CONTRIBUTION AGREEMENT, DATED AS OF
JUNE 30, 1998
CONTRIBUTION AGREEMENT, DATED AS OF
JUNE 30, 1998
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TABLE OF CONTENTS
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ARTICLE 1 DEFINITIONS
1.1 Terms Defined in this Section.....................................1
1.2 Terms Defined Elsewhere in this Agreement.........................7
1.3 Terms Generally...................................................7
ARTICLE 2 CONTRIBUTIONS
2.1 Formation of the Company and Contributions to the Company.........8
2.2 Excluded Assets..................................................10
2.3 Refinancing......................................................11
ARTICLE 3 VALUE OF CONTRIBUTIONS
3.1 Fair Market Value of Contributed Assets..........................11
3.2 Certain Adjustments..............................................12
ARTICLE 4 ASSUMED LIABILITIES
4.1 Assumption of Central Liabilities................................13
4.2 Liabilities Not Assumed..........................................13
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF CENTRAL
5.1 Organization, Standing, and Authority............................14
5.2 Authorization and Binding Obligation.............................14
5.3 Absence of Conflicting Agreements................................14
5.4 Financial Statements.............................................14
5.5 Interim Operations...............................................15
5.6 Title to Assets; Liens...........................................15
5.7 Franchises.......................................................15
5.8 Governmental Permits.............................................16
5.9 Real Property and Real Property Interests........................16
5.10 Tangible Personal Property......................................16
5.11 Contracts.......................................................16
5.12 Intangibles.....................................................17
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5.13 System Information..............................................17
5.14 Employees and Compensation......................................20
5.15 Taxes...........................................................21
5.16 Environmental Matters...........................................21
5.17 Compliance with Laws............................................22
5.18 Claims and Legal Actions........................................22
5.19 Insurance and Bonds.............................................22
5.20 Transactions with Affiliates....................................22
5.21 Brokers.........................................................22
5.22 Assets..........................................................23
5.23 Accounts Receivable.............................................23
5.24 No Undisclosed Liabilities......................................23
5.25 Liabilities to Customers........................................23
5.26 Restoration.....................................................23
5.27 Overbuilds......................................................23
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF INSIGHT
6.1 Organization, Standing, and Authority............................24
6.2 Authorization and Binding Obligation.............................24
6.3 Absence of Conflicting Agreements................................24
6.4 Claims and Legal Actions.........................................25
6.5 Brokers..........................................................25
ARTICLE 7 OPERATIONS OF SYSTEM PRIOR TO CLOSING
7.1 Generally........................................................25
7.2 Contracts or Commitments.........................................25
7.3 Disposition of Assets............................................25
7.4 Distributions....................................................26
7.5 Encumbrances.....................................................26
7.6 Franchises and Governmental Permits..............................26
7.7 Access to Information............................................26
7.8 Maintenance of Assets............................................26
7.9 Insurance and Bonds..............................................26
7.10 Compliance with Contracts and Laws..............................26
7.11 Changes to Employee Compensation and Benefits...................27
7.12 Delivery of Financial Information...............................27
7.13 Acquisition of Business Office and Headend Site.................27
7.14 Marketing Programs..............................................27
7.15 Accounts Payable................................................27
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ARTICLE 8 SPECIAL COVENANTS AND AGREEMENTS
8.1 Consents.........................................................28
8.2 Cooperation......................................................29
8.3 Deferred Contributions...........................................29
8.4 Confidentiality..................................................30
8.5 Bulk Sales Law...................................................31
8.6 Further Assurances...............................................31
8.7 HSR Act..........................................................31
8.8 Risk of Loss.....................................................32
8.9 Use of Names and Logos...........................................32
8.10 Power of Attorney...............................................32
8.11 Access to Books and Records.....................................32
8.12 Other Transaction Documents.....................................32
ARTICLE 9 CLOSING CONDITIONS
9.1 Conditions to Obligations of Insight.............................33
9.2 Conditions to Obligations of Central.............................34
ARTICLE 10 CLOSING AND CLOSING DELIVERIES
10.1 Time and Place of Closing........................................35
10.2 Deliveries by Central............................................36
10.3 Deliveries by the Company........................................36
10.4 Deliveries by Insight............................................37
ARTICLE 11 TERMINATION RIGHTS
11.1 Termination by Agreement.........................................37
11.2 Termination by Central...........................................37
11.3 Termination by Insight...........................................38
11.4 Due Diligence Termination........................................38
11.5 Escrow Deposit...................................................38
11.6 Rights on Termination............................................39
11.7 Specific Performance.............................................40
ARTICLE 12 MISCELLANEOUS
12.1 Survival of Representations and Warranties.......................40
12.2 Taxes, Fees, and Expenses........................................41
12.3 Notices..........................................................42
12.4 Benefit and Binding Effect.......................................43
12.5 Entire Agreement.................................................43
12.6 Waiver of Compliance; Consents...................................43
12.7 Severability.....................................................44
12.8 GOVERNING LAW....................................................44
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12.9 Disputed Matters.................................................44
12.10 Headings.........................................................46
12.11 Rights Cumulative................................................46
12.12 Construction.....................................................46
12.13 Business Day.....................................................46
12.14 Counterparts.....................................................47
12.15 No Third-Party Beneficiaries.....................................47
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TABLE OF EXHIBITS
Exhibit Description
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Exhibit A Form of Operating Agreement
Exhibit B Form of Amended Articles of Incorporation of
Central
Exhibit C Form of Close Corporation Agreement of
Central
Exhibit D Form of Single-Member LLC Operating Agreement
Exhibit E Form of Single-Member LLC Management
Agreement
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TABLE OF SCHEDULES
Schedule Description
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Schedule 2.2 Certain Excluded Assets
Schedule 2.3(a) Use of Refinancing Proceeds
Schedule 5.3 Consents
Schedule 5.5 Interim Operations
Schedule 5.6 Liens
Schedule 5.7 Franchises
Schedule 5.8 Governmental Permits
Schedule 5.9 Real Property
Schedule 5.10 Tangible Personal Property
Schedule 5.11 Contracts
Schedule 5.12 Intangibles
Schedule 5.13 System Information
Schedule 5.14 Employees and Compensation
Schedule 5.17 Compliance with Laws
Schedule 5.18 Claims and Legal Actions
Schedule 5.19 Insurance and Bonds
Schedule 5.20 Transactions with Affiliates
Schedule 5.24 Liabilities
Schedule 5.27 Overbuilds
Schedule 6.3 Absence of Conflicting Agreements: Insight Consents
Schedule 7.2 Post-Signing Contracts
Schedule 7.11 Changes to Compensation
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CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT is made and entered into as of June 30, 1998 by
and between Coaxial Communications of Central Ohio, Inc., an Ohio corporation
("Central"), and Insight Communications Company, L.P., a Delaware limited
partnership ("Insight").
PRELIMINARY STATEMENT
Central owns and operates a cable television system serving Columbus, Ohio,
and the surrounding communities identified on Schedule 5.7.
Central and Insight desire to form Insight Communications of Central Ohio,
LLC, a Delaware limited liability company (the "Company"), pursuant to the
Delaware Limited Liability Company Act and an Operating Agreement to be entered
into between Insight and Central.
Central and Insight desire that Central contribute to the Company
substantially all the assets of the System, subject to certain liabilities being
assumed by the Company, and that Insight or its permitted assignee contribute to
the Company cash in the amount of Ten Million Dollars, all as specified in this
Agreement.
The parties desire to enter into this Agreement to provide for the
transactions described above and certain other matters.
NOW, THEREFORE, the parties agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Terms Defined in this Section.
For purposes of this Agreement, the following terms shall have the
following meanings (all terms used in this Agreement that are not defined in
this Section 1.1 shall have the meanings set forth elsewhere in this Agreement
as indicated in Section 1.2):
"Affiliate" means, with respect to any Person, any other Person
controlling, controlled by or under common control with such Person. For
purposes of this definition, "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities or
voting interests, by contract or otherwise.
"Agreement" means this Contribution Agreement, as it may be amended from
time to time.
"Assets" means the assets to be contributed by Central to the Company under
this Agreement, as specified in Section 2.1(b).
"Assumed Contracts" means (a) all Contracts listed in Schedule 5.11, other
than Contracts that are Excluded Assets, other Contracts designated on Schedule
5.11 as not being Assumed Contracts, and Contracts that terminate or expire
prior to Closing, (b) Contracts of Central in existence on the date of this
Agreement that are not required by Section 5.11 to be listed on Schedule 5.11,
other than Contracts that are Excluded Assets, (c) Contracts of Central in
existence on the Closing Date that were entered into after the date of this
Agreement in compliance with Section 7.2, other than Contracts that are Excluded
Assets, and (d) all other Contracts of Central in existence on the Closing Date
that Insight has agreed in writing will be assumed by the Company at the
Closing.
"Business Day" means any day other than a Saturday or Sunday or a day on
which banking institutions in Columbus, Ohio or New York, New York, are required
or authorized to be closed.
"Central's Knowledge" means the actual knowledge of any of Central's
President and Chief Executive Officer, Executive Vice President and Chief
Financial Officer, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, or ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇.
"Close Corporation Agreement" means the Close Corporation Agreement of
Central, substantially in the form of Exhibit C, with any changes thereto that
are agreed to by the parties.
"Closing" means the consummation of the contribution of the Assets to the
Company, as contemplated by this Agreement, as described in Article 10.
"Closing Date" means the date on which the Closing occurs.
"Code" means the Internal Revenue Code of 1986, as amended, and the
regulations thereunder, or any subsequent legislative enactment thereof, as in
effect from time to time.
"Communications Act" means the Communications Act of 1934, as amended,
including the Cable Communications Policy Act of 1984, the Cable Television
Consumer Protection and Competition Act of 1992, and the Telecommunications Act
of 1996, each as amended, and all rules, regulations, and policies thereunder.
"Compensation Arrangement" means any written plan or compensation
arrangement other than an Employee Plan or a Multiemployer Plan that provides to
employees of Central employed at the System any compensation or other benefits,
whether deferred or not, in excess of base salary or wages and excluding
overtime pay, including any bonus or incentive plan, stock rights plan, deferred
compensation arrangement, stock purchase plan, severance pay plan, and any other
perquisites and employee fringe benefit plan.
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"Consent Conditions" means those conditions specified in Section 9.1(c),
Section 9.1(d), Section 9.1(e), and Section 9.1(f).
"Consents" means all of the consents, permits, approvals, or other actions
of Governmental Authorities and other third parties necessary to permit the
transfer of the Assets to the Company or otherwise to consummate lawfully the
transactions contemplated by this Agreement.
"Contracts" means all pole attachment and conduit agreements,
retransmission consent agreements and must-carry elections, leases,
non-governmental licenses, employment agreements, subscriber agreements, and
other agreements, written or oral (including any amendments and other
modifications thereto), to which Central is a party or which are binding upon
Central and which relate to the Assets or the business or operations of the
System, and (a) which are in effect on the date of this Agreement or (b) which
are entered into by Central between the date of this Agreement and the Closing
Date.
"Copyright Act" means the Copyright Act of 1976, as amended, all rules,
regulations, orders, and policies of the United States Copyright Office
thereunder.
"Employee Plan" means any written pension, retirement, profit-sharing,
deferred compensation, vacation, severance, bonus, incentive, medical, vision,
dental, disability, life insurance, or other employee benefit plan as defined in
Section 3(3) of ERISA (other than a Multiemployer Plan) to which Central
contributes or which Central sponsors or maintains or by which Central otherwise
is bound, that provides benefits to employees of Central employed at the System.
"Employee Transition Agreement" means the Employee Transition Agreement,
substantially in the form to be agreed to by the parties prior to the funding of
the escrow deposit described in Section 11.5, to be entered into at Closing
between the Company and Central.
"Environmental Law" means any Legal Requirement pertaining to the release
or threatened release of hazardous substances or pollution or protection of the
environment, including the following federal laws as they may be amended from
time to time: (a) Clean Air Act; (b) Clean Water Act; (c) Resource Conservation
and Recovery Act; (d) Comprehensive Environmental Response, Compensation and
Liability Act; (e) Safe Drinking Water Act; (f) Toxic Substance Control Act; (g)
Occupational Safety and Health Act; (h) Rivers and Harbors Act of 1899; and (i)
Endangered Species Act of 1973.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations thereunder, as in effect from time to
time.
"Escrow Agreement" means that certain Escrow Agreement to be entered into
among Insight, Central, and the Escrow Agent pursuant to Section 11.5.
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"FAA" means the Federal Aviation Administration.
"FCC" means the Federal Communications Commission.
"Franchises" means all authorizations (including any applications therefor)
issued to Central by Governmental Authorities empowered by federal, state, or
local law to issue such authorizations, whether such authorizations are
designated as franchises, permits, licenses, resolutions, contracts,
certificates, agreements, or otherwise, in connection with the construction,
operation, or maintenance of the System, including the authorizations listed in
Schedule 5.7, and all amendments thereto and renewals and modifications thereof,
together with any additions thereto between the date of this Agreement and the
Closing Date.
"Franchising Authorities" means the Governmental Authorities that have
issued the Franchises, or before which there are pending any applications filed
by Central relating to the operation of the System.
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States of America.
"Governmental Authority" means the United States of America, any state,
commonwealth, territory, or possession of the United States of America and any
political subdivision thereof, and any agency, authority, or instrumentality of
any of the foregoing, including any court, tribunal, department, bureau,
commission, or board.
"Governmental Permits" means all licenses, permits, and other
authorizations (other than the Franchises) issued by the FCC, the FAA, or any
other federal, state, or local Governmental Authority and held by Central in
connection with the conduct of the business or operations of the System,
including the items listed in Schedule 5.8, together with any additions thereto
between the date of this Agreement and the Closing Date.
"Hazardous Substance" means any substance designated as "hazardous" or
"toxic," including petroleum and petroleum related substances, or having
characteristics identified as "hazardous" or "toxic" under any Environmental
Law.
"Homes Passed" means the total number of single family residences or
dwelling units within a building containing multiple dwelling units (including
hotel rooms and similar units) capable of being serviced by the System without
further line construction, plus the total number of commercial and other
buildings (including hotels) actually served by the System.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976,
as amended, and the rules and regulations thereunder, as in effect from time to
time.
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"Intangibles" means all copyrights, trademarks, trade names, service marks,
service names, licenses, patents, permits, proprietary information, technical
information and data, machinery and equipment warranties, and other intangible
property rights and interests (and any goodwill associated with any of the
foregoing) applied for, issued to, transferred to, or owned by Central or under
which Central is licensed or franchised and which are used or held for use in
connection with the business and operations of the System, including the items
listed in Schedule 5.12, together with any additions thereto between the date of
this Agreement and the Closing Date.
"Judgment" means any judgment, writ, order, injunction, award or decree of
any court, judge, justice, arbitrator, panel of arbitrators, or magistrate,
including any bankruptcy court or judge, and any order of or by any Governmental
Authority.
"Legal Requirements" means applicable common law and any applicable
statute, ordinance, code, or other law, rule, regulation, order, technical or
other standard, requirement, or procedure enacted, adopted, promulgated, or
applied by any Governmental Authority, including any applicable Judgment that
may have been handed down, adopted, or imposed by any Governmental Authority.
"Lien" means any lien, mortgage, deed of trust, hypothecation, pledge,
easement, right-of-way, building or use restriction, exception, reservation,
security interest, or similar third-party right.
"Multiemployer Plan" means a plan, as defined in ERISA Section 3(37) or
4001(a)(3), to which Central or any trade or business which would be considered
a single employer with Central under Section 4001(b)(1) of ERISA contributed,
contributes or is required to contribute that provides benefits to employees of
Central employed at the System.
"Operating Agreement" means the Operating Agreement of the Company,
substantially in the form of Exhibit A, with any changes thereto that are agreed
to by the parties, to be entered into between Insight and Central pursuant to
this Agreement.
"Permitted Liens" means any of the following: (a) liens for taxes,
assessments, and governmental charges not yet due and payable or that Central is
contesting in good faith through appropriate proceedings, (b) mechanic's,
materialmen's, and similar liens, (c) purchase money liens and liens securing
rental payments under capital lease arrangements, (d) in the case of Real
Property Interests that are leaseholds, the rights of any lessor and any lien
encumbering any lessor's interest in the underlying Real Property, (e) zoning
laws and ordinances and similar Legal Requirements and rights reserved to any
Governmental Authority to regulate the affected property, (f) liens,
liabilities, or encumbrances that secure liabilities to be assumed by the
Company pursuant to Article 4, and (g) as to any Real Property Interest, any
easements, rights-of-way, servitudes, permits, restrictions, and minor
imperfections or irregularities in title that are reflected in the public
records and do not individually or in the aggregate, materially affect the value
of,
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or materially interfere with the right or ability to own, use, or operate the
underlying Real Property.
"Person" means any association, corporation, general or limited
partnership, Governmental Authority, joint venture, limited liability company,
natural person, trust, or unincorporated entity of any kind.
"Principals" means ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, and ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇.
"Real Property" means all real property, and all buildings and other
improvements thereon, used or held for use in connection with the business or
operations of the System.
"Real Property Interests" means all interests of Central in any of the Real
Property, including fee estates, leaseholds, and subleaseholds, purchase
options, licenses, easements, rights to access, and rights of way, including the
items listed in Schedule 5.9, together with any additions thereto between the
date of this Agreement and the Closing Date (including that contemplated by
Section 7.13).
"Service Area" means any of the geographic areas in which Central is
authorized to provide cable television service pursuant to a municipal, county,
or state Franchise or provides cable television service without a municipal,
county, or state Franchise being required by any applicable Legal Requirement.
"Single-Member LLCs" means the three Delaware limited liability companies
to be formed by the Principals to own the stock of Central.
"Single-Member LLC Management Agreements" means the three management
agreements, substantially in the form of Exhibit E, with any changes thereto
that are agreed to by the parties, to be entered into between Insight and each
Single-Member LLC.
"Single-Member LLC Operating Agreements" means the Operating Agreements of
Single-Member LLCs, substantially in the form of Exhibit D, with any changes
thereto that are agreed to by the parties.
"System" means the cable television systems of Central in and around the
areas listed on Schedule 5.7.
"Tangible Personal Property" means all plant, machinery, equipment, tools,
vehicles, furniture, leasehold improvements that are not Real Property, office
equipment, inventory, spare parts, supplies, customer billing systems, and other
tangible personal property which is owned, leased, used or held for use by
Central in connection with the conduct of the business or operations of the
System, including the items listed in Schedule 5.10, together with any additions
thereto between the date of this Agreement and the Closing Date.
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"Taxes" means any federal, state or local taxes or assessments.
"Transferable Service Area" means any Service Area with respect to which
(a) any Consent necessary for the assignment of any municipal, county, or state
Franchise for such Service Area in connection with the consummation of the
transactions contemplated by this Agreement shall have been obtained without any
condition or qualification that would impose conditions or obligations
materially more burdensome than those currently contained in the Franchise that
is the subject of the Consent, or (b) no Consent is necessary for the assignment
of any municipal, county, or state Franchise for such Service Area in connection
with the consummation of the transactions contemplated by this Agreement, or (c)
no municipal, county, or state Franchise is required for the provision of cable
television service in the Service Area.
1.2 Terms Defined Elsewhere in this Agreement.
For purposes of this Agreement, the following terms have the meanings set
forth in the sections indicated:
Term Section
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AAA Section 12.9(b)
Arbitration Notice Section 12.9(e)
Central Preamble
Company Preliminary Statement
Escrow Agent Section 11.5
Excluded Assets Section 2.2
Financial Statements Section 5.4
Insight Preamble
Management Agreement Section 8.3(b)(2)
Marketing Programs Section 5.13(c)
Refinancing Proposals Section 2.3(a)
Retained Assets Section 8.3(a)
System Employee Section 5.14(a)
1.3 Terms Generally.
The definitions in Section 1.1 and elsewhere in this Agreement shall apply
equally to both the singular and plural forms of the terms defined. Whenever the
context requires, any pronoun
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includes the corresponding masculine, feminine, and neuter forms. The words
"include," "includes," and "including" are not limiting. Any reference in this
Agreement to a "day" or number of "days" (without the explicit qualification of
"Business") shall be interpreted as a reference to a calendar day or number of
calendar days.
ARTICLE 2
CONTRIBUTIONS
2.1 Formation of the Company and Contributions to the Company.
(a) At or prior to the Closing, Central and Insight shall execute and
deliver the Operating Agreement.
(b) At the Closing, subject to the terms and conditions set forth in
this Agreement and in accordance with the Operating Agreement, Central shall
contribute or cause to be contributed to the Company, and the Company shall
acquire from Central, all of the tangible and intangible assets owned or held by
Central and used or held for use by Central in connection with the ownership and
conduct of the business or operations of the System (other than the Excluded
Assets and any assets disposed of by Central prior to the Closing Date in
compliance with this Agreement), together with any additions thereto between the
date of this Agreement and the Closing Date, free and clear of all Liens except
for Permitted Liens, including the following:
(1) the Tangible Personal Property;
(2) the Real Property Interests;
(3) the Franchises;
(4) the Assumed Contracts;
(5) the Governmental Permits;
(6) the Intangibles and the goodwill of the System, if any;
(7) all of Central's proprietary information, customer lists,
technical information and data, maps, computer discs and tapes, plans, diagrams,
blueprints and schematics relating to the business and operation of the System;
(8) all accounts receivable of the System as of the Closing;
(9) Central's cash on hand as of the Closing Date and all other
cash and cash equivalents in Central's bank, savings, or other depository
accounts;
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(10) any and all bonds, surety instruments, letters of credit, or
other similar items and any cash surrender value in regard thereto, and any
stocks, bonds, certificates of deposit, and similar investments;
(11) all choses in action of Central;
(12) any insurance policies and rights or claims thereunder;
(13) all deposits, advance payments, and prepaid expenses
relating to the System; and
(14) all books and records (including copies of Central's filings
with Franchising Authorities and FCC and copyright filings) relating to the
business or operations of the System.
(c) At the Closing, subject to the terms and conditions set forth in
this Agreement and in accordance with the Operating Agreement, Insight shall
contribute or cause to be contributed to the Company, in cash, the sum of Ten
Million Dollars.
(d) Central shall also contribute cash to the Company as provided in
this Section 2.1(d).
(1) If any amendment to this Agreement pursuant to Section 3.2
reduces the net fair market value of the Assets, then Central shall contribute
to the Company, at the time specified in Section 2.1(d)(3) and otherwise in
accordance with this Section 2.1(d), cash in an amount equal to the amount of
such reduction.
(2) Concurrently with the making of each capital contribution
pursuant to this Section 2.1(d), Central shall pay to the Company interest at a
rate of eleven percent per year, compounded annually, from the Closing Date
through the date on which such capital contribution is made, on the amount of
such capital contribution. Interest paid or payable pursuant to this Section
2.1(d)(2) shall not, for purposes of the Operating Agreement, be deemed to be a
Capital Contribution (as defined in the Operating Agreement).
(3) Central may make its capital contributions and interest
payments pursuant to this Section 2.1(d) at any time, subject to the other
provisions of this Section 2.1(d)(3) and Section 2.1(d)(4). Central shall be
required to make capital contributions and interest payments pursuant to this
Section 2.1(d) concurrently with, and to the extent of, any distributions to
Central (or any assignee of any portion of its membership interest in the
Company) pursuant to the Operating Agreement, other than any distributions with
respect to the Preferred A Interest or the Preferred B Interest (each as defined
in the Operating Agreement) and distributions based on the amount of any taxable
income allocated to the members of the Company (including the
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April Distributions and the Estimated Tax Distributions, as defined in the
Operating Agreement). The Company shall withhold from any distributions to
Central (or any assignee described in this Section 2.1(d)(3)) pursuant to the
Operating Agreement (other than any distributions with respect to the Preferred
A Interest or the Preferred B Interest (each as defined in the Operating
Agreement) and distributions based on the amount of any taxable income allocated
to the members of the Company (including the April Distributions and the
Estimated Tax Distributions, as defined in the Operating Agreement)) the amount
of its remaining obligations under this Section 2.1(d) and any amount so
withheld shall be treated for purposes of the Operating Agreement and this
Agreement as having been distributed in accordance with the Operating Agreement
on the date on which Central would otherwise have received such distribution and
contributed or paid (as applicable) the amount of such distribution in
accordance with this Section 2.1(d) on the same date.
(4) To the extent that the effect of any circumstance giving rise
to an amendment to this Agreement pursuant to Section 3.2(b) is to reduce the
operating income of the Company such that the Company is unable to make any
required distribution with respect to the Preferred A Interest or the Preferred
B Interest (each as defined in the Operating Agreement), then Central shall be
required to make capital contributions and interest payments pursuant to this
Section 2.1(d) at any time within ten Business Days after a demand therefor by
the Manager (as defined in the Operating Agreement).
2.2 Excluded Assets.
The assets to be contributed to the Company by Central pursuant to Section
2.1(a) exclude the following assets (the "Excluded Assets"):
(a) all programming agreements (other than retransmission agreements
and must-carry elections) and all other Contracts of Central that are
designated on Schedule 5.11 as not being Assumed Contracts;
(b) any books and records that Central is required by any Legal
Requirement to retain, Central's corporate minute books, and any other books and
records related to internal corporate matters of Central;
(c) any claims, rights, and interest in and to any refunds of Taxes
for periods prior to the Closing Date;
(d) all choses in action of Central relating to any Excluded Asset or
any liability that is not assumed by the Company,
(e) any chose in action of Central relating to any circumstance giving
rise to any reduction to the net fair market value of the Assets pursuant to
Section 3.2 to the extent such chose of action is not assignable;
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(f) any trademarks, service marks, service names, logos, and similar
proprietary rights incorporating the name "Coaxial";
(g) the accounting system, the account books of original entry,
general ledgers, and financial records used in connection with the System;
(h) any insurance policies and rights or claims thereunder relating to
any Excluded Asset or any liability that is not assumed by the Company;
(i) any insurance policies and rights or claims thereunder relating to
any circumstance giving rise to any reduction to the net fair market value of
the Assets pursuant to Section 3.2 to the extent such insurance policies,
rights, or claims are not assignable;
(j) any other assets of Central not used or held for use in connection
with the business or operations of the System; and
(k) any assets (including accounts receivable or notes owed by
Affiliates of Central) described on Schedule 2.2.
2.3 Refinancing.
(a) Central has received proposals (collectively, the "Refinancing
Proposals") from CIBC ▇▇▇▇▇▇▇▇▇▇▇ Corp., copies of which have been delivered to
Insight, concerning (1) the issuance by the Single-Member LLCs of certain senior
deferred interest notes, a portion of the net proceeds of which will be used to
repay, in part, obligations under the Credit Agreement, dated November 15, 1994,
among Central, certain other parties, and the lenders named therein, as amended,
(2) the purchase of the remaining obligations of Central under such Credit
Agreement from the lenders under the Credit Agreement and the restructuring of
such obligations, and (3) the granting to the Company of a revolving line of
credit. Insight acknowledges that the proceeds of the transactions contemplated
by the Refinancing Proposals will be used as described on Schedule 2.3(a).
(b) Central and Insight will each use their commercially reasonable
efforts to cause the transactions contemplated by the Refinancing Proposals to
be consummated in accordance with the terms thereof (without regard to any
change in interest rates for the senior notes from those contemplated by the
Refinancing Proposals).
ARTICLE 3
VALUE OF CONTRIBUTIONS
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3.1 Fair Market Value of Contributed Assets.
Central and Insight agree that the net fair market value of the Assets as
of the Closing Date for purposes of this Agreement and the Operating Agreement
(subject to adjustment as provided in Section 3.2) shall equal (a) $3,333,333
plus (b) the sum of the Preferred A Capital Amount and the Preferred B Capital
Amount (each as defined in the Operating Agreement) as of the Closing Date.
3.2 Certain Adjustments.
(a) If any loss, damage, confiscation, or condemnation of any of the
Assets occurs prior to the Closing, and the effect of such loss, damage,
confiscation, or condemnation is to reduce the net fair market value of the
Assets as of the Closing (taking into account any increase in liabilities and
obligations and any reduction in operating income resulting from such loss,
damage, confiscation, or condemnation and any insurance, condemnation, or other
proceeds received or to be received by the Company as a result of such loss,
damage, confiscation, or condemnation) by more than $500,000, then this
Agreement shall be amended to reduce the net fair market value of the Assets for
purposes of Section 3.1 by the amount by which the reduction in the net fair
market value of the Assets after the Closing as a result of such loss, damage,
confiscation, or condemnation exceeds $500,000.
(b) If (1) any of the representations and warranties of Central in
this Agreement or in the certificate delivered by Central pursuant to Section
10.2(e) was not true when made or if Central fails to perform and comply with
any covenant or agreement required by this Agreement to be performed or complied
with by Central prior to or on the Closing Date, and (2) Insight delivers a
written notice to Central (A) with respect to a breach of any representation or
warranty in Section 5.6 relating to title to the Assets, Section 5.15 relating
to Taxes, or Section 5.18 relating to third-party claims (including any
third-party claims relating to environmental matters), at any time, or (B) with
respect to a breach of any other representation or warranty, prior to or within
one year after the Closing, in each case identifying any circumstance described
in clause (1), and (3) the net fair market value of the Assets as of the Closing
(taking into account any increase in liabilities and obligations and any
reduction in operating income and any proceeds received by the Company as a
result of such circumstances under any chose of action or any insurance policy
or claim thereunder assigned by Central to the Company) is reduced by those
circumstances described in clause (1) that are identified in one or more notices
delivered by Insight pursuant to clause (2) by more than $500,000, then this
Agreement shall be amended to reduce the net fair market value of the Assets for
purposes of Section 3.1 by the lesser of (x) the amount by which the reduction
in the net fair market value of the Assets as of the Closing (taking into
account any increase in liabilities and obligations and any reduction in
operating income) attributable to the circumstances described in clause (1) that
are identified in any notice delivered by Insight pursuant to clause (2) exceeds
$500,000, or (y) $3,333,333.
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(c) Insight and Central shall use good faith efforts to negotiate and
enter into any amendment to this Agreement required by this Section 3.2. If
Insight and Central are unable to agree on such an amendment, the matter shall
be resolved pursuant to Section 12.9. Upon final determination, this Agreement
shall be deemed amended in accordance with any mediated resolution or
arbitrators' decision, as applicable.
ARTICLE 4
ASSUMED LIABILITIES
4.1 Assumption of Central Liabilities.
Effective as of the Closing, Insight shall cause the Company to assume and
undertake to pay, discharge, and perform the following:
(a) all obligations of Central to customers of the System for (1)
customer deposits held by Central as of the Closing that are refundable, (2)
customer, advertising, and other advance payments held by Central as of the
Closing for services to be rendered by the Company on or after the Closing Date,
and (3) the delivery of cable television service to cable television service
customers and the exhibition of advertising for advertising customers of the
System on or after the Closing Date;
(b) all obligations of Central under the Franchises, Governmental
Permits, and Assumed Contracts;
(c) all costs and expenses of Central and Insight that are set forth
in Section 12.2; and
(d) all other obligations and liabilities arising out of the Company's
ownership of the Assets or operation of the System, other than obligations or
liabilities arising under any Contract that is not included in the Assumed
Contracts, any obligations or liabilities relating to any Excluded Asset, and
any obligations and liabilities with respect to any Taxes for periods prior to
the Closing Date.
4.2 Liabilities Not Assumed.
Notwithstanding any provision of this Agreement to the contrary, except as
expressly provided in Section 4.1 or Section 12.2, the Company shall not assume
by virtue of this Agreement or the transactions contemplated hereby, and the
Company shall not have any liability for, any obligations or liabilities of
Central or of Insight of any kind, character, or description whatsoever.
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF CENTRAL
Central represents and warrants to Insight as follows:
5.1 Organization, Standing, and Authority.
Central is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Ohio. Central has all requisite
corporate power and authority (a) to own, lease, and use the Assets as now
owned, leased, and used by Central, (b) to conduct the business and operations
of the System as now conducted by Central, and (c) to execute and deliver this
Agreement and the documents contemplated hereby, and to perform and comply with
all of the terms, covenants, and conditions to be performed and complied with by
Central hereunder and thereunder.
5.2 Authorization and Binding Obligation.
The execution, delivery, and performance by Central of this Agreement and
the documents contemplated hereby have been duly authorized by all necessary
corporate actions on the part of Central. This Agreement has been duly executed
and delivered by Central, and this Agreement constitutes, and when executed and
delivered the documents contemplated hereby will constitute, the legal, valid,
and binding obligations of Central, enforceable against Central in accordance
with their terms, except as the enforceability of this Agreement and the
documents contemplated hereby may be affected by bankruptcy, insolvency, or
similar laws affecting creditors' rights generally and by the application of
general equitable principles.
5.3 Absence of Conflicting Agreements.
Subject to obtaining the Consents listed on Schedule 5.3 or as otherwise
disclosed on Schedule 5.3, the execution, delivery, and performance by Central
of this Agreement and the documents contemplated hereby (with or without the
giving of notice, the lapse of time, or both): (a) do not require the consent
of, notice to, or filing with any Governmental Authority or any third party; (b)
will not conflict with any provision of the Articles of Incorporation, Code of
Regulations, or any other organizational document of Central; (c) will not
conflict with, result in a breach of, or constitute a default under, any Legal
Requirement or any Judgment; (d) will not conflict with, constitute grounds for
termination of, result in a breach of, constitute a default under, or accelerate
or permit the acceleration of any performance required by the terms of, any
agreement, instrument, license, or permit to which Central is a party or by
which Central or any of the Assets may be bound; and (e) will not create any
Lien upon any of the Assets.
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5.4 Financial Statements.
Central has previously delivered to Insight audited financial statements
for the System containing a balance sheet, statement of income, and statement of
cash flows as at and for the fiscal year ended December 31, 1997, and unaudited
financial statements for the System containing a balance sheet, statement of
income, and statement of cash flows as at and for the three months ended March
31, 1998 (collectively, the "Financial Statements"). The Financial Statements
have been prepared from the books and records of Central with respect to the
System, have been prepared in accordance with GAAP consistently applied and
maintained throughout the periods indicated, accurately reflect the books,
records, and accounts of the System, and present fairly the financial condition
of the System as at their respective dates and results of operations for the
periods then ended.
5.5 Interim Operations.
Except as disclosed on Schedule 5.5, since March 31, 1998, Central has
conducted the business and operations of the System in the ordinary course of
business consistent with past practice and has not:
(a) sold or otherwise disposed of any assets that would have been
included in the Assets, except obsolete assets where suitable replacements have
been made therefor;
(b) suffered any material adverse change in its ability to conduct the
business and operations of the System in a manner consistent with Central's past
practices;
(c) waived or released any material claim or right of Central against
any third party; or
(d) mortgaged, pledged, or subjected to any Lien any of the Assets
(other than the Liens disclosed in Schedule 5.6).
5.6 Title to Assets; Liens.
Except as disclosed on Schedule 5.6, Central has good title to the Assets
free and clear of all Liens, except for Permitted Liens. The Company will, at
the Closing, acquire good title to, and all of Central's right, title, and
interest in and to, the Assets free and clear of all Liens, except for Permitted
Liens. No Person has an option to purchase, right of first refusal, or other
similar right with respect to any Assets.
5.7 Franchises.
Schedule 5.7 lists all Franchises held by Central (including the Service
Area covered by each such Franchise, the Franchising Authority that is party to
each such Franchise, Consent
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requirement, if any, and the effective date and expiration date for each such
Franchise). Central has delivered to Insight true and complete copies of all
Franchises. The Franchises listed on Schedule 5.7 constitute all of the
governmental authorizations (whether designated as franchises or otherwise),
other than the Governmental Permits, required to conduct the business of the
System and operate the System lawfully and in the same manner as the business of
the System is currently conducted and the System is currently operated by
Central. Each Franchise is in full force and effect in accordance with its
terms. Central is the authorized legal holder of each Franchise. Except as
disclosed on Schedule 5.7, Central is not in violation of or in default in the
performance of its obligations under any Franchise. All appropriate requests for
renewal under the Communications Act have been filed with the appropriate
Franchising Authorities within the time frame required by each Franchise and
pursuant to applicable Legal Requirements. Central has no reason to believe that
under existing Legal Requirements, any of the Franchises would not be renewed by
the granting authority in the ordinary course. Central has not made any
commitments (oral or written) to any Franchising Authorities with respect to the
System other than those contained in the Franchises.
5.8 Governmental Permits.
Each Governmental Permit held by Central is listed in Schedule 5.8. Central
holds all governmental licenses, permits, and other authorizations that are
required by any applicable Legal Requirement in connection with the conduct of
the business and operation of the System as it is currently conducted and
operated by Central. Each Governmental Permit is valid and in full force and
effect. Central has delivered to Insight true and complete copies of all written
Governmental Permits. Central is not in violation or default of any Governmental
Permit. No proceeding is pending or, to Central's Knowledge, threatened, to
revoke, terminate, cancel, or modify any Governmental Permit.
5.9 Real Property and Real Property Interests.
Schedule 5.9 contains a complete and accurate description of all Real
Property and the nature of all Real Property Interests with respect thereto
(including street address, owner, and use and location of all improvements
thereon). On the date of this Agreement, none of the Real Property Interests are
fee estates. All buildings and improvements occupied by Central on the Real
Property are available for immediate use in the conduct of the business and
operations of the System. There are no pending or, to Central's Knowledge,
threatened condemnation proceedings, special assessments, proceedings for
changes in zoning, lawsuits, or administrative actions that could adversely
affect Central's current use or occupancy of any Real Property. All Real
Property has full legal and practical access to public roads or streets and
facilities necessary for the operation of the System. To Central's Knowledge,
there are no leases, subleases, licenses, concessions, or other agreements,
whether written or oral, granting to any Person the right to use or occupy any
of the Real Property that would impair the Company's ability to use such Real
Property after the Closing for its intended purpose.
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5.10 Tangible Personal Property.
Schedule 5.10 describes all material items of Tangible Personal Property
(including the name of the lessor with respect to such property which is
leased). The Tangible Personal Property, taken as a whole, is in good operating
condition and repair, subject to ordinary wear and tear.
5.11 Contracts.
Schedule 5.11 is a true and complete list of all written Contracts, other
than (a) Contracts entered into in the ordinary course of business that may be
canceled by Central without penalty on not more than thirty days' notice (other
than material agreements to provide cable television service to multiple
dwelling units), (b) subscription agreements with customers for cable services
provided by the System in the ordinary course of business, (c) programming
agreements (other than retransmission agreements and must-carry elections), and
(d) any Contracts through which Central obtains access or rights-of-entry to any
real property that do not require periodic payments by Central. Central has
delivered to Insight true and complete copies of all Assumed Contracts listed on
Schedule 5.11. Central has given Insight reasonable access to review all other
Assumed Contracts. All of the Assumed Contracts are validly existing, in full
force and effect, and binding and enforceable against Central and the other
parties thereto (subject to bankruptcy, insolvency, or similar laws affecting
creditors' rights generally and to the application of general equitable
principles). No default exists under any Assumed Contract. Central has not, nor
has any other party to a Contract, given or received any notice that any party
to any Assumed Contract intends to terminate or not to renew such Assumed
Contract or amend the terms thereof and, subject to receipt of the Consents, the
consummation of the transactions contemplated by this Agreement is not likely to
result in any such termination, non-renewal, or amendment. Except for the need
to obtain the Consents described in Schedule 5.3, Central has full legal power
and authority to assign its rights under all Assumed Contracts to the Company in
accordance with this Agreement, and such assignment will not affect the
validity, enforceability, or continuation of any such Assumed Contract.
5.12 Intangibles.
Schedule 5.12 is a true and complete list of the Intangibles, all of which
are valid and in full force and effect and uncontested. Central does not possess
any patent, patent right, trademark, or copyright used or held for use in
connection with the operation of the System and is not party to any license or
royalty agreement with respect to any patent, trademark, or copyright except for
licenses respecting program material and obligations under Section 111 of the
Copyright Act applicable to cable television systems generally. Central, in its
operations of the System, is not infringing upon or otherwise acting adversely
to any trademarks, trade names, copyrights, patents, patent applications,
know-how, methods, or processes owned by any other Person, and there is no claim
or action pending or, to Central's Knowledge, threatened with respect thereto.
- 17 -
5.13 System Information.
(a) Schedule 5.13 sets forth, as of the date indicated on Schedule
5.13, for each Service Area, the approximate number of customers of the System
in each class of service. The System consists of approximately 2,300 miles of
total plant, of which approximately 736 miles are underground and approximately
1,564 miles are aerial, from one headend and not fewer than 160,000 Homes
Passed.
(b) All of the communities to which the System provides cable
television service have been registered with the FCC. Schedule 5.13 contains a
true and complete, as of the date indicated on Schedule 5.13, list of each such
community and its corresponding FCC community unit identification number. Except
as disclosed on Schedule 5.13, Central has not received notice from any
community or other political subdivision served by the System that it has
applied to or become certified by the FCC for the purpose of regulating the
System's basic rates. Central has used reasonable efforts to establish rates
charged to customers that would be allowable under the rules and regulations
promulgated by the FCC under the Communications Act and any authoritative
interpretation thereof, if such rates were subject to regulation by any
Governmental Authority, including the local franchising authority, or the FCC,
and to Central's Knowledge, such rates as computed under the FCC's rules and
regulations are permitted rates except as set forth in Schedule 5.13. Central
has delivered to Insight true and complete copies of the most recent FCC Forms
393, 1200, 1205, 1210, 1215, 1220, 1230, and 1240 (as applicable) that have been
prepared with respect to the System. Central has given Insight reasonable access
to review all other such FCC Forms. No rate order of any Governmental Authority
is in effect or, to Central's Knowledge, threatened and no complaints have been
filed with the FCC with respect to the rates charged by Central with respect to
the System.
(c) Schedule 5.13 also sets forth a true and complete list of the
current channel alignment or lineup, channel capacity, and bandwidth capability
for the System. Central has delivered to Insight true and accurate records of
the rates, including installation charges, charged to customers for each class
of service and each category of customers of the System. Except as disclosed in
Schedule 5.13, the System is carrying channels and is providing reception on all
such channels in compliance with the technical standards set forth in all
applicable FCC rules, regulations, and requirements. All offset notifications
required to be filed by Central in connection with its operation of the System
have been filed pursuant to Section 76.615 of the FCC's regulations for all
aeronautical frequencies in use by the System. Schedule 5.13 also sets forth all
broadcast and non-broadcast stations or signals carried by the System, with a
breakdown as to each signal as between satellite and off-air reception, current
channel and frequencies utilized (including system radius and designated
coordinates reported to the FCC); all marketing programs pursuant to which any
customers of the System currently are receiving discounts, whether or not such
programs currently are being offered to customers or potential customers of the
System, and all marketing programs active as of the date of this Agreement as
described in written materials distributed to customers or potential customers
of the System (collectively, "Marketing
- 18 -
Programs"); and all FCC call signs and licenses, including business radio, earth
station, and microwave licenses.
(d) All broadcast television station signals carried on the System,
excluding superstations carried pursuant to 47 C.F.R. section 76.64, are being
carried either pursuant to a valid must- carry election or a retransmission
consent agreement authorizing the retransmission of the station's signal. Each
such retransmission consent agreement is in full force and effect and consistent
with FCC rules, and there is no dispute pending or, to Central's Knowledge,
threatened, with respect to the carriage or non-carriage or channel position of
any broadcast station by the System. Central has complied with the must-carry
and retransmission consent provisions of the Communications Act and the FCC
rules and regulations promulgated thereunder as they relate to the System. No
retransmission consent agreement requires a cash payment by Central or imposes
other material onerous conditions. Central has not received any request or
demand to lease channel capacity on the System pursuant to Section 612 of the
Communications Act.
(e) Central and the System are currently in compliance with 47 C.F.R.
section 76.92 and section 76.151, with respect to network non-duplication
protection and syndicated exclusivity, and Central is not aware of any complaint
filed with the FCC alleging noncompliance with such regulations with respect to
the System.
(f) All required authorizations, certificates, licenses, permits, and
clearances from Governmental Authorities (including the FCC and the FAA) with
respect to the System's operations, including all of Central's towers, earth
stations, business radios, and frequencies utilized and carried by the System,
have been obtained by Central and are currently valid and in full force and
effect, and the towers are being operated in compliance with all applicable FCC
and FAA rules.
(g) Schedule 5.13 contains a true and complete list of each of the
System's towers (including tower coordinates and height for each such tower).
Copies of all relevant determinations of the FAA, if any, with respect thereto
have been delivered to Insight.
(h) Central has filed all reports, applications, financial statements,
and other documents required to be filed by Central with the FCC or any other
Governmental Authority with respect to its ownership and operation of the
System. All of such returns, reports, and documents filed by Central were,
complete and correct in all material respects as filed.
(i) (1) Central has filed with the U.S. Copyright Office all copyright
notices, statements of accounts, supplements, and other documents required to be
filed under Section 111 of the Copyright Act with respect to Central's ownership
and operation of the System and has paid all royalties, supplemental royalties,
fees, and other sums to the U.S. Copyright Office under the Copyright Act (with
all required interest and penalties, if any) required to be paid by it with
respect to such filings, (2) the operations of the System are in compliance with
the Copyright Act
- 19 -
and the rules and regulations of the U.S. Copyright Office, and (3) the System
qualifies for, and has obtained, holds, and maintains, the compulsory license
under Section 111 of the Copyright Act, which compulsory copyright license is in
full force and effect. Central has made available to Insight complete and
correct copies of all reports and filings for the past three years made or filed
pursuant to the Copyright Act with respect to the System. Central has not
received any notice or inquiry from the United States Copyright Office or from
any other party concerning any claim, action, or demand relating to its
copyright filings, statements of accounts, or royalty payments or any notice,
inquiry, or claim from any other Person to the effect that the conduct of the
business or operations of the System has infringed, or as currently conducted
infringes, on the intellectual property rights of any Person.
(j) Without limiting the generality of the foregoing, and except as
set forth in Schedule 5.13 hereto:
(1) all of the annual performance tests on the System required
under the rules and regulations of the FCC have been performed and the results
of such tests demonstrate satisfactory compliance in all material respects;
(2) the System currently meets or exceeds the technical standards
set forth in the rules and regulations of the FCC, including, without
limitation, the leakage limits contained in 47 C.F.R. Section 76.605(a)(11);
(3) the System is being operated in compliance with the
provisions of 47 C.F.R. Section 76.610 through 76.619 (mid-band and super-band
signal carriage), including 47 C.F.R. Section 76.611 (compliance with the
cumulative signal leakage index);
(4) all notices to subscribers of the System required by the
rules and regulations of the FCC have been provided;
(5) Central is in compliance with its obligations with regard to
the protection of subscriber privacy pursuant to Section 631 of the
Communications Act; and
(6) no programmer is currently auditing the System with respect
to the number of System subscribers or amounts paid to any programmer.
5.14 Employees and Compensation.
(a) Schedule 5.14 contains a true and complete list of the names,
present titles and work assignments, respective dates of initial employment, and
current annual salary or hourly rate for all employees of Central as of the date
hereof who perform services primarily in connection with the operation of the
System (each a "System Employee"). Central generally enjoys good
employer-employee relations with the System Employees. Central does not have any
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written or oral contracts of employment with any System Employee, other than
those listed in Schedule 5.11.
(b) Except as set forth on Schedule 5.14, neither Central nor any of
its Affiliates is party to, administers, sponsors, maintains, or contributes to
any Employee Plan or Compensation Arrangement for the System Employees,
including any plans subject to ERISA. Except as disclosed in Schedule 5.14,
there is not now in effect or to become effective after the date of this
Agreement and until the Closing Date, any new Employee Plan or Compensation
Arrangement or any amendment to an existing Employee Plan or Compensation
Arrangement that will affect the benefits of System Employees and former System
Employees. All Employee Plans that are subject to Section 4980B(f) of the Code
and Sections 601 through 607 of ERISA comply in all material respects with and
have been administered in material compliance with the health care
continuation-coverage requirements for tax-favored status under Section 4980B(f)
of the Code, and Sections 601 through 607 of ERISA. Central has complied in all
material respects with all applicable provisions of ERISA, the Code, the
National Labor Relations Act, Title VII of the Civil Rights Act of 1964, the Age
Discrimination in Employment Act and all other laws pertaining to employee
benefit plans. Central has no liability for any delinquent contributions due to
employee benefit plans within the meaning of Section 515 of ERISA (including
related attorneys' fees, costs, liquidated damages and interest) or for any
arrearages of wages. Central does not contribute to and is not required to
contribute to any Multiemployer Plan with respect to System Employees.
(c) Central has complied in all material respects with all applicable
Legal Requirements relating to the employment of labor, including those related
to wages, hours, collective bargaining, discrimination, and the payment of
Social Security or similar taxes. Central has not been and is not a party to or
subject to any collective bargaining agreement with respect to the System. No
proceedings or material controversies or disputes are pending or, to Central's
Knowledge, threatened between it and any System Employee (singly or
collectively). No labor union or other collective bargaining unit represents or
claims to represent any of the System Employees.
5.15 Taxes.
All federal, state and local tax returns required to be filed by Central in
connection with the operation of the System with respect to any Taxes have been
filed and all Taxes which are due and payable have been paid, except such
amounts as are being contested diligently and in good faith and are not in the
aggregate material. There are no legal, administrative, or tax proceedings
pursuant to which Central is or could be made liable for any taxes, penalties,
interest, or other charges, the liability of which could extend to the Company
as transferee of the System or Assets or business related thereto, and no event
has occurred that could impose on the Company any transferee liability for any
taxes, penalties, or interest due or to become due from Central.
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5.16 Environmental Matters.
Central's operation of the System and use of the Real Property and Assets
complies and has complied with all Environmental Laws, and Central has no
liability under any Environmental Law based on its operation of the System and
use of the Real Property and Assets. Central has not received notice of any
claim or investigation based on Environmental Laws that relates to the
operations of the System, any Real Property or any operations conducted by
Central on such Real Property, including any such notice indicating that the
Real Property has been or may be placed on any federal or state "Superfund" or
"Superlien" list. Neither Central nor, to Central's Knowledge, any other Person
has released any reportable quantity of any Hazardous Substance on the Real
Property, treated or disposed of any Hazardous Substance on the Real Property,
or transported any Hazardous Substance to or from any Real Property, except for
such substances found in commercial cleaning products or standard office
supplies of the types and in the amounts customarily used by businesses similar
to the business of the System. Neither Central nor, to Central's Knowledge, any
other Person has installed or removed any tanks on or below the surface of the
Real Property. Central has provided Insight with complete and correct copies of
(1) all studies, reports, surveys or other materials in Central's possession
relating to the presence or alleged presence of Hazardous Substances on the Real
Property, (2) all notices or other materials in Central's possession that were
received from any Governmental Authority having the power to administer or
enforce any Environmental Law relating to current or past ownership, use, or
operation of the Real Property or activities at the Real Property, and (3) all
materials in Central's possession relating to any claim, allegation, or action
by any Person under any Environmental Law relating to current or past ownership,
use, or operation of the Real Property.
5.17 Compliance with Laws.
Except as disclosed on Schedule 5.17, neither Central nor the ownership of
the Assets as they are currently owned by Central or the operation of the System
as it is currently operated by Central, is in violation of (a) any applicable
Judgment relating to the System or Assets or (b) any Legal Requirement
applicable to the System or the Assets.
5.18 Claims and Legal Actions.
Except as disclosed on Schedule 5.18 and except for proceedings generally
affecting the cable television industry, (a) there is no action, suit, claim,
demand, arbitration, or other proceeding (or, to Central's Knowledge, any
investigation), administrative or judicial, pending (or, to Central's Knowledge,
threatened) against or relating to Central with respect to its ownership or
operation of the System or otherwise relating to the Assets, and (b) no Judgment
been issued against or relating to any of the foregoing.
- 22 -
5.19 Insurance and Bonds.
Schedule 5.19 is a true and complete list of all insurance policies of
Central that insure any part of the Assets or the business of the System and all
performance, surety, or other bonds maintained by Central with respect to the
Assets or the business of the System. All of such policies and bonds are in full
force and effect, and Central has received no notice of non-renewal or
cancellation of any such policies or bonds.
5.20 Transactions with Affiliates.
Except as disclosed on Schedule 5.20, Central has not been involved in any
business arrangement or relationship relating to the System with any Affiliate
of Central, and no Affiliate of Central owns any property or right, tangible or
intangible, that is used in the business of the System.
5.21 Brokers.
Neither Central nor any Person acting on Central's behalf has incurred any
liability for any finders' or brokers' fees or commissions in connection with
the transaction contemplated by this Agreement, except for fees or commissions
payable to ▇▇▇▇▇▇ Capital Corporation.
5.22 Assets.
Central uses no properties or assets in the business or operations of the
System, other than the Assets and the Excluded Assets, and the Assets and the
Excluded Assets together include all material properties and assets necessary
for the conduct of the business of the System in the ordinary course of business
in substantially the same manner as now conducted.
5.23 Accounts Receivable.
All accounts receivable reflected on the Financial Statements, and all
accounts receivable of Central that arose after the date of the Financial
Statements and prior to the date of this Agreement, arose from bona fide
transactions in the ordinary course of business.
5.24 No Undisclosed Liabilities.
Except as and to the extent set forth on Schedule 5.24, Central does not
have any liability or obligation (direct or indirect, absolute, fixed,
contingent, or otherwise) arising out of the Assets or operation of the System
that would be required by GAAP to be reflected or reserved on the Financial
Statements but which are not so reflected or reserved, other than any such
liability or obligation incurred since March 31, 1998 in the ordinary course of
business.
- 23 -
5.25 Liabilities to Customers.
Central has no obligations or liabilities to customers of the System except
with respect to (a) prepayments or deposits made by such customers as set forth
in the Financial Statements or, since March 31, 1998, incurred in the ordinary
course of business consistent with past practices, and (b) obligations to supply
services to customers in the ordinary course of business in accordance with and
pursuant to the terms of the Franchises, the Governmental Permits, and
Contracts.
5.26 Restoration.
No property of any third party has been damaged, destroyed, disturbed or
removed in the process of constructing or maintaining the System that has not
been, or will not be, prior to the Closing, repaired, restored, or replaced,
other than in connection with installation and work projects undertaken in the
ordinary course of business and ongoing as of Closing.
5.27 Overbuilds.
Except as set forth in Schedule 5.27, to Central's Knowledge, on the date
of this Agreement, (a) no construction programs have been undertaken or are
proposed or threatened to be undertaken by any municipality or other cable
television, multichannel multipoint distribution system, or multipoint
distribution system provider or operator in any Service Area; and (b) no
application of any Person for any franchise to provide cable television service
in any Service Area is pending. Except as set forth in Schedule 5.27, Central is
not, nor is an affiliate of Central, a party to any agreement restricting the
ability of a third party to operate cable television systems in the Franchise
areas.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF INSIGHT
Insight represents and warrants to Central as follows:
6.1 Organization, Standing, and Authority.
Insight is a limited partnership duly organized, validly existing, and in
good standing under the laws of the State of Delaware. Insight has all requisite
partnership power and authority to own, lease, and use its properties and
assets, to engage in the business or businesses in which it is engaged, and to
execute and deliver this Agreement and the documents contemplated hereby, and to
perform and comply with all of the terms, covenants, and conditions to be
performed and complied with by Insight hereunder and thereunder.
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6.2 Authorization and Binding Obligation.
The execution, delivery, and performance of this Agreement by Insight have
been duly authorized by all necessary actions on the part of Insight. This
Agreement has been duly executed and delivered by Insight, and this Agreement
constitutes, and when executed and delivered the documents contemplated hereby
will constitute, the legal, valid, and binding obligations of Insight,
enforceable against Insight in accordance with their terms, except as the
enforceability of this Agreement and the documents contemplated hereby may be
affected by bankruptcy, insolvency, or similar laws affecting creditors' rights
generally and by the application of general equitable principles.
6.3 Absence of Conflicting Agreements.
Except as set forth on Schedule 6.3, subject to obtaining any Consents
required to be disclosed by Central on Schedule 5.3, the execution, delivery,
and performance by Insight of this Agreement and the documents contemplated
hereby (with or without the giving of notice, the lapse of time, or both): (a)
do not require the consent of, notice to, or filing with any Governmental
Authority or any third party; (b) will not conflict with any provision of
Insight's agreement of limited partnership or certificate of limited
partnership; (c) will not conflict with, result in a breach of, or constitute a
default under, any Legal Requirement or any Judgment; and (d) will not conflict
with, constitute grounds for termination of, result in a breach of, constitute a
default under, or accelerate or permit the acceleration of any performance
required by the terms of, any agreement, instrument, license, or permit to which
Insight is a party or by which Insight may be bound.
6.4 Claims and Legal Actions.
Except for proceedings generally affecting the cable television industry,
there is no claim, legal action, counterclaim, suit, arbitration, governmental
investigation, or other legal, administrative, or tax proceeding in progress or
pending or, to the knowledge of Insight, threatened, nor any Judgment
outstanding, against or relating to Insight, that may impair Insight's ability
to perform its obligations under this Agreement, the Operating Agreement, or the
Single-Member LLC Management Agreements.
6.5 Brokers.
Neither Insight nor any Person acting on its behalf has incurred any
liability for any finders' or brokers' fees or commissions in connection with
the transactions contemplated by this Agreement, except for fees or commissions
payable to Lazard Freres & Co. LLC.
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ARTICLE 7
OPERATIONS OF SYSTEM PRIOR TO CLOSING
7.1 Generally.
Central agrees that, between the date of this Agreement and the Closing
Date, Central shall operate the System in the ordinary course of business
consistent with past practices and in compliance with the other covenants in
this Article 7, except as specifically required by this Agreement or consented
to by Insight.
7.2 Contracts or Commitments.
Central shall not (a) modify or amend in any material respect any
Franchise, Governmental Permit, or Assumed Contract, (b) terminate, suspend, or
abrogate any Franchise, Governmental Permit, or Assumed Contract, or (c) enter
into any contract that will be binding on the Company after Closing other than
(1) contracts entered into in the ordinary course of business that do not
involve consideration individually in excess of $75,000 and, in the aggregate,
in excess of $350,000, measured at Closing, and (2) contracts described on
Schedule 7.2.
7.3 Disposition of Assets.
Central shall not sell, lease or otherwise dispose of any of the Assets
other than in the ordinary course of business where suitable replacements have
been made therefor.
7.4 Distributions.
Central shall not make any distributions to its shareholders, except for
distributions made consistent with past practices for the purpose of offsetting
tax liabilities attributable to the allocation of taxable income to the
shareholders of Central.
7.5 Encumbrances.
Central shall not create, assume, or permit to exist any Lien upon the
Assets, except for Permitted Liens and Liens that are disclosed on Schedule 5.6.
7.6 Franchises and Governmental Permits.
Central shall not cause or permit, by any act or failure to act, any of the
Franchises or Governmental Permits to expire or to be revoked, suspended, or
modified, or take any action that would cause any Franchising Authority or other
Governmental Authority to institute proceedings for the suspension, revocation,
or adverse modification of any of the Franchises or Governmental Permits.
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7.7 Access to Information.
Central shall, upon reasonable advance notice, give Insight and its
counsel, accountants, engineers, and other authorized representatives reasonable
access to the Assets and to all other properties, equipment, books, records,
Contracts, and documents relating to the System and the Assets for the purpose
of audit and inspection, and will, upon reasonable advance notice, furnish or
cause to be furnished to Insight or its authorized representatives all
information with respect to the affairs and business of the System that Insight
may reasonably request.
7.8 Maintenance of Assets.
Central shall maintain all of the Tangible Personal Property in good
operating condition (ordinary wear and tear excepted), use, operate, and
maintain all of the Assets in a reasonable manner, and maintain inventories
consistent with past practices.
7.9 Insurance and Bonds.
Central shall at all times prior to and through the Closing maintain the
insurance policies (or comparable replacement policies) and bonds described in
Section 5.19 in amounts not less than those in effect on the date hereof.
7.10 Compliance with Contracts and Laws.
Central shall comply in all material respects with all contractual
obligations and Legal Requirements applicable or relating to its ownership and
operation of the System.
7.11 Changes to Employee Compensation and Benefits.
Except as described on Schedule 7.11, Central shall not cause or permit (a)
any change in the existing salary or compensation rates payable to any System
Employees (other than as required by any Legal Requirement or regularly
scheduled bonuses and increases in salary or compensation in the ordinary course
of business consistent with past practice as described on Schedule 7.11), or (b)
any change in the employee benefits or benefit plans existing on the date of
this Agreement or the establishment of any new employee benefits or benefit
plans (other than as required by any Legal Requirement).
7.12 Delivery of Financial Information.
Central shall furnish to Insight within 20 days after the end of each month
ending between the date of this Agreement and the Closing Date a flash report of
income and expense for the month just ended for the System and such other
financial information (including information on payables and receivables) as
Insight may reasonably request. Promptly after the preparation
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thereof, Central shall deliver to Insight copies of any other financial
statements, subscriber counts, and other operational data regularly prepared by
Central for its internal use.
7.13 Acquisition of Business Office and Headend Site.
Prior to Closing, Central will acquire, at no cost (net of any capital
contributions received by Central from its shareholders to finance such
acquisition, if required) to Central, good title, free and clear of all Liens
except for Permitted Liens (other than any purchase money liens), to the Real
Property designated on Schedule 5.9 as being owned by Tierra Associates, an
Affiliate of Central, and leased to Central for use as a business office,
warehouse, and headend site.
7.14 Marketing Programs.
Central shall not initiate any Marketing Programs other than as described
in Schedule 5.13.
7.15 Accounts Payable.
Central shall pay its accounts payable, on average, within forty-five days.
ARTICLE 8
SPECIAL COVENANTS AND AGREEMENTS
8.1 Consents.
(a) Central shall use commercially reasonable efforts to obtain as
expeditiously as possible all Consents required for the performance of its
obligations under this Agreement and the documents contemplated hereby. No such
Consent shall include any condition or qualification that would impose terms or
conditions that are materially more burdensome than those set forth in the
Franchise, Governmental Permit, or other Assumed Contract that is the subject of
the Consent, unless otherwise agreed to by Insight. Any instrument evidencing
any Consent shall be in form and substance reasonably satisfactory to Insight.
(b) Central will submit an FCC Form 394 to each Franchising Authority
that granted any of the Franchises (excluding any Franchising Authority the
consent of which is not required to assign to the Company the Franchise issued
by such Franchising Authority) within fifteen days after Central receives from
Insight all information regarding Insight that is required to complete such FCC
Form 394.
(c) Nothing in this Agreement shall require Central to make any
expenditure or payment of funds or give any other consideration in order to
obtain any Consent required for the performance of their obligations under this
Agreement and the documents contemplated hereby, except for fees of attorneys
for Central, filing fees, and other reasonable fees or out-of-
- 28 -
pocket costs (for example, application fees) imposed by any Franchising
Authority, Governmental Authority or other third party and any costs required to
remedy any item of breach by Central with the terms of any Franchise,
Governmental Permit, or other Contract.
(d) Insight will cooperate fully with Central in obtaining any
necessary Consents, but Insight will not be required (1) to make any payment to
any Person or Franchising Authority from which such Consent is sought or (2) to
accept any terms, conditions, or obligations that are materially more burdensome
than those currently contained in any Franchise, Governmental Permit, or Assumed
Contract as a condition to obtaining any Consent. Insight may participate with
Central in negotiations with Franchising Authorities and other third parties
with respect to the Consents. Insight will not, without the prior written
consent of Central, seek amendments or modifications to the Franchises or other
Assumed Contracts.
(e) Insight shall promptly furnish to any Franchising Authority or
other third party any information regarding Insight, including financial
information concerning Insight and other information relating to the cable and
other operations of Insight (other than information that Insight reasonably
deems to be proprietary), that such Franchising Authority or other third party
may reasonably require in connection with obtaining any Consent, and Insight
shall promptly furnish to Central a copy of any such information provided to
such Franchising Authority or other third party. Each of Insight and Central
shall use reasonable efforts to ensure that its appropriate officers and
employees shall be available to attend, as the Franchising Authority may
reasonably request, any scheduled hearings or meetings in connection with
obtaining such Consent.
8.2 Cooperation.
The parties to this Agreement will cooperate fully with each other and
their respective counsel and accountants in connection with any actions required
to be taken as part of their respective obligations under this Agreement, and
each party shall execute such other documents as may be reasonably necessary and
desirable to the implementation and consummation of this Agreement, and
otherwise shall use its commercially reasonable efforts to consummate the
transactions contemplated by this Agreement and to fulfill its obligations
hereunder.
8.3 Deferred Contributions.
If on the date specified for the Closing pursuant to Section 10.1(a), any
Service Area is not a Transferable Service Area, then, notwithstanding any other
provision of this Agreement, the following provisions shall apply:
(a) At the Closing, Central shall contribute to the Company, only
those Assets that do not relate solely to a Service Area that is not a
Transferable Service Area (including any Assets, such as head-ends and business
offices and the Real Property Interests and equipment related thereto, that may
relate both to Transferable Service Areas and Service Areas that are not
Transferable Service Areas). The Assets that are not contributed to the Company
at the Closing
- 29 -
in accordance with the preceding sentence are referred to in this Section 8.3 as
the "Retained Assets." From and after the Closing, Central shall retain the
Retained Assets, and Central shall contribute the Retained Assets to the Company
in accordance with the terms of this Section 8.3.
(b) At the Closing:
(1) All conveyancing documents, certificates, and other documents
contemplated by this Agreement to be delivered at the Closing shall be in the
form and substance provided for in this Agreement with such modifications as are
necessary or appropriate to reflect the provisions of this Section 8.3 and to
relate only to the Assets being contributed to the Company at the Closing.
(2) Central and the Company shall enter into a management
agreement (each, a "Management Agreement"), in form and substance reasonably
satisfactory to Insight and Central, which will provide that the Company will
manage the Retained Assets for Central's benefit and the Company will be
entitled to receive and retain all revenues, and will be responsible for all
costs and expenses, attributable to the operations of such Retained Assets after
the Closing.
(c) After the Closing, Central, Insight, and the Company shall
continue to undertake, in accordance with this Agreement, to obtain any Consent
necessary to cause any Service Area that was not a Transferable Service Area on
the Closing Date to become a Transferable Service Area, and the agreements and
obligations of Central and Insight under Section 8.1 shall be fully applicable
in seeking such Consents after the Closing. Central shall give Insight written
notice of the receipt of any Consent necessary to cause any Service Area that
was not a Transferable Service Area on the Closing Date to become a Transferable
Service Area. As soon as practicable after any Service Area that was not a
Transferable Service Area on the Closing Date becomes a Transferable Service
Area, on a date to be specified by Insight, a closing shall be held at which
Central shall contribute to the Company those Retained Assets relating to such
Service Area and the Company and Central shall execute and deliver conveyancing
documents, certificates, and other documents corresponding to those delivered at
the Closing with such modifications as are necessary or appropriate to reflect
the provisions of this Section 8.3 (including the Company's management of the
Retained Assets) and to relate only to the Retained Assets being contributed to
the Company at such closing. Upon such closing, the applicable Management
Agreement will be terminated insofar as it relates to the Retained Assets
transferred at such closing. The value of such Retained Assets is reflected in
the net fair market value of the Assets as calculated in accordance with this
Agreement, and any such contribution by Central shall not increase the amount of
capital contributions made by Central for purposes of the Operating Agreement.
(d) If any Retained Assets have not been contributed to the Company
prior to the dissolution of the Company pursuant to the Operating Agreement,
then, upon the dissolution and liquidation of the Company, the Liquidator (as
defined in the Operating Agreement) shall have the authority to sell such
Retained Assets on behalf of Central in connection with the liquidation
- 30 -
of the Company in accordance with the liquidation procedures in the Operating
Agreement. Upon the consummation of any such sale of the Retained Assets,
Central shall contribute to the Company an amount in cash equal to the net
pre-tax proceeds of such sale, and the Company shall treat such amount as if it
were proceeds from the liquidating sale of assets of the Company. The right to
receive such net sale proceeds in lieu of the Retained Assets, under the
circumstances described in this Section 8.3(d), is reflected in the net fair
market value of the Assets as calculated in accordance with this Agreement, and
neither such contribution by Central nor Central's failure to contribute the
Retained Assets shall increase or decrease the amount of capital contributions
made by Central for purposes of the Operating Agreement.
8.4 Confidentiality.
(a) Except as and to the extent required by any Legal Requirement or
as provided in Section 8.4(c), each party will keep confidential any information
obtained from the other party in connection with the transactions contemplated
by this Agreement. If this Agreement is terminated, each party will return to
the other party or destroy all information obtained by such party from the other
party in connection with the transactions contemplated by this Agreement. The
obligations of the parties under this Section 8.4(a) will survive the
termination of this Agreement.
(b) Except as provided in Section 8.4(c), neither party shall publish
any press release or make any other public announcement concerning this
Agreement or the transactions contemplated hereby without the prior written
consent of the other party, which shall not be withheld unreasonably.
(c) Nothing contained in this Agreement shall prevent either party
from making any filings with Governmental Authorities, including in connection
with any securities filings with any Governmental Authorities or exchanges that,
in its judgment, may be required or advisable in connection with the execution
and delivery of this Agreement or the consummation of the transactions
contemplated hereby.
8.5 Bulk Sales Law.
Insight, for itself and on behalf of the Company, waives compliance by
Central with Article 6 of the Uniform Commercial Code (regarding bulk sales) as
in effect in the states in which the Assets are located and the business of the
System is conducted.
8.6 Further Assurances.
After the Closing, Central shall take such actions, and execute and deliver
to the Company such further deeds, bills of sale, assignments, or other transfer
documents as, in the opinion of counsel for Insight, may be reasonably necessary
to ensure the full and effective transfer of the Assets to the Company pursuant
to this Agreement.
- 31 -
8.7 HSR Act.
Each party to this Agreement has determined that neither such party nor its
ultimate parent entity (within the meaning of the HSR Act) is required to make
any filings with the Department of Justice or the Federal Trade Commission under
the HSR Act in connection with the transactions contemplated by this Agreement.
If either party subsequently determines that any filing under the HSR Act is
required in connection with the transactions contemplated by this Agreement, (a)
each party and its Affiliates will cooperate with the other party in causing
such filing to be made as expeditiously as practicable, (b) each party and its
Affiliates will promptly file, after any request by the Department of Justice or
the Federal Trade Commission and after appropriate negotiation with the
Department of Justice or the Federal Trade Commission of the scope of such
request, any information or documents so requested, and (c) each party will
furnish to other party any correspondence from or to, and notify the other party
of any other communications with, the Department of Justice or the Federal Trade
Commission that relates to the transactions contemplated by this Agreement.
8.8 Risk of Loss.
The risk of any loss, damage, impairment, confiscation, or condemnation of
any of the Assets from any cause whatsoever shall be borne by Central at all
times prior to the Closing and thereafter shall be borne by the Company.
8.9 Use of Names and Logos.
For a period of 180 days after Closing, the Company shall be entitled to
use the trademarks, trade names, service marks, service names, logos, and
similar proprietary rights of Central to the extent incorporated in or on the
Assets transferred to the Company at Closing, provided that Insight shall
exercise reasonable efforts to cause the Company to remove all such names,
marks, logos, and similar proprietary rights of Central from such Assets as soon
as reasonably practicable following Closing.
8.10 Power of Attorney.
At Closing, Central shall grant to the Company the limited, irrevocable
right, in Central's name, place, and stead, as Central's attorney-in-fact, to
cash, deposit, endorse, or negotiate checks received on or after the Closing
Date made out to Central in payment for cable television and related services
provided by the System. In addition, on or prior to the Closing Date, Central
shall provide written instructions to its lock-box service provider or similar
agents to promptly forward to the Company all such cash, deposits, and checks
that it may receive. From and after the Closing, Central shall promptly remit to
the Company any payment received by Central on or after the Closing Date in
respect of any accounts receivable of the System as of the Closing.
- 32 -
8.11 Access to Books and Records.
Central shall provide the Company with access and the right to copy for a
period of three years after the Closing Date any books and records that are
Excluded Assets.
8.12 Other Transaction Documents.
Central agrees that, on or prior to the Closing Date, (a) each Principal
will execute the Single-Member LLC Operating Agreement to which he is a party,
(b) each Principal will cause the Single-Member LLC of which he is sole member
to execute and deliver to Insight the Single-Member LLC Management Agreement to
which it is a party, (c) the Amended Articles of Incorporation of Central will
be duly adopted and filed with the Secretary of State of the State of Ohio, and
(d) Central and each Single-Member LLC will execute the Close Corporation
Agreement. Central and Insight agree that, on the Closing Date, the Company will
enter into the Employee Transition Agreement.
ARTICLE 9
CLOSING CONDITIONS
9.1 Conditions to Obligations of Insight.
All obligations of Insight at the Closing are subject, at Insight's option,
to the fulfillment prior to and at the Closing Date of each of the following
conditions (any one or more of which may be waived by Insight, in its
discretion):
(a) All representations and warranties of Central in this Agreement
shall be true in all material respects at and as of the Closing Date as though
made at and as of such date.
(b) Central shall have performed and complied with in all material
respects all covenants and agreements required by this Agreement to be performed
or complied with by Central prior to or on the Closing Date.
(c) Each Consent designated on Schedule 5.3 as a "Required Consent"
shall have been duly obtained and delivered to Insight without any conditions,
qualifications, or obligations that are materially more burdensome than those
currently set forth in the Governmental Permit or Assumed Contract that is the
subject of such Consent.
(d) The aggregate number of customers in those Service Areas that are
Transferable Service Areas shall be at least two-thirds of the aggregate number
of customers in all Service Areas. For purposes of this Section 9.1(d) and
Section 9.2(c), the number of customers in a Service Area shall be the number of
customers set forth next to the name of such
- 33 -
Service Area on Schedule 5.13 (regardless of the actual number of customers in
such Service Area on the Closing Date).
(e) The FCC shall have consented, to the extent such consent is
legally required, to the transfer to the Company of all Governmental Permits
issued by the FCC.
(f) All waiting periods under the HSR Act applicable to this Agreement
or the transactions contemplated by this Agreement to be consummated at the
Closing shall have expired or been terminated.
(g) Central shall have made or stand willing and able to make all the
deliveries required to be made by Central pursuant to Section 10.2.
(h) There shall not be in effect any Judgment that would prevent or
make unlawful the Closing.
(i) The transactions contemplated by the Refinancing Proposals shall
have been consummated substantially in accordance with the terms of the
Refinancing Proposals (without regard to any change in interest rates for the
senior notes from those contemplated by the Refinancing Proposals).
(j) Central's operating income for the quarter ended June 30, 1998
shall not have been less than $5,200,000, where Central's operating income for
such period means the net income (or loss) of Central for such period (exclusive
of any extraordinary gain or loss) determined in accordance with GAAP applied in
a manner consistent with Central's past practices, plus interest, depreciation,
amortization, income tax expense, any home office expenses, any non-operating
expenses, and any expenses incurred in connection with the transactions
contemplated by this Agreement or the procurement of any financing, to the
extent such items were deducted in determining Central's net income (or loss)
for such period.
(k) Each Principal shall have executed the Single-Member LLC Operating
Agreement to which he is a party, each Single-Member LLC shall have executed and
delivered to Insight the Single-Member LLC Management Agreement to which it is a
party, the Amended Articles of Incorporation of Central shall have been duly
adopted and filed with the Secretary of State of the State of Ohio, Central and
each Single-Member LLC shall have executed the Close Corporation Agreement, and
Central shall have executed and delivered to the Company the Employee Transition
Agreement.
9.2 Conditions to Obligations of Central.
All obligations of Central at the Closing are subject, at Central's option,
to the fulfillment prior to and at the Closing Date of each of the following
conditions (any one or more of which may be waived by Central, in its
discretion):
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(a) All representations and warranties of Insight in this Agreement
shall be true in all material respects at and as of the Closing Date as though
made at and as of such date.
(b) Insight shall have performed and complied with in all material
respects all covenants and agreements required by this Agreement to be performed
or complied with by it prior to or on the Closing Date.
(c) The aggregate number of customers in those Service Areas that are
Transferable Service Areas shall be at least two-thirds of the aggregate number
of customers in all Service Areas.
(d) The FCC shall have consented, to the extent such consent is
legally required, to the transfer to the Company of all Governmental Permits
issued by the FCC.
(e) All waiting periods under the HSR Act applicable to this Agreement
or the transactions contemplated by this Agreement to be consummated at the
Closing shall have expired or been terminated.
(f) Insight shall have caused or stand willing and able to cause the
Company to make all the deliveries to Central set forth in Section 10.3, and
Insight shall have made or shall stand willing and able to make all the
deliveries to the Company set forth in Section 10.4.
(g) There shall not be in effect any Judgment that would prevent or
make unlawful the Closing.
(h) The transactions contemplated by the Refinancing Proposals shall
have been consummated substantially in accordance with the terms of the
Refinancing Proposals (without regard to any change in interest rates for the
senior notes from those contemplated by the Refinancing Proposals).
(i) The Operating Agreement and the Single-Member LLC Management
Agreements shall have been executed and delivered by Insight, and the Employee
Transition Agreement shall have been executed and delivered by the Company.
ARTICLE 10
CLOSING AND CLOSING DELIVERIES
10.1 Time and Place of Closing.
(a) Closing Date.
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(1) Except as provided in Section 10.1(a)(2), or as otherwise
agreed to by Central and Insight, the Closing shall take place at 10:00 a.m. on
the fifth Business Day after the satisfaction of the last of the Consent
Conditions to be satisfied.
(2) If on the date on which the Closing would otherwise be
required to take place pursuant to Section 10.1(a)(1), (A) there shall be in
effect any Judgment that would prevent or make unlawful the Closing, (B) any
other circumstance beyond the reasonable control of the party making an election
under this Section 10.1(a)(2) shall exist that would prevent the Closing or the
satisfaction of any of the conditions precedent to the obligations of either
party set forth in this Agreement, or (C) the conditions specified in Section
9.1(i) and Section 9.2(h) shall not be satisfied, then Insight or Central may,
at its option, postpone the date on which the Closing is required to take place
until the fifth Business Day after such Judgment ceases to be in effect, such
other circumstance ceases to exist, or such conditions have been satisfied or
are capable of being satisfied concurrently with the Closing; provided, however,
that any postponement of the date on which the Closing is required to take place
pursuant to this Section 10.1(a)(2) shall not restrict the exercise by either
Central or Insight of its rights under Section 11.2(b) or Section 11.3(b), as
applicable.
(b) Closing Place. The Closing shall be held at the offices of
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, or any other place that is agreed upon by Central and Insight.
10.2 Deliveries by Central.
On the Closing Date, Central shall deliver to the Company the following, in
form and substance reasonably satisfactory to Insight and its counsel:
(a) Duly executed bills of sale, motor vehicle titles, assignments of
the Franchises, Governmental Permits, and Assumed Contracts, special warranty
deeds and such other transfer documents which shall be sufficient to vest good
title to the Assets in the name of the Company (or its designee), free and clear
of all Liens except for Permitted Liens.
(b) A manually executed copy of any instrument evidencing any Consent
that has been obtained.
(c) Any Management Agreement required pursuant to Section 8.3, duly
executed by Central.
(d) An opinion of counsel to Central, dated as of the Closing Date and
including FCC matters, in form and substance reasonably satisfactory to Insight
and its counsel.
(e) A certificate, dated as of the Closing Date, executed by Central,
certifying that except as disclosed in such certificate, all representations and
warranties of Central contained
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in this Agreement are true in all material respects at and as of the Closing
Date as though made at and as of that date.
(f) Such additional documents, information, and materials as Insight
shall reasonably request.
10.3 Deliveries by the Company.
On the Closing Date, the Company shall deliver to Central the following, in
form and substance reasonably satisfactory to Central and its counsel:
(a) Appropriate assumption agreements, pursuant to which the Company
shall assume the obligations and liabilities described in Section 4.1.
(b) Any Management Agreement required pursuant to Section 8.3, duly
executed by the Company.
(c) The Employee Transition Agreement, duly executed by the Company.
(d) Such additional documents, information, and materials as Central
shall reasonably request.
10.4 Deliveries by Insight.
On the Closing Date, Insight shall contribute or cause to be contributed to
the Company, in cash, the sum of Ten Million Dollars and shall deliver to
Central:
(a) An opinion of counsel to Insight, dated as of the Closing Date, in
form and substance reasonably satisfactory to Central and its counsel.
(b) The Operating Agreement, duly executed by Insight.
(c) The Single-Member LLC Management Agreements, duly executed by
Insight.
ARTICLE 11
TERMINATION RIGHTS
11.1 Termination by Agreement.
This Agreement may be terminated at any time prior to the Closing by
agreement between Insight and Central.
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11.2 Termination by Central.
This Agreement may be terminated by Central prior to the Closing, by
delivering written notice to Insight of its election to terminate this
Agreement, under any of the following circumstances (unless any of such
circumstances occurred as a result of the failure of Central to act in good
faith or as a result of any breach by Central of its representations,
warranties, covenants, or other obligations in this Agreement):
(a) If on the date on which the Closing is required to take place
pursuant to Section 10.1(a) any of the conditions precedent to the obligations
of Central set forth in this Agreement has not been satisfied or waived in
writing by Central.
(b) If the Closing shall not have occurred on or before December 31,
1998.
(c) If Insight breaches any of its covenants under this Agreement in
any material respect and fails to cure such breach within thirty days after its
receipt of notice thereof from Central.
(d) After July 15, 1998, if Insight fails to make the escrow deposit
described in Section 11.5.
11.3 Termination by Insight.
This Agreement may be terminated by Insight prior to the Closing, by
delivering written notice to Central of its election to terminate this
Agreement, under any of the following circumstances (unless any of such
circumstances occurred as a result of the failure of Insight to act in good
faith or as a result of any breach by Insight of its representations,
warranties, covenants, or other obligations in this Agreement):
(a) If on the date on which the Closing is required to take place
pursuant to Section 10.1(a) any of the conditions precedent to the obligations
of Insight set forth in this Agreement has not been satisfied or waived in
writing by Insight.
(b) If the Closing shall not have occurred on or before December 31,
1998.
(c) If Central breaches any of its covenants under this Agreement in
any material respect and fails to cure such breach within thirty days after its
receipt of notice thereof from Insight.
11.4 Due Diligence Termination.
This Agreement may be terminated by Insight, by delivering written notice
to Central of its election to terminate this Agreement, on or before July 15,
1998 (but in no event after Insight's
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funding of the escrow deposit described in Section 11.5), if Insight has
determined in its sole discretion that, after completing its due diligence,
Insight is not satisfied with any matter relating to the System or the
transactions contemplated by this Agreement (including the Exhibits and
Schedules to this Agreement).
11.5 Escrow Deposit.
On or prior to July 15, 1998, if Insight has not terminated this Agreement
pursuant to Section 11.4, Insight shall deposit with an escrow agent agreed to
between Central and Insight (the "Escrow Agent") the amount of $2,000,000 in
accordance with an Escrow Agreement among Insight, Central, and the Escrow
Agent, in form and substance reasonably satisfactory to the parties. All funds
and documents deposited with the Escrow Agent shall be held and disbursed in
accordance with the terms of the Escrow Agreement and the following provisions:
(a) At the Closing, Insight and Central shall jointly instruct the
Escrow Agent to disburse all amounts held by the Escrow Agent pursuant to the
Escrow Agreement, including any interest or other proceeds from the investment
of funds held by the Escrow Agent, to or at the direction of Insight.
(b) If this Agreement is terminated pursuant to this Article 11 and
Section 11.5(c) does not apply, Insight and Central shall jointly instruct the
Escrow Agent to disburse all amounts held by the Escrow Agent pursuant to the
Escrow Agreement, including any interest or other proceeds from the investment
of funds held by the Escrow Agent, to or at the direction of Insight.
(c) If this Agreement is terminated by Central due to Insight's breach
of this Agreement, then Insight and Central shall jointly instruct the Escrow
Agent to disburse all amounts held by the Escrow Agent pursuant to the Escrow
Agreement, including any interest or other proceeds from the investment of funds
held by the Escrow Agent, to or at the direction of Central.
11.6 Rights on Termination.
(a) If this Agreement is terminated by Central and Section 11.5(c)
applies, then the payment to Central pursuant to Section 11.5(c) shall be
liquidated damages and shall constitute full payment and the exclusive remedy
for any damages suffered by Central by reason of Insight's breach of this
Agreement. Central and Insight agree in advance that actual damages would be
difficult to ascertain and that the amount of the payment to be made to Central
pursuant to Section 11.5(c) is a fair and equitable amount to reimburse Central
for damages sustained due to Insight's breach of this Agreement.
(b) Upon termination of this Agreement pursuant to this Article 11,
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(1) The transactions contemplated by this Agreement shall be
terminated and abandoned, without further action by Insight or Central.
(2) Each party shall return to the other party or destroy all
documents and other material received from the other party and relating to the
transactions contemplated by this Agreement, whether received from the other
party before or after the execution of this Agreement.
(3) All confidential information received by either party to this
Agreement with respect to the business of the other party or any of its
Affiliates shall be treated in accordance with Section 8.4(a).
(4) The provisions of Section 12.2 shall continue in effect.
(5) Neither party to this Agreement shall have any further
obligation or liability under this Agreement to the other party, or to any of
the members, partners, officers, directors, shareholders, employees, or agents
of the other party, except as provided in this Section 11.6, or otherwise in
this Agreement.
(c) Following the termination of this Agreement pursuant to this
Article 11, each party agrees to indemnify, defend, and hold harmless the other
party from any liability, loss, or damage incurred by the other party by reason
of any claim made against the other party under this Agreement, in violation of
Section 11.6(b)(5), by any of the members, partners, officers, directors,
shareholders, employees, or agents of the indemnifying party.
11.7 Specific Performance.
The parties recognize that if Central breaches this Agreement and refuses
to perform under the provisions of this Agreement, monetary damages alone would
not be adequate to compensate Insight for its injury. Insight shall therefore be
entitled, in addition to any other remedies that may be available, including
money damages, to obtain specific performance of the terms of this Agreement. If
any action is brought by Insight to enforce this Agreement, Central shall waive
the defense that there is an adequate remedy at law.
ARTICLE 12
MISCELLANEOUS
12.1 Survival of Representations and Warranties.
(a) The representations and warranties contained in this Agreement
with respect to (1) title to any asset to be contributed to the Company pursuant
to Section 2.1, (2) Taxes, as set forth in Section 5.15, (3) third-party claims,
as set forth in Section 5.18 and Section 6.4, (4)
- 40 -
the authority of each party to execute and deliver this Agreement and the
documents contemplated hereby and to perform and comply with the terms,
covenants, and conditions of this Agreement and the documents contemplated
hereby, as set forth in Section 5.2 and Section 6.2 and (5) the enforceability
of this Agreement, as set forth in Section 5.2 and Section 6.2, shall survive
the Closing indefinitely. All covenants contained in this Agreement that by
their terms are to be performed in whole or in part at or following the Closing
shall survive until fully discharged or performed.
(b) All representations and warranties contained in this Agreement and
not described in Section 12.1(a) and all covenants in this Agreement that by
their terms are only to be performed prior to the Closing shall not survive the
Closing. Except with respect to those representations, warranties, and covenants
that survive the Closing pursuant to Section 12.1(a), after the Closing, neither
party shall have any recourse against the other party as a result of the breach
of any representation, warranty, or covenant contained in this Agreement, and
each party hereby unconditionally and irrevocably waives and releases any and
all actual or potential claims that it may have against the other party (and its
officers, directors, stockholders, partners, and affiliates) as a result of the
breach by the other party of any representation, warranty, or covenant contained
in this Agreement; provided, however, that nothing in this Section 12.1(b) is
intended to limit the application of Section 3.2(b) to any of the circumstances
described in clause (1) thereof that are identified in a timely notice by
Insight pursuant to clause (2) thereof.
(c) In determining the accuracy of representations and warranties in
this Agreement as of a date other than the date of this Agreement, any
representation and warranty in this Agreement that expressly refers to facts
existing on the date of this Agreement or on any other specified date shall
continue to be construed only to refer to facts existing on the date specified
and shall not be construed as a representation or warranty concerning facts
existing at any later date.
12.2 Taxes, Fees, and Expenses.
(a) All filing fees (including all FCC filing fees and all fees
required in connection with filings under the HSR Act), transfer taxes,
recordation taxes, sales taxes, document stamps, or other charges (other than
income taxes) levied by any Governmental Authority prior to the Closing in
connection with the transactions contemplated by this Agreement shall be paid
equally by Central and by Insight. Insight and Central shall pay fees and
expenses of the Escrow Agent as provided in the Escrow Agreement.
(b) Following the Closing, the Company shall:
(1) pay all filing fees, transfer taxes, recordation taxes, sales
taxes, document stamps, or other charges (other than income taxes) levied by any
Governmental Authority at or after the Closing in connection with the
transactions contemplated by this Agreement,
- 41 -
(2) reimburse Insight for all costs and expenses required to be
paid by Insight pursuant to Section 12.2(a), for all attorney's fees and
expenses incurred by Insight in connection with the authorization, preparation,
execution, and closing of this Agreement, for all costs and expenses incurred by
Insight in connection with the consummation of the transactions contemplated by
the Refinancing Proposals, and for all fees or commissions payable to Lazard
Freres & Co. LLC in connection with the transactions contemplated by this
Agreement, and
(3) reimburse Central for all costs and expenses required to be
paid by Central pursuant to Section 12.2(a), for all attorney's fees and
expenses incurred by Central in connection with the authorization, preparation,
execution, and closing of this Agreement, for all costs and expenses incurred by
Central in connection with the consummation of the transactions contemplated by
the Refinancing Proposals, for all fees or commissions payable to ▇▇▇▇▇▇ Capital
Corporation in connection with the transactions contemplated by this Agreement,
and for any obligations or liabilities incurred by Central as a result of the
termination or cancellation of any programming agreement to which Central is a
party that relates to the business or operations of the System.
(c) Except as otherwise provided in this Agreement, each party hereto
shall pay its own fees and other expenses incurred in connection with the
authorization, preparation, execution, and performance of this Agreement.
(d) The obligations of the parties under this Section 12.2 will
survive the termination of this Agreement.
12.3 Notices.
All notices, demands, and requests required or permitted to be given
under the provisions of this Agreement shall be (a) in writing, (b) delivered by
personal delivery, sent by commercial delivery service or registered or
certified mail, return receipt requested, or transmitted by telecopy, (c) deemed
to have been given on the date of receipt, and (d) addressed as follows:
If to Central: Coaxial Communications of Central Ohio, Inc.
c/o Coaxial Communications
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
- 42 -
With copies to: Coaxial Communications of Central Ohio, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
and
Dow, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, PLLC
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. Wild
Telecopier: 202-776-2222
If to Insight: Insight Communications, Inc.
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
or to any other or additional Persons and addresses as the parties may from time
to time designate in a writing delivered in accordance with this Section 12.3.
12.4 Benefit and Binding Effect.
Neither party hereto may assign this Agreement without the prior written
consent of the other party hereto, except that Insight may, without the consent
of Central, prior to Closing, assign all of Insight's rights and delegate all of
Insight's obligations under this Agreement to a Delaware limited liability
company of which Insight is the sole member if such assignee executes and
delivers to Central an assignment and assumption agreement, in form and
substance reasonably satisfactory to Central, pursuant to which such assignee
shall assume all obligations of Insight under this Agreement. Upon such
assignee's execution and delivery to Central of such assignment and assumption
agreement, Insight shall be released from its obligations hereunder, except that
Insight shall continue to be obligated to make the escrow deposit described in
Section 11.5, and Insight shall execute and deliver to Central and the
Principals a Parent Undertaking substantially in the form to be agreed to by the
parties prior to the funding of the escrow deposit
- 43 -
described in Section 11.5. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.
12.5 Entire Agreement.
This Agreement, and all Schedules and Exhibits hereto (which are hereby
incorporated herein), and all documents and certificates to be delivered by the
parties pursuant hereto collectively represent the entire understanding and
agreement between the parties with respect to the subject matter hereof. This
Agreement supersedes all prior negotiations, letters of intent, or other
writings between the parties with respect to the subject matter hereof and
cannot be amended, supplemented, or modified except by waiver pursuant to
Section 12.6 or a written agreement which makes specific reference to this
Agreement and which is signed by the party against which enforcement of any such
amendment, supplement, or modification is sought.
12.6 Waiver of Compliance; Consents.
Any failure of either party to comply with any obligation, representation,
warranty, covenant, or agreement herein may be waived by the party entitled to
the benefits thereof only by a written instrument signed by the party granting
such waiver, but such waiver or failure to insist upon strict compliance with
such obligation, representation, warranty, covenant, or agreement shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure. Whenever this Agreement requires or permits consent by or on behalf of
either party hereto, such consent shall be given in writing in a manner
consistent with the requirements for a waiver of compliance as set forth in this
Section 12.6.
12.7 Severability.
If any provision hereof or the application thereof to any Person or
circumstance shall be invalid or unenforceable to any extent, the remainder of
this Agreement and the application of such provision to other Persons or
circumstances shall not be affected thereby and shall be enforced to the
greatest extent permitted by law.
12.8 GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED, CONSTRUED, AND ENFORCED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO THE CHOICE OF LAW
PROVISIONS THEREOF) AND THE UNITED STATES ARBITRATION ACT, TO THE EXTENT
PROVIDED IN SECTION 12.9.
12.9 Disputed Matters.
(a) Generally. If a dispute arises out of or relates to this Agreement
or any alleged breach thereof, Central and Insight will attempt in good faith to
resolve such dispute
- 44 -
through negotiation. Either party may initiate negotiations by providing written
notice in letter form to the other party setting forth in general terms the
subject of the dispute. Representatives of each party with full settlement
authority shall meet at a mutually agreeable time and place in order to attempt
to resolve the dispute. If the dispute is not resolved in this manner, either
party may proceed to arbitration pursuant to Section 12.9(c) hereof, or, if they
so agree, first proceed to mediation pursuant to Section 12.9(b) hereof.
(b) Mediation. If a dispute arises out of or relates to this Agreement
or any alleged breach thereof and if the dispute is not settled through
negotiation as described in Section 12.9(a), Central and Insight may agree to
submit the dispute for mediation administered by the American Arbitration
Association (or any organization successor thereto) ("AAA") under its Commercial
Mediation Rules before resorting to arbitration. Either party may initiate
mediation pursuant to Rule 2 of the AAA's Commercial Mediation Rules. The
parties will cooperate with the AAA and with one another in the appointment of a
mediator and in scheduling the mediation proceedings. Unless otherwise agreed by
Central and Insight, the first mediation session shall be held no later than
thirty days after the date of filing the written request for mediation, and the
memorandum provided for under Rule 9 of the Commercial Mediation Rules shall be
provided to the mediator at least five days prior to the first mediation
session. All offers, promises, conduct, and statements, whether oral or written,
made in the course of the mediation by any of the parties, their agents,
employees, experts, and attorneys, and by the mediator or any AAA employees,
shall be confidential and inadmissible for any purposes, including impeachment,
in any arbitration or other proceeding involving the parties, but evidence that
is otherwise admissible or discoverable shall not be rendered inadmissible or
non-discoverable as a result of its use in the mediation. Either party may
initiate arbitration with respect to the matters submitted to mediation by
filing a written demand for arbitration with the AAA no sooner than thirty days
after the first mediation session. The mediation may continue after the
commencement of arbitration if the parties so agree. Unless otherwise agreed by
Central and Insight, the mediator shall be disqualified from serving as
arbitrator in the case.
(c) Arbitration. If a dispute arises out of or relates to this
Agreement or any alleged breach thereof, and if the dispute is not resolved
through negotiation and, if so agreed, mediation as described in Section 12.9(a)
and Section 12.9(b), such dispute shall be settled by arbitration in New York,
New York, in accordance with the Commercial Arbitration Rules of the AAA and the
Supplementary Procedures for Large, Complex Disputes of the AAA or other rules
agreed to by Central and Insight, by a panel of three arbitrators.
(d) United States Arbitration Act. The parties acknowledge that this
Agreement evidences a transaction involving interstate commerce. Insofar as it
applies, the United States Arbitration Act shall govern the interpretation of,
enforcement of, and proceedings pursuant to the arbitration clause in this
Agreement. After arbitration has commenced pursuant to Rule 6 of the Commercial
Arbitration Rules, either party may make an application to the arbitrator
seeking injunctive relief to maintain the status quo until such time as the
arbitration award is rendered or the dispute is otherwise resolved.
- 45 -
(e) Request for Arbitration. The party requesting arbitration shall do
so by giving notice to that effect (the "Arbitration Notice") to the party and
by filing the notice with the AAA in accordance with Rule 6 of the Commercial
Arbitration Rules. Within thirty days after the Arbitration Notice is filed,
Central and Insight shall select an arbitrator using the procedures for
arbitrator selection of the AAA from the arbitrators in the Large, Complex case
pool for the New York, New York, AAA office.
(f) Administrative Conference and Hearing. Upon selection of the
arbitrator, Central and Insight shall conduct an initial administrative
conference provided for by the Supplementary Procedures for Large, Complex
Disputes of the AAA at which Central and Insight shall agree to a schedule and
procedures for the exchange of relevant information and the hearing and to any
other matters the arbitrator or Central and Insight deem appropriate. Either
party may submit to the arbitrator prior to the hearing any written information
and may make any oral presentation at the hearing that it deems appropriate to
support its position with respect to the disputed matter. At any hearing before
the arbitrator at which witnesses present testimony either in person or
telephonically Central and Insight shall be entitled to cross examine the
witnesses.
(g) Decision and Award. The arbitrator shall render his written
decision and award, including a statement of reasons upon which such award is
based, within thirty days after the arbitration hearing. Except insofar as the
United States Arbitration Act applies to such matters, the agreement to
arbitrate set forth in this Section 12.9 shall be construed, and the legal
relations between the parties shall be determined in accordance with, the
substantive laws of the State of New York as provided for in Section 12.8 of
this Agreement. The decision of the arbitrators shall be in writing and shall be
binding upon Central and Insight, final, and non-appealable. Judgment upon the
award rendered by the arbitrators may be entered in any court having
jurisdiction thereof.
(h) Exclusivity of Arbitration. Except as provided under the United
States Arbitration Act, no action at law or in equity based upon any dispute
that is subject to arbitration under this Section 12.9 shall be instituted.
(i) Fees and Expenses. All expenses of any arbitration pursuant to
this Section 12.9, including fees and expenses of the parties' attorneys, fees
and expenses of the arbitrator, and fees and expenses of any witness or the cost
of any proof produced at the request of the arbitrator, shall be borne as
determined by the arbitrator. If either party institutes any action in law or in
equity in violation of Section 12.9(h) and the other party successfully compels
arbitration under this Section 12.9, the party instituting such action shall pay
all reasonable expenses incurred by the other party relating to such action,
including reasonable fees and expenses of the other party's attorneys.
- 46 -
12.10 Headings.
The headings in this Agreement are included for ease of reference only and
shall not control or affect the meaning or construction of the provisions of
this Agreement.
12.11 Rights Cumulative.
Except as specified in this Agreement, all rights and remedies of each of
the parties under this Agreement will be cumulative, and the exercise of one or
more rights or remedies will not preclude the exercise of any other right or
remedy available under this Agreement or applicable law.
12.12 Construction.
This Agreement has been negotiated by the parties and their respective
legal counsel, and legal or equitable principles that might require the
construction of this Agreement or any provision of this Agreement against the
party drafting this Agreement will not apply in any construction or
interpretation of this Agreement.
12.13 Business Day.
If the last day permitted for the giving of any notice or the performance
of any act required or permitted under this Agreement falls on a day which is
not a Business Day, the time for the giving of such notice or the performance of
such act will be extended to the next succeeding Business Day.
12.14 Counterparts.
This Agreement may be executed in two counterparts, each of which, when so
executed and delivered, shall be an original, and both of which counterparts
together shall constitute one and the same fully executed instrument.
12.15 No Third-Party Beneficiaries.
This Agreement is not intended to, and shall not be construed to, create
any right enforceable by any Person that is not a party to this Agreement.
- 47 -
IN WITNESS WHEREOF, the parties have executed this Contribution Agreement
as of the day first mentioned above.
COAXIAL COMMUNICATIONS OF CENTRAL OHIO,
INC.
By:
-------------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
Title: Chairman
INSIGHT COMMUNICATIONS COMPANY, L.P.
By: ICC Associates, L.P., its General Partner
By: Insight Communications, Inc., General Partner
By:
-------------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
- 48 -