EXHIBIT 99.5
EXECUTION COPY
AMENDMENT NUMBER 2 (this "Amendment") dated as of April 20, 2005 by and
among Comcast Cable Communications Holdings, Inc., a Delaware corporation
("Comcast"), MOC Holdco II, Inc., a Delaware corporation ("Comcast Subsidiary"),
TWE Holdings I Trust, a Delaware statutory trust ("Comcast Trust I"), TWE
Holdings II Trust, a Delaware statutory trust ("Comcast Trust"), Comcast
Corporation, a Pennsylvania corporation ("Comcast Parent"), Cable Holdco Inc., a
Delaware corporation ("Holdco"), Time Warner Cable Inc., a Delaware corporation
("Time Warner Cable"), and Time Warner Inc., a Delaware corporation ("Time
Warner").
WHEREAS, the parties hereto, other than Time Warner are parties to a
Tolling and Optional Redemption Agreement dated as of September 24, 2004, as
amended by Amendment Number 1 dated as of February 17, 2005 (as so amended, the
"Agreement");
WHEREAS, the parties hereto desire to amend the Agreement as set forth
herein (the Agreement, as amended hereby, the "Amended Agreement");
WHEREAS, Time Warner has agreed to be made party to the Amended Agreement
for the limited purposes set forth in Annex A hereto;
NOW, THEREFORE, the parties hereto agree as follows:
Section 1 . Definitions. Capitalized terms used herein and not defined
shall have the meanings specified in the Amended Agreement. References to
Sections in this Amendment refer to such Sections in the Amended Agreement.
Section 2 . Amendment. The Agreement (including the exhibits and schedules
thereto) is hereby amended to read in full as set forth in Annex A hereto.
Section 3 . Time Warner. Time Warner is hereby made party to the Amended
Agreement for the limited purposes set forth in Annex A.
Section 4 . Interpretation. As used in the Amended Agreement, the phrases
"the date hereof" and "the date of this Agreement", and any substantially
similar phrase, shall be deemed to refer to September 24, 2004.
Section 5 . Good Faith Notice. This Amendment No. 2 shall constitute the
Good Faith Notice of Comcast Trust for all purposes under the Amended Agreement.
Comcast Subsidiary hereby requests that Time Warner Cable deliver, in accordance
with Section 7.20(d) of the Amended Agreement, such documentation with respect
to the SSBC Systems as would be consistent with the information provided by Time
Warner Cable and its Affiliates prior to the date hereof with respect to the
Designated Systems.
Section 6 . Entire Agreement. The Agreement, as amended hereby, and the
other Transaction Documents executed concurrent therewith embody the entire
agreement among the parties hereto with respect to the subject matter thereof
and supersedes all prior representations, agreements and understandings, oral or
written, with respect thereto.
Section 7 . Binding Effect. Except to the extent expressly provided
herein, the Agreement shall remain in full force and effect in accordance with
its terms.
Section 8 . Miscellaneous. Article 12 of the Agreement (other than
Sections 12.1, 12.2, 12.5, 12.14 and 12.16), is hereby incorporated by reference
into this Amendment and made a part hereof, except that references in such
Article to the Agreement shall be deemed to refer this Amendment (other than
references to specific provisions of the Agreement, which shall be deemed to
refer to such provisions of the Agreement).
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IN WITNESS WHEREOF, the undersigned have executed, or have caused to be
executed, this Amendment 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 II, INC.
By: /s/ Xxxxx X. XxXxx
---------------------------------------
Name: Xxxxx X. XxXxx
Title: President
TWE HOLDINGS II TRUST
By: /s/ Xxxxx X. Holiday
---------------------------------------
Name: Xxxxx X. Holiday, solely in her
capacity as Operating Trustee
CABLE HOLDCO INC.
By: /s/ Xxxxx X. X'Xxxxx
---------------------------------------
Name: Xxxxx X. X'Xxxxx
Title: Executive Vice President,
Investments
TIME WARNER CABLE INC.
By: /s/ Xxxxx X. X'Xxxxx
---------------------------------------
Name: Xxxxx X. X'Xxxxx
Title: Executive Vice President,
Investments
COMCAST CORPORATION
By: /s/ Xxxxxx X. Block
------------------------
Name: Xxxxxx X. Block
Title: Senior Vice President
TIME WARNER INC.
By: /s/ Xxxxxx Xxxxxx
------------------------
Name: Xxxxxx X. Xxxxxx
Title: Senior Vice President
TWE HOLDINGS I TRUST
By: /s/ Xxxxx X. Holiday
---------------------------------------
Name: Xxxxx X. Holiday, solely in her
capacity as Operating Trustee
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EXECUTION COPY
ANNEX A
TOLLING AND OPTIONAL REDEMPTION AGREEMENT
DATED AS OF SEPTEMBER 24, 2004
BY AND AMONG
COMCAST CABLE COMMUNICATIONS HOLDINGS, INC.,
MOC HOLDCO II, INC.,
TWE HOLDINGS II TRUST,
CABLE HOLDCO INC.,
TIME WARNER CABLE INC.
AND
THE OTHER PARTIES NAMED HEREIN
TABLE OF CONTENTS
PAGE
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ARTICLE 1 Definitions.................................................... 2
Section 1.1 Terms Defined in this Section......................... 2
Section 1.2 Other Definitions..................................... 15
Section 1.3 Rules of Construction................................. 19
ARTICLE 2 Option Exercise; Redemptions; Tolling.......................... 20
Section 2.1 Option; Redemptions................................... 20
Section 2.2 Assumed Liabilities................................... 26
Section 2.3 Registration Rights Agreement......................... 26
Section 2.4 Estimated Closing Adjustment Amount................... 27
Section 2.5 Final-Closing Adjustment Amount....................... 27
ARTICLE 3 Related Matters................................................ 31
Section 3.1 Employees............................................. 31
Section 3.2 Use of Names and Logos................................ 39
Section 3.3 Transfer Laws......................................... 39
Section 3.4 Transfer Taxes and Fees............................... 39
ARTICLE 4 Comcast Trust's Representations and Warranties................. 40
Section 4.1 Organization and Qualification of Comcast Trust....... 40
Section 4.2 Authority............................................. 40
Section 4.3 No Conflict; Required Consents........................ 40
Section 4.4 Litigation............................................ 41
Section 4.5 Ownership of Redemption Securities.................... 41
Section 4.6 Brokers............................................... 41
ARTICLE 5 Comcast Subsidiary's Representations and Warranties............ 41
Section 5.1 Organization and Qualification of Comcast Subsidiary.. 41
Section 5.2 Authority............................................. 42
Section 5.3 No Conflict; Required Consents........................ 42
Section 5.4 Litigation............................................ 42
Section 5.5 Brokers............................................... 42
Section 5.6 Comcast Balance Sheet................................. 43
Section 5.7 Tolling............................................... 43
ARTICLE 6 Time Warner Cable's Representations and Warranties............. 43
Section 6.1 Organization and Qualification of Time Warner Cable... 43
Section 6.2 Authority............................................. 43
Section 6.3 No Conflict; Required Consents........................ 44
Section 6.4 Sufficiency of Assets; Title.......................... 44
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PAGE
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Section 6.5 Transferred System Franchises, Transferred System
Licenses, Transferred Systems Contracts, Owned
Property and Real Property Interests.............. 45
Section 6.6 Employee Benefits..................................... 47
Section 6.7 Litigation............................................ 48
Section 6.8 Transferred Systems Information....................... 48
Section 6.9 Compliance with Legal Requirements.................... 49
Section 6.10 Real Property......................................... 49
Section 6.11 Financial Statements; No Adverse Change;
Telephony Budget................................... 49
Section 6.12 Employees............................................. 50
Section 6.13 Transactions with Affiliates.......................... 51
Section 6.14 Undisclosed Material Liabilities...................... 51
Section 6.15 Holdco; TWE Holdco I.................................. 51
Section 6.16 Insurance............................................. 53
Section 6.17 Intellectual Property................................. 53
Section 6.18 Brokers............................................... 53
Section 6.19 Transferred Systems Options........................... 53
Section 6.20 Transferred Systems Proprietary Rights................ 54
Section 6.21 Promotional Campaigns................................. 54
Section 6.22 Environmental......................................... 54
Section 6.23 Taxes................................................. 55
Section 6.24 Tax Matters Agreement Representations................. 56
ARTICLE 7 Covenants...................................................... 56
Section 7.1 Certain Affirmative Covenants of Time Warner Cable.... 56
Section 7.2 Certain Negative Covenants of Time Warner Cable....... 59
Section 7.3 Certain Additional Covenants Regarding
Required Consents; HSR Act Filing.................. 62
Section 7.4 Confidentiality and Publicity......................... 64
Section 7.5 Retransmission Consent Agreements..................... 65
Section 7.6 Title Insurance Commitments........................... 65
Section 7.7 Intentionally Omitted................................. 67
Section 7.8 Post-Closing Obtaining of Consents.................... 67
Section 7.9 Transitional Services................................. 67
Section 7.10 Cooperation Upon Inquiries as to Rates................ 67
Section 7.11 Updated Schedules..................................... 69
Section 7.12 Commercially Reasonable Efforts; Further Assurances... 70
Section 7.13 Post-Closing Access to Personnel Records.............. 70
Section 7.14 [Intentionally Omitted]............................... 70
Section 7.15 Tax Returns with respect to Applicable Taxes.......... 70
Section 7.16 Environmental Reports................................. 71
Section 7.17 Certain Notices....................................... 71
Section 7.18 Franchise Expirations................................. 71
Section 7.19 Insurance............................................. 72
Section 7.20 Second Stage Review................................... 72
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PAGE
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Section 7.21 [Intentionally Omitted]............................... 74
Section 7.22 Promotional Campaigns................................. 74
Section 7.23 Launch Support........................................ 74
Section 7.24 Section 338(h)(10) Election........................... 74
Section 7.25 Pre-Closing Access.................................... 75
Section 7.26 Ordinary Course from Closing to Closing Time.......... 76
ARTICLE 8 Conditions Precedent........................................... 77
Section 8.1 Conditions to the Comcast Parties' Obligations........ 77
Section 8.2 Conditions to Time Warner Cable's Obligations......... 79
ARTICLE 9 Closing........................................................ 81
Section 9.1 Closing; Time and Place............................... 81
Section 9.2 Time Warner Cable's Obligations....................... 81
Section 9.3 Comcast Trust's Obligations........................... 83
ARTICLE 10 Termination and Default....................................... 83
Section 10.1 Termination Events.................................... 83
Section 10.2 Effects of Termination................................ 84
ARTICLE 11 Indemnification............................................... 84
Section 11.1 Indemnification by Time Warner Cable.................. 84
Section 11.2 Indemnification by Holdco............................. 85
Section 11.3 Procedure for Certain Indemnified Claims.............. 86
Section 11.4 Determination of Indemnification Amounts
and Related Matters................................ 87
Section 11.5 Time and Manner of Certain Claims..................... 89
Section 11.6 Other Indemnification................................. 89
Section 11.7 Exclusivity........................................... 89
Section 11.8 Release............................................... 89
Section 11.9 Indemnification for Income Taxes...................... 90
Section 11.10 Tax Treatment of Indemnification Payments............. 90
Section 11.11 Guaranteed Obligations of Comcast..................... 91
ARTICLE 12 Miscellaneous Provisions...................................... 92
Section 12.1 Expenses.............................................. 92
Section 12.2 Attorneys' Fees....................................... 92
Section 12.3 Waivers............................................... 92
Section 12.4 Notices............................................... 92
Section 12.5 Entire Agreement; Prior Representations; Amendments... 94
Section 12.6 Specific Performance.................................. 95
Section 12.7 Jurisdiction.......................................... 95
Section 12.8 WAIVER OF JURY TRIAL.................................. 95
Section 12.9 Binding Effect; Benefits.............................. 95
Section 12.10 Headings and Schedules................................ 96
Section 12.11 Counterparts.......................................... 96
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PAGE
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Section 12.12 GOVERNING LAW......................................... 96
Section 12.13 Severability.......................................... 96
Section 12.14 Third Parties; Joint Ventures......................... 96
Section 12.15 Construction.......................................... 97
Section 12.16 Risk of Loss; Governmental Taking..................... 97
Section 12.17 Commercially Reasonable Efforts....................... 98
Section 12.18 Time.................................................. 98
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EXHIBITS
--------
A Form of Second Stage Bringdown Certificate
B Form of Tax Matters Agreement
C Form of GP Redemption and Amendment Agreement
D Protective Election Legend
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TOLLING AND OPTIONAL REDEMPTION AGREEMENT
This TOLLING AND OPTIONAL REDEMPTION AGREEMENT (this "Agreement"), dated as
of September 24, 2004, is by and among Comcast Cable Communications Holdings,
Inc., a Delaware corporation ("Comcast"), MOC Holdco II, Inc., a Delaware
corporation ("Comcast Subsidiary"), TWE Holdings I Trust, a Delaware statutory
trust ("Comcast Trust I"), but solely for purposes of Section 2.1(b)(iv), TWE
Holdings II Trust, a Delaware statutory trust ("Comcast Trust"), Comcast
Corporation, a Pennsylvania corporation ("Comcast Parent"), but solely for
purposes of Section 2.3 and the last sentence of Section 12.5, Cable Holdco
Inc., a Delaware corporation ("Holdco"), TWE Holding I LLC, a Delaware limited
liability company ("TWE Holdco I") and Time Warner Cable Inc., a Delaware
corporation ("Time Warner Cable") and Time Warner Inc., a Delaware corporation,
but solely for purposes of the last sentence of Section 12.5. Capitalized terms
used herein and not otherwise defined shall have the respective meanings
assigned to them in Article 1.
RECITALS
A. Comcast Trust, Time Warner Inc., a Delaware corporation ("Time Warner"),
and Time Warner Cable are parties to that certain Registration Rights Agreement,
dated as of March 31, 2003, as amended on the date hereof (the "Registration
Rights Agreement").
B. The parties have agreed that from and after the date hereof until the
Tolling Termination Date Comcast Trust will not exercise its demand registration
rights under the Registration Rights Agreement.
C. Time Warner Cable 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").
D. Comcast Trust has agreed to toll its demand registration rights under
the Registration Rights Agreement, and Time Warner Cable has agreed, at the
option of Comcast Subsidiary, to (i) transfer to Holdco the Transferred Assets
and (ii) 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 Securities.
E. The parties intend that, for federal Income Tax purposes, (i) the Holdco
Transaction and TWC Redemption shall be governed by Sections 355, 361(c) and
368(a)(1)(D) of the Internal Revenue Code of 1986 (the "Code"), (ii) that all of
the shares of Holdco shall qualify as "qualified property" for purposes of
Section 355(c)(2) and 361(c) of the Code and (iii) that no share of Holdco
constitutes "other property" for purposes of Section 355(a)(3)(B) of the Code.
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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 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 Time Warner Cable'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.
"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, of 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 Time Warner Cable, on the other hand, shall
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not be deemed to be Affiliates of one another, (ii) after the Closing Time
Warner Cable, 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 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.
"Alternate Tolling Agreement" shall have the meaning assigned to such term
in the Alternate Transaction Letter.
"Alternate Transaction Letter" means the letter agreement dated the date
hereof among Time Warner Cable, Comcast Parent, Comcast Trust and Comcast Trust
I, regarding the Alternate Tolling Agreement (as defined therein).
"Amendment Date" means April 20, 2005.
"Applicable Taxes" means Taxes that are Assumed Liabilities.
"Applicable Tax Return" shall mean any Tax Return relating to Applicable
Taxes.
"Authorization" means any waiver, amendment, consent, approval, license,
franchise, permit (including construction permits), certificate, exemption,
variance or authorization of, expiration or termination of any waiting period
requirement (including pursuant to the HSR Act) or other action by, or notice,
filing, registration, qualification, declaration or designation with, any Person
(including any Governmental Authority).
"Balance Sheet Date" means June 30, 2004 or, to the extent relating to a
Designated System, December 31, 2004.
"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) $422,000,000 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)).
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"Class A Common Stock" means the Class A Common Stock, par value $0.01 per
share, of Time Warner Cable.
"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 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.
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"Designated Systems" means the Transferred Systems serving the communities
identified in Schedule 1.1(a).
"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.
"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 Amendment Date and prior to the
Closing Time in respect of which the Total SMATV Consideration (A) exceeds
$2,500,000 or (B) exceeds $3,800,000 when aggregated with the Total SMATV
Consideration paid in all previous such SMATV Acquisitions consummated after the
Amendment Date and prior to the Closing Time.
"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.
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"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.
"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.
"GP Redemption" means the transactions contemplated by the GP Redemption
and Amendment Agreement.
"GP Redemption and Amendment Agreement" means the GP Redemption and
Amendment Agreement, in the form attached hereto as Exhibit C, as amended from
time to time; provided that any such amendments which would adversely affect
Comcast Trust or its Affiliates are approved by Comcast Trust.
"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.
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"Holdco Transaction Liabilities" means any and all Liabilities of Holdco
arising under Section 3.4 or Article 11 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) 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 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.
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"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.
"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 Time Warner Cable
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 Time Warner Cable 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
9
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 Time Warner Cable that similarly affect the Time
Warner Cable Retained Cable Systems, taken as a whole; or (vi) as described on
Schedule 1.1(b).
"Non-SSBC Original Systems" means the Transferred Systems serving the
communities identified in Schedule 1.1(c).
"Option Commencement Date" means December 1, 2004.
"Option Expiration Date" means the earlier of (i) the date that is 40 days
following the Amendment Date and (ii) the Option Decision Date; provided that if
Time Warner Cable does not comply in all material respects with it obligations
under Section 7.20, the Option Expiration Date shall be the later of such dates.
"Original Systems" means the Transferred Systems serving the communities
identified in Schedule 1.1(d).
"Party" or "party" means either Comcast, Comcast Trust, Comcast Subsidiary,
Holdco or Time Warner Cable.
"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)
10
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 Securities" means 42.602 shares of Class A Common Stock owned
by Comcast Trust (as such number may be appropriately adjusted to reflect any
stock dividends, subdivisions, splits, combinations or other similar events
relating to the capital stock of Time Warner Cable).
"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 Time Warner Cable Retained
Cable System.
"Second Stage Bringdown Certificate" means the certificate to be delivered
by Time Warner Cable in the form attached hereto as Exhibit A.
"Second Stage Documents" means (i) any Contract, list or other item (and
all material information relating thereto that is available to Time Warner
Cable) added to the Schedules for Sections 6.3(c), 6.3(f) or 6.5 pursuant to
Section 7.20 and (ii) any other documents or other information to be provided by
Time Warner Cable pursuant to Section 7.20(d).
"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
11
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 Launch Support Liabilities" means any Liabilities of Time Warner
Cable and its Affiliates under agreements with third parties in effect (and on
the terms in effect) as of the date hereof (or, with respect to the Designated
Systems, the Amendment Date), to repay launch support payments received by Time
Warner Cable or its Affiliates prior to the date hereof (or, with respect to the
Designated Systems, the Amendment Date), up to a maximum of (i) $727,200 in the
aggregate with respect to the Original Systems and (ii) $1,835,800 in the
aggregate with respect to the Designated Systems, in each case 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 Time Warner Cable or its Affiliates prior to the date hereof
(or, with respect to the Designated Systems, the Amendment Date), 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 after the
Closing Date and prior to the fifth anniversary of the date hereof (or, with
respect to the Designated Systems, the Amendment Date).
"SSBC Systems" means the Transferred Systems serving the communities
identified in Schedule 1.1(i).
"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.
"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 Time Warner Cable.
"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,
12
additions to tax or additional amounts applicable thereto and, in the case of
Time Warner Cable, any amounts payable by or to Time Warner Cable under the Time
Warner Tax Matters Agreement.
"Tax Matters Agreement" means the Holdco Tax Matters Agreement, by and
between Time Warner, Time Warner Cable, Comcast Parent, Comcast and Holdco
substantially in the form attached hereto as Exhibit B, as such agreement may be
modified pursuant to Section 7.11 of this Agreement or as such Agreement may be
amended after the Closing, and any successor agreement.
"Tax Law" means the Code, final, temporary or proposed Treasury
regulations, published pronouncements of the U.S. Treasury Department or
Internal Revenue Service, published court decisions or other relevant binding
legal authority.
"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 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 Time Warner Cable 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 Time Warner
Cable or any of its Affiliates maintains or contributes to or in respect of
which Time Warner Cable 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.
"Time Warner Cable Required Consents" means (a) any and all consents,
authorizations and approvals (other than any approval of any Franchising
Authority consent) the failure of which to obtain in connection with the GP
Redemption, Subsidiary
13
Transfers, TWE-A/N Transfer, Holdco Transaction, TWC 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
Time Warner Cable Required Consents.
"Time Warner Cable Retained Cable Systems" means all cable communications
systems operated directly or indirectly by Time Warner Cable and its Affiliates
(in each case to the extent the results of such systems are included in the
consolidated results of Time Warner Cable) at the Closing other than the
Transferred Systems and any systems acquired after the date hereof.
"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.
"Tolling Termination Date" means the Amendment Date.
"Total SMATV Consideration" means, in respect of any SMATV Acquisition, the
total consideration payable to the SMATV Seller and its Affiliates in respect of
such SMATV Acquisition plus the amount of any net liabilities assumed by the
acquiror.
"Transaction Documents" means (i) the instruments and documents described
in Sections 9.2 and 9.3 which are being executed and delivered by or on behalf
of Comcast Trust, Comcast Subsidiary, Comcast Trust I, Holdco or Time Warner
Cable, as the case may be, or any Affiliate of any of them in connection with
this Agreement or the transactions contemplated hereby, (ii) the instruments and
documents required to effect the Comcast Subsidiary Transfer, if applicable and
(iii) the Second Stage Bringdown Certificate.
"Transactions" means the GP Redemption, the TWE-A/N Transfer, the
Subsidiary Transfers, the Holdco Transaction and the TWC 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 a 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)
if a consent of a Franchising Authority is necessary for the transfer of any
Transferred
14
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 Time Warner Cable). 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, Time Warner
Cable 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 Time Warner Cable or any of its Subsidiaries, or (b) has been designated by
mutual written agreement of Comcast and Time Warner Cable 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 System Employee, including
the dependents or beneficiaries of any Transferred System Employee.
"TWC Participant" means each Transferring Person and Holdco.
"TWC Redemption Agreement" means the Redemption Agreement dated as of April
20, 2005 by and among Comcast, Comcast Subsidiary, Comcast Trust, Cable Holdco
II Inc., a Delaware corporation, Time Warner Cable and the other parties named
therein.
"TWE" means Time Warner Entertainment Company, L.P., a Delaware limited
partnership.
"TWE-A/N" means Time Warner Entertainment-Advance/Xxxxxxxx Partnership, a
New York general partnership.
"TWE-A/N Transfer" means the transfers by TWE-A/N of certain Transferred
Systems to TWE.
"TWE Redemption Agreement" means the Redemption Agreement, dated as of the
date hereof, by and among TWE, Comcast, MOC Holdco I, LLC, a Delaware limited
liability company, Comcast Trust I, Cable Holdco III LLC, and the other parties
named therein.
15
"Variable Expense Item" means the items identified as variable expense
items on the 2004 Operating Budget and the 2005 Operating Budget (consistent in
type with the items so identified in the 2005 Operating Budget), as applicable.
"$" 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
---- ------------------
338(h)(10) Election 7.24(a)
2004 Budgets 7.1(i)
2004 Capital Budget 7.1(i)
2004 Operating Budget 7.1(i)
2005 Budgets 7.1(i)
2005 Capital Budget 7.1(i)
2005 Operating Budget 7.1(i)
Accounting Referee 2.5(c)
Affirmative Third Party Firm Determination 7.24(b)
Agreement Preamble
Adjustment Payment 2.5(f)(i)
Assumed Liabilities 2.2
Books and Records 2.1(c)(vii)
Cap 11.4(a)
CARS 2.1(c)(iv)
Closing 9.1(a)
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)
16
Comcast Parent Preamble
Comcast Reimbursement Plan 3.1(h)
Comcast Statement 2.5(a)
Comcast Subsidiary Preamble
Comcast Subsidiary Transfer 2.1(b)(iii)
Comcast Transferred System Employees 3.1(a)
Comcast Trust Preamble
Comcast Trust I Preamble
Comcast Trust Releasing Parties 11.8(a)
Confidential Information 7.4(a)
Delayed Transfer Asset 2.1(e)(i)
Delivery Date 2.5(a)
Designated Offices 7.20(a)
Designated Relative Percentage Amount 2.5(h)
Designated Retained Base Subscriber Number 2.5(h)
Designated Retained Percentage 2.5(h)
Designated Transferred Base Subscriber Number 2.5(h)
Designated Transferred Closing Subscriber Number 2.5(h)
Designated Transferred Percentage 2.5(h)
Determination 7.24(b)
Determination Deadline 7.24(b)
Diligence Request Date 7.4(c)
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(d)
Excluded Liabilities 2.2
17
Excluded Transferred Cash 2.1(d)
Final Closing Adjustment Amount 2.5(d)
Franchise Matter 11.3
Good Faith Notice 7.20(b)
Guaranteed Parties 11.11(a)
Guaranteed Obligations 11.11(a)
Holdco Preamble
Holdco Adjustment Payment 2.5(f)(i)
Holdco Indemnification Payment 11.10(a)
Holdco Indemnified Liabilities 6.15(b)
Holdco Shares 2.1(b)(ii)
Holdco Transaction 2.1(b)(i)
Indemnification Payment 11.10(a)
Indemnitee 11.3
Indemnitor 11.3
Joint Determination 7.24(b)
Knowledge 1.3
Leases 6.10
Option 2.1(a)
Option Decision Date 7.20(a)
Option Exercise Date 2.1(a)(i)
Option Exercise Notice 2.1(a)(i)
Original Relative Percentage Amount 2.5(h)
Original Retained Base Subscriber Number 2.5(h)
Original Retained Percentage 2.5(h)
Original Transferred Base Subscriber Number 2.5(h)
Original Transferred Closing Subscriber Number 2.5(h)
Original Transferred Percentage 2.5(h)
Outside Closing Date 10.1(a)
Owned Property 2.1(c)(ii)
POFS 7.1(h)(ii)
Post-Closing Consent 7.8
18
Previous Request 2.3(a)
QSP 7.24(b)
Rate Regulatory Matter 7.10(d)
Real Property Interests 2.1(c)(ii)
Registration Rights Agreement Recitals
Retained Closing Subscriber Number 2.5(h)
Required Threshold 8.1(h)
Securities Act 4.3
Selected Employees 3.1(g)(v)
Subscriber Adjustment Amount 2.5(h)
Surveys 7.6(a)
Taking 12.16(b)
Tangible Personal Property 2.1(c)(i)
Third Party Firm 7.24(b)
Threshold Damage Requirement 11.4(a)
Time Warner Recitals
Time Warner Cable Preamble
Time Warner Cable Adjustment Payment 2.5(f)(i)
Time Warner Cable FCC Counsel Opinion 8.1(j)
Time Warner Cable 401(k) Plan 3.1(e)
Time Warner Cable Health or Welfare Plan 3.1(g)(i)
Time Warner Cable Indemnification Payment 11.10(a)
Time Warner Cable Marks 3.2
Time Warner Cable Statement 2.5(a)
Time Warner Cable Reimbursement Plan 3.1(h)
Time Warner Cable Pension Plans 3.1(f)
Time Warner Cable Released Parties 11.8(a)
Time Warner Cable Title Policies 8.1(o)
Title Commitment Notice 7.6(a)
19
Title Commitments 7.6(a)
Title Company 7.6(a)
Title Defect 7.6(a)
Transferred Assets 2.1(c)
Transferred Systems Recitals
Transferred Systems Contracts 2.1(c)(v)
Transferred Systems Financial Statements 6.11(a)
Transferred Systems Franchises 2.1(c)(iii)
Transferred Systems Licenses 2.1(c)(iv)
Transferred Systems Option 6.19
Transferring Person 6.1
Transitional Services 7.9
TWC Redemption 2.1(b)(ii)
TWE Holdco I Preamble
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 Time Warner Cable to
Comcast Trust and Comcast Subsidiary on the Amendment Date in connection with
this Agreement, as such Schedules may be updated pursuant to Sections 7.11 and
7.20 (but, in such case, subject to the provisions of such Sections). 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 Time
Warner Cable on the Amendment Date 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 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 Time Warner Cable, means the actual knowledge of a particular
matter of any of the individuals listed on Schedule 1.3(A), and,
20
from and after delivery of the Second Stage Bringdown Certificate but solely
with respect to Sections 6.3(c), 6.3(f) and 6.5 and solely to the extent such
Sections relate to the SSBC Systems, the additional individuals identified on
Schedule 1.3(B).
ARTICLE 2
OPTION EXERCISE; REDEMPTIONS; TOLLING
Section 2.1 Option; Redemptions.
(a) Option.
(i) Notwithstanding anything to the contrary set forth
herein, in no event shall any party hereto have any obligation to consummate the
transactions contemplated to occur at the Closing, including the GP Redemption,
the Holdco Transaction and the TWC Redemption, unless and until Comcast
Subsidiary shall deliver a written notice (the "Option Exercise Notice") to Time
Warner Cable during the period commencing on the Option Commencement Date and
expiring at 5:00 p.m. (NYT) on the Option Expiration Date specifying that it is
irrevocably exercising its option (the "Option") to cause such transactions to
be consummated in accordance with the terms and conditions herein set forth. The
date on which the Option Exercise Notice, if any, is received by Time Warner
Cable is herein referred to as the "Option Exercise Date."
(ii) The Option shall be non-transferable and is solely for
the benefit of Comcast Subsidiary.
(iii) The Option, if not yet exercised, shall automatically
terminate and be null and void and of no further force or effect at 5:00 p.m.
(NYT) on the Option Expiration Date (so long as prior thereto Comcast Subsidiary
did not deliver the Option Exercise Notice in accordance with Sections 2.1(a)(i)
and 12.4).
(iv) From and after the Option Exercise Date, if any,
consummation of the transactions contemplated by this Agreement shall be subject
to the satisfaction of the conditions set forth in Sections 8.1, 8.2 and 9.1.
(b) GP Redemption; Holdco Transaction; TWC Redemption. Subject to
the terms and conditions set forth in this Agreement, including exercise of the
Option:
(i) Subject to Section 2.1(e), prior to the consummation of
the Holdco Transaction, (a) pursuant to the terms and conditions of the GP
Redemption and Amendment Agreement, the GP Redemption shall be effected, (b) the
TWE-A/N Redemption shall be effected and (c) the Subsidiary Transfers shall be
effected. Subject to Section 2.1(e), following the consummation of the GP
Redemption the TWE-A/N Redemption and the Subsidiary Transfers and prior to the
consummation of the TWC Redemption, (a) Time Warner Cable shall (or shall cause
its Affiliates to) assign, transfer, convey and deliver to Holdco and Holdco
shall accept from Time Warner Cable (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
21
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 Time Warner Cable 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, both the GP
Redemption and the Holdco Transaction shall take place prior to the Closing.
(ii) At the Closing, (a) Time Warner Cable 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 Shares") in exchange for and in complete redemption of the
Redemption Securities and (b) Comcast Trust shall deliver to Time Warner Cable a
stock certificate evidencing the Redemption Securities which shall be in
definitive form and registered in the name of Comcast Trust, in proper form for
transfer and, if requested by Time Warner Cable, execute, acknowledge and
deliver a stock power or such other customary instruments of transfer as Time
Warner Cable may reasonably request. The transactions contemplated by the
preceding sentence are referred to as the "TWC Redemption."
(iii) If the Holdco Shares are delivered to Comcast Trust
(rather than Comcast Subsidiary) pursuant to Section 2.1(b)(ii), then
immediately after such transaction, Comcast Trust will transfer the Holdco
Shares to Comcast Subsidiary (the "Comcast Subsidiary Transfer"). For purposes
of Section 2.1(e)(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 GP
Redemption, the Holdco Transaction, the TWC Redemption and the Comcast
Subsidiary Transfer, if any, for all purposes. Without limiting the foregoing,
Comcast Trust I hereby agrees to execute and deliver the GP Redemption and
Amendment Agreement at such time prior to the Closing as Time Warner Cable shall
request.
(c) 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 Time Warner Cable'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 Time Warner Cable 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(e)(i)). The Transferred Assets shall include the following types of
assets and properties:
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(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(c)(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(c)(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(c)(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(c)(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(c)(iv);
(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(c)(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 Time Warner Cable (or its Affiliates) with the FCC and
statements of account filed by or on behalf of Time Warner Cable (or its
Affiliates) with the U.S. Copyright Office (the "Books and Records"); and
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(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 Time Warner Cable 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 the Balance Sheet Date 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, instead of
being partnerships, 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 Time Warner Cable's and its Affiliates' right,
title and interest therein.
For the avoidance of doubt, and subject to Section 2.1(e), the parties
intend that to the fullest extent permitted all record and beneficial ownership
interests of Time Warner Cable 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.
(d) Excluded Assets. Notwithstanding anything to the contrary set
forth herein, all right, title and interest of Time Warner Cable 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 Time Warner Cable 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(c)(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(c)(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 Time Warner Cable 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(c)(viii), (C) xxxxx cash on-hand, if any, (D) any cash referred
to in Section 12.16, (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, instead of
being partnerships, 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
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and similar proprietary rights, including the "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" 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 Time Warner Cable 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 Time Warner
Cable or any of its Affiliates for borrowed money; (xii) the assets described on
Schedule 2.1(d); (xiii) any surplus inventory in excess of amounts of inventory
held consistent with Specified Division practice; (xiv) any and all
Authorizations of Governmental Authorities to provide telephony service held,
directly or indirectly, by Time Warner Cable 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 (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 Time
Warner Cable 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
Time Warner Cable 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.
(e) Authorizations and Consents.
(i) If and to the extent that the transfer or assignment
from TWE to TWE Holdco I, from TWE-A/N to TWE, from any Transferring Person to
Time Warner Cable or from Time Warner Cable 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 Shares 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
25
applicable transferee thereunder then the transfer or assignment to Time Warner
Cable or Holdco, as applicable, 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(e) or for
any other reason, then Time Warner Cable (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, Time
Warner Cable 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(e)
and the parties agree to use reasonable commercial efforts to cooperate and
coordinate with respect thereto. For the avoidance of doubt, Time Warner Cable
will cause TWE and each other Transferring Person to comply with the provisions
hereof as if TWE or such other Transferring Person were a party hereto to the
extent any Transferred Asset was intended to be, but was not, transferred in the
GP Redemption, TWE-A/N Transfer, 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(e), 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 Time Warner Cable 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, Time Warner Cable shall
deliver to Holdco a list identifying, in reasonable detail and to Time Warner
26
Cable'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(e) 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, provided that if such a resolution would result
in Time Warner Cable taking a position that is inconsistent with any reporting
position required to be taken under the Tax Matters Agreement the provisions of
the Tax Matters Agreement shall apply).
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 Time Warner Cable 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 Time Warner Cable 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 created to record cash lent to the Transferred Systems prior to Closing
(clauses (i) through (vii) collectively, "Excluded Liabilities").
Section 2.3 Registration Rights Agreement.
(a) Comcast Trust and Time Warner Cable each hereby acknowledge
and agree that any request by Comcast Trust for a demand registration under the
Registration Rights Agreement prior to the date hereof (the "Previous Request")
will be treated for all purposes as if it had not been made. Unless and until a
subsequent request for a demand registration is delivered on or after the
Tolling Termination Date to Time Warner Cable in accordance with the
Registration Rights Agreement, Time Warner Cable will not be required to take
any action under the Registration Rights Agreement in respect of any request for
a demand registration thereunder.
27
(b) Except as set forth in Section 2.3 of the TWC Redemption
Agreement, Comcast Trust hereby agrees on behalf of itself and its Controlled
Affiliates that it shall not exercise (or cause to be exercised) (or make any
request with respect thereto) any of its demand registration rights under the
Registration Rights Agreement with respect to any "Registrable Securities" (as
defined in the Registration Rights Agreement) beneficially owned by it or any of
its Controlled Affiliates or otherwise prior to the Tolling Termination Date.
The foregoing shall be deemed to amend, modify and supplement the Registration
Rights Agreement; provided, that, it is acknowledged and agreed by Time Warner
Cable that nothing contained in this Section 2.3 shall be deemed a revocation by
Comcast Trust for purposes of Section 4.1(c) of the Registration Rights
Agreement.
(c) Comcast Trust hereby agrees that it will not from and after
the date hereof until the Tolling Termination Date transfer or otherwise dispose
of any Registrable Securities to any Person unless prior to such transfer or
disposition (and as a condition thereto) such Person agrees in writing to be
bound by 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).
(d) In its capacity as the ultimate indirect beneficiary of the
Comcast Trust, Comcast Parent hereby expressly acknowledges and approves of the
agreement made by Comcast Trust in this Section 2.3.
Section 2.4 Estimated Closing Adjustment Amount. No later than two
Business Days prior to the Closing Date, Time Warner Cable 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 Time Warner Cable
(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) Time Warner Cable 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 "Time Warner Cable Statement"). Each such
statement shall be prepared in good faith in accordance with this Agreement
based on the books and records of the
28
Transferred Systems held by Holdco or based on the books and records of the Time
Warner Cable Retained Cable Systems held by Time Warner Cable, as the case may
be.
(b) If Time Warner Cable disagrees with any item in the Comcast
Statement delivered pursuant to Section 2.5(a)(i), Time Warner Cable may, within
ninety (90) days after the Delivery Date, deliver a notice to Comcast Subsidiary
disagreeing with such item and setting forth Time Warner Cable'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 Time Warner Cable disagrees, and Time Warner Cable
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 Time Warner
Cable Statement delivered pursuant to Section 2.5(a)(ii), Comcast Subsidiary
may, within ninety (90) days after the Delivery Date, deliver a notice to Time
Warner Cable disagreeing with such item and setting forth Time Warner Cable'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 Time Warner Cable Statement delivered to it pursuant 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 Time Warner Cable Retained Cable Systems, as the
case may be.
(c) If a notice of disagreement shall be duly delivered pursuant
to Section 2.5(b), Time Warner Cable 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, Time Warner Cable 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 Time Warner Cable'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 Time Warner Cable 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 Time
Warner Cable and Comcast Subsidiary. The Accounting Referee shall deliver to
Time Warner Cable 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 Time
Warner Cable and Comcast Subsidiary. The costs of the Accounting Referee shall
be shared equally by Time Warner Cable and Comcast Subsidiary. Holdco and Time
Warner Cable 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
29
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 Time Warner Cable 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 Time Warner Cable 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, Time Warner Cable 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 Time Warner Cable the amount of
such excess. Any payment 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 Time Warner Cable (a "Time Warner Cable
Adjustment Payment") or to Time Warner Cable by Holdco (a "Holdco Adjustment
Payment" and, each, an "Adjustment Payment") as (x) with respect to a Time
Warner Cable Adjustment Payment, a contribution by Time Warner Cable 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 Time Warner
Cable 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.
30
(g) As used herein, the term "Closing Net Liabilities Adjustment
Amount" means the excess, if any, of the Closing Net Liabilities Amount over
$17,160,000. 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 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 Acquisition. 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.
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(h) "Subscriber Adjustment Amount" means an amount (which may be
positive or negative) equal to the sum of the (A) product of (x) $3,500 times
(y) the Original Relative Percentage Amount times (z) the Original Transferred
Base Subscriber Number plus (B) (x) $3,500 times (y) the Designated Relative
Percentage Amount times (z) the Designated Transferred Base Subscriber Number.
As used herein, the term "Original Relative Percentage Amount" means an amount
(which shall be expressed as a percentage and may be positive or negative) equal
to (i) the Original Retained Percentage (as defined below) minus (ii) the
Original Transferred Percentage (as defined below). As used herein, the term
"Original Retained Percentage" means a fraction (expressed as a percentage) the
numerator of which is the number of Individual Subscribers of the Time Warner
Cable 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 Time Warner Cable Retained Cable Systems as of July 31, 2004
(the "Original Retained Base Subscriber Number"). As used herein, the term
"Original Transferred Percentage" means a fraction (expressed as a percentage)
the numerator of which is (A) the number of Individual Subscribers of the
Original Systems as of the Closing Date minus (B) the number of Individual
Subscribers of the Original Systems acquired pursuant to any Excluded SMATV
Acquisition (the "Original Transferred Closing Subscriber Number") and the
denominator of which is the number of Individual Subscribers of such Original
Systems as of July 31, 2004 (the "Original Transferred Base Subscriber Number").
As used herein, the term "Designated Relative Percentage Amount" means an amount
(which shall be expressed as a percentage and may be positive or negative) equal
to (iii) the Designated Retained Percentage (as defined below) minus (iv) the
Designated Transferred Percentage (as defined below). As used herein, the term
"Designated Retained Percentage" means a fraction (expressed as a percentage)
the numerator of which is Retained Closing Subscriber Number and the denominator
of which is the number of Individual Subscribers of the Time Warner Cable
Retained Cable Systems as of December 31, 2004 (the "Designated Retained Base
Subscriber Number"). As used herein, the term "Designated Transferred
Percentage" means a fraction (expressed as a percentage) the numerator of which
is (A) the number of Individual Subscribers of the Designated Systems as of the
Closing Date minus (B) the number of Individual Subscribers of the Designated
Systems acquired pursuant to any Excluded SMATV Acquisition (the "Designated
Transferred Closing Subscriber Number") and the denominator of which is the
number of Individual Subscribers of such Designated Systems as of December 31,
2004 (the "Designated Transferred Base Subscriber Number").
ARTICLE 3
RELATED MATTERS
Section 3.1 Employees.
(a) Employees. Each Transferred System Employee who is an
employee of Time Warner Cable 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
32
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 Time Warner Cable) remains employed
by Time Warner Cable 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. 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
Time Warner Cable and any of its Affiliates (other than Holdco) prior to the
Closing under all Time Warner Cable Benefit Plans to the extent so recognized by
Time Warner Cable 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 Time Warner Cable Benefit Plan that is continued by Time
Warner Cable or any of its Affiliates (other 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, Time Warner Cable and its Affiliates
(other than Holdco) shall assign to Holdco, and Holdco shall assume, (A) all
rights, obligations and Liabilities of Time Warner Cable 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 Time Warner Cable Benefit
Plans, and (B) all other employment-related rights,
33
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 Time Warner Cable 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 Time Warner Cable Benefit Plan is continued by Time
Warner Cable 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 Time Warner Cable
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 Time Warner Cable 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. 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, Time Warner Cable shall discontinue
providing benefits to Comcast Transferred System Employees under all Time Warner
Cable 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
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 Time Warner Cable or any
of its Affiliates as permitted by Section 3.1(l) in the 12 month period
following the Closing.
34
(d) Participation in Benefit Plans. With respect to Comcast
Transferred System Employees, compensation and service of such employees with
Time Warner Cable and its Affiliates prior to Closing shall be recognized under
all applicable Comcast Benefit Plans to the extent so recognized under the
corresponding Time Warner Cable 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 Time Warner Cable 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 Time Warner Cable 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 Time Warner Cable or any
of its Affiliates (other than Holdco) and Holdco or any of its Affiliates (other
than Time Warner Cable). 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 other agreement between Time Warner Cable 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 Time Warner Cable Benefit Plan that
is a health or welfare plan within the meaning of Section 3(1) of ERISA (each a
"Time Warner Cable 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.
35
(ii) Other than as required by COBRA, each Transferred
System Employee shall cease to participate in any Time Warner Cable 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 Time Warner Cable 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 Time Warner Cable
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 Time Warner Cable
Health Welfare Plan.
(v) Upon the written request of Comcast Subsidiary or one of
its Affiliates delivered to Time Warner Cable at least 60 days prior to the
expected Closing Date, Time Warner Cable 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 Time Warner Cable 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
36
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 Time Warner Cable Benefit
Plan that is a reimbursement account plan, such as a health care or dependent
care reimbursement plan ("Time Warner Cable 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 Time Warner Cable or an Affiliate, as applicable. As soon
as practicable following the Closing, Time Warner Cable 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 Time Warner Cable
Reimbursement Plan. Comcast Subsidiary shall assume all obligations of Time
Warner Cable with respect to each Transferred System Employee under the
applicable Time Warner Cable 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 COBRA) on or after the Closing, to be offered COBRA coverage on
and after the Closing under a Comcast Health or Welfare Plan. Time Warner Cable
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
37
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 Time Warner Cable), from the date of this Agreement
(or, with respect to the Designated Systems, the Amendment Date) until the first
anniversary of the Closing neither Time Warner Cable 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 Time Warner Cable), from the Amendment Date until the
first anniversary of the Closing neither Time Warner Cable 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) 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.
(iv) Time Warner Cable or its Affiliates shall make
available to Comcast Subsidiary or its Affiliates for consultation and
transitional services those employees holding the job titles as of the date
hereof listed on Schedule 3.1(l)(i) (if hired or retained by Time Warner Cable
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
Time Warner Cable or its Affiliates.
38
(v) 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 (or, with
respect to employees of the Designated Systems, the Amendment Date) through the
Closing Date) would be a Transferred System Employee if the Closing Date
occurred on such date.
(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 Time Warner Cable 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 or other
future, present, or former employee of Comcast Subsidiary, Holdco, Time Warner
Cable, or any of their respective Affiliates, under any Comcast Benefit Plan or
Time Warner Cable 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 Time Warner
Cable or any of its Affiliates, at any time from amending, merging, modifying,
terminating, eliminating, reducing, or otherwise altering in any respect any
Time Warner Cable Benefit Plan, any benefit under any such plan or any trust,
insurance policy or funding vehicle related to any Time Warner Cable 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.
(o) Collective Bargaining. To the extent any provision of this
Agreement is contrary to the provisions of any collective bargaining agreement
to which Time Warner Cable or any of its Subsidiaries is a party as of the date
hereof (or, with respect to the Designated Systems, the Amendment Date) that
covers Transferred System 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 Time Warner Cable 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 (or, with
respect to the Designated Systems, the Amendment Date) Transferred System
Employees to the extent consistent
39
with Comcast's rights and responsibilities under applicable labor law. If Time
Warner Cable or any of its Affiliates acquires a duty to bargain with any labor
organization with respect to Transferred System Employees, then Time Warner
Cable 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 Time Warner Cable
and its Affiliates to the extent incorporated in or on the Transferred Assets
(collectively, the "Time Warner Cable Marks"), provided, that (a) Comcast
Subsidiary and Holdco acknowledge that the Time Warner Cable Marks belong to
Time Warner Cable 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 Time Warner Cable and its Affiliates of such Transferred
Assets prior to Closing; (c) Comcast Subsidiary shall exercise reasonable
efforts to remove all Time Warner Cable Marks from the Transferred Assets as
soon as reasonably practicable following Closing; and (d) the use of the Time
Warner Cable Marks during such period shall inure to the benefit of Time Warner
Cable and, to the extent any goodwill in the Time Warner Cable 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 Time Warner
Cable; provided, that Holdco shall indemnify and hold harmless Time Warner Cable
for any Liabilities arising from or otherwise relating to Holdco's use of the
Time Warner Cable Marks. Upon expiration of such 150-day period, Comcast
Subsidiary shall cause Holdco to remove all Time Warner Cable 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 Time Warner Cable
Marks within ten Business Days and shall provide Time Warner Cable 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 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
40
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 GP Redemption, the TWE-A/N Transfer, the Subsidiary
Transfers and the TWC Redemption, shall be paid one-half by Holdco and one-half
by Time Warner Cable (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 Time Warner Cable, 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 Securities.
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.
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 Time Warner Cable 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
41
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 Securities; 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 Securities. 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 Time Warner Cable
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 Time Warner Cable or its Affiliates or by the FCC Trust
Requirements) all of the Redemption Securities. In the TWC Redemption, Comcast
Trust will transfer to Time Warner Cable valid title to the Redemption
Securities 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 Time Warner
Cable or its Affiliates in connection with the transactions contemplated by this
Agreement.
ARTICLE 5
COMCAST SUBSIDIARY'S REPRESENTATIONS AND WARRANTIES
Comcast Subsidiary represents and warrants to Time Warner Cable, 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 corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware.
42
Section 5.2 Authority. Comcast Subsidiary has all requisite corporate
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 corporate
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 Time Warner Cable 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 incorporation or
bylaws 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 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 Time Warner Cable or its Affiliates in connection with the transactions
contemplated by this Agreement.
43
Section 5.6 Comcast Balance Sheet. Comcast has provided to Time Warner
Cable an internal unaudited consolidated balance sheet of Comcast and its
Subsidiaries as of June 30, 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 tolling of registration rights pursuant thereto).
ARTICLE 6
TIME WARNER CABLE'S REPRESENTATIONS AND WARRANTIES
Time Warner Cable represents and warrants to Comcast Trust and Comcast
Subsidiary, as of the date of this Agreement (or, with respect to the Designated
Systems, the Amendment Date) (subject, in each case, to Section 7.20 with
respect to Sections 6.3(c), 6.3(f) and 6.5, to the extent such Sections relate
to the SSBC Systems) and as of Closing, as follows:
Section 6.1 Organization and Qualification of Time Warner Cable. Time
Warner Cable is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Time Warner Cable and each
Affiliate of Time Warner Cable that holds Transferred Assets or is otherwise a
participant in any of the transactions referred to in Section 2.1(b)(i) (each, a
"Transferring Person") has all requisite corporate 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 Time Warner Cable and Holdco has all
requisite corporate 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 transactions contemplated hereby by Time Warner
Cable and Holdco have been, and in the case of the Transaction Documents to be
executed and delivered by Time Warner Cable or any TWC 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 Time Warner Cable and each such TWC Participant. This
44
Agreement has been duly and validly executed and delivered by Time Warner Cable
and Holdco and is, and in the case of the Transaction Documents to be executed
and delivered by Time Warner Cable or any TWC Participant, when so executed and
delivered shall be, the valid and binding obligation of Time Warner Cable or
such TWC Participant, enforceable against Time Warner Cable or such TWC
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 Time Warner Cable and Holdco of this
Agreement and the Transaction Documents to be executed and delivered by Time
Warner Cable 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 the certificate of incorporation or by-laws or other organizational
or governing documents of Time Warner Cable, 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 Time Warner Cable, 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.
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 Time
45
Warner Cable 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 Time Warner
Cable 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 Time Warner Cable has delivered a Title Policy,
or a Title Commitment to deliver a Title Policy, as provided in Section 8.1.
(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(c)(ii), 2.1(c)(iii),
2.1(c)(iv), 2.1(c)(v) or Schedule 6.5(a) and except for the Excluded Assets,
neither Time Warner Cable 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 Time
Warner Cable 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 Time
Warner Cable 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 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
46
Contract with Time Warner Cable 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 Time Warner Cable in any twelve month period exceeding
$500,000 or is otherwise material to the Transferred Systems.
(b) Time Warner Cable has prior to the date hereof (or, with
respect to the Designated Systems or the Non-SSBC Original Systems, the
Amendment Date) provided or otherwise made available (or, with respect to the
SSBC Systems, will as part of delivery of the Second Stage Documents provide or
otherwise make 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(c)(ii) (to the extent in the possession of Time Warner Cable or its
Affiliates), 2.1(c)(iii), 2.1(c)(iv), 2.1(c)(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 on Schedule 2.1(c)(ii), to the extent in the
possession of Time Warner Cable or its Affiliates), (iii) in the case of oral
Real Property Interests listed on Schedule 2.1(c)(ii) or oral Transferred
Systems Contracts listed on Schedule 2.1(c)(v), true and complete written
summaries thereof and (iv) each document in the possession of Time Warner Cable
or its Affiliates evidencing or insuring Time Warner Cable'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) Time Warner Cable and each of its Affiliates
are in compliance with each of the Transferred Systems Franchises, Transferred
Systems Licenses and Transferred Systems Contracts; (ii) Time Warner Cable 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 Time Warner Cable or any of
its Affiliates and, to the knowledge of Time Warner Cable, 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
47
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(c)(iii) lists the date on which each Transferred
Systems Franchise shall expire.
(d) Except as described on Schedules 2.1(c)(iii), 2.1(c)(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 Time Warner Cable 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 Time Warner
Cable, 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), Time Warner
Cable 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 Time Warner Cable'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 (or, with respect
to the Designated Systems or the Non-SSBC Original Systems, the Amendment Date),
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 Time
Warner Cable Benefit Plans is set forth in Schedule 6.6. Except as set forth on
Schedule 6.6, none of Time Warner Cable, any of its ERISA Affiliates, any Time
Warner Cable Benefit Plan other than a multiemployer plan (as defined in Section
3(37) of ERISA), or to the knowledge of Time Warner Cable, any Time Warner Cable
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 Time Warner
Cable 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 Time Warner
Cable Benefit Plan other than a multiemployer plan (as defined in Section 3(37)
of ERISA) or, to the knowledge of Time Warner Cable, any Time Warner Cable
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 Time
Warner Cable Benefit
48
Plan currently maintained by Time Warner Cable or any of its ERISA Affiliates.
Except as set forth in Schedule 6.6, since the Balance Sheet Date, there has
been no change in the Time Warner Cable Benefit Plans or level of compensation
provided the 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, (i) there
is no Litigation pending or, to Time Warner Cable's knowledge, threatened, by or
before any Governmental Authority or private arbitration tribunal, against Time
Warner Cable or any of its Affiliates; and (ii) there is no Judgment requiring
Time Warner Cable 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 Time Warner Cable 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 Time Warner Cable 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 the Balance Sheet Date, 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 the Balance Sheet Date), 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 the Balance Sheet Date), the approximate number of homes passed by
each of the Transferred Systems as reflected in Time Warner Cable's system
records for such date;
(d) as of the date hereof (or, with respect to the Designated
Systems, the Amendment Date), a description of basic and optional or tier
services available from each of the Transferred Systems and the rates charged by
Time Warner Cable for each;
(e) as of the hereof (or, with respect to the Designated Systems,
the Amendment Date), 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]
49
(g) the municipalities served by each of the Transferred Systems
and the community identification numbers of such municipalities.
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 Time Warner Cable, 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(c)(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) Time Warner Cable has provided to Comcast Trust and Comcast
Subsidiary internal unaudited financial statements for the Transferred Systems
consisting of balance sheets and statements of operations (i) with respect to
the Original Systems, as of and for the 12 months ended December 31, 2003 and as
of and for the 6 months ended June 30, 2004 and (ii) with respect to the
Designated Systems, as of and for the 12 months ended December 31, 2004
(collectively, 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);
50
(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 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 TWC or TWC and relieving the third-party
liability at the Transferred Systems).
(b) Except as set forth in Schedule 6.11(b), (i) since Balance
Sheet Date, 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) since the Balance Sheet Date, 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 Time Warner Cable nor any Affiliate of Time Warner Cable, 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 Time Warner Cable or any Affiliate of Time Warner
Cable, 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.
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(b) Except as set forth on Schedule 6.12(b), Time Warner Cable
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 forth on
Schedule 6.12(b), neither Time Warner Cable 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 Time Warner
Cable 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,
Time Warner Cable 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 the Balance Sheet Date 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 Holdco I.
(a) Holdco is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and has all corporate
powers required to carry on its business as now conducted. Holdco is (or at the
Closing
52
will be) duly registered as a foreign corporation 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 capital stock of Holdco, free and clear of all Liens,
other than restrictions imposed by applicable federal or state securities Laws.
All of such capital stock is duly authorized, validly issued, fully paid and
non-assessable, and was issued in compliance in all material respects with all
applicable Legal Requirements. There shall be no outstanding options, warrants,
rights, commitments, conversion rights, preemptive rights or agreements of any
kind to which Time Warner Cable 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 shares of capital stock, 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 TWC Redemption, Time Warner Cable will transfer to Comcast
Trust or Comcast Subsidiary, as the case may be, valid title to the Holdco
Shares 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 corporate
existence, (ii) any Liabilities for Taxes of any member of an Affiliated Group
of which Holdco is or was a member on or prior to the Closing Date by reason of
Liability under Treasury Regulation Section 1.1502-6, Treasury Regulation
Section 1.1502-78 or similar provisions of state, local, provincial or foreign
law and (iii) 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 TWC Redemption, Holdco will own the
Transferred Assets, subject to the Assumed Liabilities and will have no other
assets or
53
Liabilities, except Holdco Indemnified Liabilities and Liabilities under this
Agreement and any Transaction Document to which Holdco is a party.
(g) Either (i) TWE Holdco I will be a disregarded entity for
federal income tax purposes as of Closing; or (ii) the contribution of assets to
TWE Holdco I permitted in the last sentence of Step 3 of the Interim Steps (as
defined in the TWC Redemption Agreement), if effectuated, will not impair or
materially delay the Holdco Transaction, the TWC Redemption, the GP Redemption,
the TWE-A/N Transfer or the Subsidiary Transfer, or otherwise adversely affect
the Transferred Systems, the Transferred Business, any Transferred Assets,
Comcast or any of its Affiliates. TWE Holdings shall be a Transferring Person.
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 Time Warner
Cable or its Affiliates, in each case which are in force as of the date hereof
(or, with respect to the Designated Systems, the Amendment Date). All such
policies are in full force and effect, all premiums due thereon have been paid
by or on behalf of Time Warner Cable, and Time Warner Cable is otherwise in
compliance in all material respects with the terms and provisions of such
policies (after giving effect to applicable grace or cure periods). After the
Closing, the terms of such policies will continue to provide coverage with
respect to acts, omissions and events occurring prior to the Closing in
accordance with their terms as if the Closing had not occurred. Time Warner
Cable 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
Time Warner Cable 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
54
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 Time Warner Cable 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 Time Warner Cable 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 Time Warner Cable or its Affiliates with respect to the
Transferred Systems, other than campaigns initiated with the consent of Comcast
Subsidiary.
Section 6.22 Environmental.
(a) Except as described on Schedule 6.22(a), to the knowledge of
Time Warner Cable, (i) neither Time Warner Cable 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 Time
Warner Cable 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
Time Warner Cable, 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 Time Warner
Cable nor any of its Affiliates has received any written notice of, or has any
knowledge of circumstances relating to, and, to the knowledge of Time Warner
Cable, 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
55
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 Time Warner
Cable'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 (or, with respect to the Designated
Systems, the Amendment Date), Time Warner Cable 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:
(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
56
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.
Section 6.24 Tax Matters Agreement Representations. The
representations and warranties set forth in Section 3 of the Tax Matters
Agreement in the form attached hereto as Exhibit B are made as of the date
hereof as if set forth in full herein.
ARTICLE 7
COVENANTS
Section 7.1 Certain Affirmative Covenants of Time Warner Cable. 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 of this Agreement, or with respect to the Designated Systems, the Amendment
Date (or with respect to Section 7.1(h), the Option Exercise Date, and with
respect to Section 7.1(i) (other than clauses (iii) and (iv) thereof), the
Amendment Date) and the Closing Time, Time Warner Cable, 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 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 Time Warner Cable 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
57
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 Time Warner Cable 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 Time Warner Cable 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 Time Warner Cable
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) Time Warner Cable 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) Time Warner Cable shall afford Comcast Subsidiary the opportunity to
review and approve the form of Time Warner Cable Required Consent and such other
consents prior to delivery to the party whose consent is sought and Time Warner
Cable 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. Time Warner Cable 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 any
Transferred Systems License or Transferred Systems Franchise. Notwithstanding
the foregoing, Time Warner Cable shall not have any further obligation to obtain
Time Warner Cable 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 Time Warner Cable, in which case Time Warner Cable shall
cooperate with and assist Comcast Subsidiary and Holdco in obtaining such
agreements; and
58
(ii) for any business radio license or any private
operational fixed service ("POFS") microwave license which Time Warner Cable
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) (A) prior to January 1, 2005, make capital expenditures in accordance
with the August 2004 re-estimated capital budget of each Transferred System set
forth on Schedule 7.1(i)(A) (the "2004 Capital Budget") and from January 1, 2005
through December 31, 2005 make capital expenditures in accordance with the 2005
capital budget of each Transferred System set forth on Schedule 7.1(i)(B) (the
"2005 Capital Budget"), (B) prior to January 1, 2005, make aggregate
expenditures (other than Variable Expense Items) in accordance with the 2004
operating budget for each Transferred System set forth on Schedule 7.1(i)(C)
(the "2004 Operating Budget", and together with the 2004 Capital Budget, the
"2004 Budgets") and from January 1, 2005 through December 31, 2005 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)(D) (the "2005 Operating Budget", and together with the 2005 Capital
Budget, the "2005 Budgets") and (C) until January 1, 2006, 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 2004 Budgets or 2005 Budgets, as applicable;
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 Time Warner Cable
shall have used commercially reasonable efforts to operate in accordance with
such telephony budgets;
(j) except as otherwise provided in this Agreement, Time Warner
Cable will use commercially reasonable efforts to promptly notify Comcast Trust
and Comcast Subsidiary of any circumstance, event or action by Time Warner Cable
or any of its Subsidiaries or otherwise, that becomes known to Time Warner
Cable, (i) which, if known at the date of this Agreement (or, with respect to
the Designated Systems, the Amendment Date), would have been required to be
disclosed in or pursuant to this Agreement or (ii) the existence, occurrence or
taking of which would result in any of its representations and warranties in
this Agreement or in any Transaction Document 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
59
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 Time Warner Cable
solely pursuant to this subsection shall not be deemed to update the Schedules
to this Agreement under Section 7.11 hereof unless Time Warner Cable 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, (i) 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, Time Warner Cable
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 2004 Operating Budget and the 2005 Operating Budget,
as applicable or, 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
Specified Division.
Section 7.2 Certain Negative Covenants of Time Warner Cable. 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 Amendment
Date and the Closing or, with respect to Sections 7.2(d) (to the extent relating
to Xxxxxxx 0.00), (x), (x), (x), (x), (x), (x), (x), (x) and (r) (and, to the
extent relating to such Sections, Section 7.2(s)), between the date hereof (or,
with respect to the Designated Systems, the Amendment Date) and the Closing,
Time Warner Cable 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(s)), 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;
60
(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
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 Time Warner Cable
or an Affiliate of Time Warner Cable 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); provided, however, that with
respect to the representation and warranty provided in Section 6.24 hereof, and
subject to Section 7.2(p) hereof, Time Warner Cable and its respective
Affiliates may enter into any transaction or take any action not otherwise
prohibited by this Agreement provided that such transactions or actions would
not (i) result in such representation and warranty not being true and correct at
Closing, and (ii) reasonably be expected to (w) cause the Holdco Transaction and
the TWC Redemption not to qualify as a reorganization and distribution within
the meaning of Sections 368(a)(1)(D), 361(c) and 355 of the Code, (x) cause any
of the shares of Holdco not to qualify as "qualified property" for purposes of
Section 355(c)(2) and 361(c) of the Code, (y) cause any of the shares of Holdco
to constitute "other property" for purposes of Section 355(a)(3)(B) of the Code,
or (z) result in Tax consequences to Comcast or any of its Affiliates that are
materially worse than the expected Tax consequences of the GP Redemption,
TWE-A/N Transfer, Subsidiary Transfers, Holdco Transaction or the TWC
Redemption; provided, that, in no case, shall any or all of (I) the Adelphia
Transactions (as defined in the TWC Redemption Agreement); provided, that either
(i) all members (other than Holdco) of the Affiliated Group for U.S. federal
income tax purposes of which
61
TWC is (or would be), as of the date hereof, the common parent remain,
immediately after the Closing, members of the Affiliated Group for U.S. federal
income tax purposes of which TWC is (or would be) the common parent or (ii) to
the extent that any member of the Affiliated Group for U.S. federal income tax
purposes of which TWC is (or would be), as of the date hereof, the common parent
(other than TWC) is not in existence immediately after the Closing, the assets
of such member were transferred to another member of the Affiliated Group for
U.S. federal income tax purposes of which TWC is (or would be) the common parent
by reason of a transaction in which no gain or loss was recognized, in whole or
in part, for U.S. federal income tax purposes, (II) Time Warner Cable ceasing to
be a member of the Affiliated Group of which TWX is the parent for federal
income tax purposes, (III) members of the Affiliated Group of which TWX is the
parent for federal income tax purposes ceasing to own, in the aggregate, stock
representing "control" of Time Warner Cable within the meaning of Section 368(c)
of the Code, (IV) any change in value (including by reason of changes in the
number of Individual Subscribers with respect to any of the Transferred Systems
or the Time Warner Cable Retained Cable Systems), from the date hereof to the
Closing of any or all of the Transferred Systems or the Time Warner Cable
Retained Cable Systems, (V) a fire, theft or other casualty as contemplated in
Sections 12.16(a), (VI) a Taking as contemplated in Sections 12.16(b) or (VII)
the liquidation for federal income tax purposes of Time Warner Cable West
Virginia LLC, a Delaware limited liability company, on or before May 12, 2005,
constitute a breach of this Section 7.2(d);
(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 2004 Operating
Budget or the 2005 Operating Budget, as applicable, 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
Time Warner Cable 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;
(i) engage in any hiring practices that are materially
inconsistent with past practices;
(j) transfer the employment duties of any employee of a
Transferred System from such Transferred System to a different business unit or
Subsidiary of Time Warner Cable or any of its Affiliates;
(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
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Transaction, or (iv) transfers solely among Time Warner Cable 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
Transaction;
(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 Specified
Division 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 Time Warner Cable Retained Cable Systems; or
(q) convert any billing systems used by the Transferred Systems
(other than the conversion described on Schedule 7.2(q));
(r) launch cable telephony service in any Transferred System
identified on Schedule 7.2(r); or
(s) 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 Option Exercise Date,
Comcast Trust, Comcast Subsidiary and Time Warner Cable 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
Time Warner
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Cable 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 Option Exercise Date.
(b) Subject to Section 7.1(h), from and after the Option Exercise
Date, the parties shall use their commercially reasonable efforts to cooperate
with each other in obtaining the Time Warner Cable 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 Time Warner Cable Required
Consents.
(c) The parties shall as soon as practicable after the Option
Exercise Date, but in any event no later than 20 Business Days after the Option
Exercise Date, 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
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 Time Warner Cable.
(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 TWC Redemption or the Comcast Subsidiary
Transfer, and any such amendment would require approval of the FCC. If such
amendment is
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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 Time Warner Cable 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 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
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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.
(c) At Comcast's request, which shall be provided to TWC no later
than thirty (30) days prior to the expected Closing Date (such date, the
"Diligence Request Date"), TWC shall provide Comcast with (i) the most recent
consolidated balance sheet for the TWC Affiliated Group (as defined in the Tax
Matters Agreement) as of the Diligence Request Date, (ii) a reasonable good
faith estimate of the aggregate number of Individual Subscribers of such TWC
Affiliated Group (as defined in the Tax Matters Agreement) as of the Diligence
Request Date; (iii) summary financial information with respect to any
nonconsolidated investments of any member of the TWC Affiliated Group (as
defined in the Tax Matters Agreement) as of the Diligence Request Date; and (iv)
a reasonable good faith estimate of the aggregate number of Individual
Subscribers of the Transferred Systems as of the Diligence Request Date.
Section 7.5 Retransmission Consent Agreements. On or prior to the date
which is 45 days prior to the anticipated date of Closing, Time Warner Cable
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 Time Warner Cable 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
Time Warner Cable shall use commercially reasonable efforts to obtain any
required Authorizations for such assumption. The foregoing shall be subject to
Section 2.1(e) 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. Time Warner Cable shall use
commercially reasonable efforts to provide to Comcast Subsidiary, within 90 days
from the date Time Warner Cable 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 designated by Comcast Subsidiary by notice (the "Title
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Commitment Notice") delivered to Time Warner Cable within 30 days following the
Option Exercise Date by ALTA extended coverage owner's or leasehold policies of
title insurance, or, if ALTA policies are not obtainable in any state, policies
in another form reasonably satisfactory to Comcast Subsidiary, and (b) surveys
of each parcel of Owned Property or Leased Property designated by Comcast
Subsidiary 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
Time Warner Cable'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 Time Warner Cable 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 Time Warner Cable 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 Time Warner Cable (each a "Title
Defect"), Time Warner Cable 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 Time Warner Cable
shall enter into a written agreement containing Time Warner Cable'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 Time Warner Cable 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 Time Warner Cable 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 Time Warner Cable's or its
Affiliates' acts for the period between
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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 Time
Warner Cable 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 shall Time Warner Cable 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(e), Time Warner Cable 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.
(a) Time Warner Cable shall provide to Holdco, upon written
request from Comcast Subsidiary received by Time Warner Cable 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 Time Warner Cable and Comcast Subsidiary to allow for
transition of existing services or establishment of replacement services
("Transitional Services"). Holdco shall promptly reimburse Time Warner Cable for
the actual out-of-pocket cost to Time Warner Cable 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 Time Warner Cable and subject to applicable Legal
Requirements.
(b) Time Warner Cable will, at its expense, rebuild the "HITS"
headend for the Transferred System identified on Schedule 7.9 on or before the
Closing and, after Closing, Time Warner Cable may, at its option, lease space
from Holdco such that Time Warner Cable will continue to have access to a
xxxxxxx to be located on properties included in such system, all on terms
mutually satisfactory to Time Warner Cable and Comcast Subsidiary to be
negotiated in good faith prior to the Closing.
Section 7.10 Cooperation Upon Inquiries as to Rates. Comcast
Subsidiary and Time Warner Cable agree as follows:
(a) For a period of 12 months after Closing, Time Warner Cable
shall cooperate with and assist Holdco by providing, upon request, all
information
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in Time Warner Cable'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, Time
Warner Cable 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 (after the Amendment Date), which consent
shall not be unreasonably withheld or delayed, Time Warner Cable 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 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, Time Warner
Cable shall have the right to participate, at its expense, in the defense of
such matter. Notwithstanding the provisions set forth in Article 11 of this
Agreement, Holdco may settle any such Rate Regulatory Matter only upon Time
Warner Cable's prior written consent, which consent shall not be unreasonably
withheld or delayed, if Time Warner Cable would have any obligation with respect
to such settlement in accordance with Article 11 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 Time Warner Cable, and (ii) keep Time Warner Cable
informed as to the progress of any such proceeding. Time Warner Cable shall have
the right to participate, at its expense, in the defense of such matter.
Notwithstanding the provisions set forth in Article 11 of this Agreement, Holdco
may settle any such Rate Regulatory Matter only upon Time Warner Cable's prior
written consent, which consent shall not be unreasonably withheld or delayed, if
Time Warner Cable would have any obligation with respect to such settlement in
accordance with Article 11 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.
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(e) If Time Warner Cable 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 Time Warner Cable's request, to make such reimbursement through Holdco's
billing system on terms specified by Comcast Subsidiary. In such event, Time
Warner Cable 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 Time Warner Cable all information in its
possession that is reasonably required by Time Warner Cable in connection with
such reimbursement.
Section 7.11 Updated Schedules.
(a) On one or more occasions, Time Warner Cable may, at least
five Business Days prior to Closing: (i) supplement Schedule 6.5(a) to reflect
leases, franchises, licenses, authorizations, consents, permits, Contracts or
commitments which were entered into or obtained between the Amendment Date (or,
with respect to the SSBC Systems, the date of delivery of the Second Stage
Bringdown Certificate) and the Closing Date not in violation of the 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 (ii) supplement any other Schedule to this Agreement (other than
the Schedules to any of Section 6.1, 6.2, 6.15 or 6.18) or to the Tax Matters
Agreement, with additional information to the extent that it reflects events,
acts or omissions that first occurred between the date hereof (or, with respect
to the Designated Systems and the Non-SSBC Original Systems, the Amendment Date)
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 or the Tax Matters Agreement in order for the representations and
warranties of Time Warner Cable contained in this Agreement or in the Tax
Matters 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 Time Warner Cable's knowledge, the potential
Liability associated with the relevant action, condition or event. Without
limitation to Section 7.20, for purposes of determining whether there is any
liability on the part of Time Warner Cable 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 (or, with respect to the Designated Systems, the Amendment
Date), (b) to the extent relating to the SSBC Systems information added to the
Schedules for Section 6.3(c), 6.3(f) or 6.5 pursuant to Section 7.20 and (c)
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 8.1(a), any update to the Schedules pursuant to clause (c) of this
sentence shall be disregarded.
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(b) In addition, if after the date that is the fifth Business Day
prior to Closing, but before the Closing, Time Warner Cable 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 Time Warner Cable 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 Time Warner Cable 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.
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 Time Warner Cable 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 Time Warner Cable) 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 Time Warner Cable (together with its Affiliates) had
with respect thereto immediately prior to the Transactions.
Section 7.13 Post-Closing Access to Personnel Records After the
Closing Date, Time Warner Cable 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 Time Warner Cable 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
Time Warner Cable is required by law to keep such files and records
confidential.
Section 7.14 [Intentionally Omitted].
Section 7.15 Tax Returns with respect to Applicable Taxes.
(a) Time Warner Cable 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.
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(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 Time
Warner Cable 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 extent relevant to such Transferred Systems. Subject
to the foregoing, Time Warner Cable and Holdco shall reasonably cooperate with
each other in the preparation and filing of any Straddle Period Applicable Tax
Returns.
Section 7.16 Environmental Reports. Following the Amendment Date,
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 7.16) 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. Time Warner Cable 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 7.16 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 7.16 at a
Leased Property shall be subject to Time Warner Cable not being prohibited from
performing such assessment pursuant to the lease for such Leased Property.
Section 7.17 Certain Notices. Prior to the Closing, Time Warner Cable,
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 7.18 Franchise Expirations. From the Amendment Date until
Closing, Time Warner Cable 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 Time Warner Cable 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. Time Warner Cable agrees, from the Amendment
Date until Closing, upon reasonable 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.
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Section 7.19 Insurance. Time Warner Cable will use commercially
reasonable efforts to take such actions as are necessary to cause insurance
policies of Time Warner Cable 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 Time Warner Cable takes any action with respect to
its umbrella insurance policies that similarly effects all of the Time Warner
Cable 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 Time Warner Cable), Time Warner Cable shall not be
deemed to have breached this Section 7.19 and shall have no liability with
respect thereto. Time Warner Cable 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. Time Warner Cable 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 Time Warner Cable when it becomes aware of any such
claim; provided, that the failure of Holdco to provide such notice shall not
relieve Time Warner Cable of its obligations under this Section 7.19, except to
the extent that Time Warner Cable's rights under the applicable insurance policy
are prejudiced by such failure to give notice.
Section 7.20 Second Stage Review.
(a) The Comcast Parties acknowledge that as of the date hereof,
to the extent that the representations and warranties set forth in Sections
6.3(c), 6.3(f) and 6.5 relate to the SSBC Systems, Time Warner Cable has only
been required to make good faith efforts to make such representations and
warranties true, correct and complete based on the limited information in the
possession of Time Warner Cable as of the date hereof without consulting with
the Transferred Systems Employees or obtaining any information in the possession
of the Transferred Systems. The purpose of this Section 7.20 is that during the
20 day period after receipt of the Good Faith Notice, Time Warner Cable shall
have the ability to update the Schedules for Sections 6.3(c), 6.3(f) and 6.5
with respect to the SSBC Systems by delivering the Second Stage Bringdown
Certificate and Second Stage Documents, in each case after consultation with the
employees of the Transferred Systems Employees, whereupon Comcast Subsidiary
will have until 20 days after the receipt of such materials (the "Option
Decision Date") to determine whether or not to exercise the Option (in its sole
discretion). This Section 7.20 shall be deemed to qualify each of the
representations and warranties set forth in Sections 6.3(c), 6.3(f) and 6.5 in
their entirety, but only to the extent such representations and warranties are
made as of the date hereof and, in each case, only to the extent such
representations and warranties relate to the SSBC Systems. Any update of
Schedules made pursuant to this Section 7.20 shall be made with reasonable
specificity, in good faith. No item may be added to a Schedule pursuant to this
Section 7.20 if the relevant item was, to Time Warner Cable's knowledge, located
in one of the offices of Time
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Warner Cable identified on Schedule 7.20(a) (such offices, the "Designated
Offices") as of the date hereof.
(b) At any time after October 5, 2004, Comcast Subsidiary may
deliver to Time Warner Cable a written notice (the "Good Faith Notice") stating
that Comcast Subsidiary intends in good faith to exercise the Option on or prior
to the Option Decision Date unless as a result of its diligence review after
delivery by Time Warner Cable of the Second Stage Bringdown Certificate and the
Second Stage Documents it determines that it is not in its best interest to
exercise the Option. For the avoidance of doubt, no more than one Good Faith
Notice may be delivered and no Good Faith Notice shall be delivered prior to the
termination of the TWC Redemption Agreement.
(c) Time Warner Cable shall, within 15 days of receipt of the
Good Faith Notice: (i) deliver to Comcast Trust and Comcast Subsidiary the
Second Stage Bringdown Certificate and, concurrent therewith and (ii) provide or
otherwise make available to Comcast Trust, Comcast Subsidiary and/or their
respective counsel the Second Stage Documents in accordance with this Section
7.20. All information included in the Schedules delivered with the Second Stage
Bringdown Certificate shall be deemed to modify the representations and
warranties set forth in Sections 6.3(c), 6.3(f) and 6.5, as applicable, as of
the date hereof and as of the Closing Date but, in each case, only to the extent
such representations and warranties relate to the SSBC Systems.
(d) Comcast Trust and Comcast Subsidiary may, on the Amendment
Date, request additional documents relating to the Transferred Business, the
Transferred Assets or the Transferred Systems. Any such documents that would
reasonably be expected to be material to Comcast Subsidiary's decision as to
whether to exercise the Option, and that can be delivered or otherwise made
available to Comcast Trust and Comcast Subsidiary by Time Warner Cable's good
faith exercise of its commercially reasonable efforts within 15 days of receipt
of the Good Faith Notice, shall be so delivered or made available as Second
Stage Documents concurrent with the delivery of the Second Stage Bringdown
Certificate.
(e) [Intentionally Omitted]
(f) To the extent any representation and warranty in Sections
6.3(c), 6.3(f) and 6.5 relates to any SSBC System and purports to relate to any
Second Stage Document, such representation and warranty shall, subject to
Section 7.20(g), only be made in the Second Stage Bringdown Certificate and at
Closing.
(g) The representations and warranties of Time Warner Cable in
the Second Stage Bringdown Certificate will be treated as if they had been
representations and warranties of Time Warner Cable in this Agreement for all
purposes of this Agreement, including the conditions and indemnities in Articles
8 and 11, respectively.
(h) For the avoidance of doubt, notwithstanding the delivery of
the Good Faith Notice, Comcast Subsidiary shall not be required or obligated to
exercise
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the Option, and shall not otherwise be deemed to have exercised the Option,
based upon delivery of the Good Faith Notice. The Option will only be exercised
as set forth in Section 2.1(a)(i).
Section 7.21 [Intentionally Omitted]
Section 7.22 Promotional Campaigns. Between the date hereof and the
Closing, Time Warner Cable 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 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 Time Warner Cable
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 RBOCor (y) not
materially less favorable to the Transferred Systems than those being conducted
by any direct broadcast satellite providers in the same DMA (but only in the
relevant market of the relevant campaign or promotion).
Section 7.23 Launch Support. At the Closing, Time Warner Cable shall
deliver to Comcast Subsidiary a schedule of the services subject to Specified
Launch Support 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 (or, with respect to the Designated Systems, the fifth anniversary
of the Amendment Date)) 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 7.24 Section 338(h)(10) Election.
(a) Subject to Section 7.24(b), the parties agree jointly to make
a timely election under Section 338(h)(10) of the Code and any corresponding or
similar elections under state, local or foreign Tax Law (in the state, local or
foreign jurisdictions as requested by Comcast) with respect to the TWC
Redemption (any such election, a "338(h)(10) Election"); provided, that, for the
purpose of making any 338(h)(10) Election, the Internal Revenue Service Forms
8023 and 8883 (or successor forms, or any corresponding forms under state, local
or foreign Tax Law in the state, local or foreign jurisdiction requested by
Comcast) filed in connection with such election shall state on the face of each
such form that such election is being made as a "protective election" and shall
contain the legend set forth in Exhibit D hereto.
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(b) If, after the Closing Date but prior to the six month
anniversary of the Closing Date, Comcast believes that there has been a change
in Tax Law after the date hereof and that by reason of such change in Tax Law
(x) the TWC Redemption should not qualify as a tax-free distribution governed by
Section 355 of the Code, and (y) the TWC Redemption should constitute a
"qualified stock purchase" within the meaning of Section 338(d)(3) of the Code
(a "QSP") (any such conclusion, a "Determination"), Comcast shall provide
written notice to Time Warner Cable of such Determination. If Time Warner Cable
agrees with the Determination, Time Warner Cable shall provide Comcast with
written notice of its agreement within 10 days (the "Determination Deadline") of
receiving notice of the Determination (such agreement shall constitute a "Joint
Determination"). If there has been no Joint Determination by the Determination
Deadline, Time Warner Cable and Comcast agree jointly to appoint a law firm that
is nationally recognized in matters relating to federal income taxation (any
such law firm, a "Third Party Firm") within 7 Business Days of the Determination
Deadline. If Time Warner Cable and Comcast cannot agree on the appointment of a
Third Party Firm in accordance with the previous sentence, such parties shall
request that the President of the Association of the Bar of the City of New York
appoint, within 7 days, a Third Party Firm other than a law firm that is
regularly employed by either Time Warner Cable or Comcast or any of their
respective Affiliates. The Third Party Firm shall be requested to deliver,
within 21 days of its appointment, a letter setting forth whether, by reason of
the change in Tax Law referred to above, it is its opinion that, (I) the TWC
Redemption should not qualify as a tax-free distribution governed by Section 355
of the Code, and (II) the TWC Redemption should constitute a QSP (any
affirmative opinion by such Third Party Firm that the items described in (I) and
(II) of this sentence have been satisfied, an "Affirmative Third Party Firm
Determination"). The fees and expenses of the Third Party Firm shall be borne
equally by Time Warner Cable and Comcast.
(c) If, at any time prior to the nine month anniversary of the
Closing Date, there shall have been a Joint Determination or an Affirmative
Third Party Determination, the parties hereby agree, notwithstanding any other
provision of this Agreement or the Transaction Documents, for all Income Tax
Purposes (unless required by subsequent change in applicable Tax Law or as a
result of a good faith resolution of a contest), (i) not to treat the TWC
Redemption as a tax-free distribution governed by Section 355 of the Code, (ii)
to treat the TWC Redemption as a QSP, and (iii) that any 338(h)(10) Election
shall be filed without regard to the protective election described in the
proviso to Section 7.24(a) .
Section 7.25 Pre-Closing Access. (a) Prior to the Amendment Date
Comcast shall not, and shall not permit any of its Affiliates to, without the
prior written consent of Time Warner Cable (i) initiate or maintain contact with
any Transferred Systems Employee regarding the transactions contemplated hereby
or otherwise related thereto, (ii) access any of the properties, whether owned
or leased, of the Transferred Systems and (iii) subject to applicable Legal
Requirements disclose the identity of the Transferred Systems to any Person
other than any of the officers, employees, directors and advisors of Comcast or
its Affiliates, provided that such officers, employees, directors and advisors
are first advised of the confidential nature of such information. Comcast shall
be responsible for any breach of such confidentiality obligation on the part
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of any of its Affiliates or such officers, employees, directors and advisors. No
breach of this Section 7.25 shall result in a failure of the condition set forth
in Section 8.2(b).
(b) From the Amendment Date until the Closing, subject to
applicable law, Time Warner Cable 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 Time
Warner Cable 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, Time Warner Cable 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 Time Warner Cable and its Affiliates, but taking into account
Comcast Subsidiary's and Comcast Trust's need for such information in connection
with the transactions contemplated hereby), (C) any information to the extent
such disclosure would reasonably be expected to violate any obligation of Time
Warner Cable 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, Time Warner Cable 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
7.16. All requests made pursuant to this Section 7.25(b) shall be directed to an
executive officer of Time Warner Cable or such Person or Persons as may be
designated by Time Warner Cable. All information received pursuant to this
Section 7.25(b) shall, prior to the Closing, be governed by Section 7.4(a) and,
to the extent applicable, the terms of the Confidentiality Agreement. No
information or knowledge obtained in any investigation by Comcast Subsidiary,
Comcast Trust or their respective Affiliates pursuant to this Section 7.25(b)
shall affect or be deemed to modify any representation or warranty made by Time
Warner Cable or its Affiliates hereunder or under any Transaction Document.
Section 7.26 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
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the usual, regular and ordinary course and shall not take any action for the
purpose of changing the calculation of the Closing Adjustment Amount.
ARTICLE 8
CONDITIONS PRECEDENT
Section 8.1 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
8.1(m) shall not be waived without the prior written consent of Comcast Trust):
(a) Accuracy of Representations and Warranties. The
representations and warranties of Time Warner Cable or any Transferring Person
in this Agreement and in any Transaction Document to which Time Warner Cable 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.
(b) Performance of Agreements. Time Warner Cable, 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.
(c) Officer's Certificate. Comcast Subsidiary has received a
certificate executed by an executive officer of Time Warner Cable, dated as of
Closing, reasonably satisfactory in form and substance to Comcast Subsidiary,
certifying that the conditions specified in Sections 8.1(a) and 8.1(b) have been
satisfied, as of Closing.
(d) Legal Proceedings. There is no Legal Requirement, and no
Judgment has been entered and not vacated by any Governmental Authority of
competent jurisdiction in any Litigation or arising therefrom, which (i)
enjoins, restrains, makes illegal or prohibits consummation of the transactions
contemplated by this Agreement or by any Transaction Document (other than any
such matter having only an immaterial effect and that does not impose criminal
liability or penalties) or (ii) requires separation or divestiture by 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
78
be considered to enjoin, restrain, make illegal or prohibit consummation of the
transactions contemplated by this Agreement or by any Transaction Document.
(e) 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.
(f) Consents. Comcast Subsidiary has received evidence, in form
and substance reasonably satisfactory to it, that all of the Time Warner Cable
Required Consents (other than from the Transferred Systems Franchises which are
addressed in Section 8.1(h)), have been obtained and are in effect.
(g) Intentionally Omitted.
(h) 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; provided, further that, if this condition is not satisfied or waived as
of the date that all other conditions in Sections 8.1 and 8.2 (except for
conditions to be satisfied at Closing that will be satisfied at Closing) have
been satisfied or waived, this condition shall be deemed not to have been
satisfied until the earlier of (i) the date upon which this condition would be
satisfied if the percentage used for the Required Threshold was 100% rather than
90% and (ii) 30 days following the date on which all other conditions in
Sections 8.1 and 8.2 (except for conditions to be satisfied at Closing that will
be satisfied at Closing) have been satisfied or waived.
(i) GP Redemption and Holdco Transaction. The GP Redemption and
the Holdco Transaction shall have been consummated.
(j) Opinion of FCC Counsel. Comcast Subsidiary and Comcast Trust
shall have received an opinion of Xxxxx Xxxx LLP, special FCC counsel to Time
Warner Cable, dated as of Closing, in form and substance reasonably acceptable
to Time Warner Cable and Comcast Subsidiary (the "Time Warner Cable FCC Counsel
Opinion").
(k) Documents and Records. Time Warner Cable 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.
(l) Redemption Agreements. Each of the TWC Redemption Agreement
and the TWE Redemption Agreement shall have been terminated without the closings
thereunder occurring.
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(m) FCC Approval. Either the transfer of the Holdco Shares to
Comcast Subsidiary in the TWC Redemption or the Comcast Subsidiary Transfer
shall be permitted under applicable FCC Trust Requirements.
(n) GP Redemption and Amendment Agreement. Each of the parties to
the GP Redemption and Amendment Agreement (other than Comcast Trust I) shall
have executed and delivered the GP Redemption and Amendment Agreement.
(o) Time Warner Cable Title Policies. Time Warner Cable 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 "Time Warner Cable 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
Time Warner Cable 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 Time Warner Cable Title Policies;
provided, that Time Warner Cable'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 8.1(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) Tax Matters Agreement. Subject to any amendments pursuant to
Section 7.11, Time Warner, Time Warner Cable and Holdco shall have executed and
delivered the Tax Matters Agreement substantially in the form attached as
Exhibit B.
(q) Schedule Update. Time Warner Cable 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.
Section 8.2 Conditions to Time Warner Cable's Obligations. The
obligations of Time Warner Cable to consummate the transactions contemplated by
this Agreement shall be subject to the following conditions, which may be waived
by Time Warner Cable:
(a) 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
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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.
(b) 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.
(c) Officer's Certificate. (i) Time Warner Cable has received a
certificate executed by the operating trustee of Comcast Trust, dated as of
Closing, reasonably satisfactory in form and substance to Time Warner Cable,
certifying that the conditions specified in Sections 8.2(a) and 8.2(b), in each
case solely with respect to Comcast Trust, have been satisfied, as of Closing.
(ii) Time Warner Cable has received a certificate executed by an executive
officer of Comcast Subsidiary, dated as of Closing, reasonably satisfactory in
form and substance to Time Warner Cable, certifying that the conditions
specified in Sections 8.2(a) and 8.2(b), in each case solely with respect to
Comcast Subsidiary, have been satisfied, as of Closing.
(d) Legal Proceedings. There is no Legal Requirement, and no
Judgment has been entered and not vacated by any Governmental Authority of
competent jurisdiction in any Litigation or arising therefrom, which 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.
(e) 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.
(f) Redemption Agreements. Each of the TWC Redemption Agreement
and the TWE Redemption Agreement shall have been terminated without the closings
thereunder occurring.
(g) Tax Matters Agreement. Subject to any amendments pursuant to
Section 7.11, Comcast Parent and Comcast shall have executed and delivered the
Tax Matters Agreement substantially in the form attached as Exhibit B.
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(h) GP Redemption and Amendment Agreement. Comcast Trust I shall
have executed and delivered the GP Redemption and Amendment Agreement.
(i) Option Exercise. Comcast Subsidiary shall have validly
exercised the Option prior to 5:00 p.m. (NYT) on the Option Expiration Date.
ARTICLE 9
CLOSING
Section 9.1 Closing; Time and Place. Subject to the final sentence of
this Section 9.1, the closing of the transactions contemplated by Section 2.1(b)
of this Agreement ("Closing") shall take place at a time and location mutually
determined by Comcast Subsidiary and Time Warner Cable on the last Business Day
of the calendar month in which all conditions set forth in Sections 8.1 and 8.2
have either been satisfied or waived in writing by the party entitled to the
benefit of each such condition (except for conditions to be satisfied at Closing
that will be satisfied at Closing), unless 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 prior to the later of (x) July
1, 2005 or (y) the 30th day following the Option Exercise Date.
Section 9.2 Time Warner Cable's Obligations. At Closing, Time Warner
Cable 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 Shares. The Holdco Shares to Comcast Trust or Comcast
Subsidiary, as the case may be, which shall be in definitive form, in proper
form for transfer and, if requested by Comcast Trust (or Comcast Subsidiary, if
applicable), Time Warner Cable shall execute, acknowledge and deliver a stock
power or such other customary instruments of transfer as Comcast Trust (or
Comcast Subsidiary, if applicable) may reasonably request.
(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
Time Warner Cable and Comcast Subsidiary and the executed Xxxx of Sale and
Assignment and Instrument of Assumption with respect to the GP Redemption in
substantially the form attached to the GP Redemption and Amendment Agreement,
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 9.2(f)).
(c) Lien Releases. Evidence reasonably satisfactory to Comcast
Subsidiary that all Liens (other than Permitted Liens) affecting or encumbering
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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 Time Warner
Cable's inability or failure to obtain the termination, release, or waiver of
any such Liens or to insure over any such Liens shall not constitute a failure
to perform the obligations set forth in this Section 9.2(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 Time Warner Cable is not a foreign person within the meaning of
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 Time Warner Cable's and its Controlled Affiliates' name,
place and stead, as Time Warner Cable'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 Time Warner Cable and its Controlled
Affiliates' in payment for cable services provided by the Transferred Systems
and written instructions to Time Warner Cable'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,
Time Warner Cable and its Controlled Affiliates shall not deposit but shall
promptly remit to Holdco any payment received by Time Warner Cable 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 Time Warner Cable Title Policies (if such Time Warner Cable Title Policies
have been obtained, or, if such Time Warner Cable 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) Time Warner Cable Title Policies. Time Warner Cable Title
Policies with such deletions or modifications as are required pursuant to
Section 8.1(o).
(h) GP Redemption and Amendment Agreement. The executed GP
Redemption and Amendment Agreement by all parties thereto (other than Comcast
Trust I).
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(i) Tax Matters Agreement. The executed Tax Matters Agreement by
all parties thereto (other than Comcast Parent and Comcast).
(j) Officer's Certificate. The executed certificate required by
Section 8.1(c)
(k) 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 9.3 Comcast Trust's Obligations. At Closing, Comcast and/or
Comcast Trust, as applicable, shall deliver or cause to be delivered to Time
Warner Cable the following:
(a) Redemption Securities Stock Certificates. Comcast Trust shall
deliver to Time Warner Cable a stock certificate evidencing the Redemption
Securities which shall be in definitive form and registered in the name of
Comcast Trust, in proper form for transfer and, if requested by Time Warner
Cable, execute, acknowledge and deliver a stock power or such other customary
instruments of transfer as Time Warner Cable may reasonably request; provided,
that upon receipt of the Comcast Trust stock certificate, Time Warner Cable
shall reissue Comcast Trust a new stock certificate evidencing the remaining
shares of Class A Common Stock owned by Comcast Trust after giving effect to the
TWC Redemption.
(b) GP Redemption and Amendment Agreement. The executed GP
Redemption and Amendment Agreement by Comcast Trust I.
(c) Tax Matters Agreement. The executed Tax Matters Agreement by
all parties thereto (other than Time Warner, Time Warner Cable and Holdco).
(d) Officer's Certificate. The executed certificate required by
Section 8.2(c).
(e) Other. Such other documents and instruments as may be
reasonably necessary to effect the intent of this Agreement and consummate the
transactions contemplated hereby.
ARTICLE 10
TERMINATION AND DEFAULT
Section 10.1 Termination Events. This Agreement may be terminated
prior to Closing and the transactions contemplated hereby may be abandoned:
(a) by either Comcast Subsidiary or Time Warner Cable, at any
time after the earlier (i) of nine months after the termination of the TWC
Redemption Agreement without the Closing (as defined thereunder) occurring and
(ii) May 31, 2007 (the earlier of (i) and (ii), the "Outside Closing Date");
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(b) at any time, by the mutual agreement of Comcast Subsidiary
and Time Warner Cable;
(c) by either Comcast Subsidiary or Time Warner Cable, 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) automatically without action by any party hereto if the
Option shall terminate pursuant to Section 2.1(a)(iii);
(e) by Comcast Subsidiary as provided in Section 12.16;
(f) by Comcast Subsidiary, at any time after April 1, 2005, if by
notice to the other parties Comcast Subsidiary irrevocably elects not to
exercise the Option; or
(g) automatically without action by any party hereto upon the
Closing (as defined in the TWC Redemption Agreement), the Closing (as defined in
the TWE Redemption Agreement) or the Closing (as such term will be defined in
the Alternate Tolling Agreement).
Section 10.2 Effects of Termination. If this Agreement is terminated
pursuant to Sections 10.1 or 12.16, this Agreement shall become void and of no
effect without liability of any party hereto (or any Affiliate, shareholder,
director, officer, trustee, employee, agent, consultant or representative of
such party) to the other parties hereto, except that (a) the agreements
contained in Sections 1.1, 1.2, 2.3 and 7.4, this Section 10.2 and Article 12
(other than Section 12.16) 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 11
INDEMNIFICATION
Section 11.1 Indemnification by Time Warner Cable. Subject to Section
11.4, from and after the Closing, Time Warner Cable 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
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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 Time Warner Cable
or any Transferring Person in this Agreement or in any Transaction Document
(other than the Tax Matters Agreement) 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 Time Warner Cable to perform in all material respects pursuant to
Sections 7.1(j), 7.11 and 7.20;
(b) any failure by Time Warner Cable, or 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), 7.11 and 7.20) or in any Transaction Document
(other than the Tax Matters Agreement) 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 Time Warner Cable under
this Section, Time Warner Cable shall furnish a bond sufficient to obtain the
prompt release thereof within 10 days after receipt from Holdco of notice
thereof.
Section 11.2 Indemnification by Holdco. Subject to Section 11.4, from
and after the Closing, Holdco shall indemnify and hold harmless Time Warner
Cable from and against any and all Losses suffered by Time Warner Cable (which
shall be deemed to include any Losses suffered by Time Warner Cable or its
Affiliates, or by its or their respective officers, directors, 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 (other than
the Tax Matters Agreement) 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 (other than the Tax
Matters Agreement) to which such Person is a Party;
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(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 Time Warner Cable for the benefit of Holdco pursuant to Section 2.1(e).
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 Time Warner Cable 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 Time Warner Cable of notice
thereof.
Section 11.3 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 11.1 or 11.2 or the assertion by
any Governmental Authority of a claim of noncompliance under any Franchise
relating, in whole or in part, to any pre-Closing period (a "Franchise Matter"),
the Indemnitee shall give written notice thereof to the party from whom
indemnification is sought pursuant hereto (the "Indemnitor") and thereafter
shall keep the Indemnitor reasonably informed with respect thereto; provided,
that failure of the Indemnitee to give the Indemnitor notice and keep it
reasonably informed as provided herein shall not relieve the Indemnitor of its
obligations hereunder, except to the extent that such failure to give notice
shall prejudice any defense or claim available to the Indemnitor. The Indemnitor
shall be entitled to assume the defense of any such Litigation or Franchise
Matter with counsel reasonably satisfactory to the Indemnitee, at the
Indemnitor's sole expense; provided that the Indemnitor shall not be entitled to
assume or continue control of the defense of any Litigation or Franchise Matter
if (i) the Litigation or Franchise Matter relates to or arises in connection
with any criminal proceeding, action, indictment, allegation or investigation;
(ii) the Litigation or Franchise Matter seeks an injunction or equitable relief
against the Indemnitee; or (iii) the Indemnitor has failed to defend or is
failing to defend in good faith the Litigation or Franchise Matter. If the
Indemnitor assumes the defense of any Litigation or Franchise Matter, (i) it
shall not settle the Litigation or Franchise Matter unless the settlement shall
include as an unconditional term thereof the giving by the claimant or the
plaintiff of a release of the Indemnitee, reasonably satisfactory to the
Indemnitee, from all liability with respect to such Litigation or Franchise
Matter and (ii) it shall indemnify and hold the Indemnitee harmless from and
against any and all Losses caused by or arising out of any settlement or
judgment of such claim and may not claim that it does not have an
indemnification obligation with respect thereto. If the Indemnitor does not
assume the defense of any Litigation or Franchise Matter, the Indemnitee may
defend against or settle such claim in such manner and on such terms as it in
good xxxxx xxxxx appropriate
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and shall be entitled to indemnification in respect thereof in accordance with
Section 11.1 or 11.2, 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 11.3,
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 11.4 Determination of Indemnification Amounts and Related
Matters.
(a) Time Warner Cable shall have no liability under Section
11.1(a) unless the aggregate amount of Losses otherwise subject to its
indemnification obligations thereunder exceeds $5 million (the "Threshold Damage
Requirement"), in which case Time Warner Cable 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 Time Warner Cable to pay any copyright
payments, including interest and penalties thereon, when due or any other breach
of Time Warner Cable'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 Time Warner Cable under Section 11.1(a) shall
not exceed $50 million (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.
(b) Holdco shall have no liability under Section 11.2(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 11.2(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 11.1 or 11.2 shall be payable by the
Indemnitor as incurred by the Indemnitee, and shall bear interest at the Base
Interest Rate plus 2% from
88
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 11.1(a) also resulted in a Loss to
the Time Warner Cable Retained Cable Systems, the Loss for which indemnification
is sought under Section 11.1(a) shall only be available (subject to the further
limitations in Section 11.4(a)) to the extent such Loss is greater than the
proportionate Loss suffered by the Time Warner Cable Retained Cable Systems and
the Transferred Systems, where proportionality is based on the percentage that
the Redemption Securities represent to the total number of outstanding shares of
common stock of Time Warner Cable, in each case 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 11.1(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 Securities represent 20% of the total number of
outstanding shares of common stock of Time Warner Cable (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 Time Warner
Cable Retained Cable Systems arising out of those same facts was $Y, then
indemnification would be available under Section 11.1(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 0.2 (and subject to the further limitations contained in Section 11.4(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.
(g) Comcast Subsidiary shall have the right to enforce (on behalf
and for the benefit of Holdco and any other Indemnitee pursuant to Section 11.1)
the right to indemnification under Section 11.1. Notwithstanding anything to the
contrary set forth in this Agreement, to the extent that any Indemnitee pursuant
to Section 11.1 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 Time Warner
Cable hereunder or (ii) Losses suffered in such capacity in respect of any
Excluded Assets, Excluded Liabilities or Holdco Indemnified Liabilities.
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Section 11.5 Time and Manner of Certain Claims. The representations
and warranties of Comcast Trust, Comcast Subsidiary, Time Warner Cable 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; provided, that
the representations in Section 6.24 shall not survive Closing. 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 Time Warner Cable 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 11.6 Other Indemnification. The provisions of Sections 11.3,
11.4 and 11.5 shall be applicable to any claim for indemnification made under
any other provision of this Agreement, and all references in Sections 11.3, 11.4
and 11.5 to Sections 11.1 and 11.2 shall be deemed to be references to such
other provisions of this Agreement.
Section 11.7 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 11 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 11.8 Release.
(a) Except as provided in Section 11.8(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, 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 Time Warner Cable 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 shareholders, directors, officers,
members, agents, trustees or employees of Time Warner Cable or any of its
respective Subsidiaries, Affiliates, predecessors,
90
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 "Time
Warner Cable 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 Securities. 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 Time Warner Cable Released Party with respect to matters covered by
the foregoing release.
(b) Nothing contained in Section 11.8(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 11.9 Indemnification for Income Taxes. Notwithstanding any
other provision of this Agreement, the provisions of Sections 11.1 through 11.8
shall not apply to any Liability for Income Taxes, which shall be governed
exclusively by the Tax Matters Agreement. For the avoidance of doubt, rights
under this Agreement shall provide the exclusive remedies for any breach of the
representations and warranties provided in Section 6.24 hereof.
Section 11.10 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 Time Warner Cable pursuant to an indemnification, reimbursement or
refund obligation provided for in this Agreement (a "Time Warner Cable
Indemnification Payment"), or (ii) to Time Warner Cable by Holdco pursuant to an
indemnification, reimbursement or refund obligation provided for in this
Agreement (a "Holdco Indemnification Payment" and collectively with any Time
Warner Cable Indemnification Payment, an "Indemnification Payment") as (x) with
respect to a Time Warner Cable Indemnification Payment, a contribution by Time
Warner Cable 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 Time Warner Cable to Holdco pursuant to the Holdco Transaction
occurring immediately prior to the Closing.
(b) Notwithstanding Section 11.10(a) above, any Indemnification
Payments that represent interest payable under Section 11.4(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 (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 11.10(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
11.10(c) shall not apply to interest as described in Section 11.10(b).
Section 11.11 Guaranteed Obligations of Comcast.
(a) From and after the Closing, Comcast hereby agrees to fully
and unconditionally guarantee to Time Warner Cable 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 Time Warner
Cable (or any Affiliate thereof or any Indemnitee pursuant to Section 11.2)
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 11.11.
(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 11.11.
ARTICLE 12
MISCELLANEOUS PROVISIONS
Section 12.1 Expenses. Except as otherwise specifically provided in
Sections 3.4, 7.3 or 12.2 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 12.2 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 12.3 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 12.4 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 II, Inc.
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 II Trust
c/o Xxxxx X. Holiday
000 Xxxx Xxxxxx
0xx Xxxxx
Xxxxxxxxxx, XX 00000
Fax: (000) 000-0000
94
With a Required Copy to:
Xxxxx & Xxxxxxx
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
ATTN: Xxxxxxx X. Silver
Fax: (000) 000-0000
To Time Warner Cable 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 12.5 Entire Agreement; Prior Representations; Amendments. This
Agreement, the Confidentiality Agreements (subject to the last sentence of this
Section 12.5) 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
95
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 12.6 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 12.7 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 12.4
shall be deemed effective service of process on such party.
Section 12.8 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 12.9 Binding Effect; Benefits. This Agreement shall inure to
the benefit of and shall be binding upon the parties hereto and their respective
96
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 Time Warner Cable. For purposes of this Section, any change in
control of Comcast, Comcast Trust, Comcast Subsidiary or Time Warner Cable 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 12.10 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 12.11 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 12.12 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 12.13 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 12.14 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.
97
Section 12.15 Construction. This Agreement has been negotiated by
Comcast Trust, Comcast Subsidiary and Time Warner Cable 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 12.16 Risk of Loss; Governmental Taking.
(a) Time Warner Cable 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, Time Warner Cable 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
$50,000,000 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, Time Warner Cable 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 Time Warner Cable, 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 12.16(a) or
pursuant to Section 11.1 for any breach of any (x) representation or warranty of
Time Warner Cable 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 10.2. If Comcast Subsidiary elects
to so terminate this Agreement, Time Warner Cable shall be discharged of any and
all obligations hereunder, subject to Section 10.2. 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 Time Warner Cable or its
Affiliates (determined on an effective after-tax basis as if TWE and TWE-A/N
are, in each case, instead of being partnerships, 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 Time Warner Cable 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 Time Warner Cable
or its Affiliates to Holdco, or the rights to such proceeds shall be assigned by
Time Warner Cable or its Affiliates to Holdco if not yet received by Time Warner
Cable or its Affiliates. Time Warner Cable shall pay any deductible required
and/or the self-insured portion of any such loss with respect to all such
insurance
98
proceeds payable under any insurance policy held by Time Warner Cable or its
Affiliates. Any amounts received or receivable hereunder shall not be included
in the Closing Net Liabilities Amount.
(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 Time Warner Cable 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 Time Warner Cable and its
Affiliates, if Comcast Subsidiary so elects, to negotiate for, claim, contest
and subject to the Closing occurring, and have Holdco receive all damages with
respect to the Taking, (ii) Time Warner Cable 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 Time Warner
Cable or its Affiliates and any replacement property acquired by Time Warner
Cable or its Affiliates), (iii) at Closing, Time Warner Cable and its Affiliates
shall assign to Holdco all of Time Warner Cable's and its Affiliates' rights to
all payments received or receivable by Time Warner Cable or its Affiliates
(determined on an effective after-tax basis as if TWE and TWE-A/N are, in each
case, instead of being partnerships, stand-alone corporations), with respect to
such Taking and shall pay to Holdco all such payments previously paid to Time
Warner Cable or any of its Affiliates with respect to the Taking (to the extent
not already expended by Time Warner Cable or its Affiliates to restore or
replace the taken Assets), and (iv) following Closing, Time Warner Cable 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 12.17 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 12.18 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.
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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:
-------------------------------------
Name:
-------------------------------
Title:
------------------------------
MOC HOLDCO II, INC.
By:
-------------------------------------
Name:
-------------------------------
Title:
------------------------------
TWE HOLDINGS II TRUST
By:
-------------------------------------
Name: Xxxxx X. Holiday, solely in her
capacity as Operating Trustee
CABLE HOLDCO INC.
By:
-------------------------------------
Name:
-------------------------------
Title:
------------------------------
TIME WARNER CABLE INC.
By:
-------------------------------------
Name:
-------------------------------
Title:
------------------------------
100
Solely for purposes of Section 2.3 and the last sentence of Section 12.5:
COMCAST CORPORATION
By:
---------------------------------
Name:
---------------------------
Title:
--------------------------
Solely for purposes the last sentence of Section 12.5:
TIME WARNER INC.
By:
---------------------------------
Name:
---------------------------
Title:
--------------------------
101
Solely for purposes of Section 2.1(b)(iv):
TWE HOLDINGS I TRUST
By:
-------------------------------------
Name: Xxxxx X. Holiday, solely in her
capacity as Operating Trustee
