EXHIBIT 99.1
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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.....................................25
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.....................................................30
SECTION 3.1 EMPLOYEES...............................................30
SECTION 3.2 USE OF NAMES AND LOGOS..................................36
SECTION 3.3 TRANSFER LAWS...........................................37
SECTION 3.4 TRANSFER TAXES AND FEES.................................37
ARTICLE 4 COMCAST TRUST'S REPRESENTATIONS AND WARRANTIES......................38
SECTION 4.1 ORGANIZATION AND QUALIFICATION OF COMCAST TRUST.........38
SECTION 4.2 AUTHORITY...............................................38
SECTION 4.3 NO CONFLICT; REQUIRED CONSENTS..........................38
SECTION 4.4 LITIGATION..............................................38
SECTION 4.5 OWNERSHIP OF REDEMPTION SECURITIES......................39
SECTION 4.6 BROKERS.................................................39
ARTICLE 5 COMCAST SUBSIDIARY'S REPRESENTATIONS AND WARRANTIES.................39
SECTION 5.1 ORGANIZATION AND QUALIFICATION OF COMCAST SUBSIDIARY....39
SECTION 5.2 AUTHORITY...............................................39
SECTION 5.3 NO CONFLICT; REQUIRED CONSENTS..........................40
SECTION 5.4 LITIGATION..............................................40
SECTION 5.5 BROKERS.................................................40
SECTION 5.6 COMCAST BALANCE SHEET...................................40
SECTION 5.7 TOLLING.................................................40
ARTICLE 6 TIME WARNER CABLE'S REPRESENTATIONS AND WARRANTIES..................41
SECTION 6.1 ORGANIZATION AND QUALIFICATION OF TIME WARNER CABLE.....41
SECTION 6.2 AUTHORITY...............................................41
SECTION 6.3 NO CONFLICT; REQUIRED CONSENTS..........................41
SECTION 6.4 SUFFICIENCY OF ASSETS; TITLE............................42
SECTION 6.5 TRANSFERRED SYSTEM FRANCHISES, TRANSFERRED SYSTEM
LICENSES, TRANSFERRED SYSTEMS CONTRACTS, OWNED
PROPERTY AND REAL PROPERTY INTERESTS....................43
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SECTION 6.6 EMPLOYEE BENEFITS.......................................44
SECTION 6.7 LITIGATION..............................................45
SECTION 6.8 TRANSFERRED SYSTEMS INFORMATION.........................45
SECTION 6.9 COMPLIANCE WITH LEGAL REQUIREMENTS......................46
SECTION 6.10 REAL PROPERTY...........................................46
SECTION 6.11 FINANCIAL STATEMENTS; NO ADVERSE CHANGE.................46
SECTION 6.12 EMPLOYEES...............................................47
SECTION 6.13 TRANSACTIONS WITH AFFILIATES............................48
SECTION 6.14 UNDISCLOSED MATERIAL LIABILITIES........................48
SECTION 6.15 HOLDCO..................................................48
SECTION 6.16 INSURANCE...............................................49
SECTION 6.17 INTELLECTUAL PROPERTY...................................50
SECTION 6.18 BROKERS.................................................50
SECTION 6.19 TRANSFERRED SYSTEMS OPTIONS.............................50
SECTION 6.20 TRANSFERRED SYSTEMS PROPRIETARY RIGHTS..................50
SECTION 6.21 PROMOTIONAL CAMPAIGNS...................................50
SECTION 6.22 ENVIRONMENTAL...........................................51
SECTION 6.23 TAXES...................................................52
SECTION 6.24 TAX MATTERS AGREEMENT REPRESENTATIONS...................52
ARTICLE 7 COVENANTS...........................................................52
SECTION 7.1 CERTAIN AFFIRMATIVE COVENANTS OF TIME WARNER CABLE......52
SECTION 7.2 CERTAIN NEGATIVE COVENANTS OF TIME WARNER CABLE.........56
SECTION 7.3 CERTAIN ADDITIONAL COVENANTS REGARDING REQUIRED
CONSENTS; HSR ACT FILING................................59
SECTION 7.4 CONFIDENTIALITY AND PUBLICITY...........................60
SECTION 7.5 RETRANSMISSION CONSENT AGREEMENTS.......................61
SECTION 7.6 TITLE INSURANCE COMMITMENTS.............................62
SECTION 7.7 2005 BUDGETS............................................63
SECTION 7.8 POST-CLOSING OBTAINING OF CONSENTS......................63
SECTION 7.9 TRANSITIONAL SERVICES...................................64
SECTION 7.10 COOPERATION UPON INQUIRIES AS TO RATES..................64
SECTION 7.11 UPDATED SCHEDULES.......................................65
SECTION 7.12 COMMERCIALLY REASONABLE EFFORTS; FURTHER ASSURANCES.....66
SECTION 7.13 POST-CLOSING ACCESS TO PERSONNEL RECORDS................67
SECTION 7.14 DISTANT BROADCAST SIGNALS...............................67
SECTION 7.15 TAX RETURNS WITH RESPECT TO APPLICABLE TAXES............67
SECTION 7.16 ENVIRONMENTAL REPORTS...................................67
SECTION 7.17 CERTAIN NOTICES.........................................68
SECTION 7.18 FRANCHISE EXPIRATIONS...................................68
SECTION 7.19 INSURANCE...............................................68
SECTION 7.20 SECOND STAGE REVIEW.....................................69
SECTION 7.21 PRE-CLOSING ACCESS......................................70
SECTION 7.22 PROMOTIONAL CAMPAIGNS...................................71
SECTION 7.23 LAUNCH SUPPORT..........................................71
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ARTICLE 8 CONDITIONS PRECEDENT................................................71
SECTION 8.1 CONDITIONS TO THE COMCAST PARTIES' OBLIGATIONS..........71
SECTION 8.2 CONDITIONS TO TIME WARNER CABLE'S OBLIGATIONS...........73
ARTICLE 9 CLOSING.............................................................75
SECTION 9.1 CLOSING; TIME AND PLACE.................................75
SECTION 9.2 TIME WARNER CABLE'S OBLIGATIONS.........................75
SECTION 9.3 COMCAST TRUST'S OBLIGATIONS.............................77
ARTICLE 10 TERMINATION AND DEFAULT............................................77
SECTION 10.1 TERMINATION EVENTS......................................77
SECTION 10.2 EFFECT OF TERMINATION...................................79
ARTICLE 11 INDEMNIFICATION....................................................79
SECTION 11.1 INDEMNIFICATION BY TIME WARNER CABLE....................79
SECTION 11.2 INDEMNIFICATION BY HOLDCO...............................80
SECTION 11.3 PROCEDURE FOR CERTAIN INDEMNIFIED CLAIMS................80
SECTION 11.4 DETERMINATION OF INDEMNIFICATION AMOUNTS AND
RELATED MATTERS.........................................81
SECTION 11.5 TIME AND MANNER OF CERTAIN CLAIMS.......................83
SECTION 11.6 OTHER INDEMNIFICATION...................................83
SECTION 11.7 EXCLUSIVITY.............................................83
SECTION 11.8 RELEASE.................................................84
SECTION 11.9 INDEMNIFICATION FOR INCOME TAXES........................84
SECTION 11.10 TAX TREATMENT OF INDEMNIFICATION PAYMENTS...............85
SECTION 11.11 GUARANTEED OBLIGATIONS OF COMCAST.......................86
ARTICLE 12 MISCELLANEOUS PROVISIONS...........................................86
SECTION 12.1 EXPENSES................................................86
SECTION 12.2 ATTORNEYS' FEES.........................................86
SECTION 12.3 WAIVERS.................................................87
SECTION 12.4 NOTICES.................................................87
SECTION 12.5 ENTIRE AGREEMENT; PRIOR REPRESENTATIONS; AMENDMENTS.....89
SECTION 12.6 SPECIFIC PERFORMANCE....................................89
SECTION 12.7 JURISDICTION............................................89
SECTION 12.8 WAIVER OF JURY TRIAL....................................90
SECTION 12.9 BINDING EFFECT; BENEFITS................................90
SECTION 12.10 HEADINGS AND SCHEDULES..................................90
SECTION 12.11 COUNTERPARTS............................................90
SECTION 12.12 GOVERNING LAW...........................................90
SECTION 12.13 SEVERABILITY............................................91
SECTION 12.14 THIRD PARTIES; JOINT VENTURES...........................91
SECTION 12.15 CONSTRUCTION............................................91
SECTION 12.16 RISK OF LOSS; GOVERNMENTAL TAKING.......................91
SECTION 12.17 COMMERCIALLY REASONABLE EFFORTS.........................93
SECTION 12.18 TIME....................................................93
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EXHIBITS
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A Form of Second Stage Bringdown Certificate
B Tax Matters Agreement
C TWE Redemption and Amendment Agreement
D Form of ▇▇▇▇ of Sale and Assignment and Assumption Agreement
E Time Warner Cable FCC Counsel Opinion
F Noncompetition Agreement
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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, Cable Holdco Inc., a Delaware corporation
("HOLDCO"), and Time Warner Cable Inc., a Delaware corporation ("TIME WARNER
CABLE"). Capitalized terms used herein and not otherwise defined shall have the
respective meanings assigned to them in Article I.
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 (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 television 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 transfer to Holdco the
Transferred Assets and Time Warner Cable shall 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.
AGREEMENTS
In consideration of the mutual covenants and promises set forth in this
Agreement, the parties hereto agree as follows:
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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; 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 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
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the one hand, and Holdco, on the other hand, shall not be deemed to be
Affiliates of one another.
"AFFILIATED GROUP" means any affiliated, consolidated, combined or
unitary group for Tax purposes under any federal state, local or foreign law
(including regulations promulgated thereunder) including (without limitation)
any affiliated group within the meaning of Section 1504(a) of the Code.
"APPLICABLE TAXES" means Taxes that are Assumed Liabilities.
"APPLICABLE TAX RETURN" shall mean any Tax Return relating to
Applicable Taxes.
"AUTHORIZATION" means any waiver, amendment, consent, approval,
license, franchise, permit (including construction permits), certificate,
exemption, variance or authorization of, expiration or termination of any
waiting period requirement (including pursuant to the HSR Act) or other action
by, or notice, filing, registration, qualification, declaration or designation
with, any Person (including any Governmental Authority).
"BASE INTEREST RATE" means the rate of interest charged in respect of
borrowings by Time Warner Cable under its senior bank credit facilities.
"BUSINESS DAY" means any day other than a Saturday or Sunday or a day
on which banks in New York, New York are authorized or required to be closed.
"CABLE ACT" means Title VI of the Communications Act, 47 U.S.C. ss.
521, ET SEQ.
"CASH AMOUNT" means an amount of cash equal to (i) $749,373,500 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)).
"COMCAST ADVERSE TAX EVENT" means (1) (A) any change in Tax Law that
would reasonably be expected to (w) cause the Holdco Transaction or the TWC
Redemption (the "TRANSACTIONS") 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 TWE Redemption, the Holdco Transaction or the TWC Redemption
or (B) a proposed change in Tax Law with respect to which Comcast Subsidiary has
delivered to Time Warner Cable an Expected Change Opinion by the earlier of (i)
thirty (30) days after the relevant Proposal Date or (ii) the Closing, and (2)
the effects of which cannot be avoided by accelerating or deferring the Closing
Date of
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the Transactions or by restructuring the Transactions, in each case in a manner
reasonably satisfactory to Comcast Subsidiary and Time Warner Cable.
"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 11:59 p.m., Central time, 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 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 Affiliates maintains or contributes to or in respect of
which Comcast Subsidiary 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 employee or former employee of Comcast
Subsidiary or any of its 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.
"CONTRACT" means any written agreement, contract, mortgage, deed of
trust, bond, indenture, lease, license, note, franchise, certificate, option,
warrant, right or other instrument, document, obligation or agreement, and any
oral obligation, right or agreement.
"CONTROLLED AFFILIATE" means, with respect to any Person, any Affiliate
of such Person that is controlled by such Person.
"DIGITAL SUBSCRIBER" means a paying customer who 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.
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"ENVIRONMENTAL LAW" means any Legal Requirement whether now or
hereafter in effect concerning the environment, including Legal Requirements
relating to emissions, discharges, releases or threatened releases of Hazardous
Substances into the environment, air (including both ambient and within
buildings and other structures), surface water, ground water or land or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, presence, disposal, transport or handling of Hazardous Substances.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA AFFILIATE" means, as to any Person, any trade or business,
whether or not incorporated, which together with such Person would be deemed a
single employer within the meaning of Section 4001 of ERISA.
"EXCLUDED TAX LIABILITY" means all Income Taxes relating to or arising
out of, or resulting from the ownership or operation of the Transferred Systems.
"EXPECTED CHANGE OPINION" means an opinion of a nationally recognized
law firm to the effect that a proposed change in Tax Law, if enacted as
proposed, would reasonably be expected to (w) cause the Transactions 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 that are materially worse than the expected Tax consequences of the
TWE Redemption, the Holdco Transaction or the TWC Redemption.
"FCC" means the Federal Communications Commission.
"FCC TRUST REQUIREMENTS" means rules, regulations, orders,
requirements, or procedures adopted by the FCC in APPLICATIONS FOR CONSENT TO
THE TRANSFER OF CONTROL OF LICENSES FROM COMCAST CORPORATION AND AT&T CORP.,
TRANSFERORS, TO AT&T COMCAST CORPORATION, TRANSFEREE, Memorandum Opinion &
Order, 17 FCC Rcd 23,246 (2002), and the trust agreements adopted pursuant to
Section III of Appendix B of that order, including any related clarifications,
amendments, modifications, and waivers authorized or approved by the FCC.
"FRANCHISE" shall have the meaning assigned to such term in Section
602(9) of the Communications Act.
"FRANCHISING AUTHORITY" shall have the meaning assigned to such term in
of Section 602(10) of the Communications Act.
"GAAP" means generally accepted accounting principles in the United
States in effect from time to time applied on a consistent basis.
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"GAAP ADJUSTMENTS" means with respect to the preparation of any
relevant financial statement, including the balance sheet referred to in Section
2.5(g), the exclusion of the items described in the proviso to the second
sentence of Section 6.11(a) in each case consistent with the practices used in
preparation of the Transferred System Financial Statements.
"GOVERNMENTAL AUTHORITY" means (a) the United States of America, (b)
any state, commonwealth, territory or possession of the United States of America
and any political subdivision thereof (including counties, municipalities,
provinces, parishes and the like), (c) any foreign (as to the United States of
America) sovereign entity and any political subdivision thereof and (d) any
court, quasi-governmental authority, tribunal, department, commission, board,
bureau, agency, authority or instrumentality of any of the foregoing.
"HAZARDOUS SUBSTANCES" means (a) any pollutant, contaminant, waste or
chemical or any toxic, radioactive, ignitable, corrosive or otherwise hazardous
substance, waste or material, (b) any "hazardous waste" as defined by the
Resource Conservation and Recovery Act of 1976 (RCRA) (42 U.S.C. ▇▇.▇▇. 6901 ET
SEQ.); (c) any "hazardous substance" as defined by CERCLA; (d) any substance
regulated by the Toxic Substances Control Act (TSCA) (42 U.S.C. ss. 2601 ET
SEQ.); (e) asbestos or asbestos-containing material of any kind or character;
(f) polychlorinated biphenyls; (g) any substances regulated under the provisions
of Subtitle I of RCRA relating to underground storage tanks; (h) any substance
the presence, use, treatment, storage or disposal of which is prohibited by or
regulated under any Legal Requirement; and (i) 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 paying customer who receives
high-speed data service offered by a Transferred System.
"HOLDCO TRANSACTION LIABILITIES" means any and all Liabilities of
Holdco arising under this Agreement, including pursuant to Section 3.4 and
Article 11, or any of the other Transaction Documents, but excluding the
Liabilities described in clauses (a) and (b) of the definition of "Assumed
Liabilities."
"HSR ACT" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976.
"INCOME TAXES" means any Tax which is based upon, measured by, or
computed by reference to net income or profits (including alternative minimum
Tax) or, in the case of Time Warner Cable and its subsidiaries with respect to
any payments in respect of Taxes that are governed by the Time Warner Tax
Matters Agreement, Income Taxes shall mean any amounts payable by or to Time
Warner Cable under the Time Warner Tax Matters Agreement.
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"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 ▇▇▇▇ 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.
"LEASED PROPERTY" means the premises demised under the Leases.
"LEGAL REQUIREMENT" means applicable common law and any statute,
ordinance, code, law, rule, regulation, order, technical or other written
standard, requirement or procedure enacted, adopted, promulgated, applied or
followed by, or any agreement entered into by, any Governmental Authority,
including any Judgment.
"LIABILITIES" means any and all liabilities, losses, charges,
indebtedness, demands, actions, damages, obligations, payments, costs and
expenses, bonds, indemnities and similar obligations, covenants, and other
liabilities, including all Contractual obligations, whether due or to become
due, absolute or contingent, inchoate or otherwise, matured or unmatured,
liquidated or unliquidated, accrued or unaccrued, known or unknown, determined
or determinable, whenever arising, and including those arising under any Legal
Requirement, in each case, whether or not recorded or reflected or required to
be recorded or reflected on the books and records or financial statements of any
Person.
"LIEN" means, with respect to any property or asset, any security
agreement, financing statement filed with any Governmental Authority,
conditional sale agreement, capital lease or other title retention agreement
relating to such property or asset, any lease, consignment or bailment given for
purposes of security, any right of first refusal, equitable interest, lien,
mortgage, indenture, pledge, option, charge, encumbrance, adverse interest,
constructive trust or other trust, claim, attachment, exception to or defect in
title or other ownership interest (including reservations, rights of entry,
possibilities of reverter, encroachments, 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.
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"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) the execution of this
Agreement and the announcement thereof; (ii) changes or conditions generally
affecting the cable television industry; (iii) changes in the economy or
financial markets in general; (iv) changes in general regulatory, political or
national security (e.g., changes resulting from military conflicts or acts of
foreign or domestic terrorism) conditions; (v) changes in the business,
operations or conditions of 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.
"MATERIAL TIME WARNER CABLE CONTRACTS" means (a) all Transferred
Systems Franchises, and (b) the Transferred Systems Licenses and Transferred
Systems Contracts designated as material on SCHEDULE 2.1(C)(II), (IV) OR (V) or,
in the case of any Transferred System Contract or Transferred System License on
a Schedule to the Second Stage Bringdown Certificate, any such Transferred
System Contract or Transferred
9
System License that could reasonably be expected to be material to the
Transferred Systems as a whole; PROVIDED THAT if Comcast Subsidiary designates
any such Transferred System Contract or Transferred System License as material
within 30 days of receipt of the Second Stage Bringdown Certificate, then such
Transferred System Contract or Transferred System License shall be deemed to be
a Material Time Warner Cable Contract for purposes of the definition of "Time
Warner Cable Required Consents" (without prejudice to whether or not such
Transferred System Contract or Transferred System License would otherwise be a
Material Time Warner Cable Contract).
"OPTION COMMENCEMENT DATE" means December 1, 2004.
"OPTION EXPIRATION DATE" means the earlier of (i) April 1, 2005 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 Option Decision Date.
"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 local 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 inchoate materialmen's, mechanic's, workmen's, repairmen's or
other like Liens arising in the ordinary course of business and (g) any Lien
described on Schedule 1.1; PROVIDED, that "PERMITTED LIENS" shall not include
any Lien securing a debt or claim (other than any Lien described in clause (e)
above) 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.
"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.
10
"PROPOSAL DATE" means, with respect to a proposed change in Tax Law,
the date on which Time Warner Cable or Comcast Subsidiary, as the case may be,
is notified by the other of the occurrence of a Tax Proposal that, if enacted,
would reasonably be expected to give rise to a Time Warner Cable Adverse Tax
Event or a Comcast Adverse Tax Event, as the case may be (assuming that an
Expected Change Opinion is timely delivered to the other party).
"QUALIFYING SPECIFIED TIME WARNER CABLE SYSTEM" means a Specified Time
Warner Cable System that (i) is owned by Time Warner Cable as of the Closing
Date and (ii) at Closing the Unimpaired Assets of which constitute not less than
substantially all of the assets primarily related to such Specified Time Warner
Cable System.
"REDEMPTION SECURITIES" means 48.33 shares of Class A Common Stock
owned by Comcast Trust.
"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.
"SHS TRANSFERRED ASSETS" means Transferred Assets primarily related to
the Specified Holdco System.
"SPECIFIED DIVISION" means the division of Time Warner Cable specified
on Schedule 1.1.
"SPECIFIED HOLDCO SYSTEM" shall mean the cable system identified in
Schedule 1.1 hereto.
11
"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, to repay launch support
payments received by Time Warner Cable or its Affiliates prior to the date
hereof, up to a maximum of $727,200 in the aggregate, arising out of, resulting
from or associated with any failure by the Transferred Systems to continue to
carry after Closing any channels for which launch support payments were received
by Time Warner Cable or its Affiliates prior to the date hereof, but only to the
extent such Liabilities result from either the deletion of the applicable
channel, change in channel placement of the applicable channel, or the transfer
of such channel to a different tier of service, in any such case prior to the
fifth anniversary of the date hereof.
"SPECIFIED TIME WARNER CABLE SYSTEMS" shall mean the cable systems
serving the communities identified in Schedule 1.1 hereto.
"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.
"TAXES" means all levies and assessments of any kind or nature imposed
by any Governmental Authority, including all income, sales, use, ad valorem,
value added, franchise, severance, net or gross proceeds, withholding, payroll,
employment, F.I.C.A., excise or property taxes, levies, and any payment required
to be made to any state abandoned property administrator or other public
official pursuant to an abandoned property, escheat or similar law, together
with any interest thereon and any penalties, additions to tax or additional
amounts applicable thereto and, in the case of Time Warner 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.
12
"TAX PROPOSAL" means, with respect to a proposed change in Tax Law, a
proposal published in writing by (i) the President of the United States, (ii)
the U.S. Treasury Department or any official on behalf of the U.S. Treasury
Department (including the Office of Tax Policy), (iii) the Commissioner of the
Internal Revenue Service or any official on behalf of the Internal Revenue
Service, (iv) a member of the United States Congress, (v) the Joint Committee on
Taxation or the Staff of the Joint Committee on Taxation, (vi) the House Ways
and Means Committee, or (vii) the Senate Finance Committee.
"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 paying customer who receives at least
the lowest-level of telephone service offered by a Transferred System.
"TIME WARNER CABLE ADVERSE TAX EVENT" means (1) (A) any change in Tax
Law that would reasonably be expected to (w) cause the Transactions 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 Time Warner Cable or any of its Affiliates that are materially
worse than the expected Tax consequences of the TWE Redemption, the Holdco
Transaction or the TWC Redemption or (B) a proposed change in Tax Law with
respect to which Time Warner Cable has received from, or delivered to, Comcast
Subsidiary an Expected Change Opinion by the earlier of (i) thirty (30) days
after the relevant Proposal Date or (ii) the Closing and (2) the effects of
which cannot be avoided by accelerating or deferring the Closing Date of the
Transactions or by restructuring the Transactions, in each case in a manner
reasonably satisfactory to Comcast Subsidiary and Time Warner Cable.
"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
13
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 required in connection with the TWE Redemption,
Holdco Transaction, TWC Redemption and/or Comcast Subsidiary Transfer under the
Material Time Warner Cable Contracts, and (b) any other consents, authorizations
and approvals set forth on SCHEDULE 6.3 and designated as Time Warner Cable
Required Consents. For purposes of this definition, a "required" consent,
authorization or approval means a consent, authorization or approval the failure
to obtain would, with respect to the TWE Redemption, Holdco Transaction, TWC
Redemption and/or Comcast Subsidiary Transfer, and 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
right of cancellation or termination, or accelerate or permit the acceleration
of the performance required by or materially adversely effect the rights or
obligations of Time Warner Cable or of any Transferring Person under any
Transferred Systems Contract, Transferred Systems Franchise or Transferred
Systems License.
"TIME WARNER CABLE RETAINED CABLE SYSTEMS" means all cable television
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, other than 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 earliest to occur of (i) April 1,
2005, (ii) termination of this Agreement by Comcast Subsidiary pursuant to
Section 10.1(c) in respect of a willful breach or default by Time Warner Cable,
(iii) termination of this Agreement by Comcast Subsidiary pursuant to Section
10.1(c) for a breach or default by Time Warner Cable that is not willful
(PROVIDED THAT in the event described in this clause (iii), the Tolling
Termination Date shall be the later of (A) December 31, 2004 and (B) the date of
such termination), (iv) termination of this Agreement by Comcast
14
Subsidiary pursuant to the second sentence of Section 12.16 and (v) termination
of this Agreement by Time Warner Cable pursuant to Section 10.1(f).
"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" has the meaning specified in the definition of "Comcast
Adverse Tax Event".
"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 Time Warner
Cable Required Consent 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 Time Warner Cable Required
Consent 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 Time Warner Cable Required Consent is necessary for the
transfer of any Transferred Systems Franchise for such Service Area in
connection with the consummation of the transactions contemplated by this
Agreement, the applicable franchising authority does not expressly deny a
request for approval to transfer such Systems Franchise within the 120-day
review period provided under FCC regulation (plus such extensions of time as are
mutually agreed upon by Comcast Subsidiary and 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 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. Unless the context clearly indicates otherwise,
15
"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.
"TWE" means Time Warner Entertainment Company, L.P., a Delaware limited
partnership.
"TWE REDEMPTION" means the transactions contemplated by the TWE
Redemption and Amendment Agreement.
"TWE REDEMPTION AND AMENDMENT AGREEMENT" means the TWE Redemption and
Amendment Agreement, in the form attached hereto as EXHIBIT C.
"UNIMPAIRED SHS TRANSFERRED ASSET" means any SHS Transferred Asset
other than an SHS Transferred Asset that (i) has suffered loss or damage
resulting from fire, theft or other casualty so as to preclude and prevent
resumption of normal operation thereof and has not been restored or replaced
pursuant to Section 12.16(a), (ii) has been subject to a Taking and has not been
restored or replaced pursuant to Section 12.16(b) or (iii) is a Delayed Transfer
Asset.
"UNIMPAIRED ASSET" means, with respect to any given Specified Time
Warner Cable System, any asset primarily related to that system other than any
asset that (i) has suffered loss or damage resulting from fire, theft or other
casualty so as to preclude and prevent resumption of normal operation thereof
and not been restored or replaced pursuant to Section 12.16(c) or (ii) has been
subject to a Taking and not been restored or replaced pursuant to Section
12.16(d).
"VARIABLE EXPENSE ITEM" means the items identified as variable expense
items on the 2004 Operating Budget and 2005 Operating Budget (consistent in type
with the items so identified in the 2004 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
--------------------------------------------------------------------------------
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)
16
--------------------------------------------------------------------------------
TERM SECTION OR EXHIBIT
--------------------------------------------------------------------------------
Agreement Preamble
Adjustment Payment 2.5(f)(i)
Applicable Tax Returns 7.15(a)
Assumed Liabilities 2.2
Books and Records 2.1(c)(vii)
Cap 11.4(a)
Capital Budget 7.1(i)
CARS 2.1(c)(iv)
Change in Law Indemnity 10.1(f)
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)
Comcast Preamble
Comcast 401(k) Plan 3.1(e)
Comcast Balance Sheet 5.6
Comcast Certificate 2.5(a)
Comcast Health or Welfare Plan 3.1(g)(iii)
Comcast Parent Preamble
Comcast Reimbursement Plan 3.1(h)
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
COBRA 3.1(i)
Confidential Information 7.4(a)
Delayed Transferred Asset 2.1(e)(i)
Delivery Date 2.5(a)
Designated Offices 7.1(f)
Disclosure Letter 1.3
17
--------------------------------------------------------------------------------
TERM SECTION OR EXHIBIT
--------------------------------------------------------------------------------
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
Final Closing Adjustment Amount 2.5(d)
Franchise Matter 11.3
Good Faith Notice 7.20
Good Faith Notice Date 7.20
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
Leases 6.10
Local Retransmission Consent Agreement 2.1(d)
Option 2.1(a)(i)
Option Decision Date 7.20(a)
Option Exercise Date 2.1(a)(i)
Option Exercise Notice 2.1(a)(i)
Outside Closing Date 10.1(a)
Owned Property 2.1(c)(ii)
POFS 7.1(h)(ii)
Post-Closing Consent 7.8
18
--------------------------------------------------------------------------------
TERM SECTION OR EXHIBIT
--------------------------------------------------------------------------------
Previous Request 2.3(a)
Rate Regulatory Matter 7.10(d)
Real Property Interests 2.1(c)(ii)
Registration Rights Agreement Recitals
Relative Percentage Amount 2.5(h)
Retained Base Subscriber Number 2.5(h)
Retained Closing Subscriber Number 2.5(h)
Retained Percentage 2.5(h)
Required Threshold 8.1(h)
Securities Act 4.3
Subscriber Adjustment Amount 2.5(h)
Surveys 7.6
Taking 12.16(b)
Tangible Personal Property 2.1(c)(i)
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 Certificate 2.5(a)
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 Reimbursement Plan 3.1(h)
Time Warner Cable Pension Plans 3.1(f)
Time Warner Cable Released Parties 11.8
Time Warner Cable Title Policies 8.1(o)
Title Commitments 7.6
Title Company 7.6
Title Defect 7.6
Transferred Assets 2.1(c)
19
--------------------------------------------------------------------------------
TERM SECTION OR EXHIBIT
--------------------------------------------------------------------------------
Transferred Base Subscriber Number 2.5(h)
Transferred Closing Subscriber Number 2.5(h)
Transferred Percentage 2.5(h)
Transferred Systems Recitals
Transferred Systems Contracts 2.1(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)
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 date hereof, as may be
updated pursuant to Sections 7.11 and 7.20 (but, in such case, subject to the
provisions of such Sections). 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 the individuals listed on SCHEDULE 1.3(A),
and, 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, the additional
individuals identified on SCHEDULE 1.3(B). References herein to "substantially
all" with respect to any assets primarily related to a cable television system
shall be deemed to include assets required for the normal operation of such
system (e.g., a headend or access to use of a headend).
20
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
TWE 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) TWE 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
Holdco Transaction, pursuant to the terms and conditions of the TWE Redemption
and Amendment Agreement, the TWE Redemption shall be effected. Subject to
Section 2.1(e), following the TWE 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 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 substantially the
same as the form attached hereto as EXHIBIT D, 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,
21
both the TWE Redemption and the Holdco Transaction are to 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
TWE 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 TWE 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 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 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:
(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
22
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 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
(viii) INSURANCE CLAIMS. All insurance proceeds
received or receivable in respect of any Assumed Liabilities, all insurance
proceeds (to the extent not already expended by Time Warner Cable to restore or
replace the lost or damaged asset, which replacement asset shall be a
Transferred Asset) received or receivable in respect of any asset damaged or
lost after June 30, 2004 and which if not so damaged or lost would have been a
Transferred Asset and all insurance 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;
23
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 Party
holds beneficial ownership in assets of the type described above while another
Transferring Party 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; 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 subscriber
deposits, the cash insurance proceeds described in Section 2.1(c)(viii), ▇▇▇▇▇
cash on-hand, if any, any cash referred to in Section 12.16, cash received as
advance payments from subscribers that are not received in the ordinary course
of business and the Cash Amount); (v) any and all patents, copyrights,
trademarks, trade names, service marks, service names, logos and similar
proprietary rights, including the "Time Warner Cable" name and any derivations
thereof (subject to Section 3.2, excluding those items 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
service for 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 licenses to provide telephony
service held, directly or indirectly, by Time
24
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 (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 Time Warner Cable or from Time Warner Cable or any of its
Affiliates to Holdco 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 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
25
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
TWE Redemption 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 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 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, including
all Master Pre-Closing Liabilities, (b) all Liabilities 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, and (c) the Holdco Transaction Liabilities (clauses
26
(a), (b) and (c) collectively, the "ASSUMED LIABILITIES"). The Assumed
Liabilities shall not include 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, 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 any
intercompany payable created to record cash lent to the Transferred Systems
prior to Closing (clauses (i) through (vii) collectively, "EXCLUDED
LIABILITIES"). For the avoidance of doubt, (x) any Liability specifically
allocated to Holdco pursuant to another provision of this Agreement shall be an
Assumed Liability rather than an Excluded Liability and (y) any Liability
specifically allocated to Time Warner Cable or any of its Affiliates (other than
Holdco) pursuant to another provision of this Agreement shall be an Excluded
Liability rather than an Assumed Liability.
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 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.
(b) 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 until after 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).
27
(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"), 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 CERTIFICATE") and 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 CERTIFICATE").
(b) If Time Warner Cable disagrees with any item in the
Comcast Certificate delivered pursuant to Section 2.5(a)(i), Time Warner Cable
may, within one hundred and twenty (120) 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 Certificate delivered to it pursuant
to Section 2.5(a)(i). If Comcast Subsidiary disagrees with any item in the Time
Warner Cable Certificate delivered pursuant to Section 2.5(a)(ii), Comcast
Subsidiary may, within one hundred and twenty (120) days after the Delivery
Date, deliver a notice to 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
Certificate delivered to it pursuant to Section 2.5(a)(ii).
28
(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 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
Certificate and the Time Warner Cable Certificate; (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
Certificate and Time Warner Cable Certificate 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 at a
mutually
29
convenient time and place within three (3) days after 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 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.
(g) As used herein, the term "CLOSING NET LIABILITIES
ADJUSTMENT AMOUNT" means the excess, if any, of the Closing Net Liabilities
Amount over $10,000,000. The "CLOSING NET LIABILITIES AMOUNT" shall equal the
amount of all Liabilities of Holdco as of the Closing (other than the Holdco
Transaction Liabilities), less the amount of all current assets (other than
inventory and the Cash Amount) of Holdco as of 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 and the GAAP Adjustments; PROVIDED
that, if Comcast Subsidiary or its Affiliate shall have made the request
referred to in Section 3.1(g)(v), the Actuarial Amount shall be treated as a
Liability for purposes of this calculation. Current assets shall include, but
shall not be limited to, all cash and cash equivalents (other than the Cash
Amount), 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. For purposes of
the foregoing calculations, Liabilities shall include, but shall not be limited
to, the Actuarial Amount (if Comcast Subsidiary or its Affiliate shall have
30
made the request referred to in Section 3.1(g)(v)), Specified Launch Support
Liabilities, accounts payable, accrued expenses (including all accrued vacation
time, sick days, paid time off, copyright fees, programming expenses, Applicable
Taxes, franchise fees and other license fees or charges), capitalized lease
obligations, Liabilities with respect to unearned income and advance payments
(including subscriber prepayments and deposits for converters, encoders, cable
television service and related sales) and interest, if any, required to be paid
on advance payments.
(h) "SUBSCRIBER ADJUSTMENT AMOUNT" means an amount
(which may be positive or negative) equal to the product of (x) $3,500 times (y)
the Relative Percentage Amount times (z) the Transferred Base Subscriber Number.
As used herein, the term "RELATIVE PERCENTAGE AMOUNT" means an amount (which
shall be expressed as a percentage and may be positive or negative) equal to (i)
the Retained Percentage (as defined below) minus (ii) the Transferred Percentage
(as defined below). As used herein, the term "RETAINED PERCENTAGE" means a
fraction (expressed as a percentage) the numerator of which is the number of
Individual Subscribers of the 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 "RETAINED BASE SUBSCRIBER NUMBER"). As
used herein, the term "TRANSFERRED PERCENTAGE" means a fraction (expressed as a
percentage) the numerator of which is the number of Individual Subscribers of
the Transferred Systems as of the Closing Date (the "TRANSFERRED CLOSING
SUBSCRIBER NUMBER") and the denominator of which is the number of Individual
Subscribers of such Transferred Systems as of July 31, 2004 (the "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 employees of Holdco as of the
consummation of the Holdco Transaction. Employees who commence employment with
Holdco in accordance with the preceding sentence shall be referred to herein as
"Comcast Transferred System Employees." 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 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 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
31
the time of the Closing. As of the Closing, Holdco shall employ no individuals
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 leave and paid time off accrued by such
Comcast Transferred System Employee but unused as of the consummation of the
Holdco Transaction.
(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, 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, 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" and the "Time Warner Cable Pension Plans" (each as defined below))
(such Liabilities shall be included in the meaning of Assumed Liabilities).
(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.
(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.
32
(b) CONTINUED EMPLOYMENT WITH HOLDCO(i). Effective as of
the Closing, all Comcast Transferred System Employees shall continue to be
employees of Holdco and shall cease to be employees of Time Warner Cable or any
of its Subsidiaries. Effective as of the Closing, Time Warner Cable shall
discontinue providing benefits to 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 Transferred
System Employee in connection with the termination of such employee's employment
with Time Warner Cable or any of its Affiliates, including, without limitation,
Liability for 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) or experiences a termination
of employment with Holdco or any of its Affiliates at any time on or after the
consummation of the Holdco Transaction, and any Liability under WARN, as
applicable other than any Liabilities with respect to the termination of
employment of the employee listed on Schedule 3.1(l)(i), if such employee is
hired by Tiger Cable or any of its Affiliates as permitted by Section 3.1(l) in
the 12 month period following the Closing.
(d) PARTICIPATION IN BENEFIT PLANS. With respect to
Comcast Transferred System Employees, compensation and service of such employees
with 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(k) 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 accruing 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).
33
(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, 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") shall be Liabilities of
Comcast Subsidiary or one of its Affiliates.
(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 coverages 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
34
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 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 Schedule 3.1(g)(v) (the "SELECTED EMPLOYEES") 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". Any
Liability associated with any long-term disability, retiree life or retiree
medical benefits, as applicable, relating to or in connection with the Selected
Employees shall not be an Assumed Liability and shall be included in the meaning
of Excluded Liabilities.
(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 and, as soon as practicable following
the Closing, Time Warner Cable shall pay to Comcast Subsidiary a cash amount
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 and 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 AND HIPAA. Comcast Subsidiary shall, or
shall cause, each 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 Code Section 4980B and ERISA Sections 601
through 608 ("COBRA") of each Transferred System Employee, who has either
elected continued group health plan coverage under COBRA or incurred a
"qualifying event" (as defined in COBRA) on or prior to the Closing, to be
either (i) offered COBRA coverage on and after the Closing under a Comcast
Health or Welfare Plan, if such person has not already elected such coverage
under an
35
applicable Time Warner Cable Health or Welfare Plan, or (ii) covered under a
Comcast Health or Welfare Plan in respect of such person's election to be
provided COBRA coverage, if such person has elected COBRA coverage under an
applicable Time Warner Cable Health or Welfare Plan on or prior to the Closing.
Comcast Subsidiary shall, or shall cause an Affiliate to, be responsible for and
administer compliance with the certificate of credible coverage requirements of
the health insurance portability and accountability requirements of "group
health plans" under the Health Insurance Portability and Accountability Act of
1996, as amended, with respect to all Comcast Transferred System Employees.
(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 Transferred System
Employees. During the period prior to the Closing, the parties agree to
cooperate with each other in order to comply with WARN, including, but not
limited to, Holdco or its Affiliates providing to Transferred System Employees
and any applicable governmental entities or other required persons (on behalf of
itself and Comcast Subsidiary) any notice and other requirements under WARN.
(k) WORKERS' COMPENSATION LIABILITIES. Comcast Subsidiary
and Holdco shall be responsible for all workers' compensation Liabilities
relating to, arising out of, or resulting from any claim incurred for a
compensable injury sustained by a Transferred System Employee, whether before,
on or after the Closing.
(l) NON-SOLICIT PROVISIONS.
(i) Except for the employee named on SCHEDULE
3.1(L)(I), from the date of this Agreement 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 prior to the Closing or to comply with the provisions set forth in
Section 3.1(a)).
(ii) Except for the employee named in SCHEDULE
3.1(L)(I), from the Good Faith Notice Date until the first anniversary of the
Closing neither Time Warner Cable nor any of its Subsidiaries, will hire any
Transferred System Employees who are employed at any time beginning on the Good
Faith Notice Date and ending on, and including, the Closing Date (other than for
the benefit of the Transferred Systems 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.
(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,
36
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 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 Transferred System Employees to the extent consistent 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,
37
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 Transferred System Franchises, Transferred System Licenses and
Transferred System Contracts, arising from or payable by reason of or otherwise
related to the TWE Redemption, Holdco Transaction and 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 prior to the Closing, then, promptly after the Closing, the other party
shall reimburse the paying party for one-half of any such amounts paid).
38
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) 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 relating to the Redemption Securities; or (d) require
any 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
39
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.
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
40
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 of this Agreement and the Transaction Documents to be executed and
delivered by Comcast Subsidiary do not and shall not: (a) conflict with or
violate any provision of the certificate of incorporation or bylaws of Comcast
Subsidiary; (b) violate any provision of any material Legal Requirement; or (c)
require any 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.
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
41
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 (subject to Section 7.20 with
respect to Sections 6.3(c), 6.3(f) and 6.5)) 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 (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. Time Warner Cable has all
requisite corporate power and authority to execute, deliver and perform this
Agreement and the Transaction Documents to be executed and delivered by Time
Warner Cable 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 have been, and in the case of the Transaction Documents to be
executed and delivered by Time Warner Cable or any Transferring Person 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 Transferring Person. This
Agreement has been duly and validly executed and delivered by Time Warner Cable
and is, and in the case of the Transaction Documents to be executed and
delivered by Time Warner Cable or any Transferring Person, when so executed and
delivered shall be, the valid and binding obligation of Time Warner Cable or
such Transferring Person, enforceable against Time Warner Cable or such
Transferring Person, 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,
42
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 of this Agreement and the Transaction Documents to be executed and
delivered by Time Warner Cable, 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 or any Transferring
Person; (b) violate any provision of any material Legal Requirement; 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 or any Transferring Person under
any Transferred Systems Contract, Transferred Systems Franchise or Transferred
Systems License; 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 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), the Transferred Assets are all of the assets of
Time 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.
(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.
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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 licenses 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;
(viii) system-specific programming Contracts, system-specific signal supply
Contracts, Local Retransmission Consent Agreements and must carry elections,
(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 Time Warner Cable Systems; (x) any partnership,
joint venture or other similar Contract or arrangement; (xi) any 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 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
provided or otherwise made available (or, in the case of Second Stage Documents,
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),
2.1(C)(III), 2.1(C)(IV), 2.1(C)(V) and
44
SCHEDULE 6.5(A) (excluding Local Retransmission Consent Agreements and
system-specific programming contracts), together with (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, (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 evidencing or
insuring Time Warner Cable's or its Affiliates' ownership of the Owned Property.
Except as described in SCHEDULE 6.5(b): (i) Time Warner Cable and of its
Affiliates are in compliance in all material respects with each of the Material
Time Warner Cable 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 material obligations under each of the Material Time
Warner Cable Contracts; (iii) there has not occurred any material 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 material default (without regard to lapse of
time or the giving of notice, or both) by any other Person, under any of the
Material Time Warner Cable Contracts; and (iv) the Material Time Warner Cable
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, 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
45
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 Plan currently maintained by Time Warner Cable or any of
its ERISA Affiliates. Except as set forth in SCHEDULE 6.6, since June 30, 2004,
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, 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 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 June 30, 2004, the approximate number of miles
of plant, aerial and underground and the technical capacity of such plant
expressed in MHz, included in the Transferred Assets;
(b) as of the date set forth on such Schedule (which
shall be no earlier than June 30, 2004), the number of Individual Subscribers,
Digital Subscribers, Telephony Subscribers and High Speed Data Subscribers
served by the Transferred Systems;
46
(c) as of the date set forth on such Schedule (which
shall be no earlier than June 30, 2004), 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 set forth on such Schedule (which
shall be no earlier than June 30, 2004), 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 June 30, 2004, the stations and signals carried
by each of the Transferred Systems and the channel position of each such signal
and station;
(f) as of June 30, 2004, the channel capacity of each of
the Transferred Systems; and
(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 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.
(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 as of and for
the 12 months ended December 31, 2003 and as of and for the 6 months ended June
30, 2004 (the "TRANSFERRED SYSTEMS FINANCIAL STATEMENTS"). The Transferred
Systems Financial Statements were prepared in accordance with GAAP (except for
the absence of required footnotes) and fairly present in all material respects
the financial condition and results of operations of the Transferred Systems as
of the dates and for the periods indicated
47
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 non-TWE systems; (v) certain balance sheet reclasses
within current assets and liabilities (e.g. reclassifying debit balances in
liability accounts to assets and vice versa); (vi) an allocation of certain
advertising revenue that was recorded at the Time Warner Cable or TWE corporate
level; (vii) an allocation of music performance royalties paid or payable to
BMI, ASCAP and SESAC and programming vendor marketing support receipts or
receivables that were recorded at the Time Warner Cable or TWE corporate level;
(viii) an allocation of variances between actual pension expense and budgeted
pension expense (e.g. the financial results of the Transferred Systems reflect
budgeted pension expense); and (ix) an allocation of other Time Warner Cable
corporate, TWE corporate and divisional overhead that is not specifically
identified to a particular cable system.
(b) Except as set forth in Schedule 6.11(b), since June
30, 2004, (i) there has been no Material Adverse Effect and (ii) the Transferred
Systems and the Transferred Assets have been operated in all material respects
only in the ordinary course of business consistent with past practices.
Section 6.12 EMPLOYEES.
(a) Except as set forth on SCHEDULE 6.12(A), there are no
collective bargaining agreements applicable to any Transferred System Employees,
and neither 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.
(b) Except as set forth on SCHEDULE 6.12(A), 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
48
Effect. Except as set forth on SCHEDULE 6.12(A), 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 and as set forth on
SCHEDULE 6.13, from and 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 June 30, 2004 in amounts substantially consistent with past
practices (subject to customary cost increases); and
(d) other Liabilities which, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.
Section 6.15 HOLDCO.
(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 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 federal, state and foreign requirements of Law. There shall be no
outstanding
49
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 ss. 1.1502-6, Treasury
Regulation ss. 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 Liabilities, except Holdco Indemnified Liabilities and
Liabilities under this Agreement and any Transaction Document to which Holdco is
a party.
Section 6.16 INSURANCE. SCHEDULE 6.16 contains a list of
all policies of title, 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. Time Warner Cable shall have made available to
Comcast Trust and Comcast Subsidiary promptly after the date hereof true '
50
and correct copies of the standard declaration pages of all such policies. All
such policies are in full force and effect, all premiums due thereon have been
paid by 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 ▇▇▇▇, 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 in connection with the transactions
contemplated by this Agreement.
Section 6.19 TRANSFERRED SYSTEMS OPTIONS. Except as
disclosed on SCHEDULE 6.19, none of the Transferred Systems or any material
Transferred Assets are subject to any purchase option, right of first refusal or
similar arrangement which would be triggered by the sale, transfer or other
disposition of such Transferred Systems or Transferred Assets ("TRANSFERRED
SYSTEMS OPTION").
Section 6.20 TRANSFERRED SYSTEMS PROPRIETARY RIGHTS.
Except as described on SCHEDULE 6.20, there is no material trademark, trade
name, service ▇▇▇▇, 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 to Subscribers
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
51
Affiliates with respect to the Transferred Systems, other than local 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 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, 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.
52
(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) set forth a list of all
jurisdictions (whether foreign or domestic) in which Holdco or the Transferred
Systems currently file Applicable Tax Returns. No written claim with respect to
Applicable Taxes has been made by any Governmental Authority in a jurisdiction
where the Transferred Business does not file Applicable Tax Returns that it is
or may be subject to taxation by that jurisdiction.
(f) There are no liens for Applicable Taxes upon the
assets or properties of the Transferred Business, except for liens for
Applicable Taxes not yet due and payable or being contested in good faith by
appropriate proceedings.
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 the Holdco Transaction) or as Comcast Subsidiary may otherwise
consent in
53
writing, which if requested shall not be unreasonably withheld or delayed,
between the date of this Agreement (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 Good Faith Notice 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) and, to the extent
consistent with such operation;
(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 Systems
and (ii) enforce in good faith the rights under insurance policies referred to
in (i)(B);
(d) (i) deliver to Comcast Trust and Comcast Subsidiary
reasonably promptly true and complete copies of all monthly trial balances 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 and (ii) as soon as reasonably practicable after
the Good Faith Notice Date, quarterly financial statements with respect to the
operation of that Transferred System prepared in a manner consistent with
Transferred Systems Financial Statements for the last financial quarter of Time
Warner Cable immediately preceding the Good Faith Notice Date;
(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) (i) give or cause to be given to Comcast Subsidiary
and Comcast Trust, and their respective counsel, accountants and other
representatives, reasonable access upon delivery of advance notice and during
normal business hours to each Transferred System, its Owned Property, its Leased
Property, all of its Transferred Assets, its Books and Records (including all
account books of original entry, general
54
ledgers and financial records used in connection with Transferred Systems) and
each Transferred System's personnel after receipt of any prior written request
with respect thereto; PROVIDED that any such access to the extent not solely to
officers of Time Warner Cable or at the offices of Time Warner Cable identified
on SCHEDULE 7.1(F) (such offices, the "DESIGNATED OFFICES") shall only be
available after the Good Faith Notice Date (and any access pursuant to this
Section 7.1(f)(i) shall be designed so at to not unreasonably disrupt the
business and operations of Time Warner Cable and/or the Transferred Systems);
and (ii) furnish or cause to be furnished to Comcast Subsidiary and Comcast
Trust and such representatives all such additional documents, financial
information and other information as either from time to time reasonably may
request in writing; PROVIDED, that: (A) in no event shall any programming
records be provided; (B) 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, Time Warner Cable shall not be required to provide other documents
containing competitively sensitive information, trade secrets, or other
sensitive information relating thereto be provided; and (C) any investigation
pursuant to this subsection shall be conducted in such manner as not to
interfere unreasonably with the conduct of the business of Time Warner Cable; no
investigation by Comcast, Comcast Subsidiary, Comcast Trust or any of their
respective representatives shall affect, limit or be deemed to modify any of the
representations or warranties of Time Warner Cable or Holdco set forth in this
Agreement.
(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:
55
(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
(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) (I) 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"), (II) until January 1, 2005,
make telephony expenditures with respect to the Transferred Systems on a
non-discriminatory basis as compared to the Specified Division and (III) make
aggregate expenditures (other than Variable Expense Items) in accordance with
the August 2004 re-estimated operating budget for each Transferred System set
forth on Schedule 7.1(i)(B) (the "2004 OPERATING BUDGET", and together with the
2004 Capital Budget, the "2004 BUDGETS"); PROVIDED, HOWEVER, that, in each case,
deviations (positive or negative) in any such expenditures by no more than 5% of
the aggregate budgeted amount shall be deemed to be in accordance with the 2004
Budgets, and (B) with respect to any period after January 1, 2005, make capital
expenditures in accordance with the 2005 capital budget of each Transferred
System (the "2005 CAPITAL BUDGET", and together with the 2004 Capital Budget,
the "CAPITAL BUDGET") and make aggregate expenditures (other than Variable
Expense Items) in accordance with the 2005 operating budget for each Transferred
System (the "2005 OPERATING BUDGET", and together with the 2005 Capital Budget,
the "2005 BUDGETS"); PROVIDED, HOWEVER, that: (x) with respect to the 2005
Operating Budget and, if Comcast Subsidiary and Time Warner Cable shall have
agreed on the 2005 Capital Budget in accordance with Section 7.7, the 2005
Capital Budget, deviations by no more than 5% (positive or negative) of the
aggregate budgeted amounts shall be deemed to be in accordance with such 2005
Budget and (y) if Comcast Subsidiary and Time Warner Cable shall not have agreed
on the 2005 Capital Budget, and as a result the 2005 Capital Budget is
determined pursuant to clause (b) of the second sentence of Section 7.7, then
56
deviations that result in expenditures greater than the budgeted amount for
expenditures in the 2005 Capital Budget shall be deemed to be in accordance with
the 2005 Capital Budget; PROVIDED, FURTHER, that, in any event, deviations
(positive or negative) in any expenditures contemplated by the telephony budgets
included in the 2005 Capital Budget shall be deemed to be in accordance with the
2005 Capital 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, 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 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);
(k) give or cause to be given to Comcast Subsidiary, and
its counsel, accountants and other representatives, as soon as reasonably
possible, but in any event prior to the date of submission to the appropriate
Governmental Authority, copies of all FCC Forms 1200, 1205, 1210, 1215, 1220 and
1240, and simultaneous with, or as soon as reasonably possible after submission
to the appropriate Government Authority, any other FCC Forms required under the
regulations of the FCC promulgated under the Cable Act that are prepared with
respect to any of the Transferred Systems and (ii) as soon as reasonably
possible after filing, copies of all copyright returns filed in connection with
any Transferred System; PROVIDED, that in the case of clause (i), before any
such FCC Forms 1200, 1205, 1210, 1215, 1220 or 1240 are filed, 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; 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 Good Faith Notice Date and the Closing or, with respect to
Sections 7.2(d) (to the extent relating to
57
▇▇▇▇▇▇▇ ▇.▇▇), (▇), (▇), (▇), (▇), (▇), (▇), (▇), (▇) and (r) (and, to the
extent relating to such Sections, Section 7.2(s)), between the date hereof 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;
(c) except as set forth on SCHEDULE 7.2(C), 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; (ii) would have a term
in excess of one year unless terminable without payment or penalty upon 30 days'
(or fewer) notice; (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 Transferring Person is a party
not being true and correct in all material respects (or if qualified by
materiality or Material Adverse Effect, in all respects) when made or at Closing
(unless and to the extent that any such representation or warranty speaks
specifically as of an earlier date, in which case, at such earlier date);
provided, 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
Transactions 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 TWE Redemption, the
Holdco Transaction or the TWC Redemption (each of the events described in
clauses (w) through (z) shall hereinafter be referred to collectively as a "TAX
ADVERSE EFFECT"); PROVIDED, further, that, for the avoidance of doubt, Time
Warner Cable shall be entitled to dispose of any Specified Time Warner Cable
Systems provided that such transaction would not
58
result in a failure of Time Warner Cable to own at Closing Specified Time Warner
Cable Systems that serve as of the Closing an aggregate number of Individual
Subscribers equal to at least 50% of the Individual Subscribers served by all of
the Specified Time Warner Cable Systems as of the date hereof;
(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, 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 or voluntarily delete any
channels from any Transferred System, or change the channel lineup in any
Transferred System or commit to do so in the future (the foregoing shall not be
deemed to prohibit the deletion of channels if such deletion is being effected
on a national or regional level);
(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 Transferred
System Employee from the Transferred Systems 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 Transaction, or (iv) transfers solely among Time
Warner Cable and its Affiliates (whereupon any such transferee would become a
"Transferring Party" hereunder);
(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 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;
59
(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;
(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 other than the 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 15 Business 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 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 20 Business 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
60
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 30 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 and 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 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
61
referred to as "CONFIDENTIAL INFORMATION"). No party shall disclose any
Confidential Information to any other Person (other than its Affiliates and its
Affiliates' directors, officers and employees, and representatives of its
advisers and lenders, in each case, whose knowledge thereof is necessary in
order to facilitate the consummation of the transactions contemplated hereby, in
which case such party shall be responsible for any breach by any such Person) or
use such information to the detriment of the other; PROVIDED, that (i) such
party may use and disclose any such information once it has been publicly
disclosed (other than by such party in breach of its obligations under this
Section) or which, to its knowledge, rightfully has come into the possession of
such party (other than from the other party), 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 other with respect to the content and timing of all press
releases and other public announcements, and any oral or written statements to
Transferred System Employees concerning this Agreement and the transactions
contemplated hereby. Except as required by applicable Legal Requirements or by
any national securities exchange or quotation system, no party hereto shall make
any such release, announcement or statement without the prior written consent
and approval of the other, which shall not be unreasonably withheld. The party
receiving a request for a consent shall respond promptly to any such request for
consent and approval.
Section 7.5 RETRANSMISSION CONSENT AGREEMENTS. On or
prior to the date which is 30 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 15 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
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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 provide to Comcast Subsidiary, within 90 days from the Option
Exercise Date, 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 fee or a valid leasehold title, as
applicable, in Holdco to each parcel of Owned Property or Leased Property
designated by Comcast Subsidiary in the Option Exercise Notice 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 Option
Exercise 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. 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. 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 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. 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 and if
acceptable to Comcast Subsidiary in its reasonable discretion, 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
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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 be required to remove any Liens
encumbering the Owned Property and Leased Property except as expressly set forth
in this Section 7.6, and in no event shall Time Warner Cable be obligated to
commence any Litigation to cause any Title Defects to be deleted.
Section 7.7 2005 BUDGETS. Comcast Subsidiary and Time
Warner Cable shall use good faith efforts to mutually agree on the 2005 Budgets
prior to December 31, 2004. If by December 31, 2004 Comcast Subsidiary and Time
Warner Cable shall not have mutually agreed on the 2005 Budgets, Comcast
Subsidiary and Time Warner Cable shall continue to work together in good faith
to mutually agree on the 2005 Budgets; PROVIDED, that until the earlier of (i)
Comcast Subsidiary and Time Warner Cable agreeing on the 2005 Budgets and (ii)
the Closing, the 2005 Budgets shall determined as follows:
(a) the 2004 Operating Budget shall be considered as the
2005 Operating Budget, PROVIDED that all operating expenses provided therein
shall be increased by 5%; and
(b) the 2005 Capital Budget shall be determined by Time
Warner Cable in good faith subject to the following conditions:
(i) with respect to the Transferred Systems other
than the system identified on SCHEDULE 7.7(B), the 2005 Capital Budget shall
provide for aggregate expenditures of not less than the aggregate expenditures
provided for in the 2004 Capital Budget (in each case, excluding the telephony
budgets included therein);
(ii) with respect to the system identified on
SCHEDULE 7.7(B), the 2005 Capital Budget shall provide for aggregate
expenditures of not less than 80% of the aggregate expenditures provided for in
the 2004 Capital Budget (in each case, excluding the telephony budgets included
therein); and,
(iii) the telephony budgets included in the 2005
Capital Budget shall be determined based on a non-discriminatory allocation of
the telephony budget of the applicable division of Time Warner Cable to the
relevant Transferred Systems.
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.
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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, Subscriber billing
services, high speed data, telephony, and such 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 conversion of existing or 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 ▇▇▇▇▇▇▇ 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 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 consent of Comcast Subsidiary (after the Good Faith Notice
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 would have any obligation under such settlement, or (B)
such settlement would reduce the rates permitted to be charged by Holdco 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
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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.
(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: supplement Schedule 6.5(a) to reflect
leases, franchises, licenses, authorizations, consents, permits, Contracts or
commitments which were entered into or obtained between the date hereof and the
Closing Date not in violation of the terms of this Agreement and are required to
be disclosed in Schedule 6.5(a) in order for the representation and warranty
contained in Section 6.5(a) to be true, complete and correct or supplement any
other Schedule to this Agreement (other than the Schedules to any of Section
6.1, 6.2, 6.15 or 6.18) or to the Tax Matters Agreement,
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with additional information to the extent that it reflects events, acts or
omissions that first occurred between the date hereof and the Closing Date and
that are not prohibited by this Agreement to be taken, and that would have been
required to be included in one or more Schedules to this Agreement 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, (b)
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) shall be disregarded.
(b) In addition, if after the date that is the fifth
Business Day prior to Closing and 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 agree 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 Holdco Transaction.
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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 DISTANT BROADCAST SIGNALS. Unless otherwise
restricted or prohibited by any Governmental Authority, applicable Legal
Requirement or Contract, Time Warner Cable shall, if requested by Comcast
Subsidiary, delete prior to Closing any distant broadcast signals with respect
to the Transferred Systems which Comcast Subsidiary determines shall result in
unacceptable liability on the part of Comcast Subsidiary or Holdco for copyright
payments with respect to continued carriage of such signals after Closing.
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.
(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 Good
Faith Notice 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
68
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 Good Faith
Notice 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
December 31, 2007, in the ordinary course of business. Neither Time Warner Cable
nor any of its Affiliates shall agree or accede to any material (or after the
Good Faith Notice Date, any) modifications or amendments to or in connection
with, or the imposition of any material (or after the Good Faith Notice Date,
any) 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 Good Faith Notice Date until Closing, upon reasonable
prior notice, to allow representatives of Comcast Subsidiary to attend meetings
and hearings before applicable Governmental Authorities in connection with the
renewal or extension of any Transferred Systems License or Transferred Systems
Franchise.
Section 7.19 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 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
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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 Time Warner Cable has only been required to make good faith efforts to
make the representations and warranties set forth in Sections 6.3(c), 6.3(f) and
6.5 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
25 day period after receipt of the Good Faith Notice or as otherwise
contemplated by Section 7.20(e) Time Warner Cable shall have the ability to
update the Schedules for Sections 6.3(c), 6.3(f) and 6.5 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 the later of December 1, 2004 and
30 days after the receipt of such materials (the later of (i) and (ii), 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. 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 the one of 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" and
the date such notice is so delivered, the "GOOD FAITH NOTICE DATE") 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 such
delivery by Time Warner Cable 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.
(c) Time Warner Cable shall, within 25 days of receipt of
the Good Faith Notice: 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 hereof and as of the Closing Date.
(d) Comcast Trust and Comcast Subsidiary may, on the Good
Faith Notice Date, request additional documents relating to the Transferred
Business, the
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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 25 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) If Comcast Subsidiary fails to deliver the Good Faith
Notice prior to exercising the Option, Time Warner Cable may nevertheless
deliver the Second Stage Bringdown Certificate and Second Stage Documents to
Comcast Trust and Comcast Subsidiary within 25 days following the Option
Exercise Date. If Comcast Subsidiary fails to deliver the Good Faith Notice
prior to exercising the Option, for all purposes hereunder, references to the
Good Faith Notice Date shall be deemed to be references to the Option Exercise
Date.
(f) To the extent any representation and warranty in
Sections 6.3(c), 6.3(f) and 6.5 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 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 PRE-CLOSING ACCESS. Prior to delivery of the
Good Faith Notice, 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, access any of the
properties, whether owned or leased, of the Transferred Systems and 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 of any of its Affiliates or such officers, employees, directors and
advisors. No breach of this Section 7.21 shall result in a failure of the
condition set forth in Section 8.2(b).
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Section 7.22 PROMOTIONAL CAMPAIGNS. Between the Good Faith
Notice Date and the Closing, Time Warner Cable shall not initiate any new
Subscriber campaigns or promotions on a local or regional level with respect to
the Transferred Systems absent the consent of Comcast Subsidiary, not to be
unreasonably withheld or delayed. For the avoidance of doubt, this Section 7.22
shall not prohibit Time Warner Cable from initiating any new Subscriber
campaigns or promotions on a divisional or national level.
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) 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.
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 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.
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(d) LEGAL PROCEEDINGS. There is no Legal Requirement,
and no Judgment has been entered and not vacated by any Governmental Authority
of competent jurisdiction in any Litigation or arising therefrom, which (i)
enjoins, restrains, makes illegal or prohibits consummation of the transactions
contemplated by this Agreement or by any Transaction Document (other than any
such matter having only an immaterial effect and that does not impose criminal
liability or penalties) or (ii) requires separation or divestiture by Comcast
Trust, Comcast Subsidiary, Holdco or any of their Affiliates of all or any
significant portion of the Transferred Assets after Closing or otherwise
materially and adversely affects the operation of the Transferred Systems (other
than applicable to the cable industry in general), and there is no Litigation
pending which was commenced by any Governmental Authority (other than a
franchising authority) seeking, or which if successful would have the effect of,
any of the foregoing, PROVIDED that the failure to obtain a consent relating to
a Transferred Systems Franchise shall not be considered to enjoin, restrain,
make illegal or prohibit consummation of the transactions contemplated by this
Agreement or by any Transaction Document.
(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) NO MATERIAL ADVERSE CHANGE. There has been no
material adverse change in the Transferred Assets, or the financial condition or
operations of the Transferred Systems, each taken as a whole, since the date of
this Agreement.
(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
95% of Individual Subscribers served by the Transferred Systems at such time
(the "REQUIRED THRESHOLD"); PROVIDED that if any Transferred Systems containing
headends are not within such Transferable Service Areas as of the Closing Time,
the Required Threshold shall not be deemed to have been reached.
(i) TWE REDEMPTION AND HOLDCO TRANSACTION. The TWE
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 ▇▇▇▇▇ ▇▇▇▇ LLP, special FCC
counsel to Time Warner Cable, dated as of Closing, in the form of EXHIBIT E (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
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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) NONCOMPETITION AGREEMENT. Time Warner Cable shall
have executed and delivered a Noncompetition Agreement substantially in the form
attached as EXHIBIT F.
(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) TWE REDEMPTION AND AMENDMENT AGREEMENT. Each of the
parties to the TWE Redemption and Amendment Agreement (other than Comcast Trust
I) shall have executed and delivered the TWE 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 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 standard printed exceptions and deleting or insuring
over, subject to Section 7.6, any Title Defects, or irrevocable Title
Commitments of the Title Company to deliver such Time Warner Cable Title
Policies.
(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.
(r) UNIMPAIRED SHS TRANSFERRED ASSETS. As of the Closing
Date, Unimpaired SHS Transferred Assets shall constitute not less than
substantially all of the SHS Transferred Assets.
(s) QUALIFYING SPECIFIED TIME WARNER CABLE SYSTEMS. The
Qualifying Specified Time Warner Cable Systems shall serve, as of the Closing
Date, an aggregate number of Individual Subscribers equal to at least 50% of the
Individual Subscribers served by all of the Specified Time Warner Cable Systems
as of the date hereof.
Section 8.2 CONDITIONS TO TIME WARNER CABLE'S
OBLIGATIONS. The obligations of Time Warner Cable to consummate the transactions
contemplated by
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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 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 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.
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(f) 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.
(g) TWE REDEMPTION AND AMENDMENT AGREEMENT. Comcast Trust
I shall have executed and delivered the TWE Redemption and Amendment Agreement.
(h) OPTION EXERCISE. Comcast Subsidiary shall have
validly exercised the Option prior to 5:00 p.m. (NYT) on the Option Expiration
Date.
(i) UNIMPAIRED SHS TRANSFERRED ASSETS. As of the Closing
Date, Unimpaired SHS Transferred Assets shall constitute not less than
substantially all of the SHS Transferred Assets.
(j) QUALIFYING SPECIFIED TIME WARNER CABLE SYSTEMS. The
Qualifying Specified Time Warner Cable Systems shall serve, as of the Closing
Date, an aggregate number of Individual Subscribers equal to at least 50% of the
Individual Subscribers served by all of the Specified Time Warner Cable Systems
as of the date hereof.
ARTICLE 9
CLOSING
Section 9.1 CLOSING; TIME AND PLACE. (a) 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 (except for conditions
to be satisfied at Closing that will be satisfied at Closing) in writing by the
party entitled to the benefit of each such condition, 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) June 16, 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
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customary instruments of transfer as Comcast Trust (or Comcast Subsidiary, if
applicable) may reasonably request.
(b) ▇▇▇▇ OF SALE AND ASSIGNMENT AND THE INSTRUMENT OF
ASSUMPTION. The executed ▇▇▇▇(s) of Sale and Assignment and Instrument of
Assumption with respect to the Holdco Transaction in substantially the form
attached hereto as EXHIBIT D, and the executed ▇▇▇▇ of Sale and Assignment and
Instrument of Assumption with respect to the TWE Redemption in substantially the
form attached to the TWE Redemption and Amendment Agreement, and such other
instruments of transfer or assignment as may be reasonably necessary to effect
the TWE Redemption and the Holdco Transaction (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 the Transferred Assets have been terminated, released or waived, or
insured over as contemplated in Section 7.6 (in the case of Real Property
Interests) as appropriate, or original, executed instruments in form and
substance satisfactory to Comcast Subsidiary effecting such terminations,
releases or waivers.
(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 television and related 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, 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.
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(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) TWE REDEMPTION AND AMENDMENT AGREEMENT. The executed
TWE Redemption and Amendment Agreement by all parties thereto (other than
Comcast Trust I).
(i) TAX MATTERS AGREEMENT. The executed Tax Matters
Agreement by all parties thereto (other than Comcast Parent and Comcast).
(j) 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) TWE REDEMPTION AND AMENDMENT AGREEMENT. The executed
TWE 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) 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 9-month anniversary of the Option Exercise Date (the "OUTSIDE
CLOSING
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DATE") if the Closing shall not have occurred by such date; PROVIDED, that if
the Closing shall not have occurred by such date by reason of the failure of one
or more of the conditions set forth in Sections 8.1(s), 8.1(t), 8.2(i) or
8.2(j), then the Outside Closing Date shall be the 18-month anniversary of the
Option Exercise Date; PROVIDED, FURTHER that if by such Outside Closing Date any
such conditions remain unsatisfied by reason of the replacement or restoration
of assets contemplated by the second proviso of Section 12.16(a) or Section
12.16(c) not being completed, then at Comcast Subsidiary's option, the Outside
Closing Date can be extended until such replacement or restoration is completed;
(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, 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 used 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;
or
(f) By Time Warner Cable upon the occurrence of a Time
Warner Cable Adverse Tax Event, provided that Time Warner Cable delivers written
notice to Comcast Subsidiary of its determination to terminate this Agreement
pursuant to this Section 10.1(f) by the earlier of (i) thirty (30) days after
the relevant change in Tax Law (or the relevant Proposal Date, if the Comcast
Adverse Tax Event is a proposed change in Tax Law) and (ii) the Closing,
provided, however, that the Agreement shall not terminate pursuant to this
Section 10.1(f) if within thirty (30) days of the receipt of a notice of
termination from Time Warner Cable (or if such notice is delivered within thirty
(30) days of the Closing, as soon as is reasonably possible prior to the
Closing), Comcast Subsidiary provides Time Warner Cable with a written rejection
of such notice of termination and agrees to indemnify and hold harmless Time
Warner Cable from and against any and all Losses suffered or incurred by Time
Warner Cable or any of its Affiliates to the extent attributable to such change
in Tax Law as applied to the TWE Redemption and/or the Transactions (a "CHANGE
IN LAW INDEMNITY"). The terms, conditions and procedures applicable to any such
Change in Law Indemnity shall be governed by the terms, conditions and
procedures applicable to the indemnification obligations of Holdco under Section
9.2(a)(i) of the Tax Matters Agreement.
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(g) By Comcast Subsidiary upon the occurrence of a
Comcast Adverse Tax Event, provided that by the earlier of (i) thirty (30) days
after the relevant change in Tax Law (or the relevant Proposal Date, if the
Comcast Adverse Tax Event is a proposed change in Tax Law) and (ii) the Closing,
Comcast Subsidiary provides written notice to Time Warner Cable of its
determination to terminate this Agreement.
Section 10.2 EFFECT 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, 7.4 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 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 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 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 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
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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 to
which such Person is a Party not being true and accurate in all respects, when
made or at Closing (or, in the case of any representation or warranty made as of
a specific date, as of such date);
(b) any failure by Comcast Trust, Comcast Subsidiary or,
after Closing, Holdco, to perform in all respects any of its covenants,
agreements, or obligations in this Agreement or in any Transaction Document to
which such Person is a Party;
(c) the Assumed Liabilities;
(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
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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, 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 ▇▇▇▇▇ ▇▇▇▇▇ appropriate 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 assumes 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
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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 $100 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 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)).
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(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.
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
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rights and claims it may have against the other parties to this Agreement,
whether in law or in equity, relating to the Transferred Systems or the
Transferred Assets or 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, 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
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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
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.
(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 11.10(b).
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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 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 Section 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
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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:
To Comcast or Holdco (after the Closing):
Comcast Communications
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
ATTN: General Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a Required Copy to:
▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
ATTN: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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To Comcast Subsidiary:
MOC Holdco II, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ATTN: President
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a Required Copy to:
▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
ATTN: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
To Comcast Trust:
TWE Trust Holdings II
c/o ▇▇▇▇▇ ▇. Holiday
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a Required Copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
ATTN: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
To Time Warner Cable or Holdco (prior to the Closing):
c/o Time Warner Cable Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
ATTN: Chief Executive Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With Required Copies to:
Legal Department
Time Warner Cable Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
ATTN: General Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇
▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
ATTN: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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 and the other 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 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 Agreement dated August 26, 2004 between Time Warner Cable and
Comcast as it relates to any obligation to keep confidential information
regarding the Transferred Assets, the Transferred Systems and/or the Assumed
Liabilities shall not survive the Closing.
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
90
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 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; 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 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
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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.
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) unless promptly (but in no event later than 10
Business Days) after actually becoming aware of such loss or damage Time Warner
Cable notifies Comcast Subsidiary in writing that it will not undertake such
obligation; PROVIDED that if Time Warner Cable so notifies Comcast Subsidiary,
Comcast Subsidiary may at any time within 10 days of receipt of such notice
elect by written notice to Time Warner Cable to terminate this Agreement;
PROVIDED, FURTHER, that if any SHS Transferred Assets have suffered loss or
damage resulting from fire, theft or other casualty and as a result the
conditions set forth in Section 8.1(r) and Section 8.2(i) are not satisfied,
Time Warner Cable shall (at its expense) use commercially reasonable efforts to
replace or restore such SHS Transferred Assets as soon as practicable and in any
event prior to Closing such that such loss or damage does not result in the
conditions set forth in
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Section 8.1(r) and Section 8.2(i) not being satisfied. If Comcast Subsidiary
elects to terminate this Agreement pursuant to the previous sentence, Time
Warner Cable shall be discharged of any and all obligations hereunder, subject
to Section 10.2. Without limitation to the first sentence of this Section
12.16(a), and except with respect to the Specified Holdco System, if any loss or
damage is equal to or greater than $30,000,000 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 hereunder 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 so to 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 referred to
in the second preceding sentence 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 paid or payable 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 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 the period through and including the Closing Date, shall be
delivered by Time Warner Cable, on an effective after-tax basis, to Holdco, or
the rights to such proceeds shall be assigned by Time Warner Cable to Holdco if
not yet paid to Time Warner Cable. Time Warner Cable shall pay any deductible
required and/or the self-insured portion of any such loss with respect to all
such insurance proceeds. 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 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, then (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
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, (iii) at Closing, Time
Warner Cable and its Affiliates shall
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assign to Holdco all of Time Warner Cable's and its Affiliates' rights to all
payments payable with respect to such Taking and shall pay to Holdco, on an
effective after-tax basis, all payments previously paid to Time Warner Cable or
any of its Affiliates with respect to the Taking, 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. Notwithstanding the
foregoing, if, prior to the Closing, any discrete item or items of SHS
Transferred Assets that is or are capable of being replaced or restored using
commercially reasonably efforts shall be subject to a Taking and as a result the
conditions set forth in Section 8.1(r) and Section 8.2(i) are not satisfied,
then Time Warner Cable shall (at its expense) use commercially reasonable
efforts to replace or restore such SHS Transferred Asset(s) as soon as
practicable and in any event prior to Closing such that such Taking does not
result in the conditions set forth in Section 8.1(r) and Section 8.2(i) not
being satisfied.
(c) If, prior to Closing, any assets relating primarily
to any Specified Time Warner Cable System have suffered loss or damage resulting
from fire, theft or other casualty and as a result the conditions set forth in
Section 8.1(s) and Section 8.2(j) are not satisfied, Time Warner Cable shall use
commercially reasonable efforts to replace or restore such Transferred Assets as
soon as practicable and in any event prior to Closing such that such loss or
damage does not result in the conditions set forth in Section 8.1(s) and Section
8.2(j) not being satisfied.
(d) If, prior to the Closing, any discrete asset or
assets relating primarily to any Specified Time Warner Cable System that is or
are capable of being replaced or restored using commercially reasonable efforts
shall be subject to a Taking and as a result the conditions set forth in Section
8.1(s) and Section 8.2(j) are not satisfied, then Time Warner Cable shall use
commercially reasonable efforts to replace or restore such assets as soon as
practicable and in any event prior to Closing such that such Taking does not
result in the conditions set forth in Section 8.1(s) and Section 8.2(j) not
being satisfied.
Section 12.17 COMMERCIALLY REASONABLE EFFORTS. For purposes
of this Agreement, "commercially reasonable efforts" shall not 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.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the undersigned have executed, or have caused to be
executed, this Agreement on the date first written above.
COMCAST CABLE
COMMUNICATIONS HOLDINGS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. Pick
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. Pick
Title: SVP
MOC HOLDCO II, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
TWE HOLDINGS II TRUST
By: /s/ ▇▇▇▇▇ ▇. Holiday
-----------------------------------
Name: ▇▇▇▇▇ ▇. Holiday, solely in
her capacity as Operating Trustee
CABLE HOLDCO INC.
By: /s/ ▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
Title: EVP, Investments
TIME WARNER CABLE INC.
By: /s/ ▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
Title: EVP, Investments
95
Solely for purposes of Section 2.3:
COMCAST CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. Pick
----------------------------------
Name: ▇▇▇▇▇▇ ▇. Pick
Title: SVP
Solely for purposes of Section 2.1(b)(iv):
TWE HOLDINGS I TRUST
By: /s/ ▇▇▇▇▇ ▇. Holiday
----------------------------------
Name: ▇▇▇▇▇ ▇. Holiday, solely in
her capacity as Operating Trustee