ASSET EXCHANGE AGREEMENT
dated May 14, 1998
among
TCI OF INDIANA, INC.,
UACC MIDWEST, INC.
and
INSIGHT COMMUNICATIONS COMPANY, L.P.
TABLE OF CONTENTS
Page
----
SECTION 1. DEFINITIONS...................................................................................1
1.1 1992 Cable Act................................................................................1
1.2 Affiliate.....................................................................................1
1.3 Assets........................................................................................2
1.4 Basic Services................................................................................2
1.5 Business Day..................................................................................2
1.6 Cable Act.....................................................................................2
1.7 Cable Business................................................................................2
1.8 Closing Time..................................................................................2
1.9 Communications Act............................................................................2
1.10 Contract......................................................................................2
1.11 Contribution..................................................................................2
1.12 Equivalent Basic Subscribers (or "EBSs")......................................................2
1.13 Environmental Law.............................................................................3
1.14 ERISA.........................................................................................3
1.15 ERISA Affiliate...............................................................................3
1.16 Expanded Basic Services.......................................................................3
1.17 FCC...........................................................................................4
1.18 Financial Statements..........................................................................4
1.19 GAAP..........................................................................................4
1.20 Governmental Authority........................................................................4
1.21 Hazardous Substances..........................................................................4
1.22 HSR Act.......................................................................................4
1.23 Insight Assets................................................................................4
1.24 Insight Books and Records.....................................................................4
1.25 Insight Leased Property.......................................................................5
1.26 Insight Other Intangibles.....................................................................5
1.27 Insight Other Real Property Interests.........................................................5
1.28 Insight Owned Property........................................................................5
1.29 Insight Required Consents.....................................................................5
1.30 Insight System Contracts......................................................................5
1.31 Insight System Franchises.....................................................................6
1.32 Insight System Licenses.......................................................................6
1.33 Insight Tangible Personal Property............................................................6
1.34 Insight's Cable Business......................................................................6
1.35 Judgment......................................................................................6
1.36 Knowledge.....................................................................................6
1.37 Leased Property...............................................................................6
1.38 Legal Requirement.............................................................................6
1.39 Lien..........................................................................................7
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1.40 Litigation....................................................................................7
1.41 Losses........................................................................................7
1.42 Other Real Property Interests.................................................................7
1.43 Owned Property................................................................................7
1.44 Pay TV........................................................................................7
1.45 Permitted Lien................................................................................7
1.46 Person........................................................................................8
1.47 Required Consents.............................................................................8
1.48 System........................................................................................8
1.49 System Contracts..............................................................................8
1.50 System Franchises.............................................................................8
1.51 System Licenses...............................................................................8
1.52 Tangible Personal Property....................................................................8
1.53 Taxes.........................................................................................8
1.54 TCI Assets....................................................................................8
1.55 TCI Books and Records.........................................................................9
1.56 TCI Leased Property...........................................................................9
1.57 TCI Other Intangibles.........................................................................9
1.58 TCI Other Real Property Interests.............................................................9
1.59 TCI Owned Property............................................................................9
1.60 TCI Required Consents.........................................................................9
1.61 TCI System Contracts.........................................................................10
1.62 TCI System Franchises........................................................................10
1.63 TCI System Licenses..........................................................................10
1.64 TCI Tangible Personal Property...............................................................10
1.65 TCI's Cable Business.........................................................................10
1.66 Third Party..................................................................................10
1.67 Transaction Documents........................................................................10
1.68 Other Definitions............................................................................11
1.69 Accounting Terms.............................................................................12
SECTION 2. EXCHANGES....................................................................................12
2.1 Exchanges....................................................................................12
SECTION 3. CONSIDERATION................................................................................13
3.1 Value of Assets..............................................................................13
3.2 Adjustments to Value of Assets...............................................................13
3.3 Calculation of Adjustments...................................................................15
SECTION 4. ASSUMED LIABILITIES AND EXCLUDED ASSETS......................................................16
4.1 Indiana and Midwest Assumed Obligations and Liabilities......................................16
4.2 TCI Excluded Assets..........................................................................17
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4.3 Insight Assumed Obligations and Liabilities..................................................18
4.4 Insight Excluded Assets......................................................................18
SECTION 5. INSIGHT'S REPRESENTATIONS AND WARRANTIES.....................................................19
5.1 Organization and Qualification of Insight....................................................19
5.2 Authority and Validity.......................................................................20
5.3 No Conflict; Required Consents...............................................................20
5.4 Assets.......................................................................................20
5.5 Insight System Franchises, Insight System Licenses, Insight System Contracts and
Insight Other Real Property Interests........................................................21
5.6 Real Property................................................................................22
5.7 Environmental................................................................................23
5.8 Compliance with Legal Requirements...........................................................24
5.9 Patents, Trademarks and Copyrights...........................................................25
5.10 Financial Statements; Undisclosed Liabilities; Absence of Certain Changes or
Events.......................................................................................26
5.11 Litigation...................................................................................26
5.12 Tax Returns; Other Reports...................................................................27
5.13 Employment Matters...........................................................................27
5.14 Insight Systems Information..................................................................28
5.15 Accounts Receivable..........................................................................29
5.16 Bonds; Letters of Credit.....................................................................29
5.17 Finders and Brokers..........................................................................29
SECTION 6. TCI'S REPRESENTATIONS AND WARRANTIES.........................................................29
6.1 Organization and Qualification of TCI........................................................29
6.2 Authority and Validity.......................................................................30
6.3 No Conflict; Required Consents...............................................................30
6.4 Assets.......................................................................................31
6.5 TCI System Franchises, TCI System Licenses, TCI System Contracts and TCI
Other Real Property Interests................................................................31
6.6 Real Property................................................................................32
6.7 Environmental................................................................................33
6.8 Compliance with Legal Requirements...........................................................34
6.9 Patents, Trademarks and Copyrights...........................................................35
6.10 Financial Statements; Undisclosed Liabilities; Absence of Certain Changes or
Events.......................................................................................36
6.11 Litigation...................................................................................36
6.12 Tax Returns; Other Reports...................................................................37
6.13 Employment Matters...........................................................................37
6.14 TCI Systems Information......................................................................38
6.15 Accounts Receivable..........................................................................39
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6.16 Bonds; Letters of Credit.....................................................................39
6.17 Finders and Brokers..........................................................................39
SECTION 7. ADDITIONAL COVENANTS.........................................................................39
7.1 Access to Premises and Records...............................................................39
7.2 Continuity and Maintenance of Operations; Certain Deliveries and Notices.....................39
7.3 Employees....................................................................................41
7.4 Leased Vehicles; Other Capital Leases........................................................43
7.5 Required Consents, Estoppel Certificates, Franchise Renewal..................................43
7.6 Title Commitments and Surveys................................................................45
7.7 HSR Notification.............................................................................45
7.8 Transfer Taxes...............................................................................46
7.9 Distant Broadcast Signals....................................................................46
7.10 Programming..................................................................................46
7.11 Schedules....................................................................................46
7.12 Use of Names and Logos.......................................................................47
7.13 Transitional Billing Services................................................................48
7.14 Confidentiality and Publicity................................................................48
7.15 Bulk Transfers...............................................................................49
7.16 Allocation of Value to Exchanged Assets......................................................49
7.17 Lien Searches................................................................................49
7.18 Further Assurances...........................................................................49
7.19 Consents.....................................................................................49
7.20 Cooperation as to Rates and Fees.............................................................50
7.21 Satisfaction of Conditions. .................................................................51
7.22 Offers. .....................................................................................51
7.23 Environmental Reports. ......................................................................51
7.24 Franchise Consents...........................................................................52
7.25 Qualification as Deferred Like-Kind Exchange.................................................54
7.26 Ad Sales.....................................................................................55
SECTION 8. CONDITIONS PRECEDENT.........................................................................56
8.1 Conditions to Insight's Obligations..........................................................56
8.2 Conditions to TCI's Obligations..............................................................57
SECTION 9. THE CLOSING..................................................................................59
9.1 The Closing; Time and Place..................................................................59
9.2 TCI's Delivery Obligations...................................................................59
9.3 Insight's Delivery Obligations...............................................................61
SECTION 10. TERMINATION AND DEFAULT......................................................................63
10.1 Termination Events...........................................................................63
10.2 Effect of Termination........................................................................64
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SECTION 11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION..............................................................................64
11.1 Survival of Representations and Warranties...................................................64
11.2 Indemnification by Indiana and Midwest.......................................................65
11.3 Indemnification by Insight...................................................................66
11.4 Third Party Claims...........................................................................66
11.5 Limitations on Indemnification - TCI.........................................................67
11.6 Limitations on Indemnification - Insight.....................................................68
11.7 Other Indemnification........................................................................68
SECTION 12. MISCELLANEOUS PROVISIONS.....................................................................68
12.1 Parties Obligated and Benefited..............................................................68
12.2 Notices......................................................................................69
12.3 Right to Specific Performance................................................................70
12.4 Waiver.......................................................................................70
12.5 Captions.....................................................................................70
12.6 Choice of Law................................................................................71
12.7 Terms........................................................................................71
12.8 Rights Cumulative............................................................................71
12.9 Time.........................................................................................71
12.10 Late Payments................................................................................71
12.11 Counterparts.................................................................................71
12.12 Entire Agreement.............................................................................71
12.13 Severability.................................................................................71
12.14 Construction.................................................................................71
12.15 Expenses.....................................................................................72
12.16 Risk of Loss.................................................................................72
12.17 Tax Consequences.............................................................................74
12.18 Commercially Reasonable Efforts..............................................................74
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LIST OF SCHEDULES AND EXHIBITS
Schedules
---------
Schedule 1.25 Insight Leased Property
Schedule 1.27 Insight Other Real Property Interests
Schedule 1.28 Insight Owned Property
Schedule 1.30 Insight System Contracts
Schedule 1.31 Insight System Franchises
Schedule 1.32 Insight System Licenses
Schedule 1.33 Insight Tangible Personal Property
Schedule 1.56 TCI Leased Property
Schedule 1.58 TCI Other Real Property Interests
Schedule 1.59 TCI Owned Property
Schedule 1.61 TCI System Contracts
Schedule 1.62 TCI System Franchises
Schedule 1.63 TCI System Licenses
Schedule 1.64 TCI Tangible Personal Property
Schedule 4.2 TCI Excluded Assets
Schedule 4.4 Insight Excluded Assets
Schedule 5.3 Insight Required Consents
Schedule 5.4 Insight Liens and Permitted Liens
Schedule 5.7 Insight Environmental Matters
Schedule 5.8 Insight Cost of Service Elections
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Schedule 5.10 Insight Financial Statements; Insight Changes or
Events
Schedule 5.11 Insight Litigation
Schedule 5.12 Insight Tax Matters
Schedule 5.13(a) Insight Employees
Schedule 5.13 Insight Plans; Employee Matters
Schedule 5.14 Insight Systems Information
Schedule 5.16 Insight Bonds
Schedule 6.3 TCI Required Consents
Schedule 6.4 TCI Liens and Permitted Liens
Schedule 6.7 TCI Environmental Matters
Schedule 6.8 TCI Cost of Service Elections
Schedule 6.10 TCI Financial Statements; TCI Changes or Events
Schedule 6.11 TCI Litigation
Schedule 6.13(a) TCI Employees
Schedule 6.13 TCI Plans; Employee Matters
Schedule 6.14 TCI Systems Information
Schedule 6.16 TCI Bonds
Exhibits
Exhibit A Insight Systems
Exhibit B TCI Systems
Exhibit 7.5(b) Form of Estoppel Certificate
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Exhibit 7.10 Form of Letter to Programmers
Exhibit 9.2(b)(1) Form of ▇▇▇▇ of Sale and Assignment
Exhibit 9.2(b)(2) Form of Assumption Agreement
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ASSET EXCHANGE AGREEMENT
THIS ASSET EXCHANGE AGREEMENT ("Agreement") is made and entered into as
of the 14th day of May, 1998, by and among TCI of Indiana, Inc., an Indiana
corporation ("Indiana"), UACC Midwest, Inc., a Delaware corporation ("Midwest"
and, together with Indiana, "TCI") and Insight Communications Company, L.P., a
Delaware limited partnership ("Insight").
RECITALS
A. Insight owns and operates cable television systems which are
franchised or hold other operating authority and operate in and around ▇▇▇▇▇▇▇
City, ▇▇▇▇▇, and Vernal, Utah and the other communities in Utah listed on
Exhibit A (the "Insight Systems").
B. TCI owns and operates cable television systems which are franchised
or hold other operating authority and operate in and around Evansville and
Jasper, Indiana and the other communities in Indiana listed on Exhibit B (the
"TCI Systems").
C. This Agreement sets forth the terms and conditions on which Insight
will convey to Indiana and Midwest substantially all of the assets comprising or
used or useful in connection with Insight's Cable Business and Indiana and
Midwest will convey to Insight substantially all of the assets comprising or
used or useful in connection with TCI's Cable Business, all in such a manner as
to effect, to the extent reasonably possible, like-kind exchanges of such assets
under Section 1031 of the United States Internal Revenue Code, as amended (the
"Code").
AGREEMENTS
In consideration of the mutual covenants and promises set forth herein,
the parties agree as follows:
SECTION 1. DEFINITIONS
1.1 In addition to terms defined elsewhere in this Agreement, the
following capitalized terms or terms otherwise defined in this Section 1 shall
have the meanings set forth below:
1.2 1992 Cable Act. The Cable Television Consumer Protection and
Competition Act of 1992, as amended, and the FCC rules and regulations
promulgated thereunder.
Affiliate. With respect to any Person, any Person controlling,
controlled by or under common control with such Person; "control" means the
ownership, directly or indirectly, of voting securities representing the right
generally to elect a majority of the directors (or similar officials) of
a Person or the possession, by contract or otherwise, of the authority to direct
the management and policies of a Person.
1.3 Assets. The Insight Assets or the TCI Assets or both, as the
context requires.
1.4 Basic Services. The lowest tier of cable television service offered
to subscribers of a System that includes the retransmission of local broadcast
signals as defined by the Cable Act and the 1992 Cable Act.
1.5 Business Day. Any day other than a Saturday, Sunday or a day on
which the banking institutions in Denver, Colorado or New York, New York are
required or authorized to be closed.
1.6 Cable Act. The Cable Communications Policy Act of 1984, as amended,
and the rules and regulations promulgated thereunder.
1.7 Cable Business. Insight's Cable Business or TCI's Cable Business,
as the context requires.
1.8 Closing Time. 11:59 P.M., Mountain Time, on the Closing Date.
1.9 Communications Act. The Communications Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
1.10 Contract. Any contract, mortgage, deed of trust, bond, indenture,
lease, license, note, franchise, certificate, option, warrant, right or other
instrument, document, obligation or agreement, whether written or oral.
1.11 Contribution. The transactions contemplated by the Contribution
Agreement among TCI, certain Affiliates of TCI, Insight and the Company dated as
of the date of this Agreement (the "Contribution Agreement") to be consummated
at the closing thereunder.
1.12 Equivalent Basic Subscribers (or "EBSs"). As of any date of
determination and for each franchise area served by a System, the sum of (a) the
total number of private residential customer accounts that are billed by
individual unit for at least Basic Services (regardless of whether such accounts
are in single-family homes or in individually billed units in apartment
buildings and other multi-unit buildings) (exclusive of (i) "second connects"
and "additional outlets" as such terms are commonly understood in the cable
television industry, and (ii) accounts that are not charged or are charged less
than the standard monthly service fees and charges then in effect for such
System for Basic Services) and (b) the quotient of (i) the total monthly
▇▇▇▇▇▇▇▇ for sales of Basic Services and Expanded Basic Services by such System
for such franchise area during the most recent billing period ended prior to the
date of calculation to commercial, bulk-billed and other accounts not billed by
individual unit (whether on a discounted or non-discounted basis) and to private
residential customer accounts that are billed by individual unit but pay less
than the standard monthly service
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fees charged for Basic Services, but excluding ▇▇▇▇▇▇▇▇ in excess of a single
month's charges for any account, divided by (ii) the standard monthly combined
rate (without discount of any kind) charged by such System for such franchise
area to individually billed subscribers for the highest level of Basic Services
and Expanded Basic Services offered by such System in effect during such billing
period, which monthly rate will not be less than the applicable rate specified
in Schedule 5.14 (in the case of Insight) or Schedule 6.14 (in the case of TCI).
For purposes of calculating the number of EBSs, there will be excluded (i) all
accounts billed by individual unit that are, and all ▇▇▇▇▇▇▇▇ to any commercial,
bulk-billed and other accounts not billed by individual unit that are, more than
60 days past due in the payment of any amount in excess of the lesser of $10.00
or the standard rate charged for Basic Services at the time of determination,
(ii) any accounts billed by individual unit and all commercial, bulk-billed and
other accounts not billed by individual units that, as of the date of
calculation, have not paid in full the charges for at least one full month of
the subscribed service, (iii) that portion of the ▇▇▇▇▇▇▇▇ to all accounts
billed by individual unit included in clause (b) above and any commercial,
bulk-billed and other accounts not billed by individual unit representing an
installation or other non-recurring charge, a charge for equipment or for any
outlet or connection other than the first outlet or first connection in any
individually billed unit or, with respect to a bulk account, in any residential
unit (e.g., an individual apartment or rental unit), a charge for any tiered
service other than Expanded Basic Services (whether or not included within Pay
TV), any charge for Pay TV or a pass-through charge for sales taxes,
line-itemized franchise fees, fees charged by the FCC and the like, (iv) any
individually billed unit and all ▇▇▇▇▇▇▇▇ to any commercial, bulk-billed and
other accounts not billed by individual unit whose service is pending
disconnection for any reason and (v) any individually billed unit and all
▇▇▇▇▇▇▇▇ to any commercial, bulk-billed or other accounts not billed by
individual unit that was solicited within the 60 day period preceding the
Closing Date to purchase such services by promotions or offers of discounts
other than those ordinarily made by the party for which the determination of
EBSs is being made. For purposes of this definition, payments on account of
monthly ▇▇▇▇▇▇▇▇ will be deemed due on the first day of the period for which the
service to which such ▇▇▇▇▇▇▇▇ relate is provided.
1.13 Environmental Law. Any Legal Requirement concerning the protection
of public or employee health, safety, welfare or the environment, including
Legal Requirements relating to emissions, discharges, releases or threatened
releases of Hazardous Substances into the environment, air (including both
ambient and within buildings and other structures), surface water, ground water
or land or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Substances.
1.14 ERISA. The Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder and published
interpretations with respect thereto.
1.15 ERISA Affiliate. As to any Person, any trade or business, whether
or not incorporated, which together with such Person would be deemed a single
employer as determined under Section 4001(a)(14) of ERISA.
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1.16 Expanded Basic Services. Any level of video programming service
greater than Basic Services provided over a cable television System, regardless
of service tier, other than Basic Services, any new product tier and Pay TV.
1.17 FCC. The Federal Communications Commission.
1.18 Financial Statements. Insight's Financial Statements or TCI's
Financial Statements, as the context requires.
1.19 GAAP. Generally accepted accounting principles as in effect from
time to time in the United States of America.
1.20 Governmental Authority. The United States of America, any state,
commonwealth, territory or possession of the United States of America and any
political subdivision or quasi-governmental authority of any of the same,
including any court, tribunal, department, commission, board, bureau, agency,
county, municipality, province, parish or other instrumentality of any of the
foregoing.
1.21 Hazardous Substances. (a) Any "hazardous waste" as defined by the
Resource Conservation and Recovery Act of 1976 (RCRA) (42 U.S.C. ▇▇.▇▇. 6901 et
seq.), as amended, and the rules and regulations promulgated thereunder; (b) any
"hazardous substance" as defined by the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (42 U.S.C. ▇▇.▇▇. 9601 et seq.) (CERCLA),
as amended, and the rules and regulations promulgated thereunder; (c) any
substance regulated by the Toxic Substances Control Act (TSCA) (15 U.S.C.
ss.ss.2601 et seq.), or the Insecticide, Fungicide and Rodenticide Act (IFRA) (7
U.S.C. ss.ss.136 et seq.), each as amended, and the rules and regulations
promulgated thereunder; (d) asbestos or asbestos-containing material of any kind
or character; (e) polychlorinated biphenyls; (f) any substances regulated under
the provisions of Subtitle I of RCRA relating to underground storage tanks; (g)
any substance the presence, use, handling, treatment, storage or disposal of
which on real property is prohibited by any Environmental Law; and (h) any other
substance which by any Environmental Law requires special handling, reporting or
notification of any Governmental Authority in its collection, storage, use,
treatment or disposal.
1.22 HSR Act. The ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976,
as amended, and the rules and regulations promulgated thereunder.
1.23 Insight Assets. All assets, properties, privileges, rights,
interests and claims, real and personal, tangible and intangible, of every type
and description that are owned, leased, held for use or used in connection with
Insight's Cable Business and in which Insight or any Affiliate of Insight has
any right, title or interest or acquires any right, title or interest on or
before the Closing, including Insight Tangible Personal Property, Insight Owned
Real Property, Insight Leased Property, Insight Other Real Property Interests,
Insight System Franchises, Insight System Licenses, Insight
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System Contracts, Insight Books and Records and Insight Other Intangibles, but
excluding any Insight Excluded Assets.
1.24 Insight Books and Records. All engineering records, files, data,
drawings, blueprints, schematics, reports, lists, plans and processes and all
other files of correspondence, lists, records and reports concerning Insight's
Cable Business, including subscribers and prospective subscribers of the Insight
Systems, signal and program carriage and dealings with Governmental Authorities,
including all reports filed by or on behalf of Insight with the FCC and
statements of account filed by or on behalf of Insight with the U.S. Copyright
Office, but excluding any Insight Excluded Assets.
1.25 Insight Leased Property. All leasehold interests in real property
that is held for use or used in connection with Insight's Cable Business which
Insight or any Affiliate of Insight has or acquires prior to Closing, including
those described as Insight Leased Property on Schedule 1.25.
1.26 Insight Other Intangibles. All intangible assets other than
Insight System Franchises, Insight System Licenses and Insight System Contracts,
including subscriber lists, accounts receivable, claims (excluding any claims
relating to Insight Excluded Assets), patents, copyrights and going concern
value, if any, that are owned, held for use or used in connection with Insight's
Cable Business and in which Insight or any Affiliate of Insight has, or acquires
prior to Closing, any right, title or interest.
1.27 Insight Other Real Property Interests. All easements and rights of
access (other than those relating to multiple dwelling units) and other
interests in real property that are held for use or used in connection with
Insight's Cable Business and in which Insight or any Affiliate of Insight has,
or acquires prior to Closing, any right, title or interest, including those
interests described as Insight Other Real Property Interests on Schedule 1.27,
but not including Insight Leased Property or Insight Owned Property.
1.28 Insight Owned Property. All fee interests in real property that is
held for use or used in connection with Insight's Cable Business which Insight
or any Affiliate of Insight has or acquires prior to Closing, including those
described as Insight Owned Property on Schedule 1.28 and all improvements
thereon.
1.29 Insight Required Consents. Any and all consents, authorizations
and approvals required for (i) Insight to transfer the Insight Assets to TCI;
(ii) TCI to operate the Insight Systems and to own, lease, use and operate the
Insight Assets and the Insight Systems at the places and in the manner in which
the Insight Assets are used and the Insight Systems are operated as of the date
of this Agreement and as of the Closing; and (iii) TCI to assume and perform the
Insight System Franchises, the Insight System Licenses, the leases and other
documents evidencing Insight Leased Property and Insight Other Real Property
Interests and the Insight System Contracts, including those consents,
authorizations and approvals required under the Insight System Franchises, the
Insight
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System Licenses, the leases and other documents evidencing Insight Leased
Property and Insight Other Real Property Interests and the Insight System
Contracts.
1.30 Insight System Contracts. All pole line agreements, underground
conduit agreements, crossing agreements, multiple dwelling, bulk billing or
commercial service agreements, leased channel access agreements and other
Contracts (other than Insight System Franchises and Insight System Licenses)
held for use or used in connection with Insight's Cable Business and to which
Insight or any Affiliate of Insight is, or becomes prior to Closing, as
permitted by this Agreement, a party or bound, including those described on
Schedule 1.30.
1.31 Insight System Franchises. All franchise agreements, operating
permits or similar governing agreements, instruments, resolutions, statutes,
ordinances, approvals, authorizations and permits obtained from any franchising
authority in connection with Insight's Cable Business, including all amendments
and modifications thereto and all renewals thereof, including those listed on
Schedule 1.31.
1.32 Insight System Licenses. The intangible cable television channel
distribution rights, cable television relay service (CARS), business radio and
other licenses, copyright notices and other licenses, authorizations, consents
or permits issued by the FCC or any other Governmental Authority in connection
with Insight's Cable Business (other than Insight System Franchises, Insight
System Contracts and Insight Other Real Property Interests), including those
described on Schedule 1.32.
1.33 Insight Tangible Personal Property. All tangible personal property
that is owned, leased, held for use or used in connection with Insight's Cable
Business and in which Insight or any Affiliate of Insight has, or acquires prior
to Closing, any right, title or interest, including towers, tower equipment,
aboveground and underground cable, distribution systems, headend amplifiers,
line amplifiers, microwave equipment, converters, testing equipment, motor
vehicles, office equipment, computers and billing equipment, furniture,
fixtures, supplies, inventory and other physical assets, the principal items of
which, including all motor vehicles, are described on Schedule 1.33.
1.34 Insight's Cable Business. The cable television business and other
income-generating businesses related to the Insight Systems conducted by Insight
through the Insight Systems.
1.35 Judgment. Any judgment, writ, order, injunction, award or decree
of any court, judge, justice or magistrate, including any bankruptcy court or
judge or the arbitrator in any binding arbitration, and any order of or by any
Governmental Authority.
1.36 Knowledge. The actual knowledge of a particular matter of one or
more of the principal corporate personnel of such party involved in the
transactions contemplated by this Agreement or the general manager or one or
more of the managers of such party's Systems.
1.37 Leased Property. The Insight Leased Property or TCI Leased
Property or both, as the context requires.
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1.38 Legal Requirement. Applicable common law and any statute,
ordinance, code or other law, rule, regulation, order, technical or other
written standard, requirement, policy or procedure enacted, adopted,
promulgated, applied or followed by any Governmental Authority, including any
Judgment and all judicial decisions applying common law or interpreting any
other Legal Requirement, in each case, as amended.
1.39 Lien. Any security interest, security agreement, financing
statement filed with any Governmental Authority, conditional sale or other title
retention agreement, any lease, consignment or bailment given for purposes of
security, any mortgage, lien, indenture, pledge, option, encumbrance, adverse
interest, constructive trust or other trust, claim, attachment, exception to,
defect in or other condition affecting title or other ownership interest
(including but not limited to reservations, rights of entry, possibilities of
reverter, encroachments, protrusions, easements, rights-of-way, rights of first
refusal, restrictive covenants, leases and licenses) of any kind, which
constitutes an interest in or claim against property, whether arising pursuant
to any Legal Requirement, System License, System Franchise, System Contract or
otherwise.
1.40 Litigation. Any written claim, action, suit, proceeding,
arbitration, or hearing.
1.41 Losses. Any claims, losses, liabilities, damages, penalties, costs
and expenses, including interest that may be imposed in connection therewith,
expenses of investigation, reasonable fees and disbursements of counsel and
other experts, and the cost to any Person making a claim or seeking
indemnification under this Agreement with respect to funds expended by such
Person by reason of the occurrence of any event or the existence or assertion of
any Liens (other than Permitted Liens) with respect to which indemnification is
sought, except Losses incurred by a party or on behalf of such party in
asserting any claim for indemnification against the other party where it is
ultimately determined (including by agreement of the parties) that such party is
not entitled to indemnification from the other party (before giving effect to
the limitations on such indemnification obligations set forth in Sections 11.5
and 11.6).
1.42 Other Real Property Interests. The Insight Other Real Property
Interests or the TCI Other Real Property Interests or both, as the context
requires.
1.43 Owned Property. Insight Owned Property or TCI Owned Property or
both, as the context requires.
1.44 Pay TV. A la carte tiers or premium programming services selected
by and sold to subscribers on a per channel or per program basis.
1.45 Permitted Lien. Any (a) Lien securing Taxes, assessments and
governmental charges not yet due and payable, (b) zoning law or ordinance or any
similar Legal Requirement, (c) right reserved to any Governmental Authority to
regulate the affected property, (d) as to Owned Property and Other Real Property
Interests, any Lien not securing indebtedness or arising out of the obligation
to pay money that does not individually or in the aggregate interfere with the
right or ability to own,
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use or operate the Owned Property or Other Real Property Interests as they are
being used or operated or materially diminish the value of such Owned Property
or Other Real Property Interests, (e) in the case of Owned Property and Leased
Property, any lease or sublease by TCI or Insight in favor of a third party that
is disclosed in the Schedules to this Agreement, and (f) in the case of Leased
Property, (i) the rights of any lessor and (ii) any Lien granted by any lessor
of Leased Property; provided that "Permitted Lien" will not include any Lien
securing a debt or claim (other than inchoate materialmen's, mechanics',
workmen's, repairmen's or other like Liens arising in the ordinary course of
business or any Lien described in clause (f) above) or any Lien which could
prevent or impair in any way the conduct of the business of the affected System
as it is currently being conducted, and provided further that the classification
of any Lien as a "Permitted Lien" will not affect any liability which TCI may
have under this Agreement for any such Lien with respect to the exchange of the
TCI Assets or which Insight may have under this Agreement for any such Lien with
respect to the exchange of the Insight Assets, including pursuant to any
indemnity obligation under this Agreement.
1.46 Person. Any natural person, Governmental Authority, corporation,
general or limited partnership, limited liability company, joint venture, trust,
association or unincorporated entity of any kind.
1.47 Required Consents. The Insight Required Consents or the TCI
Required Consents, as the context requires.
1.48 System. Any of the Insight Systems or the TCI Systems or all of
them, as the context requires.
1.49 System Contracts. The Insight System Contracts or the TCI System
Contracts or both, as the context requires.
1.50 System Franchises. The Insight System Franchises or the TCI System
Franchises or both, as the context requires.
1.51 System Licenses. The Insight System Licenses or the TCI System
Licenses or both, as the context requires.
1.52 Tangible Personal Property. The Insight Tangible Personal Property
or the TCI Tangible Personal Property or both, as the context requires.
1.53 Taxes. All levies and assessments of any kind or nature imposed by
any Governmental Authority, including all income, sales, use, ad valorem, value
added, franchise, severance, net or gross proceeds, withholding, payroll,
employment, excise or property taxes and levies or assessments related to
unclaimed property, together with any interest thereon and any penalties,
additions to tax or additional amounts applicable thereto.
- 8 -
1.54 TCI Assets. All assets, properties, privileges, rights, interests
and claims, real and personal, tangible and intangible, of every type and
description that are owned, leased, held for use or used in connection with
TCI's Cable Business and in which TCI or any Affiliate of TCI has any right,
title or interest or acquires any right, title or interest on or before the
Closing, including TCI Tangible Personal Property, TCI Owned Real Property, TCI
Leased Property, TCI Other Real Property Interests, TCI System Franchises, TCI
System Licenses, TCI System Contracts, TCI Books and Records and TCI Other
Intangibles, but excluding any TCI Excluded Assets.
1.55 TCI Books and Records. All engineering records, files, data,
drawings, blueprints, schematics, reports, lists, plans and processes and all
other files of correspondence, lists, records and reports concerning TCI's Cable
Business, including subscribers and prospective subscribers of the TCI Systems,
signal and program carriage and dealings with Governmental Authorities,
including all reports filed by or on behalf of TCI with the FCC and statements
of account filed by or on behalf of TCI with the U.S. Copyright Office, but
excluding any TCI Excluded Assets.
1.56 TCI Leased Property. All leasehold interests in real property that
is held for use or used in connection with TCI's Cable Business which TCI or any
Affiliate of TCI has or acquires prior to Closing, including those described as
TCI Leased Property on Schedule 1.56.
1.57 TCI Other Intangibles. All intangible assets other than TCI System
Franchises, TCI System Licenses and TCI System Contracts, including subscriber
lists, accounts receivable, claims (excluding any claims relating to TCI
Excluded Assets), patents, copyrights and going concern value, if any, that are
owned, held for use or used in connection with TCI's Cable Business and in which
TCI or any Affiliate of TCI has, or acquires prior to Closing, any right, title
or interest.
1.58 TCI Other Real Property Interests. All easements and rights of
access (other than those relating to multiple dwelling units) and other
interests in real property that are held for use or used in connection with
TCI's Cable Business and in which TCI or any Affiliate of TCI has, or acquires
prior to Closing, any right, title or interest, including those interests
described as TCI Other Real Property Interests on Schedule 1.58, but not
including TCI Leased Property or TCI Owned Property.
1.59 TCI Owned Property. All fee interests in real property that is
owned, held for use or used in connection with TCI's Cable Business which TCI or
any Affiliate of TCI has or acquires prior to Closing, including those described
as TCI Owned Property on Schedule 1.59 and all improvements thereon.
1.60 TCI Required Consents. Any and all consents, authorizations and
approvals required for (i) TCI to transfer the TCI Assets to Insight and Insight
to transfer the TCI Assets to Insight Communications of Indiana, LLC (the
"Company"); (ii) Insight and, following the transfer by Insight pursuant to the
Contribution Agreement, the Company, to operate the TCI Systems and to own,
lease, use and operate the TCI Assets and the TCI Systems at the places and in
the manner in which the TCI Assets are used and the TCI Systems are operated as
of the date of this Agreement
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and as of the Closing; and (iii) Insight and, following the transfer by Insight
pursuant to the Contribution Agreement, the Company, to assume and perform the
TCI System Franchises, the TCI System Licenses, the leases and other documents
evidencing TCI Leased Property or TCI Other Real Property Interests and the TCI
System Contracts, including those consents, authorizations and approvals
required under the TCI System Franchises, the TCI System Licenses, the leases
and other documents evidencing TCI Leased Property and TCI Other Real Property
Interests and the TCI System Contracts.
1.61 TCI System Contracts. All pole line agreements, underground
conduit agreements, crossing agreements, multiple dwelling, bulk billing or
commercial service agreements, leased channel access agreements and other
Contracts (other than TCI System Franchises and TCI System Licenses) held for
use or used in connection with TCI's Cable Business and to which TCI or any
Affiliate of TCI is, or becomes prior to Closing, as permitted by this
Agreement, a party or bound, including those described on Schedule 1.61.
1.62 TCI System Franchises. All franchise agreements, operating permits
or similar governing agreements, instruments, resolutions, statutes, ordinances,
approvals, authorizations and permits obtained from any franchising authority in
connection with TCI's Cable Business, including all amendments and modifications
thereto and all renewals thereof, including those listed on Schedule 1.62.
1.63 TCI System Licenses. The intangible cable television channel
distribution rights, cable television relay service (CARS), business radio and
other licenses, copyright notices and other licenses, authorizations, consents
or permits issued by the FCC or any other Governmental Authority in connection
with TCI's Cable Business (other than TCI System Franchises, TCI System
Contracts and TCI Other Real Property Interests), including those described on
Schedule 1.63.
1.64 TCI Tangible Personal Property. All tangible personal property
that is owned, leased, held for use or used in connection with TCI's Cable
Business and in which TCI or any Affiliate of TCI has, or acquires prior to
Closing, any right, title or interest, including towers, tower equipment,
aboveground and underground cable, distribution systems, headend amplifiers,
line amplifiers, microwave equipment, converters, testing equipment, motor
vehicles, office equipment, computers and billing equipment, furniture,
fixtures, supplies, inventory and other physical assets, the principal items of
which, including all motor vehicles, are described on Schedule 1.64.
1.65 TCI's Cable Business. The cable television business and other
income-generating businesses related to the TCI Systems conducted by TCI through
the TCI Systems.
1.66 Third Party. With respect to TCI, any Person other than TCI and
its Affiliates and, with respect to Insight, any Person other than Insight and
its Affiliates.
1.67 Transaction Documents. The instruments and documents described in
Sections 9.2 and 9.3 which are to be executed and delivered by or on behalf of
Insight or TCI in connection with
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this Agreement or the transactions contemplated hereby; provided, that for
purposes of Section 11, "Transaction Documents" does not include the Management
Agreements, it being agreed that the parties' indemnification rights and
obligations with respect to the matters covered by such agreements and other
rights and obligations with respect thereto shall be as specified in those
agreements.
1.68 Other Definitions. The following terms are defined in the Sections
or Recitals indicated:
Term Section or Recital
---- ------------------
Action 11.4
Adjustment Amount 3.2(i)
Agreement Preamble
Antitrust Division 7.7
Appraiser 7.16
Closing 9.1
Closing Date 9.1
Code Recital C
"commercially reasonable efforts" 12.18
Company 1.60
Contribution Agreement 1.11
Copyright Act 5.8(a)
Cost of Service Election 5.8(d)
EBS 1.12
Estoppel Certificate 7.5(b)
FAA 5.8(c)
Final Adjustment Certificate 3.3(b)
FTC 7.7
Hired Employee 7.3(g)
Hiring Party 7.3(g)
Indemnified Party 11.4
Indemnifying Party 11.4
Indiana Preamble
Initial Adjustment Certificate 3.3(a)
Insight Preamble
Insight Assumed Obligations and Liabilities 4.3
Insight Balance Sheet 5.10
Insight Damages 11.5
Insight Excluded Assets 4.4
Insight Matching Franchise 7.24(a)
Insight Plans 5.13(b)
Insight Retained Franchise 7.24(b)
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Insight Systems Recital A
Insight Title Policies 9.3(d)
Insight's Financial Statements 5.10
LLC Agreement4.2 Management Agreements 7.24(a)
Matching Franchise 7.24(a)
Midwest Preamble
Outside Closing Date 10.1(b)
Pending TCI Rate Order 6.8
Primary Transfer 7.24(d)
Prime Rate 12.10
Pro Rata Adjustments 3.3(a)
Retained Employees 7.3(a)
Retained Franchise 7.24(a)
Subsequent Transfer 7.24(e)
Surveys 7.6
Survival Period 11.1
Taking 12.16
TCI Preamble
TCI Assumed Obligations and Liabilities 4.1
TCI Balance Sheet 6.10
TCI Damages 11.6
TCI Excluded Assets 4.2
TCI Matching Franchise 7.24
TCI Plans 6.13(b)
TCI Retained Franchise 7.24(a)
TCI Systems Recital B
TCI Title Policies 9.2(d)
TCI's Financial Statement 6.10
Title Commitments 7.6
Title Company 7.6
Title Defect 7.6
Transitional Billing Services 7.13
WARN 5.13(a)
1.69 Accounting Terms. All accounting terms not otherwise defined in
this Agreement will have the meanings ascribed to them under GAAP.
SECTION 2. EXCHANGES
2.1 Exchanges.
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(a) Subject to the terms and conditions set forth in this
Agreement, at the Closing, (i) Indiana and Insight agree to exchange the TCI
Assets owned by Indiana (the Jasper TCI System as identified on the Schedules
hereto) for the Insight Assets that relate to the Vernal Insight System and to
the Tremonton, Brigham, Willard, Fielding, and Bear River headends that are part
of the ▇▇▇▇▇▇▇ City Insight System (as identified on the Schedules hereto), in
each case free and clear of all Liens (except Permitted Liens) and (ii) Midwest
and Insight agree to exchange the TCI Assets owned by Midwest (the Evansville
TCI System as identified on the Schedules hereto) for the Insight Assets that
relate to the ▇▇▇▇▇ Insight System and to the ▇▇▇▇▇▇ and Fruit Heights headends
that are part of the ▇▇▇▇▇▇▇ City Insight System (as identified on the Schedules
hereto), in each case free and clear of all Liens (except Permitted Liens).
Insight and Indiana with respect to the exchange transaction between them, and
Insight and Midwest with respect to the exchange transaction between them, agree
to use all reasonable efforts to structure the transactions in such a way that
each will be a tax free exchange of like-kind assets under Section 1031 of the
Code, the regulations promulgated thereunder, and judicial and administrative
interpretations thereof.
(b) To the maximum extent permitted by Section 1031 of the
Code, the regulations promulgated thereunder, and judicial and administrative
interpretations thereof, in each exchange (i) the TCI Tangible Personal Property
and the Insight Tangible Personal Property will be exchanged each for the other;
(ii) the TCI Owned Property, TCI Leased Property and TCI Other Property
Interests and the Insight Owned Property, Insight Leased Property and Insight
Other Real Property Interests will be exchanged each for the other; and (iii)
the TCI System Contracts, TCI System Franchises, TCI System Licenses and TCI
Other Intangibles and the Insight System Contracts, Insight System Franchises,
Insight System Licenses and Insight Other Intangibles will be exchanged each for
the other.
SECTION 3. CONSIDERATION
3.1 Value of Assets. The parties agree that the value of the TCI Assets
owned by Indiana and the value of the Insight Assets being transferred to
Indiana are equal; provided that at Closing the value of such Assets will be
subject to adjustment as provided in Section 3.2 and Section 3.3. The parties
further agree that the value of the TCI Assets owned by Midwest and the value of
the Insight Assets being transferred to Midwest are equal; provided that at
Closing the value of such Assets will be subject to adjustment as provided in
Section 3.2 and Section 3.3.
3.2 Adjustments to Value of Assets. The value of the TCI Assets and the
Insight Assets shall be adjusted as follows, it being agreed that
notwithstanding anything to the contrary set forth below, separate adjustments
will be made with respect to each exchange transaction:
(a) Appropriate adjustments on a pro rata basis as of the
Closing Time will be made with respect to each of TCI and Insight for all
prepaid expenses other than inventory (but only to the extent the full benefit
of such prepaid expenses will be realizable by the other party within 12 months
after the Closing Date), accrued expenses (including real and personal property
taxes), copyright fees and franchise or license fees or charges, prepaid income,
subscriber prepayments and,
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subject to paragraph (e) below, accounts receivable related to such party's
Cable Business to the extent specified in Section 3.2(e), all as determined in
accordance with GAAP consistently applied and to reflect the principle that all
expenses and income attributable to such party's Cable Business for the period
through and including the Closing Time are for the account of such party, and
all expenses and income attributable to such party's Cable Business for the
period after the Closing Time are for the account of the other party.
(b) All advance payments to, or funds of third parties on
deposit with, TCI or Insight as of the Closing Time and relating to such party's
Cable Business, including advance payments and deposits (including any accrued
interest on such deposits) by subscribers served by such party's Cable Business
for converters, encoders, decoders, cable television service and related sales,
shall be assumed by, and credited to the account of, the other party.
(c) There shall be credited to each party the economic value
of all accrued vacation time that such party credits after the Closing Time to
the employees of the other party that are hired by such party pursuant to
Section 7.3(g), where economic value is the amount equal to the cash
compensation that would be payable to each such employee at his or her level of
compensation on the Closing Date for a period equal to such employee's credited
accrued vacation.
(d) All deposits relating to the business and operations of
each party's Systems that are held by third parties as of the Closing Time for
the account of such party or as security for such party's performance of its
obligations, including deposits on leases and deposits for utilities, will be
credited to the account of such party in their full amounts and will become the
property of the other party; provided that no adjustment will be made for any
deposits the full benefit of which for contractual or other reasons cannot be
made available to the other party within 12 months following the Closing Time.
(e) Neither TCI nor Insight will receive credit for any of its
(i) accounts receivable resulting from cable television service sales any
portion of which is 60 days or more past due as of the Closing Date, or (ii)
accounts receivable from customers whose accounts are inactive or whose service
is pending disconnection for any reason as of the Closing Date. TCI and Insight
will receive credit for their accounts receivable resulting from cable
television service sales the entire portion of which are 0-59 days past due as
of the Closing Date in an amount equal to 99% of the face amount of such
accounts receivable. For purposes of making "past due" calculations under the
foregoing sentence, the billing statements of a System will be deemed to be due
and payable on the first day of the period during which the service to which
such billing statements relate is provided. TCI and Insight will receive credit
for their advertising accounts receivable as follows: (i) 100% of the face
amount of the advertising accounts receivable which are outstanding 30 days or
less from the invoice date, (ii) 95% of the face amount of all advertising
accounts receivable which are outstanding more than 30 but fewer than 61 days
from the invoice date, (iii) 80% of the face amount of all advertising accounts
receivable which are outstanding more than 60 but fewer than 91 days from the
invoice date, and (iv) 50% of the face amount of all advertising accounts
receivable which are outstanding more than 90 but fewer than 121 days from the
invoice date. Neither TCI nor Insight
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will receive credit for advertising accounts receivable which are outstanding
more than 120 days from the invoice date. Notwithstanding the foregoing, each of
TCI and Insight will receive credit for 100% of the face amount of their
advertising accounts receivable from national and regional representation
accounts, regardless of the age thereof. The obligations of Mountain Cable
Network, Inc., under the Advertising Availability Purchase and Sale Agreement
dated as of April 1, 1993 between it and Insight with respect to the period
prior to Closing are not affected by this Agreement.
(f) Each of TCI and Insight shall receive a credit equal to
the aggregate amount of all capital expenditures made by such party during the
period from January 1, 1998 through the Closing Date relating to (i) upgrades
and rebuilds of System plant capacity and associated items (including headend
sites and headend equipment to expand channel capacity), and (ii) the launch of
digital services, including the purchase of digital converters but not including
digital converters purchased in the ordinary course of business to replace lost,
stolen or defective digital converters.
(g) Any amounts paid, or accrued as a current liability, prior
to Closing by TCI or its Affiliates with respect to retroactive franchise fees
in respect of TCI's Systems or by Insight or its Affiliates with respect to
retroactive franchise fees in respect of Insight's Systems will be credited to
the account of TCI or Insight, as applicable, in their full amounts to the
extent that (i) such amounts can legally be passed through to and collected from
subscribers of the TCI Systems or the Insight Systems after Closing, and (ii) no
agreement has been entered into prohibiting the collection of such amounts, with
such amounts with respect to the TCI Systems being assets of Insight upon
collection and such amounts with respect to the Insight Systems being assets of
TCI upon collection.
(h) The adjustments provided for in this Section 3.2 will be
made without duplication. In addition, none of the adjustments provided for in
this Section 3.2 will be made with respect to any Excluded Asset or with respect
to any item of income or expense related to an Excluded Asset.
(i) The net amount of the adjustments calculated under this
Section 3.2 (the "Adjustment Amount"), as preliminarily determined pursuant to
Section 3.3, shall be paid by TCI or Insight, as applicable, to the other party
at the Closing by wire transfer of immediately available funds.
3.3 Calculation of Adjustments.
(a) Each party will estimate in good faith with respect to its
Systems, and set forth, together with a detailed statement of the calculation
thereof, the adjustments and prorations with respect to its Cable Business
prescribed by Section 3.2 (the "Pro Rata Adjustments"), in a certificate (the
"Initial Adjustment Certificate") executed by an authorized representative of
such party and delivered to the other party at least 10 Business Days prior to
the Closing. Each Initial Adjustment Certificate will be accompanied by
appropriate documentation, including an accounts receivable detail with relevant
aging information as of the Closing Time, in summary form,
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supporting the determination of the Pro Rata Adjustments proposed in such
certificate. Following receipt of such Initial Adjustment Certificate, the
recipient shall have five Business Days to review such schedule and supporting
information and to notify the preparer of such Initial Adjustment Certificate of
any disagreements with the preparer's estimates of its Pro Rata Adjustments. If
the recipient provides a notice of disagreement with the preparer's estimates of
such amounts within such five Business Day period, TCI and Insight shall
negotiate in good faith to resolve any such dispute and to reach an agreement
prior to the Closing on such estimated amounts as of the Closing Time. The
estimates so agreed upon by TCI and Insight or (if the parties do not reach such
an agreement on such estimated amounts set forth in the Initial Adjustments
Certificate prior to the Closing Date or if the recipient fails to provide a
notice of disagreement with the preparer's estimates of such amounts within the
time provided) the estimates of such Pro Rata Adjustments set forth in the
Initial Adjustments Certificate shall be the basis for determining the
preliminary Adjustment Amount payable pursuant to Section 3.2. All disagreements
that may exist with respect to the Initial Adjustment Certificate shall be
resolved in connection with the preparation of the Final Adjustment Certificate
pursuant to paragraph (b) below.
(b) Within 90 days after the Closing, each party will deliver
to the other a certificate (the "Final Adjustment Certificate") showing in full
detail its final determination of the Pro Rata Adjustments with respect to its
Systems, which certificate will be accompanied by appropriate documentation
supporting the amounts proposed in such certificate, including an accounts
receivable detail with relevant aging information as of the Closing Time, and
which will be executed by an officer of such party. Each party will review the
other's Final Adjustment Certificate and will give written notice to the other
party of any objections it has to the calculations shown in such certificate
within 30 days after its receipt thereof. TCI and Insight will endeavor in good
faith to resolve any such objections within 30 days after the receipt by the
parties of each other's objections. If any objections or disputes have not been
resolved at the end of such 30-day period, the disputed portions of the Pro Rata
Adjustments will be determined within the following 30 days by a partner in a
major accounting firm with substantial cable television audit experience which
is not the auditor of either Insight or TCI (or any Affiliate of either of them)
and the determination of such auditor will be final and will be binding upon all
parties. If Insight and TCI cannot agree with respect to the selection of an
auditor, Insight and TCI will each select an auditor and those two auditors will
select a third auditor whose determination will be final and will be binding
upon all parties. Insight and TCI will bear equally the expenses arising in
connection with an auditor's determination of disputed amounts, and payment of
the final Adjustment Amount (after taking into account any estimated Adjustment
Amount paid at the Closing) will be made by the party responsible therefor to
the other party in immediately available funds within 15 Business Days after the
final determination is made.
(c) Each party will provide to the other reasonable access to
all records in its possession which were used in the preparation of its Initial
Adjustment Certificate and Final Adjustment Certificate.
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SECTION 4. ASSUMED LIABILITIES AND EXCLUDED ASSETS
4.1 Indiana and Midwest Assumed Obligations and Liabilities. As of the
Closing, each of Indiana and Midwest will assume and after the Closing, each
will pay, discharge and perform the following, to the extent related to the
Assets received by it from Insight (the "TCI Assumed Obligations and
Liabilities"): (a) those obligations and liabilities accruing and relating to
periods after the Closing Time under or with respect to the Insight Assets
assigned and transferred to it at the Closing; (b) those obligations and
liabilities of Insight to customers of Insight's Cable Business for (i)
subscriber deposits related to the Insight Systems held by Insight as of the
Closing Date in the amount for which such party received credit under Section
3.2 and (ii) customer, advertising and other advance payments held by Insight as
of the Closing Date in the amount for which such party received credit under
Section 3.2; (c) all obligations and liabilities accruing and relating to
Insight's Cable Business prior to the Closing Time in respect of which such
party received a credit pursuant to Section 3.2; and (d) all other obligations
and liabilities accruing and relating to periods after the Closing Time and
arising out of such party's ownership of the Insight Assets assigned and
transferred to it at the Closing or the operation of the Insight Systems
assigned and transferred to it after the Closing Time, except to the extent that
such obligations or liabilities relate to any Insight Excluded Asset. All
obligations and liabilities, contingent, fixed or otherwise, arising out of or
relating to the Insight Assets or the Insight Systems other than the TCI Assumed
Obligations and Liabilities will remain and be the obligations and liabilities
solely of Insight including any obligation, liability or claim relating to or
arising pursuant to (x) rate refunds to subscribers of the Insight Systems with
respect to rates charged to such subscribers during periods through and
including the Closing Time, (y) litigation commenced prior to, or related to an
event occurring at any time prior to the Closing Time, or (z) any Insight
Excluded Asset.
4.2 TCI Excluded Assets. "TCI Excluded Assets" means all: (a)
programming (including cable guide Contracts) and retransmission consent
Contracts of TCI other than those listed on Schedule 1.61 (TCI System
Contracts), it being agreed that leased channel access agreements are not
programming agreements for purposes of this Section 4.2; (b) TCI Plans; (c)
insurance policies of TCI and rights and claims thereunder (except as otherwise
provided in Section 12.16); (d) bonds, letters of credit, surety instruments and
other similar items and any stocks, bonds, certificates of deposit and similar
investments of TCI; (e) cash and cash equivalents and notes receivable of TCI;
(f) TCI's trademarks, trade names, service marks, service names, logos and
similar proprietary rights, subject to Section 7.12; (g) subscriber billing
Contracts and related leased equipment and software of TCI, subject to Section
7.13; (h) all contracts and related accounts receivable for providing DMX
service to commercial accounts via direct broadcast satellite; (i) all TCI
Contracts relating to national advertising sales representation, including
Contracts with National Cable Communications or Cable Networks, Inc.; (j) all
agreements pursuant to which TCI has created, incurred, assumed or guaranteed
indebtedness for borrowed money or under which any Lien securing such
indebtedness has been or may be imposed on any TCI Asset; (k) any claims, rights
or choses in action of TCI related to the period prior to the Closing Time
(other than customer and advertising accounts receivable), including, without
limitation, any Litigation and the proceeds thereof and any claims, rights and
interest in and to any refunds of federal, state or local franchise, income or
other taxes or
- 17 -
payments of any nature for the periods prior to the Closing Time, including
copyright fees; (l) any books and records that TCI is required by any Legal
Requirement to retain and any books of account, tax reports and returns and the
like related to the TCI Systems; provided that copies of such books and records
will be made available to Insight for a period of three years (and six years in
the case of tax reports and returns and underlying books and records, although
in the case of underlying books and records, the parties acknowledge that they
are not retained for periods for which an IRS field examination has been
completed) from the Closing Date upon reasonable request; (m) TCI's corporate
minute books and other books and records related to internal corporate matters
and financial relationships with TCI's lenders and affiliates; (n) any
employment, union, collective bargaining, compensation, bonus, deferred
compensation, noncompetition, confidentiality, consulting, agency or management
agreements of TCI; (o) all documents, reports and records relating to the
employees of the TCI Systems; provided that copies of such books and records
will be made available to Insight for a period of three years from the Closing
Date upon reasonable request by Insight accompanied by a waiver and release from
the employee whose records are sought in form and substance reasonably
satisfactory to TCI; (p) any agreement, right, asset or property owned, leased
or held by TCI that is not used or held for use in connection with the operation
of the TCI Systems; (q) TCI's rights under the @Home Distribution Agreement (as
defined in the Operating Agreement among, Insight, TCI and certain Affiliates of
TCI (the "LLC Agreement")), it being agreed that the parties' rights and
obligations with respect thereto shall be as specified in the LLC Agreement; and
(r) rights, assets and properties described on Schedule 4.2.
4.3 Insight Assumed Obligations and Liabilities. As of the Closing,
Insight will assume and after the Closing, Insight will pay, discharge and
perform the following (the "Insight Assumed Obligations and Liabilities"): (a)
those obligations and liabilities accruing and relating to periods after the
Closing Time under or with respect to the TCI Assets assigned and transferred to
Insight at the Closing; (b) those obligations and liabilities of TCI to
customers of TCI's Cable Business for (i) subscriber deposits related to the TCI
Systems held by TCI as of the Closing Date in the amount for which Insight
received credit under Section 3.2 and (ii) customer, advertising and other
advance payments held by TCI as of the Closing Date in the amount for which
Insight received credit under Section 3.2; (c) all obligations and liabilities
accruing and relating to TCI's Cable Business prior to the Closing Time in
respect of which Insight received a credit pursuant to Section 3.2; and (d) all
other obligations and liabilities accruing and relating to periods after the
Closing Time and arising out of Insight's ownership of the TCI Assets or
operation of the TCI Systems after the Closing Time, except to the extent that
such obligations or liabilities relate to any TCI Excluded Asset. It is
understood and agreed that following the Contribution, the Company shall assume
the Insight Assumed Obligations and Liabilities for the benefit of TCI and upon
such assumption, Insight shall have no further obligation or liability in
respect of the same to the extent assumed by the Company. All obligations and
liabilities, contingent, fixed or otherwise, arising out of or relating to the
TCI Assets or the TCI Systems other than the Insight Assumed Obligations and
Liabilities will remain and be the obligations and liabilities solely of TCI
including any obligation, liability or claim relating to or arising pursuant to
(x) rate refunds to subscribers of the TCI Systems with respect to rates charged
to such subscribers during periods through and including the Closing Time,
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(y) litigation commenced prior to, or related to an event occurring at any time
prior to the Closing Time, or (z) any TCI Excluded Asset.
4.4 Insight Excluded Assets. "Insight Excluded Assets" means all: (a)
programming (including cable guide Contracts) and retransmission consent
Contracts of Insight other than those listed on Schedule 1.30 (Insight System
Contracts), it being agreed that leased channel access agreements are not
programming agreements for purposes of this Section 4.2; (b) Insight Plans; (c)
insurance policies of Insight and rights and claims thereunder (except as
otherwise provided in Section 12.16); (d) bonds, letters of credit, surety
instruments and other similar items and any stocks, bonds, certificates of
deposit and similar investments of Insight; (e) cash and cash equivalents and
notes receivable of Insight; (f) Insight's trademarks, trade names, service
marks, service names, logos and similar proprietary rights, subject to Section
7.12; (g) subscriber billing Contracts and related leased equipment and software
of Insight, subject to Section 7.13; (h) all Insight Contracts relating to
national advertising sales representation; (i) all agreements pursuant to which
Insight has created, incurred, assumed or guaranteed indebtedness for borrowed
money or under which any Lien securing such indebtedness has been or may be
imposed on any Insight Asset; (j) any claims, rights or choses in action of
Insight related to the period prior to the Closing Time (other than customer and
advertising accounts receivable), including, without limitation, any Litigation
and the proceeds thereof and any claims, rights and interest in and to any
refunds of federal, state or local franchise, income or other taxes or payments
of any nature for the periods prior to the Closing Time, including copyright
fees; (k) any books and records that Insight is required by any Legal
Requirement to retain and any books of account, tax reports and returns and the
like related to the Insight Systems; provided that copies of such books and
records will be made available to TCI for a period of three years (and six years
in the case of tax reports and returns and underlying books and records,
although in the case of underlying books and records, the parties acknowledge
that they are not retained for periods for which an IRS field examination has
been completed) from the Closing Date upon reasonable request; (l) Insight's
partnership record books and other books and records related to internal
partnership matters and financial relationships with Insight's lenders and
affiliates; (m) any employment, union, collective bargaining, compensation,
bonus, deferred compensation, noncompetition, confidentiality, consulting,
agency or management agreements of Insight; (n) all documents, reports and
records relating to the employees of the Insight Systems; provided that copies
of such books and records will be made available to TCI for a period of three
years from the Closing Date upon reasonable request by TCI accompanied by a
waiver and release from the employee whose records are sought in form and
substance reasonably satisfactory to Insight; (o) any agreement, right, asset or
property owned, leased or held by Insight that is not used or held for use in
connection with the operation of the Insight Systems; and (p) rights, assets and
properties described on Schedule 4.4.
SECTION 5. INSIGHT'S REPRESENTATIONS AND WARRANTIES
Insight represents and warrants to TCI as of the date of this Agreement
(or, if a different date is specified in this Section 5 or in Insight's
Schedules, as of such specified date) as follows:
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5.1 Organization and Qualification of Insight. Insight is a limited
partnership duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite partnership power and authority
to own, lease and use the Insight Assets and to conduct Insight's Cable Business
as it is currently conducted. Insight is duly qualified to do business and is in
good standing under the laws of each jurisdiction in which the ownership,
leasing or use of the Insight Assets or the nature of its activities in
connection with the Insight Systems makes such qualification necessary, except
in any such jurisdiction where the failure to be so qualified and in good
standing would not have a material adverse effect on the ownership or operation
of Insight's Cable Business, the Insight Assets or Insight Systems or on the
ability of Insight to perform its obligations under this Agreement. Insight's
U.S. taxpayer identification number is ▇▇▇▇▇▇▇▇▇.
5.2 Authority and Validity. Insight has all requisite partnership power
and authority to execute and deliver, to perform its obligations under, and to
consummate the transactions contemplated by, this Agreement and the Transaction
Documents to which Insight is a party. The execution and delivery by Insight,
the performance by Insight under, and the consummation by Insight of the
transactions contemplated by, this Agreement and the Transaction Documents to
which Insight is a party have been duly and validly authorized by all required
partnership action by or on behalf of Insight. This Agreement has been, and when
executed and delivered by Insight the Transaction Documents will be, duly and
validly executed and delivered by Insight and the valid and binding obligations
of Insight, enforceable against Insight in accordance with their terms, except
as the same may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws now or hereafter in effect relating to the
enforcement of creditors' rights generally or by principles governing the
availability of equitable remedies.
5.3 No Conflict; Required Consents. Except for, and subject to receipt
of, the Insight Required Consents, all of which are listed on Schedule 5.3, and
the TCI Required Consents and the notification and expiration or earlier
termination of the waiting period under the HSR Act, the execution and delivery
by Insight, the performance of Insight under, and the consummation of the
transactions contemplated by, this Agreement and the Transaction Documents to
which Insight is a party do not and will not: (a) conflict with or violate any
provision of its agreement of limited partnership; (b) violate any provision of
any Legal Requirement; (c) require any consent, approval or authorization of, or
filing of any certificate, notice, application, report or other document with,
any Governmental Authority or other Person; or (d) (i) conflict with, violate,
result in a breach of or constitute a default under (without regard to
requirements of notice, lapse of time or elections of other Persons or any
combination thereof), (ii) permit or result in the termination, suspension or
modification of, (iii) result in the acceleration of (or give any Person the
right to accelerate) the performance of Insight under, (iv) result in the
creation or imposition of any Lien under any Insight System Franchise, Insight
System License or any Insight System Contract or other instrument evidencing any
of the Insight Assets or by which Insight or any of its assets is bound or
affected, except for purposes of clauses (c) and (d) such consents, approvals,
authorizations and filings that, if not obtained or made, would not, and such
violations, conflicts, breaches, defaults, terminations, suspensions,
modifications and accelerations as would not, individually or in the aggregate,
have a material adverse effect on any Insight System, Insight's Cable Business
or on the ability of Insight
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to perform its obligations under this Agreement or the Transaction Documents to
which Insight is a party.
5.4 Assets.
(a) Insight has good and valid title to (or, in the case of
Assets that are leased, valid leasehold interests in) the Insight Assets (other
than Insight Owned Real Property, Insight Leased Property and Insight Other Real
Property Interests, as to which representations and warranties in Section 5.6
apply). The Insight Assets are free and clear of all Liens, except (i) Permitted
Liens and (ii) Liens described on Schedule 5.4, all of which Liens on Schedule
5.4 will be terminated, released or, in the case of the rights of first refusal
listed on Schedule 5.4, waived, as appropriate, at or prior to the Closing.
Except as described on Schedule 1.33 (Insight Tangible Personal Property), the
Insight Tangible Personal Property is in good operating condition and repair
(ordinary wear and tear excepted).
(b) Except for items included in the Insight Excluded Assets,
the Insight Assets constitute all the assets necessary to permit TCI to conduct
Insight's Cable Business and to operate the Insight Systems substantially as
they are being conducted and operated on the date of this Agreement and in
compliance in all material respects with all applicable Legal Requirements,
Insight System Contracts, Insight System Licenses and Insight System Franchises
and to perform all of the TCI Assumed Obligations and Liabilities.
(c) Except as disclosed on Schedule 5.4, to the Knowledge of
Insight, no third party has been granted or applied for a cable television
franchise or is providing or intending to provide cable television services in
any of the communities or unincorporated areas currently served by Insight's
Cable Business.
5.5 Insight System Franchises, Insight System Licenses, Insight System
Contracts and Insight Other Real Property Interests.
(a) Except as described on Schedules 1.25 (Insight Leased
Property), 1.27 (Insight Other Real Property Interests), 1.30 (Insight System
Contracts), 1.31 (Insight System Franchises) and 1.32 (Insight System Licenses),
or as described on Schedule 4.4 (Insight Excluded Assets) or otherwise included
in the definition of Insight Excluded Assets, Insight is not bound or affected
by any of the following that relate primarily or in whole to Insight's Cable
Business: (i) leases of real or personal property; (ii) franchises for the
construction or operation of cable television systems or Contracts of
substantially equivalent effect; (iii) other licenses, authorizations, consents
or permits of the FCC or any other Governmental Authority; (iv) material
easements, rights of access, underground conduit agreements, crossing agreements
or other interests in real property; (v) pole line or attachment agreements;
(vi) multiple dwelling unit agreements, including bulk agreements, and
commercial service agreements; (vii) agreements pursuant to which the Insight
Systems receive or provide advertising sales representation services; (viii)
agreements pursuant to which an Insight System has constructed or agreed to
construct for third parties an institutional
- 21 -
network or otherwise provides to third parties telecommunications services other
than one-way video; (ix) construction and development agreements (other than
installation agreements where services are provided in the ordinary course of
business on an as-needed basis); or (x) Contracts relating to the operation of
Insight's Cable Business other than those described in any other clause of this
Section which contemplate payments by or to Insight in any 12-month period
exceeding $25,000 individually or $150,000 in the aggregate or that have a
remaining term of two years or more as of the Closing Date. Except as described
on the Schedules to this Agreement, no Affiliate of Insight is a party to any
documents listed on such Schedules.
(b) Complete and correct copies of the Insight System
Franchises and Insight System Licenses have been delivered by Insight to TCI.
Except as set forth on Schedule 1.31 (Insight System Franchises), the Insight
System Franchises contain all of the commitments and obligations of Insight to
the applicable Governmental Authority granting such Franchises with respect to
the construction, ownership and operation of the Insight Systems. The Insight
System Franchises and Insight System Licenses are currently in full force and
effect and are valid and enforceable under all applicable Legal Requirements
according to their terms. There is no legal action, governmental proceeding or,
to Insight's Knowledge, investigation, pending or to Insight's Knowledge
threatened, to terminate, suspend or modify any Insight System Franchise or any
Insight System License and, except as set forth on Schedule 1.31, Insight is in
material compliance with the terms and conditions of all the Insight System
Franchises and Insight System Licenses and with other applicable requirements of
all Governmental Authorities (including the FCC and the Register of Copyrights)
relating to the Insight System Franchises and Insight System Licenses, including
all requirements for notification, filing, reporting, posting and maintenance of
logs and records. All areas served by the Insight Systems are served pursuant to
one of the Insight System Franchises except as set forth on Schedule 1.31.
(c) Complete and correct copies of all Insight System
Contracts required to be listed on Insight's Schedules (including all Contracts
relating to Leased Property and Other Real Property Interests described on
Schedule 1.27) have been provided to TCI. Such documents constitute the entire
agreement with the other party. Each such Insight System Contract is in full
force and effect and constitutes the valid, legal, binding and enforceable
obligation of Insight and Insight is not and to Insight's Knowledge, each other
party thereto is not in breach or default of any material terms or conditions
thereunder.
5.6 Real Property. All Insight Assets consisting of Insight Owned
Property, Insight Leased Property and material Insight Other Real Property
Interests are described on Schedules 1.25 (Insight Leased Property), 1.27
(Insight Other Real Property Interests) and 1.28 (Insight Owned Property).
Except as otherwise disclosed on Schedule 1.28 (Insight Owned Property), Insight
holds title to the Insight Owned Property free and clear of all Liens except (a)
Permitted Liens and (b) Liens described on Schedule 5.4, all of which Liens on
Schedule 5.4 will be terminated, released or, in the case of the rights of first
refusal listed on Schedule 5.4, waived, as appropriate, at or prior to the
Closing, and has the valid and enforceable right to use and possess such Insight
Owned Property, subject only to the above-referenced Liens. Except as otherwise
disclosed on Schedules
- 22 -
1.25 (Insight Leased Property) and 1.27 (Insight Other Real Property Interests),
Insight has valid and enforceable leasehold interests in all Insight Leased
Property and, with respect to Insight Other Real Property Interests, has valid
and enforceable rights to use such Insight Other Real Property Interests,
subject only to the above-referenced Liens. Except for ordinary wear and tear
and routine repairs, all of the material improvements, leasehold improvements
and the premises of the Insight Owned Property and the premises demised under
the leases and other documents evidencing the Insight Leased Property are in
good condition and repair and are suitable for the purposes used. Each parcel of
Insight Owned Property and each parcel of Insight Leased Property and any
improvements thereon and their current use (x) has access to and over public
streets or private streets for which Insight has a valid right of ingress and
egress, (y) conforms in its current use and occupancy to all material zoning
requirements without reliance upon a variance issued by a Governmental Authority
or a classification of the parcel in question as a nonconforming use and (z)
conforms in its current use to all restrictive covenants, if any, or other Liens
affecting all or part of such parcel. Except where the failure of the
representations made in this sentence to be true and correct would not have a
material adverse effect on the Insight Assets or Insight's Cable Business, all
buildings, towers, guy wires and anchors, headend equipment, earth-receiving
dishes and related facilities used in the operations of the Insight Systems are
located entirely on Insight Owned Property or Insight Leased Property or other
real property in which Insight has an Insight Other Real Property Interest and
are maintained, placed and located in accordance with the provisions of all
applicable Legal Requirements, deeds, leases, licenses, permits or other legally
enforceable arrangements.
5.7 Environmental.
(a) To Insight's Knowledge, except as disclosed on Schedule
5.7, the Insight Owned Property and Insight Leased Property comply in all
material respects with and have previously been operated in compliance in all
material respects with all Environmental Laws. Insight has not, either directly
or indirectly (i) generated, stored, used, treated, handled, discharged,
released or disposed of any Hazardous Substances at, on, under, in or about, to
or from or in any other manner affecting, any Insight Owned Property or Insight
Leased Property, (ii) transported any Hazardous Substances to or from any
Insight Owned Property or Insight Leased Property or (iii) undertaken or caused
to be undertaken any other activities relating to the Insight Owned Property or
Insight Leased Property, which could reasonably give rise to any liability under
any Environmental Law and, to Insight's Knowledge, no other present or previous
owner, tenant, occupant or user of any Insight Owned Property or Insight Leased
Property or any other Person has committed or suffered any of the foregoing. To
Insight's Knowledge, no release of Hazardous Substances outside the Insight
Owned Property or Insight Leased Property has entered or threatens to enter any
Insight Owned Property or Insight Leased Property, nor is there any pending or
threatened Litigation based on Environmental Laws which arises from any
condition of the land adjacent to or immediately surrounding any Insight Owned
Property or Insight Leased Property. No Litigation based on Environmental Laws
which relates to any Insight Owned Property or Insight Leased Property or any
operations or conditions on it (1) has been asserted or conducted in the past
with respect to, or is currently pending against, Insight or, to Insight's
Knowledge, any other Person or (2) to Insight's Knowledge, is threatened or
contemplated.
- 23 -
(b) To Insight's Knowledge, except as disclosed on Schedule
5.7, (i) no aboveground or underground storage tanks are currently or have been
located on any Insight Owned Property or Insight Leased Property, (ii) no
Insight Owned Property or Insight Leased Property has been used at any time as a
gasoline service station or any other facility for storing, pumping, dispensing
or producing gasoline or any other petroleum products or wastes and (iii) no
building or other structure on any Insight Owned Property or Insight Leased
Property contains asbestos, asbestos-containing material or material presumed to
be asbestos-containing material under any Environmental Law.
(c) Insight has provided TCI with complete and correct copies
of (i) all studies, reports, surveys or other written materials in Insight's
possession relating to the presence or alleged presence of Hazardous Substances
at, on, under or affecting the Insight Owned Property or Insight Leased
Property, (ii) all notices (other than general notices made by general
publication) or other materials in Insight's possession that were received from
any Governmental Authority having the power to administer or enforce any
Environmental Laws relating to current or past ownership, use or operation of
the Insight Owned Property or Insight Leased Property or activities at the
Insight Owned Property or Insight Leased Property and (iii) all materials in
Insight's possession relating to any Litigation or allegation by any private
third party concerning any Environmental Law.
5.8 Compliance with Legal Requirements.
(a) The ownership, leasing and use of the Insight Assets as
they are currently owned, leased and used and the conduct of Insight's Cable
Business and the operation of the Insight Systems as they are currently
conducted and operated do not violate or infringe in any material respect any
Legal Requirements currently in effect (other than Legal Requirements described
in Sections 5.7, 5.8(d) and 5.13, as to which the representations and warranties
set forth in those subsections shall apply), including (i) the Communications
Act, (ii) Section 111 of the U.S. Copyright Act of 1976, and the U.S. Copyright
Office rules and regulations promulgated thereunder (the "Copyright Act") and
(iii) all other applicable Legal Requirements relating to the construction,
maintenance, ownership and operation of the Insight Assets, the Insight Systems
and Insight's Cable Business. Insight has received no written notice of any
violation by Insight or Insight's Cable Business of any Legal Requirement
applicable to the operation of Insight's Cable Business as currently conducted,
or the Insight Systems as currently operated and to Insight's Knowledge, there
is no existing fact, circumstance or condition that could reasonably form the
basis for a finding by any Governmental Authority of any such violation.
(b) A valid request for renewal has been duly and timely filed
under Section 626 of the Communications Act with the proper Governmental
Authority with respect to all Insight System Franchises that have expired prior
to or will expire within 36 months after the date of this Agreement.
(c) Except as set forth in Schedule 5.8, (i) no written
notices or demands have been received from the FCC, from any television station,
or from any other Person or Governmental
- 24 -
Authority (1) challenging the right of the Insight Systems to carry any
television broadcast station or deliver the same or (2) claiming that any
Insight System has failed to carry a television broadcast station required to be
carried pursuant to the Communications Act or has failed to carry a television
broadcast station on a channel designated by such station consistent with the
requirements of the Communications Act; (ii) all necessary Federal Aviation
Administration ("FAA") approvals have been obtained with respect to the height
and location of towers used in connection with the operation of the Insight
Systems and are listed in Schedule 5.8, and such towers are being operated in
compliance in all material respects with applicable FCC and FAA rules; and (iii)
Insight has received no written notice from any Governmental Authority with
respect to an intention to enforce customer service standards pursuant to the
1992 Cable Act and Insight has not agreed with any Governmental Authority to
establish customer service standards that exceed the FCC standards promulgated
pursuant to the 1992 Cable Act.
(d) Notwithstanding the foregoing, to Insight's Knowledge,
each Insight System is in compliance in all material respects with the
provisions of the 1992 Cable Act as such Legal Requirements relate to the rates
and other fees charged to subscribers of Insight's Cable Business. Insight has
used reasonable good faith efforts to establish rates charged to subscribers,
effective since September 1, 1993, that are or were allowable under the 1992
Cable Act and any authoritative interpretation thereof now or then in effect, to
the extent such rates are or were subject to regulation at such time by any
Governmental Authority, including any local franchising authority and/or the
FCC. Notwithstanding the foregoing, Insight makes no representation or warranty
that any of its rates that are not subject to rate regulation would be allowable
if such rates were subject to regulation and makes no representation or warranty
that the rates charged to subscribers would be allowable under any rules and
regulations of the FCC or any authoritative interpretation thereof, promulgated
after the Closing Date. Insight has delivered to TCI complete and correct copies
of all FCC Forms and other information reasonably requested by TCI relating to
rate regulation generally or specific rates charged to subscribers with respect
to the Insight Systems. Except as set forth on Schedule 5.8, Insight has not
made any election with respect to any cost of service proceeding conducted in
accordance with Part 76.922 of Title 47 of the Code of Federal Regulations or
any similar proceeding with respect to any of the Insight Systems (a "Cost of
Service Election"). Insight has not entered into and is not subject to any
so-called social contract or proposed resolution with the FCC with respect to
rates charged for cable television services in the Insight Systems and is not
currently negotiating or anticipating entering into or being subject to the
same. Except as otherwise described on Schedule 5.8, as of the date of this
Agreement, (i) to the Knowledge of Insight, there are no outstanding or
unresolved proceedings or investigations (other than those affecting the cable
industry generally) dealing with or otherwise affecting the rates that any cable
television system included in the Insight Systems can charge (whether for
programming, equipment, installation, service or otherwise), (ii) no cable
television system included in the Insight Systems is subject to any currently
effective order issued by a Governmental Authority that reduced the rates that
it may charge (whether for programming, equipment, installation, service, or
otherwise), (iii) no local franchising authority has been certified by the FCC
as a rate regulating authority with respect to any of the Insight Systems and
(iv) there is no unresolved complaint pending with respect to the CPST tier of
any Insight System and no rate order with respect to the Insight Systems that is
being appealed.
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5.9 Patents, Trademarks and Copyrights. Insight has deposited with the
U.S. Copyright Office all statements of account and other documents and
instruments, and has paid all royalties, supplemental royalties, fees and other
sums to the U.S. Copyright Office under the Copyright Act with respect to the
business and operations of the Insight Systems as are required to obtain, hold
and maintain the compulsory license for cable television systems prescribed in
Section 111 of the Copyright Act. To Insight's Knowledge, there is no inquiry,
claim, action or demand pending before the U.S. Copyright Office or from any
other Person which questions the copyright filings or payments made by Insight
with respect to the Insight Systems. Insight has delivered to TCI complete and
correct copies of all current reports and filings for the past three years, made
or filed pursuant to copyright rules and regulations with respect to Insight's
Cable Business. Insight does not possess any patent, patent right, trademark or
copyright related to or material to the operation of the Insight Systems and
Insight is not a party to any license or royalty agreement with respect to any
such patent, patent right, trademark or copyright, except for licenses
respecting program material and obligations under the Copyright Act applicable
to cable television systems generally. The Insight Systems and Insight's Cable
Business have been operated in such a manner so as not to violate or infringe
upon the rights, or give rise to any rightful claim of any Person for copyright,
trademark, service ▇▇▇▇, patent or license infringement or the like.
5.10 Financial Statements; Undisclosed Liabilities; Absence of Certain
Changes or Events. Insight has delivered to TCI complete and correct copies of
an unaudited trial balance sheet for each Insight System as of April 21, 1998
and an unaudited income and expense summary statement for each Insight System
for the year ended December 31, 1997 and the three-month period ended March 31,
1997, including all notes and schedules thereto (all of such financial
statements and notes being hereinafter referred to as "Insight's Financial
Statements"). Insight's Financial Statements are in accordance with the books
and records of Insight, were prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby, and, except as may be
described therein, present fairly the financial condition of Insight at the
dates and for the periods indicated, subject only to standard year-end
adjustments and the omission of footnotes. The unaudited trial balance sheets of
Insight as of April 21, 1998 are herein called the "Insight Balance Sheets." At
the date of the Insight Balance Sheets, Insight had no material liabilities
required by GAAP to be reflected or reserved against therein that were not fully
reflected or reserved against on the Insight Balance Sheets, other than
liabilities as set forth on Schedule 5.10. Except as set forth on Schedule 5.10,
since the date of the Insight Balance Sheets through the date of this Agreement:
(x) Insight has not incurred any obligation or liability (contingent or
otherwise), except normal trade or business obligations incurred in the ordinary
course of business, the performance of which will not, to Insight's Knowledge,
individually or in the aggregate, have a material adverse effect on the
financial condition of Insight or the results of operations of Insight's Cable
Business; (y) there has been no material adverse change in the Insight Assets
comprising any Insight System or in the business, condition, financial or
otherwise, or liabilities of Insight's Cable Business or any Insight System and,
to Insight's Knowledge, no fact or condition exists or is contemplated or
threatened which would result in such a change in the future; and (z) Insight's
Cable Business has been conducted only in the ordinary course of business
consistent with past practice. For the purpose of this Agreement, the impact of
general economic conditions (including changes in capital and
- 26 -
financial markets), governmental legislation and regulations and other events
which affect the cable industry as a whole in the State of Utah or the United
States, shall not be considered in determining whether there has been a material
adverse change in the business, condition, financial or otherwise or liabilities
of Insight's Cable Business or any Insight System or the Insight Assets.
5.11 Litigation. Except as set forth in Schedule 5.11: (a) there is no
Litigation pending or, to Insight's Knowledge, threatened, and, to Insight's
Knowledge, there is no investigation pending or threatened, by or before any
Governmental Authority or private arbitration tribunal against Insight which, if
adversely determined, would materially adversely affect the financial condition
or operations of Insight's Cable Business, Insight Systems, the Insight Assets
or the ability of Insight to perform its obligations under this Agreement, or
which, if adversely determined, would result in the modification, revocation,
termination, suspension or other limitation of any of the Insight System
Franchises, Insight System Licenses, Insight System Contracts or leases or other
documents evidencing the Insight Leased Property or the Insight Other Real
Property Interests; and (b) there is not in existence any Judgment requiring
Insight to take any action of any kind with respect to the Insight Assets or the
operation of the Insight Systems, or to which Insight (with respect to the
Insight Systems), the Insight Systems or the Insight Assets are subject or by
which they are bound or affected.
5.12 Tax Returns; Other Reports. Insight has duly and timely filed in
correct form all federal, state, local and foreign Tax returns and other Tax
reports required to be filed by Insight, and has timely paid all Taxes which
have become due and payable, whether or not so shown on any such return or
report, the failure of which to be filed or paid could adversely affect or
result in the imposition of a Lien upon the Insight Assets or that could impose
on TCI any transferee liability for any taxes, penalties or interest due or to
become due from Insight, except such amounts as are being contested diligently
and in good faith and are not in the aggregate material. Except as set forth on
Schedule 5.12, Insight has received no notice of, nor does Insight have any
Knowledge of, any deficiency, assessment or audit, or proposed deficiency,
assessment or audit from any taxing Governmental Authority which could affect or
result in the imposition of a Lien upon the Insight Assets.
5.13 Employment Matters.
(a) Schedule 5.13(a) contains a complete and correct list of
the names and positions of all employees engaged principally in Insight's Cable
Business as of the date set forth on Schedule 5.13(a). Insight has complied in
all material respects with all applicable Legal Requirements relating to the
employment of labor, including, the Worker Adjustment and Retraining
Notification Act, 29 U.S.C. Section 2101, et seq. ("WARN"), ERISA, continuation
coverage requirements with respect to group health plans and those relating to
wages, hours, collective bargaining, unemployment insurance, worker's
compensation, equal employment opportunity, age and disability discrimination,
immigration control and the payment and withholding of Taxes.
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(b) Each employee benefit plan (as defined in Section 3(3) of
ERISA) or any multi-employer plan (as defined in Section 3(37) of ERISA) with
respect to which Insight or any of its ERISA Affiliates has any liability or in
which any employees or agents, or any former employees or agents, of Insight or
any of its ERISA Affiliates participate is set forth in Schedule 5.13 (the
"Insight Plans"). Neither Insight, any of its ERISA Affiliates nor any Insight
Plan is in material violation of any provision of the Code or ERISA. No
"reportable event" (as defined in Section 4043 of ERISA) has occurred and is
continuing with respect to any Insight Plan and no "prohibited transaction" (as
defined in Section 406 of ERISA) has occurred with respect to any Insight Plan
which reasonably could result in material liability to Insight or any of its
ERISA Affiliates. No material "accumulated funding deficiency" or "withdrawal
liability" (as defined in Section 302 of ERISA) exists with respect to any of
the Insight Plans. After the Closing, TCI will not be required, under ERISA, the
Code or any collective bargaining agreement, to establish, maintain or continue
any Plan currently maintained by Insight or any of its ERISA Affiliates.
(c) Except as set forth on Schedule 5.13, there are no
collective bargaining agreements applicable to any Person employed by Insight
that renders services in connection with the Insight Systems and Insight has no
duty to bargain with any labor organization with respect to any such Person.
There are not pending any unfair labor practice charges against Insight, any
demand for recognition or any other effort of or request or demand from, a labor
organization for representative status with respect to any Person employed by
Insight that renders services in connection with the Insight Systems. Except as
described on Schedule 5.13, Insight has no employment agreements, either written
or oral, with any employee of the Insight Systems and none of the employment
agreements listed on Schedule 5.13 requires Insight or will require TCI to
employ any Person after the Closing.
(d) Insight is not aware of the existence of any governmental
inspection, investigation, audit or examination of any Insight Plan or of any
facts which would lead it to believe that any such governmental inspection,
investigation, audit or examination is pending or threatened. There exists no
action, suit or claim (other than routine claims for benefits) with respect to
any Insight Plan pending or to the knowledge of Insight threatened against any
of such plans and Insight possesses no knowledge of any facts which could give
rise to any such action, suit or claim. Each Insight Plan that is intended to be
tax-qualified, and each amendment thereto, is the subject of a favorable
determination letter, and no plan amendment that is not the subject of a
favorable determination letter would affect the validity of any Insight Plan's
letter. At all times prior to the Closing, each Insight Plan, to the extent such
plan is intended to be tax-qualified, satisfies all minimum coverage and minimum
participation requirements, if any, imposed on such Insight Plan by the
applicable terms of the Code and ERISA.
5.14 Insight Systems Information. Schedule 5.14 sets forth a materially
true and accurate description of the following information relating to Insight's
Cable Business as of the most recent monthly report generated by Insight in the
ordinary course of business containing the information required to prepare such
Schedule 5.14 (which date is specified in Schedule 5.14) provided that such date
is no earlier than two months prior to the date of this Agreement:
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(a) the approximate number of miles (both underground and
aerial) of plant included in the Insight Assets;
(b) the number of Equivalent Basic Subscribers (including the
number that are residential and the number that are bulk-billed) served by the
Insight Systems for each Insight System service area (by franchise area or
community);
(c) the approximate number of single family homes and
residential dwelling units passed by the Insight Systems;
(d) a description of basic and optional or tier services
available from the Insight Systems, the rates charged by Insight for each and
the number of EBSs receiving each optional or tier service;
(e) the stations and signals carried by the Insight Systems
and the channel position of each such signal and station and the basis for
carriage of all television broadcast signals; and
(f) the cities, towns, villages, townships, boroughs, counties
or other communities served by the Insight Systems (with or without the
requirement of a franchise) that have been, or are required to be, registered
with the FCC pursuant to Section 76.12 of its rules, including each C.U.I.D.
number.
5.15 Accounts Receivable. Insight's accounts receivable for its Cable
Business are actual and bona fide receivables representing obligations for the
total dollar amount of such receivables, as shown on the books of Insight, that
resulted from the regular course of Insight's Cable Business. Such receivables
are subject to no offset or reduction of any nature, except for a reserve for
uncollectible amounts consistent with the reserve established by Insight in
Insight's Financial Statements and those credits or reductions to such accounts
made in the ordinary course of business.
5.16 Bonds; Letters of Credit. Except as set forth on Schedule 5.16,
there are no franchise, construction, fidelity, performance, or other bonds,
guaranties in lieu of bonds or letters of credit posted by Insight in connection
with its operation or ownership of any of the Insight Systems or Insight Assets.
5.17 Finders and Brokers. Insight has not employed any financial
advisor, broker or finder or incurred any liability for any financial advisory,
brokerage, finder's or similar fee or commission in connection with the
transactions contemplated by this Agreement for which TCI could be liable.
SECTION 6. TCI'S REPRESENTATIONS AND WARRANTIES
Each of Indiana and Midwest severally represents and warrants to
Insight, as of the date of this Agreement (or, if a different date is specified
in this Section 6 or in the TCI's Schedules, as of
- 29 -
such specified date) as follows; provided, that each makes the following
representations and warranties only with respect to itself and its own Assets,
Systems and Cable Business.
6.1 Organization and Qualification of TCI. Indiana is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Indiana and Midwest is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and each has all
requisite corporate power and authority to own, lease and use the TCI Assets
owned, leased or used by it and to conduct TCI's Cable Business as it is
currently conducted. TCI is duly qualified to do business and is in good
standing under the laws of each jurisdiction in which the ownership, leasing or
use of its TCI Assets or the nature of its activities in connection with the TCI
Systems makes such qualification necessary, except in any such jurisdiction
where the failure to be so qualified and in good standing would not have a
material adverse effect on the ownership or operation of TCI's Cable Business,
the TCI Assets or TCI Systems or on the ability of TCI to perform its
obligations under this Agreement. Indiana's U.S. taxpayer identification number
is ▇▇▇▇▇▇▇▇▇ and Midwest's U.S. taxpayer identification number is ▇▇▇▇▇▇▇▇▇.
6.2 Authority and Validity. TCI has all requisite corporate power and
authority to execute and deliver, to perform its obligations under, and to
consummate the transactions contemplated by, this Agreement and the Transaction
Documents to which TCI is a party. The execution and delivery by TCI, the
performance by TCI under, and the consummation by TCI of the transactions
contemplated by, this Agreement and the Transaction Documents to which TCI is a
party have been duly and validly authorized by all required corporate action by
or on behalf of TCI, subject to TCI obtaining board of director approval for the
same. This Agreement has been, and when executed and delivered by TCI the
Transaction Documents will be, duly and validly executed and delivered by TCI
and the valid and binding obligations of TCI, enforceable against TCI in
accordance with their terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws now or
hereafter in effect relating to the enforcement of creditors' rights generally
or by principles governing the availability of equitable remedies and subject to
TCI obtaining board of director approval for the same.
6.3 No Conflict; Required Consents. Except for, and subject to receipt
of, the TCI Required Consents, all of which are listed on Schedule 6.3, and the
Insight Required Consents and the notification and expiration or earlier
termination of the waiting period under the HSR Act, the execution and delivery
by TCI, the performance of TCI under, and the consummation of the transactions
contemplated by, this Agreement and the Transaction Documents to which TCI is a
party do not and will not: (a) conflict with or violate any provision of its
charter or bylaws; (b) violate any provision of any Legal Requirement; (c)
require any consent, approval or authorization of, or filing of any certificate,
notice, application, report or other document with, any Governmental Authority
or other Person; or (d) (i) conflict with, violate, result in a breach of or
constitute a default under (without regard to requirements of notice, lapse of
time or elections of other Persons or any combination thereof), (ii) permit or
result in the termination, suspension or modification of, (iii) result in the
acceleration of (or give any Person the right to accelerate) the performance of
TCI under, (iv) result in the creation or imposition of any Lien under any ▇▇▇
- ▇▇ -
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ System License or any TCI System Contract or other
instrument evidencing any of the TCI Assets or by which TCI or any of its assets
is bound or affected, except for purposes of clauses (c) and (d) such consents,
approvals, authorizations and filings, that, if not obtained or made, would not,
and such violations, conflicts, breaches, defaults, terminations, suspensions,
modifications and accelerations as would not, individually or in the aggregate,
have a material adverse effect on any TCI System, TCI's Cable Business or on the
ability of TCI to perform its obligations under this Agreement or the
Transaction Documents to which TCI is a party.
6.4 Assets.
(a) TCI has good and valid title to (or, in the case of Assets
that are leased, valid leasehold interests in) the TCI Assets (other than TCI
Owned Real Property, TCI Leased Property and TCI Other Real Property Interests,
as to which representations and warranties in Section 6.6 apply). The TCI Assets
are free and clear of all Liens, except (i) Permitted Liens and (ii) Liens
described on Schedule 6.4, all of which Liens on Schedule 6.4 will be
terminated, released or, in the case of the rights of first refusal listed on
Schedule 6.4, waived, as appropriate, at or prior to the Closing. Except as
described on Schedule 1.64 (TCI Tangible Personal Property), the TCI Tangible
Personal Property is in good operating condition and repair (ordinary wear and
tear excepted).
(b) Except for items included in the TCI Excluded Assets, the
TCI Assets constitute all the assets necessary to permit Insight to conduct
TCI's Cable Business and to operate the TCI Systems substantially as they are
being conducted and operated on the date of this Agreement and in compliance in
all material respects with all applicable Legal Requirements, TCI System
Contracts, TCI System Licenses and TCI System Franchises and to perform all of
the Insight Assumed Obligations and Liabilities.
(c) Except as disclosed on Schedule 6.4, to the Knowledge of
TCI, no third party has been granted or applied for a cable television franchise
or is providing or intending to provide cable television services in any of the
communities or unincorporated areas currently served by TCI's Cable Business.
6.5 TCI System Franchises, TCI System Licenses, TCI System Contracts
and TCI Other Real Property Interests.
(a) Except as described on Schedules 1.56 (TCI Leased
Property), 1.58 (TCI Other Real Property Interests), 1.61 (TCI System
Contracts), 1.62 (TCI System Franchises) and 1.63 (TCI System Licenses) or as
described on Schedule 4.2 (TCI Excluded Assets) or otherwise included in the
definition of TCI Excluded Assets, TCI is not bound or affected by any of the
following that relate primarily or in whole to TCI's Cable Business: (i) leases
of real or personal property; (ii) franchises for the construction or operation
of cable television systems or Contracts of substantially equivalent effect;
(iii) other licenses, authorizations, consents or permits of the FCC or any
other Governmental Authority; (iv) material easements, rights of access,
underground conduit agreements, crossing agreements or other interests in real
property; (v) pole line or attachment
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agreements; (vi) multiple dwelling unit agreements, including bulk agreements,
and commercial service agreements; (vii) agreements pursuant to which the TCI
Systems receive or provide advertising sales representation services; (viii)
agreements pursuant to which a TCI System has constructed or agreed to construct
for third parties an institutional network or otherwise provide to third parties
telecommunications services other than one-way video; (ix) construction and
development agreements (other than installation agreements where services are
provided in the ordinary course of business on an as-needed basis); or (x)
Contracts relating to the operation of TCI's Cable Business other than those
described in any other clause of this Section which contemplate payments by or
to TCI in any 12-month period exceeding $25,000 individually or $150,000 in the
aggregate or that have a remaining term of two years or more as of the Closing
Date. Except as described on the Schedules to this Agreement, no Affiliate of
TCI is a party to any documents listed on such Schedules.
(b) Complete and correct copies of the TCI System Franchises
and TCI System Licenses have been delivered by TCI to Insight. Except as set
forth on Schedule 1.62 (TCI System Franchises), the TCI System Franchises
contain all of the commitments and obligations of TCI to the applicable
Governmental Authority granting such Franchises with respect to the
construction, ownership and operation of the TCI Systems. The TCI System
Franchises and TCI System Licenses are currently in full force and effect and
are valid and enforceable under all applicable Legal Requirements according to
their terms. There is no legal action, governmental proceeding or, to TCI's
Knowledge, investigation, pending or to TCI's Knowledge threatened, to
terminate, suspend or modify any TCI System Franchise or TCI System License and
TCI is in material compliance with the terms and conditions of all the TCI
System Franchises and TCI System Licenses and with other applicable requirements
of all Governmental Authorities (including the FCC and the Register of
Copyrights) relating to the TCI System Franchises and TCI System Licenses,
including all requirements for notification, filing, reporting, posting and
maintenance of logs and records. All areas served by the TCI Systems are served
pursuant to one of the TCI System Franchises except as set forth on Schedule
1.62.
(c) Complete and correct copies of all TCI System Contracts
required to be listed on TCI's Schedules (including all Contracts relating to
Leased Property and Other Real Property Interests described on Schedule 1.58)
have been provided to Insight. Such documents constitute the entire agreement
with the other party. Each such TCI System Contract is in full force and effect
and constitutes the valid, legal, binding and enforceable obligation of TCI and
TCI is not and to TCI's Knowledge, each other party thereto is not in breach or
default of any material terms or conditions thereunder.
6.6 Real Property. All TCI Assets consisting of TCI Owned Property, TCI
Leased Property and material TCI Other Real Property Interests are described on
Schedules 1.56 (TCI Leased Property), 1.58 (TCI Other Real Property Interests)
and 1.59 (TCI Owned Property). Except as otherwise disclosed on Schedule 1.59
(TCI Owned Property), TCI holds title to the TCI Owned Property free and clear
of all Liens except (a) Permitted Liens and (b) Liens described on Schedule 6.4,
all of which Liens on Schedule 6.4 will be terminated, released or, in the case
of the
- 32 -
rights of first refusal listed on Schedule 6.4, waived, as appropriate, at or
prior to the Closing, and has the valid and enforceable right to use and possess
such TCI Owned Property, in each case subject only to the above-referenced
Liens. Except as otherwise disclosed on Schedules 1.56 (TCI Leased Property) and
1.58 (TCI Other Real Property Interests); TCI has valid and enforceable
leasehold interests in all TCI Leased Property and, with respect to TCI Other
Real Property Interests, has valid and enforceable rights to use all TCI Other
Real Property Interests subject, subject only to the above-referenced Liens.
Except for ordinary wear and tear and routine repairs, all of the material
improvements, leasehold improvements and the premises of the TCI Owned Property
and the premises demised under the leases and other documents evidencing the TCI
Leased Property are in good condition and repair and are suitable for the
purposes used. Each parcel of TCI Owned Property and each parcel of TCI Leased
Property and any improvements thereon and their current use (x) has access to
and over public streets or private streets for which TCI has a valid right of
ingress and egress, (y) conforms in its current use and occupancy to all
material zoning requirements without reliance upon a variance issued by a
Governmental Authority or a classification of the parcel in question as a
nonconforming use and (z) conforms in its current use to all restrictive
covenants, if any, or other Liens affecting all or part of such parcel. Except
where the failure of the representations made in this sentence to be true and
correct would not have a material adverse effect on the TCI Assets or TCI's
Cable Business, all buildings, towers, guy wires and anchors, headend equipment,
earth-receiving dishes and related facilities used in the operations of the TCI
Systems are located entirely on TCI Owned Property or TCI Leased Property or
other real property in which TCI has a TCI Other Real Property Interest and are
maintained, placed and located in accordance with the provisions of all
applicable Legal Requirements, deeds, leases, licenses, permits or other legally
enforceable arrangements.
6.7 Environmental.
(a) To TCI's Knowledge, except as disclosed on Schedule 6.7,
the TCI Owned Property and TCI Leased Property comply in all material respects
with and has previously been operated in compliance in all material respects
with all Environmental Laws. TCI has not either directly or indirectly (i)
generated, stored, used, treated, handled, discharged, released or disposed of
any Hazardous Substances at, on, under, in or about, to or from or in any other
manner affecting, any TCI Owned Property or TCI Leased Property, (ii)
transported any Hazardous Substances to or from any TCI Owned Property or TCI
Leased Property or (iii) undertaken or caused to be undertaken any other
activities relating to the TCI Owned Property or TCI Leased Property, which
could reasonably give rise to any liability under any Environmental Law and, to
TCI's Knowledge, no other present or previous owner, tenant, occupant or user of
any TCI Owned Property or TCI Leased Property or any other Person has committed
or suffered any of the foregoing. To TCI's Knowledge, no release of Hazardous
Substances outside the TCI Owned Property or TCI Leased Property has entered or
threatens to enter any TCI Owned Property or TCI Leased Property, nor is there
any pending or threatened Litigation based on Environmental Laws which arises
from any condition of the land adjacent to or immediately surrounding any TCI
Owned Property or TCI Leased Property. No Litigation based on Environmental Laws
which relates to any TCI Owned Property or TCI Leased Property or any operations
or conditions on it (1) has been asserted or
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conducted in the past with respect to, or is currently pending against. TCI or,
to TCI's Knowledge, any other Person, or (2) to TCI's Knowledge, is threatened
or contemplated.
(b) To TCI's Knowledge, except as disclosed on Schedule 6.7,
(i) no aboveground or underground storage tanks are currently or have been
located on any TCI Owned Property or TCI Leased Property, (ii) no TCI Owned
Property or TCI Leased Property has been used at any time as a gasoline service
station or any other facility for storing, pumping, dispensing or producing
gasoline or any other petroleum products or wastes and (iii) no building or
other structure on any TCI Owned Property or TCI Leased Property contains
asbestos, asbestos-containing material or material presumed to be
asbestos-containing material under any Environmental Law.
(c) TCI has provided Insight with complete and correct copies
of (i) all studies, reports, surveys or other written materials in TCI's
possession relating to the presence or alleged presence of Hazardous Substances
at, on, under or affecting the TCI Owned Property or TCI Leased Property, (ii)
all notices (other than general notices made by general publication) or other
materials in TCI's possession that were received from any Governmental Authority
having the power to administer or enforce any Environmental Laws relating to
current or past ownership, use or operation of the TCI Owned Property or TCI
Leased Property or activities at the TCI Owned Property or TCI Leased Property
and (iii) all materials in TCI's possession relating to any Litigation or
allegation by any private third party concerning any Environmental Law.
6.8 Compliance with Legal Requirements.
(a) The ownership, leasing and use of the TCI Assets as they
are currently owned, leased and used and the conduct of TCI's Cable Business and
the operation of the TCI Systems as they are currently conducted and operated do
not violate or infringe in any material respect any Legal Requirements currently
in effect (other than Legal Requirements described in Sections 6.7, 6.8(d) and
6.13, as to which the representations and warranties set forth in those
subsections shall apply), including (i) the Communications Act, (ii) Section 111
of the Copyright Act and (iii) all other applicable Legal Requirements relating
to the construction, maintenance, ownership and operation of the TCI Assets, the
TCI Systems and TCI's Cable Business. TCI has received no written notice of any
violation by TCI or TCI's Cable Business of any Legal Requirement applicable to
the operation of TCI's Cable Business as currently conducted, or the TCI Systems
as currently operated and to TCI's Knowledge, there is no existing fact,
circumstance or condition that could reasonably form the basis for a finding by
any Governmental Authority of any such violation.
(b) A valid request for renewal has been duly and timely filed
under Section 626 of the Communications Act with the proper Governmental
Authority with respect to all TCI System Franchises that have expired prior to
or will expire within 36 months after the date of this Agreement.
(c) Except as set forth in Schedule 6.8, (i) no written
notices or demands have been received from the FCC, from any television station,
or from any other Person or Governmental
- 34 -
Authority (1) challenging the right of the TCI Systems to carry any television
broadcast station or deliver the same or (2) claiming that any TCI System has
failed to carry a television broadcast station required to be carried pursuant
to the Communications Act or has failed to carry a television broadcast station
on a channel designated by such station consistent with the requirements of the
Communications Act; (ii) all necessary FAA approvals have been obtained with
respect to the height and location of towers used in connection with the
operation of the TCI Systems and are listed in Schedule 6.8, and such towers are
being operated in compliance in all material respects with applicable FCC and
FAA rules; and (iii) TCI has received no written notice from any Governmental
Authority with respect to an intention to enforce customer service standards
pursuant to the 1992 Cable Act and TCI has not agreed with any Governmental
Authority to establish customer service standards that exceed the FCC standards
promulgated pursuant to the 1992 Cable Act.
(d) Notwithstanding the foregoing, to TCI's Knowledge, each
TCI System is in compliance in all material respects with the provisions of the
1992 Cable Act as such Legal Requirements relate to the rates and other fees
charged to subscribers of TCI's Cable Business. TCI has used reasonable good
faith efforts to establish rates charged to subscribers, effective since
September 1, 1993, that are or were allowable under the 1992 Cable Act and any
authoritative interpretation thereof now or then in effect, to the extent such
rates are or were subject to regulation at such time by any Governmental
Authority, including any local franchising authority and/or the FCC.
Notwithstanding the foregoing, TCI makes no representation or warranty that any
of its rates that are not subject to rate regulation would be allowable if such
rates were subject to regulation and makes no representation or warranty that
the rates charged to subscribers would be allowable under any rules and
regulations of the FCC or any authoritative interpretation thereof, promulgated
after the Closing Date. TCI has delivered to Insight complete and correct copies
of all FCC Forms and other information reasonably requested by Insight relating
to rate regulation generally or specific rates charged to subscribers with
respect to the TCI Systems. TCI has not entered into and is not subject to any
so-called social contract or proposed resolution with the FCC with respect to
rates charged for cable television services in the TCI Systems that would be
applicable to such Systems following Closing and is not currently negotiating or
anticipating entering into or being subject to any new social contract with
respect to the TCI Systems; provided, that certain of the TCI Systems are
affected by FCC Order 97-324 (adopted 9/10/97) that is currently pending
approval before the FCC (the "Pending TCI Rate Order"). Except as set forth on
Schedule 6.8, TCI has not made any Cost of Service Election with respect to any
of the TCI Systems. Except as otherwise described on Schedule 6.8 and except
with respect to the Pending TCI Rate Order, as of the date of this Agreement,
(i) to the Knowledge of TCI, there are no outstanding or unresolved proceedings
or investigations (other than those affecting the cable industry generally)
dealing with or otherwise affecting the rates that any cable television system
included in the TCI Systems can charge (whether for programming, equipment,
installation, service or otherwise), (ii) no cable television system included in
the TCI Systems is subject to any currently effective order issued by a
Governmental Authority that reduced the rates that it may charge (whether for
programming, equipment, installation, service, or otherwise), (iii) no local
franchising authority has been certified by the FCC as a rate regulating
authority with respect to any of the TCI Systems (iv) there is no unresolved
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complaint pending with respect to the CPST tier of any TCI System and no rate
order with respect to the TCI Systems is being appealed.
6.9 Patents, Trademarks and Copyrights. TCI has deposited with the U.S.
Copyright Office all statements of account and other documents and instruments,
and has paid all royalties, supplemental royalties, fees and other sums to the
U.S. Copyright Office under the Copyright Act with respect to the business and
operations of the TCI Systems as are required to obtain, hold and maintain the
compulsory license for cable television systems prescribed in Section 111 of the
Copyright Act. To TCI's Knowledge, there is no inquiry, claim, action or demand
pending before the U.S. Copyright Office or from any other Person which
questions the copyright filings or payments made by TCI with respect to the TCI
Systems. TCI has delivered to Insight complete and correct copies of all current
reports and filings for the past three years, made or filed pursuant to
copyright rules and regulations with respect to TCI's Cable Business. TCI does
not possess any patent, patent right, trademark or copyright related to or
material to the operation of the TCI Systems and TCI is not a party to any
license or royalty agreement with respect to any such patent, patent right,
trademark or copyright, except for licenses respecting program material and
obligations under the Copyright Act applicable to cable television systems
generally. The TCI Systems and TCI's Cable Business have been operated in such a
manner so as not to violate or infringe upon the rights, or give rise to any
rightful claim of any Person for copyright, trademark, service ▇▇▇▇, patent or
license infringement or the like.
6.10 Financial Statements; Undisclosed Liabilities; Absence of Certain
Changes or Events. TCI has delivered to Insight complete and correct copies of
an unaudited balance sheet for each TCI System as of December 31, 1997 and an
unaudited statement of operations for the year ended December 31, 1997 for each
System, including all notes and Schedules thereto (all of such financial
statements and notes being hereinafter referred to as "TCI's Financial
Statements"). TCI's Financial Statements are in accordance with the books and
records of TCI, were prepared in accordance with GAAP, applied on a consistent
basis throughout the periods covered thereby, present fairly the financial
condition of TCI with respect to the TCI Systems at the dates and for the
periods indicated, subject, in the case of unaudited TCI Financial Statements,
only to standard year-end adjustments and the omission of footnotes. The
unaudited balance sheets of TCI as of December 31, 1997 are herein called the
"TCI Balance Sheets." At the date of the TCI Balance Sheets, TCI had no material
liabilities with respect to the Systems required by GAAP to be reflected or
reserved against therein that were not fully reflected or reserved against on
the TCI Balance Sheets, other than liabilities as set forth on Schedule 6.10.
Except as set forth on Schedule 6.10, since the date of the TCI Balance Sheets
through the date of this Agreement: (x) TCI has not incurred any obligation or
liability (contingent or otherwise), except normal trade or business obligations
incurred in the ordinary course of business, the performance of which will not,
to TCI's Knowledge, individually or in the aggregate, have a material adverse
effect on the financial condition of TCI or the results of operations of TCI or
TCI's Cable Business; (y) there has been no material adverse change in the TCI
Assets comprising any TCI System or in the business, condition, financial or
otherwise, or liabilities of TCI's Cable Business or any TCI System and, to
TCI's Knowledge, no fact or condition exists or is contemplated or threatened
which would result in such a change in the future; and (z) TCI's Cable Business
has
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been conducted only in the ordinary course of business consistent with past
practice. For the purpose of this Agreement, the impact of general economic
conditions (including changes in capital and financial markets), governmental
legislation and regulations and other events which affect the cable industry as
a whole in the State of Indiana or the United States, shall not be considered in
determining whether there has been a material adverse change in the business,
condition, financial or otherwise or liabilities of TCI's Cable Business or any
TCI System or the TCI Assets.
6.11 Litigation. Except as set forth in Schedule 6.11: (a) there is no
Litigation pending or, to TCI's Knowledge, threatened, and, to TCI's knowledge,
there is no investigation pending or threatened, by or before any Governmental
Authority or private arbitration tribunal against TCI which, if adversely
determined, would materially adversely affect the financial condition or
operations of TCI's Cable Business, TCI Systems, the TCI Assets or the ability
of TCI to perform its obligations under this Agreement, or which, if adversely
determined, would result in the modification, revocation, termination,
suspension or other limitation of any of the TCI System Franchises, TCI System
Licenses, TCI System Contracts or leases or other documents evidencing the TCI
Leased Property or the TCI Other Real Property Interests; and (b) there is not
in existence any Judgment requiring TCI to take any action of any kind with
respect to the TCI Assets or the operation of the TCI Systems, or to which TCI
(with respect to the TCI Systems), the TCI Systems or the TCI Assets are subject
or by which they are bound or affected.
6.12 Tax Returns; Other Reports. TCI has duly and timely filed in
correct form all federal, state, local and foreign Tax returns and other Tax
reports required to be filed by TCI, and has timely paid all Taxes which have
become due and payable, whether or not so shown on any such return or report,
the failure of which to be filed or paid could adversely affect or result in the
imposition of a Lien upon the TCI Assets or that could impose on Insight any
transferee liability for any taxes, penalties or interest due or to become due
from TCI, except such amounts as are being contested diligently and in good
faith and are not in the aggregate material. TCI has received no notice of, nor
does TCI have any Knowledge of, any deficiency, assessment or audit, or proposed
deficiency, assessment or audit from any taxing Governmental Authority which
could affect or result in the imposition of a Lien upon the TCI Assets.
6.13 Employment Matters.
(a) Schedule 6.13(a) contains a complete and correct list of
the names and positions of all employees engaged principally in TCI's Cable
Business as of the date set forth on Schedule 6.13(a). TCI has complied in all
material respects with all applicable Legal Requirements relating to the
employment of labor, including WARN, ERISA, continuation coverage requirements
with respect to group health plans and those relating to wages, hours,
collective bargaining, unemployment insurance, worker's compensation, equal
employment opportunity, age and disability discrimination, immigration control
and the payment and withholding of Taxes.
(b) Each employee benefit plan (as defined in Section 3(3) of
ERISA) or any multi-employer plan (as defined in Section 3(37) of ERISA) with
respect to which TCI or any of its
- 37 -
ERISA Affiliates has any liability or in which any employees or agents, or any
former employees or agents, of TCI or any of its ERISA Affiliates participate is
set forth in Schedule 6.13 (the "TCI Plans"). Neither TCI, any of its ERISA
Affiliates nor any TCI Plan is in material violation of any provision of the
Code or ERISA. No "reportable event" (as defined in Section 4043 of ERISA) has
occurred and is continuing with respect to any TCI Plan and no "prohibited
transaction" (as defined in Section 406 of ERISA) has occurred with respect to
any TCI Plan which reasonably could result in material liability to TCI or any
of its ERISA Affiliates. No material "accumulated funding deficiency" or
"withdrawal liability" (as defined in Section 302 of ERISA) exists with respect
to any of the TCI Plans. After the Closing, Insight will not be required, under
ERISA, the Code or any collective bargaining agreement, to establish, maintain
or continue any Plan currently maintained by TCI or any of its ERISA Affiliates.
(c) Except as set forth on Schedule 6.13, there are no
collective bargaining agreements applicable to any Person employed by TCI that
renders services in connection with the TCI Systems and TCI has no duty to
bargain with any labor organization with respect to any such Person. There are
not pending any unfair labor practice charges against TCI, any demand for
recognition or any other effort of or request or demand from, a labor
organization for representative status with respect to any Person employed by
TCI that renders services in connection with the TCI Systems. Except as
described on Schedule 6.13, TCI has no employment Contracts, either written or
oral, with any employee of the TCI Systems and none of the employment Contracts
listed on Schedule 6.13 requires TCI or will require Insight to employ any
Person after the Closing.
(d) TCI is not aware of the existence of any governmental
inspection, investigation, audit or examination of any TCI Plan or of any facts
which would lead it to believe that any such governmental inspection,
investigation, audit or examination is pending or threatened. There exists no
action, suit or claim (other than routine claims for benefits) with respect to
any TCI Plan pending or to the knowledge of TCI threatened against any of such
plans and TCI possesses no knowledge of any facts which could give rise to any
such action, suit or claim. Each TCI Plan that is intended to be tax-qualified
is the subject of a favorable determination letter or IRS opinion or
notification letter. At all times prior to the Closing, each TCI Plan, to the
extent such plan is intended to be tax-qualified, satisfies all minimum coverage
and minimum participation requirements, if any, imposed on such TCI Plan by the
applicable terms of the Code and ERISA.
6.14 TCI Systems Information. Schedule 6.14 sets forth a materially
true and accurate description of the following information relating to TCI's
Cable Business as of the most recent monthly report generated by TCI in the
ordinary course of business containing the information required to prepare such
Schedule 6.14 (which date is specified in Schedule 6.14) provided that such date
is no earlier than two months prior to the date of this Agreement:
(a) the approximate number of miles (both underground and
aerial) of plant included in the TCI Assets;
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(b) the number of Equivalent Basic Subscribers (including the
number that are residential and the number that are bulk-billed) served by the
TCI Systems for each TCI System service area (by franchise area or community);
(c) the approximate number of single family homes and
residential dwelling units passed by the TCI Systems;
(d) a description of basic and optional or tier services
available from the TCI Systems, the rates charged by TCI for each and the number
of EBSs receiving each optional or tier service;
(e) the stations and signals carried by the TCI Systems and
the channel position of each such signal and station and the basis for carriage
of all television broadcast signals; and
(f) the cities, towns, villages, townships, boroughs,
counties, or other communities served by the TCI Systems (with or without the
requirement of a franchise) that have been, or are required to be, registered
with the FCC pursuant to Section 76.12 of its rules, including each C.U.I.D.
number.
6.15 Accounts Receivable. TCI's accounts receivable for its Cable
Business are actual and bona fide receivables representing obligations for the
total dollar amount of such receivables, as shown on the books of TCI, that
resulted from the regular course of TCI's Cable Business. Such receivables are
subject to no offset or reduction of any nature, except for a reserve for
uncollectible amounts consistent with the reserve established by TCI in TCI's
Financial Statements and those credits or reductions to such accounts made in
the ordinary course of business.
6.16 Bonds; Letters of Credit. Except as set forth on Schedule 6.16,
there are no franchise, construction, fidelity, performance, or other bonds,
guaranties in lieu of bonds or letters of credit posted by TCI in connection
with its operation or ownership of any of the TCI Systems or TCI Assets.
6.17 Finders and Brokers. TCI has not employed any financial advisor,
broker or finder or incurred any liability for any financial advisory,
brokerage, finder's or similar fee or commission in connection with the
transactions contemplated by this Agreement for which Insight could be liable.
SECTION 7. ADDITIONAL COVENANTS
7.1 Access to Premises and Records. Between the date of this Agreement
and the Closing Date each of TCI and Insight will give to the other and its
representatives full access during normal business hours to all the premises and
books and records of its Cable Business and to all its Assets and Systems'
personnel and will furnish to the other and its representatives all such
documents, financial information and other information regarding its Cable
Business and its Assets
- 39 -
as the other from time to time reasonably may request; provided that no
investigation by TCI or Insight will affect or limit the scope of any of the
representations, warranties, covenants and indemnities of the other party in
this Agreement or in any Transaction Document or limit such party's liability
for breach of any of the foregoing.
7.2 Continuity and Maintenance of Operations; Certain Deliveries and
Notices. Between the date of this Agreement and the Closing, TCI with respect to
TCI's Cable Business, the TCI Systems and the TCI Assets and Insight with
respect to Insight's Cable Business, the Insight Systems and the Insight Assets:
(a) will conduct its Cable Business and operate its Systems
only in the usual, regular and ordinary course and consistent with past
practices, including continuing to make ordinary marketing, advertising and
promotional expenditures, and, to the extent consistent with such conduct and
operation, will use its commercially reasonable efforts to (i) preserve its
current business intact in all material respects, including preserving existing
relationships with franchising authorities, suppliers, customers and others
having business dealings with its Systems, and (ii) keep available the services
of its employees and agents providing services in connection with the Cable
Business;
(b) will maintain its Assets in good repair, order and
condition, ordinary wear and tear excepted; will maintain equipment and
inventory for its Systems at not less than normal historical levels consistent
with past practices; will maintain in full force and effect policies of
insurance with respect to its Cable Business consistent with past practices; and
will maintain its books, records and accounts with respect to its Assets and the
operation of its Systems in the usual, regular and ordinary manner on a basis
consistent with past practices;
(c) except with respect to Excluded Assets, will not (i)
modify, terminate, renew, suspend, abrogate or enter into any System Contract or
other instrument that would be included in such party's Assets, other than in
the ordinary course of business provided that the other party's consent, not to
be unreasonably withheld or delayed, will be required to modify, terminate,
renew, suspend, abrogate or enter into any retransmission consent or programming
agreement, any System Franchise, any lease or document evidencing Leased
Property or any other agreement that contemplates payments to or by the
transferring party in any 12-month period exceeding $25,000 individually or
$150,000 in the aggregate; (ii) take or omit to take any action that would
result in the condition set forth in Section 8.1(a) with respect to TCI or
Section 8.2(a) with respect to Insight not being satisfied at any time prior to
the Closing; (iii) engage in any marketing, subscriber installation,
disconnection or collection practices other than in the ordinary course of
business consistent with its past practices; (iv) make any Cost of Service
Election; (v) enter into any agreement with or commitment to any competitive
access providers with respect to any System; (vi) sell, transfer or assign any
portion of its Assets other than sales in the ordinary course of business and
assets sold or disposed of and replaced by other assets of comparable utility
and value or permit the creation of a Lien, other than a Permitted Lien, on any
Asset; (vii) engage in any hiring or employee compensation practices that are
inconsistent with past practices except for changes in such practices
implemented by such party and its Affiliates on a company-wide basis; or (viii)
take any actions that
- 40 -
would cause the transactions contemplated hereby to fail to qualify as like-kind
exchanges under Section 1031 of the Code;
(d) will promptly deliver to the other true and complete
copies of all quarterly financial statements and all monthly and quarterly
operating reports with respect to the operation of the Cable Business prepared
in the ordinary course of business by or for such party at any time from the
date of this Agreement until the Closing;
(e) will give or cause to be given to the other and its
counsel, accountants and other representatives, as soon as reasonably possible
but in any event prior to the date of submission to the appropriate Governmental
Authority, copies of all FCC Forms 1200, 1205, 1210, 1215, 1220, 1225, 1235 and
1240 or any other FCC forms required to be filed with any Governmental Authority
under the 1992 Cable Act with respect to rates and prepared with respect to any
of its Systems, such forms to be reasonably satisfactory in form and substance
to the other;
(f) will duly and timely file a valid notice of renewal under
Section 626 of the Cable Act with the appropriate Governmental Authority with
respect to any System Franchise that will expire within 36 months after any date
between the date of this Agreement and the Closing Date;
(g) will promptly notify the other of any fact, circumstance,
event or action by it or otherwise (i) which if known at the date of this
Agreement would have been required to be disclosed by it in or pursuant to this
Agreement or (ii) the existence, occurrence or taking of which would result in
the condition set forth in Section 8.1(a) with respect to TCI or Section 8.2(a)
with respect to Insight not being satisfied at any time prior to the Closing,
and, with respect to clause (ii), will use its commercially reasonable efforts
to remedy the same, subject to Section 12.16; and
(h) will consult the other prior to decreasing or increasing
the rate charged for any level of Basic Services, Expanded Basic Services or Pay
TV and prior to adding, deleting, retiering or repackaging any programming
services; provided that the other's consent is not required for any such action
and provided that TCI does not need to consult Insight with respect to its
scheduled June 1998 rate increases.
7.3 Employees.
(a) Each party may, but shall have no obligation to employ or
offer employment to any employee of the other party's Cable Business. Not more
than 60 days after the date of this Agreement, each party shall provide to the
other a list of all active employees of their respective Systems as of a recent
date, showing then-current positions and rates of compensation and indicating
which of such employees such party desires to retain as its employees (the
"Retained Employees"). Within 30 days after receipt of this list, the party
receiving such list will provide to the other in writing a list of employees
that such party or its Affiliates may desire to employ following the Closing
(subject to the satisfaction of such party's conditions for employment), which
list shall not
- 41 -
include any Retained Employees. At Closing, each party shall terminate the
employment of all its employees who were employed incidental to the conduct of
such party's Cable Business other than Retained Employees and any other
employees not hired by the other party that such party determines to retain.
(b) Each party will pay to all employees of its Cable Business
all compensation, including salaries, commissions, bonuses, deferred
compensation, severance, insurance, vacation (except for accrued vacation
included in the adjustments calculated pursuant to Section 3.2(c) to be carried
over pursuant to Section 7.3(g)), sick pay and other compensation or benefits to
which they are entitled for periods through and including the Closing Time in
accordance with the terms and conditions of any arrangement providing for such
compensation or benefits, including, without limitation, all amounts, if any,
payable on account of the termination of their employment. Each party agrees to
cooperate in all reasonable respects with the other party to allow such party to
evaluate and interview employees of the Cable Business in order to make hiring
decisions. Such cooperation shall include but not be limited to allowing the
other party to contact employees during normal business hours and making
personnel records available.
(c) Each party will be responsible for the maintenance and
distribution of benefits accrued under any employee benefit plan (as defined in
ERISA) maintained by such party pursuant to the provisions of any Legal
Requirement and of such plans. Neither party will assume any obligation or
liability for any such accrued benefits or any fiduciary or administrative
responsibility to account for or dispose of any such accrued benefits under any
employee benefit plans maintained by the other party.
(d) All claims and obligations under, pursuant to or in
connection with any welfare, medical, insurance, disability or other employee
benefit plans of either party or arising under any Legal Requirement affecting
employees of such party incurred through and including the Closing Date or
resulting from or arising from events or occurrences occurring or commencing
through and including the Closing Date will remain the responsibility of such
party, whether or not such employees are hired by the other party after the
Closing. Neither party will have and assume any obligation or liability under or
in connection with any such plan maintained by the other party.
(e) Each party will remain solely responsible for, and will
indemnify and hold harmless the other from and against all Losses arising from
or with respect to, all salaries and all severance, vacation (except for accrued
vacation included in the adjustments calculated pursuant to Section 3.2(c)),
medical, sick, holiday, continuation coverage and other compensation or benefits
to which its employees may be entitled, whether or not such employees may be
hired by the other party, as a result of their employment by it through and
including the Closing Time, the termination of their employment at the Closing
Time, the obligation, if any, to notify and/or bargain with any labor
organization, the consummation of the transactions contemplated hereby or
pursuant to any applicable Legal Requirement (including without limitation WARN)
or otherwise relating to their employment through and including the Closing
Time.
- 42 -
(f) Each party will retain full responsibility and liability
for offering and providing "continuation coverage" of any "qualified
beneficiary" who is covered by a "group health plan" sponsored or contributed to
by such party and who has experienced a "qualifying event" or is receiving
"continuation coverage" through and including the Closing Date. "Continuation
coverage," "qualified beneficiary," "group health plan," and "qualifying event"
shall have the meanings given such terms under Code Section 4980B.
(g) Notwithstanding anything to the contrary herein, each
party (a "Hiring Party") shall (i) credit each employee of the other party who
becomes an employee of such Hiring Party after the Closing Time (a "Hired
Employee") the lesser of the amount of vacation accrued by him or her as an
employee of the other party through and including the Closing Time or the amount
of accrued vacation permitted to be accrued by similarly situated employees of
the Hiring Party in accordance with the Hiring Party's standard practices; (ii)
permit each Hired Employee and their dependents to participate in the Hiring
Party's employee benefit plans to the same extent as similarly situated
employees of the Hiring Party and their dependents; (iii) give each Hired
Employee credit for his or her past service with the other party at the Closing
Time (including past service with any prior owner or operator of such party to
the extent such Hired Employee previously received credit for such service) for
purposes of eligibility and vesting under the Hiring Party's employee benefit
and other plans to the same extent as other similarly situated employees of the
Hiring Party; (iv) not subject any Hired Employee to any waiting periods or
limitations on benefits for pre-existing conditions under the Hiring Party's
employee benefit plans, including any group health and disability plans, except
to the extent such employees were subject to such limitations under the other
party's employee benefit plans and (v) give credit under the Hiring Party's
group health plans for any deductible previously met by a Hired Employee under
the other party's group health plan.
(h) If the Hiring Party discharges without cause within 90
days after the Closing any Hired Employee and such Hired Employee would have
been entitled to severance payments pursuant to the other party's severance
benefits plan if such Hired Employee had been discharged without cause at
Closing by the other party as of the Closing Time, then the Hiring Party shall
pay severance benefits to such Hired Employee in accordance with the other
party's severance benefit plan to the extent such plan would have paid severance
to such Hired Employee. Any employee that is hired by the Company at Closing
will not be deemed to have been discharged by Insight by virtue of such hiring
but the obligations of Insight as Hiring Party shall also apply to the Company.
(i) Nothing in this Section 7.3 or elsewhere in this Agreement
shall be deemed to make any employee of the parties a third party beneficiary of
this Agreement.
7.4 Leased Vehicles; Other Capital Leases. Each party will pay the
remaining balances on any leases for vehicles included in its Tangible Personal
Property and will deliver valid and good title to such vehicles free and clear
of all Liens (other than Permitted Liens) to the other party at the Closing.
- 43 -
7.5 Required Consents, Estoppel Certificates, Franchise Renewal.
(a) Each party will use its commercially reasonable efforts to
obtain in writing as promptly as possible and at its expense, all of its
Required Consents in form and substance reasonably satisfactory to the other
party, and will deliver to the other party copies of such Required Consents
promptly after they are obtained by such party; provided however that each party
will afford the other party the opportunity to review, approve and revise the
form of Required Consent prior to delivery to the party whose consent is sought.
Each party will cooperate with the other party in its efforts to obtain its
Required Consents, but neither party will be required to accept or agree or
accede to any condition to transfer of any Asset, or any modifications or
amendments to any of the System Franchises, System Licenses, System Contracts or
leases or documents evidencing Leased Property or Other Real Property Interests
of its Cable Business that, in either case, would make, or are reasonably likely
to make, the underlying instrument materially more onerous in any respect or
that would materially reduce, or are reasonably likely to materially reduce, the
benefits available under the instrument in respect of which the consent relates.
As soon as practicable after the date of this Agreement, but in any event no
later than 45 days after the date of this Agreement, the parties will cooperate
with each other to complete, execute and deliver, or cause to be completed,
executed and delivered to the appropriate Governmental Authority, a request for
such Governmental Authority's consent to transfer each System Franchise as to
which such consent is required.
(b) Each party will use its commercially reasonable efforts to
obtain a certificate executed by the lessor of each parcel of Leased Property
substantially in the form of Exhibit 7.5(b), the substance of which may be
included as part of the consent obtained pursuant to Section 7.5(a) (an
"Estoppel Certificate").
(c) Each party will use commercially reasonable efforts to
obtain and cooperate with the other party to obtain renewals or extensions of
any System Franchise for which a valid notice of renewal pursuant to the formal
renewal procedures established by Section 626 of the Cable Act has not been
timely delivered to the appropriate Governmental Authority for a period expiring
no earlier than three years after the date of this Agreement.
(d) Each party will use commercially reasonable efforts to
obtain and cooperate with the other party to obtain renewals or extensions for a
period expiring no earlier than two years after the date of this Agreement of
any System Franchise which is expired or has a term of less than one year
remaining as of the date of this Agreement.
(e) Each party will cooperate with the other party in its
efforts to obtain renewals or extensions of any System Franchises pursuant to
Section 7.5(c) or (d), but neither party will be required to accept or agree or
accede to any renewal or extended System Franchise that contains terms that
would make, or are reasonably likely to make, the System Franchise that is being
renewed or extended materially more onerous in any respect or that would
materially reduce, or are reasonably likely to materially reduce, the benefits
available under the System Franchise that is being renewed or extended.
- 44 -
(f) Notwithstanding Section 7.5(a), no party will have any
further obligation to obtain Required Consents: (i) with respect to license
agreements relating to pole attachments where the licensing party will not,
after the assigning party's exercise of commercially reasonable efforts, consent
to an assignment of such license agreement but requires that the proposed
assignee enter into a new agreement with such licensing authority, in which case
the proposed assignee shall use its commercially reasonable efforts to enter
into such agreement prior to the Closing or as soon as practicable thereafter
and the party to the license agreement will cooperate with and assist the other
party in obtaining such agreements; provided however that the proposed
assignee's commercially reasonable efforts shall not require it to take any
action of the type that such party is not required to take pursuant to this
Section 7.5; and (ii) for any business radio license which such party reasonably
expects can be obtained within 120 days after the Closing and so long as a
temporary authorization is available to the other party under FCC rules with
respect thereto.
7.6 Title Commitments and Surveys. Insight and TCI each will provide to
the other, within 60 days after the date of this Agreement, (a) current
commitments to issue title insurance policies on the 1992 ALTA owner's form (or
its local equivalent in any state in which ALTA policies are not available)
("Title Commitments") by an agent writing for Old Republic Insurance Company,
Chicago Title Insurance Company or another nationally-recognized title insurance
company (the "Title Company") and containing policy limits and other terms
reasonably acceptable to the other, and, legible photocopies of all recorded
items described as exceptions therein, committing to insure fee simple title in
the other party to each parcel of the Owned Property and easements that provide
access to such Owned Real Property included in its Assets, subject only to
Permitted Liens, and (b) surveys of each parcel of Owned Property in such form
as is necessary to obtain the title insurance to be issued pursuant to the Title
Commitments with the standard printed exceptions relating to survey matters
deleted (the "Surveys"), certified to the other party and to the Title Company
issuing a Title Commitment. The cost to obtain such Title Commitments and
Surveys and other documents required by the Title Company to issue such policies
and Surveys shall be split equally between Insight and TCI; provided however
that (x) each party shall pay for the cost to delete or insure over any Title
Defects relating to its Owned Property and (y) the requesting party will pay the
premiums and charges for any additional endorsements such party requests with
respect to any Title Policy other than the endorsements to delete the standard
survey exceptions from such Title Policy and to delete or insure over any Title
Defects. If Insight or TCI notifies the other within 30 days following its
receipt of both the Title Commitments and the Surveys of any Lien (other than a
Permitted Lien or a Lien set forth in Schedules 5.4 or 6.4, as applicable) or
other matter affecting title to Owned Property of the other which prevents
access to or which could prevent or impede in any way the use or operation of
any parcel of Owned Property for the purposes for which it is currently used or
operated by the other (each a "Title Defect"), the other will exercise
commercially reasonable efforts to (i) remove such Title Defect, or (ii) with
the consent of the objecting party, cause the Title Company to commit to insure
over each such Title Defect prior to the Closing. If such Title Defect cannot be
removed prior to Closing or the Title Company does not commit to insure over
such Title Defect prior to Closing and if the objecting party elects to waive
such Title Defect and proceed towards consummation of the transaction in
accordance with this Agreement in its reasonable discretion, the objecting party
and the party that owns such property shall enter into
- 45 -
a written agreement at Closing containing the commitment of the party that owns
such property to use commercially reasonable efforts to remedy the Title Defect
following Closing on terms satisfactory to the objecting party, in its
reasonable discretion.
7.7 HSR Notification. As soon as practicable but in any event no later
than 60 days after the date of this Agreement, Insight and TCI will each
complete and file, or cause to be completed and filed, any notification and
report required to be filed under the HSR Act and each such filing shall request
early termination of the waiting period imposed by the HSR Act. The parties
shall use their commercially reasonable efforts to respond as promptly as
reasonably practicable to any inquiries received from the Federal Trade
Commission (the "FTC") and the Antitrust Division of the Department of Justice
(the "Antitrust Division") for additional information or documentation and to
respond as promptly as reasonably practicable to all inquiries and requests
received from any other Governmental Authority in connection with antitrust
matters. The parties shall use their respective commercially reasonable efforts
to overcome any objections which may be raised by the FTC, the Antitrust
Division or any other Governmental Authority having jurisdiction over antitrust
matters. Notwithstanding the foregoing, no party shall be required to make any
significant change in the operations or activities of the business (or any
material assets employed therein) of such party or any of its Affiliates, if a
party determines in good faith that such change would be materially adverse to
the operations or activities of the business (or any material assets employed
therein) of such party or any of its Affiliates having significant assets, net
worth or revenue. Each of the parties will coordinate with the other party with
respect to its filings and will cooperate to prevent inconsistencies between
their respective filings and will furnish to each other such necessary
information and reasonable assistance as the other may reasonably request in
connection with its preparation of necessary filings or submissions under the
HSR Act. Notwithstanding anything to the contrary in this Agreement if either
party determines in its reasonable business judgment that a request for
additional data and information in connection with the HSR Act is unduly
burdensome, either party may terminate this Agreement by notifying the other
party within 30 days following the unduly burdensome request.
7.8 Transfer Taxes. All sales, use or excise Taxes arising from or
payable by reason of the transfer of any of the TCI Assets and the Insight
Assets will be shared equally by TCI and Insight. All transfer and similar Taxes
or assessments, including transfer and recording fees and similar assessments
for or under System Franchises, System Licenses and System Contracts, arising
from or payable by reason of the conveyance of the TCI Assets and the Insight
Assets will be paid by TCI with respect to the TCI Assets and by Insight with
respect to the Insight Assets.
7.9 Distant Broadcast Signals. Unless otherwise restricted or
prohibited by any Governmental Authority or applicable Legal Requirement, if
requested by the party to which a System will be transferred under this
Agreement, the transferor of such System will delete prior to the Closing Date
any distant broadcast signals which the transferee determines will result in
unacceptable liability on the part of the transferee for copyright payments with
respect to continued carriage of such signals after the Closing.
- 46 -
7.10 Programming. Not later than 20 Business Days prior to the Closing,
Insight will deliver a letter in the form attached as Exhibit 7.10 to all
programmers from which Insight purchases programming and will execute and
deliver to TCI such other documents as may be reasonably requested by TCI to
comply with the requirements of its programming Contracts and channel line-up
requirements with respect to acquisitions and divestitures of cable television
systems. TCI will execute and deliver such documents as may be reasonably
requested by Insight to comply with the requirements of its programming
Contracts and channel line-up requirements with respect to acquisitions and
divestitures of cable television systems. Neither party will be required to make
any payments to the other's programmers in the fulfillment of its obligations
under this Section 7.10.
7.11 Schedules.
(a) TCI and Insight acknowledge that this Agreement was signed
and delivered without Schedules attached hereto and that they have not reached
final agreement on, among other things, which of their agreements will be
Excluded Assets. TCI and Insight agree to negotiate in good faith to reach
agreement on the Schedules to this Agreement on or before June 1, 1998 and in
connection therewith to supply to the other party such information and copies of
agreements as the other party may reasonably request in connection with its
review of such Schedules. Neither party may refuse to accept the other party's
Schedules based upon any exception to the other party's representations and
warranties that was previously disclosed to such party or based upon any
exception to the other party's representations and warranties that was not
previously disclosed to such party but that would not have a material adverse
effect on the Assets, Systems or Cable Business to be transferred to such party.
If TCI and Insight do not reach agreement on the Schedules to this Agreement on
or before June 1, 1998, either party may terminate this Agreement upon written
notice to the other party given at any time after June 1, 1998 but prior to such
agreement being reached. Once TCI and Insight reach agreement on the Schedules
to this Agreement, the Schedules will be deemed to have been part of this
Agreement effective as of the date hereof.
(b) Not less than ten Business Days prior to Closing, each
party will deliver to the other revised copies of each of its Schedules included
in this Agreement, except for Schedules 5.14 and 6.14 or Schedules 5.13(a) and
6.13(a), in each case updated and marked to show any changes occurring between
the date of this Agreement and the date of delivery (it being agreed that a
complete set of Schedules shall be delivered pursuant to this Section 7.11, not
just individual schedules that have been changed); provided however that for
purposes of such party's representations and warranties and covenants in this
Agreement, all references to the Schedules will mean the version of the
Schedules attached to this Agreement on the date of signing, and provided
further that if the effect of any such updates to Schedules is to disclose any
one or more additional properties, privileges, rights, interests or claims
acquired or arising after the date of this Agreement as Assets, the party to
whom such Assets would otherwise be transferred at the Closing will have the
right (to be exercised by written notice to the other party at or before
Closing) to cause any one or more of such items to be designated as and deemed
to constitute Excluded Assets for all purposes under this Agreement unless such
items are Contracts that were not required to be scheduled or that were entered
into after the date of this Agreement in accordance with the terms of this
Agreement.
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Without changing the result set forth in the preceding sentence that a party's
updated Schedules do not serve to update such party's representations and
warranties, the updated Schedules delivered pursuant to this Section shall be
accompanied by an officer's certificate of the party delivering such Schedules,
certifying that the information set forth in such Schedules is true and accurate
in all material respects as of the date of delivery thereof and that all
information required to be given in the Schedules "as of the date of this
Agreement" has been updated to the date of delivery of the updated Schedules or
other date permitted to be specified in such Schedules.
7.12 Use of Names and Logos. For a period of 90 days after the Closing,
Insight and TCI will be entitled to use the trademarks, trade names, service
marks, service names, logos and similar proprietary rights of the other to the
extent incorporated in or on the Assets transferred to it at the Closing,
provided that each will exercise reasonable efforts to remove all such names,
marks, logos and similar proprietary rights of the other from the Assets by such
earlier date as reasonably practicable following the Closing. Notwithstanding
the foregoing, the transferee party will not be required to remove or
discontinue using any such name or ▇▇▇▇ that is affixed to converters or other
items in or to be used in customer homes or properties, or as are used in
similar fashion making such removal or discontinuation impracticable for the
transferee party.
7.13 Transitional Billing Services. Insight and TCI will each provide
to the other access to and the right to use its billing system computers,
software and related fixed assets in connection with the Systems acquired by the
other party for a period of up to 180 days following the Closing to allow for
conversion of existing billing arrangements ("Transitional Billing Services").
All Transitional Billing Services that are requested by a party will be provided
on terms and conditions reasonably satisfactory to each party; provided however
that the amount to be paid by the party receiving Transitional Billing Services
will not exceed the cost to the other party of providing such Transitional
Billing Services. Each party will notify the other party at least 45 days prior
to the Closing of the cost to such party of providing such Transitional Billing
Services.
7.14 Confidentiality and Publicity.
(a) Each party will use commercially reasonable efforts to
assure that any non-public information that such party may obtain from the other
in connection with this Agreement with respect to the other's Cable Business and
Systems (it being understood and agreed that all proprietary information of the
transferring party that is included among the Assets of such transferring party
shall become the proprietary information of the transferee party at Closing)
will be kept confidential and, such party will not disclose, and will cause its
employees, consultants, advisors and agents not to disclose, any such
information to any other Person (other than its directors, officers and
employees and representatives of its advisers and lenders whose knowledge
thereof is necessary in order to facilitate the consummation of the transactions
contemplated hereby) or use, and will cause its employees, consultants, advisors
and agents not to use, such information to the detriment of the other; provided
that (i) such party may use and disclose any such information once it has been
publicly disclosed (other than by such party in breach of its obligations under
this Section) or which rightfully has come into the possession of such party
(other than from the other
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party) and (ii) to the extent that such party may, in the reasonable opinion of
its counsel, be compelled by Legal Requirements to disclose any of such
information, such party may disclose such information if it will have used all
reasonable efforts, and will have afforded the other the opportunity, to obtain
an appropriate protective order or other satisfactory assurance of confidential
treatment, for the information compelled to be disclosed. The obligation of
either party to hold information in confidence pursuant to this Section will be
satisfied if such party exercises the same care with respect to such information
as it would exercise to preserve the confidentiality of its own similar
information. In the event of termination of this Agreement, each party will use
all reasonable efforts to cause to be delivered to the other, and retain no
copies of, any documents, work papers and other materials obtained by such party
or on its behalf from the other, whether so obtained before or after the
execution hereof.
(b) Neither party will issue any press release or make any
other public announcement or any oral or written statement to its or the other
party's employees concerning this Agreement and the transactions contemplated
hereby, except as required by applicable Legal Requirements, without the prior
written consent and approval of the other, which consent and approval may not be
unreasonably withheld.
7.15 Bulk Transfers. Insight and TCI each waives compliance by the
other with Legal Requirements relating to bulk transfers applicable to the
transactions contemplated hereby.
7.16 Allocation of Value to Exchanged Assets. Following Closing, the
parties agree to jointly hire an appraiser (the "Appraiser") to prepare, not
later than 60 days after the Closing, a written report regarding the value to be
allocated to the tangible personal property included in the Assets pursuant to
Internal Revenue Service regulations relating to like-kind exchanges of assets
under Section 1031 of the Code. The fees of the Appraiser will be split equally
between TCI and Insight. The parties agree that for purposes of Sections 1031
and 1060 of the Code and the regulations thereunder, each will report the
transactions contemplated by this Agreement in accordance with the values
determined by the Appraiser. Liabilities assumed or taken subject to by each
party are being exchanged each for the other to the maximum extent permitted
under Section 1031 of the Code and regulations thereunder. Each party promptly
will give the other notice of any disallowance or challenge of asset values by
the Internal Revenue Service or any state or local tax authority.
7.17 Lien Searches. Within 45 days after the execution of this
Agreement, each party will obtain at its expense and deliver to the other party,
the results of a lien search conducted by a professional search company of
records in the offices of the secretaries of state in each state and county
clerks in each county where there exists any of its Owned Property or Tangible
Personal Property, and in the state and county where such party's principal
offices are located, including copies of all financing statements or similar
notices or filings (and any continuation statements) discovered by such search
company. Each party will be required to update its lien search and deliver the
results thereof to the other party at least 10 Business Days prior to the date
scheduled for Closing.
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7.18 Further Assurances. At, and after the Closing, each of Insight and
TCI at the request of the other, will promptly execute and deliver, or cause to
be executed and delivered, to the other all such documents and instruments, in
addition to those otherwise required by this Agreement, in form and substance
reasonably satisfactory to the other as the other may reasonably request in
order to carry out or evidence the terms of this Agreement or to collect on
behalf of the transferee party any accounts receivable or other claims included
in the Insight Assets or the TCI Assets. Without limiting the generality of the
foregoing, Insight and TCI will take, or cause to be taken, all actions
consistent with the terms of this Agreement, including execution and delivery of
any documents or instruments, as the other may reasonably request to effect the
qualification of the transactions contemplated hereby as a like-kind exchange
under Section 1031 of the Code.
7.19 Consents. If and to the extent Insight or TCI shall have waived
satisfaction of the condition to Closing set forth in Section 8.1(e) or Section
8.2(e), respectively, subsequent to the Closing, subject to Section 7.24, each
of TCI with respect to the TCI Systems and the TCI Assets and Insight with
respect to the Insight Systems and the Insight Assets will continue to use
commercially reasonable efforts to obtain in writing as promptly as possible any
Required Consent which was not obtained on or before the Closing and will
deliver copies of the same, reasonably satisfactory in form and substance, to
the other. The obligations set forth in this Section will survive the Closing
and will not be merged in the consummation of the transactions contemplated
hereby.
7.20 Cooperation as to Rates and Fees.
(a) Each party shall diligently pursue any current rate
proceedings and shall make available to the other party upon request copies of
any documents, correspondence or notices sent by or received by such party in
connection with the current rate proceedings or any rate regulatory matter with
respect to its Systems instituted after the date of this Agreement.
(b) Prior to Closing, without the prior consent of the other
party, neither party shall settle any rate proceeding with respect to its
Systems if such settlement would (i) impose upon the other party any liability,
or (ii) adversely affect the rates to be charged by the other party during the
post-Closing time period unless such party compensates the other party therefor
in the manner agreed by the parties, or if the parties do not agree, as
determined by an independent auditor in accordance with the procedures
established in Section 3.3(b), it being agreed, without in any way affecting
TCI's indemnification obligations, that Insight's consent is not required to
settle the Pending TCI Rate Order in accordance with its current terms. TCI will
notify Insight of any material changes to the Pending TCI Rate Order after the
date of this Agreement.
(c) After Closing and except with respect to the Pending TCI
Rate Order, notwithstanding the terms of Section 11.4 hereof, the transferee of
a System shall have the right at its own expense to assume control of the
defense of any rate proceeding with respect to such System that remains pending
as of Closing or that arises after Closing but relates to the pre-Closing
operation of a System. The transferee of a System shall notify the other party
regarding the commencement of any such rate proceeding relating to the
pre-Closing operation of such System.
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In any such rate proceeding involving a System, the transferor of such System
shall cooperate in such proceeding and promptly deliver to the other party all
information reasonably requested by the other party as necessary or helpful in
such proceeding.
(i) If the transferee of a System elects to assume
control of the defense of any such rate proceeding, then (1) the other party
shall have the right to participate, at its expense, in the defense in such rate
proceeding, and (2) the transferee shall have the right to settle any rate
proceeding relating to the pre-Closing operation of a System unless under such
settlement the other party would be required to bear liability with respect to
the pre-Closing time period, in which event such settlement shall require the
other party's prior written consent, which consent shall not be unreasonably
withheld.
(ii) If the transferee of a System does not elect to
assume control of the defense of any such rate proceeding, then (1) the
transferee shall have the right to participate, at its expense, in the defense
in such rate proceeding, and (2) without the prior consent of the transferee,
the other party shall not settle such rate proceeding if such settlement would
require the transferee to bear any liability or would adversely affect the rates
to be charged by the transferee unless the other party compensates the
transferee therefor in the manner agreed by the parties, or if the parties do
not so agree, as determined by an independent auditor in accordance with the
procedures established in Section 3.3(b).
(d) If TCI is required following Closing pursuant to any Legal
Requirement, settlement or otherwise to reimburse to any subscribers of the TCI
Systems any subscriber payments previously made by them, including fees for
cable television service, late fees and similar payments, Insight agrees that it
will make such reimbursement through Insight's billing system on terms specified
by TCI and TCI will pay Insight for all such payments made by Insight following
Closing and for Insight's reasonable out-of-pocket expenses incurred in
connection therewith. Without limiting the foregoing, Insight will provide TCI
with all information in Insight's possession that is reasonably required by TCI
in connection with such reimbursement.
(e) If Insight is required following Closing pursuant to any
Legal Requirement, settlement or otherwise to reimburse to any subscribers of
the Insight Systems any subscriber payments previously made by them, including
fees for cable television service, late fees and similar payments, TCI agrees
that it will make such reimbursement through TCI's billing system on terms
specified by Insight and Insight will pay TCI for all such payments made by TCI
following Closing and for TCI's reasonable out-of-pocket expenses incurred in
connection therewith. Without limiting the foregoing, TCI will provide Insight
with all information in TCI's possession that is reasonably required by Insight
in connection with such reimbursement.
7.21 Satisfaction of Conditions. Each party will use its commercially
reasonable efforts to satisfy, or to cause to be satisfied, the conditions to
the obligations of the other party to consummate the transactions contemplated
by this Agreement, as set forth in Section 8, with "commercially reasonable
efforts" being determined with respect to any particular matter as set forth
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elsewhere in this Agreement. Without limiting the foregoing, each party agrees
to cooperate with the other in its efforts to obtain any required retransmission
consents prior to Closing.
7.22 Offers. Neither party will offer its Assets or Cable Business for
sale, entertain offers for such Assets or Cable Business or otherwise negotiate
for the sale of such Assets or Cable Business or make information about such
Assets or Cable Business available to any third party in connection with the
possible sale of such Assets or Cable Business prior to the Closing Date or the
date this Agreement is terminated in accordance with its terms.
7.23 Environmental Reports. Each party may obtain at its expense, such
environmental assessments and reports with respect to the real property that it
is acquiring as it may determine. Without limiting the generality of the
foregoing, if requested by either party, the other party shall give such
requesting party and all environmental engineers and consultants acting on its
behalf such access during normal business hours to the sites and facilities
relating to the other party's Systems as is reasonably required to permit such
engineers and consultants to conduct the physical on-site inspections and
prepare the environmental surveys and assessments with respect to such sites and
facilities as the requesting party shall reasonably request. If the results of a
party's environmental investigation reveal a matter that would be a breach of
the other party's representations given with respect to environmental matters,
without taking into account the Knowledge limitations in such representations,
such party shall have the right to terminate this Agreement, by written notice
given to the other party not later than 120 days after the date of this
Agreement unless the other party agrees to, and by Closing does, make
satisfactory arrangements, as reasonably determined by the party that
commissioned the investigation, to either fix the problem or indemnify the party
that commissioned the environmental investigation
7.24 Franchise Consents. Notwithstanding anything to the contrary in
this Section 7.24, the 95% tests provided for herein shall be made separately
with respect to each of the exchange transactions contemplated by this Agreement
and the other provisions of this Section 7.24 shall be applied separately with
respect to each exchange transaction. If by the date that is 210 days after the
date of this Agreement (i) the aggregate number of TCI EBSs located in areas
that are served without a franchise or that are served pursuant to TCI System
Franchises that either do not require consent or as to which Required Consents
have been obtained is at least 95% of the number of EBSs for all TCI Systems (it
being agreed that 95% for this purpose is 43,845 EBSs as to the Midwest/Insight
exchange transaction and 16,186 EBSs as to the Indiana/Insight exchange
transaction); (ii) the aggregate number of Insight EBSs located in areas that
are served without a franchise or that are served pursuant to Insight System
Franchises that either do not require consent or as to which Required Consents
have been obtained is at least 95% of the number of EBSs for all Insight Systems
(it being agreed that 95% for this purpose is 39,093 EBSs as to the
Midwest/Insight exchange transaction and 14,017 EBSs as to the Indiana/Insight
exchange transaction); (iii) all conditions precedent to the obligations of the
parties have been satisfied or waived by the applicable parties (other than any
condition that all Required Consents for System Franchises have been obtained
and any conditions precedent that are to be satisfied at Closing by delivery of
documents), and (iv) the System Franchises for which consents have not then been
obtained do not, and applicable Legal
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Requirements do not, in the reasonable judgment of the party transferring such
System Franchises, prohibit the actions contemplated by this Section 7.24, then
the following shall occur:
(a) With respect to each TCI System Franchise for which a TCI
Required Consent has not been obtained as of the Closing Date (including any TCI
Assets that are located in the franchise area for such franchise or relate
exclusively to such franchise, a "TCI Retained Franchise"), the parties will
negotiate in good faith to reach agreement on an Insight System Franchise
(including any Insight Assets that are located in the franchise area for such
franchise or relate exclusively to such franchise, an "Insight Matching
Franchise") that is to the greatest extent possible, like kind to such TCI
Retained Franchise for purposes of Section 1031 of the Code. An Insight Matching
Franchise may also be an Insight Retained Franchise. For purposes of this
Section 7.24 a "Retained Franchise" means either a TCI Retained Franchise or an
Insight Retained Franchise or both, as the context requires, and a "Matching
Franchise" means either a TCI Matching Franchise or an Insight Matching
Franchise or both, as the context requires.
(b) With respect to each Insight System Franchise for which an
Insight Required Consent has not been obtained as of the Closing Date (including
any Insight Assets that are located in the franchise area for such franchise or
relate exclusively to such franchise, an "Insight Retained Franchise"), the
parties will negotiate in good faith to reach agreement on a TCI System
Franchise (including any TCI Assets that are located in the franchise area for
such franchise or relate exclusively to such franchise, a "TCI Matching
Franchise") that is to the greatest extent possible, like kind to such Insight
Retained Franchise for purposes of Section 1031 of the Code. A TCI Matching
Franchise may also be a TCI Retained Franchise.
(c) The parties shall negotiate in good faith to reach
agreement on one or more management agreements pursuant to which the intended
transferee of each Retained Franchise will manage such Retained Franchise for a
management fee equal to 3% of gross revenues and the intended transferee of each
Matching Franchise will manage such Matching Franchise in exchange for a
management fee equal to 3% of gross revenues, which management agreements shall
also contain any required signal sharing arrangements that the parties, each
acting in good faith, may determine to be necessary (the "Management
Agreements").
(d) At the Closing, Insight and TCI shall transfer, convey and
assign (the "Primary Transfer") all of the TCI System Assets other than any TCI
Retained Franchises or TCI Matching Franchises and all of the Insight System
Assets other than any Insight Retained Franchises or Insight Matching
Franchises.
(e) Following the Closing of the Primary Transfer, the parties
will continue to use commercially reasonable efforts to obtain Required Consents
for all TCI Retained Franchises and Insight Retained Franchises. Within ten
Business Days of obtaining a Required Consent for a Retained Franchise, the
parties will assign and transfer, each to the other, such Retained Franchise for
the Matching Franchise (a "Subsequent Transfer"), free and clear of all Liens
other than Permitted Liens. If the Matching Franchise for a Retained Franchise
was also a Retained Franchise,
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the transfer of such Retained Franchise shall be delayed until the earlier of
two years from the Closing Date or five Business Days after the date on which
consent to transfer such Matching Franchise is obtained.
(f) All references in this Agreement to the Closing and the
Closing Date will mean the Closing and Closing Date of the Primary Transfer
except as specifically provided otherwise in this Section 7.24(f). Without
limiting the foregoing, all representations and warranties (except as to those
Required Consents that have not been obtained) made in connection with the
Retained Franchises and the Matching Franchises will be made as of the Closing
Date rather than the Subsequent Transfer date and the covenants in Section 7
will not apply to the Retained Franchises or the Matching Franchises following
the Closing Date; provided, that the parties will negotiate in good faith to
include appropriate covenants in the Management Agreement that will apply to the
Retained Franchises and the Matching Franchises following Closing. The closing
conditions in Section 8 will not apply to any Retained Franchise or Matching
Franchise transfer; provided, that the parties will negotiate in good faith to
include appropriate conditions to the later transfer of the Retained Franchises
and the Matching Franchises in the Management Agreements, including appropriate
provisions reflecting the fact that the risk of loss with respect to Retained
Franchises and Matching Franchises remains with the transferor thereof until
such assets are actually transferred to the intended transferee. Notwithstanding
the foregoing, the adjustments provided for in Section 3 will be made as of the
Subsequent Closing Date for both the Retained Franchises and the Matching
Franchises.
(g) If (i) the Required Consents have not been obtained for
any Retained Franchise (including a Matching Franchise that is a Retained
Franchise) within two years following the Closing Date or (ii) a Retained
Franchise (including a Matching Franchise that is a Retained Franchise) is
revoked as a result of the transactions described in this Section 7.24 or (iii)
a court orders the termination of the Management Agreement with respect to a
Retained Franchise (including a Matching Franchise that is a Retained Franchise)
within two years following the Closing Date, the party that owns the Matching
Franchise (including a Matching Franchise that is a Retained Franchise for which
consent to transfer has then been obtained) for each such Retained Franchise
(including a Matching Franchise that is a Retained Franchise) will transfer such
Matching Franchise (including a Matching Franchise that is a Retained Franchise
for which consent to transfer has then been obtained) to the other party for an
amount of cash equal to the fair market value of such Matching Franchise as
mutually agreed to by the parties each acting reasonably and in good faith and
will have no further obligation to purchase the Retained Franchise (including a
Matching Franchise that is a Retained Franchise) from the other party. The
parties shall negotiate in good faith to include provisions in the Management
Agreements that deal with the obligations of TCI and Insight to defend any
challenge raised with respect to a Retained Franchise and the Management
Agreements shall provide that the cost of any such challenge will be split
equally by TCI and Insight.
(h) If the provisions of this Section 7.24 become operative,
the parties agree to use commercially reasonable efforts and act in good faith
in taking such actions and negotiating such additional provisions or other
agreements, including amendments to this Agreement, as may be
- 54 -
necessary or appropriate to carry out the intent of this Section 7.24, including
without limitation, keeping franchise transfers effective.
7.25 Qualification as Deferred Like-Kind Exchange.
(a) Notwithstanding anything in this Agreement to the
contrary, (i) prior to the end of the Insight Exchange Period (as defined
below), Insight shall have no rights to receive, pledge, borrow, or otherwise
obtain the benefits of the sale proceeds for an Insight Matching System (which
sale shall not occur prior to the end of the Insight Exchange Period); (ii)
prior to the date on which the Subsequent Transfer of a TCI Retained Franchise
occurs pursuant to Section 7.24(g) (which may occur prior to the end of the
Insight Exchange Period). Insight shall have no rights to receive, pledge,
borrow, or otherwise obtain the benefits of such TCI Retained Franchise; (iii)
prior to the end of the TCI Exchange Period (as defined below), TCI shall have
no rights to receive, pledge, borrow, or otherwise obtain the benefits of the
sale proceeds for a TCI Matching System (which sale shall not occur prior to the
end of the TCI Exchange Period); and (iv) prior to the date on which the
Subsequent Transfer occurs pursuant to Section 7.24(g) (which may occur prior to
the end of the TCI Exchange Period), TCI shall have no rights to receive,
pledge, borrow, or otherwise obtain the benefits of such Insight Retained
Franchise. This Section 7.25(a) is intended to meet the requirements of Treasury
Regulation Section 1.1031(k)-1 and shall be interpreted consistently with
therewith.
(b) To ensure that Insight will be able to satisfy the
requirements of Treasury Regulation Section 1.1031(k)-1, within 40 days
following the date on which the Primary Transfer occurs, TCI will furnish to
Insight a detailed description of each of the assets that are part of the TCI
Retained Franchises and the TCI Matching Franchises, which description shall
satisfy, to the greatest extent possible, the requirements of Treasury
Regulation 1.1031(k)-1(c)(3). Thereafter, within 45 days following the date on
which the Primary Transfer occurs, Insight shall deliver to TCI a written notice
signed by Insight setting forth such detailed description and identifying such
assets as replacement property for the Insight Assets.
(c) To ensure that TCI will be able to satisfy the
requirements of Treasury Regulation Section 1.1031(k)-1, within 40 days
following the date on which the Primary Transfer occurs, Insight will furnish to
TCI a detailed description of each of the assets that are part of the Insight
Retained Franchises and the Insight Matching Franchises, which description shall
satisfy, to the greatest extent possible, the requirements of Treasury
Regulation Section 1.1031(k)-1. Thereafter, within 45 days following the date on
which the Primary Transfer occurs, TCI shall deliver to Insight a written notice
signed by TCI setting forth such detailed description and identifying such
assets as replacement property for the TCI Assets.
(d) The "Insight Exchange Period" means the period beginning
on the date on which the Primary Transfer occurs and ending at midnight on the
earlier of (x) 180 days after the date on which the Primary Transfer occurs, or
(y) the due date (including extensions) of Insight's federal income tax return
for the taxable year of Insight that includes the Primary Transfer. The
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"TCI Exchange Period" means the period beginning on the date on which the
Primary Transfer occurs and ending at midnight on the earlier of (x) 180 days
after the date on which the Primary Transfer occurs, or (y) the due date
(including extensions) of TCI's federal income tax return for the taxable year
of TCI that includes the Primary Transfer.
7.26 Ad Sales. Midwest recently sold its cable television system
serving ▇▇▇▇▇▇▇▇ County, ▇▇▇▇▇▇ Springs, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ County, ▇▇▇▇▇▇▇
County, Providence, St. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ County, Kentucky to InterMedia
Partners of Kentucky, L.P. ("InterMedia"). In connection with such sale, Midwest
or its Affiliates agreed to continue to provide advertising sales representation
services to such system and to other systems in Kentucky owned by InterMedia and
its affiliates. Insight agrees to negotiate in good faith with Midwest to enter
into an agreement whereby Midwest or its Affiliates would subcontract the
advertising sales representation services for the areas identified in this
Section 7.26 to Insight or otherwise arrange for such services to be provided by
Insight on Midwest or its Affiliate's behalf from the Evansville ad sales
office.
SECTION 8. CONDITIONS PRECEDENT
8.1 Conditions to Insight's Obligations. Subject to Section 7.24, the
obligations of Insight to consummate the transactions contemplated by this
Agreement are subject to the satisfaction at or before the Closing of the
following conditions, any of which may be waived by Insight.
(a) Accuracy of Representations and Warranties. The
representations and warranties of TCI in this Agreement and in any Transaction
Document, if specifically qualified by materiality, are true in all respects
and, if not so qualified, are true in all material respects, in each case at and
as of the Closing with the same effect as if made at and as of the Closing.
(b) Performance of Agreements. TCI has performed in all
material respects all obligations and agreements and complied in all material
respects with all covenants in this Agreement and in any Transaction Document to
be performed and complied with by it at or before the Closing.
(c) Deliveries. TCI has delivered the items and documents
required to be delivered by it pursuant to this Agreement, including those
required under Section 9.2.
(d) Legal Proceedings. No action, suit or proceeding is
pending or threatened by or before any Governmental Authority and no Legal
Requirement has been enacted, promulgated or issued or become or deemed
applicable to any of the transactions contemplated by this Agreement by any
Governmental Authority, which would (i) prohibit Insight's ownership or
operation of all or a material portion of any TCI System, TCI's Cable Business
or the TCI Assets, (ii) compel Insight to dispose of or hold separately all or a
material portion of any TCI System, TCI's Cable Business or the TCI Assets as a
result of any of the transactions contemplated by this Agreement, (iii) if
determined adversely to Insight's interest, materially impair the ability of
Insight to realize the benefits of the transactions contemplated by this
Agreement or have a material adverse effect on the
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right of Insight to exercise full rights of ownership of the TCI Systems or (iv)
prevent or make illegal the consummation of any transactions contemplated by
this Agreement.
(e) Consents. Subject to Section 7.24, Insight has received
evidence, in form and substance reasonably satisfactory to it, that the
following TCI Required Consents have been obtained without the imposition of any
condition or any modification that in either case makes, or is reasonably likely
to make, the underlying instrument materially more onerous in any respect or
materially reduces in any respect, or is reasonably likely to materially reduce
in any respect, the benefits available under the instrument in respect of which
the consent relates: TCI Required Consents for the TCI System Franchises, the
TCI System Licenses, and any TCI Leased Property or TCI Other Real Property
Interest on which a headend, tower or other reception site is located. In
addition, subject to Section 7.24, the Insight Required Consents for the Insight
System Franchises and Insight System Licenses shall have been obtained.
(f) No Material Adverse Change. There has not been any
material adverse change in the TCI Assets or the financial condition or
operations of TCI's Cable Business or the TCI Systems since the date of this
Agreement. In making the determination required by the preceding sentence, the
last sentence of Section 6.10 shall be applicable.
(g) Subscribers. The TCI Systems are serving at least 56,000
Equivalent Basic Subscribers as of the Closing Date.
(h) HSR Act. All filings required under the HSR Act have been
made and the applicable waiting period has expired or been earlier terminated.
(i) Franchise Renewals. Any TCI System Franchise for which a
valid notice of renewal pursuant to the formal renewal procedures established by
Section 626 of the Cable Act has not been timely delivered to the appropriate
Governmental Authority has been renewed or extended for a period expiring no
earlier than three years after the Closing Date, such renewal or extension being
on terms that would not make, or are not reasonably likely to make, the System
Franchise that is being renewed or extended materially more onerous in any
respect and that would not materially reduce, or are not reasonably likely to
materially reduce, the benefits available under the System Franchise that is
being renewed or extended.
(j) Contribution. All of the conditions to Insight's
obligation to consummate the Contribution shall have been satisfied or waived
(other than those based on acts to be performed at such closing) by Insight in
accordance with the terms of the Contribution Agreement (taking into account the
provisions of Section 7.24 thereof as they modify the condition in Section
8.1(e) thereof) and TCI shall stand ready, willing and able to consummate the
Contribution in accordance with the terms and conditions set forth in the
Contribution Agreement.
(k) Retransmission Consents. With respect to any
retransmission consent agreements for broadcast signals carried on the TCI
Systems on the date of this Agreement and on
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the date of the Closing that are included as part of the TCI Excluded Assets,
all required retransmission consents for continued carriage of such broadcast
signals by the Company have been obtained on terms and conditions reasonably
acceptable to Insight.
(l) Management Agreements. If Section 7.24 has become
operative, the parties shall have reached agreement on the Management Agreements
and other agreements contemplated thereby.
8.2 Conditions to TCI's Obligations. Subject to Section 7.24, the
obligations of TCI to consummate the transactions contemplated by this Agreement
are subject to the satisfaction at or before the Closing of the following
conditions, any of which may be waived by TCI.
(a) Accuracy of Representations and Warranties. The
representations and warranties of Insight in this Agreement and in any
Transaction Document, if specifically qualified by materiality, are true in all
respects and, if not so qualified, are true in all material respects, in each
case at and as of the Closing with the same effect as if made at and as of the
Closing.
(b) Performance of Agreements. Insight has performed in all
material respects all obligations and agreements and complied in all material
respects with all covenants in this Agreement and in any Transaction Document to
be performed and complied with by it at or before the Closing.
(c) Deliveries. Insight has delivered the items and documents
required to be delivered by it pursuant to this Agreement, including those
required under Section 9.3.
(d) Legal Proceedings. No action, suit or proceeding is
pending or threatened by or before any Governmental Authority and no Legal
Requirement has been enacted, promulgated or issued or become or deemed
applicable to any of the transactions contemplated by this Agreement by any
Governmental Authority, which would (i) prohibit TCI's ownership or operation of
all or a material portion of any Insight System, Insight's Cable Business or the
Insight Assets, (ii) compel TCI to dispose of or hold separately all or a
material portion of any Insight System, Insight's Cable Business or Insight
Assets as a result of any of the transactions contemplated by this Agreement,
(iii) if determined adversely to TCI's interest, materially impair the ability
of TCI to realize the benefits of the transactions contemplated by this
Agreement or have a material adverse effect on the right of TCI to exercise full
rights of ownership of the Insight Systems or (iv) prevent or make illegal the
consummation of any transactions contemplated by this Agreement.
(e) Consents. Subject to Section 7.24, TCI has received
evidence, in form and substance reasonably satisfactory to it, that the
following Insight Required Consents have been obtained without the imposition of
any condition or any modification that in either case makes, or is reasonably
likely to make, the underlying instrument materially more onerous in any respect
or materially reduces in any respect, or is reasonably likely to materially
reduce in any respect, the benefits available under the instrument in respect of
which the consent relates: Insight Required
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Consents for the Insight System Franchises, the Insight System Licenses, and any
Insight Leased Property or Insight Other Real Property Interest on which a
headend, tower or other reception site is located. In addition, subject to
Section 7.24, the TCI Required Consents for the TCI System Franchises and TCI
System Licenses shall have been obtained and all required TCI board of director,
membership or partnership approvals shall have been obtained.
(f) No Material Adverse Change. There has not been any
material adverse change in the Insight Assets or the financial condition or
operations of Insight's Cable Business or the Insight Systems since the date of
this Agreement. In making the determination required by the preceding sentence,
the last sentence of Section 5.10 shall be applicable.
(g) Subscribers. The Insight Systems are serving at least
50,000 Equivalent Basic Subscribers as of the Closing Date.
(h) HSR Act. All filings required under the HSR Act have been
made and the applicable waiting period has expired or been earlier terminated.
(i) Franchise Renewals. Any Insight System Franchise for which
a valid notice of renewal pursuant to the formal renewal procedures established
by Section 626 of the Cable Act has not been timely delivered to the appropriate
Governmental Authority has been renewed or extended for a period expiring no
earlier than three years after the Closing Date, such renewal or extension being
on terms that would not make, or are not reasonably likely to make, the System
Franchise that is being renewed or extended materially more onerous in any
respect and that would not materially reduce, or are not reasonably likely to
materially reduce, the benefits available under the System Franchise that is
being renewed or extended.
(j) Contribution. All of the conditions to TCI's obligation to
consummate the Contribution shall have been satisfied or waived (other than
those based on acts to be performed at such closing) by TCI in accordance with
the terms of the Contribution Agreement (taking into account the provisions of
Section 7.24 thereof as they modify the condition in Section 8.2(e) thereof) and
Insight shall stand ready, willing and able to consummate the Contribution in
accordance with the terms and conditions set forth in the Contribution
Agreement.
(k) Retransmission Consents. With respect to any
retransmission consent agreements for broadcast signals carried on the Insight
Systems on the date of this Agreement and on the date of the Closing that are
included as part of the Insight Excluded Assets, all required retransmission
consents for continued carriage of such broadcast signals by TCI have been
obtained on terms and conditions reasonably acceptable to TCI.
(l) Management Agreements. If Section 7.24 has become
operative, the parties shall have reached agreement on the Management Agreements
and other agreements contemplated thereby.
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SECTION 9. THE CLOSING
9.1 The Closing; Time and Place. Subject to Section 7.24, the closing
of the transactions contemplated by this Agreement (the "Closing") will take
place at a date (the "Closing Date") and time mutually determined by TCI and
Insight, which Closing Date shall be within ten days after the date on which all
conditions set forth in Sections 8.1 and 8.2 (other than those based on acts to
be performed at the Closing) have either been satisfied or waived in writing by
the party entitled to the benefit of such condition.
9.2 TCI's Delivery Obligations. At the Closing, TCI will deliver or
cause to be delivered to Insight the following.
(a) Closing Payment. Amounts, if any, payable by TCI to
Insight pursuant to Section 3.
(b) ▇▇▇▇ of Sale and Assignment and Assumption Agreement. An
executed ▇▇▇▇ of Sale and Assignment and an executed Assumption Agreement in the
forms of Exhibit 9.2(b)(1) and Exhibit 9.2(b)(2), respectively, from each of
Indiana and Midwest and such other instruments of transfer, assignment or
assumption, in form and substance mutually satisfactory to TCI and Insight, as
Insight may reasonably require to further document the transfer and assignment
of the TCI Assets to Insight and TCI's assumption of the TCI Assumed Obligations
and Liabilities.
(c) Deeds. A special or limited warranty deed in a form
reasonably acceptable to Insight (and complying with applicable state laws) with
respect to each parcel of TCI Owned Property, duly executed and acknowledged and
in recordable form, warranting only to defend title to such TCI Owned Property
in the peaceable possession of Insight against all Persons claiming by, through
or under Indiana or Midwest, as applicable, subject however, to any Permitted
Liens and any Title Defects insured over pursuant to Section 7.6, and in form
sufficient to permit the applicable Title Company to issue the TCI Title
Policies referred to in paragraph (d) below to Insight, together with any title
affidavit reasonably required by the title insurer that does not expand the
aforesaid limited or special warranty of TCI.
(d) Title Policies. A policy of title insurance issued by an
eligible Title Company for each parcel of TCI Owned Property, updated to the
Closing Date, containing such endorsements as are required or permitted by
Section 7.6, deleting the survey exception and otherwise consistent with the
form and substance prescribed by Section 7.6 and the Title Commitments
contemplated thereby (the "TCI Title Policies"), or the irrevocable written
commitment of the Title Company to deliver the TCI Title Policies, provided that
with respect to each Title Defect affecting the TCI Owned Property, either (i)
the TCI Title Policy relating to the affected parcel of TCI Owned Property shall
not contain an exception for such Title Defect, or (ii) if Insight has consented
as provided in Section 7.6, such TCI Title Policy shall contain an endorsement
insuring over such Title Defect, or (iii) if, in lieu of a TCI Title Policy
satisfying either of the two preceding requirements, Insight has
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agreed to accept a written agreement of Indiana or Midwest, as applicable, as
contemplated in the last sentence of Section 7.6, TCI shall have executed and
delivered such an agreement.
(e) Estoppel Certificates. Each TCI Estoppel Certificate
obtained pursuant to Section 7.5(b).
(f) Lien Releases. Evidence reasonably satisfactory to Insight
that all Liens (other than Permitted Liens) affecting or encumbering the TCI
Assets have been terminated, released or waived, as appropriate, or original,
executed instruments in form reasonably satisfactory to Insight effecting such
terminations, releases or waivers.
(g) Vehicle Titles. Title certificates to all vehicles
included among the TCI Assets, endorsed for transfer of valid and good title to
Insight free and clear of all Liens (other than Permitted Liens), and separate
bills of sale therefor or other transfer documentation, if required by the laws
of the States in which such vehicles are titled.
(h) Evidence of Authorization Actions. Certified resolutions
of the Board of Directors or other evidence reasonably satisfactory to Insight
that TCI has taken all corporate action necessary to authorize the execution of
this Agreement and the Transaction Documents and the consummation of the
transactions contemplated hereby.
(i) FIRPTA Certificate. A FIRPTA Non-Foreign Seller
Certificate from each of Indiana and Midwest certifying that neither is a
foreign person within the meaning of Section 1445 of the Code reasonably
satisfactory in form and substance to Insight.
(j) Officer's Certificate. A certificate from each of Indiana
and Midwest executed by an executive officer of Indiana or Midwest, as
applicable, dated the Closing Date, reasonably satisfactory in form and
substance to Insight certifying (i) that the conditions specified in Sections
8.1(a) and 8.1(b) have been satisfied as to Indiana or Midwest, as applicable;
and (ii) the total number of EBSs for all the TCI Systems owned by Indiana or
Midwest, as applicable, estimated in good faith as of the Closing Date.
(k) Documents and Records. All TCI Books and Records,
including a list of all pending subscriber hook-ups, disconnect and repair
orders, supply orders and any other lists reasonably necessary to the operation
of the TCI Systems. Delivery of the foregoing will be deemed made to the extent
such TCI Books and Records are then located at any of the offices included in
the TCI Owned Property or TCI Leased Property.
(l) Other. Such other documents and instruments as may be
reasonably necessary to effect the intent of this Agreement and consummate the
transactions contemplated hereby, including any documents requested under
Section 7.10 and a signature page to the Management Agreements, if applicable.
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9.3 Insight's Delivery Obligations. At the Closing, except as otherwise
provided below, Insight will deliver or cause to be delivered to TCI the
following.
(a) Closing Payments. Amounts, if any, payable by Insight to
TCI pursuant to Section 3.
(b) ▇▇▇▇ of Sale and Assignment and Assumption Agreement. An
executed ▇▇▇▇ of Sale and Assignment and an executed Assumption Agreement in the
forms of Exhibit 9.2(b)(1) and Exhibit 9.2(b)(2), respectively, for each of the
exchange transactions, and such other instruments of transfer, assignment or
assumption for each exchange transaction, in form and substance mutually
satisfactory to Insight and TCI, as TCI may reasonably require to further
document the transfer and assignment of the Insight Assets to TCI and Insight's
assumption of the Insight Assumed Obligations and Liabilities.
(c) Deeds. A special or limited warranty deed in a form
reasonably acceptable to TCI (and complying with applicable state laws) with
respect to each parcel of Insight Owned Property, duly executed and acknowledged
and in recordable form, warranting only to defend title to such Insight Owned
Property in the peaceable possession of Indiana or Midwest, as applicable,
against all Persons claiming by, through or under Insight, subject however, to
any Permitted Liens and any Title Defects insured over pursuant to Section 7.6,
and in form sufficient to permit the applicable Title Company to issue the
Insight Title Policies referred to in paragraph (d) below to Indiana or Midwest,
as applicable, together with any title affidavit reasonably required by the
title insurer that does not expand the aforesaid limited or special warranty of
Insight.
(d) Title Policies. A policy of title insurance issued by an
eligible Title Company for each parcel of Insight Owned Property, updated to the
Closing Date, containing such endorsements as are required or permitted by
Section 7.6, deleting the survey exception and otherwise consistent with the
form and substance prescribed by Section 7.6 and the Title Commitments
contemplated thereby (the "Insight Title Policies"), or the irrevocable written
commitment of the Title Company to deliver the Insight Title Policies, provided
that with respect to each Title Defect affecting the Insight Owned Property,
either (i) the Insight Title Policy relating to the affected parcel of Insight
Owned Property shall not contain an exception for such Title Defect, or (ii) if
TCI has consented as provided in Section 7.6, such Insight Title Policy shall
contain an endorsement insuring over such Title Defect, or (iii) if, in lieu of
a Insight Title Policy satisfying either of the two preceding requirements, TCI
has agreed to accept a written agreement of Insight as contemplated in the last
sentence of Section 7.6, Insight shall have executed and delivered such an
agreement.
(e) Estoppel Certificates. Each Insight Estoppel Certificate
obtained pursuant to Section 7.5(b).
(f) Lien Releases. Evidence reasonably satisfactory to TCI
that all Liens (other than Permitted Liens) affecting or encumbering the Insight
Assets have been terminated, released
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or waived, as appropriate, or original, executed instruments in form reasonably
satisfactory to TCI effecting such terminations, releases or waivers.
(g) Vehicle Titles. Title certificates to all vehicles
included among the Insight Assets, endorsed for transfer of valid and good title
to Indiana or Midwest, as applicable, free and clear of all Liens (other than
Permitted Liens) and separate bills of sale therefor or other transfer
documentation, if required by the laws of the States in which such vehicles are
titled.
(h) Evidence of Authorization Actions. Evidence reasonably
satisfactory to TCI that Insight has taken all action necessary to authorize the
execution of this Agreement and the Transaction Documents and the consummation
of the transactions contemplated hereby.
(i) FIRPTA Certificate. A FIRPTA Non-Foreign Seller
Certificate certifying that Insight is not a foreign person within the meaning
of Section 1445 of the Code reasonably satisfactory in form and substance to
TCI.
(j) Officer's Certificates. A certificate executed by an
executive officer of the ultimate corporate general partner of Insight dated the
Closing Date, reasonably satisfactory in form and substance to TCI certifying
(i) that the conditions specified in Sections 8.2(a) and 8.2(b) have been
satisfied; and (ii) the total number of EBSs for all the Insight systems,
estimated in good faith as of the Closing Date.
(k) Documents and Records. All Insight Books and Records,
including a list of all pending subscriber hook-ups, disconnect and repair
orders, supply orders and any other lists reasonably necessary to the operation
of the Insight Systems. Delivery of the foregoing will be deemed made to the
extent such Insight Books and Records are then located at any of the offices
included in the Insight Owned Property or Insight Leased Property.
(l) Other. Such other documents and instruments as may be
reasonably necessary to effect the intent of this Agreement and consummate the
transactions contemplated hereby, including any documents requested under
Section 7.10 and a signature page to the Management Agreements, if applicable.
SECTION 10. TERMINATION AND DEFAULT
10.1 Termination Events. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned:
(a) at any time by the mutual agreement of Insight and TCI;
(b) prior to the Primary Transfer, by either Insight or TCI at
any time (if such party itself is not then in material breach of any of its
covenants,
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agreements or other obligations contained in this Agreement), if the other is in
material breach or default of any of its covenants, agreements or other
obligations herein, or if any of its representations herein if specifically
qualified by materiality, is not true in all respects or, if qualified by
materiality, is not true in all material respects when made or when otherwise
required by this Agreement to be true, if the non-breaching party provides the
breaching party with prompt written notice that provides a reasonably detailed
explanation of the facts and circumstances surrounding such breach or default;
provided that such party shall have no right to terminate if (i) the breaching
Party cures such breach or default within 30 days after its receipt of such
written notice, unless such breach or default cannot be cured within such 30-day
period; or (ii) the breach or default is capable of being cured prior to the one
year anniversary of the date of this Agreement (the "Outside Closing Date") and
the breaching party commences to cure such breach or default within such 30-day
period and diligently continues to take all action reasonably necessary to cure
such breach or default prior to the Outside Closing Date and such breach or
default is cured prior to the Outside Closing Date; or
(c) prior to the Primary Transfer, by either Insight or TCI
upon written notice to the other given not earlier than the Outside Closing
Date, if any of the conditions to its obligations set forth in Sections 8.1 and
8.2, respectively, are not satisfied on or before the Outside Closing Date for
any reason other than a material breach or default by the terminating party of
its respective covenants, agreements or other obligations under this Agreement,
or if any of its representations herein, if specifically qualified by
materiality, is not true in all respects or, if qualified by materiality, is not
true in all material respects when made or when otherwise required by this
Agreement to be true; or
(d) by either Insight or TCI, by written notice to the other
party, if the Contribution Agreement has been terminated prior to any closing
thereunder in accordance with its terms; or
(e) if TCI does not notify Insight on or before June 1, 1998
that its representations in Section 6.2 are no longer subject to TCI obtaining
board of director, membership or partnership approval and that the obligations
of TCI LLC and TCI Communications, Inc. under the LLC Agreement are no longer
subject to those entities obtaining board of director, membership or partnership
approval, as applicable, Insight may terminate this Agreement by written notice
to TCI given at any time after June 1, 1998 but before TCI notifies Insight that
is has obtained such approvals; provided, that upon such notice by TCI to
Insight the condition to TCI's obligations in Section 8.2(e) regarding all
required TCI board of director, membership or partnership approvals having been
obtained shall be deemed irrevocably satisfied; or
(f) as otherwise provided in this Agreement.
10.2 Effect of Termination. If this Agreement is terminated pursuant to
Section 10.1, all obligations of the parties under this Agreement will
terminate, except for the obligations set forth in Sections 7.14 and 12.15.
Notwithstanding the preceding sentence, termination of this Agreement pursuant
to Sections 10.1(b) or 10.1(c) or 10.1(d) or 12.16 will not limit or impair any
remedies that
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any of TCI or Insight may have with respect to a breach or default by the other
of its covenants, agreements or obligations under this Agreement prior to
Closing.
SECTION 11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION
11.1 Survival of Representations and Warranties. The representations
and warranties of TCI and Insight in this Agreement and in the Transaction
Documents and the covenants of TCI and Insight in this Agreement and the
Transaction Documents to be performed prior to the Closing will survive until
the first anniversary of the Closing Date except that (a) all such
representations and warranties with respect to Taxes, rates, Environmental Laws,
ERISA, employment matters or copyright matters will survive until 60 days after
the expiration of the applicable statute of limitations (including any
extensions) for such Taxes, rates, Environmental Laws, ERISA, employment matters
or copyright matters, respectively, and (b) the representations and warranties
as to title to the Assets in Sections 5.4(a) and 6.4(a), respectively, and as to
title to Owned Property set forth in Sections 5.6 and 6.6, respectively, and in
the special warranty deed or deeds delivered with respect to Owned Property will
survive the Closing and the delivery of such deeds and will continue in full
force and effect without limitation with the understanding that, notwithstanding
any language contained in any such deed, the representations and warranties as
to title to Owned Property set forth in Sections 5.6 and 6.6, respectively, will
not be merged into any such deed or other Transaction Document. The periods of
survival of the representations and warranties and of the covenants to be
performed prior to the Closing prescribed by this Section 11.1 are referred to
as the "Survival Period." The liabilities of each party under its respective
representations and warranties and its respective covenants to be performed
prior to the Closing will expire as of the expiration of the applicable Survival
Period; provided however that such expiration will not include, extend or apply
to any such representation or warranty or covenant, the breach of which has been
asserted by a party in a written notice to the other party before such
expiration or about which a party has given the other party written notice
before such expiration indicating that facts or conditions exist that, with the
passage of time or otherwise, can reasonably be expected to result in a breach
(and describing such potential breach in reasonable detail). The covenants and
agreements of each party in this Agreement and in the Transaction Documents to
be performed after the Closing will survive the Closing and will continue in
full force and effect in accordance with their terms. The Survival Periods and
the other provisions of this Section 11 shall apply to any Retained Franchise or
Matching Franchise, measured as of the Closing Date of the Primary Transfer;
provided, that the party making such claim shall notify the other party of such
claim within the applicable Survival Period but may not collect its Losses until
ownership of the applicable Retained Franchise or Matching Franchise is
transferred to it, with its Losses being determined as of the date ownership is
transferred to it.
11.2 Indemnification by Indiana and Midwest. From and after the
Closing, each of Indiana and Midwest will severally indemnify, defend and hold
harmless Insight and its partners and its and their respective Affiliates, and
the members, partners, shareholders, officers, directors, employees, agents,
successors and assigns of them and any Person claiming by or through any of
them, as the
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case may be, from and against any and all Losses arising out of or
resulting from (a) any breach of any representation or warranty made by such
party in this Agreement or any Transaction Document; (b) any breach of any
covenant, agreement or obligation of such party contained in this Agreement or
any Transaction Document; (c) any act or omission of such party with respect to,
or any event or circumstance related to, the ownership or operation of such
party's TCI Assets or the conduct of such party's TCI's Cable Business, which
act, omission, event or circumstance occurred or existed prior to or at the
Closing Time, without regard to whether a claim with respect to such matter is
asserted before or after the Closing Time, including any matter described on
Schedule 6.11; (d) any liability or obligation of such party not included in the
Insight Assumed Obligations and Liabilities; (e) any Title Defect relating to
any of such party's TCI Owned Property that is not deleted as an exception in,
or insured over by, the applicable TCI Title Policy; (f) any claim that the
transactions contemplated by this Agreement to be performed by such party
violate WARN or any Legal Requirement or any bulk transfer or fraudulent
conveyance laws of any jurisdiction; (g) any claim relating to "continuation
coverage" under Code Section 4980B with respect to former employees of such
party at and after the Closing Time or that Insight is deemed to be a successor
employer of such party under Code Section 4980B; (h) any claim by a third party
relating to the presence, generation, removal or transportation of a Hazardous
Substance on or from any of such party's TCI Owned Property or TCI Leased
Property through and including the Closing Time, including the costs in response
to a third party claim of removal or clean-up of such Hazardous Substance and
other compliance with the provisions of any Environmental Laws (whether before
or after Closing); (i) any rate refund or credit, penalty and/or interest
payment with respect thereto ordered by any Governmental Authority with respect
to such party's TCI Systems for periods through and including the Closing Time;
or (j) the failure of such party to perform the TCI Assumed Obligations and
Liabilities assumed by it.
In the event that an indemnified item arises under both clause (a) and under one
or more of clauses (b) through (j) of this Section, Insight's rights to pursue
its claim under clauses (b) through (j) as applicable will exist notwithstanding
the expiration of the Survival Period applicable to such claim under clause (a).
11.3 Indemnification by Insight. From and after the Closing, Insight
will indemnify, defend and hold harmless TCI and its shareholders and its and
their respective Affiliates and the members, partners, shareholders, officers,
directors, employees, agents, successors and assigns of them and any Person
claiming by or through any of them, as the case may be, from and against any and
all Losses arising out of or resulting from (a) any breach of any representation
or warranty made by Insight in this Agreement or any Transaction Document; (b)
any breach of any covenant, agreement or obligation of Insight contained in this
Agreement or any Transaction Document; (c) any act or omission of Insight with
respect to, or any event or circumstance related to, the ownership or operation
of the Insight Assets or the conduct of Insight's Cable Business, which act,
omission, event or circumstance occurred or existed prior to or at the Closing
Time, without regard to whether a claim with respect to such matter is asserted
before or after the Closing Time, including any matter described on Schedule
5.11; (d) any liability or obligation not included in the TCI Assumed
Obligations and Liabilities; (e) any Title Defect relating to any Insight Owned
Property
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that is not deleted as an exception in, or insured over by, the
applicable Insight Title Policy; (f) any claim that the transactions
contemplated by this Agreement violate WARN or any similar Legal Requirement or
any bulk transfer or fraudulent conveyance laws of any jurisdiction; (g) any
claim relating to "continuation coverage" under Code Section 4980B with respect
to former employees of Insight at and after the Closing Time or that TCI is
deemed to be a successor employer of Insight under Code Section 4980B; (h) any
claim by a third party relating to the presence, generation, removal or
transportation of a Hazardous Substance on or from any of the Insight Owned
Property or Insight Leased Property through and including the Closing Time,
including the costs in response to a third party claim of removal or clean-up of
such Hazardous Substance and other compliance with the provisions of any
Environmental Laws (whether before or after Closing); (i) any rate refund or
credit, penalty and/or interest payment with respect thereto ordered by any
Governmental Authority with respect to the Insight Systems for periods through
and including the Closing Time; or (j) the failure of Insight to perform the
Insight Assumed Obligations and Liabilities.
In the event that an indemnified item arises under both clause (a) and under one
or more of clauses (b) through (j) of this Section, TCI's rights to pursue its
claim under clauses (b) through (j) as applicable will exist notwithstanding the
expiration of the Survival Period applicable to such claim under clause (a).
11.4 Third Party Claims. Promptly after the receipt by either party of
notice of any claim, action, suit or proceeding by any third party
(collectively, an "Action"), which Action is subject to indemnification under
this Agreement, such party (the "Indemnified Party") will give reasonable
written notice to the party from whom indemnification is claimed (the
"Indemnifying Party"). The Indemnified Party will be entitled, at the sole
expense and liability of the Indemnifying Party, to exercise full control of the
defense, compromise or settlement of any such Action unless the Indemnifying
Party, within a reasonable time after the giving of such notice by the
Indemnified Party, (a) admits in writing to the Indemnified Party the
Indemnifying Party's liability to the Indemnified Party for such Action under
the terms of this Section 11, (b) notifies the Indemnified Party in writing of
the Indemnifying Party's intention to assume such defense, (c) provides evidence
reasonably satisfactory to the Indemnified Party of the Indemnifying Party's
ability to pay the amount, if any, for which the Indemnified Party may be liable
as a result of such Action and (d) retains legal counsel reasonably satisfactory
to the Indemnified Party to conduct the defense of such Action. The other party
will cooperate with the party assuming the defense, compromise or settlement of
any such Action in accordance with this Agreement in any manner that such party
reasonably may request. If the Indemnifying Party so assumes the defense of any
such Action, the Indemnified Party will have the right to employ separate
counsel and to participate in (but not control) the defense, compromise or
settlement of the Action, but the fees and expenses of such counsel will be at
the expense of the Indemnified Party unless (x) the Indemnifying Party has
agreed to pay such fees and expenses, (y) any relief other than the payment of
money damages is sought against the Indemnified Party or (z) the Indemnified
Party will have been advised by its counsel that there may be one or more
defenses available to it which are different from or additional to those
available to the Indemnifying Party, and in any such case that portion of the
fees and expenses of such separate counsel that are reasonably related to
matters covered by the indemnity provided in
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this Section 11 will be paid by the Indemnifying Party. No Indemnified Party
will settle or compromise any such Action for which it is entitled to
indemnification under this Agreement without the prior written consent of the
Indemnifying Party, unless the Indemnifying Party has failed, after reasonable
notice, to undertake control of such Action in the manner provided in this
Section 11.4. No Indemnifying Party will settle or compromise any such Action
(A) in which any relief other than the payment of money damages is sought
against any Indemnified Party or (B) in the case of any Action relating to the
Indemnified Party's liability for any Tax, if the effect of such settlement
would be an increase in the liability of the Indemnified Party for the payment
of any Tax for any period beginning after the Closing Date, unless the
Indemnified Party consents in writing to such compromise or settlement.
11.5 Limitations on Indemnification - TCI. TCI will not be liable to
Insight with respect to any matter or claim for which indemnification could be
sought pursuant to Section 11.2(a) or (b) for (a) any Losses of or to Insight or
any other Person entitled to indemnification from TCI or (b) any Losses
incidental to or relating to or resulting from any of the foregoing (the items
described in clauses (a) and (b) collectively being referred to for purposes of
this Section 11 as "Insight Damages") unless the amount of Insight Damages for
which TCI would, but for the provisions of this Section, be liable exceeds, on
an aggregate basis, $250,000, in which case TCI will be liable for all such
Insight Damages from dollar zero, which will be due and payable within 15 days
after TCI's receipt of a statement therefor. TCI will not have any liability
under Section 11.2(a) or (b) to the extent that the aggregate amount of Losses
otherwise subject to its indemnification obligation thereunder exceeds
$10,000,000. The limitations set forth in this Section 11.5 do not apply to (i)
the Pro Rata Adjustments to the extent they are included in the calculation of
Pro Rata Adjustments pursuant to Sections 3.2 and 3.3 or (ii) any claim made
pursuant to Sections 11.2(c)-(j), including, without limitation, any Losses
related to any liability or obligation for late fees; any liability or
obligation with respect to paying franchise fees on franchise fees; subscriber
refunds, including pursuant to the Pending TCI Rate Order; or TCI litigation
listed in the Schedules to this Agreement. The limitations in this Section 11.5
apply to Indiana and Midwest on an aggregate basis; e.g., if the amount of
Insight Damages claimed against Indiana are $125,000 and the amount of Insight
Damages claimed against Midwest are $126,000, the basket will have been met.
Similarly, if Insight recovers Losses from Indiana under Sections 11.2(a) or (b)
of $10,000,000, the cap will have been met and Insight will not be able to
recover any Losses under Sections 11.2(a) or (b) from Midwest unless the
limitations on liability are not applicable to such Losses as specified above.
11.6 Limitations on Indemnification - Insight. Insight will not be
liable to TCI with respect to any matter or claim for which indemnification
could be sought pursuant to Section 11.3(a) or (b) for (a) any Losses of or to
TCI or any other Person entitled to indemnification from Insight or (b) any
Losses incidental to or relating to or resulting from any of the foregoing (the
items described in clauses (a) and (b) collectively being referred to for
purposes of this Section 11 as "TCI Damages") unless the amount of TCI Damages
for which Insight would, but for the provisions of this Section, be liable
exceeds, on an aggregate basis, $250,000, in which case Insight will be liable
for all such TCI Damages from dollar zero, which will be due and payable within
15 days after Insight's receipt of a statement therefor. Insight will not have
any liability under Section 11.3(a) or
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(b) to the extent that the aggregate amount of Losses otherwise subject to its
indemnification obligations thereunder exceeds $5,000,000. The limitations set
forth in this Section 11.6 do not apply to (i) the Pro Rata Adjustments to the
extent they are included in the calculation of Pro Rata Adjustments pursuant to
Section 3.2 and 3.3 or (ii) any claims made pursuant to Sections 11.3(c)-(j),
including, without limitation, any Losses related to any liability or obligation
for late fees; any liability or obligation with respect to paying franchise fees
on franchise fees; subscriber refunds or Insight litigation listed in the
Schedules to this Agreement.
11.7 Other Indemnification. The provisions of Sections 11.1, 11.5 and
11.6 will be applicable to any claim for indemnification made under any other
provision of this Agreement and all references in Sections 11.1, 11.5 and 11.6
to Sections 11.2 and 11.3 will be deemed to be references to such other
provisions of this Agreement.
SECTION 12. MISCELLANEOUS PROVISIONS
12.1 Parties Obligated and Benefited. Subject to the limitations set
forth below, this Agreement will be binding upon the parties and their
respective assigns and successors in interest and will inure solely to the
benefit of the parties and their respective assigns and successors in interest,
and no other Person will be entitled to any of the benefits conferred by this
Agreement. Without the prior written consent of the other parties, no party will
assign any of its rights under this Agreement or delegate any of its duties
under this Agreement, provided that a party may, without the consent of any
other party, prior to Closing assign all of such party's rights and obligations
under this Agreement to any Affiliate of such party; provided such assignee can
make all of the representations and warranties applicable to the assigning party
hereunder (other than those relating to jurisdiction of incorporation), the
assigning party can provide reasonable assurances that such assignee can
otherwise perform the covenants, agreements and obligations applicable to the
assigning party hereunder and such assignment would not materially delay or
hinder the consummation of the transactions contemplated by this Agreement. In
addition, after the Closing, without the consent of TCI, Insight may assign all
of its rights and obligations under this Agreement to the Company (provided
that, without limiting the Company's indemnification rights, Insight shall
retain its indemnification rights against TCI as if they had not been assigned
and provided further that Insight may not assign its rights and obligations
under Sections 7.24 and 7.25 or under any other Section of this Agreement
insofar as such Section relates to the Retained Franchises and Matching
Franchises until such time as the transactions contemplated by Section 7.24 have
been consummated with respect to a given franchise) and either party may grant
to its lenders a security interest in the indemnification rights hereunder
inuring to the benefit of such party. No assignment by either party of its
rights hereunder shall release such party from its obligations hereunder.
Notwithstanding the foregoing, Insight may also assign all of its rights under
this Agreement (provided that, without limiting the Company's indemnification
rights, Insight shall retain its indemnification rights against TCI as if they
had not been assigned and provided further that Insight may not assign its
rights under Sections 7.24 and 7.25 or under any other Section of this Agreement
insofar as such Section relates to the Retained Franchises and Matching
Franchises until such time as the transactions contemplated by Section 7.24 have
been consummated with respect to a given franchise), but not its obligations
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under this Agreement, to a qualified intermediary (as defined in the Code). If
Insight elects to assign such rights under this Agreement to a qualified
intermediary, TCI will pay for the reasonable costs incurred by Insight in
connection with such assignment; provided, that TCI shall be entitled to select
the qualified intermediary.
12.2 Notices. Any notice, request, demand, waiver or other
communication required or permitted to be given under this Agreement will be in
writing and will be deemed to have been duly given only if delivered in person
or by first class, prepaid, registered or certified mail, or sent by courier or,
if receipt is confirmed, by telecopier:
To TCI at:
c/o Tele-Communications, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy similarly addressed to the attention of
Legal Department
To Insight at:
Insight Communications Company, L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Cooperman, Levitt, Winikoff & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
and
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Dow, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ PLLC
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Any party may change the address to which notices are required to be sent by
giving notice of such change in the manner provided in this Section. All notices
will be deemed to have been received on the date of delivery, which in the case
of deliveries by telecopier will be the date of the sender's confirmation.
12.3 Right to Specific Performance. The parties acknowledge that the
unique nature of the Assets to be exchanged by the parties pursuant to this
Agreement renders money damages an inadequate remedy for the breach by the
parties of its obligations under this Agreement, and the parties agree that in
the event of such breach, the parties will upon proper action instituted by
either of them, be entitled to a decree of specific performance of this
Agreement.
12.4 Waiver. This Agreement or any of its provisions may not be waived
except in writing. The failure of any party to enforce any right arising under
this Agreement on one or more occasions will not operate as a waiver of that or
any other right on that or any other occasion.
12.5 Captions. The section and other captions of this Agreement are for
convenience only and do not constitute a part of this Agreement.
12.6 Choice of Law. THIS AGREEMENT AND THE RIGHTS OF THE PARTIES UNDER
IT WILL BE GOVERNED BY AND CONSTRUED IN ALL RESPECTS IN ACCORDANCE WITH THE LAWS
OF THE STATE OF DELAWARE, WITHOUT REGARD TO THE CONFLICTS OF LAWS RULES OF
DELAWARE.
12.7 Terms. Terms used with initial capital letters or otherwise
defined in this Agreement will have the meanings specified, applicable to both
singular and plural forms, for all purposes of this Agreement. The word
"include" and derivatives of that word are used in this Agreement in an
illustrative sense rather than limiting sense.
12.8 Rights Cumulative. 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.
12.9 Time. Time is of the essence under this Agreement. 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.
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12.10 Late Payments. If a party fails to pay any other party any
amounts when due under this Agreement, the amounts due will bear interest from
the due date to the date of payment at the annual rate publicly announced from
time to time by The Bank of New York as its prime rate (the "Prime Rate") plus
2%, adjusted as and when changes in the Prime Rate are made.
12.11 Counterparts. This Agreement may be executed in counterparts,
each of which will be deemed an original.
12.12 Entire Agreement. Except for the Contribution Agreement, this
Agreement (including the Transaction Documents and the Schedules and Exhibits
referred to in this Agreement, which are incorporated in and constitute a part
of this Agreement) contains the entire agreement of the parties and supersedes
all prior oral or written agreements and understandings with respect to the
subject matter. This Agreement may not be amended or modified except by a
writing signed by the parties.
12.13 Severability. Any term or provision of this Agreement which is
invalid or unenforceable will be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining rights
of the Person intended to be benefitted by such provision or any other
provisions of this Agreement.
12.14 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.
12.15 Expenses. Except as otherwise expressly provided in this
Agreement (which expenses the parties shall pay as so provided), each party will
pay all of its expenses, including attorneys' and accountants' fees, in
connection with the negotiation of this Agreement, the performance of its
obligations and the consummation of the transactions contemplated by this
Agreement.
12.16 Risk of Loss.
(a) The risk of any loss or damage to the Insight Assets or
TCI Assets resulting from fire, theft or other casualty (except reasonable wear
and tear) will be borne by Insight or TCI, respectively, at all times through
and including the Closing. If any such loss or damage is sufficiently
substantial so as to preclude and prevent resumption of normal operations of any
material portion of a System or the replacement or restoration of the lost or
damaged property within twenty days or, if earlier, prior to the Outside Closing
Date, Insight or TCI as appropriate, will immediately notify the other in
writing of that fact and subject to the other provisions of this Section 12.16,
Insight, in the event of loss or damage to the Insight Assets, or TCI, in the
event of loss or damage to the TCI Assets, as appropriate, will use its
commercially reasonable efforts to repair, replace and restore the lost or
damaged property to its former condition as soon as practicable at its
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sole expense, subject to Section 12.16(b), including applying any insurance
proceeds to restore such assets to their prior condition.
(b) If the aggregate cost to repair, replace or restore the
lost or damaged property to its former condition would exceed $2,000,000,
Insight, in the event of loss or damage to the Insight Assets, or TCI, in the
event of loss or damage to the TCI Assets, as appropriate, may, subject to the
other party's right to consummate the Closing as described below, elect to
terminate this Agreement by written notice to the other party at any time within
ten days of the occurrence of the event of loss or damage, and upon such
termination both parties will stand fully released and discharged of any and all
obligations under this Agreement (except with respect to any then existing
breaches by either such party).
(c) If any such loss or damage to the TCI Assets is
sufficiently substantial so as to preclude and prevent resumption of normal
operations of any material portion of a TCI System or the repair, replacement or
restoration of the lost or damaged property within twenty days, or if earlier,
the Outside Closing Date and TCI is not obligated to correct the problem because
the cost would exceed $2,000,000, and TCI elects not to repair, replace and
restore the lost or damaged property, Insight may elect to terminate this
Agreement upon written notice to TCI at any time within ten days after it
receives written notice from TCI of the occurrence of the event of such loss or
damage and the fact that TCI is not obligated to correct the problem and TCI has
elected not to correct the problem, and upon such termination both parties will
stand fully released and discharged of any and all obligations under this
Agreement (except with respect to any then existing breaches by either such
party). In the absence of a timely election to terminate this Agreement, Insight
shall be deemed to have waived such loss or damage and to have elected to
consummate the Closing in accordance with all of the remaining provisions of
this Agreement and notwithstanding TCI's election to terminate this Agreement
pursuant to Section 12.16(b), Insight may elect to consummate the Closing in
accordance with all of the remaining provisions of this Agreement, in which
event at the closing the amount of any insurance deductible payable by TCI and
all insurance proceeds payable as a result of the occurrence of the event
resulting in such loss or damage to the TCI Assets (in each case to the extent
not used to repair, replace or restore such lost or damaged TCI Assets), except
for any proceeds from business interruption insurance relating to the loss of
revenue for the period through and including the Closing Time, will be delivered
by TCI to Insight or the rights to such proceeds will be assigned by TCI to
Insight if not yet paid over to TCI, and upon such delivery or assignment and
consummation of the Closing TCI shall have no additional liability to Insight in
respect of any such loss or damage to the TCI Assets.
(d) If any such loss or damage to the Insight Assets is
sufficiently substantial so as to preclude and prevent resumption of normal
operations of any material portion of an Insight System or the repair,
replacement or restoration of the lost or damaged property within twenty days,
or if earlier, the Outside Closing Date, and Insight is not obligated to correct
the problem because the cost would exceed $2,000,000, and Insight elects not to
repair, replace and restore the lost or damaged property, TCI may elect to
terminate this Agreement upon written notice to Insight at any time within ten
days after it receives written notice from Insight of the occurrence of the
event of
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such loss or damage and the fact that Insight is not obligated to correct the
problem and has elected not to correct the problem, and upon such termination
both parties will stand fully released and discharged of any and all obligations
under this Agreement (except with respect to any then existing breaches by
either such party). In the absence of a timely election to terminate this
Agreement, TCI shall be deemed to have waived such loss or damage and to have
elected to consummate the Closing in accordance with all of the remaining
provisions of this Agreement, and notwithstanding Insight's election to
terminate this Agreement pursuant to Section 12.16(b), TCI may elect to
consummate the Closing in accordance with all of the remaining provisions of
this Agreement in which event at the Closing the amount of any insurance
deductible payable by TCI and all insurance proceeds payable as a result of the
occurrence of the event resulting in such loss or damage to the Insight Assets
(in each case to the extent not used to repair, replace or restore such lost or
damaged Insight Assets), except for any proceeds from business interruption
insurance relating to the loss of revenue for the period through and including
the Closing Time, will be delivered by Insight to TCI or the rights to such
proceeds will be assigned by Insight to TCI if not yet paid over to Insight, and
upon such delivery or assignment and consummation of the Closing Insight shall
have no additional liability to TCI in respect of any such loss or damage to the
Insight Assets.
If, prior to the Closing, any part of or interest in any material
Insight Assets or any material TCI Assets is taken or condemned as a result of
the exercise of the power of eminent domain, or if a Governmental Authority
having such power informs Insight or TCI that it intends to condemn all or any
part of any material Assets of such party (such event being called, in either
case, a "Taking"), then the other party may terminate this Agreement. If the
other party does not elect to terminate this Agreement, then (a) the other party
will have the sole right, in the name of the party if the other party so elects,
to negotiate for, claim, contest and receive all damages with respect to the
Taking, (b) the party will be relieved of its obligation to convey to the party
the Assets or interests that are the subject of the Taking, (c) at the Closing
the party will assign to the other party all of the party's rights to all
damages payable with respect to the Taking and (d) following the Closing, the
party will give the other party such further assurances of such rights and
assignment with respect to the Taking as the other party may from time to time
reasonably request.
12.17 Tax Consequences. No party to this Agreement makes any
representation or warranty, express or implied, with respect to the Tax
implications of any aspect of this Agreement on any other party to this
Agreement, and all parties expressly disclaim any such representation or
warranty with respect to any Tax consequences arising under this Agreement. Each
party has relied solely on its own Tax advisors with respect to the Tax
implications of this Agreement.
12.18 Commercially Reasonable Efforts. For purposes of this Agreement,
unless a different standard is expressly provided with respect to any particular
matter, "commercially reasonable efforts" will not be deemed to require a party
to undertake extraordinary measures, including the initiation or prosecution of
legal proceedings or the payment of amounts in excess of normal and usual filing
fees and processing fees, if any.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first written above.
TCI OF INDIANA, INC.
By:______________________________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Vice President
UACC MIDWEST, INC.
By:______________________________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Vice President
INSIGHT COMMUNICATIONS
COMPANY, L.P.
By: ICC Associates, L.P., its general partner
By: Insight Communications, Inc., its
general partner
By:______________________________________________________
Name:____________________________________________________
Title:___________________________________________________
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