Master Transaction Agreement - Time Warner Entertainment - Advance/Newhouse Partnership, Time Warner Entertainment Co. LP, Paragon Communications and Advance/Newhouse Partnership
EXECUTIION COPY
MASTER TRANSACTION AGREEMENT
by and among
Time Warner Entertainment - Advance/Newhouse Partnership,
Time Warner Entertainment Company, L.P.,
Paragon Communications
and
Advance/Newhouse Partnership
Dated as of August 1, 2002
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS.........................................................1
1.1. Advance/Newhouse...........................................................1
1.2. Advance/Newhouse Group ....................................................1
1.3. Affiliate..................................................................1
1.4. Agreement..................................................................1
1.5. Amended and Restated Indemnity Agreement ..................................2
1.6. A/N Parties ...............................................................2
1.7. ATW .......................................................................2
1.8. Closing ...................................................................2
1.9. Closing Contribution ......................................................2
1.10. Closing Date...............................................................2
1.11. Contract...................................................................2
1.12. Contribution ..............................................................2
1.13. Contribution Agreement ....................................................2
1.14. Debt Assumption Agreement..................................................2
1.15. Delayed Transfer Assets ...................................................2
1.16. Effective Date ............................................................2
1.17. Effective Time ............................................................2
1.18. Employee Matters Agreement.................................................2
1.19. Franchise .................................................................2
1.20. Franchising Authority .....................................................2
1.21. Governmental Authority.....................................................2
1.22. Guarantee Agreement .......................................................3
1.23. Indemnity Agreement .......................................................3
1.24. Insurance Policies ........................................................3
1.25. Insurance Proceeds ........................................................3
1.26. Intellectual Property Agreement............................................3
1.27. Law........................................................................3
1.28. Letter Agreement ..........................................................3
1.29. Management Agreement ......................................................3
1.30. Original Partnership Agreement.............................................3
1.31. Paragon....................................................................3
1.32. Parties ...................................................................3
1.33. Partnership Agreement .....................................................3
1.34. Person.....................................................................4
1.35. Refinancing Arrangements ..................................................4
1.36. Residual Business .........................................................4
1.37. Road Runner ...............................................................4
1.38. Road Runner Affiliation Agreement .........................................4
1.39. Road Runner Letter Agreement...............................................4
1.40. Second Amended and Restated Partnership Agreement .........................4
1.41. Selected Business .........................................................4
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1.42. Selected Pool .............................................................4
1.43. Selected Subsidiary .......................................................5
1.44. Selection Date ............................................................5
1.45. Services Agreement ........................................................5
1.46. Subsidiary.................................................................5
1.47. System.....................................................................5
1.48. Third Amended and Restated Partnership Agreement ..........................5
1.49. Transaction Agreements.....................................................5
1.50. Transactions...............................................................5
1.51. TWE........................................................................5
1.52. TWE Parties ...............................................................5
1.53. TWEAN .....................................................................5
1.54. TWE Group .................................................................5
ARTICLE II THE EFFECTIVE DATE..................................................6
2.1. Second Amended and Restated Partnership Agreement..........................6
2.2. Guarantee Agreement........................................................6
2.3. Indemnity Agreement........................................................6
ARTICLE III THE DEBT CLOSING....................................................6
3.1. Refinancing................................................................6
3.2. Payments Being Made by Advance/Newhouse....................................6
3.3. Payments Being Made by TWE and to Paragon..................................9
3.4. Services Agreement........................................................10
3.5. Employee Matters Agreement................................................10
3.6. Third Amended and Restated Partnership Agreement..........................10
3.7. Intellectual Property Agreement...........................................11
3.8. Termination of Advance/Newhouse's Participation in Road Runner and TCP....11
3.9. Mutual Resolution of Claims...............................................11
ARTICLE IV THE CLOSING DATE...................................................12
4.1. Closing...................................................................12
4.2. Conditions to Closing.....................................................12
4.3. Closing Deliveries........................................................13
ARTICLE V COVENANTS AND OTHER MATTERS........................................13
5.1. Closing Efforts...........................................................13
5.2. FCC and Franchise Approvals and Other Material Third-Party Consents.......13
5.3. Regulatory Compliance.....................................................14
5.4. Further Assurances........................................................14
5.5. Disclaimer of Representations and Warranties..............................14
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ARTICLE VI MISCELLANEOUS......................................................15
6.1. Counterparts; Entire Agreement............................................15
6.2. Governing Law.............................................................15
6.3. Assignability.............................................................15
6.4. Third Party Beneficiaries.................................................15
6.5. Notices...................................................................16
6.6. Severability..............................................................17
6.7. Expenses..................................................................17
6.8. Headings..................................................................17
6.9. Waivers of Default........................................................17
6.10. Specific Performance......................................................17
6.11. Amendments................................................................18
6.12. Interpretation............................................................18
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EXHIBITS:
Exhibit A: Second Amended and Restated Partnership Agreement
Exhibit B: Guarantee Agreement
Exhibit C: Indemnity Agreement
Exhibit D: Debt Assumption Agreement
Exhibit E: Terms of Services Agreement
Exhibit F: Employee Matters Terms
Exhibit G: Intellectual Property Agreement
Exhibit H: Form of Contribution Agreement
Exhibit I: Form of Amended and Restated Indemnity Agreement
Exhibit J: Form of Management Agreement
Schedule 1 Terminated Agreements
Illustration A Illustration of Assumed Debt
Annex A Description of Selected Pool
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MASTER TRANSACTION AGREEMENT
THIS MASTER TRANSACTION AGREEMENT, dated as of August 1, 2002, is by and
among Time Warner Entertainment - Advance/Newhouse Partnership, a New York
general partnership ("TWEAN"), Time Warner Entertainment Company, L.P., a
Delaware limited partnership and general partner of TWEAN ("TWE"), Paragon
Communications, a Colorado general partnership and general partner of TWEAN
("Paragon"), and Advance/Newhouse Partnership, a New York general partnership
and a general partner of TWEAN ("Advance/Newhouse"). Capitalized terms used
herein and not otherwise defined herein shall have the respective meanings
assigned to them in Article I.
WHEREAS, TWE, Paragon and Advance/Newhouse are party to the Amended and
Restated Partnership Agreement of TWEAN, dated as of February 1, 2001, as
amended by the First Amendment thereto, dated as of March 2, 2001 (the "Original
Partnership Agreement");
WHEREAS, on June 24, 2002 TWE, Paragon and Advance/Newhouse entered into a
letter agreement (including all exhibits, attachments and illustrations thereto,
the "Letter Agreement"), which provides for, among other things, a restructuring
of TWEAN; and
WHEREAS, in accordance with the Letter Agreement, except as otherwise
contemplated herein, the parties desire to set forth definitive agreements
providing for the transactions contemplated in the Letter Agreement.
NOW, THEREFORE, the parties hereto, intending to be legally bound, agree as
follows:
ARTICLE I
DEFINITIONS
For the purpose of this Agreement the following terms shall have the
following meanings:
1.1. Advance/Newhouse has the meaning set forth in the Preamble.
1.2. Advance/Newhouse Group means Advance/Newhouse and each of its
Affiliates, which, for the avoidance of doubt, shall include the Selected
Business but shall not include TWEAN.
1.3. Affiliate has the meaning ascribed thereto in the Partnership
Agreement.
1.4. Agreement means this Master Transaction Agreement, including all of
the Schedules, Annexes and Exhibits hereto.
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1.5. Amended and Restated Indemnity Agreement has the meaning set forth in
Section 4.3 hereto.
1.6. A/N Parties has the meaning set forth in Section 3.9 hereto.
1.7. ATW means AOL Time Warner Inc.
1.8. Closing has the meaning set forth in Section 4.1 hereto.
1.9. Closing Contribution means the Contribution described in clause (ii)
of the definition of such term.
1.10. Closing Date has the meaning set forth in Section 4.1 hereto.
1.11. Contract means any contract, lease, agreement, covenant, indenture,
note, security, instrument, arrangement, commitment or any other binding
understanding, whether written or oral.
1.12. Contribution means one or more of the following (as applicable): (i)
the conversion of Advance/Newhouse's Prior Partnership Units (as defined in and
contemplated by the Partnership Agreement), (ii) the contributions of the
Selected Business to the Selected Subsidiary pursuant to the Contribution
Agreement and the other Transaction Agreements and (iii) the distribution of the
Selected Business to Advance/Newhouse pursuant to Section 8.1 of the Partnership
Agreement.
1.13. Contribution Agreement has the meaning set forth in Section 4.3
hereto.
1.14. Debt Assumption Agreement has the meaning set forth in Section 3.2.
1.15. Delayed Transfer Assets has the meaning ascribed such term in the
Contribution Agreement.
1.16. Effective Date means the date hereof.
1.17. Effective Time means 12:01 a.m.on the Effective Date.
1.18. Employee Matters Agreement has the meaning set forth in Section 3.5
hereto.
1.19. Franchise means written "franchise" within the meaning of Section
602(8) of the Cable Communications Policy Act of 1984 (47 U.S.C. 'SS' 522(9)).
1.20. Franchising Authority has the meaning that term is given by Section
602(9) of the Cable Communications Policy Act of 1984 (47 U.S.C. 'SS' 522(10)).
1.21. Governmental Authority means any supranational, national, state,
municipal or local government, political subdivision or other governmental
department,
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court, commission, board, bureau, agency, instrumentality, or other authority
thereof, or any quasi-governmental or private body exercising any regulatory,
taxing, importing or other governmental or quasi-governmental authority, whether
domestic or foreign.
1.22. Guarantee Agreement has the meaning set forth in Section 2.2 hereto.
1.23. Indemnity Agreement has the meaning set forth in Section 2.3 hereto.
1.24. Insurance Policies means the insurance policies written by insurance
carriers under which TWEAN or any of its Affiliates (or such Person's officers)
is an insured party.
1.25. Insurance Proceeds means those monies:
(a) received by an insured from an insurance carrier; or
(b) paid by an insurance carrier on behalf of an insured;
in any such case net of any premium adjustments specifically relating to
the Insurance Policy under which the Insurance Proceeds are paid and only to the
extent directly attributable to those Insurance Proceeds.
1.26. Intellectual Property Agreement has the meaning set forth in Section
3.7 hereto.
1.27. Law means any foreign or domestic law, statute, code, ordinance,
rule, regulation, treaty, judicial decision, order, judgment, writ, stipulation,
award, injunction or decree enacted, entered or promulgated by a Governmental
Authority.
1.28. Letter Agreement has the meaning set forth in the Recitals.
1.29. Management Agreement has the meaning set forth in Section 4.3 hereto.
1.30. Original Partnership Agreement has the meaning set forth in the
Recitals.
1.31. Paragon has the meaning set forth in the Preamble.
1.32. Parties means TWE, TWEAN, Paragon and Advance/Newhouse.
1.33. Partnership Agreement means the Second Amended and Restated
Partnership Agreement until Closing and thereafter means the Third Amended and
Restated Partnership Agreement.
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1.34. Person means an individual, a general or limited partnership, a
corporation, a trust, a joint venture, an unincorporated organization, a limited
liability company, a Governmental Authority or any other entity.
1.35. Refinancing Arrangements has the meaning set forth in Section 3.1
hereto.
1.36. Residual Business means TWEAN and all of the businesses, assets and
liabilities of TWEAN (whether conducted or owned itself or through direct or
indirect divisions, Subsidiaries, joint ventures or other investments),
including, without limitation all of the assets and liabilities of TWEAN under
the Transaction Agreements, or any of their predecessors or successors, other
than the Selected Business (including, without limitation, any assets or
liabilities of the Selected Business under the Transaction Agreements). For the
avoidance of doubt, references to actions taken by, or to be taken by, the
Residual Business shall mean that TWEAN will take such action solely on behalf
of and with respect to the Residual Business.
1.37. Road Runner has the meaning set forth in Section 3.8 hereto.
1.38. Road Runner Affiliation Agreement has the meaning set forth in
Section 3.8 hereto.
1.39. Road Runner Letter Agreement has the meaning set forth in Section 3.2
hereof.
1.40. Second Amended and Restated Partnership Agreement has the meaning set
forth in Section 2.1 hereto.
1.41. Selected Business means (a) prior to the Closing, the Selected Pool
and the assets and liabilities of the Selected Business under the Refinancing
Arrangements and the Transaction Agreements, (b) on or following the Closing,
the Selected Subsidiary and all of the businesses, assets and liabilities
granted or contributed to, or otherwise assumed, by the Selected Subsidiary and
the A/N Group pursuant to the Refinancing Arrangements and the Transaction
Agreements, and including the Delayed Transfer Assets and the Free Cash Flow
therefrom, if any, and (c) in the case of either clause (a) and (b), including
any Assets (including cash) generated by the Selected Pool on or after the
Effective Date, subject to any Liabilities incurred by the Selected Pool on or
after the Effective Date. For the avoidance of doubt, references to actions
taken by, or to be taken by, the Selected Business shall mean, prior to the
Closing Date, that TWEAN or Advance/Newhouse will take such action solely on
behalf of and with respect to the Selected Business as provided in the
Partnership Agreement and, after the Closing Date, that the Selected Subsidiary
will take such action on behalf of itself and any Delayed Transfer Assets.
Following the Closing, references to the Selected Business shall be deemed to be
references to the Selected Subsidiary and the Delayed Transfer Assets, including
Free Cash Flow therefrom, if any.
1.42. Selected Pool has the meaning ascribed such term in Annex A hereto.
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1.43. Selected Subsidiary means TWEAN Subsidiary, LLC, a Delaware limited
liability company of which TWEAN is the sole member, which shall be deemed to
include any "Delayed Transfer Assets" held by TWEAN for the benefit of TWEAN
Subsidiary, LLC, and any Free Cash Flow therefrom, pursuant to the Contribution
Agreement.
1.44. Selection Date means June 24, 2002.
1.45. Services Agreement has the meaning set forth in Section 3.4 hereto.
1.46. Subsidiary of any Person means any corporation or other organization,
whether incorporated or unincorporated, of which at least a majority of the
equity securities or interests having by the terms thereof ordinary voting power
to elect at least a majority of the board of directors or others performing
similar functions with respect to such corporation or other organization is
directly or indirectly, owned or controlled by such Person or by any one or more
of its Subsidiaries, or by such Person and one or more of its Subsidiaries;
provided, however, that no Person that is not directly or indirectly wholly
owned by any other Person shall be a Subsidiary of such other Person unless such
other Person controls, or has the right, power or ability to control, that
Person.
1.47. System means a "cable television system" within the meaning of
Section 602(7) of the Communications Act of 1934, as amended.
1.48. Third Amended and Restated Partnership Agreement has the meaning set
forth in Section 3.6 hereto.
1.49. Transaction Agreements means this Agreement, the Partnership
Agreement, the Guarantee Agreement, the Indemnity Agreement, the Debt Assumption
Agreement, the Services Agreement, the Contribution Agreement, the Employee
Matters Agreement, the Intellectual Property Agreement, the Management Agreement
and the Amended and Restated Indemnity Agreement, and all other agreements and
instruments delivered in connection therewith.
1.50. Transactions means the transactions contemplated to be consummated by
the Transaction Agreements.
1.51. TWE has the meaning set forth in the Preamble.
1.52. TWE Parties has the meaning set forth in Section 3.9 hereto.
1.53. TWEAN has the meaning set forth in the Preamble.
1.54. TWE Group means TWE and each of its Affiliates, which, for the
avoidance of doubt, shall include TWEAN but shall not include the Selected
Business.
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ARTICLE II
THE EFFECTIVE DATE
2.1. Second Amended and Restated Partnership Agreement. Concurrently with
the execution hereof, each of TWE and Paragon has duly executed and delivered to
Advance/Newhouse, and Advance/Newhouse has duly executed and delivered to TWE
and Paragon, the Second Amended and Restated Partnership Agreement attached
hereto as Exhibit A (the "Second Amended and Restated Partnership Agreement").
2.2. Guarantee Agreement. Concurrently with the execution hereof, Newhouse
Programming Holdings Corp., Advance Publications, Inc. and Newhouse Broadcasting
Corporation have each duly executed and delivered to TWE the Guarantee Agreement
attached hereto as Exhibit B (the "Guarantee Agreement").
2.3. Indemnity Agreement. Concurrently with the execution hereof, each of
the Selected Business and Advance/Newhouse has duly executed and delivered to
TWE, and the Residual Business and TWE has duly executed and delivered to
Advance/Newhouse, the Indemnity Agreement attached hereto as Exhibit C (the
"Indemnity Agreement").
ARTICLE III
THE DEBT CLOSING
3.1. Refinancing. Concurrently with the execution hereof, the
Advance/Newhouse Group is consummating its own stand-alone financings under one
or more credit arrangements secured by the Selected Subsidiary and the
Advance/Newhouse Group's rights in respect of the Selected Business (the
"Refinancing Arrangements").
3.2. Payments Being Made by Advance/Newhouse
(a) Prior to or concurrently with the execution hereof, Advance/Newhouse
shall pay cash to TWEAN (exclusively for the benefit of the Residual Business)
by wire transfer of immediately available funds to an account previously
designated by TWE: (i) an amount equal to $7,790,000, as payment for a tax
contribution required of Advance/Newhouse in accordance with the Original
Partnership Agreement for periods ending on or prior to the Effective Date; and
(ii) an amount equal to the Unpaid Contribution Amounts (as defined below) in
full satisfaction and discharge of its obligations ("Contribution Obligations)
to pay the Second Advance/Newhouse Contribution Amount and the Fourth
Advance/Newhouse Contribution Amount under and as defined in the Original
Partnership Agreement. For purposes hereof "Unpaid Contribution Amounts" equals
the sum of all accrued and unpaid principal and interest up to and including the
Effective Date under the following promissory notes issued to secure such
Contribution Obligations:
(A) the promissory note in the aggregate principal amount of $15,042,000 in
favor of TWEAN by Advance/Newhouse dated December 31, 1998; and
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(B) the promissory note in the aggregate principal amount of $13,573,626 in
favor of TWEAN by Advance/Newhouse dated February 1, 2001.
Upon such payment of the Unpaid Contribution Amounts, such promissory notes
shall be canceled.
(b) Concurrently with the execution hereof, Advance/Newhouse has executed
and delivered to TWEAN the Instrument of Debt Assumption attached hereto as
Exhibit D (the "Debt Assumption Agreement"), pursuant to which it is assuming
$777,511,000 principal amount of TWEAN's senior bank debt (such assumed debt,
the "Assumed Debt").
(c) On the date hereof, immediately after assuming the Assumed Debt as
provided in clause (b) of this Section 3.2, Advance/Newhouse shall satisfy and
fully discharge all of the Assumed Debt by wiring cash in immediately available
funds to the bank account as specified in the Debt Assumption Agreement.
(d) Within 60 days following the Effective Date, TWE shall deliver a notice
(the "Debt Notice") to Advance/Newhouse setting forth the actual amount (the
"Actual Assumption Amount"), together with the calculations thereof, of the sum
of the following:
(i) one-third of TWEAN's Net Debt (as defined below); plus
(ii) $190 million; plus
(iii) 33-1/3% multiplied by the sum of (I) the aggregate Priority
Return accrued and unpaid as of the Effective Date with respect to the
Series A Preferred Partnership Units, the Series B Preferred Partnership
Units and the Series C Preferred Partnership Units, respectively, held by
Paragon and TWE and (II) the aggregate number of Series A Preferred
Partnership Units, the Series B Preferred Partnership Units and the Series
C Preferred Partnership Units, respectively, held by Paragon and TWE
multiplied by $1000; minus
(iv) $51.5 million; minus
(v) interest accrued on the amount set forth in clause (iv) of this
Section 3.2(d) each applicable date the Partnership funded the indemnified
obligations referenced in Sections 8 and 9 of that certain letter
agreement, dated September 6, 2000, between Advance/Newhouse, TWE and TWEAN
(the "Road Runner Letter Agreement") to, and including, the Effective Date
at a rate equal to the rate charged by TWEAN's senior bank lenders on the
Effective Date, or, if TWEAN has no senior bank debt on the Effective Date,
at a rate equal to the rate charged by ATW's senior bank lenders on the
Effective Date.
At the request of Advance/Newhouse, TWE shall provide Advance/Newhouse with
prompt and complete access to all working papers and relevant supporting
documentation, as well as appropriate TWE Cable Division personnel, in each
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case reasonably necessary in connection with Advance/Newhouse's review of the
information set forth in the Debt Notice. If Advance/Newhouse concludes that
such notice is not accurate, then Advance/Newhouse may, within 60 days of
receipt of the Debt Notice, furnish TWE with a written statement of any
discrepancy or discrepancies believed to exist (it being understood for the
avoidance of doubt no discrepancy may exist with respect to the amount in clause
(ii) or (iv) in Section 3.2(d) (the "Debt Discrepancy Statement").
Advance/Newhouse and TWE shall attempt to jointly resolve any discrepancy set
forth in the Debt Discrepancy Statement within 30 days after receipt thereof,
which resolution, if achieved shall be final and binding upon the parties and
not subject to dispute or review. If they cannot resolve the discrepancy to
their mutual satisfaction within such 30-day period, Advance/Newhouse and TWE
shall within 10 days following the expiration of such 30-day period, jointly
designate a nationally known independent certified public accounting firm to
review the Debt Notice, together with the Debt Discrepancy Statement, and any
other relevant documents. If Advance/Newhouse and TWE do not agree upon such
firm within such 10-day period, then such review shall be performed by a
nationally known independent certified public accounting firm selected by two
other nationally known independent certified public accounting firms, one
selected by TWE and one selected by Advance/Newhouse; provided that if one party
fails to notify the other party of its selection within five days of receipt
from the other party of its selection, the firm selected by the other party
shall perform such review. The cost of retaining such firm shall be borne
one-half by Advance/Newhouse and one-half by TWE. Such firm shall report its
conclusion as to the Actual Assumption Amount, which shall be binding on the
parties hereto and not subject to review or dispute. The Actual Assumption
Amount shall be adjusted, if necessary, to reflect any such resolution.
(e) As used in clause (d) of this Section 3.2, and as illustrated in the
attached Illustration A (it being understood the numbers used therein are
hypothetical), the term "Net Debt" shall mean an amount equal to the sum of:
(i) all debt of TWEAN as of the Effective Date, including, without
limitation, all accrued and unpaid principal and interest accrued under
that certain promissory note, dated as of November 1, 2001, issued by TWEAN
in favor of Time Warner Inc.; minus
(ii) all accrued and unpaid principal, interest and return as of the
Effective Date in respect of the promissory note(s) and the preferred
interests in Road Runner that were assets of TWEAN as of the Effective Date
and which were issued in satisfaction of the funding of liabilities
described in Section 8 of the Road Runner Letter Agreement; minus
(iii) all cash and cash equivalents of TWEAN as of the Effective Date,
taking into account all cash received or disbursed in connection with
payments made pursuant to Section 3.2(a) and Section 3.3 hereof, but
excluding (in each case to the extent arising from, or principally related
to, any Systems of TWEAN in the Selected Business or the Residual Business)
the cash receipts of (x) all refunds received by TWEAN on or after the
Selection Date with respect to State, Local and Other Taxes (as defined in
Annex A hereto) paid after the
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Selection Date, (y) all Insurance Proceeds received by TWEAN on or after
the Selection Date under Insurance Policies existing as of the Selection
Date to the extent received as a result of a casualty or loss occurring
after the Selection Date and (z) all cash deposits under TWEAN's
subscriber, utility, pole rental or similar agreements (the total amount
described in this clause (iii), the "Cash Amount"); minus
(iv) the amount in excess of $4.5 million, if any, paid in cash prior
to the Effective Date by TWEAN in accordance with Section 3.1(h)(vii) of
the Partnership Agreement for the costs, fees and expenses for financings
(including refinancings of ATW's senior bank debt) consummated after the
Selection Date but on or prior to the Effective Date.
(f) On the third business day following final resolution of any discrepancy
as provided in above, or if no such discrepancy exists, following expiration of
the period in which Advance/Newhouse was permitted to deliver a Debt Discrepancy
Statement, (a) if the Actual Assumption Amount is greater than the amount of the
Assumed Debt, then Advance/Newhouse shall assume additional TWEAN debt selected
by TWE in an amount equal to such excess (plus interest thereon calculated from
the Effective Date at a rate equal to the rate charged by TWEAN's senior bank
lenders on the Effective Date, or, if TWEAN has no senior bank debt on the
Effective Date, at a rate equal to the rate charged by ATW's senior bank lenders
on the Effective Date) (which shall be considered Assumed Debt for purposes of
the Transaction Agreements), shall immediately satisfy and fully discharge such
additional Assumed Debt and shall execute and deliver to TWEAN a Debt Assumption
Agreement with respect thereto or (b) if the Actual Assumption Amount is less
than the amount of the Assumed Debt, then TWEAN shall pay cash to
Advance/Newhouse in an amount equal to such deficiency (plus interest thereon
calculated from the Effective Date at a rate equal to the rate charged by
TWEAN's senior bank lenders on the Effective Date, or, if TWEAN has no senior
bank debt on the Effective Date, at a rate equal to the rate charged by ATW's
senior bank lenders on the Effective Date).
3.3. Payments Being Made by TWE and to Paragon.
(a) Prior to or concurrently with the execution hereof, TWE shall pay cash
to TWEAN (exclusively for the benefit of the Residual Business) by wire transfer
of immediately available funds to an account previously designated by TWEAN in
an amount equal to the sum of all accrued and unpaid principal and interest up
to and including the Effective Date under the promissory note, dated December
31, 1998, issued by TWE to TWEAN, in the aggregate principal amount of
$352,381,133 as of July 31, 2002, in complete satisfaction and discharge of such
note and obligations.
(b) Prior to or concurrently with the execution hereof, TWE shall pay cash
to TWEAN (exclusively for the benefit of the Residual Business) by wire transfer
of immediately available funds to an account previously designated by TWE in an
amount equal to $13,070,000, as payment for a tax contribution required of TWE
in accordance
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with the Original Partnership Agreement for periods ending on or prior to the
Effective Date.
(c) Prior to or concurrently with the execution hereof, TWEAN shall pay
cash to Paragon by wire transfer of immediately available funds to an account
previously designated by Paragon in an amount equal to $4,560,000, as payment
for a tax distribution to Paragon in accordance with the Original Partnership
Agreement for periods ending on or prior to the Effective Date.
3.4. Services Agreement. Concurrently with the execution hereof, the
Selected Business, Advance/Newhouse and TWE will begin to comply with the terms
described on Exhibit E hereto. The parties agree to use good faith efforts prior
to Closing to negotiate definitive documentation by the Closing with respect to
such binding terms (such binding terms or, to the extent superseded by such
documentation, such definitive documentation being referred to herein as the
"Services Agreement"). The Parties expressly agree that Exhibit E constitutes a
binding agreement among them unless and until definitive documentation
superseding such terms is executed and delivered by the Parties, and if such
definitive documentation is not executed and delivered with respect to Exhibit E
by the Closing, then Exhibit E shall continue to constitute a binding agreement
among the Parties with respect to such matters unless and until such definitive
documentation is executed and delivered by them.
3.5. Employee Matters Agreement. The terms set forth on Exhibit F hereto
(the "Employee Matters Terms") became binding on the parties on the Selection
Date and shall continue to be binding on the parties. The parties agree to use
good faith efforts prior to Closing to negotiate definitive documentation by the
Closing with respect to the Employee Matters Terms (such binding terms or, to
the extent superseded by such documentation, such documentation being referred
to as the "Employee Matters Agreement"). The Parties expressly agree that the
Employee Matters Terms constitute a binding agreement among them unless and
until definitive documentation superceding such terms is executed and delivered
by the Parties, and if such definitive documentation is not executed and
delivered with respect to the Employee Matters Terms by the Closing, then the
Employee Matters Terms shall continue to constitute a binding agreement among
the Parties with respect to such matters unless and until such definitive
documentation is executed and delivered by them.
3.6. Third Amended and Restated Partnership Agreement. The parties agree to
use good faith efforts prior to Closing to negotiate definitive documentation
providing for a Third Amended and Restated Partnership Agreement reflecting the
modifications attributed to "Amendment #2" as contemplated by the Letter
Agreement (the Second Amended and Restated Partnership Agreement or, to the
extent superseded by such documentation, such documentation being referred to as
the "Third Amended and Restated Partnership Agreement"). The Parties expressly
agree that the Second Amended and Restated Partnership Agreement constitutes a
binding agreement among them unless and until definitive documentation
superceding such terms is executed and delivered by the Parties, and if such
definitive documentation is not executed and delivered with respect to the
Second Amended and Restated Partnership
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Agreement by the Closing, then the Second Amended and Restated Partnership
Agreement shall continue to constitute a binding agreement among the Parties
with respect to such matters unless and until such definitive documentation is
executed and delivered by them.
3.7. Intellectual Property Agreement. Concurrently with the execution
hereof, TWE has duly executed and delivered to the Selected Business and
Advance/Newhouse and the Selected Business and Advance/Newhouse have duly
executed and delivered to TWE, the Intellectual Property Agreement attached
hereto as Exhibit G (the "Intellectual Property Agreement").
3.8. Termination of Advance/Newhouse's Participation in Road Runner and
TCP. As of the Effective Time, all of the Advance/Newhouse Group's right, title
and interest (whether equity or debt and whether held directly or indirectly,
including through TWEAN) and obligations in and to Road Runner HoldCo LLC, a
Delaware limited liability company, or any of its Subsidiaries (collectively,
"Road Runner") or Texas Cable Partners, L.P., a Delaware limited partnership, or
any of its Subsidiaries (collectively, "TCP"), or any of their respective Assets
(as such term is defined on Annex A hereto including, without limitation, (a)
any rights to the "Road Runner" name, trademarks, e-mail domain address or other
intellectual property owned or used by Road Runner or TCP and (b) any rights
with respect to Road Runner or TCP arising out of or granted by any Contract,
including, without limitation, under the Amended and Restated Operating
Agreement of Road Runner, dated as of May 1, 2001, as amended; under the Road
Runner Letter Agreement; and under that certain letter agreement, dated as of
May 1, 2001, from Time Warner Cable and TWEAN to Advance/Newhouse; under the
Agreement dated as of June 23, 1998 among Time Warner Inc., MediaOne Group Inc.,
TWE, Advance/Newhouse and TWEAN; shall cease and be of no further force or
effect; provided, however, that the Master Affiliation Agreement, dated as of
May 1, 2001, between Road Runner and Time Warner Cable, a Division of TWE, as
amended (the "Road Runner Affiliation Agreement"), shall remain in full force
and effect, including with respect to the Systems comprising the Selected
Business, subject to the applicable terms and conditions set forth in the
Services Agreement. For the avoidance of doubt, all of TWEAN's right, title and
interest (whether equity or debt and whether held directly or indirectly) in
Road Runner and TCP shall continue to be held by the Residual Business.
3.9. Mutual Resolution of Claims.
Effective at Effective Time, TWEAN, TWE, Paragon, the Residual Business, on
their own behalf and on behalf of each of their respective directors, officers,
employees, partners, successors and assigns (collectively, the "TWE Parties") do
hereby release and forever discharge Advance/Newhouse, its Affiliates, the
Selected Business, each of their respective directors, officers, employees,
partners, successors and assigns (collectively, the "A/N Parties"), and the A/N
Parties do hereby release and forever discharge the TWE Parties, from any and
all manner of action or actions, cause and causes of action, suits, debts, sums
of money, accounts, covenants, contracts, controversies, agreements, promises,
damages, judgments, executions, claims and
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demands, in law or equity, any such releasing party has had, now has, or
hereafter can, shall or may have, against any such released party, or any of
them, for, by reason of, based upon, related to, in respect of, or arising out
of (i) Restructuring Indebtedness as defined in the Original Partnership
Agreement (other than the amounts described in Section 3.2(d)(iii) above); (ii)
Excess Tax Amount Indebtedness, as defined in the Original Partnership
Agreement; (iii) other than with respect to the rights of Advance/Newhouse under
the provision identified in the following proviso, any "true-up" right of
Advance/Newhouse regarding affiliated transaction under the Original Partnership
Agreement or otherwise; (iv) Section 3.4 of the Original Partnership Agreement
(except as contemplated in Exhibit E under the heading "New Affiliated
Programming"); (v) Section 8.6 of the Original Partnership Agreement; (vi) any
"Value Diminution" provisions in Section 8.1, 8.2 or 8.3 of the Original
Partnership Agreement; (vii) true-up claims existing as of the Selection Date;
(viii) any obligations of the A/N Parties in respect of employee stock option
reimbursements under Section 3.1(h)(i)(A)(3) or Section 3.1(h)(iii) of the
Original Partnership Agreement; (ix) any disputes regarding TCP cash; or (x) any
of the agreements described on Schedule 1 hereto.
ARTICLE IV
THE CLOSING DATE
4.1. Closing. The closing of the Closing Contribution (the "Closing") shall
take place at the offices Paul, Weiss, Rifkind, Wharton & Garrison, at 10:00
a.m. on the date (the "Closing Date") which is the last day of the month in
which the conditions set forth in clauses (a), (b), (c) and (d) of Section 4.2
are satisfied; provided, however, that if the condition set forth in clause (b)
is not satisfied by December 31, 2002, such condition shall be deemed waived
through no further action of the Parties; provided, that the Closing Date shall
not occur earlier than December 31, 2002.
4.2. Conditions to Closing. The respective obligation of each of the
Parties to consummate the Closing Contribution shall be subject to the
satisfaction as determined by, or waiver by, each of TWE and Advance/Newhouse,
of the following conditions:
(a) receipt of consents or waivers from the relevant Franchising
Authorities, Governmental Authorities or other third parties necessary to
transfer the direct or indirect ownership of Franchises for Systems serving at
least 70% of the total cable television subscribers of the Selected Business as
of the Effective Time;
(b) receipt of all material consents or material approvals of all Persons,
other than Governmental Authorities, required for or in connection with the
execution, delivery and performance of this Agreement and the consummation of
the Closing Contribution and the other transactions contemplated by this
Agreement;
(c) receipt of any required consents or waivers from the Federal
Communications Commission to transfer licenses granted by the Federal
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Communications Commission to Systems, divisions or other business units in the
Selected Business; and
(d) neither Advance/Newhouse nor TWE shall have effected a restructuring in
accordance with Section 8.1 of the Second Amended and Restated Partnership
Agreement.
4.3. Closing Deliveries.
(a) Contribution Agreement. At the Closing, TWEAN shall duly execute and
deliver to the Selected Subsidiary, and the Selected Subsidiary shall duly
execute and deliver to TWEAN, the Contribution Agreement substantially in the
form attached hereto as Exhibit H (the "Contribution Agreement"). The
Contribution Agreement shall become effective as of the Closing.
(b) Amended and Restated Indemnity Agreement. At the Closing, each of the
Selected Subsidiary and Advance/Newhouse shall duly execute and deliver to TWE,
and TWE shall duly execute and deliver to Advance/Newhouse and the Selected
Subsidiary, the Amended and Restated Indemnity Agreement substantially in the
form attached hereto as Exhibit I (the "Amended and Restated Indemnity
Agreement"), pursuant to which the Selected Subsidiary shall be added as an
additional indemnitor and indemnitee of the TWE Group, TWEAN shall be added as
an additional indemnitor and indemnitee of the Advance/Newhouse Group and the
Selected Business and Residual Business shall be removed as parties to the
Indemnity Agreement.
(c) Intellectual Property Agreement. At the Closing, the Selected
Subsidiary shall execute and deliver to TWE the Intellectual Property Agreement
and thereby assume all of the Selected Business' right and obligations
thereunder.
(d) Management Agreement. At the Closing, each of TWE, Paragon and TWEAN
shall duly execute and deliver to the Selected Subsidiary and Advance/Newhouse,
and the Selected Subsidiary and Advance/Newhouse shall duly execute and deliver
to TWE, Paragon and TWEAN, the Management Agreement substantially in the form
attached hereto as Exhibit J (the "Management Agreement"). The Management
Agreement shall become effective as of the Closing.
ARTICLE V
COVENANTS AND OTHER MATTERS
5.1. Closing Efforts. Each of the Parties shall cooperate and use its
commercially reasonable efforts to cause the Closing to occur as promptly as
practicable, including to fulfill or obtain the fulfillment of the conditions to
the Closing set forth in Section 4.2 hereof.
5.2. FCC and Franchise Approvals and Other Material Third-Party Consents.
Each of the Parties shall use its commercially reasonable efforts, to the extent
not previously obtained, to obtain (a) all consents or waivers from the relevant
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Franchising Authorities, Governmental Authorities or other third parties
necessary to transfer the direct or indirect ownership of Franchises for all
Systems in the Selected Business, (b) all material consents or material
approvals of all Persons, other than Governmental Authorities, required for or
in connection with the execution, delivery and performance of this Agreement and
the consummation of the Closing Contribution and the other transactions
contemplated by this Agreement and (c) any required consents or waivers from the
Federal Communications Commission to transfer licenses granted by the Federal
Communications Commission to Systems, divisions or other business units in the
Selected Business.
5.3. Regulatory Compliance. The Parties agree to effectuate this Agreement,
each of the Transaction Agreements and the transactions contemplated hereby and
thereby in compliance with all Franchising Authorities, the Federal
Communications Commission, other applicable Governmental Authorities and all
applicable Laws. The Parties agree to provide to the other Parties, upon
request, reasonable access to any books and records if such access if needed (i)
to comply with the reporting, disclosure, filing or other requirements imposed
on the requesting Party by a Governmental Authority having jurisdiction over the
requesting Party or (ii) for use in any other judicial, regulatory or tax
proceeding; provided that in the event that any Party determines that any such
provision of books and records could be commercially detrimental, violate any
Law or agreement, or waive any attorney-client privilege, the Parties shall take
all reasonable measures to permit the compliance with such obligations in a
manner that avoids any such harm or consequence
5.4. Further Assurances. In addition to the actions specifically provided
for elsewhere in this Agreement or the Transaction Agreements, but subject to
the provisions hereof and thereof, each of the parties hereto shall use its
commercially reasonable efforts prior to and following the Closing to take, or
cause to be taken, all actions, and to do, or cause to be done, all things,
reasonably necessary, proper or advisable under applicable Laws and agreements
to consummate and make effective the transactions contemplated by this Agreement
and the Transaction Agreements.
5.5. Disclaimer of Representations and Warranties. (A) EXCEPT AS EXPRESSLY
PROVIDED IN A TRANSACTION AGREEMENT, NEITHER TWEAN, ADVANCE/NEWHOUSE, TWE,
PARAGON NOR ANY OTHER PERSON MAKES ANY REPRESENTATION OR WARRANTY OF ANY KIND
WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE TRANSACTIONS
(INCLUDING ANY CONSENTS OR APPROVALS REQUIRED IN CONNECTION HEREWITH OR
THEREWITH) OR THE BUSINESS, ASSETS, CONDITION OR PROSPECTS (FINANCIAL OR
OTHERWISE) OF, OR ANY OTHER MATTER INVOLVING, THE ASSETS, BUSINESSES OR
LIABILITIES OF THE SELECTED BUSINESS, OR OF TWEAN, ADVANCE/NEWHOUSE, TWE,
PARAGON OR ANY OF ITS SUBSIDIARIES; (B) ALL OF THE ASSETS TO BE TRANSFERRED OR
THE LIABILITIES TO BE ASSUMED OR TRANSFERRED IN CONNECTION WITH EACH
CONTRIBUTION OR THE OTHER TRANSACTIONS SHALL BE ASSUMED OR TRANSFERRED ON AN "AS
IS, WHERE IS BASIS," AND ALL IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR
A SPECIFIC PURPOSE
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OR OTHERWISE ARE HEREBY EXPRESSLY DISCLAIMED, AND (C) NEITHER TWEAN,
ADVANCE/NEWHOUSE, TWE, PARAGON NOR ANY OTHER PERSON MAKES ANY REPRESENTATION OR
WARRANTY OF ANY KIND WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO ANY
INFORMATION, DOCUMENTS OR MATERIAL MADE AVAILABLE IN CONNECTION WITH A
CONTRIBUTION OR THE OTHER TRANSACTIONS.
ARTICLE VI
MISCELLANEOUS
6.1. Counterparts; Entire Agreement.
(a) This Agreement and each Transaction Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other party.
(b) This Agreement, the Transaction Agreements and the Exhibits, Schedules
and Appendices hereto and thereto contain the entire agreement between the
parties with respect to the subject matter hereof or thereof, supersede all
previous agreements (including, the Letter Agreement and all exhibits,
schedules, illustrations and attachments thereto), negotiations, discussions,
writings, understandings, commitments and conversations with respect to such
subject matter and there are no agreements or understandings between the parties
with respect to such subject matter other than those set forth or referred to
herein or therein.
6.2. Governing Law. This Agreement and, unless expressly provided therein,
each Transaction Agreement, shall be governed by and construed and interpreted
in accordance with the Laws of the State of New York, irrespective of the choice
of laws principles of the State of New York, as to all matters, including
matters of validity, construction, effect, enforceability, performance and
remedies.
6.3. Assignability. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns;
provided, however, that no party hereto or thereto may assign its respective
rights or delegate its respective obligations under this Agreement without the
express prior written consent of each of the other parties hereto or thereto.
6.4. Third Party Beneficiaries. Except as set forth in any Transaction
Agreement, (i) the provisions of this Agreement and each Transaction Agreement
are solely for the benefit of the parties and are not intended to confer upon
any Person except the parties any rights or remedies hereunder and (ii) there
are no third party beneficiaries of this Agreement or any Transaction Agreement
and neither this Agreement nor any Transaction Agreement shall provide any third
person with any remedy, claim, liability, reimbursement, claim of action or
other right in excess of those existing without reference to this Agreement or
any Transaction Agreement.
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6.5. Notices. All notices or other communications under this Agreement or
any Transaction Agreement shall be in writing and shall be deemed to be duly
given when (a) delivered in person or (b) deposited in the United States mail or
private express mail, postage prepaid, addressed as follows:
If to TWE, Paragon or TWEAN:
----------------------------
75 Rockefeller Plaza,
New York, NY
10019
Attention: General Counsel
with a copy to:
290 Harbor Drive
Stamford, CT
06902
Attention: General Counsel
and:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, NY, 10019
Facsimile: (212) 757-3990
Attention: Robert B. Schumer
Kelley D. Parker
If to Advance/Newhouse:
-----------------------
6005 Fair Lakes Road
East Syracuse, New York
13057
Attention: Robert J. Miron
with a copy to
Sabin, Bermant & Gould LLP
Four Times Square
New York, NY, 10036
Facsimile: (212) 381-7218
Attention: Arthur J. Steinhauer
and
Dow, Lohnes & Albertson
1200 New Hampshire Avenue NW, Suite 800
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Washington, DC, 20036
Facsimile: (202) 776-2222
Attention: John Byrnes
Any party may, by notice to the other party, change the address to which
such notices are to be given.
6.6. Severability. If any provision of this Agreement or any Transaction
Agreement or the application thereof to any Person or circumstance is determined
by a court of competent jurisdiction to be invalid, void or unenforceable, the
remaining provisions hereof or thereof, or the application of such provision to
Persons or circumstances or in jurisdictions other than those as to which it has
been held invalid or unenforceable, shall remain in full force and effect and
shall in no way be affected, impaired or invalidated thereby, so long as the
economic and legal substance of the transactions contemplated hereby or thereby,
as the case may be, is not affected in any manner materially adverse to any
party. Upon such determination, the parties shall negotiate in good faith in an
effort to agree upon such a suitable and equitable provision to effect the
original intent of the parties.
6.7. Expenses. Except as expressly otherwise provided in this Agreement or
any Transaction Agreement, TWE, Paragon, TWEAN and Advance/Newhouse shall each
bear its own costs and expenses (including legal, accounting and broker fees and
expenses) incurred in connection with this Agreement, the Transaction Agreements
and the transactions contemplated hereby or thereby.
6.8. Headings. The Article, Section and paragraph headings contained in
this Agreement and in the Transaction Agreements are for reference purposes only
and shall not affect in any way the meaning or interpretation of this Agreement
or any Transaction Agreement.
6.9. Waivers of Default. Waiver by any party of any default by the other
party of any provision of this Agreement or any Transaction Agreement shall not
be deemed a waiver by the waiving party of any subsequent or other default, nor
shall it prejudice the rights of the other party.
6.10. Specific Performance. In the event of any actual or threatened
default in, or breach of, any of the terms, conditions and provisions of this
Agreement or any Transaction Agreement, the party or parties who are or are to
be thereby aggrieved shall have the right to specific performance and injunctive
or other equitable relief of its rights under this Agreement or such Transaction
Agreement, in addition to any and all other rights and remedies at Law or in
equity, and all such rights and remedies shall be cumulative. The parties agree
that the remedies at Law for any breach or threatened breach, including monetary
damages, are inadequate compensation for any loss and that any defense in any
action for specific performance that a remedy at Law would be adequate is
waived. Any requirements for the securing or posting of any bond with such
remedy are waived.
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6.11. Amendments. No provisions of this Agreement or any Transaction
Agreement shall be deemed waived, amended, supplemented or modified by any
party, unless such waiver, amendment, supplement or modification is in writing
and signed by the authorized representative of the party against whom such
waiver, amendment, supplement or modification it is sought to be enforced.
6.12. Interpretation. In this Agreement, unless otherwise specified or
where the context otherwise requires:
(a) a reference to a Recital is to the relevant Recital to this Agreement,
to a Section is to the relevant Section of this Agreement and to an Exhibit is
to the relevant Exhibit to this Agreement;
(b) words importing any gender shall include other genders;
(c) words importing the singular only shall include the plural and vice
versa;
(d) the words "include", "includes" or "including" shall be deemed to be
followed by the words "without limitation";
(e) the words "hereof", "herein", "hereunder" and "herewith" and words of
similar import shall, unless otherwise stated, be construed to refer to this
Agreement as a whole and not to any particular provision of this Agreement, and
Article, clause and Exhibit references are to the Articles, clauses and Exhibits
to this Agreement unless otherwise specified;
(f) references to any Person or any other agreement or document shall
include such Person's successors and permitted assigns;
(g) the parties hereto have participated jointly in the negotiation and
drafting of this Agreement and all Transaction Agreements, and, in the event an
ambiguity or question of intent or interpretation arises, this Agreement and
each Transaction Agreement shall be construed as if drafted jointly by the
parties hereto, and no presumption or burden of proof shall arise favoring or
disfavoring any party hereto by virtue of the authorship of any provisions of
this Agreement; and
(h) Unless otherwise expressly provided herein, any Contract or Law defined
or referred to herein or in any Contract that is referred to herein means such
Contract or Law as from time to time amended, modified or supplemented,
including (in the case of a Contract) by waiver or consent and (in the case of a
Law) by succession of comparable successor Laws to all attachments thereto and
instruments incorporated therein, and any reference in this Agreement or in any
Transaction Agreement to a Law shall be deemed to include any rules and
regulations promulgated thereunder.
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IN WITNESS WHEREOF, the parties have caused this Master Transaction
Agreement to be executed by their duly authorized representatives.
TIME WARNER ENTERTAINMENT -
ADVANCE NEWHOUSE PARTNERSHIP
By: Time Warner Entertainment Company, L.P.,
a general partner
By:
---------------------------------------
Name: Robert D. Marcus
Title: Senior Vice President
By: Advance/Newhouse Partnership,
a general partner
By: Advance Cable Holdings Corp.
By:
---------------------------------------
Name: S.I. Newhouse, Jr.
Title: Vice President
By: Newhouse Cable Holdings LLC
By:
---------------------------------------
Name: S.I. Newhouse, Jr.
Title: Vice President
TIME WARNER ENTERTAINMENT COMPANY, L.P.
By:
--------------------------------------------
Name: Robert D. Marcus
Title: Senior Vice President
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PARAGON COMMUNICATIONS
By: KBL Communications, Inc.,
its Managing General Partner
By:
---------------------------------------
Name: Robert D. Marcus
Title: Senior Vice President
ADVANCE/NEWHOUSE PARTNERSHIP
By: Advance Cable Holdings Corp.
By:
---------------------------------------
Name: S.I. Newhouse, Jr.
Title: Vice President
By: Newhouse Cable Holdings LLC
By:
---------------------------------------
Name: S.I. Newhouse, Jr.
Title: Vice President
20