EXHIBIT 99.4
EXECUTION COPY
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EXCHANGE AGREEMENT
DATED AS OF APRIL 20, 2005
BY AND AMONG
COMCAST CORPORATION,
TIME WARNER CABLE INC.,
TIME WARNER NY CABLE LLC
AND
THE OTHER PARTIES NAMED HEREIN
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TABLE OF CONTENTS
Page
ARTICLE 1 Definitions................................................................................ 2
Section 1.1 Terms Defined in this Section............................................... 2
Section 1.2 Other Definitions........................................................... 29
Section 1.3 Rules of Construction....................................................... 33
ARTICLE 2 Exchange................................................................................... 34
Section 2.1 Newco Transactions and Exchanges............................................ 34
Section 2.2 TWC Native Assumed Liabilities.............................................. 43
Section 2.3 Comcast Native Assumed Liabilities.......................................... 43
Section 2.4 Closing Adjustments......................................................... 44
Section 2.5 Like-Kind Exchange Covenants................................................ 45
ARTICLE 3 Related Matters............................................................................ 46
Section 3.1 Employees................................................................... 46
Section 3.2 Use of Names and Logos...................................................... 54
Section 3.3 Transfer Laws............................................................... 55
Section 3.4 Transfer Taxes and Fees..................................................... 55
ARTICLE 4 Comcast's Representations and Warranties................................................... 55
Section 4.1 Organization and Qualification of the Comcast Group......................... 55
Section 4.2 Authority................................................................... 55
Section 4.3 No Conflict; Required Consents.............................................. 56
Section 4.4 Sufficiency of Assets; Title................................................ 57
Section 4.5 Comcast Native Franchises, Comcast Native Licenses, Comcast Native
Contracts, Comcast Native Owned Property and Comcast Native Real Property
Interests................................................................... 57
Section 4.6 Employee Benefits........................................................... 60
Section 4.7 Litigation.................................................................. 60
Section 4.8 Comcast Native Systems Information.......................................... 60
Section 4.9 Compliance with Legal Requirements.......................................... 61
Section 4.10 Real Property............................................................... 61
Section 4.11 Financial Statements; No Adverse Change..................................... 61
Section 4.12 Employees................................................................... 62
Section 4.13 Environmental............................................................... 63
Section 4.14 Transactions with Affiliates................................................ 64
Section 4.15 Undisclosed Material Liabilities............................................ 64
Section 4.16 Insurance................................................................... 64
Section 4.17 Intellectual Property....................................................... 65
Section 4.18 Brokers..................................................................... 65
Section 4.19 Transferred Systems Options................................................. 65
Section 4.20 Comcast Native Systems Proprietary Rights................................... 65
Section 4.21 Promotional Campaigns....................................................... 65
Section 4.22 Taxes....................................................................... 66
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Section 4.23 Comcast Newcos.............................................................. 67
Section 4.24 Adelphia Representations.................................................... 68
Section 4.25 Comcast/Adelphia Purchase Agreement......................................... 68
ARTICLE 5 TWC's Representations and Warranties....................................................... 69
Section 5.1 Organization and Qualification of the TWC Group............................. 69
Section 5.2 Authority................................................................... 69
Section 5.3 No Conflict; Required Consents.............................................. 70
Section 5.4 Sufficiency of Assets; Title................................................ 70
Section 5.5 TWC Native Franchises, TWC Native Licenses, TWC Native Contracts, Native
Property and Real Property Interests........................................ 71
Section 5.6 Employee Benefits........................................................... 73
Section 5.7 Litigation.................................................................. 74
Section 5.8 TWC Native System Information............................................... 74
Section 5.9 Compliance with Legal Requirements.......................................... 74
Section 5.10 Real Property............................................................... 75
Section 5.11 Financial Statements; No Adverse Change..................................... 75
Section 5.12 Employees................................................................... 76
Section 5.13 Environmental............................................................... 77
Section 5.14 Transactions with Affiliates................................................ 78
Section 5.15 Undisclosed Material Liabilities............................................ 78
Section 5.16 Insurance................................................................... 78
Section 5.17 Intellectual Property....................................................... 78
Section 5.18 Brokers..................................................................... 79
Section 5.19 Transferred Systems Options................................................. 79
Section 5.20 TWC Native System Proprietary Rights........................................ 79
Section 5.21 Promotional Campaigns....................................................... 79
Section 5.22 Taxes....................................................................... 79
Section 5.23 TWC Newcos.................................................................. 80
Section 5.24 Adelphia Representations.................................................... 82
Section 5.25 TWC/Adelphia Purchase Agreement............................................. 82
ARTICLE 6 Covenants.................................................................................. 82
Section 6.1 Certain Affirmative Covenants of Transferor Parent.......................... 82
Section 6.2 Certain Negative Covenants of Transferor Parent............................. 86
Section 6.3 Certain Additional Covenants Regarding Required Consents; HSR Act Filing.... 89
Section 6.4 Confidentiality and Publicity............................................... 90
Section 6.5 Title Insurance Commitments................................................. 91
Section 6.6 Pre-Closing Access.......................................................... 93
Section 6.7 Post-Closing Obtaining of Consents.......................................... 93
Section 6.8 Transitional Services....................................................... 94
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Section 6.9 Cooperation Upon Inquiries as to Rates...................................... 95
Section 6.10 Updated Schedules........................................................... 97
Section 6.11 Certain Notices............................................................. 98
Section 6.12 Franchise Expirations....................................................... 98
Section 6.13 Environmental Reports....................................................... 98
Section 6.14 Commercially Reasonable Efforts; Further Assurances......................... 99
Section 6.15 Post-Closing Access to Personnel Records.................................... 99
Section 6.16 Insurance................................................................... 99
Section 6.17 [Intentionally Omitted]..................................................... 100
Section 6.18 Promotional Campaigns....................................................... 100
Section 6.19 Local Retransmission Consent Agreements..................................... 101
Section 6.20 Adelphia Purchase Agreements................................................ 101
Section 6.21 Adelphia Shared Assets; Mistaken Allocations................................ 106
Section 6.22 Additional Financial Information............................................ 107
Section 6.23 Newco Disregarded Entities.................................................. 108
Section 6.24 Certain Consultation Obligations............................................ 108
Section 6.25 Ordinary Course from Closing to Closing Time................................ 108
Section 6.26 Urban Purchase.............................................................. 108
ARTICLE 7 Conditions Precedent....................................................................... 108
Section 7.1 Conditions to the Comcast Parties' Obligations.............................. 108
Section 7.2 Conditions to the TWC Group's Obligations................................... 111
ARTICLE 8 Closing.................................................................................... 113
Section 8.1 Closing; Time and Place..................................................... 113
Section 8.2 TWC Group's Obligations..................................................... 114
Section 8.3 Comcast Group's Obligations................................................. 115
ARTICLE 9 Termination and Default.................................................................... 117
Section 9.1 Termination Events.......................................................... 117
Section 9.2 Effect of Termination....................................................... 118
ARTICLE 10 Indemnification........................................................................... 118
Section 10.1 Indemnification by the TWC Transferors...................................... 118
Section 10.2 Indemnification by the Comcast Group........................................ 119
Section 10.3 Procedure for Certain Indemnified Claims.................................... 120
Section 10.4 Determination of Indemnification Amounts and Related Matters................ 121
Section 10.5 Time and Manner of Certain Claims........................................... 123
Section 10.6 Other Indemnification....................................................... 123
Section 10.7 Exclusivity................................................................. 123
Section 10.8 Tax Treatment of Indemnification Payments................................... 124
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Section 10.9 Guaranteed Obligations of Transferors....................................... 124
ARTICLE 11 Miscellaneous Provisions.................................................................. 125
Section 11.1 Expenses.................................................................... 125
Section 11.2 Attorneys' Fees............................................................. 125
Section 11.3 Waivers..................................................................... 125
Section 11.4 Notices..................................................................... 125
Section 11.5 Entire Agreement; Prior Representations; Amendments......................... 127
Section 11.6 Specific Performance........................................................ 127
Section 11.7 Jurisdiction................................................................ 127
Section 11.8 WAIVER OF JURY TRIAL........................................................ 128
Section 11.9 Binding Effect; Benefits.................................................... 128
Section 11.10 Headings and Schedules...................................................... 128
Section 11.11 Counterparts................................................................ 128
Section 11.12 GOVERNING LAW............................................................... 128
Section 11.13 Severability................................................................ 128
Section 11.14 Third Parties; Joint Ventures............................................... 129
Section 11.15 Construction................................................................ 129
Section 11.16 Risk of Loss; Government Taking............................................. 129
Section 11.17 Additional Parties.......................................................... 131
Section 11.18 Commercially Reasonable Efforts............................................. 131
Section 11.19 Time........................................................................ 131
EXHIBITS
Exhibit A Comcast Dallas Native Systems
Exhibit B Comcast LA Native Systems
Exhibit C Comcast Ohio Native System
Exhibit D TWC Native System
Exhibit E TWC/Adelphia Systems
Exhibit F Comcast/Adelphia Systems
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EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT ("Agreement") is made and entered into as of
April 20, 2005 among Comcast Corporation, a Pennsylvania corporation
("Comcast"), Comcast Cable Communications Holdings, Inc., a Delaware corporation
("Comcast Cable"), Comcast of Georgia, Inc., a Colorado corporation ("Comcast
Georgia"), and TCI Holdings, Inc., a Delaware corporation ("TCI," and together
with Comcast Cable and Comcast Georgia, the "Comcast Transferors"; the Comcast
Transferors and Comcast are referred to herein collectively as the "Comcast
Parties"), Time Warner Cable Inc., a Delaware corporation ("Time Warner Cable"
or "TWC"), Time Warner NY Cable LLC, a Delaware limited liability company ("TW
NY"), and Urban Cable Works of Philadelphia, L.P., a Delaware limited
partnership ("Urban", and together with TW NY, the "TWC Transferors"; the TWC
Transferors and TWC are referred to herein collectively as the "TWC Parties").
RECITALS
A. Comcast and its Affiliates own and operate (i) the cable
communications systems serving the communities identified in Exhibit A hereto
(the "Comcast Dallas Native Systems"), (ii) the cable communications systems
serving the communities identified in Exhibit B hereto (the "Comcast LA Native
Systems"), and (iii) the cable communications systems serving the communities
identified in Exhibit C hereto (the "Comcast Ohio Native Systems", and together
with the Comcast Dallas Native Systems and the Comcast LA Native Systems, the
"Comcast Native Systems").
B. TWC and its Affiliates operate the cable communications system
serving the communities set forth on Exhibit D hereto (the "TWC Native System").
C. TW NY is party to that certain Asset Purchase Agreement dated as
of the date hereof (as amended from time to time in accordance therewith and
herewith, the "TWC/Adelphia Purchase Agreement") between Adelphia Communications
Corporation, a Delaware corporation ("Adelphia"), and TW NY, a true and complete
copy of which has been provided to Comcast.
D. Comcast is party to that certain Asset Purchase Agreement dated
as of the date hereof (as amended from time to time in accordance therewith and
herewith, the "Comcast/Adelphia Purchase Agreement") between Adelphia and
Comcast, a true and complete copy of which has been provided to TWC.
E. Subject to the terms and conditions in the TWC/Adelphia Purchase
Agreement, at the Adelphia Closing, among other things, the TWC Newcos (as
defined below), will acquire ownership of the cable communications systems
serving the communities identified in Exhibit E hereto (the "TWC/Adelphia
Systems" and, together with the TWC Native System, the "TWC Transferred
Systems").
F. Subject to the terms and conditions in the Comcast/Adelphia
Purchase Agreement, at the Adelphia Closing, among other things, Comcast and its
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Affiliates will acquire ownership of the Transferred Joint Venture Entities (as
defined below), which own and operate the cable communications systems serving
the communities identified in Exhibit F hereto (the "Comcast/Adelphia Systems"
and, together with the Comcast Native Systems, the "Comcast Transferred
Systems").
G. Urban is managed by TWC, and TWC has agreed with third parties to
purchase 100% ownership of Urban subject to specified terms and conditions and
Urban's rights and obligations hereunder are conditioned upon the consummation
of such purchase (the "Urban Purchase").
H. This Agreement sets forth the terms and conditions on which
Comcast and its Affiliates shall convey, or cause to be conveyed directly or
indirectly, to TWC and its Affiliates substantially all of the assets of the
Comcast Transferred Systems, and TWC and its Affiliates shall convey, or cause
to be conveyed directly or indirectly, to Comcast and its Affiliates
substantially all of the assets of the TWC Transferred Systems, in such a manner
as to effect exchanges of property of a like-kind within the meaning of Section
1031 of the Internal Revenue Code (the "Code").
AGREEMENTS
In consideration of the mutual covenants and promises set forth in
this Agreement, the Comcast Parties and the TWC Parties agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 Terms Defined in this Section. In addition to terms
defined elsewhere in this Agreement, the following terms with initial capital
letters, when used in this Agreement, shall have the meanings set forth below:
"Adelphia Assets" means the Comcast/Adelphia Assets and/or the
TWC/Adelphia Assets, as the context requires.
"Adelphia Assumed Liabilities" means the TWC/Adelphia Assumed
Liabilities and/or the Comcast/Adelphia Assumed Liabilities, as the context
requires.
"Adelphia Basic Subscriber" means a Basic Subscriber, as defined in
the relevant Adelphia Purchase Agreement.
"Adelphia Business" means the Comcast/Adelphia Business and/or the
TWC/Adelphia Business, as the context requires.
"Adelphia Closing" means the closing of the transactions
contemplated by the TWC/Adelphia Purchase Agreement and/or the closing of the
transactions contemplated by the Comcast/Adelphia Purchase Agreement (for the
avoidance of doubt, other than pursuant to Section 5.15 of the TWC/Adelphia
Purchase Agreement), as the context requires.
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"Adelphia Closing Documents" means the Ancillary Agreements (as
defined in the relevant Adelphia Purchase Agreement).
"Adelphia Employee" means any individual who, immediately prior to
the Adelphia Closing, was then an employee of Adelphia or its Subsidiaries, and
who became a "Transferred Employee" (for this purpose only, as such term is
defined in the relevant Adelphia Purchase Agreement) on the Adelphia Closing.
"Adelphia Newcos" means the Comcast/Adelphia Newcos and/or the
TWC/Adelphia Newcos, as the context requires.
"Adelphia Purchase Agreements" means the TWC/Adelphia Purchase
Agreement and/or the Comcast/Adelphia Purchase Agreement, as the context
requires.
"Adelphia Subscriber Reduction Threshold" means, with respect to
each Adelphia Newco, (i) the Initial Adelphia Subscriber Number for such
Adelphia Newco multiplied by (ii) the product of 0.25% multiplied by a fraction,
the numerator of which is the number of days from and including the day
immediately following the relevant Adelphia Closing through and including the
Closing Date, and the denominator of which is 30 (provided that such fraction
shall be rounded up to the nearest whole number).
"Adelphia Systems" means the TWC/Adelphia Systems and/or the
Comcast/Adelphia Systems, as the context requires.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by or under common control with
such Person as of the date on which, or at any time during the period for which,
the determination of affiliation is being made, and "Affiliated" shall have a
correlative meaning; provided, that for purposes of this definition and the
definition of "Controlled Affiliate", "control" (including with correlative
meanings, the terms "controlled by" and "under common control with"), as used
with respect to any Person, shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities or other Equity
Securities, by Contract or otherwise. For purposes of this Agreement, (i) each
Transferred Joint Venture Entity shall be deemed an Affiliate of Adelphia prior
to completion of the Adelphia Closing under the Comcast/Adelphia Purchase
Agreement and an Affiliate of Comcast after the Adelphia Closing under the
Comcast/Adelphia Purchase Agreement, (ii) each Comcast Newco shall be deemed an
Affiliate of Comcast prior to completion of the Closing and an Affiliate of TWC
after the Closing and (iii) each TWC Newco shall be deemed an Affiliate of TWC
prior to completion of the Closing and an Affiliate of Comcast after the
Closing.
"Affiliated Group" means any affiliated, consolidated, combined or
unitary group for Tax purposes under any federal, state, local or foreign law
(including regulations promulgated thereunder) including (without limitation)
any affiliated group within the meaning of Section 1504(a) of the Code.
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"Applicable Taxes" means Taxes that are Comcast/Adelphia Assumed
Liabilities, Comcast Native Assumed Liabilities, TWC/Adelphia Assumed
Liabilities or TWC Native Assumed Liabilities, as the context requires.
"Applicable Tax Return" means any Tax Return relating to Applicable
Taxes.
"Authorization" means any waiver, amendment, consent, approval,
license, franchise, permit (including construction permits), certificate,
exemption, variance or authorization of, expiration or termination of any
waiting period requirement (including pursuant to the HSR Act) or other action
by, or notice, filing, registration, qualification, declaration or designation
with, any Person (including any Governmental Authority).
"Benefit Plan" means a Comcast Benefit Plan or a TWC Benefit Plan,
as the context requires.
"Budgeted Subscriber Number" means, with respect to each Native
Newco, the number of Individual Subscribers of the Native Systems of such Native
Newco corresponding to the month in which the Closing occurs, as set forth on
Schedule 1.1A.
"Business Day" means any day other than a Saturday or Sunday or a
day on which banks in New York, New York are authorized or required to be
closed.
"Cable Act" means Title VI of the Communications Act, 47 USC Section
521, et seq.
"Capital Expenditure Adjustment Amount" means:
(i) with respect to each Comcast/Adelphia Newco, the portion
of the Capital Expenditure Adjustment Amount (as defined in the
Comcast/Adelphia Purchase Agreement and as determined pursuant to
Section 2.8 of the Comcast/Adelphia Purchase Agreement for purposes
of determining the Final Adjustment Amount (as defined therein)
thereunder) attributable to the portion of the Group 1 Business held
by such Comcast/Adelphia Newco after giving effect to the
Comcast/Adelphia Newco Transaction multiplied by (i) 133 1/3% to the
extent attributable to the Century Business, (ii) 150% to the extent
attributable to the Parnassos Business or the Western Business and
(iii) 100% to the extent attributable to the Group 1 Remainder
Business (expressed as a positive, if positive, or a negative, if
negative); and
(ii) with respect to each TWC/Adelphia Newco, the portion of
the Capital Expenditure Adjustment Amount (as defined in the
TWC/Adelphia Purchase Agreement and as determined pursuant to
Section 2.6 of the TWC/Adelphia Purchase Agreement for purposes of
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determining the Final Adjustment Amount (as defined therein)
thereunder) attributable to the portion of the Group 1 Business held
by such TWC/Adelphia Newco after giving effect to the TWC/Adelphia
Newco Transaction referred to in the third sentence of Section
2.1(a) (expressed as a positive, if positive, or as a negative, if
negative).
"Century Business" has the meaning set forth in the Comcast/Adelphia
Purchase Agreement.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, and any rules or regulations
promulgated thereunder (42 U.S.C. Sections 9601 et seq.).
"Closing Adjustment Amount" means:
(i) with respect to each Adelphia Newco, the sum (expressed as
a positive, if positive, or as a negative, if negative) of (A) the
Net Liabilities Adjustment Amount for such Adelphia Newco minus (B)
the Subscriber Adjustment Amount for such Adelphia Newco minus (C)
the Capital Expenditure Adjustment Amount for such Adelphia Newco;
and
(ii) with respect to each Native Newco, the sum (expressed as
a positive, if positive, or a negative, if negative) of (A) the Net
Liabilities Adjustment Amount for such Native Newco minus (B) the
Subscriber Adjustment Amount for such Native Newco.
"Closing Date" means the date on which the Closing occurs.
"Closing Subscriber Number" means (i) with respect to each Adelphia
Newco, the number of Adelphia Basic Subscribers of the Adelphia Systems of such
Adelphia Newco as of the Closing Time and (ii) with respect to each Native
Newco, (A) the number of Individual Subscribers of the Native Systems of such
Native Newco as of the Closing Time minus (B) the number of Individual
Subscribers of the Native Systems of such Native Newco acquired pursuant to any
Excluded SMATV Acquisition.
"Closing Time" means, with respect to each Transferred System, 11:59
p.m., local time in the location of such Transferred System, on the Closing
Date.
"Comcast/Adelphia Assets" means (i) all of the Assets (as such term
is defined in the Comcast/Adelphia Purchase Agreement) of each of the
Transferred Joint Venture Entities as of immediately following the Adelphia
Closing, (ii) the Transferred Assets (as such term is defined in the
Comcast/Adelphia Purchase Agreement) of the Group 1 Remainder Business (together
with clause (i), the "Initial Comcast/Adelphia Assets"), (iii) all right, title
and interest in all assets and properties, real and personal, tangible and
intangible, acquired or received by any Comcast Group Member following the
Adelphia Closing and owned, held for use, leased, licensed or used by any
Comcast Group Member primarily in the operation of the Comcast/Adelphia Systems
as of the
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Closing (but subject to Section 2.1(f)(viii) mutatis mutandis, to the extent
relating to insurance claims and proceeds and condemnation proceeds), and (iv)
all of the rights and interests of the Comcast Group under the Comcast/Adelphia
Purchase Agreement and the Ancillary Agreements (as defined in the
Comcast/Adelphia Purchase Agreement) to the extent relating to the Group 1
Business; provided that the Comcast/Adelphia Assets shall not include any
Comcast/Adelphia Excluded Assets.
"Comcast/Adelphia Assumed Liabilities" means (i) all Liabilities of
the Transferred Joint Venture Entities as of immediately following the Adelphia
Closing, (ii) the Assumed Liabilities (as such term is defined in the
Comcast/Adelphia Purchase Agreement) of the Group 1 Remainder Business, (iii)
all Liabilities of the Comcast Group to the extent arising out of, resulting
from or associated with the ownership and operation of the Comcast/Adelphia
Assets and/or the Comcast/Adelphia Business between the Adelphia Closing and the
Closing, the transfer of the Comcast/Adelphia Assets or the Comcast/Adelphia
Business to the Comcast/Adelphia Newcos pursuant to Section 2.1(c) or the
Exchanges relating to such Comcast/Adelphia Newcos, but in each case only to the
extent such Liabilities are reflected in the Net Liabilities Adjustment Amount
used to calculate the Final Closing Adjustment Amount, (iv) all Liabilities to
the extent relating to, arising out of or resulting from the ownership and
operation of the Comcast/Adelphia Assets and/or the Comcast/Adelphia Business
after the Closing, and (v) all of the Liabilities of the Comcast Group arising
under the Comcast/Adelphia Purchase Agreement and the Ancillary Agreements (as
defined in the Comcast/Adelphia Purchase Agreement) to the extent relating to
the Group 1 Business; provided that the Comcast/Adelphia Assumed Liabilities
shall not include any Comcast/Adelphia Excluded Liabilities.
"Comcast/Adelphia Business" means the business conducted with the
Comcast/Adelphia Assets, including the operation of the Comcast/Adelphia
Systems.
"Comcast/Adelphia Escrow Agreement" means the Escrow Agreement, as
defined in the Comcast/Adelphia Purchase Agreement.
"Comcast/Adelphia Excluded Assets" means (i) any Initial
Comcast/Adelphia Assets or other assets or properties that are sold or otherwise
disposed of after the Adelphia Closing by the Comcast Group in the ordinary
course of business (to the extent not sold or otherwise disposed of in violation
of Section 6.1 or 6.2), (ii) all rights and interests in the Palm Beach Joint
Venture (and its assets and Liabilities) and in any other Equity Securities, and
under any related JV Documents or Investment Documents, other than rights and
interests in those Equity Securities set forth on Schedule 1.1B and any related
Investment Documents, (iii) the Comcast/Adelphia Retained Rights, and (iv) all
assets and properties acquired or received by any Comcast Group Member following
the Adelphia Closing (other than pursuant to the Comcast/Adelphia Purchase
Agreement to the extent relating to the Group 1 Business) that would be Native
Excluded Assets applying the provisions of Section 2.1(g) mutatis mutandis
(except that for this purpose the reference in Section 2.1(g)(xiii) to "Retained
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System" will be deemed to be a reference to "Comcast/Adelphia System" and
disregarding Section 2.1(g)(xix)).
"Comcast/Adelphia Excluded Liabilities" means (i) any
Comcast/Adelphia Assumed Liabilities to the extent discharged or released prior
to the Closing, (ii) any Liabilities to the extent related to the ownership of
the interests in the Palm Beach Joint Venture (and its assets and Liabilities)
or any other Equity Securities (other than, in the case of such other Equity
Securities, any such Liabilities to the extent arising as a result of being a
general partner of the issuer of such Equity Securities, or any such Liabilities
arising under veil piercing or other similar legal or equitable theories), and
any Liabilities under any related JV Documents or any Investment Documents,
other than those Equity Securities set forth on Schedule 1.1B and any related
Investment Documents, (iii) any Liability in respect of Transfer Taxes (as
defined in the Comcast/Adelphia Purchase Agreement) pursuant to Section 5.4(c)
of the Comcast/Adelphia Purchase Agreement, (iv) Excluded Tax Liabilities (but
only to the extent relating to any period after the Adelphia Closing), (v)
Liabilities for long-term debt (including the current portion thereof) to the
extent arising after the Adelphia Closing and prior to the Closing, (vi)
Liabilities to the extent arising out of, resulting from or associated with the
use, ownership or operation of any Comcast/Adelphia Excluded Asset, (vii) any
Liabilities of any Comcast Group Member other than Comcast/Adelphia Assumed
Liabilities, (viii) any Liabilities arising after the Adelphia Closing of the
type that would be excluded from financial statements by reason of the GAAP
Adjustments, (ix) any intercompany payable created to record cash lent to the
Comcast/Adelphia Newcos or Comcast/Adelphia Systems by any Comcast Group Member
after the Adelphia Closing and prior to Closing and (x) the Comcast/Adelphia
Retained Obligations.
"Comcast/Adelphia Purchase Price Per Subscriber" means $3,275.
"Comcast/Adelphia Retained Obligations" means (i) all obligations of
the Comcast Group under Section 2.8 of the Comcast/Adelphia Purchase Agreement
(and, to the extent related thereto, any other provisions of the
Comcast/Adelphia Purchase Agreement and the Comcast/Adelphia Escrow Agreement),
including all payments to be made thereunder (subject to Section 6.20(d)), (ii)
the Liabilities of the Comcast Group under the Comcast/Adelphia Purchase
Agreement and the Ancillary Agreements (as defined in the Comcast/Adelphia
Purchase Agreement) referred to in Section 6.20(j), if applicable, and (iii) all
Liabilities of the Comcast Group arising under the Comcast/Adelphia Purchase
Agreement and the Ancillary Agreements (as defined in the Comcast/Adelphia
Purchase Agreement) to the extent relating to (A) the Group 2 Business (as
defined in the Comcast/Adelphia Purchase Agreement) or (B) any breach of any
such agreement by any Comcast Group Member prior to the Closing.
"Comcast/Adelphia Retained Rights" means (i) all rights and
interests under Section 2.8 of the Comcast/Adelphia Purchase Agreement (and, to
the extent related thereto, any other provisions of the Comcast/Adelphia
Purchase Agreement and the Comcast/Adelphia Escrow Agreement), including all
payments to be received thereunder (subject to Section 6.20(d)), (ii) the rights
and interests under the
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Comcast/Adelphia Purchase Agreement and the Ancillary Agreements (as defined in
the Comcast/Adelphia Purchase Agreement) referred to in Section 6.20(j), if
applicable, (iii) the Retained Claims (as defined in the Comcast/Adelphia
Purchase Agreement), (iv) all rights and interests under the Comcast/Adelphia
Purchase Agreement and the Ancillary Agreements (as defined in the
Comcast/Adelphia Purchase Agreement) to the extent relating to any Equity
Securities or any related JV Documents or Investment Documents, other than those
Equity Securities set forth on Schedule 1.1B and any related Investment
Documents, (v) all rights and interests under Article VII of the
Comcast/Adelphia Purchase Agreement (and any related provisions of the
Comcast/Adelphia Escrow Agreement) to the extent relating to any breach by
Adelphia of (A) any of the representations and warranties contained in Section
3.9(d), Section 3.9(e), Section 3.9(f), Section 3.9(h) or Section 3.9(i) thereof
or (B) the covenants and agreements contained in Section 5.4(f) thereof, (vi)
all rights with respect to the determination of the Buyer Discharge Amount (as
defined in the Comcast/Adelphia Purchase Agreement) and (vii) all rights and
interests of the Comcast Group under the Comcast/Adelphia Purchase Agreement and
the Ancillary Agreements (as defined in the Comcast/Adelphia Purchase
Agreement), including in respect of any breach by Adelphia, to the extent
relating to the Group 2 Business (as defined in the Comcast/Adelphia Purchase
Agreement).
"Comcast Benefit Plan" means any plan, program, arrangement or
agreement that is a pension, profit-sharing, savings, retirement, employment,
consulting, severance pay, termination, executive compensation, incentive
compensation, deferred compensation, bonus, stock purchase, stock option,
phantom stock or other equity-based compensation, change-in-control, retention,
salary continuation, vacation, sick leave, disability, death benefit, group
insurance, hospitalization, medical, dental, life (including all individual life
insurance policies as to which Comcast or any of its ERISA Affiliates is the
owner, the beneficiary, or both), Code Section 125 "cafeteria" or "flexible"
benefit, employee loan, educational assistance or fringe benefit plan, program,
policy or arrangement whether written or oral, including, without limitation,
any (i) "employee benefit plan" within the meaning of Section 3(3) of ERISA or
(ii) other employee benefit plan, agreement, program, policy, arrangement or
payroll practice, whether or not subject to ERISA (including any funding
mechanism therefor now in effect or required in the future as a result of the
transactions contemplated by this Agreement or otherwise) which Comcast or any
of its ERISA Affiliates maintains or contributes to or in respect of which
Comcast or any of its ERISA Affiliates has any obligation to maintain or
contribute, or have any direct or indirect liability, whether contingent or
otherwise, with respect to which any Comcast Native Employee has any present or
future right to benefits.
"Comcast Excluded Assets" means the Comcast Native Excluded Assets
and/or the Comcast/Adelphia Excluded Assets, as the context requires.
"Comcast Excluded Liabilities" means the Comcast Native Excluded
Liabilities and/or the Comcast/Adelphia Excluded Liabilities, as the context
requires.
"Comcast Group" means Comcast and its Affiliates.
9
"Comcast Group Member" means Comcast or any of its Affiliates.
"Comcast Leased Property" means the Comcast Native Leased Property
and/or all leases of real property included in the Comcast/Adelphia Assets, as
the context requires.
"Comcast Native Business" means the business conducted with the
Comcast Native Assets, including the operation of the Comcast Native Systems.
"Comcast Native Employee" means any individual who, as of the
Closing Date, either (a)(x) is then a current employee of (including any
full-time, part-time, or temporary employee or an individual in any other
employment relationship with), or is then on a leave of absence (including,
without limitation, paid or unpaid leave, short-term disability, medical,
personal, or any other form of authorized leave, but excluding individuals on
long-term disability) from, a Comcast Group Member and (y) who is primarily
employed by a Comcast Group Member in connection with a Comcast Native System,
or with respect to any individual hired after the Adelphia Closing, a
Comcast/Adelphia System, or (b) has been designated by mutual written agreement
of Comcast and TWC as a Comcast Native Employee. Unless the context clearly
indicates otherwise, "Comcast Native Employee" shall include any person claiming
benefits or rights under or through any Comcast Native Employee, including the
dependents or beneficiaries of any Comcast Native Employee.
"Comcast Native Leased Property" means the premises demised under
the Comcast Native Leases.
"Comcast Owned Property" means the Comcast Native Owned Property
and/or all fee interests in real property included in the Comcast/Adelphia
Assets, as the context requires.
"Comcast Required Consents" means (a) any and all consents,
authorizations and approvals (other than any approval of any Franchising
Authority) the failure to obtain in connection with the transactions
contemplated hereby would, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect and (b) any other consents,
authorizations and approvals set forth on Schedule 4.3 and designated thereon as
Comcast Required Consents.
"Comcast Retained Systems" means all cable communications systems
operated directly or indirectly by the Comcast Group (in each case to the extent
the results of such systems are included in the consolidated results of Comcast)
at the Closing other than the Comcast Transferred Systems and any cable
communications systems acquired after the date hereof.
"Comcast Transferred Assets" means the Comcast/Adelphia Assets
and/or the Comcast Native Assets, as the context requires.
10
"Comcast Transferred Books and Records" means (i) the Comcast Native
Books and Records and (ii) the Books and Records (as defined in the
Comcast/Adelphia Purchase Agreement) to the extent relating to the
Comcast/Adelphia Systems and delivered by Adelphia at the Adelphia Closing
(other than Tax Returns of any Transferred Joint Venture Entity, except to the
extent related to Applicable Taxes), and all books, records and other documents
relating to the Comcast/Adelphia Systems that are created, amended, supplemented
or updated following the Adelphia Closing to the extent such books, records and
other documents would be Comcast Native Books and Records applying the
provisions of Section 2.1(f)(vii) mutatis mutandis.
"Comcast Transferred Business" means the Comcast Native Business
and/or the Comcast/Adelphia Business, as the context requires.
"Comcast Transferred Contracts" means the Comcast Native Contracts
and/or the Contracts included in the Comcast/Adelphia Assets, as the context
requires.
"Comcast Transferred Franchises" means the Comcast Native Franchises
and/or the Franchises included in the Comcast/Adelphia Assets, as the context
requires.
"Comcast Transferred Licenses" means the Comcast Native Licenses
and/or the Licenses included in the Comcast/Adelphia Assets, as the context
requires.
"Communications Act" means the Communications Act of 1934.
"Confidentiality Agreements" means (i) the letter agreement dated
November 9, 2004 between TWX and Comcast, as amended, regarding confidential
information of the TWC Group and (ii) the letter agreement dated November 9,
2004 between Comcast and TWX, as amended, regarding confidential information of
the Comcast Group.
"Contract" means any written agreement, contract, mortgage, deed of
trust, bond, indenture, lease, license, note, franchise, certificate, option,
warrant, right or other instrument, document, obligation or agreement, and any
oral obligation, right or agreement.
"Controlled Affiliate" means, with respect to any Person, any
Affiliate of such Person that is controlled by such Person.
"Current Assets" means:
(i) with respect to each Comcast/Adelphia Newco, if the Closing
occurs on the same date as the Adelphia Closing, the Current Assets (as
defined in the Comcast/Adelphia Purchase Agreement and as determined
pursuant to Section 2.8 of the Comcast/Adelphia Purchase Agreement for
purposes of determining the Final Adjustment Amount (as defined therein)
thereunder) attributable to the portion of the Group 1 Business held by
such
11
Comcast/Adelphia Newco after giving effect to the Comcast/Adelphia Newco
Transaction;
(ii) with respect to each TWC/Adelphia Newco, if the Closing occurs
on the same date as the Adelphia Closing, the Current Assets (as defined
in the TWC/Adelphia Purchase Agreement and as determined pursuant to
Section 2.6 of the TWC/Adelphia Purchase Agreement for purposes of
determining the Final Adjustment Amount (as defined therein) thereunder)
attributable to the portion of the Group 1 Business held by such
TWC/Adelphia Newco after giving effect to the TWC/Adelphia Newco
Transaction referred to in the third sentence of Section 2.1(a); and
(iii) with respect to each Native Newco and, if the Closing occurs
on any date after the date of the Adelphia Closing, with respect to each
Adelphia Newco, the amount of all current assets (other than inventory and
the Excluded Transferred Cash) of such Newco as of the Closing Time (after
giving effect to the relevant Exchange), as would be reflected on the face
of a balance sheet (excluding any footnotes thereto) prepared in
accordance with GAAP; provided that, Current Assets shall include, but
shall not be limited to, all cash and cash equivalents (including the cash
paid to the relevant Transferee pursuant to Section 3.1(g) but excluding
the Excluded Transferred Cash), prepaid expenses, funds on deposit with
third parties, and accounts receivable other than (A) the portion of any
account receivable resulting from cable, telephony, data or Internet
service sales that is sixty (60) days or more past due as of the Closing
Date, (B) the portion of any national agency account receivable resulting
from advertising sales that is one hundred and twenty (120) days or more
past due as of the Closing Date, (C) any non-national agency account
receivable resulting from advertising sales any portion of which is ninety
(90) days or more past due as of the Closing Date, (D) accounts receivable
from customers whose accounts are inactive as of the Closing Date or (E)
any accounts receivable that have not arisen from a bona fide transaction
in the ordinary course of business; provided further that, for purposes of
making the foregoing "past due" calculations, the billing statements of
any Transferred System will be deemed to be due and payable consistent
with ordinary accounting practice. Current Assets shall include the Total
SMATV Consideration paid in respect of any Excluded SMATV Acquisition.
"Digital Subscribers" means, as of any given date, the aggregate of
all of the following digital subscribers:
(a)with respect to the TWC Transferred Systems, a paying customer
who has been installed and receives any level of video service offered by a TWC
Transferred System and received via digital technology, including without
limitation, the digital guide tier, the digital basic tier, digital sports tiers
and digital movie tiers; and
(b) with respect to any Comcast Transferred System, the aggregate of
all of the following customers who have been installed and who subscribe to at
least the lowest level of video programming offered by such Transferred System
and received via
12
digital technology: (i) private residential customer accounts that are billed by
individual unit (regardless of whether such accounts are in single family homes
or in individually billed units in apartment houses and other multi-unit
buildings) (excluding "second connects" or "additional outlets," as such terms
are commonly understood in the cable industry and excluding courtesy accounts),
each of which shall be counted as one Digital Subscriber, and (ii) bulk billed
residential and commercial accounts not billed by individual unit, such as
apartment houses, multi-family homes, hotels, motels and restaurants (provided
that the number of Digital Subscribers served by each such account referred to
in this clause (ii) shall equal the quotient of (x) the aggregate monthly
revenue from the provision of such bulk digital service (excluding any revenue
associated with analog basic or analog tier video service), for the last billing
period ending on or preceding the date of determination, divided by (y) the
applicable rate for the franchise area in which such establishment is located,
determined in accordance with past practice).
"Disregarded Entities" means, with respect to each of the Comcast
Transferors and TWC Transferors (or, as applied in Section 6.8(d), each of
Comcast and TWC), a single member Delaware limited liability company (or, in the
case of Comcast Native Newco 2 and Comcast Native Newco 3, a Delaware business
trust) that (i) is wholly-owned by the applicable Transferor (or, as applied in
Section 6.8(d), by one Person that is a Comcast Group Member or TWC Group
Member, as applicable), (ii) has not elected to be taxed as a corporation and
(iii) subject to Section 2.5(c), is newly formed by such Transferor (or, as
applied in Section 6.8(d), such Comcast Group Member or TWC Group Member) for
the purpose of the applicable Newco Transaction (or any transaction contemplated
by Section 6.8(d)) to which it is party.
"DMA" means a geographic area established by Xxxxxxx Media Research
for the purpose of rating the viewership of commercial television stations.
"Environmental Law" means any Legal Requirement, whether now or
hereafter in effect, concerning the environment, including Legal Requirements
relating to emissions, discharges, releases or threatened releases of Hazardous
Substances into the environment, air (including both ambient and within
buildings and other structures), surface water, ground water or land or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, presence, disposal, transport or handling of Hazardous Substances.
"Equity Security" has the meaning ascribed to such term in Rule 405
promulgated under the Securities Act as in effect on the date hereof and, in any
event, shall also include (i) any capital stock of a corporation, any
partnership interest, any limited liability company interest, trust interest and
any other equity interest, (ii) any security or right convertible into,
exchangeable for, or evidencing the right to subscribe for any such stock,
equity or trust interest or security referred to in clause (i), (iii) any stock
appreciation right, contingent value right or similar security or right that is
derivative of any such stock, equity or trust interest or security referred to
in clause (i) or (ii), and (iv) any contract to grant, issue, award, convey or
sell any of the foregoing.
13
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA Affiliate" means, as to any Person, any trade or business,
whether or not incorporated, which together with such Person would be deemed a
single employer within the meaning of Section 4001 of ERISA.
"Excluded Rights and Obligations" means, as applicable, (i) the
Comcast/Adelphia Retained Rights (other than clause (i) thereof) and the
Comcast/Adelphia Retained Obligations (other than clause (i) thereof) or (ii)
the TWC/Adelphia Retained Rights (other than clause (i) thereof) and the
TWC/Adelphia Retained Obligations (other than clause (i) thereof), in each case
as the context requires.
"Excluded SMATV Acquisition" means (i) in respect of the Comcast
Native Systems, any SMATV Acquisition consummated after the date hereof and
prior to the Closing Time in respect of which the Total SMATV Consideration (A)
exceeds $2,500,000 or (B) exceeds $20,000,000 when aggregated with the Total
SMATV Consideration paid in all previous SMATV Acquisitions consummated after
the date hereof and prior to the Closing Time (other than the SMATV Acquisition
contemplated by the Asset Purchase Agreement dated as of March 24, 2005 referred
to on Schedule 4.5(a)) and (ii) in respect of the TWC Native System, any SMATV
Acquisition consummated after the date hereof and prior to the Closing Time in
respect of which the Total SMATV Consideration (A) exceeds $1,100,000 or (B)
exceeds $1,100,000 when aggregated with the Total SMATV Consideration paid in
all previous SMATV Acquisitions consummated after the date hereof and prior to
the Closing Time.
"Excluded Tax Liabilities" means all Liabilities for Income Taxes
relating to or arising out of, or resulting from the ownership or operation of
the Comcast/Adelphia Assets, the Comcast Native Assets, the TWC/Adelphia Assets
or the TWC Native Assets, as the context requires, for taxable periods, or
portions thereof, ending on or prior to the Closing, other than Income Taxes
suffered by Comcast or any of its Affiliates as a partner in TWE.
"FCC" means the Federal Communications Commission.
"Final Closing Adjustment Amount" means, with respect to each Newco,
the Closing Adjustment Amount as set forth in the Transferee's Statement for
such Newco and, in the event of an Objection Notice, as adjusted by either the
agreement of Transferor and Transferee, or by the Accounting Referee, acting
pursuant to Section 2.4.
"Financial Statements" means the TWC Native Financial Statements or
the Comcast Native Financial Statements, as the context requires.
"Franchise" shall have the meaning assigned to such term in Section
602(9) of the Communications Act.
"Franchising Authority" shall have the meaning assigned to such term
in Section 602(10) of the Communications Act.
14
"GAAP" means generally accepted accounting principles in the United
States in effect from time to time applied on a consistent basis.
"GAAP Adjustments" means, as the context requires, with respect to
the preparation of any relevant financial statement, (i) with respect to the
Comcast Group, the exclusion of the items described in the proviso to the second
sentence of Section 4.11(a) (other than clauses (A)(v) and (vi) and (B)(i),
(iii) and (iv) of such proviso) in each case consistent with the practices used
in preparation of the Comcast Native Financial Statements, and (ii) with respect
to the TWC Group, the exclusion of the items described in the proviso to the
second sentence of Section 5.11(a) (other than clauses (v), (vii), (xi) and
(xii) of such proviso) in each case consistent with the practices used in
preparation of the TWC Native Financial Statements.
"Governmental Authority" means (i) the United States of America,
(ii) any state, commonwealth, territory or possession of the United States of
America and any political subdivision thereof (including counties,
municipalities, provinces, parishes and the like), (iii) any foreign (as to the
United States of America) sovereign entity and any political subdivision thereof
and (iv) any court, quasi-governmental authority, tribunal, department,
commission, board, bureau, agency, authority or instrumentality of any of the
foregoing.
"Group" means the Comcast Group or the TWC Group, as the context
requires.
"Group 1 Business" means the Group 1 Business as defined in the
relevant Adelphia Purchase Agreement, as the context requires.
"Group 1 Remainder Business" means the Group 1 Remainder Business as
defined in the Comcast/Adelphia Purchase Agreement.
"Group Member" means a member of a Group.
"Hazardous Substances" means (i) any pollutant, contaminant, waste
or chemical or any toxic, radioactive, ignitable, corrosive or otherwise
hazardous substance, waste or material, (ii) any "hazardous waste" as defined by
the Resource Conservation and Recovery Act of 1976 (RCRA) (42 U.S.C. Sections
6901 et seq.); (iii) any "hazardous substance" as defined by CERCLA; (iv) any
substance regulated by the Toxic Substances Control Act of 1976 (TSCA) (15
U.S.C. Section 2601 et seq.); (v) asbestos or asbestos-containing material of
any kind or character; (vi) polychlorinated biphenyls; (vii) any substance the
presence, use, treatment, storage or disposal of which is prohibited by or
regulated under any Legal Requirement; and (viii) any other substance which by
any Legal Requirement requires special handling, reporting or notification of or
to any Governmental Authority in its collection, storage, use, treatment,
presence or disposal.
"High Speed Data Subscriber" means, with respect to any Transferred
System, a customer who subscribes to at least the lowest level of internet
service offered by such Transferred System, excluding courtesy accounts.
00
"XXX Xxx" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976.
"Income Taxes" means any Tax which is based upon, measured by, or
computed by reference to net income or profits (including alternative minimum
Tax) or, in the case of Time Warner Cable and its Subsidiaries, with respect to
any payments in respect of Taxes that are governed by the Time Warner Tax
Matters Agreement, Income Taxes shall mean any amounts payable by or to Time
Warner Cable under the Time Warner Tax Matters Agreement.
"Individual Subscribers" means, as of any given date, the aggregate
of all of the following Subscribers:
(a) with respect to the TWC Transferred Systems, (i) private
residential customer accounts that are billed by individual unit
(regardless of whether such accounts are in single family homes or in
individually billed units in apartment houses and other multi-unit
buildings) (excluding "second connects" or "additional outlets," as such
terms are commonly understood in the cable industry), each of which shall
be counted as one Individual Subscriber, (ii) bulk xxxx residential
accounts not billed by individual unit, such as apartment houses and
multi-family homes, provided, each unit in such apartment house or
multi-family home shall be counted as one Individual Subscriber, and (iii)
commercial bulk accounts such as hotels, motels and restaurants, provided,
each commercial account shall count as one Individual Subscriber;
provided, that in all such cases, Individual Subscribers shall not include
any free accounts; and
(b) with respect to the Comcast Transferred Systems, (i) private
residential customer accounts that are billed by individual unit
(regardless of whether such accounts are in single family homes or in
individually billed units in apartment houses and other multi-unit
buildings) (excluding "second connects" or "additional outlets," as such
terms are commonly understood in the cable industry and excluding courtesy
accounts), each of which shall be counted as one Individual Subscriber,
and (ii) bulk billed residential and commercial accounts not billed by
individual unit, such as apartment houses, hotels, motels and restaurants
(provided that the number of Individual Subscribers served by each such
account referred to in this clause (ii) shall equal the quotient of (x)
the aggregate monthly revenue from the provision of basic service and any
applicable analog bulk tier service for the last billing period ending on
or preceding the date of determination, divided by (y) the applicable rate
for the franchise area in which such establishment is located, determined
in accordance with past practice).
"Initial Adelphia Subscriber Number" means, with respect to each
Adelphia Newco, the number of Adelphia Basic Subscribers of the Adelphia Systems
of such Adelphia Newco as of the Adelphia Closing.
"Investment Documents" means the documents governing any Equity
Securities or any investment therein.
16
"Judgment" means any judgment, judicial decision, writ, order,
injunction, award or decree of or by any Governmental Authority or any
arbitration panel or authority whose decision is binding and enforceable.
"JV Documents" means the documents governing the management,
operations and rights of joint venture partners or other equity holders in the
Transferred Joint Venture Entities (including all certificates of incorporation,
bylaws, partnership agreements and operating agreements), including all
amendments or supplements thereto.
"Legal Requirement" means applicable common law and any statute,
ordinance, code, law, rule, regulation, order, technical or other written
standard, requirement or procedure enacted, adopted, promulgated, applied or
followed by, or any agreement entered into by, any Governmental Authority,
including any Judgment.
"LFA Approvals" means all consents, approvals or waivers required to
be obtained from any Governmental Authority with respect to the transfer or
change in control of Transferred Franchises in connection with the transactions
contemplated hereby. For purposes hereof, the waiver of a Transferred Systems
Option of any Person shall be considered to be a required LFA Approval.
"Liability" or "Liabilities" means any and all liabilities, losses,
charges, indebtedness, demands, actions, damages, obligations, payments, costs
and expenses, bonds, indemnities and similar obligations, covenants, and other
liabilities, including all Contractual obligations, whether due or to become
due, absolute or contingent, inchoate or otherwise, matured or unmatured,
liquidated or unliquidated, accrued or unaccrued, known or unknown, determined
or determinable, whenever arising, and including those arising under any Legal
Requirement, in each case, whether or not recorded or reflected or required to
be recorded or reflected on the books and records or financial statements of any
Person.
"Lien" means, with respect to any property or asset, any security
agreement, financing statement filed with any Governmental Authority,
conditional sale agreement, capital lease or other title retention agreement
relating to such property or asset, any lease, consignment or bailment given for
purposes of security, any right of first refusal, equitable interest, lien,
mortgage, indenture, pledge, option, charge, encumbrance, adverse interest,
constructive trust or other trust, claim, attachment, exception to or defect in
title or other ownership interest (including reservations, rights of entry,
possibilities of reverter, encroachments, survey defects, easements,
rights-of-way, restrictive covenants, leases and licenses) of any kind, which
otherwise constitutes an interest in or claim against property, whether arising
pursuant to any Legal Requirement, any Contract or otherwise.
"Litigation" means any claim, action, suit, proceeding, arbitration,
investigation, hearing or other activity or procedure that could result in a
Judgment, and any notice of any of the foregoing.
17
"Local Retransmission Consent Agreement" means any retransmission
consent agreement that covers a signal carried by a Group's Transferred System
that does not also cover a signal carried by a Retained System of such Group.
"Losses" means any claims, losses, damages, penalties, costs and
expenses, including interest which may be imposed in connection therewith,
expenses of investigation, reasonable fees and disbursements of counsel and
other experts and the reasonable cost to any Person making a claim or seeking
indemnification under this Agreement with respect to funds expended by such
Person by reason of the occurrence of any event with respect to which
indemnification is sought, but shall in no event include incidental, punitive or
consequential damages except to the extent required to be paid to a third party.
For the avoidance of doubt, an item that is included in the definition of
"Losses" shall be included regardless of whether it arises as a result of the
negligence, strict liability or any other liability under any theory of law or
equity of, or violation of any Law.
"Material Adverse Effect" means, as applicable, (a) (i) a material
adverse effect on the business, condition (financial or otherwise), assets or
results of operations of (A) for all purposes other than Section 7.2(a) and
Section 7.2(h), any Comcast Transferred Business, and (B) for purposes of
Section 7.2(a) and Section 7.2(h), the Comcast Transferred Businesses taken as a
whole, provided that in each case any such effect with respect to the
Comcast/Adelphia Business shall only include effects to the extent arising from
events, circumstances or conditions occurring after the Adelphia Closing, or
(ii) a material impairment or delay of the ability of any Comcast Party to
effect the Closing or to perform its obligations under this Agreement or any
Transaction Documents to which it is a party; or (b) (i) a material adverse
effect on the business, condition (financial or otherwise), assets or results of
operations of (A) for all purposes other than Section 7.1(a) and Section 7.1(h),
any TWC Transferred Business, and (B) for purposes of Section 7.1(a) and Section
7.1(h), the TWC Transferred Businesses taken as a whole, provided that in each
case any such effect with respect to the TWC/Adelphia Business shall only
include effects to the extent arising from events, circumstances or conditions
occurring after the Adelphia Closing, or (ii) a material impairment or delay of
the ability of any TWC Party to effect the Closing or to perform its obligations
under this Agreement or any Transaction Documents to which it is a party;
provided, however, that none of the following (or the results thereof) shall be
taken into account in either clause (a) or (b) above: (A) any change in law or
accounting standards or interpretations thereof that is of general application;
(B) any change in general economic or business conditions or industry wide or
financial market conditions generally; (C) except with respect to Sections 4.3
and 5.3, any adverse effect as a result of the execution or announcement of this
Agreement, the Transaction Documents and the transactions contemplated hereunder
or thereunder; and (D) any loss of Subscribers or failure to obtain LFA
Approvals with respect to any Transferred System.
"Native Assets" means the TWC Native Assets and/or the Comcast
Native Assets, as the context requires.
18
"Native Assumed Liabilities" means the Comcast Native Assumed
Liabilities and/or the TWC Native Assumed Liabilities, as the context requires.
"Native Business" means the Comcast Native Business and/or the TWC
Native Business, as the context requires.
"Native Employee" means a Comcast Native Employee or a TWC Native
Employee, as the context requires.
"Native Leased Property" means the Comcast Native Leased Property
and/or the TWC Native Leased Property, as the context requires.
"Native Newcos" means the Comcast Native Newcos and/or the TWC
Native Newco, as the context requires.
"Native Owned Property" means the Comcast Native Owned Property
and/or the TWC Native Owned Property, as the context requires.
"Native Purchase Price Per Subscriber" means $3,730.
"Native Real Property Interests" means the Comcast Native Real
Property Interests and/or the TWC Native Real Property Interests, as the context
requires.
"Native Systems" means the TWC Native System and/or the Comcast
Native Systems, as the context requires.
"Net Liabilities Adjustment Amount" means, with respect to each
Newco, the Current Assets of such Newco minus the Total Liabilities of such
Newco, expressed as a positive, if positive, or as a negative, if negative.
"Newcos" means the Comcast Newcos and the TWC Newcos.
"Palm Beach Joint Venture" means Palm Beach Group Cable Joint
Venture, a Florida general partnership.
"Parent" means Comcast or Time Warner Cable, as the context
requires.
"Parnassos Business" has the meaning set forth in the
Comcast/Adelphia Purchase Agreement.
"Party" or "party" means any Comcast Party or TWC Party.
"Permitted Lien" means (a) any Lien securing Taxes, assessments and
governmental charges not yet due and payable or being contested in good faith
(and for which adequate accruals or reserves have been established), (b) any
zoning law or ordinance or any similar Legal Requirement, (c) any right reserved
to any Governmental Authority, including any Franchising Authority, to regulate
the affected property, (d) as to all Transferred Owned Property and Transferred
Real Property Interests, any Lien
19
(other than Liens securing indebtedness or arising out of the obligation to pay
money) which does not individually or in the aggregate with one or more other
Liens interfere in any material respect with the right or ability to own, use,
enjoy or operate the Transferred Owned Property or Transferred Real Property
Interests as they are currently being used or operated, or to convey good and
indefeasible fee simple title to the same (with respect to Transferred Owned
Property), (e) in the case of Transferred Leased Property, any right of any
lessor or any Lien granted by any lessor of Transferred Leased Property or by
any other party having an interest in such leased property which is superior to
that which is demised under the applicable Lease (or to which the fee interest
in Transferred Leased Property or any other interest superior to that which is
demised under the applicable lease is otherwise subject), (f) any materialmen's,
mechanic's, workmen's, repairmen's or other like Liens arising in the ordinary
course of business, (g) any Lien described on Schedule 1.1D and (h) nonmaterial
leases, subleases, licenses or sublicenses in favor of third parties; provided,
that "Permitted Liens" shall not include any Lien (other than any Lien described
in clause (e) above) (i) in the case of a non-monetary claim, which is
reasonably likely to prevent or interfere in any material respect with the
conduct of the business of the affected Transferred System as it is currently
being conducted or (ii) in the case of a monetary claim or debt, including those
described in clauses (a), (d) and (f) above, except to the extent such monetary
claim or debt is reflected in the Net Liabilities Adjustment Amount used in
calculating the Final Closing Adjustment Amount.
"Person" means any human being, Governmental Authority, corporation,
limited liability company, general or limited partnership, joint venture, trust,
association or unincorporated entity of any kind.
"Prime Rate" means the prime rate of interest, as announced from
time to time, of The Bank of New York in New York City.
"Refund" shall mean, with respect to any Person, any refund of
Income Taxes including any reduction in Income Tax liabilities by means of a
credit, offset or otherwise.
"Required Consents" means the Comcast Required Consents or the TWC
Required Consents, as the context requires.
"Retained System" means a Comcast Retained System or a TWC Retained
System, as the context requires.
"Service Area" means any geographic area in which the Transferred
Systems are authorized to provide cable television service pursuant to a
Transferred Franchise or in which such Transferred Systems provide cable
television service for which a Franchise or other Authorization is not required
pursuant to applicable Legal Requirements.
"Shared Assets and Liabilities" has the meaning attributed thereto
in the Adelphia Purchase Agreements.
20
"SMATV Acquisition" means any acquisition, within or within close
geographical proximity to the Service Area of a Native System, of multi-channel
video subscribers from a private cable communications system operator (including
any owner of a Dwelling, a "SMATV Seller") in respect of any one or more
apartment houses or multi-unit buildings, complexes or private communities,
hotels or motels or similar facilities (each a "Dwelling") pursuant to which any
payment is required to be made to the SMATV Seller to transfer or terminate its
existing cable service agreement with the owner or manager of such Dwelling or,
if the SMATV Seller is the owner of the Dwelling, to terminate the owner's
provision of cable services to the Dwelling; provided that the payment in the
ordinary course of business of door fees, commissions, revenue sharing and
similar amounts to any owner or manager of any Dwelling in connection with the
provision of multi-channel video service to such Dwelling shall not constitute a
SMATV Acquisition.
"SMATV Purchase Price Per Subscriber" means, in respect of any SMATV
Acquisition, the Total SMATV Consideration payable in respect of such SMATV
Acquisition divided by the number of Individual Subscribers acquired pursuant to
such SMATV Acquisition.
"Subscriber" means, with respect to any Transferred System, a
customer who has been installed and who subscribes to at least the lowest level
of video programming offered by such Transferred System.
"Subscriber Adjustment Amount" means:
(i) with respect to each Comcast/Adelphia Newco, (A) if the
Closing occurs on the same date as the Adelphia Closing, the portion
of the Subscriber Adjustment Amount (as defined in the
Comcast/Adelphia Purchase Agreement and determined pursuant to
Section 2.8 of the Comcast/Adelphia Purchase Agreement for purposes
of determining the Final Adjustment Amount (as defined therein)
thereunder) attributable to the portion of the Group 1 Business held
by such Comcast/Adelphia Newco multiplied by (x) 133 1/3% to the
extent attributable to the Century Business and (y) 150% to the
extent attributable to the Parnassos Business or the Western
Business, and (B) if the Closing occurs on any date after the
Adelphia Closing, an amount equal to the sum of (x) the amount
determined in respect of such Comcast/Adelphia Newco pursuant to
clause (A) above plus (y) the product of the Comcast/Adelphia
Purchase Price Per Subscriber multiplied by the amount (if any) by
which the Subscriber Change for such Comcast/Adelphia Newco exceeds
the Adelphia Subscriber Reduction Threshold for such
Comcast/Adelphia Newco, in each case expressed as a positive, if
positive, or a negative, if negative;
(ii) with respect to each TWC/Adelphia Newco, (A) if the
Closing occurs on the same date as the Adelphia Closing, the portion
of the Subscriber Adjustment Amount (as defined in the TWC/Adelphia
21
Purchase Agreement and determined pursuant to Section 2.6 of the
TWC/Adelphia Purchase Agreement for purposes of determining the
Final Adjustment Amount (as defined therein) thereunder)
attributable to the portion of the Group 1 Business held by such
TWC/Adelphia Newco, and (B) if the Closing occurs on any date after
the Adelphia Closing, an amount equal to the sum of (x) the amount
determined in respect of such TWC/Adelphia Newco pursuant to clause
(A) above plus (y) the product of the TWC/Adelphia Purchase Price
Per Subscriber multiplied by the amount (if any) by which the
Subscriber Change for such TWC/Adelphia Newco exceeds the Adelphia
Subscriber Reduction Threshold for such TWC/Adelphia Newco, in each
case expressed as a positive, if positive, or a negative, if
negative; and
(iii) with respect to each Native Newco, the product of (A)
the Native Purchase Price Per Subscriber multiplied by (B) the
Subscriber Change for such Native Newco, expressed as a positive, if
positive, or as a negative, if negative.
"Subscriber Change" means:
(i) with respect to each Adelphia Newco, the Initial Adelphia
Subscriber Number for such Adelphia Newco minus the Closing
Subscriber Number for such Adelphia Newco (provided that if such
amount is a negative number, the Subscriber Change shall be deemed
to be zero); and
(ii) with respect to each Native Newco, the Budgeted
Subscriber Number for such Native Newco minus the Closing Subscriber
Number for such Native Newco (expressed as a positive, if positive,
or as a negative, if negative).
"Subsidiary" means, with respect to any Person, any entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other body performing similar functions
are at any time directly or indirectly owned by such Person.
"Tangible Personal Property" means the Comcast Native Tangible
Personal Property or the TWC Native Tangible Personal Property, as the context
requires.
"Taxes" means all levies and assessments of any kind or nature
imposed by any Governmental Authority, including all income, sales, use, ad
valorem, value added, franchise, severance, net or gross proceeds, withholding,
payroll, employment, F.I.C.A., excise or property taxes, levies, and any payment
required to be made to any state abandoned property administrator or other
public official pursuant to an abandoned property, escheat or similar law,
together with any interest thereon and any penalties, additions to tax or
additional amounts applicable thereto.
22
"Tax Return" shall mean any report, return or other information
(including any attached schedules or any amendments to such report, return or
other information) required to be supplied to or filed with a Governmental
Authority with respect to any Tax, including (without limitation) an information
return, claim for refund, amended return, declaration, or estimated Tax return,
in connection with the determination, assessment, collection or administration
of any Tax.
"Telephony Subscriber" means with respect to a Transferred System, a
customer who subscribes to at least the lowest level of telephone service
offered by such Transferred System, excluding courtesy accounts.
"Time Warner Tax Matters Agreement" means the Tax Matters Agreement,
by and between Time Warner Inc. and Time Warner Cable, dated as of March 31,
2003, as such agreement may be amended from time to time and any successor
agreement; provided that for purposes of this Agreement, no such amendment or
successor agreement shall be taken into account unless it was made or entered
into with the prior written consent of Comcast, not to be unreasonably withheld
or delayed.
"Total Liabilities" means:
(i) with respect to each Comcast/Adelphia Newco, if the Closing
occurs on the same date as the Adelphia Closing, the Total
Liabilities (as defined in the Comcast/Adelphia Purchase
Agreement and as determined pursuant to Section 2.8 of the
Comcast/Adelphia Purchase Agreement for purposes of
determining the Final Adjustment Amount (as defined therein)
thereunder) attributable to the portion of the Group 1
Business held by such Comcast/Adelphia Newco;
(ii) with respect to each TWC/Adelphia Newco, if the Closing occurs
on the same date as the Adelphia Closing, the Total
Liabilities (as defined in the TWC/Adelphia Purchase Agreement
and as determined pursuant to Section 2.6 of the TWC/Adelphia
Purchase Agreement for purposes of determining the Final
Adjustment Amount (as defined therein) thereunder)
attributable to the portion of the Group 1 Business held by
such TWC/Adelphia Newco; and
(iii) with respect to each Native Newco and, if the Closing occurs
on any date after the date of the Adelphia Closing, with
respect to each Adelphia Newco, the amount of all Liabilities
of such Newco as of the Closing Time (after giving effect to
the Exchanges), as would be reflected on the face of a balance
sheet (excluding any footnotes thereto) prepared in accordance
with GAAP; provided that, for purposes of this clause (iii),
Total Liabilities shall include Liabilities of the relevant
Newco or the relevant Transferee or its Affiliates under
Section 3.1 to the extent such Liabilities would be reflected
on the face of a balance sheet (excluding any footnotes
23
thereto) of the relevant Native Business or Adelphia Business,
as the case may be, prepared in accordance with GAAP as of the
Closing Time, but without giving effect to the Closing. For
purposes of this definition, in the case of each Adelphia
Newco, Liabilities with respect to sale bonuses due and
payable at or after the Closing Time to Adelphia Employees
under the Adelphia Communications Corporation Sale Bonus
Program to the extent reflected in the Closing Net Liabilities
Amount (as defined in the relevant Adelphia Purchase Agreement
and as determined pursuant to Section 2.8 of the
Comcast/Adelphia Purchase Agreement or Section 2.6 of the
TWC/Adelphia Purchase Agreement, as applicable, for purposes
of determining the Final Adjustment Amount thereunder)
attributable to the portion of the Group 1 Business held by
such Adelphia Newco shall be deemed to be a Liability of such
Adelphia Newco on the face of a balance sheet prepared in
accordance with GAAP as of the Closing Time. For the avoidance
of doubt, Liabilities shall include, but are not limited to,
accounts payable, accrued expenses (including all accrued
vacation time, sick days, other accrued paid time off,
copyright fees, Applicable Taxes, franchise fees and other
license fees or charges), capitalized lease obligations,
Contract obligations that are due and payable (including lease
obligations), due and payable obligations that are subject to
materialmen's, mechanic's and similar Liens, Liabilities with
respect to unearned income and advance payments (including
subscriber prepayments and deposits for converters, encoders,
cable television service and related sales) and interest, if
any, required to be paid on advance payments. For the
avoidance of doubt, Total Liabilities shall exclude the Total
SMATV Consideration due and payable at or after the Closing
Time in respect of any SMATV Acquisition not prohibited by
Section 6.2(c)(i).
"Total SMATV Consideration" means, in respect of any SMATV
Acquisition, the total consideration payable to the SMATV Seller and its
Affiliates in respect of such SMATV Acquisition, plus the amount of any net
liabilities assumed by the acquiror.
"Transaction Documents" means the instruments and documents
described in Sections 8.2 and 8.3, which are being executed and delivered by or
on behalf of any Comcast Group Member or TWC Group Member, as the case may be,
in connection with this Agreement or the transactions contemplated hereby.
"Transferable Service Area" means a Service Area with respect to
which (a) no Franchise or similar Authorization is required or issued for the
provision of cable television service in such Service Area, (b) no LFA Approval
is necessary for the transfer of any Transferred Franchise for such Service Area
in connection with the consummation
24
of the transactions contemplated by this Agreement, (c) if any LFA Approval is
necessary for the transfer of any Transferred Franchise for such Service Area in
connection with the consummation of the transactions contemplated by this
Agreement, such LFA Approval has been obtained (and is in effect), or (d) if any
LFA Approval is necessary for the transfer of any Transferred Franchise for such
Service Area in connection with the consummation of the transactions
contemplated by this Agreement, the applicable Franchising Authority does not
expressly deny a request for approval to transfer such Transferred Franchise
within the 120-day review period provided under FCC regulation (plus such
extensions of time as are mutually agreed upon by Comcast and TWC). Any Service
Area in which any Person has a Transferred Systems Option that has not been
waived in respect of the transactions contemplated by this Agreement and the
Transaction Documents shall not be considered a Transferable Service Area.
"Transferee" means, with respect to each Exchange, the Comcast Group
Member or TWC Group Member, as applicable, that receives Equity Securities from
the Transferor in such Exchange.
"Transferee Parent" means TWC or Comcast, as the context requires,
in its capacity as the parent entity of a Transferee.
"Transferor" means with respect to each Exchange, the Comcast Group
Member or TWC Group Member, as applicable, that transfers the Equity Securities
of the relevant Newco to the Transferee in such Exchange.
"Transferor Parent" means TWC or Comcast, as the context requires,
in its capacity as the parent entity of a Transferor.
"Transferred Asset" means any Comcast Transferred Asset or TWC
Transferred Asset.
"Transferred Business" means the Comcast Transferred Business and/or
the TWC Transferred Business, as the context requires.
"Transferred Franchise" means any Native Franchise or any Franchise
included in the Comcast/Adelphia Assets or in the TWC/Adelphia Assets.
"Transferred Joint Venture Entity" has the meaning ascribed thereto
in the Comcast/Adelphia Purchase Agreement.
"Transferred Joint Venture Parent" has the meaning ascribed thereto
Iin the Comcast/Adelphia Purchase Agreement.
"Transferred Leased Property" means the Comcast Leased Property
and/or the TWC Leased Property, as the context requires.
"Transferred Owned Property" means the Comcast owned Property and/or
the TWC Owned Property, as the context requires.
25
"Transferred Real Property Interests" means the Comcast Native Real
Property Interests, the TWC Native Real Property Interests and/or the leases,
easements, rights of access and other interests (not including fee interests) in
real property included in the Comcast/Adelphia Assets or the TWC/Adelphia
Assets, as the context requires.
"Transferred Systems" means the Comcast Transferred Systems and/or
the TWC Transferred Systems, as the context requires.
"Transferred Systems Option" means, with respect to any Transferred
System or Transferred Asset, any purchase option, right of first refusal or
similar arrangement which would be triggered by the sale, transfer or other
disposition of such Transferred System or Transferred Asset.
"TWC/Adelphia Assets" means (i) the Transferred Assets (as defined
in the TWC/Adelphia Purchase Agreement) of the Group 1 Business (the "Initial
TWC/Adelphia Assets"), (ii) all right, title and interest in all assets and
properties, real and personal, tangible and intangible, acquired or received by
any TWC Group Member following the Adelphia Closing and owned, held for use,
leased, licensed or used by any TWC Group Member primarily in the operation of
the TWC/Adelphia Systems as of the Closing (but subject to Section 2.1(f)(viii)
mutatis mutandis, to the extent relating to insurance claims and proceeds and
condemnation proceeds), and (iii) all of the rights and interests of the TWC
Group under the TWC/Adelphia Purchase Agreement and the Ancillary Agreements (as
defined in the TWC/Adelphia Purchase Agreement) to the extent relating to the
Group 1 Business; provided that the TWC/Adelphia Assets shall not include any
TWC/Adelphia Excluded Assets.
"TWC/Adelphia Assumed Liabilities" means (i) the Assumed Liabilities
(as defined in the TWC/Adelphia Purchase Agreement) of the Group 1 Business,
(ii) all Liabilities of the TWC Group to the extent arising out of, resulting
from or associated with the ownership and operation of the TWC/Adelphia Assets
and/or the TWC/Adelphia Business between the Adelphia Closing and the Closing,
the transfer of the TWC/Adelphia Assets or the TWC/Adelphia Business to the
TWC/Adelphia Newcos pursuant to Section 2.1(a) or the Exchanges relating to such
TWC/Adelphia Newcos, but in each case only to the extent such Liabilities are
reflected in the Net Liabilities Adjustment Amount used to calculate the Final
Closing Adjustment Amount, (iii) all Liabilities to the extent relating to,
arising out of or resulting from the ownership and operation of the TWC/Adelphia
Assets and/or the TWC/Adelphia Business after the Closing, and (iv) all of the
Liabilities of the TWC Group arising under the TWC/Adelphia Purchase Agreement
and the Ancillary Agreements (as defined in the TWC/Adelphia Purchase Agreement)
to the extent relating to the Group 1 Business; provided that the TWC/Adelphia
Assumed Liabilities shall not include any TWC/Adelphia Excluded Liabilities.
"TWC/Adelphia Business" means the business conducted with the
TWC/Adelphia Assets, including the operation of the TWC/Adelphia Systems.
26
"TWC/Adelphia Escrow Agreement" means the Escrow Agreement, as
defined in the TWC/Adelphia Purchase Agreement.
"TWC/Adelphia Excluded Assets" means (i) any Initial TWC/Adelphia
Assets or other assets or properties that are sold or otherwise disposed of
after the Adelphia Closing by the TWC Group in the ordinary course of business
(to the extent not sold or otherwise disposed of in violation of Section 6.1 or
6.2), (ii) all rights and interests in any Equity Securities and under any
related Investment Documents, other than rights and interests in those Equity
Securities set forth on Schedule 1.1E and under any related Investment
Documents, (iii) the TWC/Adelphia Retained Rights, and (iv) all assets and
properties acquired or received by any TWC Group Member following the Adelphia
Closing (other than pursuant to the TWC/Adelphia Purchase Agreement to the
extent relating to the Group 1 Business) that would be Native Excluded Assets
applying the provisions of Section 2.1(g) mutatis mutandis (except that for this
purpose the reference in Section 2.1(g)(xiii) to "Retained System" will be
deemed to be a reference to "TWC/Adelphia System" and disregarding Section
2.1(g)(xix)).
"TWC/Adelphia Excluded Liabilities" means (i) any TWC/Adelphia
Assumed Liabilities to the extent discharged or released prior to the Closing,
(ii) any Liabilities to the extent related to the ownership of any Equity
Securities and Liabilities under any related Investment Documents, other than
those Equity Securities set forth on Schedule 1.1E and any related Investment
Documents, (iii) any Liability in respect of Transfer Taxes (as defined in the
TWC/Adelphia Purchase Agreement) pursuant to Section 5.7(c) of the TWC/Adelphia
Purchase Agreement, (iv) Excluded Tax Liabilities (but only to the extent
relating to any period after the Adelphia Closing), (v) Liabilities for
long-term debt (including the current portion thereof) to the extent arising
after the Adelphia Closing and prior to the Closing, (vi) Liabilities to the
extent arising out of, resulting from or associated with the use, ownership or
operation of any TWC/Adelphia Excluded Asset, (vii) any Liabilities of any TWC
Group Member other than TWC/Adelphia Assumed Liabilities, (viii) any Liabilities
arising after the Adelphia Closing of the type that would be excluded from
financial statements by reason of the GAAP Adjustments, (ix) any intercompany
payable created to record cash lent to the TWC/Adelphia Newcos or TWC/Adelphia
Systems by any TWC Group Member after the Adelphia Closing and prior to Closing
and (x) the TWC/Adelphia Retained Obligations.
"TWC/Adelphia Purchase Price Per Subscriber" means $3,810.
"TWC/Adelphia Retained Obligations" means (i) all obligations of the
TWC Group under Section 2.6 of the TWC/Adelphia Purchase Agreement (and, to the
extent related thereto, any other provisions of the TWC/Adelphia Purchase
Agreement and the TWC/Adelphia Escrow Agreement), including all payments to be
made thereunder (subject to Section 6.20(d)) and (ii) all Liabilities of the TWC
Group arising under the TWC/Adelphia Purchase Agreement and the Ancillary
Agreements (as defined in the TWC/Adelphia Purchase Agreement) to the extent
relating to (A) the Group 2 Business (as defined in the TWC/Adelphia Purchase
Agreement), (B) any breach of any
27
such agreement by any TWC Group Member prior to the Closing, (C) the Parent
Class A Common Stock or Excluded Claims (each as defined in the TWC/Adelphia
Purchase Agreement) or (D) Section 5.19 of the TWC/Adelphia Purchase Agreement.
"TWC/Adelphia Retained Rights" means (i) all rights and interests
under Section 2.6 of the TWC/Adelphia Purchase Agreement (and, to the extent
related thereto, other provisions of the TWC/Adelphia Purchase Agreement and
TWC/Adelphia Escrow Agreement), including all payments to be received thereunder
(subject to Section 6.20(d)) and (ii) all rights and interests of the TWC Group
under the TWC/Adelphia Purchase Agreement and the Ancillary Agreements (as
defined in the TWC/Adelphia Purchase Agreement), including in respect of any
breach by Adelphia, to the extent relating to the Group 2 Business (as defined
in the TWC/Adelphia Purchase Agreement).
"TWC Benefit Plan" means any plan, program, arrangement or agreement
that is a pension, profit-sharing, savings, retirement, employment, consulting,
severance pay, termination, executive compensation, incentive compensation,
deferred compensation, bonus, stock purchase, stock option, phantom stock or
other equity-based compensation, change-in-control, retention, salary
continuation, vacation, sick leave, disability, death benefit, group insurance,
hospitalization, medical, dental, life (including all individual life insurance
policies as to which TWC or any of its Affiliates is the owner, the beneficiary,
or both), Code Section 125 "cafeteria" or "flexible" benefit, employee loan,
educational assistance or fringe benefit plan, program, policy or arrangement
whether written or oral, including, without limitation, any (i) "employee
benefit plan" within the meaning of Section 3(3) of ERISA or (ii) other employee
benefit plan, agreement, program, policy, arrangement or payroll practice,
whether or not subject to ERISA (including any funding mechanism therefor now in
effect or required in the future as a result of the transactions contemplated by
this Agreement or otherwise) which TWC or any of its Affiliates maintains or
contributes to or in respect of which TWC or any of its Affiliates has any
obligation to maintain or contribute, or have any direct or indirect liability,
whether contingent or otherwise, with respect to which any TWC Native Employee
has any present or future right to benefits.
"TWC Excluded Assets" means the TWC Native Excluded Assets and/or
the TWC/Adelphia Excluded Assets, as the context requires.
"TWC Excluded Liabilities" means the TWC Native Excluded Liabilities
and/or the TWC/Adelphia Excluded Liabilities, as the context requires.
"TWC Group" means TWC and its Affiliates.
"TWC Group Member" means TWC or any of its Affiliates.
"TWC Leased Property" means the TWC Native Leased Property and/or
all leases of real property included in the TWC/Adelphia Assets, as the context
requires.
"TWC Native Business" means the business conducted with the TWC
Native Assets, including the operation of the TWC Native System.
28
"TWC Native Employee" means any individual who, as of the Closing
Date, either (a)(x) is then a current employee of (including any full-time,
part-time, or temporary employee or an individual in any other employment
relationship with), or is then on a leave of absence (including, without
limitation, paid or unpaid leave, short-term disability, medical, personal, or
any other form of authorized leave, but excluding individuals on long-term
disability) from, a TWC Group Member and (y) who is primarily employed by a TWC
Group Member in connection with a TWC Native System or, with respect to any
individual hired after the Adelphia Closing, a TWC/Adelphia System, or (b) has
been designated by mutual written agreement of Comcast and TWC as a TWC Native
Employee. Unless the context clearly indicates otherwise, "TWC Native Employee"
shall include any person claiming benefits or rights under or through any TWC
Native Employee, including the dependents or beneficiaries of any TWC Native
Employee.
"TWC Native Leased Property" means the premises demised under the
TWC Native Leases.
"TWC Owned Property" means the TWC Native Owned Property and/or all
fee interests in real property included in the TWC/Adelphia Assets, as the
context requires.
"TWC Required Consents" means (a) any and all consents,
authorizations and approvals (other than any approval of any Franchising
Authority) the failure to obtain in connection with the transactions
contemplated hereby would, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect and (b) any other consents,
authorizations and approvals set forth on Schedule 5.3 and designated thereon as
TWC Required Consents.
"TWC Retained Systems" means all cable communications systems
operated directly or indirectly by the TWC Group (in each case to the extent the
results of such systems are included in the consolidated results of TWC) at the
Closing other than the TWC Transferred Systems, the cable communications systems
to be transferred directly or indirectly by TWC to Comcast or its Affiliates
under the Friendco Parent Redemption Agreement and the TWE Redemption Agreement
(as such terms are defined in the Comcast/Adelphia Purchase Agreement) and any
cable communications systems acquired after the date hereof.
"TWC Transferred Assets" means the TWC Native Assets and/or the
TWC/Adelphia Assets, as the context requires.
"TWC Transferred Books and Records" means (i) the TWC Native Books
and Records and (ii) the Books and Records (as defined in the TWC/Adelphia
Purchase Agreement) to the extent relating to the TWC/Adelphia Systems and
delivered by Adelphia at the Adelphia Closing, and all books, records and other
documents relating to the TWC/Adelphia Systems that are created, amended,
supplemented or updated following the Adelphia Closing to the extent such books,
records and other documents would be TWC Native Books and Records applying the
provisions of Section 2.1(f)(vii) mutatis mutandis.
29
"TWC Transferred Business" means the TWC Native Business and/or the
TWC/Adelphia Business, as the context requires.
"TWC Transferred Contracts" means the TWC Native Contracts and/or
the Contracts included in the TWC/Adelphia Assets, as the context requires.
"TWC Transferred Franchises" means the TWC Native Franchises and/or
the Franchises included in the TWC/Adelphia Assets, as the context requires.
"TWC Transferred Licenses" means the TWC Native Licenses and/or the
Licenses included in the TWC/Adelphia Assets, as the context requires.
"TWE" means Time Warner Entertainment Company, L.P., a Delaware
limited partnership.
"TWX" means Time Warner Inc., a Delaware corporation.
"Variable Expense Item" means, with respect to any Native System,
the items identified as variable expense items on the 2005 Operating Budget or
on Schedule 1.1F.
"Western Business" has the meaning set forth in the Comcast/Adelphia
Purchase Agreement.
"$" means the U.S. dollar. -
Section 1.2 Other Definitions. The following terms are defined in
the Sections indicated:
TERM SECTION
---------------------------------------------- -------------------
2005 Budgets Section 6.1(a)
2005 Capital Budget Section 6.1(a)
2005 Operating Budget Section 6.1(a)
Accounting Referee Section 2.4(d)
Adelphia Recitals
Agreement Preamble
Business Section 1.3
Cable Pension Plans Section 3.1(e)
CARS Section 2.1(f)(iv)
Cash Reconciliation Section 6.20(e)
Class 1 Comcast Representations and Warranties Section 7.2(a)
Class 1 TWC Representations and Warranties Section 7.1(a)
Class 2 Comcast Representations and Warranties Section 7.2(a)
Class 2 TWC Representations and Warranties Section 7.1(a)
Closing Section 8.1
COBRA Section 3.1(h)
Code Recitals
30
TERM SECTION
---------------------------------------------- -------------------
Comcast Preamble
Comcast Assumed Liabilities Section 2.3
Comcast Cable Preamble
Comcast Dallas Native Systems Recitals
Comcast FCC Counsel Opinion Section 7.2(e)
Comcast Financial Information Section 6.22(a)
Comcast Georgia Preamble
Comcast LA Native Systems Recitals
Comcast Native Assets Section 2.1(f)
Comcast Native Assumed Liabilities Section 2.3
Comcast Native Books and Records Section 2.1(f)(vii)
Comcast Native Cap Section 10.4(d)
Comcast Native Contracts Section 2.1(f)(v)
Comcast Native Excluded Assets Section 2.1(g)
Comcast Native Excluded Liabilities Section 2.3
Comcast Native Financial Statements Section 4.11(a)
Comcast Native Franchises Section 2.1(f)(iii)
Comcast Native Lease Section 4.10
Comcast Native Leases Section 4.10
Comcast Native Licenses Section 2.1(f)(iv)
Comcast Native Minimum Damage Requirement Section 10.4(c)
Comcast Native Newco 1 Section 2.1(d)
Comcast Native Newco 2 Section 2.1(d)
Comcast Native Newco 3 Section 2.1(d)
Comcast Native Newco Transaction Section 2.1(d)
Comcast Native Newcos Section 2.1(d)
Comcast Native Owned Property Section 2.1(f)(ii)
Comcast Native Real Property Interests Section 2.1(f)(ii)
Comcast Native Systems Recitals
Comcast Native Tangible Personal Property Section 2.1(f)(i)
Comcast Native Title Policies Section 7.2(h)
Comcast Newco Indemnified Liabilities Section 4.23(b)
Comcast Newco Transaction Section 2.1(d)
Comcast Newcos Section 2.1(d)
Comcast Ohio Native Systems Recitals
Comcast Participant Section 4.1
Comcast Parties Preamble
Comcast Required Threshold Section 7.2(j)
Comcast Transferors Preamble
Comcast Transferred Systems Recitals
Comcast/Adelphia Cap Section 10.4(d)
Comcast/Adelphia Century Newco 1 Section 2.1(c)
Comcast/Adelphia Century Newco 2 Section 2.1(c)
Comcast/Adelphia Employee Section 3.1(o)(i)
Comcast/Adelphia Minimum Damage Requirement Section 10.4(c)
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TERM SECTION
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Comcast/Adelphia Newco Transaction Section 2.1(c)
Comcast/Adelphia Newcos Section 2.1(c)
Comcast/Adelphia Parnassos Newco Section 2.1(c)
Comcast/Adelphia Purchase Agreement Recitals
Comcast/Adelphia Systems Recitals
Confidential Information Section 6.4(a)
Delayed Transfer Asset Section 2.1(h)(i)
Delivery Date Section 2.4(b)
Disclosure Letter Section 1.3
ERISA Group Liabilities Section 4.23(b)
Estimated Closing Adjustment Amount Section 2.4(a)
Exchange Section 2.1(e)(i)
Exchange Act Section 4.3
Exchanges Section 2.1(e)(i)
Excluded Transferred Cash Section 2.1(g)
Franchise Matter Section 10.3
Guaranteed Obligations Section 10.9(a)
Guaranteed Parties Section 10.9(a)
Guaranteed Party Section 10.9(a)
Indemnification Payment Section 10.4(j)
Indemnitee Section 10.3
Indemnitor Section 10.3
Knowledge Section 1.3
Native Excluded Assets Section 2.1(g)
Newco Transactions Section 2.1(d)
Objection Notice Section 2.4(c)
Outside Closing Date Section 9.1(a)
Palm Beach Indemnification Payment Section 6.20(j)
POFS Section 6.1(f)(ii)
Post-Closing Consent Section 6.7
Proprietary Rights Section 3.2
Rate Regulatory Matter Section 6.9(d)
Retained Native Employees Section 3.1(a)
Securities Act Section 4.3
Specified Price Section 6.8(d)
Specified System Section 6.8(d)
Surveys Section 6.5
Taking Section 11.16(b)
TCI Preamble
Time Warner Cable Preamble
Time Warner Cable Financial Information Section 6.22(b)
Title Commitment Notice Section 6.5
Title Commitments Section 6.5
Title Company Section 6.5
Title Defect Section 6.5
Transferee Health or Welfare Plans Section 3.1(f)(ii)
32
TERM SECTION
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Transferee Reimbursement Plan Section 3.1(g)
Transferee 401(k) Plan Section 3.1(d)
Transferee's Statement Section 2.4(b)
Transferor Benefit Plan Section 3.1(a)(ii)
Transferor Health or Welfare Plan Section 3.1(f)(i)
Transferor Reimbursement Plan Section 3.1(g)
Transferor 401(k) Plan Section 3.1(d)
Transferor's Statement Section 2.4(a)
Transferred Native Employees Section 3.1(a)
Transition Closing Section 6.8(d)
TW NY Preamble
TWC Preamble
TWC Assumed Liabilities Section 2.2
TWC FCC Counsel Opinion Section 7.1(e)
TWC Native Assumed Liabilities Section 2.2
TWC Native Books and Records Section 2.1(f)(vii)
TWC Native Cap Section 10.4(b)
TWC Native Contracts Section 2.1(f)(v)
TWC Native Excluded Assets Section 2.1(g)
TWC Native Excluded Liabilities Section 2.2
TWC Native Financial Statements Section 5.11(a)
TWC Native Franchises Section 2.1(f)(iii)
TWC Native Lease Section 5.10
TWC Native Leases Section 5.10
TWC Native Licenses Section 2.1(f)(iv)
TWC Native Minimum Damage Requirement Section 10.4(a)
TWC Native Newco Section 2.1(b)
TWC Native Newco Transaction Section 2.1(b)
TWC Native Owned Property Section 2.1(f)(ii)
TWC Native Real Property Interests Section 2.1(f)(ii)
TWC Native System Recitals
TWC Native Tangible Personal Property Section 2.1(f)(i)
TWC Native Title Policies Section 7.1(h)
TWC Newco Indemnified Liabilities Section 5.23(b)
TWC Newco Transaction Section 2.1(b)
TWC Newcos Section 2.1(b)
TWC Participant Section 5.1
TWC Parties Preamble
TWC Required Threshold Section 7.1(j)
TWC Transferors Preamble
TWC Transferred Systems Recitals
TWC Native Assets Section 2.1(f)
TWC/Adelphia Cap Section 10.4(b)
TWC/Adelphia Employee Section 3.1(o)(i)
TWC/Adelphia Minimum Damage Requirement Section 10.4(a)
33
TERM SECTION
---------------------------------------------- -------------------
TWC/Adelphia Newco 1 Section 2.1(a)
TWC/Adelphia Newco 2 Section 2.1(a)
TWC/Adelphia Newco 3 Section 2.1(a)
TWC/Adelphia Newco 4 Section 2.1(a)
TWC/Adelphia Newco 5 Section 2.1(a)
TWC/Adelphia Newco Transaction Section 2.1(a)
TWC/Adelphia Newcos Section 2.1(a)
TWC/Adelphia Purchase Agreement Recitals
TWC/Adelphia Systems Recitals
Unallocated Items Section 6.21(a)
Urban Preamble
Urban Purchase Recitals
Urban Removal Date Section 2.1(e)(iii)
WARN Section 3.1(i)
Section 1.3 Rules of Construction. References to one or more
schedules or Schedules shall be references to schedules included in those
separate disclosure letters (each a "Disclosure Letter") delivered by TWC to
Comcast and by Comcast to TWC on the date hereof in connection with this
Agreement, as such Schedules may be updated pursuant to Section 6.10 (but, in
such case, subject to the provisions of such Section). Unless otherwise
expressly provided in this Agreement: (a) accounting terms used in this
Agreement shall have the meaning ascribed to them under GAAP; (b) words used in
this Agreement, regardless of the gender used, shall be deemed and construed to
include any other gender, masculine, feminine, or neuter, as the context
requires; (c) the word "include" or "including" is not limiting, and the word
"or" is not exclusive; (d) the capitalized term "Section" refers to sections of
this Agreement, except as the context otherwise requires; (e) references to a
particular Section include all subsections thereof, (f) references to a
particular statute or regulation include all amendments thereto, rules and
regulations thereunder and any successor statute, rule or regulation, or
published clarifications or interpretations with respect thereto, in each case
as from time to time in effect; (g) references to a Person include such Person's
successors and assigns to the extent not prohibited by this Agreement; (h)
references to a "day" or number of "days" (without the explicit qualification
"Business") shall be interpreted as a reference to a calendar day or number of
calendar days. "Knowledge" (whether or not capitalized) and words of similar
import, when used with reference to TWC, means the actual knowledge of a
particular matter of any of the individuals listed on Schedule 1.3(A), and, when
used with reference to Comcast, means the actual knowledge of a particular
matter of any of the individuals listed on Schedule 1.3(B); and (i)
"transactions contemplated hereby" (or words of similar import) in this
Agreement shall not be deemed to include the transactions contemplated by the
Adelphia Agreements.
34
ARTICLE 2
EXCHANGE
Section 2.1 Newco Transactions and Exchanges.
(a) TWC/Adelphia Newco Transaction. Prior to the Adelphia
Closing, TW NY shall assign to five Disregarded Entities, referred to herein as
"TWC/Adelphia Newco 1", "TWC/Adelphia Newco 2", "TWC/Adelphia Xxxxx 0",
"XXX/Xxxxxxxx Xxxxx 0", and "TWC/Adelphia Newco 5", respectively, and
collectively as the "TWC/Adelphia Newcos", the rights and obligations to
purchase the TWC/Adelphia Assets and to assume from Adelphia and its Affiliates
the TWC/Adelphia Assumed Liabilities, in each case as set forth opposite the
name of such TWC/Adelphia Newco on Schedule 2.1(a). The rights and obligations
to purchase or assume any TWC/Adelphia Assets or TWC/Adelphia Assumed
Liabilities that are not allocated to any TWC/Adelphia Newco pursuant to
Schedule 2.1(a) shall be assigned to one or more TWC/Adelphia Newcos designated
by TWC at the time of such assignment. At the Adelphia Closing, TWC shall cause
each TWC/Adelphia Newco to purchase such TWC/Adelphia Assets and assume such
TWC/Adelphia Assumed Liabilities pursuant to the terms of the TWC/Adelphia
Purchase Agreement and this Section 2.1(a). Following the Adelphia Closing and
immediately prior to the Exchanges, (i) TWC shall, or shall cause its Affiliates
to, assign, transfer, convey and deliver to the applicable TWC/Adelphia Newcos,
and the applicable TWC/Adelphia Newcos shall accept from TWC and its Affiliates,
all of its and their respective right, title and interest in and to any
TWC/Adelphia Assets not held by the applicable TWC/Adelphia Newcos at such time,
and (ii) each TWC/Adelphia Newco shall assume and agree to pay and discharge, as
and when they become due, any applicable TWC/Adelphia Assumed Liabilities
arising after the Adelphia Closing that such TWC/Adelphia Newco has not assumed
and is not otherwise subject to at such time. The transactions contemplated by
this Section 2.1(a) are referred to collectively as the "TWC/Adelphia Newco
Transaction" and shall be consummated pursuant to one or more Bills of Sale and
Assignment and Instruments of Assumption in form and substance reasonably
satisfactory to TWC and Comcast, and such other instruments of transfer or
assignment as may be reasonably necessary to effect the TWC/Adelphia Newco
Transaction.
(b) TWC Native Newco Transaction. Immediately prior to the
Exchanges, (i) TWC shall, and shall cause its Affiliates to, assign, transfer,
convey and deliver to a Disregarded Entity referred to herein as the "TWC Native
Newco" (and together with the TWC/Adelphia Newcos, the "TWC Newcos"), and the
TWC Native Newco shall accept from TWC and its Affiliates, all of its and their
respective right, title and interest in and to the TWC Native Assets, and (ii)
the TWC Native Newco shall assume and agree to pay and discharge, as and when
they become due, the TWC Native Assumed Liabilities. The transactions
contemplated by this Section 2.1(b) are referred to collectively as the "TWC
Native Newco Transaction" (and, together with the TWC/Adelphia Newco
Transaction, the "TWC Newco Transaction") and shall be consummated pursuant to
one or more Bills of Sale and Assignment and Instruments of Assumption in form
and substance reasonably satisfactory to TWC and Comcast, and
35
such other instruments of transfer or assignment as may be reasonably necessary
to effect the TWC Native Newco Transaction.
(c) Comcast/Adelphia Newco Transaction. Immediately prior to
the Exchanges, (i) Comcast shall, and shall cause each Transferred Joint Venture
Entity and each other Affiliate of Comcast to, assign, transfer, convey and
deliver to three Disregarded Entities, referred to as "Comcast/Adelphia Century
Newco 1", "Comcast/Adelphia Century Newco 2" and "Comcast/Adelphia Parnassos
Newco", respectively and collectively as the "Comcast/Adelphia Newcos", and the
Comcast/Adelphia Newcos shall accept from each such Person, all of its (and
their) right, title and interest in and to the Comcast/Adelphia Assets set forth
opposite the name of such Comcast/Adelphia Newco on Schedule 2.1(c), and (ii)
each of the Comcast/Adelphia Newcos shall assume and agree to pay and discharge,
as and when they become due, the Comcast/Adelphia Assumed Liabilities set forth
opposite the name of such Comcast/Adelphia Newco on Schedule 2.1(c). Any
Comcast/Adelphia Assets or Comcast/Adelphia Assumed Liabilities that are not
allocated to any Comcast/Adelphia Newco pursuant to Schedule 2.1(c) shall be
assigned, transferred, conveyed and delivered to, or assumed by, one or more
Comcast/Adelphia Newcos designated by Comcast at the time of such transaction.
The transactions contemplated by this Section 2.1(c) are referred to
collectively as the "Comcast/Adelphia Newco Transaction" and shall be
consummated pursuant to one or more Bills of Sale and Assignment and Instruments
of Assumption in form and substance reasonably satisfactory to TWC and Comcast,
and such other instruments of transfer or assignment as may be reasonably
necessary to effect the Comcast/Adelphia Newco Transaction.
(d) Comcast Native Newco Transaction. Immediately prior to the
Exchanges, (i) Comcast shall, and shall cause its Affiliates to, assign,
transfer, convey and deliver to three Disregarded Entities, referred to as
"Comcast Native Newco 1", "Comcast Native Newco 2" and "Comcast Native Newco 3",
respectively, and collectively as the "Comcast Native Newcos", (and together
with the Comcast/Adelphia Newcos, the "Comcast Newcos"), and the Comcast Native
Newcos shall accept from Comcast and its Affiliates, all of its and their
respective right, title and interest in and to the Comcast Native Assets set
forth opposite the name of such Comcast Native Newco on Schedule 2.1(d), and
(ii) each Comcast Native Newco shall assume and agree to pay and discharge, as
and when they become due, the Comcast Native Assumed Liabilities set forth
opposite the name of such Comcast Native Newco on Schedule 2.1(d). Any Comcast
Native Assets or Comcast Native Assumed Liabilities that are not allocated to
any Comcast Native Newco pursuant to Schedule 2.1(d) shall be assigned,
transferred, conveyed and delivered to, or assumed by, one or more Comcast
Native Newcos designated by Comcast at the time of such transaction. The
transactions contemplated by this Section 2.1(d) are referred to collectively as
the "Comcast Native Newco Transaction" (and, together with the Comcast/Adelphia
Newco Transaction, the "Comcast Newco Transaction", and together with the TWC
Newco Transaction, the "Newco Transactions") and shall be consummated pursuant
to one or more Bills of Sale and Assignment and Instruments of Assumption in
form and substance reasonably satisfactory to TWC and Comcast, and such other
instruments of transfer or assignment as may be reasonably necessary to effect
the Comcast Native Newco Transaction.
36
(e) Exchange Covenant. Subject to the terms and conditions set
forth in this Agreement, at Closing, following the TWC/Adelphia Newco
Transaction and immediately following consummation of the TWC Native Newco
Transaction and the Comcast Newco Transaction:
(i) Subject to Section 2.1(e)(iii), each Transferor
shall cause the following exchanges of Equity Securities (collectively, the
"Exchanges" and each an "Exchange"):
(A) 100% of the outstanding Equity Securities of
TWC/Adelphia Newco 1 shall be exchanged for 100% of the outstanding Equity
Securities of Comcast/Adelphia Century Newco 1, in each case free and
clear of all Liens other than applicable securities laws.
(B) 100% of the outstanding Equity Securities of
TWC Native Newco shall be exchanged for 100% of the outstanding Equity
Securities of Comcast/Adelphia Century Newco 2, in each case free and
clear of all Liens other than applicable securities laws.
(C) 100% of the outstanding Equity Securities of
TWC/Adelphia Newco 2 shall be exchanged for 100% of the outstanding Equity
Securities of Comcast/Adelphia Parnassos Newco, in each case free and
clear of all Liens other than applicable securities laws.
(D) 100% of the outstanding Equity Securities of
TWC/Adelphia Newco 3 shall be exchanged for 100% of the outstanding Equity
Securities of Comcast Native Newco 1, in each case free and clear of all
Liens other than applicable securities laws.
(E) 100% of the outstanding Equity Securities of
TWC/Adelphia Newco 4 shall be exchanged for 100% of the outstanding Equity
Securities of Comcast Native Newco 2, in each case free and clear of all
Liens other than applicable securities laws.
(F) 100% of the outstanding Equity Securities of
TWC/Adelphia Newco 5 shall be exchanged for 100% of the outstanding Equity
Securities of Comcast Native Newco 3, in each case free and clear of all
Liens other than applicable securities laws.
(ii) If the Estimated Closing Adjustment Amount calculated
with respect to any Newco is a positive number, such amount shall be payable at
the Closing by the Transferee of such Newco to the Transferor of such Newco. If
the Estimated Closing Adjustment Amount calculated with respect to any Newco is
a negative number, such amount shall be payable at the Closing by the Transferor
of such Newco to the Transferee of such Newco. The amounts payable pursuant to
this clause (ii) (and the amount payable pursuant to Section 2.1(e)(iii)(B), if
applicable) in respect of any Exchange shall be netted against each other such
that only one payment in cash is made in respect of each Exchange. The payment
to be made pursuant to this clause
37
(ii) shall be paid by wire transfer of immediately available funds to the
accounts designated by each of Transferor Parent and Transferee Parent by
written notice to the other at least five Business Days prior to Closing (or, in
the case of Section 2.1(e)(iii)(B), designated by Comcast by written notice to
TWC at least two Business Day prior to Closing).
(iii) If the Urban Purchase has not been consummated by
the Business Day preceding the Closing Date (the "Urban Removal Date"), then:
(A) the Exchange contemplated by Section
2.1(e)(i)(B) shall not occur at the Closing;
(B) subject to the terms and conditions set forth
in this Agreement, at the Closing, following the TWC/Adelphia Newco
Transaction and immediately following consummation of the Comcast Newco
Transaction, the relevant Comcast Transferor shall sell, convey, transfer
and deliver to TWC, and TWC shall purchase from such Comcast Transferor,
100% of the outstanding Equity Securities of Comcast/Adelphia Century
Newco 2, free and clear of all Liens other than applicable securities
laws, for an amount of cash equal to (x) the Native Purchase Price Per
Subscriber multiplied by (y) the Budgeted Subscriber Number for the TWC
Native Newco (and such transaction shall be deemed to be an Exchange for
purposes of this Agreement);
(C) all representations and warranties, covenants,
conditions and other provisions contained in this Agreement (other than,
for the avoidance of doubt, this Section 2.1(e)(iii) and Section 6.26)
shall, to the extent relating to the TWC Native Business, the TWC Native
Assets, the TWC Native System, the TWC Native Employees (other than those
individuals primarily employed in connection with a TWC/Adelphia System
referred to in clause (a)(y) of the definition of TWC Native Employee) and
the TWC Native Newco, be of no further force or effect, and the TWC Native
Business, the TWC Native Assets, the TWC Native System, such TWC Native
Employees and the TWC Native Newco shall not be considered a Transferred
Business, Transferred Assets, a Transferred System, Transferred Employees
or a Newco, respectively, in each case from and after the Urban Removal
Date; and
(D) Urban shall be deemed removed as a party
hereto and shall have no rights or obligations hereunder from and after
the Urban Removal Date.
(f) Composition of Native Asset Groups. "Comcast Native
Assets" means all of the Comcast Group's right, title and interest in the assets
and properties, real and personal, tangible and intangible, owned, held for use,
leased, licensed or used by any Comcast Group Member primarily in the operation
of the Comcast Native Systems as of the Closing (that are not Comcast Native
Excluded Assets), which right, title and interest shall be owned by the Comcast
Native Newcos as of the Closing (other than as contemplated by Section
2.1(h)(i)). "TWC Native Assets"
38
means all of the TWC Group's right, title and interest in the assets and
properties, real and personal, tangible and intangible, owned, held for use,
leased, licensed or used by any TWC Group Member primarily in the operation of
the TWC Native System as of the Closing (that are not TWC Native Excluded
Assets), which right, title and interest shall be owned by the TWC Native Newco
as of the Closing (other than as contemplated by Section 2.1(h)(i)). The Comcast
Native Assets and the TWC Native Assets, respectively, shall include the
following types of assets and properties:
(i) Tangible Personal Property. All tangible personal
property, including towers, tower equipment, aboveground and underground cable,
distribution systems, headend equipment, line amplifiers, microwave equipment,
converters, testing equipment, motor vehicles, office equipment, furniture,
fixtures, supplies, inventory and other physical assets (the "Comcast Native
Tangible Personal Property" or the "TWC Native Tangible Personal Property," as
applicable), including with respect to the Comcast Native Tangible Personal
Property, the items described on Schedule 2.1(f)(i)(A), and with respect to the
TWC Native Tangible Personal Property, the items described on Schedule
2.1(f)(i)(B);
(ii) Real Property. All fee interests in real property
(including improvements thereon) (the "Comcast Native Owned Property" or the
"TWC Native Owned Property," as applicable), including the interests described
as Comcast Native Owned Property on Schedule 2.1(f)(ii)(A) or as TWC Native
Owned Property on Schedule 2.1(f)(ii)(B), and all leases, easements, rights of
access and other interests (not including fee interests) in real property (the
"Comcast Native Real Property Interests" or the "TWC Native Real Property
Interests," as applicable), including with respect to the Comcast Native Real
Property Interests, those described on Schedule 2.1(f)(ii)(A), and with respect
to the TWC Native Real Property Interests, those described on Schedule
2.1(f)(ii)(B);
(iii) Franchises. All franchises and similar
authorizations or similar permits issued by any Governmental Authority (the
"Comcast Native Franchises" or the "TWC Native Franchises," as applicable),
including with respect to the Comcast Native Franchises, those described on
Schedule 2.1(f)(iii)(A), and with respect to the TWC Native Franchises, those
described on Schedule 2.1(f)(iii)(B);
(iv) Licenses. All cable television relay service
("CARS"), business radio and other licenses, authorizations, consents or permits
issued by the FCC or any other Governmental Authority (other than the Comcast
Native Franchises and the TWC Native Franchises) (the "Comcast Native Licenses"
or the "TWC Native Licenses," as applicable), including with respect to the
Comcast Native Licenses, those described on Schedule 2.1(f)(iv)(A), and with
respect to the TWC Native Licenses, those described on Schedule 2.1(f)(iv)(B);
(v) Contracts. All pole line or joint line agreements,
underground conduit agreements, crossing agreements, bulk service, commercial
service or multiple dwelling agreements, access agreements, system specific
programming agreements or signal supply agreements, agreements with community
groups,
39
commercial leased access agreements, capacity license agreements, partnership,
joint venture or other similar agreements or arrangements, advertising
representation and interconnect agreements, and other Contracts (including all
Contracts in respect of Native Real Property Interests) (the "Comcast Native
Contracts" or the "TWC Native Contracts," as applicable), including with respect
to the Comcast Native Contracts, those described on Schedule 2.1(f)(v)(A), and
with respect to the TWC Native Contracts, those described on Schedule
2.1(f)(v)(B);
(vi) Accounts Receivable and Current Assets. All
subscriber, trade and other accounts receivable (including advertising accounts
receivable) and pre-paid expense items;
(vii) Books and Records. All engineering records, files,
data, drawings, blueprints, schematics, reports, lists, plans and processes and
all files of correspondence, lists, records and reports concerning subscribers
and prospective subscribers of the Comcast Native Systems or the TWC Native
System, signal and program carriage and dealings with Governmental Authorities,
including all reports filed by or on behalf of any Comcast Group Member or TWC
Group Member, as applicable, with the FCC and statements of account filed by or
on behalf of any Comcast Group Member or TWC Group Member, as applicable, with
the U.S. Copyright Office (the "Comcast Native Books and Records" or the "TWC
Native Books and Records", as applicable); and
(viii) Insurance and Condemnation Proceeds. All rights
to insurance and condemnation proceeds receivable after Closing in respect of
any Comcast Native Assumed Liabilities or TWC Native Assumed Liabilities, all
insurance and condemnation proceeds (to the extent not already expended by the
applicable Transferor Parent or its Affiliates to restore or replace the lost,
damaged or condemned asset, which replacement asset shall be a Transferred
Asset) received or receivable in respect of any asset damaged, lost or condemned
after December 31, 2004 and which if not so damaged, lost or condemned would
have been a Comcast Native Asset or a TWC Native Asset, as applicable, and all
insurance and condemnation proceeds received or receivable in respect of
business interruption of the Comcast Native Systems or the TWC Native System, as
applicable, to the extent relating to any period after Closing;
in the case of each of the foregoing, if such property is owned, held for use,
leased, licensed or used primarily in the operation of the Comcast Native
Systems or the TWC Native System, as applicable, and then only to the extent of
the Comcast Group's or the TWC Group's (as applicable) right, title and interest
therein.
For the avoidance of doubt, and subject to Section 2.1(h), the
parties intend that to the fullest extent permitted all record and beneficial
ownership interests of the Comcast Group in the Comcast Transferred Assets, and
all record and beneficial ownership interests of the TWC Group in the TWC
Transferred Assets, will be transferred to the applicable Newcos in the Newco
Transactions, and if any Group Member holds beneficial ownership in assets of
the type described above while another
40
Group Member holds record ownership in such assets, all of such ownership
interests would be transferred to the applicable Newcos in the Newco
Transactions.
(g) Native Excluded Assets. Notwithstanding anything to the
contrary set forth herein, all right, title and interest of the TWC Group in, to
and under the following (collectively, the "TWC Native Excluded Assets"), and
all right, title and interest of the Comcast Group in, to and under the
following (collectively, the "Comcast Native Excluded Assets" and together with
the TWC Native Excluded Assets, the "Native Excluded Assets") in each case
regardless of whether related to the Native Systems, shall not be Native Assets
under this Agreement and, except with respect to the Native Excluded Assets
described in clause (xix), shall be retained directly or indirectly by the TWC
Group or the Comcast Group, as the case may be, from and after the Closing: (i)
any and all cable programming services agreements (including cable guide
contracts but excluding system specific programming agreements listed on
Schedule 2.1(f)(v)(A) with respect to the Comcast Group and Schedule
2.1(f)(v)(B) with respect to the TWC Group) and any payments received or to be
received with respect thereto; (ii) any and all insurance policies and rights
and claims thereunder other than the matters described in Section 2.1(f)(viii);
(iii) letters of credit and any stocks, bonds (other than surety bonds),
certificates of deposit and similar investments; (iv) any and all cash and cash
equivalents (including cash received as advance payments by subscribers in the
ordinary course of business and held by the Comcast Group or the TWC Group, as
applicable, as of the Closing, but excluding cash in an amount equal to the
amount of cash received as (A) the cash insurance and condemnation proceeds
described in Section 2.1(f)(viii), (B) xxxxx cash on-hand, if any, (C) any cash
referred to in Section 11.16 and (D) cash proceeds of any exercise of a
Transferred Systems Option (clauses (A) (except to the extent relating to a
Native Assumed Liability), (C) and (D), the "Excluded Transferred Cash"); (v)
any and all patents, copyrights, trademarks, trade names, service marks, service
names, logos and similar proprietary rights, including, as appropriate, the
"Comcast" name, the "Time Warner" or "Road Runner" names and any derivations
thereof (subject to Section 3.2 and excluding those items (other than those
incorporating the "Comcast" or "Time Warner" or "Road Runner" name) owned,
licensed, used or held for use exclusively in connection with the operation of
the Native Systems); (vi) any and all Contracts for subscriber billing services
and any equipment leased with respect to the provision of services under such
Contracts (subject to Section 6.8); (vii) any and all Contracts relating to
national advertising sales representation; (viii) any and all agreements with
any Internet service provider, including with respect to the TWC Group, Road
Runner Holdco LLC; (ix) any and all Contracts pursuant to which the TWC Group or
the Comcast Group, as applicable, procures goods or services for both Native
Systems and Retained Systems; (x) any and all retransmission consent agreements,
except as provided in Section 6.19 with respect to certain Local Retransmission
Consent Agreements; (xi) any and all agreements governing or evidencing an
obligation of any TWC Group Member or Comcast Group Member, as the case may be,
for borrowed money; (xii) the assets described on Schedule 2.1(g)(xii)(A) with
respect to the Comcast Group and Schedule 2.1(g)(xii)(B) with respect to the TWC
Group; (xiii) any surplus inventory in excess of amounts of inventory held
consistent with Retained System practice; (xiv) any and all Authorizations of
Governmental Authorities to provide telephony service held, directly
41
or indirectly, by any TWC Group Member or Comcast Group Member; (xv) any and all
assets relating to any Transferor 401(k) Plan or any tax-qualified defined
benefit plan maintained by any Group Member; (xvi) any and all account books of
original entry, general ledgers, and financial records used in connection with
the Native Systems; (xvii) any assets of the type that would be excluded from
financial statements by reason of the GAAP Adjustments; (xviii) any intercompany
account receivable created to record cash swept from the Native Systems prior to
Closing (except to the extent such cash would be excluded from the definition of
"Excluded Assets" pursuant to clause (iv) above and such cash amount is not
otherwise transferred to the TWC Native Newco in the TWC Native Newco
Transaction or to a Comcast Native Newco in the Comcast Native Newco
Transaction, as applicable); (xix) any TWC/Adelphia Assets or Comcast/Adelphia
Assets; or (xx) any other assets of the Comcast Group or the TWC Group, as
applicable, other than Native Assets; provided, that Transferor shall, at
Transferee's request and expense, provide copies of, or information contained
in, such books, records and ledgers referred to in clause (xvi) above (other
than information pertaining to programming agreements that are not Native
System-specific programming or, to the extent necessary to protect the
legitimate legal, business and/or confidentiality concerns of Transferor or its
Affiliates but taking into account Transferee's and its Affiliates' need for
such information, other information that is competitively sensitive, is subject
to confidentiality restrictions or that contains trade secrets or other
sensitive information) to the extent reasonably requested by Transferee after
the Closing Date.
(h) Authorizations and Consents.
(i) If and to the extent that the transfer or assignment
of any asset to the applicable Newco or, following such transfer or
assignment, the transfer of the Equity Securities of any Newco (or any
successor thereof), in each case in accordance with this Section 2.1,
would in any case be a violation of applicable Legal Requirements with
respect to such asset, require any Authorization with respect to such
asset or otherwise adversely affect the rights of the applicable Newco or
Transferee thereunder, then the transfer or assignment of each such asset
to the applicable Newco (each a "Delayed Transfer Asset") shall be
automatically deemed deferred and any such purported transfer or
assignment shall be null and void until such time as all legal impediments
are removed and/or such Authorizations have been made or obtained.
Notwithstanding the foregoing, any such Delayed Transfer Asset shall be
deemed a Transferred Asset for purposes of determining whether any
Liability is a Native Assumed Liability or Adelphia Assumed Liability, as
applicable.
(ii) If the transfer or assignment of any Transferred
Asset intended to be transferred or assigned directly or indirectly
hereunder is not consummated prior to or at the Closing, whether as a
result of the provisions of this Section 2.1(h) or for any other reason,
then the Group Member responsible for transferring or assigning such
Transferred Asset shall thereafter, directly or indirectly, hold such
Delayed Transfer Asset for the use and benefit, insofar as reasonably
possible and not prohibited under the terms of any applicable Contract, of
the applicable Newco (at the expense of such Newco). In addition, the
Group
42
Member responsible for directly or indirectly transferring or assigning
such Transferred Asset shall take or cause to be taken such other actions
as may be reasonably requested by the applicable Newco in order to place
such Newco, insofar as reasonably possible, in the same position as if
such Delayed Transfer Asset had been transferred as contemplated hereby
and so that all the benefits and burdens relating to such Delayed Transfer
Asset including possession, use, risk of loss, potential for gain, and
dominion, control and command over such Delayed Transfer Asset, are to
inure from and after the Closing to such Newco. To the extent permitted by
Legal Requirements and to the extent otherwise permissible in light of any
required Authorization, the applicable Newco shall be entitled to, and
shall be responsible for, the management of any Delayed Transfer Assets
not yet transferred to it as a result of this Section 2.1(h) and the
parties agree to use reasonable commercial efforts to cooperate and
coordinate with respect thereto.
(iii) If and when the Authorizations, the absence of
which caused the deferral of transfer of any Delayed Transfer Asset
pursuant to this Section 2.1(h), are obtained, the transfer of the
applicable Delayed Transfer Asset to the applicable Newco shall
automatically and without further action be effected in accordance with
the terms of this Agreement and the applicable Transaction Documents.
(iv) No party or any Affiliate thereof shall be
obligated, in connection with the foregoing, to expend any money unless
the necessary funds are advanced by the applicable Newco or its
Affiliates, other than reasonable out-of-pocket expenses, attorneys' fees
and recording or similar fees, all of which shall be promptly reimbursed
by such Newco except as otherwise specifically provided in this Agreement,
including for this purpose Section 3.4.
(v) Prior to the Closing, each party shall deliver to
the other party a list identifying, in reasonable detail and to their
respective knowledge, the Delayed Transfer Assets and the Authorizations
required therefor.
(vi) The parties hereto further agree (A) that any
Delayed Transfer Assets referred to in this Section 2.1(h) shall be
treated for all Income Tax purposes as assets of the applicable Newco (or
any successor thereof) and (B) not to report or take any Tax position (on
a Tax Return or otherwise) inconsistent with such treatment (unless
required by a change in applicable Tax law or a good faith resolution of a
contest).
(vii) The parties agree that the treatment of any
Delayed Transfer Asset (as defined in the TWC/Adelphia Purchase Agreement)
shall be governed by the terms of the TWC/Adelphia Purchase Agreement to
the extent inconsistent herewith.
(viii) Each Transferee shall cause its applicable Newco
to perform its obligations under this Section 2.1(h).
43
Section 2.2 TWC Native Assumed Liabilities. At the Closing, and
except as otherwise provided for herein, each TWC Native Newco being assigned
TWC Native Assets pursuant to Section 2.1(b) shall assume, and, from and after
the Closing, such TWC Native Newco or its Affiliates shall pay, discharge and
perform as and when due, its applicable portion of all (a) Liabilities of the
TWC Group to the extent arising out of, resulting from or associated with the
ownership and operation of the TWC Native Assets and/or the TWC Native Business
prior to Closing, or the transfer of such TWC Native Assets or such portion of
the TWC Native Business to the TWC Native Newco pursuant to Section 2.1(b) or
the Exchanges, but in each case only to the extent such Liabilities are
reflected in the Net Liabilities Adjustment Amount used to calculate the Final
Closing Adjustment Amount, and (b) all Liabilities to the extent relating to,
arising out of or resulting from the ownership and operation of the TWC Native
Assets and/or the TWC Native Business after the Closing (clauses (a) and (b)
collectively, the "TWC Native Assumed Liabilities" and, together with the
TWC/Adelphia Assumed Liabilities, the "TWC Assumed Liabilities"). The TWC Native
Assumed Liabilities shall not include, with respect to any TWC Native Assets or
TWC Native Business, (i) Excluded Tax Liabilities, (ii) Liabilities set forth on
Schedule 2.2, (iii) Liabilities for long-term debt (including the current
portion thereof), (iv) Liabilities to the extent arising out of, resulting from
or associated with the use, ownership or operation of the TWC Excluded Assets,
(v) any Liabilities of any TWC Group Member other than TWC Native Assumed
Liabilities, (vi) any Liabilities of the type that would be excluded from
financial statements by reason of the GAAP Adjustments or (vii) any intercompany
payable created to record cash lent to the TWC Native System prior to Closing
(clauses (i) through (vii) collectively, "TWC Native Excluded Liabilities").
Section 2.3 Comcast Native Assumed Liabilities. At the Closing, and
except as otherwise provided for herein, each Comcast Native Newco being
assigned Comcast Native Assets pursuant to Section 2.1(d) shall assume, and,
from and after the Closing, such Comcast Native Newco or its Affiliates shall
pay, discharge and perform as and when due, its applicable portion of all (a)
Liabilities of the Comcast Group to the extent arising out of, resulting from or
associated with the ownership and operation of the Comcast Native Assets and/or
the Comcast Native Business prior to Closing, or the transfer of such Comcast
Native Assets or such portion of the Comcast Native Business to the Comcast
Native Newcos pursuant to Section 2.1(d) or the Exchanges, but in each case only
to the extent such Liabilities are reflected in the Net Liabilities Adjustment
Amount used to calculate the Final Closing Adjustment Amount and (b) all
Liabilities to the extent relating to, arising out of or resulting from the
ownership and operation of the Comcast Native Assets and/or the Comcast Native
Business after the Closing (clauses (a) and (b) collectively, the "Comcast
Native Assumed Liabilities" and, together with the Comcast/Adelphia Assumed
Liabilities, the "Comcast Assumed Liabilities"). The Comcast Native Assumed
Liabilities shall not include, with respect to any Comcast Native Assets or
Comcast Native Business, (i) Excluded Tax Liabilities, (ii) Liabilities set
forth on Schedule 2.3, (iii) Liabilities for long-term debt (including the
current portion thereof), (iv) Liabilities to the extent arising out of,
resulting from or associated with the use, ownership or operation of the Comcast
Excluded Assets, (v) any Liabilities of any Comcast Group Member other than
Comcast Native Assumed Liabilities, (vi) any
44
Liabilities of the type that would be excluded from financial statements by
reason of the GAAP Adjustments or (vii) any intercompany payable created to
record cash lent to the Comcast Native Systems prior to Closing (clauses (i)
through (vii) collectively, "Comcast Native Excluded Liabilities").
Section 2.4 Closing Adjustments.
(a) No later than five Business Days prior to the Closing
Date, each Transferor in an Exchange shall prepare, or cause to be prepared, and
deliver to the Transferee in such Exchange, a statement (each, a "Transferor's
Statement"), which shall set forth such Transferor's good faith estimate of the
Closing Adjustment Amount for the Newco being directly or indirectly transferred
by it in such Exchange which shall be determined in accordance with this
Agreement (the "Estimated Closing Adjustment Amount"), together with appropriate
documentation supporting such estimate. Each Transferor's Statement shall be
prepared in good faith in accordance with this Agreement based on the books and
records of the Transferred Systems held by such Newco.
(b) As soon as practicable but in any event prior to the date
which is the later of (i) 90 days following the Closing and (ii) 10 days after
the Final Adjustment Amounts (as defined in the Adelphia Purchase Agreements)
have been determined pursuant to the Adelphia Purchase Agreements (the "Delivery
Date"), each Transferee in an Exchange shall prepare, or cause to be prepared,
and deliver to the Transferor in such Exchange, with respect to the Newco
directly or indirectly transferred by such Transferor in such Exchange, a
statement (each, a "Transferee's Statement") of the actual Closing Adjustment
Amount, as of the Closing Date, which shall be determined in accordance with
this Agreement, together with appropriate documentation supporting such
determination. Each Transferee's Statement shall be prepared in good faith in
accordance with this Agreement based on the books and records of the Transferred
Systems held by such Newco.
(c) If the Transferor in any Exchange disagrees with any item
in the Transferee's Statement relating to such Exchange, such Transferor may,
within 90 days after the Delivery Date, deliver a notice (an "Objection Notice")
to the relevant Transferee disagreeing with such item and setting forth such
Transferor's calculation of such item, together with appropriate documentation
supporting such determination. Any such Objection Notice shall specify those
items or portions thereof as to which such Transferor disagrees, and such
Transferor shall be deemed to have agreed with all other items and portions of
items contained in the Transferee's Statement.
(d) If an Objection Notice shall be duly delivered pursuant to
Section 2.4(c), Transferor and Transferee shall, during the thirty (30) days
following such delivery, use their commercially reasonable efforts to reach
agreement on the disputed items and amounts. If during such period, Transferor
and Transferee are unable to reach such agreement, they shall promptly jointly
retain a nationally recognized accounting firm that is not the principal
independent accountant of either Comcast, TWC or TWX (the "Accounting Referee")
to resolve the disputed items or amounts. In making its determinations of the
propriety of items and amounts, the Accounting Referee shall
45
consider only those items (or portions thereof) or amounts as to which
Transferor and Transferee disagree and, with respect to each item (or portion
thereof) or amount, shall select a number within the range of the dispute
between Transferor and Transferee. The Accounting Referee shall deliver to
Transferor and Transferee, as promptly as practicable (but, in any event, within
thirty (30) days after submission of the dispute to it), a report setting forth
its resolution of the disputed items and amounts, and based thereon (and on the
items (or portions thereof) and amounts not in dispute) the Closing Adjustment
Amount. Such report shall be final and binding upon Transferor, Transferee and
their respective Affiliates. The costs of the Accounting Referee shall be shared
equally by Transferor and Transferee. Transferor and Transferee will, and will
cause their Affiliates and independent accountants to, cooperate and assist each
other and the Accounting Referee in conducting their respective reviews of the
amounts referred to in this Section 2.4, including without limitation, making
available to the extent necessary any books, records, work papers and personnel.
(e) Upon satisfaction of the applicable procedures of this
Section 2.4, within two Business Days after the date on which the Final Closing
Adjustment Amount has been finally determined, each Transferor or Transferee
shall pay the relevant Transferee or Transferor, respectively, an amount
sufficient so that when added to the net payment made by each of such parties
under Section 2.1(e)(ii), each such party has paid or received the amount of
cash it would have been obligated to pay or entitled to receive under Section
2.1(e)(ii) had the Estimated Closing Adjustment Amount been equal to the Final
Closing Adjustment Amount, provided that any payment made pursuant to this
Section 2.4(e) shall be made together with interest thereon at the Prime Rate,
from and including the Closing Date to but excluding the date of payment. All
payments to be made pursuant to this Section 2.4 shall be paid by wire transfer
of immediately available funds to the accounts designated by the recipient by
written notice to the party owing such payment.
Section 2.5 Like-Kind Exchange Covenants.
(a) The parties intend that, and, subject to Section 2.5(b),
agree to use commercially reasonable efforts to structure each Exchange in such
a way that to the maximum extent possible, such Exchange will be an exchange of
property that is (i) of equivalent value and (ii) of like-kind within the
meaning of Section 1031 of the Code. The parties will cooperate in good faith to
minimize any adverse Tax effect resulting from a Newco Transaction or Exchange,
including, but not limited to (x) cooperating to match property transferred in
each Exchange into "Exchange Groups" (as defined under Treasury Regulation
Section 1.1031(j)-1(b)(2)) and (y) using commercially reasonable efforts to
restructure one or more Newco Transactions or Exchanges so as to minimize the
expected payments pursuant to Section 2.1(e)(ii) or any other expected adverse
Tax consequences of any such Newco Transaction or Exchange (including but not
limited to cooperating with respect to (A) the assignment of the parties' rights
under this Agreement to a "qualified intermediary" engaged by one or more of the
parties to effect a deferred exchange and (B) transfer taxes as set forth in
Section 2.5(c)).
46
(b) Time Warner Cable and Comcast shall each use commercially
reasonable efforts to reach agreement as to the value of the Comcast Transferred
Assets and the TWC Transferred Assets in each Exchange (including agreement as
to the value to any Exchange Groups transferred in an Exchange and the value of
the assets comprising any such Exchange Group), with an understanding that, to
the greatest extent possible, the fair market value of the Comcast Transferred
Assets and the TWC Transferred Assets in each Exchange, are equivalent. Each of
Time Warner Cable and Comcast shall file, and shall cause all members of its
Affiliated Group to file, all Tax Returns and schedules thereto, including those
Tax Returns and forms required under Sections 1031 and 1060 (if applicable) of
the Code, consistent with any such agreed-upon allocations, unless otherwise
required by a change in tax law or a good faith resolution of a contest. In the
event the parties do not reach agreement on such allocations, each of Time
Warner Cable and Comcast and their respective Affiliated Groups shall reflect
the Transferred Assets acquired by the Transferee members of such Affiliated
Group in accordance with such party's own determination of such allocations.
(c) The parties shall consult and reasonably cooperate with
each other so as to minimize any state and local transfer taxes arising as a
result of the Newco Transactions and the Exchange, including by identifying
appropriate immaterial Subsidiaries of one or more Transferors that would
qualify as a Disregarded Entity (but for clause (ii) of such definition) to
serve as one or more of the Newcos and negotiating in good faith appropriate
indemnification arrangements to put the Transferee in substantially the same
position as if clause (ii) of such definition were satisfied with respect to
such Subsidiary.
ARTICLE 3
RELATED MATTERS
Section 3.1 Employees.
(a) Each Native Employee who is an employee of Transferor
Parent or its Affiliates as of immediately prior to the Closing Date shall
become an employee of Transferee Parent or its Affiliates on the Closing Date.
Native Employees who commence employment with Transferee Parent (or its
Affiliates as of the Closing) in accordance with the preceding sentence shall be
referred to herein as "Transferred Native Employees." For the avoidance of
doubt, if any employee holding the job title as of the date hereof (as
previously identified by name to the Comcast Group by the TWC Group) listed on
Schedule 3.1(k)(i) remains employed by the TWC Group, or if any employee holding
the job title as of the date hereof (as previously identified by name to the TWC
Group by the Comcast Group) listed on Schedule 3.1(k)(ii) remains employed by
the Comcast Group, in each case on the Closing Date as permitted by Section
3.1(k) hereof, such employee shall not be a Transferred Native Employee. For
purposes of this Article 3, "Transferred Native Employees" shall not include
those employees holding the job titles as of the date hereof to be retained by a
TWC Group Member, on the one hand, or a Comcast Group Member, on the other hand,
(as previously identified by name to the Comcast Group by the TWC Group or to
the TWC Group by the Comcast Group, as applicable) listed on Schedule 3.1(a)(i)
in the case of the TWC Group, or
47
Schedule 3.1(a)(ii) in the case of the Comcast Group (such employees, the
"Retained Native Employees"). TWC Group shall have no obligation or Liability
with respect to those Retained Native Employees to be retained by a Comcast
Group Member and Comcast Group shall have no obligation or Liability with
respect to those Retained Native Employees to be retained by a TWC Group Member.
Transferor Parent shall take or cause to be taken such actions as are reasonably
necessary to effectuate the transfer of employment described in this Section
3.1(a), including, without limitation, making a general offer of employment to
such Native Employees. The parties hereto shall not take any action that is not
otherwise permitted under this Article 3 that would interfere with such
employees (other than the Retained Native Employees) becoming employed by
Transferee Parent or its Affiliates as of the Closing.
(i) If the Closing does not occur on the same date as
the Adelphia Closing, for purposes of the remainder of this Section 3.1, to the
extent not inconsistent with the relevant Adelphia Purchase Agreement, or to the
extent not otherwise explicitly provided in Section 3.1(o), "Transferred Native
Employees" shall include Adelphia Employees who are primarily employed in
connection with the Adelphia Systems. If the Closing occurs on the same date as
the Adelphia Closing, the treatment of Adelphia Employees shall be governed by
Section 3.1(o)(i).
(ii) At the Closing, Comcast Group shall terminate or
cause to be terminated the employment of all the Comcast Native Employees and
the TWC Group shall terminate or cause to be terminated the employment of all
the TWC Native Employees, in each case other than Retained Native Employees.
Effective as of the Closing, Transferor Parent shall discontinue providing
benefits to Transferred Native Employees under all Benefit Plans maintained by
Transferor Parent or its Affiliates (each, a "Transferor Benefit Plan") and each
Transferred Native Employee shall cease to participate in each Transferor
Benefit Plan, except as otherwise required by law or as explicitly required by
this Agreement. From and after the Closing Date, Transferor Parent and its
Affiliates shall remain solely responsible for any and all Liabilities in
respect of the Transferred Native Employees relating to the Transferor Benefit
Plans, except as otherwise explicitly required by this Agreement. None of
Transferee Parent or any of its Affiliates shall assume or have transferred to
them the sponsorship of any of the Transferor Benefit Plans or any other benefit
plans or arrangements maintained by Transferor Parent or any of its Affiliates,
except as otherwise explicitly required by Section 3.1(a)(iii) of this
Agreement. Transferee Parent and its Affiliates shall have no obligation or
Liability with respect to any employee of, or other individual performing
services for, Transferor or its Affiliates who is not a Transferred Native
Employee and, with respect to Transferred Native Employees, only to the extent
arising on or after the Closing Date or to the extent such Liabilities are
reflected in the Net Liabilities Adjustment Amount used to calculate the Final
Closing Adjustment Amount.
(iii) Subject to obtaining any necessary consents and
except as provided in Section 6.2(h) or as otherwise provided in this Agreement,
as of the Closing Date, Transferor Parent shall assign to Transferee Parent, and
Transferee Parent shall assume, all rights, obligations and Liabilities of
Transferor and its Affiliates under all employment agreements with the
Transferred Native Employees, but in no event
48
Liabilities relating to or arising under any retirement, savings or pension plan
(whether or not any such plan is intended to be a tax-qualified plan) or any
Liabilities associated with any long-term disability, retiree life, retiree
medical or any other post-employment welfare benefits.
(b) Severance-Related Liabilities. Subject to Section
3.1(o)(iii), Transferee Parent shall be responsible for all Liabilities with
respect to any Transferred Native Employee in connection with the termination of
such employee's employment on or after the Closing Date, and any Liability for
WARN and severance payments and benefits under Transferor Parent's severance
plan or any individual employment or severance arrangement, each, in accordance
with its terms, applicable to a Transferred Native Employee who rejects the
general offer of employment made pursuant to Section 3.1(a). Notwithstanding the
foregoing, Transferee Parent shall have no Liability with respect to the
termination of employment of the employees of Transferor or its Affiliates
holding the job titles as of the date hereof listed on Schedule 3.1(k)(i) or
(ii), as applicable, if any such employee is hired by Transferor Parent or any
of its Affiliates as permitted by Section 3.1(k) in the 12 month period
following the Closing.
(c) Participation in Benefit Plans and Service. With respect
to Transferred Native Employees, compensation and service of such employees with
Transferor Parent and its Affiliates prior to Closing shall be recognized under
all applicable Transferee Benefit Plans (other than for any purpose under any
defined benefit pension plan of Transferee) to the extent so recognized under
the corresponding Transferor Benefit Plans prior to Closing, except to the
extent that duplication of benefits would result or as otherwise provided in
this Agreement. In addition, Transferee Parent shall recognize, as to each
Transferred Native Employee, all vacation, sick days and other paid time off
accrued by such Transferred Native Employee but unused as of the Closing Date,
in each case to the extent such Liabilities are reflected in the Net Liabilities
Adjustment Amount used to calculate the Final Closing Adjustment Amount.
(d) Tax-Qualified Defined Contribution Plans. As of and
following the Closing, Transferred Native Employees shall not be entitled to
make contributions to or to benefit from matching or other contributions under
any defined contribution plan sponsored or maintained by Transferor Parent or
any of its Affiliates intended to qualify under Section 401(a) of the Code and
meeting the requirements of Section 401(k) of the Code (the "Transferor 401(k)
Plan"). None of Transferee Parent or any of its Affiliates shall have any
Liability with respect to Transferor's 401(k) Plan except as may be provided in
any other agreement between the Comcast Group, on the one hand, and the TWC
Group on the other. Transferred Native Employees who were participants in the
Transferor 401(k) Plan immediately prior to the Closing shall become
participants in a defined contribution plan qualified under Section 401(a) of
the Code and meeting the requirements of Section 401(k) of the Code established
or maintained by Transferee or its Affiliates (the "Transferee 401(k) Plan") as
of the Closing; provided that any Transferred Native Employee who was,
immediately prior to the Closing Date, a TWC Native Employee or a TWC/Adelphia
Employee and has completed less than 6 months of combined service with TWC or
any of its Affiliates and Adelphia (if
49
applicable) immediately prior to Closing will only become a participant in any
such plan maintained by Comcast or its Affiliates after completing 6 months of
combined continuous service with Adelphia (if applicable), TWC or any of its
Affiliates, and Comcast or any of its Affiliates (without duplication).
Transferee shall cause the Transferee 401(k) Plan to accept cash eligible
rollover distributions (as defined in 402(c)(4) of the Code) by Transferred
Native Employees with respect to account balances distributed to them on or
after the Closing Date by the Transferor 401(k) Plan.
(e) Tax-Qualified Defined Benefit Plans. As of the Closing,
Transferred Native Employees who were, immediately prior to the Closing Date,
TWC Group Native Employees shall to the extent applicable cease accruing
benefits under the Time Warner Cable Pension Plan, the Time Warner Cable Union
Pension Plan and the Time Warner Cable Excess Benefit Pension Plan
(collectively, the "Cable Pension Plans"). None of Comcast or any of its
Affiliates shall have any Liability with respect to the Cable Pension Plans.
None of TWC or any of its Affiliates shall have any Liability with respect to
any defined benefit pension plan sponsored or maintained by Comcast or any of
its Affiliates.
(f) Health and Welfare Plans.
(i) Other than as required by COBRA, each Transferred
Native Employee shall cease to participate in each Benefit Plan that is a health
or welfare plan within the meaning of Section 3(1) of ERISA maintained or
sponsored by Transferor Parent or any of its Affiliates (each, a "Transferor
Health or Welfare Plan") as of the Closing.
(ii) Each Transferred Native Employee who, after the
recognition of service provided for in Section 3.1(c) satisfies the eligibility
requirements under the applicable Benefit Plan that is health or welfare plan
within the meaning of Section 3(1) of ERISA maintained or sponsored by
Transferee Parent or any of its Affiliates (the "Transferee Health or Welfare
Plans") shall be (A) entitled to enroll, effective as of the Closing, as a
newly-eligible employee of Transferee Parent or one of its Affiliates in the
Transferee Health or Welfare Plans then available to similarly situated
employees of Transferee Parent or any of its Affiliates and (B) eligible to
elect such coverage and benefit options as may then be available or provided
under the terms of the Transferee Health or Welfare Plans to new employees of
Transferee Parent or its Affiliates. All compensation, benefit elections,
deductible payments, payments toward the applicable out-of-pocket maximums and
other benefit-affecting determinations affecting Transferred Native Employees
that, as of immediately prior to the Closing, were recognized under any
Transferor Health or Welfare Plan with respect to the plan year in which the
Closing occurs shall receive full recognition, credit and validity and be taken
into account under the corresponding Transferee Health or Welfare Plan as of the
Closing with respect to that same plan year.
(iii) With respect to any Transferred Native Employee
and his or her dependents (if any) who were covered under any Transferor Health
or Welfare Plan immediately prior to the Closing, Transferee Parent shall take,
or cause to
50
be taken, the appropriate actions reasonably necessary to ensure that the proof
of insurability requirements (if any) and the preexisting condition exclusions
(if any) applicable to new enrollees under the corresponding Transferee Health
or Welfare Plan (if any) are waived with respect to such Transferred Native
Employee, to the extent that such requirements and exclusions were waived under
any similar corresponding Transferor Health or Welfare Plan.
(g) Reimbursement Account Plans. To the extent any Transferred
Native Employee made contributions to any Benefit Plan maintained or sponsored
by Transferor Parent or any of its Affiliates that is a reimbursement account
plan, such as a health care or dependent care reimbursement plan (the
"Transferor Reimbursement Plan"), during the calendar year in which the Closing
occurs, such Transferred Native Employee shall be permitted to file claims for
reimbursement under a Benefit Plan maintained or sponsored by Transferee Parent
or any of its Affiliates that is a comparable reimbursement account plan (the
"Transferee Reimbursement Plan") for qualifying expenses incurred during the
calendar year in which the Closing occurs, including periods prior to the
Closing, for a total amount not to exceed the amount elected by such Transferred
Native Employee for that year under such plan. Account balances, whether
positive or negative, shall be transferred and assigned to the appropriate
Transferee Reimbursement Plan by Transferor. As soon as practicable following
the Closing, Transferor Parent shall pay to Transferee Parent a cash amount
(which amount shall be deemed to constitute a Current Asset of the applicable
Newco) equal to the aggregate positive balances as of the Closing Date of each
flexible spending account of each Transferred Native Employee under the
applicable Transferor Reimbursement Plan. Transferee Parent shall assume all
obligations of Transferor Parent with respect to each Transferred Native
Employee under the applicable Transferor Reimbursement Plan.
(h) COBRA. Transferee Parent shall, or shall cause, each
Transferred Native Employee and each "qualified beneficiary" (as defined in
Title X of the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended, and as codified in Section 4980B of the Code and ERISA Sections 601
through 608 ("COBRA") of each Transferred Native Employee, who elects continued
group health plan coverage under COBRA or incurs a "qualifying" event (as
defined in COBRA) on or after the Closing, to be offered COBRA coverage on and
after the Closing under a Transferee Health or Welfare Plan. Transferor Parent
and its Affiliates shall retain all obligations and Liabilities with respect to
each of its Native System Employees and their qualified beneficiaries who
elected continued group plan coverage under COBRA or incurred a "qualifying
event" prior to the Closing.
(i) WARN Compliance. Transferee Parent shall be responsible
for any Liability arising under the Worker Adjustment and Retraining
Notification Act and any similar state or local laws (collectively, "WARN") with
respect to the termination of employment of Transferred Native Employees on or
after the Closing. During the period prior to the Closing, the parties agree to
cooperate with each other in order to comply with WARN, including, but not
limited to, Transferor Parent or its Affiliates providing to Transferred Native
Employees and any applicable
51
Governmental Authorities or other required Persons (on behalf of itself and
Transferee Parent) any notice and other requirements under WARN.
(j) Workers' Compensation Liabilities. Transferee Parent shall
be responsible for all workers' compensation Liabilities relating to, arising
out of, or resulting from any claim incurred for a compensable injury sustained
by a Transferred Native Employee on or after the Closing Date and, to the extent
reflected in the Net Liabilities Adjustment Amount used in calculating the Final
Closing Adjustment Amount, before Closing.
(k) Non-Solicit Provisions.
(i) Except for the employees holding job titles as of
the date hereof listed on Schedule 3.1(k)(i) (as previously identified by name
to the Comcast Group), in the case of the TWC Group, or Schedule 3.1(k)(ii) (as
previously identified by name to the TWC Group), in the case of the Comcast
Group, from the date hereof until the first anniversary of the Closing (x) none
of the TWC Group will solicit any TWC Native Employees (other than for the
benefit of the TWC Native Systems or with the prior written consent of the
Comcast Group, in each case, prior to the Closing or to comply with the
provisions of Section 3.1(a)) and (y) none of the Comcast Group will solicit any
Comcast Native Employees (other than for the benefit of Comcast Native Systems
or with the prior written consent of the TWC Group, in each case, prior to the
Closing or to comply with the provisions of Section 3.1(a)).
(ii) Except for the employees holding the job titles as
of the date hereof listed on Schedule 3.1(k)(i) (as previously identified by
name to the Comcast Group) in the case of the TWC Group, or on Schedule
3.1(k)(ii) (as previously identified by name to the TWC Group) in the case of
the Comcast Group, from the date hereof until the first anniversary of the
Closing (x) none of the TWC Group will hire any TWC Native Employees (other than
for the benefit of TWC Native Systems or with the prior written consent of the
Comcast Group, in each case, prior to the Closing or to comply with the
provisions of Section 3.1(a)) and (y) none of the Comcast Group will hire any
Comcast Native Employees (other than for the benefit of Comcast Native Systems
or with the prior written consent of the TWC Group in each case, prior to the
Closing or to comply with the provisions of Section 3.1(a)).
(iii) Solely for purposes of this Section 3.1(k), "TWC
Native Employee" and "Comcast Native Employee", as applicable, shall be applied
so as to include any individual who as of any relevant date (which shall include
the period from the date hereof through the Closing Date) would be a TWC Native
Employee or Comcast Native Employee, as applicable, if the Closing Date occurred
on such date.
(iv) Notwithstanding the foregoing, advertising through
mass media in which an offer of employment, if any, is available to the general
public, such as magazines, newspapers and sponsorships of public events shall
not be prohibited by this Section 3.1(k). Solely for purposes of this Section
3.1(k), Native Employees shall
52
in no event include the beneficiary or dependent of any Native Employee unless
such beneficiary or dependent is otherwise a Native Employee.
(v) From the Closing Date until the first anniversary of
the Closing, none of Transferee Parent or its Affiliates will hire any Retained
Native Employees of Transferor Parent or its Affiliates.
(vi) Retained Native Employees and employees listed on
Schedule 3.1(k) (i) or (ii), as applicable, if hired or retained by Transferor
or its Affiliates, shall be made available by Transferor for consultation and
transitional services as reasonably requested by Transferee. The provision of
any such services shall be in accordance with the terms of Section 6.8(a) hereof
and shall not unreasonably interfere with such Retained Native Employee or
employee listed on Schedule 3.1(k) (i) or (ii), as applicable, from performing
any of such employee's duties to the Transferor or its Affiliates.
(l) Confidentiality and Proprietary Information. No provision
of this Section 3.1 shall be deemed to release any individual for any violation
of a plan, policy, agreement or guideline regarding non-competition or
pertaining to confidential or proprietary information of the Comcast Group or of
the TWC Group or otherwise relieve any individual of his or her obligations
under such guideline or any such plan, program or arrangement.
(m) No Implied Rights or Third Party Beneficiaries. The
parties hereto hereby acknowledge and agree that no provision of this Agreement
shall be construed to create any right, or accelerate entitlement, to any
compensation or benefit whatsoever on the part of any Transferred Native
Employee, Retained Native Employee or other future, present, or former employee
of the Comcast Group or the TWC Group, under any Comcast Benefit Plan or TWC
Benefit Plan or otherwise. Without limiting the generality of the foregoing
except as expressly provided in this Agreement, nothing in this Agreement shall
preclude the Comcast Group or the TWC Group, at any time after the Closing, from
amending, merging, modifying, terminating, eliminating, reducing or otherwise
altering in any respect any Comcast Group Benefit Plan or TWC Group Benefit
Plan, as applicable, any benefit under any such plan or any trust, insurance
policy or funding vehicle related to any Comcast Group Benefit Plan or TWC Group
Benefit Plan, as applicable. Nothing in this Section 3.1 or elsewhere in this
Agreement shall be deemed to make any employee of the parties a third party
beneficiary of this section or any rights relating hereto.
(n) Collective Bargaining. With respect to those Transferred
Native Employees who are covered by a collective bargaining agreement,
Transferee Parent will retain any and all of the rights and obligations it may
have pursuant to applicable labor law. If Transferor Parent or any of its
Affiliates acquires a duty to bargain with any labor organization with respect
to Native Employees, then Transferor Parent or its Affiliates shall (i) give
prompt written notice of such development to Transferee Parent and (ii) not
enter into any contract with such labor organization that contains a successor
clause or otherwise purports to bind (after the Closing) Transferee
53
Parent or any of its Affiliates in any way, without the prior written consent of
Transferee Parent.
(o) Adelphia Employees.
(i) If the Closing occurs on the same date as the
Adelphia Closing, then this Section 3.1(o)(i) shall govern the treatment of
Adelphia Employees. Each Adelphia Employee who on or immediately prior to the
Adelphia Closing and the Closing Date was primarily employed in connection with
the TWC/Adelphia Systems (each, a "TWC/Adelphia Employee") shall become an
employee of the Comcast Group on the Closing Date. For the avoidance of doubt,
each covenant made by the TWC Group in the TWC/Adelphia Purchase Agreement in
respect of the Adelphia Employees employed in the TWC/Adelphia Systems as of the
Closing Date shall be deemed to be a TWC/Adelphia Assumed Liability. Each
Adelphia Employee who on or immediately prior to the Adelphia Closing and the
Closing Date was primarily employed in connection with the Comcast/Adelphia
Systems (each, a "Comcast/Adelphia Employee") shall become an employee of the
TWC Group on the Closing Date. For the avoidance of doubt, each covenant made by
the Comcast Group in the Comcast/Adelphia Purchase Agreement in respect of the
Adelphia Employees employed in the Comcast/Adelphia Systems as of the Closing
Date shall be deemed to be a Comcast/Adelphia Assumed Liability.
(ii) If the Closing does not occur on the same date as
the Adelphia Closing:
(A) (x) all current TWC/Adelphia Employees,
(excluding those on long-term disability) shall become employees of the
Comcast Group on the Closing Date and (y) all current Comcast/Adelphia
Employees (excluding those on long-term disability) shall become employees
of the TWC Group on the Closing Date. Transferor Parent shall take or
cause to be taken such actions as are reasonably necessary to effectuate
this transfer of employment. The parties hereto shall not take any action
that would interfere with such employees becoming employed by the Comcast
Group or the TWC Group, as applicable, on the Closing Date, unless (and
only to the extent) such action is required by the relevant Adelphia
Purchase Agreement or is otherwise permitted under this Article 3 or
Section 6.2(s); and
(B) Transferor Parent shall deliver to Transferee
Parent true and complete copies of each employment, bonus, severance,
termination or other agreement entered into by, or any plan, program,
policy or arrangement covering, any Adelphia Employee who becomes employed
by Transferee Parent or its Affiliates as provided in clause (A) above on
the Closing Date (other than a Comcast Benefit Plan or TWC Benefit Plan,
as applicable).
(iii) If the Closing does not occur on the same date as
the Adelphia Closing, (a) with respect to any TWC/Adelphia Employee, the amount
of
54
any severance or termination pay or benefits incurred by the TWC Group in
connection with a termination of employment of any such employee following the
Adelphia Closing and prior to the Closing (other than any severance incurred as
a result of (x) the TWC Group's failure to comply with the requirement to offer
employment on the terms set forth in Section 5.8(a) of the TWC/Adelphia Purchase
Agreement, except if such failure to comply is as a result of Comcast's express
instruction to TWC to not offer employment under such Section 5.8(a) or to offer
employment on a basis not in compliance with such Section 5.8(a) or (y) TWC
Group's failure to comply with Section 6.2(s) hereof) shall be deemed to be a
Current Asset of the relevant TWC/Adelphia Newco; and (b) with respect to any
Comcast/Adelphia Employee, the amount of any severance or termination pay or
benefits incurred by the Comcast Group in connection with a termination of
employment of any such employee following the Adelphia Closing and prior to the
Closing (other than any severance incurred as a result of (x) the Comcast
Group's failure to comply with the requirement to offer employment on the terms
set forth in Section 5.5(a) of the Comcast/Adelphia Purchase Agreement, except
if such failure to comply is as a result of TWC's express instruction to Comcast
to not offer employment under such Section 5.5(a) or to offer employment on a
basis not in compliance with such Section 5.5(a) or (y) Comcast Group's failure
to comply with Section 6.2(s) hereof) shall be deemed to be a Current Asset of
the relevant Comcast/Adelphia Newco.
Section 3.2 Use of Names and Logos. For a period of 150 days after
Closing, Transferee Parent and its Affiliates shall be entitled to use the
trademarks, trade names, service marks, service names, logos and similar
proprietary rights of Transferor Parent and its Affiliates to the extent
incorporated in or on the Transferred Assets held by the Newcos then affiliated
with such Transferee Parent (collectively, the "Proprietary Rights"), provided,
that (a)Transferee Parent acknowledges that the Proprietary Rights belong to
Transferor Parent and its Affiliates, and that neither Transferee Parent nor any
of its Affiliates acquires any rights therein during or pursuant to such 150-day
period; (b) all such Transferred Assets shall be used in a manner consistent
with the use made by Transferor Parent and its Affiliates of such Transferred
Assets prior to Closing; (c) Transferee Parent shall exercise reasonable efforts
to remove all Proprietary Rights from the Transferred Assets it receives as soon
as reasonably practicable following Closing and (d) the use of the Proprietary
Rights during such period shall inure to the benefit of Transferor Parent;
provided, that Transferee Parent shall indemnify and hold harmless Transferor
Parent and its Affiliates for any Liabilities arising from or otherwise relating
to Transferee Parent's use of the Proprietary Rights. Upon expiration of such
150-day period, Transferee Parent shall remove all Proprietary Rights from the
Transferred Assets held by the Newcos Affiliated with such Transferee Parent and
shall destroy all unused letterhead, checks, business-related forms, preprinted
form contracts, product literature, sales literature, labels, packaging material
and any other materials displaying Transferor Parent's or its Affiliates'
Proprietary Rights within ten Business Days and shall provide Transferor Parent
with a written certification that it destroyed any and all such materials.
Notwithstanding the foregoing, Transferee Parent and its Affiliates shall not be
required to remove or discontinue using any such Proprietary Rights that are
affixed to converters or other items located in customer homes or properties
such that prompt removal is
55
impracticable for such Transferee Parent and its Affiliates; provided, that such
Transferee Parent and its Affiliates shall remove or discontinue using such
Proprietary Rights promptly upon the return of such converters or other items to
such Transferee Parent or its Affiliates. The rights of Transferee Parent and
its Affiliates under this Section 3.2 with respect to any Adelphia Assets shall
be subject to the relevant Adelphia Purchase Agreement.
Section 3.3 Transfer Laws. The parties hereto each waives compliance
by the others with Legal Requirements relating to bulk transfers applicable to
the transactions contemplated hereby.
Section 3.4 Transfer Taxes and Fees. All sales, use, transfer and
similar Taxes or assessments, including transfer fees and similar assessments
for Franchises, Authorizations and Contracts, arising from or payable by reason
of the conveyance of the TWC Transferred Assets and the Comcast Transferred
Assets in a Newco Transaction (other than a TWC/Adelphia Newco Transaction
effected pursuant to the third sentence of Section 2.1(a)) or an Exchange, shall
be borne 50% by Transferor Parent and 50% by Transferee Parent, it being
understood and agreed that if any such payable is satisfied by a party or any
Affiliate thereof, then promptly after the later of (x) the Closing and (y)
demand by the paying party, the other party shall reimburse the paying party for
50% of any such amount paid by the paying party.
ARTICLE 4
COMCAST'S REPRESENTATIONS AND WARRANTIES
Each Comcast Party represents and warrants to the TWC Parties as of
the date of this Agreement (except in the case of the representations and
warranties in Section 4.24 and the representations and warranties relating to
the Comcast Newcos) and as of Closing as follows:
Section 4.1 Organization and Qualification of the Comcast Group.
Each Comcast Party is a corporation or other entity duly organized, validly
existing and in good standing under the laws of its state of organization. Each
Comcast Group Member that holds any right, title or interest in, to or under any
Comcast Native Asset has, and each Comcast Group Member that, upon and after
completion of the Adelphia Closing, will hold any right title or interest in, to
or under any Comcast/Adelphia Asset (each, with respect to both Comcast Native
Assets and Comcast/Adelphia Assets, a "Comcast Participant") will at and
following the Adelphia Closing have, all requisite corporate or other entity
power and authority to own and lease such Comcast Transferred Assets and to
conduct the portion of the Comcast Transferred Business related to such Comcast
Transferred Assets as currently conducted. As of the Comcast Newco Transaction
and the Closing, each Comcast Transferor will have all requisite corporate or
other entity power and authority to own the Equity Securities of the applicable
Comcast Newco.
Section 4.2 Authority. Each Comcast Party has all requisite
corporate or other organizational power and authority to execute, deliver and
perform this
56
Agreement and the Transaction Documents to be executed and delivered by such
Comcast Party and to consummate the transactions contemplated hereby and
thereby. Each Comcast Transferor, each Comcast Participant and each Comcast
Newco has all requisite corporate or other power and authority to execute,
deliver and perform the Transaction Documents to be executed and delivered by it
and to consummate the transactions contemplated thereby, or prior to such
execution, delivery, performance or consummation will have such power and
authority. The execution, delivery and performance of this Agreement by each
Comcast Party and of each Transaction Document to which any Comcast Group Member
is, or shall after the date hereof become, party and the consummation of the
transactions contemplated hereby or thereby has been (or upon such execution and
delivery, shall have been at Closing), duly and validly authorized by all
necessary corporate or other entity action on the part of the applicable Comcast
Group Member. This Agreement and each Transaction Document to which a Comcast
Group Member is, or shall after the date hereof become, party is (or in the case
of such Transaction Documents, will be at Closing) duly and validly executed and
delivered by the applicable Comcast Group Member and the valid and binding
obligation of such Comcast Group Member, enforceable against such Comcast Group
Member in accordance with its terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
now or hereafter in effect relating to the enforcement of creditors' rights
generally or by principles governing the availability of equitable remedies.
Section 4.3 No Conflict; Required Consents. Except as described on
Schedules 4.3 and 4.19, and subject to compliance with the HSR Act, the
Securities Act of 1933 (the "Securities Act") and the Securities Exchange Act of
1934 (the "Exchange Act") and except for Authorizations required from, by or
with the relevant Franchising Authorities in respect of the Franchises for the
Comcast Transferred Systems, Authorizations required from, by or with the FCC in
connection with a change of control of the holder and/or assignment of the
Comcast Transferred Licenses, Authorizations from state public utility
commissions having jurisdiction over the assets of the Comcast Transferred
Systems, Authorizations to be obtained by the TWC Group and Authorizations to be
obtained in connection with the Adelphia Purchase Agreements, the execution,
delivery and performance by the applicable Comcast Group Members of this
Agreement and the Transaction Documents to be executed and delivered by such
Comcast Group Members, do not and shall not: (a) conflict with or violate any
provision of the certificate of incorporation or by-laws or other organizational
or governing documents of any Comcast Group Member; (b) violate any provision of
any material Legal Requirement; (c) without regard to requirements of notice,
lapse of time, elections of other Persons or any combination thereof, conflict
with, violate, result in a breach of, constitute a default under or give rise to
any third party's right(s) of first refusal or similar right or right of
cancellation or termination, or accelerate or permit the acceleration of the
performance required by or adversely effect the rights or obligations of Comcast
or any Comcast Group Member under any Comcast Transferred Contract, Comcast
Transferred Franchise or Comcast Transferred License; (d) result in the creation
or imposition of any Lien against or upon any of the Comcast Transferred Assets
other than a Permitted Lien; (e) require any material consent, approval or
authorization of, or filing of any certificate,
57
notice, application, report or other document with, any Governmental Authority;
or (f)require any consent, approval or authorization of, or filing of any
certificate, notice, application, report or other document with, any Person
(other than any Governmental Authority), in the case of clauses (c), (d) and (f)
with only such exceptions as would not individually or in the aggregate
reasonably be expected to have a Material Adverse Effect. Notwithstanding the
foregoing, no representation is made pursuant to this Section 4.3 with respect
to the Initial Comcast/Adelphia Assets as they exist at the time of the Adelphia
Closing.
Section 4.4 Sufficiency of Assets; Title.
(a) Except for items included in the Comcast Native Excluded
Assets or as described on Schedule 4.4(a), (i) the Comcast Native Assets are all
of the assets of the Comcast Group owned, used or held for use primarily in
connection with the operation of the Comcast Native Systems, and (ii) the right,
title and interest in the Comcast Native Assets conveyed to the applicable
Comcast Newcos pursuant to the Comcast Newco Transaction shall be sufficient to
permit the applicable Comcast Newcos to operate the Comcast Native Systems
substantially as they are being operated by the Comcast Group immediately prior
to the Closing and in compliance with all material Legal Requirements and,
except where the failure to do so would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect, in compliance with all
contractual requirements that comprise part of the TWC Native Assumed
Liabilities. At the Closing, the applicable Comcast Native Newcos will have good
and marketable title to (or in the case of assets that are leased, valid
leasehold interests in) the tangible Comcast Native Assets free and clear of any
Liens, other than Permitted Liens (disregarding clause (d) of the definition
thereof), except where the failure to do so would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
Notwithstanding the foregoing, the representation contained in the immediately
preceding sentence shall not apply with respect to any Comcast Native Owned
Property or Comcast Native Leased Property with respect to which the Comcast
Group has delivered a Title Policy, or a Title Commitment to deliver a Title
Policy, as provided in Section 7.2.
(b) Except as described on Schedule 4.4(b), the Comcast Native
Tangible Personal Property and improvements on the Comcast Native Owned Property
and real property subject to the Comcast Native Real Property Interests are in
all material respects adequate for their present uses.
Section 4.5 Comcast Native Franchises, Comcast Native Licenses,
Comcast Native Contracts, Comcast Native Owned Property and Comcast Native Real
Property Interests.
(a) Except as described on Schedules 2.1(f)(ii)(A),
2.1(f)(iii)(A), 2.1(f)(iv)(A), 2.1(f)(v)(A) or Schedule 4.5(a) and except for
the Comcast Native Excluded Assets, no Comcast Group Member is bound or affected
by any of the following that relate wholly or primarily to the Comcast Native
Assets or the Comcast Native Systems: (i) leases of real or material personal
property; (ii) Franchises, and
58
similar authorizations for the operation of the Comcast Native Systems, or
Contracts of substantially equivalent effect; (iii) other licenses,
authorizations, consents or permits of the FCC or, to the extent material, any
other Governmental Authority; (iv) all Authorizations of Governmental
Authorities to provide telephony services held, directly or indirectly, by the
Comcast Group and used in connection with the operation of any Comcast Native
Systems; (v) material crossing Contracts, easements, rights of way or access
Contracts; (vi) pole line or joint line Contracts or underground conduit
Contracts; (vii) bulk service, commercial service or multiple-dwelling unit
access Contracts which individually provide for payments by or to the Comcast
Group in any twelve month period exceeding $50,000; (viii) system-specific
programming Contracts, system-specific signal supply Contracts and Local
Retransmission Consent Agreements; (ix) any Contract with the FCC or any other
Governmental Authority relating to the operation or construction of the Comcast
Native Systems that are not fully reflected in the Comcast Native Franchises, or
any Contracts with community groups or similar third parties restricting or
limiting the types of programming that may be shown on any of the Comcast Native
Systems; (x) any partnership, joint venture or other similar Contract or
arrangement; (xi) any Contract with any Comcast Group Member; (xii) any Contract
that limits the freedom of the Comcast Native Systems to compete in any line of
business or with any Person or in any area or which would so limit the freedom
of any TWC Group Member after the Closing Date; (xiii) any Contract relating to
the use by third parties of the Comcast Native Assets to provide, or the
provision by the Comcast Native Systems of, telephone, Internet or data services
other than Contracts with subscribers of any such services; (xiv) any
advertising representation or interconnect Contract; (xv) any Contract with any
employee employed primarily in connection with the Comcast Native Systems; (xvi)
any Contract granting any Person the right to use any portion of the cable
television system plant included in the Comcast Native Assets; (xvii) any
Contract that is not the subject of any other clause of this Section 4.5(a) that
shall remain effective for more than one year after Closing (except those
Contracts that may be terminated upon no more than 30 days' notice without
penalty and subscription agreements with residential subscribers to provide
cable service); or (xviii) any Contract other than those described in any other
clause of this Section 4.5(a) which individually provides for payments by or to
the Comcast Group in any twelve month period exceeding $500,000 or is otherwise
material to the Comcast Native Systems.
(b) The Comcast Group has prior to the date hereof provided or
otherwise made available to TWC true and complete copies of each of the Comcast
Native Franchises, Comcast Native Licenses and Comcast Native Contracts
described on any of Schedules 2.1(f)(ii)(A) (to the extent in the possession of
Comcast or its Affiliates), 2.1(f)(iii)(A), 2.1(f)(iv)(A), 2.1(f)(v)(A) and
Schedule 4.5(a) (excluding Local Retransmission Consent Agreements and
system-specific programming contracts), together with true and complete copies
of (i) any notices alleging continuing non compliance with the requirements of
any Comcast Native Franchise, (ii) in each case any amendments to any of the
items on any such Schedule (in the case of the items on Schedule 2.1(f)(ii)(A),
to the extent in the possession of Comcast or its Affiliates), (iii) in the case
of oral Comcast Native Real Property Interests listed on Schedule 2.1(f)(ii)(A)
or oral Comcast Native Contracts listed on Schedule 2.1(f)(v)(A), true and
complete written summaries thereof and (iv) each document in the possession of
Comcast or its Affiliates
59
evidencing or insuring the Comcast Group's ownership of the Comcast Native Owned
Property. Except as described in Schedule 4.5(b) and except as would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect: (i) the Comcast Group is in compliance with each of the Comcast
Native Franchises, Comcast Native Licenses and Comcast Native Contracts and, as
of the Closing, with each of the Contracts included in the Comcast/Adelphia
Assets; (ii) the Comcast Group has fulfilled when due, or has taken all action
necessary to enable it to fulfill when due, all of its obligations under each of
the Comcast Native Franchises, Comcast Native Licenses and Comcast Native
Contracts and, as of the Closing, under each of the Contracts included in the
Comcast/Adelphia Assets; (iii) there has not occurred any default (without
regard to lapse of time or to the giving of notice or both) by any of the
Comcast Group Members and, to the knowledge of Comcast, there has not occurred
any default (without regard to lapse of time or the giving of notice, or both)
by any other Person, under any of the Comcast Native Franchises, Comcast Native
Licenses or Comcast Native Contracts or, as of the Closing, under any of the
Contracts included in the Comcast/Adelphia Assets; and (iv) the Comcast Native
Franchises, Comcast Native Licenses and Comcast Native Contracts and, as of the
Closing, the Contracts included in the Comcast/Adelphia Assets, are valid and
binding agreements and are in full force and effect; provided, that the
representations and warranties made in this Section 4.5(b) with respect to the
material Contracts included in the Comcast/Adelphia Assets are made to the
knowledge of Comcast and solely with respect to events, circumstances or
conditions, in any such case, first arising after the Adelphia Closing.
(c) Schedule 2.1(f)(iii)(A) lists the date on which each
Comcast Native Systems Franchise shall expire.
(d) Except as described on Schedules 2.1(f)(iii)(A),
2.1(f)(iv)(A) or Schedule 4.5(d), there are no applications relating to any
Comcast Native Franchise or the Comcast Native Licenses pending before any
Governmental Authority that are material to any of the Comcast Native Systems.
Except as described on Schedule 4.5(d), none of the Comcast Group Members has
received, nor do any of them have notice that they shall receive, from any
Governmental Authority a preliminary assessment that a Comcast Native Franchise
should not be renewed as provided in Section 626(c)(1) of the Communications
Act. Except as described on Schedule 4.5(d), none of the Comcast Group Members
nor any Governmental Authority has commenced or requested the commencement of an
administrative proceeding concerning the renewal of a Comcast Native Franchise
as provided in Section 626(c)(1) of the Communications Act. Except as described
on Schedule 4.5(d), the Comcast Group has timely filed notices of renewal in
accordance with the Communications Act with all Governmental Authorities with
respect to each Comcast Native Franchise expiring within 30 months of the date
of this Agreement. Except as described on Schedule 4.5(d), such notices of
renewal have been filed pursuant to the formal renewal procedures established by
Section 626(a) of the Communications Act. To Comcast's knowledge, there exist no
facts or circumstances that make it likely that any Comcast Native Franchise
shall not be renewed or extended on commercially reasonable terms. Except as
described on Schedule 4.5(d), as of the date hereof, no Governmental Authority
has commenced, or
60
given notice that it intends to commence, a proceeding to revoke or suspend a
Comcast Native Franchise.
Section 4.6 Employee Benefits. A true and complete list of the
Comcast Benefit Plans is set forth in Schedule 4.6. Except as set forth on
Schedule 4.6, none of Comcast, any of its ERISA Affiliates, any Comcast Benefit
Plan other than a "multiemployer plan" (as defined in Section 3(37) of ERISA),
or to the knowledge of Comcast, any Comcast Benefit Plan that is a
"multiemployer plan" (as defined in Section 3(37) of ERISA) is in material
violation of any provision of ERISA with respect to a Comcast Benefit Plan. No
material "reportable event" (as defined in Sections 4043(c) of ERISA),
"accumulated funding deficiency" (as defined in Section 302 of ERISA) or
"withdrawal liability" (as determined under Section 4201 et seq. of ERISA) has
occurred or exists and is continuing with respect to any Comcast Benefit Plan
other than a "multiemployer plan" (as defined in Section 3(37) of ERISA) or, to
the knowledge of Comcast, any Comcast Benefit Plan that is a "multiemployer
plan" (as defined in Section 3(37) of ERISA). After the Closing, none of the
Comcast Newcos, TWC or any of their respective ERISA Affiliates shall be
required, under ERISA, the Code or any collective bargaining agreement, to
establish, maintain or continue any Comcast Benefit Plan currently maintained by
Comcast or any of its ERISA Affiliates. Except as set forth in Schedule 4.6,
since December 31, 2004, there has been no change in the Comcast Benefit Plans
or level of compensation provided the Comcast Native Employees that would
materially increase the cost of operating the Comcast Native Systems.
Section 4.7 Litigation. Except as set forth in Schedule 4.7, (i)
there is no Litigation pending or, to Comcast's knowledge, threatened, by or
before any Governmental Authority or private arbitration tribunal, against any
of the Comcast Group Members relating to the Comcast Native Systems, Comcast
Native Assets or Comcast Native Business; and (ii) there is no Judgment
requiring any of the Comcast Group Members to take any action of any kind with
respect to the Comcast Native Assets or the operation of the Comcast Native
Systems, or to which any of the Comcast Group Members (with respect to the
Comcast Native Systems), the Comcast Native Systems or the Comcast Native Assets
are subject or by which they are bound or affected, in the case of clauses (i)
and (ii), which could, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect. For the avoidance of doubt, this Section 4.7
shall have no application with respect to Taxes of any of the Comcast Group
Members.
Section 4.8 Comcast Native Systems Information. Schedule 4.8 sets
forth a true and complete description in all material respects of the following
information.
(a) as of December 31, 2004, the approximate number of miles
of plant, aerial and underground and the technical capacity of such plant
expressed in MHz, included in the Comcast Native Assets;
(b) as of the date set forth on such Schedule (which shall be
no earlier than December 31, 2004), the number of Individual Subscribers,
Digital
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Subscribers, Telephony Subscribers and High Speed Data Subscribers served by the
Comcast Native Systems;
(c) as of the date set forth on such Schedule (which shall be
no earlier than December 31, 2004), the approximate number of homes passed by
each of the Comcast Native Systems as reflected in the Comcast Group's system
records for such date;
(d) as of the date hereof, a description of basic and optional
or tier services available from each of the Comcast Native Systems and the rates
charged by the Comcast Group for each;
(e) as of the date hereof, the stations and signals carried by
each of the Comcast Native Systems and the channel position of each such signal
and station; and
(f) [Intentionally Omitted]
(g) the municipalities served by each of the Comcast Native
Systems and the community identification numbers of such municipalities.
Section 4.9 Compliance with Legal Requirements. Except as set forth
on Schedule 4.9, the Comcast Native Assets include all material Authorizations
of, by or with any Governmental Authority that are necessary for the lawful
conduct of the Comcast Native Systems as currently conducted and each of the
material Authorizations is in full force and effect in all material respects.
Except as set forth on Schedule 4.9, the Comcast Native Systems are, and have
been, operated in compliance in all material respects with all material Legal
Requirements and Authorizations, and, to the knowledge of Comcast, none of the
Comcast Native Systems are under investigation with respect to or have been
threatened to be charged with or given written notice of any material violation
of any material Legal Requirement or Authorization.
Section 4.10 Real Property. Schedule 2.1(f)(ii)(A) sets forth all
leases included in the Comcast Native Real Property Interests (the "Comcast
Native Leases", and each such lease, a "Comcast Native Lease") and all ownership
interests in real property included in the Comcast Native Owned Property and all
other material Comcast Native Real Property Interests. The Comcast Native Owned
Property and Comcast Native Real Property Interests include all leases, fee
interests, material easements, material access agreements and other material
real property interests necessary to operate the Comcast Native Systems as
currently conducted.
Section 4.11 Financial Statements; No Adverse Change.
(a) Comcast has provided to TWC internal unaudited financial
statements for the Comcast Native Systems consisting of balance sheets and
statements of operations as of and for the 12 months ended December 31, 2004
(the "Comcast Native Financial Statements"). The Comcast Native Financial
Statements were prepared in
62
accordance with GAAP (except for the absence of required footnotes) and fairly
present in all material respects the financial condition and results of
operations of the Comcast Native Systems as of the dates and for the periods
indicated therein; provided; that (A) the Comcast Native System Financial
Statements do not reflect the following items, which may have been recorded
within the financial results of the Comcast Native Systems had the Comcast
Native Systems been stand-alone entities during the periods presented: (i) an
allocation of a portion of goodwill and identifiable intangible assets, and
related amortization expense, arising from purchase business combinations, which
is recorded at the Comcast corporate level; (ii) an allocation of fair value
appraisal adjustments related to fixed assets, and the related depreciation
expense, arising from purchase business combinations, which is recorded at the
Comcast corporate level; (iii) an allocation of debt and related interest
expense which is recorded at the Comcast corporate level; (iv) an allocation of
deferred Income Taxes, Income Taxes payable and Income Tax expense which is
recorded at the Comcast corporate level; (v) certain assets, deferred revenue
liabilities, revenues and expenses related to systems' provision of commercial
fiber services which are recorded at the Comcast corporate level; (vi) certain
assets related to the high speed data business, including routers and head-end
equipment, which are recorded at the Comcast corporate level; (vii) certain
receivables which are recorded at the Comcast corporate level (e.g., shopping
commission receivables and programming receivables); and (B) the presentation in
the Comcast Native Financial Statements of the following items would have been
reported differently in respect of the following had the Comcast Native Systems
been stand-alone entities during the periods presented: (i) certain balance
sheet reclassifications within current assets and liabilities (e.g.
reclassifying debit balances in liability accounts to assets and vice versa);
(ii) receivables related to cash swept to the Comcast corporate level which are
recorded net in the inter-company payables/receivable financial line item; (iii)
liabilities related to payments made by Comcast on behalf of the Comcast Native
Systems for programming costs, salary, payroll taxes, employee benefits,
accounts payables, dues, and other certain company-wide costs which are recorded
net in the inter-company payables/receivable financial line item; (iv) franchise
fee expense which is recorded net of collections from customers.
(b) Except as set forth in Schedule 4.11(b), since December
31, 2004, (i) there have been no events, circumstances or conditions (other than
with respect to the Adelphia Systems and Adelphia Assets) that, individually or
in the aggregate, would reasonably be expected to have a Material Adverse Effect
and (ii) the Comcast Native Systems and the Comcast Native Assets have been
operated in all material respects only in the ordinary course of business
consistent with past practices.
Section 4.12 Employees.
(a) Except as set forth on Schedule 4.12(a), there are no
collective bargaining agreements applicable to any Comcast Native Employees, and
no Comcast Group Member as of the Closing, has any duty to bargain with any
labor organization with respect to any such persons. There are not pending any
material unfair labor practice charges against any Comcast Group Member, or any
request or demand for
63
recognition, or any petitions filed by a labor organization for representative
status, with respect to any Comcast Native Systems Employees.
(b) Except as set forth on Schedule 4.12(b), the Comcast Group
Members have complied, and the Comcast Native Newcos will be in compliance as of
the Closing, in all material respects with all applicable Legal Requirements
relating to the employment of labor, including WARN, ERISA, continuation
coverage requirements with respect to group health plans and those relating to
wages, hours, collective bargaining, unemployment insurance, worker's
compensation, equal employment opportunity, age, sex, race and disability
discrimination, immigration control and the payment and withholding of Taxes
except for any non-compliance which would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. Except as set forth on
Schedule 4.12(b), none of the Comcast Group Members is a party to any material
labor or employment dispute involving any of its employees who render services
in connection with the Comcast Native Systems.
(c) Except as described on Schedule 4.12(c), none of the
Comcast Group Members has any employment agreements, either written or oral,
with any Comcast Native Employees and none of the employment agreements listed
on Schedule 4.12(c) require any TWC Group Member to employ any person after
Closing.
Section 4.13 Environmental.
(a) Except as described on Schedule 4.13(a), to the knowledge
of Comcast, (i) none of the Comcast Group Members has received any notice,
demand, request for information, citation, summons or order relating to any
material evaluation or investigation and (ii) none of the Comcast Group Members
is the subject of any pending or threatened material investigation, action,
claim, suit, review, complaint, penalty or proceeding of any Governmental
Authority or other Person, in each case with respect to the Comcast Native
Assets, the Comcast Native Systems or, at the Closing, any Comcast Native Newco
which relate to or arise out of any Environmental Law.
(b) Except as described on Schedule 4.13(b), to the knowledge
of Comcast, no Hazardous Substance has been discharged, disposed of, dumped,
injected, pumped, deposited, spilled, leaked, emitted, or released at, on or
under any Comcast Native Asset or in connection with the operation of any
Comcast Native System or, at the Closing, any Comcast Native Newco, except as
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(c) Except as described on Schedule 4.13(c), none of the
Comcast Group Members has received any written notice of, or has any knowledge
of circumstances relating to, and, to the knowledge of Comcast, there are no
past events, facts, conditions, circumstances, activities, practices or
incidents (including but not limited to the presence, use, generation,
manufacture, disposal, release or threatened release of any Hazardous
Substances) relating to any Comcast Native Asset or in connection with the
operation of any Comcast Native System or, at the Closing, any Comcast Native
Newco, which could materially interfere with or prevent material
64
compliance with, or which have resulted in or are reasonably likely to give rise
to any material liability of any kind whatsoever, whether accrued, contingent,
absolute, determined, determinable or otherwise, arising under or relating to
any Environmental Law.
(d) Except as set forth on Schedule 4.13(d), to Comcast's
knowledge, no Comcast Native Asset nor any property to which Hazardous
Substances located on or resulting from the use of any Comcast Native Asset (or
from the operation of any Comcast Native System or, at the Closing, any Comcast
Native Newco), have been transported, is listed or proposed for listing on the
National Priorities List promulgated pursuant to CERCLA, or CERCLIS (as defined
in CERCLA) or on any similar federal, state, local or foreign list of sites
requiring investigation or cleanup.
(e) Prior to the date hereof, Comcast has provided or made
available to TWC copies of all material environmental assessments, or other
material environmental studies, audits, tests, reviews or other analyses of or
relating to the Comcast Native Assets and/or the Comcast Native Systems.
(f) None of the transactions contemplated by this Agreement
relating to the Comcast Native Systems will trigger any filing or other action
under any environmental transfer statute, including the Connecticut Hazardous
Waste Establishment Transfer Act and the New Jersey Industrial Site Recovery
Act.
Section 4.14 Transactions with Affiliates. Except for this Agreement
and Transaction Documents to which it is a party, or as set forth on Schedule
4.14, immediately after the Closing, the Comcast Newcos shall not be bound by
any Contract or any other arrangement of any kind whatsoever with, or have any
Liability to, any Comcast Group Member.
Section 4.15 Undisclosed Material Liabilities. The Comcast Native
Assumed Liabilities will include no Liabilities, and there is no existing
condition, situation or set of circumstances which would reasonably be expected
to result in such a Liability, other than:
(a) the Liabilities disclosed on Schedule 4.15;
(b) the Liabilities disclosed in the Comcast Native Financial
Statements;
(c) the Liabilities arising in the ordinary course of business
of the Comcast Native Systems since December 31, 2004 in amounts substantially
consistent with past practices (subject to customary cost increases); and
(d) other Liabilities which, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect.
Section 4.16 Insurance. Schedule 4.16 contains a list of all
policies of property, fire, casualty, liability, life, workers' compensation,
libel and slander, and other
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forms of insurance of any kind that relate to the Comcast Native Assets, the
Comcast Native Systems or any of the employees, officers or directors of the
Comcast Native Systems and are maintained by or on behalf of any of the Comcast
Group Members, in each case which are in force as of the date hereof. All such
policies are in full force and effect, all premiums due thereon have been paid
by the Comcast Group, and the Comcast Group is otherwise in compliance in all
material respects with the terms and provisions of such policies (after giving
effect to applicable grace or cure periods). After the Closing, the terms of
such policies will continue to provide coverage with respect to acts, omissions
and events occurring prior to the Closing in accordance with their terms as if
the Closing had not occurred. Comcast has no knowledge of any threatened
termination of, material premium increase (other than with respect to customary
annual premium increases) with respect to, or material alteration of coverage
under, any of such policies.
Section 4.17 Intellectual Property. Except as would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect or as set forth on Schedule 4.17, the Comcast Native Business,
the Comcast Native Assets and the Comcast Native Systems do not infringe and
have not infringed upon the intellectual property rights of any Person, or give
rise to any rightful claim of any Person for copyright, trademark, service xxxx,
patent, license or other intellectual property right infringement.
Section 4.18 Brokers. There is no investment banker, broker, finder
or other intermediary who has been retained by or is authorized to act on behalf
of any of the Comcast Group Members who might be entitled to any fee or
commission from any TWC Group Member in connection with the transactions
contemplated by this Agreement.
Section 4.19 Transferred Systems Options. Except as disclosed on
Schedule 4.19, none of the Comcast Transferred Systems or any material Comcast
Transferred Assets are subject to any Transferred Systems Option; provided that
the foregoing shall apply to Comcast/Adelphia Systems or Comcast/Adelphia Assets
only to the extent any such Transferred Systems Option was granted following the
Adelphia Closing.
Section 4.20 Comcast Native Systems Proprietary Rights. Except as
described on Schedule 4.20, there is no material trademark, trade name, service
xxxx, service name or logo, or any application therefor, owned, licensed, used
or held for use by any of the Comcast Group Members primarily in connection with
the operation of the Comcast Native Systems.
Section 4.21 Promotional Campaigns. After Closing, no Comcast Newco
will be obligated to continue to make promotional offers under any promotional
or marketing campaigns or programs initiated or maintained by any of the Comcast
Group Members with respect to the Comcast Transferred Systems (other than
promotional or marketing campaigns initiated by Adelphia or any Transferred
Joint Venture Entity prior to the Adelphia Closing and which Comcast has used
commercially reasonable efforts to terminate); provided, that for the avoidance
of doubt, subscribers
66
who subscribed for services prior to the Closing and took advantage of any such
campaign or promotional offers may be entitled to continue to receive the
benefits offered under such campaign or promotion in accordance with its terms
after Closing. After Closing, no Comcast Newco will be obligated to pay for any
advertisements run or to be run after the Closing under promotional or marketing
campaigns or programs initiated or maintained by any of the Comcast Group
Members with respect to the Comcast Transferred Systems (other than promotional
or marketing campaigns initiated by Adelphia or any Transferred Joint Venture
Entity prior to the Adelphia Closing and which Comcast has used commercially
reasonable efforts to terminate), other than campaigns initiated with the
consent of TWC.
Section 4.22 Taxes. With respect to the Comcast Native Systems,
except as would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect or as set forth on Schedule 4.22:
(a) All material Applicable Tax Returns with respect to the
Comcast Native Systems have been duly and timely filed (taking into account
extensions) or, where not so timely filed, are covered under a valid extension
that has been obtained therefor and the information set forth on such Applicable
Tax Returns is true, correct and complete in all material respects.
(b) All Applicable Taxes shown as due on the Applicable Tax
Returns referred to in clause (a) have been paid in full.
(c) All deficiencies asserted or assessments made with respect
to the Comcast Native Business as a result of the examinations of any of the
Applicable Tax Returns referred to in clause (a) (together with any interest,
additions or penalties with respect thereto and any interest in respect of such
additions or penalties) have been paid in full.
(d) No issues with respect to the Comcast Native Business that
have been raised in writing by the relevant Governmental Authority in connection
with the examination of any of the Applicable Tax Returns referred to in clause
(a) are pending.
(e) Schedule 4.22(e) sets forth a list of all jurisdictions
(whether foreign or domestic) in which any of the Comcast Native Systems
currently file Applicable Tax Returns. No written claim with respect to
Applicable Taxes has been made by any Governmental Authority in a jurisdiction
where the Comcast Native Business does not file Applicable Tax Returns that it
is or may be subject to taxation by that jurisdiction.
(f) There are no liens for Applicable Taxes upon the assets or
properties of the Comcast Native Business, except for liens for Applicable Taxes
not yet due and payable or being contested in good faith by appropriate
proceedings.
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Section 4.23 Comcast Newcos.
(a) As of the time of the Comcast Newco Transaction and the
Closing, each Comcast Newco will be a single member limited liability company
duly organized, validly existing and in good standing under the laws of the
State of Delaware and have all limited liability company (or trust, as
applicable) powers required to carry on its business as conducted at such time.
As of the time of the Comcast Newco Transaction and the Closing, each Comcast
Newco will be duly registered as a foreign limited liability company (or trust,
as applicable) in all jurisdictions in which the ownership or leasing of the
applicable Comcast Transferred Assets or the nature of its activities in
connection with the Comcast Transferred Systems makes such qualification
necessary, with only such exceptions as would not, individually or in the
aggregate, result in a Material Adverse Effect. As of the time of the Comcast
Newco Transaction and the Closing (i) Comcast will own, directly or indirectly,
all of the issued and outstanding limited liability company interests (or trust
interests, as applicable)of each Comcast Newco, free and clear of all Liens,
other than restrictions imposed by applicable federal or state securities Laws,
(ii) all of such interests will be duly authorized, validly issued, fully paid
and non-assessable, and will have been issued in compliance in all material
respects with all Legal Requirements and (iii) there shall be no outstanding
options, warrants, rights, commitments, conversion rights, preemptive rights or
agreements of any kind to which any Comcast Group Member is a party or by which
any of them is bound which would obligate any of them to issue, deliver,
purchase or sell any additional limited liability company interests, units,
membership, or other equity, trust or profit interests of any kind in any
Comcast Newco or any security convertible into or exercisable or exchangeable
for any of the foregoing. In the Exchanges, each Comcast Transferor will
transfer to the appropriate Transferee valid title to all of the outstanding
limited liability company interests (or trust interests, as applicable) of the
appropriate Comcast Newco free and clear of any Liens, other than restrictions
imposed by federal and state securities laws. As of the Closing, no Comcast
Newco will be, or will ever have been, an entity separate and apart from the
Transferor of such Comcast Newco for U.S. federal income tax purposes.
(b) Prior to the Comcast Newco Transaction, each Comcast Newco
will have conducted no business or operations and will have no indebtedness and
no Liabilities (excluding (i) any Liabilities for Taxes with respect to such
Comcast Newco's existence and (ii) any Liabilities with respect to any employee
benefit arrangements ("ERISA Group Liabilities") arising either under the Code
or ERISA solely as a result of such Comcast Newco having been, at any time on or
prior to Closing, a member of a group described in Section 4001(b) of ERISA or
Section 414(b), (c), (m) or (o) of the Code (collectively, the "Comcast Newco
Indemnified Liabilities")) other than under this Agreement and any Transaction
Document to which such Comcast Newco is a party.
(c) Prior to the Comcast Newco Transaction, no Comcast Newco
will have been party to any Contracts other than any Transaction Document to
which such Comcast Newco is a party. Each Comcast Newco has no Subsidiaries.
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(d) As of the Closing, no ERISA Group Liability has been
incurred by any Comcast Newco and no ERISA Group Liability is reasonably
expected to be asserted against any such Comcast Newco for periods prior to the
Closing.
(e) Prior to the Comcast Newco Transaction, no such Comcast
Newco will have, and will never have had, any employees other than unpaid
corporate officers with no entitlement to benefits or other compensation that
was, is or will be a liability of such Comcast Newco.
(f) At the Closing for each Exchange, the applicable Comcast
Newco will own the applicable Comcast Transferred Assets, subject to the
applicable Comcast Assumed Liabilities, and will have no other assets and be
subject to no other Liabilities, except for the applicable Comcast Newco
Indemnified Liabilities and Liabilities under any Transaction Document to which
such Comcast Newco is a party.
Section 4.24 Adelphia Representations. Except as set forth on
Schedule 4.24, to the knowledge of Comcast, there have been no events,
circumstances or conditions, in any such case, first arising after the Adelphia
Closing, that have caused any of the representations and warranties provided by
Adelphia under Sections 3.8, 3.9 (other than Sections 3.9(d), (e), (f), (h) and
(i), 3.10 (other than Section 3.10(a)), 3.11, 3.12 (disregarding the references
to "As of the date hereof" in Section 3.12(b) and (g)), 3.13, 3.14, 3.15(d)
(only as to Contracts included in the Comcast/Adelphia Assets and other than the
first and third sentences thereof), 3.17 (other than clause (ii) of the first
sentence of Section 3.17(a)), 3.19, 3.20(a), 3.21 (other than the first sentence
of Section 3.21(c)), 3.22, 3.23 (other than the first sentence thereof) and 3.25
of the Comcast/Adelphia Purchase Agreement not to be true and correct in all
material respects (or, if qualified by materiality or Material Adverse Effect
(as defined in the Comcast/Adelphia Purchase Agreement), in all respects) as
they relate to the Group 1 Business (except to the extent relating to any
Comcast/Adelphia Excluded Assets or Comcast/Adelphia Excluded Liabilities) under
the Comcast/Adelphia Purchase Agreement, if such representations and warranties
were given as of Closing (except to the extent expressly made as of an earlier
date, in which case as of such earlier date), in each case: (i) to the extent
such representations and warranties apply to any period after the Adelphia
Closing, applying such representations and warranties mutatis mutandis given,
among other things, (A) the Comcast Group Members' ownership of such Group 1
Business, (B) the possible addition to or disposition of Transferred Assets and
the incurrence or payment of Assumed Liabilities (as such terms are defined in
the Comcast/Adelphia Purchase Agreement) consistent with the terms of this
Agreement after the Adelphia Closing and (C) the Newco Transactions and (ii)
disregarding any qualification to Seller's Knowledge (as defined in the
Comcast/Adelphia Purchase Agreement) included in any such representation and
warranty.
Section 4.25 Comcast/Adelphia Purchase Agreement. Comcast has
previously delivered to TWC a true and complete copy of the Comcast/Adelphia
Purchase Agreement as currently in effect. Except for the Comcast/Adelphia
Purchase Agreement, any Ancillary Agreements (as defined in the Comcast/Adelphia
Purchase Agreement) to which Comcast or any of its Affiliates is party and any
agreements to
69
which TWC is a party (or is a party to a substantially equivalent agreement with
Adelphia), Comcast and/or any of its Affiliates, on the one hand, and Adelphia
and/or any of its Affiliates, on the other hand, are not party to any Contract
related to or entered into in connection with the transactions contemplated by
the Adelphia Purchase Agreements or the Ancillary Agreements (as defined in
either Adelphia Purchase Agreement).
ARTICLE 5
TWC'S REPRESENTATIONS AND WARRANTIES
Each TWC Party represents and warrants to the Comcast Parties as of
the date of this Agreement (except in the case of the representations and
warranties in Section 5.24 and the representations and warranties relating to
the TWC Newco) and as of Closing as follows:
Section 5.1 Organization and Qualification of the TWC Group. Each
TWC Party is a corporation or other entity duly organized, validly existing and
in good standing under the laws of its state of organization. Each TWC Group
Member that holds any right, title or interest in, to or under any TWC Native
Asset has, and each TWC Group Member that, upon and after completion of the
Adelphia Closing, will hold any right title or interest in, to or under any
TWC/Adelphia Asset (each, with respect to both TWC Native Assets and
TWC/Adelphia Assets, a "TWC Participant") will at and following the Adelphia
Closing have all requisite corporate or other entity power and authority to own
and lease such TWC Transferred Assets and to conduct the portion of the TWC
Transferred Business related to such TWC Transferred Assets as currently
conducted. As of the Adelphia Closing and the Closing, each TWC Transferor will
have all requisite corporate or other entity power and authority to own the
Equity Securities of the applicable TWC Newco.
Section 5.2 Authority. Each TWC Party has all requisite corporate or
other organizational power and authority to execute, deliver and perform this
Agreement and the Transaction Documents to be executed and delivered by such TWC
Party and to consummate the transactions contemplated hereby and thereby. Each
TWC Transferor, each TWC Participant and each TWC Newco has all requisite
corporate or other power and authority to execute, deliver and perform the
Transaction Documents to be executed and delivered by it and to consummate the
transactions contemplated thereby, or prior to such execution, delivery,
performance or consummation will have such power and authority. The execution,
delivery and performance of this Agreement by each TWC Party and of each
Transaction Document to which any TWC Group Member is, or shall after the date
hereof become, party and the consummation of the transactions contemplated
hereby or thereby has been (or upon such execution and delivery, shall have been
at Closing), duly and validly authorized by all necessary corporate or other
entity action on the part of the applicable TWC Group Member. This Agreement and
each Transaction Document to which a TWC Group Member is, or shall after the
date hereof become, party is (or in the case of such Transaction Documents, will
be at Closing) duly and validly executed and delivered by the applicable TWC
Group Member
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and the valid and binding obligation of such TWC Group Member, enforceable
against such TWC Group Member in accordance with its terms, except as the same
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws now or hereafter in effect relating to the enforcement of
creditors' rights generally or by principles governing the availability of
equitable remedies.
Section 5.3 No Conflict; Required Consents. Except as described on
Schedules 5.3 and 5.19, and subject to compliance with the HSR Act, the
Securities Act and the Exchange Act and except for Authorizations required from,
by or with the relevant Franchising Authorities in respect of the Franchises for
the TWC Transferred Systems, Authorizations required from, by or with the FCC in
connection with a change of control of the holder and/or assignment of the TWC
Transferred Licenses, Authorizations from state public utility commissions
having jurisdiction over the assets of the TWC Transferred Systems,
Authorizations to be obtained by the Comcast Group and Authorizations to be
obtained in connection with the Adelphia Purchase Agreements, the execution,
delivery and performance by the applicable TWC Group Members of this Agreement
and the Transaction Documents to be executed and delivered by such TWC Group
Members, do not and shall not: (a) conflict with or violate any provision of the
certificate of incorporation or by-laws or other organizational or governing
documents of any TWC Group Member; (b) violate any provision of any material
Legal Requirement; (c) without regard to requirements of notice, lapse of time,
elections of other Persons or any combination thereof, conflict with, violate,
result in a breach of, constitute a default under or give rise to any third
party's right(s) of first refusal or similar right or right of cancellation or
termination, or accelerate or permit the acceleration of the performance
required by or adversely effect the rights or obligations of TWC or any TWC
Group Member under any TWC Transferred Contract, TWC Transferred Franchise or
TWC Transferred License; (d) result in the creation or imposition of any Lien
against or upon any of the TWC Transferred Assets other than a Permitted Lien;
(e) require any material consent, approval or authorization of, or filing of any
certificate, notice, application, report or other document with, any
Governmental Authority; or (f) require any consent, approval or authorization
of, or filing of any certificate, notice, application, report or other document
with, any Person (other than any Governmental Authority), in the case of clauses
(c), (d) and (f) with only such exceptions as would not individually or in the
aggregate reasonably be expected to have a Material Adverse Effect.
Notwithstanding the foregoing, no representation is made pursuant to this
Section 5.3 with respect to the Initial TWC/Adelphia Assets as they exist at the
time of the Adelphia Closing.
Section 5.4 Sufficiency of Assets; Title.
(a) Except for items included in the TWC Excluded Assets or as
described on Schedule 5.4(a), (i) the TWC Native Assets are all of the assets of
the TWC Group owned, used or held for use primarily in connection with the
operation of the TWC Native System, and (ii) the right, title and interest in
the TWC Native Assets conveyed to the applicable TWC Newcos pursuant to the TWC
Native Newco Transaction shall be sufficient to permit the applicable TWC Newcos
to operate the TWC Native System substantially as they are being operated by the
TWC Group immediately
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prior to the Closing and in compliance with all material Legal Requirements and,
except where the failure to do so would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect, in compliance with all
contractual requirements that comprise part of the Comcast Native Assumed
Liabilities. At the Closing, the applicable TWC Native Newcos will have good and
marketable title to (or in the case of assets that are leased, valid leasehold
interests in) the tangible TWC Native Assets free and clear of any Liens, other
than Permitted Liens (disregarding clause (d) of the definition thereof), except
where the failure to do so would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. Notwithstanding the
foregoing, the representation contained in the immediately preceding sentence
shall not apply with respect to any TWC Native Owned Property or TWC Native
Leased Property with respect to which the TWC Group has delivered a Title
Policy, or a Title Commitment to deliver a Title Policy, as provided in Section
7.1.
(b) Except as described on Schedule 5.4(b), the TWC Native
Tangible Personal Property and improvements on the TWC Native Owned Property and
real property subject to the TWC Native Real Property Interests are in all
material respects adequate for their present uses.
Section 5.5 TWC Native Franchises, TWC Native Licenses, TWC Native
Contracts, Native Property and Real Property Interests.
(a) Except as described on Schedules 2.1(f)(ii)(B),
2.1(f)(iii)(B), 2.1(f)(iv)(B), 2.1(f)(v)(B) or Schedule 5.5(a) and except for
the TWC Group Native Excluded Assets, no TWC Group Member is bound or affected
by any of the following that relate wholly or primarily to the TWC Native Assets
or the TWC Native System: (i) leases of real or material personal property; (ii)
Franchises, and similar authorizations for the operation of the TWC Native
System, or Contracts of substantially equivalent effect; (iii) other licenses,
authorizations, consents or permits of the FCC or, to the extent material, any
other Governmental Authority; (iv) all Authorizations of Governmental
Authorities to provide telephony services held, directly or indirectly, by the
TWC Group and used in connection with the operation of any TWC Native System;
(v) material crossing Contracts, easements, rights of way or access Contracts;
(vi) pole line or joint line Contracts or underground conduit Contracts; (vii)
bulk service, commercial service or multiple-dwelling unit access Contracts
which individually provide for payments by or to the TWC Group in any twelve
month period exceeding $50,000; (viii) system-specific programming Contracts,
system-specific signal supply Contracts and Local Retransmission Consent
Agreements; (ix) any Contract with the FCC or any other Governmental Authority
relating to the operation or construction of the TWC Native System that are not
fully reflected in the TWC Native Franchises, or any Contracts with community
groups or similar third parties restricting or limiting the types of programming
that may be shown on any of the TWC Native System; (x) any partnership, joint
venture or other similar Contract or arrangement; (xi) any Contract with any TWC
Group Member; (xii) any Contract that limits the freedom of the TWC Native
System to compete in any line of business or with any Person or in any area or
which would so limit the freedom of any Comcast Group Member after the Closing
Date; (xiii) any Contract relating to the use by third parties of the TWC Native
Assets to
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provide, or the provision by the TWC Native System of, telephone, Internet or
data services other than Contracts with subscribers of any such services; (xiv)
any advertising representation or interconnect Contract; (xv) any Contract with
any employee employed primarily in connection with the TWC Native System; (xvi)
any Contract granting any Person the right to use any portion of the cable
television system plant included in the TWC Native Assets; (xvii) any Contract
that is not the subject of any other clause of this Section 5.5(a) that shall
remain effective for more than one year after Closing (except those Contracts
that may be terminated upon no more than 30 days' notice without penalty and
subscription agreements with residential subscribers to provide cable service);
or (xviii) any Contract other than those described in any other clause of this
Section 5.5(a) which individually provides for payments by or to the TWC Group
in any twelve month period exceeding $500,000 or is otherwise material to the
TWC Native System.
(b) The TWC Group has prior to the date hereof provided or
otherwise made available to Comcast true and complete copies of each of the TWC
Native Franchises, TWC Native Licenses and TWC Native Contracts described on any
of Schedules 2.1(f)(ii)(B) (to the extent in the possession of Time Warner Cable
or its Affiliates), 2.1(f)(iii)(B), 2.1(f)(iv)(B), 2.1(f)(v)(B) and Schedule
5.5(a) (excluding Local Retransmission Consent Agreements and system-specific
programming contracts), together with true and complete copies of (i) any
notices alleging continuing non compliance with the requirements of any TWC
Native Franchise, (ii) in each case any amendments to any of the items on any
such Schedule (in the case of the items in Schedule 2.1(f)(ii)(B), to the extent
in the possession of Time Warner Cable or its Affiliates), (iii) in the case of
oral TWC Native Real Property Interests listed on Schedule 2.1(f)(ii)(B) or oral
TWC Native Contracts listed on Schedule 2.1(f)(v)(B), true and complete written
summaries thereof and (iv) each document in the possession of Time Warner Cable
or its Affiliates evidencing or insuring the TWC Group's ownership of the TWC
Native Owned Property. Except as described in Schedule 5.5(b) and except as
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect: (i) the TWC Group is in compliance with each of the TWC
Native Franchises, TWC Native Licenses and TWC Native Contracts and, as of the
Closing, with each of the Contracts included in the TWC/Adelphia Assets; (ii)
the TWC Group has fulfilled when due, or has taken all action necessary to
enable it to fulfill when due, all of its obligations under each of the TWC
Native Franchises, TWC Native Licenses and TWC Native Contracts and, as of the
Closing, under each of the Contracts included in the TWC/Adelphia Assets; (iii)
there has not occurred any default (without regard to lapse of time or to the
giving of notice or both) by any of the TWC Group Members and, to the knowledge
of TWC, there has not occurred any default (without regard to lapse of time or
the giving of notice, or both) by any other Person, under any of the TWC Native
Franchises, TWC Native Licenses or TWC Native Contracts or, as of the Closing,
under any of the Contracts included in the TWC/Adelphia Assets; and (iv) the TWC
Native Franchises, TWC Native Licenses and TWC Native Contracts and, as of the
Closing, the Contracts included in the TWC/Adelphia Assets, are valid and
binding agreements and are in full force and effect; provided, that the
representations and warranties made in this Section 5.5(b) with respect to the
material Contracts included in the TWC/Adelphia
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Assets are made to the knowledge of TWC and solely with respect to events,
circumstances or conditions, in any such case, first arising after the Adelphia
Closing.
(c) Schedule 2.1(f)(iii)(B) lists the date on which each TWC
Native System Franchise shall expire.
(d) Except as described on Schedules 2.1(f)(iii)(B),
2.1(f)(iv)(B), or Schedule 5.5(d), there are no applications relating to any TWC
Native Franchise or the TWC Native Licenses pending before any Governmental
Authority that are material to any of the TWC Native System. Except as described
on Schedule 5.5(d), none of the TWC Group Members has received, nor do any of
them have notice that they shall receive, from any Governmental Authority a
preliminary assessment that a TWC Native Franchise should not be renewed as
provided in Section 626(c)(1) of the Communications Act. Except as described on
Schedule 5.5(d), none of the TWC Group Members nor any Governmental Authority
has commenced or requested the commencement of an administrative proceeding
concerning the renewal of a TWC Native Franchise as provided in Section
626(c)(1) of the Communications Act. Except as described on Schedule 5.5(d), the
TWC Group has timely filed notices of renewal in accordance with the
Communications Act with all Governmental Authorities with respect to each TWC
Native Franchise expiring within 30 months of the date of this Agreement. Except
as described on Schedule 5.5(d), such notices of renewal have been filed
pursuant to the formal renewal procedures established by Section 626(a) of the
Communications Act. To TWC's knowledge, there exist no facts or circumstances
that make it likely that any TWC Native Franchise shall not be renewed or
extended on commercially reasonable terms. Except as described on Schedule
5.5(d), as of the date hereof, no Governmental Authority has commenced, or given
notice that it intends to commence, a proceeding to revoke or suspend a TWC
Native Franchise.
Section 5.6 Employee Benefits. A true and complete list of the TWC
Benefit Plans is set forth in Schedule 5.6. Except as set forth on Schedule 5.6,
none of TWC, any of its ERISA Affiliates, any TWC Benefit Plan other than a
multiemployer plan (as defined in Section 3(37) of ERISA), or to the knowledge
of TWC, any TWC Benefit Plan that is a multiemployer plan (as defined in Section
3(37) of ERISA) is in material violation of any provision of ERISA with respect
to a TWC Benefit Plan. No material "reportable event" (as defined in Sections
4043(c) of ERISA), "accumulated funding deficiency" (as defined in Section 302
of ERISA) or "withdrawal liability" (as determined under Section 4201 et seq. of
ERISA) has occurred or exists and is continuing with respect to any TWC Benefit
Plan other than a multiemployer plan (as defined in Section 3(37) of ERISA) or,
to the knowledge of TWC, any TWC Benefit Plan that is a multiemployer plan (as
defined in Section 3(37) of ERISA). After the Closing, none of the TWC Newcos,
Comcast or any of their respective ERISA Affiliates shall be required, under
ERISA, the Code or any collective bargaining agreement, to establish, maintain
or continue any TWC Benefit Plan currently maintained by TWC or any of its ERISA
Affiliates. Except as set forth in Schedule 5.6, since December 31, 2004, there
has been no change in the TWC Benefit Plans or level of compensation provided
the TWC Native Employees that would materially increase the cost of operating
the TWC Native System.
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Section 5.7 Litigation. Except as set forth in Schedule 5.7, (i)
there is no Litigation pending or, to TWC's knowledge, threatened, by or before
any Governmental Authority or private arbitration tribunal, against any of the
TWC Group Members relating to the TWC Native System, TWC Native Assets or TWC
Native Business; and (ii) there is no Judgment requiring any of TWC Group
Members to take any action of any kind with respect to the TWC Native Assets or
the operation of the TWC Native System, or to which any of the TWC Group Members
(with respect to the TWC Native System), the TWC Native System or the TWC Native
Assets are subject or by which they are bound or affected, in the case of
clauses (i) and (ii), which could, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect. For the avoidance of doubt, this
Section 5.7 shall have no application with respect to Taxes of any of the TWC
Group Members.
Section 5.8 TWC Native System Information. Schedule 5.8 sets forth a
true and complete description in all material respects of the following
information.
(a) as of December 31, 2004, the approximate number of miles
of plant, aerial and underground and the technical capacity of such plant
expressed in MHz, included in the TWC Native Assets;
(b) as of the date set forth on such Schedule (which shall be
no earlier than December 31, 2004), the number of Individual Subscribers,
Digital Subscribers, Telephony Subscribers and High Speed Data Subscribers
served by the TWC Native System;
(c) as of the date set forth on such Schedule (which shall be
no earlier than December 31, 2004), the approximate number of homes passed by
each of the TWC Native System as reflected in the TWC Group's system records for
such date;
(d) as of the date hereof a description of basic and optional
or tier services available from each of the TWC Native System and the rates
charged by the TWC Group for each;
(e) as of the date hereof, the stations and signals carried by
each of the TWC Native System and the channel position of each such signal and
station; and
(f) [Intentionally Omitted]
(g) the municipalities served by each of the TWC Native System
and the community identification numbers of such municipalities.
Section 5.9 Compliance with Legal Requirements. Except as set forth
on Schedule 5.9, the TWC Native Assets include all material Authorizations of,
by or with any Governmental Authority that are necessary for the lawful conduct
of the TWC Native System as currently conducted and each of the material
Authorizations is in full force and effect in all material respects. Except as
set forth on Schedule 5.9, the TWC
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Native System are, and have been, operated in compliance in all material
respects with all material Legal Requirements and Authorizations, and, to the
knowledge of TWC, none of the TWC Native System are under investigation with
respect to or have been threatened to be charged with or given written notice of
any material violation of any material Legal Requirement or Authorization.
Section 5.10 Real Property. Schedule 2.1(f)(ii)(B) sets forth all
leases included in the TWC Native Real Property Interests (the "TWC Native
Leases", and each such lease, a "TWC Native Lease") and all ownership interests
in real property included in TWC Native Owned Property and all other material
TWC Native Real Property Interests. The TWC Native Owned Property and TWC Native
Real Property Interests include all leases, fee interests, material easements,
material access agreements and other material real property interests necessary
to operate the TWC Native System as currently conducted.
Section 5.11 Financial Statements; No Adverse Change.
(a) TWC has provided to Comcast internal unaudited financial
statements for the TWC Native System consisting of balance sheets and statements
of operations as of and for the 12 months ended December 31, 2004 (the "TWC
Native Financial Statements"). The TWC Native Financial Statements were prepared
in accordance with GAAP (except for the absence of required footnotes) and
fairly present in all material respects the financial condition and results of
operations of the TWC Native System as of the dates and for the periods
indicated therein; provided that the TWC Native System Financial Statements do
not reflect the following items, which may have been recorded within the
financial results of the TWC Native System had the TWC Native System been
stand-alone entities during the periods presented: (i) an allocation of a
portion of goodwill and identifiable intangible assets, and related amortization
expense, arising from recent purchase business combinations, which is recorded
at the Time Warner Cable or TWE corporate level; (ii) an allocation of debt and
related interest expense recorded at the Time Warner Cable or TWE corporate
level; (iii) an allocation of deferred Income Taxes, Income Taxes payable and
Income Tax expense recorded at the Time Warner Cable corporate level; (iv) a
management fee for services provided by Time Warner Cable corporate entities has
not been recorded on the books of the non-TWE systems; (v) certain balance sheet
reclasses within current assets and liabilities (e.g. reclassifying debit
balances in liability accounts to assets and vice versa); (vi) an allocation of
certain advertising revenue that was recorded at the Time Warner Cable or TWE
corporate level; (vii) an allocation of music performance royalties paid or
payable to BMI, ASCAP and SESAC and programming vendor marketing support
receipts or receivables that were recorded at the Time Warner Cable or TWE
corporate level; (viii) an allocation of variances between actual pension
expense and budgeted pension expense (e.g. the financial results of the TWC
Native System reflect budgeted pension expense); (ix) an allocation of other
Time Warner Cable corporate, TWE corporate and divisional overhead that is not
specifically identified to a particular cable system; (x) an allocation of
certain assets, including routers and other equipment located at regional data
centers, related to Time Warner Cable's high-speed data business; (xi) certain
expense accruals that are paid by Time Warner Cable or TWE corporate on behalf
of the TWC Native
76
System including the following: (1) programming accruals of approximately one
month's service would be reflected as a liability for the TWC Native System and
liabilities in excess of one month are transferred to Time Warner Cable or TWE
corporate to be paid; (2) group insurance liabilities are recorded on the
balance sheet at Time Warner Cable or TWE corporate; (3) casualty insurance,
including workers compensation liabilities are recorded on the balance sheet at
Time Warner Cable or TWE corporate; (4) certain property tax and sales and use
tax liabilities are recorded on the balance sheet at Time Warner Cable or TWE
corporate; and (6) other miscellaneous liabilities related to company-wide costs
are recorded on the balance sheet at Time Warner Cable or TWE corporate, which
are recorded net in the intercompany payables/receivables line items on the TWC
Native System trial balances; and (xii) third party and payroll payments made by
Time Warner Cable and TWE corporate on behalf of the TWC Native System after the
monthly cut-off are not pushed down to the TWC Native System until the following
month (i.e., there is a lag between the time of payment of the liability by Time
Warner Cable or Time Warner Cable and relieving the third-party liability at the
TWC Native System).
(b) Except as set forth in Schedule 5.11(b), since December
31, 2004, (i) there have been no events, circumstances or conditions (other than
with respect to the Adelphia Systems and Adelphia Assets) that, individually or
in the aggregate, would reasonably be expected to have a Material Adverse Effect
and (ii) the TWC Native System and the TWC Native Assets have been operated in
all material respects only in the ordinary course of business consistent with
past practices.
Section 5.12 Employees.
(a) Except as set forth on Schedule 5.12(a), there are no
collective bargaining agreements applicable to any TWC Native Employees, and no
TWC Group Member as of the Closing, has any duty to bargain with any labor
organization with respect to any such persons. There are not pending any
material unfair labor practice charges against any TWC Group Member, or any
request or demand for recognition, or any petitions filed by a labor
organization for representative status, with respect to any TWC Native System
Employees.
(b) Except as set forth on Schedule 5.12(b), the TWC Group
Members have complied, and the TWC Native Newcos will be in compliance as of the
Closing, in all material respects with all applicable Legal Requirements
relating to the employment of labor, including WARN, ERISA, continuation
coverage requirements with respect to group health plans and those relating to
wages, hours, collective bargaining, unemployment insurance, worker's
compensation, equal employment opportunity, age, sex, race and disability
discrimination, immigration control and the payment and withholding of Taxes
except for any non-compliance which would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. Except as set forth on
Schedule 5.12(b), none of the TWC Group Members is a party to any material labor
or employment dispute involving any of its employees who render services in
connection with the TWC Native System.
77
(c) Except as described on Schedule 5.12(c), none of the TWC
Group Members has any employment agreements, either written or oral, with any
TWC Native Employees and none of the employment agreements listed on Schedule
5.12(c) require any Comcast Group Member to employ any person after Closing.
Section 5.13 Environmental.
(a) Except as described on Schedule 5.13(a), to the knowledge
of TWC, (i) none of the TWC Group Members has received any notice, demand,
request for information, citation, summons or order relating to any material
evaluation or investigation, and (ii) none of the TWC Group Members is the
subject of any pending or threatened material investigation, action, claim,
suit, review, complaint, penalty or proceeding of any Governmental Authority or
other Person, in each case with respect to the TWC Native Assets, the TWC Native
System or, at the Closing, any TWC Native Newco which relate to or arise out of
any Environmental Law.
(b) Except as described on Schedule 5.13(b), to the knowledge
of TWC, no Hazardous Substance has been discharged, disposed of, dumped,
injected, pumped, deposited, spilled, leaked, emitted, or released at, on or
under any TWC Native Asset or in connection with the operation of any TWC Native
System or, at the Closing, any TWC Native Newco, except as would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(c) Except as described on Schedule 5.13(c), none of the TWC
Group Members has received any written notice of, or has any knowledge of
circumstances relating to, and, to the knowledge of TWC, there are no past
events, facts, conditions, circumstances, activities, practices or incidents
(including but not limited to the presence, use, generation, manufacture,
disposal, release or threatened release of any Hazardous Substances) relating to
any TWC Native Asset or in connection with the operation of any TWC Native
System or, at the Closing, any TWC Native Newco, which could materially
interfere with or prevent material compliance with, or which have resulted in or
are reasonably likely to give rise to any material liability of any kind
whatsoever, whether accrued, contingent, absolute, determined, determinable or
otherwise, arising under or relating to any Environmental Law.
(d) Except as set forth on Schedule 5.13(d), to TWC's
knowledge, no TWC Native Asset nor any property to which Hazardous Substances
located on or resulting from the use of any TWC Native Asset (or from the
operation of any TWC Native System or, at the Closing, any TWC Native Newco),
have been transported, is listed or proposed for listing on the National
Priorities List promulgated pursuant to CERCLA, or CERCLIS (as defined in
CERCLA) or on any similar federal, state, local or foreign list of sites
requiring investigation or cleanup.
(e) Prior to the date hereof, TWC has provided or made
available to Comcast copies of all material environmental assessments, or other
material environmental studies, audits, tests, reviews or other analyses of or
relating to the TWC Native Assets and/or the TWC Native System.
78
(f) None of the transactions contemplated by this Agreement
relating to the TWC Native System will trigger any filing or other action under
any environmental transfer statute, including the Connecticut Hazardous Waste
Establishment Transfer Act and the New Jersey Industrial Site Recovery Act.
Section 5.14 Transactions with Affiliates. Except for this Agreement
and Transaction Documents to which it is a party, or as set forth on Schedule
5.14, immediately after the Closing, the TWC Newcos shall not be bound by any
Contract or any other arrangement of any kind whatsoever with, or have any
Liability to, any TWC Group Member.
Section 5.15 Undisclosed Material Liabilities. The TWC Native
Assumed Liabilities will include no Liabilities, and there is no existing
condition, situation or set of circumstances which would reasonably be expected
to result in such a Liability, other than:
(a) the Liabilities disclosed on Schedule 5.15;
(b) the Liabilities disclosed in the TWC Native Financial
Statements;
(c) the Liabilities arising in the ordinary course of business
of the TWC Native System since December 31, 2004 in amounts substantially
consistent with past practices (subject to customary cost increases); and
(d) other Liabilities which, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect.
Section 5.16 Insurance. Schedule 5.16 contains a list of all
policies of property, fire, casualty, liability, life, workers' compensation,
libel and slander, and other forms of insurance of any kind that relate to the
TWC Native Assets, the TWC Native System or any of the employees, officers or
directors of the TWC Native System and are maintained by or on behalf of any of
the TWC Group Members, in each case which are in force as of the date hereof.
All such policies are in full force and effect, all premiums due thereon have
been paid by the TWC Group, and the TWC Group is otherwise in compliance in all
material respects with the terms and provisions of such policies (after giving
effect to applicable grace or cure periods). After the Closing, the terms of
such policies will continue to provide coverage with respect to acts, omissions
and events occurring prior to the Closing in accordance with their terms as if
the Closing had not occurred. TWC has no knowledge of any threatened termination
of, material premium increase (other than with respect to customary annual
premium increases) with respect to, or material alteration of coverage under,
any of such policies.
Section 5.17 Intellectual Property. Except as would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect or as set forth on Schedule 5.17, the TWC Native Business, the
TWC Native Assets and the TWC Native System do not infringe and have not
infringed upon the intellectual property rights
79
of any Person, or give rise to any rightful claim of any Person for copyright,
trademark, service xxxx, patent, license or other intellectual property right
infringement.
Section 5.18 Brokers. There is no investment banker, broker, finder
or other intermediary who has been retained by or is authorized to act on behalf
of any of the TWC Group Members who might be entitled to any fee or commission
from any Comcast Group Member in connection with the transactions contemplated
by this Agreement.
Section 5.19 Transferred Systems Options. Except as disclosed on
Schedule 5.19, none of the TWC Transferred Systems or any material TWC
Transferred Assets are subject to any Transferred System Option; provided that
the foregoing shall apply to TWC/Adelphia Systems or TWC/Adelphia Assets only to
the extent any such Transferred System Option was granted following the Adelphia
Closing.
Section 5.20 TWC Native System Proprietary Rights. Except as
described on Schedule 5.20, there is no material trademark, trade name, service
xxxx, service name or logo, or any application therefor, owned, licensed, used
or held for use by any of the TWC Group Members primarily in connection with the
operation of the TWC Native System.
Section 5.21 Promotional Campaigns. After Closing, no TWC Newco will
be obligated to continue to make promotional offers under any promotional or
marketing campaigns or programs initiated or maintained by any of the TWC Group
Members with respect to the TWC Transferred Systems (other than promotional or
marketing campaigns initiated by Adelphia prior to the Adelphia Closing and
which TWC has used commercially reasonable efforts to terminate); provided, that
for the avoidance of doubt, subscribers who subscribed for services prior to the
Closing and took advantage of any such campaign or promotional offers may be
entitled to continue to receive the benefits offered under such campaign or
promotion in accordance with its terms after Closing. After Closing, no TWC
Newco will be obligated to pay for any advertisements run or to be run after the
Closing under promotional or marketing campaigns or programs initiated or
maintained by any of the TWC Group Members with respect to the TWC Transferred
Systems (other than promotional or marketing campaigns initiated by Adelphia
prior to the Adelphia Closing and which TWC has used commercially reasonable
efforts to terminate), other than campaigns initiated with the consent of
Comcast.
Section 5.22 Taxes. With respect to the TWC Native System, except as
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect or as set forth on Schedule 5.22:
(a) All material Applicable Tax Returns with respect to the
TWC Native System have been duly and timely filed (taking into account
extensions) or, where not so timely filed, are covered under a valid extension
that has been obtained therefor and the information set forth on such Applicable
Tax Returns is true, correct and complete in all material respects.
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(b) All Applicable Taxes shown as due on the Applicable Tax
Returns referred to in clause (a) have been paid in full.
(c) All deficiencies asserted or assessments made with respect
to the TWC Native Business as a result of the examinations of any of the
Applicable Tax Returns referred to in clause (a) (together with any interest,
additions or penalties with respect thereto and any interest in respect of such
additions or penalties) have been paid in full.
(d) No issues with respect to the TWC Native Business that
have been raised in writing by the relevant Governmental Authority in connection
with the examination of any of the Applicable Tax Returns referred to in clause
(a) are pending.
(e) Schedule 5.22(e) sets forth a list of all jurisdictions
(whether foreign or domestic) in which any of the TWC Native System currently
file Applicable Tax Returns. No written claim with respect to Applicable Taxes
has been made by any Governmental Authority in a jurisdiction where the TWC
Native Business does not file Applicable Tax Returns that it is or may be
subject to taxation by that jurisdiction.
(f) There are no liens for Applicable Taxes upon the assets or
properties of the TWC Native Business, except for liens for Applicable Taxes not
yet due and payable or being contested in good faith by appropriate proceedings.
Section 5.23 TWC Newcos.
(a) As of the Adelphia Closing and the Closing, each TWC Newco
will be a single member limited liability company duly organized, validly
existing and in good standing under the laws of the State of Delaware and have
all limited liability company powers required to carry on its business as
conducted at such time. As of the Adelphia Closing and the Closing, each TWC
Newco will be duly registered as a foreign limited liability company in all
jurisdictions in which the ownership or leasing of the applicable TWC
Transferred Assets or the nature of its activities in connection with the TWC
Transferred Systems makes such qualification necessary, with only such
exceptions as would not, individually or in the aggregate, result in a Material
Adverse Effect. As of the Adelphia Closing and the Closing (i) TW NY will own
all of the issued and outstanding limited liability company interests of each
TWC Newco, free and clear of all Liens, other than restrictions imposed by
applicable federal or state securities Laws, (ii) all of such interests will be
duly authorized, validly issued, fully paid and non-assessable, and will be
issued in compliance in all material respects with all Legal Requirements and
(iii) there shall be no outstanding options, warrants, rights, commitments,
conversion rights, preemptive rights or agreements of any kind to which any TWC
Group Member is a party or by which any of them is bound which would obligate
any of them to issue, deliver, purchase or sell any additional limited liability
company interests, units, membership, or other equity or profit interests of any
kind in any TWC Newco or any security convertible into or exercisable or
exchangeable for any of the foregoing. In the
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Exchanges, each TWC Transferor will transfer to the appropriate Transferee valid
title to all of the outstanding limited liability company interests of the
appropriate TWC Newco free and clear of any Liens, other than restrictions
imposed by federal and state securities laws. As of the Closing, no TWC Newco
will be, or will ever have been, an entity separate and apart from the
Transferor of such TWC Newco for U.S. federal income tax purposes.
(b) Prior to the TWC Newco Transaction (or in the case of the
TWC Native Newco, prior to the Closing), each TWC Newco will have conducted no
business or operations and will have no indebtedness and no Liabilities
(excluding (i) any Liabilities for Taxes with respect to such TWC Newco's
existence and (ii) any ERISA Group Liabilities arising either under the Code or
ERISA solely as a result of such TWC Newco having been, at any time on or prior
to Closing, a member of a group described in Section 4001(b) of ERISA or Section
414(b), (c), (m) or (o) of the Code (collectively, and whether arising prior to
the Adelphia Closing or the Closing, the "TWC Newco Indemnified Liabilities"))
other than under this Agreement and any Transaction Document to which such TWC
Newco is a party. From the Adelphia Closing until the completion of the Closing,
no TWC/Adelphia Newco will conduct any business or operations other than its
applicable portion of the TWC Transferred Business.
(c) Prior to the Adelphia Closing (or in the case of the TWC
Native Newco, prior to the Closing), no TWC Newco will have been party to any
Contracts other than any Transaction Document to which such TWC Newco is a
party. From the Adelphia Closing until the completion of the Closing, no
TWC/Adelphia Newco will be party to any Contracts other than TWC Transferred
Contracts and any Transaction Documents to which such Newco is a party. Each TWC
Newco has no Subsidiaries.
(d) As of the Closing, no ERISA Group Liability has been
incurred by any TWC Newco and no ERISA Group Liability is reasonably expected to
be asserted against any such TWC Newco for periods prior to the Closing.
(e) Prior to the Adelphia Closing (or in the case of the TWC
Native Newco, prior to the Closing), no TWC Newco will have, and will never have
had, any employees, and from the Adelphia Closing until the completion of the
Closing, no TWC/Adelphia Newco will have any employees other than Adelphia
Employees primarily employed and performing services for the TWC/Adelphia
Systems, in each case other than unpaid corporate officers with no entitlement
to benefits or other compensation that was, is or will be a liability of such
TWC Newco.
(f) At the Closing for each Exchange, the applicable TWC Newco
will own the applicable TWC Transferred Assets, subject to the applicable TWC
Assumed Liabilities, and will have no other assets and be subject to no other
Liabilities, except for the applicable TWC Newco Indemnified Liabilities and the
Liabilities under any Transaction Document to which such TWC Newco is a party.
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Section 5.24 Adelphia Representations. Except as set forth on
Schedule 5.24, to the knowledge of TWC, there have been no events, circumstances
or conditions, in any such case, first arising after the Adelphia Closing, that
have caused any of the representations and warranties provided by Adelphia under
Sections 3.8, 3.9, 3.10 (other than Section 3.10(a)), 3.11, 3.12 (disregarding
the references to "As of the date hereof" in Section 3.12(b) and (g)), 3.13,
3.14, 3.15(d) (only as to Contracts included in the TWC/Adelphia Assets and
other than the first and third sentences thereof), 3.17 (other than clause (ii)
of the first sentence of Section 3.17(a)), 3.19, 3.20(a), 3.21 (other than the
first sentence of Section 3.21(c)), 3.22, 3.23 (other than the first sentence
thereof) and 3.25 of the TWC/Adelphia Purchase Agreement not to be true and
correct in all material respects (or, if qualified by materiality or Material
Adverse Effect (as defined in the TWC/Adelphia Purchase Agreement), in all
respects) as they relate to the Group 1 Business (except to the extent relating
to any TWC/Adelphia Excluded Assets or TWC/Adelphia Excluded Liabilities) under
the TWC/Adelphia Purchase Agreement, if such representations and warranties were
given as of Closing (except to the extent expressly made as of an earlier date,
in which case as of such earlier date), in each case: (i) to the extent such
representations and warranties apply to any period after the Adelphia Closing,
applying such representations and warranties mutatis mutandis given, among other
things, (A) the TWC Group Members' ownership of such Group 1 Business, (B) the
possible addition to or disposition of Transferred Assets and the incurrence or
payment of Assumed Liabilities (as such terms are defined in the TWC/Adelphia
Purchase Agreement) consistent with the terms of this Agreement after the
Adelphia Closing and (C) the Newco Transactions and (ii) disregarding any
qualification to Seller's Knowledge (as defined in the TWC/Adelphia Purchase
Agreement) included in any such representation and warranty.
Section 5.25 TWC/Adelphia Purchase Agreement. TWC has previously
delivered to Comcast a true and complete copy of the TWC/Adelphia Purchase
Agreement as currently in effect. Except for the TWC/Adelphia Purchase
Agreement, any Ancillary Agreements (as defined in the TWC/Adelphia Purchase
Agreement) to which TWC or any of its Affiliates is party and any agreement to
which Comcast is a party (or is a party to a substantially equivalent agreement
with Adelphia), TWC and/or any of its Affiliates, on the one hand, and Adelphia
and/or any of its Affiliates, on the other hand, are not party to any Contract
related to or entered into in connection with the transactions contemplated by
the Adelphia Purchase Agreements or the Ancillary Agreements (as defined in
either Adelphia Purchase Agreement).
ARTICLE 6
COVENANTS
Section 6.1 Certain Affirmative Covenants of Transferor Parent.
Except as otherwise expressly contemplated hereunder, or as the applicable
Transferee Parent may otherwise consent in writing (which if requested shall not
be unreasonably withheld or delayed), (i) between the date of this Agreement and
the Closing, with respect to each Native System to be directly or indirectly
transferred by Transferor Parent or its Affiliates in an Exchange and the Native
Assets related to such Native System, and
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(ii) between the time of the applicable Adelphia Closing (or, with respect to
Section 6.1(f), the date of this Agreement; provided that it is understood that,
until the Adelphia Closing, such obligations under Section 6.1(f) will be
limited to those that can be fulfilled using commercially reasonable efforts
taking into account that Transferor Parent and its Affiliates do not own the
relevant Adelphia Systems) and the Closing, with respect to each Adelphia System
to be directly or indirectly transferred by Transferor Parent or its Affiliates
in an Exchange and the Adelphia Assets related to such Adelphia System, such
Transferor Parent shall, and shall cause its Affiliates to:
(a) operate or cause to be operated such Transferred Systems
only in the usual, regular and ordinary course and in accordance with applicable
material Legal Requirements (including completing line extensions, placing
conduit or cable in new developments, fulfilling installation requests and
continuing work on existing construction projects) and (i) use its commercially
reasonable efforts to preserve the current business organization of such
Transferred System intact, including preserving existing relationships with
Governmental Authorities, suppliers, customers and others having business
dealings with such Transferred System, unless Transferee Parent requests
otherwise, (ii) use commercially reasonable efforts to keep available the
services of its employees providing services in connection with each such
Transferred System, (iii) continue normal marketing, advertising and promotional
expenditures with respect to each such Transferred System and (iv) prior to
January 1, 2006 (I) make capital expenditures in accordance with the 2005
capital budget of each such Native System set forth on Schedule 6.1(A)(I) (as to
each such Native System, the "2005 Capital Budget") and (II) make aggregate
expenditures (other than Variable Expense Items) in accordance with the 2005
operating budget for each such Native System set forth on Schedule 6.1(A)(II)
(as to each such Native System, the "2005 Operating Budget", and together with
the 2005 Capital Budget, the "2005 Budgets"); provided, however, that, in each
case, deviations (positive or negative) in any such expenditures by no more than
5% of the aggregate budgeted amount shall be deemed to be in accordance with the
2005 Budgets; provided further that, in any event, deviations (positive or
negative) in any expenditures contemplated by the telephony budget included in
any 2005 Budget shall be deemed to be in accordance with such 2005 Budget so
long as Transferor Parent shall have used commercially reasonable efforts to
operate in accordance with such telephony budget;
(b) perform all of its obligations under all of the applicable
Transferred Franchises, Transferred Licenses and Transferred Contracts without
material breach or default, and pay its Liabilities in the ordinary course of
business;
(c) (i) maintain or cause to be maintained (A) the applicable
Transferred Assets in adequate condition and repair for their current use,
ordinary wear and tear excepted, and (B) in full force and effect policies of
insurance with respect to the applicable Transferred Assets and operation of
such Transferred Systems, in such amounts and with respect to such risks as are
customarily maintained by the applicable Retained Systems and (ii) enforce in
good faith the rights under insurance policies referred to in (i)(B);
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(d) maintain or cause to be maintained its books, records and
accounts with respect to the applicable Transferred Assets and the operation of
such Transferred Systems in the usual, regular and ordinary manner on a basis
consistent with Transferor Parent's past practices;
(e) use its commercially reasonable efforts to renew any
applicable Transferred Licenses which expire prior to the Closing Date;
(f) use its commercially reasonable efforts to obtain in
writing as promptly as practicable the applicable Required Consents and any
other consent, authorization or approval necessary or commercially advisable in
connection with the transactions contemplated hereby (and shall deliver to
Transferee Parent copies of any such Required Consents and such other consents,
authorizations or approvals as it obtains), in each case in form and substance
reasonably satisfactory to such Transferee Parent; provided, that (i) Transferor
Parent and its Affiliates shall have no obligation to make any payment (other
than customary filing fees) to, or agree to any concession to, any Person to
obtain any such consent, authorization or approval; and (ii) Transferor Parent
shall afford Transferee Parent the opportunity to review and approve the form of
Required Consent and such other consents prior to delivery to the party whose
consent is sought and neither Transferor Parent nor any of its Affiliates shall
accept or agree or accede to any modifications or amendments to or in connection
with, or any conditions to the transfer of, any of the applicable Transferred
Franchises, Transferred Licenses or Transferred Contracts of such Transferred
System that are not approved in writing by Transferee Parent, which approval
shall not be unreasonably withheld or delayed. Transferor Parent agrees, upon
reasonable prior notice, to allow representatives of Transferee Parent to attend
meetings and hearings before applicable Governmental Authorities in connection
with the transfer of any Transferred License or Transferred Franchise of such
Transferred Systems. Notwithstanding the foregoing, no party shall have any
further obligation to obtain Required Consents:
(i) with respect to Contracts relating to pole attachments where the
licensing Person shall not consent to an assignment of such license
agreement but requires the applicable Newco to enter into a new agreement
with such Person on overall terms which are no less favorable to such
Newco than the original license agreement was to Transferor Parent or its
Affiliates, in which case Transferor shall cooperate with and assist
Transferee Parent and its Affiliates in obtaining such agreements; and
(ii) for any business radio license or any private operational fixed
service ("POFS") microwave license which Required Consent could reasonably
be expected to be obtained within 120 days after Closing and so long as a
conditional temporary authorization (for a business radio license) or a
special temporary authorization (for a POFS license) is obtained by
Transferee Parent or is Affiliates under FCC rules with respect thereto;
(g) deliver to Transferee Parent reasonably promptly true and
complete copies of all monthly trial balances, financial statements and
subscriber and
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other service recipient (including Individual Subscribers, Digital Subscribers,
Telephony Subscribers and High Speed Data Subscribers) counts with respect to
such Transferred Systems, management and operating reports and any written
reports or data with respect to the operation of such Transferred Systems
prepared by or for Transferor Parent or its Affiliates at any time from the date
hereof (or, with respect to the Adelphia Systems, from the Adelphia Closing)
until Closing;
(h) except as otherwise provided in this Agreement, Transferor
Parent will use commercially reasonable efforts to promptly notify Transferee
Parent of any circumstance, event or action by Transferor Parent or any of its
Affiliates, or otherwise that becomes known to Transferor Parent (i) which, if
known at the date of this Agreement, would have been required to be disclosed in
or pursuant to this Agreement, or (ii) the existence, occurrence or taking of
which would result in any of its representations and warranties in this
Agreement or in any Transaction Document not being true and correct in all
material respects (or if qualified by materiality, Material Adverse Effect or a
similar standard, in all respects) when made or at Closing (unless and to the
extent that any such representation or warranty speaks specifically as of an
earlier date, in which case, at such earlier date); provided, that any
notification provided by Transferor Parent solely pursuant to this subsection
shall not be deemed to update the Schedules to this Agreement under Section 6.10
unless Transferor Parent expressly specifies that such notification is intended
as an update pursuant to Section 6.10;
(i) give or cause to be given to Transferee, and its counsel,
accountants and other representatives, as soon as reasonably possible but in any
event prior to the date of submission to the appropriate Governmental Authority,
copies of all (i) FCC Forms 1200, 1205, 1210, 1215, 1220 and 1240, and
simultaneous with, or as soon as reasonably possible after submission to the
appropriate Government Authority, any other FCC Forms required under the
regulations of the FCC promulgated under the Cable Act that are prepared with
respect to any such Transferred System and (ii) as soon as reasonably possible
after filing, copies of all copyright returns filed in connection with any such
Transferred System; provided, that in the case of clause (i), and simultaneous
with, or as soon as reasonably possible after submission to the appropriate
Governmental Authority, before such FCC Forms, Forms 1200, 1205, 1210, 1215,
1220 or 1240 are filed, Transferor Parent and Transferee Parent shall consult in
good faith concerning the contents of such forms;
(j) in the case of the Native Systems, use commercially
reasonable efforts to implement all budgeted rate changes provided for in the
2005 Operating Budgets or, with respect to periods after January 1, 2006, rate
changes in the ordinary course of business; and
(k) maintain inventory (i) in the case of a Native System,
sufficient for the operation of such Native System in the ordinary course of
business for a period of time consistent with the period of time such inventory
is maintained for the applicable Retained Systems, and (ii) with respect to any
Adelphia System, sufficient for the operation of such Adelphia System in the
ordinary course of business consistent with the inventory maintained as of the
Adelphia Closing.
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Section 6.2 Certain Negative Covenants of Transferor Parent. Except
as otherwise expressly contemplated hereunder (including with respect to the
Newco Transactions) or as the applicable Transferee Parent may otherwise consent
in writing (which if requested shall not be unreasonably withheld or delayed)
(i) between the date of this Agreement and the Closing, with respect to each
Native System to be directly or indirectly transferred by Transferor Parent or
its Affiliates in an Exchange, the Native Assets related to such Native System
and, in the case of Section 6.2(d) (and, to the extent relating thereto, Section
6.2(t)), the transactions contemplated hereby, and (ii) between the time of the
applicable Adelphia Closing and the Closing, with respect to each Adelphia
System to be directly or indirectly transferred by Transferor Parent or its
Affiliates in an Exchange and the Adelphia Assets related to such Adelphia
System, such Transferor Parent shall not, and shall cause its Affiliates not to:
(a) modify, terminate, renew, suspend or abrogate any material
Transferred Contract other than in the ordinary course of business;
(b) modify in any material respect, terminate, renew, suspend
or abrogate any applicable Transferred Franchise or material applicable
Transferred License;
(c) (i) except as set forth in Schedule 6.2(c)(i)(A), with
respect to the Comcast Group, or Schedule 6.2(c)(ii)(B), with respect to the TWC
Group, and except for Contracts in respect of SMATV Acquisitions, other than any
SMATV Acquisition in which the SMATV Purchase Price Per Subscriber exceeds
$3,730 (for the avoidance of doubt, notwithstanding any other provision of this
Section 6.2 to the contrary, Transferor Parent shall be permitted to integrate
any SMATV Acquisition into its Native Systems in the ordinary course of
business), and renewals and extensions of leases, in each case entered into in
the ordinary course of business, enter into any Contract or commitment of any
kind relating to such Transferred Systems which would be binding on Transferee
Parent or any of its Affiliates after Closing and which (A) would involve an
aggregate expenditure or receipt in excess of $500,000 after Closing, (B) would
have a term in excess of one year after Closing unless terminable without
payment or penalty upon 30 days' (or fewer) notice (other than with respect to
bulk service, commercial service or multiple dwelling unit access Contracts),
(C) is not being entered into in the usual regular and ordinary course and in
accordance with past practices, (D) would limit the freedom of Transferee Parent
or any of its Affiliates to compete in any line of business or with any Person
or in any area, (E) relates to the use of assets of such Transferred System by
third parties to provide telephone or high speed data services, (F) is not on
arm's-length terms, or (G) is with Transferor Parent or any of its Affiliates
and is not terminated prior to Closing without penalty and without liability on
the part of Transferee Parent or any of its Affiliates from and after Closing,
or (ii) with respect to any Adelphia System, make or commit to make any material
capital expenditures (including in respect of any plant upgrade);
(d) enter into any transaction or take any action that would
result in any of its representations and warranties in this Agreement or in any
Transaction
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Document to which it or any of its Affiliates is party not being true and
correct in all material respects (or if qualified by materiality, Material
Adverse Effect or a similar standard, in all respects) when made or at Closing
(unless and to the extent that any such representation or warranty speaks
specifically as of an earlier date, in which case, at such earlier date);
(e) engage in any marketing, subscriber installation or
collection practices other than in the ordinary course of business;
(f) (i) in the case of any Native System, change the rate
charged for any level of cable television service of such Native System, except
for rate increases provided for in the 2005 Operating Budgets or, with respect
to periods after January 1, 2006, rate changes in the ordinary course of
business, or (ii) in the case of any Adelphia System, change the rate charged
for any level of any service of such Adelphia System;
(g) add any channels to any Transferred System, or change the
channel lineup in any Transferred System or commit to do so in the future,
except as required by applicable Legal Requirements or as set forth in Schedule
6.2(g)(i), with respect to the Comcast Native Systems, and Schedule 6.2(g)(ii),
with respect to the TWC Native System (provided that deletions of channels shall
not be considered a change in channel lineup);
(h) except in accordance with the applicable Adelphia Purchase
Agreement and except for "staying" or "sticking" bonuses to induce such
employees to remain with any such Transferred System and which shall be paid for
by Transferor Parent or its Affiliates on or prior to Closing, grant or agree to
grant to any employee of any such Transferred System any increase in (i) wages
or bonuses except in the ordinary course of business and consistent with past
practices or (ii) any severance, profit sharing, retirement, deferred
compensation, insurance or other compensation or benefits, except in the
ordinary course of business and consistent with past practices; provided that
the foregoing shall not apply to any Retained Native Employee;
(i) engage in any hiring practices that are (i) materially
inconsistent with Transferor Parent's past practices or (ii) with respect to
Adelphia Employees, inconsistent with the applicable covenants contained in the
applicable Adelphia Purchase Agreement;
(j) transfer the employment duties of any employee of a
Transferred System from such Transferred System to a different business unit or
Subsidiary of Transferor Parent or its Affiliates; provided that the foregoing
shall not apply to any Retained Native Employee;
(k) sell, assign, transfer or otherwise dispose of any of the
applicable Transferred Assets except in the ordinary course of business and
except for (i) the disposition of obsolete or worn-out equipment, (ii)
dispositions with respect to which such Transferred Assets are replaced with
assets of at least equal value, or (iii) transfers
88
among Transferor Parent and its Affiliates (whereupon any such transferee would
become a Comcast Participant or TWC Participant, as applicable, hereunder);
provided, for the avoidance of doubt, that the foregoing clause shall not permit
the disposition of any Transferred System other than pursuant to clause (iii);
(l) mortgage, pledge or subject to any material Lien that
would survive the Closing any of the applicable Transferred Assets or such
Transferred System, other than Permitted Liens;
(m) enter into any System-specific programming agreement
(other than Local Retransmission Consent Agreements) relating to the applicable
Transferred Assets or such Transferred System that is not terminated prior to
Closing without penalty and without liability on the part of Transferee Parent
or its Affiliates from and after Closing;
(n) except as set forth on Schedule 6.2(n)(i), with respect to
the Comcast Group, and Schedule 6.2(n)(ii), with respect to the TWC Group, make
any cost-of-service or hardship election under the Rules and Regulations adopted
under the Cable Act;
(o) make any material change to any method of accounting
except for any such change (i) required by reason of a concurrent (including any
transition period) change in GAAP or applicable law or any change with respect
to the applicable Retained Systems, or (ii) to conform Adelphia Systems to
Transferor Parent's accounting policies, in each case made in accordance with
GAAP;
(p) make or change in any material respect any Tax election,
change any annual Tax accounting period or adopt or change any method of Tax
accounting, file any amended Tax Returns enter into any closing agreement,
settle any Tax claim or assessment, surrender any right to claim a Tax Refund,
offset or any other reduction in Tax liability or consent to any extension or
waiver of the limitations period applicable to any Tax claim or assessment, in
each case, in a manner that is inconsistent with the Tax treatment applicable to
the applicable Retained Systems;
(q) convert any billing systems used by such Transferred
System (other than the conversions described on Schedule 6.2(q)(i), with respect
to the Comcast Group, and Schedule 6.2(q)(ii), with respect to the TWC Group);
(r) launch or commit to launch any new product or service
(including telephony) in any Adelphia System;
(s) (i) terminate the employment of any Comcast/Adelphia
Employee with respect to the Comcast Group or any TWC/Adelphia Employee with
respect to the TWC Group (other than, with respect to an employee who is
classified as "non-exempt" for Federal wage and hour purposes, a termination of
employment for "cause" (as defined in the Adelphia Communications Corporation
Severance Plan) or a termination under such other circumstances that would deny
the employee severance pay or benefits under such plan), or (ii) amend any
existing or enter into any new,
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employment, severance, or other similar agreement with, any Comcast/Adelphia
Employee, with respect to the Comcast Group, or any TWC/Adelphia Employee, with
respect to the TWC Group; or
(t) announce an intention, commit or agree to do any of the
foregoing.
Section 6.3 Certain Additional Covenants Regarding Required
Consents; HSR Act Filing.
(a) By no later than 45 days from the date of this Agreement,
Transferee Parent and Transferor Parent shall provide each other with all
necessary documentation to allow filing of FCC Forms 394 with respect to the
Transferred Franchises. Transferor Parent and Transferee Parent shall use
commercially reasonable efforts to cooperate with one another and file with the
applicable Governmental Authority FCC Forms 394 for each Transferred Franchise
which requires the consent of such Governmental Authority in connection with the
transactions contemplated by this Agreement, no later than 60 days after the
date hereof.
(b) Subject to Section 6.1(f), from and after the date hereof,
Transferee Parent shall use its commercially reasonable efforts to cooperate
with Transferor Parent in obtaining the Required Consents and any other consent,
Authorization or approval, including with the relevant franchising authorities
in respect of the Transferred Franchises, necessary or commercially advisable
with respect to the transactions contemplated hereby including, to the extent
commercially reasonable, the attendance of representatives of Transferee Parent
at meetings and hearings before applicable Governmental Authorities in
connection with the transfer of any Transferred License or Transferred Franchise
and by providing appropriate financial statements, insurance certificates and
surety bonds required to obtain such Required Consents.
(c) The parties shall as soon as practicable after the date
hereof, but in any event no later than 20 Business Days after the date hereof
(except to the extent any delay beyond such period results from a failure to
obtain any required information relating to the Adelphia Systems or Adelphia
Assets from Adelphia or its Affiliates), complete and file, or cause to be
completed and filed, any notification and report required to be filed under the
HSR Act with respect to the transactions contemplated by this Agreement and each
such filing shall request early termination of the waiting period imposed by the
HSR Act. The parties shall use commercially reasonable efforts to respond as
promptly as reasonably practicable to any inquiries or requests received from a
Governmental Authority for additional information or documentation in connection
with antitrust matters. The parties shall use commercially reasonable efforts to
overcome any objections which may be raised by any Governmental Authority having
jurisdiction over antitrust matters. Each party shall cooperate to prevent
inconsistencies between their respective filings and between their respective
responses to all such inquiries and requests, and shall furnish to each other
such necessary information and reasonable assistance as the other may request in
connection with its preparation of necessary filings or submissions under the
HSR Act.
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Notwithstanding the foregoing or anything else in the Agreement to the contrary,
neither party shall be required to enter into any consent decree with any
Governmental Authority relating to antitrust matters or to sell or hold separate
any assets or make any change in operations or activities of the business (or
any material assets employed therein) of such party or its Affiliates, if a
party determines in good faith that such change would be adverse to the
operations or activities of the business (or any material assets employed
therein) of such party or any of its Affiliates having significant assets, net
worth or revenue. The cost of any filing fees in connection with any required
filing pursuant to the HSR Act shall be borne equally by Comcast and TWC.
(d) It is understood and agreed that the obligations of the
parties under this Section 6.3 are, with respect to the Adelphia Systems and the
period prior to the Adelphia Closings, limited to those that can be fulfilled
using commercially reasonable efforts taking into account that the parties do
not own the Adelphia Systems. If as a result of this limitation any given filing
cannot be made prior to the Adelphia Closings, the parties will take all
reasonable actions to make such filing as promptly as practicable after the
Adelphia Closings.
Section 6.4 Confidentiality and Publicity.
(a) Unless and until Closing occurs, any non-public
information that either party (treating, for purposes of this Section 6.4, the
Comcast Parties as one party and the TWC Parties as the other party) may obtain
from the other or its Affiliates in connection with this Agreement shall be
confidential, and following Closing, each party shall keep confidential any
non-public information that such party may receive from the other party or its
Affiliates in connection with this Agreement unrelated to the Transferred
Systems or the Transferred Assets to be directly or indirectly transferred by
the other party in an Exchange as well as any non-public information in the
possession of such party related to the Transferred Systems and Transferred
Assets transferred directly or indirectly by such party to the other party
pursuant to this Agreement (any such information that a party is required to
keep confidential pursuant to this sentence shall, with respect to such party,
be referred to as "Confidential Information"). Each party shall not disclose any
Confidential Information to any other Person (other than its Affiliates and its
Affiliates' directors, officers and employees, and representatives of its
advisers and lenders, in each case, whose knowledge thereof is necessary in
order to facilitate the consummation of the transactions contemplated hereby, in
which case such party shall be responsible for any breach by any such Person) or
use such information to the detriment of the other; provided, that (i) such
party may use and disclose any such information once it has been publicly
disclosed (other than by such party in breach of its obligations under this
Section) or which, to its knowledge, rightfully has come into the possession of
such party (other than from the other party), (ii) to the extent that such party
may, in the reasonable judgment of its counsel, be compelled by Legal
Requirements to disclose any of such information, such party may disclose such
information if it has used commercially reasonable efforts, and has afforded the
other party the opportunity, to obtain an appropriate protective order, or other
satisfactory assurance of confidential treatment, for the information compelled
to be disclosed, (iii) such party may use and disclose such information to the
extent reasonably
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necessary to permit such party to file Tax Returns, defend any dispute relating
to Taxes, claim any Refund or otherwise provide information to a Governmental
Authority in connection with any other Tax proceeding, (iv) such party may use
and disclose such information to the extent necessary to comply with Legal
Requirements or any periodic reporting obligations such party may have by virtue
of such party or any of its Affiliates having securities listed on a national
securities exchange or quotation system, and (v) such party may disclose such
information as may be required under or in connection with the obligations of
such party under either Adelphia Purchase Agreement. In the event of termination
of this Agreement, (A) the obligation set forth in this Section shall continue
for a period of two years after such termination, and (B) each party shall use
commercially reasonable efforts to cause to be delivered to the other, and to
retain no copies of, any documents, work papers or other materials obtained by
such party or on its behalf from the other, whether so obtained before or after
the execution of this Agreement.
(b) TWC and Comcast each shall consult with and cooperate with
the other with respect to the content and timing of all press releases and other
public announcements, and any oral or written statements to the Comcast
Transferred Employees and the TWC Transferred Employees concerning this
Agreement and the transactions contemplated hereby. Except as required by
applicable Legal Requirements or by any national securities exchange or
quotation system, none of TWC, Comcast, or their respective Affiliates shall
make any such release, announcement or statement without the prior written
consent and approval of the other, which shall not be unreasonably withheld. The
party receiving such a request for a consent shall respond promptly to any such
request for consent and approval.
Section 6.5 Title Insurance Commitments. Transferor Parent shall use
commercially reasonable efforts to provide to Transferee Parent, within 90 days
from the date Transferor Parent receives the Title Commitment Notice, or, in the
case of any Survey, such longer period of time as is necessary to obtain such
Survey with the exercise of reasonable diligence, (a) commitments to issue to
the applicable Native Newco title insurance policies ("Title Commitments") in
amounts reasonably satisfactory to Transferee Parent issued by a nationally
recognized title insurance company (a "Title Company") and containing, to the
extent available, legible photocopies of all recorded items described as
exceptions therein, committing to insure, subject only to Permitted Liens, fee
or a valid leasehold title, as applicable, in the applicable Native Newco to
each parcel of Transferor's and its Affiliates' Native Owned Property or Native
Leased Property on Schedule 2.1(f)(ii)(A) and Schedule 2.1(f)(ii)(B), as
applicable, and so designated by notice ("Title Commitment Notice") within 30
days from the date of this Agreement, as applicable, by ALTA extended coverage
owner's or leasehold policies of title insurance, or, if ALTA policies are not
obtainable in any state, policies in another form reasonably satisfactory to
Transferee Parent, and (b) surveys of each parcel of Transferor's Native Owned
Property or Transferor's Native Leased Property on Schedule 2.1(f)(ii)(A) and
Schedule 2.1(f)(ii)(B) ("Surveys"), as applicable, and so designated in such
Title Commitment Notice in such form as is reasonably necessary to obtain the
title insurance to be issued pursuant to the related Title Commitments with the
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standard printed exceptions relating to survey matters deleted, certified to
Transferee Parent, the applicable Native Newco and to the Title Company with
respect to that Native Owned Property or Native Leased Property provided that
Transferor Parent's inability to provide Title Commitments satisfying the
foregoing requirements shall not constitute a breach of the foregoing covenant
if the Liens, or other matters relating to title, giving rise to such inability
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. In no event shall Transferor Parent be obligated to
procure a Title Commitment for any Native Leased Property with respect to which
the lease or a memorandum thereof has not been recorded in the land records of
the county in which the Native Leased Property is located. The cost to obtain
such Title Commitments and Surveys and other documents required by the Title
Company to issue such policies and Surveys, as well as the cost of title policy
premiums, except for attorneys' fees and other incidental costs incurred by
Transferor Parent or its Affiliates in connection with providing such Title
Commitments and Surveys and otherwise complying with this Section 6.5 shall be
borne by Transferee Parent or its Affiliates. If Transferee Parent notifies
Transferor Parent within 30 days following delivery to Transferee Parent of both
the Title Commitments and the Surveys of any Lien (other than a Permitted Lien
or a Lien set forth in Schedule 4.4(a) or Schedule 5.4(a), as applicable) which
prevents access to or which could prevent or impede in any material way the use
or operation of any parcel of Native Owned Property or Native Leased Property
for which a Title Commitment is required pursuant to this Section 6.5 for the
purposes for which it is currently used or operated by Transferor Parent or its
Affiliate (each a "Title Defect"), Transferor Parent shall exercise commercially
reasonable efforts, including paying attorney's fees and other incidental costs
associated with any such efforts, to (1) remove such Title Defect, or (2) cause
the Title Company to commit to insure over each such Title Defect prior to
Closing at customary premium rates without additional premium or charge. If such
Title Defect cannot be removed prior to Closing or the Title Company does not
commit to insure over such Title Defect prior to Closing, Transferor Parent and
Transferee Parent shall enter into a written agreement containing Transferor
Parent's commitment to use commercially reasonable efforts for 180 days
following Closing to remedy the Title Defect following Closing on terms
reasonably satisfactory to Transferee Parent, in its reasonable discretion.
Notwithstanding anything to the contrary contained in this Agreement, in no
event shall Transferor Parent or its Affiliates be required to remove any Liens
encumbering the Native Owned Property and Native Leased Property except as
expressly set forth in this Section 6.5 or to expend any moneys (other than
attorneys' fees and other incidental costs as hereinabove set forth) or to incur
any obligation in order to remove or cause the insuring over of any Liens (other
than pursuant to customary short form affidavits of title which do not in any
event require Transferor Parent or its Affiliates to make representations or
incur obligations more onerous than those made or set forth elsewhere in this
Agreement and customary gap indemnities covering Transferor Parent's and its
Affiliates' acts for the period between Closing and the recording of the
applicable deed or assignment of lease with respect to such Native Owned
Property or Native Leased Property, and in no event shall Transferor Parent or
its Affiliates be obligated to commence any Litigation to cause any Title
Defects to be removed or insured over, and, without limiting the other
provisions of this Section 6.5, in
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no event shall Transferor Parent or its Affiliates be required to give a
non-imputation affidavit to the title insurance company.
Section 6.6 Pre-Closing Access. From the date hereof until the
Closing, subject to applicable law, Transferor Parent shall, and shall cause its
Affiliates to, (i) afford Transferee Parent and its authorized representatives
reasonable access, during regular business hours, upon reasonable advance
notice, to the Transferred Systems (including the Transferred Assets and
employees) to be directly or indirectly acquired by such Transferee Parent, (ii)
furnish, or cause to be furnished, to such Transferee Parent any financial and
operating data and other information with respect to such Transferred Systems as
Parent Transferee from time to time reasonably requests, and (iii) instruct its
employees, and its counsel and financial advisors to cooperate with such
Transferee Parent in its reasonable investigation of such Transferred Systems;
provided that, in each case, any such access shall be designed so as to not
unreasonably disrupt the business and operations of Transferor Parent or its
Affiliates; provided further that in no event shall such Transferee Parent have
access to (A) any information that would reasonably be expected to create
Liability under applicable laws, including U.S. antitrust laws, or waive any
material legal privilege (provided that, in such latter event, Transferor Parent
and Transferee Parent shall use commercially reasonable efforts to cooperate to
permit disclosure of such information in a manner consistent with the
preservation of such legal privilege) (B) documents containing competitively
sensitive information, trade secrets or other sensitive information (to the
extent necessary to protect the legitimate legal, business and/or
confidentiality concerns of Transferor Parent and its Affiliates, but taking
into account Transferee Parent's need for such information in connection with
the transactions contemplated hereby), (C) any information to the extent such
disclosure would reasonably be expected to violate any obligation of Transferor
Parent or its Affiliates with respect to confidentiality so long as, with
respect to confidentiality, to the extent specifically requested by Transferee
Parent, Transferor Parent has made commercially reasonable efforts to obtain a
waiver regarding the possible disclosure from the third party to whom an
obligation of confidentiality is owed or (D) any programming records; it being
understood that such Parent Transferee shall conduct any environmental sampling
solely in the manner contemplated by Section 6.13. All requests made pursuant to
this Section 6.6 shall be directed to an executive officer of Transferor Parent
or such Person or Persons as may be designated by Transferor Parent. All
information received pursuant to this Section 6.6 shall, prior to the Closing,
be governed by Section 6.4(a) and, to the extent applicable, the terms of the
Confidentiality Agreement. No information or knowledge obtained in any
investigation by Transferee Parent or its Affiliates pursuant to this Section
6.6 shall affect or be deemed to modify any representation or warranty made by
Transferor Parent or its Affiliates hereunder or under any Transaction Document.
This Section 6.6 shall apply to the Adelphia Systems and the Adelphia Assets
only after the Adelphia Closing.
Section 6.7 Post-Closing Obtaining of Consents. Subsequent to
Closing and subject to Section 2.1(h), Transferor Parent shall, and shall cause
its Affiliates to, continue to use commercially reasonable efforts to obtain in
writing as promptly as possible any Authorization necessary or commercially
advisable in
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connection with the transactions contemplated hereunder which was not obtained
on or before Closing (a "Post-Closing Consent") in form and substance reasonably
satisfactory to Transferee Parent. A true and complete copy of any such
Post-Closing Consent shall be delivered to Transferee Parent promptly after it
has been obtained.
Section 6.8 Transitional Services.
(a) Each of Comcast and TWC shall provide, or cause its
Affiliates to provide, to the other and its Affiliates, upon written request
received by Comcast or TWC, as applicable, such signal supply, subscriber
billing, high speed data, telephony and such other non-management services as
may be reasonably requested in connection with the operation of the Native
Systems, the Adelphia Systems and any other assets or properties acquired from
Adelphia pursuant to the Adelphia Agreements, as applicable, for a commercially
reasonable period following the Closing to be mutually agreed upon in good faith
by Comcast and TWC to allow for transition of existing services or establishment
of replacement services.
(b) Without limitation of Section 6.8(a), if the Closing does
not occur on the date of the Adelphia Closing, each of Comcast and TWC shall
provide, or cause its Affiliates to provide, to the other and its Affiliates,
signal supply, subscriber billing, high speed data, telephony and such other
non-management services as may be reasonably requested in connection with any
assets or properties acquired from Adelphia pursuant to the Comcast/Adelphia
Purchase Agreement or the TWC/Adelphia Purchase Agreement, as the case may be.
The services referred to in this Section 6.8(b) shall be provided from the
Adelphia Closing until the Closing or, if this Agreement is terminated in
accordance with its terms, for a commercially reasonable period to be mutually
agreed upon in good faith by TWC and Comcast to allow for transition of existing
services or establishment of replacement services (with respect to the Specified
Systems, until the Transition Closing, and, if requested, a commercially
reasonable period thereafter).
(c) The recipient of any services referred to in Section
6.8(a) or (b) shall promptly reimburse the provider thereof for the actual
out-of-pocket cost to such provider and its Affiliates of providing such
services, and all other terms and conditions for the provision of such services
shall be reasonably satisfactory to both Comcast and TWC, and subject to
applicable Legal Requirements.
(d) If this Agreement is terminated in accordance with Section
9.1, at a closing (the "Transition Closing") to be held as soon as reasonably
practicable after such termination, subject to the receipt of the consents and
approvals referred to in the last sentence of this Section 6.8(d), each of
Comcast and TW NY shall, and shall cause their respective Affiliates to (i)
assign, transfer, convey and deliver the Adelphia Assets received by it (and
them) at the Adelphia Closing that comprise the Specified Systems (as defined
below) (and all Adelphia Assets primarily related thereto) to a Disregarded
Entity, (ii) cause such Disregarded Entity to assume and agree to pay and
discharge, as and when they come due, all Adelphia Assumed Liabilities primarily
related to such Adelphia Assets and (iii) sell to TW NY and Comcast
respectively, and each of TWC and Comcast will purchase from Comcast and TWC (or
their respective Affiliates),
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respectively, 100% of the outstanding Equity Securities of such Disregarded
Entity for the Specified Price. For purposes hereof, "Specified Price" means
with respect to each Disregarded Entity, cash in an amount equal to the sum of
(x) the product of (1) the number of Eligible Basic Subscribers (as defined in
the Comcast/Adelphia Purchase Agreement or the TWC/Adelphia Purchase Agreement,
as applicable) served by the Specified Systems transferred to such Disregarded
Entity pursuant to this Section 6.8(d), calculated as of the Adelphia Closing as
determined pursuant to Section 2.8 in the Comcast/Adelphia Purchase Agreement or
Section 2.6 of the TWC/Adelphia Purchase Agreement, as applicable, for purposes
of determining the Final Adjustment Amount (as defined therein) thereunder,
multiplied by (2) the Comcast/Adelphia Purchase Price Per Subscriber (in the
case of Specified Systems held by a Disregarded Entity to be sold by Comcast or
its Affiliates) or the TWC/Adelphia Purchase Price Per Subscriber (in the case
of Specified Systems held by a Disregarded Entity to be sold by TWC and its
Affiliates) plus (y) the Closing Adjustment Amount in respect of such
Disregarded Entity as of the Transition Closing, as determined in accordance
with procedures described in Section 2.4 applied mutatis mutandis, treating such
Disregarded Entity as an Adelphia Newco but assuming the amounts described in
clause (i)(A) and (ii)(A) of the definition of Subscriber Adjustment Amount were
zero. For purposes hereof, "Specified System" means any System as defined in
clause (ii) of the definition of such term in the Comcast/Adelphia Purchase
Agreement or the TWC/Adelphia Purchase Agreement that is allocated to the Group
2 Business in the Comcast/Adelphia Purchase Agreement or the TWC/Adelphia
Purchase Agreement and is accounted for as of the date hereof by Adelphia as a
non-primary "Cost Center" and that as of the termination of this Agreement would
be inoperable or not commercially viable as an independent cable communications
system without one or more material services described in Section 6.8(b)
(whether due to lack of independent franchise, headend or otherwise). Each such
sale and purchase shall be subject to receipt of required consents and approvals
of Governmental Authorities and required material consents and approvals of
other third parties, and the parties shall negotiate in good faith definitive
agreements to evidence such transactions that contain representations,
warranties, covenants (including indemnification provisions) and conditions
substantially the same as those contained in this Agreement with respect to the
Adelphia Systems mutatis mutandis.
Section 6.9 Cooperation Upon Inquiries as to Rates. Transferor
Parent and Transferee Parent agree as follows:
(a) For a period of 12 months after Closing, Transferor Parent
shall cooperate with and assist Transferee Parent by providing, upon request,
all information in Transferor Parent's possession (and not previously provided
to Transferee Parent) relating directly to the rates set forth in Schedule 4.8
or 5.8, as applicable, or the then current rates with respect to any Transferred
System, if different from the rates set forth on such Schedule (or not otherwise
set forth in such Schedule) or the rate on any FCC Form 393, 1200, 1205, 1210,
1220, 1235 or 1240 that Transferee Parent may reasonably require to justify such
rates in response to any inquiry, order or requirement of any Governmental
Authority or any Rate Regulatory Matter instituted before or after the date of
this Agreement.
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(b) If at any time prior to Closing (but in respect of the
Adelphia Systems, after the Adelphia Closing), any Governmental Authority
commences a Rate Regulatory Matter with respect to a Transferred System, the
applicable Transferor Parent shall (i) promptly notify Transferee Parent, and
(ii) keep Transferee Parent informed as to the progress of any such proceeding.
Without the prior written consent of Transferee Parent, which consent shall not
be unreasonably withheld or delayed, Transferor Parent shall not settle any such
Rate Regulatory Matter, either before or after Closing, if (A) Transferee Parent
or any of Transferee Parent's Affiliates would have any obligation under such
settlement, or (B) such settlement would reduce the rates permitted to be
charged by Transferee Parent or any of Transferee Parent's Affiliates after
Closing below the rates set forth on Schedule 4.8 or 5.8, as applicable or
otherwise then in effect. Notwithstanding anything to the contrary herein, after
Closing, Transferee Parent shall have the right, at its own expense, to assume
control of the defense of any pending Rate Regulatory Matter, to the extent, and
only to the extent, that it relates to a Transferred System transferred to
Transferee Parent or its Affiliates. If Transferee Parent elects to assume
control of the defense of any such Rate Regulatory Matter, Transferor Parent
shall have the right to participate, at its expense, in the defense of such
matter. Notwithstanding the provisions set forth in Article 10 of this
Agreement, Transferee Parent may settle any such Rate Regulatory Matter only
upon Transferor Parent's prior written consent, which consent shall not be
unreasonably withheld or delayed, if Transferor Parent or any of its Affiliates
would have any obligation with respect to such settlement in accordance with
Article 10 hereof or otherwise.
(c) If at any time after Closing, any Governmental Authority
commences a Rate Regulatory Matter with respect to a Transferred System
transferred to Transferee Parent or its Affiliates involving any time period
prior to Closing (or in the case of any Adelphia System, prior to the Closing
but after the Adelphia Closing), Transferee Parent shall (i) promptly notify
Transferor Parent, and (ii) keep Transferor Parent informed as to the progress
of any such proceeding. Transferor Parent shall have the right to participate,
at its expense, in the defense of such matter. Notwithstanding the provisions
set forth in Article 10 of this Agreement, Transferee Parent may settle any such
Rate Regulatory Matter only upon Transferor Parent's prior written consent,
which consent shall not be unreasonably withheld or delayed, if Transferor
Parent or any of its Affiliates would have any obligation with respect to such
settlement in accordance with Article 10 hereof or otherwise. The rights and
obligations of the parties under this Section 6.9(c) in respect of the Adelphia
Systems shall be subject to the relevant Adelphia Purchase Agreement.
(d) For purposes hereof, "Rate Regulatory Matter" means any
proceeding or investigation with respect to a Transferred System arising out of
or related to the Cable Act (other than those affecting the cable television
industry generally) dealing with, limiting or affecting the rates which can be
charged by such Transferred System for programming, equipment, installation,
service or otherwise.
(e) If Transferor Parent or any of its Affiliates is required
pursuant to any Rate Regulatory Matter or any other Legal Requirement,
settlement or otherwise to reimburse following Closing any subscribers of the
Transferred Systems to
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be directly or indirectly transferred by such Transferor Parent or any of its
Affiliates in an Exchange for any subscriber payments previously made, including
fees for cable television service, late fees and similar payments, Transferee
Parent shall, at Transferor Parent's request, make such reimbursement through
Transferee Parent's or its Affiliate's billing system on terms specified by
Transferee Parent. In such event, Transferor Parent shall pay to Transferee
Parent or its Affiliate all such payments made by Transferee Parent through its
billing system. Without limiting the foregoing, Transferee Parent shall provide
to Transferor Parent all information in its possession that is reasonably
required by Transferor Parent in connection with such reimbursement.
Section 6.10 Updated Schedules.
(a) On one or more occasions, Transferor Parent may, at least
five Business Days prior to Closing: (i) supplement Schedule 4.5(a) or 5.5(a),
as applicable, to reflect leases, franchises, licenses, authorizations,
consents, permits, Contracts or commitments which were entered into or obtained
between the date hereof and the Closing Date not in violation of the terms of
this Agreement and are required to be disclosed in Schedule 4.5(a) or 5.5(a), as
applicable, in order for the representation and warranty contained in Section
4.5(a) or 5.5(a), as applicable, to be true, complete and correct, or (ii)
supplement any other Schedule to this Agreement (other than the Schedules to any
of Section 4.1, 4.2, 4.15, 4.18, 5.1, 5.2, 5.15 or 5.18) including, for the
avoidance of doubt, 4.24 and 5.24, with additional information to the extent
that it reflects events, acts or omissions that first occurred between the date
hereof and the Closing Date and that are not prohibited by this Agreement to be
taken, and that would have been required to be included in one or more Schedules
to this Agreement in order for the representations and warranties of Transferor
Parent contained in this Agreement to be true, complete and correct as of the
Closing. Any such supplement to a Schedule pursuant to clause (i) above shall
specifically identify each license, Contract or other item being added to
Schedule 4.5(a) or 5.5(a), as applicable, and any supplement pursuant to clause
(ii) above shall be made with reasonable specificity and shall identify, to
Transferor Parent's knowledge, the potential Liability associated with the
relevant action, condition or event. For purposes of determining whether there
is any liability on the part of Transferor Parent following Closing for breaches
of its representations and warranties under this Agreement, the Schedules to
this Agreement shall be deemed to include only (a) the information contained
therein on the date hereof and (b) information added to such Schedules by
written supplements to this Agreement delivered in accordance with the first
sentence of this Section 6.10; provided, that for purposes of determining the
satisfaction of the condition set forth in Section 7.1(a) or 7.2(a), as
applicable, any update to the Schedules pursuant to clause (b) of this sentence
shall be disregarded.
(b) In addition, if after the date that is the fifth Business
Day prior to Closing, but before the Closing, Transferor Parent first becomes
aware of any event, act, occurrence or omission which, if known on the fifth
Business Day prior to Closing would have been permitted to be included in a
supplement pursuant to clause (ii) of the foregoing paragraph, then Transferor
Parent may make such supplement as provided above (in which case such supplement
shall be deemed to have been made
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pursuant to clause (ii) of the foregoing paragraph); provided that Transferor
Parent may only utilize the rights in this paragraph on one occasion and, if
Transferee Parent elects, upon receipt of any such supplement pursuant to this
paragraph, the date of Closing may be delayed until the end of the next
succeeding month.
Section 6.11 Certain Notices. Prior to the Closing (or, with respect
to the Adelphia Systems, between the Adelphia Closing and Closing), Transferor
Parent, with respect to the Transferred Systems to be directly or indirectly
transferred by such Transferor Parent or its Affiliates in an Exchange, shall
cause to be timely filed a request for renewal under Section 626 of the Cable
Act with the proper Governmental Authority with respect to Transferred
Franchises that shall expire within 36 months after any date between the date of
this Agreement and Closing Date; provided that the foregoing obligation with
respect to Adelphia Systems shall apply only to the extent such obligations can
reasonably be fulfilled after the Adelphia Closing.
Section 6.12 Franchise Expirations. From the date hereof (or, with
respect to the Adelphia Systems, from the Adelphia Closing) until Closing,
Transferor Parent shall, and shall cause its Affiliates to, use commercially
reasonable efforts to obtain renewals or valid extensions of any Transferred
Franchises of such Transferor Parent which expire on or before June 30, 2008, in
the ordinary course of business. Neither Transferor Parent nor any of its
Affiliates shall agree or accede to any material modifications or amendments to
or in connection with, or the imposition of any material condition to the
renewal or extension of, any Transferred Franchises of such Transferor Parent or
its Affiliates that are not reasonably acceptable to Transferee Parent.
Transferor Parent agrees, from the date hereof (or, with respect to the Adelphia
Systems, from the Adelphia Closing) until Closing, upon reasonable prior written
notice, to allow representatives of Transferee Parent to attend meetings and
hearings before applicable Governmental Authorities in connection with the
renewal or extension of any Transferred License or Transferred Franchise of such
Transferor Parent.
Section 6.13 Environmental Reports. From and after the date hereof
(or, with respect to the Adelphia Systems, from and after the Adelphia Closing),
Transferee Parent may upon reasonable advance written notice and during normal
business hours, at Transferee Parent's expense, perform any environmental site
assessments of Transferor Parent's or its Affiliate's Transferred Owned Property
or Transferred Leased Property (subject to the final sentence of this Section
6.13) as Transferee Parent determines, in its sole discretion, to have
performed; provided that, prior to taking any samples of soil or groundwater for
testing, Transferee Parent shall have a reasonable basis for determining that
such sampling is appropriate. Transferor Parent shall cooperate with all
reasonable requests of Transferee Parent and its consultants with respect to the
conduct of such assessments or sampling. Any assessment performed pursuant to
this Section 6.13 shall to the fullest extent practicable be designed so as not
to disrupt the business and operations of the Transferred Systems. Any right to
perform an assessment pursuant to this Section 6.13 at a Transferred Leased
Property shall be subject to Transferor Parent or its Affiliate not being
prohibited from performing such assessment pursuant to the lease for such Leased
Property.
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Section 6.14 Commercially Reasonable Efforts; Further Assurances.
Subject to the terms and conditions of this Agreement, Comcast and TWC shall,
and shall cause their Affiliates to, use commercially reasonable efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary or desirable to consummate the transactions contemplated by
this Agreement as promptly as practicable. Each of Comcast and the TWC agrees
to, and to cause their Affiliates to, execute and deliver such other documents,
certificates, agreements and other writings (including completed transfer tax
returns, showing in each case a purchase price or consideration reasonably
acceptable to Comcast and TWC) and to take such other commercially reasonable
actions as may be necessary or desirable in order to consummate or implement
expeditiously the transactions contemplated by this Agreement and to (i) vest in
Transferee Parent or its Affiliates, as applicable, the same title to the
Transferred Assets (other than the Initial TWC/Adelphia Assets) that Transferor
Parent (together with its Affiliates) had with respect thereto immediately prior
to the Newco Transactions (other than the TWC/Adelphia Newco Transaction
referred to in the third sentence of Section 2.1(a)) and (ii) vest in Comcast or
its Affiliates, as applicable, the same title to the Initial TWC/Adelphia Assets
that TWC (together with its Affiliates) had with respect thereto immediately
following the Adelphia Closing.
Section 6.15 Post-Closing Access to Personnel Records. After the
Closing Date, Transferor Parent shall, and shall cause its Affiliates to,
provide Transferee Parent with access to, and the right to make copies or
extracts of, pertinent information from the personnel files and records of
Transferor Parent and its Affiliates relating to the applicable Transferred
Employees other than Retained Native Employees in connection with litigation,
administrative proceedings, payment of Taxes or any other valid business reason
from time to time during normal business hours upon reasonable notice from
Transferee Parent (i) with respect to matters other than matters relating to
Taxes, for a period not to exceed one year from the Closing Date, or (ii) with
respect to matters relating to Taxes, until the expiration of the statute of
limitations applicable to such Taxes, in each case except to the extent that
Transferor Parent or any of its Affiliates is required by law to keep such files
and records confidential.
Section 6.16 Insurance. Transferor Parent will use commercially
reasonable efforts to take such actions as are necessary to cause insurance
policies of Transferor Parent and its Affiliates that immediately prior to
Closing provide coverage to or with respect to the Transferred Business, the
Transferred Systems or the Transferred Assets to be directly or indirectly
transferred by such Transferor Parent or its Affiliates in an Exchange to
continue to provide such coverage with respect to acts, omissions, and events
occurring prior to the Closing (or, in the case of any Adelphia Business,
Adelphia Systems or Adelphia Assets, prior to the Closing but after the Adelphia
Closing) in accordance with their terms as if the Closing had not occurred;
provided, that to the extent Transferor Parent takes any action with respect to
its umbrella insurance policies that similarly effects all of Transferor
Parent's Retained Systems but results in such insurance coverage no longer being
available (other than a change denying coverage based upon a Person ceasing to
be an Affiliate of Transferor Parent), Transferor Parent shall not be deemed to
have breached this Section 6.16 and shall have no liability with
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respect thereto. Transferor Parent will give Transferee Parent written notice of
the taking of any such action if done during the first 12 months after the
Closing prior to or as soon as practicable thereafter. Transferor Parent shall,
and shall cause its Affiliates to, cooperate with and assist Transferee Parent,
if Transferee Parent or any of its Affiliates determines to make any claim under
any such policy with respect to any pre-Closing act, omission or event.
Transferee Parent shall use commercially reasonable efforts to promptly notify
Transferor Parent when it becomes aware of any such claim; provided, that the
failure of Transferee Parent to provide such notice shall not relieve Transferor
Parent of its obligations under this Section 6.16, except to the extent that
Transferor Parent's or its Affiliates' rights under the applicable insurance
policy are prejudiced by such failure to give notice.
Section 6.17 [Intentionally Omitted].
Section 6.18 Promotional Campaigns.
(a) Between the date hereof and the Closing, Transferor Parent
and its Affiliates shall not initiate any Subscriber campaigns or promotions on
a local or regional level with respect to the Native Systems of Transferor
Parent or its Affiliates, other than (i) any such campaigns or promotions that
are on the same terms and conditions (or on terms and conditions that are no
less favorable to such Native Systems) as subscriber campaigns or promotions
undertaken with respect to the relevant Native Systems during the year ended
December 31, 2004 in the relevant market, (ii) with respect to the Comcast LA
Native Systems, the Comcast Ohio Native Systems or the TWC Native System, any
such campaigns or promotions that are not materially less favorable to such
Native Systems than campaigns and promotions being conducted by the Transferee
Parent and its Affiliates in the same DMA, (iii) with respect to the Comcast
Dallas Native Systems, any such campaigns or promotions that are not materially
less favorable to such Native Systems than campaigns and promotions being
conducted by any other multiple system cable operator (other than Charter
Communications and its Affiliates) in the Dallas DMA, and (iv) any such
campaigns or promotions that are either (x) with respect to campaigns and
promotions conducted in an overbuild area, not materially less favorable to the
Native Systems than the campaigns and promotions being conducted by the
applicable overbuilder or ROBC or (y) not materially less favorable to the
Native Systems than those being conducted by any direct broadcast satellite
providers in the same DMA (but only in the relevant market of the relevant
campaign or promotion).
(b) With respect to the Adelphia Systems of Transferor Parent
or its Affiliates, Transferor Parent and its Affiliates shall not, between the
Adelphia Closing and the Closing, initiate or continue any subscriber campaigns
or promotions (including door-to-door, inbound, outbound, retention or win-back
campaigns or promotions) on a local or regional level, other than (i) such
campaigns or promotions as are developed pursuant to the immediately following
sentence, (ii) continuation of any such campaigns or promotions initiated by
Adelphia (or, in the case of Comcast, any Transferred Joint Venture Entity)
prior to the Adelphia Closing, and (iii) such other campaigns and promotions
that are conducted in the ordinary course of business
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consistent with Transferor Parent's Retained Systems. As soon as reasonably
practicable following the Adelphia Closing, if the Closing has not occurred,
Transferor Parent and Transferee Parent shall consult with each other regarding
the development of subscriber campaigns and promotions to be conducted in
respect of the Adelphia Systems during the period between the Adelphia Closing
and the Closing.
Section 6.19 Local Retransmission Consent Agreements. On or prior to
the date which is 45 days prior to the anticipated date of Closing, each
Transferor Parent shall deliver to Transferee Parent a list of all Local
Retransmission Consent Agreements then in effect with respect to the Native
Systems (or, with respect to the Adelphia Systems, those Local Retransmission
Consent Agreements entered into between the Adelphia Closing and the Closing) to
be directly or indirectly transferred by such Transferor Parent or its
Affiliates in an Exchange. By written notice delivered to Transferor Parent at
least 30 days prior to Closing, Transferee Parent may, in its sole discretion,
elect to have the applicable Newco assume (or in the case of any TWC/Adelphia
Newco, terminate with no further liability to such TWC/Adelphia Newco) any one
or more of such Local Retransmission Consent Agreements and, in the case of any
such assumption, Transferor Parent shall use commercially reasonable efforts to
obtain any required Authorizations for such assumption. The foregoing shall be
subject to Section 2.1(h) to the extent any related Authorization is not
obtained. Any Local Retransmission Consent Agreements which Transferee Parent
elects to have assumed pursuant to this Section 6.19 shall be included in the
applicable Transferred Assets. To the extent the provisions of this Section 6.19
conflict with any other provision of this Agreement, the provisions of this
Section 6.19 shall control. Any Local Retransmission Consent Agreements which
Transferee Parent elects to have a TWC/Adelphia Newco terminate shall constitute
a TWC/Adelphia Excluded Liability.
Section 6.20 Adelphia Purchase Agreements.
(a) Capitalized terms used in this Section 6.20 and not
defined in this Agreement (or, if the context otherwise requires, even if
defined herein) shall have the meanings specified in the Adelphia Purchase
Agreements, as applicable.
(b) Comcast shall not, and shall not permit any of its
Affiliates to, terminate the Comcast/Adelphia Purchase Agreement by mutual
agreement with Adelphia without TWC's consent. TWC shall not, and shall not
permit any of its Affiliates to, terminate the TWC/Adelphia Purchase Agreement
by mutual agreement with Adelphia without Comcast's consent.
(c) Except as would not reasonably be expected to have an
adverse effect on Comcast or its Affiliates or to materially impair or delay the
transactions contemplated by this Agreement, TWC shall, and shall cause its
Affiliates to, take all necessary action to enforce and perform on a timely
basis its and their rights and obligations set forth in the TWC/Adelphia
Purchase Agreement and any related Ancillary Agreements, and shall provide
Comcast with a copy of any notice delivered to TWC or its Affiliates by Adelphia
under the TWC/Adelphia Purchase Agreement or any related Ancillary Agreement (to
the extent such notice relates to the Group 1 Business or
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addresses any matter that would reasonably be expected to have an adverse effect
on the transactions contemplated by this Agreement). Except as would not
reasonably be expected to have an adverse effect on TWC or its Affiliates or to
materially impair or delay the transactions contemplated by this Agreement,
Comcast shall, and shall cause its Affiliates to, take all necessary action to
enforce and perform on a timely basis its rights and obligations set forth in
the Comcast/Adelphia Purchase Agreement and any related Ancillary Agreements and
the JV Documents, and shall provide TWC with a copy of any notice delivered to
Comcast by Adelphia under the Comcast/Adelphia Purchase Agreement or the JV
Documents (to the extent such notice relates to the Group 1 Business or
addresses any matter that would reasonably be expected to have an adverse effect
on the transactions contemplated by this Agreement). No Transferor Parent shall
be liable under this Section 6.20(c) to the extent any breach was caused by the
Transferee Parent or its Affiliates. Nothing herein shall require TWC to waive
any rights under the TWC/Adelphia Purchase Agreement to the extent relating to
the Group 2 Business thereunder or the Excluded Rights and Obligations, or
require Comcast to waive any rights under the Comcast/Adelphia Purchase
Agreement to the extent relating to the Group 2 Business thereunder or the
Excluded Rights and Obligations.
(d) Except as otherwise provided in this Section 6.20, the
decision by Transferor Parent or any of its Affiliates to grant any consent or
waiver under, exercise any right under (including making any offer of
employment, requesting information or access, designating any Contract an
Assigned Contract, or taking any actions under Section 2.6 of the TWC/Adelphia
Purchase Agreement or Section 2.8 of the Comcast/Adelphia Purchase Agreement) or
to approve or enter into any amendment of or supplement to, the relevant
Adelphia Purchase Agreement or any Ancillary Agreement to which such Transferor
Parent or its Affiliate is party shall, to the extent relating to the Group 1
Business (except with respect to the Excluded Rights and Obligations) under such
Adelphia Purchase Agreement (or to the extent it would otherwise adversely
affect Transferee Parent or its Affiliates), be controlled by Transferee Parent,
subject to the consent of Transferor Parent, such consent not to be unreasonably
withheld or delayed; provided that Transferee Parent may also exercise rights
regarding information, access and other matters that would not reasonably be
expected to adversely affect Transferee Parent or its Affiliates. If pursuant
hereto a party or its Affiliate requests information from Adelphia under Section
5.11(a) of the TWC/Adelphia Purchase Agreement or Section 5.9(a) of the
Comcast/Adelphia Purchase Agreement, such party or its Affiliate shall be
responsible for all costs to be reimbursed to Adelphia thereunder; provided,
that with respect to any such information that is likely to be needed by members
of both the TWC Group and the Comcast Group, the parties shall reasonably
cooperate to minimize the costs thereunder and negotiate in good faith an
equitable sharing of such costs. For the avoidance of doubt, TWC shall remain
solely liable for all costs under Section 5.19 of the TWC/Adelphia Purchase
Agreement.
(e) If, at any time after the Closing, any Comcast Group
Member is entitled to receive a payment out of the Escrow Account established in
connection with the TWC/Adelphia Purchase Agreement in the form of assets other
than cash, TWC or its Affiliate and such Comcast Group Member shall immediately
after such payment is made effect an exchange pursuant to which such Comcast
Group Member
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exchanges such non-cash assets with TWC or its Affiliate for a payment in cash
in an amount equal to the difference between the total amount that would have
been payable to such Comcast Group Member out of the Escrow Account if such
amount would have been paid in cash (for the avoidance of doubt, each share of
Parent Class A Common Stock shall be valued at the Per Share Value of Purchase
Shares, as such terms are defined in the TWC/Adelphia Purchase Agreement,
adjusted appropriately to reflect any stock splits, reverse stock splits, stock
dividends, recapitalizations or similar actions affecting the Parent Class A
Common Stock after the Adelphia Closing) and the portion of such amount (if any)
that was paid in cash (a "Cash Reconciliation"). The parties agree (a) that any
such Cash Reconciliation shall be treated for Tax purposes as if the Comcast
Group Member received a cash payment out of the Escrow Account in the total
amount payable to such Comcast Group Member (and as if the Comcast Group did not
receive any such non-cash consideration) and (b) not to report or take any Tax
position (on a Tax Return or otherwise) inconsistent with such treatment unless
required by a change in applicable Tax law or a good faith resolution of a
contest.
(f) The parties will cooperate with each other in connection
with the satisfaction of their respective obligations under Section 5.6 of the
TWC/Adelphia Purchase Agreement and Section 5.3 of the Comcast/Adelphia Purchase
Agreement.
(g) Following the Closing for a period not to exceed two
years, subject to applicable law, TWC shall, and shall cause its Affiliates to,
provide Comcast and its Affiliates with reasonable cooperation in respect of the
investigation and pursuit by Comcast and its Affiliates of the Retained Claims
(as defined in the Comcast/Adelphia Purchase Agreement), including providing
Comcast and its Affiliates and their respective authorized representatives with
reasonable access, during regular business hours and upon reasonable advance
notice, to the books and records of the Comcast/Adelphia Business to the extent
relating to the Retained Claims (other than any Excluded Books and Records (as
defined in the Comcast/Adelphia Purchase Agreement)); provided, however, that
(i) the foregoing shall not unreasonably interfere with the operations
(including the post-Closing integration efforts with the TWC Group) of the
Comcast/Adelphia Business and (ii) the rights of Comcast and its Affiliates
hereunder are subject to the establishment of a system reasonably acceptable to
TWC to allow TWC to readily identify and distinguish Excluded Books and Records
of the Comcast/Adelphia Business from other books and records of such business,
and the receipt by TWC of confirmation from Adelphia that such system has been
approved by it under Section 5.23 of the Comcast Adelphia Asset Purchase
Agreement. Comcast shall reimburse TWC for the reasonable costs and expenses
incurred by TWC and its Affiliates pursuant to this Section 6.20(g).
(h) The parties acknowledge and agree that certain amounts to
be received under the Adelphia Purchase Agreements (such as (i) Condemnation
Proceeds, Insurance Claims and certain other amounts excluded from the
definition of "Current Assets" and (ii) indemnity payments under the Adelphia
Purchase Agreements) and certain liabilities to be assumed under the Adelphia
Purchase Agreements (such as the liabilities excluded from the definition of
"Total Liabilities" under clause (a)(i) of the
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second proviso to such definition) are, to the extent related to the Group 1
Business, generally intended to be treated as assets or liabilities, as the case
may be, of the Group 1 Business in respect of periods prior to the Adelphia
Closing and are intended to benefit or burden, as the case may be, the Group 1
Business in the hands of the Transferee. If the Closing does not occur on the
same day as the Adelphia Closing, the parties agree to cooperate in good faith
to properly account for any such assets and liabilities (and (i) any purchase
orders or current assets to be acquired thereunder, and (ii) Liabilities under
Sale Bonus Programs, in each case that are taken into account in determining any
Closing Net Liabilities Adjustment Amount (as defined in the Adelphia Purchase
Agreements)) in connection with determining the Net Liabilities Adjustment
Amounts hereunder.
(i) TW NY will not waive the condition set forth in Section
6.1(i) of the TWC/Adelphia Purchase Agreement. Comcast will not waive the
condition set forth in Section 6.1(g) of the Comcast/Adelphia Purchase
Agreement.
(j) If, pursuant to Section 5.20 of the Comcast/Adelphia
Purchase Agreement, the Palm Beach Joint Venture is treated as part of the Group
1 Business for purposes of Article VII thereof, the rights and interests of the
Comcast Group under, and the Liabilities of the Comcast Group arising under, the
Comcast/Adelphia Purchase Agreement and the Ancillary Agreements (as defined in
the Comcast/Adelphia Purchase Agreement) to the extent relating to the Palm
Beach Joint Venture shall not constitute Comcast/Adelphia Assets or
Comcast/Adelphia Assumed Liabilities, respectively, and shall be
Comcast/Adelphia Excluded Assets and Comcast/Adelphia Excluded Liabilities,
respectively. If, pursuant to such rights and interests, any Comcast Group
Member (or any other Buyer Indemnified Party (as defined in the Comcast/Adelphia
Purchase Agreement) associated with any Comcast Group Member) recovers any
Losses (as defined in the Comcast/Adelphia Purchase Agreement) pursuant to
Section 7.2(a)(i) of the Comcast/Adelphia Purchase Agreement in respect of the
Palm Beach Joint Venture (a "Palm Beach Indemnification Payment") and, as a
result of such Palm Beach Indemnification Payment, any recovery that any TWC
Group Member (or any other Buyer Indemnified Party associated with any TWC Group
Member) would otherwise be entitled to receive (disregarding any such recovery
by any Comcast Group Member or any other such Buyer Indemnified Party) from
Adelphia under such Section is reduced (as a result of the Group 1 Cap Amount
(as defined in the Comcast/Adelphia Purchase Agreement)), then Comcast or such
Affiliate shall pay the amount of such reduced recovery (not to exceed the
amount of the Palm Beach Indemnification Payment) to TWC or its Affiliate (as
directed by TWC).
(k) If, as of any time following the Closing, the Buyer
Indemnified Parties that have made claims to recover Losses in respect of the
Group 1 Business (as such terms are defined in the relevant Adelphia Purchase
Agreement) pursuant to Section 7.2(a)(i) of the Comcast/Adelphia Purchase
Agreement include both Comcast Group Members and TWC Group Members (or, in each
case, any other Buyer Indemnified Parties associated with such Group Members),
each such Buyer Indemnified Party shall be entitled to receive a pro rata share
of the aggregate amount of Losses which all such Buyer Indemnified Parties are
entitled to receive pursuant to such Section 7.2(a)(i), after taking into
account the limitations contained in Section 7.2(b)(i) of such
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Adelphia Purchase Agreement (such pro rata share to be determined based on the
amount of Losses to which such Buyer Indemnified Party is entitled as a
proportion of the aggregate amount of Losses to which all such Buyer Indemnified
Parties are entitled, in each case disregarding the limitations contained in
such Section 7.2(b)(i)); provided that if as a result of the foregoing any
recovery that any TWC Group Member (or any other Buyer Indemnified Party
associated with any TWC Group Member) would otherwise be entitled to receive
(disregarding any recovery by any Comcast Group Member or any other Buyer
Indemnified Party associated therewith) from Adelphia under Section 7.2(a)(i) of
the Comcast/Adelphia Purchase Agreement is reduced, then Comcast shall, or shall
cause its Affiliates to, pay the amount of such reduced recovery to TWC or its
Affiliate (as directed by TWC) (not to exceed the amount recovered under such
Section 7.2(a)(i) by the Comcast Group Members and any other Buyer Indemnified
Parties associated therewith). This shall not apply to any Losses to which any
Buyer Indemnified Party is entitled under the Comcast/Adelphia Purchase
Agreement pursuant to an exercise of the rights and interests referred to in
Section 6.20(j).
(l) At or immediately following the Closing, each of Comcast
and TWC shall execute and deliver an agreement with Adelphia pursuant to which
such party agrees to perform and be bound by (i) in the case of Comcast, all of
the Liabilities assumed pursuant to this Agreement by Comcast or its Affiliates
(including the TWC Newcos) arising under the TWC/Adelphia Purchase Agreement and
the Ancillary Agreements (as defined in the TWC/Adelphia Purchase Agreement) and
(ii) in the case of TWC, all of the Liabilities assumed pursuant to this
Agreement by TWC or its Affiliates (including the Comcast Newcos) arising under
the Comcast/Adelphia Purchase Agreement and the Ancillary Agreements (as defined
in the Comcast/Adelphia Purchase Agreement).
(m) No party shall be treated as being in breach of, or having
breached, any covenant hereunder with respect to the Adelphia Systems or the
Adelphia Assets as a result of circumstances with respect to such Adelphia
Systems or Adelphia Assets existing as of the Adelphia Closing to the extent
such circumstances were reasonably beyond such party's control and such party
uses all commercially reasonable efforts to remedy such matter as promptly as
possible.
(n) Comcast shall not, and shall not permit any of its
Affiliates to, amend, modify, terminate or waive any rights under, or authorize
any of the foregoing with respect to, the JV Documents in a manner that would
reasonably be expected to adversely impact TWC or the Transferred Joint Venture
Entities in any material respect, or to materially prejudice or delay its rights
hereunder, in each case without TWC's prior consent.
(o) The parties agree to use good faith efforts to coordinate
closing efforts with Adelphia so as to minimize duplicative costs and expenses
and further agree that any payments to Adelphia for reimbursement of Adelphia's
out-of-pocket or incremental costs under Section 5.3(f), (g) or (h) of the
Comcast/Adelphia Purchase Agreement or under Section 5.6(f), (g) or (i) of the
TWC/Adelphia Purchase Agreement shall be shared 83% by TWC and 17% by Comcast
(it being understood that
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the parties shall promptly upon request make appropriate payments to each other
to effect such sharing following any reimbursement thereunder to Adelphia).
(p) If the Closing Capital Expenditure Amount (as defined in
the TWC/Adelphia Purchase Agreement and as determined pursuant to Section 2.6 of
the TWC/Adelphia Purchase Agreement for purposes of determining the Final
Adjustment Amount (as defined therein) thereunder) for the Group 2 Business (as
defined in the TWC/Adelphia Purchase Agreement) reflects less than the amount of
capital expenditures included in Component 1 of the "Calcutta Budget" (as set
forth on Schedule 5.2(s) of the Seller Disclosure Schedules to the TWC/Adelphia
Purchase Agreement), TWC shall pay to Comcast 17% of the amount of such
deficiency promptly following the satisfaction of the Subsequent Adjustment
Amount as contemplated by Section 2.6 of the TWC/Adelphia Asset Purchase
Agreement.
Section 6.21 Adelphia Shared Assets; Mistaken Allocations.
(a) Capitalized terms used in this Section 6.21 and not
defined have the meanings specified in the Adelphia Purchase Agreements. With
respect to any Shared Assets and Liabilities (including Contracts) that are not
allocated pursuant to Schedule 6.21(b) ("Unallocated Items"), TWC and Comcast
agree to cooperate in good faith and use all commercially reasonable efforts to
agree, within 120 days following the date hereof, to a specific system of
identifying and allocating such assets and liabilities between the parties and
their respective Affiliates, as well a method of making decisions regarding
contract selection and other decisions with regard to the directions to be
provided to Adelphia under the Adelphia Purchase Agreements, with the general
principle being that the parties intend to minimize transaction costs and
expenses and avoid incremental costs from the foregoing principles to the extent
reasonable. Unless the parties otherwise agree, the Unallocated Items (other
than the Adelphia call center in Vermont) that are utilized at the "area" or
"local" level will be shared on the basis of the relative numbers of subscribers
served by or benefitting from such Unallocated Items while the remainder of
Unallocated Items and the Adelphia call center in Vermont will be allocated on
the basis of an 83%/17% split between TWC and Comcast, respectively. For the
avoidance of doubt, the foregoing allocation includes both the benefits and the
burdens of the Unallocated Items. In the event of a dispute as to the value or
amount of the benefit or burden in respect of a given Unallocated Item, Comcast
and TWC will retain a mutually acceptable third party appraiser to make such
determination, the decision of such appraiser shall be final and binding and the
costs of such appraiser shall be divided. The parties also agree to work
together in good faith to determine whether any equitable adjustments are
appropriate in light of the purchase price adjustments and other terms under the
Adelphia Purchase Agreements.
(b) The Shared Assets and Liabilities set forth on Schedule
6.21(b) shall be allocated to TWC and Comcast as described on such schedule.
(c) The parties also agree that the process with respect to
Contracts relating solely to either the TWC/Adelphia Business or solely to the
Comcast/Adelphia Business shall be designated as "Assigned Contracts" under the
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Adelphia Purchase Agreements and allocated between the Transferors and
Transferees hereunder as set forth on Schedule 6.21(c).
(d) All patents included in the Unallocated Items shall be
jointly owned by TWC and Comcast or their respective designees, with each party
having full rights thereto. Domain names shall be allocated to TWC provided that
Comcast and its Affiliates shall be entitled to receive continuing use of e-mail
accounts and redirects to a new website for such reasonable period as Comcast
requests. All other intellectual property included in the Unallocated Items will
be owned by TWC, provided that Comcast and its Affiliates will be entitled to a
royalty free, perpetual, world-wide freely assignable license thereto.
(e) Transferred Investments in ad-interconnects will be
allocated to the systems to which they primarily relate.
Section 6.22 Additional Financial Information.
(a) Comcast shall use its commercially reasonable efforts, and
shall cause each of its Affiliates to use its commercially reasonable efforts,
to provide TWC and its Affiliates with financial statements and related
information (collectively, "Comcast Financial Information") sufficient to permit
any of them to fulfill their obligations to include financial disclosure
relating to the Comcast Transferred Systems (to the extent in the possession of
Comcast or its Affiliates or their respective representatives and advisors), on
a timely basis under the Exchange Act and, if any of them undertakes an offering
of securities prior to Closing, the Securities Act. If some or all of the
Comcast Financial Information is included in or incorporated by reference into a
prospectus for an offering of securities by TWC or any of its Affiliates prior
to the Closing, Comcast shall use its commercially reasonable efforts to cause
the independent auditors of Comcast to provide customary assistance to TWC and
its Affiliates and its underwriters in connection with such financing, including
the provision of consent and comfort letters addressed to the SEC, comfort
letters addressed to the underwriters, participation in due diligence matters
with respect to such offering and assistance in responding to comments or
questions from the SEC with respect to the Comcast Financial Information. Time
Warner Cable shall reimburse Comcast for the reasonable costs and expenses
incurred by the Comcast Group pursuant to this Section 6.22(a), including
reasonable out-of-pocket costs and expenses. Comcast shall give TWC reasonable
advance notice of the type and amount of such costs and expenses prior to the
incurrence thereof.
(b) Time Warner Cable shall use its commercially reasonable
efforts to, and shall cause each of its Affiliates to use its commercially
reasonable efforts to, provide Comcast and its Affiliates with financial
statements and related information (collectively, "Time Warner Cable Financial
Information") sufficient to permit any of them to fulfill their obligations to
include financial disclosure relating to the TWC Transferred Systems (to the
extent in the possession of TWC or its Affiliates or their respective
representatives and advisors), on a timely basis under the Exchange Act and, if
any of them undertakes an offering of securities prior to Closing, the
Securities Act. If
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some or all of the Time Warner Cable Financial Information is included in or
incorporated by reference into a prospectus for an offering of securities by
Comcast or any of its Affiliates prior to the Closing, Time Warner Cable shall
use its commercially reasonable efforts to cause the independent auditors of
Time Warner Cable to provide customary assistance to Comcast and its Affiliates
and its underwriters in connection with such financing, including the provision
of consent and comfort letters addressed to the SEC, comfort letters addressed
to the underwriters, participation in due diligence matters with respect to such
offering and assistance in responding to comments or questions from the SEC with
respect to the Time Warner Cable Financial Information. Comcast shall reimburse
Time Warner Cable for the reasonable costs and expenses incurred by the TWC
Group pursuant to this Section 6.22(b), including reasonable out-of-pocket costs
and expenses. TWC shall give Comcast reasonable advance notice of the type and
amount of such costs and expenses prior to the incurrence thereof.
Section 6.23 Newco Disregarded Entities. Comcast and its Affiliates
and Time Warner Cable and its Affiliates shall not take any action that would
cause a Comcast Newco or a TWC Newco, respectively, to be treated as an entity
that is separate and apart from the Transferor of such Newco for U.S. federal
income tax purposes.
Section 6.24 Certain Consultation Obligations. Prior to the Adelphia
Closing and, if the Closing does not occur on the same date as the Adelphia
Closing, from time to time after the Adelphia Closing and prior to the Closing,
Transferor Parent shall, with respect to the Adelphia Systems to be acquired by
such Transferor Parent or its Affiliates pursuant to the relevant Adelphia
Purchase Agreement, consult with Transferee Parent to the extent permitted by
applicable law with respect to (i) the development of capital and operating
budgets for such Adelphia Systems and (ii) the rates to be charged for the
services of such Adelphia Systems.
Section 6.25 Ordinary Course from Closing to Closing Time. During
the time between the Closing and the Closing Time, each Transferee Parent and
its Affiliates shall operate or cause to be operated the Transferred Systems and
Transferred Assets transferred to such Transferee Parent or its Affiliates at
the Closing in the usual, regular and ordinary course and shall not take any
action for the purpose of changing the calculation of the Closing Adjustment
Amount with respect to any Newco.
Section 6.26 Urban Purchase. TWC shall use its commercially
reasonable efforts to consummate the Urban Purchase as soon as practicable after
the date hereof and prior to the Closing.
ARTICLE 7
CONDITIONS PRECEDENT
Section 7.1 Conditions to the Comcast Parties' Obligations. The
obligations of each Comcast Party to consummate the transactions contemplated by
this Agreement shall be subject to the following conditions, which may be waived
by Comcast:
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(a) Accuracy of Representations and Warranties. The
representations and warranties in Sections 5.1, 5.2, 5.3, 5.14, 5.18, 5.23 and
5.25 (the "Class 1 TWC Representations and Warranties" and all other
representations and warranties contained in Article 5, the "Class 2 TWC
Representations and Warranties") that are qualified as to materiality or
Material Adverse Effect shall be true and correct, and the Class 1 TWC
Representations and Warranties that are not so qualified shall be true and
correct in all material respects, in each case, at the time made and as of the
Closing Date as if made at and as of such time (except, in each case, to the
extent expressly made as of an earlier date, in which case as of such earlier
date). The Class 2 TWC Representations and Warranties shall be true and correct
(without giving effect to any materiality or Material Adverse Effect qualifiers
set forth therein) at the time made and as of the Closing Date as if made at and
as of such time (except to the extent expressly made as of an earlier date, in
which case as of such earlier date), except where the failure of such Class 2
TWC Representations and Warranties to be true and correct has not and would not,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect.
(b) Performance of Agreements. Each TWC Party shall have
performed in all material respects all obligations and agreements of such TWC
Party under, and shall have complied in all material respects with all covenants
of such TWC Party in, this Agreement and any Transaction Document to which such
TWC Party is a party to be performed and complied with by it at or before
Closing.
(c) Officer's Certificate. Comcast has received a certificate
executed by an executive officer of TWC, dated as of Closing, reasonably
satisfactory in form and substance to Comcast, certifying that the conditions
specified in Section 7.1(a) and (b) have been satisfied as of Closing.
(d) Legal Proceedings. There is no Legal Requirement, and no
Judgment has been entered and not vacated by any Governmental Authority of
competent jurisdiction in any Litigation or arising therefrom, which (i)
enjoins, restrains, makes illegal or prohibits consummation of the transactions
contemplated by this Agreement or by any Transaction Document (other than any
such matter having only an immaterial effect and that does not impose criminal
liability or penalties) or (ii) requires separation or divestiture by the
Comcast Group of all or any significant portion of the TWC Transferred Assets
after Closing or otherwise materially and adversely affects the operation of the
TWC Transferred Systems (other than applicable to the cable industry in
general), and there is no Litigation pending which was commenced by any
Governmental Authority (other than a Franchising Authority) seeking, or which if
successful would have the effect of, any of the foregoing, provided, that the
failure to obtain a consent relating to a Transferred Franchise shall not be
considered to enjoin, restrain, make illegal or prohibit consummation of the
transactions contemplated by this Agreement or by any Transaction Document.
(e) Opinion of FCC Counsel. Comcast has received an opinion
regarding the TWC Native System of Xxxxx Xxxx LLP, special FCC counsel to TWC,
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dated as of Closing, in form and substance reasonably satisfactory to Comcast
(the "TWC FCC Counsel Opinion").
(f) HSR Act Waiting Period. The waiting period under the HSR
Act with respect to the transactions contemplated by this Agreement has expired
or been terminated.
(g) Consents. Comcast has received evidence, in form and
substance reasonably satisfactory to it, that all of the TWC Required Consents
(other than in respect of the TWC Transferred Franchises, which are addressed in
Section 7.1(j)), have been obtained and are in effect.
(h) TWC Title Policies. TWC shall have delivered to Comcast
ALTA extended coverage owners' policies of title insurance, or the local
equivalent, dated as of the Closing Date and issued by the Title Company (the
"TWC Native Title Policies"), insuring, subject only to Permitted Liens, the
applicable TWC Newco's fee or leasehold title in each parcel of the TWC Native
Owned Property and the TWC Native Leased Property with respect to which a Title
Commitment was required pursuant to Section 6.5 deleting or modifying to the
reasonable satisfaction of Comcast the Schedule B standard printed exceptions
(other than Permitted Liens, and other than the survey exception or any similar
exception with respect to properties for which no survey is obtained), and other
than any other exception the deletion of which would require TWC to give any
affidavit or undertaking which would make representations or impose obligations
more onerous than those made or set forth elsewhere in this Agreement, including
gap coverage, and deleting or insuring over (subject to Section 6.5), any Title
Defects, or irrevocable Title Commitments of the Title Company to issue such TWC
Native Title Policies; provided, that the TWC Group's inability or failure to
provide the TWC Group Native Title Policies (or Title Commitments to issue the
same) shall not constitute a violation of the condition set forth in this
Section 7.1(h) if the Liens, or other matters relating to title, giving rise to
such inability would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(i) Documents and Records. TWC shall have delivered to Comcast
all of the TWC Transferred Books and Records. Delivery of the foregoing shall be
deemed made to the extent such lists, files and records are then located at any
of the offices included in the TWC Owned Property or TWC Leased Property.
(j) Franchise Required Consents. The aggregate number of
Individual Subscribers served by the TWC Transferred Systems in the Service
Areas that are, as of the Closing, Transferable Service Areas shall be at least
90% of the Individual Subscribers served by the TWC Transferred Systems at such
time (the "TWC Required Threshold"); provided that if any portion of the TWC
Transferred Systems containing active headends is not within such Transferable
Service Areas as of the Closing, then any other portion of the TWC Transferred
Systems served by such headends shall be deemed not to be included in such
Transferable Service Areas.
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(k) Adelphia Acquisition. The closing under each of the
Adelphia Purchase Agreements shall have occurred. For the avoidance of doubt,
the closing of the transactions contemplated by the Comcast/Adelphia Asset
Purchase Agreement pursuant to Section 5.15 of the TWC/Adelphia Asset Purchase
Agreement shall not constitute the closing under the Comcast/Adelphia Asset
Purchase Agreement for purposes of this Section 7.1(k).
(l) Schedule Update. TWC shall not have exercised its right to
update any Schedule to this Agreement pursuant to clause (ii) of the first
sentence of Section 6.10.
(m) TWC Financial Information. TWC shall have delivered all of
the TWC Financial Information reasonably required to permit Comcast to comply
with its obligations under Form 8-K under the Exchange Act with respect to the
transactions provided for herein.
Section 7.2 Conditions to the TWC Group's Obligations. The
obligations of each TWC Party to consummate the transactions contemplated by
this Agreement shall be subject to the following conditions, which may be waived
by TWC:
(a) Accuracy of Representations and Warranties. The
representations and warranties in Sections 4.1, 4.2, 4.3, 4.14, 4.18, 4.23 and
4.25 (the "Class 1 Comcast Representations and Warranties" and all other
representations and warranties contained in Article 4, the "Class 2 Comcast
Representations and Warranties") that are qualified as to materiality or
Material Adverse Effect shall be true and correct, and the Class 1 Comcast
Representations and Warranties that are not so qualified shall be true and
correct in all material respects, in each case, at the time made and as of the
Closing Date as if made at and as of such time (except, in each case, to the
extent expressly made as of an earlier date, in which case as of such earlier
date). The Class 2 Comcast Representations and Warranties shall be true and
correct (without giving effect to any materiality or Material Adverse Effect
qualifiers set forth therein) at the time made and as of the Closing Date as if
made at and as of such time (except to the extent expressly made as of an
earlier date, in which case as of such earlier date), except where the failure
of such Class 2 Comcast Representations and Warranties to be true and correct
has not and would not, individually or in the aggregate, reasonably be expected
to result in a Material Adverse Effect.
(b) Performance of Agreements. Each Comcast Party shall have
performed in all material respects all obligations and agreements of such
Comcast Party under, and shall have complied in all material respects with all
covenants of such Comcast Party in, this Agreement and any Transaction Document
to which such Comcast Party is a party to be performed and complied with by it
at or before Closing.
(c) Officer's Certificate. TWC has received a certificate
executed by an executive officer of Comcast, dated as of Closing, reasonably
satisfactory in form and substance to TWC, certifying that the conditions
specified in Sections 7.2(a) and (b) have been satisfied as of Closing.
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(d) Legal Proceedings. There is no Legal Requirement, and no
Judgment has been entered and not vacated by any Governmental Authority of
competent jurisdiction in any Litigation or arising therefrom, which (i)
enjoins, restrains, makes illegal or prohibits consummation of the transactions
contemplated by this Agreement or by any Transaction Document (other than any
such matter having only an immaterial effect and that does not impose criminal
liability or penalties) or (ii) requires separation or divestiture by the TWC
Group of all or any significant portion of the Comcast Transferred Assets after
Closing or otherwise materially and adversely affects the operation of the
Comcast Transferred Systems (other than applicable to the cable industry in
general), and there is no Litigation pending which was commenced by any
Governmental Authority (other than a Franchising Authority) seeking, or which if
successful would have the effect of, any of the foregoing, provided, that the
failure to obtain a consent relating to a Transferred Franchise shall not be
considered to enjoin, restrain, make illegal or prohibit consummation of the
transactions contemplated by this Agreement or by any Transaction Document.
(e) Opinion of FCC Counsel. TWC has received an opinion
regarding the Comcast Native Systems of Xxxx, Raywid and Xxxxxxxxx, LLP, special
FCC counsel to Comcast, dated as of Closing, in form and substance reasonably
satisfactory to TWC (the "Comcast FCC Counsel Opinion").
(f) HSR Act Waiting Period. The waiting period under the HSR
Act with respect to the transactions contemplated by this Agreement has expired
or been terminated.
(g) Consents. TWC has received evidence, in form and substance
reasonably satisfactory to it, that all of the Comcast Required Consents (other
than in respect of the Comcast Transferred Franchises, which are addressed in
Section 7.2(j)), have been obtained and are in effect.
(h) Comcast Title Policies. Comcast shall have delivered to
TWC ALTA extended coverage owners' policies of title insurance, or the local
equivalent, dated as of the Closing Date and issued by the Title Company (the
"Comcast Native Title Policies"), insuring, subject only to Permitted Liens, the
applicable Comcast Newco's fee or leasehold title in each parcel of the Comcast
Native Owned Property and the Comcast Native Leased Property with respect to
which a Title Commitment was required pursuant to Section 6.5 deleting or
modifying to the reasonable satisfaction of TWC the Schedule B standard printed
exceptions (other than Permitted Liens, and other than the survey exception or
any similar exception with respect to properties for which no survey is
obtained), and other than any other exception the deletion of which would
require Comcast to give any affidavit or undertaking which would make
representations or impose obligations more onerous than those made or set forth
elsewhere in this Agreement, including gap coverage, and deleting or insuring
over (subject to Section 6.5) any Title Defects, or irrevocable Title
Commitments of the Title Company to issue such Comcast Native Title Policies;
provided, that the Comcast Group's inability or failure to provide the Comcast
Group Native Title Policies (or Title Commitments to issue the same) shall not
constitute a violation of the condition set forth in this Section 7.2(h) if the
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Liens, or other matters relating to title, giving rise to such inability would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(i) Documents and Records. Comcast shall have delivered to TWC
all of the Comcast Transferred Books and Records. Delivery of the foregoing
shall be deemed made to the extent such lists, files and records are then
located at any of the offices included in the Comcast Owned Property or Comcast
Leased Property.
(j) Franchise Required Consents. The aggregate number of
Individual Subscribers served by the Comcast Transferred Systems in the Service
Areas that are, as of the Closing, Transferable Service Areas shall be at least
90% of the Individual Subscribers served by the Comcast Transferred Systems at
such time (the "Comcast Required Threshold"); provided that if any portion of
the Comcast Transferred Systems containing active headends is not within such
Transferable Service Areas as of the Closing, then any other portion of the
Comcast Transferred Systems served by such headends shall be deemed not to be
included in such Transferable Service Areas.
(k) Adelphia Acquisition. The closing under each of the
Adelphia Purchase Agreements shall have occurred. For the avoidance of doubt,
the closing of the transactions contemplated by the Comcast/Adelphia Asset
Purchase Agreement pursuant to Section 5.15 of the TWC/Adelphia Asset Purchase
Agreement shall not constitute the closing under the Comcast/Adelphia Asset
Purchase Agreement for purposes of this Section 7.2(k).
(l) Schedule Update. Comcast shall not have exercised its
right to update any Schedule to this Agreement pursuant to clause (ii) of the
first sentence of Section 6.10.
(m) Comcast Financial Information. Comcast shall have
delivered all of the Comcast Financial Information reasonably required to permit
TWC and TWX to comply with their respective obligations under Form 8-K under the
Exchange Act with respect to the transactions provided for herein.
ARTICLE 8
CLOSING
Section 8.1 Closing; Time and Place. Subject to the following
sentence, the closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at a time and location mutually determined by
Comcast and TWC on the date of the Adelphia Closing; provided that if, as of
such date, all conditions set forth in Sections 7.1 and 7.2 have not been
satisfied or waived in writing by the party entitled to the benefit of each such
condition (except for conditions to be satisfied at Closing that will be
satisfied at Closing), then the Closing shall occur on the last Business Day of
the calendar month in which all conditions set forth in Sections 7.1 and 7.2
have either been satisfied or waived in writing by the party entitled to the
benefit of each such condition (except for conditions to be satisfied at Closing
that will be satisfied at Closing), unless
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such conditions have not been so satisfied or waived (except for conditions to
be satisfied at Closing that will be satisfied at Closing) by the fifth Business
Day preceding the last Business Day of such calendar month, in which case the
Closing shall take place on the last Business Day of the next calendar month (or
such later date as agreed by the parties). In no event shall the Closing take
place prior to the consummation of the Adelphia Closings.
Section 8.2 TWC Group's Obligations. At Closing, TWC shall deliver
or cause to be delivered to Comcast the following:
(a) Closing Adjustment Amount. If the net amount payable
pursuant to Section 2.1(e)(ii) and Section 2.1(e)(iii)(B), if applicable, in
respect of any Exchange is payable to any Comcast Transferor or Comcast
Transferee, the relevant TWC Transferor or TWC Transferee, as the case may be,
shall make such payment by wire transfer of immediately available funds to the
account designated by the relevant Comcast Transferor or Comcast Transferee.
(b) Bills of Sale and Assignment and Instruments of
Assumption. The executed Bills of Sale and Assignment and Instruments of
Assumption with respect to the transactions contemplated hereby, and such other
instruments of transfer or assignment as may be reasonably necessary to effect
the transactions contemplated hereby (excluding those delivered pursuant to
Section 8.2(c) and (j)).
(c) Deeds and Other Real Estate Transfer Documents. Special
warranty deeds conveying to the applicable TWC Newcos, subject only to the
exceptions reflected on the TWC Native Title Policies (if such TWC Native Title
Policies have been obtained, or, if such TWC Native Title Policies have not been
obtained, subject only to such exceptions as are consistent with the
representation set forth in Section 5.4 hereof), each parcel of the TWC Native
Owned Property, assignments of leases of TWC Native Leased Property and such
other documents as may be reasonably necessary to convey other TWC Native Real
Property Interests, in each case, in form and substance reasonably satisfactory
to Comcast, provided that in no event shall the warranties in such deed create
any greater liability or liability to any other Person on the part of the
grantor in excess of that provided for under the other provisions of this
Agreement.
(d) TWC Title Policies. TWC Native Title Policies with such
deletions or modifications as are required pursuant to Section 7.1(h).
(e) Officer's Certificate. The certificate described in
Section 7.1(c).
(f) TWC FCC Counsel Opinion. The TWC FCC Counsel Opinion.
(g) Lien Releases. Evidence reasonably satisfactory to Comcast
that all Liens (other than Permitted Liens) affecting or encumbering the TWC
Native Assets have been terminated, released or waived or insured over as
contemplated
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under (and only to the extent required under) Section 6.5 (in the case of the
TWC Native Real Property Interests), as appropriate, or original, executed
instruments in form and substance reasonably satisfactory to Comcast effecting
such terminations, releases or waivers; provided, that Time Warner Cable's
inability or failure to obtain the termination, release, or waiver of any such
Liens or to insure over any such Liens shall not constitute a failure to perform
the obligations set forth in this Section 8.2(g) if the existence of the Liens
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(h) FIRPTA Certificate. FIRPTA Non-Foreign Seller Certificate
certifying that each TWC Transferor is not a foreign person within the meaning
of Section 1445 of the Code, reasonably satisfactory in form and substance to
Comcast.
(i) Power of Attorney for Accounts Receivable. The limited,
irrevocable right, in TWC's and its Controlled Affiliates' name, place and
stead, as TWC's and its Controlled Affiliates' attorney-in-fact, to cash,
deposit, endorse or negotiate checks received on or after the Closing Date made
out to TWC or any of its Controlled Affiliates in payment for cable services
provided by the TWC Transferred Systems and written instructions to TWC's and
its Controlled Affiliates' lock-box service provider or similar agents to
promptly forward to the applicable TWC Newco all such cash, deposits and checks
representing accounts receivable of the TWC Transferred Systems that it or they
may receive. From and after the Closing, TWC and its Controlled Affiliates shall
not deposit but shall promptly remit to the applicable TWC Newco any payment
received by TWC or any of its Controlled Affiliates on or after the Closing Date
in respect of any such account receivable.
(j) TWC Newco Interests. Instruments of transfer transferring
all limited liability company interests of each TWC Newco reasonably
satisfactory in form and substance to Comcast.
(k) Adelphia Closing Documents. The Adelphia Closing
Documents, to the extent relating to the TWC/Adelphia Systems or the
TWC/Adelphia Business, in form and substance reasonably acceptable to Comcast.
(l) Other. Such other documents and instruments as may be
reasonably necessary to effect the intent of this Agreement and consummate the
transactions contemplated hereby.
Section 8.3 Comcast Group's Obligations. At Closing, Comcast shall
deliver or cause to be delivered to TWC the following:
(a) Closing Adjustment Amount. If the net amount payable
pursuant to Section 2.1(e)(ii) in respect of any Exchange is payable to any TWC
Transferor or TWC Transferee, the relevant Comcast Transferor or Comcast
Transferee, as the case may be, shall make such payment by wire transfer of
immediately available funds to the account designated by the relevant TWC
Transferor or TWC Transferee.
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(b) Bills of Sale and Assignment and Instruments of
Assumption. The executed Bills of Sale and Assignment and Instruments of
Assumption with respect to the transactions contemplated hereby, and such other
instruments of transfer or assignment as may be reasonably necessary to effect
the transactions contemplated hereby (excluding those delivered pursuant to
Section 8.3(c) and (j)).
(c) Deeds and Other Real Estate Transfer Documents. Special
warranty deeds conveying to the applicable Comcast Newcos, subject only to the
exceptions reflected on the Comcast Native Title Policies (if such Comcast
Native Title Policies have been obtained, or, if such Comcast Native Title
Policies have not been obtained, subject only to such exceptions as are
consistent with the representation set forth in Section 4.4 hereof), each parcel
of the Comcast Native Owned Property, assignments of leases of Comcast Native
Leased Property and such other documents as may be reasonably necessary to
convey other Comcast Native Real Property Interests, in each case, in form and
substance reasonably satisfactory to TWC, provided that in no event shall the
warranties in such deed create any greater liability or liability to any other
Person on the part of the grantor in excess of that provided for under the other
provisions of this Agreement.
(d) Comcast Title Policies. Comcast Native Title Policies with
such deletions or modifications as are required pursuant to Section 7.2(h).
(e) Officer's Certificate. The certificate described in
Section 7.2(c).
(f) Comcast FCC Counsel Opinion. The Comcast FCC Counsel
Opinion.
(g) Lien Releases. Evidence reasonably satisfactory to TWC
that all Liens (other than Permitted Liens) affecting or encumbering the Comcast
Native Assets have been terminated, released or waived, or insured over as
contemplated under (and only to the extent required under) Section 6.5 (in the
case of the Comcast Native Real Property Interests) as appropriate, or original,
executed instruments in form and substance reasonably satisfactory to TWC
effecting such terminations, releases or waivers; provided, that Comcast's
inability or failure to obtain the termination, release, or waiver of any such
Liens or to insure over any such Liens shall not constitute a failure to perform
the obligations set forth in this Section 8.3(g) if the existence of the Liens
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(h) FIRPTA Certificate. FIRPTA Non-Foreign Seller Certificate
certifying that each Comcast Transferor is not a foreign person within the
meaning of Section 1445 of the Code, reasonably satisfactory in form and
substance to TWC.
(i) Power of Attorney for Accounts Receivable. The limited,
irrevocable right, in Comcast's and its Controlled Affiliates' name, place and
stead, as
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Comcast's and its Controlled Affiliates' attorney-in-fact, to cash, deposit,
endorse or negotiate checks received on or after the Closing Date made out to
Comcast or any of its Controlled Affiliates in payment for cable services
provided by the Comcast Transferred Systems and written instructions to
Comcast's and its Controlled Affiliates' lock-box service provider or similar
agents to promptly forward to the applicable Comcast Newco all such cash,
deposits and checks representing accounts receivable of the Comcast Transferred
Systems that it or they may receive. From and after the Closing, Comcast Group
and its Controlled Affiliates shall not deposit but shall promptly remit to the
applicable Comcast Newco any payment received by Comcast or its Controlled
Affiliates on or after the Closing Date in respect of any such account
receivable.
(j) Comcast Newco Interests. Instruments of transfer
transferring all limited liability company interests (or trust interests, as
applicable) of each Comcast Newco reasonably satisfactory in form and substance
to TWC.
(k) Adelphia Closing Documents. The Adelphia Closing
Documents, to the extent relating to the Comcast/Adelphia Systems or the
Comcast/Adelphia Business, in form and substance reasonably acceptable to TWC.
(l) Other. Such other documents and instruments as may be
reasonably necessary to effect the intent of this Agreement and consummate the
transactions contemplated hereby.
ARTICLE 9
TERMINATION AND DEFAULT
Section 9.1 Termination Events. This Agreement may be terminated
prior to the Closing and the transactions contemplated hereby may be abandoned:
(a) by either Comcast or TWC, upon written notice to the
other, at any time after the date that is six months following the date of the
Adelphia Closings, or if the Adelphia Closings do not occur on the last day of a
month, the last Business Day of the month that is the sixth month after the
month in which the Adelphia Closings occur (such date, the "Outside Closing
Date");
(b) at any time, by the mutual agreement of Comcast and TWC;
(c) by either Comcast or TWC, at any time upon written notice
to the other, if the other is in material breach or default of its respective
covenants, agreements, representations, or other obligations herein or in any
Transaction Document to which such Person or its Affiliates is a party and such
breach or default (i) has not been cured within 30 days after receipt of written
notice or such longer period as may be reasonably required to cure such breach
or default (provided, that the breaching or defaulting party shall be using
commercially reasonable efforts to cure such breach or default) or (ii) would
not reasonably be expected to be cured prior to the Outside Closing Date;
provided, that if any covenant, agreement, representation or other obligation in
this
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Agreement is qualified by a reference to materiality or Material Adverse Effect,
such qualifier shall be taken into account without duplication;
(d) by either Comcast or TWC, upon written notice to the
other, pursuant to Section 11.16; or
(e) automatically and without any action by any of the parties
hereto at any time prior to the Closing if either of the Adelphia Purchase
Agreements shall have been terminated in accordance with its terms (provided
that such termination was not in violation of Section 6.20(b)).
Section 9.2 Effect of Termination. If this Agreement is terminated
pursuant to Section 9.1, this Agreement shall become void and of no effect
without liability of any party hereto (or any Affiliate, shareholder, director,
officer, trustee, employee, agent, consultant, or representative of such party)
to the other parties hereto, except that (a) the agreements contained in
Sections 1.1, 1.2, 6.4, 6.8(b), 6.8(c), (to the extent relating to Section
6.8(b)), 6.8(d), 6.20(d) (last two sentences), 6.20(o) and 6.20(p) and Article
11 (other than Section 11.16) shall survive the termination hereof and (b) no
such termination shall relieve any party hereto of any liability or damages
resulting from any willful breach by such party of this Agreement.
ARTICLE 10
INDEMNIFICATION
Section 10.1 Indemnification by the TWC Transferors. Subject to
Section 10.4, from and after Closing, each TWC Transferor shall indemnify and
hold harmless each Comcast Transferee and its Affiliates (including the TWC
Newcos) and its and their respective officers, directors, trustees, employees,
agents and representatives, and any Person claiming by or through any of them,
as the case may be, from and against any and all Losses arising out of or
resulting from:
(a) any representations and warranties made by any TWC Party
in this Agreement or in any Transaction Document to which it is a party not
being true and accurate in all respects, when made or at Closing (or, in the
case of any representation or warranty made as of a specific date, as of such
date) or any failure by any TWC Party to perform in all material respects
pursuant to Section 6.1(h) or Section 6.10;
(b) any failure by any TWC Party to perform in all respects
any of its covenants, agreements, or obligations in this Agreement (other than
pursuant to Section 6.1(h) or Section 6.10) or in any Transaction Document to
which it is a party;
(c) the TWC Excluded Liabilities;
(d) the TWC Excluded Assets;
(e) the Comcast Assumed Liabilities;
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(f) the TWC Newco Indemnified Liabilities;
(g) other than with respect to the Comcast Excluded
Liabilities, the ownership and operation of the Comcast Transferred Systems or
the Comcast Transferred Assets after the Closing; and
(h) other than with respect to the Comcast Excluded
Liabilities, any Comcast Transferred Asset, or any claim or right or any benefit
arising thereunder, held by any Comcast Group Member for the benefit of any
Comcast Newco pursuant to Section 2.1(h).
If, by reason of the claim of any third party relating to any of the matters
subject to such indemnification, a Lien is placed or made upon any of the
properties or assets owned or leased by any Comcast Transferee or any TWC Newco
or any other Indemnitee under this Section, in addition to any indemnity
obligation of the TWC Transferors under this Section, the applicable TWC
Transferor shall furnish a bond sufficient to obtain the prompt release thereof
within ten days after receipt from Comcast of notice thereof.
Section 10.2 Indemnification by the Comcast Group. Subject to
Section 10.4, from and after Closing, each Comcast Transferor shall indemnify
and hold harmless each TWC Transferee and its Affiliates (including the Comcast
Newcos) and its and their respective officers, directors, trustees, employees,
agents and representatives, and any Person claiming by or through any of them,
as the case may be, from and against any and all Losses arising out of or
resulting from:
(a) any representations and warranties made by any Comcast
Party in this Agreement or in any Transaction Document to which it is a party
not being true and accurate in all respects, when made or at Closing (or, in the
case of any representation or warranty made as of a specific date, as of such
date) or any failure by any Comcast Party to perform in all material respects
pursuant to Section 6.1(h) or Section 6.10;
(b) any failure by any Comcast Party to perform in all
respects any of its covenants, agreements, or obligations in this Agreement
(other than pursuant to Section 6.1(h) or Section 6.10) or in any Transaction
Document to which it is a party;
(c) the Comcast Excluded Liabilities;
(d) the Comcast Excluded Assets;
(e) the TWC Assumed Liabilities;
(f) the Comcast Newco Indemnified Liabilities;
(g) other than with respect to the TWC Excluded Liabilities,
the ownership and operation of the TWC Transferred Systems or the TWC
Transferred Assets after the Closing;
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(h) other than with respect to the TWC Excluded Liabilities,
any TWC Transferred Asset, or any claim or right or any benefit arising
thereunder, held by any TWC Group Member for the benefit of any TWC Newco
pursuant to Section 2.1(h); and
(i) any claim by Adelphia or its successors arising as a
result of TWC or its Affiliates providing Comcast or its Affiliates access to
any Excluded Books and Records (as defined in the Comcast/Adelphia Purchase
Agreement) pursuant to Section 6.20(g).
If, by reason of the claim of any third party relating to any of the matters
subject to such indemnification, a Lien is placed or made upon any of the
properties or assets owned or leased by any TWC Transferee or any Comcast Newco
or any other Indemnitee under this Section, in addition to any indemnity
obligation of the Comcast Transferors under this Section, the applicable Comcast
Transferor shall furnish a bond sufficient to obtain the prompt release thereof
within ten days after receipt from TWC of notice thereof.
Section 10.3 Procedure for Certain Indemnified Claims. Promptly
after receipt by a party entitled to indemnification hereunder (the
"Indemnitee") of written notice of the assertion or the commencement of any
Litigation with respect to any matter referred to in Section 10.1 or 10.2 or the
assertion by any Governmental Authority of a claim of noncompliance under any
Franchise relating, in whole or in part, to any pre-Closing period (a "Franchise
Matter"), the Indemnitee shall give written notice thereof to the party from
whom indemnification is sought pursuant hereto (the "Indemnitor") and thereafter
shall keep the Indemnitor reasonably informed with respect thereto; provided,
that failure of the Indemnitee to give the Indemnitor notice and keep it
reasonably informed as provided herein shall not relieve the Indemnitor of its
obligations hereunder, except to the extent that such failure to give notice
shall prejudice any defense or claim available to the Indemnitor. The Indemnitor
shall be entitled to assume the defense of any such Litigation or Franchise
Matter with counsel reasonably satisfactory to the Indemnitee, at the
Indemnitor's sole expense; provided, that the Indemnitor shall not be entitled
to assume or continue control of the defense of any Litigation or Franchise
Matter if (i) the Litigation or Franchise Matter relates to or arises in
connection with any criminal proceeding, action, indictment, allegation or
investigation; (ii) the Litigation or Franchise Matter seeks an injunction or
equitable relief against the Indemnitee; or (iii) the Indemnitor has failed to
defend or is failing to defend in good faith the Litigation or Franchise Matter.
If the Indemnitor assumes the defense of any Litigation or Franchise Matter, (i)
it shall not settle the Litigation or Franchise Matter unless the settlement
shall include as an unconditional term thereof the giving by the claimant or the
plaintiff of a release of the Indemnitee, reasonably satisfactory to the
Indemnitee, from all liability with respect to such Litigation or Franchise
Matter and (ii) it shall indemnify and hold the Indemnitee harmless from and
against any and all Losses caused by or arising out of any settlement or
judgment of such claim and may not claim that it does not have an
indemnification obligation with respect thereto. If the Indemnitor does not
assume the defense of any Litigation or Franchise Matter, the Indemnitee may
defend against or settle such claim in such manner and on such terms as it in
good xxxxx xxxxx appropriate
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and shall be entitled to indemnification in respect thereof in accordance with
Section 10.1 or 10.2, as applicable. If the Indemnitor is not entitled to assume
the defense or continue to control the defense of any Litigation or Franchise
Matter as a result of the proviso in the second sentence of this Section 10.3,
the Indemnitee shall not settle the Litigation or Franchise Matter in question
if the Indemnitor shall have any obligation as a result of such settlement
(whether monetary or otherwise) unless such settlement is consented to in
writing by the Indemnitor, such consent not to be unreasonably withheld or
delayed. In no event shall the Indemnitee settle any Litigation or Franchise
Matter for which the defense thereof is controlled by the Indemnitor absent the
consent of the Indemnitor (such consent not to be unreasonably withheld or
delayed). Each party shall cooperate, and cause their respective Affiliates to
cooperate, in the defense or prosecution of any Litigation or Franchise Matter
and shall furnish or cause to be furnished such records, information and
testimony, and attend such conferences, discovery proceedings, hearings, trials
or appeals, as may be reasonably requested in connection therewith.
Section 10.4 Determination of Indemnification Amounts and Related
Matters.
(a) The TWC Transferors shall have no liability under Section
10.1(a) in respect of the TWC/Adelphia Business unless the aggregate amount of
Losses otherwise subject to their indemnification obligations thereunder in
respect of the TWC/Adelphia Business exceeds $74,600,000 (the "TWC/Adelphia
Minimum Damage Requirement"), in which case the TWC Transferors shall be liable
for the full amount of such Losses including the Losses incurred in reaching the
TWC/Adelphia Minimum Damage Requirement. The TWC Transferors shall have no
liability under Section 10.1(a) in respect of the TWC Native Business unless the
aggregate amount of Losses otherwise subject to their indemnification
obligations thereunder in respect of the TWC Native Business exceeds $5,700,000
(the "TWC Native Minimum Damage Requirement"), in which case the TWC Transferors
shall be liable for the full amount of such Losses including the Losses incurred
in reaching the TWC Native Minimum Damage Requirement. For purposes of this
Section 10.4(a), neither the TWC/Adelphia Minimum Damage Requirement nor the TWC
Native Minimum Damage Requirement shall apply to any Losses resulting from or
arising out of (i) the failure by any TWC Group Member to pay any copyright
payments, including interest and penalties thereon, when due or any other breach
of TWC's representations, warranties, covenants or agreements with respect to
copyright payments contained in this Agreement, and (ii) breaches of the Class 1
TWC Representations and Warranties.
(b) The maximum liability of the TWC Transferors under Section
10.1(a) in respect of the TWC/Adelphia Business shall not, in the aggregate,
exceed $746,000,000 (the "TWC/Adelphia Cap"). The maximum liability of the TWC
Transferors under Section 10.1(a) in respect of the TWC Native Business shall
not, in the aggregate, exceed $19,100,000 (the "TWC Native Cap").
Notwithstanding the foregoing, neither the TWC/Adelphia Cap nor the TWC Native
Cap shall apply to breaches of the Class 1 TWC Representations and Warranties.
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(c) The Comcast Transferors shall have no liability under
Section 10.2(a) in respect of the Comcast/Adelphia Business unless the aggregate
amount of Losses otherwise subject to their indemnification obligations
thereunder in respect of the Comcast/Adelphia Business exceeds $34,900,000 (the
"Comcast/Adelphia Minimum Damage Requirement"), in which case the Comcast
Transferors shall be liable for the full amount of such Losses including the
Losses incurred in reaching the Comcast/Adelphia Minimum Damage Requirement. The
Comcast Transferors shall have no liability under Section 10.2(a) in respect of
the Comcast Native Business unless the aggregate amount of Losses otherwise
subject to their indemnification obligations thereunder in respect of the
Comcast Native Business exceeds $41,500,000 (the "Comcast Native Minimum Damage
Requirement"), in which case the Comcast Transferors shall be liable for the
full amount of such Losses including the Losses incurred in reaching the Comcast
Native Minimum Damage Requirement. For purposes of this Section 10.4(c), neither
the Comcast/Adelphia Minimum Damage Requirement nor the Comcast Native Minimum
Damage Requirement shall apply to any Losses resulting from or arising out of
(i) the failure by any Comcast Group Member to pay any copyright payments,
including interest and penalties thereon, when due or any other breach of
Comcast's representations, warranties, covenants or agreements with respect to
copyright payments contained in this Agreement, and (ii) breaches of the Class 1
Comcast Representations and Warranties.
(d) The maximum liability of the Comcast Transferors under
Section 10.2(a) in respect of the Comcast/Adelphia Business shall not, in the
aggregate, exceed $349,000,000 (the "Comcast/Adelphia Cap"). The maximum
liability of the Comcast Transferors under Section 10.2(a) in respect of the
Comcast Native Business shall not, in the aggregate, exceed $415,000,000 (the
"Comcast Native Cap"). Notwithstanding the foregoing, neither the
Comcast/Adelphia Cap nor the Comcast Native Cap shall apply to breaches of the
Class 1 Comcast Representations and Warranties.
(e) Amounts payable by the Indemnitor to the Indemnitee in
respect of any Losses under Sections 10.1 or 10.2 shall be payable by the
Indemnitor as incurred by the Indemnitee, and shall bear interest at the Prime
Rate plus 2% from the date the Losses for which indemnification is sought were
incurred by the Indemnitee until the date of payment of indemnification by the
Indemnitor.
(f) The Indemnitor shall not be obligated to indemnify the
Indemnitee with respect to any Losses to the extent of any proceeds received in
connection with any such Losses by the Indemnitee under any insurance policy of
the Indemnitee in effect on the Closing Date (including under any rights under
any insurance policies or proceeds that are part of the Transferred Assets). The
Indemnitee will use commercially reasonable efforts to claim and recover under
such insurance policies.
(g) In determining the amount of any Losses in connection with
any inaccuracy of a representation and warranty (but not for purposes of
determining whether any such inaccuracy has occurred), any materiality, Material
Adverse Effect or similar qualifier in such representation or warranty will be
disregarded.
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(h) Notwithstanding anything to the contrary set forth in this
Agreement, to the extent that any Indemnitee pursuant to Section 10.1 or Section
10.2 is or becomes a holder of equity interests in any TWC Group Member or
Comcast Group Member, respectively, indemnification hereunder shall not include
Losses suffered by such Indemnitee (or its Affiliates) in its capacity as such
an equity holder by reason of (i) the indemnities being provided hereunder by
the TWC Transferors or Comcast Transferors, respectively, or (ii) Losses
suffered in such capacity in respect of TWC Excluded Assets or TWC Excluded
Liabilities, or Comcast Excluded Assets or Comcast Excluded Liabilities,
respectively.
(i) No TWC Transferor or Comcast Transferor shall be
responsible for indemnifying any Indemnitee with respect to any Adelphia Asset
or Adelphia Assumed Liability except to the extent of a breach of any
representations and warranties made in this Agreement, or any failure to perform
in all respects any of its covenants, agreements or obligations under this
Agreement.
(j) The recipient of any payment pursuant to Section 10.1 or
10.2 (an "Indemnification Payment") shall allocate such Indemnification Payment
to the Exchange or Exchanges in respect of which the claim giving rise to such
payment arose.
Section 10.5 Time and Manner of Certain Claims. The representations
and warranties of Comcast and TWC in this Agreement and any Transaction Document
to which such Person is a party shall survive Closing for a period of 12 months.
Notwithstanding the foregoing: (a) the liability of the parties shall extend
beyond the 1-year period following Closing with respect to any claim which has
been asserted in a bona fide written notice before the expiration of such 1-year
period specifying in reasonable detail the facts and circumstances giving rise
to such right; and (b) (i) the Class 1 Comcast Representations and Warranties
and the Class 1 TWC Representations and Warranties shall survive Closing and
shall continue in full force and effect without limitation and (ii) the
representations and warranties of the parties in Section 4.13, Section 4.22, the
last sentence of Section 4.23(a), Section 5.13, Section 5.22 and the last
sentence of Section 5.23(a) shall survive until the expiration of the applicable
statute of limitations (giving effect to any waiver, mitigation or extension
thereof).
Section 10.6 Other Indemnification. The provisions of Sections 10.3,
10.4 and 10.5 shall be applicable to any claim for indemnification made under
any other provision of this Agreement, and all references in Sections 10.3, 10.4
and 10.5 to Sections 10.1 or 10.2 shall be deemed to be references to such other
provisions of this Agreement.
Section 10.7 Exclusivity. Except as specifically set forth in this
Agreement or any Transaction Document and except for claims against a party for
breach of any provision of this Agreement or any Transaction Document, each
party waives any rights and claims it may have against the other parties to this
Agreement, whether in law or in equity, relating to the transactions
contemplated hereby. The rights and claims waived by each party include claims
for contribution or other rights of recovery arising out of or relating to
claims for breach of contract, breach of representation or warranty,
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negligent misrepresentation and all other claims for breach of duty. After
Closing, Article 10 and the Transaction Documents shall provide the exclusive
remedy for any misrepresentation or breach of warranty under this Agreement or
any Transaction Document, other than any claims sounding in fraud.
Section 10.8 Tax Treatment of Indemnification Payments.
(a) For all Tax purposes (unless required by a change in
applicable Tax law or a good faith resolution of a contest) the parties hereto
agree (i) if the Transferee in the Exchange to which an Indemnification Payment
is allocated under Section 10.4(j) made a net payment to the Transferor in such
Exchange pursuant to Sections 2.1(e)(ii) and 2.4(e), such Indemnification
Payment shall be treated as a reduction in the amount of such net payment to the
extent of the lesser of (x) the amount of such net payment and (y) the amount of
the Indemnification Payment, and (ii) in all other circumstances, such
Indemnification Payment shall be treated as additional consideration received by
such Transferee in such Exchange.
(b) Notwithstanding Section 10.8(a), any Indemnification
Payments that represent interest payable under Section 10.4(e) hereof shall be
treated for all Tax purposes (unless required by a change in applicable Tax law
or a good faith resolution of a contest), as (i) deductible to the Indemnitor
and (ii) taxable to the Indemnitee.
Section 10.9 Guaranteed Obligations of Transferors.
(a) From and after the Closing, each of Comcast and TWC hereby
agree to fully and unconditionally guarantee to TWC and its Affiliates, in the
case of Comcast, and to Comcast and its Affiliates, in the case of TWC, the due
and punctual performance, compliance and payment by each Comcast Transferor, in
the case of Comcast, and each TWC Transferor, in the case of TWC (each, a
"Guaranteed Party" and collectively, the "Guaranteed Parties") of each and every
covenant, term, condition or other obligation to be performed or complied with
by any such party for the benefit of Comcast or TWC (or any Affiliate thereof or
any Indemnitee pursuant to Section 10.1 or 10.2, as applicable) under this
Agreement and any Transaction Document to which any Guaranteed Party is a party
delivered in connection herewith when, and to the extent that, any of the same
shall become due and payable or performance of or compliance with any of the
same shall be required (collectively, the "Guaranteed Obligations").
(b) Each of Comcast and TWC hereby acknowledges and agrees
that this guarantee constitutes an absolute, present, primary, continuing and
unconditional guaranty of performance, compliance and payment by each of the
Guaranteed Parties of the Guaranteed Obligations when due under this Agreement
and any Transaction Document to which any Guaranteed Party is a party delivered
in connection herewith and not of collection only and is in no way conditioned
or contingent upon any attempt to enforce such performance, compliance or
payment by a Guaranteed Party or upon any other condition or contingency. Each
of Comcast and TWC hereby waives any right to require a proceeding first against
any of the Guaranteed Parties.
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(c) The obligations of each of Comcast and TWC under this
guarantee shall not be subject to any reduction, limitation, impairment or
termination for any reason (other than by indefeasible payment or performance in
full of any of the Guaranteed Obligations) and shall not be subject to (i) any
discharge of any of the Guaranteed Parties from any of the Guaranteed
Obligations in a bankruptcy or similar proceeding (except by indefeasible
payment or performance in full of the Guaranteed Obligations) or (ii) any other
circumstance whatsoever which constitutes, or might be construed to constitute,
an equitable or legal discharge of either Comcast or TWC as guarantor under this
Section 10.9.
(d) Each of Comcast and TWC shall cause any transferee of or
successor to all or substantially all of its assets to assume its obligations
under this Section 10.9.
ARTICLE 11
MISCELLANEOUS PROVISIONS
Section 11.1 Expenses. Except as otherwise specifically provided in
Section 3.4, Section 6.3, Section 6.20, Section 6.21, Section 6.22, Section 11.2
or Section 11.16 or elsewhere in this Agreement, each of the parties shall pay
its own expenses and the fees and expenses of its counsel, accountants, and
other experts in connection with this Agreement.
Section 11.2 Attorneys' Fees. If any Litigation between any TWC
Group Member and any Comcast Group Member with respect to this Agreement, the
Transaction Documents or the transactions contemplated hereby or thereby shall
be resolved or adjudicated by a Judgment of any court, the party prevailing
under such Judgment (as determined by the trier of fact based on all relevant
facts, including, but not limited to, amounts demanded or sought in such
litigation, amounts, if any, offered in settlement of such litigation and
amounts, if any, awarded in such litigation) shall be entitled, as part of such
Judgment, to recover from the other party its reasonable attorneys' fees and
costs and expenses of litigation.
Section 11.3 Waivers. No action taken pursuant to this Agreement,
including any investigation by or on behalf of any party hereto, shall be deemed
to constitute a waiver by the party taking the action of compliance with any
representation, warranty, covenant or agreement contained herein or in any
Transaction Document. The waiver by any party hereto of any condition or of a
breach of another provision of this Agreement or any Transaction Document shall
be in writing and shall not operate or be construed as a waiver of any other
condition or subsequent breach. The waiver by any party of any of the conditions
precedent to its obligations under this Agreement shall not preclude it from
seeking redress for breach of this Agreement other than with respect to the
condition so waived.
Section 11.4 Notices. All notices, requests, demands, applications,
services of process and other communications which are required to be or may be
given under this Agreement or any Transaction Document shall be in writing and
shall be
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deemed to have been duly given if sent by telecopy or facsimile transmission,
upon answer back requested, or delivered by courier or mailed, certified first
class mail, postage prepaid, return receipt requested, to the parties at the
following addresses:
To the TWC Parties
or TWC Newcos (prior to Closing)
or Comcast Newcos (after the Closing):
c/o Time Warner Cable Inc.
000 Xxxxxx Xxxxx
Xxxxxxxx, XX 00000-0000
ATTN: Chief Executive Officer
Fax: (000) 000-0000
With Required Copies to:
Legal Department
Time Warner Cable Inc.
000 Xxxxxx Xxxxx
Xxxxxxxx, XX 00000-0000
ATTN: General Counsel
Fax: (000) 000-0000
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
ATTN: Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxxx
Fax: (000) 000-0000
To the Comcast Parties
or Comcast Newcos (prior to Closing)
or TWC Newcos (after the Closing):
Comcast Corporation
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
ATTN: General Counsel
Fax: (000) 000-0000
With a Required Copy:
Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
ATTN: Xxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Fax: (000) 000-0000
127
or to such other address as any party shall have furnished to the other by
notice given in accordance with this Section. Such notice shall be effective,
(i) if delivered in person or by courier, upon actual receipt by the intended
recipient, (ii) if sent by telecopy or facsimile transmission, upon confirmation
of transmission received, or (iii) if mailed, upon the date of delivery as shown
by the return receipt therefor.
Section 11.5 Entire Agreement; Prior Representations; Amendments.
This Agreement, the Confidentiality Agreements (subject to the last sentence of
this Section 11.5) and the Transaction Documents executed concurrent herewith
embody the entire agreement between the parties hereto with respect to the
subject matter hereof and supersede all prior representations, agreements and
understandings, oral or written, with respect thereto. Notwithstanding any
representations which may have been made by either party in connection with the
transactions contemplated by this Agreement, each party acknowledges that it has
not relied on any representation by the other party with respect to such
transactions, the Transferred Assets, or the Transferred Systems except those
contained in this Agreement, the Schedules, the Exhibits hereto or any
Transaction Document. This Agreement may not be modified orally, but only by an
agreement in writing signed by the party or parties against whom any waiver,
change, amendment, modification or discharge may be sought to be enforced. The
Confidentiality Agreements, as they relate to any obligation on the part of any
party or its Affiliates to keep confidential information regarding the
Transferred Assets, the Transferred Systems and/or the Assumed Liabilities
acquired or assumed by such party or its Affiliates are hereby terminated.
Section 11.6 Specific Performance. The parties recognize that their
rights under this Agreement are unique and, accordingly, the parties shall, in
addition to such other remedies as may be available to any of them at law or in
equity, have the right to enforce their rights hereunder by actions for
injunctive relief and specific performance to the extent permitted by applicable
law so long as the party seeking such relief is prepared to consummate the
transactions contemplated hereby and the transactions shall be accomplished in a
manner that qualifies as a like-kind exchange under Section 1031 of the Code.
The parties agree that monetary damages would not be adequate compensation for
any loss incurred by reason of a breach of the provisions of this Agreement and
hereby agree to waive the defense in any action for specific performance that a
remedy at law would be adequate. The parties waive any requirement for security
or the posting of any bond or other surety in connection with any temporary or
permanent award or injunctive, mandatory or other equitable relief.
Section 11.7 Jurisdiction. Except as otherwise expressly provided in
this Agreement, the parties hereto agree that any suit, action or proceeding
seeking to enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement, the Transaction Documents or the transactions
contemplated hereby or thereby may be brought in the United States District
Court for the Southern District of New York or any other New York State court
sitting in New York City, and each of the parties hereby consents to the
jurisdiction of such courts (and of the appropriate appellate courts therefrom)
in any such suit, action or proceeding and irrevocably waives, to the
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fullest extent permitted by law, any objection which it may now or hereafter
have to the laying of the venue of any such suit, action or proceeding in any
such court or that any such suit, action or proceeding which is brought in any
such court has been brought in an inconvenient forum. Process in any such suit,
action or proceeding may be served on any party anywhere in the world, whether
within or without the jurisdiction of any such court. Without limiting the
foregoing, each party agrees that service of process on such party as provided
in Section 11.4 shall be deemed effective service of process on such party.
Section 11.8 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE TRANSACTION DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
Section 11.9 Binding Effect; Benefits. This Agreement shall inure to
the benefit of and shall be binding upon the parties hereto and their respective
heirs, legal representatives, successors, and permitted assigns. No party hereto
shall assign this Agreement or delegate any of its duties hereunder to any other
Person without the prior written consent of the other parties hereto, which
consent shall not be unreasonably withheld or delayed; provided, that any party
hereto may, upon notice to the other parties, assign its rights and delegate its
obligations under this Agreement (in whole or in part) to any Affiliate of such
party. For purposes of this Section, any change in control of the Comcast Group
or the TWC Group shall not constitute an assignment by it of this Agreement. In
no event shall any assignment of rights or delegation of obligations relieve any
party of its obligations hereunder.
Section 11.10 Headings and Schedules. The section and other headings
contained in this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of this Agreement. Reference to Schedules shall,
unless otherwise indicated, refer to the Schedules contained in the Disclosure
Letters, as applicable, which shall be incorporated in and constitute a part of
this Agreement by such reference.
Section 11.11 Counterparts. This Agreement may be executed in any
number of counterparts (including by facsimile), each of which, when executed,
shall be deemed to be an original and all of which together shall be deemed to
be one and the same instrument.
Section 11.12 GOVERNING LAW. THE VALIDITY, PERFORMANCE, AND
ENFORCEMENT OF THIS AGREEMENT AND ALL TRANSACTION DOCUMENTS, UNLESS EXPRESSLY
PROVIDED TO THE CONTRARY, SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK, WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAW OF SUCH STATE.
Section 11.13 Severability. Any term or provision of this Agreement
which is invalid or unenforceable shall be ineffective to the extent of such
invalidity or
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unenforceability without rendering invalid or unenforceable the remaining rights
of the Person intended to be benefited by such provision or any other provisions
of this Agreement.
Section 11.14 Third Parties; Joint Ventures. This Agreement
constitutes an agreement solely among the parties hereto, and, except as
otherwise provided herein, is not intended to and shall not confer any rights,
remedies, obligations, or liabilities, legal or equitable, including any right
of employment, on any Person other than the parties hereto and their respective
successors, or assigns, or otherwise constitute any Person a third party
beneficiary under or by reason of this Agreement. For the avoidance of doubt, no
Person other than a party hereto shall have any right to enforce Section 3.1 or
any other provision of this Agreement to the extent relating thereto. Nothing in
this Agreement, expressed or implied, is intended to or shall constitute the
parties hereto partners or participants in a joint venture.
Section 11.15 Construction. This Agreement has been negotiated by
the parties and their respective legal counsel, and legal or equitable
principles that might require the construction of this Agreement or any
provision of this Agreement against the party drafting this Agreement shall not
apply in any construction or interpretation of this Agreement.
Section 11.16 Risk of Loss; Government Taking.
(a) Each Transferor shall bear the risk of any loss or damage
to Transferred Assets to be directly or indirectly transferred by such
Transferor in an Exchange resulting from fire, theft or other casualty (except
reasonable wear and tear) at all times prior to the Closing (or, in respect of
the Adelphia Assets, prior to the Closing but after the Adelphia Closing). In
the event any such loss or damage occurs, the applicable Transferor shall (at
its expense) use its commercially reasonable efforts to replace or restore such
lost or damaged property as soon as practicable and in any event prior to
Closing (or, if such damaged property is not replaced or restored prior to
Closing, Transferor shall indemnify Transferee for any Losses arising out of
such unrepaired damage or unrestored property). If any loss or damage described
in the first sentence of this Section 11.16(a) would result in such losses or
damage of all Affiliated Transferors being equal to or exceeding $100,000,000
and is sufficiently substantial so as to preclude and prevent resumption of
normal operations of any material portion of any Transferred System by the
Outside Closing Date, Transferor Parent shall, to the extent reasonably
practical, immediately notify Transferee Parent in writing of that fact (which
notice shall, to the extent reasonably practical, specify with reasonable
particularity the loss or damage incurred, the cause thereof if known or
reasonably ascertainable, and the insurance coverage related thereto), and
Transferee Parent, at any time within ten days after receipt of such notice, may
elect by written notice to Transferor Parent, to either (i) waive such defect
and proceed toward consummation in accordance with the terms of this Agreement
(provided, that any such waiver shall also be deemed to be a waiver of any right
to indemnification pursuant to the first sentence of this Section 11.16(a) or
pursuant to Section 10.1 or 10.2, as applicable, for any breach of any (x)
representation or warranty of Transferor Parent set forth in Article 4 or 5, as
applicable, resulting from any
130
such loss or damage or (y) covenant hereunder to the extent that compliance
therewith is frustrated or made commercially impracticable as a result of such
loss or damage) or (ii)terminate this Agreement, subject to Section 9.2. If
Transferee Parent elects to so terminate this Agreement, Transferor Parent shall
be discharged of any and all obligations hereunder, subject to Section 9.2. If
Transferee elects to consummate the transactions contemplated by this Agreement
notwithstanding such loss or damage and does so, there shall be no adjustment in
the consideration payable to or by Transferee Parent on account of such loss or
damage, but all insurance proceeds received or receivable by Transferor or its
Affiliates as a result of the occurrence of the event resulting in such loss or
damage, including any such proceeds received or receivable by Transferor Parent
or its Affiliates pursuant to the TWC/Adelphia Purchase Agreement or the
Comcast/Adelphia Purchase Agreement (as applicable), to the extent not already
expended by the applicable Transferor or its Affiliates to restore or replace
the lost or damaged Transferred Assets, except for any proceeds from business
interruption insurance relating to the loss of revenue for any period through
and including the Closing Date, shall be delivered by the applicable Transferor
or its Affiliates to the applicable Transferee, or the rights to such proceeds
shall be assigned by the applicable Transferor or its Affiliates to the
applicable Transferee if not yet paid to the applicable Transferor or its
Affiliates. The applicable Transferor shall pay any deductible required and/or
the self-insured portion of any such loss with respect to all such insurance
proceeds payable under any insurance policy held by Transferor or its
Affiliates. Any amounts received or receivable hereunder shall not be included
in the Net Liabilities Adjustment Amount.
(b) If, prior to Closing in respect of Native Assets, or prior
to Closing but after the Adelphia Closing in respect of Adelphia Assets, any
material part of or interest in such Transferred Assets is taken or condemned as
a result of the exercise of the power of eminent domain, or if a Governmental
Authority having such power informs Transferor or any of its Affiliates that it
intends to condemn or take all or any material part of the Transferred Assets of
Transferor or any of its Affiliates (such event being called, in either case, a
"Taking"), then Transferee Parent may terminate this Agreement. If Transferee
Parent does not elect to terminate this Agreement, (i) Transferee and its
Affiliates shall have the sole right, in the name of Transferor and its
Affiliates, if Transferee Parent so elects, to negotiate for, claim, contest
and, subject to the Closing occurring, have Transferee receive all damages with
respect to the Taking, (ii) Transferor shall be relieved of its obligation to
convey directly or indirectly to Transferee such Transferor's Transferred Assets
or interests that of the Taking if the Taking has occurred, (but shall convey to
Transferee Parent any interest therein still held by Transferor Parent or its
Affiliates and any replacement property acquired by Transferor Parent or its
Affiliates), (iii) at Closing, such Transferor and its Affiliates shall assign
to Transferee all of such Transferor's and its Affiliates' rights to all
payments received or receivable with respect to such Taking, including any such
payments received or receivable by Transferor or its Affiliates pursuant to the
TWC/Adelphia Purchase Agreement or the Comcast/Adelphia Purchase Agreement (as
applicable), and shall pay to such Transferee all such payments previously paid
to such Transferor or any of its Affiliates with respect to the Taking (to the
extent not already expended by Transferor or its Affiliates to restore or
replace the Assets taken), and (iv) following Closing, Transferor and its
Affiliates shall give Transferee and its Affiliates such further assurances of
such rights and assignment
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with respect to the Taking as Transferee or its Affiliates may from time to time
reasonably request. Any amounts received or receivable hereunder shall not be
included in the Net Liabilities Adjustment Amount.
Section 11.17 Additional Parties. Immediately following the Adelphia
Closing and prior to the Closing, Comcast shall cause each Transferred Joint
Venture Parent to become a party to this Agreement. Upon such joinder, but not
before, each Transferred Joint Venture Entity shall be considered a "Comcast
Transferor", "Comcast Participant", "Comcast Party", "Comcast Group Member" and
Affiliate of the other Comcast Group Members, as relevant, for all purposes of
this Agreement. The parties hereto agree that none of Comcast or any of its
Affiliates shall have any Liability under this Agreement or any Transaction
Document with respect to any Transferred Joint Venture Entity until such time as
the Transferred Joint Venture Parents become parties to this Agreement and, in
such event, only with respect to events, conditions or circumstances first
arising thereafter. The parties agree to execute an appropriate amendment to
this Agreement adding the Transferred Joint Venture Parents to this Agreement in
accordance with the foregoing.
Section 11.18 Commercially Reasonable Efforts. For purposes of this
Agreement, "commercially reasonable efforts" shall not, with regard to obtaining
any consent, approval or authorization, be deemed to require a party to
undertake extraordinary measures, including the initiation or prosecution of
legal proceedings or the payment of amounts in excess of normal and usual filing
fees and processing fees, if any.
Section 11.19 Time. Time is of the essence under this Agreement. If
the last day for the giving of any notice or the performance of any act required
or permitted under this Agreement is a day that is not a Business Day, the time
for the giving of such notice or the performance of such act shall be extended
to the next succeeding Business Day.
[Remainder Of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the undersigned have executed, or have caused to
be executed, this Agreement on the date first written above.
COMCAST CORPORATION
By: /s/ Xxxxxx X. Block
--------------------------------
Name: Xxxxxx X. Block
Title: Senior Vice President
COMCAST CABLE
COMMUNICATIONS HOLDINGS, INC.
By: /s/ Xxxxxx X. Block
--------------------------------
Name: Xxxxxx X. Block
Title: Senior Vice President
COMCAST OF GEORGIA, INC.
By: /s/ Xxxxxx X. Block
--------------------------------
Name: Xxxxxx X. Block
Title: Senior Vice President
TCI HOLDINGS, INC.
By: /s/ Xxxxxx X. Block
--------------------------------
Name: Xxxxxx X. Block
Title: Senior Vice President
TIME WARNER CABLE INC.
By: /s/ Xxxxx X. X'Xxxxx
--------------------------------
Name: Xxxxx X. X'Xxxxx
Title: Executive Vice President,
Investments
TIME WARNER NY CABLE LLC
By: /s/ Xxxxx X. X'Xxxxx
--------------------------------
Name: Xxxxx X. X'Xxxxx
Title: Executive Vice President,
Investments
URBAN CABLE WORKS OF
PHILADELPHIA, L.P.,
By Time Warner Entertainment Company,
L.P., Manager
By: /s/ Xxxxx X. X'Xxxxx
--------------------------------
Name: Xxxxx X. X'Xxxxx
Title: Executive Vice President,
Investments
