EXHIBIT 2.3
ASSET PURCHASE AND SALE AGREEMENT
dated August 15, ▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇, INC., TCI OF RACINE, 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 Accounting Terms................................................................ 1
1.3 Affiliate....................................................................... 1
1.4 Assets.......................................................................... 2
1.5 Basic Services.................................................................. 2
1.6 Business Day.................................................................... 2
1.7 Books and Records............................................................... 2
1.8 Cable Business.................................................................. 2
1.9 Cable Act....................................................................... 2
1.10 Closing Time.................................................................... 2
1.11 Communications Act.............................................................. 2
1.12 Contract........................................................................ 2
1.13 Contribution.................................................................... 2
1.14 Equivalent Basic Subscribers (or "EBSs")........................................ 3
1.15 Environmental Law............................................................... 3
1.16 ERISA........................................................................... 4
1.17 ERISA Affiliate................................................................. 4
1.18 Expanded Basic Services......................................................... 4
1.19 FCC............................................................................. 4
1.20 GAAP............................................................................ 4
1.21 Governmental Authority.......................................................... 4
1.22 Hazardous Substances............................................................ 4
1.23 HSR Act......................................................................... 5
1.24 Judgment........................................................................ 5
1.25 Knowledge....................................................................... 5
1.26 Leased Property................................................................. 5
1.27 Legal Requirement............................................................... 5
1.28 Liberty Media Group............................................................. 5
1.29 Lien............................................................................ 5
1.30 Litigation...................................................................... 5
1.31 Losses.......................................................................... 5
1.32 Other Intangibles............................................................... 6
1.33 Other Real Property Interests................................................... 6
1.34 Owned Property.................................................................. 6
1.35 Pay TV.......................................................................... 6
1.36 Permitted Lien.................................................................. 6
1.37 Person.......................................................................... 7
1.38 Required Consents............................................................... 7
1.39 System Contracts................................................................ 7
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1.40 System Franchises............................................................... 7
1.41 System Licenses................................................................. 7
1.42 Tangible Personal Property...................................................... 7
1.43 Taxes........................................................................... 8
1.44 Third Party..................................................................... 8
1.45 Transaction Documents........................................................... 8
1.46 Other Definitions............................................................... 8
SECTION 2. SALE AND PURCHASE................................................................ 9
2.1 Sale and Purchase.............................................................. 9
SECTION 3. ADJUSTMENTS...................................................................... 9
3.1 Adjustments to Value of Assets................................................. 9
3.2 Calculation of Adjustments.....................................................11
SECTION 4. ASSUMED LIABILITIES AND EXCLUDED ASSETS........................................12
4.1 Excluded Assets................................................................12
4.2 Assumed Obligations and Liabilities............................................13
SECTION 5. INSIGHT'S REPRESENTATIONS AND WARRANTIES.........................................14
5.1 Organization and Qualification of Insight......................................14
5.2 Authority and Validity.........................................................14
5.3 No Conflict; Required Consents.................................................15
5.4 Finders and Brokers............................................................15
SECTION 6. AT&T'S REPRESENTATIONS AND WARRANTIES............................................15
6.1 Organization and Qualification of AT&T Parties.................................15
6.2 Authority and Validity.........................................................16
6.3 No Conflict; Required Consents.................................................16
6.4 Assets.........................................................................17
6.5 System Franchises, System Licenses, System Contracts and Other Real Property
Interests......................................................................17
6.6 Real Property..................................................................18
6.7 Environmental..................................................................19
6.8 Compliance with Legal Requirements.............................................20
6.9 Patents, Trademarks and Copyrights.............................................22
6.10 Financial Statements; Undisclosed Liabilities; Absence of Certain Changes or
Events.........................................................................22
6.11 Litigation.....................................................................23
6.12 Tax Returns; Other Reports.....................................................23
6.13 Employment Matters.............................................................23
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6.14 Accounts Receivable........................................................... 25
6.15 Finders and Brokers........................................................... 25
6.16 Transactions With Affiliates.................................................. 25
SECTION 7. ADDITIONAL COVENANTS............................................................ 25
7.1 Access to Premises and Records................................................ 25
7.2 Continuity and Maintenance of Operations; Certain Deliveries and Notices...... 25
7.3 Employees..................................................................... 27
7.4 Leased Vehicles; Other Capital Leases......................................... 32
7.5 Required Consents, Franchise Renewal.......................................... 32
7.6 Title Commitments and Surveys................................................. 33
7.7 HSR Notification.............................................................. 33
7.8 Transfer Taxes................................................................ 34
7.9 Distant Broadcast Signals..................................................... 34
7.10 Programming................................................................... 34
7.11 Use of Names and Logos........................................................ 34
7.12 Transitional Billing Services................................................. 34
7.13 Confidentiality and Publicity................................................. 35
7.14 Bulk Transfers................................................................ 35
7.15 Lien Searches................................................................. 35
7.16 Further Assurances............................................................ 36
7.17 Consents...................................................................... 36
7.18 Cooperation as to Rates and Fees.............................................. 36
7.19 Satisfaction of Conditions.................................................... 38
7.20 Offers........................................................................ 38
7.21 Environmental Reports......................................................... 38
7.22 Cooperation on SEC Matters.................................................... 38
7.23 Cooperation on Pending Litigation............................................. 39
7.24 CSG........................................................................... 39
7.26 Schedules..................................................................... 39
SECTION 8. CONDITIONS PRECEDENT.......................................................... 40
8.1 Conditions to Insight's Obligations........................................... 40
8.2 Conditions to AT&T's Obligations.............................................. 42
SECTION 9. THE CLOSING................................................................... 42
9.1 The Closing; Time and Place................................................... 42
9.2 AT&T's Delivery Obligations................................................... 42
9.3 Insight's Delivery Obligations................................................ 44
SECTION 10. TERMINATION AND DEFAULT........................................................ 44
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10.1 Termination Events.............................................................44
10.2 Effect of Termination..........................................................45
SECTION 11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION................................................................45
11.1 Survival of Representations and Warranties.....................................45
11.2 Indemnification by AT&T........................................................46
11.3 Indemnification by Insight.....................................................47
11.4 Third Party Claims.............................................................47
11.5 Limitations on Indemnification - AT&T..........................................48
11.6 Limitations on Indemnification - Insight.......................................48
SECTION 12. MISCELLANEOUS PROVISIONS.......................................................49
12.1 Parties Obligated and Benefitted...............................................49
12.2 Notices........................................................................49
12.3 Right to Specific Performance..................................................51
12.4 Waiver.........................................................................51
12.5 Captions.......................................................................51
12.6 Choice of Law..................................................................51
12.7 Terms..........................................................................51
12.8 Rights Cumulative..............................................................51
12.9 Time...........................................................................51
12.10 Late Payments..................................................................52
12.11 Counterparts...................................................................52
12.12 Entire Agreement...............................................................52
12.13 Severability...................................................................52
12.14 Construction...................................................................52
12.15 Expenses.......................................................................52
12.16 Risk of Loss...................................................................52
12.17 Tax Consequences...............................................................54
12.18 Commercially Reasonable Efforts................................................54
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LIST OF SCHEDULES AND EXHIBITS
Schedules
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Schedule 1.14 Subscriber Rates
Schedule 1.26 Leased Property
Schedule 1.33 Other Real Property Interests
Schedule 1.34 Owned Property
Schedule 1.39 System Contracts
Schedule 1.40 System Franchises
Schedule 1.41 System Licenses
Schedule 4.1 Excluded Assets
Schedule 5.3 Insight Required Consents
Schedule 6.3 Required Consents
Schedule 6.4 Liens
Schedule 6.7 Environmental Matters
Schedule 6.8 Cost of Service Elections
Schedule 6.10 Financial Statements; Changes or Events
Schedule 6.11 Litigation
Schedule 6.12 Tax Matters
Schedule 6.13(a) Employees
Schedule 6.13 Plans; Employee Matters
Schedule 6.16 Affiliate Transactions
Exhibits
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Exhibit A Systems
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ASSET PURCHASE AND SALE AGREEMENT
---------------------------------
THIS ASSET PURCHASE AND SALE AGREEMENT ("Agreement") is made and entered
into as of the 15/th/ day of August, 2000, by and between TCI of Illinois, Inc.
an Illinois corporation, TCI of Racine, Inc., a Wisconsin corporation, and UACC
Midwest, Inc., a Delaware corporation, on the one hand (TCI of Illinois, Inc.,
TCI of Racine, Inc., and UACC Midwest, Inc. are referred to herein as "AT&T"
individually and collectively as the context requires) and Insight
Communications Company, L.P., a Delaware limited partnership on the other hand
("Insight").
RECITALS
A. AT&T owns and operates cable television systems which are franchised
or hold other operating authority and operate in and around Central and North
Central Illinois and the other communities in Illinois listed on Exhibit A (the
"Systems").
B. This Agreement sets forth the terms and conditions on which AT&T will
convey to Insight substantially all of the assets comprising or used or useful
in connection with AT&T's Cable Business.
AGREEMENTS
In consideration of the mutual covenants and promises set forth herein, the
parties agree as follows:
SECTION 1. DEFINITIONS
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:
1.1 1992 Cable Act. The Cable Television Consumer Protection and
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Competition Act of 1992, as amended, and the FCC rules and regulations
promulgated thereunder.
1.2 Accounting Terms. All accounting terms not otherwise defined in
----------------
this Agreement will have the meanings ascribed to them under GAAP.
1.3 Affiliate. With respect to any Person, any Person controlling,
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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. For the avoidance of doubt,
notwithstanding anything in this Agreement or in the Transaction Documents, no
member of the Liberty Media Group shall be deemed to be an Affiliate of AT&T.
1.4 Assets. All assets, properties, privileges, rights, interests and
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claims, real and personal, tangible and intangible, of every type and
description that are owned, leased, held for use or used in connection with the
Cable Business and in which AT&T has any right, title or interest or acquires
any right, title or interest on or before the Closing, including Tangible
Personal Property, Owned Real Property, Leased Property, Other Real Property
Interests, System Franchises, System Licenses, System Contracts, Books and
Records and Other Intangibles, but excluding any Excluded Assets.
1.5 Basic Services. The lowest tier of cable television service
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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.
1.6 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.
1.7 Books and Records. All engineering records, files, data, drawings,
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blueprints, schematics, reports, lists, plans and processes and all other files
of correspondence, lists, records and reports concerning the Cable Business,
including subscribers and prospective subscribers of the Systems, signal and
program carriage and dealings with Governmental Authorities, including all
reports filed by or on behalf of AT&T with the FCC and statements of account
filed by or on behalf of AT&T with the U.S. Copyright Office, but excluding any
Excluded Assets.
1.8 Cable Business. The cable television business and other income-
--------------
generating businesses related to the Systems conducted by AT&T through the
Systems.
1.9 Cable Act. The Cable Communications Policy Act of 1984, as
---------
amended, and the rules and regulations promulgated thereunder.
1.10 Closing Time. 12:01 A.M., Mountain Time, on the Closing Date.
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1.11 Communications Act. The Communications Act of 1934, as amended,
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and the rules and regulations promulgated thereunder.
1.12 Contract. Any contract, mortgage, deed of trust, bond, indenture,
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lease, license, note, franchise, certificate, option, warrant, right or other
instrument, document, obligation or agreement, whether written or oral.
1.13 Contribution. The transactions contemplated by the Contribution
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Agreement among certain Affiliates of AT&T, Insight and the Partnership dated as
of the date of this Agreement (the "Contribution Agreement") to be consummated
at the closing thereunder.
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1.14 Equivalent Basic Subscribers (or "EBSs"). As of any date of
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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 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 current rate specified in Schedule 1.14 and such rate card
specified in Schedule 1.14 lists the current rates charged by AT&T on the date
of this Agreement. 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
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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.
1.15 Environmental Law. Any Legal Requirement concerning the
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protection of public or employee health, safety, welfare or the environment,
including Legal Requirements relating to
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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.
1.16 ERISA. The Employee Retirement Income Security Act of 1974, as
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amended, and the rules and regulations promulgated thereunder and published
interpretations with respect thereto.
1.17 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 of ERISA.
1.18 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.
1.19 FCC. The Federal Communications Commission.
---
1.20 GAAP. Generally accepted accounting principles as in effect from
----
time to time in the United States of America.
1.21 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.
1.22 Hazardous Substances. (a) Any "hazardous waste" as defined by the
--------------------
Resource Conservation and Recovery Act of 1976 (RCRA) (42 U.S.C. (S)(S) 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. (S)(S) 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.
(S)(S)2601 et seq.), or the Insecticide, Fungicide and Rodenticide Act (IFRA) (7
U.S.C. (S)(S)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.
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1.23 HSR Act. The ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976,
-------
amended, and the rules and regulations promulgated thereunder.
1.24 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.
1.25 Knowledge. The actual knowledge of a particular matter of one or
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more of the principal corporate personnel of AT&T involved in the transactions
contemplated by this Agreement or the general manager or one or more of the
managers of the Systems.
1.26 Leased Property. All leasehold interests in real property that is
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held for use or used in connection with the Cable Business which AT&T has or
acquires prior to Closing, including those described as Leased Property on
Schedule 1.26.
1.27 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.
1.28 Liberty Media Group. Liberty Media Corporation, any of its direct
-------------------
or indirect current or future subsidiaries, any Person in which it or they have
or acquire any direct or indirect equity investment and any other Person
directly or indirectly controlled by any of the foregoing.
1.29 Lien. Any security interest, security agreement, financing
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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.
1.30 Litigation. Any written claim, action, suit, proceeding,
----------
arbitration, or hearing.
1.31 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
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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).
1.32 Other Intangibles. All intangible assets other than System
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Franchises, System Licenses and System Contracts, including subscriber lists,
accounts receivable, claims (excluding any claims relating to Excluded Assets),
patents, copyrights and going concern value, if any, that are owned, held for
use or used in connection with the Cable Business and in which AT&T has, or
acquires prior to Closing, any right, title or interest.
1.33 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 the Cable
Business and in which AT&T has, or acquires prior to Closing, any right, title
or interest, including those interests described as Other Real Property
Interests on Schedule 1.33, but not including Leased Property or Owned Property.
1.34 Owned Property. All fee interests in real property that is owned,
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held for use or used in connection with the Cable Business which AT&T has or
acquires prior to Closing, including those described as Owned Property on
Schedule 1.34 and all improvements thereon.
1.35 Pay TV. A la carte tiers or premium programming services selected
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by and sold to subscribers on a per channel or per program basis.
1.36 Permitted Lien. Any (a) Lien securing Taxes, assessments and
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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 or to acquire a Franchise or System upon default
under, or termination of, any System Franchise, (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, 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 AT&T
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 AT&T may have under this Agreement for any such Lien with
respect to the sale of the Assets, including pursuant to any indemnity
obligation under this Agreement.
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1.37 Person. Any natural person, Governmental Authority, corporation,
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general or limited partnership, limited liability company, joint venture, trust,
association or unincorporated entity of any kind.
1.38 Required Consents. Any and all consents, authorizations and
-----------------
approvals required for (i) AT&T to transfer the Assets to Insight and Insight to
transfer the Assets to Insight Midwest, L.P., a Delaware limited partnership
(the "Partnership"); (ii) the Partnership to, directly or indirectly, transfer
the Assets to Insight Communications of Indiana, LLC ("Indiana LLC") (iii)
Insight and, following the transfer by Insight pursuant to the Contribution
Agreement, the Partnership and Indiana LLC, to operate the Systems and to own,
lease, use and operate the Assets and the Systems at the places and in the
manner in which the Assets are used and the Systems are operated as of the date
of this Agreement and as of the Closing; and (iv) Insight and, following the
transfer by Insight pursuant to the Contribution Agreement, the Partnership and
Indiana LLC, to assume and perform the System Franchises, the System Licenses,
the leases and other documents evidencing Leased Property or Other Real Property
Interests and the System Contracts, including those consents, authorizations and
approvals required under the System Franchises, the System Licenses, the leases
and other documents evidencing Leased Property and Other Real Property Interests
and the System Contracts.
1.39 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 System Franchises and System Licenses) held for use or used in connection
with the Cable Business and to which AT&T is, or becomes prior to Closing, as
permitted by this Agreement, a party or bound, including those described on
Schedule 1.39.
1.40 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 the Cable Business, including all amendments and modifications
thereto and all renewals thereof for the areas and communities listed on
Schedule 1.40.
1.41 System Licenses. The intangible cable television channel
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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 the Cable Business (other than System Franchises, System Contracts and
Other Real Property Interests), including those described on Schedule 1.41.
1.42 Tangible Personal Property. All tangible personal property that is
--------------------------
owned, leased, held for use or used in connection with the Cable Business and in
which AT&T 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,
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converters, testing equipment, motor vehicles, office equipment, computers and
billing equipment, furniture, fixtures, supplies, inventory and other physical
assets.
1.43 Taxes. All levies and assessments of any kind or nature imposed by
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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.
1.44 Third Party. With respect to AT&T, any Person other than AT&T and
-----------
its Affiliates and with respect to Insight, any Person other than Insight and
its Affiliates.
1.45 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 AT&T Illinois in connection with this Agreement or the transactions
contemplated hereby.
1.46 Other Definitions. The following terms are defined in the Sections
-----------------
or Recitals indicated:
TERM Section or Recital
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Action 11.4
Adjustment Amount 3.1(h)
Agreement Preamble
Antitrust Division 7.7
Approved Leave of Absence 7.3(a)
Assumed Obligations and Liabilities 4.2
AT&T Preamble
AT&T Damages 11.6
AT&T Late Fee Settlement 4.2
Base Purchase Price 2.1
Balance Sheet 6.10
Closing 9.1
Closing Date 9.1
Code 6.13(b)
"commercially reasonable efforts" 12.18
Contribution Agreement 1.13
Copyright Act 6.(a)
Cost of Service Election 6.8(d)
EBS 1.14
Employees on Leave Status 7.3(a)
Excluded Assets 4.1
FAA 6.8(c)
-8-
Final Adjustment Certificate 3.2(b)
Financial Statements 6.10
FTC 7.7
Hired Employee 7.3(a)
Hiring Party 7.3(f)
Indemnified Party 11.4
Indemnifying Party 11.4
Indiana LLC 1.38
Initial Adjustment Certificate 3.2(a)
Insight Preamble
Insight Damages 11.5
NCE Agreement 7.3(h)
Outside Closing Date 10.1(b)
Partnership 1.38
Partnership Agreement 4.1
Plans 6.13(b)
Prime Rate 12.10
Pro Rata Adjustments 3.2(a)
Retained Employees 7.3(a)
Survival Period 11.1
Systems Recital A
Taking 12.16
Time Warner Social Contract 4.1
Transitional Billing Services 7.12
WARN 6.13(a)
SECTION 2. SALE AND PURCHASE
2.1 Sale and Purchase. Subject to the terms and conditions set forth in
-----------------
this Agreement, at the Closing, AT&T will sell the assets to Insight for the
total cash consideration of $393,500,000 (the "Base Purchase Price") which will
be adjusted as provided in Section 3 and paid by Insight to AT&T at the Closing.
SECTION 3. ADJUSTMENTS
3.1 Adjustments to Value of Assets. The Base Purchase Price shall be
------------------------------
adjusted as follows:
(a) Appropriate adjustments on a pro rata basis as of the Closing
Time will be made with respect to the Systems for all prepaid expenses other
than inventory (but only to the extent the full benefit of such prepaid expenses
will be realizable by Insight 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, subject to
-9-
paragraph (e) below, accounts receivable related to the Cable Business to the
extent specified in Section 3.1(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 AT&T, and all expenses and income
attributable to the Cable Business for the period after the Closing Time are for
the account of Insight.
(b) All advance payments to, or funds of third parties on deposit
with, AT&T as of the Closing Time and relating to the Cable Business, including
advance payments and deposits (including any accrued interest on such deposits)
by subscribers served by the Cable Business for converters, encoders, decoders,
cable television service and related sales, shall be assumed by, and credited to
the account of Insight.
(c) There shall be credited to Insight the economic value of all
accrued vacation time that Insight credits after the Closing Time to the
employees of AT&T that are hired by Insight pursuant to Section 7.3(f), 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 the
Systems that are held by Third Parties as of the Closing Time for the account of
AT&T or as security for AT&T's performance of its obligations, including
deposits on leases and deposits for utilities, will be credited to the account
of AT&T in their full amounts and will become the property of Insight; 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 Insight within 12
months following the Closing Time.
(e) AT&T will not receive credit for any of its (i) accounts
receivable resulting from cable television or internet service sales any portion
of which is 60 days or more past due as of the Closing Time, or (ii) accounts
receivable from customers whose accounts are inactive or whose service is
pending disconnection for any reason as of the Closing Time. AT&T will receive
credit for its accounts receivable resulting from cable television or internet
service sales the entire portion of which are 0-59 days past due as of the
Closing Time 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. AT&T will receive credit for its
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. AT&T
will not receive credit for advertising accounts receivable which are
outstanding more than 120 days from the
-10-
invoice date. Notwithstanding the foregoing, AT&T will receive credit for 100%
of the face amount of its advertising accounts receivable from national and
regional representation accounts, regardless of the age thereof.
(f) Any amounts paid, or accrued as a current liability, prior to
the Closing Time by AT&T or its Affiliates with respect to retroactive franchise
fees in respect of the Systems will be credited to the account of AT&T in their
full amounts to the extent that (i) such amounts can legally be passed through
to and collected from subscribers of the Systems after Closing, and (ii) no
agreement has been entered into prohibiting the collection of such amounts, with
such amounts with respect to the Systems being assets of Insight upon
collection.
(g) The adjustments provided for in this Section 3.1 will be made
without duplication. In addition, none of the adjustments provided for in this
Section 3.1 will be made with respect to any Excluded Asset or with respect to
any item of income or expense related to an Excluded Asset.
(h) The net amount of the adjustments to the Base Purchase Price
calculated under this Section 3.1 (the "Adjustment Amount"), as preliminarily
determined pursuant to Section 3.2, shall be paid by Insight to AT&T at the
Closing by wire transfer of immediately available funds or, if the Adjustment
Amount is in favor of Insight, the Base Purchase Price will be reduced by the
Adjustment Amount.
3.2 Calculation of Adjustments.
--------------------------
(a) AT&T 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 3.1 (the "Pro Rata Adjustments"), in a certificate (the "Initial
Adjustment Certificate") executed by an authorized representative of AT&T and
delivered to Insight at least 10 Business Days prior to the Closing. The Initial
Adjustment Certificate will be accompanied by appropriate supporting
documentation, including an accounts receivable detail with relevant aging
information as of the Closing Time, in summary form, supporting the
determination of the Pro Rata Adjustments proposed in such certificate.
Following receipt of the Initial Adjustment Certificate, Insight shall have five
Business Days to review such schedule and supporting information and to notify
AT&T of any disagreements with AT&T's estimates of its Pro Rata Adjustments. If
Insight provides a notice of disagreement with AT&T's estimates of such amounts
within such five Business Day period, AT&T 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 AT&T 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
AT&T'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 3.1. All
-11-
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, AT&T will deliver to Insight
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 AT&T. Insight will review AT&T's Final Adjustment
Certificate and will give written notice to AT&T of any objections it has to the
calculations shown in such certificate within 30 days after its receipt thereof.
AT&T and Insight will endeavor in good faith to resolve any such objections
within 30 days after the receipt by AT&T of Insight'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 AT&T
(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 AT&T cannot agree
with respect to the selection of an auditor, Insight and AT&T 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
AT&T 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) AT&T will provide to Insight reasonable access to all records
in its possession which were used in the preparation of its Initial Adjustment
Certificate and Final Adjustment Certificate and Insight will provide to AT&T
access to all records in its possession, following the closing, relating to the
Systems as may be necessary in the preparation of AT&T's Final Adjustment
Certificate.
SECTION 4. ASSUMED LIABILITIES AND EXCLUDED ASSETS
4.1 Excluded Assets. "Excluded Assets" means all: (a) programming
---------------
(including music programming and cable guide Contracts) and retransmission
consent Contracts other than those listed on Schedule 1.39 (System Contracts)
and those hereafter designated by AT&T as being included in the AT&T Assets by
written notice to Insight given on or before September 15, 2000, it being agreed
that leased channel access agreements are not programming agreements for
purposes of this Section 4.1; (b) Plans; (c) insurance policies of AT&T 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 AT&T; (e) cash
and cash equivalents and notes receivable of AT&T; (f) AT&T's trademarks, trade
names, service marks, service names, logos and similar proprietary rights,
subject to Section 7.11;
-12-
(g) subscriber billing Contracts and related leased equipment and software of
AT&T, subject to Section 7.12; (h) all contracts and related accounts receivable
for providing DMX service to commercial accounts via direct broadcast satellite;
(i) all Contracts relating to national advertising sales representation,
including any Contracts with National Cable Communications or Cable Networks,
Inc.; (j) all agreements pursuant to which AT&T 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 Asset; (k) any claims,
rights or choses in action of AT&T 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; (l) any books and records that AT&T is
required by any Legal Requirement to retain and any books of account, tax
reports and returns and the like related to the 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) AT&T's corporate minute books and other books and records related to
internal corporate matters and financial relationships with AT&T's lenders and
affiliates; (n) any employment, union, collective bargaining, compensation,
bonus, deferred compensation, consulting, agency or management agreements of
AT&T; (o) all documents, reports and records relating to the employees of the
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 AT&T; (p)
any agreement, right, asset or property owned, leased or held by AT&T that is
not used or held for use in connection with the operation of the Systems; (q)
AT&T's or its Affiliates' rights under the @Home Distribution Agreement (as
defined in the Limited Partnership Agreement among Insight and TCI of Indiana
Holdings, LLC (the "Partnership Agreement")), it being agreed that the parties'
rights and obligations with respect thereto shall be as specified in the
Partnership Agreement; (r) all obligations under the Social Contract released on
November 30, 1995 (FCC 95-478) between Time Warner Cable and the FCC, as amended
by the FCC Orders released May 21, 1999 (DA 99-968) and December 15, 1995 (DA 95
-2491) (the "Time Warner Social Contract") and (s) rights, assets and properties
described on Schedule 4.1.
4.2 Assumed Obligations and Liabilities. As of the Closing, Insight
-----------------------------------
will assume and after the Closing, Insight will pay, discharge and perform the
following (the "Assumed Obligations and Liabilities"): (a) those obligations
and liabilities accruing and relating to periods after the Closing Time under or
with respect to the Assets assigned and transferred to Insight at the Closing;
(b) those obligations and liabilities of AT&T to customers of the Cable Business
for (i) subscriber deposits related to the Systems held by AT&T as of the
Closing Time in the amount for which Insight received credit under Section 3.1
and (ii) customer, advertising and other advance payments held by AT&T as of the
Closing Time in the amount for which Insight received credit under Section 3.1;
(c) all obligations and liabilities accruing and relating to the Cable Business
prior to the
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Closing Time in respect of which Insight received a credit pursuant to Section
3.1; and (d) all other obligations and liabilities accruing and relating to
periods after the Closing Time and arising out of the ownership of the Assets or
operation of the Systems after the Closing Time, except to the extent that such
obligations or liabilities relate to any Excluded Asset. It is understood and
agreed that at the closing of the Contribution, the Partnership shall assume the
Assumed Obligations and Liabilities for the benefit of AT&T and its Affiliates
and upon such assumption, Insight shall have no further obligation or liability
in respect of the same. All obligations and liabilities, contingent, fixed or
otherwise, arising out of or relating to the Assets or the Systems other than
the Assumed Obligations and Liabilities will remain and be the obligations and
liabilities solely of AT&T including any obligation, liability or claim relating
to or arising pursuant to (x) rate refunds to subscribers of the 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 AT&T Excluded
Asset, including the Time Warner Social Contract and, subject to Section 7.18,
the pending Settlement Agreement and Release that relates to certain of the
Systems with respect to late fees charged by them, a copy of which, in the form
submitted to the courts, has been provided to Insight by AT&T (the "AT&T Late
Fee Settlement").
SECTION 5. INSIGHT'S REPRESENTATIONS AND WARRANTIES
Insight represents and warrants to AT&T 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:
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 its assets and to conduct its 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
its assets or the nature of its activities in connection with its business 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 business or its assets 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
-14-
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 Required Consents and the notification and expiration or earlier
termination of the waiting period under the HSR Act and except as otherwise
disclosed on Schedule 5.3, 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 other instrument or other agreement
to which Insight is a party 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 the ability of Insight to perform its
obligations under this Agreement or the Transaction Documents to which Insight
is a party.
5.4 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 AT&T could be liable.
SECTION 6. AT&T'S REPRESENTATIONS AND WARRANTIES
AT&T 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 AT&T's Schedules,
as of such specified date) as follows:
6.1 Organization and Qualification of AT&T Parties. TCI of Illinois,
----------------------------------------------
Inc. is a corporation duly organized, validly existing and in good standing
under the laws of the State of Illinois and has all requisite corporate power
and authority to own, lease and use the Assets owned, leased or used by it and
to conduct the Cable Business as it is currently conducted. TCI of Racine, Inc.
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Wisconsin and has all requisite corporate power and
authority to own, lease and use the Assets owned, leased or used by it and to
conduct the Cable Business as it is currently conducted. UACC Midwest, Inc. is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
own, lease
-15-
and use the Assets owned, leased or used by it and to conduct the Cable Business
as it is currently conducted. AT&T 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 Assets or the nature of its activities in connection with
the 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 the Cable Business, the
Assets or Systems or on the ability of AT&T to perform its obligations under
this Agreement. TCI of Racine, Inc.'s, UACC Midwest, Inc.'s and TCI of Illinois,
Inc.'s taxpayer identification numbers are ▇▇-▇▇▇▇▇▇▇, 61116778, ▇▇-▇▇▇▇▇▇▇,
respectively.
6.2 Authority and Validity. AT&T 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 it is a party. The execution and delivery by AT&T, the
performance by AT&T under, and the consummation by AT&T of the transactions
contemplated by, this Agreement and the Transaction Documents to which it is a
party have been duly and validly authorized by all required corporate action by
or on behalf of AT&T. This Agreement has been, and when executed and delivered
by AT&T the Transaction Documents will be, duly and validly executed and
delivered by AT&T and the valid and binding obligations of AT&T, enforceable
against AT&T 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.
6.3 No Conflict; Required Consents. Except for, and subject to receipt
------------------------------
of, the Required Consents, all of which are listed on Schedule 6.3, and the
notification and expiration or earlier termination of the waiting period under
the HSR Act and except as otherwise disclosed on Schedule 6.3, the execution and
delivery by AT&T, the performance of AT&T under, and the consummation of the
transactions contemplated by, this Agreement and the Transaction Documents to
which it is a party do not and will not: (a) conflict with or violate any
provision of AT&T's 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 AT&T under, (iv) result in the creation
or imposition of any Lien under any System Franchise, System License or any
System Contract or other instrument evidencing any of the Assets or by which
AT&T 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 System,
the Cable Business or on the ability of AT&T to perform its obligations under
this Agreement or the Transaction Documents to which AT&T is a party.
-16-
6.4 Assets.
------
(a) AT&T has good and valid title to (or, in the case of Assets
that are leased, valid leasehold interests in) the Assets (other than Owned Real
Property, Leased Property and Other Real Property Interests, as to which the
representations and warranties in Section 6.6 apply). The 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. The Tangible Personal Property is in
good operating condition and repair (ordinary wear and tear excepted).
(b) Except for items included in the Excluded Assets, the Assets
constitute all the assets necessary to permit Insight and the Partnership to
conduct the Cable Business and to operate the 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, System Contracts,
System Licenses and System Franchises and to perform all of the Assumed
Obligations and Liabilities.
(c) Except as described on Schedule 6.4, as of the date of this
Agreement (i) the Systems do not offer telephony, high speed data or internet
access services and (ii) the Systems do not have any digital transport
arrangement (e.g., HITS).
----
6.5 System Franchises, System Licenses, System Contracts and Other Real
-------------------------------------------------------------------
Property Interests.
------------------
(a) Except pursuant to the agreements referenced on Schedules 1.26
(Leased Property), 1.33 (Other Real Property Interests), 1.39 (System
Contracts), 1.40 (System Franchises) and 1.41 (System Licenses) or as described
on Schedule 4.1 (Excluded Assets) or otherwise included in the definition of
Excluded Assets, as of the date of this Agreement, AT&T is not bound or affected
by any of the following that relate primarily or in whole to the 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) agreements pursuant to
which the Systems receive or provide advertising sales representation services;
(vii) agreements pursuant to which a System has constructed or agreed to
construct for Third Parties or any Affiliate of AT&T, an institutional network
or otherwise provide to Third Parties or any Affiliate of AT&T,
telecommunications services other than one-way video; (viii) agreements pursuant
to which any bandwidth capacity on the Systems is leased or otherwise made
available to any Third Party or any Affiliate of AT&T; (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 the Cable Business other than those
described in any other clause of this Section which
-17-
contemplate payments by or to AT&T 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; provided that multiple dwelling unit
agreements, including bulk billed agreements and commercial service agreements,
are not required to be listed. Except as described on the Schedules to this
Agreement, no Affiliate of AT&T is a party to any documents listed on such
Schedules.
(b) Complete and correct copies of the System Franchises and System
Licenses have been delivered by AT&T to Insight or will be delivered by AT&T to
Insight by September 15, 2000. Except as set forth on Schedule 1.40 (System
Franchises), the System Franchises contain all of the commitments and
obligations of AT&T to the applicable Governmental Authority granting such
Franchises with respect to the construction, ownership and operation of the
Systems. The System Franchises and 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 AT&T's Knowledge, investigation, pending or to AT&T's Knowledge threatened,
to terminate, suspend or modify any System Franchise or System License and,
except as set forth on Schedule 1.40 (System Franchises), AT&T is in material
compliance with the terms and conditions of all the System Franchises and System
Licenses and with other applicable requirements of all Governmental Authorities
(including the FCC and the Register of Copyrights) relating to the System
Franchises and System Licenses, including all requirements for notification,
filing, reporting, posting and maintenance of logs and records. All areas
served by the Systems are served pursuant to one of the System Franchises except
as set forth on Schedule 1.40.
(c) Complete and correct copies of all System Contracts required to
be listed on the Schedules (including all Contracts relating to Leased Property
and Other Real Property Interests described on Schedules 1.26 and 1.33) have
been provided to Insight or will be provided to Insight by September 15, 2000.
Such documents constitute the entire agreement with the other party. Each such
System Contract is in full force and effect and constitutes the valid, legal,
binding and enforceable obligation of AT&T and AT&T is not and to AT&T's
Knowledge, each other party thereto is not in breach or default of any material
terms or conditions thereunder. AT&T has also provided to Insight or will
provide to Insight by September 15, 2000, a complete and correct list of all
bulk billed accounts and commercial service accounts of the Systems as of the
date of this Agreement.
6.6 Real Property. As of the date of this Agreement, all Assets
-------------
consisting of Owned Property, Leased Property and material Other Real Property
Interests are described on Schedules 1.26 (Leased Property), 1.33 (Other Real
Property Interests) and 1.34 (Owned Property). Except as otherwise disclosed on
Schedule 1.34 (Owned Property), AT&T holds title to the 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 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 Owned Property, in each case subject only to the
above-referenced Liens. Except as otherwise disclosed on Schedules 1.26 (
Leased Property) and 1.33 (Other Real Property Interests); AT&T has valid and
enforceable leasehold
-18-
interests in all Leased Property and, with respect to Other Real Property
Interests, has valid and enforceable rights to use all Other Real Property
Interests, subject only to the above-referenced Liens. Except for ordinary wear
and tear and routine repairs and except as disclosed on Schedules 1.26 (Leased
Property) or 1.34 (Owned Property), as applicable, all of the material
improvements, leasehold improvements and the premises of the Owned Property and
the premises demised under the leases and other documents evidencing the Leased
Property are in good condition and repair and are suitable for the purposes
used. Unless otherwise disclosed on Schedules 1.26 (Leased Property) or 1.34
(Owned Property), as applicable, each parcel of Owned Property and each parcel
of Leased Property and any improvements thereon and their current use (x) has
access to and over public streets or private streets for which AT&T 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 Assets or the Cable
Business, and except as disclosed on Schedules 1.26 (Leased Property) or 1.34
(Owned Property), as applicable, all buildings, towers, guy wires and anchors,
headend equipment, earth-receiving dishes and related facilities used in the
operations of the Systems are located entirely on Owned Property or Leased
Property or other real property in which AT&T has an 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 AT&T's Knowledge, except as disclosed on Schedule 6.7, the
Owned Property and Leased Property comply in all material respects with and has
previously been operated in compliance in all material respects with all
Environmental Laws. AT&T 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 Owned Property or Leased Property, (ii) transported any
Hazardous Substances to or from any Owned Property or Leased Property or (iii)
undertaken or caused to be undertaken any other activities relating to the Owned
Property or Leased Property, which could reasonably give rise to any liability
under any Environmental Law and, to AT&T's Knowledge, no other present or
previous owner, tenant, occupant or user of any Owned Property or Leased
Property or any other Person has committed or suffered any of the foregoing. To
AT&T's Knowledge, no release of Hazardous Substances outside the Owned Property
or Leased Property has entered or threatens to enter any Owned Property or
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 Owned Property or Leased Property. No Litigation
based on Environmental Laws which relates to any Owned Property or 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 AT&T or,
to AT&T's Knowledge, any other Person, or (2) to AT&T's Knowledge, is threatened
or contemplated.
-19-
(b) To AT&T's Knowledge, except as disclosed on Schedule 6.7, (i)
no aboveground or underground storage tanks are currently or have been located
on any Owned Property or Leased Property, (ii) no Owned Property or 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
Owned Property or Leased Property contains asbestos, asbestos-containing
material or material presumed to be asbestos-containing material under any
Environmental Law.
(c) AT&T has provided Insight or will provide Insight by September
15, 2000, with complete and correct copies of (i) all studies, reports, surveys
or other written materials in its possession relating to the presence or alleged
presence of Hazardous Substances at, on, under or affecting the Owned Property
or Leased Property, (ii) all notices (other than general notices made by general
publication) or other materials in its 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 Owned Property or Leased Property or activities at the Owned Property or
Leased Property and (iii) all materials in its 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 Assets as they are
currently owned, leased and used and the conduct of the Cable Business and the
operation of the 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 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 Assets, the Systems and the Cable Business. AT&T
has received no written notice of any violation by AT&T or the Cable Business of
any Legal Requirement applicable to the operation of the Cable Business as
currently conducted, or the Systems as currently operated and to AT&T'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) Except as set forth in Schedule 6.8, 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 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 Authority (1) challenging the right of the
Systems to carry any television broadcast station or deliver
-20-
the same or (2) claiming that any 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 Systems and such towers are being operated in
compliance in all material respects with applicable FCC and FAA rules; and (iii)
AT&T 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 AT&T has not agreed with any Governmental Authority to establish
customer service standards that exceed the FCC standards promulgated pursuant to
the 1992 Cable Act except as set forth in the System Franchises.
(d) Notwithstanding the foregoing, to AT&T's Knowledge, each 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 the Cable Business. AT&T 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,
AT&T makes no representation or warranty that any of AT&T's 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. AT&T
has delivered to Insight or will deliver to Insight by September 15, 2000,
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 Systems. AT&T 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
Systems which would limit or specify the rates that may be charged for cable
television services provided by the Systems following Closing and is not
currently negotiating or anticipating entering into or being subject to any new
social contract with respect to the Systems. Except as set forth on Schedule
6.8, AT&T 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 Systems
(a "Cost of Service Election"). Except as otherwise described on Schedule 6.8 as
of the date of this Agreement, (i) to the Knowledge of AT&T, 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 Systems can charge
(whether for programming, equipment, installation, service or otherwise), (ii)
except pursuant to the Time Warner Social Contract, no cable television system
included in the 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 Systems and (iv)
-21-
there is no unresolved complaint pending with respect to the CPST tier of any
System and no rate order with respect to the Systems is being appealed.
6.9 Patents, Trademarks and Copyrights. AT&T 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 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 AT&T'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 AT&T with respect to the
Systems. AT&T has delivered to Insight or will deliver to Insight by September
15, 2000, 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 the Cable Business. AT&T does not possess any patent, patent right,
trademark or copyright related to or material to the operation of the Systems
and AT&T 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 Systems and the 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. AT&T has delivered to Insight complete and correct copies of
-----------------
an unaudited balance sheet for each System as of March 31, 2000 and an unaudited
statement of operations for the year ended December 31, 1999 for each System,
including all notes and Schedules thereto, if any (all of such financial
statements and notes being hereinafter referred to as "Financial Statements").
The Financial Statements are in accordance with the books and records of AT&T,
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 the Systems at the dates and for the periods
indicated, subject, in the case of unaudited Financial Statements, only to
standard year-end adjustments and the omission of footnotes. The unaudited
balance sheets of the Systems as of March 31, 2000 are herein called the
"Balance Sheets." At the date of the Balance Sheets, AT&T 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 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 Balance Sheets
through the date of this Agreement: (x) AT&T 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 AT&T's Knowledge, individually or in the aggregate, have a material adverse
effect on the financial condition of AT&T or the results of operations of AT&T
or the Cable Business; (y) there has been no material adverse change in the
Assets comprising any System or in the business, condition, financial or
otherwise, or liabilities of the Cable Business or any System and, to AT&T's
Knowledge, no fact or condition exists or is contemplated or threatened which
would result in such a change in the future; and (z)
-22-
the 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 financial
markets), governmental legislation and regulations and other events which affect
the cable industry as a whole in the State of Illinois 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 the
Cable Business or any System or the AT&T Assets.
6.11 Litigation. Except as set forth in Schedule 6.11: (a) there is no
----------
Litigation pending or, to AT&T's Knowledge, threatened, and, to AT&T's
Knowledge, there is no investigation pending or threatened, by or before any
Governmental Authority or private arbitration tribunal against AT&T (or AT&T
with respect to clause (ii) below) which, if adversely determined, would
materially adversely affect (i) the financial condition or operations of the
Cable Business, the Systems, the Assets or (ii) the ability of AT&T 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 System Franchises, System Licenses, System Contracts or
leases or other documents evidencing the Leased Property or the Other Real
Property Interests; and (b) there is not in existence any Judgment requiring
AT&T to take any action of any kind with respect to the Assets or the operation
of the Systems, or to which AT&T (with respect to the Systems), the Systems or
the Assets are subject or by which they are bound or affected.
6.12 Tax Returns; Other Reports. AT&T 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 AT&T, 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 Assets or that could impose on Insight any
transferee liability for any taxes, penalties or interest due or to become due
from AT&T, 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
6.12, AT&T has received no notice of, nor does AT&T 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 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 by AT&T or its Affiliates
principally in connection with the Systems as of the date set forth on Schedule
6.13(a). Except to the extent that any noncompliance would not reasonably be
expected to have a material adverse effect on the Systems, AT&T and its
Affiliates have, with respect to the Systems, 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. (S)
2101, et seq. ("WARN"), 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,
-23-
sex, race and disability discrimination, occupational safety, immigration
control and the payment and withholding of Taxes. Except as set forth in
Schedule 6.13(a), to AT&T's Knowledge, there are no current or threatened
investigations relating to the classification of independent contractors engaged
by AT&T or its Affiliates principally in connection with the Systems.
(b) For purposes of this Agreement, "Plans" means 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 AT&T or any of its
ERISA Affiliates has any liability or in which any employees or agents, or any
former employees or agents, of AT&T or any of its ERISA Affiliates participate.
The Plans in which any employee of the Systems participates are set forth on
Schedule 6.13. Except to the extent that any violation would not reasonably be
expected to have a material adverse effect on the Systems, none of AT&T, any of
its ERISA Affiliates, any Plan other than a multiemployer plan (as defined in
Section 3(37) of ERISA), or to the Knowledge of AT&T or any of its ERISA
Affiliates, any Plan that is a multiemployer plan (as defined in Section 3(37)
of ERISA), is in violation of any provision of the United States Internal
Revenue Code of 1986, as amended, (the "Code") or ERISA. No material
"reportable event" (as defined in Sections 4043(c)(1), (2), (3), (5), (6), (7),
(10) and (13) of ERISA), non-exempt "prohibited transaction" (as defined in
Section 406 of ERISA or Section 4975 of the Code), "accumulated funding
deficiency" (as defined in Section 302 of ERISA), or "withdrawal liability" (as
determined under Section 4201 et seq. of ERISA) has occurred or exists with
-- ---
respect to any Plan which reasonably could result in material liability to AT&T
or any of its ERISA Affiliates. No material "accumulated funding deficiency"
(as defined in Section 302 of ERISA) or "withdrawal liability" (as determined
under Section 4201 et seq. of ERISA) has occurred or exists and is continuing
-- ---
with respect to any Plan other than a multiemployer plan (as defined in Section
3(37) of ERISA) or to the Knowledge of AT&T or any of its ERISA Affiliates, any
Plan that is a multiemployer plan (as defined in Section 3(37) of ERISA). After
the Closing, neither Insight nor any of its ERISA Affiliates will be required,
under ERISA, the Code, any collective bargaining agreement, to establish,
maintain or continue any Plan currently maintained by AT&T or any of its ERISA
Affiliates.
(c) Except as set forth on Schedule 6.13, (i) there are no
collective bargaining agreements applicable to any Person employed by AT&T or
its Affiliates principally in connection with the Systems; (ii) neither AT&T nor
its Affiliates has any duty to and neither has agreed to bargain with any labor
organization with respect to any such Person and (iii) there are not pending any
unfair labor practice charges against AT&T or its Affiliates with respect to any
such Person, 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 AT&T or its Affiliates in connection with the Systems now or
to the Knowledge of AT&T and its Affiliates, within the last one year and (iv)
there are not currently pending or threatened, nor to the Knowledge of AT&T and
its Affiliates, have there been within the last one year any strikes, picketing,
work slow downs or other labor disputes involving or relating to employees of
the Systems. Except as described on Schedule 6.13, neither AT&T nor its
Affiliates has any employment Contracts, either written or oral except for oral
contracts terminable at will without penalty, with any employee of the Systems
and none of the
-24-
employment Contracts listed on Schedule 6.13 requires AT&T or its Affiliates or
will require Insight or its Affiliates to employ any Person after the Closing.
(d) The following documents and records will be located at one of
the System offices included in the Assets on the Closing Date: Forms 395A for
calendar years 1995 through 1999, all correspondence to and from the FCC
regarding such 395A reports, proof of EEO certification for calendar years 1993
through 1999, and OSHA 200 logs and loss runs for calendar years 1999 and 2000.
6.14 Accounts Receivable. AT&T'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 AT&T, that
resulted from the regular course of its 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 AT&T in its
Financial Statements and those credits or reductions to such accounts made in
the ordinary course of business.
6.15 Finders and Brokers. AT&T 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.
6.16 Transactions With Affiliates. Except to the extent set forth in
----------------------------
Schedule 6.16 or included in the Excluded Assets and except with respect to
customary corporate overhead services provided by the corporate, division or
regional offices of AT&T, AT&T is not a party to any material business
arrangement or business relationship with any of its Affiliates that affects the
Systems, and none of its Affiliates owns any property or right, tangible or
intangible, that is used principally in the business or operations of the
Systems.
SECTION 7. ADDITIONAL COVENANTS
7.1 Access to Premises and Records. Between the date of this Agreement
------------------------------
and the Closing Date, AT&T will give to Insight 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 Insight and its representatives all such documents, financial information and
other information regarding its Cable Business and its Assets as Insight from
time to time reasonably may request, including the employment records described
in Section 7.3; provided that no investigation by Insight will affect or limit
the scope of any of the representations, warranties, covenants and indemnities
of AT&T in this Agreement or in any Transaction Document or limit AT&T'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, AT&T with respect
-------
to its Cable Business, the Systems and the Assets:
-25-
(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 but will be under no obligation to incur cost to do so (other than
employee salaries and similar costs);
(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 the Assets, other than in the ordinary
course of business provided that Insight'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) 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; or (vii) engage in any hiring
or employee compensation practices (including severance plans or policies) that
are inconsistent with past practices except for changes in such practices
implemented by AT&T and its Affiliates on a company-wide basis (and it being
agreed that AT&T will give prompt notice to Insight of any such changes);
(d) will promptly deliver to Insight 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 AT&T at any time from the date of this
Agreement until the Closing;
-26-
(e) will give or cause to be given to Insight 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 Insight 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 AT&T 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) 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 Insight 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 Insight's consent is not required for any such action.
7.3 Employees.
---------
(a) Insight may, but shall have no obligation to, employ or offer
employment to all employees of the Cable Business. Within fifteen (15) days
after the date of this Agreement, AT&T shall provide to Insight a list of all
employees of the Systems by work location as of a recent date, showing the
original hire date, then-current positions and rates of compensation, rate type
(hourly or salary) and scheduled hours per week, whether the employee is subject
to an employment agreement, a collective bargaining agreement or represented by
a labor organization and indicating which of such employees AT&T desires to
retain as its employees (the "Retained Employees"). Within forty five (45) days
after receipt of such list, or such other date as the parties may agree, Insight
will provide to AT&T in writing a list of employees that Insight or its
Affiliates may desire to employ following the Closing Time (subject only to the
evaluations and return to active service conditions permitted by this Section
7.3), which list shall not include any Retained Employees. AT&T agrees and shall
cause its appropriate Affiliates, to cooperate in all reasonable respects with
Insight to allow Insight or Insight's Affiliates to evaluate the employees of
the Cable Business to make hiring decisions. In this regard, Insight shall have
the opportunity to make such appropriate prehire investigation of AT&T's
employees, as it deems necessary, including the right to review personnel files
which shall include attendance and discipline records and performance
evaluations, and the right to interview such employees during normal working
hours so long as such interviews
-27-
are conducted after notice to AT&T and do not unreasonably interfere with AT&T's
operations and such investigations and interviews do not violate any law or
contract. All employment offers shall include base compensation at least equal
to the employee's rate of base compensation as of the Closing Time. Insight may,
if it wishes, condition any offer of employment upon the employee's passing a
pre-employment drug screening test, the completion of a satisfactory background
check and, if the employee is on Approved Leave of Absence at the Closing Time
(the "Employees on Leave Status"), upon the employees' return to active service
(with or without reasonable accommodations requirements) within sixteen (16)
weeks after the Closing Time or, if earlier, on the first Business Day following
expiration of the employees' Approved Leave of Absence. For purposes of this
Agreement, employees on "Approved Leave of Absence" means employees absent from
work at the Closing Time and unable to perform their regular job duties by
reason of illness or injury under approved plans or policies of AT&T or its
Affiliates (other than employee's absence for less than ten (10) days due to
short term illness or injury not requiring written approval by the employer) or
otherwise absent from work under approved or unpaid leave policies of AT&T or
its Affiliates. Insight shall bear the expense of such examination but AT&T
shall, upon reasonable notice, cooperate in the scheduling of such examinations
so long as the examinations do not unreasonably interfere with AT&T's
operations. AT&T agrees that as of the Closing Time, the only employees of the
Systems shall be the employees to be hired by Insight or its Affiliates (the
"Hired Employees") which employees will be listed on a schedule provided by AT&T
on the day before the Closing Date. Such schedule also will include a list of
Employees on Leave Status as of the Closing Date for each System. Insight and
its Affiliates shall not be deemed to employ any of the employees of AT&T's
Cable Business at any time except for (i) the Hired Employees, as of the Closing
Time and (ii) such Employees on Leave Status as are hired by Insight or its
Affiliates after the Closing Time, at the time such Employee on Leave Status
begins employment with Insight or its Affiliates in accordance with this Section
7.3(a). Insight and its Affiliates shall have no obligation to AT&T or its
Affiliates or to the employees of AT&T's Cable Business, other than the Hired
Employees as of the Closing Time and the Employees on Leave Status when, and to
the extent that, such Employees on Leave Status become employed by Insight or
its Affiliates after the Closing Time, it being acknowledged that Insight or its
Affiliates will hire any Employee on Leave Status to whom it has made an offer
of employment if such employee returns to active service (with or without
reasonable accommodations requirements) within sixteen (16) weeks after the
Closing Time or, if earlier, on the first Business Day following expiration of
the employee's Approved Leave of Absence, provided that the employee returns to
active service (with or without reasonable accommodation) by such date.
(b) AT&T or its Affiliates will pay to all employees of its Cable
Business all compensation, including salaries, commissions, bonuses, deferred
compensation, severance (if applicable), insurance, vacation (except for accrued
vacation included in the adjustments calculated pursuant to Section 3.1(c) to be
carried over pursuant to Section 7.3(f)), pension, profit sharing, disability
payment, medical, sick pay and other compensation or benefits to which they are
entitled for periods through and including the date of termination of the
employee's employment with AT&T 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
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of their employment. AT&T shall promptly satisfy any legal obligation with
respect to continuation of group health coverage required pursuant to Section
4980B of the Code or Section 601, et seq., of ERISA.
(c) If the transactions contemplated by this Agreement do not
result in a permissible distribution event under Section 401(k) of the Code, and
if the parties mutually agree to do so, the parties shall cooperate in arranging
transfers between AT&T Corp.'s 401(k) plan and Insight's 401(k) plan with
respect to the Hired Employees as of the effective date of such asset transfer.
If there is no plan-to-plan transfer, and if no permissible distribution is
allowed, in order to permit AT&T or its appropriate Affiliate, to make
distributions to any former employee of AT&T who becomes a Hired Employee of
Insight of the balance of such employee's 401(k) account in AT&T's or its
Affiliate's tax qualified plan, if any, as soon as legally permitted, Insight
shall notify AT&T of the date of termination of such employee's employment with
Insight for any reason.
(d) All claims and obligations under, pursuant to or in connection
with any welfare, medical, insurance, disability or other employee benefit plans
of AT&T or its Affiliates or arising under any Legal Requirement affecting
System employees of AT&T or its Affiliates incurred through and including the
Closing Time or resulting from or arising from events, obligations or
occurrences occurring or commencing through and including the Closing Time will
remain the responsibility of AT&T, whether or not such employees are hired by
Insight after the Closing Time. Insight will not have nor assume any obligation
or liability under or in connection with any such plan maintained by AT&T or its
Affiliates. For purposes of this Agreement, the following claims and
liabilities shall be deemed to be incurred as follows: (i) medical, dental
and/or prescription drug benefits when the treatment is provided, except with
respect to such benefits provided in connection with a continuous period of
hospitalization, which shall be deemed to be incurred at the time of admission
to the hospital; (ii) life, accidental death and dismemberment and business
travel accident insurance benefits and workers' compensation benefits, upon the
death, disability or accident giving rise to such benefits; and (iii) salary
continuation or other short-term disability benefits, or long-term disability,
upon commencement of the disability giving rise to such benefit. In regard to
any Employee on Leave Status, such responsibility for benefit coverage of such
employee, and liability for payment of benefits, shall remain that of AT&T until
such employee becomes a Hired Employee of Insight after the Closing Time
pursuant to Section 7.3.(a) or is terminated by AT&T or its Affiliate.
(e) AT&T or its appropriate Affiliate will remain solely
responsible for, and will indemnify and hold harmless Insight from and against
all Losses arising from or with respect to, all salaries, commissions, bonuses,
deferred compensation and all severance, insurance, pension, profit sharing,
disability payment, vacation (except for accrued vacation included in the
adjustments calculated pursuant to Section 3.1(c)), medical, sick, holiday,
continuation coverage and other compensation or benefits to which AT&T's
employees may be entitled, whether or not such employees may be hired by Insight
or any Affiliate of Insight, as a result of their employment by AT&T or any
Affiliate of AT&T, the termination of their employment with AT&T or its
Affiliates, the consummation of the transactions contemplated hereby or pursuant
to any applicable Legal
-29-
Requirement or otherwise relating to their employment with AT&T or its
Affiliates. Any liability under WARN with regard to any employee terminated on
or prior to the Closing Time or not hired by Insight on or after the Closing
Time, shall, as a matter of contract between the parties, be the responsibility
of AT&T. Each party and such party's Affiliates shall cooperate with the other
party and such party's Affiliates, if requested, in the giving of WARN notices
on behalf of the other party.
(f) Notwithstanding anything to the contrary herein, Insight or
Affiliates of Insight (a "Hiring Party") shall (i) upon receipt of a schedule
showing the vacation balances and value of such balances of each Hired Employee,
which schedule shall be delivered by AT&T within 10 days after the Closing Date,
credit each Hired Employee the lesser of the amount of vacation accrued and
unused by him or her as an employee of AT&T 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 (to a maximum of four weeks) accrued and unused by him or
her as an employee of AT&T through and including the Closing Time; provided,
however, that if any Hired Employee has accrued vacation time in excess of the
amount credited by the Hiring Party, then AT&T shall pay to such employee the
amount of such excess and the Hiring Party shall not assume any liability or
obligation in respect of such excess; (ii) give each Hired Employee credit for
such employee's past service with AT&T or its Affiliates as of the Closing Time
(including past service with any prior owner or operator of the Systems to the
extent such Hired Employee previously received credit for such service) for
purposes of eligibility to participate in the Hiring Party's employee benefit
plans that are generally applicable to other similarly situated employees and
their dependents of the Hiring Party; (iii) give each Hired Employee credit for
his or her past service with AT&T or its Affiliates at the Closing Time
(including past service with any prior owner or operator of the Systems to the
extent such Hired Employee previously received credit for such service) for
purposes of participation and vesting under the Hiring Party's 401(k) plan,
stock plans and pension plan, if any, that are generally applicable to other
similarly situated employees of the Hiring Party; (iv) give each Hired Employee
credit for such employee's past service with AT&T or its Affiliates as of the
Closing Time (including past service with any prior owner or operator of the
Systems to the extent such Hired Employee previously received credit for such
service) for any waiting periods under the Hiring Party's employee benefit
plans, including any group health and disability plans, that are generally
applicable to other similarly situated employees of the Hiring Party, and not
subject any Hired Employees to any limitations on benefits for any preexisting
conditions provided that the treatment is covered under the Hiring Party's group
health plans; (v) credit each Hired Employee under any group health plans for
any deductible and out of pocket expenses previously met by a Hired Employee
under AT&T's or its Affiliates' group health plans for the plan year in which
the transfer of employment occurs; and (vi) provide the Hired Employees as of
the Closing Time with employee benefits and compensation no less favorable in
the aggregate than those employee benefits and compensation that are generally
applicable to other similarly situated employees of the Hiring Party.
Notwithstanding anything set forth in this Section 7.3(f), the Hiring Party
shall have no obligation to employees of AT&T who are Employees on Leave Status
until they become employees of the Hiring Party pursuant to Section 7.3(a)
hereof.
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(g) If the Hiring Party discharges without cause within 120 days
after the Closing any Hired Employee, then (1) the Hiring Party shall pay cash
severance benefits to such Hired Employee in accordance with AT&T's severance
benefit plan based on the terms of such plan as in effect as of the Closing Time
and delivered to the Hiring Party at or prior to the Closing Time and (2) the
Hiring Party shall give such Hired Employee any non-cash severance benefits
available to similarly situated employees of the Hiring Party, and shall in each
case count the period of such Hired Employee's employment with AT&T or its
Affiliates and with Insight or its Affiliates for purposes of calculating
severance benefits due to the Hired Employee pursuant to this sentence.
Following such 120 day period, such Hired Employee shall be covered under
Insight's severance benefit plan counting the period of employment with AT&T and
its Affiliates and Insight or its Affiliates for purposes of calculating
benefits under such plan. For purposes of this Section 7.3(g), "cause" shall
have the meaning set forth in the Hiring Party's employment policies, procedures
or agreements applicable to Hiring Party's employees who are similarly situated
to the discharged Hired Employee. Any employee that is hired by the Partnership
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
Partnership.
(h) If AT&T has, or acquires, a duty to bargain with any labor
organization with respect to employees of the Cable Business, then AT&T will (i)
give prompt written notice of such development to the Hiring Party, including
notice of the date and place of any negotiating sessions as they are planned or
contemplated and permit the Hiring Party to have a representative present at all
negotiating sessions with such labor organization and at all meetings
preparatory thereto (including making the Hiring Party's representative a
representative of AT&T's delegation if required by the labor organization) and
(ii) not, without the Hiring Party's written consent, enter into any Contract
with such labor organization that purports to bind the Hiring Party, including
any successor clause or other clause that would have this purpose or effect,
except pursuant to a Contract required to be entered into under the NCE
Agreement. AT&T acknowledges and agrees that Insight has not agreed to be
bound, and will not be bound, without an explicit assumption of such liability
or responsibility by Insight, by any provision of any collective bargaining
agreement or similar Contract with any labor organization to which AT&T is or
may become bound, except to the extent that such a contract entered into
pursuant to the NCE Agreement so requires. Except as may be required on the
part of AT&T or its Affiliates under the terms of the Neutrality and Consent
Agreement dated July 1, 1999 by and among CWA, IBEW and certain business
operating units and divisions of AT&T Corp. (the "NCE Agreement"), AT&T shall
not take any action or engage in any inaction which might obligate or require it
or another party to this Agreement or its Affiliates to recognize or bargain
with any labor organization on behalf of its System employees. Further, except
as may be required on the part of AT&T and its Affiliates under the NCE
Agreement, AT&T shall cooperate fully with Insight in resisting union
organization of the System employees. For purposes of this Agreement and
determining what is required under the NCE Agreement, Insight and the
Partnership acknowledge that AT&T in its sole discretion may elect to treat all
of the Systems as covered by the NCE Agreement.
-31-
(i) Nothing in this Section 7.3 or elsewhere in this Agreement
shall be deemed to make any employee of AT&T or its Affiliates a third party
beneficiary of this Agreement.
7.4 Leased Vehicles; Other Capital Leases. AT&T 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.
7.5 Required Consents, Franchise Renewal.
-------------------------------------
(a) AT&T 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 Insight, and will deliver to
Insight copies of such Required Consents promptly after they are obtained by
AT&T; provided however that AT&T will afford Insight the opportunity to review,
approve and revise the form of Required Consent prior to delivery to Insight.
Insight will cooperate with AT&T in its efforts to obtain its Required Consents,
but Insight will not 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
20 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) AT&T will use commercially reasonable efforts to obtain and
Insight will cooperate with AT&T 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.
(c) AT&T will use commercially reasonable efforts to obtain and
Insight will cooperate with AT&T 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.
(d) Insight will cooperate with AT&T in its efforts to obtain
renewals or extensions of any System Franchises pursuant to Section 7.5(b) or
(c), but Insight will not 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
-32-
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. Insight shall make
the decision as to whether the foregoing standard is met with respect to the
System Franchises.
(e) Notwithstanding Section 7.5(a), AT&T will not 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 AT&T'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 AT&T will cooperate with
and assist the proposed assignee 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 proposed assignee is not required to
take pursuant to this Section 7.5; and (ii) for any business radio license which
AT&T 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. The parties agree that Insight will
-----------------------------
not obtain title insurance or surveys with respect to any real property it is
acquiring pursuant to this Agreement.
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 AT&T will each
complete and file, or cause to be completed and filed by such party's ultimate
parent, 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
-33-
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 Assets will be shared equally by
AT&T 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 Assets will be paid by AT&T.
7.9 Distant Broadcast Signals. Unless otherwise restricted or
-------------------------
prohibited by any Governmental Authority or applicable Legal Requirement, if
requested 45 days or more prior to the anticipated Closing Date by Insight or
the Partnership, AT&T will delete prior to the Closing Date any distant
broadcast signals which Insight or the Partnership determines will result in
unacceptable liability on the part of Insight or the Partnership for copyright
payments with respect to continued carriage of such signals after the Closing.
7.10 Programming. Insight will execute and deliver or will cause the
-----------
Partnership to execute and deliver to AT&T such documents as may be reasonably
requested by AT&T to comply with the requirements of its programming Contracts
and channel line-up requirements with respect to divestitures of cable
television systems. AT&T will execute and deliver such documents as may be
reasonably requested by Insight or the Partnership to comply with the
requirements of its programming Contracts and channel line-up requirements with
respect to acquisitions 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 Use of Names and Logos. For a period of 90 days after the Closing,
----------------------
Insight will be entitled to use the trademarks, trade names, service marks,
service names, logos and similar proprietary rights of AT&T to the extent
incorporated in or on the Assets transferred to it at the Closing, provided that
Insight will exercise reasonable efforts to remove all such names, marks, logos
and similar proprietary rights from the Assets by such earlier date as
reasonably practicable following the Closing. Notwithstanding the foregoing,
Insight 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 Insight.
7.12 Transitional Billing Services. Subject to Section 7.24, AT&T will
-----------------------------
provide to Insight 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 Insight will be provided
on terms and conditions reasonably satisfactory to each party; provided however
that the amount to be paid by Insight for such services will not exceed the cost
to AT&T of providing such Transitional Billing
-34-
Services. AT&T will notify Insight at least 45 days prior to the Closing of the
cost to AT&T of providing such Transitional Billing Services.
7.13 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 or from AT&T with respect to the Cable Business
and Systems (it being understood and agreed that all proprietary information of
AT&T that is included among the Assets shall become the proprietary information
of Insight 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 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 Insight nor AT&T 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.
7.14 Bulk Transfers. Insight and AT&T each waives compliance by the
--------------
other with Legal Requirements relating to bulk transfers applicable to the
transactions contemplated hereby.
7.15 Lien Searches. Within 20 Business Days prior to the anticipated
-------------
Closing Date, AT&T will obtain at its expense and deliver to Insight, 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 AT&T's principal offices are
located, including copies
-35-
of all financing statements or similar notices or filings (and any continuation
statements) discovered by such search company.
7.16 Further Assurances. At, and after the Closing, each of Insight and
------------------
AT&T 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 Insight any accounts receivable or other claims included in the
Assets.
7.17 Consents. If and to the extent Insight shall have waived
--------
satisfaction of the condition to Closing set forth in Section 8.1(e) subsequent
to the Closing, AT&T 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 (other than consents which AT&T has no further
obligation to obtain pursuant to Section 7.5(e)) and will deliver copies of the
same, reasonably satisfactory in form and substance, to Insight. The obligations
set forth in this Section will survive the Closing for a period of 30 days and
will not be merged in the consummation of the transactions contemplated hereby.
After the expiration of the survival period set forth in this Section 7.17, AT&T
will no longer be obligated to obtain any Required Consents which were not
obtained on or before the Closing and will be released from all liability for
any failure to obtain such consents with respect to which AT&T used commercially
reasonable efforts to obtain. To the extent that Insight or the Partnership, as
applicable, continues to try to obtain any Required Consents that were not
obtained by AT&T prior to the expiration of the survival period set forth in
this Section 7.17, AT&T will cooperate with and provide information to Insight
and the Partnership to the extent reasonably necessary for Insight or the
Partnership to continue to try to obtain such Required Consents.
7.18 Cooperation as to Rates and Fees.
--------------------------------
(a) AT&T shall diligently pursue any current rate proceedings with
respect to its Systems and shall make available to Insight upon request copies
of any documents, correspondence or notices sent by or received by AT&T 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 Insight, AT&T
shall not settle any rate proceeding with respect to its Systems if such
settlement would (i) impose upon Insight any liability, or (ii) adversely affect
the rates to be charged by Insight during the post-Closing time period unless
AT&T compensates Insight 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 3.2(b). Notwithstanding the foregoing,
Insight agrees that AT&T may complete the AT&T Late Fee Settlement.
(c) After Closing, notwithstanding the terms of Section 11.4
hereof, Insight shall have the right at its own expense to assume control of the
defense of any rate proceeding with
-36-
respect to any System that remains pending as of Closing or that arises after
Closing but relates to the pre-Closing operation of a System; provided, that
AT&T may complete the pending AT&T Late Fee Settlement and the defense of such
litigation as it relates to the Systems shall not be turned over to Insight.
Insight shall notify AT&T regarding the commencement of any such rate proceeding
relating to the pre-Closing operation of such System. In any such rate
proceeding involving a System, AT&T shall cooperate in such proceeding and
promptly deliver to Insight all information reasonably requested by Insight as
necessary or helpful in such proceeding.
(i) If Insight elects to assume control of the defense of
any such rate proceeding, then (1) AT&T shall have the right to participate, at
its expense, in the defense in such rate proceeding, and (2) Insight shall have
the right to settle any rate proceeding relating to the pre-Closing operation of
a System unless under such settlement AT&T would be required to bear liability
with respect to the pre-Closing time period, in which event such settlement
shall require AT&T's prior written consent, which consent shall not be
unreasonably withheld.
(ii) If Insight does not elect to assume control of the
defense of any such rate proceeding, then (1) Insight shall have the right to
participate, at its expense, in the defense in such rate proceeding, and (2)
without the prior consent of Insight, AT&T shall not settle such rate proceeding
if such settlement would require Insight to bear any liability or would
adversely affect the rates to be charged by Insight unless AT&T compensates
Insight 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 3.2(b). In any such rate proceeding involving
a System, Insight shall cooperate in such proceeding and promptly deliver to
AT&T all information in its possession that is reasonably requested by AT&T as
necessary or helpful in such proceeding.
(d) If AT&T or the Systems are required, following Closing,
pursuant to any Legal Requirement, settlement or otherwise, including, without
limitation, the Time Warner Social Contract or the AT&T Late Fee Settlement, to
reimburse or provide in-kind or another form of consideration to any subscribers
of the Systems in respect of 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 or provide such in-kind or
other form of consideration through Insight's billing system on terms specified
by AT&T, and AT&T will reimburse Insight for all such payments and other
consideration 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 AT&T with all information in Insight's
possession that is reasonably required by AT&T in connection with such
reimbursement. In addition, following the contribution by Insight of the Systems
to the Partnership, the Partnership or its subsidiary that owns such Systems
will comply with paragraph 16 of the AT&T Late Fee Settlement on its current
terms with respect to those Systems covered by such settlement and will
hereafter execute from time to time such documentation as may be reasonably
requested by AT&T to further evidence such agreement (it being understood that
this shall be the Partnership's and its subsidiaries' sole obligation with
respect to the AT&T Late Fee Settlement).
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7.19 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
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.
7.20 Offers. AT&T will not 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.
7.21 Environmental Reports. The parties agree that Insight will not
---------------------
obtain environmental assessments or reports with respect to the real property
that it is acquiring pursuant to this Agreement.
7.22 Cooperation on SEC Matters. AT&T agrees to cooperate, and cause its
--------------------------
Affiliates and independent accountants to cooperate, in all commercially
reasonable respects with Insight and its counsel and accountants in connection
with any filing required to be made in connection with this Agreement by Insight
or its Affiliates with the SEC or any securities exchange or pursuant to
applicable Legal Requirements, including the Securities Act and the Exchange Act
and requirements of securities exchanges (including any filing required in
connection with any public financing proposed to be obtained by Insight). AT&T
shall provide to Insight such financial statements, schedules and other
information relating to the Cable Business and Systems as Insight may reasonably
request for inclusion in any such filing, in appropriate form as provided in
applicable federal or state securities laws. Insight or its Affiliates shall
promptly reimburse AT&T or its Affiliates or, upon request, advance to AT&T or
its Affiliates, all out-of-pocket costs, expenses and fees incurred by AT&T or
its Affiliates or independent accountants or attorneys in connection with the
preparation or provision of such financial statements, schedules and other
information to Insight and Insight or its Affiliates shall likewise bear any
out-of-pocket costs, expenses and fees incurred by Insight in connection with
the preparation and inclusion by Insight or its Affiliates of such information
in any such filing. AT&T hereby consents to the inclusion by Insight or its
Affiliates of such financial statements, schedules and other information of the
Cable Business and Systems, if requested to be so included by Insight, in any
report to be filed with the SEC or any securities exchange or pursuant to
applicable Legal Requirements, including the Securities Act and the Exchange Act
and requirements of securities exchanges. AT&T agrees to use, and will cause
its Affiliates to use, commercially reasonable efforts to obtain the consent of
the independent public accountants of AT&T or its Affiliates to the inclusion of
such financial statements in any report to be filed by Insight. Insight shall
indemnify and hold harmless AT&T and its Affiliates from any Losses resulting
from the inclusion of any such financial statements, schedules and other
information in any such filing, except Insight shall not have any
indemnification liability to AT&T or its Affiliates to the extent such Losses
arise out of any information included by Insight or its
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Affiliates in reliance upon and in conformity with written information furnished
to Insight or its Affiliates by AT&T or its Affiliates for use in connection
with such filings.
7.23 Cooperation on Pending Litigation. With respect to any defense or
---------------------------------
prosecution of any Litigation with respect to the Systems that relates to the
period prior to the Closing Time and for which AT&T and its Affiliates are
responsible pursuant to this agreement, Insight will cooperate with and assist
AT&T and its Affiliates, upon reasonable request, by making witnesses available
and providing all information in its possession (including access to employees
with information regarding such proceedings and access to books and records that
may relate to the proceedings) that AT&T and its Affiliates may reasonably
require in connection with such Litigation or in response to any complaint,
claim, inquiry, order or requirements of any Governmental Authority or other
Third Party so long as such cooperation and assistance does not unduly interfere
with Insight's business, as determined by Insight in good faith. AT&T will
promptly reimburse Insight for all reasonable direct out-of-pocket expenses
incurred by Insight or its Affiliates in connection with such cooperation;
provided that the provisions of this Section 7.23 shall not in any way be
interpreted to limit Insight's indemnification rights in accordance with Section
11 of this Agreement or be subject to the limitations on indemnification set
forth in Section 11.5.
7.24 CSG. Insight will continue to use CSG as the billing service
---
provider for the Systems that currently use CSG as their billing provider unless
AT&T consents to a change in billing service providers for such Systems.
7.25 Time Warner Social Contract. AT&T agrees that it is responsible for
---------------------------
all subscriber refunds, interest, penalties and all other costs and expenses and
other Losses resulting from the AT&T System's compliance or non-compliance with
the terms of the Time Warner Social Contract, whether such compliance or non-
compliance occurs before or after the Closing, and AT&T shall indemnify and hold
Insight, the Partnership and its subsidiaries harmless from all of the
foregoing. If requested by AT&T, after the contribution to the Partnership, the
Partnership will render any refunds or other payments to the subscribers of the
AT&T Systems through the Partnership's billing system and AT&T shall reimburse
the Partnership for all such payments and for the Partnership's reasonable out-
of-pocket expenses incurred in connection therewith. Insight, the Partnership
and its subsidiaries are not required to assume or agree to any obligations or
burdens on the AT&T Systems in connection with the satisfaction of any
obligations arising from the Time Warner Social Contract as currently in effect
or as subsequently modified.
7.26 Schedules. Insight and AT&T acknowledge that the parties may need
---------
to provide copies of additional due diligence materials and make additional
revisions to its Schedules and that they need to reach final agreement on, among
other things, which of the System Contracts will be Excluded Assets and whether,
and the terms on which, any arrangements between AT&T and its Affiliates
relating to the Systems will continue after the Closing. Prior to September 15,
2000, either AT&T or Insight may update its Schedules or make revisions thereto
and either may request the other party to make revisions to such party's
Schedules (but the delivering party shall not be obligated to make the requested
revisions). Each party shall deliver to the other party prior to
-39-
September 15, 2000, copies of any agreements or other information that is
required to be provided hereunder or that the other party may reasonably request
in connection with its review of the Schedules. The Schedules of each of AT&T
and Insight in the form attached to this Agreement as of the date hereof,
together with all revisions thereto delivered to the other party prior to
September 15, 2000, shall constitute the final Schedules of each of them and
shall be deemed to have been attached to this Agreement and to have been a part
hereof for all purposes as of the date of this Agreement, whether or not this
Agreement is hereafter terminated pursuant to this Section 7.26. If any issue or
matter, individually, or in the aggregate, disclosed in the delivering party's
Schedules would affect the economic or legal substance of the transactions
contemplated hereby in any manner materially adverse to the other party, and
such other party notifies the delivering party in writing (a "Schedule Objection
Notice") of such effect on or before September 30, 2000, the parties will
negotiate in good faith to reach an appropriate agreement with respect to such
issue or matter so as to effect the original benefit of the bargain of the
parties as closely as possible. If a valid Schedule Objection Notice is given
and the parties are unable to reach an appropriate agreement as contemplated by
the foregoing sentence prior to October 15, 2000, the party that delivered such
notice may terminate this Agreement by written notice given to the other party
no later than October 20, 2000 but prior to such agreement being reached. In
addition, the parties will negotiate in good faith to reach a final agreement on
or before September 15, 2000 as to which of the System Contracts will be
Excluded Assets and whether, and the terms on which, any arrangements between
AT&T and its Affiliates will continue after the Closing. If the parties are
unable to reach a final agreement on these matters on or prior to September 15,
2000, either party may terminate this Agreement by written notice given to the
other party no later than September 20, 2000 but prior to an agreement being
reached.
SECTION 8. CONDITIONS PRECEDENT
8.1 Conditions to Insight's Obligations. 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 AT&T 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. AT&T 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. AT&T has delivered the items and documents
----------
required to be delivered by it pursuant to this Agreement, including those
required under Section 9.2.
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(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 System, the Cable Business or the Assets, (ii) compel Insight to dispose
of or hold separately all or a material portion of any System, the Cable
Business or the 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 right of
Insight to exercise full rights of ownership of the Systems or (iv) prevent or
make illegal the consummation of any transactions contemplated by this
Agreement.
(e) Consents. Insight has received evidence, in form and substance
--------
reasonably satisfactory to it, that the following 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: Required Consents
for the System Franchises, the System Licenses, and any Leased Property or Other
Real Property Interest on which a headend, tower or other reception site is
located.
(f) No Material Adverse Change. There has not been any material
--------------------------
adverse change in the Assets or the financial condition or operations of the
Cable Business or the 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 Systems are serving at least 96,000 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) Retransmission Consents. With respect to any retransmission
-----------------------
consent agreements for broadcast signals carried on the Systems on the date of
this Agreement and on the date of the Closing that are included as part of the
Excluded Assets, all required retransmission consents for continued carriage of
such broadcast signals by Insight have been obtained on terms and conditions
reasonably acceptable to Insight.
(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 and the AT&T Affiliates who are
party to the Contribution Agreement shall stand ready, willing and able to
-41-
consummate the Contribution in accordance with the terms and conditions set
forth in the Contribution Agreement.
8.2 Conditions to AT&T's Obligations. The obligations of AT&T 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 AT&T.
(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) HSR Act. All filings required under the HSR Act have been made
-------
and the applicable waiting period has expired or been earlier terminated.
(e) Contribution. All of the conditions to AT&T'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 AT&T in accordance with
the terms of the Contribution Agreement 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.
SECTION 9. THE CLOSING
9.1 The Closing; Time and Place. 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 AT&T 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 AT&T's Delivery Obligations. At the Closing, AT&T will deliver or
---------------------------
cause to be delivered to Insight the following.
(a) ▇▇▇▇ of Sale and Assignment Agreement. An executed ▇▇▇▇ of Sale
-------------------------------------
and Assignment Agreement in a form mutually and reasonably acceptable to AT&T
and Insight and
-42-
such other instruments of transfer, assignment or assumption, in form and
substance mutually satisfactory to AT&T and Insight, as Insight may reasonably
require to further document the transfer and assignment of the Assets to
Insight.
(b) 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 Owned Property, duly executed and acknowledged and in recordable
form, warranting only to defend title to such Owned Property in the peaceable
possession of Insight against all Persons claiming by, through or under AT&T,
subject however, to any Permitted Liens.
(c) Lien Releases. Evidence reasonably satisfactory to Insight that
-------------
all Liens (other than Permitted Liens) affecting or encumbering the 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.
(d) Vehicle Titles. Title certificates to all vehicles included among
--------------
the 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.
(e) Evidence of Authorization Actions. Certified resolutions of the
---------------------------------
Board of Directors or other evidence reasonably satisfactory to Insight that
AT&T 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.
(f) FIRPTA Certificate. A FIRPTA Non-Foreign Seller Certificate from
------------------
AT&T certifying that it is not a foreign person within the meaning of Section
1445 of the Code reasonably satisfactory in form and substance to Insight.
(g) Officer's Certificate. A certificate from AT&T executed by an
---------------------
executive officer of AT&T, 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; and (ii) the total number of
EBSs for all the Systems, estimated in good faith as of the Closing Date.
(h) Documents and Records. All 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 Systems. Delivery
of the foregoing will be deemed made to the extent such Books and Records are
then located at any of the offices included in the Owned Property or Leased
Property.
(i) Other. Such other documents and instruments as may be reasonably
-----
necessary to effect the intent of this Agreement and consummate the transactions
contemplated hereby.
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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 AT&T Illinois
the following.
(a) Purchase Price. The Base Purchase Price, as adjusted pursuant to
--------------
Section 3, payable by Insight to AT&T.
(b) Assumption Agreement. An executed Assumption Agreement in a form
--------------------
mutually acceptable to AT&T and Insight and such other instruments of transfer,
assignment or assumption, in form and substance mutually and reasonably
satisfactory to Insight and AT&T, as AT&T may reasonably require to further
document the transfer and assignment of the Assets to Insight and Insight's
assumption of the Assumed Obligations and Liabilities.
(c) Evidence of Authorization Actions. Evidence reasonably
---------------------------------
satisfactory to AT&T 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.
(d) 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 AT&T certifying that the
conditions specified in Sections 8.2(a) and 8.2(b) have been satisfied.
(e) Other. Such other documents and instruments as may be reasonably
-----
necessary to effect the intent of this Agreement and consummate the transactions
contemplated hereby.
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 AT&T;
(b) by either Insight or AT&T at any time (if such party itself is
not then in material breach of any of its covenants, 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
-44-
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) by either Insight or AT&T 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;
(d) by either Insight or AT&T if the Contribution Agreement is
terminated prior to closing thereunder; or
(e) as otherwise provided in this Agreement.
10.2 Effect of Termination. If this Agreement is terminated pursuant to
---------------------
Section 7.26 or 10.1, all obligations of the parties under this Agreement will
terminate, except for the obligations set forth in Sections 7.13, 7.22 (with
respect to Insight's obligation to pay for AT&T's and its Affiliates' expenses
as specified therein) and 12.15. Notwithstanding the preceding sentence,
termination of this Agreement pursuant to Sections 10.1(b), 10.1(c), 10.1(d),
10.1(e) or 12.16 will not limit or impair any remedies that AT&T 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 AT&T and Insight in this Agreement and in the Transaction
Documents and the covenants of AT&T 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 Section 6.4(a) and as to title to Owned Property
set forth in Section 6.6 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
Section 6.6 will not be merged into any such deed or other Transaction Document.
The periods of survival of the
-45-
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.
11.2 Indemnification by AT&T. From and after the Closing AT&T will
-----------------------
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 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 AT&T in this Agreement or any Transaction Document; (b) any
breach of any covenant, agreement or obligation of AT&T contained in this
Agreement or any Transaction Document; (c) any act or omission of AT&T with
respect to, or any event or circumstance related to, the ownership or operation
of the Assets or the conduct of the 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 AT&T not included in the Assumed Obligations and
Liabilities; (e) any matter affecting title to Owned Property 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 AT&T; (f) any claim that the transactions contemplated by this
Agreement to be performed by AT&T 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 AT&T at and after the Closing Time or that Insight is deemed
to be a successor employer of AT&T or its Affiliates 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 Owned Property or
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 Systems for periods through and including the Closing Time; or
(j) the Time Warner Social Contract, without regard to whether the Losses arise
as a result of actions or omissions before or after the Closing Time, including
as provided in Section 7.25.
-46-
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 AT&T 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; or (c) 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) or (c) of this Section, AT&T's rights to pursue its claim
under clauses (b) or (c) 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 a 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 and then only if the settlement or compromise
includes as an unconditional term thereof a release of the Indemnified Party
from all liability relating to such matter 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 - AT&T. AT&T 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 AT&T 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 AT&T would, but for the provisions of this Section, be liable exceeds, on
an aggregate basis, $100,000, in which case AT&T will be liable for all such
Insight Damages from dollar zero, which will be due and payable within 15 days
after AT&T's receipt of a statement therefor. AT&T 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
$5,000,000. 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 3.1 and 3.2; (ii) direct out-of-pocket
expenses incurred by Insight in connection with cooperation or pending
litigation pursuant to Section 7.23 or other expenses and costs for which AT&T
is responsible pursuant to this Agreement, including, without limitation,
pursuant to Sections 7.8 and 7.18; or (iii) 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 or AT&T's litigation listed
in the Schedules to this Agreement. AT&T will not be liable under Section
11.2(c) to the extent that an adjustment was made in favor of Insight pursuant
to Sections 3.1 and 3.2.
11.6 Limitations on Indemnification - Insight. Insight will not be liable
----------------------------------------
to AT&T 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 AT&T 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 "AT&T Damages") unless the amount of AT&T Damages for which
Insight would, but for the provisions of this Section, be liable exceeds, on an
aggregate basis, $100,000, in which case Insight will be liable for all such
AT&T Damages from dollar zero, which will be due and payable within
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15 days after Insight's receipt of a statement therefor. Insight will not have
any liability under Section 11.3(a) or (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 3.1 and 3.2; (ii)
expenses and costs for which Insight is responsible pursuant to this Agreement,
including, without limitation, pursuant to Sections 7.8, 7.12, 7.18 and 7.22 or
(iii) any claims made pursuant to Sections 11.3(c). Insight will not be liable
under Section 11.3(c) to the extent that an adjustment was made in favor of AT&T
Illinois pursuant to Sections 3.1 and 3.2.
SECTION 12. MISCELLANEOUS PROVISIONS
12.1 Parties Obligated and Benefitted. 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, (a) after the Closing, without the consent of AT&T, Insight shall
assign all of its rights and obligations under this Agreement to the Partnership
pursuant to Section 9.3(i) of the Contribution Agreement (provided that, without
limiting the Partnership's indemnification rights, Insight shall retain its
indemnification rights against AT&T for Third Party claims against Insight as if
they had not been assigned), (b) any party may grant to its lenders a security
interest in the indemnification rights hereunder inuring to the benefit of such
party and (c) AT&T may assign its rights under this Agreement but not its
obligations to a qualified intermediary within the meaning of Code Section
1.1031(k)-1(g)(4)(iii) ("Qualified Intermediary") and Insight hereby consents to
any such assignment by AT&T. If AT&T elects to assign its rights under this
Agreement to a Qualified Intermediary, Insight will cooperate with AT&T as may
be reasonably necessary in connection with such assignment and the deferred tax-
free exchange to be accomplished in connection therewith, including
acknowledging the execution of a written agreement between AT&T and the
Qualified Intermediary. No assignment by any party of its rights hereunder
shall release such party from its obligations hereunder except that Insight
shall be released from its obligations hereunder following its assignment to the
Partnership of its rights and obligations hereunder as contemplated above and
the Partnership's assumption of all obligations of Insight hereunder for the
benefit of AT&T and its Affiliates.
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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 AT&T at:
AT&T Broadband, LLC
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy similarly addressed to the attention of Legal
Department
With a copy to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.C.
▇▇▇ - ▇▇/▇▇/ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
To Insight at:
Insight Communications Company, L.P.
▇▇▇ ▇/▇▇/ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
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Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
and
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 sold and purchased 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.
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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.
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. 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 Assets or resulting from
fire, theft or other casualty (except reasonable wear and tear) will be borne by
AT&T 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, AT&T will immediately notify Insight in writing of that
fact and subject to the other
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provisions of this Section 12.16, 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 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, AT&T may,
subject to Insight's right to consummate the Closing as described below, elect
to terminate this Agreement by written notice to Insight 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 Assets is sufficiently
substantial so as to preclude and prevent resumption of normal operations of any
material portion of a System or the repair, replacement or restoration of the
lost or damaged property within twenty days, or if earlier, the Outside Closing
Date and AT&T is not obligated to correct the problem because the cost would
exceed $2,000,000, and AT&T elects not to repair, replace and restore the lost
or damaged property, Insight may elect to terminate this Agreement upon written
notice to AT&T at any time within ten days after it receives written notice from
AT&T of the occurrence of the event of such loss or damage and the fact that
AT&T is not obligated to correct the problem and AT&T 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 AT&T'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 AT&T and all insurance proceeds
payable as a result of the occurrence of the event resulting in such loss or
damage to the Assets (in each case to the extent not used to repair, replace or
restore such lost or damaged 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 AT&T to Insight or the
rights to such proceeds will be assigned by AT&T to Insight if not yet paid over
to AT&T, and upon such delivery or assignment and consummation of the Closing
AT&T shall have no additional liability to Insight in respect of any such loss
or damage to the Assets.
If, prior to the Closing, any part of or interest in any material 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 AT&T that it intends to
condemn all or any part of any material Assets (such event being called, in
either case, a "Taking"), then Insight may terminate this Agreement. If Insight
does not elect to terminate this Agreement, then (a) Insight will have the sole
right, in the name of AT&T if Insight so elects, to negotiate for, claim,
contest and receive all damages with respect to the Taking, (b) AT&T will be
relieved of its obligation to convey to Insight the Assets or interests
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that are the subject of the Taking, (c) at the Closing AT&T will assign to
Insight all of AT&T's rights to all damages payable with respect to the Taking
and (d) following the Closing, AT&T will give such further assurances of such
rights and assignment with respect to the Taking as Insight 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 ILLINOIS, INC.
By:____________________________
Name:__________________________
Title:_________________________
TCI OF RACINE, INC.
By:____________________________
Name:__________________________
Title:_________________________
UACC MIDWEST, INC.
By:____________________________
Name:__________________________
Title:_________________________
INSIGHT COMMUNICATIONS COMPANY, L.P.
By: Insight Communications Company, Inc., its
general partner
By:_______________________
Name:_____________________
Title:____________________
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