Exhibit 2.2
ASSET EXCHANGE AGREEMENT
dated August 15, 2000
between
MEDIAONE OF ILLINOIS, INC.
and
INSIGHT COMMUNICATIONS COMPANY, L.P.
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS.......................................... 1
1.1 1992 Cable Act.................................... 1
1.2 Affiliate......................................... 1
1.3 Assets............................................ 2
1.4 AT&T Assets....................................... 2
1.5 AT&T Books and Records............................ 2
1.6 AT&T Leased Property.............................. 2
1.7 AT&T Other Intangibles............................ 2
1.8 AT&T Other Real Property Interests................ 2
1.9 AT&T Owned Property............................... 2
1.10 AT&T Required Consents............................ 3
1.11 AT&T System Contracts............................. 3
1.12 AT&T System Franchises............................ 3
1.13 AT&T System Licenses.............................. 3
1.14 AT&T Tangible Personal Property................... 3
1.15 AT&T's Cable Business............................. 4
1.16 Basic Services.................................... 4
1.17 Business Day...................................... 4
1.18 Cable Act......................................... 4
1.19 Cable Business.................................... 4
1.20 Closing Time...................................... 4
1.21 Communications Act................................ 4
1.22 Contract.......................................... 4
1.23 Contribution...................................... 4
1.24 Equivalent Basic Subscribers (or "EBSs").......... 4
1.25 Environmental Law................................. 5
1.26 ERISA............................................. 5
1.27 ERISA Affiliate................................... 5
1.28 Expanded Basic Services........................... 6
1.29 FCC............................................... 6
1.30 Financial Statements.............................. 6
1.31 GAAP.............................................. 6
1.32 Governmental Authority............................ 6
1.33 Hazardous Substances.............................. 6
1.34 HSR Act........................................... 6
1.35 Insight Assets.................................... 6
1.36 Insight Books and Records......................... 7
1.37 Insight Leased Property........................... 7
1.38 Insight Other Intangibles......................... 7
1.39 Insight Other Real Property Interests............. 7
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1.40 Insight Owned Property........................... 7
1.41 Insight Required Consents........................ 7
1.42 Insight System Contracts......................... 8
1.43 Insight System Franchises........................ 8
1.44 Insight System Licenses.......................... 8
1.45 Insight Tangible Personal Property............... 8
1.46 Insight's Cable Business......................... 8
1.47 Judgment......................................... 8
1.48 Knowledge........................................ 8
1.49 Leased Property.................................. 8
1.50 Legal Requirement................................ 8
1.51 Liberty Media Group.............................. 9
1.52 Lien............................................. 9
1.53 Litigation....................................... 9
1.54 Losses........................................... 9
1.55 Other Real Property Interests.................... 9
1.56 Owned Property................................... 9
1.57 Pay TV........................................... 9
1.58 Permitted Lien................................... 9
1.59 Person........................................... 10
1.60 Required Consents................................ 10
1.61 System........................................... 10
1.62 System Contracts................................. 10
1.63 System Franchises................................ 10
1.64 System Licenses.................................. 10
1.65 Tangible Personal Property....................... 10
1.66 Taxes............................................ 10
1.67 Third Party...................................... 11
1.68 Transaction Documents............................ 11
1.69 Other Definitions................................ 11
1.70 Accounting Terms................................. 12
SECTION 2. EXCHANGES........................................... 12
2.1 Exchanges........................................ 12
SECTION 3. CONSIDERATION....................................... 13
3.1 Value of Assets.................................. 13
3.2 Adjustments to Value of Assets................... 13
3.3 Calculation of Adjustments....................... 15
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SECTION 4. ASSUMED LIABILITIES AND EXCLUDED ASSETS............ 16
4.1 AT&T Assumed Obligations and Liabilities........... 16
4.2 AT&T Excluded Assets............................... 17
4.3 Insight Assumed Obligations and Liabilities........ 18
4.4 Insight Excluded Assets............................ 18
SECTION 5. INSIGHT'S REPRESENTATIONS AND WARRANTIES.............. 19
5.1 Organization and Qualification of Insight.......... 19
5.2 Authority and Validity............................. 20
5.3 No Conflict; Required Consents..................... 20
5.4 Assets............................................. 21
5.5 Insight System Franchises, Insight System Licenses,
Insight System Contracts and Insight Other
Real Property Interests............................ 21
5.6 Real Property...................................... 22
5.7 Environmental...................................... 23
5.8 Compliance with Legal Requirements................. 24
5.9 Patents, Trademarks and Copyrights................. 26
5.10 Financial Statements; Undisclosed Liabilities;
Absence of Certain Changes or Events............... 26
5.11 Litigation......................................... 27
5.12 Tax Returns; Other Reports......................... 27
5.13 Employment Matters................................. 28
5.14 Accounts Receivable................................ 29
5.15 Finders and Brokers................................ 29
5.16 Transactions With Affiliates....................... 29
SECTION 6. AT&T ILLINOIS' REPRESENTATIONS AND WARRANTIES...... 30
6.1 Organization and Qualification of AT&T Illinois.... 30
6.2 Authority and Validity............................. 30
6.3 No Conflict; Required Consents..................... 30
6.4 Assets............................................. 31
6.5 AT&T System Franchises, AT&T System Licenses,
AT&T System Contracts and AT&T Other Real Property
Interests.......................................... 31
6.6 Real Property...................................... 33
6.7 Environmental...................................... 34
6.8 Compliance with Legal Requirements................. 35
6.9 Patents, Trademarks and Copyrights................. 36
6.10 Financial Statements; Undisclosed Liabilities;
Absence of Certain Changes or Events............... 37
6.11 Litigation......................................... 37
6.12 Tax Returns; Other Reports......................... 38
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6.13 Employment Matters................................ 38
6.14 Accounts Receivable............................... 40
6.15 Finders and Brokers............................... 40
6.16 Transactions With Affiliates...................... 40
SECTION 7. ADDITIONAL COVENANTS.............................. 40
7.1 Access to Premises and Records.................... 40
7.2 Continuity and Maintenance of Operations; Certain
Deliveries and Notices............................ 40
7.3 Employees......................................... 42
7.4 Leased Vehicles; Other Capital Leases............. 47
7.5 Required Consents; Franchise Renewal.............. 47
7.6 Title Commitments and Surveys..................... 48
7.7 HSR Notification.................................. 49
7.8 Transfer Taxes.................................... 49
7.9 Distant Broadcast Signals......................... 49
7.10 Programming....................................... 50
7.11 Use of Names and Logos............................ 50
7.12 Transitional Billing Services..................... 50
7.13 Confidentiality and Publicity..................... 50
7.14 Bulk Transfers.................................... 51
7.15 Allocation of Value to Exchanged Assets........... 51
7.16 Lien Searches..................................... 52
7.17 Further Assurances................................ 52
7.18 Consents.......................................... 52
7.19 Cooperation as to Rates and Fees.................. 52
7.20 Satisfaction of Conditions........................ 54
7.21 Offers............................................ 54
7.22 Environmental Reports............................. 55
7.23 Cooperation on SEC Matters........................ 55
7.24 Rebuild of AT&T Systems........................... 56
7.25 Cooperation on Pending Litigation................. 56
7.26 CSG............................................... 57
7.27 Schedules......................................... 57
SECTION 8. CONDITIONS PRECEDENT.............................. 58
8.1 Conditions to Insight's Obligations............... 58
8.2 Conditions to AT&T Illinois' Obligations.......... 59
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Page
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SECTION 9. THE CLOSING....................................... 60
9.1 The Closing; Time and Place....................... 60
9.2 AT&T Illinois' Delivery Obligations............... 60
9.3 Insight's Delivery Obligations.................... 62
SECTION 10. TERMINATION AND DEFAULT........................... 63
10.1 Termination Events................................ 63
10.2 Effect of Termination............................. 64
SECTION 11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION................................... 64
11.1 Survival of Representations and Warranties........ 64
11.2 Indemnification by AT&T Illinois.................. 65
11.3 Indemnification by Insight........................ 66
11.4 Third Party Claims................................ 66
11.5 Limitations on Indemnification - AT&T Illinois.... 67
11.6 Limitations on Indemnification - Insight.......... 68
SECTION 12. MISCELLANEOUS PROVISIONS.......................... 68
12.1 Parties Obligated and Benefited................... 68
12.2 Notices........................................... 69
12.3 Right to Specific Performance..................... 71
12.4 Waiver............................................ 71
12.5 Captions.......................................... 71
12.6 Choice of Law..................................... 71
12.7 Terms............................................. 71
12.8 Rights Cumulative................................. 71
12.9 Time.............................................. 71
12.10 Late Payments..................................... 71
12.11 Counterparts...................................... 71
12.12 Entire Agreement.................................. 71
12.13 Severability...................................... 72
12.14 Construction...................................... 72
12.15 Expenses.......................................... 72
12.16 Risk of Loss...................................... 72
12.17 Tax Consequences.................................. 74
12.18 Commercially Reasonable Efforts................... 74
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LIST OF SCHEDULES AND EXHIBITS
Schedules
Schedule 1.6 AT&T Leased Property
Schedule 1.8 AT&T Other Real Property Interests
Schedule 1.9 AT&T Owned Property
Schedule 1.11 AT&T System Contracts
Schedule 1.12 AT&T System Franchises
Schedule 1.13 AT&T System Licenses
Schedule 1.25A Insight Rates
Schedule 1.25B AT&T Illinois Rates
Schedule 1.37 Insight Leased Property
Schedule 1.39 Insight Other Real Property Interests
Schedule 1.40 Insight Owned Property
Schedule 1.42 Insight System Contracts
Schedule 1.43 Insight System Franchises
Schedule 1.44 Insight System Licenses
Schedule 4.2 AT&T Excluded Assets
Schedule 4.4 Insight Excluded Assets
Schedule 5.3 Insight Required Consents
Schedule 5.4 Insight Liens and Permitted Liens
Schedule 5.7 Insight Environmental Matters
Schedule 5.8 Insight Cost of Service Elections
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Schedule 5.10 Insight Financial Statements; Insight Changes or
Events
Schedule 5.11 Insight Litigation
Schedule 5.12 Insight Tax Matters
Schedule 5.13(a) Insight Employees
Schedule 5.13 Insight Plans; Employee Matters
Schedule 5.16 Insight Affiliate Transactions
Schedule 6.3 AT&T Required Consents
Schedule 6.4 AT&T Liens and Permitted Liens
Schedule 6.7 AT&T Environmental Matters
Schedule 6.8 AT&T Cost of Service Elections
Schedule 6.10 AT&T Financial Statements; AT&T Changes or Events
Schedule 6.11 AT&T Litigation
Schedule 6.12 AT&T Tax Matters
Schedule 6.13(a) AT&T Employees
Schedule 6.13 AT&T Plans; Employee Matters
Schedule 6.16 AT&T Affiliate Transactions
Schedule 7.24 AT&T System Upgrade Requirements
Exhibits
Exhibit A Insight Systems
Exhibit B AT&T Systems
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ASSET EXCHANGE AGREEMENT
------------------------
THIS ASSET EXCHANGE AGREEMENT ("Agreement") is made and entered into as of
the 15th day of August, 2000, by and between MediaOne of Illinois, Inc., a
Delaware corporation ("AT&T Illinois"), and Insight Communications Company,
L.P., a Delaware limited partnership ("Insight").
RECITALS
A. Insight owns and operates cable television systems which are
franchised or hold other operating authority and operate in and around
Claremont, California and the other communities in California listed on Exhibit
A (the "Insight Systems").
B. AT&T Illinois owns and operates cable television systems which are
franchised or hold other operating authority and operate in and around Freeport,
Illinois and the other communities in Illinois listed on Exhibit B (the "AT&T
Systems").
C. This Agreement sets forth the terms and conditions on which Insight
will convey to AT&T Illinois substantially all of the assets comprising or used
or useful in connection with Insight's Cable Business and AT&T Illinois will
convey to Insight substantially all of the assets comprising or used or useful
in connection with AT&T's Cable Business, all in such a manner as to effect, to
the extent reasonably possible, like-kind exchanges of such assets under Section
1031 of the United States Internal Revenue Code of 1986, as amended (the
"Code").
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
--------------
Competition Act of 1992, as amended, and the FCC rules and regulations
promulgated thereunder.
1.2 Affiliate. With respect to any Person, any Person controlling,
---------
controlled by or under common control with such Person; "control" means the
ownership, directly or indirectly, of voting securities representing the right
generally to elect a majority of the directors (or similar officials) of a
Person or the possession, by contract or otherwise, of the authority to direct
the management and policies of a Person. 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 Illinois.
1.3 Assets. The Insight Assets or the AT&T Assets or both, as the context
------
requires.
1.4 AT&T Assets. All assets, properties, privileges, rights, interests
-----------
and claims, real and personal, tangible and intangible, of every type and
description that are owned, leased, held for use or used in connection with
AT&T's Cable Business and in which AT&T Illinois has any right, title or
interest or acquires any right, title or interest on or before the Closing,
including AT&T Tangible Personal Property, AT&T Owned Real Property, AT&T Leased
Property, AT&T Other Real Property Interests, AT&T System Franchises, AT&T
System Licenses, AT&T System Contracts, AT&T Books and Records and AT&T Other
Intangibles, but excluding any AT&T Excluded Assets.
1.5 AT&T Books and Records. All engineering records, files, data,
----------------------
drawings, blueprints, schematics, reports, lists, plans and processes and all
other files of correspondence, lists, records and reports concerning AT&T's
Cable Business, including subscribers and prospective subscribers of the AT&T
Systems, signal and program carriage and dealings with Governmental Authorities,
including all reports filed by or on behalf of AT&T Illinois with the FCC and
statements of account filed by or on behalf of AT&T Illinois with the U.S.
Copyright Office, but excluding any AT&T Excluded Assets.
1.6 AT&T Leased Property. All leasehold interests in real property that
--------------------
is held for use or used in connection with AT&T's Cable Business which AT&T
Illinois has or acquires prior to Closing, including those described as AT&T
Leased Property on Schedule 1.6.
1.7 AT&T Other Intangibles. All intangible assets other than AT&T System
----------------------
Franchises, AT&T System Licenses and AT&T System Contracts, including subscriber
lists, accounts receivable, claims (excluding any claims relating to AT&T
Excluded Assets), patents, copyrights and going concern value, if any, that are
owned, held for use or used in connection with AT&T's Cable Business and in
which AT&T Illinois has, or acquires prior to Closing, any right, title or
interest.
1.8 AT&T 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
AT&T's Cable Business and in which AT&T Illinois has, or acquires prior to
Closing, any right, title or interest, including those interests described as
AT&T Other Real Property Interests on Schedule 1.8, but not including AT&T
Leased Property or AT&T Owned Property.
1.9 AT&T Owned Property. All fee interests in real property that is
-------------------
owned, held for use or used in connection with AT&T's Cable Business which AT&T
Illinois has or acquires prior to
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Closing, including those described as AT&T Owned Property on Schedule 1.9 and
all improvements thereon.
1.10 AT&T Required Consents. Any and all consents, authorizations and
----------------------
approvals required for (i) AT&T Illinois to transfer the AT&T Assets to Insight
and Insight to transfer the AT&T Assets to Insight Midwest, L.P., a Delaware
limited partnership (the "Partnership"); (ii) the Partnership to, directly or
indirectly, transfer the AT&T 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
AT&T Systems and to own, lease, use and operate the AT&T Assets and the AT&T
Systems at the places and in the manner in which the AT&T Assets are used and
the AT&T 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 AT&T System Franchises, the AT&T System Licenses, the leases and other
documents evidencing AT&T Leased Property or AT&T Other Real Property Interests
and the AT&T System Contracts, including those consents, authorizations and
approvals required under the AT&T System Franchises, the AT&T System Licenses,
the leases and other documents evidencing AT&T Leased Property and AT&T Other
Real Property Interests and the AT&T System Contracts.
1.11 AT&T 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 AT&T System Franchises and AT&T System Licenses) held for
use or used in connection with AT&T's Cable Business and to which AT&T Illinois
is, or becomes prior to Closing, as permitted by this Agreement, a party or
bound, including those described on Schedule 1.11.
1.12 AT&T 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 AT&T's Cable Business, including all amendments and
modifications thereto and all renewals thereof, for the areas and communities
listed on Schedule 1.12.
1.13 AT&T System Licenses. The intangible cable television channel
--------------------
distribution rights, cable television relay service (CARS), business radio and
other licenses, copyright notices and other licenses, authorizations, consents
or permits issued by the FCC or any other Governmental Authority in connection
with AT&T's Cable Business (other than AT&T System Franchises, AT&T System
Contracts and AT&T Other Real Property Interests), including those described on
Schedule 1.13.
1.14 AT&T Tangible Personal Property. All tangible personal property
-------------------------------
that is owned, leased, held for use or used in connection with AT&T's Cable
Business and in which AT&T Illinois 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,
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microwave equipment, converters, testing equipment, motor vehicles, office
equipment, computers and billing equipment, furniture, fixtures, supplies,
inventory and other physical assets.
1.15 AT&T's Cable Business. The cable television business and other
---------------------
income-generating businesses related to the AT&T Systems conducted by AT&T
Illinois through the AT&T Systems.
1.16 Basic Services. The lowest tier of cable television service offered
--------------
to subscribers of a System that includes the retransmission of local broadcast
signals as defined by the Cable Act and the 1992 Cable Act.
1.17 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.
1.18 Cable Act. The Cable Communications Policy Act of 1984, as amended,
---------
and the rules and regulations promulgated thereunder.
1.19 Cable Business. Insight's Cable Business or AT&T's Cable Business,
--------------
as the context requires.
1.20 Closing Time. 12:01 A.M., Mountain Time, on the Closing Date.
------------
1.21 Communications Act. The Communications Act of 1934, as amended, and
------------------
the rules and regulations promulgated thereunder.
1.22 Contract. Any contract, mortgage, deed of trust, bond, indenture,
--------
lease, license, note, franchise, certificate, option, warrant, right or other
instrument, document, obligation or agreement, whether written or oral.
1.23 Contribution. The transactions contemplated by the Contribution
------------
Agreement among certain Affiliates of AT&T Illinois, Insight and the Partnership
dated as of the date of this Agreement (the "Contribution Agreement") to be
consummated at the closing thereunder.
1.24 Equivalent Basic Subscribers (or "EBSs"). As of any date of
----------------------------------------
determination and for each franchise area served by a System, the sum of (a) the
total number of private residential customer accounts that are billed by
individual unit for at least Basic Services (regardless of whether such accounts
are in single-family homes or in individually billed units in apartment
buildings and other multi-unit buildings) (exclusive of (i) "second connects"
and "additional outlets" as such terms are commonly understood in the cable
television industry, and (ii) accounts that are not charged or are charged less
than the standard monthly service fees and charges then in effect for such
System for Basic Services) and (b) the quotient of (i) the total monthly
xxxxxxxx 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
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customer accounts that are billed by individual unit but pay less than the
standard monthly service fees charged for Basic Services, but excluding xxxxxxxx
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 1.24A (Insight Rates) or
Schedule 1.24B (AT&T Illinois Rates) and such rate card specified in Schedule
1.24(A) and Schedule 1.24(B) lists the current rates charged by Insight and AT&T
Illinois, as applicable, 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 xxxxxxxx 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 xxxxxxxx to all accounts billed by individual
unit included in clause (b) above and any commercial, bulk-billed and other
accounts not billed by individual unit representing an installation or other
non-recurring charge, a charge for equipment or for any outlet or connection
other than the first outlet or first connection in any individually billed unit
or, with respect to a bulk account, in any residential unit (e.g., an individual
----
apartment or rental unit), a charge for any tiered service other than Expanded
Basic Services (whether or not included within Pay TV), any charge for Pay TV or
a pass-through charge for sales taxes, line-itemized franchise fees, fees
charged by the FCC and the like, (iv) any individually billed unit and all
xxxxxxxx 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 xxxxxxxx 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 xxxxxxxx will be deemed due on the first day of the period
for which the service to which such xxxxxxxx relate is provided.
1.25 Environmental Law. Any Legal Requirement concerning the protection
-----------------
of public or employee health, safety, welfare or the environment, including
Legal Requirements relating to emissions, discharges, releases or threatened
releases of Hazardous Substances into the environment, air (including both
ambient and within buildings and other structures), surface water, ground water
or land or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Substances.
1.26 ERISA. The Employee Retirement Income Security Act of 1974, as
-----
amended, and the rules and regulations promulgated thereunder and published
interpretations with respect thereto.
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1.27 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.
1.28 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.
1.29 FCC. The Federal Communications Commission.
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1.30 Financial Statements. Insight's Financial Statements or AT&T's
--------------------
Financial Statements, as the context requires.
1.31 GAAP. Generally accepted accounting principles as in effect from
----
time to time in the United States of America.
1.32 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.
1.33 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.
1.34 HSR Act. The Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
-------
as amended, and the rules and regulations promulgated thereunder.
1.35 Insight Assets. All assets, properties, privileges, rights,
--------------
interests and claims, real and personal, tangible and intangible, of every type
and description that are owned, leased, held for use or used in connection with
Insight's Cable Business and in which Insight has any right, title or
-6-
interest or acquires any right, title or interest on or before the Closing,
including Insight Tangible Personal Property, Insight Owned Real Property,
Insight Leased Property, Insight Other Real Property Interests, Insight System
Franchises, Insight System Licenses, Insight System Contracts, Insight Books and
Records and Insight Other Intangibles, but excluding any Insight Excluded
Assets.
1.36 Insight Books and Records. All engineering records, files, data,
-------------------------
drawings, blueprints, schematics, reports, lists, plans and processes and all
other files of correspondence, lists, records and reports concerning Insight's
Cable Business, including subscribers and prospective subscribers of the Insight
Systems, signal and program carriage and dealings with Governmental Authorities,
including all reports filed by or on behalf of Insight with the FCC and
statements of account filed by or on behalf of Insight with the U.S. Copyright
Office, but excluding any Insight Excluded Assets.
1.37 Insight Leased Property. All leasehold interests in real property
-----------------------
that is held for use or used in connection with Insight's Cable Business which
Insight has or acquires prior to Closing, including those described as Insight
Leased Property on Schedule 1.37.
1.38 Insight Other Intangibles. All intangible assets other than Insight
-------------------------
System Franchises, Insight System Licenses and Insight System Contracts,
including subscriber lists, accounts receivable, claims (excluding any claims
relating to Insight Excluded Assets), patents, copyrights and going concern
value, if any, that are owned, held for use or used in connection with Insight's
Cable Business and in which Insight has, or acquires prior to Closing, any
right, title or interest.
1.39 Insight Other Real Property Interests. All easements and rights of
-------------------------------------
access (other than those relating to multiple dwelling units) and other
interests in real property that are held for use or used in connection with
Insight's Cable Business and in which Insight has, or acquires prior to Closing,
any right, title or interest, including those interests described as Insight
Other Real Property Interests on Schedule 1.39, but not including Insight Leased
Property or Insight Owned Property.
1.40 Insight Owned Property. All fee interests in real property that is
----------------------
held for use or used in connection with Insight's Cable Business which Insight
has or acquires prior to Closing, including those described as Insight Owned
Property on Schedule 1.40 and all improvements thereon.
1.41 Insight Required Consents. Any and all consents, authorizations and
-------------------------
approvals required for (i) Insight to transfer the Insight Assets to AT&T
Illinois; (ii) AT&T Illinois to operate the Insight Systems and to own, lease,
use and operate the Insight Assets and the Insight Systems at the places and in
the manner in which the Insight Assets are used and the Insight Systems are
operated as of the date of this Agreement and as of the Closing; and (iii) AT&T
Illinois to assume and perform the Insight System Franchises, the Insight System
Licenses, the leases and other
-7-
documents evidencing Insight Leased Property and Insight Other Real Property
Interests and the Insight System Contracts, including those consents,
authorizations and approvals required under the Insight System Franchises, the
Insight System Licenses, the leases and other documents evidencing Insight
Leased Property and Insight Other Real Property Interests and the Insight System
Contracts.
1.42 Insight System Contracts. All pole line agreements, underground
------------------------
conduit agreements, crossing agreements, multiple dwelling, bulk billing or
commercial service agreements, leased channel access agreements and other
Contracts (other than Insight System Franchises and Insight System Licenses)
held for use or used in connection with Insight's Cable Business and to which
Insight is, or becomes prior to Closing, as permitted by this Agreement, a party
or bound, including those described on Schedule 1.42.
1.43 Insight System Franchises. All franchise agreements, operating
-------------------------
permits or similar governing agreements, instruments, resolutions, statutes,
ordinances, approvals, authorizations and permits obtained from any franchising
authority in connection with Insight's Cable Business, including all amendments
and modifications thereto and all renewals thereof, for the areas and
communities listed on Schedule 1.43.
1.44 Insight System Licenses. The intangible cable television channel
-----------------------
distribution rights, cable television relay service (CARS), business radio and
other licenses, copyright notices and other licenses, authorizations, consents
or permits issued by the FCC or any other Governmental Authority in connection
with Insight's Cable Business (other than Insight System Franchises, Insight
System Contracts and Insight Other Real Property Interests), including those
described on Schedule 1.44.
1.45 Insight Tangible Personal Property. All tangible personal property
----------------------------------
that is owned, leased, held for use or used in connection with Insight's Cable
Business and in which Insight has, or acquires prior to Closing, any right,
title or interest, including towers, tower equipment, aboveground and
underground cable, distribution systems, headend amplifiers, line amplifiers,
microwave equipment, converters, testing equipment, motor vehicles, office
equipment, computers and billing equipment, furniture, fixtures, supplies,
inventory and other physical assets.
1.46 Insight's Cable Business. The cable television business and other
------------------------
income-generating businesses related to the Insight Systems conducted by Insight
through the Insight Systems.
1.47 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.
1.48 Knowledge. The actual knowledge of a particular matter of one or
---------
more of the principal corporate personnel of such party involved in the
transactions contemplated by this Agreement or the general manager or one or
more of the managers of the AT&T Systems or Insight Systems, as applicable.
-8-
1.49 Leased Property. The Insight Leased Property or AT&T Leased
---------------
Property or both, as the context requires.
1.50 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.
1.51 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.
1.52 Lien. Any security interest, security agreement, financing
----
statement filed with any Governmental Authority, conditional sale or other title
retention agreement, any lease, consignment or bailment given for purposes of
security, any mortgage, lien, indenture, pledge, option, encumbrance, adverse
interest, constructive trust or other trust, claim, attachment, exception to,
defect in or other condition affecting title or other ownership interest
(including but not limited to reservations, rights of entry, possibilities of
reverter, encroachments, protrusions, easements, rights-of-way, rights of first
refusal, restrictive covenants, leases and licenses) of any kind, which
constitutes an interest in or claim against property, whether arising pursuant
to any Legal Requirement, System License, System Franchise, System Contract or
otherwise.
1.53 Litigation. Any written claim, action, suit, proceeding,
----------
arbitration, or hearing.
1.54 Losses. Any claims, losses, liabilities, damages, penalties, costs
------
and expenses, including interest that may be imposed in connection therewith,
expenses of investigation, reasonable fees and disbursements of counsel and
other experts, and the cost to any Person making a claim or seeking
indemnification under this Agreement with respect to funds expended by such
Person by reason of the occurrence of any event or the existence or assertion of
any Liens (other than Permitted Liens) with respect to which indemnification is
sought, except Losses incurred by a party or on behalf of such party in
asserting any claim for indemnification against the other party where it is
ultimately determined (including by agreement of the parties) that such party is
not entitled to indemnification from the other party (before giving effect to
the limitations on such indemnification obligations set forth in Sections 11.5
and 11.6).
1.55 Other Real Property Interests. The Insight Other Real Property
-----------------------------
Interests or the AT&T Other Real Property Interests or both, as the context
requires.
1.56 Owned Property. Insight Owned Property or AT&T Owned Property or
--------------
both, as the context requires.
-9-
1.57 Pay TV. A la carte tiers or premium programming services selected
------
by and sold to subscribers on a per channel or per program basis.
1.58 Permitted Lien. Any (a) Lien securing Taxes, assessments and
--------------
governmental charges not yet due and payable, (b) zoning law or ordinance or any
similar Legal Requirement, (c) right reserved to any Governmental Authority to
regulate the affected property or to acquire a Franchise or System upon default
under, or termination of, any 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
Illinois or Insight in favor of a third party that is disclosed in the Schedules
to this Agreement, and (f) in the case of Leased Property, (i) the rights of any
lessor and (ii) any Lien granted by any lessor of Leased Property; provided that
"Permitted Lien" will not include any Lien securing a debt or claim (other than
inchoate materialmen's, mechanics', workmen's, repairmen's or other like Liens
arising in the ordinary course of business or any Lien described in clause (f)
above) or any Lien which could prevent or impair in any way the conduct of the
business of the affected System as it is currently being conducted, and provided
further that the classification of any Lien as a "Permitted Lien" will not
affect any liability which AT&T Illinois may have under this Agreement for any
such Lien with respect to the exchange of the AT&T Assets or which Insight may
have under this Agreement for any such Lien with respect to the exchange of the
Insight Assets, including pursuant to any indemnity obligation under this
Agreement.
1.59 Person. Any natural person, Governmental Authority, corporation,
------
general or limited partnership, limited liability company, joint venture, trust,
association or unincorporated entity of any kind.
1.60 Required Consents. The Insight Required Consents or the AT&T
-----------------
Required Consents, as the context requires.
1.61 System. Any of the Insight Systems or the AT&T Systems or all of
------
them, as the context requires.
1.62 System Contracts. The Insight System Contracts or the AT&T System
----------------
Contracts or both, as the context requires.
1.63 System Franchises. The Insight System Franchises or the AT&T System
-----------------
Franchises or both, as the context requires.
1.64 System Licenses. The Insight System Licenses or the AT&T System
---------------
Licenses or both, as the context requires.
-10-
1.65 Tangible Personal Property. The Insight Tangible Personal Property
--------------------------
or the AT&T Tangible Personal Property or both, as the context requires.
1.66 Taxes. All levies and assessments of any kind or nature imposed by
-----
any Governmental Authority, including all income, sales, use, ad valorem, value
added, franchise, severance, net or gross proceeds, withholding, payroll,
employment, excise or property taxes and levies or assessments related to
unclaimed property, together with any interest thereon and any penalties,
additions to tax or additional amounts applicable thereto.
1.67 Third Party. With respect to AT&T Illinois, any Person other than
-----------
AT&T Corp. and its Affiliates and, with respect to Insight, any Person other
than Insight and its Affiliates.
1.68 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.
1.69 Other Definitions. The following terms are defined in the Sections
-----------------
or Recitals indicated:
Term Section or Recital
---- ---------------------
Action 11.4
Adjustment Amount 3.2(i)
Agreement Preamble
Antitrust Division 7.7
Appraiser 7.15
Approved Leave of Absence 7.3(a)
AT&T Assumed Obligations and Liabilities 4.1
AT&T Balance Sheet 6.10
AT&T Damages 11.6
AT&T Excluded Assets 4.2
AT&T's Financial Statements 6.10
AT&T Illinois Preamble
AT&T Late Fee Settlement 4.3
AT&T Plans 6.13(b)
AT&T Systems Recital B
Closing 9.1
Closing Date 9.1
Code Recital C
"commercially reasonable efforts" 12.18
Contribution Agreement 1.23
Copyright Act 5.8(a)
Cost of Service Election 5.8(d)
-11-
EBS 1.24
Employees on Leave Status 7.3(a)
FAA 5.8(c)
Final Adjustment Certificate 3.3(b)
FTC 7.7
Hired Employee 7.3(a)
Hiring Party 7.3(f)
Indemnified Party 11.4
Indemnifying Party 11.4
Indiana LLC 1.10
Initial Adjustment Certificate 3.3(a)
Insight Preamle
Insight Assumed Obligations and Liabilities 4.3
Insight Balance Sheet 5.10
Insight Damages 11.5
Insight Excluded Assets 4.4
Insight Plans 5.13(b)
Insight Systems Recital A
Insight's Financial Statements 5.10
MediaOne Social Contract 6.8(d)
NCE Agreement 7.2(h)
Outside Closing Date 10.1(b)
Partnership 1.10
Prime Rate 12.10
Pro Rata Adjustments 3.3(a)
Retained Employees 7.3(a)
Surveys 7.6
Survival Period 11.1
Taking 12.16
Title Commitments 7.6
Title Company 7.6
Title Defect 7.6
Title Policy 7.6
Transitional Billing Services 7.12
WARN 5.13(a)
1.70 Accounting Terms. All accounting terms not otherwise defined in
----------------
this Agreement will have the meanings ascribed to them under GAAP.
SECTION 2. EXCHANGES
2.1 Exchanges.
---------
-12-
(a) Subject to the terms and conditions set forth in this Agreement,
at the Closing, (i) AT&T Illinois and Insight will exchange the AT&T Assets for
the Insight Assets, in each case free and clear of all Liens (except Permitted
Liens). AT&T Illinois and Insight will use all reasonable efforts to structure
the transaction in such a way that it will be a tax free exchange of like-kind
assets under Section 1031 of the Code, the regulations promulgated thereunder,
and judicial and administrative interpretations thereof.
(b) To the maximum extent permitted by Section 1031 of the Code, the
regulations promulgated thereunder, and judicial and administrative
interpretations thereof, (i) the AT&T Tangible Personal Property and the Insight
Tangible Personal Property will be exchanged each for the other; (ii) the AT&T
Owned Property, AT&T Leased Property and AT&T Other Real Property Interests and
the Insight Owned Property, Insight Leased Property and Insight Other Real
Property Interests will be exchanged each for the other; and (iii) the AT&T
System Contracts, AT&T System Franchises, AT&T System Licenses and AT&T Other
Intangibles and the Insight System Contracts, Insight System Franchises, Insight
System Licenses and Insight Other Intangibles will be exchanged each for the
other.
SECTION 3. CONSIDERATION
3.1 Value of Assets. The parties agree that the value of the AT&T Assets
---------------
being transferred to Insight and the value of the Insight Assets being
transferred to AT&T Illinois are equal; provided that at Closing the value of
such Assets will be subject to adjustment as provided in Section 3.2 and Section
3.3.
3.2 Adjustments to Value of Assets. The value of the AT&T Assets and the
------------------------------
Insight Assets shall be adjusted as follows:
(a) Appropriate adjustments on a pro rata basis as of the Closing
Time will be made with respect to each of the AT&T Systems and Insight Systems
for all prepaid expenses other than inventory (but only to the extent the full
benefit of such prepaid expenses will be realizable by the other party within 12
months after the Closing Date), accrued expenses (including real and personal
property taxes), copyright fees and franchise or license fees or charges,
prepaid income, subscriber prepayments and, subject to paragraph (e) below,
accounts receivable related to such party's Cable Business to the extent
specified in Section 3.2(e), all as determined in accordance with GAAP
consistently applied and to reflect the principle that all expenses and income
attributable to such party's Cable Business for the period through and including
the Closing Time are for the account of such party, and all expenses and income
attributable to such party's Cable Business for the period after the Closing
Time are for the account of the other party.
(b) All advance payments to, or funds of third parties on deposit
with, AT&T Illinois or Insight as of the Closing Time and relating to such
party's Cable Business, including advance payments and deposits (including any
accrued interest on such deposits) by subscribers
-13-
served by such party's Cable Business for converters, encoders, decoders, cable
television service and related sales, shall be assumed by, and credited to the
account of, the other party.
(c) There shall be credited to each party the economic value of all
accrued vacation time that such party credits after the Closing Time to the
employees of the other party that are hired by such party pursuant to Section
7.3(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 each
party's Systems that are held by Third Parties as of the Closing Time for the
account of such party or as security for such party's performance of its
obligations, including deposits on leases and deposits for utilities, will be
credited to the account of such party in their full amounts and will become the
property of the other party; provided that no adjustment will be made for any
deposits the full benefit of which for contractual or other reasons cannot be
made available to the other party within 12 months following the Closing Time.
(e) Neither AT&T Illinois nor Insight will 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
Illinois and Insight will receive credit for their 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 Illinois
and Insight will receive credit for their advertising accounts receivable as
follows: (i) 100% of the face amount of the advertising accounts receivable
which are outstanding 30 days or less from the invoice date, (ii) 95% of the
face amount of all advertising accounts receivable which are outstanding more
than 30 but fewer than 61 days from the invoice date, (iii) 80% of the face
amount of all advertising accounts receivable which are outstanding more than 60
but fewer than 91 days from the invoice date, and (iv) 50% of the face amount of
all advertising accounts receivable which are outstanding more than 90 but fewer
than 121 days from the invoice date. Neither AT&T Illinois nor Insight will
receive credit for advertising accounts receivable which are outstanding more
than 120 days from the invoice date. Notwithstanding the foregoing, each of AT&T
Illinois and Insight will receive credit for 100% of the face amount of their
advertising accounts receivable from national and regional representation
accounts, regardless of the age thereof.
(f) Any amounts paid, or accrued as a current liability, prior to the
Closing Time by AT&T Illinois or its Affiliates with respect to retroactive
franchise fees in respect of the AT&T Systems or by Insight or its Affiliates
with respect to retroactive franchise fees in respect of Insight's Systems will
be credited to the account of AT&T Illinois or Insight, as applicable, in their
full
-14-
amounts to the extent that (i) such amounts can legally be passed through to and
collected from subscribers of the AT&T Systems or the Insight Systems after
Closing, and (ii) no agreement has been entered into prohibiting the collection
of such amounts, with such amounts with respect to the AT&T Systems being assets
of Insight upon collection and such amounts with respect to the Insight Systems
being assets of AT&T Illinois upon collection.
(g) AT&T Illinois shall receive a credit, not to exceed $3,200,000,
equal to the amount of capital expenditures by AT&T during the period from
September 30, 1999 through the Closing Date relating to (i) the upgrade and
rebuild of the AT&T Systems' plant capacity and associated items (including
headend sites and headend equipment to expand channel capacity), and (ii) the
launch of digital services for the AT&T Systems, including the purchase of
digital converters (but not including digital converters purchased in the
ordinary course of business to replace lost, stolen or defective digital
converters), the launch of telephony services, and the launch of high speed data
services, including the purchase of modems.
(h) The adjustments provided for in this Section 3.2 will be made
without duplication. In addition, none of the adjustments provided for in this
Section 3.2 will be made with respect to any Excluded Asset or with respect to
any item of income or expense related to an Excluded Asset.
(i) The net amount of the adjustments calculated under this Section
3.2 (the "Adjustment Amount"), as preliminarily determined pursuant to Section
3.3, shall be paid by AT&T Illinois or Insight, as applicable, to the other
party at the Closing by wire transfer of immediately available funds.
3.3 Calculation of Adjustments.
--------------------------
(a) Each of AT&T Illinois and Insight will estimate in good faith
with respect to its Systems, and set forth, together with a detailed statement
of the calculation thereof, the adjustments and prorations with respect to its
Cable Business prescribed by Section 3.2 (the "Pro Rata Adjustments"), in a
certificate (the "Initial Adjustment Certificate") executed by an authorized
representative of such party and delivered to the other party at least 10
Business Days prior to the Closing. Each Initial Adjustment Certificate will be
accompanied by appropriate 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 such Initial Adjustment Certificate,
the recipient shall have five Business Days to review such schedule and
supporting information and to notify the preparer of such Initial Adjustment
Certificate of any disagreements with the preparer's estimates of its Pro Rata
Adjustments. If the recipient provides a notice of disagreement with the
preparer's estimates of such amounts within such five Business Day period, AT&T
Illinois 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 Illinois and Insight or
(if the parties do not reach such an agreement on such estimated amounts set
forth
-15-
in the Initial Adjustments Certificate prior to the Closing Date or if the
recipient fails to provide a notice of disagreement with the preparer's
estimates of such amounts within the time provided) the estimates of such Pro
Rata Adjustments set forth in the Initial Adjustments Certificate shall be the
basis for determining the preliminary Adjustment Amount payable pursuant to
Section 3.2. All disagreements that may exist with respect to the Initial
Adjustment Certificate shall be resolved in connection with the preparation of
the Final Adjustment Certificate pursuant to paragraph (b) below.
(b) Within 90 days after the Closing, each of AT&T Illinois and
Insight will deliver to the other a certificate (the "Final Adjustment
Certificate") showing in full detail its final determination of the Pro Rata
Adjustments with respect to its Systems, which certificate will be accompanied
by appropriate documentation supporting the amounts proposed in such
certificate, including an accounts receivable detail with relevant aging
information as of the Closing Time, and which will be executed by an officer of
such party. Each party will review the other's Final Adjustment Certificate and
will give written notice to the other party of any objections it has to the
calculations shown in such certificate within 30 days after its receipt thereof.
AT&T Illinois and Insight will endeavor in good faith to resolve any such
objections within 30 days after the receipt by the parties of each other's
objections. If any objections or disputes have not been resolved at the end of
such 30-day period, the disputed portions of the Pro Rata Adjustments will be
determined within the following 30 days by a partner in a major accounting firm
with substantial cable television audit experience which is not the auditor of
either Insight or AT&T Illinois (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 Illinois cannot agree with respect to the selection
of an auditor, Insight and AT&T Illinois 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 Illinois will bear equally
the expenses arising in connection with an auditor's determination of disputed
amounts, and payment of the final Adjustment Amount (after taking into account
any estimated Adjustment Amount paid at the Closing) will be made by the party
responsible therefor to the other party in immediately available funds within 15
Business Days after the final determination is made.
(c) Each of AT&T Illinois and Insight will provide to the other
reasonable access to all records in its possession which were used in the
preparation of its Initial Adjustment Certificate and Final Adjustment
Certificate and as may be necessary in the preparation of the other party's
Initial Adjustment Certificate and Final Adjustment Certificate.
SECTION 4. ASSUMED LIABILITIES AND EXCLUDED ASSETS
4.1 AT&T Assumed Obligations and Liabilities. As of the Closing, AT&T
----------------------------------------
Illinois will assume and after the Closing, AT&T Illinois will pay, discharge
and perform the following (the "AT&T Assumed Obligations and Liabilities"): (a)
those obligations and liabilities accruing and relating to periods after the
Closing Time under or with respect to the Insight Assets assigned and
transferred to AT&T Illinois at the Closing; (b) those obligations and
liabilities of Insight to customers of Insight's Cable Business for (i)
subscriber deposits related to the Insight Systems held
-16-
by Insight as of the Closing Time in the amount for which AT&T Illinois received
credit under Section 3.2 and (ii) customer, advertising and other advance
payments held by Insight as of the Closing Time in the amount for which AT&T
Illinois received credit under Section 3.2; (c) all obligations and liabilities
accruing and relating to Insight's Cable Business prior to the Closing Time in
respect of which AT&T Illinois received a credit pursuant to Section 3.2; and
(d) all other obligations and liabilities accruing and relating to periods after
the Closing Time and arising out of the ownership of the Insight Assets or the
operation of the Insight Systems after the Closing Time, except to the extent
that such obligations or liabilities relate to any Insight Excluded Asset. All
obligations and liabilities, contingent, fixed or otherwise, arising out of or
relating to the Insight Assets or the Insight Systems other than the AT&T
Assumed Obligations and Liabilities will remain and be the obligations and
liabilities solely of Insight including any obligation, liability or claim
relating to or arising pursuant to (x) rate refunds to subscribers of the
Insight Systems with respect to rates charged to such subscribers during periods
through and including the Closing Time, (y) litigation commenced prior to, or
related to an event occurring at any time prior to the Closing Time, or (z) any
Insight Excluded Asset.
4.2 AT&T Excluded Assets. "AT&T Excluded Assets" means all: (a)
--------------------
programming (including music programming and cable guide Contracts) and
retransmission consent Contracts of AT&T Illinois other than those listed on
Schedule 1.11 (AT&T System Contracts) and those hereafter designated by AT&T
Illinois 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 4.2; (b)
AT&T Plans; (c) insurance policies of AT&T Illinois 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 Illinois; (e) cash and
cash equivalents and notes receivable of AT&T Illinois; (f) AT&T Illinois'
trademarks, trade names, service marks, service names, logos and similar
proprietary rights, subject to Section 7.11; (g) subscriber billing Contracts
and related leased equipment and software of AT&T Illinois, 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 AT&T
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 Illinois 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 AT&T Asset; (k) any claims,
rights or choses in action of AT&T Illinois 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 Illinois is required by any Legal Requirement to retain and any books of
account, tax reports and returns and the like related to the AT&T 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
-17-
not retained for periods for which an IRS field examination has been completed)
from the Closing Date upon reasonable request; (m) AT&T Illinois' corporate
minute books and other books and records related to internal corporate matters
and financial relationships with AT&T Illinois' lenders and affiliates; (n) any
employment, union, collective bargaining, compensation, bonus, deferred
compensation, consulting, agency or management agreements of AT&T Illinois; (o)
all documents, reports and records relating to the employees of the AT&T
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
Illinois; (p) any agreement, right, asset or property owned, leased or held by
AT&T Illinois that is not used or held for use in connection with the operation
of the AT&T Systems; (q) AT&T Illinois' or its Affiliates' rights under the
@Home Distribution Agreement (as defined in the Limited Partnership Agreement of
Insight Midwest, L.P.), it being agreed that the parties' rights and obligations
with respect thereto shall be as specified in the Limited Partnership Agreement
of Insight Midwest, L.P.; (r) all obligations under the MediaOne Social
Contract; and (s) rights, assets and properties described on Schedule 4.2.
4.3 Insight Assumed Obligations and Liabilities. As of the Closing,
-------------------------------------------
Insight will assume and after the Closing, Insight will pay, discharge and
perform the following (the "Insight Assumed Obligations and Liabilities"): (a)
those obligations and liabilities accruing and relating to periods after the
Closing Time under or with respect to the AT&T Assets assigned and transferred
to Insight at the Closing; (b) those obligations and liabilities of AT&T
Illinois to customers of AT&T's Cable Business for (i) subscriber deposits
related to the AT&T Systems held by AT&T Illinois as of the Closing Time in the
amount for which Insight received credit under Section 3.2 and (ii) customer,
advertising and other advance payments held by AT&T Illinois as of the Closing
Time in the amount for which Insight received credit under Section 3.2; (c) all
obligations and liabilities accruing and relating to AT&T's Cable Business prior
to the Closing Time in respect of which Insight received a credit pursuant to
Section 3.2; and (d) all other obligations and liabilities accruing and relating
to periods after the Closing Time and arising out of the ownership of the AT&T
Assets or operation of the AT&T Systems after the Closing Time, except to the
extent that such obligations or liabilities relate to any AT&T Excluded Asset.
It is understood and agreed that at the closing of the Contribution, the
Partnership shall assume the Insight Assumed Obligations and Liabilities to the
extent related to the period from and after the "Closing Time" under the
Contribution Agreement for the benefit of AT&T Illinois and its Affiliates and
upon such assumption, Insight shall have no further obligation or liability in
respect of the same to the extent assumed by the Partnership. All obligations
and liabilities, contingent, fixed or otherwise, arising out of or relating to
the AT&T Assets or the AT&T Systems other than the Insight Assumed Obligations
and Liabilities will remain and be the obligations and liabilities solely of
AT&T Illinois including any obligation, liability or claim relating to or
arising pursuant to (x) rate refunds to subscribers of the AT&T 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 Media One Social Contract and, subject to Section 7.19, the
pending Settlement Agreement and Release that may relate to certain of the AT&T
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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").
4.4 Insight Excluded Assets. "Insight Excluded Assets" means all: (a)
-----------------------
programming (including music programming and cable guide Contracts) and
retransmission consent Contracts of Insight other than those listed on Schedule
1.42 (Insight System Contracts) and those hereafter designated by Insight as
being included in the Insight Assets by written notice to AT&T given on or
before September 15, 2000, it being agreed that leased channel access agreements
are not programming agreements for purposes of this Section 4.4; (b) Insight
Plans; (c) insurance policies of Insight and rights and claims thereunder
(except as otherwise provided in Section 12.16); (d) bonds, letters of credit,
surety instruments and other similar items and any stocks, bonds, certificates
of deposit and similar investments of Insight; (e) cash and cash equivalents and
notes receivable of Insight; (f) Insight's trademarks, trade names, service
marks, service names, logos and similar proprietary rights, subject to Section
7.11; (g) subscriber billing Contracts and related leased equipment and software
of Insight, subject to Section 7.12; (h) all Insight Contracts relating to
national advertising sales representation; (i) all agreements pursuant to which
Insight has created, incurred, assumed or guaranteed indebtedness for borrowed
money or under which any Lien securing such indebtedness has been or may be
imposed on any Insight Asset; (j) any claims, rights or choses in action of
Insight related to the period prior to the Closing Time (other than customer and
advertising accounts receivable), including, without limitation, any Litigation
and the proceeds thereof and any claims, rights and interest in and to any
refunds of federal, state or local franchise, income or other taxes or payments
of any nature for the periods prior to the Closing Time, including copyright
fees; (k) any books and records that Insight is required by any Legal
Requirement to retain and any books of account, tax reports and returns and the
like related to the Insight Systems; provided that copies of such books and
records will be made available to AT&T Illinois for a period of three years (and
six years in the case of tax reports and returns and underlying books and
records, although in the case of underlying books and records, the parties
acknowledge that they are not retained for periods for which an IRS field
examination has been completed) from the Closing Date upon reasonable request;
(l) Insight's partnership record books and other books and records related to
internal partnership matters and financial relationships with Insight's lenders
and affiliates; (m) any employment, union, collective bargaining, compensation,
bonus, deferred compensation, consulting, agency or management agreements of
Insight; (n) all documents, reports and records relating to the employees of the
Insight Systems; provided that copies of such books and records will be made
available to AT&T Illinois for a period of three years from the Closing Date
upon reasonable request by AT&T Illinois accompanied by a waiver and release
from the employee whose records are sought in form and substance reasonably
satisfactory to Insight; (o) any agreement, right, asset or property owned,
leased or held by Insight that is not used or held for use in connection with
the operation of the Insight Systems; (p) the At Home Network Distribution
Agreement dated May 1, 1998 between At Home Corporation and Insight; and (q)
rights, assets and properties described on Schedule 4.4.
-19-
SECTION 5. INSIGHT'S REPRESENTATIONS AND WARRANTIES
Insight represents and warrants to AT&T Illinois 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 the Insight Assets and to conduct Insight's Cable Business
as it is currently conducted. Insight is duly qualified to do business and is in
good standing under the laws of each jurisdiction in which the ownership,
leasing or use of the Insight Assets or the nature of its activities in
connection with the Insight Systems makes such qualification necessary, except
in any such jurisdiction where the failure to be so qualified and in good
standing would not have a material adverse effect on the ownership or operation
of Insight's Cable Business, the Insight Assets or Insight Systems or on the
ability of Insight to perform its obligations under this Agreement. Insight's
U.S. taxpayer identification number is 000000000.
5.2 Authority and Validity. Insight has all requisite partnership power
----------------------
and authority to execute and deliver, to perform its obligations under, and to
consummate the transactions contemplated by, this Agreement and the Transaction
Documents to which Insight is a party. The execution and delivery by Insight,
the performance by Insight under, and the consummation by Insight of the
transactions contemplated by, this Agreement and the Transaction Documents to
which Insight is a party have been duly and validly authorized by all required
partnership action by or on behalf of Insight. This Agreement has been, and when
executed and delivered by Insight the Transaction Documents will be, duly and
validly executed and delivered by Insight and the valid and binding obligations
of Insight, enforceable against Insight in accordance with their terms, except
as the same may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws now or hereafter in effect relating to the
enforcement of creditors' rights generally or by principles governing the
availability of equitable remedies.
5.3 No Conflict; Required Consents. Except for, and subject to receipt
------------------------------
of, the Insight Required Consents, all of which are listed on Schedule 5.3, and
the AT&T 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
-20-
Insight under, (iv) result in the creation or imposition of any Lien under any
Insight System Franchise, Insight System License or any Insight System Contract
or other instrument evidencing any of the Insight Assets or by which Insight or
any of its assets is bound or affected, except for purposes of clauses (c) and
(d) such consents, approvals, authorizations and filings that, if not obtained
or made, would not, and such violations, conflicts, breaches, defaults,
terminations, suspensions, modifications and accelerations as would not,
individually or in the aggregate, have a material adverse effect on any Insight
System, Insight's Cable Business or on the ability of Insight to perform its
obligations under this Agreement or the Transaction Documents to which Insight
is a party.
5.4 Assets.
------
(a) Insight has good and valid title to (or, in the case of Assets
that are leased, valid leasehold interests in) the Insight Assets (other than
Insight Owned Real Property, Insight Leased Property and Insight Other Real
Property Interests, as to which the representations and warranties in Section
5.6 apply). The Insight Assets are free and clear of all Liens, except (i)
Permitted Liens and (ii) Liens described on Schedule 5.4, all of which Liens on
Schedule 5.4 will be terminated, released or, in the case of the rights of first
refusal listed on Schedule 5.4, waived, as appropriate, at or prior to the
Closing. The Insight Tangible Personal Property is in good operating condition
and repair (ordinary wear and tear excepted).
(b) Except for items included in the Insight Excluded Assets, the
Insight Assets constitute all the assets necessary to permit AT&T Illinois to
conduct Insight's Cable Business and to operate the Insight Systems
substantially as they are being conducted and operated on the date of this
Agreement and in compliance in all material respects with all applicable Legal
Requirements, Insight System Contracts, Insight System Licenses and Insight
System Franchises and to perform all of the AT&T Assumed Obligations and
Liabilities.
(c) Except as described on Schedule 5.4, as of the date of this
Agreement, (i) the Insight Systems do not offer telephony, high speed data or
internet access services and (ii) the Insight Systems do not have any digital
transport arrangement (e.g., HITS).
----
5.5 Insight System Franchises, Insight System Licenses, Insight System
------------------------------------------------------------------
Contracts and Insight Other Real Property Interests.
---------------------------------------------------
(a) Except pursuant to the agreements referenced on Schedules 1.37
(Insight Leased Property), 1.39 (Insight Other Real Property Interests), 1.42
(Insight System Contracts), 1.43 (Insight System Franchises) and 1.44 (Insight
System Licenses), or as described on Schedule 4.4 (Insight Excluded Assets) or
otherwise included in the definition of Insight Excluded Assets, as of the date
of this Agreement, Insight is not bound or affected by any of the following that
relate primarily or in whole to Insight's Cable Business: (i) leases of real or
personal property; (ii) franchises for the construction or operation of cable
television systems or Contracts of substantially equivalent effect; (iii) other
licenses, authorizations, consents or permits of the FCC
-21-
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 Insight Systems receive or provide advertising sales representation
services; (vii) agreements pursuant to which an Insight System has constructed
or agreed to construct for Third Parties or any Affiliate of Insight, an
institutional network or otherwise provides to Third Parties or any Affiliate of
Insight, telecommunications services other than one-way video; (viii) agreements
pursuant to which any bandwidth capacity of the Insight Systems is leased or
otherwise made available to any Third Party or any Affiliate of Insight; (ix)
construction and development agreements (other than installation agreements
where services are provided in the ordinary course of business on an as-needed
basis); or (x) Contracts relating to the operation of Insight's Cable Business
other than those described in any other clause of this Section which contemplate
payments by or to Insight in any 12-month period exceeding $25,000 individually
or $150,000 in the aggregate or that have a remaining term of two years or more
as of the Closing Date; 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 Insight is a party to any documents listed on such Schedules.
(b) Complete and correct copies of the Insight System Franchises and
Insight System Licenses have been delivered by Insight to AT&T Illinois or will
be delivered by Insight to AT&T Illinois by September 15, 2000. Except as set
forth on Schedule 1.43 (Insight System Franchises), the Insight System
Franchises contain all of the commitments and obligations of Insight to the
applicable Governmental Authority granting such Franchises with respect to the
construction, ownership and operation of the Insight Systems. The Insight System
Franchises and Insight System Licenses are currently in full force and effect
and are valid and enforceable under all applicable Legal Requirements according
to their terms. There is no legal action, governmental proceeding or, to
Insight's Knowledge, investigation, pending or to Insight's Knowledge
threatened, to terminate, suspend or modify any Insight System Franchise or any
Insight System License and, except as set forth on Schedule 1.43 (Insight System
Franchises), Insight is in material compliance with the terms and conditions of
all the Insight System Franchises and Insight System Licenses and with other
applicable requirements of all Governmental Authorities (including the FCC and
the Register of Copyrights) relating to the Insight System Franchises and
Insight System Licenses, including all requirements for notification, filing,
reporting, posting and maintenance of logs and records. All areas served by the
Insight Systems are served pursuant to one of the Insight System Franchises
except as set forth on Schedule 1.43 (Insight System Franchises).
(c) Complete and correct copies of all Insight System Contracts
required to be listed on Insight's Schedules (including all Contracts relating
to Leased Property and Other Real Property Interests described on Schedule 1.39)
have been provided to AT&T Illinois or will be provided to AT&T Illinois by
September 15, 2000. Such documents constitute the entire agreement with the
other party. Each such Insight System Contract is in full force and effect and
constitutes the valid, legal, binding and enforceable obligation of Insight and
Insight is not and to Insight's Knowledge, each other party thereto is not in
breach or default of any material terms or conditions
-22-
thereunder. Insight has also provided to AT&T Illinois or will provide to AT&T
Illinois by September 15, 2000 a complete and correct list of all bulk-billed
accounts and commercial service accounts of the Insight Systems as of the date
of this Agreement.
5.6 Real Property. As of the date of this Agreement, all Insight Assets
-------------
consisting of Insight Owned Property, Insight Leased Property and material
Insight Other Real Property Interests are described on Schedules 1.37 (Insight
Leased Property), 1.39 (Insight Other Real Property Interests) and 1.40 (Insight
Owned Property). Except as otherwise disclosed on Schedule 1.40 (Insight Owned
Property), Insight holds title to the Insight Owned Property free and clear of
all Liens except (a) Permitted Liens and (b) Liens described on Schedule 5.4,
all of which Liens on Schedule 5.4 will be terminated, released or, in the case
of the rights of first refusal listed on Schedule 5.4, waived, as appropriate,
at or prior to the Closing, and has the valid and enforceable right to use and
possess such Insight Owned Property, subject only to the above-referenced Liens.
Except as otherwise disclosed on Schedules 1.37 (Insight Leased Property) and
1.39 (Insight Other Real Property Interests), Insight has valid and enforceable
leasehold interests in all Insight Leased Property and, with respect to Insight
Other Real Property Interests, has valid and enforceable rights to use such
Insight Other Real Property Interests, subject only to the above-referenced
Liens. Except for ordinary wear and tear and routine repairs and except as
disclosed on Schedules 1.37 (Insight Leased Property) or 1.40 (Insight Owned
Property), all of the material improvements, leasehold improvements and the
premises of the Insight Owned Property and the premises demised under the leases
and other documents evidencing the Insight Leased Property are in good condition
and repair and are suitable for the purposes used. Except as disclosed on
Schedules 1.37 (Insight Leased Property) or 1.40 (Insight Owned Property), each
parcel of Insight Owned Property and each parcel of Insight Leased Property and
any improvements thereon and their current use (x) has access to and over public
streets or private streets for which Insight has a valid right of ingress and
egress, (y) conforms in its current use and occupancy to all material zoning
requirements without reliance upon a variance issued by a Governmental Authority
or a classification of the parcel in question as a nonconforming use and (z)
conforms in its current use to all restrictive covenants, if any, or other Liens
affecting all or part of such parcel. Except where the failure of the
representations made in this sentence to be true and correct would not have a
material adverse effect on the Insight Assets or Insight's Cable Business and
except as disclosed on Schedules 1.37 (Insight Leased Property) or 1.40 (Insight
Owned Property), all buildings, towers, guy wires and anchors, headend
equipment, earth-receiving dishes and related facilities used in the operations
of the Insight Systems are located entirely on Insight Owned Property or Insight
Leased Property or other real property in which Insight has an Insight Other
Real Property Interest and are maintained, placed and located in accordance with
the provisions of all applicable Legal Requirements, deeds, leases, licenses,
permits or other legally enforceable arrangements.
5.7 Environmental.
-------------
(a) To Insight's Knowledge, except as disclosed on Schedule 5.7, the
Insight Owned Property and Insight Leased Property comply in all material
respects with and have previously been operated in compliance in all material
respects with all Environmental Laws.
-23-
Insight has not, either directly or indirectly (i) generated, stored, used,
treated, handled, discharged, released or disposed of any Hazardous Substances
at, on, under, in or about, to or from or in any other manner affecting, any
Insight Owned Property or Insight Leased Property, (ii) transported any
Hazardous Substances to or from any Insight Owned Property or Insight Leased
Property or (iii) undertaken or caused to be undertaken any other activities
relating to the Insight Owned Property or Insight Leased Property, which could
reasonably give rise to any liability under any Environmental Law and, to
Insight's Knowledge, no other present or previous owner, tenant, occupant or
user of any Insight Owned Property or Insight Leased Property or any other
Person has committed or suffered any of the foregoing. To Insight's Knowledge,
no release of Hazardous Substances outside the Insight Owned Property or Insight
Leased Property has entered or threatens to enter any Insight Owned Property or
Insight Leased Property, nor is there any pending or threatened Litigation based
on Environmental Laws which arises from any condition of the land adjacent to or
immediately surrounding any Insight Owned Property or Insight Leased Property.
No Litigation based on Environmental Laws which relates to any Insight Owned
Property or Insight Leased Property or any operations or conditions on it (1)
has been asserted or conducted in the past with respect to, or is currently
pending against, Insight or, to Insight's Knowledge, any other Person or (2) to
Insight's Knowledge, is threatened or contemplated.
(b) To Insight's Knowledge, except as disclosed on Schedule 5.7, (i)
no aboveground or underground storage tanks are currently or have been located
on any Insight Owned Property or Insight Leased Property, (ii) no Insight Owned
Property or Insight Leased Property has been used at any time as a gasoline
service station or any other facility for storing, pumping, dispensing or
producing gasoline or any other petroleum products or wastes and (iii) no
building or other structure on any Insight Owned Property or Insight Leased
Property contains asbestos, asbestos-containing material or material presumed to
be asbestos-containing material under any Environmental Law.
(c) Insight has provided AT&T Illinois or will provide AT&T Illinois
by September 15, 2000, with complete and correct copies of (i) all studies,
reports, surveys or other written materials in Insight's possession relating to
the presence or alleged presence of Hazardous Substances at, on, under or
affecting the Insight Owned Property or Insight Leased Property, (ii) all
notices (other than general notices made by general publication) or other
materials in Insight's possession that were received from any Governmental
Authority having the power to administer or enforce any Environmental Laws
relating to current or past ownership, use or operation of the Insight Owned
Property or Insight Leased Property or activities at the Insight Owned Property
or Insight Leased Property and (iii) all materials in Insight's possession
relating to any Litigation or allegation by any private third party concerning
any Environmental Law.
5.8 Compliance with Legal Requirements.
----------------------------------
(a) The ownership, leasing and use of the Insight Assets as they are
currently owned, leased and used and the conduct of Insight's Cable Business and
the operation of the Insight Systems as they are currently conducted and
operated do not violate or infringe in any material
-24-
respect any Legal Requirements currently in effect (other than Legal
Requirements described in Sections 5.7, 5.8(d) and 5.13, as to which the
representations and warranties set forth in those subsections shall apply),
including (i) the Communications Act, (ii) Section 111 of the U.S. Copyright Act
of 1976, and the U.S. Copyright Office rules and regulations promulgated
thereunder (the "Copyright Act") and (iii) all other applicable Legal
Requirements relating to the construction, maintenance, ownership and operation
of the Insight Assets, the Insight Systems and Insight's Cable Business. Insight
has received no written notice of any violation by Insight or Insight's Cable
Business of any Legal Requirement applicable to the operation of Insight's Cable
Business as currently conducted, or the Insight Systems as currently operated
and to Insight's Knowledge, there is no existing fact, circumstance or condition
that could reasonably form the basis for a finding by any Governmental Authority
of any such violation.
(b) Except as set forth in Schedule 5.8, 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 Insight System Franchises
that have expired prior to or will expire within 36 months after the date of
this Agreement.
(c) Except as set forth in Schedule 5.8, (i) no written notices or
demands have been received from the FCC, from any television station, or from
any other Person or Governmental Authority (1) challenging the right of the
Insight Systems to carry any television broadcast station or deliver the same or
(2) claiming that any Insight System has failed to carry a television broadcast
station required to be carried pursuant to the Communications Act or has failed
to carry a television broadcast station on a channel designated by such station
consistent with the requirements of the Communications Act; (ii) all necessary
Federal Aviation Administration ("FAA") approvals have been obtained with
respect to the height and location of towers used in connection with the
operation of the Insight Systems and such towers are being operated in
compliance in all material respects with applicable FCC and FAA rules; and (iii)
Insight has received no written notice from any Governmental Authority with
respect to an intention to enforce customer service standards pursuant to the
1992 Cable Act and Insight has not agreed with any Governmental Authority to
establish customer service standards that exceed the FCC standards promulgated
pursuant to the 1992 Cable Act except as set forth in the Insight System
Franchises.
(d) Notwithstanding the foregoing, to Insight's Knowledge, each
Insight System is in compliance in all material respects with the provisions of
the 1992 Cable Act as such Legal Requirements relate to the rates and other fees
charged to subscribers of Insight's Cable Business. Insight has used reasonable
good faith efforts to establish rates charged to subscribers, effective since
September 1, 1993, that are or were allowable under the 1992 Cable Act and any
authoritative interpretation thereof now or then in effect, to the extent such
rates are or were subject to regulation at such time by any Governmental
Authority, including any local franchising authority and/or the FCC.
Notwithstanding the foregoing, Insight makes no representation or warranty that
any of its rates that are not subject to rate regulation would be allowable if
such rates were subject to regulation and makes no representation or warranty
that the rates charged to subscribers would be allowable under any rules and
regulations of the FCC or any authoritative interpretation thereof,
-25-
promulgated after the Closing Date. Insight has delivered to AT&T Illinois or
will deliver to AT&T Illinois by September 15, 2000, complete and correct copies
of all FCC Forms and other information reasonably requested by AT&T Illinois
relating to rate regulation generally or specific rates charged to subscribers
with respect to the Insight Systems. Insight has not entered into and is not
subject to any so-called social contract or proposed resolution with the FCC
with respect to rates charged for cable television services in the Insight
Systems and is not currently negotiating or anticipating entering into or being
subject to the same. Except as set forth on Schedule 5.8, Insight has not made
any election with respect to any cost of service proceeding conducted in
accordance with Part 76.922 of Title 47 of the Code of Federal Regulations or
any similar proceeding with respect to any of the Insight Systems (a "Cost of
Service Election"). Except as otherwise described on Schedule 5.8, as of the
date of this Agreement, (i) to the Knowledge of Insight, there are no
outstanding or unresolved proceedings or investigations (other than those
affecting the cable industry generally) dealing with or otherwise affecting the
rates that any cable television system included in the Insight Systems can
charge (whether for programming, equipment, installation, service or otherwise),
(ii) no cable television system included in the Insight Systems is subject to
any currently effective order issued by a Governmental Authority that reduced
the rates that it may charge (whether for programming, equipment, installation,
service, or otherwise), (iii) no local franchising authority has been certified
by the FCC as a rate regulating authority with respect to any of the Insight
Systems and (iv) there is no unresolved complaint pending with respect to the
CPST tier of any Insight System and no rate order with respect to the Insight
Systems that is being appealed.
5.9 Patents, Trademarks and Copyrights. Insight has deposited with the
----------------------------------
U.S. Copyright Office all statements of account and other documents and
instruments, and has paid all royalties, supplemental royalties, fees and other
sums to the U.S. Copyright Office under the Copyright Act with respect to the
business and operations of the Insight Systems as are required to obtain, hold
and maintain the compulsory license for cable television systems prescribed in
Section 111 of the Copyright Act. To Insight's Knowledge, there is no inquiry,
claim, action or demand pending before the U.S. Copyright Office or from any
other Person which questions the copyright filings or payments made by Insight
with respect to the Insight Systems. Insight has delivered to AT&T Illinois or
will deliver to AT&T Illinois 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 Insight's Cable
Business. Insight does not possess any patent, patent right, trademark or
copyright related to or material to the operation of the Insight Systems and
Insight is not a party to any license or royalty agreement with respect to any
such patent, patent right, trademark or copyright, except for licenses
respecting program material and obligations under the Copyright Act applicable
to cable television systems generally. The Insight Systems and Insight's Cable
Business have been operated in such a manner so as not to violate or infringe
upon the rights, or give rise to any rightful claim of any Person for copyright,
trademark, service xxxx, patent or license infringement or the like.
5.10 Financial Statements; Undisclosed Liabilities; Absence of Certain
-----------------------------------------------------------------
Changes or Events. Insight has delivered to AT&T Illinois complete and correct
-----------------
copies of an unaudited statement of
-26-
assets and liabilities for each Insight System as of March 31, 2000 and an
unaudited income and expense summary statement for each Insight System for the
year ended December 31, 1999 and the three-month period ended March 31, 2000,
including all notes and schedules thereto, if any (all of such financial
statements and notes being hereinafter referred to as "Insight's Financial
Statements"). Insight's Financial Statements are in accordance with the books
and records of Insight, were prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby, and, except as may be
described therein, present fairly the financial condition of the Insight Systems
at the dates and for the periods indicated, subject only to standard year-end
adjustments and the omission of footnotes. The unaudited statements of assets
and liabilities of the Insight Systems as of March 31, 2000 are herein called
the "Insight Balance Sheets." At the date of the Insight Balance Sheets, Insight
had no material liabilities with respect to the Insight Systems required by GAAP
to be reflected or reserved against therein that were not fully reflected or
reserved against on the Insight Balance Sheets, other than liabilities as set
forth on Schedule 5.10. Except as set forth on Schedule 5.10, since the date of
the Insight Balance Sheets through the date of this Agreement: (x) Insight has
not incurred any obligation or liability (contingent or otherwise), except
normal trade or business obligations incurred in the ordinary course of
business, the performance of which will not, to Insight's Knowledge,
individually or in the aggregate, have a material adverse effect on the
financial condition of Insight or the results of operations of Insight's Cable
Business; (y) there has been no material adverse change in the Insight Assets
comprising any Insight System or in the business, condition, financial or
otherwise, or liabilities of Insight's Cable Business or any Insight System and,
to Insight's Knowledge, no fact or condition exists or is contemplated or
threatened which would result in such a change in the future; and (z) Insight's
Cable Business has been conducted only in the ordinary course of business
consistent with past practice. For the purpose of this Agreement, the impact of
general economic conditions (including changes in capital and financial
markets), governmental legislation and regulations and other events which affect
the cable industry as a whole in the State of California or the United States,
shall not be considered in determining whether there has been a material adverse
change in the business, condition, financial or otherwise or liabilities of
Insight's Cable Business or any Insight System or the Insight Assets.
5.11 Litigation. Except as set forth in Schedule 5.11: (a) there is no
----------
Litigation pending or, to Insight's Knowledge, threatened, and, to Insight's
Knowledge, there is no investigation pending or threatened, by or before any
Governmental Authority or private arbitration tribunal against Insight which, if
adversely determined, would materially adversely affect the financial condition
or operations of Insight's Cable Business, Insight Systems, the Insight Assets
or the ability of Insight to perform its obligations under this Agreement, or
which, if adversely determined, would result in the modification, revocation,
termination, suspension or other limitation of any of the Insight System
Franchises, Insight System Licenses, Insight System Contracts or leases or other
documents evidencing the Insight Leased Property or the Insight Other Real
Property Interests; and (b) there is not in existence any Judgment requiring
Insight to take any action of any kind with respect to the Insight Assets or the
operation of the Insight Systems, or to which Insight (with respect to the
Insight Systems), the Insight Systems or the Insight Assets are subject or by
which they are bound or affected.
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5.12 Tax Returns; Other Reports. Insight has duly and timely filed in
--------------------------
correct form all federal, state, local and foreign Tax returns and other Tax
reports required to be filed by Insight, and has timely paid all Taxes which
have become due and payable, whether or not so shown on any such return or
report, the failure of which to be filed or paid could adversely affect or
result in the imposition of a Lien upon the Insight Assets or that could impose
on AT&T Illinois any transferee liability for any taxes, penalties or interest
due or to become due from Insight, except such amounts as are being contested
diligently and in good faith and are not in the aggregate material. Except as
set forth on Schedule 5.12, Insight has received no notice of, nor does Insight
have any Knowledge of, any deficiency, assessment or audit, or proposed
deficiency, assessment or audit from any taxing Governmental Authority which
could affect or result in the imposition of a Lien upon the Insight Assets.
5.13 Employment Matters.
------------------
(a) Schedule 5.13(a) contains a complete and correct list of the
names and positions of all employees engaged by Insight or its Affiliates
principally in connection with the Insight Systems as of the date set forth on
Schedule 5.13(a). Except to the extent that any noncompliance would not
reasonably be expected to have a material adverse effect on the Insight Systems,
Insight and its Affiliates have, with respect to the Insight 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, sex, race and disability discrimination,
occupational safety, immigration control and the payment and withholding of
Taxes. Except as set forth in Schedule 5.13(a), to Insight's Knowledge, there
are no current or threatened investigations relating to the classification of
independent contractors engaged by Insight or its Affiliates principally in
connection with the Insight Systems.
(b) For purposes of this Agreement, "Insight 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
Insight or any of its ERISA Affiliates has any liability or in which any
employees or agents, or any former employees or agents, of Insight or any of its
ERISA Affiliates participate. The Insight Plans in which any employee of the
Insight Systems participates are set forth on Schedule 5.13. Except to the
extent that any violation would not reasonably be expected to have a material
adverse effect on the Insight Systems, none of Insight, any of its ERISA
Affiliates, any Insight Plan other than a multiemployer plan (as defined in
Section 3(37) of ERISA), or to the Knowledge of Insight or any of its ERISA
Affiliates, any Insight Plan that is a multiemployer plan (as defined in Section
3(37) of ERISA), is in violation of any provision of the Code or ERISA. No
material "reportable event" (described 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
-- ---
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occurred or exists with respect to any Insight Plan which reasonably could
result in material liability to Insight or any of its ERISA Affiliates. No
material "accumulated funding deficiency" (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 Insight Plan other
than a multiemployer plan (as defined in Section 3(37) of ERISA) or to the
Knowledge of Insight or any of its ERISA Affiliates, any Insight Plan that is a
multiemployer plan (as defined in Section 3(37) of ERISA). After the Closing,
neither AT&T Illinois nor any of its ERISA Affiliates will be required, under
ERISA, the Code, any collective bargaining agreement or this Agreement, to
establish, maintain or continue any Insight Plan currently maintained by Insight
or any of its ERISA Affiliates.
(c) Except as set forth on Schedule 5.13, (i) there are no collective
bargaining agreements applicable to any Person employed by Insight or its
Affiliates principally in connection with the Insight Systems; (ii) neither
Insight 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 Insight 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 Insight or its Affiliates principally in
connection with the Insight Systems now or, to the Knowledge of Insight and its
Affiliates, within the last one year and (iv) there are not currently pending or
threatened nor, to the Knowledge of Insight 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 Insight Systems. Except as
described on Schedule 5.13, neither Insight nor its Affiliates has any
employment agreements, either written or oral, except for oral contracts
terminable at will without penalty, with any employee of the Insight Systems and
none of the employment agreements listed on Schedule 5.13 requires Insight or
its Affiliates or will require AT&T Illinois or its Affiliates to employ any
Person after the Closing.
(d) The following documents and records will be located at one of the
Insight System offices included in the Insight 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.
5.14 Accounts Receivable. Insight's accounts receivable for its Cable
-------------------
Business are actual and bona fide receivables representing obligations for the
total dollar amount of such receivables, as shown on the books of Insight, that
resulted from the regular course of Insight's Cable Business. Such receivables
are subject to no offset or reduction of any nature, except for a reserve for
uncollectible amounts consistent with the reserve established by Insight in
Insight's Financial Statements and those credits or reductions to such accounts
made in the ordinary course of business.
5.15 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
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commission in connection with the transactions contemplated by this Agreement
for which AT&T Illinois could be liable.
5.16 Transactions With Affiliates. Except to the extent set forth on
----------------------------
Schedule 5.16 or included in the Insight Excluded Assets and except with respect
to customary corporate overhead services provided by the corporate, division or
regional offices of Insight, Insight is not a party to any material business
arrangement or business relationship with any of its Affiliates that affects the
Insight 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
Insight Systems.
SECTION 6. AT&T ILLINOIS' REPRESENTATIONS AND WARRANTIES
AT&T Illinois represents and warrants to Insight, as of the date of this
Agreement (or, if a different date is specified in this Section 6 or in the
AT&T's Schedules, as of such specified date) as follows:
6.1 Organization and Qualification of AT&T Illinois. AT&T Illinois is a
-----------------------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and AT&T Illinois has all requisite corporate power and
authority to own, lease and use the AT&T Assets owned, leased or used by it and
to conduct AT&T's Cable Business as it is currently conducted. AT&T Illinois 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 AT&T Assets or the
nature of its activities in connection with the AT&T 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 AT&T's Cable Business, the AT&T Assets or AT&T
Systems or on the ability of AT&T Illinois to perform its obligations under this
Agreement. AT&T Illinois' U.S. taxpayer identification number is 00-0000000.
6.2 Authority and Validity. AT&T Illinois 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 AT&T Illinois is a party. The execution and
delivery by AT&T Illinois, the performance by AT&T Illinois under, and the
consummation by AT&T Illinois of the transactions contemplated by, this
Agreement and the Transaction Documents to which AT&T Illinois is a party have
been duly and validly authorized by all required corporate action by or on
behalf of AT&T Illinois. This Agreement has been, and when executed and
delivered by AT&T Illinois the Transaction Documents will be, duly and validly
executed and delivered by AT&T Illinois and the valid and binding obligations of
AT&T Illinois, enforceable against AT&T Illinois 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.
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6.3 No Conflict; Required Consents. Except for, and subject to receipt
------------------------------
of, the AT&T Required Consents, all of which are listed on Schedule 6.3, and the
Insight Required Consents and the notification and expiration or earlier
termination of the waiting period under the HSR Act and except as otherwise
disclosed on Schedule 6.3, the execution and delivery by AT&T Illinois, the
performance of AT&T Illinois under, and the consummation of the transactions
contemplated by, this Agreement and the Transaction Documents to which AT&T
Illinois is a party do not and will not: (a) conflict with or violate any
provision of AT&T Illinois' 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 Illinois under, (iv) result in the
creation or imposition of any Lien under any AT&T System Franchise, AT&T System
License or any AT&T System Contract or other instrument evidencing any of the
AT&T Assets or by which AT&T Illinois 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 AT&T System, AT&T's Cable Business or on
the ability of AT&T Illinois to perform its obligations under this Agreement or
the Transaction Documents to which AT&T Illinois is a party.
6.4 Assets.
------
(a) AT&T Illinois has good and valid title to (or, in the case of
Assets that are leased, valid leasehold interests in) the AT&T Assets (other
than AT&T Owned Real Property, AT&T Leased Property and AT&T Other Real Property
Interests, as to which the representations and warranties in Section 6.6 apply).
The AT&T 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 AT&T
Tangible Personal Property is in good operating condition and repair (ordinary
wear and tear excepted).
(b) Except for items included in the AT&T Excluded Assets, the AT&T
Assets constitute all the assets necessary to permit Insight and the Partnership
to conduct AT&T's Cable Business and to operate the AT&T 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, AT&T
System Contracts, AT&T System Licenses and AT&T System Franchises and to perform
all of the Insight Assumed Obligations and Liabilities.
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(c) Except as described on Schedule 6.4, as of the date of this
Agreement (i) the AT&T Systems do not offer telephony, high speed data or
internet access services and (ii) the AT&T Systems do not have any digital
transport arrangement (e.g., HITS).
----
6.5 AT&T System Franchises, AT&T System Licenses, AT&T System Contracts
-------------------------------------------------------------------
and AT&T Other Real Property Interests.
--------------------------------------
(a) Except pursuant to the agreements referenced on Schedules 1.6
(AT&T Leased Property), 1.8 (AT&T Other Real Property Interests), 1.11 (AT&T
System Contracts), 1.12 (AT&T System Franchises) and 1.13 (AT&T System Licenses)
or as described on Schedule 4.2 (AT&T Excluded Assets) or otherwise included in
the definition of AT&T Excluded Assets, as of the date of this Agreement, AT&T
Illinois is not bound or affected by any of the following that relate primarily
or in whole to AT&T's Cable Business: (i) leases of real or personal property;
(ii) franchises for the construction or operation of cable television systems or
Contracts of substantially equivalent effect; (iii) other licenses,
authorizations, consents or permits of the FCC or any other Governmental
Authority; (iv) material easements, rights of access, underground conduit
agreements, crossing agreements or other interests in real property; (v) pole
line or attachment agreements; (vi) agreements pursuant to which the AT&T
Systems receive or provide advertising sales representation services; (vii)
agreements pursuant to which a AT&T System has constructed or agreed to
construct for Third Parties or any Affiliate of AT&T Illinois, an institutional
network or otherwise provide to Third Parties or any Affiliate of AT&T Illinois,
telecommunications services other than one-way video; (viii) agreements pursuant
to which any bandwidth capacity on the AT&T Systems is leased or otherwise made
available to any Third Party or any Affiliate of AT&T Illinois; (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 AT&T's Cable Business
other than those described in any other clause of this Section which contemplate
payments by or to AT&T Illinois 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 Illinois is a party to any documents listed on
such Schedules.
(b) Complete and correct copies of the AT&T System Franchises and
AT&T System Licenses have been delivered by AT&T Illinois to Insight or will be
delivered by AT&T Illinois to Insight by September 15, 2000. Except as set forth
on Schedule 1.12 (AT&T System Franchises), the AT&T System Franchises contain
all of the commitments and obligations of AT&T Illinois to the applicable
Governmental Authority granting such Franchises with respect to the
construction, ownership and operation of the AT&T Systems. The AT&T System
Franchises and AT&T 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
Illinois' Knowledge, investigation, pending or to AT&T Illinois' Knowledge
threatened, to terminate, suspend or modify any AT&T System Franchise or AT&T
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System License and, except as set forth on Schedule 1.12 (AT&T System
Franchises), AT&T Illinois is in material compliance with the terms and
conditions of all the AT&T System Franchises and AT&T System Licenses and with
other applicable requirements of all Governmental Authorities (including the FCC
and the Register of Copyrights) relating to the AT&T System Franchises and AT&T
System Licenses, including all requirements for notification, filing, reporting,
posting and maintenance of logs and records. All areas served by the AT&T
Systems are served pursuant to one of the AT&T System Franchises except as set
forth on Schedule 1.12 (AT&T System Franchises).
(c) Complete and correct copies of all AT&T System Contracts required
to be listed on AT&T's Schedules (including all Contracts relating to Leased
Property and Other Real Property Interests described on Schedule 1.8) 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 AT&T
System Contract is in full force and effect and constitutes the valid, legal,
binding and enforceable obligation of AT&T Illinois and AT&T Illinois is not and
to AT&T Illinois' Knowledge, each other party thereto is not in breach or
default of any material terms or conditions thereunder. AT&T Illinois has also
provided Insight or will provide Insight by September 15, 2000, a complete and
correct list of all bulk-billed accounts and commercial service accounts of the
AT&T Systems as of the date of this Agreement.
6.6 Real Property. As of the date of this Agreement, all AT&T Assets
-------------
consisting of AT&T Owned Property, AT&T Leased Property and material AT&T Other
Real Property Interests are described on Schedules 1.6 (AT&T Leased Property),
1.8 (AT&T Other Real Property Interests) and 1.9 (AT&T Owned Property). Except
as otherwise disclosed on Schedule 1.9 (AT&T Owned Property), AT&T Illinois
holds title to the AT&T 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 AT&T
Owned Property, in each case subject only to the above-referenced Liens. Except
as otherwise disclosed on Schedules 1.6 (AT&T Leased Property) and 1.8 (AT&T
Other Real Property Interests); AT&T Illinois has valid and enforceable
leasehold interests in all AT&T Leased Property and, with respect to AT&T Other
Real Property Interests, has valid and enforceable rights to use all AT&T 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
1.6 (AT&T Leased Property) or 1.9 (AT&T Owned Property), all of the material
improvements, leasehold improvements and the premises of the AT&T Owned Property
and the premises demised under the leases and other documents evidencing the
AT&T Leased Property are in good condition and repair and are suitable for the
purposes used. Except as disclosed on Schedules 1.6 (AT&T Leased Property) or
1.9 (AT&T Owned Property), each parcel of AT&T Owned Property and each parcel of
AT&T 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 Illinois 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
-33-
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 AT&T Assets or AT&T's Cable
Business and except as disclosed on Schedules 1.6 (AT&T Leased Property) or 1.9
(AT&T Owned Property), all buildings, towers, guy wires and anchors, headend
equipment, earth-receiving dishes and related facilities used in the operations
of the AT&T Systems are located entirely on AT&T Owned Property or AT&T Leased
Property or other real property in which AT&T Illinois has an AT&T 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 Illinois' Knowledge, except as disclosed on Schedule 6.7,
the AT&T Owned Property and AT&T 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 Illinois 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 AT&T Owned Property or AT&T Leased Property, (ii)
transported any Hazardous Substances to or from any AT&T Owned Property or AT&T
Leased Property or (iii) undertaken or caused to be undertaken any other
activities relating to the AT&T Owned Property or AT&T Leased Property, which
could reasonably give rise to any liability under any Environmental Law and, to
AT&T Illinois' Knowledge, no other present or previous owner, tenant, occupant
or user of any AT&T Owned Property or AT&T Leased Property or any other Person
has committed or suffered any of the foregoing. To AT&T Illinois' Knowledge, no
release of Hazardous Substances outside the AT&T Owned Property or AT&T Leased
Property has entered or threatens to enter any AT&T Owned Property or AT&T
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 AT&T Owned Property or AT&T Leased Property. No
Litigation based on Environmental Laws which relates to any AT&T Owned Property
or AT&T 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 Illinois or, to AT&T Illinois' Knowledge, any other Person, or (2)
to AT&T Illinois' Knowledge, is threatened or contemplated.
(b) To AT&T Illinois' Knowledge, except as disclosed on Schedule 6.7,
(i) no aboveground or underground storage tanks are currently or have been
located on any AT&T Owned Property or AT&T Leased Property, (ii) no AT&T Owned
Property or AT&T 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 AT&T Owned Property or AT&T Leased Property contains
asbestos, asbestos-containing material or material presumed to be asbestos-
containing material under any Environmental Law.
-34-
(c) AT&T Illinois 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 AT&T Illinois' possession
relating to the presence or alleged presence of Hazardous Substances at, on,
under or affecting the AT&T Owned Property or AT&T Leased Property, (ii) all
notices (other than general notices made by general publication) or other
materials in AT&T Illinois' 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 AT&T Owned
Property or AT&T Leased Property or activities at the AT&T Owned Property or
AT&T Leased Property and (iii) all materials in AT&T Illinois' 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 AT&T Assets as they are
currently owned, leased and used and the conduct of AT&T's Cable Business and
the operation of the AT&T Systems as they are currently conducted and operated
do not violate or infringe in any material respect any Legal Requirements
currently in effect (other than Legal Requirements described in Sections 6.7,
6.8(d) and 6.13, as to which the representations and warranties set forth in
those subsections shall apply), including (i) the Communications Act, (ii)
Section 111 of the Copyright Act and (iii) all other applicable Legal
Requirements relating to the construction, maintenance, ownership and operation
of the AT&T Assets, the AT&T Systems and AT&T's Cable Business. AT&T Illinois
has received no written notice of any violation by AT&T Illinois or AT&T's Cable
Business of any Legal Requirement applicable to the operation of AT&T's Cable
Business as currently conducted, or the AT&T Systems as currently operated and
to AT&T Illinois' Knowledge, there is no existing fact, circumstance or
condition that could reasonably form the basis for a finding by any Governmental
Authority of any such violation.
(b) A valid request for renewal has been duly and timely filed under
Section 626 of the Communications Act with the proper Governmental Authority
with respect to all AT&T 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 AT&T
Systems to carry any television broadcast station or deliver the same or (2)
claiming that any AT&T System has failed to carry a television broadcast station
required to be carried pursuant to the Communications Act or has failed to carry
a television broadcast station on a channel designated by such station
consistent with the requirements of the Communications Act; (ii) all necessary
FAA approvals have been obtained with respect to the height and location of
towers used in connection with the operation of the AT&T Systems and such towers
are being operated in compliance in all material respects with applicable FCC
and FAA rules; and (iii) AT&T Illinois 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
-35-
Illinois 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 AT&T System Franchises.
(d) Notwithstanding the foregoing, to AT&T Illinois' Knowledge, each
AT&T 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 AT&T's Cable Business. AT&T Illinois 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 Illinois makes no representation or
warranty that any of AT&T Illinois' 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 Illinois 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 AT&T Systems. AT&T Illinois 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
AT&T Systems which would limit or specify the rates that may be charged for
cable television services provided by the AT&T Systems following Closing and is
not currently negotiating or anticipating entering into or being subject to any
new social contract with respect to the AT&T Systems. Except as set forth on
Schedule 6.8, AT&T Illinois has not made any Cost of Service Election with
respect to any of the AT&T Systems. Except as otherwise described on Schedule
6.8 as of the date of this Agreement, (i) to the Knowledge of AT&T Illinois,
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 AT&T
Systems can charge (whether for programming, equipment, installation, service or
otherwise), (ii) except for the Social Contract released on August 3, 1995 (FCC
95-335) between Continental Cablevision (predecessor to MediaOne) and the FCC,
and the Social Contract Amendment released on August 23, 1996 (FCC 96-358), as
amended, revised, extended or supplemented from time to time (the "MediaOne
Social Contract"), no cable television system included in the AT&T 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 AT&T Systems, and (iv) there is no unresolved complaint pending with respect
to the CPST tier of any AT&T System and no rate order with respect to the AT&T
Systems is being appealed.
6.9 Patents, Trademarks and Copyrights. AT&T Illinois 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
-36-
Copyright Act with respect to the business and operations of the AT&T 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
Illinois' 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 Illinois with respect to the AT&T Systems. AT&T
Illinois 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 AT&T's Cable Business. AT&T Illinois does not possess any patent,
patent right, trademark or copyright related to or material to the operation of
the AT&T Systems and AT&T Illinois 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 AT&T Systems
and AT&T's Cable Business have been operated in such a manner so as not to
violate or infringe upon the rights, or give rise to any rightful claim of any
Person for copyright, trademark, service xxxx, patent or license infringement or
the like.
6.10 Financial Statements; Undisclosed Liabilities; Absence of Certain
-----------------------------------------------------------------
Changes or Events. AT&T Illinois has delivered to Insight complete and correct
-----------------
copies of an unaudited balance sheet for each AT&T 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 "AT&T's
Financial Statements"). AT&T's Financial Statements are in accordance with the
books and records of AT&T Illinois, were prepared in accordance with GAAP,
applied on a consistent basis throughout the periods covered thereby, present
fairly the financial condition of the AT&T Systems at the dates and for the
periods indicated, subject, in the case of unaudited AT&T Financial Statements,
only to standard year-end adjustments and the omission of footnotes. The
unaudited balance sheets of the AT&T Systems as of March 31, 2000 are herein
called the "AT&T Balance Sheets." At the date of the AT&T Balance Sheets, AT&T
Illinois had no material liabilities with respect to the AT&T Systems required
by GAAP to be reflected or reserved against therein that were not fully
reflected or reserved against on the AT&T 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 AT&T Balance Sheets through the date of this Agreement: (x) AT&T
Illinois 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 Illinois' Knowledge,
individually or in the aggregate, have a material adverse effect on the
financial condition of AT&T Illinois or the results of operations of AT&T
Illinois or AT&T's Cable Business; (y) there has been no material adverse change
in the AT&T Assets comprising any AT&T System or in the business, condition,
financial or otherwise, or liabilities of AT&T's Cable Business or any AT&T
System and, to AT&T Illinois' Knowledge, no fact or condition exists or is
contemplated or threatened which would result in such a change in the future;
and (z) AT&T's Cable Business has been conducted only in the ordinary course of
business consistent with past practice. For the purpose of this Agreement, the
impact of general economic conditions (including changes in capital and
financial markets), governmental legislation and regulations and other events
which affect the cable industry as a whole in the State of Illinois
-37-
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 AT&T's Cable Business or any AT&T 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 Illinois' Knowledge, threatened, and, to AT&T
Illinois' Knowledge, there is no investigation pending or threatened, by or
before any Governmental Authority or private arbitration tribunal against AT&T
Illinois which, if adversely determined, would materially adversely affect (i)
the financial condition or operations of AT&T's Cable Business, AT&T Systems,
the AT&T Assets or (ii) the ability of AT&T Illinois 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 AT&T System Franchises, AT&T System Licenses, AT&T System Contracts or
leases or other documents evidencing the AT&T Leased Property or the AT&T Other
Real Property Interests; and (b) there is not in existence any Judgment
requiring AT&T Illinois to take any action of any kind with respect to the AT&T
Assets or the operation of the AT&T Systems, or to which AT&T Illinois (with
respect to the AT&T Systems), the AT&T Systems or the AT&T Assets are subject or
by which they are bound or affected.
6.12 Tax Returns; Other Reports. AT&T Illinois 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 Illinois, 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 AT&T Assets or that could impose on
Insight any transferee liability for any taxes, penalties or interest due or to
become due from AT&T Illinois, 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 Illinois has received no notice of, nor does
AT&T Illinois 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 AT&T 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 Illinois or its Affiliates
principally in connection with the AT&T 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 AT&T Systems,
AT&T Illinois and its Affiliates have, with respect to the AT&T Systems,
complied in all material respects with all applicable Legal Requirements
relating to the employment of labor, including 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, 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
-38-
classification of independent contractors engaged by AT&T Illinois or its
Affiliates principally in connection with the AT&T Systems.
(b) For purposes of this Agreement, "AT&T 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 Illinois 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 Illinois or any of its ERISA
Affiliates participate; provided, that in no event does "AT&T Plans" include any
employee benefit plan applicable to the employees of the AT&T Systems prior to
June 1, 1999, the date on which the employees of the AT&T Systems became
employees of AT&T Corp. or its Affiliates. The AT&T Plans in which any employee
of the AT&T 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 AT&T Systems, none of AT&T Illinois, any of its ERISA
Affiliates, any AT&T Plan other than a multiemployer plan (as defined in Section
3(37) of ERISA), or to the Knowledge of AT&T Illinois or any of its ERISA
Affiliates, any AT&T Plan that is a multiemployer plan (as defined in Section
3(37) of ERISA), is in violation of any provision of 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 AT&T Plan which reasonably could result in material
liability to AT&T Illinois 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 AT&T Plan other than a
multiemployer plan (as defined in Section 3(37) of ERISA) or to the Knowledge of
AT&T Illinois or any of its ERISA Affiliates, any AT&T 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 AT&T Plan currently maintained by AT&T Illinois 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
Illinois or its Affiliates principally in connection with the AT&T Systems; (ii)
neither AT&T Illinois nor its Affiliates has any duty to and neither has agreed
to bargain with any labor organization with respect to any such Person; (iii)
there are not pending any unfair labor practice charges against AT&T Illinois 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 Illinois or
its Affiliates in connection with the AT&T Systems now or, to the Knowledge of
AT&T Illinois or its Affiliates, within the last one year; and (iv) there are
not currently pending or threatened nor, to the Knowledge of AT&T Illinois and
its Affiliates, have there been within the past one year any strikes, picketing,
work slowdowns or other labor disputes involving or relating to any employees of
the AT&T Systems. Except as described on Schedule 6.13, neither AT&T Illinois
nor its Affiliates has any employment Contracts, either written or oral, except
for oral contracts terminable
-39-
at will without penalty, with any employee of the AT&T Systems and none of the
employment Contracts listed on Schedule 6.13 requires AT&T Illinois 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 AT&T System offices included in the AT&T 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 Illinois' 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 Illinois,
that resulted from the regular course of AT&T's Cable Business. Such
receivables are subject to no offset or reduction of any nature, except for a
reserve for uncollectible amounts consistent with the reserve established by
AT&T Illinois in AT&T's Financial Statements and those credits or reductions to
such accounts made in the ordinary course of business.
6.15 Finders and Brokers. AT&T Illinois 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 AT&T Excluded Assets and except with respect to
customary corporate overhead services provided by the corporate, division or
regional offices of AT&T Corp. AT&T Illinois is not a party to any material
business arrangement or business relationship with any of its Affiliates, and
none of its Affiliates owns any property or right, tangible or intangible, that
is used principally in the business or operations of the AT&T Systems.
SECTION 7 ADDITIONAL COVENANTS
7.1 Access to Premises and Records. Between the date of this Agreement
------------------------------
and the Closing Date each of AT&T Illinois and Insight will give to the other
and its representatives full access during normal business hours to all the
premises and books and records of its Cable Business and to all its Assets and
Systems' personnel and will furnish to the other and its representatives all
such documents, financial information and other information regarding its Cable
Business and its Assets as the other from time to time reasonably may request,
including the employment records described in Section 7.3; provided that no
investigation by AT&T Illinois or Insight will affect or limit the scope of any
of the representations, warranties, covenants and indemnities of the other party
in this Agreement or in any Transaction Document or limit such party's liability
for breach of any of the foregoing.
-40-
7.2 Continuity and Maintenance of Operations; Certain Deliveries and
----------------------------------------------------------------
Notices. Between the date of this Agreement and the Closing, AT&T Illinois with
-------
respect to AT&T's Cable Business, the AT&T Systems and the AT&T Assets and
Insight with respect to Insight's Cable Business, the Insight Systems and the
Insight Assets:
(a) will conduct its Cable Business and operate its Systems only in
the usual, regular and ordinary course and consistent with past practices,
including continuing to make ordinary marketing, advertising and promotional
expenditures, and, to the extent consistent with such conduct and operation,
will use its commercially reasonable efforts to (i) preserve its current
business intact in all material respects, including preserving existing
relationships with franchising authorities, suppliers, customers and others
having business dealings with its Systems, and (ii) keep available the services
of its employees and agents providing services in connection with the Cable
Business 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 such party's Assets, other than in the
ordinary course of business provided that the other party's consent, not to be
unreasonably withheld or delayed, will be required to modify, terminate, renew,
suspend, abrogate or enter into any retransmission consent or programming
agreement, any System Franchise, any lease or document evidencing Leased
Property or any other agreement that contemplates payments to or by the
transferring party in any 12-month period exceeding $25,000 individually or
$150,000 in the aggregate; (ii) take or omit to take any action that would
result in the condition set forth in Section 8.1(a) with respect to AT&T
Illinois or Section 8.2(a) with respect to Insight not being satisfied at any
time prior to the Closing; (iii) engage in any marketing, subscriber
installation, disconnection or collection practices other than in the ordinary
course of business consistent with its past practices; (iv) make any Cost of
Service Election; (v) enter into any agreement with or commitment to any
competitive access providers with respect to any System; (vi) sell, transfer or
assign any portion of its Assets other than sales in the ordinary course of
business and assets sold or disposed of and replaced by other assets of
comparable utility and value or permit the creation of a Lien, other than a
Permitted Lien, on any Asset; (vii) engage in any hiring or employee
compensation practices (including severance plans or policies) that are
inconsistent with past practices except for changes in such practices
implemented by such party and its Affiliates on a company-wide basis (and it
being agreed that such party will give prompt notice to the other party of any
such changes); or (viii) take any actions that would cause the transactions
contemplated hereby to fail to qualify as like-kind exchanges under Section 1031
of the Code;
-41-
(d) will promptly deliver to the other true and complete copies of
all quarterly financial statements and all monthly and quarterly operating
reports with respect to the operation of the Cable Business prepared in the
ordinary course of business by or for such party at any time from the date of
this Agreement until the Closing;
(e) will give or cause to be given to the other and its counsel,
accountants and other representatives, as soon as reasonably possible but in any
event prior to the date of submission to the appropriate Governmental Authority,
copies of all FCC Forms 1200, 1205, 1210, 1215, 1220, 1225, 1235 and 1240 or any
other FCC forms required to be filed with any Governmental Authority under the
1992 Cable Act with respect to rates and prepared with respect to any of its
Systems, such forms to be reasonably satisfactory in form and substance to the
other;
(f) will duly and timely file a valid notice of renewal under
Section 626 of the Cable Act with the appropriate Governmental Authority with
respect to any System Franchise that will expire within 36 months after any date
between the date of this Agreement and the Closing Date;
(g) will promptly notify the other of any fact, circumstance, event
or action by it or otherwise (i) which if known at the date of this Agreement
would have been required to be disclosed by it in or pursuant to this Agreement
or (ii) the existence, occurrence or taking of which would result in the
condition set forth in Section 8.1(a) with respect to AT&T Illinois or Section
8.2(a) with respect to Insight not being satisfied at any time prior to the
Closing, and, with respect to clause (ii), will use its commercially reasonable
efforts to remedy the same, subject to Section 12.16; and
(h) will consult the other prior to decreasing or increasing the
rate charged for any level of Basic Services, Expanded Basic Services or Pay TV
and prior to adding, deleting, retiering or repackaging any programming
services; provided that the other's consent is not required for any such action.
7.3 Employees.
---------
(a) Each party may, but shall have no obligation to, employ or offer
employment to all employees of the other party's Cable Business. Within fifteen
(15) days after the date of this Agreement, each party shall provide to the
other a list of all employees of their respective 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 such party 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, the party receiving such list will provide
to the other in writing a list of employees that such party or its Affiliates
may desire to employ following the Closing Time (subject only to the evaluations
and return to active service conditions permitted by this Section 7.3), which
-42-
list shall not include any Retained Employees. Each party agrees and shall
cause such party's appropriate Affiliates, to cooperate in all reasonable
respects with the other party to allow the other party or such other party's
Affiliates to evaluate the employees of its Cable Business to make hiring
decisions. In this regard, each party shall have the opportunity to make such
appropriate prehire investigation of the employees of such other party's Cable
Business, 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 are conducted after notice to the other party
and do not unreasonably interfere with the other party'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. Each party 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 the employer
(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 the employer. The
party requesting such examination shall bear the expense of such examination but
the other party shall, upon reasonable notice, cooperate in the scheduling of
such examinations so long as the examinations do not unreasonably interfere with
the other party's operations. Each of AT&T Illinois and Insight agrees that as
of the Closing Time, the only employees of its Systems shall be the employees to
be hired by the other party (the "Hired Employees") which employees will be
listed on a schedule provided by each of AT&T and Insight, as applicable, on the
day before the Closing Date. Such schedule also will include a list of
Employees on Leave Status. The Hiring Party and its Affiliates shall not be
deemed to employ any of the employees of the other party'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 the Hiring Party or its Affiliates
after the Closing Time, at the time such Employee on Leave Status begins
employment with the Hiring Party in accordance with this Section 7.3(a). The
Hiring Party and its Affiliates shall have no obligation to the other party or
its Affiliates or to the employees of the other party'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 the Hiring Party or its Affiliates after the Closing Time, it being
acknowledged that the Hiring Party 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.
-43-
(b) Each party 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
3.2(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 such party in accordance with the
terms and conditions of any arrangement providing for such compensation or
benefits, including, without limitation, all amounts, if any, payable on account
of the termination of their employment. The transferor party shall promptly
satisfy any legal obligation with respect to continuation of group health
coverage for its employees 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 a transferor party or its appropriate Affiliate, to
make distributions to any former employee of such party who becomes a Hired
Employee of the other party of the balance of such employee's 401(k) account in
the transferor party's or its Affiliate's tax qualified plan, if any, as soon as
legally permitted, each transferee party shall notify the other party of the
date of termination of such employee's employment with the transferee party 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 either party or its Affiliates or arising under any Legal Requirement
affecting System employees of such party 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 such party, whether or not such employees are
hired by the other party after the Closing Time. Neither party will have or
assume any obligation or liability under or in connection with any such plan
maintained by the other party 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 the transferor party until such
employee becomes a Hired Employee of the transferee party after the Closing Time
pursuant to Section 7.3.(a) or is terminated by the transferor party or its
Affiliate.
-44-
(e) Each party or its appropriate Affiliate will remain solely
responsible for, and will indemnify and hold harmless the other from and against
all Losses arising from or with respect to, all salaries, 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 3.2(c)), medical, sick, holiday,
continuation coverage and other compensation or benefits to which the employees
of its Cable Business may be entitled, whether or not such employees may be
hired by the other party or any Affiliate of the other party, as a result of
their employment by the transferor party or any Affiliate of transferor party,
the termination of their employment with such party or its Affiliates, the
consummation of the transactions contemplated hereby or pursuant to any
applicable Legal Requirement or otherwise relating to their employment with such
party or its Affiliates. Any liability under WARN with regard to any employee
terminated on or prior to the Closing Time or not hired by the other party on or
after the Closing Time, shall, as a matter of contract between the parties, be
the responsibility of the party by which such employee was employed prior to the
Closing Time. 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, transferee
party or Affiliate of transferee party (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 transferor party 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 the transferor
party through and including the Closing Time or the amount of accrued vacation
permitted to be accrued by similarly situated employees of the Hiring Party in
accordance with the Hiring Party's standard practices (to a maximum of four
weeks) accrued and unused by him or her as an employee of the transferor party
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 the transferor party 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 the other party or its Affiliates as of the Closing Time
(including past service with any prior owner or operator of such party to the
extent such Hired Employee previously received credit for such service) for
purposes of eligibility 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 the other party or its Affiliates at the Closing
Time (including past service with any prior owner or operator of such party to
the extent such Hired Employee previously received credit for such service) for
purposes of 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 the other party or its Affiliates
as of the Closing Time (including past service with any prior owner or operator
of such party to the extent such Hired Employee previously received credit for
such service) for 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
-45-
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 the other party'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 Section 7.3(f), the Hiring Party shall have no obligation to employees
of the other party's Cable Business who are Employees on Leave Status until they
become employees of the Hiring Party pursuant to Section 7.3(a) hereof.
(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 the other party'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 the
transferor party or its Affiliates and with the transferee party 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 the transferee party's severance benefit plan
counting the period of employment with transferor party or its Affiliates and
transferee party 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 a transferor party has, or acquires, a duty to bargain with any
labor organization with respect to employees of its Cable Business, then such
transferor party 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 the other party'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 in the case of AT&T Illinois, pursuant to a
Contract required to be entered into under the NCE Agreement. Each party (as a
transferor party) acknowledges and agrees that the other party has not agreed to
be bound, and will not be bound, without an explicit assumption of such
liability or responsibility by the Hiring Party, by any provision of any
collective bargaining agreement or similar Contract with any labor organization
to which the other party is or may become bound
-46-
except in the case of AT&T Illinois, to the extent that such a Contract entered
into pursuant to the NCE Agreement so requires. Except as may be required on the
part AT&T Illinois or its Affiliates under 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"), no party shall take any
action or engage in any inaction which might obligate or require it or another
party to the 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 Illinois or its Affiliates under the NCE Agreement,
each party shall cooperate fully with the other parties in resisting union
organization of System Employee. For purposes of this Agreement and determining
what is required under the NCE Agreement, Insight and the Partnership
acknowledge that AT&T Illinois in its sole discretion may elect to treat all of
the AT&T Systems as covered by the NCE Agreement.
(i) Nothing in this Section 7.3 or elsewhere in this Agreement shall
be deemed to make any employee of the parties or their respective Affiliates a
third party beneficiary of this Agreement.
7.4 Leased Vehicles; Other Capital Leases. Each of AT&T Illinois and
-------------------------------------
Insight 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) Each party will use its commercially reasonable efforts to obtain
in writing as promptly as possible and at its expense, all of its Required
Consents in form and substance reasonably satisfactory to the other party, and
will deliver to the other party copies of such Required Consents promptly after
they are obtained by such party; provided however that each party will afford
the other party the opportunity to review, approve and revise the form of
Required Consent prior to delivery to the party whose consent is sought. Each
party will cooperate with the other party in its efforts to obtain its Required
Consents, but neither party will be required to accept or agree or accede to any
condition to transfer of any Asset, or any modifications or amendments to any of
the System Franchises, System Licenses, System Contracts or leases or documents
evidencing Leased Property or Other Real Property Interests of its Cable
Business that, in either case, would make, or are reasonably likely to make, the
underlying instrument materially more onerous in any respect or that would
materially reduce, or are reasonably likely to materially reduce, the benefits
available under the instrument in respect of which the consent relates. As soon
as practicable after the date of this Agreement, but in any event no later than
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.
-47-
(b) Each party will use commercially reasonable efforts to obtain and
will cooperate with the other 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) Each of AT&T Illinois and Insight will use commercially reasonable
efforts to obtain and cooperate with the other 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. In addition, Insight will use
commercially reasonable efforts to obtain an extension of the lease for the
Claremont Insight System headend for a period expiring no earlier than May 31,
2001.
(d) Each party will cooperate with the other in such other party's
efforts to obtain renewals or extensions of any System Franchises pursuant to
Section 7.5(b) or (c), but neither party will be required to accept or agree or
accede to any renewal or extended System Franchise that contains terms that
would make, or are reasonably likely to make, the System Franchise that is being
renewed or extended materially more onerous in any respect or that would
materially reduce, or are reasonably likely to materially reduce, the benefits
available under the System Franchise that is being renewed or extended. Insight
shall make such decision with respect to the AT&T System Franchises and AT&T
Illinois shall make such decision with respect to the Insight Systems
Franchises.
(e) Notwithstanding Section 7.5(a), no party will have any further
obligation to obtain Required Consents: (i) with respect to license agreements
relating to pole attachments where the licensing party will not, after the
assigning party's exercise of commercially reasonable efforts, consent to an
assignment of such license agreement but requires that the proposed assignee
enter into a new agreement with such licensing authority, in which case the
proposed assignee shall use its commercially reasonable efforts to enter into
such agreement prior to the Closing or as soon as practicable thereafter and the
party to the license agreement will cooperate with and assist the other party in
obtaining such agreements; provided however that the proposed assignee's
commercially reasonable efforts shall not require it to take any action of the
type that such party is not required to take pursuant to this Section 7.5; and
(ii) for any business radio license which such party reasonably expects can be
obtained within 120 days after the Closing and so long as a temporary
authorization is available to the other party under FCC rules with respect
thereto.
7.6 Title Commitments and Surveys. With respect to the real property that
-----------------------------
it is acquiring, within 45 days after the date of this Agreement, each party may
obtain, at its own expense, (a) current commitments to issue title insurance
policies ("Title Commitments"), committing to insure fee simple title in such
party to each parcel of the Owned Property and easements that provide access to
such Owned Property included in the Assets to be acquired by such party, subject
only to Permitted Liens, and (b) surveys of each parcel of Owned Property in
such form as is necessary to obtain the title insurance to be issued pursuant to
the Title Commitments (the
-48-
"Surveys"). For purposes of this Agreement "Title Policy" or "Title Policies"
shall mean the policies of title insurance issued by an agent writing for Old
Republic Insurance Company, Chicago Title Insurance Company or another
nationally recognized title insurance company (the "Title Company") for each
parcel of real property chosen by the acquirer to be insured pursuant to this
Section 7.6. If Insight or AT&T Illinois notifies the other within 90 days after
the date of this Agreement of any Lien (other than a Permitted Lien) or other
matter affecting title to Owned Property of the other which prevents access to
or which could prevent or impede in any way the use or operation of any parcel
of Owned Property for the purposes for which it is currently used or operated by
the other (each a "Title Defect"), the other will exercise commercially
reasonable efforts to (i) remove such Title Defect at or prior to Closing, or
(ii) with the consent of the objecting party, cause the Title Company to commit
to insure over each such Title Defect prior to the Closing. If such Title Defect
cannot be removed at or prior to Closing or the Title Company does not commit to
insure over such Title Defect prior to Closing and if the objecting party elects
to waive such Title Defect and proceed towards consummation of the transaction
in accordance with this Agreement in its reasonable discretion, the objecting
party and the party that owns such property shall enter into a written agreement
at Closing containing the commitment of the party that owns such property to use
commercially reasonable efforts to remedy the Title Defect following Closing on
terms satisfactory to the objecting party, in its reasonable discretion.
7.7 HSR Notification. As soon as practicable but in any event no later
----------------
than 60 days after the date of this Agreement, Insight and AT&T Illinois 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
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.
-49-
7.8 Transfer Taxes. All sales, use or excise Taxes arising from or
--------------
payable by reason of the transfer of any of the AT&T Assets and the Insight
Assets will be shared equally by AT&T Illinois 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 AT&T
Assets and the Insight Assets will be paid by AT&T Illinois with respect to the
AT&T Assets and by Insight with respect to the Insight Assets.
7.9 Distant Broadcast Signals. Unless otherwise restricted or prohibited
-------------------------
by any Governmental Authority or applicable Legal Requirement, if requested 45
days or more prior to the anticipated Closing Date by the party to which a
System will be transferred under this Agreement, the transferor of such System
will delete prior to the Closing Date any distant broadcast signals which the
transferee determines will result in unacceptable liability on the part of the
transferee for copyright payments with respect to continued carriage of such
signals after the Closing.
7.10 Programming. Not later than 20 Business Days prior to the Closing,
-----------
Insight will deliver a letter in a form reasonably requested by AT&T Illinois to
all programmers from which Insight purchases programming and will execute and
deliver to AT&T Illinois such other documents as may be reasonably requested by
AT&T Illinois to comply with the requirements of its programming Contracts and
channel line-up requirements with respect to acquisitions and divestitures of
cable television systems. AT&T Illinois 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 and divestitures of cable television systems. Neither
party will be required to make any payments to the other's programmers in the
fulfillment of its obligations under this Section 7.10.
7.11 Use of Names and Logos. For a period of 90 days after the Closing,
----------------------
each of Insight and AT&T Illinois will be entitled to use the trademarks, trade
names, service marks, service names, logos and similar proprietary rights of the
other to the extent incorporated in or on the Assets transferred to it at the
Closing, provided that each will exercise reasonable efforts to remove all such
names, marks, logos and similar proprietary rights of the other from the Assets
by such earlier date as reasonably practicable following the Closing.
Notwithstanding the foregoing, the transferee party will not be required to
remove or discontinue using any such name or xxxx that is affixed to converters
or other items in or to be used in customer homes or properties, or as are used
in similar fashion making such removal or discontinuation impracticable for the
transferee party.
7.12 Transitional Billing Services. Subject to Section 7.26, Insight and
-----------------------------
AT&T Illinois will each provide to the other access to and the right to use its
billing system computers, software and related fixed assets in connection with
the Systems acquired by the other party for a period of up to 180 days following
the Closing to allow for conversion of existing billing arrangements
("Transitional Billing Services"). All Transitional Billing Services that are
requested by a party will be provided on terms and conditions reasonably
satisfactory to each party; provided however that
-50-
the amount to be paid by the party receiving Transitional Billing Services will
not exceed the cost to the other party of providing such Transitional Billing
Services. Each party will notify the other party at least 45 days prior to the
Closing of the cost to such party of providing such Transitional Billing
Services.
7.13 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 with respect to the other's Cable Business and
Systems (it being understood and agreed that all proprietary information of the
transferring party that is included among the Assets of such transferring party
shall become the proprietary information of the transferee party at Closing)
will be kept confidential and, such party will not disclose, and will cause its
employees, consultants, advisors and agents not to disclose, any such
information to any other Person (other than its directors, officers and
employees and representatives of its advisers and lenders whose knowledge
thereof is necessary in order to facilitate the consummation of the transactions
contemplated hereby) or use, and will cause its employees, consultants, advisors
and agents not to use, such information to the detriment of the other; provided
that (i) such party may use and disclose any such information once it has been
publicly disclosed (other than by such party in breach of its obligations under
this Section) or which rightfully has come into the possession of such party
(other than from the other 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 or AT&T Illinois 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 Illinois each waives compliance by
--------------
the other with Legal Requirements relating to bulk transfers applicable to the
transactions contemplated hereby.
7.15 Allocation of Value to Exchanged Assets. Following Closing, the
---------------------------------------
parties agree to jointly hire an appraiser (the "Appraiser") to prepare, not
later than 60 days after the Closing, a
-51-
written report regarding the value to be allocated to the tangible personal
property included in the Assets pursuant to Internal Revenue Service regulations
relating to like-kind exchanges of assets under Section 1031 of the Code. The
fees of the Appraiser will be split equally between AT&T Illinois and Insight.
The parties agree that for purposes of Sections 1031 and 1060 of the Code and
the regulations thereunder, each will report the transactions contemplated by
this Agreement in accordance with the values determined by the Appraiser.
Liabilities assumed or taken subject to by each party are being exchanged each
for the other to the maximum extent permitted under Section 1031 of the Code and
regulations thereunder. Each party promptly will give the other notice of any
disallowance or challenge of asset values by the Internal Revenue Service or any
state or local tax authority.
7.16 Lien Searches. Within 20 Business Days prior to the anticipated
-------------
Closing Date, each party will obtain at its expense and deliver to the other
party, the results of a lien search conducted by a professional search company
of records in the offices of the secretaries of state in each state and county
clerks in each county where there exists any of its Owned Property or Tangible
Personal Property, and in the state and county where such party's principal
offices are located, including copies of all financing statements or similar
notices or filings (and any continuation statements) discovered by such search
company.
7.17 Further Assurances. At, and after the Closing, each of Insight and
------------------
AT&T Illinois at the request of the other, will promptly execute and deliver, or
cause to be executed and delivered, to the other all such documents and
instruments, in addition to those otherwise required by this Agreement, in form
and substance reasonably satisfactory to the other as the other may reasonably
request in order to carry out or evidence the terms of this Agreement or to
collect on behalf of the transferee party any accounts receivable or other
claims included in the Insight Assets or AT&T Assets. Without limiting the
generality of the foregoing, Insight and AT&T Illinois will take, or cause to be
taken, all actions consistent with the terms of this Agreement, including
execution and delivery of any documents or instruments, as the other may
reasonably request to effect the qualification of the transactions contemplated
hereby as a like-kind exchange under Section 1031 of the Code.
7.18 Consents. If and to the extent Insight or AT&T Illinois shall have
--------
waived satisfaction of the condition to Closing set forth in Section 8.1(e) or
Section 8.2(e), respectively, subsequent to the Closing, each of AT&T Illinois
with respect to the AT&T Systems and the AT&T Assets and Insight with respect to
the Insight Systems and the Insight Assets will continue to use commercially
reasonable efforts to obtain in writing as promptly as possible any Required
Consent which was not obtained on or before the Closing (other than consents
which such party 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 the other. The obligations set forth in this Section will survive
the Closing for a period of thirty (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 7.18, the transferor party will no
longer be obligated to obtain any of its Required Consents which were not
obtained on or before the Closing and will be released from all liability for
any failure to obtain such
-53-
consents with respect to which it used commercially reasonable efforts to
obtain. To the extent that the transferee party continues to try to obtain any
Required Consents that were not obtained by the end of such survival period each
of AT&T Illinois and Insight will cooperate with the other party and provide
information to the other party to the extent reasonably necessary for the other
party to continue to try to obtain any Required Consents pursuant to this
Section 7.18.
7.19 Cooperation as to Rates and Fees.
--------------------------------
(a) Each party shall diligently pursue any current rate proceedings
with respect to its Systems and shall make available to the other party upon
request copies of any documents, correspondence or notices sent by or received
by such party in connection with the current rate proceedings or any rate
regulatory matter with respect to its Systems instituted after the date of this
Agreement.
(b) Prior to Closing, without the prior consent of the other party,
neither party shall settle any rate proceeding with respect to its Systems if
such settlement would (i) impose upon the other party any liability, or (ii)
adversely affect the rates to be charged by the other party during the post-
Closing time period unless such party compensates the other party therefor in
the manner agreed by the parties, or if the parties do not agree, as determined
by an independent auditor in accordance with the procedures established in
Section 3.3(b). Notwithstanding the foregoing, Insight agrees that AT&T
Illinois may complete the AT&T Late Fee Settlement.
(c) After Closing, notwithstanding the terms of Section 11.4 hereof,
the transferee of a System shall have the right at its own expense to assume
control of the defense of any rate proceeding with respect to such System that
remains pending as of Closing or that arises after Closing but relates to the
pre-Closing operation of a System; provided, that AT&T Illinois may complete the
pending AT&T Late Fee Settlement and the defense of such litigation as it
relates to the AT&T Systems shall not be turned over to Insight. The transferee
of a System shall notify the other party regarding the commencement of any such
rate proceeding relating to the pre-Closing operation of such System. In any
such rate proceeding involving a System, the transferor of such System shall
cooperate in such proceeding and promptly deliver to the other party all
information in its possession that is reasonably requested by the other party as
necessary or helpful in such proceeding.
(i) If the transferee of a System elects to assume control of the
defense of any such rate proceeding, then (1) the other party shall have the
right to participate, at its expense, in the defense in such rate proceeding,
and (2) the transferee shall have the right to settle any rate proceeding
relating to the pre-Closing operation of a System unless under such settlement
the other party would be required to bear liability with respect to the pre-
Closing time period, in which event such settlement shall require the other
party's prior written consent, which consent shall not be unreasonably withheld.
-53-
(ii) If the transferee of a System does not elect to assume control of
the defense of any such rate proceeding, then (1) the transferee shall have the
right to participate, at its expense, in the defense in such rate proceeding,
and (2) without the prior consent of the transferee, the other party shall not
settle such rate proceeding if such settlement would require the transferee to
bear any liability or would adversely affect the rates to be charged by the
transferee unless the other party compensates the transferee therefor in the
manner agreed by the parties, or if the parties do not so agree, as determined
by an independent auditor in accordance with the procedures established in
Section 3.3(b). In any such rate proceeding involving a System, the transferee
party shall cooperate with the transferor party in such proceeding and promptly
deliver to the transferor party all information reasonably requested by the
transferor party as necessary or helpful in such proceeding.
(d) If AT&T Illinois or the AT&T Systems are required following Closing
pursuant to any Legal Requirement, settlement or otherwise, including, without
limitation, the MediaOne 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 AT&T 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 Illinois and AT&T Illinois 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 Illinois with all
information in Insight's possession that is reasonably required by AT&T Illinois
in connection with such reimbursement. In addition, Insight, and following the
contribution of the AT&T Systems to the Partnership, the Partnership, agrees
that it 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 AT&T
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 Insight's and the
Partnership's and its subsidiaries' sole obligation with respect to the AT&T
Late Fee Settlement).
(e) If Insight or the Insight System is required following Closing
pursuant to any Legal Requirement, settlement or otherwise to reimburse or
provide in-kind or another form of consideration to any subscribers of the
Insight Systems in respect of any subscriber payments previously made by them,
including fees for cable television service, late fees and similar payments,
AT&T Illinois agrees that it will make such reimbursement or provide such in-
kind or other form of consideration through AT&T Illinois' billing system on
terms specified by Insight and Insight will reimburse AT&T Illinois for all such
payments and other consideration made by AT&T Illinois following Closing and for
AT&T Illinois' reasonable out-of-pocket expenses incurred in connection
therewith. Without limiting the foregoing, AT&T Illinois will provide Insight
with all information in AT&T Illinois' possession that is reasonably required by
Insight in connection with such reimbursement.
-54-
7.20 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.
7.21 Offers. Neither party will offer its Assets or Cable Business for
------
sale, entertain offers for such Assets or Cable Business or otherwise negotiate
for the sale of such Assets or Cable Business or make information about such
Assets or Cable Business available to any third party in connection with the
possible sale of such Assets or Cable Business prior to the Closing Date or the
date this Agreement is terminated in accordance with its terms.
7.22 Environmental Reports. Each party may obtain at its expense, such
---------------------
environmental assessments and reports with respect to the real property that it
is acquiring as it may determine. Without limiting the generality of the
foregoing, if requested by either party, the other party shall give such
requesting party and all environmental engineers and consultants acting on its
behalf such access during normal business hours to the sites and facilities
relating to the other party's Systems as is reasonably required to permit such
engineers and consultants to conduct the physical on-site inspections and
prepare the environmental surveys and assessments with respect to such sites and
facilities as the requesting party shall reasonably request. If the results of a
party's environmental investigation reveal a matter that would be a breach of
the other party's representations given with respect to environmental matters,
without taking into account the Knowledge limitations in such representations,
such party shall have the right to terminate this Agreement, by written notice
given to the other party not later than 120 days after the date of this
Agreement unless the other party agrees to, and by Closing does, make
satisfactory arrangements, as reasonably determined by the party that
commissioned the investigation, to either fix the problem or indemnify the party
that commissioned the environmental investigation
7.23 Cooperation on SEC Matters. Each transferor party agrees to
----------------------------
cooperate, and cause its Affiliates and independent accountants to cooperate in
all commercially reasonable respects with the transferee party and its counsel
and accountants in connection with any filing required to be made in connection
with this Agreement by the transferee party 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 the transferee party). The transferor party shall provide to
the transferee party such financial statements, schedules and other information
relating to the transferor party's Cable Business and Systems as the transferee
party may reasonably request for inclusion in any such filing, in appropriate
form as provided in applicable federal or state securities laws. The transferee
party or its Affiliates shall promptly reimburse the transferor party or its
Affiliates or, upon request, advance to the transferor party or its Affiliates,
all out-of-pocket costs, expenses and fees incurred by the transferor party or
its Affiliates or its independent accountants or attorneys in connection with
the preparation or provision of such
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financial statements, schedules and other information to the transferee party
and the transferee party or its Affiliates shall likewise bear any out-of-pocket
costs, expenses and fees incurred by the transferee party or its Affiliates in
connection with the preparation by the transferee and inclusion by the
transferee party or its Affiliates of such information in any such filing. The
transferor party hereby consents to the inclusion by the transferee party or its
Affiliates of such financial statements, schedules and other information of the
transferor party's Cable Business and Systems, if requested to be so included by
the transferee party, in any report required 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.
The transferor party agrees to use, and will cause its Affiliates to use,
commercially reasonable efforts to obtain the consent of the independent public
accountants of the transferor party or its Affiliates to the inclusion of such
financial statements in any report to be filed by the transferee party. The
transferee party shall indemnify and hold harmless the transferor party and its
Affiliates from any Losses resulting from the inclusion of any such financial
statements, schedules and other information in any such filing, except the
transferee party shall not have any indemnification liability to the transferor
party or its Affiliates to the extent such Losses arise out of any information
included by the transferee party or its Affiliates in reliance upon and in
conformity with written information furnished to the transferee party or its
Affiliates by the transferor party or its Affiliates for use in connection with
such filings.
7.24 Rebuild of AT&T Systems. Following the Closing, Insight, and after
-----------------------
the contribution to the Partnership, the Partnership, agrees to use commercially
reasonable efforts to upgrade the AT&T Systems in accordance with the
requirements of the MediaOne Social Contract (which will be specified by AT&T to
Insight by September 15, 2000 but in no event will require an upgrade to greater
than 750 MHZ) as soon as reasonably practicable. Subject to the following
sentence and subject to the last sentence of Section 3.3(f) of the Contribution
Agreement, Insight, and after the contribution to the Partnership, the
Partnership, will be responsible for the capital expenditures and other expenses
required to complete the upgrade. Notwithstanding the foregoing, AT&T Illinois
shall be responsible for all subscriber refunds, interest, penalties and all
other costs and expenses and other Losses resulting from the AT&T Systems'
compliance or non-compliance with the terms of the MediaOne Social Contract,
whether such compliance or non-compliance occurs before or after the Closing,
including obtaining or not obtaining an extension of time under the MediaOne
Social Contract to complete the AT&T Systems upgrade, and AT&T Illinois shall
indemnify and hold Insight, the Partnership and its subsidiaries harmless from
all of the foregoing. If requested by AT&T Illinois, Insight, and after the
contribution to the Partnership, the Partnership, each agrees that it will
render any refunds or other payments (including in-kind payments) to the
subscribers of the AT&T Systems through Insight's or the Partnership's billing
system as applicable, and AT&T Illinois shall reimburse Insight and the
Partnership, as applicable, for all such payments (including in-kind payments)
and for Insight's and the Partnership's, as applicable, 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 MediaOne Social Contract as currently in effect or as
subsequently modified.
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7.25 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 the transferor party and its
Affiliates are responsible pursuant to this agreement, the transferee party will
cooperate with and assist the transferor party and its Affiliates, upon
reasonable request, by making witnesses reasonably available and providing all
information in its possession (including reasonable access to employees with
information regarding such proceedings and access to books and records that may
relate to the proceedings) that the transferor party 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
unreasonably interfere with the transferee party's business, as determined by
the transferee party in good faith. The transferor party will promptly reimburse
the transferee party for all reasonable direct out-of-pocket expenses incurred
by the transferee party or its Affiliates in connection with such cooperation;
provided that the provisions of this Section 7.25 shall not in any way be
interpreted to limit the transferee party's indemnification rights in accordance
with Section 11 of the Agreement or be subject to the limitations on
indemnification set forth in Sections 11.5 and 11.6, as applicable.
7.26 CSG. Insight will continue to use CSG as the billing service
---
provider for the AT&T Systems that currently use CSG as their billing service
provider unless A&T Illinois consents to a change in billing service providers
for such AT&T Systems.
7.27 Schedules. Insight and AT&T acknowledge that the parties may need to
---------
provide copies of additional due diligence materials and make additional
revisions to their Schedules and that they need to reach final agreement on,
among other things, which of their System Contracts will be Excluded Assets and
whether, and the terms on which, any arrangements between Insight and its
Affiliates relating to the Insight Systems or any arrangements between AT&T and
its Affiliates relating to the AT&T Systems will continue after the Closing.
Prior to September 15, 2000, either AT&T Illinois 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 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 Illinois 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 7.27. 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
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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 Insight and its Affiliates and 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 Illinois 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 Illinois 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 Illinois has delivered the items and
----------
documents required to be delivered by it pursuant to this Agreement, including
those required under Section 9.2.
(d) Legal Proceedings. No action, suit or proceeding is pending or
-----------------
threatened by or before any Governmental Authority and no Legal Requirement has
been enacted, promulgated or issued or become or deemed applicable to any of the
transactions contemplated by this Agreement by any Governmental Authority, which
would (i) prohibit Insight's ownership or operation of all or a material portion
of any AT&T System, AT&T's Cable Business or the AT&T Assets, (ii) compel
Insight to dispose of or hold separately all or a material portion of any AT&T
System, AT&T's Cable Business or the AT&T 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 AT&T Systems or (iv) prevent or make illegal the consummation of any
transactions contemplated by this Agreement.
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(e) Consents. Insight has received evidence, in form and substance
--------
reasonably satisfactory to it, that the following AT&T 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: AT&T Required
Consents for the AT&T System Franchises, the AT&T System Licenses, and any AT&T
Leased Property or AT&T Other Real Property Interest on which a headend, tower
or other reception site is located. In addition, the Insight Required Consents
for the Insight System Franchises and Insight System Licenses shall have been
obtained.
(f) No Material Adverse Change. There has not been any material
--------------------------
adverse change in the AT&T Assets or the financial condition or operations of
AT&T's Cable Business or the AT&T 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) HSR Act. All filings required under the HSR Act have been made
-------
and the applicable waiting period has expired or been earlier terminated.
(h) Retransmission Consents. With respect to any retransmission
-----------------------
consent agreements for broadcast signals carried on the AT&T Systems on the date
of this Agreement and on the date of the Closing that are included as part of
the AT&T 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.
8.2 Conditions to AT&T Illinois' Obligations. The obligations of AT&T
----------------------------------------
Illinois 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 Illinois.
(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.
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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 AT&T Illinois' ownership or operation of all or a material
portion of any Insight System, Insight's Cable Business or the Insight Assets,
(ii) compel AT&T Illinois to dispose of or hold separately all or a material
portion of any Insight System, Insight's Cable Business or Insight Assets as a
result of any of the transactions contemplated by this Agreement, (iii) if
determined adversely to AT&T Illinois' interest, materially impair the ability
of AT&T Illinois to realize the benefits of the transactions contemplated by
this Agreement or have a material adverse effect on the right of AT&T Illinois
to exercise full rights of ownership of the Insight Systems or (iv) prevent or
make illegal the consummation of any transactions contemplated by this
Agreement.
(e) Consents. AT&T Illinois has received evidence, in form and
--------
substance reasonably satisfactory to them, that the following Insight Required
Consents have been obtained without the imposition of any condition or any
modification that in either case makes, or is reasonably likely to make, the
underlying instrument materially more onerous in any respect or materially
reduces in any respect, or is reasonably likely to materially reduce in any
respect, the benefits available under the instrument in respect of which the
consent relates: Insight Required Consents for the Insight System Franchises,
the Insight System Licenses, and any Insight Leased Property or Insight Other
Real Property Interest on which a headend, tower or other reception site is
located. In addition, the AT&T Required Consents for the AT&T System Franchises
and AT&T System Licenses shall have been obtained.
(f) No Material Adverse Change. There has not been any material
--------------------------
adverse change in the Insight Assets or the financial condition or operations of
Insight's Cable Business or the Insight Systems since the date of this
Agreement. In making the determination required by the preceding sentence, the
last sentence of Section 5.10 shall be applicable.
(g) HSR Act. All filings required under the HSR Act have been made
-------
and the applicable waiting period has expired or been earlier terminated.
(h) Retransmission Consents. With respect to any retransmission
-----------------------
consent agreements for broadcast signals carried on the Insight Systems on the
date of this Agreement and on the date of the Closing that are included as part
of the Insight Excluded Assets, all required retransmission consents for
continued carriage of such broadcast signals by AT&T Illinois have been obtained
on terms and conditions reasonably acceptable to AT&T Illinois.
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 Illinois and Insight, which
Closing Date shall be within ten days after the date
-60-
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 Illinois' Delivery Obligations. At the Closing, AT&T Illinois
-----------------------------------
will deliver or cause to be delivered to Insight the following.
(a) Closing Payment. Amounts, if any, payable by AT&T Illinois to
---------------
Insight pursuant to Section 3.
(b) Xxxx of Sale and Assignment and Assumption Agreement. An
----------------------------------------------------
executed Xxxx of Sale and Assignment and an executed Assumption Agreement in
form and substance mutually and reasonably acceptable to AT&T Illinois and
Insight and such other instruments of transfer, assignment or assumption, in
form and substance mutually satisfactory to AT&T Illinois and Insight, as
Insight may reasonably require to further document the transfer and assignment
of the AT&T Assets to Insight and AT&T Illinois' assumption of the AT&T Assumed
Obligations and Liabilities.
(c) Deeds. A special or limited warranty deed in a form reasonably
-----
acceptable to Insight (and complying with applicable state laws) with respect to
each parcel of AT&T Owned Property, duly executed and acknowledged and in
recordable form, warranting only to defend title to such AT&T Owned Property in
the peaceable possession of Insight against all Persons claiming by, through or
under AT&T Illinois, subject however, to any Permitted Liens and any Title
Defects insured over pursuant to Section 7.6, and in form sufficient to permit
the applicable Title Company, if any, to issue the Title Policies to Insight,
together with any title affidavit reasonably required by the title insurer, if
any, that does not expand the aforesaid limited or special warranty of AT&T
Illinois.
(d) Lien Releases. Evidence reasonably satisfactory to Insight that
-------------
all Liens (other than Permitted Liens) affecting or encumbering the AT&T 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.
(e) Vehicle Titles. Title certificates to all vehicles included
--------------
among the AT&T 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.
(f) Evidence of Authorization Actions. Certified resolutions of the
---------------------------------
Board of Directors or other evidence reasonably satisfactory to Insight that
AT&T Illinois 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.
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(g) FIRPTA Certificate. A FIRPTA Non-Foreign Seller Certificate from
------------------
AT&T Illinois 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.
(h) Officer's Certificate. A certificate from AT&T Illinois executed
---------------------
by an executive officer of AT&T Illinois, 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 AT&T Systems, estimated in good faith as of the
Closing Date.
(i) Documents and Records. All AT&T 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 AT&T
Systems. Delivery of the foregoing will be deemed made to the extent such AT&T
Books and Records are then located at any of the offices included in the AT&T
Owned Property or AT&T Leased Property.
(j) Other. Such other documents and instruments as may be reasonably
-----
necessary to effect the intent of this Agreement and consummate the transactions
contemplated hereby.
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) Closing Payments. Amounts, if any, payable by Insight to AT&T
----------------
Illinois pursuant to Section 3.
(b) Xxxx of Sale and Assignment and Assumption Agreement. An
----------------------------------------------------
executed Xxxx of Sale and Assignment and an executed Assumption Agreement in
form and substance mutually and reasonably acceptable to AT&T Illinois and
Insight and such other instruments of transfer, assignment or assumption for
each exchange transaction, in form and substance mutually satisfactory to
Insight and AT&T Illinois, as AT&T Illinois may reasonably require to further
document the transfer and assignment of the Insight Assets to AT&T Illinois and
Insight's assumption of the Insight Assumed Obligations and Liabilities.
(c) Deeds. A special or limited warranty deed in a form reasonably
-----
acceptable to AT&T Illinois (and complying with applicable state laws) with
respect to each parcel of Insight Owned Property, duly executed and acknowledged
and in recordable form, warranting only to defend title to such Insight Owned
Property in the peaceable possession of AT&T Illinois against all Persons
claiming by, through or under Insight, subject however, to any Permitted Liens
and any Title Defects insured over pursuant to Section 7.6, and in form
sufficient to permit the applicable Title Company, if any, to issue the Title
Policies to AT&T Illinois, together with any title affidavit reasonably required
by the title insurer, if any, that does not expand the aforesaid limited or
special warranty of Insight.
-62-
(d) Lien Releases. Evidence reasonably satisfactory to AT&T Illinois
-------------
that all Liens (other than Permitted Liens) affecting or encumbering the Insight
Assets have been terminated, released or waived, as appropriate, or original,
executed instruments in form reasonably satisfactory to AT&T Illinois effecting
such terminations, releases or waivers.
(e) Vehicle Titles. Title certificates to all vehicles included
--------------
among the Insight Assets, endorsed for transfer of valid and good title to AT&T
Illinois, 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.
(f) Evidence of Authorization Actions. Evidence reasonably
---------------------------------
satisfactory to AT&T Illinois 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.
(g) FIRPTA Certificate. A FIRPTA Non-Foreign Seller Certificate
------------------
certifying that Insight is not a foreign person within the meaning of Section
1445 of the Code reasonably satisfactory in form and substance to AT&T Illinois.
(h) 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 Illinois certifying
(i) that the conditions specified in Sections 8.2(a) and 8.2(b) have been
satisfied; and (ii) the total number of EBSs for all the Insight Systems,
estimated in good faith as of the Closing Date.
(i) Documents and Records. All Insight Books and Records, including
---------------------
a list of all pending subscriber hook-ups, disconnect and repair orders, supply
orders and any other lists reasonably necessary to the operation of the Insight
Systems. Delivery of the foregoing will be deemed made to the extent such
Insight Books and Records are then located at any of the offices included in the
Insight Owned Property or Insight Leased Property.
(j) 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. 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
Illinois;
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(b) by either Insight or AT&T Illinois 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 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 Illinois upon written notice to the
other given not earlier than the Outside Closing Date, if any of the conditions
to its obligations set forth in Sections 8.1 and 8.2, respectively, are not
satisfied on or before the Outside Closing Date for any reason other than a
material breach or default by the terminating party of its respective covenants,
agreements or other obligations under this Agreement, or if any of its
representations herein, if specifically qualified by materiality, is not true in
all respects or, if qualified by materiality, is not true in all material
respects when made or when otherwise required by this Agreement to be true; or
(d) as otherwise provided in this Agreement.
10.2 Effect of Termination. If this Agreement is terminated pursuant to
---------------------
Section 7.27 or 10.1, all obligations of the parties under this Agreement will
terminate, except for the obligations set forth in Sections 7.13, 7.23 (with
respect to the transferee party's obligation to pay for the transferor party'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) or 10.1(c) or 10.1(d) or 12.16 will not limit or impair any remedies
that any AT&T Illinois 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 Illinois and Insight in this Agreement and in the Transaction
Documents and the covenants of AT&T Illinois 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,
-64-
employment matters or copyright matters will survive until 60 days after the
expiration of the applicable statute of limitations (including any extensions)
for such Taxes, rates, Environmental Laws, ERISA, employment matters or
copyright matters, respectively, and (b) the representations and warranties as
to title to the Assets in Sections 5.4(a) and 6.4(a), respectively, and as to
title to Owned Property set forth in Sections 5.6 and 6.6, respectively, and in
the special warranty deed or deeds delivered with respect to Owned Property will
survive the Closing and the delivery of such deeds and will continue in full
force and effect without limitation with the understanding that, notwithstanding
any language contained in any such deed, the representations and warranties as
to title to Owned Property set forth in Sections 5.6 and 6.6, respectively, will
not be merged into any such deed or other Transaction Document. The periods of
survival of the representations and warranties and of the covenants to be
performed prior to the Closing prescribed by this Section 11.1 are referred to
as the "Survival Period." The liabilities of each party under its respective
representations and warranties and its respective covenants to be performed
prior to the Closing will expire as of the expiration of the applicable Survival
Period; provided however that such expiration will not include, extend or apply
to any such representation or warranty or covenant, the breach of which has been
asserted by a party in a written notice to the other party before such
expiration or about which a party has given the other party written notice
before such expiration indicating that facts or conditions exist that, with the
passage of time or otherwise, can reasonably be expected to result in a breach
(and describing such potential breach in reasonable detail). The covenants and
agreements of each party in this Agreement and in the Transaction Documents to
be performed after the Closing will survive the Closing and will continue in
full force and effect in accordance with their terms.
11.2 Indemnification by AT&T Illinois. From and after the Closing AT&T
--------------------------------
Illinois 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 Illinois in this Agreement or any
Transaction Document; (b) any breach of any covenant, agreement or obligation of
AT&T Illinois contained in this Agreement or any Transaction Document; (c) any
act or omission of AT&T Illinois with respect to, or any event or circumstance
related to, the ownership or operation of the AT&T Assets or the conduct of the
AT&T 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
Illinois not included in the Insight Assumed Obligations and Liabilities; (e)
any Title Defect relating to any AT&T Owned Property; (f) any claim that the
transactions contemplated by this Agreement to be performed by AT&T Illinois
violate WARN (to the extent AT&T Illinois is responsible for compliance with
WARN pursuant to Section 7.3(e)) 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 the AT&T Systems at and after the Closing Time or that Insight is
deemed to be a successor employer of AT&T Illinois or its Affiliates under Code
Section 4980B; (h) any claim by a third party relating
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to the presence, generation, removal or transportation of a Hazardous Substance
on or from any of the AT&T Owned Property or AT&T 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 AT&T Systems
for periods through and including the Closing Time; (j) the failure of AT&T
Illinois to perform the AT&T Assumed Obligations and Liabilities; (k) the merger
consummated pursuant to the Agreement and Plan of Merger, dated as of May 6,
1999, as amended, by and among AT&T Corp., Meteor Acquisition Inc. and MediaOne
Group, Inc., including, without limitation, any claim brought by the sellers or
MediaOne Group, Inc. or their Affiliates or any other Third Party relating to
such merger, except to the extent that such Losses arise out of a breach by
Insight of its obligations under this Agreement or (l) the MediaOne 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
7.24.
In the event that an indemnified item arises under both clause (a) and under one
or more of clauses (b) through (l) of this Section, Insight's rights to pursue
its claim under clauses (b) through (l) 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 Illinois and its shareholders and its
and their respective Affiliates and the members, partners, shareholders,
officers, directors, employees, agents, successors and assigns of them and any
Person claiming by or through any of them, as the case may be, from and against
any and all Losses arising out of or resulting from (a) any breach of any
representation or warranty made by Insight in this Agreement or any Transaction
Document; (b) any breach of any covenant, agreement or obligation of Insight
contained in this Agreement or any Transaction Document; (c) any act or omission
of Insight with respect to, or any event or circumstance related to, the
ownership or operation of the Insight Assets or the conduct of Insight's Cable
Business, which act, omission, event or circumstance occurred or existed prior
to or at the Closing Time, without regard to whether a claim with respect to
such matter is asserted before or after the Closing Time, including any matter
described on Schedule 5.11; (d) any liability or obligation not included in the
AT&T Assumed Obligations and Liabilities; (e) any Title Defect relating to any
Insight Owned Property; (f) any claim that the transactions contemplated by this
Agreement violate WARN (to the extent Insight is responsible for compliance with
WARN pursuant to Section 7.3(e)) or any similar Legal Requirement or any bulk
transfer or fraudulent conveyance laws of any jurisdiction; (g) any claim
relating to "continuation coverage" under Code Section 4980B with respect to
former employees of Insight at and after the Closing Time or that AT&T Illinois
is deemed to be a successor employer of Insight 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 Insight Owned Property or Insight Leased Property through and including the
Closing Time, including the costs in response to a third party claim of removal
or clean-up of such Hazardous Substance and other compliance with the provisions
of any Environmental Laws
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(whether before or after Closing); (i) any rate refund or credit, penalty and/or
interest payment with respect thereto ordered by any Governmental Authority with
respect to the Insight Systems for periods through and including the Closing
Time; or (j) the failure of Insight to perform the Insight Assumed Obligations
and Liabilities.
In the event that an indemnified item arises under both clause (a) and under one
or more of clauses (b) through (j) of this Section, AT&T Illinois' rights to
pursue its claim under clauses (b) through (j) as applicable will exist
notwithstanding the expiration of the Survival Period applicable to such claim
under clause (a).
11.4 Third Party Claims. Promptly after the receipt by 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 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
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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 Illinois. AT&T Illinois 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 Illinois 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 Illinois would, but for the
provisions of this Section, be liable exceeds, on an aggregate basis, $100,000,
in which case AT&T Illinois will be liable for all such Insight Damages from
dollar zero, which will be due and payable within 15 days after AT&T Illinois'
receipt of a statement therefor. AT&T Illinois 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 3.2 and 3.3; (ii) direct out-of-
pocket expenses incurred by Insight or its Affiliates in connection with
cooperation on pending litigation pursuant to Section 7.25 or other expenses and
costs for which AT&T Illinois is responsible pursuant to this Agreement,
including, without limitation, pursuant to Sections 7.8, 7.12, and 7.19; or
(iii) any claim made pursuant to Sections 11.2(c)-(l), 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 Illinois' litigation listed in the Schedules to this
Agreement. AT&T Illinois will not be liable under Section 11.2(c) to the extent
that an adjustment was made in favor of Insight pursuant to Sections 3.2 and
3.3.
11.6 Limitations on Indemnification - Insight. Insight will not be liable
----------------------------------------
to AT&T Illinois 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 Illinois 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 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 3.2 and 3.3; (ii)
direct out-of-pocket expenses incurred by AT&T or its Affiliates in connection
with cooperation on pending litigation pursuant to Section 7.25 or other
expenses and costs for which Insight is responsible pursuant to this Agreement,
including, without limitation, pursuant to Sections 7.8, 7.12 and 7.19; (iii)
costs,
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expenses and fees incurred by AT&T Illinois or its Affiliates, accountants or
attorneys pursuant to Section 7.23 or (iv) any claims made pursuant to Sections
11.3(c)-(j), including, without limitation, any Losses related to any liability
or obligation for late fees; any liability or obligation with respect to paying
franchise fees on franchise fees; subscriber refunds or Insight litigation
listed in the Schedules to this Agreement. 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 3.2 and 3.3.
SECTION 12. MISCELLANEOUS PROVISIONS
12. Parties Obligated and Benefited. Subject to the limitations set forth
-------------------------------
below, this Agreement will be binding upon the parties and their respective
assigns and successors in interest and will inure solely to the benefit of the
parties and their respective assigns and successors in interest, and no other
Person will be entitled to any of the benefits conferred by this Agreement.
Without the prior written consent of the other parties, no party will assign any
of its rights under this Agreement or delegate any of its duties under this
Agreement, provided that a party may, without the consent of any other party,
prior to Closing assign all of such party's rights and obligations under this
Agreement to any Affiliate of such party; provided such assignee can make all of
the representations and warranties applicable to the assigning party hereunder
(other than those relating to jurisdiction of incorporation), the assigning
party can provide reasonable assurances that such assignee can otherwise perform
the covenants, agreements and obligations applicable to the assigning party
hereunder and such assignment would not materially delay or hinder the
consummation of the transactions contemplated by this Agreement. In addition,
(a) upon closing of the Contribution, without the consent of AT&T Illinois,
Insight may assign all of its rights and obligations under this Agreement to the
Partnership (provided that, without limiting the Partnership's indemnification
rights, Insight shall retain its indemnification rights against AT&T Illinois
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 Illinois 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 Illinois. If AT&T Illinois elects to assign its rights under this
Agreement to a Qualified Intermediary, Insight will cooperate with AT&T Illinois
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 Illinois 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 to the extent related to the
period from and after the "Closing Time" under the Contribution Agreement
following its assignment to the Partnership of its rights and obligations
hereunder as contemplated above and the Partnership's assumption of all such
obligations of Insight hereunder for the benefit of AT&T Illinois 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 Illinois at:
MediaOne of Illinois, Inc.
c/o AT&T Broadband, LLC
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx Xx Xxxxxx
Telephone: (000) 000-0000
Telecopy: 000-000-0000
With a copy similarly addressed to the attention of Legal
Department
With a copy to:
Xxxxxxx & Xxxxxx L.L.C.
000 - 00/xx/ Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
To Insight at:
Insight Communications Company, L.P.
000 0/xx/ Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Telecopy: (000) 000-0000
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With a copy to:
Xxxxxxxxxxxx Xxxx & Xxxxxxxxx
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxxx, Esq.
Telecopy: (000) 000-0000
and
Dow, Xxxxxx & Xxxxxxxxx PLLC
0000 Xxx Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxxx X. Xxxx, Esq.
Telecopy: (000) 000-0000
Any party may change the address to which notices are required to be sent by
giving notice of such change in the manner provided in this Section. All
notices will be deemed to have been received on the date of delivery, which in
the case of deliveries by telecopier will be the date of the sender's
confirmation.
12.3 Right to Specific Performance. The parties acknowledge that the
-----------------------------
unique nature of the Assets to be exchanged by the parties pursuant to this
Agreement renders money damages an inadequate remedy for the breach by the
parties of its obligations under this Agreement, and the parties agree that in
the event of such breach, the parties will upon proper action instituted by
either of them, be entitled to a decree of specific performance of this
Agreement.
12.4 Waiver. This Agreement or any of its provisions may not be waived
------
except in writing. The failure of any party to enforce any right arising under
this Agreement on one or more occasions will not operate as a waiver of that or
any other right on that or any other occasion.
12.5 Captions. The section and other captions of this Agreement are for
--------
convenience only and do not constitute a part of this Agreement.
12.6 Choice of Law. THIS AGREEMENT AND THE RIGHTS OF THE PARTIES UNDER IT
-------------
WILL BE GOVERNED BY AND CONSTRUED IN ALL RESPECTS IN ACCORDANCE WITH THE LAWS OF
THE STATE OF DELAWARE, WITHOUT REGARD TO THE CONFLICTS OF LAWS RULES OF
DELAWARE.
12.7 Terms. Terms used with initial capital letters or otherwise defined
-----
in this Agreement will have the meanings specified, applicable to both singular
and plural forms, for all purposes of
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this Agreement. The word "include" and derivatives of that word are used in this
Agreement in an illustrative sense rather than limiting sense.
12.8 Rights Cumulative. All rights and remedies of each of the parties
-----------------
under this Agreement will be cumulative, and the exercise of one or more rights
or remedies will not preclude the exercise of any other right or remedy
available under this Agreement or applicable law.
12.9 Time. Time is of the essence under this Agreement. If the last day
----
permitted for the giving of any notice or the performance of any act required or
permitted under this Agreement falls on a day which is not a Business Day, the
time for the giving of such notice or the performance of such act will be
extended to the next succeeding Business Day.
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.
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12.16 Risk of Loss.
------------
(a) The risk of any loss or damage to the Insight Assets or AT&T
Assets resulting from fire, theft or other casualty (except reasonable wear and
tear) will be borne by Insight or AT&T Illinois, respectively, at all times
through and including the Closing. If any such loss or damage is sufficiently
substantial so as to preclude and prevent resumption of normal operations of any
material portion of a System or the replacement or restoration of the lost or
damaged property within twenty days or, if earlier, prior to the Outside Closing
Date, Insight or AT&T Illinois as appropriate, will immediately notify the other
in writing of that fact and subject to the other provisions of this Section
12.16, Insight, in the event of loss or damage to the Insight Assets, or AT&T
Illinois, in the event of loss or damage to the AT&T Assets, as appropriate,
will use its commercially reasonable efforts to repair, replace and restore the
lost or damaged property to its former condition as soon as practicable at its
sole expense, subject to Section 12.16(b), including applying any insurance
proceeds to restore such assets to their prior condition.
(b) If the aggregate cost to repair, replace or restore the lost or
damaged property to its former condition would exceed $2,000,000, Insight, in
the event of loss or damage to the Insight Assets, or AT&T Illinois, in the
event of loss or damage to the AT&T Assets, as appropriate, may, subject to the
other party's right to consummate the Closing as described below, elect to
terminate this Agreement by written notice to the other party at any time
within ten days of the occurrence of the event of loss or damage, and upon such
termination both parties will stand fully released and discharged of any and all
obligations under this Agreement (except with respect to any then existing
breaches by either such party).
(c) If any such loss or damage to the AT&T Assets is sufficiently
substantial so as to preclude and prevent resumption of normal operations of any
material portion of a AT&T 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 Illinois is not obligated to correct the problem because
the cost would exceed $2,000,000, and AT&T Illinois 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 Illinois at any time within ten days
after it receives written notice from AT&T Illinois of the occurrence of the
event of such loss or damage and the fact that AT&T Illinois is not obligated to
correct the problem and AT&T Illinois 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 Illinois'
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 Illinois and all insurance proceeds payable
as a result of the occurrence of the event resulting in such loss or damage to
the AT&T Assets (in each case to the extent not used to repair, replace or
restore such lost or damaged AT&T
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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 Illinois to Insight or the rights to such proceeds
will be assigned by AT&T Illinois to Insight if not yet paid over to AT&T
Illinois, and upon such delivery or assignment and consummation of the Closing
AT&T Illinois shall have no additional liability to Insight in respect of any
such loss or damage to the AT&T Assets.
(d) If any such loss or damage to the Insight Assets is sufficiently
substantial so as to preclude and prevent resumption of normal operations of any
material portion of an Insight System or the repair, replacement or restoration
of the lost or damaged property within twenty days, or if earlier, the Outside
Closing Date, and Insight is not obligated to correct the problem because the
cost would exceed $2,000,000, and Insight elects not to repair, replace and
restore the lost or damaged property, AT&T Illinois may elect to terminate this
Agreement upon written notice to Insight at any time within ten days after it
receives written notice from Insight of the occurrence of the event of such loss
or damage and the fact that Insight is not obligated to correct the problem and
has elected not to correct the problem, and upon such termination both parties
will stand fully released and discharged of any and all obligations under this
Agreement (except with respect to any then existing breaches by either such
party). In the absence of a timely election to terminate this Agreement, AT&T
Illinois shall be deemed to have waived such loss or damage and to have elected
to consummate the Closing in accordance with all of the remaining provisions of
this Agreement, and notwithstanding Insight's election to terminate this
Agreement pursuant to Section 12.16(b), AT&T Illinois 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
Insight and all insurance proceeds payable as a result of the occurrence of the
event resulting in such loss or damage to the Insight Assets (in each case to
the extent not used to repair, replace or restore such lost or damaged Insight
Assets), except for any proceeds from business interruption insurance relating
to the loss of revenue for the period through and including the Closing Time,
will be delivered by Insight to AT&T Illinois or the rights to such proceeds
will be assigned by Insight to AT&T Illinois if not yet paid over to Insight,
and upon such delivery or assignment and consummation of the Closing Insight
shall have no additional liability to AT&T Illinois in respect of any such loss
or damage to the Insight Assets.
If, prior to the Closing, any part of or interest in any material Insight
Assets or any material AT&T Assets is taken or condemned as a result of the
exercise of the power of eminent domain, or if a Governmental Authority having
such power informs Insight or AT&T Illinois that it intends to condemn all or
any part of any material Assets of such party (such event being called, in
either case, a "Taking"), then the transferee party with respect to such Assets
may terminate this Agreement. If the transferee party does not elect to
terminate this Agreement, then (a) the transferee party will have the sole
right, in the name of the transferor party if the transferee party so elects, to
negotiate for, claim, contest and receive all damages with respect to the
Taking, (b) the transferor party will be relieved of its obligation to convey to
the transferee party the Assets or interests that are the subject of the Taking,
(c) at the Closing the transferor party will assign to the transferee party all
of the transferor party's rights to all damages payable with respect to the
Taking and (d) following
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the Closing, the transferor party will give the transferee party such further
assurances of such rights and assignment with respect to the Taking as the
transferee party may from time to time reasonably request.
12.17 Tax Consequences. No party to this Agreement makes any representation
----------------
or warranty, express or implied, with respect to the Tax implications of any
aspect of this Agreement on any other party to this Agreement, and all parties
expressly disclaim any such representation or warranty with respect to any Tax
consequences arising under this Agreement. Each party has relied solely on its
own Tax advisors with respect to the Tax implications of this Agreement.
12.18 Commercially Reasonable Efforts. For purposes of this Agreement,
-------------------------------
unless a different standard is expressly provided with respect to any particular
matter, "commercially reasonable efforts" will not be deemed to require a party
to undertake extraordinary measures, including the initiation or prosecution of
legal proceedings or the payment of amounts in excess of normal and usual filing
fees and processing fees, if any.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first written above.
MEDIAONE OF ILLINOIS, INC.
By:___________________________________________
Name:_________________________________________
Title:________________________________________
INSIGHT COMMUNICATIONS COMPANY, L.P.
By: Insight Communications Company, Inc., its
general partner
By:_______________________________________
Name:_____________________________________
Title:____________________________________
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