but without any personal liability to such
officer, setting forth the Designated CVI System Value, the Net CVI
Contribution, the Excess Paragon Subscriber Value and the Net Paragon
Contribution and the calculation thereof in accordance with Section
1(c), Section 2(d), Section 10(a), Section 10(b) and this Section 9. At
the request of Advance/Xxxxxxxx or TWE, TW Holding Co. shall provide the
requesting party with prompt and complete access to all working papers
and relevant supporting documentation as well as appropriate TWX, TW
Holding Co. or TWE personnel, in each case reasonably necessary in
connection with such party's review of the information set forth in the
Valuation Certificate. If either Advance/Xxxxxxxx or TWE shall conclude
that the Valuation Certificate is not accurate, then Advance/Xxxxxxxx or
TWE, as appropriate (the "Disputing Party"), within 90 days of receipt
of such Valuation Certificate, shall furnish TW Holding Co. with a
written statement of any discrepancy or discrepancies believed to exist
(the "Discrepancy Certificate"). The Disputing Party and TW Holding Co.
shall attempt jointly to resolve any discrepancy set forth in the
Discrepancy Certificate within 30 days after receipt thereof, which
resolution, if achieved, shall be binding upon all parties to this
Agreement and not subject to dispute or review. If the Disputing Party
and TW Holding Co. cannot resolve the discrepancy to their mutual
satisfaction within such 30-day period, the Disputing Party and TW
Holding Co. shall, within 10 days following the expiration of such
30-day period, jointly designate a nationally known independent
certified public accounting firm to review the Valuation Certificate,
together with the Discrepancy Certificate, and any other relevant
documents. If the Disputing Party and TW Holding Co. do not agree upon
a nationally known independent certified public accounting firm in
accordance with the preceding sentence within such 10-day period, then
such review shall be performed by a nationally known independent
certified
public accounting firm selected by two other nationally known certified
public accounting firms, one selected by the Disputing Party and one
selected by TW Holding Co.; provided that if one party fails to notify
the other party of its selection within 5 days following receipt from
the other party of its selection, the accounting firm so selected shall
perform such review. The cost of retaining such independent public
accounting firm shall be borne one-half by the Disputing Party and
one-half by TW Holding Co. Such firm shall report its conclusions and
such report shall be conclusive and binding on all parties to this
Agreement and not subject to dispute or review. The Designated CVI
System Value, the Net CVI Contribution, the Advance/Xxxxxxxx Contribution
Amount, the Assumed CVI Liabilities, the Excess Paragon Subscriber Value,
the Net Paragon Contribution and the Assumed Paragon Liabilities
shall be adjusted, if necessary, to reflect any such resolution.
10. Closing Adjustments.
(a) July 1, 1996 Adjustments.
(i) TW Holding Co. Adjustment Amount. At the Closing, TW
Holding Co. shall deliver to the Partnership a certificate setting
forth the estimated TW Holding Co. Adjustment Amount (as defined
below), which shall be determined in good faith by TW Holding Co.
If the estimated TW Holding Co. Adjustment Amount is greater than
zero, then the Designated CVI System Value shall be reduced by an
amount equal to such estimated TW Holding Co. Adjustment Amount.
If the estimated TW Holding Co. Adjustment Amount is less than
zero, then the Designated CVI System Value shall be increased by
an amount equal to the absolute value of such TW Holding Co.
Adjustment Amount. The Valuation Certificate delivered by TW
Holding Co. pursuant to Section 9(d) shall set forth the final TW
Holding Co. Adjustment Amount and, to the extent necessary, the
Designated CVI System Value, the Net CVI Contribution, the
Advance/Xxxxxxxx Contribution Amount and the Assumed CVI
Liabilities shall be adjusted to reflect difference between the
final TW Holding Co. Adjustment Amount and the estimated TW
Holding Co. Adjustment Amount.
(ii) TWE Adjustment Amount. At the Closing, TWE shall
deliver to the Partnership a certificate setting forth the
estimated TWE Adjustment Amount (as defined below), which shall be
determined in good faith by TWE. If the estimated TWE Adjustment
Amount is greater than zero, then at the Closing TWE shall
contribute to the Partnership an amount in cash equal to such
estimated TWE Adjustment Amount. If the estimated TWE Adjustment
Amount is less than zero, then at the Closing the Partnership
shall assume from TWE indebtedness for money borrowed in an amount
equal to the absolute value of such TWE Adjustment Amount. No
later than 60 days
following the Closing, TWE shall deliver to the Partnership
a certificate setting forth the final TWE Adjustment Amount
(the "TWE Closing Adjustments Certificate"). If the final
TWE Adjustment Amount is greater than the estimated TWE
Adjustment Amount, then TWE shall promptly contribute to the
Partnership an amount in cash equal to the final TWE
Adjustment Amount minus the estimated TWE Adjustment Amount.
If the final TWE Adjustment Amount is less than the
estimated TWE Adjustment Amount, then the Partnership shall
promptly pay to TWE an amount in cash equal to the estimated
TWE Adjustment Amount minus the final TWE Adjustment Amount.
The foregoing adjustments are intended to place the
Partnership and its Partners in substantially the same after-tax
economic position with respect to the Designated CVI Systems, the
Designated Paragon Systems and the Designated Primestar Subscribers that
it would have been in had the Effective Date occurred on July 1, 1996.
For purposes of the foregoing, (i) "TW Holding Co. Adjustment Amount"
means (A) the Cash Flow (as defined below) generated by the Designated
CVI Systems and the Excess Paragon Subscribers during the period from
July 1, 1996 to the Effective Date, less (B) interest on the Assumed CVI
Indebtedness and the Assumed Paragon Indebtedness accruing from July 1,
1996 to the Effective Date (calculated at an interest rate equal to the
interest rate that would have been applicable to such Assumed CVI
Indebtedness and Assumed Paragon Indebtedness had such amounts been
indebtedness of the Partnership under the senior bank credit facility of
the Partnership in effect during such period), less (C) the Priority
Return (as defined in the First Amendment) that would have accrued on
the TW Holding Co. Preferred Partnership Units from July 1, 1996 to the
Effective Date had the TW Holding Co. Preferred Partnership Units issued
on the Effective Date been outstanding throughout such period, less
(D) an amount equal to the income taxes that would be payable on the net
income relating to the Cash Flow described in clause (A), calculated at
the Special Effective Tax Rate (as defined in the First Amendment)
assuming for such purposes that such net income were reduced by the
amount of interest described in clause (B) and the amount of the
Priority Return described in clause (C); (ii) "TWE Adjustment Amount"
means (A) the Cash Flow generated by the TWE Paragon Subscribers and the
Designated Primestar Subscribers during the period from July 1, 1996 to
the Effective Date, minus (B) an amount equal to the income taxes that
would be payable on the net income relating to the Cash Flow described
in clause (A), calculated at the Special Effective Tax Rate; and (iii)
"Cash Flow" means, with respect to any period, (A) total revenues less
total operating, selling, general and administrative expenses,
determined in accordance with generally accepted accounting principles
(excluding expenses that do not result in the accrual of current
liabilities), generated at the cable system level, including an
allocation of the management fees payable to TWE (calculated in a manner
consistent with the manner in which such management fees would have been
calculated under Section 3.1(h) of the Partnership Agreement had such
systems been owned by the Partnership during such period) minus
(B) capital expenditures, plus or minus (C) changes in working capital
from the
beginning of such period to the end of such period (assuming for such
purposes that working capital as of June 30, 1996 is zero). For
purposes of the foregoing, the Cash Flow generated by the Excess Paragon
Subscribers and the TWE Paragon Subscribers, respectively, shall bear
the same proportion to the total Cash Flow generated by the Designated
Paragon Systems as the number of subscribers comprising the Excess
Paragon Subscribers and the TWE Paragon Subscribers, respectively, bear
to the total number of subscribers served by all Designated Paragon
Systems. The adjustments made pursuant to this Section 10 are already
reflected in the capital account balances of the partners of the
Partnership and, accordingly, no additional adjustments to the partners'
capital account balances shall be made in respect of such adjustments.
Notwithstanding anything to the contrary contained in the Contribution
Agreement, the Free Cash Flow Amount payable by TWE to the Partnership
in respect of the assets described in paragraph 1 of Schedule A to the
April 1995 Letter for the period from April 1, 1995 through June 30,
1996 shall not take into account changes in working capital.
(b) Dispute Resolution. At the request of
Advance/Xxxxxxxx, TWE shall provide Advance/Xxxxxxxx with prompt and
complete access to all working papers and relevant supporting
documentation as well as appropriate TWE personnel, in each case
reasonably necessary in connection with Advance/Xxxxxxxx'x review of the
information set forth in the TWE Closing Adjustments Certificate. If
Advance/Xxxxxxxx shall conclude that the TWE Closing Adjustments
Certificate is not accurate, then Advance/Xxxxxxxx, within 90 days of
receipt of such Closing Adjustments Certificate, shall furnish TWE with
a written statement of any discrepancy or discrepancies believed to
exist (the "Dispute Certificate"). Advance/Xxxxxxxx and TWE shall
attempt jointly to resolve any discrepancy set forth in the Dispute
Certificate within 30 days after receipt thereof which resolution, if
achieved, shall be binding upon all parties to this Agreement and not
subject to dispute or review. If Advance/Xxxxxxxx and TWE cannot
resolve the discrepancy to their mutual satisfaction within such 30-day
period, Advance/Xxxxxxxx or TWE shall, within 10 days following the
expiration of such 30-day period, jointly designate a nationally known
independent certified public accounting firm to review the TWE Closing
Adjustments Certificate, together with the Dispute Certificate and any
other relevant documents. If Advance/Xxxxxxxx and TWE do not agree upon
a nationally known independent certified public accounting firm in
accordance with the preceding sentence within such 10-day period, then
such review shall be performed by a nationally known independent
certified public accounting firm selected by two other nationally known
independent certified public accounting firms, one selected by
Advance/Xxxxxxxx and one selected by TWE; provided that if one party
fails to notify the other party of its selection within 5 days following
receipt from the other party of its selection, the accounting firm so
selected shall perform such review. The cost of retaining such
accounting firm shall be borne one-half by Advance/Xxxxxxxx and one-half
by TWE. Such accounting firm shall report its conclusions and such
report shall be conclusive and binding on all parties to
this Agreement and not subject to dispute or review and, if necessary,
the parties shall take all such action necessary to implement such
conclusions.
11. Other Agreements.
(a) Revised Long Term Strategic Plan. Within 60
days following the Effective Date, TWE shall present to Advance/Xxxxxxxx
for its approval a revised Long Term Strategic Plan as contemplated by
Section 3.3(a) of the Partnership Agreement, which plan shall give
effect to the acquisition by the Partnership of the Designated CVI
Systems, the Designated Paragon Systems and the Designated Primestar
Subscribers.
(b) Post-Closing Accounting Report. Within 90 days
following the Effective Date, TWE shall provide to the Advance/Xxxxxxxx
Accountants a complete report on the following matters:
(i) Accounting for the Designated Paragon Interest for the
period from April 1, 1995 through June 30, 1996.
(ii) Revised accounting for the assets described in
paragraph 1 of Schedule A to the April 1995 Letter for the period
from April 1, 1995 through June 30, 1996 based upon a pro rata
allocation of the Designated Paragon Systems.
(iii) Accounting for all Partnership Primestar activity
during the period from October 1, 1995 through June 30, 1996, and
the Primestar activity within the TWE Systems and the
Advance/Xxxxxxxx Systems (each, as defined in the Contribution
Agreement) for the period from April 1, 1995 through September 30,
1995. Such report shall include a complete and correct listing of
all Partnership Primestar territories (whether or not any
subscribers are currently served) and shall properly allocate to
the Partnership all Primestar activity in all systems formerly
owned by Advance/Xxxxxxxx and all TWE systems contributed to the
Partnership, plus Savannah.
TWE shall fully and promptly cooperate with the Advance/Xxxxxxxx
Accountants in their review and audit of such reports so that within 90
days of receipt of such reports, TWE and Advance/Xxxxxxxx shall be in
position to agree upon the final accounting of such matters. TWE shall
thereafter make any appropriate adjustments.
(c) Amendment to Section 6.7 of Contribution
Agreement. Section 6.7 of the Contribution Agreement shall be amended
(effective from and after the Effective Date) by deleting the following
words from the third sentence thereof: "(net of taxes on the net income
relating thereto calculated at the highest marginal combined Federal,
state and local income tax rate (giving effect to the deduction of state
and local income taxes, as applicable, for Federal and state income tax
purposes), applicable to a corporation located in the jurisdiction in
which the Person holding such Beneficial Asset is located)".
(d) Substitution of Paragon for TW Holding Co.
Prior to the Closing, TWE may elect by written notice to
Advance/Xxxxxxxx, to substitute Paragon Communications, a Colorado
general partnership ("Paragon"), for TW Holding Co., in which case all
references herein to TW Holding Co. shall be deemed to mean Paragon.
12. Miscellaneous.
(a) This Agreement shall be governed by and
construed in accordance with the laws of the State of New York (other
than its rules of conflicts of law to the extent the application of the
law of another jurisdiction would be required thereby).
(b) The parties hereto shall cooperate with each
other and their respective counsel and accountants in connection with
any steps required to be taken as part of their respective obligations
under this Agreement and will each use reasonable best efforts to
perform or fulfill all conditions and obligations to be performed or
fulfilled by them under this Agreement so that the transactions
contemplated hereby shall be consummated.
(c) This Agreement may be terminated by either TWE
or Advance/Xxxxxxxx (by delivery of written notice to the other) if the
Closing hereunder has not occurred on or before April 1, 1998.
(d) Section headings contained in this Agreement are
inserted only as a matter of convenience and reference and in no way
define, limit, extend or describe the scope of this Agreement or the
intent of any provisions hereof.
(e) This Agreement may be executed in one or more
counterparts, each of which shall be an original and all of which, when
taken together, shall constitute one and the same instrument.
(f) This Agreement supersedes the Original
Transaction Agreement and from and after the date hereof the Original
Transaction Agreement shall be of no force and effect.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
ADVANCE PUBLICATIONS, INC.
By: /s/ X.X. XXXXXXXX, JR.
Name: X.X. Xxxxxxxx, Jr.
Title: Chairman & Vice President
XXXXXXXX BROADCASTING
CORPORATION
By: /s/ X.X. XXXXXXXX, JR.
Name: X.X. Xxxxxxxx, Jr.
Title: Vice President
ADVANCE/XXXXXXXX PARTNERSHIP
By: ADVANCE COMMUNICATION
CORP., General Partner
By: /s/ X.X. XXXXXXXX, JR.
Name: X.X. Xxxxxxxx, Jr.
Title: Vice President
By: XXXXXXXX BROADCASTING
CORPORATION, General Partner
By: /s/ X.X. XXXXXXXX, JR.
Name: X.X. Xxxxxxxx, Jr.
Title: Vice President
TIME WARNER ENTERTAINMENT
COMPANY, L.P.
By: /s/ XXXXXXX X. XXXX
Name: Xxxxxxx X. Xxxx
Title: Vice President
TW HOLDING CO.
By: TWI CABLE INC., General Partner
By: /s/ XXXXXXX X. XXXX
Name: Xxxxxxx X. Xxxx
Title: Vice President
TIME WARNER ENTERTAINMENT -
ADVANCE/XXXXXXXX PARTNERSHIP
By: TIME WARNER ENTERTAINMENT
COMPANY, L.P., General Partner
By: /s/ XXXXXXX X. XXXX
Name: Xxxxxxx X. Xxxx
Title: Vice President
By: ADVANCE/XXXXXXXX
PARTNERSHIP, General Partner
By: ADVANCE COMMUNICATION CORP.,
General Partner
By: /s/ X.X. XXXXXXXX, JR.
Name: X.X. Xxxxxxxx, Jr.
Title: Vice President
By: XXXXXXXX BROADCASTING
CORPORATION, General Partner
By: /s/ X.X. XXXXXXXX, JR.
Name: X.X. Xxxxxxxx, Jr.
Title: Vice President
For purposes of Section 8 only:
TIME WARNER INC.
By: /s/ XXXXXXX X. XXXX
Name: Xxxxxxx X. Xxxx
Title: Vice President
Accepted and agreed to as
of the date set forth above:
U S WEST, INC.
By: /s/ XXXXX XXXXXXX
Name: Xxxxx Xxxxxxx
Title: Vice President
U S WEST MULTIMEDIA COMMUNICATIONS, INC.
By: /s/ XXXXX XXXXXXX
Name: Xxxxx Xxxxxxx
Title: Vice President
