Distribution Agreement - Time Warner Entertainment Co. LP, Warner Communications Inc. and AOL Time Warner Inc.
EXECUTION COPY
DISTRIBUTION AGREEMENT
BY AND AMONG
TIME WARNER ENTERTAINMENT COMPANY, L.P.,
WARNER COMMUNICATIONS INC.
AND
AOL TIME WARNER INC.
DATED AS OF AUGUST 20, 2002
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
PAGE
ARTICLE I DEFINITIONS....................................................1
ARTICLE II THE SEPARATION................................................16
2.1. Transfer of Assets; Assumption of Liabilities; Redemption of
Partnership Interests............................................16
2.2. Disclaimer of Representations and Warranties.....................18
2.3. Other Ancillary Agreements.......................................18
2.4. Documents Relating to Transfer of Real Property Interests
and Tangible Property Located Thereon............................18
2.5. Documents Relating to Other Transfers of Assets and Assumption
of Liabilities...................................................19
2.6. Governmental Approvals and Consents..............................20
2.7. Novation of TWE Non-Broadband Liabilities........................21
2.8. Novation of Non-Transferred Liabilities..........................21
2.9. Joint Purchasing Arrangements....................................22
2.10. Intellectual Property Matters....................................23
2.11. Employee Matters.................................................23
ARTICLE III CONDITIONS....................................................23
3.1. Conditions.......................................................23
ARTICLE IV INDEMNIFICATION; TAXES........................................24
4.1. Indemnification by AOLTW and Holdco..............................24
4.2. Indemnification by TWE...........................................24
4.3. Indemnification Obligations Net of Insurance Proceeds and
Other Amounts....................................................25
4.4. Procedures for Indemnification of Third Party Claims.............25
4.5. Additional Matters...............................................26
4.6. Remedies Cumulative..............................................27
4.7. Survival of Indemnities..........................................27
4.8. Tax Effects of Indemnification...................................27
4.9. Refunds..........................................................28
ARTICLE V INSURANCE.....................................................28
5.1. Insurance Matters................................................28
ARTICLE VI EXCHANGE OF INFORMATION; CONFIDENTIALITY......................29
6.1. Agreement for Exchange of Information............................29
6.2. Ownership of Information.........................................30
6.3. Compensation for Providing Information...........................30
6.4. Record Retention.................................................30
6.5. Limitation of Liability..........................................31
6.6. Other Agreements Providing for Exchange of Information...........31
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
PAGE
6.7. Production of Witnesses; Records; Cooperation....................31
6.8. Confidentiality..................................................32
6.9. Protective Arrangements..........................................32
ARTICLE VII FURTHER ASSURANCES............................................33
7.1. Further Assurances...............................................33
ARTICLE VIII TERMINATION...................................................33
8.1. Termination......................................................33
8.2. Effect of Termination............................................33
ARTICLE IX MISCELLANEOUS.................................................34
9.1. Counterparts; Entire Agreement...................................34
9.2. Governing Law....................................................34
9.3. Assignability....................................................34
9.4. Jurisdiction.....................................................34
9.5. WAIVER OF JURY TRIAL.............................................34
9.6. Third Party Beneficiaries........................................35
9.7. Notices..........................................................35
9.8. Treatment of Advance-Newhouse....................................36
9.9. Severability.....................................................37
9.10. Public Announcements.............................................37
9.11. Expenses.........................................................37
9.12. Headings.........................................................37
9.13. Waivers of Default...............................................37
9.14. Specific Performance.............................................37
9.15. Amendments.......................................................38
9.16. Late Payments....................................................38
9.17. Interpretation...................................................38
</TABLE>
-ii-
<PAGE>
PAGE
SCHEDULES:
Schedule 1.28(a): Excluded Assets
Schedule 1.29(c): Excluded Liabilities
Schedule 1.80(e): TWE Franchises
Schedule 1.80(h): TWE Systems
Schedule 1.80(i): Actions Retained by TWE
Schedule 1.80(n): Other Assets Retained by TWE
Schedule 1.81(c): Terminated/Divested/Discontinued Businesses
Schedule 1.81(e): Businesses/Assets/Liabilities Retained by TWE
Schedule 1.82(c): Contracts Retained by TWE
Schedule 1.85(j): Other Liabilities Retained by TWE
Schedule 1.87(a): Retained Real Property
Schedule 2.1(g): TWE Partnership Interests
Schedule 2.4(b): Leasehold Improvements, Etc. Retained by TWE
Schedule 2.4(c): Leasehold Improvements, Etc. Transferred to Holdco
Schedule 2.4(d): Transferred Real Property to be Leased or Subleased to TWE
Schedule 2.4(e): Retained Real Property to be Leased or Subleased to Holdco
-iii-
<PAGE>
DISTRIBUTION AGREEMENT
THIS DISTRIBUTION AGREEMENT, dated as of August 20, 2002, is
by and among Time Warner Entertainment Company, L.P., a Delaware limited
partnership ("TWE"), Warner Communications Inc., a Delaware corporation
("HOLDCO"), and AOL Time Warner Inc., a Delaware corporation ("AOLTW") (which is
a party for purposes of Article IV only). Capitalized terms used herein and not
otherwise defined shall have the respective meanings assigned to them in Article
I.
WHEREAS, pursuant to the Restructuring Agreement (the
"RESTRUCTURING AGREEMENT"), dated as of the date hereof, by and among TWE,
Holdco and the other parties named therein, the parties thereto agreed to, among
other things, restructure TWE by distributing the TWE Non-Broadband Assets,
subject to the TWE Non-Broadband Liabilities, to Holdco or other TWE
Non-Broadband Members, in partial redemption of the general partnership and
limited partnership interests in TWE (collectively, the "TWE PARTNERSHIP
INTERESTS") held by Holdco; and
WHEREAS, it is appropriate and desirable to set forth the
principal corporate transactions required to effect certain transactions
contemplated by the Restructuring Agreement and certain other agreements that
will govern certain matters relating to such transactions and the relationship
of the parties hereto and their respective Subsidiaries following the Closing.
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. ACTION means any demand, action, suit, countersuit,
arbitration, inquiry, proceeding or investigation by or before any federal,
state, local, foreign or international Governmental Authority or any arbitration
or mediation tribunal.
1.2. ADVANCE/NEWHOUSE means the Advance/Newhouse
Partnership, a New York general partnership.
1.3. 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 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; and provided, further, that, unless otherwise specified, for purposes
of this Agreement, no TWE Broadband Member or TWE Non-Broadband Member shall be
deemed to be an Affiliate of any member of the other Group and no employee plan
or employee plan trust shall be deemed an Affiliate of any employer or of any
Affiliate of any employer.
<PAGE>
1.4. AGREEMENT means this Distribution Agreement,
including all of the Schedules and Exhibits hereto.
1.5. ANCILLARY AGREEMENTS means the Intellectual Property
Agreement, the Patent Assignment, the Copyright and Technology Assignment, the
Trademark and Service Mark Assignment and the Real Property Instruments.
1.6. AOLTW has the meaning set forth in the Preamble.
1.7. AOLTW BROADBAND PERMITTED INDEBTEDNESS has the
meaning ascribed thereto in the Restructuring Agreement.
1.8. ASSETS means assets, properties and rights (including
goodwill), wherever located (including in the possession of vendors or other
third parties or elsewhere), whether real, personal or mixed, tangible,
intangible or contingent, in each case whether or not recorded or reflected or
required to be recorded or reflected on the books and records or financial
statements of any Person, including the following:
(a) all accounting and other books, records and files
whether in paper, microfilm, microfiche, computer tape or disc, magnetic tape or
any other form;
(b) all apparatus, computers and other electronic data
processing equipment, fixtures, machinery, equipment, furniture, office
equipment, automobiles, trucks, aircraft, rolling stock, vessels, motor vehicles
and other transportation equipment, special and general tools, test devices,
prototypes and models and other tangible personal property;
(c) all inventories of materials, parts, raw materials,
supplies, work-in-process and finished goods and products;
(d) all interests in real property of whatever nature,
including easements and rights of way, whether as owner, mortgagee or holder of
a Security Interest in real property, lessor, sublessor, lessee, sublessee or
otherwise, and copies of all related documentation;
(e) all interests in any capital stock or other equity
interests of any Subsidiary or any other Person, all bonds, notes, debentures or
other securities issued by any Subsidiary or any other Person, all loans,
advances or other extensions of credit or capital contributions to any
Subsidiary or any other Person and all other investments in securities of any
Person;
(f) all license agreements, leases of personal property,
open purchase orders for raw materials, supplies, parts or services, unfilled
orders for the manufacture and sale of products and other contracts, agreements
or commitments;
(g) all deposits, letters of credit and performance and
surety bonds;
(h) all written technical information, data,
specifications, research and development information, engineering drawings,
operating and maintenance manuals, and materials and analyses prepared by
consultants and other third parties;
(i) all domestic and foreign patents, copyrights, trade
names, trademarks, service marks and registrations and applications for any of
the foregoing, mask works, trade
-2-
<PAGE>
secrets, inventions, other proprietary information and licenses from third
Persons granting the right to use any of the foregoing;
(j) all computer applications, programs and other
software, including operating software, network software, firmware, middleware,
design software, design tools, systems documentation and instructions;
(k) all cost information, sales and pricing data,
customer prospect lists, supplier records, customer and supplier lists, records
pertaining to customers and customer accounts, customer and vendor data,
correspondence and lists, product literature, artwork, design, development and
manufacturing files, vendor and customer drawings, formulations and
specifications, quality records and reports and other books, records, studies,
surveys, reports, plans and documents;
(l) all prepaid expenses, trade accounts and other
accounts and notes receivable;
(m) all rights under contracts or agreements, all claims
or rights against any Person arising from the ownership of any Asset, all rights
in connection with any bids or offers and all claims, choses in action or
similar rights, whether accrued or contingent;
(n) all insurance proceeds and rights under insurance
policies and all rights in the nature of insurance, indemnification or
contribution;
(o) all licenses (including radio and similar licenses),
permits, approvals and authorizations that have been issued by any Governmental
Authority;
(p) all cash or cash equivalents, bank accounts, lock
boxes and other deposit arrangements;
(q) copies of all documentation related to Insurance
Policies; and
(r) interest rate, currency, commodity or other swap,
collar, cap or other hedging or similar agreements or arrangements.
1.9. 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.
1.10. AT&T COMCAST means AT&T Comcast Corporation, a
Pennsylvania corporation.
1.11. AT&T-COMCAST MERGER has the meaning ascribed thereto
in the Restructuring Agreement.
1.12. AUTHORIZATION means any waiver, amendment, consent,
approval, license, franchise, permit (including construction permits),
certificate, exemption, variance or authorization of, expiration or termination
of any waiting period requirement (including pursuant
-3-
<PAGE>
to the HSR Act) or other action by, or notice, filing, registration,
qualification, declaration or designation with, any Person (including any
Governmental Authority).
1.13. BENEFIT PLAN means any employee benefit plan,
arrangement, policy or program (whether or not an employee benefit plan within
the meaning of Section 3(3) of ERISA and whether or not written), including,
without limitation, any employment, consulting or deferred compensation
agreement, executive compensation, bonus, incentive, pension, profit-sharing,
savings, retirement, stock option, stock purchase or severance pay plan, any
life, health, disability or accident insurance plan or any holiday or vacation
practice.
1.14. CLOSING has the meaning ascribed thereto in the
Restructuring Agreement.
1.15. CODE means the Internal Revenue Code of 1986.
1.16. COMMUNICATIONS ACT means the Communications Act of
1934.
1.17. CONFIDENTIALITY AGREEMENTS has the meaning ascribed
thereto in the Restructuring Agreement.
1.18. CONSENTS means any consents, waivers or approvals
from, or notification requirements to, any third parties.
1.19. CONTRACT means any contract, lease, agreement,
covenant, indenture, note, security, instrument, arrangement, commitment or any
other binding understanding, whether written or oral.
1.20. COPYRIGHT AND TECHNOLOGY ASSIGNMENT means the
Copyright and Technology Assignment, dated as of the date hereof, by and between
TWE and Holdco.
1.21. DELAYED NON-TRANSFERRED ASSETS means any
Non-Transferred Assets that are to be transferred after the Closing pursuant to
Section 2.6 of this Agreement or pursuant to any Ancillary Agreement.
1.22. DELAYED TRANSFER ASSETS means any TWE Non-Broadband
Assets that are to be transferred after the Closing pursuant to Section 2.6 of
this Agreement or pursuant to any Ancillary Agreement.
1.23. ENVIRONMENTAL LAW means any Law (including common
law) relating to pollution or the protection of public health, safety, welfare
or the pollution, protection or restoration of the environment, including Laws
relating to emissions, discharges, releases or threatened releases of Hazardous
Substances into the environment (including ambient air, surface water, ground
water or land) or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Substances.
1.24. ENVIRONMENTAL LIABILITIES means all Liabilities
relating to, arising out of or resulting from any Environmental Law or contract
or agreement relating to environmental, health or safety matters (including all
removal, remediation or cleanup costs, investigatory costs, governmental
response costs, costs arising out of the actual or alleged violation of
Environmental Laws, natural resources damages, property damages, personal injury
damages, costs of compliance with any settlement, judgment or other
determination of Liability and indemnity,
-4-
<PAGE>
contribution or similar obligations) and all costs and expenses, interest,
fines, penalties or other monetary sanctions in connection therewith.
1.25. EQUITY SECURITY has the meaning ascribed to such term
in Rule 405 promulgated under the Securities Act of 1933 as in effect on the
date hereof and, in any event, shall also include (i) any capital stock of a
corporation, any partnership interest, any limited liability company interest
and any other equity interest; (ii) any security or Indebtedness having the
attendant right to vote for directors or similar representatives; (iii) any
security or right convertible into, exchangeable for, or evidencing the right to
subscribe for any such stock, equity interest, security or Indebtedness referred
to in clause (i) or (ii); (iv) any stock appreciation right, contingent value
right or similar security or right that is derivative of any such stock, equity
interest, security or Indebtedness referred to in clause (i), (ii) or (iii); and
(v) any Contract to grant, issue, award, convey or sell any of the foregoing.
1.26. ERISA means the Employee Retirement Income Securities
Act of 1974.
1.27. EXCEPTED THIRD PARTY CLAIM means a Third Party Claim
(a) for injunctive or equitable relief against the Indemnitee or (b) in respect
of which it is reasonably likely that, based on the financial condition of the
Indemnifying Party and the maximum amount of Liability that could reasonably be
expected to result from such Third Party Claim, the Indemnifying Party would not
possess the financial resources to satisfy such Liability.
1.28. EXCLUDED ASSETS means (without duplication):
(a) any Assets listed or described on Schedule 1.28(a);
and
(b) all cash and cash equivalents held by (A) TWE, (B)
TWEAN or (C) any wholly-owned Subsidiaries of TWE that, in each case, are
generated in compliance with the Restructuring Agreement and, as of the Closing,
are legally and contractually available for transfer to Holdco.
1.29. EXCLUDED LIABILITIES means (without duplication) the
following and, in each case, whether arising before, on or after the Closing:
(a) any Liabilities arising out of, relating to or
resulting from any consolidated Indebtedness of TWE other than the AOLTW
Broadband Permitted Indebtedness;
(b) all Liabilities arising out of, relating to or
resulting from any Excluded Assets; and
(c) any Liabilities listed or described on Schedule
1.29(c).
1.30. FRANCHISE means a written "franchise" within the
meaning of Section 602(9) of the Communications Act.
1.31. FRANCHISE CONSENTS means the Authorization required
from, by or with the relevant Franchising Authorities in respect of the
Franchises for the Systems owned or operated by any TWE Broadband Member.
-5-
<PAGE>
1.32. FRANCHISING AUTHORITY means "franchising authority"
within the meaning of Section 602(9) of the Communications Act.
1.33. GAAP means generally accepted accounting principles
in the United States in effect from time to time.
1.34. GOVERNMENTAL APPROVALS means any notices, reports or
other filings to be made, or any consents, registrations, approvals, permits or
authorizations to be obtained from, any Governmental Authority.
1.35. GOVERNMENTAL AUTHORITY means any supranational,
national, state, municipal or local government, political subdivision or other
governmental department, 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.
1.36. GROUP means the TWE Broadband Group or the TWE
Non-Broadband Group as the context requires. Any Person in a Group may be
referred to as a "MEMBER."
1.37. HAZARDOUS SUBSTANCES means (a) any "hazardous waste"
as defined by the Resource Conservation and Recovery Act of 1976 (RCRA) (42
U.S.C. Sections 6901 et seq.); (b) any "hazardous substance" as defined by the
Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42
U.S.C. Sections 9601 et seq.) (CERCLA); (c) any substance regulated by the Toxic
Substances Control Act (TSCA) (42 U.S.C. Section 2601 et seq.) or the Federal
Insecticide, Fungicide and Rodenticide Act (FIFRA) (7 U.S.C. Section 136 et
seq.); (d) asbestos or asbestos-containing material of any kind or character;
(e) polychlorinated biphenyls; (f) any substances regulated under the provisions
of Subtitle I of RCRA relating to underground storage tanks; (g) any substance
the presence, use, handling, treatment, storage, release or disposal of which on
real property owned or leased by TWE is regulated or prohibited by any
Environmental Law; and (h) any other substance which by any Environmental Law
requires special handling, reporting or notification of any Governmental
Authority in its collection, storage, release, use, treatment or disposal.
1.38. HOLDCO has the meaning set forth in the Preamble.
1.39. HSR ACT means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976.
1.40. INCOME TAXES means any Tax which is based upon,
measured by, or calculated with respect to net income or profits (including
alternative minimum Tax).
1.41. INDEBTEDNESS means, with respect to any Person, (a)
any obligation of such Person (i) for borrowed money, (ii) evidenced by a bond,
note, debenture or similar instrument for value received or in settlement of
claims, (iii) under conditional sale or other title retention agreements
relating to property acquired by such Person, (iv) for the deferred purchase
price of property or services, except trade accounts payable arising in the
ordinary course of business, or (v) under any lease or similar arrangement that
would be required to be accounted for by the lessee as a capital lease in
accordance with GAAP, or (b) without duplication, any guarantee (or keepwell
agreement) by such Person of any Indebtedness of others described in
-6-
<PAGE>
clause (a); provided, that in no event shall Indebtedness include letters of
credit that are performance or surety bonds or similar instruments issued in the
ordinary course of business or disclosed pursuant to Schedule 1.85(j).
1.42. INDEMNIFICATION PAYMENT has the meaning set forth in
Section 4.8(a).
1.43. INDEMNIFYING PARTY has the meaning set forth in
Section 4.3(a).
1.44. INDEMNITEE has the meaning set forth in Section
4.3(a).
1.45. INDEMNITY PAYMENT has the meaning set forth in
Section 4.3(a).
1.46. INFORMATION means information, whether or not
patentable or copyrightable, in written, oral, electronic or other tangible or
intangible forms, stored in any medium, including studies, reports, records,
books, Contracts, instruments, surveys, discoveries, ideas, concepts, know-how,
techniques, designs, specifications, drawings, blueprints, diagrams, models,
prototypes, samples, flow charts, data, computer data, disks, diskettes, tapes,
computer programs or other software, marketing plans, customer names,
communications by or to attorneys (including attorney-client privileged
communications), memos and other materials prepared by attorneys or under their
direction (including attorney work product) and other technical, financial,
employee or business information or data.
1.47. INSURANCE POLICIES means the insurance policies
written by insurance carriers under which, prior to the Closing, any Member (or
such Member's officers or directors) are insured parties, excluding insurance
policies funding Benefit Plans.
1.48. 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 costs or expenses incurred in the collection
thereof.
1.49. INTELLECTUAL PROPERTY AGREEMENT means the
Intellectual Property Agreement, dated as of the date hereof, by and between TWE
and Holdco.
1.50. IRS means the United States Internal Revenue Service.
1.51. JUDGMENT means any judicial decision, judgment, writ,
order, injunction, stipulation, award or decree of any court, judge, justice or
magistrate, including any bankruptcy court or judge or the arbitrator in any
binding arbitration, and any order of or by any Governmental Authority.
1.52. LAW means any foreign or domestic law, statute, code,
ordinance, rule, regulation, treaty, or Judgment, enacted, entered or
promulgated by a Governmental Authority.
1.53. LIABILITIES means any and all losses, claims,
charges, Indebtedness, demands, Actions, damages, obligations, payments, costs
and expenses, bonds, indemnities and similar obligations, covenants, Contracts,
controversies, omissions, make whole agreements and
-7-
<PAGE>
similar obligations, and other liabilities, including all Contractual
obligations, whether due or to become due, absolute or contingent, inchoate or
otherwise, matured or unmatured, liquidated or unliquidated, accrued or
unaccrued, known or unknown, determined or determinable, whenever arising, and
including those arising under any Law, principles of common law or equity
(including negligence and strict liability), Action, threatened or contemplated
Action (including the costs and expenses of demands, assessments, judgments,
settlements and compromises relating thereto and attorneys' fees and any and all
costs and expenses, whatsoever reasonably incurred in investigating, preparing
or defending against any such Actions or threatened or contemplated Actions),
order or consent decree of any Governmental Authority or any award of any
arbitrator or mediator of any kind, and those arising under any Contract,
commitment or undertaking, including those arising under this Agreement or any
Ancillary Agreement or incurred by a party hereto or thereto in connection with
enforcing its rights to indemnification hereunder or thereunder, in each case,
whether or not recorded or reflected or required to be recorded or reflected on
the books and records or financial statements of any Person.
1.54. LIEN means, with respect to any property or asset,
any mortgage, lien, pledge, charge, security interest, encumbrance or other
adverse claim of any kind in respect of such property or asset. For purposes of
this Agreement, a Person shall be deemed to own subject to a Lien any property
or asset that it has acquired or holds subject to the interest of a vendor or
lessor under any conditional sale agreement, capital lease or other title
retention agreement relating to such property or asset.
1.55. MASTER TRANSACTION AGREEMENT means the Master
Transaction Agreement, dated as of August 1, 2002, by and among TWEAN, TWE,
Paragon Communications, a Colorado general partnership, and Advance/Newhouse
Partnership, a New York general partnership.
1.56. MEMBER has the meaning set forth in the definition of
Group.
1.57. NON-INCOME TAXES shall mean all Taxes other than
Income Taxes. For the avoidance of doubt, Non-Income Taxes shall include, but
not be limited to, business and occupation, sales, use, ad valorem property,
real property gains, real or personal property, intangibles, transfer,
telecommunications, or similar Taxes.
1.58. NON-TRANSFERRED ASSETS means any TWE Broadband Assets
held by the TWE Non-Broadband Group or any of its Members.
1.59. NON-TRANSFERRED LIABILITIES means any TWE Broadband
Liabilities to which the TWE Non-Broadband Group or any of its Members are
subject.
1.60. PASS-THROUGH ENTITY means an entity which, for
federal income tax purposes, is treated as a partnership, disregarded entity or
a grantor trust or any entity treated similarly to any of the foregoing for
federal income tax purposes.
1.61. PATENT ASSIGNMENT means the Patent Assignment, dated
as of the date hereof, by and between TWE and Holdco.
-8-
<PAGE>
1.62. PERSON means an individual, corporation, partnership,
limited liability company, association, trust, joint venture or other entity or
organization, including a Governmental Authority.
1.63. PRIME RATE means the rate that the Bank of New York
(or any successor thereto or other major money center commercial bank agreed to
by the parties hereto) announces from time to time as its prime lending rate, as
in effect from time to time.
1.64. REAL PROPERTY INSTRUMENTS has the meaning set forth
in Section 2.4(a).
1.65. RESTRUCTURING AGREEMENT has the meaning set forth in
the Recitals.
1.66. SECURITY INTEREST means any mortgage, security
interest, pledge, lien, charge, claim, option, right to acquire, voting or other
restriction, right-of-way, covenant, condition, easement, encroachment,
restriction on transfer, or other encumbrance of any nature whatsoever.
1.67. SELECTED BUSINESS has the meaning ascribed thereto in
the Master Transaction Agreement.
1.68. SUBSIDIARY of any Person means any corporation or
other organization, whether incorporated or unincorporated, of which at least a
majority of the 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.
1.69. SYSTEM means a "cable television system" within the
meaning of Section 602(7) of the Communications Act.
1.70. TAX RETURN shall mean any report, return or other
information (including any attached schedules or any amendments to such report,
return or other information) required to be supplied to or filed with a
Governmental Authority with respect to any Tax, including an information return,
claim for refund, amended return, declaration, or estimated Tax return, in
connection with the determination, assessment, collection or administration of
any Tax.
1.71. TAXES shall mean all forms of taxes, fees, imposts,
levies or other assessments whenever created or imposed, and whether of the
United States or elsewhere, and whether imposed by any Governmental Authority
and, without limiting the generality of the foregoing, shall include income,
gross receipts, business and occupation, property, sales, use, license, excise,
franchise, capital stock, employment, payroll, unemployment insurance, social
security, stamp, environmental, value added, alternative or added minimum, ad
valorem, trade, recording, withholding, occupation or transfer tax, custom or
duty or other like governmental assessment or charge of any kind whatsoever,
whether computed on a separate, consolidated, unitary, combined or any other
basis, together with any related interest, penalties and additions imposed by
any Governmental Authority.
-9-
<PAGE>
1.72. THIRD PARTY CLAIM has the meaning set forth in
Section 4.4(a).
1.73. TRADEMARK AND SERVICE MARK ASSIGNMENT means the
Trademark and Service Mark Assignment, dated as of the date hereof, by and
between TWE and Holdco.
1.74. TRANSFEREE INDEMNIFICATION PAYMENT has the meaning
set forth in Section 4.8(a).
1.75. TRANSFEROR INDEMNIFICATION PAYMENT has the meaning
set forth in Section 4.8(a).
1.76. TRANSACTION AGREEMENTS has the meaning ascribed
thereto in the Restructuring Agreement.
1.77. TWE has the meaning set forth in the Preamble.
1.78. TWEAN means Time Warner Entertainment -
Advance/Newhouse Partnership, a New York general partnership.
1.79. TWEAN RESTRUCTURING means the transactions
contemplated by the Master Transaction Agreement.
1.80. TWE BROADBAND ASSETS means (without duplication):
(a) any Assets existing on the date hereof, subject to
any dispositions of such Assets subsequent to the date hereof in compliance with
the terms of the Restructuring Agreement, that are primarily related to or
primarily used in the TWE Broadband Business;
(b) any Assets acquired subsequent to the date hereof, in
compliance with the terms of the Restructuring Agreement, that are primarily
related to the TWE Broadband Business;
(c) any rights, benefits and privileges of any TWE
Broadband Member under any TWE Broadband Contract, this Agreement and any
Ancillary Agreement, including any Assets to be conveyed to any TWE Broadband
Member under the terms of any Ancillary Agreement;
(d) any interests in and rights with respect to Equity
Securities in any TWE Broadband Member (other than TWE), unless disposed of
after the date hereof in compliance with the terms of the Restructuring
Agreement;
(e) any Authorizations of TWE or any of its Subsidiaries
that are primarily related to or primarily used in the TWE Broadband Business,
including the rights, benefits, privileges or other interests of TWE and its
Subsidiaries in any Franchises (including those set forth on Schedule 1.80(e));
(f) any TWE Broadband Real Property and related Assets
referred to in Section 2.4(b);
-10-
<PAGE>
(g) any other Assets that are expressly identified by
this Agreement or any Ancillary Agreement (or the Schedules hereto or thereto)
as Assets to be assigned to, or retained by, any TWE Broadband Member, and all
rights of any TWE Broadband Member under this Agreement or any of the Ancillary
Agreements following the Closing;
(h) any Assets comprising, and any rights, benefits,
privileges or other interests in, the Systems set forth on Schedule 1.80(h) and
all other Systems owned, managed or operated directly or indirectly by TWE or
its Subsidiaries;
(i) any rights relating to, arising out of or resulting
from any Actions primarily related to the TWE Broadband Business, including
those listed on Schedule 1.80(i) that are primarily related to the TWE Broadband
Business;
(j) any monies, contracts or other funds relating to the
participation of any current or former employees of TWE or its Subsidiaries who
are or, in the case of former employees, were primarily employed in connection
with the TWE Broadband Business, in any Benefit Plan;
(k) any interest in and rights with respect to any Equity
Security in a joint venture or similar investment primarily related to the TWE
Broadband Business (including, without limitation, the interest of TWE and its
Subsidiaries in Road Runner Holdco LLC, a Delaware limited liability company,
TWEAN, Texas Cable Partners, L.P., a Delaware limited partnership, Kansas City
Cable Partners, a Colorado general partnership, or any joint venture the primary
business of which is the ownership or management of Systems);
(l) any interest in any other investments primarily
related to the TWE Broadband Business;
(m) any other Assets that are primarily used or primarily
held for use in the TWE Broadband Business; and
(n) any Assets listed or described on Schedule 1.80(n)
that are primarily related to the TWE Broadband Business.
Notwithstanding the foregoing, the TWE Broadband Assets shall not in any event
include the Excluded Assets.
1.81. TWE BROADBAND BUSINESS means the businesses conducted
directly or indirectly by TWE (either itself or through direct or indirect
divisions, subsidiaries, affiliates, joint ventures or other investments, or any
of their predecessors or successors) with, through, in or by (a) all of the
business related to the ownership, management and operation of any Systems that
are owned, managed or operated directly or indirectly by TWE or its
Subsidiaries, including those set forth on Schedule 1.80(h) and any Systems
divested by TWE or its Subsidiaries; (b) all of the business related to the
ownership and operation of the Road Runner high speed data service business and
TWE's interest in Road Runner Holdco LLC, a Delaware limited liability company;
(c) any terminated, divested or discontinued businesses or operations that at
the time of termination, divestiture or discontinuation primarily related to the
TWE Broadband Business, including those listed on Schedule 1.81(c); (d) all of
the businesses, Assets and Liabilities related to the ownership and operation of
local news channels in the locations of the Systems described
-11-
<PAGE>
in clause (a); and (e) the businesses, Assets and Liabilities primarily related
to the TWE Broadband Business, including the ownership interests in joint
ventures that are primarily engaged in the TWE Broadband Business, including
those listed or described on Schedule 1.81(e); provided that the TWE Broadband
Business shall not include (x) any Assets disposed of or otherwise transferred
from, or Liabilities discharged by, the TWE Broadband Group after the date
hereof in compliance with the terms of the Restructuring Agreement or (y) the
Excluded Assets or the Excluded Liabilities.
1.82. TWE BROADBAND CONTRACTS means the following Contracts
to which TWE or any of its Subsidiaries is a party or by which it or any of its
Subsidiaries or any of their respective Assets is bound (provided that any
contract or agreement that is expressly contemplated to be assigned to or
retained by any TWE Non-Broadband Member pursuant to any provision of this
Agreement or any Ancillary Agreement shall not be considered a TWE Broadband
Contract):
(a) any Contract that relates primarily to the TWE
Broadband Business, including Contracts that may be extended, modified or
terminated after the date hereof;
(b) any Contract to the extent representing AOLTW
Broadband Permitted Indebtedness;
(c) any Contract listed or described on Schedule 1.82(c)
that relates primarily to the TWE Broadband Business;
(d) any Contract that pursuant to this Agreement or any
Ancillary Agreement is otherwise to be expressly retained or assumed by any TWE
Broadband Member;
(e) this Agreement and the Ancillary Agreements, to the
extent of the rights or obligations of any TWE Broadband Member hereunder or
thereunder; and
(f) the Master Transaction Agreement, including all of
the Exhibits thereto.
Any Contract between the TWE Broadband Business and the TWE Non-Broadband
Business will be treated (i) as a TWE Broadband Contract with respect to the
rights and obligations of the TWE Broadband Business and (ii) as a TWE
Non-Broadband Contract with respect to the rights and obligations of the TWE
Non-Broadband Business.
1.83. TWE BROADBAND GROUP means, unless otherwise specified
(a) before the Closing, including at the time of determination of TWE Broadband
Assets or TWE Broadband Liabilities, TWE (other than any divisions of TWE that
are not primarily engaged in the TWE Broadband Business) and any direct or
indirect Subsidiary of TWE primarily engaged in the TWE Broadband Business and
(b) at or following the Closing, TWE and its Subsidiaries (including their
respective successors and assigns). Any Person in the TWE Broadband Group may be
referred to as a "TWE BROADBAND MEMBER."
1.84. TWE BROADBAND INDEMNITEES has the meaning set forth
in Section 4.1.
1.85. TWE BROADBAND LIABILITIES means (without duplication)
the following and, in each case, whether arising before, on or after the
Closing:
-12-
<PAGE>
(a) any Liabilities existing on the date hereof, subject
to any discharge of such Liabilities subsequent to the date hereof, that are
primarily related to the TWE Broadband Business;
(b) any Liabilities that are expressly identified by this
Agreement or any Ancillary Agreement (or the Schedules hereto or thereto) as
Liabilities to be retained by, or assumed by, any TWE Broadband Member, subject
to discharge of such Liabilities subsequent to the date hereof and all
agreements, obligations and Liabilities of any TWE Broadband Member under this
Agreement or any of the Ancillary Agreements;
(c) any Liabilities relating to, arising out of or
resulting from any TWE Broadband Contract;
(d) any Liabilities assumed, incurred or arising
subsequent to the date hereof (including with respect to periods prior to the
date hereof), that are primarily related to the TWE Broadband Business;
(e) any Liabilities to the extent relating to, arising
out of or resulting from any Actions related to the TWE Broadband Business,
including those Actions listed on Schedule 1.80(i) to the extent related to the
TWE Broadband Business;
(f) any Liabilities, including any Environmental
Liabilities and Liabilities for Non-Income Taxes and TWE Entity Level Income
Taxes, primarily relating to:
(i) the TWE Broadband Business, including the operation
of the TWE Broadband Business, as conducted at any time prior
to, on or after the Closing (including any such Liability
relating to, arising out of or resulting from any act or failure
to act by any director, officer, employee, agent or
representative (whether or not such act or failure to act is or
was within such Person's authority));
(ii) the operation of any business conducted by any TWE
Broadband Member at any time after the Closing (including any
such Liability relating to, arising out of or resulting from any
act or failure to act by any director, officer, employee, agent
or representative (whether or not such act or failure to act is
or was within such Person's authority)); or
(iii) any TWE Broadband Assets (including any TWE
Broadband Contracts and any TWE Broadband Real Property);
(g) any Liabilities relating to, arising out of, or
resulting from any employee, employment activity or practice or Benefit Plan,
with respect to any current or former employees of TWE or its Subsidiaries who
are or, in the case of former employees, were primarily employed in connection
with the TWE Broadband Business;
(h) any Liability in respect of 55% of up to two months
of accrued and unpaid management fee arising pursuant to Section 12.10 of the
Original Partnership Agreement (as defined in the Restructuring Agreement);
(i) any Liabilities arising out of, relating to or
resulting from the AOLTW Broadband Permitted Indebtedness; and
-13-
<PAGE>
(j) any Liabilities listed or described on Schedule
1.85(j) that are primarily related to the TWE Broadband Business.
Notwithstanding the foregoing, the TWE Broadband Liabilities shall not include
the Excluded Liabilities.
1.86. TWE BROADBAND MEMBER has the meaning set forth in the
definition of TWE Broadband Group.
1.87. TWE BROADBAND REAL PROPERTY means all right, title
and interest in real property primarily used in connection with the TWE
Broadband Business, wherever located, of TWE or any of its Subsidiaries,
including: (a) the real property listed on Schedule 1.87(a) that is primarily
used or primarily held for use in connection with the TWE Broadband Business,
(b) all land (the "LAND") owned by TWE or any of its Subsidiaries and primarily
used or primarily held for use in connection with the TWE Broadband Business,
together with all buildings, structures and other improvements (the
"IMPROVEMENTS") now or hereafter located thereon (the Land and the Improvements,
collectively, the "OWNED REAL PROPERTY"), (c) all real property leased,
subleased or otherwise occupied by TWE or any of its Subsidiaries and primarily
used or primarily held for use in connection with the TWE Broadband Business
(the "LEASED REAL PROPERTY" and, together with the Owned Real Property, the
"REAL PROPERTY"), (d) all easements, licenses, permits, rights of way,
reservations, privileges, and other estates and rights of TWE or any of its
Subsidiaries, either in gross or appurtenant pertaining to such Real Property or
to any other real property and primarily used or primarily held for use in
connection with the TWE Broadband Business, (e) all right, title and interest of
TWE or any of its Subsidiaries in and to all strips and gores, all alleys
adjoining land, and the land lying in the bed of any street, road or avenue,
opened or proposed, in front of or adjoining the Land to the center line
thereof, and all right, title and interest of TWE or any of its Subsidiaries in
and to any award made or to be made in lieu thereof and in and to any unpaid
award for any taking by condemnation or any damages to the Owned Real Property
by reason of any change of grade of any street, road or avenue, in each case,
primarily used or primarily held for use in connection with the TWE Broadband
Business, (f) all right, title and interest of any of TWE or any of its
Subsidiaries in and to the airspace above the Real Property (and the rights to
use such airspace) and any transferable development or similar rights
appurtenant to the Real Property by allocation under applicable Laws, by zoning
lot merger or otherwise and (g) all rights, licenses, easements, leases,
indefeasible rights of use, title, attachment rights, authorizations and other
rights pertaining to poles, conduits and cable primarily used or primarily held
for use in connection with the TWE Broadband Business and held by TWE or any of
its Subsidiaries.
1.88. TWE DISTRIBUTION has the meaning ascribed thereto in
the Restructuring Agreement.
1.89. TWE ENTITY LEVEL INCOME TAXES shall mean Income Taxes
of TWE or any entity owned directly or indirectly, in whole or in part, by TWE
to the extent that such Income Taxes are imposed by Law on such entity and not
passed through to its owners by reason of such entity being a Pass-Through
Entity.
1.90. TWE NON-BROADBAND ASSETS means all Assets of TWE,
including its ownership interest in its Subsidiaries and the TWE Non-Broadband
Real Property but, in each case, excluding the TWE Broadband Assets; provided
that, to the extent that any direct or
-14-
<PAGE>
indirect Subsidiary of TWE owns any assets other than TWE Broadband Assets, such
other assets shall be deemed to be TWE Non-Broadband Assets hereunder, including
for purposes of Section 2.1(c). Notwithstanding the foregoing, the TWE
Non-Broadband Assets shall include the Excluded Assets.
1.91. TWE NON-BROADBAND BUSINESS means the businesses
conducted (including any businesses or operations terminated, discontinued or
divested) directly or indirectly by TWE (either itself or through direct or
indirect divisions, subsidiaries, affiliates, joint ventures or other
investments, or any of their predecessors or successors), other than the TWE
Broadband Business.
1.92. TWE NON-BROADBAND CONTRACTS means any Contracts to
which TWE or any of its Subsidiaries (which, for purposes of this definition,
shall also include TWE Non-Broadband Members) is a party or by which it or any
of its Subsidiaries or any of their respective Assets is bound, except for the
TWE Broadband Contracts. Any Contract between the TWE Broadband Business and the
TWE Non-Broadband Business will be treated (i) as a TWE Broadband Contract with
respect to the rights and obligations of the TWE Broadband Business and (ii) as
a TWE Non-Broadband Contract with respect to the rights and obligations of the
TWE Non-Broadband Business.
1.93. TWE NON-BROADBAND GROUP means (a) before the Closing,
including at the time of determination of TWE Broadband Assets or TWE Broadband
Liabilities, TWE (other than any divisions of TWE that are primarily engaged in
the TWE Broadband Business) and any direct or indirect Subsidiary of TWE that is
not a TWE Broadband Member and (b) at or following the Closing, Holdco and its
Subsidiaries, including their respective successors and assigns but excluding
TWE and its Subsidiaries. Any Person in the TWE Non-Broadband Group may be
referred to as a "TWE NON-BROADBAND MEMBER."
1.94. TWE NON-BROADBAND INDEMNITEES has the meaning set
forth in Section 4.2.
1.95. TWE NON-BROADBAND LIABILITIES means all Liabilities
of TWE and its Subsidiaries, including all Liabilities primarily relating to,
arising out of or resulting from the TWE Non-Broadband Real Property but
excluding the TWE Broadband Liabilities. Notwithstanding the foregoing, the TWE
Non-Broadband Liabilities shall include the Excluded Liabilities.
1.96. TWE NON-BROADBAND MEMBER has the meaning set forth in
the definition of TWE Non-Broadband Group.
1.97. TWE NON-BROADBAND REAL PROPERTY means all right,
title and interest in real property, wherever located, of TWE and its
Subsidiaries, other than the TWE Broadband Real Property.
1.98. TWE PARTNERSHIP INTERESTS has the meaning set forth
in the Recitals.
-15-
<PAGE>
ARTICLE II
THE SEPARATION
2.1. TRANSFER OF ASSETS; ASSUMPTION OF LIABILITIES;
REDEMPTION OF PARTNERSHIP INTERESTS
(a) Subject to Section 2.1(h) and Section 3.1, at the
Closing and immediately prior to the transactions contemplated in Section
2.1(c), TWE will cause the applicable TWE Non-Broadband Members to assign,
transfer, convey and deliver to TWE (or to one or more TWE Broadband Members
designated by TWE), and TWE (or such TWE Broadband Member(s)) will accept from
such TWE Non-Broadband Members, all of each TWE Non-Broadband Member's
respective right, title and interest in and to all of the Non-Transferred
Assets, other than the Delayed Non-Transferred Assets.
(b) Subject to Section 2.1(h) and Section 3.1, at the
Closing and concurrently with the transactions contemplated in Section 2.1(a),
TWE will cause the applicable TWE Non-Broadband Members to assign, transfer,
convey and deliver to TWE (or one or more TWE Broadband Members designated by
TWE) and TWE (or such TWE Broadband Member(s)) will assume and agree faithfully
to perform and fulfill all the Non-Transferred Liabilities in accordance with
their respective terms; provided that such Non-Transferred Liabilities shall not
be assigned or otherwise transferred to the extent that such Non-Transferred
Liabilities are already Liabilities of a TWE Broadband Member. TWE (or the TWE
Broadband Member(s) receiving the corresponding Non-Transferred Assets) shall be
responsible for all Non-Transferred Liabilities, regardless of when or where
such Liabilities arose or arise, or whether the facts on which they are based
occurred prior to, on or subsequent to the date hereof, regardless of where or
against whom such Liabilities are asserted or determined or whether asserted or
determined prior to the date hereof, and regardless of whether arising from or
alleged to arise from negligence, recklessness, violation of Law, fraud,
misrepresentation or any other cause by a Member of any Group or any of their
respective directors, officers, employees, agents, Subsidiaries or Affiliates.
(c) Subject to Section 2.1(i) and Section 3.1, at the
Closing, TWE will assign, transfer, convey and deliver to Holdco (or one or more
TWE Non-Broadband Members designated by Holdco), and will cause its applicable
Subsidiaries to assign, transfer, convey and deliver to Holdco (or to such TWE
Non-Broadband Member(s)), and Holdco (or such TWE Non-Broadband Member(s)) will
accept from TWE and its applicable Subsidiaries, all of each TWE Broadband
Member's respective right, title and interest in and to all of the TWE
Non-Broadband Assets, other than the Delayed Transfer Assets.
(d) Subject to Section 2.1(i) and Section 3.1, at the
Closing and concurrently with the transactions contemplated in Section 2.1(c),
TWE will assign, transfer, convey and deliver to Holdco (or one or more TWE
Non-Broadband Members designated by Holdco), and will cause its applicable
Subsidiaries to assign, transfer, convey and deliver to Holdco (or to such TWE
Non-Broadband Member(s)), and Holdco (or such TWE Non-Broadband Member(s)) will
assume and agree faithfully to perform and fulfill all the TWE Non-Broadband
Liabilities, in accordance with their respective terms; provided that such TWE
Non-Broadband Liabilities shall not be assigned or otherwise transferred to the
extent that such TWE Non-Broadband Liabilities are already Liabilities of a TWE
Non-Broadband Member (other than TWE). Holdco (or the TWE Non-Broadband
Member(s) receiving the corresponding TWE Non-Broadband Assets)
-16-
<PAGE>
shall be responsible for all TWE Non-Broadband Liabilities, regardless of when
or where such Liabilities arose or arise, or whether the facts on which they are
based occurred prior to, on or subsequent to the date hereof, regardless of
where or against whom such Liabilities are asserted or determined or whether
asserted or determined prior to the date hereof, and regardless of whether
arising from or alleged to arise from negligence, recklessness, violation of
Law, fraud, misrepresentation or any other cause by a Member of any Group or any
of their respective Subsidiaries, directors, officers, employees or agents or
Affiliates.
(e) Each of the parties hereto agrees that the Delayed
Transfer Assets and the Delayed Non-Transferred Assets will be assigned,
transferred, conveyed and delivered in accordance with the terms of Section 2.6
or other agreements that provide for such assignment, transfer, conveyance and
delivery after the Closing. The parties hereto further agree (i) that all such
Delayed Transfer Assets and Delayed Non-Transferred Assets shall be treated for
all Tax purposes as assets of the beneficial owner and (ii) not to report or
take any Tax position (on a Tax Return or otherwise) inconsistent with such
treatment (unless required by a change in applicable Tax law or good faith
resolution of a contest). Following the Closing, the Delayed Transfer Assets and
Delayed Non-Transferred Assets shall (except where the context otherwise
requires) be treated for all purposes of this Agreement and the Ancillary
Agreements as TWE Non-Broadband Assets and Non-Transferred Assets, respectively.
(f) In the event that at any time or from time to time
(whether prior to or after the Closing), any party hereto (or any Member of such
party's respective Group) shall receive or otherwise possess any Asset that
should have been assigned or transferred to or retained by any other Person
pursuant to this Agreement or any Ancillary Agreement, such party shall promptly
transfer, or cause to be transferred, such Asset to the Person so entitled
thereto. Prior to any such transfer, the Person receiving or possessing such
Asset shall hold such Asset in trust for any such other Person.
(g) Subject to Section 3.1, at the Closing, certain of
the TWE Partnership Interests held by Holdco will be redeemed as set forth on
Schedule 2.1(g).
(h) For the avoidance of doubt, the parties acknowledge
and agree that any Non-Transferred Assets to be assigned, transferred, conveyed
and delivered hereunder and any Non-Transferred Liabilities to be assumed
hereunder, may, at the option of TWE, be transferred or assumed, as applicable,
by transferring all of the Equity Securities in a Person that owns such
Non-Transferred Assets or is subject to such Non-Transferred Liabilities, as
applicable (provided that if such Person owns any TWE Non-Broadband Assets or is
subject to any TWE Non-Broadband Liabilities, such TWE Non-Broadband Assets
shall be transferred to a TWE Non-Broadband Member, and such TWE Non-Broadband
Liabilities shall be assumed by a TWE Non-Broadband Member, in each case prior
to the Closing), or by causing such Person to directly transfer such
Non-Transferred Assets or assign such Non-Transferred Liabilities.
(i) For the avoidance of doubt, the parties acknowledge
and agree that any TWE Non-Broadband Assets to be assigned, transferred,
conveyed and delivered hereunder and any TWE Non-Broadband Liabilities to be
assumed hereunder, may, at the option of TWE, be transferred or assumed, as
applicable, by transferring all of the Equity Securities in a Person that owns
such TWE Non-Broadband Assets or is subject to such TWE Non-Broadband
Liabilities, as applicable (provided that if such Person owns any TWE Broadband
Assets or is subject to any TWE Broadband Liabilities, such TWE Broadband Assets
shall be transferred to a TWE
-17-
<PAGE>
Broadband Member, and such TWE Broadband Liabilities shall be assumed by a TWE
Broadband Member, in each case prior to the Closing), or by causing such Person
to directly transfer such TWE Non-Broadband Assets or assign such TWE
Non-Broadband Liabilities.
2.2. DISCLAIMER OF REPRESENTATIONS AND WARRANTIES. EXCEPT
AS MAY EXPRESSLY BE SET FORTH HEREIN, IN ANY ANCILLARY AGREEMENT, IN THE
RESTRUCTURING AGREEMENT OR IN ANY OTHER TRANSACTION AGREEMENT, (A) NONE OF TWE,
HOLDCO OR ANY OTHER PERSON MAKES ANY REPRESENTATION OR WARRANTY OF ANY KIND
WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY (INCLUDING ANY CONSENTS OR APPROVALS REQUIRED IN CONNECTION
THEREWITH) OR THE BUSINESS, ASSETS, CONDITION OR PROSPECTS (FINANCIAL OR
OTHERWISE) OF, OR ANY OTHER MATTER INVOLVING, THE ASSETS, BUSINESSES OR
LIABILITIES OF TWE, HOLDCO, THE TWE NON-BROADBAND GROUP OR THE TWE BROADBAND
GROUP; (B) ALL OF THE ASSETS TO BE RETAINED OR TRANSFERRED OR THE LIABILITIES TO
BE RETAINED, ASSUMED OR TRANSFERRED IN ACCORDANCE WITH THIS AGREEMENT SHALL BE
TRANSFERRED OR ASSUMED ON AN "AS IS, WHERE IS BASIS," AND ALL IMPLIED WARRANTIES
OF MERCHANTABILITY, FITNESS FOR A SPECIFIC PURPOSE OR OTHERWISE ARE HEREBY
EXPRESSLY DISCLAIMED, AND (C) NONE OF TWE, HOLDCO OR ANY OTHER PERSON MAKES ANY
REPRESENTATION OR WARRANTY WITH RESPECT TO ANY INFORMATION, DOCUMENTS OR
MATERIAL MADE AVAILABLE IN CONNECTION WITH THE ENTERING INTO OF THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY.
2.3. OTHER ANCILLARY AGREEMENTS. On or prior to the
Closing, each of TWE and Holdco will execute and deliver, and will cause its
Subsidiaries to execute and deliver, all Ancillary Agreements to which such
Person is a party.
2.4. DOCUMENTS RELATING TO TRANSFER OF REAL PROPERTY
INTERESTS AND TANGIBLE PROPERTY LOCATED THEREON. (a) To the extent necessary, in
furtherance of the assignment, transfer and conveyance of the TWE Broadband Real
Property and the assumption of the related Non-Transferred Liabilities pursuant
to Sections 2.1(a) and (b) and the assignment, transfer and conveyance of the
TWE Non-Broadband Real Property and the assumption of the related TWE
Non-Broadband Liabilities pursuant to Sections 2.1(c) and (d), at the Closing
(to the extent practicable) or promptly thereafter in accordance with Article
VII hereof, each of TWE and Holdco, or their applicable Subsidiaries, will
execute and deliver such deeds, lease assignments and assumptions, leases,
subleases and sub-subleases, transfer tax returns, affidavits and similar
instruments as may be necessary to effect the transactions contemplated by this
Agreement, including this Section 2.4 (collectively, the "REAL PROPERTY
INSTRUMENTS"), provided that the Real Property Instruments need not be delivered
to the extent that the TWE Non-Broadband Real Property is already owned by or
held in the name of any TWE Non-Broadband Member or the TWE Broadband Real
Property is wholly owned by, or held in the name of, any TWE Broadband Member.
The applicable Real Property Instruments will be on mutually acceptable terms.
(b) Except as otherwise expressly provided in this
Agreement or any Ancillary Agreement or on Schedule 2.4(b), all leasehold
improvements, fixtures, furniture,
-18-
<PAGE>
office equipment, servers, private branch exchanges, artwork and other tangible
property (other than equipment subject to capital or operating equipment leases,
which will be transferred or retained based on whether the associated capital or
operating equipment lease is or is not a TWE Non-Broadband Contract) located as
of the date hereof on any TWE Non-Broadband Real Property shall be transferred
to Holdco and included within the definition of TWE Non-Broadband Assets;
provided that any such Assets that were acquired by or on behalf of a TWE
Broadband Member and are primarily used or primarily held for use in the TWE
Broadband Business shall not be considered TWE Non-Broadband Assets and shall
not be transferred to Holdco.
(c) Except as otherwise expressly provided in this
Agreement or any Ancillary Agreement or on Schedule 2.4(c), all leasehold
improvements, fixtures, furniture, office equipment, servers, private branch
exchanges, artwork and other tangible property (other than equipment subject to
capital or operating equipment leases, which will be transferred or retained
based on whether the associated capital or operating equipment lease is or is
not a TWE Broadband Contract) located as of the date hereof on any TWE Broadband
Real Property shall be retained by TWE and included within the definition of TWE
Broadband Assets; provided that any such Assets that were acquired by or on
behalf of a TWE Non-Broadband Member and are not primarily used or primarily
held for use in the TWE Broadband Business shall not be considered TWE Broadband
Assets and shall not be retained by TWE.
(d) Any TWE Non-Broadband Real Property (including the
TWE Non-Broadband Real Property listed on Schedule 2.4(d)) used in connection
with both the TWE Broadband Business and the TWE Non-Broadband Business will be
leased or subleased following the Closing by the relevant TWE Non-Broadband
Member to the relevant TWE Broadband Member substantially on terms currently in
effect for a reasonable transition period or such longer period as the parties
may agree; provided that the terms of any such lease or sublease shall be
subject to Section 7.6 of the Amended and Restated Partnership Agreement of TWE.
(e) Any TWE Broadband Real Property (including the TWE
Broadband Real Property listed on Schedule 2.4(e)) used in connection with both
the TWE Broadband Business and the TWE Non-Broadband Business will be leased or
subleased following the Closing by the relevant TWE Broadband Member to the
relevant TWE Non-Broadband Member substantially on terms currently in effect for
a reasonable transition period or such longer period as the parties may agree;
provided that the terms of any such lease or sublease shall be subject to
Section 7.6 of the Amended and Restated Partnership Agreement of TWE.
2.5. DOCUMENTS RELATING TO OTHER TRANSFERS OF ASSETS AND
ASSUMPTION OF LIABILITIES. In furtherance of the assignment, transfer and
conveyance of TWE Non-Broadband Assets and Non-Transferred Assets and the
assumption of TWE Non-Broadband Liabilities, and Non-Transferred Liabilities
pursuant to Section 2.1(a), (b), (c) and (d), simultaneously with the Closing
or, to the extent not capable of being delivered at such time, as promptly as
practicable thereafter, (a) TWE shall execute and deliver, and shall cause its
Subsidiaries to execute and deliver, such bills of sale, stock powers,
certificates of title, assignments and assumptions of contracts and other
instruments of transfer, conveyance, assignment and assumption as and to the
extent necessary to evidence (i) the transfer, conveyance and assignment of all
of the TWE Broadband Members' right, title and interest in and to the TWE
Non-Broadband Assets to Holdco (or the TWE Non-Broadband Member designated by
Holdco), to the extent required by
-19-
<PAGE>
Section 2.1(c) and (ii) the valid and effective assumption of the
Non-Transferred Liabilities by TWE (or the TWE Broadband Member receiving the
corresponding Non-Transferred Asset), to the extent required by Section 2.1(b)
and (b) Holdco shall execute and deliver, and shall cause its Subsidiaries to
execute and deliver, such bills of sale, stock powers, certificates of title,
assignments and assumptions of contracts and other instruments of transfer,
conveyance, assignment and assumption as and to the extent necessary to evidence
(i) the transfer, conveyance and assignment of all of Holdco and the TWE
Non-Broadband Members' right, title and interest in and to the Non-Transferred
Assets to TWE (or the TWE Broadband Member designated by TWE), to the extent
required by Section 2.1(a) and (ii) the valid and effective assumption of the
TWE Non-Broadband Liabilities by Holdco (or the TWE Non-Broadband Members
receiving the corresponding Transferred Asset), to the extent required by
Section 2.1(d).
2.6. GOVERNMENTAL APPROVALS AND CONSENTS. (a) If and to
the extent that the valid, complete and perfected transfer or assignment to
Holdco (or the applicable TWE Non-Broadband Member) of any TWE Non-Broadband
Assets (or from any TWE Non-Broadband Member of any Non-Transferred Assets held
by such Member) would be a violation of applicable Laws or require any Consent
or Governmental Approval in connection with the transactions contemplated by the
Restructuring Agreement, then, unless Holdco (in the case of a TWE Non-Broadband
Asset) or TWE (in the case of a Non-Transferred Asset) shall otherwise
determine, the transfer or assignment to Holdco (or such TWE Non-Broadband
Member) of such TWE Non-Broadband Assets or from any TWE Non-Broadband Member of
such Non-Transferred Asset shall be automatically deemed deferred and any such
purported transfer or assignment shall be null and void until such time as all
legal impediments are removed and/or such Consents or Governmental Approvals
have been made or obtained. Notwithstanding the foregoing, any such Delayed
Transferred Asset or Delayed Non-Transferred Asset shall be deemed an Asset of
the TWE Non-Broadband Group or the TWE Broadband Group, respectively, for
purposes of determining whether any Liability is a TWE Non-Broadband Liability
or a TWE Broadband Liability, respectively.
(b) If the transfer or assignment of any Asset intended
to be transferred or assigned hereunder is not consummated prior to or at the
Closing, whether as a result of the provisions of Section 2.6(a) or for any
other reason, then the Person retaining such Asset shall thereafter hold such
Asset for the use and benefit, insofar as reasonably possible, of the Person
entitled thereto (at the expense of the Person entitled thereto). In addition,
the Person retaining such Asset shall take such other actions as may be
reasonably requested by the Person to whom such Asset is to be transferred in
order to place such Person, insofar as reasonably possible, in the same position
as if such Asset had been transferred as contemplated hereby and so that all the
benefits and burdens relating to such Assets including possession, use, risk of
loss, potential for gain, and dominion, control and command over such TWE
Non-Broadband Asset or Non-Transferred Assets, are to inure from and after the
Closing to the TWE Non-Broadband Group or the TWE Broadband Group, respectively.
To the extent permitted by Law and to the extent otherwise permissible in light
of any required Consent and/or Governmental Approval, the TWE Non-Broadband
Group, on the one hand, and the TWE Broadband Group, on the other, shall be
entitled to, and shall be responsible for, the management of any TWE
Non-Broadband Assets or Non-Transferred Asset, as the case may be, not yet
transferred to it as a result of this Section 2.6(b) and the parties agree to
use reasonable commercial efforts to cooperate and coordinate with respect
thereto.
-20-
<PAGE>
(c) If and when the Consents and/or Governmental
Approvals, the absence of which caused the deferral of transfer of any Asset
pursuant to Section 2.6(a), are obtained, the transfer of the applicable Asset
shall be effected in accordance with the terms of this Agreement and/or the
applicable Ancillary Agreement.
(d) The Person retaining an Asset due to the deferral of
the transfer of such Asset shall not be obligated, in connection with the
foregoing, to expend any money unless the necessary funds are advanced by the
Person entitled to the Asset, other than reasonable out-of-pocket expenses,
attorneys' fees and recording or similar fees, all of which shall be promptly
reimbursed by the Person entitled to such Asset.
2.7. NOVATION OF TWE NON-BROADBAND LIABILITIES. (a) Each
of TWE and Holdco, at the reasonable written request of the other, shall use its
reasonable commercial efforts to obtain, or to cause to be obtained, any
release, consent, substitution, approval or amendment required to novate and
assign all obligations under agreements, leases, licenses and other obligations
or Liabilities of any nature whatsoever that constitute TWE Non-Broadband
Liabilities, or to obtain in writing the unconditional release of all parties to
such arrangements other than Holdco (or the TWE Non-Broadband Member that
received the corresponding TWE Non-Broadband Asset), so that, in any such case,
Holdco (or such TWE Non-Broadband Member) will be solely responsible for such
Liabilities; provided however, that none of the Members of any Group shall be
obligated to pay any consideration or surrender, release or modify any rights or
remedies therefor to any third party from whom such releases, consents,
approvals, substitutions and amendments are requested, except as expressly set
forth in the Restructuring Agreement or any other Transaction Agreement.
(b) If TWE or Holdco is unable to obtain, or to cause to
be obtained, any such required release, consent, substitution, approval or
amendment, the applicable TWE Broadband Member shall continue to be bound by
such Contracts, licenses and other obligations and, unless not permitted by Law
or the terms thereof, the applicable TWE Non-Broadband Member shall, as agent or
subcontractor for such TWE Broadband Member pay, perform and discharge fully all
the obligations or other Liabilities of such TWE Broadband Member thereunder
from and after the Closing. Holdco shall indemnify each TWE Broadband Indemnitee
and hold it harmless against any Liabilities arising in connection therewith.
TWE shall, without further consideration, pay and remit, or cause to be paid or
remitted, to the applicable TWE Non-Broadband Member promptly all money, rights
and other consideration received by it or any TWE Broadband Member in respect of
such performance (unless any such consideration is a Non-Transferred Asset). If
and when any such release, consent, substitution, approval or amendment shall be
obtained or such agreement, lease, license or other rights or obligations shall
otherwise become assignable or able to be novated, TWE shall thereafter assign,
or cause to be assigned, all of its rights, obligations and other Liabilities
thereunder or any rights or obligations of any TWE Broadband Member to such TWE
Non-Broadband Member without payment of further consideration and such TWE
Non-Broadband Member shall, without the payment of any further consideration,
assume such rights and obligations. Notwithstanding the foregoing, unless TWE
shall so elect in writing, Holdco shall assume, or cause the assumption of, all
TWE Non-Broadband Liabilities as of the Closing, except for Liabilities of
another TWE Non-Broadband Member.
2.8. NOVATION OF NON-TRANSFERRED LIABILITIES. (a) Each of
TWE and Holdco, at the reasonable written request of the other, shall use its
reasonable commercial efforts
-21-
<PAGE>
to obtain, or to cause to be obtained, any release, consent, substitution,
approval or amendment required to novate and assign all obligations under
Contracts, licenses, and other obligations or Liabilities of any nature
whatsoever that constitute Non-Transferred Liabilities by which any TWE
Non-Broadband Member is bound, or to obtain in writing the unconditional release
of all parties to such arrangements other than any TWE Broadband Member, so
that, in any such case, TWE (or the TWE Broadband Member party to such
arrangement) will be solely responsible for such Liabilities; provided, however,
that none of the Members of any Group shall be obligated to pay any
consideration therefor or surrender, release or modify any rights or remedies to
any third party from whom such releases, consents, approvals, substitutions and
amendments are requested, except as expressly set forth in the Restructuring
Agreement or any other Transaction Agreement.
(b) If TWE or Holdco is unable to obtain, or to cause to
be obtained, any such required release, consent, approval, substitution or
amendment, the applicable TWE Non-Broadband Member shall continue to be bound by
such Contracts, licenses, and other obligations and, unless not permitted by Law
or the terms thereof, the applicable TWE Broadband Member shall, as agent or
subcontractor for such TWE Non-Broadband Member, pay, perform and discharge
fully all the obligations or other Liabilities of such TWE Non-Broadband Member
thereunder from and after the Closing. TWE shall indemnify each TWE
Non-Broadband Indemnitee and hold each of them harmless against any Liabilities
arising in connection therewith. Holdco shall cause each TWE Non-Broadband
Member, without further consideration, to pay and remit, or cause to be paid or
remitted, to TWE or another TWE Broadband Member specified by TWE, promptly all
money, rights and other consideration received by such TWE Non-Broadband Member
in respect of such performance (unless any such consideration is a TWE
Non-Broadband Asset). If and when any such consent, approval, release,
substitution or amendment shall be obtained or such agreement, lease, license or
other rights or obligations shall otherwise become assignable or able to be
novated, Holdco shall promptly assign, or cause to be assigned, all of its
rights, obligations and other Liabilities thereunder or any rights or
obligations of any TWE Non-Broadband Member to such TWE Broadband Member without
payment of further consideration and such TWE Broadband Member shall, without
the payment of further consideration, assume such rights and obligations.
Notwithstanding the foregoing, unless Holdco shall so elect in writing, TWE
shall assume or cause the assumption of the Non-Transferred Liabilities as of
the Closing, except for Liabilities of another TWE Broadband Member.
2.9. JOINT PURCHASING ARRANGEMENTS. (a) In the case of
existing purchasing Contracts of TWE that prior to the Closing provide the TWE
Broadband Group and the TWE Non-Broadband Group with volume discounts, until
terminated by either TWE or Holdco, the parties agree to use their respective
commercially reasonable efforts so that to the extent permitted under the terms
of such existing agreements, after the Closing, the Members of each Group shall
continue to be able to make purchases and obtain the benefits of the volume
discounts. In the case of any other existing purchasing Contracts, the parties
will, at the request of either party and subject to applicable law, cooperate
reasonably in seeking modifications to such Contracts or alternative or
substitute Contracts so that, to the extent practicable after the Closing, until
terminated by either TWE or Holdco, the Members of each Group shall be able to
make purchases and obtain the benefits of the volume discounts. Notwithstanding
the foregoing, but subject to the terms of any TWE Broadband Contract or TWE
Non-Broadband Contract, no Member of any Group shall be required to commit to
any additional purchases or other
-22-
<PAGE>
obligations, make any payments or waive any rights in order to effect the
foregoing. Each party hereby agrees to indemnify and hold harmless the other
party, and if applicable the other party's Subsidiaries, with respect to any
losses or claims arising from such first party's, or such first party's
Subsidiaries', own purchases, commitments or other obligations under any such
Contracts.
(b) Subject to applicable law, each party will, if
requested by the other party, use reasonable commercial efforts to cooperate
with each other and, as applicable, with each other's Subsidiaries, to
coordinate and combine their purchases in cases where they purchase common
supplies or use the same supplier, in each case until terminated by either TWE
or Holdco and to the extent permitted by Law from time to time. It is the intent
of the parties that this coordination and cooperation will be focused on
achieving more favorable pricing and terms for such supplies and from such
suppliers by aggregating the combined purchases of the parties and their
Subsidiaries. Notwithstanding the foregoing, no party shall be obligated to
make, or cause its Subsidiaries to make, any specific purchases or to use any
specific supplier except to the extent (i) it, or one of its Subsidiaries, has
previously committed to make a specific purchase or to use a specific supplier
or (ii) subsequent to the date of this Agreement, it, or one of its
Subsidiaries, makes a commitment for a specific purchase or to use a specific
supplier. Each party will be responsible for its own and its Subsidiaries'
commitments and its own and its Subsidiaries' purchases and other obligations
made under any common or shared Contracts with suppliers and will, in respect of
such commitments, purchases or other obligations, indemnify and hold harmless
the other party and the other party's Subsidiaries that use such Contracts.
2.10. INTELLECTUAL PROPERTY MATTERS. To the extent that
this Agreement or any Ancillary Agreement contains provisions which purport to
cover or address any matter addressed in the Intellectual Property Agreement,
the Patent Assignment, the Copyright and Technology Assignment or the Trademark
and Service Mark Assignment, the Intellectual Property Agreement, the Patent
Assignment, the Copyright and Technology Assignment and the Trademark and
Service Mark Assignment, respectively, shall prevail.
2.11. EMPLOYEE MATTERS. As of the Closing, TWE and its
Subsidiaries shall employ no individuals other than employees who are primarily
employed in connection with the TWE Broadband Business. As of the Closing, all
employees of TWE and its Subsidiaries (including individuals on a leave of
absence, short term disability or long term disability) who are not primarily
employed in connection with the TWE Broadband Business shall become employees of
Holdco or its Subsidiaries. Holdco and its Subsidiaries shall take such actions
as are reasonably necessary to effectuate the transfers of employment
contemplated by this Section 2.11, including, without limitation, making a
general offer of employment. The parties hereto shall take all steps reasonably
necessary to give effect to the intent of this Section 2.11 and shall take no
actions that would interfere therewith.
ARTICLE III
CONDITIONS
3.1. CONDITIONS. The obligations of each party hereto to
consummate the transactions contemplated by this Agreement are subject to the
satisfaction or waiver of the conditions set forth in Article IX of the
Restructuring Agreement.
-23-
<PAGE>
ARTICLE IV
INDEMNIFICATION; TAXES
4.1. INDEMNIFICATION BY AOLTW AND HOLDCO.
(a) Except as provided in Section 4.3, following the
Closing, AOLTW and Holdco, on a joint and several basis, shall indemnify, defend
and hold harmless TWE, each TWE Broadband Member and each of their respective
partners, directors, officers, agents and employees, and each of the heirs,
executors, successors and assigns of any of the foregoing (collectively, the
"TWE BROADBAND INDEMNITEES"), from and against any and all Liabilities of the
TWE Broadband Indemnitees relating to, arising out of or resulting from any of
the following items (without duplication), whether arising prior to or after the
Closing or the date hereof:
(i) the failure of Holdco or any other TWE
Non-Broadband Member or any other Person to pay, perform or
otherwise promptly discharge any TWE Non-Broadband Liabilities in
accordance with their respective terms;
(ii) the TWE Non-Broadband Business, including the
operation thereof;
(iii) any breach by Holdco or any TWE Non-Broadband
Member of this Agreement or any of the Ancillary Agreements; and
(iv) any Third Party Claim in respect of any TWE
Non-Broadband Liability.
(b) Notwithstanding the foregoing, AOLTW in its sole
discretion can elect at any time upon written notice to TWE to terminate this
Section 4.1 with respect to Holdco (and only with respect to Holdco) and release
Holdco from any and all of its obligations under this Section 4.1, and TWE shall
execute and deliver all instruments reasonably requested by AOLTW to evidence
such release and termination.
4.2. INDEMNIFICATION BY TWE. Except as provided in Section
4.3, following the Closing, TWE shall indemnify, defend and hold harmless
Holdco, each TWE Non-Broadband Member and each of their respective partners,
directors, officers, agents and employees, and each of the heirs, executors,
successors and assigns of any of the foregoing (collectively, the "TWE
NON-BROADBAND INDEMNITEES"), from and against any and all Liabilities of the TWE
Non-Broadband Indemnitees relating to, arising out of or resulting from any of
the following items (without duplication), whether arising prior to or after the
Closing or the date hereof:
(a) the failure of TWE or any other TWE Broadband Member or
any other Person to pay, perform or otherwise promptly discharge any TWE
Broadband Liabilities (including any Non-Transferred Liabilities) in accordance
with their respective terms;
(b) the TWE Broadband Business, including the operation
thereof;
(c) any breach by TWE or any other TWE Broadband Member of
this Agreement or any of the Ancillary Agreements; and
-24-
<PAGE>
(d) any Third Party Claim in respect of any TWE Broadband
Liability.
4.3. INDEMNIFICATION OBLIGATIONS NET OF INSURANCE PROCEEDS
AND OTHER AMOUNTS. (a) The parties intend that any indemnification or
reimbursement obligation pursuant to this Agreement or any Ancillary Agreement
will be net of Insurance Proceeds that actually reduce the amount of the
Liability. Accordingly, the amount which any party (an "INDEMNIFYING PARTY") is
required to pay to any Person entitled to indemnification hereunder (an
"INDEMNITEE") will be reduced by any Insurance Proceeds theretofore actually
recovered by or on behalf of the Indemnitee in reduction of the related
Liability. If an Indemnitee receives a payment (an "INDEMNITY PAYMENT") required
by this Agreement from an Indemnifying Party in respect of any Liability and
subsequently receives Insurance Proceeds, then the Indemnitee will pay to the
Indemnifying Party an amount equal to the excess of the Indemnity Payment
received over the amount of the Indemnity Payment that would have been due if
the Insurance Proceeds had been received, realized or recovered before the
Indemnity Payment was made.
(b) An insurer who would otherwise be obligated to defend
or make payment in response to any claim shall not be relieved of the
responsibility with respect thereto or, solely by virtue of the indemnification
provisions hereof, have any subrogation rights with respect thereto, it being
expressly understood and agreed that no insurer or any other third party shall
be entitled to a "windfall" (i.e., a benefit it would not be entitled to receive
in the absence of the indemnification provisions) by virtue of the
indemnification provisions hereof.
(c) With respect to the rights and obligations described
in clauses (a) and (b) of this Section 4.3, the parties agree to act in good
faith and to use their reasonable best efforts to preserve and maximize the
insurance benefits due to be provided thereunder and to cooperate with one
another as necessary to permit each other to access or obtain the benefits under
those policies, provided, however, that nothing in this Section 4.3 shall be
construed to prevent any party or any other Person from asserting claims for
insurance benefits or accepting insurance benefits provided by the policies. The
parties agree to exchange information upon reasonable request of the other party
regarding requests that they have made for insurance benefits, notices of
claims, occurrences and circumstances that they have submitted to the insurance
companies or other entities managing the policies, responses they have received
from those insurance companies or entities, including any payments they have
received from the insurance companies and any agreements by the insurance
companies to make payments, and any other information that the parties may need
to determine the status of the insurance policies and the continued availability
of benefits thereunder.
4.4. PROCEDURES FOR INDEMNIFICATION OF THIRD PARTY CLAIMS.
(a) If an Indemnitee shall receive notice or otherwise learn of the assertion by
a Person (including any Governmental Authority) who is not a Member of either
Group of any claim or of the commencement by any such Person of any Action
(collectively, a "THIRD PARTY CLAIM") with respect to which an Indemnifying
Party may be obligated to provide indemnification to such Indemnitee pursuant to
Section 4.1 or 4.2, or any other Section of this Agreement or any Ancillary
Agreement (except as otherwise provided therein), such Indemnitee shall give
such Indemnifying Party written notice thereof promptly after receipt of notice
or senior executives actually becoming aware of such Third Party Claim. Any such
notice shall describe the Third Party Claim in reasonable detail.
Notwithstanding the foregoing, the failure of any Indemnitee to give notice as
provided in this Section 4.4(a) shall not relieve the related Indemnifying Party
of
-25-
<PAGE>
its obligations under this Agreement or any Ancillary Agreement, except to the
extent that such Indemnifying Party is actually prejudiced by such failure to
give notice.
(b) An Indemnifying Party may elect to defend (and,
except as set out in clause (e), below, unless the Indemnifying Party has
specified any reservations or exceptions, to seek to settle or compromise), at
such Indemnifying Party's own expense and by such Indemnifying Party's own
counsel (provided such counsel is reasonably acceptable to the Indemnitee), any
Third Party Claim; provided that notwithstanding the foregoing, an Indemnitee
may elect to defend any Excepted Third Party Claim and the Indemnifying Party
shall have the right to elect to defend such Excepted Third Party Claim only if
the Indemnitee does not elect to do so. Within 30 days after the receipt of
notice from an Indemnitee in accordance with Section 4.4(a) (or sooner, if the
nature of such Third Party Claim so requires), the Indemnifying Party shall
notify the Indemnitee of its election whether the Indemnifying Party will assume
responsibility for defending such Third Party Claim, which election shall
specify any reservations or exceptions. After notice from an Indemnifying Party
to an Indemnitee of its election to assume the defense of a Third Party Claim,
such Indemnitee shall have the right to employ separate counsel and to
participate in (but not control) the defense, compromise, or settlement thereof,
but the fees and expenses of such counsel shall be the expense of such
Indemnitee, except as set forth in the next sentence. In the event that the
Indemnifying Party has elected to assume the defense of the Third Party Claim
but has specified and continues to assert, any reservations or exceptions in
such notice, then, in any such case, the reasonable fees and expenses of one
separate counsel (and one separate local counsel) for all Indemnitees shall be
borne by the Indemnifying Party.
(c) If an Indemnifying Party elects not to assume
responsibility for defending a Third Party Claim, or fails to notify an
Indemnitee of its election as provided in Section 4.4(b), or in the case of an
Excepted Third Party Claim, such Indemnitee may defend such Third Party Claim at
the reasonable cost and expense of the Indemnifying Party.
(d) Unless the Indemnifying Party has failed to assume
the defense of the Third Party Claim in accordance with the terms of this
Agreement, no Indemnitee may settle or compromise any Third Party Claim
(including any Excepted Third Party Claim) without the consent of the
Indemnifying Party (not to be unreasonably withheld), unless such Indemnitee has
waived any rights to indemnification hereunder in respect of such Third Party
Claim.
(e) Without the consent of the Indemnitee (which consent
shall not be unreasonably withheld), the Indemnifying Party shall not enter into
or consent to any settlement or compromise of the Third Party Claim, unless such
settlement or compromise involves only the payment of money damages concurrently
with such settlement (and such amount is so paid by the Indemnifying Party),
does not impose any equitable relief upon the Indemnitee or any of its
Affiliates, or any of its or their respective officers or directors and contains
an unconditional release of the Indemnitee, each of its Affiliates and each of
its and their respective officers or directors in respect of such claim.
4.5. ADDITIONAL MATTERS. (a) Any claim on account of a
Liability that does not result from a Third Party Claim shall be asserted by
written notice given by the Indemnitee to the related Indemnifying Party. Such
Indemnifying Party shall have a period of 30 days after the receipt of such
notice within which to respond thereto (or sooner, if the nature of such claim
so requires). If such Indemnifying Party does not respond within such period,
such Indemnifying
-26-
<PAGE>
Party shall be deemed to have refused to accept responsibility to make payment.
If such Indemnifying Party does not respond within such period or rejects such
claim in whole or in part, such Indemnitee shall be free to pursue such remedies
as may be available to such party.
(b) In the event of payment by or on behalf of any
Indemnifying Party to any Indemnitee in connection with any Third Party Claim,
such Indemnifying Party shall be subrogated to and shall stand in the place of
such Indemnitee as to any events or circumstances in respect of which such
Indemnitee may have any right, defense or claim relating to such Third Party
Claim against any claimant or plaintiff asserting such Third Party Claim or
against any other person but only to the extent of such payment. Such Indemnitee
shall cooperate with such Indemnifying Party in a reasonable manner, and at the
reasonable cost and expense of such Indemnifying Party, in prosecuting any
subrogated right, defense or claim.
(c) In the event of an Action in which the Indemnifying
Party is not a named defendant, if either the Indemnitee (in the case where the
Indemnifying Party has not specified any reservations or exceptions) or
Indemnifying Party shall so request, the parties shall endeavor to substitute
the Indemnifying Party for the named defendant, if at all practicable. If such
substitution or addition cannot be achieved for any reason or is not requested,
the named defendant shall allow the Indemnifying Party to manage the Action as
set forth in Section 4.4 and the Indemnifying Party shall fully indemnify the
named defendant against all Liabilities in connection therewith, including costs
of defending the Action (including court costs, sanctions imposed by a court,
attorneys' fees, experts' fees and all other external expenses, the costs of any
judgment or settlement, and the cost of any interest or penalties relating to
any judgment or settlement.
4.6. REMEDIES CUMULATIVE. The remedies provided in this
Article IV shall be cumulative and shall not preclude assertion by any
Indemnitee of any other rights or the seeking of any and all other remedies
against any Indemnifying Party.
4.7. SURVIVAL OF INDEMNITIES. The rights and obligations
of AOLTW, each TWE Broadband Member, TWE Non-Broadband Member and their
respective Indemnitees under this Article IV shall survive the sale or other
transfer by any party of any Assets or businesses or the assignment by it of any
Liabilities.
4.8. TAX EFFECTS OF INDEMNIFICATION.
(a) For all Tax purposes (unless required by a change in
applicable Tax law or good faith resolution of a contest), the parties hereto
agree to treat, and to cause their respective affiliates to treat any payment
(i) to Holdco by TWE pursuant to an indemnification, reimbursement or refund
obligation provided for in this Agreement (a "TRANSFEROR INDEMNIFICATION
PAYMENT"), or (ii) to TWE by Holdco or AOLTW pursuant to an indemnification,
reimbursement or refund obligation provided for in this Agreement (a "TRANSFEREE
INDEMNIFICATION PAYMENT" and, collectively with any Transferor Indemnification
Payment, an "INDEMNIFICATION PAYMENT") as (x) with respect to a Transferor
Indemnification Payment, a distribution by TWE to Holdco as part of the
distribution described in Section 2.1(c) of this Agreement, and (y) with respect
to a Transferee Indemnification Payment, a payment by Holdco of a TWE
Non-Broadband Liability.
-27-
<PAGE>
(b) The amount of any loss for which indemnification is
provided under this Agreement shall be (i) increased to take account of the net
Tax cost, if any, incurred by the indemnitee arising from the receipt or accrual
of an Indemnification Payment hereunder (grossed up for such increase) and (ii)
reduced to take account of the net Tax benefit, if any, realized by the
indemnitee arising from incurring or paying such loss. In computing the amount
of any such Tax cost or benefit, the indemnitee shall be deemed to recognize all
other items of income, gain, loss, deduction or credit before recognizing any
item arising from the receipt or accrual of any Indemnification Payment
hereunder or incurring or paying any indemnified loss. Any Indemnification
Payment hereunder shall initially be made without regard to this Section 4.8(b)
and shall be increased or reduced to reflect any such net Tax cost (including
gross-up) or net Tax benefit only after the indemnitee has actually realized
such cost or benefit. For purposes of this Agreement, an indemnitee shall be
deemed to have "actually realized" a net Tax cost or a net Tax benefit to the
extent that, and at such time as, the amount of Taxes payable by such indemnitee
is increased above or reduced below, as the case may be, the amount of Taxes
that such indemnitee would be required to pay but for the receipt or accrual of
the Indemnification Payment or the incurrence or payment of such loss. The
amount of any increase or reduction hereunder shall be adjusted to reflect any
adjustment with respect to the indemnitee's liability for Taxes, and payments
between the parties hereto to reflect such adjustment shall be made. In the
event that the parties disagree regarding the appropriate application of this
Section 4.8(b), such disagreement shall be resolved by submitting the same to a
national accounting firm that does not have a material relationship with either
party.
4.9. REFUNDS. TWE shall pay to Holdco all refunds or
credits of Taxes received by TWE after the Closing that are attributable to the
TWE Non-Broadband Business, net of any Taxes imposed on such refund amount, to
be paid to Holdco promptly following any receipt thereof by TWE. In the event
that the parties disagree regarding the appropriate application of this Section
4.9, such disagreement shall be resolved by submitting the same to a national
accounting firm that does not have a material relationship with either party.
ARTICLE V
INSURANCE
5.1. INSURANCE MATTERS. (a) The parties intend that both
TWE and Holdco and each other TWE Broadband Member and TWE Non-Broadband Member,
after the Closing, shall be successors-in-interest to and retain all rights and
interest (whether known, unknown, contingent or otherwise) that each has as of
the Closing under any Insurance Policy issued to and/or providing coverage to
TWE, as it existed immediately prior to the Closing, or any of its Subsidiaries
or Affiliates, and any agreements related to such Insurance Policies executed
and delivered prior to the Closing, including any rights or interests each has,
as an insured, named insured, or additional named insured, Subsidiary,
Affiliate, division or department, to avail itself of any benefit under any such
Insurance Policy or any such agreement related to such policy as in effect prior
to the Closing. The provisions of this Agreement are not intended to relieve any
insurer of any Liability under any policy. Notwithstanding the foregoing, no TWE
Broadband Member or TWE Non-Broadband Member shall be deemed to have made any
representation or warranty as to the availability of any Insurance Policy or the
rights and benefits provided thereunder.
-28-
<PAGE>
(b) This Agreement shall not be considered as an
attempted assignment of (if such an assignment would be prohibited or would
otherwise adversely affect the rights of the insured parties under such
policies) any rights or interest under any policy of insurance or as a contract
of insurance and shall not be construed to waive any right or remedy of any TWE
Broadband Member or TWE Non-Broadband Member in respect of any Insurance Policy
or any other contract or policy of insurance.
(c) Each of TWE and Holdco does hereby, for itself and
each other TWE Broadband Member and TWE Non-Broadband Member, respectively,
agree that, as and to the extent necessary to give effect to Section 5.1(a), it
will assign any chose in action, claim, right or benefit under an Insurance
Policy.
(d) TWE does hereby, for itself and each other TWE
Broadband Member, agree that no TWE Non-Broadband Member or TWE Non-Broadband
Indemnitee shall have any Liability whatsoever to any TWE Broadband Member as a
result of the insurance policies and practices of TWE and its Affiliates as in
effect or undertaken at any time prior to the Closing, including as a result of
the level or scope of any such insurance, the creditworthiness of any insurance
carrier, the terms and conditions of any policy, the adequacy or timeliness of
any notice to any insurance carrier with respect to any claim or potential claim
or otherwise.
(e) Holdco does hereby, for itself and each other TWE
Non-Broadband Member, agree that no TWE Broadband Member or TWE Broadband
Indemnitee shall have any Liability whatsoever to any TWE Non-Broadband Member
as a result of the insurance policies and practices of TWE and its Affiliates as
in effect or undertaken at any time prior to the Closing, including as a result
of the level or scope of any such insurance, the creditworthiness of any
insurance carrier, the terms and conditions of any policy, the adequacy or
timeliness of any notice to any insurance carrier with respect to any claim or
potential claim or otherwise.
(f) Each of TWE and Holdco does hereby, for itself and
each other TWE Broadband Member and TWE Non-Broadband Member, respectively,
agree that all duties and obligations under any Insurance Policy, including the
fulfillment of any conditions and the payment of any deductibles, retentions,
co-insurance payment or retrospective premiums, that correspond in any way with
or may be necessary to perfect, preserve or maintain an insured's right to
obtain benefits under that Insurance Policy, will be performed by the insured
that is seeking the benefits, subject to the indemnification provisions of
Article IV. In the event Members of both Groups have claims under a given
policy, any deductibles, retentions, co-insurance payments, retrospective
premiums, caps, limitations on average and similar items will be appropriately
allocated between such parties based on the recoveries they would have obtained
in the absence of such items.
ARTICLE VI
EXCHANGE OF INFORMATION; CONFIDENTIALITY
6.1. AGREEMENT FOR EXCHANGE OF INFORMATION. (a) Each of
TWE and Holdco, on behalf of itself and each other TWE Broadband Member and TWE
Non-Broadband Member, respectively, agrees to provide, or cause to be provided,
to each other Group, at any time before or after the Closing, as soon as
reasonably practicable after written request therefor, any Information in the
possession or under the control of such respective Group that the
-29-
<PAGE>
requesting party reasonably needs (i) to comply with reporting, disclosure,
filing or other requirements imposed on the requesting party (including under
applicable securities or Tax laws) by a Governmental Authority having
jurisdiction over the requesting party, (ii) for use in any other judicial,
regulatory, administrative, Tax or other proceeding or in order to satisfy
audit, accounting, claims, regulatory, litigation, Tax or other similar
requirements or (iii) to comply with its obligations under this Agreement or any
Ancillary Agreement; provided, however, that in the event that any party
determines that any such provision of Information 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. TWE and Holdco intend that any transfer of Information that would
otherwise be within the attorney-client privilege shall not operate as a waiver
of any potentially applicable privilege.
(b) After the date hereof, each of TWE (and its
Subsidiaries) and Holdco (and its Subsidiaries) shall maintain in effect
adequate systems and controls to the extent necessary to enable the members of
the other Group to satisfy their respective reporting, accounting, audit and
other obligations.
6.2. OWNERSHIP OF INFORMATION. Any Information owned by
one Group that is provided to a requesting party pursuant to Section 6.1 shall
be deemed to remain the property of the providing party. Unless specifically set
forth herein, nothing contained in this Agreement shall be construed as granting
or conferring rights of license or otherwise in any such Information.
6.3. COMPENSATION FOR PROVIDING INFORMATION. The party
requesting such Information agrees to reimburse the other party for the
reasonable costs, if any, of creating, gathering and copying such Information,
to the extent that such costs are incurred for the benefit of the requesting
party. Except as may be otherwise specifically provided elsewhere in this
Agreement or in any other agreement between the parties, such costs shall be
computed in accordance with the providing party's standard methodology and
procedures.
6.4. RECORD RETENTION. To facilitate the possible exchange
of Information pursuant to this Article VI and other provisions of this
Agreement after the Closing, the parties agree to use their reasonable best
efforts to retain all Information in their respective possession or control on
the Closing in accordance with their respective record retention policies as in
effect on the Closing. No party will destroy, or permit any of its Subsidiaries
to destroy, any Information that the other party may have the right to obtain
pursuant to this Agreement prior to the third anniversary of the date hereof
without first using its reasonable best efforts to notify the other party of the
proposed destruction and giving the other party the opportunity to take
possession of such Information prior to such destruction; provided, however,
that in the case of any Information relating to Taxes, employee-related matters
or to Environmental Liabilities, such period shall be extended to the expiration
of the applicable statute of limitations (giving effect to any extensions
thereof). Moreover, no party will destroy, or permit any of its Subsidiaries to
destroy, any policies of insurance (or records related to such insurance
policies) without first using its reasonable best efforts to notify the other
party of the proposed destruction and giving the other party reasonable
opportunity to take possession of such Information prior to such destruction, if
it is possible (in the first party's reasonable judgment) that the other party
may be able to obtain coverage under such policies. (The foregoing includes
"occurrence"-based
-30-
<PAGE>
liability policies, which continue to cover liability for alleged harm during
their policy period, even if no claim is made based on such alleged harm until
after the end of the policy period.)
6.5. LIMITATION OF LIABILITY. No party shall have any
Liability to any other party in the event that any Information exchanged or
provided pursuant to this Agreement that is an estimate or forecast, or that is
based on an estimate or forecast, is found to be inaccurate, in the absence of
willful misconduct by the party providing such Information. No party shall have
any Liability to any other party if any Information is destroyed after
reasonable best efforts by such party to comply with the provisions of Section
6.4.
6.6. OTHER AGREEMENTS PROVIDING FOR EXCHANGE OF
INFORMATION. The rights and obligations granted under this Article VI are
subject to any specific limitations, qualifications or additional provisions on
the sharing, exchange or confidential treatment of Information set forth in any
Ancillary Agreement.
6.7. PRODUCTION OF WITNESSES; RECORDS; COOPERATION. (a)
After the Closing, except in the case of an adversarial Action by one party
against the other party (which shall be governed by such discovery rules as may
be applicable thereto), each party hereto shall take all reasonable steps to
make available to the other party, upon written request, the former, current and
future directors, officers, employees, other personnel and agents of the Members
of its respective Group (whether as witnesses or otherwise) and any books,
records or other documents within its control or that it otherwise has the
ability to make available, to the extent that such person (giving consideration
to business demands of such directors, officers, employees, other personnel and
agents) or books, records or other documents may reasonably be required in
connection with any Action (including preparation for such Action) in which the
requesting party may from time to time be involved, regardless of whether such
Action is a matter with respect to which indemnification may be sought
hereunder. The requesting party shall bear all reasonable costs and expenses in
connection therewith.
(b) If an Indemnifying Party chooses to defend or to seek
to compromise or settle any Third Party Claim, or if any party chooses or is
required to prosecute, pursue, otherwise evaluate or defend any Action, the
other party shall reasonably cooperate in such defense, settlement or
compromise, or such prosecution, evaluation or pursuit, as the case may be. The
requesting party shall bear all reasonable costs and expenses in connection
therewith.
(c) Without limiting the foregoing, the parties shall
cooperate and consult to the extent reasonably necessary with respect to any
Actions.
(d) The obligation of the parties to make available
former, current and future directors, officers, employees, other personnel and
agents pursuant to this Section 6.7 is intended to be interpreted in a manner so
as to facilitate cooperation and shall include the obligation to make available
inventors and other officers without regard to whether such individual or the
employer of such individual could assert a possible business conflict (subject
to the exception set forth in the first sentence of Section 6.7(a)). Without
limiting the foregoing, each party agrees that neither it nor any member of its
respective Group will take any adverse action against any employee of its Group
based on such employee's provision of assistance or information to the other
party pursuant to Section 6.7(a).
-31-
<PAGE>
(e) In connection with any Action contemplated by this
Article VI, the parties will enter into a mutually acceptable joint defense
agreement so as to maintain to the extent practicable any applicable
attorney-client privilege or work product immunity of either Group.
6.8. CONFIDENTIALITY. (a) Subject to Section 6.9, each of
TWE and Holdco, on behalf of itself and each Member of its respective Group,
agrees to hold, and to cause its respective directors, officers, employees,
agents, accountants, counsel and other advisors and representatives to hold, in
strict confidence, with at least the same degree of care that it applies to
TWE's confidential and proprietary information pursuant to policies in effect as
of the Closing, all Information concerning the other Group that is either in its
possession (including Information in its possession prior to the date hereof or
of the Closing) or furnished by the other Group or its respective directors,
officers, employees, agents, accountants, counsel and other advisors and
representatives at any time pursuant to this Agreement, or any Ancillary
Agreement, and shall not use any such Information other than for such purposes
as shall be expressly permitted hereunder or thereunder, except, in each case,
to the extent that such Information has been (i) in the public domain through no
fault of such party or such party's Group or any of their respective directors,
officers, employees, agents, accountants, counsel and other advisors and
representatives, (ii) later lawfully acquired from other sources by such party
(or such party's Group), which sources are not themselves bound by a
confidentiality obligation) to the knowledge of such party or members of such
party's Group or (iii) independently generated without reference to any
proprietary or confidential Information of the other party.
(b) Each party agrees not to release or disclose, or
permit to be released or disclosed, any such Information concerning the other
Group to any other Person, except its directors, officers, employees, agents,
accountants, counsel and other advisors and representatives who need to know
such Information (who shall be advised of their obligations hereunder with
respect to such Information) and in compliance with Section 6.9. Without
limiting the foregoing, when any Information is no longer needed for the
purposes contemplated by this Agreement or any Ancillary Agreement, each party
will promptly after request of the other party either return to the other party
all Information in a tangible form (including all copies thereof and all notes,
extracts or summaries based thereon) or certify to the other party that it has
destroyed such Information (and all electronic or other copies thereof and all
notes, extracts or summaries based thereon).
6.9. PROTECTIVE ARRANGEMENTS. In the event that any party
or any member of its Group either determines on the advice of its counsel that
it is required to disclose any Information concerning the other Group pursuant
to applicable Law or receives any demand under lawful process or from any
Governmental Authority to disclose or provide Information concerning the other
Group that is subject to the confidentiality provisions hereof, such party shall
notify the other party prior to disclosing or providing such Information and
shall cooperate at the expense of the requesting party in seeking any reasonable
protective arrangements requested by such other party. Subject to the foregoing,
the Person that received such request may thereafter disclose or provide
Information to the extent required by such Law (as so advised by counsel) or by
lawful process or such Governmental Authority.
-32-
<PAGE>
ARTICLE VII
FURTHER ASSURANCES
7.1. FURTHER ASSURANCES.
(a) In addition to the actions specifically provided for
elsewhere in this Agreement, the Ancillary Agreements, the Restructuring
Agreement or the other Transaction Agreements, but subject to the provisions
hereof and thereof, each of the parties hereto shall use its reasonable best
efforts, prior to, on and after 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, regulations and agreements to
consummate and make effective the transactions contemplated by this Agreement
and the Ancillary Agreements.
(b) Without limiting the foregoing, prior to, on and
after the Closing, each party hereto shall cooperate with the other party, and
without any further consideration, but at the expense of the requesting party,
to execute and deliver, or use its reasonable best efforts to cause to be
executed and delivered, all instruments, including instruments of conveyance,
assignment and transfer, and to make all filings with, and to obtain all
consents, approvals or authorizations of, any Governmental Authority or any
other Person under any permit, license, agreement, indenture or other instrument
(including any Consents or Governmental Approvals), and to take all such other
actions as such party may reasonably be requested to take by any other party
hereto from time to time, consistent with the terms of this Agreement, the
Ancillary Agreements, the Restructuring Agreements or the other Transaction
Agreements, in order to effectuate the provisions and purposes of this Agreement
and the Ancillary Agreements and the transfers of the TWE Non-Broadband Assets
and Non-Transferred Assets and the assignment and assumption of the TWE
Non-Broadband Liabilities and Non-Transferred Liabilities and the other
transactions contemplated hereby and thereby.
(c) On or prior to the Closing, TWE and Holdco in their
respective capacities as direct and indirect shareholders of their respective
Subsidiaries, shall each ratify any actions that are reasonably necessary or
desirable to be taken by TWE and Holdco or any Subsidiary of TWE or Holdco, as
the case may be, to effectuate the transactions contemplated by this Agreement.
ARTICLE VIII
TERMINATION
8.1. TERMINATION. This Agreement shall automatically, and
without further action by either party, terminate immediately upon the
termination of the Restructuring Agreement in accordance with its terms.
8.2. EFFECT OF TERMINATION. In the event of any
termination of this Agreement prior to the Closing, no Member of either Group
(or any of its directors or officers) shall have any Liability or further
obligation to any Member of the other Group with respect to this Agreement.
-33-
<PAGE>
ARTICLE IX
MISCELLANEOUS
9.1. COUNTERPARTS; ENTIRE AGREEMENT.
(a) This Agreement and each Ancillary 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, together with the Ancillary
Agreements, the Restructuring Agreement, the Transaction Agreements, the
Confidentiality Agreements and the Exhibits, Schedules and Appendices hereto and
thereto, constitutes the entire agreement between the parties with respect to
the subject matter hereof and thereof and supersedes all prior agreements and
understandings, both oral and written, between the parties with respect to such
subject matter.
9.2. GOVERNING LAW. This Agreement and, unless expressly
provided therein, each Ancillary 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.
9.3. ASSIGNABILITY. Except as set forth in any Ancillary
Agreement, this Agreement and each Ancillary Agreement shall be binding upon and
inure to the benefit of the parties hereto and thereto, respectively, 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 or any Ancillary Agreement without the express prior
written consent of each of the other parties hereto or thereto.
9.4. 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. Without limiting the foregoing, each
party hereto agrees that service of process on such party as provided in Section
9.7 shall be deemed effective service of process on such party.
9.5. 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.
-34-
<PAGE>
9.6. THIRD PARTY BENEFICIARIES. Except for the
indemnification rights under this Agreement of any TWE Broadband Indemnitee or
TWE Non-Broadband Indemnitee in their respective capacities as such, (i) the
provisions of this Agreement and each Ancillary Agreement are solely for the
benefit of the relevant parties and are not intended to confer upon any Person
except the relevant parties any rights or remedies hereunder or thereunder and
(ii) there are no third party beneficiaries of this Agreement or any Ancillary
Agreement and neither this Agreement nor any Ancillary 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 Ancillary Agreement.
9.7. NOTICES. All notices, requests or other
communications under this Agreement or any Ancillary Agreement shall be in
writing (including facsimile transmission) and shall be given:
If to Holdco to: Warner Communications Inc.
c/o AOL Time Warner Inc.
75 Rockefeller Plaza
New York, NY 10019
Attn: General Counsel
Fax: 212-258-3172
If to TWE to: Time Warner Entertainment Company, L.P.
c/o AOL Time Warner Inc.
75 Rockefeller Plaza
New York, NY 10019
Attn: General Counsel
Fax: 212-259-3172
In each case with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019
Attn: Robert B. Schumer, Esq.
Fax: 212-757-3990
Prior to the consummation of the AT&T
Comcast Merger:
AT&T Corp.
295 North Maple Avenue
Basking Ridge, New Jersey 07920
Attention: Secretary
Fax: (908) 953-8360
-35-
<PAGE>
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
Following Consummation of the AT&T
Comcast Merger
Comcast Corporation
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. Any party may, by notice to the
other party, change the address to which such notices are to be given.
9.8. TREATMENT OF ADVANCE-NEWHOUSE. Notwithstanding
anything to the contrary contained in this Agreement or in any Ancillary
Agreement, the parties acknowledge and agree that, for all purposes of this
Agreement and the other Ancillary Agreements: (i) the ownership and operation of
TWEAN is currently in the process of being restructured, (ii) the TWEAN
Franchises and Systems in the Selected Business are in the process of being
assigned to a third party (subject to the receipt of Franchise Consents), (iii)
none of the parties hereto or its Subsidiaries shall have any rights or
responsibilities with respect to the Selected Business, except to the extent
contemplated by the Master Transaction Agreement, (iv) no Indebtedness, cash or
cash equivalents attributable to the Selected Business shall be distributed to,
or assumed by, Holdco and (v) no party makes any representation, warranty or
covenant with respect to the TWEAN Restructuring or the Selected Business except
as explicitly provided in the Restructuring Agreement.
-36-
<PAGE>
9.9. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held 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 be
consummated as originally contemplated to the fullest extent possible.
9.10. PUBLIC ANNOUNCEMENTS. Prior to Closing, the parties
hereto will consult with each other before issuing any press release or making
any public statement with respect to, this Agreement, any Ancillary Agreements,
the Restructuring Agreement or any other Transaction Agreement (except to the
extent consistent with a release or statement previously approved hereunder)
and, except as may be required by applicable Law or any listing agreement with
any national securities exchange or quotation system, will not issue any such
press release or make any such public statement without the prior consent of the
other parties, which consent shall not be unreasonably withheld. Notwithstanding
the foregoing, any such press release or public statement that may be required
by applicable Law or any listing agreement with any national securities exchange
or quotation system may be issued without such consent, if the party hereto
making such release or statement has used its reasonable efforts to consult with
the other parties.
9.11. EXPENSES. Whether or not the transactions
contemplated by this Agreement are consummated, all third party fees, costs and
expenses (including governmental transfer taxes, recording fees and other
similar fees and impositions) paid or incurred in connection with such
transactions will be paid in accordance with Section 12.3 of the Restructuring
Agreement.
9.12. HEADINGS. The Article, Section and paragraph headings
contained in this Agreement and in the Ancillary Agreements are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement or any Ancillary Agreement.
9.13. WAIVERS OF DEFAULT. Waiver by any party of any
default by the other party of any provision of this Agreement or any Ancillary
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.
9.14. 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 Ancillary 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
Ancillary 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.
-37-
<PAGE>
9.15. AMENDMENTS. No provisions of this Agreement or any
Ancillary 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.
9.16. LATE PAYMENTS. Except as expressly provided to the
contrary in this Agreement or in any Ancillary Agreement, any amount not paid
when due pursuant to this Agreement or any Ancillary Agreement (and any amounts
billed or otherwise invoiced or demanded and properly payable that are not paid
within 30 days of such bill, invoice or other demand) shall accrue interest at a
rate per annum equal to the Prime Rate plus 2%.
9.17. 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, in the event an ambiguity or
question of intent or interpretation arises, this 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 to a Law shall be deemed to include any rules and regulations
promulgated thereunder.
-38-
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Distribution
Agreement to be executed by their duly authorized representatives.
TIME WARNER ENTERTAINMENT COMPANY, L.P.
BY: AMERICAN TELEVISION AND COMMUNICATIONS
CORPORATION, ITS GENERAL PARTNER
By: /s/ Spencer B. Hays
--------------------------------
Name: Spencer B. Hays
Title: Senior Vice President
WARNER COMMUNICATIONS INC.
By: /s/ Robert D. Marcus
--------------------------------
Name: Robert D. Marcus
Title: Senior Vice President
For purposes of Article IV only:
AOL TIME WARNER INC.
By: /s/ Robert D. Marcus
------------------------
Name: Robert D. Marcus
Title: Senior Vice President
-39-