FIRST AMENDMENT
TO THE
AMENDED AND RESTATED PARTNERSHIP AGREEMENT
OF
TIME WARNER ENTERTAINMENT-ADVANCE ▇▇▇▇▇▇▇▇ PARTNERSHIP
FIRST AMENDMENT TO THE AMENDED AND RESTATED PARTNERSHIP AGREEMENT OF
TIME WARNER ENTERTAINMENT-ADVANCE/▇▇▇▇▇▇▇▇ PARTNERSHIP, dated as of March 2,
2001 (this "Amendment") among Time Warner Entertainment Company, L.P., a
Delaware limited partnership ("TWE"), Advance/▇▇▇▇▇▇▇▇ Partnership, a New York
general partnership ("Advance/▇▇▇▇▇▇▇▇), and Paragon Communications, a Colorado
general partnership ("Paragon").
WHEREAS, Time Warner Entertainment-Advance/▇▇▇▇▇▇▇▇ Partnership, a New
York general partnership (the "Partnership"), was formed between TWE and
Advance/▇▇▇▇▇▇▇▇ pursuant to a Partnership Agreement dated as of September 9,
1994 (the "Original Agreement"), as amended by the First Amendment to the
Partnership Agreement of the Partnership dated as of February 12, 1998 (the
"First Amendment"), the Second Amendment to the Partnership Agreement dated as
of December 31, 1998 (the "Second Amendment") and the Third Amendment to the
Partnership Agreement dated as of March 1, 1999 (the "Third Amendment") (the
Original Agreement, together with such amendments, the "Original Partnership
Agreement").
WHEREAS, the Original Partnership Agreement was amended and restated in
its entirety pursuant to the Amended and Restated Partnership Agreement dated as
of February 1, 2001 (the "Partnership Agreement").
WHEREAS, pursuant to Section 15.4 of the Partnership Agreement, the
Partnership Agreement may be amended by an instrument in writing signed by TWE,
Advance/▇▇▇▇▇▇▇▇ and Paragon; and
WHEREAS, the parties hereto desire to enter into this Amendment.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties agree as follows:
I.
AMENDMENTS TO SECTION 1
-----------------------
(1) The following definitions are hereby added to the Partnership
Agreement:
"ATW" means AOL Time Warner, Inc.
"ATW Change of Control" means the occurrence of any one or
more of the following events after the Merger Closing Date (as defined
in Section 8.2):
(i) any person (as such term is used in Section 13(d)(3) of
the Securities Exchange Act of 1934 (the "Exchange Act") and as defined
in Section 3(a)(9) of the Exchange Act), after the Merger Closing Date
becomes the beneficial owner, as defined in Rules 13d-3 and 13d-5
promulgated under the Exchange Act, directly or indirectly, of more
than 35% of the total voting power of ATW's Voting Equity, other than
in connection with (x) a Reorganization Transaction or (y) any other
merger, consolidation, combination, liquidation or dissolution
transaction that in each case of clauses (x) or (y) does not constitute
an ATW Change of Control under clause (iii), (iv) or (vi) below;
provided, that for purposes hereof such person shall be deemed to have
beneficial ownership of all shares that such person has the right to
acquire, whether such right is exercisable immediately or only after
the passage of time or upon the occurrence or satisfaction of any
condition;
(ii) individuals who at the Merger Closing Date, constituted
ATW's Board of Directors, together with any new directors whose
election by ATWs' Board of Directors or whose nomination for election
by ATW shareholders was approved by a vote of majority of ATW's
directors then still in office who were either directors at the Merger
Closing Date or whose election or nomination for election was
previously so approved, cease for any reason to constitute a majority
of the ATW Board of Directors then in office;
(iii) ATW's merger or consolidation with or into another
Person (or group of Persons acting in concert) or the merger of another
Person (or group of Persons acting in concert) with or into ATW, if
ATW's securities that are outstanding immediately prior to such
transaction and which represent 100% of the aggregate voting power of
ATW Voting Equity are changed into or exchanged for cash, securities or
property, unless pursuant to such transaction such securities are
changed into or exchanged for, in addition to any other consideration,
securities of the surviving or transferee Person that represent
immediately after such transaction, more than fifty percent (50%) of
the aggregate voting power of the Voting Equity of the surviving or
transferee Person;
(iv) any other merger, consolidation, business combination or
other transaction or series of related transactions ("Reorganization
Transactions") involving ATW and/or its shareholders, directly or
indirectly, such that immediately following consummation of such
Reorganization Transactions, the shareholders of ATW prior to such
Reorganization Transactions own, directly or indirectly, less than
fifty and one-tenth percent (50.1%) of the Voting Equity of ATW (or
other surviving or transferee Person resulting from such Reorganization
Transactions);
(v) the sale, transfer, conveyance or other disposition in one
or a series of related transactions, of all or substantially all of the
assets of AOL and its Subsidiaries taken as a whole to any Person (or
group of Persons acting in concert) other than to any Controlled
Affiliates of ATW; or
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(vi) the adoption of a plan relating to the liquidation or
dissolution of ATW other than in connection with (x) a Reorganization
Transaction or (y) other merger, consolidation or combination that in
each case of clauses (x) or (y) does not constitute an ATW Change of
Control pursuant to clause (iii) or (iv) above.
"Cable Change of Control" means the occurrence of any one or
more of the following events after the Merger Closing Date:
(i) Any Person (or group of Persons acting in concert), other
than ATW or an Affiliate of ATW, has the power to control, by voting
power, contract or otherwise, the actions of TWE (if at the time it
owns the TWE Cable Division) or the TWE-Cable Division; or
(ii) Any merger, consolidation, business combination, joint
venture, sale, exchange, transfer or other transaction pursuant to
which all or substantially all of the cable television systems owned by
TWE Cable are after such transaction under the direction and control of
a Person (or group of Persons acting in concert) that is not ATW or an
Affiliate of ATW.
"Voting Equity" of a Person means all classes of capital
stock, or other interests, of such Person then outstanding and normally
entitled, without regard to the occurrence of any contingency, to vote
in the election of directors, managers or trustees thereof, or, in the
case of a partnership, the general partnership interests.
(2) The following defined term is amended to read as follows:
"TWX" means, for the period prior to the Merger Closing Date,
Time Warner Inc. and for the period after the Merger Closing Date, ATW.
(3) The last sentence of the definition of "Capital Account" is deleted
in its entirety and the following substituted therefor:
Notwithstanding the foregoing, for purposes of determining Capital
Accounts, (I) (u) all of the adjustments, contributions or
distributions required pursuant to the Contribution Agreement to be
made subsequent to the Initial Closing Date and the contribution of TWE
pursuant to Section 4.1(c)(ii) hereof shall be treated as if they had
been made on the Initial Closing Date, (v) the Paragon Adjustment
Amount and the TWE Adjustment Amount (as such terms are defined in
Section 10 of the First Transaction Agreement) shall be treated as if
they had been made on the First Effective Date, (w) all of the
adjustments, contributions or distributions required pursuant to the
Second Transaction Agreement or the TCI Contribution Agreement shall be
treated as if they had been made on the Second Effective Date, (x) all
of the adjustments, contributions or distributions required pursuant to
the Third Transaction Agreement or the TCI Contribution Agreement shall
be treated as if they had been made on the Third Effective Date, (y)
all of the adjustments, contributions or distributions required
pursuant to the Fourth
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Transaction Agreement shall be treated as if they had been made on the
Fourth Effective Date, and (z) such adjustments, contributions,
distributions, and Adjustment Amounts shall not give rise to any
adjustments to Capital Account balances or redetermination of amounts
contributed by or distributed to any Partner; and (II) any payment made
by TWE pursuant to Section 3.4 hereof shall not be treated as a Capital
Contribution or otherwise give rise to any adjustments to Capital
Account balances (other than to the extent such payment is included in
Net Profit or Net Loss or redetermination of amounts contributed by
TWE).
(4) The definition of "Common Tax Amount" is amended by adding the
following at the end thereof:
For purposes of determining the Common Tax Amount, Net Profit, Gross
Profit, Net Loss and Gross Loss, shall be calculated without taking
into account the items described in clause (i), clause (ii), clause
(iii), clause (vi), clause (vii), and clause (ix) of the definition of
"Net Profit" and "Net Loss."
(5) The definition of "Special Tax Amount" is amended by adding the
following at the end thereof:
For purposes of determining the Special Tax Amount, Net Profit, Gross
Profit, Net Loss and Gross Loss, shall be calculated without taking
into account the items described in clause (i), clause (ii), clause
(iii), clause (vi), clause (vii), and clause (ix) of the definition of
"Net Profit" and "Net Loss."
(6) The definitions of "Excess Debt Shift Tax Amount," "Restructuring
Deferred Tax Amount," and "Special Income" are hereby deleted in their entirety
and amended and restated in the form attached hereto as Exhibit A.
II.
OTHER AMENDMENTS
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(1) The fifth sentence of Section 3.1(c) of the Partnership Agreement
is hereby amended to provide for monthly, rather than quarterly, Executive
Committee meetings. Section 3.1(c) is also hereby amended by adding the
following after the fifth sentence of Section 3.1(c):
The Managing Partner agrees to provide to Advance/▇▇▇▇▇▇▇▇ the agenda
for such meetings at least one week in advance of such meeting in order
to provide time for Advance/▇▇▇▇▇▇▇▇ to submit additions and/or
comments to such agenda. Such Executive Committee meetings will
include, without limitation, a review of any planned committees or
working groups that will address issues affecting the Partnership,
whether such committees or working groups are to be at the TWE Cable
Division level or at the ATW level if one or more persons on the list
attached hereto as Schedule 1 (or their successors or persons holding
the same or similar positions exercising comparable
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responsibilities) are to participate on such committees or working
groups; provided, however, that with respect to committees or working
groups at the ATW level, if ATW determines, in the exercise of its
reasonable judgment, that it would be inappropriate for
Advance/▇▇▇▇▇▇▇▇ to have representation on any such committee or
working groups based on the composition of such committee or group,
then TWE shall notify Advance/▇▇▇▇▇▇▇▇ of such judgment and the reasons
therefor. Such Executive Committee meetings shall also include, without
limitation, a review by the Managing Partner of the substance of any
significant communications between ATW senior management and senior
management of the TWE Cable Division regarding matters relating to the
Partnership. Advance/▇▇▇▇▇▇▇▇ shall be notified and consulted in
advance regarding changes in "senior management," of TWE Cable as
hereinafter defined, but Advance/▇▇▇▇▇▇▇▇ shall have no right to veto
or otherwise delay such changes. For purposes hereof, "Senior
Management" of TWE Cable means the Chairman and CEO, the President and
COO, the Executive Vice President/Operations, the Senior Vice
President/Engineering and the Executive Vice Presidents responsible for
the cable television systems owned by the Partnership and persons who
may hereafter hold the same or similar positions exercising comparable
responsibilities.
(2) Section 3.1(h) of the Partnership Agreement is hereby amended by
adding the following subsection (vi):
(vi) Notwithstanding any provision in this Agreement to the
contrary, the aggregate payments to be made by the Partnership to TWE
for management fees and reimbursement for exercise of options with
respect to any Fiscal Year pursuant to Section 3.1(h)(i) and Section
3.1(h)(iii) shall not exceed three percent (3%) of the Partnership's
revenues for such Fiscal Year. The limitations set forth in this
Section 3.1(h)(vi) shall be applied separately with respect to each
Fiscal Year.
(3) The Partnership Agreement is hereby amended by deleting Section
3.2(l) requiring approval of affiliated transactions or contracts on other than
an arm's length basis.
(4) Section 3.3(a) of the Partnership Agreement is hereby deleted in
its entirety and the following substituted therefor:
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3.3 Business Plans.
(a) Long Term Strategic Plan.
(i) On or about ▇▇▇▇▇ ▇, ▇▇▇▇, ▇▇▇ presented to
Advance/▇▇▇▇▇▇▇▇ a statement of the Partnership's strategic objectives
for the first five years of the Partnership's operations (the "Long
Term Strategic Plan"), which plan included the Partnership's strategic
objectives with respect to acquisitions and investments, asset
dispositions, capital expenditures and the entry into or withdrawal
from any material line of business as well as overall timing and
numerical parameters with respect thereto. The Long Term Strategic Plan
was prepared in a manner materially consistent with the long term
strategic plan of TWE's Cable Division. On March 9, 1995
Advance/▇▇▇▇▇▇▇▇ approved the Long Term Strategic Plan.
(ii) On August 18, 1998, TWE presented a successor
Long Term Strategic Plan as required by Section 11(a) of the First
Transaction Agreement. On October 21, 1998, Advance/▇▇▇▇▇▇▇▇ approved
such successor Long Term Strategic Plan.
(iii) Prior to September 30, 2001, and within three
years following the adoption and approval of each successor long term
strategic plan in accordance with this paragraph (iii), the Managing
Partner shall present to Advance/▇▇▇▇▇▇▇▇ a new long term strategic
plan for the five year period beginning no later than the first day of
the calendar year following the date which is three years following the
adoption of the previous Long Term Strategic Plan. Such long term
strategic plan shall be prepared in a manner materially consistent with
the long term strategic plan of TWE's Cable Division and shall be
subject to the approval of Advance/▇▇▇▇▇▇▇▇. Any long term strategic
plan approved by Advance/▇▇▇▇▇▇▇▇ and adopted by the Partnership shall
upon the effective date stated in such plan be the Long Term Strategic
Plan for all purposes of this Agreement. Until a successor Long Term
Strategic Plan is approved by Advance/▇▇▇▇▇▇▇▇, the Long Term Strategic
Plan then in effect shall continue in effect; provided that upon the
expiration of the five year period covered by such Long Term Strategic
Plan, such Long Term Strategic Plan shall remain in effect as if it
applied to such fiscal year, but shall be appropriately adjusted to
provide for any capital expenditures required to be incurred by the
Partnership by the terms of any franchise agreement or other
requirement of law or to enable the Partnership to continue or complete
any project or activity in progress that was contemplated by a
previously approved Long Term Strategic Plan or was approved by the
Executive Committee with the consent of Advance/▇▇▇▇▇▇▇▇'▇
representatives.
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(5) The Partnership Agreement is hereby amended by adding a new Section
3.4, to read as follows:
Section 3.4 Affiliate Transactions.
(a) With respect to any contract (or series of related
contracts) or transaction (or series of related transactions) entered
into by the Managing Partner or any Affiliate of the Managing Partner
with the Partnership or any of its Subsidiaries after the Merger
Closing Date, other than immaterial transactions (defined for purposes
hereof as contracts or transactions that individually involve less than
$750,000 and do not involve significant non-monetary obligations)
(hereinafter, individually or collectively, "Affiliate Transactions"),
the Managing Partner agrees to notify Advance/▇▇▇▇▇▇▇▇ in writing of
entry into such Affiliate Transactions and the terms of such Affiliate
Transactions not later than 10 business days after entering into such
contract(s) or transaction(s). The Managing Partner agrees to provide
Advance/▇▇▇▇▇▇▇▇, within 10 days of request from Advance/▇▇▇▇▇▇▇▇, with
all financial information relating to the Affiliate Transactions and
all documents evidencing or executed in connection with such Affiliate
Transactions including copies of the relevant contracts, agreements or
transaction documents. For purposes of clarification and not by way of
limitation of the scope of the term "Affiliate Transactions," it is
agreed that for purposes of all relevant provisions of this Partnership
Agreement the term "Affiliate Transactions" shall include: (i)
reimbursement arrangements by the Partnership with HBO and ▇▇▇▇▇▇ in
respect of Fox programming agreements entered into in December 1999;
(ii) any amendment, renewal, extension, modification or waiver of the
AOL-TWC High Speed Service Agreement, dated as of January 31, 2001, by
and among America Online, Inc. and Time Warner Cable (the "ISP
Agreement") and any agreement replacing or substituting for the ISP
Agreement; and (iii) the Implementation Plan (as defined in the ISP
Agreement) and any amendments, modifications or waivers thereof or
replacements or substitutions therefor.
(b) If the Managing Partner on behalf of the Partnership or
any of its Subsidiaries enters into any Affiliate Transactions
contemplated by Section 3.4(a) without the approval of
Advance/▇▇▇▇▇▇▇▇, at its option, Advance/▇▇▇▇▇▇▇▇ may elect to initiate
negotiation and arbitration to determine (i) whether such Affiliate
Transactions were on arm's-length terms and (ii) if not, the loss,
damage or diminution in value, if any, suffered by the Partnership or
its Subsidiaries as a result of such Affiliate Transactions failing to
be on arm's-length terms. Alternatively, Advance/▇▇▇▇▇▇▇▇ may elect
instead to exercise its rights in respect of such Affiliate
Transactions by having such Affiliate Transactions taken into account
by the Appraiser in connection with a Restructuring, as contemplated
under Section 8.2, or a Put Event, as contemplated under Section 9, as
the case may be. In order to elect negotiation and arbitration,
Advance/▇▇▇▇▇▇▇▇ must give written notice to TWE of its election within
45 days of receiving the financial information and documents relating
to the Affiliate Transactions from the Managing Partner under Section
3.4(a); provided that if at the time of receiving such information
there are no comparable agreements or transactions by the Partnership
or its Subsidiaries with independent third parties, or between
Affiliates of the Managing Partner and independent third parties,
Advance/▇▇▇▇▇▇▇▇ shall have the right to postpone its election
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to initiate negotiation or arbitration until 45 days after it is
notified by the Managing Partner of entry by the Managing Partner or
its Affiliates into such comparable transactions or agreements with at
least two separate independent third parties each of which must be one
of the five largest multiple system cable operators in the United
States at such time (unless the terms of such Affiliate Transaction
expressly provide that the Partnership and its Subsidiaries,
automatically and without further action by them, will be treated,
viewing the material terms as a whole, on terms at least as favorable
as those to be provided to any independent third party, in which case
Advance/▇▇▇▇▇▇▇▇ shall not have the right to postpone its election). If
Advance/▇▇▇▇▇▇▇▇ elects to initiate negotiation and arbitration
pursuant to this Section 3.4(b), TWE and Advance/▇▇▇▇▇▇▇▇ agree to
attempt in good faith to resolve through negotiation whether the
subject Affiliate Transactions were arm's length and, if not, the loss,
damage or diminution in value, if any, suffered by the Partnership or
any of its Subsidiaries as a result of such Affiliate Transactions. If
the dispute is not resolved by negotiation within 60 days of
Advance/▇▇▇▇▇▇▇▇ giving notice to TWE of its election (or such
additional period of time to which Advance/▇▇▇▇▇▇▇▇ and TWE agree), the
matter will be resolved as set forth in Section 3.4(e) below.
(c) All Affiliate Transactions, shall, unless otherwise
approved by Advance/▇▇▇▇▇▇▇▇, treat the Partnership and its
Subsidiaries on no less favorable terms than those applicable generally
to the TWE Cable Division, as a whole, i.e., the Managing Partner shall
not enter into any transaction or agreement that treats one cable
system differently from another cable system, except for a transaction
or agreement that warrants different treatment based upon legitimate
business considerations that are entirely unrelated to whether the
Partnership (or a Subsidiary thereof) rather than an Affiliate of the
Partnership owns such cable system. If Advance/▇▇▇▇▇▇▇▇ disputes that
the different treatment of the Partnership or its Subsidiaries in
regard to a particular transaction or agreement was based on such
legitimate business considerations entirely unrelated to whether the
Partnership (or a Subsidiary thereof) rather than an Affiliate of the
Partnership owns such cable system, Advance/▇▇▇▇▇▇▇▇ may initiate
negotiation and arbitration to determine (i) whether the different
treatment of the Partnership or its Subsidiaries in regard to the
transaction or agreement was based on legitimate business
considerations entirely unrelated to whether the Partnership (or a
Subsidiary thereof) rather than an Affiliate of the Partnership owns
such cable system and (ii) if not, the loss, damage or diminution in
value suffered by the Partnership or its Subsidiaries as a result of
such transaction or agreement. In order to elect negotiation and
arbitration, Advance/▇▇▇▇▇▇▇▇ must give written notice to TWE of its
election within 45 days of receiving the financial information and
documents related to the Affiliate Transactions from the Managing
Partner under Section 3.4(a). If Advance/▇▇▇▇▇▇▇▇ elects to initiate
negotiation and arbitration pursuant to this Section 3.4(c), TWE and
Advance/▇▇▇▇▇▇▇▇ agree to attempt in good faith to resolve through
negotiation whether the different treatment of the Partnership or its
Subsidiaries in regards to the transaction or agreement was based on
legitimate business considerations entirely unrelated to whether the
Partnership (or a Subsidiary thereof) rather than an Affiliate of the
Partnership owns such cable system and, if it was not, the loss, damage
or diminution in value suffered by the Partnership or any of its
Subsidiaries as a result of such transaction or agreement. If the
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dispute is not resolved by negotiation within 60 days of
Advance/▇▇▇▇▇▇▇▇ giving notice to TWE of its election (or such
additional period of time to which Advance/▇▇▇▇▇▇▇▇ and TWE agree), the
matter will be resolved as set forth in Section 3.4(f) below.
(d) If it is determined, either by agreement of the parties or
by arbitration, that a loss, damage or diminution in value was suffered
by the Partnership or its Subsidiaries as a result of any Affiliate
Transactions covered by Sections 3.4(b) or (c), TWE shall make a cash
payment to the Partnership of the determined amount within 10 days of
the parties' agreement or the issuance of the arbitration award,
whichever is applicable; provided, however, it is expressly understood
that any loss, damage or diminution in value relating to or arising
from periods following such determination shall only be payable as and
when incurred (in a series of recurring payments, rather than a single
payment, at the times agreed by the parties or ordered by the
arbitrators). It is understood and agreed that, notwithstanding
anything to the contrary contained herein, so long as the Managing
Partner complied in all material respects with the disclosure
obligations required pursuant to Section 3.4(a) above, the sole remedy
of Advance/▇▇▇▇▇▇▇▇ in respect of such Affiliate Transactions with the
Partnership or any of its Subsidiaries that was not approved by
Advance/▇▇▇▇▇▇▇▇ is (i) the payment of money damages as provided for in
this Section 3.4 or (ii) if Advance/▇▇▇▇▇▇▇▇ does not elect to initiate
negotiation and arbitration under this Section 3.4, the exercise by
Advance/▇▇▇▇▇▇▇▇ of its rights pursuant to Section 8.2 or Section 9, as
the case may be, to have such Affiliate Transactions taken into account
by the Appraiser. Nothing herein shall limit the Managing Partner's
ability to amend or terminate any Affiliate Transaction in order to
mitigate or eliminate any future loss, damage or diminution in value,
subject, however to the following: (x) any action to amend or terminate
such Affiliate Transaction will itself be an Affiliate Transaction and
subject to the provisions of this Section 3.4, including without
limitation, whether and to what extent such amendment or termination
mitigates or eliminates the future loss, damage or diminution in value;
and (y) if the Managing Partner takes such action following an adverse
arbitration determination to it and Advance/▇▇▇▇▇▇▇▇ challenges any
such action in a subsequent arbitration, the Managing Partner shall
promptly reimburse (A) Advance/▇▇▇▇▇▇▇▇ for its reasonable
out-of-pocket costs incurred in connection with the initial arbitration
of the Affiliate Transaction, including the fees and expenses of
counsel, other advisors and witnesses or experts and (B) the
Partnership for the expenses borne by it in connection with such
initial arbitration.
(e) (i) If Advance/▇▇▇▇▇▇▇▇ elects negotiation and arbitration
pursuant to Sections 3.4(b) or (c) and the dispute is not resolved
through negotiation, the parties agree that such dispute shall be
settled by arbitration administered by the American Arbitration
Association ("AAA") under its Commercial Arbitration Rules and its
Optional Procedures for Large, Complex Commercial Disputes, or other
rules agreed to by the parties, by three arbitrators. Any decision by
such arbitrators shall be final and binding on the parties, and
judgment on the award rendered by the arbitrators may be entered in any
court having jurisdiction thereof. The parties' agreement to arbitrate
is with respect to only those disputes set forth in this Section 3.4.
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(ii) Any arbitration shall take place in New York,
New York. Advance/▇▇▇▇▇▇▇▇ shall initiate the arbitration in accordance
with the procedures set forth in Rule 4 of the AAA Commercial
Arbitration Rules.
(iii) The arbitrators shall be selected from the
Large, Complex Commercial Case Panel in accordance with the procedures
in Rule 13(a) and (b) of the Commercial Arbitration Rules, and Rule
13(c) shall not apply. At least one of the arbitrators shall be
experienced in commercial matters related to the cable television
industry.
(iv) As part of discovery and the exchange of
information and documents between the parties in an arbitration of a
dispute under Section 3.4(b), TWE and its Affiliates shall be required
to produce to Advance/▇▇▇▇▇▇▇▇, inter alia, all documents and
information relating to the contract or transaction at issue, as well
as documents or information relating to comparable contracts or
transactions with non-affiliated parties; provided that the production
of third party agreements that contain competitively sensitive
information or that are subject to confidentiality restrictions shall
be subject to such protections as the arbitrators may determine are
adequate to protect the legitimate confidentiality concerns of TWE and
its Affiliates taking into account the need for Advance/▇▇▇▇▇▇▇▇ to
review such agreements as part of its preparation of its presentation
in the arbitration. It is agreed that as part of such protections the
arbitrators may direct that in lieu of such agreements being provided
to Advance/▇▇▇▇▇▇▇▇ directly that such agreements may be delivered to
Advance/▇▇▇▇▇▇▇▇'▇ legal counsel and other advisors. As part of
discovery and the exchange of information and documents between the
parties in an arbitration of a dispute under Section 3.4(c), TWE shall
be required to produce to Advance/▇▇▇▇▇▇▇▇, inter alia, all documents
and information relating to the transaction or agreement at issue,
including all documents relating to the business considerations for the
terms of the transaction or agreement at issue, as well as all
documents and information relating to the treatment of other cable
systems in the TWE Cable Division in comparable circumstances.
Advance/▇▇▇▇▇▇▇▇ and TWE may submit to the arbitrators prior to the
hearing any written information and may make any oral presentation at
the hearing that Advance/▇▇▇▇▇▇▇▇ or TWE deem appropriate to support
their respective positions with respect to the disputed matter. At any
hearing before the arbitrators at which witnesses present testimony
either in person or telephonically, Advance/▇▇▇▇▇▇▇▇ and TWE shall be
entitled to cross examine the witnesses; provided, however, that this
provision shall not be deemed to preclude the ability of either party
to present testimony by affidavit in the arbitration hearing.
(v) The arbitrators shall render their written
decision and award (which shall be limited to money damages), including
a statement of reasons upon which such award is based (which shall
include a statement of the elements of an Affiliate Transaction that
are not arm's length, but which need not include a statement of
modifications necessary to cure such elements), within thirty days from
the date of the closing of the arbitration hearing. The merits of the
dispute and the legal relations between Advance/▇▇▇▇▇▇▇▇ and TWE shall
be determined under and in accordance with the substantive laws of the
State of New York as provided for in Section 15.10 of this
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Partnership Agreement. The agreement to arbitrate set forth in this
Section 3.4 shall be construed and enforced pursuant to the United
States Arbitration Act, 9 U.S.C. 'SS''SS' 1 et seq.
(vi) Except as provided in Section 3.4(d) above, each
party shall bear the fees and expenses of its own attorneys, other
advisors, experts, witnesses or cost of proof (in each case other than
those produced at the request of the arbitrators) in connection with
the negotiation or arbitration. Except as provided in Section 3.4(d)
above, all other expenses of any arbitration pursuant to this Section
3.4, including fees and expenses of the AAA, fees and expenses of the
arbitrators, and fees and expenses of any expert, witness or the cost
of any proof (in each case produced at the request of the arbitrators),
shall be borne by the Partnership.
(vii) It is expressly understood and agreed that
Advance/▇▇▇▇▇▇▇▇ and TWE shall each be entitled to provide the
arbitrators with more information than is requested by the arbitrators,
in accordance with procedures established by the arbitrators, and that
the parties intend for the arbitrators to consider, to the extent they
deem appropriate, all such information; provided that it is also
understood and agreed that the other party shall be entitled to receive
copies of such additional information furnished to the arbitrators,
subject to the same confidentiality procedures referenced in this
Section 3.4.
(f) Advance/▇▇▇▇▇▇▇▇ is required to maintain as confidential,
unless otherwise required by law or judicial decision: (i) all
documents and information provided by TWE under Section 3.4(a)
designated by TWE as "confidential," and (ii) all documents or
information provided by TWE or its Affiliates to Advance/▇▇▇▇▇▇▇▇ in
connection with any negotiation or arbitration that are designated by
TWE as "confidential." TWE is required to maintain as confidential,
unless otherwise required by law or judicial decision, all documents or
information provided by Advance/▇▇▇▇▇▇▇▇ to TWE in connection with any
negotiation or arbitration that are designated by Advance/▇▇▇▇▇▇▇▇ as
"confidential." Advance/▇▇▇▇▇▇▇▇ and TWE are required to maintain as
confidential, unless otherwise required by law or judicial decision:
(i) any arbitration proceedings, including any hearings, and (ii) any
arbitration award, except as necessary in connection with judicial
enforcement of an award. The arbitrators in any arbitration also may
issue orders to protect the confidentiality of proprietary information,
competitively sensitive information, information subject to
confidentiality agreements with third parties, trade secrets, or other
sensitive information.
(6) Section 5.5 of the Partnership Agreement is hereby amended by
adding the following subsection (h) at the end thereof:
(h) In the event that any item or items of income,
gain, loss or deduction of the Partnership or any Partner is
reallocated between the Partnership and any Partner, then the
allocations of the income, gain , loss or deduction of the Company for
the year in which such reallocation occurs shall be made in such a
fashion that the Capital Accounts of all Partners, after taking into
account any deemed contributions or
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distributions arising in connection with such reallocation, shall be,
to the greatest extent possible, in the same amounts as they would have
been in had such reallocation not occurred.
(7) Section 8 of the Partnership Agreement is hereby deleted in its
entirety and new Section 8 in the form attached hereto as Exhibit B shall be
substituted therefor.
(8) Section 9 of the Partnership Agreement is hereby deleted in its
entirety and new Section 9 in the form attached hereto as Exhibit C shall be
substituted therefor.
(9) Section 11.5 of the Partnership Agreement is hereby amended as
follows:
(i) by adding the following immediately following the
first sentence of Section 11.5:
Advance/▇▇▇▇▇▇▇▇ shall have the right to receive (promptly after such
reports are available) copies of all reports on matters affecting the
Partnership provided to, or sent from, the following persons in the TWE
Cable Division (or persons who may hereafter hold similar positions or
have comparable responsibilities): Chairman and CEO; President and COO;
Executive Vice President/Operations; Senior Vice President/Engineering;
and Executive Vice Presidents responsible for the cable television
systems owned by the Partnership.
(ii) by adding the following immediately following
the second sentence of Section 11.5:
Without limiting any other information requirements set forth in this
Section 11.5 or elsewhere in the Partnership Agreement, TWE shall cause
to be delivered within 5 days of the preparation of such reports and
information, the reports and information referred to in the memoranda
attached hereto as Exhibit D. It is understood and agreed that the
Managing Partner may elect to exclude information otherwise to be
provided pursuant to this Section 11.5 if the Managing Partner
furnishes to Advance/▇▇▇▇▇▇▇▇ a legal opinion from the general counsel
of ATW or the TWE Cable Division or outside counsel that states that
furnishing such information would reasonably be expected to violate
applicable antitrust law, rules or regulations or would reasonably be
expected to result in the loss of any applicable attorney-client
privilege. It is further understood and agreed that the Managing
Partner shall have the right to redact material unrelated to the
Partnership from any information to be provided to Advance/▇▇▇▇▇▇▇▇
pursuant to this Section 11.5.
(iii) by adding the following sentence at the end of
Section 11.5:
The Managing Partner shall designate an employee of the Managing
Partner knowledgeable concerning the information to be provided to
Advance/▇▇▇▇▇▇▇▇ (and notify Advance/▇▇▇▇▇▇▇▇ of such designation) who
will be charged with the authority to insure, and the responsibility
for implementing and enforcing of the provisions of this
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Section 11.5 and other provisions of this Partnership Agreement
relating to provision of information to Advance/▇▇▇▇▇▇▇▇. The Managing
Partner agrees that such employee's compensation will, in part, be
based on compliance by the Managing Partner with such provisions, and
such employee's compensation shall be subject to review with
Advance/▇▇▇▇▇▇▇▇.
III.
GENERAL PROVISIONS
------------------
(1) Governing Law; Venue; Disputes. This Amendment shall be governed by
the internal laws of the State of New York. Any action, suit or proceeding shall
be prosecuted as to any party hereto in the County of New York, State of New
York.
(2) Captions. Section headings contained in this Amendment are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Amendment.
(3) Effectiveness. The amendments to the Partnership Agreement set
forth in sections (4), (5) and (6) of Article I shall be effective as of
February 12, 1998. All other amendments to the Partnership Agreement contained
in this First Amendment shall be effective as of the date hereof.
(4) Other Provisions. Except as amended hereby, the Partnership
Agreement shall in all respects continue in full force and effect and the
parties ratify and confirm that they continue to be bound by the terms and
conditions thereof.
(5) Counterparts. This Amendment may be executed in one or more
counterparts, each of which shall be an original and all of which, when taken
together, shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first above written.
ADVANCE/▇▇▇▇▇▇▇▇ PARTNERSHIP
By: Advance Cable Holdings Corp.,
General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
By: ▇▇▇▇▇▇▇▇ Broadcasting Corporation,
General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
TIME WARNER ENTERTAINMENT COMPANY, L.P.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President
PARAGON COMMUNICATIONS
By: KBL Communications, Inc.
Managing General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Executive Vice President
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