Partnership Interest Sale Agreement - Time Warner Cable Inc., AOL Time Warner Inc., AT&T Corp. and MediaOne of Colorado Inc.
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FORM OF
PARTNERSHIP INTEREST SALE AGREEMENT
among
TIME WARNER CABLE INC.,
AOL TIME WARNER INC.,
AT&T CORP.
and
MEDIAONE OF COLORADO, INC.
Dated: [__________], 200[ ]
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TABLE OF CONTENTS
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1. Definitions.......................................................1
2. MediaOne Disposition Rights.......................................5
3. Appraisal Right...................................................5
4. Sale Right........................................................8
5. Provisions Relating to Common Stock..............................11
6. Miscellaneous....................................................12
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PARTNERSHIP INTEREST SALE AGREEMENT
PARTNERSHIP INTEREST SALE AGREEMENT (this "Agreement"), dated
[__________], 200[ ], among Time Warner Cable Inc., a Delaware corporation,
f/k/a MediaOne TWE Holdings, Inc. (the "Company"), AOL Time Warner Inc., a
Delaware corporation ("AOLTW"), MediaOne of Colorado, Inc., a Colorado
corporation(1)("MediaOne"), and, solely for the purposes of Section 6(c)
hereof, AT&T Corp., a New York corporation(2).
WHEREAS, effective as of and in consideration of the closing
of the transactions contemplated by the Restructuring Agreement, dated as of
August 20, 2002 (the "Restructuring Agreement"), by and among the Company,
AOLTW, MediaOne and the other parties thereto, the parties wish to provide for
certain rights with respect to the Disposition (as defined below) of the
partnership interest (the "Partnership Interest") held by MediaOne or any other
MediaOne Partner (as defined below) in Time Warner Entertainment Company, L.P.
("TWE");
WHEREAS, pursuant to the Amended and Restated Agreement of
Limited Partnership of TWE, dated the date hereof (as amended from time to
time, the "Partnership Agreement"), a MediaOne Partner may Dispose of all or
any portion of its Partnership Interest only to a Permitted Entity or, from and
after the Transfer Date, in a Permitted Transfer; and
WHEREAS, a Disposition in accordance with this Agreement
constitutes a Permitted Transfer under the Partnership Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and for good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto agree
as follows:
1. Definitions. As used in this Agreement, and unless
the context requires a different meaning, the following terms have the meanings
indicated:
"AAA" has the meaning set forth in Section 3(d)(ii).
"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,
"control" (including with correlative meanings, the terms "controlled by" and
"under common control with"), as used with
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(1) If MediaOne of Colorado has transferred its interest to a Disposition
Trust, then the Disposition Trust shall be a party to this Agreement
in lieu of MediaOne of Colorado.
(2) In the event that the AT&T-Comcast Merger is completed prior to the
execution hereof, AT&T-Comcast shall replace AT&T as a signatory to
this Agreement.
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2
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.
"Agreement" means this Agreement as the same may be amended,
supplemented or modified in accordance with the terms hereof.
"AOLTW" has the meaning set forth in the preamble.
"AOLTW Common Stock" means the common stock, par value $0.01
per share, of AOLTW, or any class of common stock of AOLTW into which such
common stock is recapitalized.
"AOLTW Exercise Notice" has the meaning set forth in Section
3(b).
"AOLTW Matching Notice" has the meaning set forth in Section
4(d).
"AOLTW Matching Period" has the meaning set forth in Section
4(d).
"AOLTW Matching Price" has the meaning set forth in Section
4(d).
"AOLTW Matching Right" has the meaning set forth in Section
4(d).
"AOLTW Option" has the meaning set forth in Section 3(b).
"AOLTW Option Period" has the meaning set forth in Section
3(b).
"AOLTW Purchase Price" has the meaning set forth in Section
3(b).
"Appraisal Notice" has the meaning set forth in Section 3(a).
"Appraisal Right" has the meaning set forth in Section 3(a).
"AT&T" means AT&T Corp., a New York corporation; provided
that, except as otherwise specifically provided herein, following consummation
of the AT&T-Comcast Merger, all references to "AT&T" shall mean AT&T Comcast
and shall no longer mean AT&T Corp.
"AT&T Comcast" means AT&T Comcast Corporation, a Pennsylvania
corporation.
"AT&T-Comcast Merger" has the meaning set forth in the
Restructuring Agreement.
"Business Day" means a day other than a Saturday, Sunday or
other day on which commercial banks in New York City are authorized or required
by law to close.
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"Comcast" means Comcast corporation, a Pennsylvania
corporation.
"Company" has the meaning set forth in the preamble to this
Agreement.
"Company Matching Notice" has the meaning set forth in
Section 4(e).
"Company Matching Period" has the meaning set forth in
Section 4(e).
"Company Matching Price" has the meaning set forth in Section
4(e).
"Company Matching Right" has the meaning set forth in Section
4(e).
"Company Purchase Price" has the meaning set forth in Section
3(c).
"Disposition" means any direct or indirect sale, assignment,
alienation, gift, exchange, conveyance, transfer, pledge, hypothecation or
other disposition, monetization or encumbrance whatsoever, whether voluntary or
involuntary, direct or indirect, including through a Subsidiary or by means of
an equity offering by any such Subsidiary. The term "Dispose" shall mean to
make a Disposition.
"Disposition Trust" has the meaning set forth in the
Restructuring Agreement.
"Investment Banking Firm" means an investment banking firm of
national reputation.
"MediaOne" has the meaning set forth in the preamble.
"MediaOne Partner" has the meaning set forth in the
Partnership Agreement.
"NASDAQ" means the National Association of Securities Dealers
Automated Quotation System.
"NYSE" means the New York Stock Exchange.
"Offered Interest" has the meaning set forth in Section 3(a).
"Offered Interest FMV" has the meaning set forth in Section
3(d).
"Partnership Agreement" has the meaning set forth in the
recitals.
"Partnership Interest" has the meaning set forth in the
recitals.
"Permitted Transferee" has the meaning set forth in the
Partnership Agreement.
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"Person" means an individual, corporation, partnership,
limited liability company, association, trust, joint venture or other entity or
organization, including a government entity or any department, agency or
political subdivision thereof.
"Prohibited Activity" means, with respect to any closing of a
Disposition of an Offered Interest pursuant to Section 3 or 4 hereof with
respect to which AOLTW and/or the Company has delivered a Stock Election Notice
pursuant to Section 5(a): (a) any purchase or sale, in open market
transactions, private transactions, or otherwise, during the period beginning
on (and including) the day that is seventeen (17) Trading Days prior to the
closing of such Disposition and ending on (and including) on the day that is
two (2) Trading Days prior to such closing (such period, the "Valuation
Period"), of (i) any shares of AOLTW Common Stock or Time Warner Cable Common
Equity, as applicable (i.e., if the applicable shares are to be delivered in
full or partial satisfaction of the purchase price), or (ii) any securities
convertible into or exchangeable for or derivative of shares of AOLTW Common
Stock or Time Warner Cable Common Equity, as applicable, (other than, in each
case, (A) shares issued or acquired pursuant to employee stock options granted
to directors, officers or employees or (B) sales or other Dispositions of
shares by directors, officers or employees) or (b) any other action taken
intentionally for the purpose of manipulating the price of AOLTW Common Stock
or Time Warner Cable Common Equity, as applicable, during the Valuation Period.
"Prospective Purchaser" has the meaning set forth in Section
4(b).
"Restructuring Agreement" has the meaning set forth in the
recitals.
"Sale Notice" has the meaning set forth in Section 4(b).
"Sale Price" has the meaning set forth in Section 4(b).
"Sale Right" has the meaning set forth in Section 4(a).
"Selling Partner" has the meaning set forth in Section 2.
"Stock Election Notice" has the meaning set forth in Section
5(a).
"Subsidiary" means, with respect to any Person, any other
Person 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.
"Time Warner Cable Common Stock" means the Class A Common
Stock, par value $0.01 per share, of the Company, or any class of common stock
into which such common stock is recapitalized.
"Time Warner Cable Class B Common Stock" means the Class B
Common Stock, par value $0.01 per share, of the Company, or any class of common
stock into which such common stock is recapitalized.
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"Time Warner Cable Common Equity" means Time Warner Cable
Common Stock and Time Warner Cable Class B Common Stock.
"Trading Day" has the meaning set forth in Section 5(c).
"Trading Value" has the meaning set forth in Section 5(c).
"Transfer Date" means the second anniversary of the date
hereof.
"TWE" has the meaning set forth in the recitals.
2. MediaOne Disposition Rights. Following the Transfer
Date, if any MediaOne Partner (any such MediaOne Partner, a "Selling Partner")
wishes to Dispose of all or any portion of its Partnership Interest in
accordance with this Agreement, it shall effectuate such Disposition by
exercising either its Appraisal Right (as defined in Section 3(a)) or its Sale
Right (as defined in Section 4(a)); provided that (a) no Selling Partner shall
be entitled to exercise any Appraisal Right or Sale Right in respect of any
Offered Interest (as defined below) while it is pursuing its Sale Right or
Appraisal Right, respectively, in respect of such Offered Interest or its
Appraisal Right or Sale Right in respect of any other Offered Interest and (b)
any Disposition must comply with Section 3.1 of the Partnership Agreement.
Prior to the Transfer Date, no MediaOne Partner shall enter into an agreement
to Dispose of all or any portion of its Partnership Interest.
3. Appraisal Right.
(a) Following the Transfer Date, the
Selling Partner shall have the right (the "Appraisal Right") to Dispose of all
or any portion of its Partnership Interest (the "Offered Interest") pursuant to
this Section 3 by delivery of written notice (the "Appraisal Notice") to AOLTW
and the Company (it being understood that no such notice may be delivered prior
to the Transfer Date).
(b) For a period of fifteen (15) days
after receipt of the Appraisal Notice (the "AOLTW Option Period"), AOLTW shall
have the right (the "AOLTW Option") but not the obligation to elect to purchase
all or any portion of the Offered Interest at a purchase price (the "AOLTW
Purchase Price") equal to (x) the percentage of the Offered Interest AOLTW
proposes to purchase multiplied by (y) the Offered Interest FMV (as defined in
Section 3(d) below). The AOLTW Option shall be exercisable by giving written
notice (the "AOLTW Exercise Notice") of the exercise thereof, prior to the
expiration of the AOLTW Option Period, to the Selling Partner, with a copy to
the Company, which notice shall state the portion of the Offered Interest to be
purchased by AOLTW. Upon delivery of the AOLTW Exercise Notice, AOLTW shall be
obligated to purchase, and the Selling Partner shall be obligated to sell, the
Offered Interest specified in the AOLTW Exercise Notice for the AOLTW Purchase
Price. The failure of AOLTW to respond within the AOLTW Option Period shall be
deemed to be an election by AOLTW not to purchase any of the Offered Interest
and shall be a waiver of the AOLTW Option, provided that AOLTW may elect not to
purchase the Offered Interest and to waive its rights under this Section 3(b)
prior to the expiration of the
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AOLTW Option Period by giving written notice to the Selling Partner, with a
copy to the Company.
(c) If AOLTW does not elect to
purchase all of the Offered Interest, then the Company shall be obligated to
purchase, and the Selling Partner shall be obligated to sell, the remaining
portion of the Offered Interest for a purchase price (the "Company Purchase
Price") equal to (x) the percentage of the Offered Interest not purchased by
AOLTW multiplied by (y) the Offered Interest FMV.
(d) The "Offered Interest FMV" shall
be determined as follows:
(i) Upon delivery of an
Appraisal Notice, the Selling Partner shall, by written notice to the Company,
designate an Investment Banking Firm to prepare a valuation of the Offered
Interest. Within five (5) days of delivery of the Appraisal Notice, the Company
shall, by written notice to the Selling Partner, designate a second Investment
Banking Firm to prepare a valuation of the Offered Interest; provided, that if
the Company fails to designate an Investment Banking Firm within such 5-day
period, the Investment Banking Firm selected by the Selling Partner shall
determine the Offered Interest FMV, without regard to the remainder of this
Section 3(d), in accordance with the guidelines set forth on Exhibit A.
(ii) Within ten (10) days
following the designation by the Company of the second Investment Banking Firm
pursuant to Section 3(d)(i), if such second Investment Banking Firm has been so
designated, the two Investment Banking Firms shall select a third Investment
Banking Firm and the Selling Partner and the Company shall engage such third
Investment Banking Firm on reasonable and customary terms. If the two
Investment Banking Firms are unable to agree on the identity of a third
Investment Banking Firm within such 10-day period, or the Selling Partner and
the Company are unable to agree as to the terms of engagement for such firm
within such period, then either the Selling Partner or the Company may refer
the matter to the American Arbitration Association (the "AAA") which shall
select such third Investment Banking Firm, and establish the terms of
engagement of such firm, within fifteen (15) days following such request;
provided that all parties shall be given notice of such referral and afforded
the opportunity to participate in any presentations to be made to the AAA. The
firm selected by the AAA shall not derive a material portion of its revenues
from either the Selling Partner, the Company or any of their respective
Affiliates, shall have experience in valuing companies engaged in the same
business then engaged in by TWE and shall be engaged on reasonable and
customary terms.
(iii) No later than thirty (30)
days following the delivery of the Appraisal Notice, the Investment Banking
Firm selected by the Selling Partner and the Investment Banking Firm selected
by the Company shall simultaneously disclose to each other their respective
determinations of the fair market value of the Offered Interest, each of which
shall be prepared in accordance with the guidelines set forth in Exhibit A;
provided, that if either Investment Banking Firm is not prepared to disclose
its valuation on such day, the valuation of the Investment Banking Firm that is
so
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prepared shall be the Offered Interest FMV. If the amount of the higher of the
values determined by the two Investment Banking Firms is no more than 110% of
the lower value, such values will be averaged and such average shall be the
Offered Interest FMV. If the amount of the higher of the values determined by
the two Investment Banking Firms is more than 110% of the lower value, then on
a day no later than forty (40) days after the delivery of the Appraisal Notice,
each of the two Investment Banking Firms will make a presentation to the third
Investment Banking Firm, regarding the methodology and conclusions used by it
in arriving at its valuation. Each party and such party's Investment Banking
Firm shall be entitled to attend the presentation of the other party's
Investment Banking Firm. Within five (5) days following the presentations, the
third Investment Banking Firm shall determine which valuation more accurately
reflects the value of the Offered Interest, and such valuation shall be the
Offered Interest FMV and shall be final and binding upon the parties.
(iv) Each party will pay the
fees and expenses of the Investment Banking Firm it selects and 50% of the fees
and expenses of the third Investment Banking Firm. If the parties are unable to
agree on the fee payable to the third Investment Banking Firm, the fees shall
be set by the AAA and the parties shall each be liable for 50% of such fees.
(e) The Company will supply, subject
to the recipients entering into customary confidentiality agreements, the
following information regarding TWE and the Company to the Investment Banking
Firms and to the Selling Partner within fifteen (15) days of delivery of the
Appraisal Notice (except that information to be provided pursuant to a request
under "(4)" below shall be provided as soon as reasonably practicable after the
date of such request): (1) 3 years of historical financial statements, (2)
current year interim quarterly financial statements, (3) certain operating
statistics (e.g. subscribers, homes passed, rebuild status) and (4) other due
diligence items that any appraiser may reasonably request (but, with respect to
(4), only the extent such information exists or is readily available within the
relevant time period). In addition to such information, if, upon the delivery
of an Appraisal Notice, the Selling Partner elects in writing to have the
Company prepare projections for the Company and TWE for the then-current fiscal
year and one (1) prospective year, then the Company shall have sixty (60) days
to deliver such projections to the Investment Banking Firms and to the Selling
Partner and the 30-day and 40-day time periods set forth in Section 3(d)(iii)
shall be adjusted to 75-day and 85-day periods, respectively; provided, that
unless the Selling Partner so elects to have the Company prepare projections
for the Company and TWE as described in this sentence, then none of the
Investment Banking Firms shall utilize projections in determining the value of
the Offered Interest, other than projections that have previously been made
available (by the Company, analysts or otherwise) to the general public (to the
extent that such projections are relevant). The Company shall make its
executive officers available for due diligence sessions, as reasonably
requested.
(f) The consummation of any purchase
of the Offered Interest by AOLTW and/or the Company pursuant to this Section 3
shall be held at a single closing at the executive office of the Company at
11:00 a.m., local time, on a
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Business Day within 30 days following the determination of the Offered Interest
FMV pursuant to Section 3(d) (upon at least five (5) days' notice to the
Selling Partner); provided, that such period shall be extended for 90
additional days, or such shorter period of time, as shall be necessary in order
to obtain requisite governmental or regulatory approvals with respect to such
transaction (which the parties shall use their respective commercially
reasonable efforts to obtain as promptly as practicable), or as provided in
Section 5(a); and provided further, that such closing may be held at such other
time and place as the parties to the transaction may agree. At such closing,
AOLTW and/or the Company shall, severally (with respect to itself) and not
jointly, pay to the Selling Partner the AOLTW Purchase Price and/or the Company
Purchase Price, as applicable, in respect of the portion of the Offered
Interest to be purchased by such party in any combination of (x) cash, which
shall be payable by wire transfer of immediately available funds, and (y)
validly issued, fully paid and non-assessable shares AOLTW Common Stock (in the
case of the AOLTW Purchase Price) or Time Warner Cable Common Stock (in the
case of the Company Purchase Price) (the fair market value of which will be
determined pursuant to Section 5 below) pursuant to such instruments as may be
reasonably necessary to deliver the AOLTW Common Stock or Time Warner Cable
Common Stock, as applicable, and in appropriate form for transfer, free and
clear of any lien or other encumbrance, and the Selling Partner shall, pursuant
to such instruments as may be reasonably necessary, deliver to AOLTW and/or the
Company, as applicable, the Offered Interest to be sold at such closing, in
appropriate form for transfer, free and clear of any lien or other encumbrance.
4. Sale Right.
(a) Following the Transfer Date, the
Selling Partner shall have the right (the "Sale Right") to Dispose of all or
any portion of its Offered Interest to any Person pursuant to this Section 4,
so long as the Selling Partner first complies with clauses (b) through (h)
below.
(b) The Selling Partner shall give
written notice (the "Sale Notice") to AOLTW and the Company (it being
understood that no such notice may be delivered prior to the Transfer Date),
which Sale Notice shall state (i) the name of the Person (the "Prospective
Purchaser") to whom the Selling Partner wishes to Dispose of such Offered
Interest, and, if such Prospective Purchaser is a Subsidiary of another Person,
the name of the Ultimate Parent (as defined in the Partnership Agreement) of
such Prospective Purchaser, neither of which Persons may be an Affiliate of, or
otherwise acting in concert to circumvent the provisions of this Section 4
with, the Selling Partner, (ii) the price to be paid for such Offered Interest
(the "Sale Price"), which price must be payable in cash upon consummation of
such Disposition, (iii) the date on which such Disposition is scheduled to
occur and (iv) that the offer of the Prospective Purchaser was made after the
Transfer Date and has been accepted by the Selling Partner subject to the
rights of AOLTW and the Company contained in this Agreement.
(c) The Sale Notice shall be
accompanied by a certificate of the Prospective Purchaser (and, if such
Prospective Purchaser is a
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Subsidiary of another Person, then also a certificate of the Ultimate Parent of
such Prospective Purchaser) stating that (i) its offer to purchase the Offered
Interest has been approved by its board of directors (or, if such Person is not
a corporation, the equivalent), (ii) the description of its offer contained in
the Sale Notice is complete and accurate in accordance with the requirements of
this Section 4, (iii) adequate financing arrangements have been, or are
reasonably expected to be, secured in respect of its offer, (iv) its offer is
reasonably capable of being consummated and that there are no significant
regulatory impediments to such consummation (other than any required regulatory
approval disclosed in the Sale Notice) and (v) it is aware of the rights of
AOLTW and the Company contained in this Agreement and that it is not an
Affiliate of, or otherwise acting in concert to circumvent the provisions of
this Section 4 with, the Selling Partner.
(d) For a period of fifteen (15) days
after receipt of the Sale Notice and the certificate required by Section 4(c)
above (the "AOLTW Matching Period"), AOLTW shall have the right (the "AOLTW
Matching Right") but not the obligation to elect to purchase all or any portion
of the Offered Interest at a purchase price (the "AOLTW Matching Price") equal
to (x) the percentage of the Offered Interest AOLTW proposes to purchase
multiplied by (y) the Sale Price. The AOLTW Matching Right shall be exercisable
by giving written notice (the "AOLTW Matching Notice") of the exercise thereof,
prior to the expiration of the AOLTW Matching Period, to the Selling Partner,
with a copy to the Company, which notice shall state the portion of the Offered
Interest to be purchased by AOLTW. Upon delivery of the AOLTW Matching Notice,
subject to Section 4(f) below, AOLTW shall be obligated to purchase, and the
Selling Partner shall be obligated to sell, the Offered Interest specified in
the AOLTW Matching Notice at the AOLTW Matching Price and upon the terms and
conditions set forth in the Sale Notice, except that AOLTW (or any Affiliate
thereof) shall be entitled to pay all or any portion of the AOLTW Matching
Price in shares of AOLTW Common Stock as provided in Section 5 below. The
failure of AOLTW to respond within the AOLTW Matching Period shall be deemed to
be an election by AOLTW not to purchase any of the Offered Interest and shall
be a waiver of the AOLTW Matching Right, provided that AOLTW may elect not to
purchase the Offered Interest and to waive its rights under this Section 4(d)
prior to the expiration of the AOLTW Matching Period by giving written notice
to the Selling Partner, with a copy to the Company.
(e) If AOLTW does not elect to
purchase all of the Offered Interest, then for a period of five (5) days after
the earlier to occur of (a) the expiration of the AOLTW Matching Period and (b)
the receipt of the AOLTW Matching Notice (or written notice from AOLTW of its
waiver of the AOLTW Matching Right) (the "Company Matching Period"), the
Company shall have the right (the "Company Matching Right") but not the
obligation to elect to purchase all but not less than all of the remaining
Offered Interest at a purchase price (the "Company Matching Price") equal to
(x) the percentage of the Offered Interest not purchased by AOLTW multiplied by
(y) the Sale Price. The Company Matching Right shall be exercisable by giving
written notice (the "Company Matching Notice") of the exercise thereof, prior
to the expiration of the Company Matching Period, to the Selling Partner. Upon
delivery of the Company Matching Notice, the Company shall be obligated to
purchase, and the Selling Partner
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shall be obligated to sell, all of such remaining Offered Interest for the
Company Matching Price and upon the terms and conditions set forth in the Sale
Notice, except that the Company (or any Affiliate thereof) shall be entitled to
pay all or any portion of the Sale Price in shares of Time Warner Cable Common
Stock as provided in Section 5 below. The failure of the Company to respond
within the Company Matching Period shall be deemed to be a waiver of the
Company Matching Right, provided that the Company Partner may waive its rights
under this Section 4(e) prior to the expiration of the Company Matching Period
by giving written notice to the Selling Partner.
(f) If AOLTW and the Company
(individually or in the aggregate) do not elect to purchase all of the Offered
Interest pursuant to Sections 4(d) and 4(e) above, the Selling Partner shall
have the right to Dispose of all but not less than all of the Offered Interest
to the Prospective Purchaser upon terms and conditions that are no more
favorable to the Prospective Purchaser with respect to the Offered Interest
than those contained in the Sale Notice; provided, that such sale is bona fide
and made within 45 days after the date of the expiration of the Company
Matching Period (as such may be extended for 90 additional days, or such
shorter period of time, as shall be necessary in order to obtain requisite
governmental or regulatory approvals with respect to such transaction). Upon
closing of any such Disposition, the Prospective Purchaser shall succeed to all
of the rights and be subject to all of the obligations of the Selling Partner
under this Agreement (including, without limitation, Sections 3 and 4 hereof)
and the Partnership Agreement.
(g) The consummation of any purchase
of the Offered Interest by AOLTW and/or the Company pursuant to this Section 4
shall be held at a single closing at the executive office of the Company at
11:00 a.m., local time, on a Business Day within 30 days following the delivery
of the Company Matching Notice (upon at least five (5) day's notice to the
Selling Partner); provided, that such period shall be extended for 90
additional days, or such shorter period of time, as shall be necessary in order
to obtain requisite governmental or regulatory approvals with respect to such
transaction (which the parties shall use their respective commercially
reasonable efforts to obtain as promptly as practicable), or as provided in
Section 5(a); and provided, further, that such closing may be held at such
other time and place as the parties to the transaction may agree. At such
closing, AOLTW and/or the Company shall, severally (with respect to itself) and
not jointly, pay to the Selling Partner the AOLTW Matching Price and/or the
Company Matching Price in respect of the portion of the Offered Interest to be
purchased by such party in any combination of (x) cash, which shall be payable
by wire transfer of immediately available funds, and (y) validly issued, fully
paid and non-assessable shares AOLTW Common Stock (in the case of the AOLTW
Matching Price) or Time Warner Cable Common Stock (in the case of the Company
Matching Price) (the fair market value of which will be determined pursuant to
Section 5 below) pursuant to such instruments as may be reasonably necessary to
deliver the AOLTW Common Stock or Time Warner Cable Common Stock, as
applicable, and in appropriate form for transfer, free and clear of any lien or
other encumbrance, and the Selling Partner shall, pursuant to such instruments
as may be reasonably necessary, deliver to AOLTW and/or
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the Company, as applicable, the Offered Interest to be sold at such closing, in
appropriate form for transfer, free and clear of any lien or other encumbrance.
(h) If the Selling Partner does not
complete the sale of all of the Offered Interest to (x) a Prospective Purchaser
in accordance with the time period specified in Section 4(f) above (or
affirmatively waives the right to complete such sale, in writing, prior to the
expiration of such period) or (y) AOLTW and/or the Company in the time period
specified in Section 4(g) above then (other than as a result of a breach by
AOLTW or the Company of such party's obligations under this Section 4), in each
case, the provisions of this Section 4 shall again be applicable and the
Selling Partner shall again be permitted to elect to exercise either its
Appraisal Right or its Sale Right with respect to any Offered Interest, as
provided in Section 2; provided, that in the case of a failure to complete a
sale to a Prospective Purchaser (other than as a result of a breach by AOLTW or
the Company of such party's obligations under this Section 4), such selling
Partner shall not be entitled to exercise its Sale Right or Appraisal Right
until sixty (60) days after the expiration of the 45-day period referred to in
Section 4(f) (or such longer period to which such 45-day period has been
extended pursuant to Section 4(f)); provided, further, that if the Selling
Partner has waived its right to complete the sale to a Prospective Purchaser
pursuant to clause (x) above, such 60-day period shall commence on the date of
such waiver.
5. Provisions Relating to Common Stock.
(a) If any portion of the purchase
price payable by AOLTW or the Company pursuant to Section 3 or 4 is to be paid
in shares of AOLTW Common Stock or Time Warner Cable Common Stock, as
applicable, then (x) the fair market value of such shares shall be deemed to be
equal to the average (rounded to the nearest 1/10,000) of the Trading Values
(as defined below) of a share of AOLTW Common Stock or Time Warner Cable Stock,
as applicable, for each of the fifteen (15) consecutive Trading Days ending two
(2) Trading Days prior to the applicable closing date, (y) any shares of Time
Warner Cable Common Stock received by the Selling Partner shall, after they are
issued to such Selling Partner, be deemed to be "Registrable Securities" held
by MediaOne (or its permitted transferee) under the Registration Rights
Agreement, dated the date hereof, among the Company, AOLTW and MediaOne
(provided that, if such Selling Partner is not then a party to such Agreement,
such shares shall only be deemed to be Registrable Securities if MediaOne
agrees to transfer all or a portion of its right thereunder to such Selling
Partner and such Selling Partner agrees to be bound by the terms and conditions
of such agreement) and (z) any shares of AOLTW Common Stock received by the
Selling Partner shall, after they are issued to such Selling Partner, have
registration rights substantially identical to the rights of MediaOne (or its
permitted transferee) under the Registration Rights Agreement, dated the date
hereof, between AOLTW and MediaOne; provided that promptly upon exercise by
AOLTW of any right to use AOLTW Common Stock as a portion of the purchase price
pursuant to Section 3 or 4, AOLTW will use all commercially reasonable efforts
to have a "shelf" registration statement declared effective as of the date the
AOLTW Common Stock is delivered pursuant hereto or as promptly thereafter as
practicable. Notwithstanding
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12
anything to the contrary in this Agreement, no shares of AOLTW Common Stock or
Time Warner Cable Common Stock, as applicable, may be delivered in full or
partial satisfaction of any purchase price payable pursuant to Section 3 or
Section 4, (A) if shares of such class are not then admitted for trading on the
NYSE or for quotation on NASDAQ or (B) if AOLTW and/or the Company, as
applicable, has not delivered to the Selling Partner written notice (a "Stock
Election Notice") setting forth (i) such party's election (which election shall
be irrevocable) to deliver such shares in full or partial satisfaction of any
such purchase price (which Stock Election Notice shall specify what portion of
the purchase price will be satisfied in shares) and (ii) the closing date
designated for the closing of such purchase, which closing date (x) shall
comply with the requirements of Section 3(f) or 4(g), as applicable and (y)
shall be no fewer than twenty (20) Trading Days subsequent to the date of such
Stock Election Notice; provided that if, as a result of events subsequent to
the delivery of the Stock Election Notice the number of Trading Days between
the date of delivery of a Stock Election Notice and the date of closing set
forth in such Stock Election Notice is fewer than twenty (20), such closing
date shall be extended to the extent necessary such that there are no fewer
than twenty (20) Trading Days between the date of such delivery and such
closing date.
(b) The parties hereto shall not, and
shall cause their respective Affiliates, agents and representatives not to,
engage in, announce an intention to engage in, or act in concert with any
Person to engage in a Prohibited Activity.
(c) For the purposes of this
Agreement, (x) the term "Trading Value" means, with respect to any AOLTW Common
Stock or Time Warner Cable Common Stock on any given Trading Day, the volume
weighted trading price (rounded to the nearest 1/10,000) of such security on
the NYSE or Nasdaq, as applicable, as reported by Bloomberg Financial Markets
(or such other source as the Selling Partner and the Company shall agree) for
that Trading Day, and (y) the term "Trading Day" means any day on which shares
of AOLTW Common Stock or the Time Warner Cable Common Stock, as applicable, are
traded on the NYSE or Nasdaq, as applicable.
6. Miscellaneous.
(a) Notices. All notices, demands or
other communications provided for or permitted hereunder shall be made in
writing and shall be by registered or certified first class mail, return
receipt requested, telecopier, courier service or personal delivery:
if to AOLTW or the Company, to: 75 Rockefeller Center Plaza
New York, New York 10019
Attention: Executive Vice President
and General Counsel
Fax: (212) 258-3172
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13
With a copy to:
Paul, Weiss, Rifkind, Wharton
& Garrison
1285 Avenue of the Americas
New York, NY 10019
Attention: Robert B. Schumer
Fax: (212) 757-3990
if to AT&T or MediaOne prior to closing AT&T Corp.
of the AT&T-Comcast Merger, to: 295 North Maple Avenue
Basking Ridge, New Jersey 07920
Attention: Corporate Secretary
Fax: (908) 953-8360
With a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Trevor S. Norwitz
Fax: (212) 403-2000
if to AT&T Comcast or MediaOne after AT&T Comcast Corporation
closing of the AT&T-Comcast Merger, to: 1500 Market Street
Philadelphia, Pennsylvania 19102
Attention: General Counsel
Fax: (215) 981-7794
With a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: Dennis S. Hersch
William L. Taylor
Fax: (212) 450-4800
or such other address or facsimile number as such party hereto may hereafter
specify for such purpose by notice to the other parties hereto. All such
notices, requests and other communications shall be deemed received on the date
of receipt by the recipient thereof if received prior to 5 p.m. on a Business
Day, in the place of receipt. Otherwise, any such notice, request or
communication shall be deemed not to have been received until the next
succeeding Business Day in the place of receipt.
(b) Successors and Assigns. The
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns; provided that
[, except as provided in Section 6(k),](3) no
---------
(3) To be deleted if Section 6(k) is deleted upon execution of this
Agreement.
<PAGE>
14
party hereto may assign, delegate or transfer any of its rights or obligations
hereunder without the consent of the other parties hereto; provided, further,
that if any MediaOne Partner transfers all or any portion of its Partnership
Interest to any other Person in accordance with the Partnership Agreement, the
rights and obligations of such MediaOne Partner under this Agreement, to the
extent relating to and in the proportion of the Partnership Interest
transferred, shall be assigned to and assumed by such transferee.
(c) Covenant of AT&T. AT&T shall cause
(i) any Prospective Purchaser and any MediaOne Partner (and any direct or
indirect transferee thereof) to whom all or any portion of MediaOne's
Partnership Interest is transferred to deliver an agreement, in form and
substance reasonably satisfactory to AOLTW and the Company, to the Company and
AOLTW agreeing to be bound by and entitled to the benefits of the terms and
conditions of this Agreement and the Partnership Agreement and (ii) for so long
as such Person is an Affiliate of AT&T, MediaOne and any other MediaOne Partner
(and any direct or indirect transferee thereof) to comply with all of the
obligations of such MediaOne Partner hereunder.
(d) Amendment and Waiver.
(i) Any amendment, supplement
or modification of or to any provision of this Agreement, any waiver of any
provision of this Agreement, and any consent to any departure by any party from
the terms of any provision of this Agreement, shall be effective only if it is
made or given in writing and signed by (i) the Company, (ii) AOLTW, (iii) the
MediaOne Partners holding a majority of the MediaOne Partnership Interest (as
defined in the Partnership Agreement), and (iv) with respect to any amendment,
supplement or modification of, or of any defined term used in, Section 6(c) of
this Agreement, AT&T. Any such amendment, supplement, modification, waiver or
consent shall be binding upon all of the parties hereto.
(ii) No failure or delay on
the part of any party hereto in exercising any right, power or remedy hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. The rights and remedies provided for herein are
cumulative and are not exclusive of any rights and remedies that may be
available to the parties hereto at law, in equity or otherwise.
(e) Counterparts; Effectiveness. This
Agreement may be signed in counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when each party hereto shall
have received a counterpart hereof signed by the other parties hereto.
(f) Headings. The headings in this
Agreement are for convenience of reference only and shall not limit or
otherwise affect the meaning hereof.
(g) GOVERNING LAW. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
<PAGE>
15
LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS
OF LAW THEREOF.
(h) Jurisdiction. 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 or the transactions contemplated
hereby shall be brought in any federal court located in the State of New York
or any New York state court, and each of the parties hereby consents to the
exclusive 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 that 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 brought in any such
court has been brought in an inconvenient forum. Process in any such suit,
action or proceeding may be served on either party hereto anywhere in the
world, whether within or without the jurisdiction of any such court.
(i) WAIVER OF JURY TRIAL. EACH OF THE
PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
(j) Severability. If any term,
provision, covenant or restriction of this Agreement is determined by a court
of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party hereto. Upon such a determination, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner
so that the transactions contemplated hereby may be consummated as originally
contemplated to the fullest extent possible.
(k) [Effect of AT&T-Comcast Merger(4).
Upon consummation of the AT&T-Comcast Merger, the parties hereto acknowledge
and agree that all of AT&T Corp.'s rights and obligations hereunder will
automatically and without further action of any of the parties hereto be
assigned to and assumed by AT&T Comcast. Upon execution of this Agreement by
AT&T Comcast, AT&T Comcast will replace AT&T Corp. as a party hereto, and AT&T
Corp. shall automatically be released from any and all of its obligations under
this Agreement and each of the parties hereto shall execute and deliver such
instruments as AT&T Corp. shall reasonably request to evidence such release.
---------
(4) In the event that the AT&T-Comcast Merger is consummated prior to the
execution of this Agreement, this Section (k) shall be deleted and the
Section references in the remainder of the document shall be properly
adjusted.
<PAGE>
16
(l) Specific Performance. The parties
hereto agree that irreparable damage would occur if any provision of this
Agreement were not performed in accordance with the terms hereof and that the
parties shall be entitled to an injunction or injunctions to enforce
specifically the performance of the terms and provisions hereof in any federal
court located in the State of New York or any New York state court, in addition
to any other remedy to which they are entitled at law or in equity.
(m) Rules of Construction. Unless the
context otherwise requires, references to sections or subsections refer to
sections or subsections of this Agreement.
(n) Entire Agreement. This Agreement
(together with the Partnership Agreement) constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes
all prior agreements and understandings, both oral and written, between the
parties with respect to such subject matter.
(o) Further Assurances. Each of the
parties shall, and shall cause their respective Affiliates to, execute such
documents and perform such further acts as may be reasonably required or
desirable to carry out or to perform the provisions of this Agreement.
<PAGE>
17
IN WITNESS WHEREOF, the undersigned have executed, or have
caused to be executed, this Partnership Interest Sale Agreement on the date
first written above; provided, however, AT&T is a party to this Agreement
solely for purposes of being bound by Section 6(c) hereof.
TIME WARNER CABLE INC.
By:
----------------------------------------
Name:
Title:
AOL TIME WARNER INC.
By:
----------------------------------------
Name:
Title:
MEDIAONE OF COLORADO, INC.
By:
----------------------------------------
AT&T CORP.
By:
----------------------------------------
<PAGE>
EXHIBIT A
VALUATION GUIDELINES
(a) Valuation of the Offered Interest will be based upon the fully
distributed public market value of the common equity of TWE assuming
TWE was a corporation and all such common equity was represented by a
single class of common stock. Such valuation will be determined
without regard to offering discounts or any discount in respect of
liquidity, corporate structure (including, without limitation, the
fact that TWE is a partnership and that the stake is a minority
interest) or tax liability from any allocation of taxable income in
respect of the Offered Interest, and will assume, notwithstanding any
facts to the contrary, that TWE is not to be liquidated in the near
future; provided that if TWE is in fact in the process of being
liquidated or is to be liquidated in the near future, the valuation
shall take into account any economic circumstances leading to such
liquidation.
(b) Any debt and preferred equity of TWE or any comparable company will be
measured at book value for purposes of preparing the valuation.
(c) The appraisers will rely on the current public trading values of a
group of not more than 3 companies which are comparable to TWE
(businesses engaged in the same business, with similar scale, credit
quality and capital structures).
(d) For purposes of determining a cable-only multiple, the value of the
non-cable assets shall be determined as the amount reflected in the
relevant company's publicly traded share price as a result of the
ownership of such assets.
(e) In calculating the value, the appraisers shall disregard any
guarantees by TWE or its Subsidiaries of debt or other obligations of
the Company or any of its Subsidiaries or by the Company or any of its
Subsidiaries of debt or other obligations of TWE or its Subsidiaries.