Time Warner Cable 2006 Annual Report Download - page 33

The TWE Redemption Agreement contains closing adjustments to be paid in cash based on (1) the relative
growth or decline in the number of basic video subscribers served by the TWE Redemption Systems as compared to
the relative growth or decline in the number of basic video subscribers served by the other cable systems owned by
TWE and (2) the excess, if any, of the net liabilities of the TWE Redemption Systems over an agreed upon threshold
amount.
The TWE Redemption Agreement contained various customary representations and warranties of the parties
thereto including representations by TWE as to the absence of certain changes or events concerning the TWE
Redemption Systems, compliance with law, litigation, employee benefit plans, property, intellectual property,
environmental matters, financial statements, regulatory matters, taxes, material contracts, insurance and brokers.
The representations and warranties of the parties to the TWE Redemption Agreement generally survive the closing
of the TWE Redemption Agreement for a period of one year and certain representations and warranties either
survive indefinitely or survive until the expiration of the applicable statute of limitations (giving effect to any
waiver, mitigation or extension thereof).
The TWE Redemption Agreement contained customary indemnification obligations on the part of the parties
thereto with respect to breaches of representations and warranties and covenants and certain other matters, generally
subject to a $6 million threshold and $60 million cap, with respect to certain representations and warranties of TWE
regarding the TWE Redemption Systems and related matters, and with respect to certain representations and
warranties of the Comcast parties relating to litigation, financial statements, finder’s fees and certain regulatory
matters.
The Exchange Agreement. Pursuant to the Exchange Agreement, dated as of April 20, 2005, as amended,
among TWC, TW NY and Comcast, the Exchange closed on July 31, 2006, immediately after the Adelphia
Acquisition. Pursuant to the Exchange Agreement, TW NY transferred all outstanding limited liability company
interests of certain newly formed limited liability companies (collectively, the “TW Newcos”) to Comcast in
exchange for all limited liability company interests of certain newly formed limited liability companies or limited
partnerships, respectively, owned by Comcast (collectively, the “Comcast Newcos”). In addition, TWC paid
Comcast approximately $67 million in cash for certain adjustments related to the Exchange. Included in the systems
TWC acquired in the Exchange were cable systems (i) that were owned by the Century-TCI joint venture in the Los
Angeles, California area and the Parnassos joint venture in Ohio and Western New York and (ii) then owned by
Comcast located in the Dallas, Texas, Los Angeles, California, and Cleveland, Ohio areas.
The Exchange Agreement contains various customary representations and warranties of the parties thereto
(which generally survive for a period of 12 months after the closing of the Exchange), including representations
concerning the cable systems subject to the Exchange Agreement originally owned by TWC or Comcast as to the
absence of certain changes or events, compliance with law, litigation, employee benefit plans, property, intellectual
property, environmental matters, financial statements, regulatory matters, taxes, material contracts, insurance and
brokers. The Exchange Agreement also contained representations regarding the accuracy of certain of the
representations of Adelphia set forth in the Purchase Agreements for events, circumstances and conditions
occurring after the closing of the TW NY Adelphia Acquisition.
The Exchange Agreement contains customary indemnification obligations on the part of the parties thereto
with respect to breaches of representations, warranties, covenants and certain other matters. Each party’s indem-
nification obligations with respect to breaches of representations and warranties (other than certain specified
representations and warranties) are subject to (1) with respect to cable systems originally owned by TWC that were
acquired by Comcast, a $5.7 million threshold and $19.1 million cap, (2) with respect to cable systems originally
owned by Adelphia that were initially acquired by TWC pursuant to the TW NY Purchase Agreement and then
transferred to Comcast pursuant to the Exchange Agreement, a $74.6 million threshold and $746 million cap,
(3) with respect to cable systems originally owned by Comcast that were acquired by TWC, a $41.5 million
threshold and $415 million cap, and (4) with respect to cable systems originally owned by Adelphia that were
initially acquired by Comcast pursuant to the Comcast Purchase Agreement and then transferred to TWC pursuant
to the Exchange Agreement, a $34.9 million threshold and $349 million cap. In addition, no party is required to
indemnify the other for breaches of representations, warranties or covenants relating to assets or liabilities initially
acquired from Adelphia and then transferred to the other party, unless the breach is of a representation, warranty or
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