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Exhibit 10.38
TRANSACTION AGREEMENT XX. 0
XXXXXXXXXXX XXXXXXXXX XX. 0, dated as of June 23, 1998 (this
"Agreement"), among ADVANCE PUBLICATIONS, INC., a New York corporation
("Advance"), XXXXXXXX BROADCASTING CORPORATION, a New York corporation
("Xxxxxxxx"), ADVANCE/XXXXXXXX PARTNERSHIP, a New York general partnership
("Advance/Xxxxxxxx"), TIME WARNER ENTERTAINMENT COMPANY, L.P., a Delaware
limited partnership ("TWE"), PARAGON COMMUNICATIONS, a Colorado general
partnership ("Paragon"), and TIME WARNER ENTERTAINMENT-ADVANCE/XXXXXXXX
PARTNERSHIP, a New York general partnership (the "Partnership").
WHEREAS, Advance/Xxxxxxxx and TWE entered into a Partnership
Agreement, dated as of September 9, 1994, as amended by the First Amendment (as
defined below), pursuant to which they formed the Partnership (the "Partnership
Agreement");
WHEREAS, Advance, Xxxxxxxx, Advance/Xxxxxxxx, TWE and the
Partnership entered into a Contribution Agreement, dated as of September 9,
1994, as amended (the "Contribution Agreement"), pursuant to which each of
Advance/Xxxxxxxx and TWE contributed certain specified assets to the
Partnership;
WHEREAS, in connection with the Amended and Restated Transaction
Agreement, dated as of October 27, 1997, among Advance, Xxxxxxxx,
Advance/Xxxxxxxx, TWE, TW Holding Co. and the Partnership, TWE, Advance/Xxxxxxxx
and Paragon have entered into the First Amendment to the Partnership Agreement,
dated as of February 12, 1998 (the "First Amendment"), pursuant to which, among
other things, Paragon became a partner of the Partnership;
WHEREAS, the Partnership, TWE-A/N Texas Cable Partners General
Partner LLC, TCI Texas Cable Holdings LLC, TCI Texas Cable Inc. and Texas Cable
Partners, L.P. a Delaware limited partnership (the "TCI Joint Venture"), have
entered into a Contribution Agreement dated as of the date hereof (the "TCI
Contribution Agreement"), pursuant to which, among other things, the Partnership
has agreed to contribute to the TCI Joint Venture certain assets, including the
cable television systems (the "Designated Texas Systems") described on Schedule
1 hereto.
WHEREAS, in contemplation thereof, the parties desire to cause the
Designated Texas Systems to be contributed to the Partnership as set forth
herein;
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NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties agree as
follows:
1. Contribution of Designated Texas Systems.
(a) Subject to the conditions set forth in Section 3, at the
Closing (as defined below), (i) Paragon shall contribute, assign, convey,
transfer and deliver to the Partnership its right, title and interest in and to
the Designated Texas Systems and (ii) the Partnership shall assume, and agree to
pay and discharge, as and when they become due, or otherwise take subject to,
the indebtedness and other liabilities associated with the Designated Texas
Systems that are described on Schedule 2 hereto (the "Assumed Texas
Liabilities").
(b) At the Closing, (i) Paragon shall deliver instruments
executed by it and in form and substance reasonably satisfactory to the
Partnership contributing, assigning, conveying, transferring and delivering to
the Partnership its right, title and interest in and to the Designated Texas
Systems and (ii) the Partnership shall deliver instruments executed by it and in
form and substance reasonably satisfactory to Paragon by which it shall assume
and agree to pay and discharge the Assumed Texas Liabilities.
(c) In exchange for the contributions contemplated by Section
1(a), Paragon shall receive (i) Common Partnership Units (as defined in the
Partnership Agreement) having a value equal to 50% of the Net Texas Contribution
and (ii) Series B Preferred Partnership Units (as defined in the Partnership
Agreement, as amended by the Second Amendment (as defined below)) having a value
equal to 50% of the Net Texas Contribution. For purposes of the foregoing, "Net
Texas Contribution" means $60,168,000.
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2. Beneficial Assets and Subsidiary Beneficial Assets. If any
consent or approval is required in connection with the contribution to the
Partnership pursuant to this Agreement of any cable television system (or the
franchise pursuant to which such cable television system is operated) and such
consent or approval is not obtained prior to the Closing, then in lieu of
contributing (and pending the actual contribution of) such cable television
systems to the Partnership, Paragon will hold such cable television systems (or
cause such cable television systems to be held) for the use and benefit of the
Partnership. Such cable television systems shall be treated as Beneficial Assets
(as defined in the Contribution Agreement) or Subsidiary Beneficial Assets (as
defined in the Contribution Agreement) in either case in accordance with Section
5.8 of the Partnership Agreement and Section 6.7 of the Contribution Agreement.
In accordance with Section 6.7 of the Contribution Agreement, following the
Effective Date, Paragon shall continue to use their reasonable best efforts to
obtain any consent or approval necessary to effectuate the contribution to the
Partnership of any Beneficial Asset or Subsidiary Beneficial Asset not
contributed to the Partnership on the Effective Date, and shall take all
reasonable actions to effectuate the contribution of such Beneficial Asset or
Subsidiary Beneficial Asset after such consent or approval is obtained;
provided, however, that no cable television franchise comprising a Beneficial
Asset or Subsidiary Beneficial Asset shall be required to be contributed to the
Partnership until consents or approvals shall have been obtained with respect to
the contribution of all cable television franchises in the same cable television
system as such franchise.
3. Closing Conditions. The obligations of Paragon and the
Partnership to effect the transactions contemplated by this Agreement, shall be
subject to the satisfaction at or prior to the Closing of the following
conditions, the imposition of which are solely for the benefit of such parties
and any one or more of which may be waived by such parties in their discretion:
(a) each of TWE, Advance/Xxxxxxxx and Paragon shall have
executed and delivered an amendment to the Partnership Agreement substantially
in the form of Exhibit A (the "Second Amendment");
(b) with respect to the assumption by the Partnership of the
Assumed Texas Liabilities, each of the conditions to Assumption, as defined in
the Credit Agreement dated as of November 10, 1997 (the "Credit Agreement")
among TWX, Time Warner Companies, Inc., TWE, Xxxxxx Broadcasting System, Inc.,
the Partnership, TWI Cable Inc., the Lenders Party thereto and The Chase
Manhattan Bank, as Administrative Agent, shall have been satisfied (or waived by
the parties entitled to waive same);
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(c) all of the conditions to the Partnership's obligations to
consummate the transactions contemplated by the TCI Contribution Agreement shall
have been satisfied or waived in accordance with the TCI Contribution Agreement;
(d) the waiting periods (and any extensions thereof), if any,
applicable to the transactions contemplated by this Agreement under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 0000 (xxx "XXX Xxx") shall have
been terminated or shall have expired (it being understood that as soon as
practicable after the execution of this Agreement, the parties will complete and
file, or cause to be completed and filed, any notification and report required
to be filed under the HSR Act and each such filing shall request early
termination of the waiting period imposed by the HSR Act); and
(e) no temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or other
legal restraint or prohibition preventing the consummation of the transactions
contemplated hereby shall be in effect.
4. Advance/Xxxxxxxx Contribution. Subject to the consummation of the
transfer or beneficial assignment of the Designated Texas Systems to the
Partnership, on or prior to the fourth anniversary of the Effective Date (but in
no event prior to the date that is six months following the Effective Date),
Advance/Xxxxxxxx shall contribute to the Partnership cash in an amount equal to
the Advance/Xxxxxxxx Contribution Amount, plus interest thereon at the Interest
Rate compounded (to the extent not paid) on a quarterly basis, from the
Effective Date until the date such contribution is made in full. For the
purposes of the foregoing, (i) "Advance/Xxxxxxxx Contribution Amount" means an
amount equal to 50% of the value of the Common Partnership Units received by
Paragon in exchange for its contribution of the Designated Texas Systems and
(ii) "Interest Rate" shall mean the average interest rate applicable from time
to time to borrowings by the Partnership under the senior revolving credit
facility of the Partnership. At the Closing, Advance/Xxxxxxxx shall execute and
deliver to the Partnership a promissory note (the "Advance/Xxxxxxxx Note")
substantially in the form of Exhibit B hereto having a principal amount equal to
the Advance/Xxxxxxxx Contribution Amount, as security for its obligation to
contribute to the Partnership the Advance/Xxxxxxxx Contribution Amount.
Advance/Xxxxxxxx shall take any and all actions and execute and deliver all
documents or agreements reasonably requested by the Partnership to enable the
Partnership to perfect its security interest in the Advance/Xxxxxxxx Note.
Advance/Xxxxxxxx and the Partnership acknowledge and agree that the
Advance/Xxxxxxxx Note shall not be deemed an asset of the Partnership unless and
until the Partnership seeks to realize upon its security interest therein. In
exchange for its agreement to contribute the Advance/Xxxxxxxx Contribution
Amount,
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Advance/Xxxxxxxx shall receive Common Partnership Units having a value equal to
the Advance/Xxxxxxxx Contribution Amount.
5. Time and Place of Closing. Subject to the satisfaction (or
waiver) of each of the conditions set forth in Section 3, the closing of the
transactions contemplated by this Agreement (the "Closing") shall take place at
the offices of Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx, 0000 Xxxxxx xx xxx
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (or such other place as the parties may
mutually agree), concurrent with the closing of the transactions contemplated by
the TCI Contribution Agreement, or such other date as the parties may mutually
agree in writing. The date on which the Closing occurs is referred to herein as
the "Effective Date".
6. Indemnification by Paragon. Paragon hereby agrees to indemnify
and hold harmless the Partnership from and against any Losses (as defined in the
TCI Contribution Agreement) for which the Partnership is required to indemnify a
party pursuant to Article XI of the TCI Contribution Agreement, to the extent
arising out of, or related to, the ownership or operations of the Designated
Texas Systems prior to Closing.
7. Miscellaneous.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of New York (other than its rules of
conflicts of law to the extent the application of the law of another
jurisdiction would be required thereby).
(b) The parties hereto shall cooperate with each other and
their respective counsel and accountants in connection with any steps required
to be taken as part of their respective obligations under this Agreement and
will each use reasonable best efforts to perform or fulfill all conditions and
obligations to be performed or fulfilled by them under this Agreement so that
the transactions contemplated hereby shall be consummated.
(c) This Agreement may be terminated by either TWE or
Advance/Xxxxxxxx (by delivery of written notice to the other) if the TCI
Contribution Agreement is terminated in accordance with its terms prior to the
consummation of the transactions contemplated thereby.
(d) Section headings contained in this Agreement are inserted
only as a matter of convenience and reference and in no way define, limit,
extend or describe the scope of this Agreement or the intent of any provisions
hereof.
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(e) This Agreement may be executed in one or more
counterparts, each of which shall be an original and all of which, when taken
together, shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
ADVANCE PUBLICATIONS, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
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Name: Xxxxxx X. Xxxxxxxx
Title: President
XXXXXXXX BROADCASTING
CORPORATION
By: /s/ Xxxxxx X. Xxxxx
-----------------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President
ADVANCE/XXXXXXXX PARTNERSHIP
By: ADVANCE COMMUNICATION
CORP., General Partner
By: /s/ Xxxxxx X. Xxxxx
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Name: Xxxxxx X. Xxxxx
Title: President
By: XXXXXXXX BROADCASTING
CORPORATION, General Partner
By: /s/ Xxxxxx X. Xxxxx
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Name: Xxxxxx X. Xxxxx
Title: Vice President
TIME WARNER ENTERTAINMENT
COMPANY, L.P.
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By: /s/ Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
Title: Vice President
PARAGON COMMUNICATIONS
By: KBL COMMUNICATIONS, INC.
General Partner
By: /s/ Xxxxxx X. XxXxxxxxx
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Name: Xxxxxx X. XxXxxxxxx
Title: Vice President
TIME WARNER ENTERTAINMENT -
ADVANCE/XXXXXXXX PARTNERSHIP
By: TIME WARNER ENTERTAINMENT
COMPANY, L.P., General Partner
By: /s/ Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
Title: Vice President
By: ADVANCE/XXXXXXXX
PARTNERSHIP, General Partner
By: ADVANCE COMMUNICATION
CORP., General Partner
By: /s/ Xxxxxx X. Xxxxx
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Name: Xxxxxx X. Xxxxx
Title: President
By: XXXXXXXX BROADCASTING
CORPORATION, General Partner
By: /s/ Xxxxxx X. Xxxxx
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Name: Xxxxxx X. Xxxxx
Title: Vice President
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Accepted and agreed to as
of the date set forth above:
MEDIAONE GROUP, INC. (as successor
in interest to U S WEST, INC. and U S WEST
MULTIMEDIA COMMUNICATIONS, INC.
under TWE's limited partnership
agreement)
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
Title: Executive Vice President
