Time Warner Cable 2007 Annual Report Download - page 25

The Comcast Purchase Agreement. The Comcast Purchase Agreement had similar terms to the TW NY
Purchase Agreement and the transactions contemplated by the Comcast Purchase Agreement also closed on July 31,
2006. The Comcast Adelphia acquisition was effected in accordance with the provisions of sections 105, 363 and
365 of the Bankruptcy Code and a plan of reorganization for the joint ventures referred to in the following sentence.
The Comcast Adelphia acquisition included cable systems and Adelphia’s interest in two joint ventures in which
Comcast also held interests: Century-TCI California Communications, L.P. (the “Century-TCI joint venture”),
which owned cable systems in the Los Angeles, California area, and Parnassos Communications, L.P. (the
“Parnassos joint venture”), which owned cable systems in Ohio and Western New York. The purchase price under
the Comcast Purchase Agreement was approximately $3.6 billion in cash.
Agreements with Comcast
As described in more detail below, on the same day as the parties consummated the transactions governed by
the Purchase Agreements, TWC and some of its affiliates (collectively, the “TWC Group”) and Comcast
consummated the TWC Redemption, the TWE Redemption and the Exchange (collectively, the “TWC/
Comcast Transactions”). Under the terms of the agreement which governed the TWC Redemption (the “TWC
Redemption Agreement”), TWC redeemed Comcast’s investment in TWC in exchange for one of TWC’s
subsidiaries that held both cable systems and cash. In accordance with the terms of the agreement which
governed the TWE Redemption (the “TWE Redemption Agreement”), TWE redeemed Comcast’s interest in
TWE in exchange for one of TWE’s subsidiaries that held both cable systems and cash. In accordance with the terms
of the agreement which governed the Exchange (as amended, the “Exchange Agreement”), TW NY and Comcast
transferred to one another subsidiaries that held certain cable systems, including cable systems acquired by each
from Adelphia. The TWC Redemption Agreement, the TWE Redemption Agreement and the Exchange
Agreement, are collectively referred to as the “TWC/Comcast Agreements.”
The TWC Redemption Agreement. Pursuant to the TWC Redemption Agreement, dated as of April 20, 2005,
as amended, among TWC and certain other members of the TWC Group and Comcast, the TWC Redemption was
effected and Comcast’s interest in TWC was redeemed on July 31, 2006, immediately prior to the Adelphia
Acquisition. The TWC Redemption Agreement required that TWC redeem all of the TWC Class A common stock
held by TWE Holdings II Trust (“Comcast Trust II”), a trust that was established for the benefit of Comcast, in
exchange for 100% of the common stock of Cable Holdco II Inc. (“Cable Holdco II”), then a subsidiary of TWC. At
the time of the TWC Redemption, Cable Holdco II held both certain cable systems previously owned directly or
indirectly by TWC (“TWC Redemption Systems”) serving approximately 589,000 basic subscribers and
approximately $1.9 billion in cash, subject generally to the liabilities associated with the TWC
Redemption Systems. Certain specified assets and liabilities of the TWC Redemption Systems were retained
by TWC.
The TWC Redemption Agreement contains customary indemnification obligations on the part of the parties
thereto with respect to breaches of representations, warranties and covenants and certain other matters, generally
subject to a $20 million threshold and $200 million cap, with respect to certain of TWC’s representations and
warranties regarding the TWC 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.
TWC/Comcast Tax Matters Agreement. In connection with the closing of the TWC Redemption, TWC,
Cable Holdco II and Comcast entered into the Holdco Tax Matters Agreement (the “TWC/Comcast Tax Matters
Agreement”). The TWC/Comcast Tax Matters Agreement allocates responsibility for income taxes of Cable
Holdco II and deals with matters relating to the income tax consequences of the TWC Redemption. This agreement
contains representations, warranties and covenants relevant to such income tax treatment. The TWC/Comcast Tax
Matters Agreement also contains indemnification obligations relating to the foregoing.
The TWE Redemption Agreement. Pursuant to the TWE Redemption Agreement, dated as of April 20, 2005,
as amended, among TWC and Comcast, Comcast’s interest in TWE was redeemed on July 31, 2006, immediately
prior to the Adelphia acquisition. Prior to the TWE Redemption, TWE Holdings I Trust (“Comcast Trust I”), a trust
established for the benefit of Comcast, owned a 4.7% residual equity interest in TWE. Pursuant to the TWE
Redemption Agreement, TWE redeemed all of the TWE residual equity interest held by Comcast Trust I in
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