EXECUTION COPY
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ASSET PURCHASE AGREEMENT
BY AND BETWEEN
TCI CABLEVISION OF GEORGIA, INC.
AND
XXXXX CABLE INCOME FUND 1-A, LTD.
DATED AS OF
NOVEMBER 8, 1996
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TABLE OF CONTENTS
Page
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Section 1. Definitions.......................................................... 1
1.1 Affiliate....................................................... 1
1.2 Assets.......................................................... 1
1.3 Basic Service................................................... 1
1.4 Business........................................................ 1
1.5 Business Day.................................................... 2
1.6 Closing......................................................... 2
1.7 Encumbrance..................................................... 2
1.8 Environmental Law............................................... 2
1.9 Equipment....................................................... 2
1.10 Equivalent Basic Subscribers (or EBSs).......................... 2
1.11 Expanded Basic Service.......................................... 3
1.12 GAAP............................................................ 3
1.13 Governmental Authority.......................................... 3
1.14 Governmental Permits............................................ 3
1.15 Hazardous Substances............................................ 3
1.16 Intangibles..................................................... 4
1.17 Knowledge....................................................... 4
1.18 Legal Requirement............................................... 4
1.19 Losses.......................................................... 4
1.20 Pay TV.......................................................... 4
1.21 Permitted Encumbrances.......................................... 4
1.22 Person.......................................................... 4
1.23 Real Property................................................... 4
1.24 Required Consents............................................... 5
1.25 Seller Contracts................................................ 5
1.26 Service Area.................................................... 5
1.27 System.......................................................... 5
1.28 Taxes........................................................... 5
1.29 Other Definitions............................................... 5
Section 2. Sale of Assets....................................................... 6
Section 3. Consideration........................................................ 6
3.1 Base Purchase Price.............................................. 6
3.2 Adjustments to Base Purchase Price............................... 6
3.3 Determination of Adjustments..................................... 7
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3.4 Allocation of Consideration..................................... 8
Section 4. Assumed Liabilities and Excluded Assets.............................. 8
4.1 Assignment and Assumption....................................... 8
4.2 Excluded Assets................................................. 8
Section 5. Representations and Warranties of Seller............................. 9
5.1 Organization and Qualification.................................. 9
5.2 Authority and Validity.......................................... 9
5.3 No Conflict; Required Consents.................................. 9
5.4 Assets.......................................................... 10
5.5 Governmental Permits............................................ 10
5.6 Seller Contracts................................................ 10
5.7 Real Property................................................... 11
5.8 Environmental Matters........................................... 11
5.9 Compliance with Legal Requirements.............................. 12
5.10 Patents, Trademarks and Copyrights.............................. 13
5.11 Financial Statements............................................ 14
5.12 Absence of Certain Changes...................................... 14
5.13 Legal Proceedings............................................... 14
5.14 Tax Returns; Other Reports...................................... 14
5.15 Employment Matters.............................................. 15
5.16 Systems Information............................................. 15
5.17 Bonds........................................................... 16
5.18 Finders and Brokers............................................. 16
Section 6. Buyer's Representations and Warranties............................... 16
6.1 Organization and Qualification.................................. 16
6.2 Authority and Validity.......................................... 16
6.3 No Conflicts; Required Consents................................. 17
6.4 Finders and Brokers............................................. 17
6.5 Legal Proceedings............................................... 17
Section 7. Additional Covenants................................................. 17
7.1 Access to Premises and Records.................................. 17
7.2 Continuity and Maintenance of Operations; Financial Statements.. 18
7.3 Employee Matters................................................ 19
7.4 Leased Vehicles; Other Capital Leases........................... 20
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7.5 Required Consents; Estoppel Certificates........................ 20
7.6 Title Commitments and Surveys................................... 21
7.7 HSR Notification................................................ 21
7.8 No Shopping..................................................... 22
7.9 Lien and Judgment Searches...................................... 22
7.10 Transfer Taxes.................................................. 22
7.11 Distant Broadcast Signals....................................... 22
7.12 Guaranty........................................................ 22
7.13 Letter to Programmers........................................... 22
7.14 Updated Schedules............................................... 23
7.15 Use of Names and Logos.......................................... 23
7.16 Subscriber Billing Services..................................... 23
7.17 Satisfaction of Conditions...................................... 23
7.18 Confidentiality and Publicity................................... 23
7.19 Bulk Transfers.................................................. 24
7.20 Environmental Reports........................................... 24
7.21 Board Approvals................................................. 24
Section 8. Conditions Precedent.................................................. 24
8.1 Conditions to the Obligations of Buyer and Seller............... 24
8.2 Conditions to the Obligations of Buyer.......................... 25
8.3 Conditions to Obligations of Seller............................. 26
8.4 Waiver of Conditions............................................ 26
Section 9. Closing............................................................... 26
9.1 The Closing; Time and Place..................................... 26
9.2 Seller's Delivery Obligations................................... 26
9.3 Buyer's Delivery Obligations.................................... 28
Section 10. Termination........................................................... 28
10.1 Termination Events.............................................. 28
10.2 Effect of Termination........................................... 29
Section 11. Survival of Representations and Warranties; Indemnification........... 29
11.1 Survival of Representations and Warranties....................... 29
11.2 Indemnification by Seller........................................ 30
11.3 Indemnification by Buyer......................................... 30
11.4 Third Party Claims............................................... 31
11.5 Limitations on Indemnification - Seller.......................... 32
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11.6 Limitations on Indemnification - Buyer.......................... 32
Section 12. Miscellaneous......................................................... 32
12.1 Parties Obligated and Benefited................................. 32
12.2 Notices......................................................... 33
12.3 Attorneys' Fees................................................. 34
12.4 Waiver.......................................................... 34
12.5 Captions........................................................ 34
12.6 Choice of Law................................................... 34
12.7 Terms........................................................... 34
12.8 Rights Cumulative............................................... 34
12.9 Further Actions................................................. 34
12.10 Time............................................................ 35
12.11 Late Payments................................................... 35
12.12 Counterparts.................................................... 35
12.13 Entire Agreement................................................ 35
12.14 Severability.................................................... 35
12.15 Construction.................................................... 35
12.16 Expenses........................................................ 35
12.17 Risk of Loss; Condemnation...................................... 36
LIST OF EXHIBITS AND SCHEDULES
EXHIBITS
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A - Xxxx of Sale
B - Assignment and Assumption of Contracts
C - Assignment of Leases
D - Guaranty
E - Letter to Programmers
F - FIRPTA Affidavit
G - Opinion of Seller's Counsel
H - Opinion of Buyer's Counsel
SCHEDULES
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1.9 - Owned Equipment and Vehicles
4.2 - Excluded Assets
5.3 - Required Consents
5.4 - Encumbrances to Be Discharged Prior to Closing
5.5 - Governmental Permits
5.6 - Seller Contracts
5.7 - Real Property
5.8 - Environmental Matters
5.9 - Cost of Service Filings
5.11 - Financial Statements
5.13 - Proceedings and Judgments
5.14 - Tax Matters
5.15 - Employee Matters
5.16 - The Business/Systems Information (including Rate Schedule)
5.17 - Bonds
ASSET PURCHASE AGREEMENT
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This Asset Purchase Agreement ("Agreement") is made as of November 8,
1996, by and between TCI Cablevision of Georgia, Inc., a Georgia corporation
("Buyer"), and Xxxxx Cable Income Fund 1-A, Ltd., a Colorado limited partnership
("Seller").
RECITALS
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Seller is engaged in the business of providing cable television
service to subscribers in and around the Service Area. Buyer desires to
purchase and Seller desires to sell substantially all the assets of Seller used
or useful in connection with that business.
AGREEMENT
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In consideration of the above recitals and the mutual agreements
stated in this Agreement, the parties agree as follows:
SECTION 1. DEFINITIONS.
In addition to terms defined elsewhere in this Agreement, the
following capitalized terms, when used in this Agreement, will have the meanings
set forth below:
1.1 Affiliate. With respect to any Person, any other Person
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controlling, controlled by or under common control with such Person, with
"control" for such purpose meaning the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities or voting interests,
by contract or otherwise.
1.2 Assets. All properties, privileges, rights, interests and
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claims, real and personal, tangible and intangible, of every type and
description that are owned, leased, held, used or useful in the Business in
which Seller has any right, title or interest or in which Seller acquires any
right, title or interest on or before the Closing Date, including Governmental
Permits, Intangibles, Seller Contracts, Equipment, Real Property and deposits
relating to the Business that are held by third parties for the account of
Seller or for security for Seller's performance of its obligations, but
excluding any Excluded Assets.
1.3 Basic Service. The lowest tier of service offered to
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subscribers of a System.
1.4 Business. The cable television business conducted by Seller
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on the date of this Agreement through one or more Systems, as described on
SCHEDULE 5.16.
1.5 Business Day. Any day other than Saturday, Sunday or a day on which
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banking institutions in Denver, Colorado are required or authorized to be
closed.
1.6 Closing. The consummation of the transactions contemplated by this
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Agreement, as described in SECTION 9, the date of which is referred to as the
Closing Date.
1.7 Encumbrance. Any security interest, security agreement, financing
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statement filed with any Governmental Authority, conditional sale or other title
retention agreement, any lease, consignment or bailment given for purposes of
security, any mortgage, lien, indenture, pledge, option, encumbrance, adverse
interest, constructive trust or other trust, claim, attachment, exception to or
defect in title or other ownership interest (including but not limited to
reservations, rights of entry, possibilities of reverter, encroachments,
easements, rights-of-way, restrictive covenants, leases and licenses) of any
kind, which constitutes an interest in or claim against property, whether
arising pursuant to any Legal Requirement, Governmental Permit, Seller Contract
or otherwise.
1.8 Environmental Law. Any Legal Requirement relating to pollution or
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protection of public health, safety or welfare or the environment, including
those relating to emissions, discharges, releases or threatened releases of
Hazardous Substances into the environment (including ambient air, surface water,
ground water or land), or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Substances.
1.9 Equipment. All electronic devices, trunk and distribution coaxial and
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optical fiber cable, amplifiers, power supplies, conduit, vaults and pedestals,
grounding and pole hardware, subscriber's devices (including converters,
encoders, transformers behind television sets and fittings), headend hardware
(including origination, earth stations, transmission and distribution system),
test equipment, vehicles and other tangible personal property owned, leased,
used or held for use in the Business, the principal items of which are described
on SCHEDULE 1.9 (and with respect to leased Equipment, on SCHEDULE 5.6).
1.10 Equivalent Basic Subscribers (or EBSs). An active customer for Basic
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Service either in a single household, a commercial establishment or in a multi-
unit dwelling (including a hotel unit); provided, however, that the number of
customers in a multi-unit dwelling or commercial establishment that obtain
service on a "bulk-rate" basis will be determined on a System by System basis by
dividing the gross bulk-rate xxxxxxxx for Basic Service and Expanded Basic
Service (but not xxxxxxxx from a la carte tiers or premium services,
installation or other non-recurring charges, converter rental or from any outlet
or connection other than the first outlet or connection or from any pass-through
charge for sales taxes, line-itemized franchise fees, fees charged by the FCC
and the like), attributable to such multi-unit dwelling or commercial
establishment during the most recent billing period ended prior to the date of
calculation (but excluding xxxxxxxx in excess of a single month's charge) by the
rate charged at the time of determination to individual households for the
highest level of Basic Service and Expanded Basic Service offered by such
System, such rate not to be less than the rate for such System set forth on
SCHEDULE 5.16 (excluding a la carte tiers or premium services, installation or
other non-recurring charges, converter rental, pass-through charges for sales
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taxes, line-itemized franchise fees charged by the FCC and the like). For
purposes of this definition, an "active customer" will mean any person,
commercial establishment or multi-unit dwelling at any given time that is paying
for and receiving Basic Service from the System who has an account that is not
more than 60 days past due (except for past due amounts of $5 or less, provided
such account is otherwise current). For purposes of this definition, an "active
customer" does not include any person, commercial establishment or multi-unit
dwelling that as of the date of calculation has not paid in full the charges for
at least one month of the services ordered or any subscriber whose service is
pending disconnection for any reason. For purposes of this definition, the
number of days past due of a customer account will be determined from the first
day of the period for which the applicable billing relates.
1.11 Expanded Basic Service. Any video programming provided over a cable
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television system, regardless of service tier other than (a) Basic Service, (b)
any new product tier and (c) video programming offered on a per channel or per
program basis.
1.12 GAAP. Generally accepted accounting principles as in effect from time
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to time in the United States of America.
1.13 Governmental Authority. The United States of America, any state,
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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.
1.14 Governmental Permits. All franchises, approvals, authorizations,
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permits, licenses, easements, registrations, qualifications, leases, variances
and similar rights obtained with respect to the Business or Assets from any
Governmental Authority, including those set forth on SCHEDULE 5.5.
1.15 Hazardous Substances. Any pollutant, contaminant, chemical,
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industrial, toxic, hazardous or noxious substance or waste which is regulated by
any Governmental Authority, including (a) any petroleum or petroleum compounds
(refined or crude), flammable substances, explosives, radioactive materials or
any other materials or pollutants which pose a hazard or potential hazard to the
Real Property or to Persons in or about the Real Property or cause the Real
Property to be in violation of any laws, regulations or ordinances of federal,
state or applicable local governments, (b) asbestos or any asbestos-containing
material of any kind or character, (c) polychlorinated biphenyls ("PCBs"), as
regulated by the Toxic Substances Control Act, 15 U.S.C. (S) 2601 et seq., (d)
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any materials or substances designated as "hazardous substances" pursuant to the
Clean Water Act, 33 U.S.C. (S) 1251 et seq., (e) "economic poison," as defined
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in the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. (S) 135 et
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seq., (f) "chemical substance," "new chemical substance" or "hazardous chemical
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substance or mixture" pursuant to the Toxic Substances Control Act, 15 U.S.C.
(S) 2601 et seq., (g) "hazardous substances" pursuant to the Comprehensive
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Environmental Response, Compensation, and Liability Act, 42 U.S.C. (S) 9601 et
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seq. and (h)
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"hazardous waste" pursuant to the Resource Conservation and Recovery Act, 42
U.S.C. (S) 6901 et seq.
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1.16 Intangibles. All intangible assets, including subscriber lists,
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accounts receivable, claims (excluding any claims relating to Excluded Assets),
patents, copyrights and goodwill, if any, owned, used or held for use in the
Business.
1.17 Knowledge. The actual knowledge of a particular matter of one or more
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of the executive officers of a Person or the general manager or one or more of
the managers of such Person's Systems.
1.18 Legal Requirement. Applicable common law and any statute, ordinance,
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code, or other law, rule, regulation, order, technical or other written standard
or procedure enacted, adopted or applied by any Governmental Authority,
including judicial decisions applying common law or interpreting any other Legal
Requirement.
1.19 Losses. Any claims, losses, liabilities, damages, penalties, costs
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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 with respect to which
indemnification is sought.
1.20 Pay TV. Premium programming services selected by and sold to
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subscribers on a per channel or per program basis.
1.21 Permitted Encumbrances. The following Encumbrances: (a) liens
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securing Taxes, assessments and governmental charges not yet due and payable,
(b) any zoning law or ordinance or any similar Legal Requirement, (c) any right
reserved to any Governmental Authority to regulate the affected property and (d)
as to Real Property interests, any Encumbrance reflected in the public records
and that does not individually or in the aggregate interfere with the right or
ability to own, use or operate the Real Property or to convey good, marketable
and indefeasible fee simple title to such Real Property, provided that
"Permitted Encumbrances" will not include any Encumbrance which could prevent or
inhibit in any way the conduct of the business of the affected System and
provided further that classification of any Encumbrance as a "Permitted
Encumbrance" will not affect any liability Seller may have for such Encumbrance,
including pursuant to any indemnity obligation under this Agreement.
1.22 Person. Any natural person, corporation, partnership, trust,
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unincorporated organization, association, limited liability company,
Governmental Authority or other entity.
1.23 Real Property. All assets held by Seller related to the Business
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consisting of realty, including appurtenances, improvements and fixtures located
on such realty, and any other interests in real property, including fee
interests, leasehold interests and easements, wire crossing
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permits, rights of entry (except agreements related to multiple dwelling units)
described on SCHEDULE 5.7.
1.24 Required Consents. All franchises, licenses, authorizations,
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approvals and consents required under Governmental Permits, Seller Contracts or
otherwise for (a) Seller to transfer the Assets and the Business to Buyer, (b)
Buyer to conduct the Business and to own, lease, use and operate the Assets at
the places and in the manner in which the Business is conducted as of the date
of this Agreement and on the Closing Date and (c) Buyer to assume and perform
the Governmental Permits, Seller Contracts and the other Assumed Liabilities.
1.25 Seller Contracts. All contracts and agreements, other than
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Governmental Permits and those relating to Real Property, pertaining to the
ownership, operation and maintenance of the Assets or the Business or used or
held for use in the Business, as described on SCHEDULE 5.6 or, in the case of
contracts and agreements relating to Real Property, on SCHEDULE 5.7.
1.26 Service Area. The area in which Seller operates the Business,
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specifically in and around the City of Milwaukie, Oregon.
1.27 System. A complete cable television reception and distribution system
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operated in the conduct of the Business, consisting of one or more headends,
subscriber drops and associated electronic and other equipment, and which is, or
is capable of being without modification, operated as an independent system
without interconnections to other systems. Any systems which are interconnected
or which are served in total or in part by a common headend will be considered a
single System.
1.28 Taxes. All levies and assessments of any kind or nature imposed by
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any Governmental Authority, including all income, sales, use, ad valorem, value
added, franchise, severance, net or gross proceeds, withholding, payroll,
employment, excise or property taxes and levies or assessments related to
unclaimed property, together with any interest thereon and any penalties,
additions to tax or additional amounts applicable thereto.
1.29 Other Definitions. The following terms are defined in the Sections
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indicated:
Term Section
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Action 11.4
Antitrust Division 7.7
Assumed Liabilities 4.1
Base Purchase Price 3.1
Buyer Damages 11.5
Closing Date 1.6
Code 5.15.2
Cost of Service Election 5.9.4
Due Diligence Deadline 10.1.4
Employee Benefit Plans 5.15.2
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ERISA 5.15.1
Excluded Assets 4.2
FCC 5.5
Final Adjustments Report 3.3.2
Financial Statements 5.11
FTC 7.7
HSR Act 7.7
Indemnified Party 11.4
Indemnifying Party 11.4
Intercable 5.2
1992 Cable Act 5.9.4
Preliminary Adjustments Report 3.3.1
Rate Regulation Documents 5.9.4
Seller Damages 11.6
Survival Period 11.1
Taking 12.17.2
Transaction Documents 5.2
SECTION 2. SALE OF ASSETS.
Subject to the terms and conditions set forth in this Agreement, at
the Closing, Seller will sell to Buyer, and Buyer will purchase from Seller, all
of Seller's rights, titles and interests in, to and under the Assets. Except as
otherwise specifically provided in this Agreement, all the Assets are intended
to be transferred to Buyer, whether or not described in the Schedules.
SECTION 3. CONSIDERATION.
3.1 Base Purchase Price. Buyer will pay to Seller total cash
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consideration of $8,200,000 (the "Base Purchase Price"), subject to adjustment
as provided in SECTIONS 3.2 and 3.3. Such consideration will be paid at Closing
by wire transfer of immediately available funds pursuant to wire instructions
delivered by Seller to Buyer no later than two Business Days prior to the
Closing Date.
3.2 Adjustments to Base Purchase Price. The Base Purchase Price will
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be adjusted as follows:
3.2.1 Reduced by an amount equal to $1,485 multiplied by the
positive difference between (a) 5,523 and (b) the number of EBSs as of the
Closing Date;
3.2.2 Adjustments on a pro rata basis as of the Closing Date will
be made for all prepaid expenses (but only to the extent the full benefit
thereof will be realizable by Buyer within 12 months after the Closing Date),
accrued expenses (including real and personal property Taxes and the economic
value of all accrued vacation time permitted by Buyer's policies to be taken
after the Closing Time by Seller's System employees hired by Buyer), prepaid
income, subscriber prepayments and accounts receivable related to the Business,
all as determined in accordance with
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GAAP consistently applied, and to reflect the principle that all expenses and
income attributable to the Business for the period prior to the Closing Date are
for the account of Seller, and all expenses and income attributable to the
Business for the period on and after the Closing Date are for the account of
Buyer. Seller will receive no credit for any accounts receivable (a) resulting
from cable service sales any portion of which is 60 days or more past due as of
the Closing Date, (b) from subscribers whose accounts are inactive or whose
service is pending disconnection for any reason as of the Closing Date or (c)
resulting from advertising sales any portion of which is 120 days or more past
due as of the Closing Date.
3.2.3 Buyer's account will be credited for the amount of all advance
payments to, or funds of third parties on deposit with, Seller as of the Closing
Date, relating to the Business, including advance payments and deposits by
subscribers served by the Business for converters, encoders, decoders, cable
television service and related sales, and the liability therefor will be assumed
by Buyer.
3.3 Determination of Adjustments. Preliminary and final adjustments to
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the Base Purchase Price will be determined as follows:
3.3.1 Not later than a date Seller reasonably believes is at least 10
Business Days prior to the expected Closing Date, Seller will deliver to Buyer a
report (the "Preliminary Adjustments Report"), certified as to completeness and
accuracy by Seller, showing in detail the preliminary determination of the
adjustments referred to in SECTION 3.2, which are calculated as of the Closing
Date (or as of any other date agreed by the parties) and any documents
substantiating the adjustments proposed in the Preliminary Adjustments Report.
The Preliminary Adjustments Report will include a complete list of subscribers,
a detailed calculation of the number of Equivalent Basic Subscribers and a
schedule setting forth advance payments made to or by Seller and deposits made
by Seller, as well as accounts receivable information relating to the Business
(showing sums due and their respective aging as of the Closing Date). Seller
also will furnish to Buyer its billing report for the most current period as of
the Closing Date. Following receipt of such Preliminary Adjustments Report and
supporting information, Buyer will have five Business Days to review such
Preliminary Adjustments Report and supporting information and to notify Seller
of any disagreements with Seller's estimates. If Buyer provides a notice of
disagreement with Seller's estimates of the adjustments referred to in SECTION
3.2 within such five Business Day period, Buyer and Seller will negotiate in
good faith to resolve any such dispute and to reach an agreement prior to the
Closing Date on such estimated adjustments as of the Closing Date. The basis
for determining the Base Purchase Price to be paid at Closing will be (a) the
estimate so agreed upon by Buyer and Seller or (b) if no notice of disagreement
is provided, or if such notice is provided but the parties do not reach such an
agreement prior to the Closing Date, the estimate of such adjustments set forth
in the Preliminary Adjustments Report.
3.3.2 Within 90 days after the Closing, Seller will deliver to
Buyer a report (the "Final Adjustments Report"), similarly certified by Seller,
showing in detail the final determination of all adjustments which were not
calculated as of the Closing Date and containing any corrections to the
Preliminary Adjustments Report, together with any documents substantiating the
adjustments proposed in the Final Adjustments Report. Buyer will provide Seller
with reasonable
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access to all records which Buyer has in its possession and which are necessary
for Seller to prepare the Final Adjustments Report.
3.3.3 Within 30 days after receipt of the Final Adjustments Report,
Buyer will give Seller written notice of Buyer's objections, if any, to the
Final Adjustments Report. If Buyer makes any such objection, the parties will
agree on the amount, if any, which is not in dispute within 30 days after
Seller's receipt of Buyer's notice of objections to the Final Adjustments
Report. Any disputed amounts will be determined within 120 days after the
Closing Date by the accounting firm of Price Waterhouse, whose determination
will be conclusive. Seller and Buyer will bear equally the fees and expenses
payable to such firm in connection with such determination. The payment required
after such determination will be made by the responsible party by wire transfer
of immediately available funds to the other party within three Business Days
after the final determination.
3.4 Allocation of Consideration. The consideration payable by Buyer
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under this Agreement will be allocated among the Assets as set forth in a
schedule to be prepared not later than 180 days after the Closing Date (or April
1 of the year following the Closing Date if earlier) by an independent appraiser
with significant experience in the cable television industry. Such appraiser
will be selected by the mutual agreement of Buyer and Seller within 30 days
after the date of this Agreement, and the fees of such appraiser will be shared
equally by Buyer and Seller. Buyer and Seller agree to be bound by the
allocation and will not take any position inconsistent with such allocation and
will file all returns and reports with respect to the transactions contemplated
by this Agreement, including all federal, state and local Tax returns, on the
basis of such allocation.
SECTION 4. ASSUMED LIABILITIES AND EXCLUDED ASSETS.
4.1 Assignment and Assumption. Seller will assign, and Buyer will assume
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and after the Closing will pay, discharge and perform the following (the
"Assumed Liabilities"): (a) Seller's obligations to subscribers of the Business
for (i) subscriber deposits held by Seller as of the Closing Date and which are
refundable, in the amount for which Buyer received credit under SECTION 3.2,
(ii) subscriber advance payments held by Seller as of the Closing Date for
services to be rendered by a System after the Closing Date, in the amount for
which Buyer received credit under SECTION 3.2 and (iii) the delivery of cable
television service to subscribers of the Business after the Closing Date; and
(b) obligations accruing and relating to periods after the Closing Date under
Governmental Permits listed on SCHEDULE 5.5 (to the extent that such
Governmental Permits are transferrable) and Seller Contracts. Buyer will not
assume or have any responsibility for any liabilities or obligations of Seller
other than the Assumed Liabilities. In no event will Buyer assume or have any
responsibility for any liabilities or obligations associated with the Excluded
Assets.
4.2 Excluded Assets. The Excluded Assets, which will be retained by
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Seller, will consist of the following: (a) programming contracts, retransmission
consent agreements and pole attachment agreements (except for those set forth on
SCHEDULE 5.6); (b) Employee Benefit Plans; (b) insurance policies and rights and
claims thereunder (except as otherwise provided in SECTION 12.17); (c) bonds,
letters of credit, surety instruments and other similar items; (d) cash and cash
equivalents and notes receivable; (e) Seller's trademarks, trade names, service
marks, service names, logos and similar proprietary rights (subject to Buyer's
rights under SECTION 7.5); (f) Seller's
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rights under any agreement governing or evidencing an obligation of Seller for
borrowed money; (g) Seller Contracts for subscriber billing and equipment; (h)
Seller's rights under any contract, license, authorization, agreement or
commitment other than those creating or evidencing Assumed Liabilities; and (i)
the assets described on SCHEDULE 4.2.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF SELLER.
Seller represents and warrants to Buyer, as of the date of this
Agreement and as of the Closing, as follows:
5.1 Organization and Qualification. Seller is a limited
------------------------------
partnership duly organized, validly existing and in good standing under the laws
of the State of Colorado and has all requisite partnership power and authority
to own, lease and use the Assets owned, leased or used by it and to conduct the
Business as it is currently conducted. Seller is duly qualified to do business
and is in good standing under the laws of each jurisdiction in which the
ownership, leasing or use of the Assets owned, leased or used by it or the
nature of Seller's activities 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 Business, the Assets or the
Systems or on the ability of Seller to perform its obligations under this
Agreement.
5.2 Authority and Validity. Seller 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 all other
documents and instruments to be executed and delivered in connection with the
transactions contemplated by this Agreement (collectively, the "Transaction
Documents") to which Seller is a party. Subject to approval by the Board of
Directors of Xxxxx Intercable, Inc. ("Intercable"), the sole general partner of
Seller, the execution and delivery by Seller of, the performance by Seller of
its obligations under, and the consummation by Seller of the transactions
contemplated by, this Agreement and the Transaction Documents to which Seller is
a party have been duly and validly authorized by all necessary action by or on
behalf of Seller. This Agreement has been, and when executed and delivered by
Seller the Transaction Documents will be, duly and validly executed and
delivered by Seller and the valid and binding obligations of Seller, enforceable
against Seller 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 the Required
------------------------------
Consents, all of which are listed on SCHEDULE 5.3, the execution and delivery by
Seller, the performance of Seller under, and the consummation of the
transactions contemplated by, this Agreement and the Transaction Documents to
which Seller is a party do not and will not: (a) violate any provision of the
partnership agreement or certificate of limited partnership of Seller; (b)
violate 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)
violate or result in a breach of or default under (without regard to
requirements of notice, lapse of time, or elections of any Person, or any
combination thereof), (ii) permit or result in the
9
termination, suspension or modification of, (iii) result in the acceleration of
(or give any Person the right to accelerate) the performance of Seller under, or
(iv) result in the creation or imposition of any Encumbrance under any Seller
Contract or any other instrument evidencing any of the Assets or by which Seller
or any of its assets is bound or affected, except for purposes of this clause
(d) such violations, conflicts, breaches, defaults, terminations, suspensions,
modifications, and accelerations as would not, individually or in the aggregate,
have a material adverse effect on any System, the Business or Seller, the
validity, binding effect or enforceability of this Agreement or on the ability
of Seller to perform its obligations under this Agreement or the Transaction
Documents to which Seller is a party.
5.4 Assets. Seller has exclusive, good and marketable title to (or, in
------
the case of Assets that are leased, valid leasehold interests in) the Assets
(other than Real Property, as to which the representations and warranties in
SECTION 5.7 apply). The Assets are free and clear of all Encumbrances, except
(a) Permitted Encumbrances and (b) Encumbrances described on SCHEDULE 5.4, all
of which will be terminated, released or, in the case of rights of refusal
listed on SCHEDULE 5.4, waived, as appropriate, at or prior to the Closing.
Except as described on SCHEDULE 5.6, none of the Equipment is leased by Seller
from any other Person. All the Equipment is in good operating condition and
repair (ordinary wear and tear excepted). Except for items included in the
Excluded Assets, the Assets constitute all the assets necessary to permit Buyer
to (i) conduct the Business and to operate the Systems substantially as they are
being conducted and operated on the date of this Agreement and in compliance in
all material respects with all Legal Requirements, Governmental Permits and
Seller Contracts and (ii) perform all the Assumed Liabilities.
5.5 Governmental Permits. All Governmental Permits are listed on SCHEDULE
--------------------
5.5. Complete and correct copies of all Governmental Permits have been
delivered by Seller to Buyer. Each Governmental Permit is in full force and
effect and Seller is not and, to Seller's Knowledge, the other party thereto is
not, in breach or default of any material terms or conditions thereunder and is
valid under all applicable Legal Requirements according to its terms. There is
no legal action, governmental proceeding or investigation, pending or, to
Seller's Knowledge threatened, to terminate, suspend or modify any Governmental
Permit and Seller is in compliance with the material terms and conditions of all
the Governmental Permits and with other material applicable requirements of all
Governmental Authorities (including the Federal Communications Commission
("FCC") and the Register of Copyrights) relating to the Governmental Permits,
including all requirements for notification, filing, reporting, posting and
maintenance of logs and records. As of the date of this Agreement, to Seller's
Knowledge, no third party has been granted or has applied for a cable television
franchise or is providing or intending to provide cable television services in
any of the communities or unincorporated areas currently served by the Business.
5.6 Seller Contracts. All Seller Contracts (other than those constituting
----------------
Excluded Assets) are described on SCHEDULE 5.6 or 5.7. Complete and correct
copies of all Seller Contracts have been delivered by Seller to Buyer. Each
Seller Contract is in full force and effect and constitutes the valid, legal,
binding and enforceable obligation of Seller and Seller is not and to
Seller's Knowledge each other party thereto is not, in breach or default of any
material terms or conditions thereunder.
10
5.7 Real Property.
-------------
5.7.1 All the Assets consisting of Real Property interests are
described on SCHEDULE 5.7. Except as otherwise disclosed on SCHEDULE 5.7, Seller
holds good, marketable and indefeasible fee simple title to the Real Property
shown as being owned by Seller on SCHEDULE 5.7 and the valid and enforceable
right to use and possess such Real Property, subject only to the Permitted
Encumbrances. Seller has valid and enforceable leasehold interests in Real
Property shown as being leased by Seller on SCHEDULE 5.7 and, with respect to
other Real Property not owned or leased by Seller, Seller has the valid and
enforceable right to use all such other Real Property pursuant to the easements,
licenses, rights-of-way or other rights described on SCHEDULE 5.7, subject only
to Permitted Encumbrances. Except for routine repairs, all of the material
improvements, leasehold improvements and the premises of the Real Property are
in good condition and repair and are suitable for the purposes used. The current
use and occupancy of the Real Property do not constitute nonconforming uses
under any applicable zoning Legal Requirements.
5.7.2 The documents delivered by Seller to Buyer as evidence of
each Seller Contract that is a lease of Real Property constitute the entire
agreement with the landlord in question. There are no leases or other
agreements, oral or written, granting to any Person other than Seller the right
to occupy or use any Real Property, except as described on SCHEDULE 5.7. All
easements, rights-of-way and other rights appurtenant to, or which are necessary
for Seller's current use of, any Real Property are valid and in full force and
effect, and Seller has not received any notice with respect to the termination,
breach or impairment of any of those rights. Each parcel of Real Property, any
improvements constructed thereon and their current use (a) has access to and
over all public streets, or private streets for which Seller has a valid right
of ingress and egress, (b) conforms in its current use and occupancy to all
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 (c) conforms in all material respects in its use to all restrictive
covenants, if any, or other Encumbrances affecting all or part of such parcel.
5.8 Environmental Matters.
---------------------
5.8.1 The Real Property currently complies in all material respects
with and, to Seller's Knowledge, has previously been operated in compliance in
all material respects with, all Environmental Laws. Seller has not directly or
indirectly (a) generated, released, stored, used, treated, handled, discharged
or disposed of any Hazardous Substances at, on, under, in or about, or in any
other manner affecting, any Real Property, (b) transported any Hazardous
Substances to or from any Real Property or (c) undertaken or caused to be
undertaken any other activities relating to the Real Property which could
reasonably give rise to any liability under any Environmental Law, and, to
Seller's Knowledge, no other present or previous owner, tenant, occupant or user
of any Real Property or any other Person has committed or suffered any of the
foregoing. To Seller's Knowledge, (i) no release of Hazardous Substances outside
the Real Property has entered or threatens to enter any Real Property, nor (ii)
is there any pending or threatened claim based on Environmental Laws which
arises from any condition of the land surrounding any Real Property. No
litigation based on Environmental Laws which relates to any Real Property or any
operations on conditions on it (A) has
11
been asserted or conducted in the past or is currently pending against or with
respect to Seller or, to Seller's Knowledge, any other Person, or (B) to
Seller's Knowledge is threatened or contemplated.
5.8.2 To Seller's Knowledge, other than as described on SCHEDULE
5.8, (a) no aboveground or underground storage tanks are currently or have been
located on any Real Property, (b) no Real 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
(c) no building or other structure on any Real Property contains asbestos-
containing material.
5.8.3 Seller has provided Buyer with complete and correct copies of
(a) all studies, reports, surveys or other materials in Seller's possession or,
to Seller's Knowledge to which it has access, relating to the presence or
alleged presence of Hazardous Substances at, on or affecting the Real Property,
(b) all notices or other materials in Seller's possession or, to Seller's
Knowledge to which it has access, 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 Real Property or
activities at the Real Property and (c) all materials in Seller's possession or,
to Seller's Knowledge to which it has access, relating to any litigation or
allegation by any Person concerning any Environmental Law.
5.9 Compliance with Legal Requirements.
----------------------------------
5.9.1 The ownership, leasing and use of the Assets as they are
currently owned, leased and used and the conduct of the Business and the
operation of the Systems as they are currently conducted and operated do not
violate or infringe, in any material respect, any Legal Requirements currently
in effect (other than the Legal Requirements described in SECTION 5.9.4, as to
which the provisions of SECTION 5.9.4 will apply). Seller has received no notice
of any violation by Seller or the Business of any Legal Requirement applicable
to the Business or the Systems as currently conducted, and to Seller's
Knowledge, there is no basis for the allegation of any such a violation.
5.9.2 A valid request for renewal has been duly and timely filed
under Section 626 of the Cable Communications Policy Act of 1984 with the proper
Governmental Authority with respect to applicable Governmental Permits with
franchising authorities that have expired prior to, or will expire within 36
months after, the date of this Agreement.
5.9.3 Seller has complied, and the Business is in compliance, in all
material respects, with the specifications set forth in Part 76, Subpart K of
the rules and regulations of the FCC, Section 111 of the U.S. Copyright Act of
1976 and the applicable rules and regulations thereunder and the applicable
rules and regulations of the U.S. Copyright Office, the Register of Copyrights,
the Copyright Royalty Tribunal and the Communications Act of 1934, including
provisions of any thereof pertaining to signal leakage, to utility pole make
ready and to grounding and bonding of cable television systems (in each case as
the same is currently in effect), and all other applicable Legal Requirements
relating to the construction, maintenance, ownership and operation of the
Assets, the Systems and the Business.
12
5.9.4 Notwithstanding the foregoing, to Seller's Knowledge, each
System is in compliance in all material respects with the provisions of the
Cable Television Consumer Protection and Competition Act of 1992 and the FCC
rules and regulations promulgated thereunder (the "1992 Cable Act") as such
Legal Requirements relate to the operation of the Business; provided, however,
that Seller does not hereby make any representation about rates charged to
subscribers, other than the representation regarding the rates charged to
subscribers set forth below. Seller has complied in all material respects with
the must carry and retransmission consent provisions of the 1992 Cable Act.
Seller 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, whether or not such rates are or were subject to regulation at that date
by any Governmental Authority, including any local franchising authority and/or
the FCC, unless such rates were not subject to regulation pursuant to a specific
exemption from rate regulation contained in the 1992 Cable Act other than the
failure of any franchising authority to have been certified to regulate rates.
Notwithstanding the foregoing, Seller makes no representation or warranty that
the rates charged to subscribers (a) are allowable under any rules and
regulations of the FCC or any authoritative interpretation thereof, or (b) would
be allowable under any rules and regulations of the FCC or any authoritative
interpretation thereof promulgated after the date of the Closing. Seller has
delivered to Buyer complete and correct copies of all FCC Forms 393, 1200, 1205,
1210, 1215, 1220, 1225, 1235 and 1240 filed with respect to the Systems and
copies of all other FCC Forms filed by Seller and of all correspondence with any
Governmental Authority relating to rate regulation generally or specific rates
charged to subscribers with respect to the Systems, including copies of any
complaints filed with the FCC with respect to any rates charged to subscribers
of the Systems, and any other documentation supporting an exemption from the
rate regulation provisions of the 1992 Cable Act claimed by Seller with respect
to any of the Systems (collectively, "Rate Regulation Documents"). As of the
date of this Agreement, Seller has received no notice from any Governmental
Authority with respect to an intention to enforce customer service standards
pursuant to the 1992 Cable Act and Seller has not agreed with any Governmental
Authority to establish customer service standards that exceed the customer
service standards promulgated pursuant to the 1992 Cable Act. In addition,
Seller has also delivered to Buyer documentation for each of the Systems in
which the franchising authority has not certified to regulate rates as of the
date of this Agreement showing a determination of allowable rates using a
benchmark methodology. Except as described in SCHEDULE 5.9, Seller 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 (a "Cost of Service Election") with respect to any of the
Systems.
5.10 Patents, Trademarks and Copyrights. Seller has timely and accurately
----------------------------------
made all requisite filings and payments with the Register of Copyrights with
respect to the Business. Seller has delivered to Buyer complete and correct
copies of all current reports and filings, and all reports and filings for the
past three years, made or filed pursuant to copyright rules and regulations with
respect to the Business. Seller does not possess any patent, patent right,
trademark or copyright material to the operation of the Business and Seller is
not a party to any license or royalty agreement with respect to any patent,
trademark or copyright except for licenses respecting program material and
obligations under the Copyright Act of 1976 applicable to cable television
systems generally. The Business and the System have been operated in such a
manner so as not to violate or infringe upon
13
the rights of, or give rise to any rightful claim of any Person for copyright,
trademark, service xxxx, patent, license, trade secret infringement or the like.
5.11 Financial Statements. A correct copy of the unaudited financial
--------------------
statements for the Systems as of September 30, 1996, including an unaudited
income statement and balance sheet which fairly present the financial condition
of the Systems, is attached as SCHEDULE 5.11 (collectively, the "Financial
Statements"). At the date of the Financial Statements, Seller had no liability
or obligation, whether accrued, absolute, fixed or contingent (including
liabilities for Taxes or unusual forward or long-term commitments), required by
GAAP to be reflected or reserved against therein that were not fully reflected
or reserved against on the balance sheet included in the Financial Statements,
other than liabilities included in current liabilities, and none of which was or
would be material to the Business.
5.12 Absence of Certain Changes. Since September 30, 1996 (a) Seller 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 would be reasonably likely, individually or
in the aggregate, to have a material adverse effect on the financial condition
or results of operations of the Business, (b) there has been no material adverse
change (except any change affecting the United States cable industry as a whole,
including any change arising from (i) legislation, litigation, rulemaking or
regulation or (ii) competition caused by or arising from other multiple channel
distribution services) in the business, condition (financial or otherwise) or
liabilities of the Business, and (c) the Business has been conducted only in the
ordinary course of business.
5.13 Legal Proceedings. Except as set forth in SCHEDULE 5.13: (a) there
-----------------
is no claim, investigation or litigation pending or, to Seller's Knowledge,
threatened, by or before any Governmental Authority or private arbitration
tribunal against Seller which, if adversely determined, would materially
adversely affect the financial condition or operations of the Business, the
Systems, the Assets or the ability of Seller 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 Governmental Permits, Seller Contracts or leases or other documents
evidencing the Real Property; and (b) there is not in existence any judgment
requiring Seller to take any action of any kind with respect to the Assets or
the operation of the Systems, or to which Seller (with respect to the Systems),
the Systems or the Assets are subject or by which they are bound or affected.
5.14 Tax Returns; Other Reports. Seller has duly and timely filed in
--------------------------
correct form all federal, state and local Tax returns and all other Tax reports
required to be filed by Seller and has timely paid all Taxes which have become
due and payable, whether or not shown on any such report or return, the failure
of which to be filed or paid could adversely affect the Assets or result in the
imposition of an Encumbrance upon the Assets, except such amounts as are being
contested diligently and in good faith and are not in the aggregate material.
Except as specifically identified on SCHEDULE 5.14, Seller has received no
notice of, nor does Seller 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 an Encumbrance upon
the Assets.
14
5.15 Employment Matters.
------------------
5.15.1 SCHEDULE 5.15 contains a complete and correct list of names and
positions of all employees of Seller engaged in the Business as of the date set
forth in such SCHEDULE. Seller has no employment agreements, either written or
oral, with any employee of the Business. Seller has complied in all material
respects with applicable Legal Requirements relating to the employment of labor,
including WARN, the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), continuation coverage requirements with respect to group health
plans, and those relating to wages, hours, collective bargaining, unemployment
insurance, worker's compensation, equal employment opportunity, age and
disability discrimination, immigration control and the payment and withholding
of Taxes.
5.15.2 Each "employee benefit plan" or "multiemployer plan" (as those
terms are defined in ERISA) with respect to which Seller or any ERISA Affiliate
(as defined in ERISA) of Seller has any liability is set forth on SCHEDULE 5.15
(the "Employee Benefit Plans"). Neither Seller nor its ERISA Affiliates nor any
Employee Benefit Plan is in material violation of any provision of ERISA. No
"reportable event," as defined in Section 4043 of ERISA, has occurred and is
continuing with respect to any Employee Benefit Plan. No "prohibited
transaction," within the meaning of Section 406 of ERISA, has occurred with
respect to any such Employee Benefit Plan, and no "accumulated funding
deficiency" or "withdrawal liability" (both as defined in Section 302 of ERISA)
exists with respect to any such Employee Benefit Plan. After the Closing, Buyer
will not be required, under ERISA, the Internal Revenue Code of 1986, as amended
(the "Code") or any collective bargaining agreement, to establish, maintain or
continue any Employee Benefit Plan currently maintained by Seller or any of its
ERISA Affiliates.
5.15.3 Seller is not a party to any collective bargaining agreements and
Seller has not recognized or agreed to recognize and has no duty to bargain with
any labor organization or collective bargaining unit. There are not pending any
unfair labor practice charges against Seller, any demand for recognition or any
other request or demand from a labor organization for representative status with
respect to any Person employed by Seller. To Seller's Knowledge, its employees
are not engaged in organizing activity with respect to any labor organization.
Seller has no employment agreement, either written or oral, express or implied,
that would require Buyer to employ any Person after the Closing Date.
5.16 Systems Information. SCHEDULE 5.16 sets forth a materially true and
-------------------
accurate description of the following information relating to the Business as of
the most recent monthly report generated by Seller in the ordinary course of
business containing the information required to prepare such SCHEDULE (provided
that such date is no earlier than two months prior to the date of this
Agreement):
(a) the approximate number of miles of plant included in the Assets;
(b) the number of subscribers and EBS's served by the Systems for each
Franchise;
15
(c) the approximate number of single family homes and residential
dwelling units passed by the Systems;
(d) a description of basic and optional or tier services
available from the Systems, the rates charged by Seller for each and the number
of subscribers and subscriber equivalents receiving each optional or tier
service;
(e) the stations and signals carried by the Systems and the
channel position of each such signal and station; and
(f) the cities, towns, villages, townships, boroughs and counties
served by the Systems.
5.17 Bonds. Except as set forth on SCHEDULE 5.17, as of the date of
-----
this Agreement, there are no franchise, construction, fidelity, performance, or
other bonds or letters of credit posted by Seller in connection with its
operation or ownership of any of the Systems or Assets.
5.18 Finders and Brokers. Seller 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 Buyer could be liable.
SECTION 6. BUYER'S REPRESENTATIONS AND WARRANTIES.
To induce Seller to enter into this Agreement, Buyer represents and
warrants to Seller, as of the date of this Agreement and as of the Closing, as
follows:
6.1 Organization and Qualification. Buyer is a corporation duly
------------------------------
organized, validly existing and in good standing under the laws of the State of
Georgia and has all requisite corporate power and authority to own, lease and
use the assets owned, leased or used by it and to conduct its business as it is
currently conducted. Buyer is duly qualified to do business and is in good
standing under the laws of each jurisdiction in which the ownership, leasing or
use of the assets owned, leased or used by it or the nature of Buyer's
activities 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 Buyer or on the ability of Buyer to perform its
obligations under this Agreement.
6.2 Authority and Validity. Buyer 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 Buyer is a party. The execution and delivery by Buyer of, the
performance by Buyer of its obligations under, and the consummation by Buyer of
the transactions contemplated by, this Agreement and the Transaction Documents
to which Buyer is a party have been duly and validly authorized by all necessary
action by or on behalf of Buyer. This Agreement has been, and when executed and
delivered by Buyer the Transaction Documents will be, duly and validly executed
and delivered by Buyer and the valid and binding obligations of Buyer,
enforceable against Buyer in accordance with their terms, except as the
16
same may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws now or hereafter in effect relating to the
enforcement of creditors' rights generally or by principles governing the
availability of equitable remedies.
6.3 No Conflicts; Required Consents. Except for the Required
-------------------------------
Consents, the execution and delivery by Buyer, the performance of Buyer under,
and the consummation of the transactions contemplated by, this Agreement and the
Transaction Documents to which Buyer is a party do not and will not (a) violate
any provision of the charter or bylaws of Buyer, (b) violate 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) violate or result in a breach
of or constitute a default under (without regard to requirements of notice,
lapse of time or elections of any Person or any combination thereof), (ii)
permit or result in the termination, suspension, modification of, (iii) result
in the acceleration of (or give any Person the right to accelerate) the
performance of Buyer under, or (iv) result in the creation or imposition of any
Encumbrance under, any instrument or other agreement to which Buyer is a party
or by which Buyer or any of its assets is bound or affected, except for purposes
of this clause (d) such violations, conflicts, breaches, defaults, terminations,
suspensions, modifications and accelerations as would not, individually or in
the aggregate, have a material adverse effect on the validity, binding effect or
enforceability of this Agreement or on the ability of Buyer to perform its
obligations under this Agreement or the Transaction Documents to which it is a
party.
6.4 Finders and Brokers. Buyer 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 Seller could be liable.
6.5 Legal Proceedings. There are no claims, actions, suits,
-----------------
proceedings or investigations pending or, to Buyer's Knowledge, threatened, by
or before any Governmental Authority, or any arbitrator, by or against or
affecting or relating to Buyer which, if adversely determined, would restrain or
enjoin the consummation of the transactions contemplated by this Agreement or
declare unlawful the transactions or events contemplated by this Agreement or
cause any of such transactions to be rescinded.
SECTION 7. ADDITIONAL COVENANTS.
7.1 Access to Premises and Records. Between the date of this
------------------------------
Agreement and the Closing Date, Seller will give Buyer and its counsel,
accountants and other representatives full access during normal business hours
upon reasonable notice to all the premises and books and records of the Business
and to all the Assets and to the System personnel and will furnish to Buyer and
such representatives all such documents, financial information, and other
information regarding the Business and the Assets as Buyer from time to time
reasonably may request; provided that no such investigation will affect or limit
the scope of any of Seller's representations, warranties, covenants and
indemnities in this Agreement or any Transaction Document or limit liability for
any breach of any of the foregoing.
17
7.2 Continuity and Maintenance of Operations; Financial Statements.
--------------------------------------------------------------
Except as Buyer may otherwise consent in writing, between the date of this
Agreement and the Closing:
7.2.1 Seller will conduct the Business and operate the Systems only in
the usual, regular and ordinary course consistent with past practices (including
making budgeted capital expenditures and fulfilling installation requests) and
will use commercially reasonable efforts to (a) preserve its current business
intact, including preserving existing relationships with franchising
authorities, suppliers, customers and others having business dealings with
Seller relating to the Business unless Buyer requests otherwise, (b) keep
available the services of its employees and agents providing services in
connection with the Business and (c) continue making marketing, advertising and
promotional expenditures with respect to the Business consistent with past
practices.
7.2.2 Seller will maintain the Assets in good repair, order and
condition (ordinary wear and tear excepted), will maintain equipment and
inventory at historical levels consistent with past practices, will maintain in
full force and effect, policies of insurance with respect to the Business in
such amounts and with respect to such risks as customarily maintained by
operators of cable television systems of the size and geographic location as the
Systems and will maintain its books, records and accounts in the usual, regular
and ordinary manner on a basis consistent with past practices. Seller will not
itself, and will not permit any of its officers, directors, shareholders, agents
or employees to, pay any of Seller's subscriber accounts receivable (other than
for their own residences) prior to the Closing Date. Seller will continue to
implement its procedures for disconnection and discontinuance of service to
subscribers whose accounts are delinquent in accordance with those in effect on
the date of this Agreement.
7.2.3 Except as specified in Section 7.2.5, without the prior approval
of Buyer, Seller will not (a) change the rate charged for Basic Service,
Expanded Basic Service or Pay TV or add, delete, retier or repackage any
programming services except to the extent required under the 1992 Cable Act or
any other Legal Requirement, provided however if Seller changes such rates in
order to so comply, Seller will provide Buyer with copies of any FCC forms (even
if not filed with any Governmental Authority) that Seller used to determine that
the new rates were allowable, (b) make any Cost of Service Election with respect
to any of the Systems, (c) sell, transfer or assign any portion of the Assets
other than sales in the ordinary course of business or permit the creation of
any Encumbrance on any Asset other than a Permitted Encumbrance or any
Encumbrance which will be released at or prior to Closing, (d) modify in any
material respect, terminate, suspend or abrogate any Governmental Permits,
Seller Contracts or any other contract or agreement (other than those
constituting Excluded Assets), (e) enter into any contract or commitment or
incur any indebtedness or other liability or obligation of any kind relating to
any System or the Business involving an expenditure in excess of $25,000, other
than contracts or commitments which are cancellable on 30 days' notice or less
without penalty, (f) take or omit to take any action that would result in any of
its representations or warranties in this Agreement or in any Transaction
Document not being true and correct when made or as of the Closing, (g) engage
in any marketing, subscriber installation or collection practices that are
inconsistent with past practices, or (h) enter into any agreement with or
commitment to any competitive access providers with respect to the Systems.
18
7.2.4 Seller promptly will deliver to Buyer true and complete copies of
monthly and quarterly financial statements and operating reports and any reports
with respect to the operations of the Business prepared by or for Seller at any
time between the date of this Agreement and the Closing Date. All financial
statements so delivered will be prepared in accordance with GAAP on a basis
consistent with the Financial Statements.
7.2.5 Seller will give or cause to be given to Buyer as soon as
reasonably possible but in any event no later than 5 Business Days prior to the
date of submission to the appropriate Governmental Authority, copies of all Rate
Regulation Documents prepared with respect to any of the Systems, and Seller
will make a good faith effort to address any specific concerns raised by Buyer
with respect to such documents. Seller will cause its "Operator Selected Rate
for Projected Period" as shown on line 110 of the FCC Form 1240 to go into
effect in the System on February 1, 1997.
7.2.6 Seller will duly and timely file a valid notice of renewal under
Section 626 of the Cable Communications Policy Act of 1984 with the appropriate
Governmental Authority with respect to all cable television franchises of the
Business that will expire within 36 months after any date between the date of
this Agreement and the Closing Date.
7.2.7 Seller will promptly notify Buyer of any fact, circumstance,
event or action by it or otherwise (a) which, if known at the date of this
Agreement, would have been required to be disclosed in or pursuant to this
Agreement or (b) the existence, occurrence or taking of which would result in
any of Seller's representations and warranties in this Agreement or any
Transaction Document not being true, complete and correct when made or at the
Closing, and, with respect to clause (b) use its best efforts to remedy the
same.
7.3 Employee Matters.
----------------
7.3.1 Buyer will have no obligation to employ or offer employment to
any of the employees of Seller. As of the Closing Date, Seller will terminate
the employment of all its employees who were employed incidental to the conduct
of the Business whose employment will not continue with Seller after the Closing
and will promptly pay to all such employees all compensation, including
salaries, commissions, bonuses, deferred compensation, severance, insurance,
pensions, profit sharing, vacation (except for accrued vacation included in the
adjustments pursuant to SECTION 3.2), sick pay and other compensation or
benefits to which they are entitled for periods prior to the Closing, including
all amounts, if any, payable on account of the termination of their employment.
Seller agrees to cooperate in all reasonable respects with Buyer to allow Buyer
to evaluate and interview employees of the Business to make hiring decisions.
Such cooperation will include but not be limited to allowing Buyer to contact
employees during work time and, with the consent of the employee, making
personnel records available. Buyer will give Seller written notice on or before
January 10, 1997 of the name of all employees of the System to whom Buyer
desires to offer employment on and after the Closing Date (subject to
satisfaction of Buyer's conditions for employment). Seller will not, without the
prior written consent of Buyer, change the compensation or benefits of any
employees of the Business except in accordance with past practice.
19
7.3.2 All claims and obligations under, pursuant to or in connection
with any welfare, medical, insurance, disability or other employee benefit plans
of Seller or arising under any Legal Requirement affecting employees of Seller
incurred on or before the Closing Date or resulting or arising from events or
occurrences occurring or commencing on or before the Closing Date will remain
the responsibility of Seller, whether or not such employees are hired by Buyer
after the Closing.
7.3.4 Seller will remain solely responsible for, and will indemnify
and hold harmless Buyer from and against all Losses arising from or with respect
to, all salaries and all severance, vacation (except for accrued vacation
included in the adjustments pursuant to SECTION 3.2), medical, sick, holiday,
continuation coverage and other compensation or benefits to which Seller's
employees (whether or not hired by Buyer) may be entitled as a result of their
employment by Seller prior to the Closing, the termination of their employment
prior to the Closing, the consummation of the transactions contemplated hereby
or pursuant to any applicable Legal Requirement (including without limitation
WARN) or otherwise relating to their employment prior to the Closing.
7.3.4 Nothing in this Agreement will require Buyer to assume any
collective bargaining agreement between Seller and any labor organization.
7.4 Leased Vehicles; Other Capital Leases. Seller will pay the remaining
-------------------------------------
balances on any leases for vehicles or capital leases included in the Equipment
and will deliver title to such vehicles and other Equipment free and clear of
all Encumbrances (other than Permitted Encumbrances) to Buyer at the Closing.
7.5 Required Consents; Estoppel Certificates.
----------------------------------------
7.5.1 Seller will use commercially reasonable efforts to obtain in
writing, as promptly as possible and at its expense, all the Required Consents
and any other consent, authorization or approval required to be obtained by
Seller in connection with the transactions contemplated by this Agreement, in
form and substance reasonably satisfactory to Buyer and deliver to Buyer copies
of such Required Consents and such other consents, authorizations or approvals
promptly after they are obtained by Seller. Such Required Consents will be
proposed in a form that provides confirmation from the third party of the
continued existence of and the absence of defaults under the applicable Seller
Contract or Governmental Permit. Buyer will cooperate with Seller to obtain all
Required Consents, but Buyer will not be required to accept or agree or accede
to any modifications or amendments to, or changes in, or the imposition of any
condition to the transfer to Buyer of (in each case other than inconsequential
matters with no adverse effect on Buyer), any Seller Contract or Governmental
Permit that are not acceptable to Buyer in its sole discretion. Notwithstanding
the foregoing, Seller will complete, execute and deliver to the appropriate
Governmental Authority, the FCC Forms 394 prepared by Buyer with respect to each
franchise as to which such Form 394 is required within two Business Days after
it receives each such Form 394 from Buyer.
20
7.5.2 Seller will use commercially reasonable efforts to obtain for
each lease that has not been recorded in the public records, execution of a
document suitable for recording in the public records and sufficient after
recording to constitute a memorandum of lease.
7.6 Title Commitments and Surveys.
-----------------------------
7.6.1 After the execution of this Agreement, Buyer will order at
Seller's expense (a) commitments for owner's title insurance policies on all
Real Property owned by Seller and on easements which provide access to each such
parcel of real property, (b) commitments for lessee's title insurance policies
for all Real Property leased by Seller which is used for headend or tower sites
and on easements which provide access to each such site and (c) an ALTA survey
(including such items on Table A of the Minimum Standard Detail Requirements and
Classifications thereto that Buyer in its reasonable judgment determines are
desirable or necessary) on each parcel of Real Property for which a title
insurance policy is to be obtained. The title commitments will evidence a
commitment to issue an ALTA title insurance policy insuring good, marketable and
indefeasible fee simple title or leasehold interest, in the case of Leased Real
Property, if applicable) to each parcel of such Real Property, subject only to
Permitted Encumbrances, for such amount as Buyer directs and will contain no
exceptions except for items which in Buyer's reasonable opinion do not adversely
affect (other than in an immaterial way as to any individual parcel) the good,
marketable and indefeasible title to or Buyer's access or quiet use or enjoyment
of such Real Property in the manner the Real Property is presently used or in
the normal conduct of the Business. At the Closing, Seller will cause Buyer to
receive, at Seller's expense, title commitments redated to the date and time of
Closing. In the event Seller has not eliminated or caused to be eliminated all
unacceptable exceptions from such policies or commitments prior to Closing, and
Buyer elects to proceed with the Closing, Buyer will be entitled to
indemnification with respect to such exceptions as provided in SECTION 11.2.
7.6.2 Title insurance policies on all Real Property in such amounts as
Buyer directs will be delivered to Buyer at Seller's expense within 30 days
after the Closing Date evidencing title to the Real Property vested in Buyer
consistent with the commitments delivered at the Closing pursuant to SECTION
7.6.1.
7.7 HSR Notification. As soon as practicable after the execution of this
----------------
Agreement, but in any event no later than 30 days after such execution, Seller
and Buyer will each complete and file, or cause to be completed and filed, any
notification and report required to be filed under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR Act"); and each such
filing will request early termination of the waiting period imposed by the HSR
Act. The parties will use their reasonable best 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 will use their respective reasonable best 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, Buyer will not be required to make any
significant change in the operations or activities of the business (or any
material assets employed therein) of Buyer or any of
21
its Affiliates, if Buyer 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 Buyer or any of its Affiliates having
significant assets, net worth, or revenue. Notwithstanding anything to the
contrary in this Agreement, if Buyer or Seller, in its sole opinion, considers a
request from a governmental agency for additional data and information in
connection with the HSR Act to be unduly burdensome, such party may terminate
this Agreement by giving written notice to the other. Within 10 days after
receipt of a statement therefor, Seller will reimburse Buyer for one-half of the
filing fees payable by Buyer in connection with Buyer's filing under the HSR
Act.
7.8 No Shopping. None of Seller, its shareholders or any agent or
-----------
representative of any of them will, during the period commencing on the date of
this Agreement and ending with the earlier to occur of the Closing or the
termination of this Agreement, directly or indirectly (a) solicit or initiate
the submission of proposals or offers from any Person for, (b) participate in
any discussions pertaining to or (c) furnish any information to any Person other
than Buyer relating to, any direct or indirect acquisition or purchase of all or
any portion of the Assets.
7.9 Lien and Judgment Searches. Not more than 20 nor fewer than 10
--------------------------
days prior to the expected Closing Date, Seller, at its expense, will provide
Buyer with (a) 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 exist tangible Assets, and in the state
and county where Seller'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 and (b) the results of a search of
the dockets of the clerk of each federal and state court sitting in the city,
county or other applicable political subdivision where the principal office or
any material assets of Seller may be located, with respect to judgments, orders,
writs or decrees against or affecting Seller or any of the Assets.
7.10 Transfer Taxes. Any state or local sales, use, transfer, Taxes or
--------------
fees or any other charge (including filing fees) imposed by any Governmental
Authority arising from or payable by reason of the transfer of any of the Assets
pursuant to this Agreement will be paid one-half by Buyer and one-half by
Seller.
7.11 Distant Broadcast Signals. Unless otherwise restricted or
-------------------------
prohibited by any Governmental Authority or applicable Legal Requirement, if
requested by Buyer, Seller will delete prior to the Closing Date any distant
broadcast signals which Buyer determines will result in unacceptable liability
on the part of Buyer for copyright payments with respect to continued carriage
of such signals after the Closing.
7.12. Guaranty. At the Closing, Seller will cause Intercable to sign
--------
and deliver to Buyer, a Guaranty in the form of EXHIBIT D.
7.13 Letter to Programmers. On or before the Closing Date, Seller will
---------------------
transmit a letter in the form of EXHIBIT E to all programmers from which Seller
purchases programming for the Systems and provide Buyer with a copy of each such
letter.
22
7.14 Updated Schedules. Not later than 10 Business Days after signing
-----------------
of this Agreement Seller will deliver to Buyer all Schedules to this Agreement
to the extent not attached at the time of signing. Not later than ten Business
Days prior to the expected Closing Date, Seller will deliver to Buyer revised
copies of all Schedules to this Agreement which will have been updated and
marked to show any changes occurring between the date of this Agreement and the
date of delivery; provided, however, that for purposes of Seller's
representations and warranties and covenants in this Agreement, all references
to the Schedules will mean the version of the Schedules attached to this
Agreement on the date of signing or the date of initial delivery in accordance
with the first sentence of this Section (if later), and provided further that if
the effect of any such updates to Schedules is to disclose any one or more
additional properties, privileges, rights, interests or claims as Assets, Buyer,
at or before Closing, will have the right (to be exercised by written notice to
Seller) to cause any one or more of such items to be designated as and deemed to
constitute Excluded Assets for all purposes under this Agreement.
7.15 Use of Names and Logos. For a period of 90 days after the Closing
----------------------
Date, Buyer will be entitled to use all trademarks, trade names, service marks,
service names, logos and similar proprietary rights of Seller and all
derivations and abbreviations of such name and related marks to the extent
incorporated in or on the Assets transferred to it at the Closing.
Notwithstanding the foregoing, Buyer will not be required to remove or
discontinue using any such trade name or xxxx that is affixed to converters or
other items in or to be used in subscriber homes or properties, or as are used
in a similar fashion making such removal or discontinuation impracticable for
Buyer.
7.16 Subscriber Billing Services. Seller will provide to Buyer, upon
---------------------------
request, on terms and conditions reasonably satisfactory to each party, access
to and the right to use its billing system computers, software and related fixed
assets in connection with the Systems acquired by Buyer for a period of up to 90
days following the Closing to allow for conversion of existing billing
arrangements ("Transitional Billing Services"); provided however that Buyer will
not be required to pay Seller more than Seller's actual cost of providing such
service. Buyer will notify Seller at least 10 days prior to the expected
Closing Date as to whether it desires Transitional Billing Services from Seller.
7.17 Satisfaction of Conditions. Each party will use its best 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, provided that Buyer will not be required to agree to
any increase in the amount payable with respect to, or any modification that
makes more burdensome in any material respect, any of the Assumed Liabilities.
7.18 Confidentiality and Publicity. Neither party will issue any press
-----------------------------
release or make any other public announcement or any oral or written statements
to Seller's employees concerning this Agreement or the transactions contemplated
hereby except as required by applicable Legal Requirements, without the prior
written consent of the other party. Each party will hold, and will cause its
employees, consultants, advisors and agents to hold the terms of this Agreement
in confidence; provided that (a) such party may use and disclose such
information once it has become 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 (b) to the
23
extent that such party may be compelled by Legal Requirements to disclose
any of such information, but the party proposing to disclose such information
will first notify and consult with the other party concerning the proposed
disclosure, to the extent reasonably feasible. Each party also may disclose
such information to employees, consultants, advisors, agents and actual or
potential lenders whose knowledge is necessary to facilitate the consummation of
the transactions contemplated by this Agreement. The obligation by 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.
7.19 Bulk Transfers. Buyer waives compliance by Seller with Legal
--------------
Requirements relating to bulk transfers applicable to the transactions
contemplated hereby.
7.20 Environmental Reports. Within 60 days after the execution of
---------------------
this Agreement, Seller will, at its expense, obtain and deliver to Buyer for
each parcel of Real Property owned or leased by Seller a current Phase I
Environmental Site Assessment ("Environmental Report") prepared by a nationally
known environmental engineering firm reasonably satisfactory to Buyer in
accordance with ASTM Standard E 1527-93 and certified to Buyer. Each
Environmental Report will include, in addition to the process described in E
1527-93, such soil and groundwater sampling and other testing as will enable the
environmental engineers to determine if Hazardous Substances are detected and to
provide an estimate of the cost to remove and dispose of the Hazardous
Substances or otherwise remediate the property in accordance with all applicable
Environmental Laws.
7.21 Board Approvals. On or before the Due Diligence Deadline, the
---------------
Board of Directors of Buyer and the Board of Directors of Intercable will have
been presented with resolutions for the approval of the transactions
contemplated hereby on behalf of Buyer and Seller, and will have approved or
disapproved the same.
SECTION 8. CONDITIONS PRECEDENT
8.1 Conditions to the Obligations of Buyer and Seller. The
-------------------------------------------------
obligations of each party to consummate the transactions contemplated by this
Agreement are subject to the satisfaction, at or before the Closing, of the
following, which may be waived by the parties to the extent permitted by
applicable Legal Requirements:
8.1.1 HSR Act Filings. All filings required under the HSR Act
---------------
have been made and the applicable waiting period has expired or been earlier
terminated without the receipt of any objection or the commencement or threat of
any litigation by a Governmental Authority of competent jurisdiction to restrain
the consummation of the transactions contemplated by this Agreement.
8.1.2 Absence of Litigation. 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 (a) prohibit Buyer's ownership or operation
of all or a material portion of any System, the Business or the Assets, (b)
compel Buyer to
24
dispose of or hold separate all or a material portion of any System, the
Business or the Assets as a result of any of the transactions contemplated by
this Agreement, (c) if determined adversely to Buyer's interest, materially
impair the ability of Buyer to realize the benefits of the transactions
contemplated by this Agreement (including the ability to acquire the Systems
pursuant to a like-kind exchange under Section 1031 of the Code) or have a
material adverse effect on the right of Buyer to exercise full rights of
ownership of the Systems or (d) prevent or make illegal the consummation of any
transactions contemplated by this Agreement.
8.2 Conditions to the Obligations of Buyer. The obligations of Buyer
--------------------------------------
to consummate the transactions contemplated by this Agreement are subject to the
satisfaction, at or before the Closing, of the following conditions, which may
be waived by Buyer to the extent permitted by applicable Legal Requirements:
8.2.1 Representations and Warranties. All representations and
------------------------------
warranties of Seller in this Agreement and any Transaction Document are, if
specifically qualified by materiality, true and correct in all respects and, if
not so qualified, are true and correct in all material respects, in each case on
and as of the Closing Date with the same effect as if made at and as of the
Closing Date, except for changes permitted or contemplated by this Agreement.
8.2.2 Performance of Agreements. Seller has performed in all
-------------------------
material respects all obligations and agreements and complied in all material
respects with all covenants and conditions in this Agreement and any Transaction
Document to be performed or complied with by Seller at or before the Closing.
8.2.3 Deliveries. Seller has delivered the items and documents
----------
required to be delivered by it pursuant to this Agreement, including those
required under SECTION 9.2.
8.2.4 Consents. Seller has delivered to Buyer evidence, in form
--------
and substance satisfactory to Buyer, that all of the Required Consents marked
with an asterisk on SCHEDULE 5.3 have been obtained or given (or deemed to have
been given) and are in full force and effect.
8.2.5 Retransmission Consent; Programming. With respect to any
-----------------------------------
retransmission consent agreements for broadcast signals carried on the Systems
that are included as part of the Excluded Assets, all required retransmission
consents for continued carriage of such broadcast signals will have been
obtained on terms and conditions reasonably acceptable to Buyer.
8.2.6 Environmental Matters. The Environmental Reports delivered
---------------------
to Buyer pursuant to SECTION 7.20 and any other environmental audits or
assessments conducted with respect to the Assets do not indicate the existence
of any conditions that could reasonably be expected to give rise to a material
risk of liability.
8.2.7 No Material Adverse Change. There has not been any material
--------------------------
adverse change in the Business, the Assets or the Systems since the date of this
Agreement other than any change arising out of general economic conditions in
the United States or any change affecting the
25
United States cable television industry as a whole, including any change arising
from (a) legislation, litigation, rulemaking or regulation or (b) competition
caused by or arising from other multiple channel distribution services.
8.2.8 EBS. As of the Closing Date, the Business has no fewer
---
than 5,250 EBSs.
8.3 Conditions to Obligations of Seller. The obligations of
-----------------------------------
Seller to consummate the transactions contemplated by this Agreement are subject
to the satisfaction by Seller at or before the Closing, of the following, which
may be waived by Seller, to the extent permitted by applicable Legal
Requirements:
8.3.1 Representations and Warranties. All representations
------------------------------
and warranties of Buyer contained in this Agreement and any Transaction Document
are, if specifically qualified by materiality, true and correct in all respects
and, if not so qualified, are true and correct in all material respects, in each
case on and as of the Closing Date with the same effect as if made on and as of
the Closing Date, except for changes permitted or contemplated by this
Agreement.
8.3.2 Performance of Agreements. Buyer has performed in all
-------------------------
material respects all obligations and agreements, and complied in all material
respects with all covenants and conditions in this Agreement and any Transaction
Document to be performed or complied with by Buyer at or before the Closing.
8.3.3 Deliveries. Buyer has delivered the items and
----------
documents required to be delivered by it pursuant to this Agreement, including
those required under SECTION 9.3.
8.3.4 EBS. As of the Closing Date, either (a) the Business
---
has no fewer than 5,250 EBSs or (b) Buyer has waived its right to an adjustment
pursuant to SECTION 3.2.1 except to the extent of the adjustment applicable if
the number of EBSs were 5,250.
8.4 Waiver of Conditions. Any party may waive in writing any or
--------------------
all of the conditions to its obligations under this Agreement.
SECTION 9. CLOSING.
9.1 The Closing; Time and Place. The Closing will be held on a
---------------------------
date specified by Buyer (upon three Business Days prior notice to Seller) that
is within 15 days after all conditions to the Closing contained in this
Agreement (other than those based on acts to be performed at the Closing) have
been satisfied or waived. The Closing will be held at 10:00 a.m. local time at
Buyer's counsel's office located at 633-17th Street, Suite 3000, Xxxxxx,
Xxxxxxxx 00000, or at such place and time as Buyer and Seller may agree.
9.2 Seller's Delivery Obligations. At the Closing, Seller will
-----------------------------
deliver (or cause to be delivered) to Buyer the following:
26
(a) a Xxxx of Sale in the form attached as EXHIBIT A;
(b) a special warranty deed in a form reasonably acceptable to Buyer
(and complying with applicable state laws) with respect to each parcel of owned
Real Property, duly executed and acknowledged and in recordable form, warranting
to defend title to such Real Property against all persons claiming by, through
or under Seller, subject only to Permitted Encumbrances, and in form sufficient
to permit the title company to issue the title policy described in SECTION 7.6.1
to Buyer with respect to such Real Property;
(c) an Assignment and Assumption of Contracts in the form attached
as EXHIBIT B;
(d) one or more Assignments of Leases in the form attached as
EXHIBIT C and, if requested by Buyer, short forms or memoranda of such
Assignments in recordable form;
(e) any memorandum of lease obtained by Seller pursuant to
SECTION 7.5(b);
(f) a Guaranty signed by Intercable in the form attached as
EXHIBIT D;
(g) an affidavit of Seller, under penalty of perjury, that Seller is
not a "foreign person" (as defined in the Foreign Investment in Real Property
Tax Act and applicable regulations) and that Buyer is not required to withhold
any portion of the consideration payable under this Agreement under the
provisions of such Act in the form attached as EXHIBIT F;
(h) motor vehicle title certificates and such other transfer
instruments as Buyer may deem necessary or advisable to transfer the Assets to
Buyer and to perfect Buyer's rights in the Assets;
(i) the opinion of Xxxxxxxxx Xxxxxx, Esq., counsel for Seller, dated
the Closing Date, in the form set forth in EXHIBIT G;
(j) evidence satisfactory to Buyer that all Encumbrances affecting
any of the Assets (other than Permitted Encumbrances) have been terminated and
released;
(k) the title insurance commitments described in SECTION 7.6.1;
(l) a certificate, dated the Closing Date, signed by the President
or any Vice President of Intercable, stating that to his or her knowledge, the
conditions set forth in SECTIONS 8.2.1, 8.2.2 and 8.2.8 are satisfied; and
(m) such other documents as Buyer may reasonably request in
connection with the transactions contemplated by this Agreement.
27
9.3 Buyer's Delivery Obligations. At the Closing, Buyer will deliver
----------------------------
(or cause to be delivered) to Seller the following:
(a) the Base Purchase Price required to be paid at the
Closing, as adjusted in accordance with this Agreement;
(b) a Xxxx of Sale in the form attached as EXHIBIT A;
(c) an Assignment and Assumption of Contracts in the form
attached as EXHIBIT B;
(d) a certificate, dated the Closing Date, signed by an
executive officer of Buyer, stating that to his or her knowledge, the conditions
set forth in SECTIONS 8.3.1 and 8.3.2, are satisfied;
(e) an opinion of Xxxx X. Xxxxxx, Esq., counsel to Buyer,
dated the Closing Date, in the form set forth in EXHIBIT H; and
(f) such other documents as Seller may reasonably request in
connection with the transactions contemplated by this Agreement.
SECTION 10. TERMINATION.
10.1 Termination Events. This Agreement may be terminated and the
------------------
transactions contemplated by this Agreement may be abandoned:
10.1.1 At any time by the mutual written agreement of Buyer
and Seller;
10.1.2 By either party at any time, if the other is in
material breach or default of any of its covenants, agreements or other
obligations in this Agreement or in any Transaction Document, or if any of its
representations in this Agreement or in any Transaction Document is not true in
all material respects when made or when otherwise required by this Agreement or
any Transaction Document to be true and such breach or default or failure to be
true is not cured or waived prior to Closing;
10.1.3 By either party upon written notice to the other, if
Closing has not occurred on or before March 12, 1997, for any reason other than
a material breach or default by such party of its respective covenants,
agreements or other obligations under this Agreement, or any of its
representations this Agreement not being true and accurate in all material
respects when made or when otherwise required by this Agreement to be true and
accurate in all material respects;
10.1.4 By Buyer, within 35 days after the date Buyer
acknowledges receipt of substantially all of the Schedules to this Agreement
that are not attached at the time of signing and all of the due diligence
materials requested by Buyer from Seller (such 35th day, or if it is not a
Business Day, the next Business Day that follows being referred to as the "Due
Diligence Deadline"),
28
which acknowledgment will be given by Buyer in writing promptly after such
receipt, if either (a) the results and findings of Buyer's investigation of the
Business and the Assets are not satisfactory in Buyer's sole discretion or (b)
all board of director approvals are not obtained by Buyer (for any reason) on or
before the Due Diligence Deadline;
10.1.5 By Seller, on or before the Due Diligence Deadline,
if Intercable has not approved the transactions contemplated by this Agreement
(for any reason) on or before such date; or
10.1.6 As otherwise provided in this Agreement.
10.2 Effect of Termination. If this Agreement is terminated
---------------------
pursuant to SECTION 10.1, all obligations of the parties under this Agreement
will terminate, except for the obligations set forth in SECTIONS 7.18 and 12.16.
Termination of this Agreement pursuant to SECTIONS 10.1.2 OR 10.1.3 will not
limit or impair any remedies that any party may have with respect to a breach or
default by the other of its covenants, agreements or obligations under this
Agreement. Buyer will have no liability in any event upon exercise of its right
to terminate pursuant to SECTION 10.1.4. Seller will have no liability in any
event upon exercise of its right to terminate pursuant to SECTION 10.1.5.
SECTION 11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION.
11.1 Survival of Representations and Warranties. The
------------------------------------------
representations and warranties of Seller in this Agreement and in the
Transaction Documents to be delivered by Seller pursuant to this Agreement will
survive until the first anniversary of the Closing Date, except that (a) all
such representations and warranties with respect to any federal, state or local
Taxes, rates, Environmental Law, ERISA, employment matters or copyright matters
will survive until 60 days after the expiration of the applicable statute of
limitations (including any extensions) for such federal, state or local Taxes,
rates, Environmental Law, ERISA, employment matters or copyright matters,
respectively and (b) the representations and warranties as to ownership of the
Assets in SECTION 5.4, SECTION 5.7.1 and in the deed or deeds delivered with
respect to Real Property will survive the Closing and the delivery of such deeds
and will continue in full force and effect without limitation. The
representations and warranties of Buyer in this Agreement and in the Transaction
Documents to be delivered by Buyer pursuant to this Agreement will survive until
the first anniversary of the Closing Date. The periods of survival of the
representations and warranties prescribed by this SECTION 11.1 are referred to
as the "Survival Period." The liabilities of the parties under their respective
representations and warranties will expire as of the expiration of the
applicable Survival Period; provided, however, that such expiration will not
include, extend or apply to any representation or warranty, the breach of which
has been asserted by Buyer in a written notice to Seller before such expiration
or about which Seller has given Buyer 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 the
parties in this Agreement (that are by their terms intended to be performed
after Closing) and in the Transaction Documents to be delivered by Seller
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or Buyer pursuant to this Agreement, will survive the Closing and will continue
in full force and effect without limitation.
11.2 Indemnification by Seller. Seller will indemnify and hold
-------------------------
harmless Buyer and its shareholders and its and their respective Affiliates, and
the shareholders, directors, officers, employees, agents, successors and assigns
and any Person claiming by or through any of them, as the case may be, from and
against:
(a) all Losses resulting from or arising out of (i) any breach
of any representation or warranty made by Seller in this Agreement or in the
Transactions Documents delivered by Seller, (ii) any breach of any covenant,
agreement or obligation of Seller contained in this Agreement or in the
Transaction Documents delivered by Seller, (iii) any act or omission of Seller
with respect to, or any event or circumstance related to, the ownership or
operation of the Assets or the conduct of the Business, which act, omission,
event or circumstance occurred or existed prior to or at the Closing Date,
without regard to whether a claim with respect to such matter is asserted before
or after the Closing Date, including any matter described on SCHEDULE 5.13, (iv)
any liability or obligation not included in the Assumed Liabilities, (v) any
title defect Seller fails to eliminate as an exception from a title insurance
commitment referred to in SECTION 7.7.1, (vi) any claim that the transactions
contemplated by this Agreement violates WARN, or any similar state or local law
or any bulk transfer or fraudulent conveyance laws of any jurisdiction, (vii)
the presence, generation, removal or transportation of a Hazardous Substance on
or from any of the Real Property prior to the Closing Date, including the costs
of removal or clean-up of such Hazardous Substance and other compliance with the
provisions of any Environmental Laws (whether before or after Closing), or
(viii) any rate refund ordered by any Governmental Authority for periods prior
to the Closing Date; and
(b) all claims, actions, suits, proceedings, demands, judgments,
assessments, fines, interest, penalties, costs and expenses (including
settlement costs and reasonable legal, accounting, experts' and other fees,
costs and expenses) incident or relating to or resulting from any of the
foregoing.
In the event that an indemnified item arises under both clause (a)(i)
and under one or more of clauses (a)(ii) through (a)(viii) of this SECTION 11.2,
Buyer's rights to pursue its claim under clauses (a)(ii) through (a)(viii), as
applicable, will exist notwithstanding the expiration of the Survival Period
applicable to such claim under clause (a)(i).
11.3 Indemnification by Buyer. Buyer will indemnify and hold
------------------------
harmless Seller and Seller's shareholders, directors, officers, employees,
agents, successors and assigns, and any Person claiming by or through any of
them, as the case may be, from and against:
(a) all Losses resulting from or arising out of (i) any breach
of any representation or warranty made by Buyer in this Agreement or in the
Transaction Documents delivered by Buyer, (ii) any breach of any covenant,
agreement or obligation of Buyer contained in this Agreement or in the
Transaction Documents delivered by Buyer or (iii) the failure by Buyer to
perform any of its obligations in respect of the Assumed Liabilities; and
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(b) all claims, actions, suits, proceedings, demands,
judgments, assessments, fines, interest, penalties, costs and expenses
(including settlement costs and reasonable legal, accounting, experts' and other
fees, costs and expenses) incident or relating to or resulting from any of the
foregoing.
In the event that an indemnified item arises under both clause (a)(i) and under
one or more of clauses (a)(ii) or (a)(iii) of this SECTION 11.3, Seller's rights
to pursue its claim under clauses (a)(ii) or (a)(iii), as applicable, will exist
notwithstanding the expiration of the Survival Period applicable to such claim
under clause (a)(i).
11.4 Third Party Claims. Promptly after the receipt by any party of
------------------
notice of any claim, action, suit or proceeding by any Person who is not a party
to this Agreement (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 (i) the Indemnifying Party has
agreed to pay such fees and expenses, (ii) any relief other than the payment of
money damages is sought against the Indemnified Party or (iii) 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 or (B) in the case of any
Action relating to the Indemnified Party's liability for any Tax, if the effect
of such settlement would be an increase in the liability of the Indemnified
Party for the payment of any Tax for any period beginning after the Closing
Date, unless the Indemnified Party consents in writing to such compromise or
settlement.
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11.5 Limitations on Indemnification - Seller. Seller will not be
---------------------------------------
liable for indemnification arising solely under SECTION 11.2(a)(i) for (a) any
Losses of or to Buyer or any other person entitled to indemnification from
Seller or (b) any claims, actions, suits, proceedings, demands, judgments,
assessments, fines, interest, penalties, costs and expenses (including
settlement costs and reasonable legal, accounting, experts' and other fees,
costs and expenses) incidental 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 11.5 as "Buyer Damages") unless the
amount of Buyer Damages for which Seller would, but for the provisions of this
SECTION 11.5, be liable exceeds, on an aggregate basis, $50,000, in which case
Seller will be liable for all such Buyer Damages, which will be due and payable
within 15 days after Seller's receipt of a statement therefor.
11.6 Limitations on Indemnification - Buyer. Buyer will not be
--------------------------------------
liable for indemnification arising solely under SECTION 11.3(a)(i) for (a) any
Losses of or to Seller or any other person entitled to indemnification from
Buyer or (b) any claims, actions, suits, proceedings, demands, judgments,
assessments, fines, interest, penalties, costs and expenses (including
settlement costs and reasonable legal, accounting, experts' and other fees,
costs and expenses) incidental 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 11.6 as "Seller Damages") unless the amount of
Seller Damages for which Buyer would, but for the provisions of this SECTION
11.6, be liable exceeds, on an aggregate basis, $50,000, in which case Buyer
will be liable for all such Seller Damages, which will be due and payable within
15 days after Buyer's receipt of a statement therefor.
SECTION 12. MISCELLANEOUS.
12.1 Parties Obligated and Benefited. Subject to the limitations
-------------------------------
set forth below, this Agreement will be binding upon the parties and their
respective assigns and successors in interest and will inure solely to the
benefit of the parties and their respective assigns and successors in interest,
and no other Person will be entitled to any of the benefits conferred by this
Agreement. Without the prior written consent of the other party, neither party
may assign any of its rights under this Agreement or delegate any of its duties
under this Agreement, except as described in the following sentence. Seller
agrees that Buyer will have the right to assign its right to purchase the Assets
under this Agreement to Norwest Bank Colorado, National Association, acting as a
Qualified Intermediary (as such term is used in Treas. Reg. Section 1.1031(k)-
1(g)(4), and that this Agreement constitutes notice to Seller of such
assignment, which assignment Buyer will make effective immediately prior to
Closing (provided no such assignment will relieve Buyer of any obligations under
this Agreement).
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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 Buyer at:
c/o Tele-Communications, Inc.
0000 XXX Xxxxxxx
Xxxxxxxxx Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxxx
Telecopy: (000) 000-0000
With a copy similarly addressed to the attention of Legal
Department, and
With a copy to:
Xxxxxxx & Xxxxxx LLC
000 Xxxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
To Seller at:
c/x Xxxxx Intercable, Inc.
0000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: President
Telecopy: (000) 000-0000
With a copy similarly addressed to the attention of Legal
Department.
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 12.2. 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, or on the third Business Day after mailing in accordance with this
Section, except that any notice of a change of address will be effective only
upon actual receipt.
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12.3 Attorneys' Fees. In the event of any action or suit based upon or
---------------
arising out of any alleged breach by any party of any representation, warranty,
covenant or agreement contained in this Agreement, the prevailing party will be
entitled to recover reasonable attorneys' fees and other costs of such action or
suit from the other party.
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 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 COLORADO, WITHOUT REGARD TO THE CONFLICTS OF LAWS RULES OF
COLORADO.
12.7 Terms. Terms used with initial capital letters will have the
-----
meanings specified, applicable to both singular and plural forms, for all
purposes of this Agreement. The word "include" and derivatives of that word are
used in this Agreement in an illustrative sense rather than limiting sense.
12.8 Rights Cumulative. All rights and remedies of each of the parties
-----------------
under this Agreement will be cumulative, and the exercise of one or more rights
or remedies will not preclude the exercise of any other right or remedy
available under this Agreement or applicable law.
12.9 Further Actions. Seller and Buyer will execute and deliver to the
---------------
other, from time to time at or after the Closing, for no additional
consideration and at no additional cost to the requesting party, such further
assignments, certificates, instruments, records, or other documents, assurances
or things as may be reasonably necessary to give full effect to this Agreement
and to allow each party fully to enjoy and exercise the rights accorded and
acquired by it under this Agreement.
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12.10 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.
12.11 Late Payments. If either party fails to pay the other 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.
12.12 Counterparts. This Agreement may be executed in counterparts,
------------
each of which will be deemed an original.
12.13 Entire Agreement. This Agreement (including the Schedules and
----------------
Exhibits referred to in this Agreement, which are incorporated in and constitute
a part of this Agreement) and the Transaction Documents contain 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.
12.14 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.
12.15 Construction. This Agreement has been negotiated by Buyer and
------------
Seller 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.
12.16 Expenses. Except as otherwise expressly provided in this
--------
Agreement, 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.
35
12.17 Risk of Loss; Condemnation.
--------------------------
12.17.1 Seller will bear the risk of any loss or damage to the
Assets resulting from fire, theft or other casualty (except reasonable wear and
tear) at all times prior to the Closing. If any such loss or damage is
sufficiently substantial so as to preclude or prevent resumption of normal
operations of any material portion of a System or the replacement or restoration
of the lost or damaged property within 30 days from the occurrence of the event
resulting in such loss or damage, Seller will immediately notify Buyer in
writing of that fact and Buyer, at any time within 10 days after receipt of such
notice, may elect by written notice to Seller either (a) to waive such defect
and proceed toward consummation of the transaction in accordance with terms of
this Agreement or (b) terminate this Agreement. If Buyer elects to so terminate
this Agreement, Buyer and Seller will stand fully released and discharged of any
and all obligations under this Agreement. If Buyer elects to consummate the
transactions contemplated by this Agreement notwithstanding such loss or damage
and does so, there will be no adjustment in the consideration payable to Seller
on account of such loss or damage but all insurance proceeds payable as a result
of the occurrence of the event resulting in such loss or damage (to the extent
not used to replace or restore such lost or damaged property) will be delivered
by Seller to Buyer, or the rights to such proceeds will be assigned by Seller to
Buyer if not yet paid over to Seller.
12.17.2 If, prior to the Closing, any part of or interest in the
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 Seller or Buyer
that it intends to condemn all or any part of or interest in the Assets (such
event being called, in either case, a "Taking"), and such Taking involves a
material part of or interest in the Assets, then Buyer may terminate this
Agreement. If Buyer does not elect or have the right to terminate this
Agreement, then (a) Buyer will have the sole right, in the name of Seller, if
Buyer so elects, to negotiate for, claim, contest and receive all damages with
respect to the Taking, (b) Seller will be relieved of its obligation to convey
to Buyer the Assets or interests that are the subject of the Taking, (c) at the
Closing Seller will assign to Buyer all of Seller's rights to all damages
payable with respect to such Taking and will pay to Buyer all damages previously
paid to Seller with respect to the Taking and (d) following the Closing, Seller
will give Buyer such further assurances of such rights and assignment with
respect to the taking as Buyer may from time to time reasonably request.
36
