EXHIBIT 99.3
EXECUTION COPY
REDEMPTION AGREEMENT
DATED AS OF APRIL 20, 2005
BY AND AMONG
COMCAST CABLE COMMUNICATIONS HOLDINGS, INC.,
MOC HOLDCO I, LLC,
TWE HOLDINGS I TRUST,
CABLE HOLDCO III LLC,
TIME WARNER ENTERTAINMENT COMPANY, L.P.
AND
THE OTHER PARTIES NAMED HEREIN
TABLE OF CONTENTS
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ARTICLE 1 Definitions................................................................................... 1
Section 1.1 Terms Defined in this Section..................................................... 1
Section 1.2 Other Definitions................................................................. 14
Section 1.3 Rules of Construction............................................................. 17
ARTICLE 2 Redemption; Tolling........................................................................... 18
Section 2.1 Redemption........................................................................ 18
Section 2.2 Assumed Liabilities............................................................... 23
Section 2.3 Partnership Interest Sale Agreement............................................... 24
Section 2.4 Estimated Closing Adjustment Amount............................................... 26
Section 2.5 Final-Closing Adjustment Amount................................................... 26
ARTICLE 3 Related Matters............................................................................... 30
Section 3.1 Employees......................................................................... 30
Section 3.2 Use of Names and Logos............................................................ 37
Section 3.3 Transfer Laws..................................................................... 38
Section 3.4 Transfer Taxes and Fees........................................................... 38
ARTICLE 4 Comcast Trust's Representations and Warranties................................................ 38
Section 4.1 Organization and Qualification of Comcast Trust................................... 38
Section 4.2 Authority......................................................................... 38
Section 4.3 No Conflict; Required Consents.................................................... 39
Section 4.4 Litigation........................................................................ 39
Section 4.5 Ownership of Redemption Interest.................................................. 39
Section 4.6 Brokers........................................................................... 39
ARTICLE 5 Comcast Subsidiary's Representations and Warranties........................................... 40
Section 5.1 Organization and Qualification of Comcast Subsidiary.............................. 40
Section 5.2 Authority......................................................................... 40
Section 5.3 No Conflict; Required Consents.................................................... 40
Section 5.4 Litigation........................................................................ 40
Section 5.5 Brokers........................................................................... 41
Section 5.6 Comcast Balance Sheet............................................................. 41
Section 5.7 Tolling........................................................................... 41
ARTICLE 6 TWE's Representations and Warranties.......................................................... 41
Section 6.1 Organization and Qualification of TWE............................................. 41
Section 6.2 Authority......................................................................... 41
Section 6.3 No Conflict; Required Consents.................................................... 42
Section 6.4 Sufficiency of Assets; Title...................................................... 43
Section 6.5 Transferred System Franchises, Transferred System Licenses, Transferred
Systems Contracts, Owned Property and Real Property Interests..................... 43
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Section 6.6 Employee Benefits................................................................. 45
Section 6.7 Litigation........................................................................ 46
Section 6.8 Transferred Systems Information................................................... 46
Section 6.9 Compliance with Legal Requirements................................................ 47
Section 6.10 Real Property..................................................................... 47
Section 6.11 Financial Statements; No Adverse Change; Telephony Budget......................... 47
Section 6.12 Employees......................................................................... 48
Section 6.13 Transactions with Affiliates...................................................... 49
Section 6.14 Undisclosed Material Liabilities.................................................. 49
Section 6.15 Holdco; TWE Holdings.............................................................. 49
Section 6.16 Insurance......................................................................... 50
Section 6.17 Intellectual Property............................................................. 51
Section 6.18 Brokers........................................................................... 51
Section 6.19 Transferred Systems Options....................................................... 51
Section 6.20 Transferred Systems Proprietary Rights............................................ 51
Section 6.21 Promotional Campaigns............................................................. 51
Section 6.22 Environmental..................................................................... 51
Section 6.23 Taxes............................................................................. 52
ARTICLE 7 Covenants..................................................................................... 53
Section 7.1 Certain Affirmative Covenants of TWE.............................................. 53
Section 7.2 Certain Negative Covenants of TWE................................................. 56
Section 7.3 Certain Additional Covenants Regarding Required Consents; HSR Act Filing.......... 59
Section 7.4 Confidentiality and Publicity..................................................... 60
Section 7.5 Retransmission Consent Agreements................................................. 61
Section 7.6 Title Insurance Commitments....................................................... 61
Section 7.7 [Intentionally Omitted]........................................................... 63
Section 7.8 Post-Closing Obtaining of Consents................................................ 63
Section 7.9 Transitional Services............................................................. 63
Section 7.10 Cooperation Upon Inquiries as to Rates............................................ 63
Section 7.11 Updated Schedules................................................................. 64
Section 7.12 Commercially Reasonable Efforts; Further Assurances............................... 65
Section 7.13 Post-Closing Access to Personnel Records.......................................... 66
Section 7.14 [Intentionally Omitted]........................................................... 66
Section 7.15 Environmental Reports............................................................. 66
Section 7.16 Certain Notices................................................................... 66
Section 7.17 Franchise Expirations............................................................. 66
Section 7.18 Insurance......................................................................... 67
Section 7.19 Promotional Campaigns............................................................. 67
Section 7.20 Launch Support.................................................................... 67
Section 7.21 Additional Financial Information.................................................. 68
Section 7.22 Pre-Closing Access................................................................ 68
Section 7.23 Adelphia Agreements............................................................... 69
Section 7.24 Ordinary Course from Closing to Closing Time...................................... 69
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Section 7.25 TWE Partnership Agreement......................................................... 69
ARTICLE 8 Tax Matters................................................................................... 70
Section 8.1 Allocation of Profits and Losses.................................................. 70
Section 8.2 Consistent Reporting.............................................................. 70
Section 8.3 Survival of Article IX of TWE Partnership Agreement............................... 70
Section 8.4 Cooperation....................................................................... 70
Section 8.5 Tax Returns with respect to Applicable Taxes...................................... 70
ARTICLE 9 Conditions Precedent.......................................................................... 71
Section 9.1 Conditions to the Comcast Parties' Obligations.................................... 71
Section 9.2 Conditions to TWE's Obligations................................................... 73
ARTICLE 10 Closing...................................................................................... 75
Section 10.1 Closing; Time and Place........................................................... 75
Section 10.2 TWE's Obligations................................................................. 75
Section 10.3 Comcast Trust's Obligations....................................................... 76
ARTICLE 11 Termination and Default...................................................................... 77
Section 11.1 Termination Events................................................................ 77
Section 11.2 Effect of Termination............................................................. 77
ARTICLE 12 Indemnification.............................................................................. 78
Section 12.1 Indemnification by TWE............................................................ 78
Section 12.2 Indemnification by Holdco......................................................... 78
Section 12.3 Procedure for Certain Indemnified Claims.......................................... 79
Section 12.4 Determination of Indemnification Amounts and Related Matters...................... 80
Section 12.5 Time and Manner of Certain Claims................................................. 82
Section 12.6 Other Indemnification............................................................. 82
Section 12.7 Exclusivity....................................................................... 82
Section 12.8 Release........................................................................... 82
Section 12.9 Tax Treatment of Indemnification Payments......................................... 83
Section 12.10 Guaranteed Obligations of Comcast................................................. 84
ARTICLE 13 Miscellaneous Provisions..................................................................... 85
Section 13.1 Expenses.......................................................................... 85
Section 13.2 Attorneys' Fees................................................................... 85
Section 13.3 Waivers........................................................................... 85
Section 13.4 Notices........................................................................... 85
Section 13.5 Entire Agreement; Prior Representations; Amendments............................... 87
Section 13.6 Specific Performance.............................................................. 88
Section 13.7 Jurisdiction...................................................................... 88
Section 13.8 WAIVER OF JURY TRIAL.............................................................. 88
Section 13.9 Binding Effect; Benefits.......................................................... 88
Section 13.10 Headings and Schedules............................................................ 89
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Section 13.11 Counterparts...................................................................... 89
Section 13.12 GOVERNING LAW..................................................................... 89
Section 13.13 Severability...................................................................... 89
Section 13.14 Third Parties; Joint Ventures..................................................... 89
Section 13.15 Construction...................................................................... 90
Section 13.16 Risk of Loss; Governmental Taking................................................. 90
Section 13.17 Commercially Reasonable Efforts................................................... 91
Section 13.18 Time.............................................................................. 91
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REDEMPTION AGREEMENT
This REDEMPTION AGREEMENT (this "Agreement"), dated as of April 20,
2005, is by and among Comcast Cable Communications Holdings, Inc., a Delaware
corporation ("Comcast"), MOC Holdco I, LLC, a Delaware limited liability company
("Comcast Subsidiary"), TWE Holdings I Trust, a Delaware statutory trust
("Comcast Trust"), Comcast Corporation, a Pennsylvania corporation ("Comcast
Parent"), but solely for purposes of Section 2.3, Section 7.23 and the last
sentence of Section 13.5, Cable Holdco III LLC, a Delaware limited liability
company ("Holdco"), Time Warner Entertainment Company, L.P., a Delaware limited
partnership ("TWE"), Time Warner Cable Inc., a Delaware corporation ("Time
Warner Cable"), but solely for purposes of Section 2.3, Section 7.23 and the
last sentence of Section 13.5 and Time Warner Inc., a Delaware corporation
("Time Warner"), but solely for purposes of Section 2.3 and the last sentence of
Section 13.5. Capitalized terms used herein and not otherwise defined shall have
the respective meanings assigned to them in Article 1.
RECITALS
A. TWE indirectly through one or more of its Subsidiaries owns and
operates the cable communications systems serving the communities identified on
Schedule A (the "Transferred Systems").
B. Comcast Trust has agreed to toll its right to exercise its
Appraisal Right and Sale Right under the Partnership Interest Sale Agreement,
TWE has agreed to transfer to Holdco the Transferred Assets, and TWE, Comcast
Trust and Comcast Subsidiary have agreed that TWE will transfer all of the
issued and outstanding securities of Holdco to Comcast Trust or Comcast
Subsidiary in exchange for and in redemption of the Redemption Interest.
C. The parties intend that, for federal Income Tax purposes, the
Holdco Transaction and TWE Redemption shall be governed by Section 731(a) of the
Internal Revenue Code of 1986 (the "Code").
AGREEMENTS
In consideration of the mutual covenants and promises set forth in
this Agreement, the parties hereto 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:
"Actually Realized" shall have the meaning set forth below. For
purposes of this Agreement, (i) a Tax cost shall be treated as Actually Realized
by any Person at
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the time at which the amount of Taxes payable by such Person is increased above
the amount of Taxes that such Person would be required to pay (or the Refund to
which such Person is entitled is reduced below the Refund to which such Person
otherwise would have been entitled) but for such incremental Tax cost, and (ii)
a Tax benefit shall be treated as Actually Realized by any Person at the time at
which the amount of Taxes payable by such Person is reduced below the amount of
Taxes that such Person would be required to pay (or the Refund to which such
Person is entitled is increased above the Refund to which such Person otherwise
would have been entitled) but for such incremental Tax benefit.
"Actuarial Amount" means an amount equal to the present value, as of
the last day of the calendar month immediately prior to the Closing Date, of the
aggregate actuarially determined cost of providing coverage (including
administrative fees associated therewith) under the applicable long-term
disability, retiree medical or retiree life plan as contemplated by Section
3.1(g)(v), less the portion of such amount (if any) that is provided by
recipient contributions, calculated in good faith by TWE's enrolled actuaries
utilizing reasonable actuarial methods and assumptions consistent with GAAP,
which calculation and assumptions shall be subject to the review and approval by
Comcast Subsidiary's designated actuaries, such approval not to be unreasonably
withheld or delayed.
"Adelphia" means Adelphia Communications Corporation, a Delaware
corporation.
"Adelphia Agreement" means the Comcast Adelphia Agreement or the TWC
Adelphia Agreement.
"Adelphia Closing" means the "Closing" as defined in the TWC
Adelphia Agreement
"Adelphia Transactions" means the Comcast Asset Purchase Transaction
and the Time Warner Cable Asset Purchase Transaction, collectively.
"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; 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 provided, further, that solely for purposes of the definitions of
"Affiliate" and "Controlled Affiliate", Comcast Trust (and its Controlled
Affiliates) will be deemed to be controlled by Comcast and any Person who
controls Comcast. For purposes of this Agreement, (i) Comcast and Comcast Trust
and Comcast Subsidiary, on the one hand, and TWE, on the other hand, shall not
be deemed to be Affiliates of one another, (ii) after the Closing, TWE, on the
one hand and Holdco, on the other hand, shall not be deemed to be Affiliates of
one another and (iii) prior to the
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completion of the Closing, Comcast and its Affiliates, on the one hand, and
Holdco, on the other hand, shall not be deemed to be Affiliates of one another.
"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.
"Applicable Taxes" means Taxes that are Assumed Liabilities.
"Applicable Tax Return" shall mean any Tax Return relating to
Applicable Taxes.
"Appraisal Right" has the meaning specified in the Partnership
Interest Sale Agreement.
"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).
"Base Interest Rate" means the rate of interest charged in respect
of borrowings by Time Warner Cable under its senior bank credit facilities.
"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 U.S.C.
Section 521, et seq.
"Cash Amount" means an amount of cash equal to (i) $133,000,000 plus
(ii) an amount equal to the Estimated Closing Adjustment Amount (which may be a
positive or a negative number) minus (iii) the Actuarial Amount (but only if
Comcast Subsidiary or its Affiliate shall have made the request referred to in
Section 3.1(g)(v)).
"Closing Date" means the date on which the Closing occurs.
"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 Agreement" means the Asset Purchase Agreement,
dated as of the date hereof, between Comcast Parent and Adelphia, as amended
from time to time, in accordance therewith and herewith.
"Comcast Asset Purchase Transaction" means the Transactions as
defined in the Comcast Adelphia Agreement.
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"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 Subsidiary 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
Subsidiary or any of its ERISA Affiliates maintains or contributes to or in
respect of which Comcast Subsidiary 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 employee or former
employee of Comcast Subsidiary or any of its ERISA Affiliates has any present or
future right to benefits.
"Comcast Parties" means Comcast, Comcast Subsidiary and Comcast
Trust.
"Communications Act" means the Communications Act of 1934.
"Confidentiality Agreements" means (i) the letter agreement dated
November 9, 2004, as amended, between Time Warner and Comcast Parent and (ii)
the letter agreement dated August 26, 2004 between Time Warner Cable and
Comcast, in each case regarding confidential information of Time Warner and its
Affiliates.
"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.
"Digital Subscriber" means a paying customer who has been installed
and receives any level of video service offered by a 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.
"DMA" means a geographic area established by Xxxxxxx Media Research
for the purpose of rating the viewership of commercial television stations.
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"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.
"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 SMATV Acquisition" means in respect to the Transferred
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 $4,200,000 when aggregated with the Total SMATV
Consideration paid in all previous such SMATV Acquisitions consummated after the
date hereof and prior to Closing.
"Excluded Tax Liabilities" means all Income Taxes relating to or
arising out of, or resulting from the ownership or operation of the Transferred
Systems 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.
"FCC Trust Requirements" means rules, regulations, orders,
requirements, or procedures adopted by the FCC in Applications for Consent to
the Transfer of Control of Licenses from Comcast Corporation and AT&T Corp.,
Transferors, to AT&T Comcast Corporation, Transferee, Memorandum Opinion &
Order, 17 FCC Rcd 23,246 (2002), and the trust agreements adopted pursuant to
Section III of Appendix B of that order, including any related clarifications,
amendments, modifications, and waivers authorized or approved by the FCC.
"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.
"GAAP" means generally accepted accounting principles in the United
States in effect from time to time applied on a consistent basis.
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"GAAP Adjustments" means with respect to the preparation of any
relevant financial statement, the exclusion of the items described in the
proviso to the second sentence of Section 6.11(a) (other than clauses (v),
(vii), (xi) and (xii) of such proviso) in each case consistent with the
practices used in preparation of the Transferred System Financial Statements.
"Governmental Authority" means (a) the United States of America, (b)
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), (c) any foreign (as to the United States of
America) sovereign entity and any political subdivision thereof and (d) any
court, quasi-governmental authority, tribunal, department, commission, board,
bureau, agency, authority or instrumentality of any of the foregoing.
"Hazardous Substances" means (a) any pollutant, contaminant, waste
or chemical or any toxic, radioactive, ignitable, corrosive or otherwise
hazardous substance, waste or material, (b) any "hazardous waste" as defined by
the Resource Conservation and Recovery Act of 1976 (RCRA) (42 U.S.C. Sections
6901 et seq.); (c) any "hazardous substance" as defined by the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (CERCLA) (42
U.S.C. Sections 9601, et. seq); (d) any substance regulated by the Toxic
Substances Control Act of 1976 (TSCA) (15 U.S.C. Section 2601 et seq.); (e)
asbestos or asbestos-containing material of any kind or character; (f)
polychlorinated biphenyls; (g) any substance the presence, use, treatment,
storage or disposal of which is prohibited by or regulated under any Legal
Requirement; and (h) 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 a customer who subscribes to at
least the lowest level of Internet service offered by a Transferred System,
excluding courtesy accounts.
"Holdco Transaction Liabilities" means any and all Liabilities of
Holdco arising under Section 3.4 or Article 12 of this Agreement.
"HSR Act" 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) and 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 Subscriber" means, as of any given date, the aggregate
of all of the following Subscribers (or Retained Subscribers, as the case may
be): (a) private residential customer accounts that are billed by individual
unit (regardless of whether
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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, (b) 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 (c)
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.
"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.
"Leased Property" means the premises demised under the Leases.
"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.
"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.
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"Local Retransmission Consent Agreement" means any retransmission
consent agreement that covers a signal carried by a Transferred System that does
not also cover a signal carried by a Time Warner Cable Retained Cable System.
"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.
"Master Pre-Closing Liabilities" means all Liabilities of TWE and
its Affiliates arising out of, resulting from or associated with the use,
ownership or operation of the Excluded Assets described in clauses (i), (ii),
(vi), (vii), (viii), or (ix) (except, with respect to clause (ix), to the extent
related to inventory included in the definition of "Excluded Assets" pursuant to
clause (xiii) thereof) in each case to the extent such Liability primarily
relates to goods or services provided to or used by the Transferred Business
prior to Closing in the ordinary course of business consistent with past
practice; provided that the amount of such Liabilities (in total and for each of
the categories described above) is identified to Comcast Subsidiary in writing
from TWE on or prior to the date that is 60 days after Closing.
"Material Adverse Effect" means a material adverse effect on the
business, assets, operations or condition (financial or otherwise) of the
Transferred Systems taken as a whole, excluding any such effect to the extent
resulting from or arising in connection with: (i) except to the extent relating
to Section 6.3, the execution of this Agreement and the announcement thereof;
(ii) changes or conditions generally affecting the cable television industry;
(iii) changes in the economy or financial markets in general; (iv) changes in
general regulatory, political or national security (e.g., changes resulting from
military conflicts or acts of foreign or domestic terrorism) conditions; (v)
changes in the business, operations or conditions of TWE that similarly affect
the TWE Retained Cable Systems, taken as a whole; or (vi) as described on
Schedule 1.1(b); provided, that solely for the purposes of Section 9.2(g) the
foregoing references to "Transferred Systems" and "Time Warner Cable Retained
Cable Systems" shall be switched in order of appearance so that the former
becomes a reference to the latter and vice versa.
"Partnership Interest Sale Agreement" means the Partnership Interest
Sale Agreement, dated March 31, 2003, among Time Warner Cable, Time Warner,
Comcast Trust and, for certain limited purposes, Comcast Parent.
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"Party" or "party" means either Comcast, Comcast Trust, Comcast
Subsidiary, Holdco or TWE.
"Percentage Interest" shall have the meaning assigned to such term
in the TWE Partnership Agreement.
"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 Owned Property and Real Property Interests,
any Lien (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 Owned Property or 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 Owned Property), (e)
in the case of Leased Property, any right of any lessor or any Lien granted by
any lessor of 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 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 1.1(c) and (h) non-material 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 the same is reflected in the Closing Net Liabilities Amount
used in calculating the Final 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.
"Redemption Interest" means the Trust I Partnership Interest (as
defined in the TWE Partnership Agreement).
"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.
"Retained Subscriber" means a paying customer who subscribes to at
least the lowest level of video programming offered by a TWE Retained Cable
System.
10
"Sale Right" has the meaning specified in the Partnership Interest
Sale Agreement.
"Service Area" means any geographic area in which the Transferred
Systems are authorized to provide cable television service pursuant to a
Transferred Systems 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.
"SMATV Acquisition" means any acquisition within or within close
geographical proximity to the Service Area of a Transferred 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.
"Specified Division" means the division of TWE specified on Schedule
1.1(d).
"Specified Launch Support Liabilities" means any Liabilities of TWE
and its Affiliates under agreements with third parties in effect (and on the
terms in effect) as of the date hereof, to repay launch support payments
received by TWE or its Affiliates prior to the date hereof, up to a maximum of
$2,743,000 in the aggregate, arising out of, resulting from or associated with
any failure by the Transferred Systems to continue to carry after Closing any
channels for which launch support payments were received by TWE or its
Affiliates prior to the date hereof, but only to the extent such Liabilities
result from either the deletion of the applicable channel, change in channel
placement of the applicable channel, or the transfer of such channel to a
different tier of service, in any such case prior to the fifth anniversary of
the date hereof.
"Straddle Period" shall mean any taxable period that begins on or
before, and ends after, the Closing Date.
"Subscriber" means a paying customer who subscribes to at least the
lowest level of video programming offered by a Transferred System.
11
"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.
"Subsidiary Transfers" means the transfers by the Transferring
Persons of the Transferred Systems to TWE.
"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 and, in the case of Time Warner any
amounts payable by or to Time Warner Cable under the Time Warner Tax Matters
Agreement.
"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 a customer who subscribes to at least
the lowest level of telephone service offered by a Transferred System, excluding
courtesy accounts.
"Time Warner Cable Asset Purchase Transaction" means the
transactions contemplated by the TWC Adelphia Agreement and the Ancillary
Agreements (as defined in the TWC Adelphia Agreement), which shall include for
the avoidance of doubt all transactions described in Section 5.3 of the Buyer
Disclosure Schedule (as defined in the TWC Adelphia Agreement) or the agreements
referenced on such Schedule (collectively, the "Interim Steps").
"Time Warner Cable Retained Cable Systems" has the meaning set forth
in the TWC Redemption Agreement.
"Time Warner Tax Matters Agreement" means the Tax Matters Agreement,
by and between Time Warner 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, however, 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 consent of Comcast Subsidiary, not to be unreasonably withheld or
delayed.
"Total SMATV Consideration" means, in respect of any SMATV
Acquisition, the total consideration payable to the SMATV Seller and its
Affiliates in
12
respect of such SMATV Acquisition plus the amount of any net liabilities assumed
by the acquiror.
"Transaction Documents" means (i) the instruments and documents
described in Sections 10.2 and 10.3 which are being executed and delivered by or
on behalf of Comcast Trust, Comcast Subsidiary, Holdco or TWE, as the case may
be, or any Affiliate of any of them in connection with this Agreement or the
transactions contemplated hereby and (ii) the instruments and documents required
to effect the Comcast Subsidiary Transfer, if applicable.
"Transactions" means the Subsidiary Transfers, the Holdco
Transaction and the TWE Redemption.
"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 Consent of a
Franchising Authority is necessary for the transfer of any Transferred Systems
Franchise for such Service Area in connection with the consummation of the
transactions contemplated by this Agreement, (c) if Consent of a Franchising
Authority is necessary for the transfer of any Transferred Systems Franchise for
such Service Area in connection with the consummation of the transactions
contemplated by this Agreement, an effective consent or approval (on terms
reasonably satisfactory to Comcast Subsidiary) has been obtained (and is in
effect) or (d) a if Consent of a Franchising Authority is necessary for the
transfer of any Transferred Systems 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 Systems Franchise within the 120-day
review period provided under FCC regulation (plus such extensions of time as are
mutually agreed upon by Comcast Subsidiary and TWE). Any Service Area in which a
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.
"Transferred Business" means the businesses conducted with the
Transferred Assets, including the operation of the Transferred Systems.
"Transferred System Employee" means any individual who, as of the
consummation of the Holdco Transaction, either (a) (x) is then a current or
former employee of (including any full-time, part-time, temporary employee or an
individual in any other employment relationship with), or then on a leave of
absence (including, without limitation, paid or unpaid leave, disability,
medical, personal, or any other form of authorized leave) from, TWE or any of
its Subsidiaries and (y) who is, or at the time of termination of employment
was, primarily employed in connection with the Transferred Systems by TWE or any
of its Subsidiaries, or (b) has been designated by mutual written agreement of
Comcast and TWE as a Transferred System Employee prior to the Closing Date.
Unless the context clearly indicates otherwise, "Transferred System Employee"
shall include any person claiming benefits or rights under or through any
Transferred
13
System Employee, including the dependents or beneficiaries of any Transferred
System Employee.
"TWC Adelphia Agreement" means the Asset Purchase Agreement, dated
as of the date hereof, between Time Warner NY Cable LLC and Adelphia, as such
agreement may be amended in accordance therewith and herewith.
"TWC Redemption Agreement" means the Redemption Agreement dated as
of April 20, 2005 by and among Comcast, Comcast Subsidiary, TWE Holdings II
Trust, a Delaware statutory trust, Cable Holdco II Inc., a Delaware corporation,
Time Warner Cable and the other parties named therein.
"TWE-A/N" means Time Warner Entertainment-Advance/Xxxxxxxx
Partnership, a New York general partnership.
"TWE 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 TWE 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 TWE or any of its Affiliates maintains or
contributes to or in respect of which TWE 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 Transferred System
Employee has any present or future right to benefits.
"TWE Participant" means each Transferring Person and Holdco.
"TWE Partnership Agreement" means the Agreement of Limited
Partnership, dated as of March 31, 2004, as amended from time to time, of TWE.
TWE 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 Subsidiary Transfers,
the Holdco Transaction, TWE Redemption and/or Comcast Subsidiary Transfer 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 6.3 and designated thereon as TWE Required Consents.
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"TWE Retained Cable Systems" means all cable communications systems
operated directly or indirectly by TWE and its Subsidiaries (in each case to the
extent the results of such systems are included in the consolidated results of
TWE) at the Closing other than the Transferred Systems and any systems acquired
after the date hereof.
"Variable Expense Item" means the items identified as variable
expense items on the Operating Budget.
"$" means the U.S. dollar. -
Section 1.2 Other Definitions. The following terms are
defined in the Section or Exhibit indicated:
TERM SECTION OR EXHIBIT
--------------------------------------------------- ------------------
Accounting Referee 2.5(c)
Agreement Preamble
Adjustment Payment 2.5(f)(i)
Assumed Liabilities 2.2
Books and Records 2.1(b)(vii)
Budgets 7.1(i)
Business 1.3
Cap 12.4(a)
Capital Budget 7.1(i)
CARS 2.1(b)(iv)
Closing 10.1
Closing Adjustment Amount 2.5(d)
Closing Net Liabilities Amount 2.5(g)
Closing Net Liabilities Adjustment Amount 2.5(g)
COBRA 3.1(i)
Code Recitals
Comcast Preamble
Comcast 401(k) Plan 3.1(e)
Comcast Balance Sheet 5.6
Comcast Health or Welfare Plan 3.1(g)(iii)
Comcast Parent Preamble
Comcast Reimbursement Plan 3.1(h)
Comcast Statement 2.5(a)
15
Comcast Subsidiary Preamble
Comcast Subsidiary Transfer 2.1(a)(iii)
Comcast Transferred System Employees 3.1(a)
Comcast Trust Preamble
Comcast Trust Releasing Parties 12.8
Confidential Information 7.4(a)
Delayed Transferred Asset 2.1(d)(i)
Delivery Date 2.5(a)
Disclosure Letter 1.3
ERISA Group Liabilities 6.15(b)
Estimated Closing Adjustment Amount 2.4
Estimated Closing Net Liabilities Adjustment Amount 2.4
Estimated Subscriber Adjustment Amount 2.4
Exchange Act 4.3
Excluded Assets 2.1(c)
Excluded Liabilities 2.2
Excluded Transferred Cash 2.1(c)
Final Closing Adjustment Amount 2.5(d)
Financial Information 7.21
Franchise Matter 12.3
Guaranteed Parties 12.10(a)
Guaranteed Obligations 12.10(a)
Holdco Preamble
Holdco Adjustment Payment 2.5(f)(i)
Holdco Indemnification Payment 12.9(a)
Holdco Indemnified Liabilities 6.15(b)
Holdco Interests 2.1(a)(ii)
Holdco Transaction 2.1(a)(i)
Indemnification Payment 12.9(a)
Indemnitee 12.3
Indemnitor 12.3
16
Knowledge 1.3
Leases 6.10
Lock-Up Period 2.3(a)
Operating Budget 7.1(i)
Outside Closing Date 11.1(a)
Owned Property 2.1(b)(ii)
POFS 7.1(h)(ii)
Post-Closing Consent 7.8
Rate Regulatory Matter 7.10(d)
Real Property Interests 2.1(b)(ii)
Relative Percentage Amount 2.5(h)
Retained Base Subscriber Number 2.5(h)
Retained Closing Subscriber Number 2.5(h)
Retained Employee 3.1(a)
Retained Percentage 2.5(h)
Required Threshold 9.1(i)
Section 1.3
Securities Act 4.3
Selected Employees 3.1(g)(v)
Subscriber Adjustment Amount 2.5(h)
Surveys 7.6
Taking 13.16(b)
Tangible Personal Property 2.1(b)(i)
Termination Notice 2.3(a)
Threshold Damage Requirement 12.4(a)
Time Warner Preamble
Time Warner Cable Preamble
Time Warner Cable 401(k) Plan 3.1(e)
Time Warner Cable Pension Plans 3.1(f)
Title Commitment Notice 7.6
Title Commitments 7.6
Title Company 7.6
Title Defect 7.6
17
Transferred Assets 2.1(b)
Transferred Base Subscriber Number 2.5(h)
Transferred Closing Subscriber Number 2.5(h)
Transferred Percentage 2.5(h)
Transferred Systems Recitals
Transferred Systems Contracts 2.1(b)(v)
Transferred Systems Financial Statements 6.11(a)
Transferred Systems Franchises 2.1(b)(iii)
Transferred Systems Licenses 2.1(b)(iv)
Transferred Systems Option 6.19
Transferring Person 6.1
Transitional Services 7.9
TWE Preamble
TWE Adjustment Payment 2.5(f)(i)
TWE FCC Counsel Opinion 9.1(k)
TWE Health or Welfare Plan 3.1(g)(i)
TWE Indemnification Payment 12.9(a)
TWE Marks 3.2
TWE Redemption 2.1(a)(ii)
TWE Reimbursement Plan 3.1(h)
TWE Released Parties 12.8(a)
TWE Statement 2.5(a)
TWE Title Policies 9.1(o)
WARN 3.1(j)
Section 1.3 Rules of Construction. References to one or more
schedules or Schedules shall be references to schedules included in that
separate disclosure letter (the "Disclosure Letter") delivered by TWE to Comcast
Trust and Comcast Subsidiary on the date hereof in connection with this
Agreement, as such Schedules may be updated pursuant to Section 7.11 (but, in
such case, subject to the provisions of such Section). It is understood that the
representations and warranties set forth in Articles 4 and 5 are qualified by
the disclosure letter delivered by Comcast Subsidiary to TWE on the date hereof
in connection with this Agreement. 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
18
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; (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; and (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 TWE, means
the actual knowledge of a particular matter of any of the individuals listed on
Schedule 1.3.
ARTICLE 2
REDEMPTION; TOLLING
Section 2.1 Redemption.
(a) Holdco Transaction; TWE Redemption. Subject to the terms
and conditions set forth in this Agreement:
(i) Subject to Section 2.1(d), prior to the Holdco
Transaction, the Subsidiary Transfers shall be effected. Subject to Section
2.1(d), prior to the consummation of the TWE Redemption, (a) TWE shall (or shall
cause its Affiliates to) assign, transfer, convey and deliver to Holdco and
Holdco shall accept from TWE (and its Affiliates), all of its (and their) right,
title and interest in and to the Transferred Assets and (b) Holdco shall assume
and agree to pay and discharge, as and when they become due, the Assumed
Liabilities. The transactions contemplated by clauses (a) and (b) of the
immediately preceding sentence are referred to together as the "Holdco
Transaction" and shall be consummated pursuant to one or more Bills of Sale and
Assignment and Instrument of Assumption in form and substance reasonably
acceptable to TWE and Comcast Subsidiary, and such other instruments of transfer
or assignment as may be reasonably necessary to effect the Holdco Transaction,
in each case in form and substance satisfactory to Comcast Subsidiary. For the
avoidance of doubt, the Holdco Transaction shall take place prior to the
Closing.
(ii) At the Closing, (a) TWE shall transfer to Comcast
Trust (or, if such transfer would be permitted under applicable FCC Trust
Requirements, to Comcast Subsidiary) all outstanding securities of Holdco (the
"Holdco Interests") by execution and delivery of a Holdco Interest Instrument of
Assignment in form and substance reasonably acceptable to TWE and Comcast
Subsidiary, in exchange for and in complete redemption of the Redemption
Interest and (b) Comcast Trust shall deliver the Redemption Interest by the
execution and delivery of a Redemption Interest Instrument of Assignment in form
and substance reasonably acceptable to TWE and Comcast Subsidiary. The
transactions contemplated by the preceding sentence are referred to as the "TWE
Redemption."
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(iii) If the Holdco Interests are delivered to Comcast
Trust (rather than Comcast Subsidiary) pursuant to Section 2.1(a)(ii), then
immediately after such transaction, Comcast Trust will transfer the Holdco
Interests to Comcast Subsidiary (the "Comcast Subsidiary Transfer"). For
purposes of Section 2.1(d)(i) and all Authorizations required or obtained in
connection with the transactions contemplated by this Agreement at the Closing,
the Comcast Subsidiary Transfer will be considered as part of such transactions
so that such Authorizations will allow such transfer.
(iv) Each of the parties hereto hereby agrees that its
execution of this Agreement shall constitute its consent and approval of the
Holdco Transaction, the TWE Redemption, the Comcast Subsidiary Transfer, if any,
and the Time Warner Cable Asset Purchase Transaction, for all purposes.
(b) Transferred Assets. "Transferred Assets" means the Cash
Amount , an amount of cash equal to the cash excluded from Excluded Assets
pursuant to clause (iv) of the definition thereof (other than the Cash Amount)
and all of TWE's and its Affiliates' right, title and interest in the assets and
properties, real and personal, tangible and intangible, owned, held for use,
leased, licensed or used by TWE or its Affiliates primarily in the operation of
the Transferred Systems as of the Closing Time (that are not Excluded Assets),
which Cash Amount and right, title and interest shall be owned by Holdco as of
the Closing (other than as contemplated by Section 2.1(d)(i)). The Transferred
Assets 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 "Tangible Personal
Property"), including the Tangible Personal Property described on Schedule
2.1(b)(i);
(ii) Real Property. All fee interests in real property
(including improvements thereon) (the "Owned Property"), including the interests
described as Owned Property on Schedule 2.1(b)(ii), and all leases, easements,
rights of access and other interests (not including fee interests) in real
property (the "Real Property Interests"), including the Real Property Interests
described on Schedule 2.1(b)(ii);
(iii) Franchises. All franchises and similar
authorizations or similar permits issued by any Governmental Authority, (the
"Transferred Systems Franchises"), including the Transferred Systems Franchises
described on Schedule 2.1(b)(iii);
(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
Transferred Systems Franchises) (the "Transferred Systems Licenses"), including
the Transferred Systems Licenses described on Schedule 2.1(b)(iv);
20
(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, 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 Real Property Interests) (the
"Transferred Systems Contracts"), including the Transferred Systems Contracts
described on Schedule 2.1(b)(v);
(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 Transferred Systems, signal and program
carriage and dealings with Governmental Authorities, including all reports filed
by or on behalf of TWE (or its Affiliates) with the FCC and statements of
account filed by or on behalf of TWE (or its Affiliates) with the U.S. Copyright
Office (the "Books and Records"); and
(viii) Insurance and Condemnation Proceeds. All rights
to insurance and condemnation proceeds received or receivable after Closing in
respect of any Assumed Liabilities, all insurance and condemnation proceeds (to
the extent not already expended by TWE 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 Transferred Asset and all insurance and condemnation proceeds received or
receivable in respect of business interruption of the Transferred Systems to the
extent relating to any period after Closing, in each case on an effective
after-tax basis as if TWE and TWE-A/N are, in each case, stand-alone
corporations;
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 Transferred Systems
and then only to the extent of TWE's and its Affiliates' right, title and
interest therein.
For the avoidance of doubt, and subject to Section 2.1(d), the
parties intend that to the fullest extent permitted all record and beneficial
ownership interests of TWE and its Affiliates in the Transferred Assets will be
transferred to Holdco in the Holdco Transaction and if any Transferring Person
holds beneficial ownership in assets of the type described above while another
Transferring Person holds record ownership in such assets, all of such ownership
interests would be transferred to Holdco in the Holdco Transaction.
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(c) Excluded Assets. Notwithstanding anything to the contrary
set forth herein, all right, title and interest of TWE and its Affiliates in, to
and under the following (collectively, the "Excluded Assets"), in each case
regardless of whether related to the Transferred Systems, shall not be
transferred to Holdco pursuant to the Holdco Transaction and shall be retained
directly or indirectly by TWE 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(b)(v)) 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(b)(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 TWE or
its Affiliates as of the Closing Time, but excluding cash in an amount equal to
the amount of cash received as (A) subscriber deposits, (B) the cash insurance
and condemnation proceeds described in Section 2.1(b)(viii), (C) xxxxx cash
on-hand, if any, (D) any cash referred to in Section 13.16, (E) cash received as
advance payments from subscribers that are not received in the ordinary course
of business, (F) cash proceeds (on an effective after-tax basis as if TWE and
TWE-A/N are, in each case, stand-alone corporations) of any exercise of a
Transferred System Option and (G) the Cash Amount (clauses (B) (except to the
extent relating to an Assumed Liability), (D), (E), (F) and (G), the "Excluded
Transferred Cash")); (v) any and all patents, copyrights, trademarks, trade
names, service marks, service names, logos and similar proprietary rights,
including the "Time Warner Entertainment", "Time Warner Cable" or "Road Runner"
name and any derivations thereof (subject to Section 3.2 and excluding those
items (other than those incorporating the "Time Warner Entertainment", "Time
Warner Cable" or "Road Runner" name) owned, licensed, used or held for use
exclusively in connection with the operation of the Transferred 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 7.9); (vii) any and all Contracts relating to national advertising sales
representation; (viii) any and all agreements with Road Runner Holdco LLC or any
other Internet service provider; (ix) any and all Contracts pursuant to which
TWE or any of its Affiliates procures goods or services for both the Transferred
Systems and the Time Warner Cable Retained Cable Systems; (x) any and all
retransmission consent agreements, except as provided in Section 7.5 with
respect to certain Local Retransmission Consent Agreements as elected by Comcast
Subsidiary; (xi) any and all agreements governing or evidencing an obligation of
TWE or any of its Affiliates for borrowed money; (xii) the assets described on
Schedule 2.1(c); (xiii) any surplus inventory in excess of amounts of inventory
held consistent with TWE Retained Cable Systems practice; (xiv) any and all
Authorizations of Governmental Authorities to provide telephony service held,
directly or indirectly, by TWE or any of its Affiliates; (xv) any and all assets
relating to the Time Warner Cable 401(k) Plan and the Time Warner Cable Pension
Plans; (xvi) any and all account books of original entry, general ledgers, and
financial records used in connection with the Transferred Systems; (xvii) any
assets of the type that would be excluded from financial statements by reason of
the GAAP Adjustments; and (xviii) any intercompany account receivable created to
record cash swept from the Transferred Systems prior to Closing
22
(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 Holdco in the Holdco Transaction); provided, that TWE
shall, at Comcast Subsidiary'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 Transferred System-specific programming or, to the extent necessary to
protect the legitimate legal, business and/or confidentiality concerns of TWE
but taking into account Holdco's and Comcast Subsidiary's 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 Holdco or Comcast Subsidiary
after the Closing Date.
(d) Authorizations and Consents.
(i) If and to the extent that the transfer or assignment
to TWE or from TWE or any of its Affiliates to Holdco (or any successor thereof)
of any Transferred Asset (or following such transfer or assignment, the transfer
of Holdco Interests to Comcast Trust or Comcast Subsidiary, or from Comcast
Trust to Comcast Subsidiary, as the case may be) would be a violation of
applicable Legal Requirements with respect to such Transferred Asset, require
any Authorization with respect to such Transferred Asset or otherwise adversely
affect the rights of the applicable transferee thereunder then the transfer or
assignment to Holdco of such Transferred Asset (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 an Assumed Liability.
(ii) If the transfer or assignment of any Transferred
Asset intended to be transferred or assigned hereunder is not consummated prior
to or at the Closing, whether as a result of the provisions of Section 2.1(d) or
for any other reason, then TWE (or its Affiliate) shall thereafter, directly or
indirectly, hold such Transferred Asset for the use and benefit, insofar as
reasonably possible and not prohibited under the terms of any applicable
Contract, of Holdco (at the expense of Holdco). In addition, TWE shall take or
cause to be taken such other actions as may be reasonably requested by Holdco in
order to place Holdco, insofar as reasonably possible, in the same position as
if such Transferred Asset had been transferred as contemplated hereby and so
that all the benefits and burdens relating to such Transferred Assets including
possession, use, risk of loss, potential for gain, and dominion, control and
command over such Transferred Asset, are to inure from and after the Closing to
Holdco. To the extent permitted by Legal Requirements and to the extent
otherwise permissible in light of any required Authorization, Holdco shall be
entitled to, and shall be responsible for, the management of any Transferred
Assets not yet transferred to it as a result of this Section 2.1(d) and the
parties agree to use reasonable commercial efforts to cooperate and coordinate
with respect thereto. For the avoidance of doubt, TWE will cause each
23
Transferring Person to comply with the provisions hereof as if such Transferring
Person were a party hereto to the extent any Transferred Asset was intended to
be, but was not, transferred in the Subsidiary Transfers or the Holdco
Transaction, as applicable.
(iii) If and when the Authorizations, the absence of
which caused the deferral of transfer of any Transferred Asset pursuant to this
Section 2.1(d), are obtained, the transfer of the applicable Transferred Asset
to Holdco shall automatically and without further action be effected in
accordance with the terms of this Agreement and the applicable Transaction
Documents.
(iv) Neither TWE nor any Affiliate thereof shall be
obligated, in connection with the foregoing, to expend any money unless the
necessary funds are advanced by Holdco, other than reasonable out-of-pocket
expenses, attorneys' fees and recording or similar fees, all of which shall be
promptly reimbursed by Holdco except as otherwise specifically provided in this
Agreement, including for this purpose Section 3.4.
(v) Prior to the Holdco Transaction, TWE shall deliver
to Holdco a list identifying, in reasonable detail and to TWE's knowledge, the
Delayed Transfer Assets and the Authorizations required therefor.
(vi) The parties hereto further agree (A) that any
Delayed Transferred Assets referred to in this Section 2.1(d) shall be treated
for all Income Tax purposes as assets of Holdco (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.
Section 2.2 Assumed Liabilities. At the Closing and except as
otherwise provided for herein, Holdco shall assume, and, from and after the
Closing, Holdco shall pay, discharge and perform as and when due, all (a)
Liabilities of TWE and its Affiliates to the extent arising out of, resulting
from or associated with the ownership and operation of the Transferred Assets
and/or the Transferred Business prior to Closing, or the transfer of such
Transferred Assets and/or Transferred Business at Closing, including all Master
Pre-Closing Liabilities, but in each case only to the extent such Liabilities
are reflected in the Closing Net Liabilities 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 Transferred
Assets and/or the Transferred Business after the Closing, including all
Specified Launch Support Liabilities (clauses (a) and (b) collectively, the
"Assumed Liabilities"). The Assumed Liabilities shall not include (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 Excluded Assets other than Master Pre-Closing Liabilities
and Specified Launch Support Liabilities, (v) any Liabilities of TWE or its
Affiliates other than 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
24
created to record cash lent to the Transferred Systems prior to Closing (clauses
(i) through (vii) collectively, "Excluded Liabilities").
Section 2.3 Partnership Interest Sale Agreement.
(a) Comcast Trust hereby agrees on behalf of itself and its
Controlled Affiliates that from the date hereof until the earlier of (i) the
date upon which this Agreement is terminated in accordance with its terms (other
than pursuant to Section 11.1(a) or 11.1(d)), (ii) the date upon which Comcast
Subsidiary delivers a Termination Notice in accordance herewith and (iii)
December 31, 2006 (such period, the "Lock-Up Period") it shall not exercise (or
cause to be exercised) (or make any request with respect thereto) its Appraisal
Right or its Sale Right under the Partnership Interest Sale Agreement with
respect to the Redemption Interest. From and after the date upon which Comcast
Subsidiary would first be entitled to terminate this Agreement under Section
11.1(a) or 11.1(d), Comcast Subsidiary may deliver to TWE and Time Warner a
notice of its intention to so terminate, which notice shall be deemed not to
have been delivered for purposes of termination pursuant to Article 11 (and this
Agreement shall continue in full force and effect) except as provided in clause
(b) below (the "Termination Notice") or as may be terminated under a provision
other than Section 11.1(a) or 11.1(b). Delivery of such Termination Notice shall
be deemed for purposes of the Partnership Interest Sale Agreement to constitute
delivery of an Appraisal Notice with respect to the Redemption Interest, a
waiver of Section 9.1(a) hereof and, for the period prior to termination of this
Agreement under Section 11.1(a) or 11.1(d) that is effective under Section
2.3(b) hereof, a waiver of Comcast Subsidiary's ability to again exercise its
rights under Section 11.1(a) or 11.1(d). Time Warner shall have the right, at
any time within 15 days of the delivery of the Termination Notice to deliver an
"AOLTW Exercise Notice" (as defined in the Partnership Interest Sale Agreement).
(b) The Termination Notice shall be treated as having been
delivered pursuant to Article 11 and this Agreement shall terminate if (i) if
Time Warner delivers the AOLTW Exercise Notice as provided in Section 2.3(a)
within 30 days of delivery of such Termination Notice or (ii) TWE shall not have
notified Comcast Subsidiary of its election to waive its condition under Section
9.2(a) within 30 day of delivery of such Termination Notice. In the event of
such termination, Comcast Trust, Time Warner and TWE shall continue to be bound
by the terms of the Partnership Interest Sale Agreement. Nothing herein shall
limit the ability of Comcast Subsidiary to terminate this Agreement under
Section 11.1(f).
(c) Prior to such time as this Agreement is terminated in
accordance with Article 11, and notwithstanding the delivery of an Appraisal
Notice under the Partnership Interest Sale Agreement, the consummation of a
purchase or sale pursuant thereto will not occur (or be required to occur) but
the Appraisal Rights process will proceed. If this Agreement is terminated at a
time when the Appraisal Rights process is ongoing, the sale under such Appraisal
Rights process shall occur, subject to the terms and conditions of the
Partnership Interest Sale Agreement, promptly after termination but in no event
prior to the time required as set forth in Section 3 of the Partnership Interest
Sale Agreement. If the Closing occurs while the Appraisal Rights
25
process is ongoing, such Appraisal Rights process shall cease and no person
participating therein shall have any further liability with respect thereto.
(d) Comcast Trust hereby agrees on behalf of itself and its
Controlled Affiliates that it shall not transfer (or cause to be transferred),
dispose (or cause to be disposed of) or otherwise monetize, in any such case
directly or indirectly, any of the Redemption Interest until after the
expiration of the Lock-Up Period. Notwithstanding any other provision of this
Section 2.3, Comcast Trust may, at any time, directly or indirectly transfer all
or any of the Redemption Interest to Comcast Parent or any Subsidiary of Comcast
Parent if such Person agrees in writing to be bound by, and entitled to the
benefits of, this Section 2.3 as if a party hereto and delivers a written
acknowledgment of the same to Time Warner Cable (including with respect to any
subsequent transfers or dispositions).
(e) Following the expiration of the Lock-Up Period, the
Partnership Interest Sale Agreement shall be deemed to have been amended (i) to
remove Time Warner Cable's right, in connection with any exercise of a Selling
Partner's Appraisal Right or Sale Right, to purchase any Offered Interest or any
portion of any Offered Interest in exchange for Time Warner Cable Common Stock
and (ii) to condition Time Warner's right, in connection with the exercise of
any Selling Partner's Appraisal Right or Sale Right, to purchase any Offered
Interest or any Portion of any Offered Interest in exchange for AOLTW Common
Stock upon the following: (x) at the time of the Stock Election Notice, Time
Warner shall certify that (A) it is using, and will continue to use, all
commercially reasonable efforts to cause any AOLTW Common Stock to be delivered
to be, at the time of delivery, immediately resellable under an effective shelf
registration statement under the Securities Act and (B) it reasonably believes
that such AOLTW Common Stock will be so immediately resellable upon such
delivery; (y) at the time of delivery of any AOLTW Common Stock, such AOLTW
Common Stock is immediately resellable under an effective shelf registration
statement under the Securities Act; and (z) the number of days between the date
of delivery of such AOLTW Common Stock and November 18, 2007 minus the number of
days that Time Warner shall be entitled to suspend sales of such AOLTW Common
Stock under the registration rights agreement to be entered into in connection
therewith in accordance with the Partnership Interest Sale Agreement shall not
be less than 60 days. Capitalized terms used in this Section 2.3(e) and not
defined have the meanings specified in the Partnership Interest Sale Agreement.
The provisions of this Section 2.3 shall terminate upon the earlier of (i)
November 18, 2007 and (ii) immediately after the time at which the Redemption
Interest is no longer owned by Comcast Trust or any of its Affiliates.
(f) The reference to "the third anniversary of the date
hereof" in Section 8.1 of the TWE Partnership Agreement shall be deemed amended
to mean the later of March 31, 2006 or 30 days following the end of the Lock-Up
Period.
(g) The foregoing shall be deemed to amend, modify and
supplement the Partnership Interest Sale Agreement and the TWE Partnership
Agreement. In its capacity as a Party to the Partnership Interest Sale Agreement
and the TWE Partnership Agreement and as the ultimate indirect beneficiary of
the Comcast
26
Trust, Comcast Parent hereby expressly acknowledges and approves of the
agreement made by Comcast Trust in this Section 2.3. Each of Comcast Parent,
Time Warner and Time Warner Cable hereby expressly acknowledges and approves the
agreements made by their respective Affiliates pursuant to this Section 2.3,
including the amendment, modification and supplement to the Partnership Interest
Sale Agreement and the TWE Partnership Agreement set forth in this Section 2.3.
Section 2.4 Estimated Closing Adjustment Amount. No later
than two Business Days prior to the Closing Date, TWE will deliver to Comcast
Trust and Comcast Subsidiary a good faith estimate of the Subscriber Adjustment
Amount (the "Estimated Subscriber Adjustment Amount"), if any, and a good faith
estimate of the Closing Net Liabilities Adjustment Amount (the "Estimated
Closing Net Liabilities Adjustment Amount"), if any, together with appropriate
documentation supporting such estimates. The sum of the Estimated Subscriber
Adjustment Amount and the Estimated Closing Net Liabilities Adjustment Amount is
referred to herein as the "Estimated Closing Adjustment Amount" and may be a
positive or a negative amount.
Section 2.5 Final-Closing Adjustment Amount.
(a) No later than ninety (90) days following the Closing Date
(the "Delivery Date"), (i) Comcast Subsidiary will deliver to TWE (A) its
determination of the Closing Net Liabilities Amount for Holdco and based on the
foregoing, the Closing Net Liabilities Adjustment Amount, (B) its determination
of the Transferred Closing Subscriber Number and the Transferred Base Subscriber
Number and (C) appropriate documentation supporting such determinations (the
"Comcast Statement") and (ii) TWE will deliver to Comcast Subsidiary (A) its
determination of the Retained Closing Subscriber Number and the Retained Base
Subscriber Number and (B) appropriate documentation supporting such
determinations (the "TWE Statement"). Each such statement shall be prepared in
good faith in accordance with this Agreement based on the books and records of
the Transferred Systems held by Holdco or the based on the books and records of
the TWE Retained Cable Systems has held by TWE, as the case may be.
(b) If TWE disagrees with any item in the Comcast Statement
delivered pursuant to Section 2.5(a)(i), TWE may, within ninety (90) days after
the Delivery Date, deliver a notice to Comcast Subsidiary disagreeing with such
item and setting forth TWE's calculation of such item, together with appropriate
documentation supporting such determination. Any such notice of disagreement
shall specify those items or portions thereof as to which TWE disagrees, and TWE
shall be deemed to have agreed with all other items and portions of items
contained in the Comcast Statement delivered to it pursuant to Section
2.5(a)(i). If Comcast Subsidiary disagrees with any item in the TWE Statement
delivered pursuant to Section 2.5(a)(ii), Comcast Subsidiary may, within one
hundred and twenty (120) days after the Delivery Date, deliver a notice to TWE
disagreeing with such item and setting forth TWE's calculation of such item,
together with appropriate documentation supporting such determination. Any such
notice of disagreement shall specify those items or portions thereof as to which
Comcast Subsidiary disagrees, and Comcast Subsidiary shall be deemed to have
agreed with all other items and portions of items contained in the TWE Statement
delivered to it pursuant
27
to Section 2.5(a)(ii). Any such notice shall be prepared in good faith in
accordance with this Agreement based on the books and records of the Transferred
Systems held by Holdco or the TWE Retained Cable Systems, as the case may be.
(c) If a notice of disagreement shall be duly delivered
pursuant to Section 2.5(b), TWE and Comcast Subsidiary 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, TWE
and Comcast Subsidiary 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 Parent or TWE's ultimate parent (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 consider only those items (or portions thereof) or amounts as to which TWE
and Comcast Subsidiary disagree and, with respect to each item (or portion
thereof) or amount, shall select a number within the range of the dispute
between TWE and Comcast Subsidiary. The Accounting Referee shall deliver to TWE
and Comcast Subsidiary, 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 TWE and Comcast Subsidiary.
The costs of the Accounting Referee shall be shared equally by TWE and Comcast
Subsidiary. Holdco and TWE 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
2.5, including without limitation, making available to the extent necessary any
books, records, work papers and personnel.
(d) As used herein, the term "Final Closing Adjustment Amount"
means, with respect to any determination of the Closing Adjustment Amount (as
defined below): (1) if no notice of disagreement is delivered by either party in
accordance with Section 2.5(b) with respect to the other party's determination
of an element used to calculated the Closing Adjustment Amount, the Closing
Adjustment Amount calculated based on the amounts in the Comcast Statement and
the TWE Statement; (2) if either party delivers a notice of disagreement in
accordance with Section 2.5(b) and the parties reach agreement on all disputed
items within 30 days following such delivery, the Closing Adjustment Amount as
determined in accordance with such agreement; or (3) if either party delivers a
notice of disagreement in accordance with Section 2.5(b) and the parties fail to
reach agreement within 30 days, the Closing Adjustment Amount as calculated
based on the undisputed amounts in the Comcast Statement and TWE Statement and
with respect to disputed items, as determined by the Accounting Referee. As used
herein, the term "Closing Adjustment Amount" means the sum of the Subscriber
Adjustment Amount and the Closing Net Liabilities Amount.
(e) If the Final Closing Adjustment Amount exceeds the
Estimated Closing Adjustment Amount, TWE will pay to Holdco the amount of such
excess. If the Estimated Closing Adjustment Amount exceeds the Final Closing
Adjustment Amount, Holdco will pay to TWE the amount of such excess. Any payment
28
pursuant to this Section 2.5(e) shall be made in cash at a mutually convenient
time and place within three (3) days following the determination of the Final
Closing Adjustment Amount. The amount of any payment to be made pursuant to this
Section 2.5(e) shall bear interest from and including the Closing Date to and
including the date of payment at the Base Interest Rate.
(f) Tax Treatment of Adjustment Payments and Interest.
(i) 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 to treat and to cause their respective Affiliates to treat any payment
pursuant to Section 2.5(e) to Holdco by TWE (a "TWE Adjustment Payment") or to
TWE by Holdco (a "Holdco Adjustment Payment" and, each, an "Adjustment Payment")
as (x) with respect to a TWE Adjustment Payment, a contribution by TWE to Holdco
occurring immediately prior to the Closing, and (y) with respect to a Holdco
Adjustment Payment, an adjustment to the Cash Amount transferred by TWE to
Holdco pursuant to the Holdco Transaction occurring immediately prior to the
Closing.
(ii) Notwithstanding Section 2.5(f)(i) above, any
Adjustment Payments that represent interest payable under Section 2.5(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 (1) deductible to the payor
and (2) taxable to the payee.
(g) As used herein, the term "Closing Net Liabilities
Adjustment Amount" means the excess, if any, of the Closing Net Liabilities
Amount over $18,700,000. The "Closing Net Liabilities Amount" shall equal the
amount of all Liabilities of Holdco (other than the Holdco Transaction
Liabilities) as of the Closing (after giving effect to the Closing), less the
amount of all current assets (other than inventory and the Excluded Transferred
Cash) of Holdco as of the Closing (after giving effect to the Closing), in each
case as would be reflected on the face of a balance sheet (excluding any
footnotes thereto) prepared in accordance with GAAP; provided that, if Comcast
Subsidiary or one of its Affiliates shall have made the request provided in the
first sentence of Section 3.1(g)(v), the Actuarial Amount shall be treated as a
Liability on the face of such balance sheet prepared in accordance with GAAP for
purposes of this calculation and if Comcast Subsidiary or any of its Affiliates
has not made such request the Liabilities assumed by Comcast Subsidiary pursuant
to the last sentence of Section 3.1(g)(v) shall be treated as a Liability on the
face of such balance sheet prepared in accordance with GAAP for purposes of this
calculation. The Closing Net Liabilities Amount shall be deemed to include
(without duplication) assets or Liabilities of Comcast Subsidiary or its
Affiliates or Holdco conveyed or assumed (as applicable) pursuant to Section
3.1, to the extent such assets or Liabilities would be reflected on the face of
a balance sheet of the Transferred Business (excluding any footnotes thereto)
prepared in accordance with GAAP as of the Closing Time, but without giving
effect to the Closing. Current assets shall include, but shall not be limited
to, all cash and cash equivalents (including the cash paid to Comcast Subsidiary
pursuant to Section 3.1(h) but excluding the Excluded Transferred Cash), prepaid
expenses, funds on deposit with third parties, and accounts receivable other
than (i) the portion of any account receivable resulting
29
from cable, telephony, data or Internet service sales that is sixty (60) days or
more past due as of the Closing Date, (ii) 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, (iii) 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,
(iv) accounts receivable from customers whose accounts are inactive as of the
Closing Date or (v) any accounts receivable that have not arisen from a bona
fide transaction in the ordinary course of business. For purposes of making the
foregoing "past due" calculations, the billing statements of a 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 Transaction. For the avoidance of doubt,
Liabilities shall include, but are not limited to, the Actuarial Amount (if
Comcast Subsidiary or any of its Affiliates shall have made the request provided
in the first sentence of Section 3.1(g)(v)), Specified Launch Support
Liabilities, accounts payable, accrued expenses (including all accrued vacation
time, sick days, other accrued paid time off, copyright fees, programming
expenses, 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.
(h) "Subscriber Adjustment Amount" means an amount (which may
be positive or negative) equal to the product of (x) $3,500 times (y) the
Relative Percentage Amount times (z) the Transferred Base Subscriber Number. As
used herein, the term "Relative Percentage Amount" means an amount (which shall
be expressed as a percentage and may be positive or negative) equal to (i) the
Retained Percentage (as defined below) minus (ii) the Transferred Percentage (as
defined below). As used herein, the term "Retained Percentage" means a fraction
(expressed as a percentage) the numerator of which is the number of Individual
Subscribers of the TWE Retained Cable Systems as of the Closing Date (the
"Retained Closing Subscriber Number") and the denominator of which is the number
of Individual Subscribers of the TWE Retained Cable Systems as of the date that
is 12 months prior to the Closing Date (the "Retained Base Subscriber Number").
As used herein, the term "Transferred Percentage" means a fraction (expressed as
a percentage) the numerator of which is (A) the number of Individual Subscribers
of the Transferred Systems as of the Closing Date minus the number of Individual
Subscribers of the Transferred Systems acquired pursuant to any Excluded SMATV
Acquisition (the "Transferred Closing Subscriber Number") and the denominator of
which is the number of Individual Subscribers of such Transferred Systems as of
the date that is 12 months prior to the Closing Date (the "Transferred Base
Subscriber Number").
30
ARTICLE 3
RELATED MATTERS
Section 3.1 Employees.
(a) Employees. Each Transferred System Employee who is an
employee of TWE or one of its Subsidiaries as of immediately prior to the Holdco
Transaction, including individuals on leave of absence, short-term disability
and long-term disability, shall become an employee of Holdco as of the
consummation of the Holdco Transaction. Employees who commence employment with
Holdco in accordance with the preceding sentence shall be referred to herein as
"Comcast Transferred System Employees." For the avoidance of doubt, if any
employee holding the job title as of the date hereof listed on Schedule
3.1(l)(i) (as previously identified by name to Comcast Subsidiary by TWE)
remains employed by TWE or its Affiliates on the Closing Date as permitted by
Section 3.1(l) hereof, such employee shall not be a Comcast Transferred System
Employee. For purposes of this Article 3, "Transferred System Employees" shall
not include those employees holding the job titles as of the date hereof listed
on Schedule 3.1(a) (as previously identified by name to Comcast Subsidiary by
TWE) (such employees, the "Retained Employees") and none of Holdco, Comcast
Subsidiary or any of their respective Affiliates shall have any obligation or
Liability with respect to any of the Retained Employees. Holdco (or its
Affiliates as of the Closing) shall take 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
each such Transferred System Employee. The parties hereto shall not take any
action that is not otherwise permitted under this Article 3 that would interfere
with such employees becoming employed by Holdco as of the consummation of the
Holdco Transaction. Immediately following the Closing, Comcast shall cause the
Comcast Transferred System Employees to be paid base salary or wage rates no
less than those rates provided to such employees immediately prior to the
consummation of the Holdco Transaction and to be provided benefit plan
participation at levels no less favorable than those applicable to similarly
situated employees of Comcast Subsidiary or its Affiliates at the time of the
Closing. As of the Closing, Holdco shall have no employees other than employees
who are primarily employed in connection with the Transferred Systems.
(i) Holdco shall recognize, as to each Comcast
Transferred System Employee, the period of service (without duplication of
benefits) with TWE and any of its Affiliates (other than Holdco) prior to the
Closing under all TWE Benefit Plans to the extent so recognized by TWE and its
Affiliates prior to the Holdco Transaction. In addition, Holdco shall recognize,
as to each Comcast Transferred System Employee, all vacation, sick days and
other paid time off accrued by such Comcast Transferred System Employee but
unused as of the consummation of the Holdco Transaction, in each case to the
extent such amounts are reflected in the Closing Net Liabilities Amount used in
calculating the Final Adjustment Amount.
(ii) Notwithstanding any provision in this Agreement to
the contrary, the parties hereto agree that, except to the extent used in
connection with the funding of any TWE Benefit Plan that is continued by TWE or
any of its Affiliates (other
31
than Holdco), as of the consummation of the Holdco Transaction the parties
hereto shall cause to be transferred to or held for the benefit of Holdco their
interests in all life, medical and other insurance policies to the extent
relating to Transferred System Employees.
(iii) Subject to obtaining any necessary consents and
except as provided in Section 7.2(h) or as otherwise provided in this Agreement,
as of the consummation of the Holdco Transaction, TWE and its Affiliates (other
than Holdco) shall assign to Holdco, and Holdco shall assume, (A) all rights,
obligations and Liabilities of TWE and its Affiliates (other than Holdco) (x)
under all employment agreements, unfunded compensation arrangements and employee
related insurance policies and (y) for benefits accrued and payable now and in
the future under all TWE Benefit Plans, and (B) all other employment-related
rights, obligations and Liabilities, in each case to the extent relating to
Transferred System Employees (other than Liabilities relating to or arising
under the "Time Warner Cable 401(k) Plan", the "Time Warner Cable Pension Plans"
(each as defined below), the Time Warner Cable Excess Benefit Pension Plan and
any equity-based compensation plans maintained by TWE or its Affiliates) (such
Liabilities shall be included in the meaning of Assumed Liabilities). With
respect to the period prior to Closing, any such Liabilities shall only be
assumed to the extent reflected in the Closing Net Liabilities Amount used in
calculating the Final Adjustment Amount.
(iv) The parties hereto agree that, except to the extent
that sponsorship of a funded TWE Benefit Plan is continued by TWE or any of its
Affiliates (other than Holdco) and except as provided in Section 7.2(h) or as
otherwise provided in this Agreement, the Transferred Assets shall include any
monies, contracts or other funds relating to the participation of any
Transferred System Employees in any TWE Benefit Plan, in each case to the extent
such amounts, monies, contracts or other funds are reflected in the Closing Net
Liabilities Amount used in calculating the Final Adjustment Amount.
(v) Subject to any required notification, as of the
consummation of the Holdco Transaction, the parties agree to take such action,
and to cause their Affiliates to take such action, as is necessary to cause
Holdco to succeed to the rights and obligations of TWE and its Affiliates (other
than Holdco), including its rights and obligations with respect to any
"multiemployer plan" (as defined in Section 3(37) of ERISA), under any
collective bargaining agreement (if any so exist) to the extent such agreement
covers Transferred System Employees.
(b) Continued Employment with Holdco(i). Effective as of the
Closing, all Comcast Transferred System Employees shall continue to be employees
of Holdco and shall cease to be employees of Time Warner Cable or any of its
Subsidiaries. Effective as of the Closing, TWE or its Affiliates shall
discontinue providing benefits to Comcast Transferred System Employees under all
TWE Benefit Plans except as otherwise required by law or as contemplated under
this Agreement.
(c) Severance-Related Liabilities. Comcast Subsidiary and
Holdco shall be responsible for all Liabilities with respect to any Comcast
Transferred
32
System Employee in connection with the termination of such employee's employment
on or after the Closing, and any Liability for WARN and severance payments and
benefits under the TWC Severance Pay Plan or any individual employment or
severance arrangement, each, in accordance with its terms, applicable to a
Transferred System Employee who rejects the general offer of employment made
pursuant to Section 3.1(a). Notwithstanding the foregoing, Comcast Subsidiary
and its Affiliates shall have no Liability with respect to the termination of
employment of the employees holding the job titles as of the date hereof listed
on Schedule 3.1(l)(i), if any such employee is hired by TWE or any of its
Affiliates as permitted by Section 3.1(l) in the 12 month period following the
Closing.
(d) Participation in Benefit Plans. With respect to Comcast
Transferred System Employees, compensation and service of such employees with
TWE and its Affiliates prior to Closing shall be recognized under all applicable
Comcast Benefit Plans to the extent so recognized under the corresponding TWE
Benefit Plans prior to Closing, except to the extent that duplication of
benefits would result or as otherwise provided in this Agreement.
(e) Tax-Qualified Defined Contribution Plans. As of and
following the Closing, Transferred System Employees shall not be entitled to
make contributions to or to benefit from matching or other contributions under
the TWC Savings Plan ("Time Warner Cable 401(k) Plan"). None of Comcast
Subsidiary, any of its Affiliates or Holdco shall have any Liability with
respect to the Time Warner Cable 401(k) Plan, except as may be provided in any
other agreement between TWE or any of its Affiliates, on the one hand, and
Comcast Subsidiary or any of its Affiliates (other than Holdco), on the other.
Comcast Transferred System Employees who were participants in the Time Warner
Cable 401(k) Plan immediately prior to the Closing shall become participants in
a defined contribution pension plan qualified under Section 401(a) of the Code
and meeting the requirements of Section 401(k) of the Code established or
maintained by Comcast Subsidiary or its Affiliates (the "Comcast 401(k) Plan")
as of the Closing; provided that any Comcast Transferred System Employee with
less than 6 months of service with TWE or any of its Affiliates immediately
prior to Closing will only become a participant in the Comcast 401(k) Plan after
completing 6 months of combined continuous service with TWE or any of its
Affiliates (other than Holdco) and Holdco or any of its Affiliates (other than
TWE). Comcast Subsidiary or its Affiliates shall cause the Comcast 401(k) Plan
to accept cash eligible rollover distributions (as defined in Section 402(c)(4)
of the Code) by Comcast Transferred System Employees with respect to account
balances distributed to them on or after the Closing Date by the Time Warner
Cable 401(k) Plan.
(f) Tax-Qualified Defined Benefit Plans. As of the Closing,
the Transferred System Employees shall cease accruing benefits under the Time
Warner Cable Pension Plan, and the Time Warner Cable Union Pension Plan
(collectively, the "Time Warner Cable Pension Plans"). None of Comcast
Subsidiary, any of its Affiliates or Holdco shall have any Liability with
respect to the Time Warner Cable Pension Plans or the Time Warner Cable Excess
Benefit Pension Plan except as may be provided in any
33
other agreement between TWE or any of its Affiliates, on the one hand, and
Comcast Subsidiary or any of its Affiliates (other than Holdco), on the other.
(g) Health and Welfare Plans.
(i) All Liabilities relating to, arising out of, or
resulting from health and welfare coverage or claims incurred by or on behalf of
each Transferred System Employee under any TWE Benefit Plan that is a health or
welfare plan within the meaning of Section 3(1) of ERISA (each a "TWE Health or
Welfare Plan") prior to the Closing shall be Liabilities of Holdco or one of its
Affiliates to the extent such Liabilities are reflected in the Closing Net
Liabilities Amount used in calculating the Final Adjustment Amount.
(ii) Other than as required by COBRA, each Transferred
System Employee shall cease to participate in any TWE Health or Welfare Plan as
of the Closing.
(iii) Each Comcast Transferred System Employee who,
after the recognition of service provided for in Section 3.1(d) satisfies the
eligibility requirements under the applicable Comcast Benefit Plan that is a
health or welfare plan within the meaning of Section 3(1) of ERISA (each, a
"Comcast Health or Welfare Plan"), shall be (A) entitled to enroll, effective as
of the Closing, as a newly-eligible employee of Comcast Subsidiary or one of its
Affiliates in the Comcast Health or Welfare Plans then available to similarly
situated employees of Comcast Subsidiary 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 Comcast Health or Welfare Plans to new employees
of Comcast Subsidiary or any of its Affiliates. All compensation, benefit
elections, deductible payments, payments toward the applicable out-of-pocket
maximums and other benefit-affecting determinations affecting Comcast
Transferred System Employees that, as of immediately prior to the Closing, were
recognized under any TWE 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 Comcast Health or Welfare Plan as
of the Closing with respect to that same plan year.
(iv) With respect to any Comcast Transferred System
Employee and his or her dependents (if any) who were covered under any TWE
Health or Welfare Plan immediately prior to the Closing, Comcast Subsidiary
shall take, or cause to 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 Comcast Health or Welfare Plan (if any) are waived with respect to
such Comcast Transferred System Employee, to the extent that such requirements
and exclusions were waived under any similar corresponding TWE Health Welfare
Plan.
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(v) Upon the written request of Comcast Subsidiary or
one of its Affiliates delivered to TWE at least 60 days prior to the expected
Closing Date, TWE shall, or shall cause its Affiliates to, permit those
Transferred System Employees on long-term disability or who are receiving
retiree life or retiree medical benefits at the time of the Closing and who are
listed on a Schedule 3.1(g)(v) (the "Selected Employees"), such Schedule
3.1(g)(v) to be updated ten Business Days prior to the expected Closing Date, to
continue to receive such coverage under the applicable long-term disability,
retiree medical or retiree life plan, as applicable, sponsored or maintained by
TWE or its Affiliates and the Actuarial Amount shall be determined and taken
into account as provided in Section 1.1 in the definition of "Cash Amount" and
as provided in Section 2.5(g) in the definition of "Closing Net Liabilities
Amount". If Comcast Subsidiary or one of its Affiliates makes the request
provided in the first sentence of this Section 3.1(g)(v), except for the payment
of the Actuarial Amount, any Liability associated with any long-term disability,
retiree life or retiree medical benefits, as applicable, relating to or in
connection with the Selected Employees shall not be an Assumed Liability and
shall be included in the meaning of Excluded Liabilities. If Comcast Subsidiary
or one of its Affiliates does not make the request provided in the first
sentence of this Section 3.1(g)(v), Comcast Subsidiary shall assume all
Liabilities associated with any long-term disability, retiree life or retiree
medical benefits relating to or in connection with the Selected Employees and
such Liabilities shall be reflected in the Closing Net Liabilities Amount used
in calculating the Final Adjustment Amount.
(h) Reimbursement Account Plans. To the extent any Comcast
Transferred System Employee made contributions to any TWE Benefit Plan that is a
reimbursement account plan, such as a health care or dependent care
reimbursement plan ("TWE Reimbursement Plan"), during the calendar year in which
the Closing occurs, such Comcast Transferred System Employee shall be permitted
to file claims for reimbursement under a Comcast Benefit Plan that is a
comparable reimbursement account plan ("Comcast 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 Comcast Transferred System Employee for that year
under such plan. Account balances, whether positive or negative, shall be
transferred and assigned to the appropriate Comcast Reimbursement Plan by TWE or
an Affiliate, as applicable. As soon as practicable following the Closing, TWE
shall pay to Comcast Subsidiary a cash amount (which amount shall be deemed to
constitute a current asset of Holdco for purposes of Section 2.5(g)) equal to
the aggregate positive balances as of the Closing Date of each flexible spending
account of each Comcast Transferred System Employee under the applicable TWE
Reimbursement Plan. Comcast Subsidiary shall assume all obligations of TWE with
respect to each Transferred System Employee under the applicable TWE
Reimbursement Plan.
(i) COBRA. Comcast Subsidiary shall, or shall cause, each
Comcast Transferred System 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 Comcast Transferred System Employee, who elects
continued group health plan coverage under COBRA or incurs a "qualifying event"
(as defined in
35
COBRA) on or after the Closing, to be offered COBRA coverage on and after the
Closing under a Comcast Health or Welfare Plan. TWE and its Affiliates (other
than Holdco) shall retain all obligations and Liabilities with respect to
Transferred System Employees who elected continued group plan coverage under
COBRA or incurred a "qualifying event" prior to the Closing.
(j) WARN Compliance. Comcast Subsidiary and Holdco 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 Comcast Transferred System 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, Holdco or its Affiliates providing to Transferred System
Employees and any applicable governmental entities or other required persons (on
behalf of itself and Comcast Subsidiary) any notice and other requirements under
WARN.
(k) Workers' Compensation Liabilities. Comcast Subsidiary and
Holdco 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 Comcast Transferred System Employee on or after the
Closing and, to the extent reflected in the Closing Net Liabilities Amount used
in calculating the Final Adjustment Amount, before Closing.
(l) Non-Solicit Provisions.
(i) Except for the employees holding the job titles as
of the date hereof listed on Schedule 3.1(l)(i) (as previously identified by
name to Comcast Subsidiary by TWE) from the date hereof until the first
anniversary of the Closing neither TWE nor any of its Subsidiaries will solicit
any Transferred System Employees (other than for the benefit of the Transferred
Systems or with the prior written consent of Comcast Subsidiary, in each case,
prior to the Closing or to comply with the provisions set forth in Section
3.1(a)).
(ii) Except for the employees holding the job titles as
of the date hereof listed on Schedule 3.1(l)(i) (as previously identified by
name to Comcast Subsidiary by TWE) from the date hereof until the first
anniversary of the Closing neither TWE nor any of its Subsidiaries will hire any
Transferred System Employees (other than for the benefit of the Transferred
Systems or with the prior written consent of Comcast Subsidiary, in each case,
prior to the Closing or to comply with the provisions set forth in Section
3.1(a)).
(iii) Solely for purposes of this Section 3.1(l)
"Transferred System Employee" 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 Transferred System Employee if the Closing
Date occurred on such date.
36
(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(l). Solely for purposes of this Section
3.1(l), Transferred System Employees shall in no event include the beneficiary
or dependent of any Transferred System Employee unless such beneficiary or
dependent is otherwise a Transferred System Employee.
(v) From the Closing Date until the first anniversary of
the Closing, neither Comcast Subsidiary nor any of its Affiliates will hire any
Retained Employees.
(vi) TWE or its Affiliates shall make available to
Comcast Subsidiary or its Affiliates for consultation and transitional services
Retained Employees and those employees listed on Schedule 3.1(l)(i) (if hired or
retained by TWE or its Affiliates as permitted by this Section 3.1(l)), as
reasonably requested by Comcast Subsidiary or its Affiliates. The provision of
any such services shall be in accordance with the terms of Section 7.9 hereof
and shall not unreasonably interfere with the performance of any such employee's
duties to TWE or its Affiliates.
(m) 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 TWE or any of its
Affiliates or otherwise relieve any individual of his or her obligations under
such guideline or any such plan, program or arrangement.
(n) 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 System
Employee, Retained Employee or other future, present, or former employee of
Comcast Subsidiary, Holdco, TWE, or any of their respective Affiliates, under
any Comcast Benefit Plan or TWE Benefit Plan or otherwise. Without limiting the
generality of the foregoing: (i) except as expressly provided in this Agreement,
nothing in this Agreement shall preclude Comcast Subsidiary or any of its
Affiliates, at any time after the Closing, from amending, merging, modifying,
terminating, eliminating, reducing or otherwise altering in any respect any
Comcast Benefit Plan, any benefit under any such plan or any trust, insurance
policy or funding vehicle related to any Comcast Benefit Plan; and (ii) except
as expressly provided in this Agreement, nothing in this Agreement shall
preclude TWE or any of its Affiliates, at any time from amending, merging,
modifying, terminating, eliminating, reducing, or otherwise altering in any
respect any TWE Benefit Plan, any benefit under any such plan or any trust,
insurance policy or funding vehicle related to any TWE Benefit Plan. 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 3.1 or any
rights relating hereto.
37
(o) Collective Bargaining. To the extent any provision of this
Agreement is contrary to the provisions of any collective bargaining agreement
to which TWE or any of its Subsidiaries is a party as of the date hereof that
covers Transferred System Employees or Retained Employees, the terms of such
collective bargaining agreement shall prevail. Should any provision of this
Agreement be deemed to relate to a topic determined by an appropriate authority
to be a mandatory subject of collective bargaining with respect to the
Transferred System Employees, Comcast Subsidiary or TWE or any of their
respective Subsidiaries may be obligated to bargain with the union representing
affected employees concerning those subjects. Comcast Subsidiary and its
Subsidiaries shall be responsible for Liabilities with respect to any
obligations to any collective bargaining unit that represents as of the date
hereof Transferred System Employees to the extent consistent with Comcast's
rights and responsibilities under applicable labor law. If TWE or any of its
Affiliates acquires a duty to bargain with any labor organization with respect
to Transferred System Employees, then TWE or its Affiliates shall (i) give
prompt written notice of such development to Comcast Subsidiary and (ii) not
enter into any contract with such labor organization that contains a successor
clause or otherwise purports to bind Comcast Trust, Comcast Subsidiary, Holdco
(after the Closing) or any of their Affiliates in any way, without the prior
written consent of Comcast Subsidiary.
Section 3.2 Use of Names and Logos. For a period of 150 days
after Closing, Holdco shall be entitled to use the trademarks, trade names,
service marks, service names, logos and similar proprietary rights of TWE and
its Affiliates to the extent incorporated in or on the Transferred Assets
(collectively, the "TWE Marks"), provided, that (a) Comcast Subsidiary and
Holdco acknowledge that the TWE Marks belong to TWE and its Affiliates, and that
neither Comcast Subsidiary nor Holdco shall acquire 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 TWE and its Affiliates of such
Transferred Assets prior to Closing; (c) Comcast Subsidiary shall exercise
reasonable efforts to remove all TWE Marks from the Transferred Assets as soon
as reasonably practicable following Closing; and (d) the use of the TWE Marks
during such period shall inure to the benefit of TWE and, to the extent any
goodwill in the TWE Marks is deemed to accrue during such period, to Holdco or
its Affiliates, then Comcast Subsidiary agrees to cause Holdco to assign all
such goodwill to TWE; provided, that Holdco shall indemnify and hold harmless
TWE for any Liabilities arising from or otherwise relating to Holdco's use of
the TWE Marks. Upon expiration of such 150-day period, Comcast Subsidiary shall
cause Holdco to remove all TWE Marks from the Transferred Assets and destroy all
unused letterhead, checks, business-related forms, preprinted form contracts,
product literature, sales literature, labels, packaging material and any other
materials displaying the TWE Marks within ten Business Days and shall provide
TWE with a written certification that it destroyed any and all such materials.
Notwithstanding the foregoing, Comcast Subsidiary and Holdco 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 impracticable for Comcast Subsidiary and Holdco;
provided, that Comcast Subsidiary and Holdco shall remove or
38
discontinue such proprietary rights promptly upon the return of such converters
or other items to their possession.
Section 3.3 Transfer Laws. The parties hereto each waive
compliance 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 Transferred System Franchises, Transferred System Licenses and
Transferred System Contracts, arising from or payable by reason of or otherwise
related to the Holdco Transaction, the Subsidiary Transfers and the TWE
Redemption, shall be paid one-half by Holdco and one-half by TWE (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) the
demand of the paying party, the other party shall reimburse the paying party for
one-half of any such amounts paid by the paying party).
ARTICLE 4
COMCAST TRUST'S REPRESENTATIONS AND WARRANTIES
Comcast Trust represents and warrants to TWE, as of the date of this
Agreement and as of Closing, as follows:
Section 4.1 Organization and Qualification of Comcast Trust.
Comcast Trust is a statutory trust duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all requisite trust
power and authority to own the Redemption Interest.
Section 4.2 Authority. Subject to the FCC Trust Requirements,
Comcast Trust has all requisite power and authority under the terms of its
declaration of trust to execute, deliver and perform this Agreement and the
Transaction Documents to be executed and delivered by Comcast Trust and to
consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby by Comcast Trust have been, and in the case of
the Transaction Documents to be executed and delivered by Comcast Trust and the
consummation of the transactions contemplated thereby, shall at Closing have
been duly and validly authorized, subject to the FCC Trust Requirements, by all
necessary trust action on the part of Comcast Trust. This Agreement has been
duly and validly executed and delivered by Comcast Trust and is, and in the case
of the Transaction Documents to be executed and delivered by Comcast Trust, when
so executed and delivered shall be, subject to the FCC Trust Requirements, the
valid and binding obligation of Comcast Trust, enforceable against Comcast Trust
in accordance with their 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.
39
Section 4.3 No Conflict; Required Consents. Subject to
compliance with the HSR Act, the FCC Trust Requirements, the Securities Act of
1933 (the "Securities Act") and the Securities Exchange Act of 1934 (the
"Exchange Act") and except for Authorizations to be obtained by TWE or its
Affiliates, the execution, delivery and performance by Comcast Trust of this
Agreement and the Transaction Documents to be executed and delivered by Comcast
Trust do not and shall not: (a) conflict with or violate any provision of the
certificate of trust or declaration of trust of Comcast Trust; (b) to the
knowledge of Comcast Trust's operating trustee, 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 under any Contract to
which Comcast Trust is a party relating to the Redemption Interest; or (d) to
the knowledge of Comcast Trust's operating trustee, require any material
consent, approval or authorization of, or filing of any certificate, notice,
application, report or other document with, any Governmental Authority or other
Person.
Section 4.4 Litigation. (i) There is no Litigation pending or,
to Comcast Trust's knowledge, threatened, by or before any Governmental
Authority or private arbitration tribunal, against or involving the assets of
Comcast Trust or any of its Controlled Affiliates; and (ii) other than the FCC
Trust Requirements, there is no Judgment requiring Comcast Trust or any of its
Controlled Affiliates to take any action of any kind, in either case, which
could adversely affect in any material respect the ability of Comcast Trust or
any of its Controlled Affiliates to perform their respective obligations under
this Agreement or the other Transaction Documents.
Section 4.5 Ownership of Redemption Interest. Comcast Trust
owns of record and, subject to the terms of its declaration of trust,
beneficially, and has good and valid title to, free and clear of any Liens
(other than restrictions imposed by federal and state securities Laws, pursuant
to the declaration of trust of Comcast Trust, under agreements with TWE or its
Affiliates or by the FCC Trust Requirements) and Comcast Trust shall own
immediately prior to Closing of record and, subject to the terms of its
declaration of trust, beneficially, and will have good and valid title to, free
and clear of any Liens (other than restrictions imposed by federal and state
securities Laws, pursuant to the declaration of trust of Comcast Trust, under
agreements with TWE or its Affiliates or by the FCC Trust Requirements) all of
the Redemption Interest. In the TWE Redemption, Comcast Trust will transfer to
TWE valid title to the Redemption Interest free and clear of any Liens, other
than restrictions imposed by federal and state securities laws.
Section 4.6 Brokers. There is no investment banker, broker,
finder or other intermediary who has been retained by or is authorized to act on
behalf of Comcast Trust who might be entitled to any fee or commission from TWE
or its Affiliates in connection with the transactions contemplated by this
Agreement.
40
ARTICLE 5
COMCAST SUBSIDIARY'S REPRESENTATIONS AND WARRANTIES
Comcast Subsidiary represents and warrants to TWE, as of the date of
this Agreement and as of Closing, as follows:
Section 5.1 Organization and Qualification of Comcast
Subsidiary. Comcast Subsidiary is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Section 5.2 Authority. Comcast Subsidiary has all requisite
limited liability company power and authority to execute, deliver and perform
this Agreement and the Transaction Documents to be executed and delivered by
Comcast Subsidiary and to consummate the transactions contemplated hereby and
thereby. The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby by Comcast Subsidiary have
been, and in the case of the Transaction Documents to be executed and delivered
by Comcast Subsidiary and the consummation of the transactions contemplated
thereby, shall at Closing have been duly and validly authorized by all necessary
limited liability company action on the part of Comcast Subsidiary. This
Agreement has been duly and validly executed and delivered by Comcast Subsidiary
and is, and in the case of the Transaction Documents to be executed and
delivered by Comcast Subsidiary, when so executed and delivered shall be, the
valid and binding obligation of Comcast Subsidiary, enforceable against Comcast
Subsidiary in accordance with their 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. Subject to
compliance with the HSR Act, the FCC Trust Requirements, the Securities Act and
the Exchange Act and except for Authorizations to be obtained by TWE or its
Affiliates, the execution, delivery and performance by Comcast Subsidiary and
Comcast Trust of this Agreement and the Transaction Documents to be executed and
delivered by Comcast Subsidiary and/or Comcast Trust do not and shall not: (a)
conflict with or violate any provision of the certificate of formation or
limited liability company agreement of Comcast Subsidiary or the certificate of
trust or declaration of trust of Comcast Trust; (b) violate any provision of any
material Legal Requirement; or (c) require any material consent, approval or
authorization of, or filing of any certificate, notice, application, report or
other document with, any Governmental Authority or other Person.
Section 5.4 Litigation. (i) There is no Litigation pending or,
to Comcast Subsidiary's knowledge, threatened, by or before any Governmental
Authority or private arbitration tribunal, against or involving the assets of
Comcast Subsidiary or any of its Affiliates; and (ii) other than the FCC Trust
Requirements, there is no Judgment requiring Comcast Subsidiary or any of its
Affiliates to take any action of any kind, in either case, which could adversely
affect in any material respect the ability of
41
Comcast Subsidiary or any of its Affiliates to perform their respective
obligations under this Agreement or any of the other Transaction Documents.
Section 5.5 Brokers. There is no investment banker, broker,
finder or other intermediary who has been retained by or is authorized to act on
behalf of Comcast and/or Comcast Subsidiary who might be entitled to any fee or
commission from TWE or its Affiliates in connection with the transactions
contemplated by this Agreement.
Section 5.6 Comcast Balance Sheet. Comcast has provided to TWE
an internal unaudited consolidated balance sheet of Comcast and its Subsidiaries
as of December 31, 2004 (the "Comcast Balance Sheet"). The Comcast Balance Sheet
was prepared in accordance with GAAP (except for the absence of required
footnotes) and fairly presents in all material respects the consolidated
financial condition of Comcast and its Subsidiaries as of the date indicated
therein, except that (i) the current and deferred income tax accounts were
derived from the general ledgers of the Comcast unaudited consolidated balance
sheet but do not reflect tax consolidation and allocation adjustments necessary
to present Comcast's balance sheet on a stand alone basis and (ii) "due to
related parties, net" is included as a component of stockholder's equity.
Section 5.7 Tolling. The FCC Trust Requirements do not
prohibit, and no consent of any Governmental Authority is required with respect
to, the agreements of Comcast Trust and of Comcast Parent pursuant to Section
2.3 (including the agreements made therein with respect to the Partnership
Interest Sale Agreement).
ARTICLE 6
TWE'S REPRESENTATIONS AND WARRANTIES
TWE represents and warrants to Comcast Trust and Comcast Subsidiary,
as of the date of this Agreement and as of Closing, as follows:
Section 6.1 Organization and Qualification of TWE. TWE is a
limited partnership duly organized, validly existing and in good standing under
the laws of the State of Delaware. TWE and each Affiliate of TWE that holds
Transferred Assets or is otherwise a participant in any of the transactions
referred to in Section 2.1(a)(i) (each, a "Transferring Person") has all
requisite limited partnership or other entity power and authority to own and
lease the Transferred Assets and to conduct the Transferred Business as
currently conducted.
Section 6.2 Authority. Each of TWE and Holdco has all
requisite limited partnership or limited liability company power and authority
to execute, deliver and perform this Agreement and the Transaction Documents to
be executed and delivered by it and to consummate the transactions contemplated
hereby and thereby. Each Transferring Person has all requisite corporate or
other power and authority to execute, deliver and perform the Transaction
Documents to be executed and delivered by such Transferring Person and to
consummate the transactions contemplated thereby. The execution, delivery and
performance of this Agreement and the consummation of the
42
transactions contemplated hereby by TWE and Holdco have been, and in the case of
the Transaction Documents to be executed and delivered by TWE or any TWE
Participant and the consummation of the transactions contemplated thereby, shall
at Closing have been duly and validly authorized by all necessary corporate or
other entity action on the part of TWE and each such TWE Participant. This
Agreement has been duly and validly executed and delivered by TWE and Holdco and
is, and in the case of the Transaction Documents to be executed and delivered by
TWE or any TWE Participant, when so executed and delivered shall be, the valid
and binding obligation of TWE or such TWE Participant, enforceable against TWE
or such TWE Participant, as applicable, in accordance with their 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 6.3 No Conflict; Required Consents. Except as
described on Schedules 6.3 and 6.19, 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 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 Transferred System Licenses, Authorizations from state public utility
commissions having jurisdiction over the assets of Transferred Systems, and
Authorizations to be obtained by Comcast Subsidiary or its Affiliates, the
execution, delivery and performance by TWE and Holdco of this Agreement and the
Transaction Documents to be executed and delivered by TWE and Holdco, and the
execution, delivery and performance by each Transferring Person of the
Transaction Documents to be executed and delivered by such Transferring Person,
do not and shall not: (a) conflict with or violate any provision of TWE's
certificate of limited partnership or the TWE Partnership Agreement or other
organizational or governing documents of TWE, Holdco or any Transferring Person;
(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 TWE, Holdco or any Transferring Person under any Transferred
Systems Contract, Transferred Systems Franchise or Transferred Systems License;
(d) result in the creation or imposition of any Lien against or upon any of the
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 or materially delay or prevent the
consummation of the transactions contemplated hereby.
43
Section 6.4 Sufficiency of Assets; Title.
(a) Except for items included in the Excluded Assets or as
described on Schedule 6.4(a), (i) the Transferred Assets are all of the assets
of TWE or its Affiliates owned, used or held for use primarily in connection
with the operation of the Transferred Systems, and (ii) the right, title and
interest in the Transferred Assets conveyed to Holdco pursuant to the Holdco
Transaction shall be sufficient to permit Holdco to operate the Transferred
Systems substantially as they are being operated by TWE and its Affiliates
immediately prior to the Holdco Transaction 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 Assumed Liabilities. At the Closing, Holdco will have good and
marketable title to (or in the case of assets that are leased, valid leasehold
interests in) the tangible Transferred 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 Owned Property or Leased Property with
respect to which TWE has delivered a Title Policy, or a Title Commitment to
deliver a Title Policy, as provided in Section 9.1.
(b) Except as described on Schedule 6.4(b), the Tangible
Personal Property and improvements on Owned Property and real property subject
to Real Property Interests are in all material respects adequate for their
present uses.
Section 6.5 Transferred System Franchises, Transferred System
Licenses, Transferred Systems Contracts, Owned Property and Real Property
Interests.
(a) Except as described on Schedules 2.1(b)(ii), 2.1(b)(iii),
2.1(b)(iv), 2.1(b)(v) or Schedule 6.5(a) and except for the Excluded Assets,
neither TWE nor any of its Affiliates is bound or affected by any of the
following that relate wholly or primarily to the Transferred Assets or the
Transferred Systems: (i) leases of real or material personal property; (ii)
Franchises, and similar authorizations for the operation of Transferred 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 TWE
or its Affiliates and used in connection with the operation of any Transferred
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 TWE or its
Affiliates 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
Transferred
44
Systems that are not fully reflected in the Transferred Systems 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 Transferred
Systems; (x) any partnership, joint venture or other similar Contract or
arrangement; (xi) any Contract with TWE or any of its Affiliates; (xii) any
Contract that limits the freedom of the Transferred Systems to compete in any
line of business or with any Person or in any area or which would so limit the
freedom of Holdco, Comcast Subsidiary, Comcast Trust or any of their Affiliates
after the Closing Date; (xiii) any Contract relating to the use by third parties
of Transferred Assets to provide, or the provision by the Transferred 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 Transferred Systems; (xvi) any Contract granting any Person the right
to use any portion of the cable television system plant included in the
Transferred Assets; (xvii) any Contract that is not the subject of any other
clause of this Section 6.5(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 6.5(a) which individually provides
for payments by or to TWE in any twelve month period exceeding $500,000 or is
otherwise material to the Transferred Systems.
(b) TWE has prior to the date hereof provided or otherwise
made available to Comcast Trust and Comcast Subsidiary true and complete copies
of each of the Transferred Systems Franchises, Transferred Systems Licenses and
Transferred Systems Contracts described on any of Schedules 2.1(b)(ii) (to the
extent in the possession of TWE or its Affiliates), 2.1(b)(iii), 2.1(b)(iv),
2.1(b)(v) and Schedule 6.5(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 Transferred Systems 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(b)(ii), to the extent in the possession of TWE or its Affiliates) ,
(iii) in the case of oral Real Property Interests listed on Schedule 2.1(b)(ii)
or oral Transferred Systems Contracts listed on Schedule 2.1(b)(v), true and
complete written summaries thereof and (iv) each document in the possession of
TWE or its Affiliates evidencing or insuring TWE's or its Affiliates' ownership
of the Owned Property. Except as described in Schedule 6.5(b) and except as
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect: (i) TWE and each of its Affiliates are in compliance
with each of the Transferred Systems Franchises, Transferred Systems Licenses
and Transferred Systems Contracts; (ii) TWE and its Affiliates have fulfilled
when due, or have taken all action necessary to enable them to fulfill when due,
all of their obligations under each of the Transferred Systems Franchises,
Transferred Systems Licenses and Transferred Systems Contracts; (iii) there has
not occurred any default (without regard to lapse of time or to the giving of
notice or both) by TWE or any of its Affiliates and, to the knowledge of TWE,
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 Transferred
Systems Franchises, Transferred Systems
45
Licenses and Transferred Systems Contracts; and (iv) the Transferred Systems
Franchises, Transferred Systems Licenses and Transferred Systems Contracts are
valid and binding agreements and are in full force and effect.
(c) Schedule 2.1(b)(iii) lists the date on which each
Transferred Systems Franchise shall expire.
(d) Except as described on Schedules 2.1(b)(iii), 2.1(b)(iv)
or Schedule 6.5(d), there are no applications relating to any Transferred
Systems Franchise or Transferred Systems Licenses pending before any
Governmental Authority that are material to any of such Transferred Systems.
Except as described on Schedule 6.5(d), neither TWE nor any of its Affiliates
has received, nor do any of them have notice that they shall receive, from any
Governmental Authority a preliminary assessment that a Transferred Systems
Franchise should not be renewed as provided in Section 626(c)(1) of the
Communications Act. Except as described on Schedule 6.5(d), neither TWE, nor any
of its Affiliates nor any Governmental Authority has commenced or requested the
commencement of an administrative proceeding concerning the renewal of a
Transferred Systems Franchise as provided in Section 626(c)(1) of the
Communications Act. Except as described on Schedule 6.5(d), TWE and its
Affiliates have timely filed notices of renewal in accordance with the
Communications Act with all Governmental Authorities with respect to each
Transferred Systems Franchise expiring within 30 months of the date of this
Agreement. Except as described on Schedule 6.5(d), such notices of renewal have
been filed pursuant to the formal renewal procedures established by Section(a)
of the Communications Act. To TWE's knowledge, there exist no facts or
circumstances that make it likely that any Transferred Systems Franchise shall
not be renewed or extended on commercially reasonable terms. Except as described
on Schedule 6.5(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 Transferred Systems Franchise.
Section 6.6 Employee Benefits. A true and complete list of the
TWE Cable Benefit Plans is set forth in Schedule 6.6. Except as set forth on
Schedule 6.6, none of TWE, any of its ERISA Affiliates, any TWE Benefit Plan
other than a multiemployer plan (as defined in Section 3(37) of ERISA), or to
the knowledge of TWE, any TWE 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 TWE 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 TWE Benefit Plan other than a multiemployer plan (as defined in
Section 3(37) of ERISA) or, to the knowledge of TWE, any TWE Benefit Plan that
is a multiemployer plan (as defined in Section 3(37) of ERISA). After the
Closing, none of Holdco, Comcast Subsidiary 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 TWE Benefit Plan currently
maintained by TWE or any of its ERISA Affiliates. Except as set forth in
Schedule 6.6, since December 31, 2004, there has been no change in the TWE
Benefit Plans or level of compensation provided the
46
Transferred System Employees that would materially increase the cost of
operating the Transferred Systems.
Section 6.7 Litigation. Except as set forth in Schedule 6.7,
there is no Litigation pending or, to TWE's knowledge, threatened, by or before
any Governmental Authority or private arbitration tribunal, against TWE or any
of its Affiliates; and there is no Judgment requiring TWE or any of its
Affiliates to take any action of any kind with respect to the Transferred Assets
or the operation of the Transferred Systems, or to which TWE or any of its
Affiliates (with respect to the Transferred Systems), the Transferred Systems or
the Transferred 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 or materially delay or
prevent the consummation of the transactions contemplated by this Agreement and
the other Transaction Documents. For the avoidance of doubt, this Section 6.7
shall have no application with respect to Taxes of TWE or any of its Affiliates.
Section 6.8 Transferred Systems Information. Schedule 6.8 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 Transferred 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 Transferred 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 Transferred Systems as reflected in TWE'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 Transferred Systems and the rates
charged by TWE for each;
(e) as of the date hereof, the stations and signals carried by
each of the Transferred Systems and the channel position of each such signal and
station; and
(f) [Intentionally Omitted]
(g) the municipalities served by each of the Transferred
Systems and the community identification numbers of such municipalities.
47
Section 6.9 Compliance with Legal Requirements. Except as set
forth on Schedule 6.9, the Transferred Assets include all material
Authorizations of, by or with any Governmental Authority that are necessary for
the lawful conduct of the Transferred 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 6.9, the Transferred Systems are, and
have been, operated in compliance in all material respects with all material
Legal Requirements and Authorizations, and, to the knowledge of TWE, none of the
Transferred 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 6.10 Real Property. Schedule 2.1(b)(ii) sets forth all
leases included in the Real Property Interests (the "Leases", and each such
lease, a "Lease") and all ownership interests in real property included in the
Owned Property and all other material Real Property Interests. The Owned
Property and Real Property Interests include all leases, fee interests, material
easements, material access agreements and other material real property interests
necessary to operate the Transferred Systems as currently conducted.
Section 6.11 Financial Statements; No Adverse Change;
Telephony Budget.
(a) TWE has provided to Comcast Trust and Comcast Subsidiary
internal unaudited financial statements for the Transferred Systems consisting
of balance sheets and statements of operations as of and for the 12 months ended
December 31, 2004 (the "Transferred Systems Financial Statements"). The
Transferred Systems 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
Transferred Systems as of the dates and for the periods indicated therein;
provided that the Transferred System Financial Statements do not reflect the
following items, which may have been recorded within the financial results of
the Transferred Systems had the Transferred 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
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 Transferred
48
Systems 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 Transferred Systems including the following: (1) programming accruals of
approximately one month's service would be reflected as a liability for the
Transferred Systems 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 Transferred System trial balances; and (xii) third party and
payroll payments made by Time Warner Cable and TWE corporate on behalf of the
Transferred Systems after the monthly cut-off are not pushed down to the
Transferred Systems until the following month (e.g. 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 Transferred Systems).
(b) Except as set forth in Schedule 6.11(b), since December
31, 2004, (i) there have been no events, circumstances or conditions that,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect and (ii) the Transferred Systems and the Transferred
Assets have been operated in all material respects only in the ordinary course
of business consistent with past practices.
Section 6.12 Employees.
(a) Except as set forth on Schedule 6.12(a), there are no
collective bargaining agreements applicable to any Transferred System Employees,
and neither TWE nor any Affiliate of TWE, nor Holdco 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 TWE or
any Affiliate of TWE, or any request or demand for recognition, or any petitions
filed by a labor organization for representative status, with respect to any
Transferred System Employees.
(b) Except as set forth on Schedule 6.12(b), TWE and its
Affiliates have complied, and Holdco 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
49
forth on Schedule 6.12(b), neither TWE nor any of its Affiliates is, and Holdco
will not be as of the Closing, a party to any material labor or employment
dispute involving any of its employees who render services in connection with
the Transferred Systems.
(c) Except as described on Schedule 6.12(c), neither TWE nor
any of its Affiliates has any employment agreements, either written or oral,
with any Transferred System Employees and none of the employment agreements
listed on Schedule 6.12(c) require Comcast Subsidiary, Holdco or any of their
Affiliates to employ any person after Closing.
Section 6.13 Transactions with Affiliates. Except for this
Agreement and Transaction Documents to which it is a party, or as set forth on
Schedule 6.13, immediately after the Closing, Holdco shall not be bound by any
Contract or any other arrangement of any kind whatsoever with, or have any
Liability to, TWE or any Affiliate thereof.
Section 6.14 Undisclosed Material Liabilities. The 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 6.14;
(b) the Liabilities disclosed in the Transferred Systems
Financial Statements;
(c) the Liabilities arising in the ordinary course of business
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 6.15 Holdco; TWE Holdings.
(a) Holdco is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all limited liability company powers required to carry on its business
as now conducted. Holdco is (or at the Closing will be) duly registered as a
foreign limited liability company in all jurisdictions in which the ownership or
leasing of the Transferred Assets or the nature of its activities in connection
with the Transferred Systems makes such qualification necessary, with only such
exceptions as would not, individually or in the aggregate, result in a Material
Adverse Effect. Time Warner Cable owns all of the issued and outstanding limited
liability company interests of Holdco, free and clear of all Liens, other than
restrictions imposed by applicable federal or state securities Laws. All of such
limited liability company interests are duly authorized, validly issued, fully
paid and non-assessable, and were issued in compliance in all material respects
with all applicable Legal Requirements. There shall be no outstanding options,
warrants, rights,
50
commitments, conversion rights, preemptive rights or agreements of any kind to
which TWE or any of its Affiliates or Holdco 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 Holdco or any security convertible
into or exercisable or exchangeable for any of the foregoing. In the TWE
Redemption, TWE will transfer to Comcast Trust or Comcast Subsidiary, as the
case may be, valid title to the Holdco Interests free and clear of any Liens,
other than restrictions imposed by federal and state securities laws.
(b) Prior to the Holdco Transaction, Holdco will have
conducted no business or operations and will have no indebtedness and no
Liabilities (excluding (i) any Liabilities for Taxes with respect to Holdco's
limited liability company 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 Holdco 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 "Holdco
Indemnified Liabilities"), other than under this Agreement and any Transaction
Document to which Holdco is a party.
(c) Prior to the Holdco Transaction, Holdco will not have been
party to any Contracts other than this Agreement and any Transaction Document to
which Holdco is a party. Holdco has no Subsidiaries.
(d) No ERISA Group Liability has been incurred by Holdco and
no ERISA Group Liability is reasonably expected to be asserted against Holdco
for periods prior to the Closing.
(e) Prior to the Holdco Transaction, Holdco will not 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 Holdco.
(f) At the time of the TWE Redemption, Holdco will own the
Transferred Assets, subject to the Assumed Liabilities and will have no other
assets or Liabilities, except Holdco Indemnified Liabilities and Liabilities
under this Agreement and any Transaction Document to which Holdco is a party.
(g) Holdco is not and has never been an entity that is
separate and apart from TWE for U.S. federal Income Tax purposes.
Section 6.16 Insurance. Schedule 6.16 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
Transferred Assets, the Transferred Systems or any of the employees, officers or
directors of the Transferred Systems and are maintained by or on behalf of TWE
or its Affiliates, 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 or on behalf of TWE, and TWE is otherwise in compliance in all material
respects with the terms and provisions of such policies (after
51
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. TWE 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 6.17 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 6.17, the Transferred Business, the
Transferred Assets and the Transferred 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 6.18 Brokers. There is no investment banker, broker,
finder or other intermediary who has been retained by or is authorized to act on
behalf of TWE or any of its Affiliates who might be entitled to any fee or
commission from Comcast Subsidiary or any of its Affiliates in connection with
the transactions contemplated by this Agreement.
Section 6.19 Transferred Systems Options. Except as disclosed
on Schedule 6.19, none of the Transferred Systems or any material Transferred
Assets are subject to any purchase option, right of first refusal or similar
arrangement which would be triggered by the sale, transfer or other disposition
of such Transferred Systems or Transferred Assets ("Transferred Systems
Option").
Section 6.20 Transferred Systems Proprietary Rights. Except as
described on Schedule 6.20, 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 TWE or any of its Affiliates primarily in connection with the
operation of the Transferred Systems.
Section 6.21 Promotional Campaigns. After Closing, Holdco will
not be obligated to continue to make promotional offers under any promotional or
marketing campaigns or programs initiated or maintained by TWE or its Affiliates
with respect to the Transferred Systems; provided that, for the avoidance of
doubt, individual 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, Holdco will not 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 TWE or
its Affiliates with respect to the Transferred Systems, other than campaigns
initiated with the consent of Comcast Subsidiary.
Section 6.22 Environmental.
52
(a) Except as described on Schedule 6.22(a), to the knowledge
of TWE, (i) neither TWE nor any of its Affiliates has received any notice,
demand, request for information, citation, summons or order relating to any
material evaluation or investigation, and (ii) neither TWE nor any of its
Affiliates 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
Transferred Assets, the Transferred Systems or Holdco which relate to or arise
out of any Environmental Law.
(b) Except as described on Schedule 6.22(b), to the knowledge
of TWE, no Hazardous Substance has been discharged, disposed of, dumped,
injected, pumped, deposited, spilled, leaked, emitted, or released at, on or
under any Transferred Asset or in connection with the operation of any
Transferred System or of Holdco, except as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
(c) Except as described on Schedule 6.22(c), neither TWE nor
any of its Affiliates has received any written notice of, or has any knowledge
of circumstances relating to, and, to the knowledge of TWE, 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 Transferred Asset or in connection with the operation of any Transferred
System or of Holdco, 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 6.22(d), to TWE's
knowledge, no Transferred Asset nor any property to which Hazardous Substances
located on or resulting from the use of any Transferred Asset (or from the
operation of the Transferred System or Holdco), 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, TWE has provided or made
available to Comcast Trust and Comcast Subsidiary copies of all material
environmental assessments, or other material environmental studies, audits,
tests, reviews or other analyses of or relating to the Transferred Assets and/or
Transferred Systems.
(f) None of the tangible Transferred Assets (excluding the
Cash Amount) are located in New Jersey or Connecticut.
Section 6.23 Taxes. Except as would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect or as
set forth on Schedule 6.23:
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(a) All material Applicable Tax Returns 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 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 Transferred 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 Transferred 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 6.23(e) sets forth a list of all jurisdictions
(whether foreign or domestic) in which Holdco or any of the Transferred 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 Transferred 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 Transferred Business, except for liens for Applicable Taxes
not yet due and payable or being contested in good faith by appropriate
proceedings.
ARTICLE 7
COVENANTS
Section 7.1 Certain Affirmative Covenants of TWE. Except as
otherwise expressly contemplated hereunder (including with respect to each of
the Transactions) or as Comcast Subsidiary may otherwise consent in writing,
which if requested shall not be unreasonably withheld or delayed, between the
date hereof and the Closing Time, TWE, with respect to each of the Transferred
Systems and the Transferred Assets, shall, and shall cause its Affiliates to:
(a) operate or cause to be operated each Transferred System
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);
(b) perform all of its obligations under all of the
Transferred Systems Franchises, Transferred Systems Licenses and Transferred
Systems Contracts
54
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 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 Transferred Assets and the operation of the Transferred Systems
in such amounts and with respect to such risks as are customarily maintained
with respect to the TWE Retained Cable Systems and (ii) enforce in good faith
the rights under insurance policies referred to in (i)(B);
(d) deliver to Comcast Trust and Comcast Subsidiary reasonably
promptly true and complete copies of all monthly trial balances, financial
statements and Subscriber and other service recipient (including Individual
Subscribers, Digital Subscribers, Telephony Subscribers and High Speed Data
Subscribers) counts with respect to each Transferred System, management and
operating reports and any written reports or data with respect to the operation
of any Transferred System prepared by or for TWE or its Affiliates at any time
from the date hereof until Closing;
(e) maintain or cause to be maintained its books, records and
accounts with respect to the Transferred Assets and the operation of each
Transferred System in the usual, regular and ordinary manner on a basis
consistent with past practices;
(f) [Intentionally Omitted]
(g) use commercially reasonable efforts to renew any
Transferred System Licenses which expire prior to the Closing Date;
(h) use its commercially reasonable efforts to obtain in
writing as promptly as practicable the TWE Required Consents and any other
consent, authorization or approval necessary or commercially advisable in
connection with the transactions contemplated hereunder (and shall deliver to
Comcast Trust and Comcast Subsidiary copies of any such TWE Required Consents
and such other consents, authorizations or approvals as it obtains), in each
case in form and substance reasonably satisfactory to Comcast Subsidiary;
provided, that (i) TWE 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) TWE shall afford Comcast
Subsidiary the opportunity to review and approve the form of TWE Required
Consent and such other consents prior to delivery to the party whose consent is
sought and TWE shall not 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 Transferred Systems Franchises, Transferred Systems Licenses or
Transferred Systems Contracts of the Transferred Systems that are not approved
in writing by Comcast Subsidiary, which approval shall not be unreasonably
withheld or delayed. TWE agrees, upon reasonable prior notice, to allow
representatives of Comcast Subsidiary to attend meetings and hearings before
applicable Governmental Authorities in connection with the transfer of
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any Transferred Systems License or Transferred Systems Franchise.
Notwithstanding the foregoing, TWE shall not have any further obligation to
obtain TWE 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 that Holdco enter into a new agreement with
such Person on overall terms which are no less favorable to Holdco than the
original license agreement was to TWE, in which case TWE shall cooperate with
and assist Comcast Subsidiary and Holdco in obtaining such agreements; and
(ii) for any business radio license or any private
operational fixed service ("POFS") microwave license which TWE 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 Holdco
under FCC rules with respect thereto;
(i) (i) use its commercially reasonable efforts to preserve
the current business organization of each Transferred System intact, including
preserving existing relationships with Governmental Authorities, suppliers,
customers and others having business dealings with each Transferred System,
unless Comcast Subsidiary requests otherwise, (ii) use commercially reasonable
efforts to keep available the services of its employees providing services in
connection with each Transferred System, (iii) continue normal marketing,
advertising and promotional expenditures with respect to each Transferred System
and (iv) prior to January 1, 2006, (A) make capital expenditures in accordance
with the 2005 capital budget of each Transferred System set forth on Schedule
7.1(i)(A) (the "Capital Budget"), (B) make aggregate expenditures (other than
Variable Expense Items) in accordance with the 2005 operating budget for each
Transferred System set forth on Schedule 7.1(i)(B) (the "Operating Budget", and
together with the Capital Budget, the "Budgets"), (C) until January 1, 2006,
with respect to Transferred Systems included in the Specified Division, make
telephony capital and telephony operating expenditures with respect to the
Transferred Systems on a non-discriminatory basis as compared to the Specified
Division; 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 Budgets and (D) until
January 1, 2006, make capital and operating expenditures with respect to the
Xxxxxxx cable systems on a non-discriminatory basis as compared to the Monroe
cable systems; provided, further, that, in any event, deviations (positive or
negative) in any expenditures contemplated by the telephony budgets included in
any Budget shall be deemed to be in accordance with such Budget so long as TWE
shall have used commercially reasonable efforts to operate in accordance with
such telephony budgets;
(j) except as otherwise provided in this Agreement, TWE will
use commercially reasonable efforts to promptly notify Comcast Trust and Comcast
Subsidiary of any circumstance, event or action by TWE or any of its
Subsidiaries or otherwise, that becomes known to TWE, (i) which, if known at the
date of this Agreement, would have been required to be disclosed in or pursuant
to this Agreement or
56
(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
to which it or any Transferring Person is a party not being true and correct in
all material respects (or if qualified by materiality or Material Adverse
Effect, 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 TWE solely pursuant to this subsection shall not be deemed to update the
Schedules to this Agreement under Section 7.11 hereof unless TWE expressly
specifies that such notification is intended as an update pursuant to Section
7.11;
(k) give or cause to be given to Comcast Subsidiary, 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 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 of the Transferred Systems and (ii) as soon as reasonably
possible after filing, copies of all copyright returns filed in connection with
any Transferred System; provided, that in the case of clause (i), before any
such FCC Forms 1200, 1205, 1210, 1215, 1220 or 1240 are filed, TWE and Comcast
Subsidiary shall consult in good faith concerning the contents of such forms;
(l) use commercially reasonable efforts to implement all rate
changes provided for in the Operating Budget and, with respect to periods after
January 1, 2006, rate changes in the ordinary course of business; and
(m) maintain inventory sufficient for the operation of the
Transferred Systems in the ordinary course of business for a period of time
consistent with the period of time such inventory is maintained for the TWE
Retained Cable Systems.
Section 7.2 Certain Negative Covenants of TWE. Except as
otherwise expressly contemplated hereunder (including with respect to the Holdco
Transaction) or as Comcast Subsidiary may otherwise consent in writing, which if
requested shall not be unreasonably withheld or delayed, between the date hereof
and the Closing, TWE shall not, and shall cause its Affiliates not to, with
respect to any of the Transferred Systems or the Transferred Assets (and, in the
case of Section 7.2(d) (and, to the extent relating thereto, Section 7.2(r), the
transactions contemplated hereby):
(a) modify, terminate, renew, suspend or abrogate any material
Transferred Systems Contract other than in the ordinary course of business;
(b) modify in any material respect, terminate, renew, suspend
or abrogate any Transferred Systems Franchise or material Transferred Systems
License;
(c) except as set forth on Schedule 7.2(c), and except for
Contracts in respect of SMATV Acquisitions (other than any SMATV Acquisition in
57
which the SMATV Purchase Price Per Subscriber exceeds $3,500) 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 the
Transferred Systems which would be binding on Holdco after Closing and which (i)
would involve an aggregate expenditure or receipt in excess of $500,000 after
Closing; (ii) 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); (iii) is not being entered into in the usual regular and
ordinary course and in accordance with past practices; (iv) would limit the
freedom of Holdco, Comcast or any Affiliate of Comcast to compete in any line of
business or with any Person or in any area; (v) relates to the use of the
Transferred Assets by third parties to provide, telephone or high speed data
services; (vi) is not on arm's-length terms; or (vii) is with TWE or an
Affiliate of TWE and is not terminated prior to the Closing without penalty and
without liability on the part of Holdco or its Affiliates from and after
Closing;
(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 Document to which it or any of its Affiliates is a party not being
true and correct in all material respects (or if qualified by materiality or
Material Adverse Effect, 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) except for rate increases provided for in the Operating
Budget or with respect to periods after January 1, 2006, rate changes in the
ordinary course of business, change the rate charged for any level of cable
television service;
(g) except as required by applicable Legal Requirements and
except as set forth on Schedule 7.2(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 (provided that deletions of channels shall not be considered a
change in channel lineup);
(h) except for "staying" or "sticking" bonuses to induce such
employees to remain with the Transferred Systems and which shall be paid for by
TWE on or prior to Closing, grant or agree to grant to any employee of the
Transferred Systems 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, however, that the foregoing shall not
apply to any Retained Employees;
(i) engage in any hiring practices that are materially
inconsistent with past practices;
58
(j) transfer the employment duties of any employee of a
Transferred System from such Transferred System to a different business unit or
Subsidiary of TWE or any of its Affiliates; provided, however, that the
foregoing shall not apply to any Retained Employees;
(k) sell, assign, transfer or otherwise dispose of any
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, (iii) the Holdco Transaction, or (iv) transfers solely among TWE
and its Affiliates (whereupon any such transferee would become a "Transferring
Person" hereunder); provided, for the avoidance of doubt, that the foregoing
clause shall not permit the disposition of any Transferred System other than
pursuant to the Transactions;
(l) mortgage, pledge or subject to any material Lien that
would survive the Closing, any of the Transferred Assets or the Transferred
Systems other than Permitted Liens;
(m) enter into any Transferred System specific programming
agreement (other than Local Retransmission Consent Agreements) relating to the
Transferred Assets or the Transferred Systems that is not terminated prior to
the Closing without penalty and without liability on the part of Holdco or its
Affiliates from and after Closing;
(n) 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 required by reason of a concurrent (including any
transition period) change in GAAP or applicable law or any change respecting the
TWE Retained Cable Systems made in accordance with GAAP; provided, that no such
change shall affect the calculation of the Closing Net Liabilities Amount;
(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 TWE Retained Cable Systems; provided that (i) in no event shall TWE or any
of its Affiliates take any action that would cause TWE to be treated as an
entity other than a partnership for U.S. federal Income Tax purposes and (ii) in
no event shall TWE or any of its Affiliates take any action that would cause
Holdco to be treated as an entity that is separate and apart from TWE for U.S.
federal Income Tax purposes.
59
(q) convert any billing systems used by the Transferred
Systems (other than the conversion described on Schedule 7.2(q)); or
(r) announce an intention, commit or agree to do any of the
foregoing.
Section 7.3 Certain Additional Covenants Regarding Required
Consents; HSR Act Filing.
(a) By no later than 45 days after the date hereof, Comcast
Trust, Comcast Subsidiary and TWE shall provide each other with all necessary
documentation to allow filing of FCC Forms 394 with respect to the Transferred
Systems Franchises. Comcast Trust, Comcast Subsidiary and TWE shall use
commercially reasonable efforts to cooperate with one another and file with the
applicable Governmental Authority FCC Forms 394 for each of the Transferred
System Franchises 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 7.1(h), from and after the date hereof,
the parties shall use their commercially reasonable efforts to cooperate with
each other in obtaining the TWE Required Consents and any other consent,
Authorization or approval, including with the relevant franchising authorities
in respect of the Transferred Systems Franchises, necessary or commercially
advisable with respect to the transactions contemplated hereunder including, to
the extent commercially reasonable, the attendance of representatives of Comcast
Trust and Comcast Subsidiary at meetings and hearings before applicable
Governmental Authorities in connection with the transfer of any Transferred
Systems License or Transferred Systems Franchise and by providing appropriate
financial statements, insurance certificates and surety bonds required to obtain
such TWE 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,
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.
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
60
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
Subsidiary and TWE.
(d) The parties understand and agree that as part of the FCC
Trust Requirements the declaration of trust of Comcast Trust may be required to
be amended in order to permit the TWE Redemption or the Comcast Subsidiary
Transfer, and any such amendment would require approval of the FCC. If such
amendment is required, Comcast Trust and Comcast Subsidiary agree to use
commercially reasonable efforts to obtain such approval prior to Closing, and if
such approval is obtained, Comcast Trust and Comcast Subsidiary will amend the
declaration of trust of Comcast Trust to permit the consummation of the
transactions contemplated by this Agreement.
Section 7.4 Confidentiality and Publicity.
(a) Unless and until Closing occurs, any non-public
information that any party may obtain from the other 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 another
party in connection with this Agreement unrelated to the Transferred Systems or
Transferred Assets and TWE and its Affiliates shall keep confidential any
non-public information in their possession related to the Transferred Systems
and Transferred Assets (any such information that a party is required to keep
confidential pursuant to this sentence shall be referred to as "Confidential
Information"). No party shall disclose any Confidential Information to any other
Person (other than its Affiliates and its 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), and (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 the
opportunity, to obtain an appropriate protective order, or other satisfactory
assurance of confidential treatment, for the information compelled to be
disclosed and (iii) such party may use and disclose such information to the
extent reasonably 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 and (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
61
its Affiliates having securities listed on a national securities exchange or
quotation system. 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. For the avoidance of doubt, Comcast Trust may disclose any
Confidential Information to Comcast Subsidiary and its Affiliates and their
respective representatives.
(b) Each of the parties hereto shall consult with and
cooperate with the others with respect to the content and timing of all press
releases and other public announcements, and any oral or written statements to
Transferred System 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, no party hereto 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 a request for a consent shall respond promptly to any such request for
consent and approval.
Section 7.5 Retransmission Consent Agreements. On or prior to
the date which is 45 days prior to the anticipated date of Closing, TWE shall
deliver to Comcast Trust and Comcast Subsidiary a list of all Local
Retransmission Consent Agreements then in effect with respect to the Transferred
Systems. By written notice delivered to TWE at least 30 days prior to Closing,
Comcast Subsidiary may, in its sole discretion, elect to have Holdco assume one
or more of the Local Retransmission Consent Agreements, in which case TWE shall
use commercially reasonable efforts to obtain any required Authorizations for
such assumption. The foregoing shall be subject to Section 2.1(d) to the extent
any related Authorization is not obtained. Any Local Retransmission Consent
Agreements which Comcast Subsidiary elects to have Holdco assume pursuant to
this Section 7.5 shall be included in the Transferred Assets. To the extent the
provisions of this Section 7.5 conflict with any other provision of this
Agreement, the provisions of this Section 7.5 shall control.
Section 7.6 Title Insurance Commitments. TWE shall use
commercially reasonable efforts to provide to Comcast Subsidiary, within 90 days
from the date TWE 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 Holdco title
insurance policies ("Title Commitments") in amounts reasonably satisfactory to
Comcast Subsidiary 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 Holdco to each parcel of Owned Property or Leased Property so designated by
notice (a "Title Commitment Notice") within 30 days from the date of this
Agreement 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
62
satisfactory to Comcast Subsidiary, and (b) surveys of each parcel of Owned
Property or Leased Property so designated in the Title Commitment Notice
("Surveys"), in such form as is reasonably necessary to obtain the title
insurance to be issued pursuant to the related Title Commitments with the
standard printed exceptions relating to survey matters deleted, certified to
Holdco, Comcast Subsidiary and to the Title Company with respect to that Owned
Property or Leased Property, provided that TWE'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 TWE
be obligated to procure a Title Commitment for any 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 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, shall be borne by Comcast Subsidiary, except for attorney's
fees and other incidental costs incurred by Time Warner Cable in connection with
providing such Title Commitments and Surveys and otherwise complying with this
Section 7.6. If Comcast Subsidiary notifies TWE within 30 days following
delivery to Comcast Subsidiary of both the Title Commitments and the Surveys of
any Lien (other than a Permitted Lien or a Lien set forth in Schedule 6.4(a))
which prevents access to or which could prevent or impede in any material way
the use or operation of any parcel of Owned Property or Leased Property for
which a Title Commitment is required pursuant to this Section 7.6 for the
purposes for which it is currently used or operated by TWE (each a "Title
Defect"), TWE shall exercise commercially reasonable efforts, including paying
attorney's fees and other incidental costs associated with any such efforts, to
(i) remove such Title Defect, or (ii) 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, Comcast Subsidiary and TWE shall enter into a written
agreement containing TWE's commitment to use commercially reasonable efforts for
180 days following Closing to remedy the Title Defect following Closing on terms
satisfactory to Comcast Subsidiary, in its reasonable discretion.
Notwithstanding anything to the contrary contained in this Agreement, in no
event shall TWE or its Affiliates be required to remove any Liens encumbering
the Owned Property and Leased Property except as expressly set forth in this
Section 7.6 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 TWE
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 TWE's or its Affiliates' acts for the period between
Closing and the recording of the applicable deed or assignment of lease with
respect to such Owned Property or Leased Property), and in no event shall TWE 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 7.6, in no event
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shall TWE or its Affiliates be required to give a non-imputation affidavit to
the title insurance company.
Section 7.7 [Intentionally Omitted].
Section 7.8 Post-Closing Obtaining of Consents. Subsequent to
Closing, and subject to Section 2.1(d), TWE 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
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 Comcast Subsidiary. A true and complete copy of any such
Post-Closing Consent shall be delivered to each of Comcast Subsidiary and Holdco
promptly after it has been obtained.
Section 7.9 Transitional Services. TWE shall provide to
Holdco, upon written request from Comcast Subsidiary received by TWE no later
than 30 days prior to the anticipated date of Closing, such subscriber billing,
high speed data, telephony and other services as may be reasonably requested by
Comcast Subsidiary in connection with the operation of the Transferred Systems
for a commercially reasonable period following Closing to be mutually agreed
upon in good faith by TWE and Comcast Subsidiary to allow for transition of
existing services or establishment of replacement services ("Transitional
Services"). Holdco shall promptly reimburse TWE for the actual out-of-pocket
cost to TWE and its Affiliates of providing any Transitional Services. All other
terms and conditions for the provision of Transitional Services shall be
reasonably satisfactory to both Comcast Subsidiary and TWE and subject to
applicable Legal Requirements.
Section 7.10 Cooperation Upon Inquiries as to Rates. Comcast
Subsidiary and TWE agree as follows:
(a) For a period of 12 months after Closing, TWE shall
cooperate with and assist Holdco by providing, upon request, all information in
TWE's or its Affiliates' possession (and not previously provided to Comcast
Subsidiary or Holdco) relating directly to the rates set forth in Schedule 6.8
or the then current rates with respect to any Transferred System, if different
from the rates set forth on such Schedule, or the rates on any FCC Form 393,
1200, 1205, 1210, 1220, 1235, or 1240 that Holdco 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.
(b) If at any time prior to Closing, any Governmental
Authority commences a Rate Regulatory Matter with respect to a Transferred
System, TWE shall (i) promptly notify Comcast Subsidiary, and (ii) keep Comcast
Subsidiary informed as to the progress of any such proceeding. Without the prior
written consent of Comcast Subsidiary, which consent shall not be unreasonably
withheld or delayed, TWE shall not settle any such Rate Regulatory Matter,
either before or after Closing, if (A) Holdco or any of its Affiliates would
have any obligation under such settlement, or (B) such
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settlement would reduce the rates permitted to be charged by Holdco or any of
its Affiliates after Closing below the rates set forth on Schedule 6.8 or
otherwise then in effect. Notwithstanding anything to the contrary herein, after
Closing, Holdco 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. If Holdco elects to assume
control of the defense of any such Rate Regulatory Matter, TWE shall have the
right to participate, at its expense, in the defense of such matter.
Notwithstanding the provisions set forth in Article 12 of this Agreement, Holdco
may settle any such Rate Regulatory Matter only upon TWE's prior written
consent, which consent shall not be unreasonably withheld or delayed, if TWE
would have any obligation with respect to such settlement in accordance with
Article 12 hereof or otherwise.
(c) If at any time after Closing, any Governmental Authority
commences a Rate Regulatory Matter with respect to a Transferred System
involving any time period prior to Closing, Comcast Subsidiary shall cause
Holdco to (i) promptly notify TWE, and (ii) keep TWE informed as to the progress
of any such proceeding. TWE shall have the right to participate, at its expense,
in the defense of such matter. Notwithstanding the provisions set forth in
Article 12 of this Agreement, Holdco may settle any such Rate Regulatory Matter
only upon TWE's prior written consent, which consent shall not be unreasonably
withheld or delayed, if TWE would have any obligation with respect to such
settlement in accordance with Article 12 hereof or otherwise.
(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 TWE or any of its Affiliates is required following
Closing pursuant to any Rate Regulatory Matter or any other Legal Requirement,
settlement or otherwise to reimburse any Subscribers for any Subscriber payments
previously made by it, including fees for cable television service, late fees
and similar payments, Comcast Subsidiary shall cause Holdco, at TWE's request,
to make such reimbursement through Holdco's billing system on terms specified by
Comcast Subsidiary. In such event, TWE shall promptly pay to Holdco all such
payments made by Holdco through its billing system. Without limiting the
foregoing, Comcast Subsidiary shall cause Holdco to provide to TWE all
information in its possession that is reasonably required by TWE in connection
with such reimbursement.
Section 7.11 Updated Schedules.
(a) On one or more occasions, TWE may, at least five Business
Days prior to Closing: supplement Schedule 6.5(a) 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
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terms of this Agreement and are required to be disclosed in Schedule 6.5(a) in
order for the representation and warranty contained in Section 6.5(a) to be
true, complete and correct or supplement any other Schedule to this Agreement
(other than the Schedules to any of Section 6.1, 6.2, 6.15 or 6.18), 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 TWE 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 6.5(a) and any supplement pursuant to
clause (ii) above shall be made with reasonable specificity and shall identify,
to TWE'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 TWE 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 7.11; provided,
that for purposes of determining the satisfaction of the condition set forth in
Section 9.1(b), 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, TWE first becomes aware of any
event, act, occurrence or omission which, if known on the fifth day prior to
Closing would have been permitted to be included in a supplement pursuant to
clause (ii) of the foregoing paragraph, then TWE may make such supplement as
provided above (in which case such supplement shall be deemed to have been made
pursuant to clause (ii) of the foregoing paragraph); provided that TWE may only
utilize the rights in this paragraph on one occasion and, if Comcast Subsidiary
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 7.12 Commercially Reasonable Efforts; Further
Assurances.
(a) Subject to the terms and conditions of this Agreement, the
parties hereto shall 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 the parties hereto agrees to, and, in the case
of TWE and Comcast Subsidiary, to cause its 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 Subsidiary and TWE) and to take
such other commercially reasonable actions as may be necessary or desirable in
order to evidence, consummate or implement expeditiously the transactions
contemplated by this Agreement and to vest in Holdco the same title to the
Transferred Assets that TWE
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(together with its Affiliates) had with respect thereto immediately prior to the
Transactions.
Section 7.13 Post-Closing Access to Personnel Records(a) After
the Closing Date, TWE shall, and shall cause its Affiliates to, provide Comcast
Subsidiary and Holdco with access to, and the right to make copies or extracts
of, pertinent information from the personnel files and records of TWE and its
Affiliates relating to Transferred System Employees in connection with
litigation, administrative proceedings, payment of Applicable Taxes or any other
valid business reason from time to time during normal business hours upon
reasonable notice from Comcast Subsidiary or Holdco (i) with respect to matters
other than matters relating to Applicable Taxes, for a period not to exceed one
year from the Closing Date or (ii) with respect to matters relating to
Applicable Taxes, until the expiration of the statute of limitations applicable
to such Taxes, in each case except to the extent that TWE is required by law to
keep such files and records confidential.
Section 7.14 [Intentionally Omitted]
Section 7.15 Environmental Reports. Following the date hereof,
Comcast Subsidiary may upon reasonable advance written notice and during normal
business hours, at Comcast Subsidiary's expense, perform any environmental site
assessments of the Owned Property or Leased Property (subject to the final
sentence of this Section 7.15) as Comcast Subsidiary determines, in its sole
discretion, to have performed; provided that prior to taking any samples of soil
or groundwater for testing, Comcast Subsidiary shall have a reasonable basis for
determining that such sampling is appropriate. TWE shall cooperate with all
reasonable requests of Comcast Subsidiary and its consultants with respect to
the conduct of such assessments or sampling. Any assessment performed pursuant
to this Section 7.15 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 7.15 at a Leased Property
shall be subject to TWE not being prohibited from performing such assessment
pursuant to the lease for such Leased Property.
Section 7.16 Certain Notices. Prior to the Closing, TWE, with
respect to the Transferred Systems, 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 System Franchises that shall expire within
36 months after any date between the date of this Agreement and Closing Date.
Section 7.17 Franchise Expirations. From the date hereof until
Closing, TWE shall, and shall cause its Affiliates to, use commercially
reasonable efforts to obtain renewals or valid extensions of any Transferred
Systems Franchises which expire on or before June 30, 2008, in the ordinary
course of business. Neither TWE 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 of the
Transferred System Franchises that are not reasonably acceptable to Comcast
Subsidiary. TWE agrees, from the date hereof until Closing, upon reasonable
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prior written notice, to allow representatives of Comcast Subsidiary to attend
meetings and hearings before applicable Governmental Authorities in connection
with the renewal or extension of any Transferred Systems License or Transferred
Systems Franchise.
Section 7.18 Insurance. TWE will use commercially reasonable
efforts to take such actions as are necessary to cause insurance policies of TWE
and its Affiliates that immediately prior to Closing provide coverage to or with
respect to the Transferred Business, the Transferred Assets or the Transferred
Systems to continue to provide such 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; provided that to the extent TWE takes any action
with respect to its umbrella insurance policies that similarly effects all of
the TWE Retained Cable 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 TWE), TWE shall not be deemed to have breached
this Section 7.18 and shall have no liability with respect thereto. TWE will
give Comcast Subsidiary 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. TWE shall, and shall cause its Affiliates to, cooperate with and
assist Holdco, if Holdco determines to make any claim under any such policy with
respect to any pre-Closing act, omission or event. Holdco shall use commercially
reasonable efforts to promptly notify TWE when it becomes aware of any such
claim; provided, that the failure of Holdco to provide such notice shall not
relieve TWE of its obligations under this Section 7.18, except to the extent
that TWE's rights under the applicable insurance policy are prejudiced by such
failure to give notice.
Section 7.19 Promotional Campaigns. Between the date hereof
and the Closing, TWE and its Affiliates shall not initiate any Subscriber
campaigns or promotions on a local or regional level with respect to the
Transferred Systems, 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 the Transferred Systems) as subscriber campaigns or promotions
undertaken with respect to the relevant the Transferred Systems during the year
ended December 31, 2004 in the relevant market, (ii) any such campaigns or
promotions that are not materially less favorable to the Transferred Systems
than campaigns and promotions being conducted with respect to TWE Retained Cable
Systems on an overall basis, (iii) any such campaigns or promotions that are not
materially less favorable to the Transferred Systems than campaigns and
promotions being conducted by Comcast and its Affiliates in the same 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 Transferred Systems than the campaigns and promotions being
conducted by the applicable overbuilder or RBOC or (y) not materially less
favorable to the Transferred Systems than being conducted by any direct
broadcast satellite providers in the same DMA (but only in the relevant market
of the relevant campaign or promotion).
Section 7.20 Launch Support. At the Closing, TWE shall deliver
to Comcast Subsidiary a schedule of the services subject to Specified Launch
Support
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Liabilities and, with respect to each such service, the remaining time period
(which shall in no event be later than the fifth anniversary of the date hereof)
in which an action in respect of any Transferred System could result in an
obligation to make a payment in respect of a Specified Launch Support Liability.
Section 7.21 Additional Financial Information. TWE shall use
its commercially reasonable efforts, and shall cause its Affiliates to use its
commercially reasonable efforts to, provide Comcast Subsidiary and its
Affiliates with financial statements and related information (collectively,
"Financial Information") sufficient to permit any of them to fulfill their
obligations to include financial disclosure relating to the Transferred Systems
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 Financial Information is included in or incorporated by reference into a
prospectus for an offering of securities by Comcast Subsidiary or any of its
Affiliates prior to Closing, TWE shall use commercially reasonable efforts to
cause the independent auditors of TWE to provide customary assistance to Comcast
Subsidiary and its Affiliates and its underwriters in connection with such
financing, including the provision of consent and comfort letters addressed to
the Securities and Exchange Commission, 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
Securities and Exchange Commission with respect to the Financial Information.
Comcast Subsidiary shall reimburse TWE for reasonable costs and expenses
incurred by TWE or its Affiliates pursuant to this Section 7.21, including
reasonable out-of-pocket costs and expenses.
Section 7.22 Pre-Closing Access. From the date hereof until
the Closing, subject to applicable law, TWE shall, and shall cause its
Affiliates to, (i) afford Comcast Subsidiary, Comcast Trust and their respective
authorized representatives reasonable access, during regular business hours,
upon reasonable advance notice, to the Transferred Systems (including the
Transferred Assets and employees), (ii) furnish, or cause to be furnished, to
Comcast Subsidiary or Comcast Trust any financial and operating data and other
information with respect to such Transferred Systems as Comcast Subsidiary or
Comcast Trust from time to time reasonably requests, and (iii) instruct its
employees, and its counsel and financial advisors to cooperate with Comcast
Subsidiary and Comcast Trust in their reasonable investigation of the
Transferred Systems; provided that, in each case, any such access shall be
designed so as to not unreasonably disrupt the business and operations of TWE or
its Affiliates; provided further that in no event shall Comcast Subsidiary or
Comcast Trust 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, TWE and Comcast Subsidiary or Comcast Trust, as the case may be, 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 TWE and its
Affiliates, but taking into account Comcast Subsidiary's and Comcast Trust's
need for such information in connection with the
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transactions contemplated hereby), (C) any information to the extent such
disclosure would reasonably be expected to violate any obligation of TWE or its
Affiliates with respect to confidentiality so long as, with respect to
confidentiality, to the extent specifically requested by Comcast Subsidiary or
Comcast Trust, TWE 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
Comcast Subsidiary and Comcast Trust shall conduct any environmental sampling
solely in the manner contemplated by Section 7.15. All requests made pursuant to
this Section 7.22 shall be directed to an executive officer of TWE or such
Person or Persons as may be designated by TWE. All information received pursuant
to this Section 7.22 shall, prior to the Closing, be governed by Section 7.4(a)
and, to the extent applicable, the terms of the Confidentiality Agreements. No
information or knowledge obtained in any investigation by Comcast Subsidiary,
Comcast Trust or their respective Affiliates pursuant to this Section 7.22 shall
affect or be deemed to modify any representation or warranty made by TWE or its
Affiliates hereunder or under any Transaction Document.
Section 7.23 Adelphia Agreements. Neither Comcast Parent nor
Time Warner Cable shall, or shall permit any of their respective Affiliates to,
terminate the Adelphia Agreement to which it or its Affiliate is party by mutual
agreement with Adelphia without the other party's consent. Neither Time Warner
Cable nor Comcast Parent shall, or shall permit any of their respective
Affiliates to, without the consent of the other party, amend or grant any waiver
under any Adelphia Agreement or any Ancillary Agreement (as defined in each
Adelphia Agreement) to which such party or its Affiliate is a party (and, in the
case of the TWC Adelphia Agreement, including the terms and conditions of the
Interim Steps), in each case in a manner that (i) would reasonably be expected
to delay the satisfaction of the conditions in Sections 9.1(a) or 9.2(a) or
alter the rights or obligations of the parties hereunder or (ii) in the case of
the TWC Adelphia Agreement, would alter the terms and conditions applicable to
the Interim Steps in a manner that could reasonably be expected to be adverse to
Comcast Trust, Comcast Subsidiary or their respective Affiliates.
Section 7.24 Ordinary Course from Closing to Closing Time.
During the time between the Closing and the Closing Time, Comcast Subsidiary and
its Affiliates shall operate or cause to be operated the Transferred Systems and
Transferred Assets 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.
Section 7.25 TWE Partnership Agreement. From and after the
Closing, Comcast Trust and its Affiliates shall not be entitled to any
distribution under, or in respect of, the TWE Partnership Agreement; provided,
however, that Comcast Trust shall be entitled to distributions pursuant to
Section 5.3 of the TWE Partnership Agreement (subject to its obligation under
Section 5.3 to make contributions to TWE of any excess distributions pursuant to
such Section) determined by reference to the Fiscal Years (as defined in the TWE
Partnership Agreement) or portions thereof ending on the Closing.
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ARTICLE 8
TAX MATTERS
Section 8.1 Allocation of Profits and Losses. All items of
TWE's income, gain, loss deduction and other tax items with respect to the
portion of the partnership taxable year ending on the Closing Date shall be
allocated for Income Tax purposes based on an actual Closing of TWE's books as
of the Closing Date.
Section 8.2 Consistent Reporting. The parties intend and agree
to treat the TWE Redemption as a partnership distribution as described in
Section 731(a) of the Code for all Income Tax purposes (unless required by a
change in applicable Tax law or a good faith resolution of a contest).
Section 8.3 Survival of Article IX of TWE Partnership Agreement.
Notwithstanding anything in this Agreement or any other Agreement to the
contrary, Article IX (other than Sections 9.3(a) and (b), which shall not
survive after the Closing Date) of the TWE Partnership Agreement shall survive
after the Closing Date in respect of taxable years of TWE ending before the
Closing Date or portions of any taxable years ending after, but including, the
Closing Date. Without limiting the generality of the foregoing, Comcast
Subsidiary shall continue to have the right after the Closing Date to obtain
from TWE information and documents, and to participate in any tax audit, tax
litigation and other proceedings as contemplated by the TWE Partnership
Agreement as in effect immediately prior to the Closing.
Section 8.4 Cooperation. The parties agree to cooperate in good
faith to minimize the amount of income, if any, recognized by any of them and/or
by TWE as a result of any actual or deemed distribution of TWE's assets or
liabilities for federal Income Tax purposes in connection with the TWE
Redemption, including, without limitation, pursuant to an agreement similar to
that described in Treas. Reg. Section 1.751-1(g), Example 3(c) specifying the
particular items of property, if any, deemed exchanged.
Section 8.5 Tax Returns with respect to Applicable Taxes.
(a) TWE shall have exclusive and sole responsibility for the
preparation and filing of all Applicable Tax Returns that are required to be
filed with any Governmental Authority on or prior to the Closing Date.
(b) Holdco shall prepare and file all Applicable Tax Returns
that are required to be filed with any Governmental Authority after the Closing
Date. Holdco shall deliver any such Straddle Period Applicable Tax Returns to
TWE for its review at least 30 days prior to the date on which such Straddle
Period Applicable Tax Return is required to be filed. Except as provided herein,
all Straddle Period Applicable Tax Returns shall (unless required by a change in
applicable Tax law or a good faith resolution of a contest) be prepared on a
basis consistent with the elections, accounting methods, conventions,
assumptions and principles of taxation on the most recently filed Applicable Tax
Returns of Holdco or a previous owner of the Transferred Systems to the
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extent relevant to such Transferred Systems. Subject to the foregoing, TWE and
Holdco shall reasonably cooperate with each other in the preparation and filing
of any Straddle Period Applicable Tax Returns.
ARTICLE 9
CONDITIONS PRECEDENT
Section 9.1 Conditions to the Comcast Parties' Obligations.
The obligations of the Comcast Parties to consummate the transactions
contemplated by this Agreement shall be subject to the following conditions,
which may be waived by Comcast Subsidiary (provided, that the condition set
forth in Section 9.1(n) shall not be waived without the prior written consent of
Comcast Trust):
(a) Conditions to Adelphia Transactions. Each of the
conditions to the closing under the Adelphia Agreements (other than conditions
to be satisfied at the closing under any such Adelphia Agreement that will be so
satisfied) shall have been satisfied or waived and Comcast Subsidiary shall be
reasonably satisfied that any conditions to be satisfied at the closing under
any such Adelphia Agreement shall be so satisfied or waived promptly following
the Closing; provided, that if the TWC Adelphia Agreement is amended pursuant to
Section 5.15 of the TWC Adelphia Agreement, then this Section 9.1(a) shall be
deemed to apply only to the conditions to the closing under the TWC Adelphia
Agreement.
(b) Accuracy of Representations and Warranties. The
representations and warranties of TWE or any Transferring Person in this
Agreement and in any Transaction Document to which TWE or any Transferring
Person is a party, if qualified by a reference to materiality or Material
Adverse Effect, are true and, if not so qualified, are true in all material
respects at and as of Closing with the same effect as if made at and as of
Closing except to the extent a different date is specified therein, in which
case such representation and warranty if qualified by a reference to materiality
or Material Adverse Effect shall be true and correct as of such date and, if not
so qualified, shall be true and correct in all material respects as of such
date.
(c) Performance of Agreements. TWE, Holdco and each
Transferring Person has performed in all material respects all obligations and
agreements and has complied in all material respects with all covenants in this
Agreement and in any Transaction Document to which it is a party to be performed
and complied with by it at or before Closing.
(d) Officer's Certificate. Comcast Subsidiary has received a
certificate executed by an executive officer of TWE, dated as of Closing,
reasonably satisfactory in form and substance to Comcast Subsidiary, certifying
that the conditions specified in Sections 9.1(b) and 9.1(c) have been satisfied,
as of Closing.
(e) 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
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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 Comcast Trust, Comcast Subsidiary,
Holdco or any of their Affiliates of all or any significant portion of the
Transferred Assets after Closing or otherwise materially and adversely affects
the operation of the 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 Systems 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.
(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 Subsidiary has received evidence, in
form and substance reasonably satisfactory to it, that all of the TWE Required
Consents (other than from the Transferred Systems Franchises which are addressed
in Section 9.1(i)), have been obtained and are in effect.
(h) [Intentionally Omitted].
(i) Franchise Required Consents. The aggregate number of
Individual Subscribers served by the Transferred Systems in the Service Areas
that are, as of the Closing Time, Transferable Service Areas shall be at least
90% of Individual Subscribers served by the Transferred Systems at such time
(the "Required Threshold"); provided that if any portion of the Transferred
Systems containing headends are not within such Transferable Service Areas as of
the Closing Time, then any other portion of the Transferred Systems served by
such headends shall be deemed not to be included in such Transferable Service
Areas.
(j) Holdco Transaction. The Holdco Transaction shall have been
consummated.
(k) Opinion of FCC Counsel. Comcast Subsidiary and Comcast
Trust shall have received an opinion of Xxxxx Xxxx LLP, special FCC counsel to
TWE, dated as of Closing, in form and substance reasonably acceptable to TWE and
Comcast Subsidiary (the "TWE FCC Counsel Opinion").
(l) Documents and Records. TWE shall have delivered to Holdco
all 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 Owned Property or Leased Property.
(m) [Intentionally Omitted].
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(n) FCC Approval. Either the transfer of the Holdco Interests
to Comcast Subsidiary in the TWE Redemption or the Comcast Subsidiary Transfer
shall be permitted under applicable FCC Trust Requirements.
(o) TWE Title Policies. TWE shall have delivered to Comcast
Subsidiary 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 "TWE Title Policies"), insuring, subject only to Permitted Liens, Holdco's
fee or leasehold title in each parcel of the Owned Property and Leased Property
with respect to which a Title Commitment was required pursuant to Section 7.6
deleting or modifying to the reasonable satisfaction of Comcast Subsidiary 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 TWE 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 7.6, any Title Defects, or irrevocable Title
Commitments of the Title Company to issue such TWE Title Policies; provided,
that TWE's inability or failure to provide the Title Policies (or Title
Commitments to issue the same) shall not constitute a violation of the condition
set forth in this Section 9.1(o) 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.
(p) Schedule Update. TWE shall not have exercised its right to
update any Schedule to this Agreement pursuant to clause (ii) of the first
sentence of Section 7.11.
(q) Financial Information. TWE shall have delivered all of the
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 9.2 Conditions to TWE's Obligations. The obligations
of TWE to consummate the transactions contemplated by this Agreement shall be
subject to the following conditions, which may be waived by TWE:
(a) Conditions to Adelphia Transactions. Each of the
conditions to the closing under the Adelphia Agreements (other than conditions
to be satisfied at the closing under any such Adelphia Agreement that will be so
satisfied) shall have been satisfied or waived and TWE shall be reasonably
satisfied that any conditions to be satisfied at the closing under any such
Adelphia Agreement shall be so satisfied or waived promptly following the
Closing; provided, that if the TWC Adelphia Agreement is amended pursuant to
Section 5.15 of the TWC Adelphia Agreement, then this Section 9.2(a) shall be
deemed to apply only to the conditions to the closing under the TWC Adelphia
Agreement.
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(b) Accuracy of Representations and Warranties. The
representations and warranties of Comcast Trust and Comcast Subsidiary in this
Agreement and in any Transaction Document to which Comcast Trust or Comcast
Subsidiary is a party, if qualified by a reference to materiality, are true and,
if not so qualified, are true in all material respects at and as of Closing with
the same effect as if made at and as of Closing, except to the extent a
different date is specified therein, in which case such representation and
warranty if qualified by a reference to materiality shall be true and correct as
of such date and, if not so qualified, shall be true and correct in all material
respects as of such date.
(c) Performance of Agreements. Each of Comcast Trust and
Comcast Subsidiary has performed in all material respects all obligations and
agreements and has complied in all material respects with all covenants in this
Agreement and in any Transaction Document to which it is a party to be performed
and complied with by it at or before Closing.
(d) Officer's Certificate. (i) TWE has received a certificate
executed by the operating trustee of Comcast Trust, dated as of Closing,
reasonably satisfactory in form and substance to TWE, certifying that the
conditions specified in Sections 9.2(b) and 9.2(c), in each case solely with
respect to Comcast Trust, have been satisfied, as of Closing. (ii) TWE has
received a certificate executed by an executive officer of Comcast Subsidiary,
dated as of Closing, reasonably satisfactory in form and substance to TWE,
certifying that the conditions specified in Sections 9.2(b) and 9.2(c), in each
case solely with respect to Comcast Subsidiary, have been satisfied, as of
Closing.
(e) 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 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), 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 Systems 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.
(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) No Material Adverse Effect. Since the date hereof, there
have been no events, circumstances or conditions that, individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect.
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ARTICLE 10
CLOSING
Section 10.1 Closing; Time and Place. (a) Subject to the final
sentence of this Section 10.1, the closing of the transactions contemplated by
Section 2.1(a) of this Agreement ("Closing") shall take place at a time and
location mutually determined by Comcast Subsidiary and TWE on the last Business
Day of the calendar month in which all conditions set forth in Sections 9.1 and
9.2 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 and the conditions set forth in Section 9.1(a)
and Section 9.2(a) but subject to satisfaction of such conditions in Sections
9.1(a) and 9.2(a)), unless 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 occur earlier than July 1, 2005.
Section 10.2 TWE's Obligations. At Closing, TWE shall deliver
or cause to be delivered to Holdco or Comcast Trust (or, in the case of item
(a), to Comcast Subsidiary, if applicable), as applicable, the following:
(a) Holdco Interest Instrument of Assignment. An executed
Holdco Interest Instrument of Assignment in form and substance reasonably
acceptable to TWE and Comcast Subsidiary.
(b) Xxxx of Sale and Assignment and the Instrument of
Assumption. The executed Xxxx(s) of Sale and Assignment and Instrument of
Assumption with respect to the Holdco Transaction in form and substance
reasonably acceptable to TWE and Comcast Subsidiary 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
10.2(f)).
(c) Lien Releases. Evidence reasonably satisfactory to Comcast
Subsidiary that all Liens (other than Permitted Liens) affecting or encumbering
the Transferred Assets have been terminated, released or waived or insured over
as contemplated under (and only to the extent required under) Section 7.6 (in
the case of the Real Property Interests), as appropriate, or original, executed
instruments in form and substance reasonably satisfactory to Comcast Subsidiary
effecting such terminations, releases or waivers; provided, that TWE'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 10.2(c) if the existence of the Liens
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(d) FIRPTA Certificate. FIRPTA Non-Foreign Seller Certificate
certifying that TWE is not a foreign person within the meaning of
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Section 1445 of the Code, reasonably satisfactory in form and substance to
Comcast Subsidiary.
(e) Power of Attorney for Accounts Receivable. The limited,
irrevocable right, in TWE's and its Controlled Affiliates' name, place and
stead, as TWE'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 TWE and its Controlled Affiliates' in payment for cable services provided
by the Transferred Systems and written instructions to TWE's and its Controlled
Affiliates' lock-box service provider or similar agents to promptly forward to
Holdco all such cash, deposits and checks representing accounts receivable of
the Transferred Systems that it or they may receive. From and after the Closing,
TWE and its Controlled Affiliates shall not deposit but shall promptly remit to
Holdco any payment received by TWE or any of its Controlled Affiliates on or
after the Closing Date in respect of any such account receivable.
(f) Deeds and Other Real Estate Transfer Documents. Special
warranty deeds conveying to Holdco, subject only to the exceptions reflected on
the TWE Title Policies (if such TWE Title Policies have been obtained, or, if
such TWE Title Policies have not been obtained, subject only to such exceptions
as are consistent with the representation set forth in Section 6.4 hereof), each
parcel of the Owned Property, assignments of leases of Real Property and such
other documents as may be necessary to convey other Real Property Interests, in
each case, in form and substance reasonably satisfactory to Comcast Subsidiary,
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.
(g) TWE Title Policies. TWE Title Policies with such deletions
or modifications as are required pursuant to Section 9.1(o).
(h) Officer's Certificate. The executed certificate required
by Section 9.1(d).
(i) 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 10.3 Comcast Trust's Obligations. At Closing,
Comcast and/or Comcast Trust, as applicable, shall deliver or cause to be
delivered to TWE the following:
(a) Redemption Interest Instrument of Assignment. The executed
Redemption Interest Instrument of Assignment in form and substance reasonably
acceptable to TWE and Comcast Subsidiary.
(b) Other. Such other documents and instruments as may be
reasonably necessary to effect the intent of this Agreement and consummate the
transactions contemplated hereby.
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ARTICLE 11
TERMINATION AND DEFAULT
Section 11.1 Termination Events. This Agreement may be
terminated prior to Closing and the transactions contemplated hereby may be
abandoned:
(a) by either Comcast Subsidiary or TWE, at any time after the
later of (i) the six-month anniversary of the Adelphia Closing and (ii) the
Extended Outside Date (as defined in the TWC Adelphia Agreement and as such date
may be amended under Section 5.15 of the TWC Adelphia Agreement) (the later of
(i) and (ii), the "Outside Closing Date");
(b) at any time, by the mutual agreement of Comcast Subsidiary
and TWE;
(c) by either Comcast Subsidiary or TWE, 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 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 Subsidiary or TWE prior to the Closing
at any time following termination of either Adelphia Agreement in accordance
with its terms; provided, that if the TWC Adelphia Agreement is amended pursuant
to Section 5.15 of the TWC Adelphia Agreement, then this Section 11.1(d) shall
be deemed to apply only to the termination of the TWC Adelphia Agreement;
(e) by Comcast Subsidiary as provided in Section 13.16; or
(f) by Comcast Subsidiary on or after the earlier of June 1,
2007 and the date that is nine months following delivery of a Termination Notice
pursuant to Section 2.3; provided, that Comcast Subsidiary shall have (i) given
TWE at least 60 days prior written notice of its non-binding good faith
intention to so terminate under this clause (f), (ii) delivered an Appraisal
Notice (as defined in the Partnership Interest Sale Agreement) on or before the
120th day prior to such termination and (iii) complied in all material respects
with its obligations herein, including in Section 7.12, to consummate the
transactions contemplated hereby.
Section 11.2 Effect of Termination. If this Agreement is
terminated pursuant to Sections 11.1 or 13.16, this Agreement shall become void
and of no effect without liability of any party hereto (or any Affiliate,
shareholder, director,
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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, 2.1(a)(iv), 2.3, 7.4 and 7.23 (but only clause (ii) of the
second sentence), this Section 11.2 and Article 13 (other than Section 13.16)
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 12
INDEMNIFICATION
Section 12.1 Indemnification by TWE. Subject to Section 12.4,
from and after the Closing, TWE shall indemnify and hold harmless Holdco from
and against any and all Losses suffered by Holdco (which shall be deemed to
include any Losses suffered by Holdco or its Affiliates, or by its or their
respective officers, directors, trustees, employees, agents or representatives,
or 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 TWE or any
Transferring Person 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 TWE to perform in all material respects
pursuant to Sections 7.1(j) and 7.11;
(b) any failure by TWE, any Transferring Person or, prior to
completion of the Closing, Holdco, to perform in all respects any of its
covenants, agreements, or obligations in this Agreement (other than pursuant to
Sections 7.1(j) and 7.11) or in any Transaction Document to which it is a party;
(c) the Excluded Liabilities;
(d) the Excluded Assets; or
(e) the Holdco Indemnified Liabilities.
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 Holdco or any other Indemnitee under
this Section, in addition to any indemnity obligation of TWE under this Section,
TWE shall furnish a bond sufficient to obtain the prompt release thereof within
10 days after receipt from Holdco of notice thereof.
Section 12.2 Indemnification by Holdco. Subject to Section
12.4, from and after the Closing, Holdco shall indemnify and hold harmless TWE
from and against any and all Losses suffered by TWE (which shall be deemed to
include any Losses suffered by TWE or its Affiliates, or by its or their
respective officers, directors,
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employees, agents or representatives, or 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 Comcast Trust
or Comcast Subsidiary in this Agreement or in any Transaction Document to which
such Person 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);
(b) any failure by Comcast Trust, Comcast Subsidiary or, after
Closing, Holdco, to perform in all respects any of its covenants, agreements, or
obligations in this Agreement or in any Transaction Document to which such
Person is a Party;
(c) the Assumed Liabilities and the Holdco Transaction
Liabilities;
(d) other than with respect to the Excluded Liabilities, the
ownership and operation of the Transferred Systems or the Transferred Assets
after the Closing;
(e) other than with respect to the Excluded Liabilities, any
Transferred Asset or any claim or right or any benefit arising thereunder held
by TWE for the benefit of Holdco pursuant to Section 2.1(d).
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 TWE or any other Indemnitee under this
Section, in addition to any indemnity obligation of Holdco under this Section,
Holdco shall furnish a bond sufficient to obtain the prompt release thereof
within 10 days after receipt from TWE of notice thereof.
Section 12.3 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 Sections 12.1 or 12.2 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
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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 and shall be entitled to
indemnification in respect thereof in accordance with Section 12.1 or 12.2, 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 12.3, 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 12.4 Determination of Indemnification Amounts and
Related Matters.
(a) TWE shall have no liability under Section 12.1(a) unless
the aggregate amount of Losses otherwise subject to its indemnification
obligations thereunder exceeds $6,000,000 (the "Threshold Damage Requirement"),
in which case TWE shall be liable for the full amount of such Losses including
the Losses incurred in reaching the Threshold Damage Requirement; provided, that
for purposes of this subsection, the Threshold Damage Requirement shall not
apply to any Losses resulting from or arising out of (i) the failure by TWE to
pay any copyright payments, including interest and penalties thereon, when due
or any other breach of TWE's representations, warranties, covenants or
agreements with respect to copyright payments contained in this Agreement, and
(ii) breaches of the representations and warranties in Sections 6.1, 6.2, 6.3,
6.4(a), 6.13, 6.15 and 6.18. The maximum liability of TWE under Section 12.1(a)
shall not exceed $60,000,000 (the "Cap"); provided, that the Cap shall not apply
to breaches of the representations and warranties in Sections 6.1, 6.2, 6.3,
6.4(a)(i), 6.13, 6.15 and 6.18.
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(b) Holdco shall have no liability under Section 12.2(a)
unless the aggregate amount of Losses otherwise subject to its indemnification
obligations thereunder exceeds the Threshold Damage Requirement, in which case
Holdco shall be liable for the full amount of such Losses including the Losses
incurred in reaching the Threshold Damage Requirement; provided, that for
purposes of this subsection, the Threshold Damage Requirement shall not apply to
any Losses resulting from or arising out of breaches of the representations and
warranties in Sections 4.1, 4.2, 4.3, 4.5, 4.6, 5.1, 5.2, 5.3, or 5.5. The
maximum liability of Holdco in the aggregate under Section 12.2(a) shall not
exceed the Cap; provided, that the Cap shall not apply to breaches of the
representations and warranties in Sections 4.1, 4.2, 4.3, 4.5, 4.6, 5.1, 5.2,
5.3, or 5.5.
(c) Amounts payable by the Indemnitor to the Indemnitee in
respect of any Losses under Sections 12.1 or 12.2 shall be payable by the
Indemnitor as incurred by the Indemnitee, and shall bear interest at the Base
Interest 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.
(d) If the facts and circumstances giving rise to the Loss for
which indemnification is sought under Section 12.1(a) also resulted in a Loss to
the TWE Retained Cable Systems, the Loss for which indemnification is sought
under Section 12.1(a) shall only be available (subject to the further
limitations in Section 12.4(a)) to the extent such Loss is greater than the
proportionate Loss suffered by the TWE Retained Cable Systems and the
Transferred Systems, where proportionality is based on the Percentage Interest
represented by the Redemption Interest immediately prior to giving effect to the
Closing; provided that the foregoing shall not apply to the extent the Loss for
which indemnification is sought under Section 12.1(a) results from or arises out
of a breach of any of the representations and warranties set forth in Sections
6.1, 6.2, 6.3, 6.4(a), 6.5(a), 6.6 (the penultimate sentence only), 6.10 (the
first sentence only), 6.12(c), 6.13, 6.15 and 6.18. By way of example only, if
the Redemption Interest represents a 4.7% Percentage Interest (immediately prior
to giving effect to the Closing) and the Losses suffered by the Transferred
Systems arising out of certain facts was $X and the Losses suffered by the TWE
Retained Cable Systems arising out of those same facts was $Y, then
indemnification would be available under Section 12.1(a) but only in an amount
equal to the excess (if any) of (i) $X over (ii) the sum of $X and $Y multiplied
by 0.047 (and subject to the further limitations contained in Section 12.4(a)).
(e) 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.
(f) 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 or
Material Adverse Effect qualifier in such representation or warranty will be
disregarded.
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(g) Comcast Subsidiary shall have the right to enforce (on
behalf and for the benefit of Holdco and any other Indemnitee pursuant to
Section 12.1) the right to indemnification under Section 12.1. Notwithstanding
anything to the contrary set forth in this Agreement, to the extent that any
Indemnitee pursuant to Section 12.1 is or becomes a shareholder of Time Warner
Cable or Time Warner or a limited partner of TWE, indemnification hereunder
shall not include Losses suffered by such Indemnitee (or its Affiliates) in its
shareholder or limited partner capacity by reason of (i) the indemnities being
provided by TWE hereunder or (ii) Losses suffered in such capacity in respect of
any Excluded Assets, Excluded Liabilities or Holdco Indemnified Liabilities.
Section 12.5 Time and Manner of Certain Claims. The
representations and warranties of Comcast Trust, Comcast Subsidiary, TWE or any
Transferring Person in this Agreement and any Transaction Document to which such
Person is a party shall survive Closing for a period of 1 year. 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 representations and warranties of the parties in Sections 4.1, 4.2,
4.3, 4.5, 4.6, 5.1, 5.2, 5.3, 5.5, 6.1, 6.2, 6.3, 6.4(a)(i), 6.13, 6.15 and 6.18
shall survive Closing and shall continue in full force and effect without
limitation and (ii) the representations and warranties of TWE in Sections 6.22
and 6.23 shall survive until the expiration of the applicable statute of
limitations (giving effect to any waiver, mitigation or extension thereof).
Section 12.6 Other Indemnification. The provisions of Sections
12.3, 12.4 and 12.5 shall be applicable to any claim for indemnification made
under any other provision of this Agreement, and all references in Sections
12.3, 12.4 and 12.5 to Sections 12.1 and 12.2 shall be deemed to be references
to such other provisions of this Agreement.
Section 12.7 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, negligent
misrepresentation and all other claims for breach of duty. After Closing,
Article 12 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 12.8 Release.
(a) Except as provided in Section 12.8(b), effective as of the
Closing, each of Comcast, Comcast Subsidiary and Comcast Trust does hereby, for
itself and each of its wholly owned Subsidiaries and their respective successors
and assigns,
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and all Persons who at any time prior to the Closing have been shareholders,
directors, officers, members, agents, trustees or employees of Comcast, Comcast
Subsidiary or Comcast Trust or any of their respective Affiliates, predecessors,
successors or assigns (in each case, in their respective capacities as such and
to the extent it may legally do so) (collectively, the "Comcast Trust Releasing
Parties"), remise, release and forever discharge TWE and each of its
Subsidiaries and Affiliates, their respective predecessors, successors and
assigns, and all Persons who at any time prior to the Closing have been limited
partners, general partners, shareholders, directors, officers, members, agents,
trustees or employees of TWE or any of its respective Subsidiaries, Affiliates,
predecessors, successors or assigns (in each case, in their respective
capacities as such and to the extent it may legally do so), and their respective
heirs, executors, administrators, predecessors, successors and assigns
(collectively, the "TWE Released Parties"), from any and all Liabilities
whatsoever (other than Liabilities based on claims sounding in fraud), whether
at law or in equity (including any right of contribution), whether arising under
any Contract, by operation of Law or otherwise, existing or arising from any
acts or events occurring or failing to occur or alleged to have occurred or to
have failed to occur or any conditions existing or alleged to have existed on or
before the Closing, whether or not known as of the Closing, related to, arising
out of or resulting from Comcast Trust's ownership of the Redemption Interest.
Comcast, Comcast Subsidiary and Comcast Trust agree, on behalf of their self and
each of the other Comcast Trust Releasing Parties, that they will not assert any
claims against any TWE Released Party with respect to matters covered by the
foregoing release.
(b) Nothing contained in Section 12.8(a) shall impair any
right of any Person to enforce this Agreement or any other Transaction Document,
in each case in accordance with its terms.
Section 12.9 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 to treat and to cause their respective affiliates to treat any payment (i)
to Holdco by TWE pursuant to an indemnification, reimbursement or refund
obligation provided for in this Agreement (a "TWE Indemnification Payment"), or
(ii) to TWE by Holdco pursuant to an indemnification, reimbursement or refund
obligation provided for in this Agreement (a "Holdco Indemnification Payment"
and collectively with any TWE Indemnification Payment, an "Indemnification
Payment") as (x) with respect to a TWE Indemnification Payment, a contribution
by TWE to Holdco occurring immediately prior to the Closing, and (y) with
respect to a Holdco Indemnification Payment, an adjustment to the Cash Amount
transferred by TWE to Holdco pursuant to the Holdco Transaction occurring
immediately prior to the Closing.
(b) Notwithstanding Section 12.9(a) above, any Indemnification
Payments that represent interest payable under Section 12.4(c) 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.
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(c) The amount of any Loss for which indemnification is
provided under this Agreement shall be (i) increased to take account of net Tax
cost, if any, incurred by the Indemnitee arising from the receipt or accrual of
an Indemnification Payment hereunder, (grossed up for such increase) and (ii)
reduced to take account of the net Tax benefit, if any, realized by the
Indemnitee arising from incurring or paying such indemnified amount. In
computing the amount of any such Tax cost or benefit, (i) the term Indemnitee
shall be deemed to include any member of any Affiliated Group of which the
Indemnitee is a member and in the case of TWE or TWE-A/N, its partners, and (ii)
the Indemnitee shall be deemed to recognize all other items of income, gain,
loss, deduction or credit before recognizing any item arising from the receipt
or accrual of any Indemnification Payment hereunder or incurring or paying any
indemnified amount hereunder. Any Indemnification Payment hereunder shall
initially be made without regard to this Section 12.9(c) and shall be increased
or reduced to reflect any such net Tax cost (including gross-up) or net Tax
benefit only after the Indemnitee has Actually Realized such cost or benefit.
The amount of any increase or reduction hereunder shall be adjusted to reflect
any adjustment with respect to the Indemnitee's liability for Taxes, and
payments between the parties hereto to reflect such adjustment shall be made.
Notwithstanding the above, this Section 12.9(c) shall not apply to interest as
described in Section 12.9(b).
Section 12.10 Guaranteed Obligations of Comcast.
(a) From and after the Closing, Comcast hereby agrees to fully
and unconditionally guarantee to TWE the due and punctual performance,
compliance and payment of Holdco, Comcast Trust and Comcast Subsidiary (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 TWE (or any Affiliate thereof or any
Indemnitee pursuant to Section 12.2) 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) Comcast 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. Comcast hereby
waives any right to require a proceeding first against any of the Guaranteed
Parties.
(c) The obligations of Comcast 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
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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 Comcast as
guarantor under this Section 12.10.
(d) Comcast shall cause any transferee of or successor to all
or substantially all of the assets of Comcast to assume Comcast's obligations
under this Section 12.10.
ARTICLE 13
MISCELLANEOUS PROVISIONS
Section 13.1 Expenses. Except as otherwise specifically
provided in Section 3.4, 7.3 or 13.2 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 13.2 Attorneys' Fees. If any Litigation between the
parties hereto 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 13.3 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 13.4 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 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:
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To Comcast or Holdco (after the Closing):
Comcast Cable Communications Holdings, Inc.
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
ATTN: General Counsel
Fax: (000) 000-0000
With a Required Copy to:
Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
ATTN: Xxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Fax: (000) 000-0000
To Comcast Subsidiary:
MOC Holdco I, LLC
0000 X. Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxxx, XX 00000
ATTN: President
Fax: (000) 000-0000
With a Required Copy to:
Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
ATTN: Xxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Fax: (000) 000-0000
To Comcast Trust:
TWE Holdings I Trust
c/o Xxxxx X. Holiday
000 Xxxx Xxxxxx
0xx Xxxxx
Xxxxxxxxxx, XX 00000
Fax: (000) 000-0000
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With a Required Copy to:
Xxxxx & Xxxxxxx
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
ATTN: Xxxxxxx X. Silver
Fax: (000) 000-0000
To TWE or Holdco (prior to 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
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 13.5 Entire Agreement; Prior Representations;
Amendments. This Agreement, the Confidentiality Agreements (subject to the last
sentence of this Section 13.5) and the Transaction Documents executed concurrent
herewith embody the entire agreement between the parties hereto with respect to
the subject matter hereof and supersedes 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
88
Transferred Assets, or the Transferred Systems except those contained in this
Agreement, the Schedules or the Exhibits hereto. 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 each relates to
any obligation to keep confidential information regarding the Transferred
Assets, the Transferred Systems and/or the Assumed Liabilities, are hereby
terminated.
Section 13.6 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. 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 13.7 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 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 13.4
shall be deemed effective service of process on such party.
Section 13.8 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 13.9 Binding Effect; Benefits. This Agreement shall
inure to the benefit of and shall be binding upon the parties hereto and their
respective
89
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 Comcast
Subsidiary may assign its rights and delegate its obligations under this
Agreement (in whole or in part) to any Affiliate of Comcast Subsidiary, upon
written notice to TWE. For purposes of this Section, any change in control of
Comcast, Comcast Trust, Comcast Subsidiary or TWE 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 13.10 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 attached to
this Agreement, which shall be incorporated in and constitute a part of this
Agreement by such reference.
Section 13.11 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 13.12 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 13.13 Severability. Any term or provision of this
Agreement which is invalid or unenforceable shall be ineffective to the extent
of such invalidity or 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 13.14 Third Parties; Joint Ventures. This Agreement
constitutes an agreement solely among the parties hereto, and, except as
otherwise expressly 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 except that Time Warner
shall be an express third party beneficiary of Section 2.3. 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.
90
Section 13.15 Construction. This Agreement has been negotiated
by Comcast Trust, Comcast Subsidiary and TWE 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 13.16 Risk of Loss; Governmental Taking.
(a) TWE shall bear the risk of any loss or damage to the
Transferred Assets resulting from fire, theft or other casualty (except
reasonable wear and tear) at all times prior to the Closing. In the event any
such loss or damage occurs, TWE 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, Time Warner shall indemnify Holdco
for any Losses arising out of such unrepaired damage or unrestored property). If
any loss or damage is equal to or greater than $50 million and is sufficiently
substantial so as to preclude and prevent resumption of normal operations of any
material portion of a Transferred System by the Outside Closing Date, TWE shall,
to the extent reasonably practical, immediately notify Comcast Subsidiary 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 Comcast Subsidiary, at any time within 10 days after receipt of
such notice, may elect by written notice to TWE, 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 13.16(a) or
pursuant to Section 12.1 for any breach of any (x) representation or warranty of
TWE set forth in Article 6 resulting from any 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 11.2. If Comcast Subsidiary elects to so
terminate this Agreement, TWE shall be discharged of any and all obligations
hereunder, subject to Section 11.2. If Comcast Subsidiary 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 on account of such loss or damage, but all insurance proceeds
received or receivable by TWE or its Affiliates (determined on an effective
after-tax basis as if TWE and TWE-A/N are, in each case, stand-alone
corporations) as a result of the occurrence of the event resulting in such loss
or damage (to the extent not already expended by TWE 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 TWE
or its Affiliate to Holdco, or the rights to such proceeds shall be assigned by
TWE or its Affiliates to Holdco if not yet received by TWE or its Affiliates.
TWE 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 TWE or its Affiliates. Any amounts received or
receivable hereunder shall not be included in the Closing Net Liabilities
Amount.
91
(b) If, prior to Closing, any material part of or interest in
the 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 TWE or any of its Affiliates that it intends to condemn or take all or
any of the Transferred Assets (such event being called, in either case, a
"Taking"), then Comcast Subsidiary may terminate this Agreement. If Comcast
Subsidiary does not elect to terminate this Agreement, (i) Comcast Subsidiary
shall have the sole right, in the name of TWE and its Affiliates, if Comcast
Subsidiary so elects, to negotiate for, claim, contest and, subject to the
Closing occurring, have Holdco receive all damages with respect to the Taking,
(ii) TWE shall be relieved of its obligation to convey to Holdco the Transferred
Assets or interests that are the subject of the Taking if the Taking has
occurred (but, subject to the Closing occurring, shall convey to Holdco any
interest therein still held by TWE or its Affiliates and any replacement
property acquired by TWE or its Affiliates), (iii) at Closing, TWE and its
Affiliates shall assign to Holdco all of TWE's and its Affiliates' rights to all
payments received or receivable by TWE or its Affiliates (determined on an
effective after-tax basis as if TWE and TWE-A/N are, in each case, stand-alone
corporations), with respect to such Taking and shall pay to Holdco all such
payments previously paid to TWE or any of its Affiliates with respect to the
Taking (to the extent not already expended by TWE or its Affiliates to restore
or replace the taken Assets), and (iv) following Closing, TWE and its Affiliates
shall give Holdco such further assurances of such rights and assignment with
respect to the Taking as Holdco may from time to time reasonably request. Any
amounts received or receivable hereunder shall not be included in the Closing
Net Liabilities Amount.
Section 13.17 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 13.18 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]
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IN WITNESS WHEREOF, the undersigned have executed, or have caused to
be executed, this Agreement on the date first written above.
COMCAST CABLE
COMMUNICATIONS HOLDINGS, INC.
By: /s/ Xxxxxx X. Block
----------------------------------------------------
Name: Xxxxxx X. Block
Title: Senior Vice President
MOC HOLDCO I, LLC
By: /s/ Xxxxx X. XxXxx
----------------------------------------------------
Name: Xxxxx X. XxXxx
Title: President
TWE HOLDINGS I TRUST
By: /s/ Xxxxx X. Holiday
----------------------------------------------------
Name: Xxxxx X. Holiday, solely in her capacity as
Operating Trustee
CABLE HOLDCO III LLC
By: /s/ Xxxxx X. X'Xxxxx
----------------------------------------------------
Name: Xxxxx X. X'Xxxxx
Title: Executive Vice President,
Investments
93
TIME WARNER ENTERTAINMENT COMPANY, L.P.
By: /s/ Xxxxx X. X'Xxxxx
----------------------------------------------------
Name: Xxxxx X. X'Xxxxx
Title: Executive Vice President,
Investments
Solely for purposes of Section 2.3, Section 7.23 and the last sentence of
Section 13.5:
COMCAST CORPORATION
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
Solely for purposes of Section 2.3 and the last sentence of Section 13.5:
TIME WARNER INC.
By: /s/ Xxxxxx Xxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Senior Vice President
