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PARTNERSHIP INTEREST PURCHASE AGREEMENT
BY AND BETWEEN
TCID OF PUERTO RICO, INC.
AND
XXXXXX COMMUNICATIONS CORP.
DATED AS OF
January ____, 1997
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1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 AFFILIATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 BASIC SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 BUSINESS DAY . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.6 CONSULTING AGREEMENT . . . . . . . . . . . . . . . . . . . . . . 2
1.7 CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.8 CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.9 ENCUMBRANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.10 ENVIRONMENTAL LAW . . . . . . . . . . . . . . . . . . . . . . . 3
1.11 EQUIPMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.12 EQUIVALENT BASIC SUBSCRIBERS (OR EBSS) . . . . . . . . . . . . . 3
1.13 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.14 EXPANDED BASIC SERVICE . . . . . . . . . . . . . . . . . . . . . 4
1.15 GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.16 GOVERNMENTAL AUTHORITY . . . . . . . . . . . . . . . . . . . . . 4
1.17 GOVERNMENTAL PERMITS . . . . . . . . . . . . . . . . . . . . . . 4
1.18 HAZARDOUS SUBSTANCES . . . . . . . . . . . . . . . . . . . . . . 4
1.19 INDEMNIFIED LIABILITIES . . . . . . . . . . . . . . . . . . . . 5
1.20 INDEMNIFIED LOSSES . . . . . . . . . . . . . . . . . . . . . . . 5
1.21 INTANGIBLES . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.22 KNOWLEDGE . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.23 LEGAL REQUIREMENT . . . . . . . . . . . . . . . . . . . . . . . 5
1.24 LOAN AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.25 MANAGEMENT AGREEMENT . . . . . . . . . . . . . . . . . . . . . . 5
1.26 PARTNERSHIP AGREEMENT . . . . . . . . . . . . . . . . . . . . . 5
1.27 PARTNERSHIP INTERESTS . . . . . . . . . . . . . . . . . . . . . 5
1.28 PARTNERSHIP NOTE . . . . . . . . . . . . . . . . . . . . . . . . 5
1.29 PAY TV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.30 PERMITTED ENCUMBRANCES . . . . . . . . . . . . . . . . . . . . . 6
1.31 PERSON . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.32 PLEDGE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . 6
1.33 REAL PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.34 REQUIRED CONSENTS . . . . . . . . . . . . . . . . . . . . . . . 6
1.35 SERVICE AREA . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.36 STATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.37 SYSTEM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.38 TCID NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.39 THIRD PARTY . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.40 OTHER DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . 7
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2. SALE OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.1 PURCHASE AND SALE OF ASSETS . . . . . . . . . . . . . . . . . . . 8
3. CONSIDERATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.1 CONSIDERATION . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.2 ADJUSTMENTS TO PURCHASE PRICE . . . . . . . . . . . . . . . . . . 8
4. REPRESENTATIONS ND WARRANTIES OF SELLER . . . . . . . . . . . . . . . . . 9
4.1 ORGANIZATION AND QUALIFICATION . . . . . . . . . . . . . . . . . 9
4.2 AUTHORITY AND VALIDITY . . . . . . . . . . . . . . . . . . . . . 10
4.3 NO BREACH OR VIOLATION . . . . . . . . . . . . . . . . . . . . . 10
4.4 PARTNERSHIP INTERESTS . . . . . . . . . . . . . . . . . . . . . . 11
4.5 ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.6 GOVERNMENTAL PERMITS . . . . . . . . . . . . . . . . . . . . . . 11
4.7 CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.8 REAL PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.9 ENVIRONMENTAL MATTERS . . . . . . . . . . . . . . . . . . . . . . 12
4.10 COMPLIANCE WITH LAW . . . . . . . . . . . . . . . . . . . . . . 13
4.11 PATENTS, TRADEMARKS, AND COPYRIGHTS . . . . . . . . . . . . . . 14
4.12 FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . 15
4.13 LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . 15
0.00.XXX RETURNS; OTHER REPORTS . . . . . . . . . . . . . . . . . . . 15
4.15 EMPLOYMENT MATTERS . . . . . . . . . . . . . . . . . . . . . . . 16
4.16 FINDERS AND BROKERS . . . . . . . . . . . . . . . . . . . . . . 16
4.17 DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5. BUYERS REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . 17
5.1 ORGANIZATION AND QUALIFICATION . . . . . . . . . . . . . . . . . 17
5.2 AUTHORITY AND VALIDITY . . . . . . . . . . . . . . . . . . . . . 17
5.3 NO BREACH OR VIOLATION . . . . . . . . . . . . . . . . . . . . . 17
5.4 FINDERS AND BROKERS . . . . . . . . . . . . . . . . . . . . . . . 18
6. ADDITIONAL COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.1 ACCESS TO PREMISES AND RECORDS . . . . . . . . . . . . . . . . . 18
6.2 CONTINUITY AND MAINTENANCE OF OPERATIONS; FINANCIAL STATEMENTS . 18
6.3 REQUIRED CONSENTS . . . . . . . . . . . . . . . . . . . . . . . . 19
6.4 HSR NOTIFICATION . . . . . . . . . . . . . . . . . . . . . . . . 20
6.5 NO SHOPPING . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.6 NOTIFICATION OF CERTAIN MATTERS . . . . . . . . . . . . . . . . . 20
6.7 RISK OF LOSS; CONDEMNATION . . . . . . . . . . . . . . . . . . . 21
6.8 LIEN AND JUDGEMENT SEARCHES . . . . . . . . . . . . . . . . . . . 21
6.9 TRANSFER TAXES . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.10 NONCOMPETITION AGREEMENT . . . . . . . . . . . . . . . . . . . . 22
6.11 UPDATED SCHEDULES . . . . . . . . . . . . . . . . . . . . . . . 22
6.12 SATISFACTION OF CONDITIONS . . . . . . . . . . . . . . . . . . . 22
6.13 EMPLOYEE MATTERS . . . . . . . . . . . . . . . . . . . . . . . . 22
6.14 CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . . . . 22
6.15 BUYER COOPERATION . . . . . . . . . . . . . . . . . . . . . . . 23
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6.16 TAX RETURNS . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.17 INCENTIVE PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . 23
6.18 PHASE I REPORTS . . . . . . . . . . . . . . . . . . . . . . . . 24
6.19 PROMISSORY NOTES . . . . . . . . . . . . . . . . . . . . . . . . 24
7. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8. CONDITIONS TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . 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 . . . . . . . . . . . . . . . 27
8.4 WAIVER OF CONDITIONS . . . . . . . . . . . . . . . . . . . . . . 28
9. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.1 EVENTS OF TERMINATION . . . . . . . . . . . . . . . . . . . . . . 28
9.2 LIABILITIES IN EVENT OF TERMINATION . . . . . . . . . . . . . . . 28
9.3 PROCEDURE UPON TERMINATION . . . . . . . . . . . . . . . . . . . 28
10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION . . . . . . . 28
10.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . 28
10.2 INDEMNIFICATION BY SELLER . . . . . . . . . . . . . . . . . . . 29
10.3 INDEMNIFICATION BY BUYER . . . . . . . . . . . . . . . . . . . . 30
10.4 THIRD PARTY CLAIMS . . . . . . . . . . . . . . . . . . . . . . . 30
10.5 LIMITATIONS ON INDEMNIFICATION - SELLER . . . . . . . . . . . . 31
10.6 FLOOR ON INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . 31
10.7 CAPS ON INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . 32
10.8 RELEASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.9 LIMITATION ON REMEDIES . . . . . . . . . . . . . . . . . . . . . 32
11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.1 PARTIES OBLIGATED AND BENEFITED . . . . . . . . . . . . . . . . 33
11.2 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.3 ATTORNEYS' FEES . . . . . . . . . . . . . . . . . . . . . . . . 34
11.4 RIGHT TO SPECIFIC PERFORMANCE . . . . . . . . . . . . . . . . . 34
11.5 WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.6 CAPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.7 CHOICE OF LAW . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.8 TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.9 RIGHTS CUMULATIVE . . . . . . . . . . . . . . . . . . . . . . . 34
11.10 FURTHER ACTIONS . . . . . . . . . . . . . . . . . . . . . . . . 34
11.11 TIME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.12 LATE PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.13 COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.14 ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . 35
11.15 SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.16 CONSTRUCTION . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.17 EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.18 BUY/SELL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . 35
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SCHEDULES
SCHEDULE 1 BUSINESS
SCHEDULE 2 GOVERNMENT PERMITS
SCHEDULE 3 CONTRACTS
SCHEDULE 4 REQUIRED CONSENTS
SCHEDULE 5 EQUIPMENT
SCHEDULE 6 REAL PROPERTY
SCHEDULE 7 SECURITY INTERESTS
SCHEDULE 8 COMPLIANCE WITH LAW
SCHEDULE 9 EXCEPTIONS TO FINANCIAL STATEMENTS
SCHEDULE 10 PROCEEDINGS AND JUDGMENTS
SCHEDULE 11 TAXES
SCHEDULE 12 EMPLOYEE MATTERS
EXHIBIT A PARTNERSHIP AGREEMENT
EXHIBIT B ASSIGNMENT AND ASSUMPTION OF PARTNERSHIP INTERESTS
EXHIBIT C NONCOMPETITION AGREEMENT
EXHIBIT D SELLER'S AFFIDAVIT
EXHIBIT E TERMINATION AGREEMENT
EXHIBIT F SELLER'S OPINION
EXHIBIT G BUYER'S OPINION
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PARTNERSHIP INTEREST PURCHASE AGREEMENT
This Partnership Interest Purchase Agreement ("Agreement") is made as of
the __ day of January, 1997, by and between TCID of Puerto Rico, Inc., a Nevada
corporation ("Buyer"), and Xxxxxx Communications Corp., a Delaware corporation
("Seller").
RECITALS
Caguas/Humacao Cable Systems, a Connecticut general partnership (the
"Partnership"), is the owner and operator of certain cable television systems
serving subscribers in and around Caguas, Gurabo, San Xxxxxxx, Humacao, Juncos,
Las Piedras, Yabucoa, Cayey, Cidra, Aibonito, Comerio, Barranquitas, Narajito,
and Aguas Buenas, Puerto Rico.
Buyer is the holder of a 50% general partnership interest in the
Partnership.
Upon formation of the Partnership, Seller, the managing general partner,
held a 30% general partnership interest in the Partnership.
Upon formation of the Partnership, PGC, Inc., a Puerto Rico corporation
("PGC"), held a 15% general partnership interest in the Partnership.
Upon formation of the Partnership, Rowal Electronics Company, Inc., a
Puerto Rico corporation ("REI"), held a 5% general partnership interest in the
Partnership. Each of Seller, Buyer, PGC and REI are referred to herein as the
"Partners."
Pursuant to an Acquisition Agreement, dated as of July 15, 1986, among
Xxxxxxx Xxxxxxxx and Xxxxx Xxxxx xx Xxxxxxxx, Xxxxxx X. Xxxxxx and Xxxxxxx
Xxxxx xx Xxxxxx and Xxxxxxx X. Xxxxxx ("Xxxxxx"), Xxxxxx (or his assignee) had
an option ("Option") to acquire the general partnership interests in the
Partnership held by PGC and REI (the "Other Partners"). On June 8, 1987,
Xxxxxx assigned his rights under the Option to Seller. Seller exercised the
Option on December 23, 1996 and acquired the general partnership interests held
by the Other Partners. Seller currently is the holder of a 50% general
partnership interest in the Partnership.
Seller desires to sell to Buyer, and Buyer desires to buy from
Seller, all of Seller's partnership interests in the Partnership after the
exercise of the Option, free and
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clear of all liens other than Permitted Encumbrances, on the terms and
conditions set forth herein.
AGREEMENT
In consideration of the above recitals and the mutual agreements stated
in this Agreement, the parties agree as follows:
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
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
claims, real and personal, tangible and intangible, of every type and
description that are owned, leased, held, used or useful in the Partnership,
including Governmental Permits, Intangibles, Contracts, Equipment, Real
Property and deposits relating to the Business that are held by third parties
for the account of the Partnership or for security for the Partnership's
performance of its obligations.
1.3. Basic Services. The lowest tier of service offered to
subscribers of a System for which a subscriber pays a fixed monthly fee to the
partnership.
1.4. Business. The cable television business conducted by the
Partnership on the date of this Agreement through one or more Systems in and
around the Service Area, as described on SCHEDULE 1.
1.5. Business Day. Any day other than Saturday, Sunday or a day on
which banking institutions in Denver, Colorado, Caguas or Humacao, Puerto Rico
or New York, New York are required or authorized to be closed.
1.6. Consulting Agreement. The Consulting Agreement, dated as of June
8, 1987, among the Partnership and the Other Partners.
1.7. Contracts. All contracts and agreements, other than 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 3.
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1.8. Closing. The consummation of the transactions contemplated by
this Agreement, as described in Section 7, the date of which is referred to as
the Closing Date.
1.9. Encumbrance. Any mortgage, lien, security interest, security
agreement, conditional sale or other title retention agreement, limitation,
pledge, option, charge, assessment, restrictive agreement, restriction,
encumbrance, adverse interest, restriction on transfer or any exception to or
defect in title or other ownership interest (including reservations, rights of
way, possibilities of reverter, encroachments, easements, rights of entry,
restrictive covenants, leases and licenses).
1.10. Environmental Law. Any applicable Legal Requirement relating to
pollution or 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.
1.11. Equipment. All electronic devices, trunk and distribution
coaxial and 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, as described on
SCHEDULE 5 (and with respect to leased Equipment, on SCHEDULE 3).
1.12. Equivalent Basic Subscribers (or EBSs). As of any date of
determination and for each franchise area served by a System, the sum of (a)
the total number of private residential customer accounts that are billed by
individual unit (regardless of whether such accounts are in single-family homes
or in individually billed units in apartment buildings and other multi-unit
buildings) (exclusive of (i) "second connects" and "additional outlets" as such
terms are commonly understood in the cable television industry, and (ii)
accounts that are not charged or are charged less than the standard monthly
service fees and charges then in effect for such System for Basic Services) for
Basic Services and (b) the quotient of (i) the total monthly xxxxxxxx for sales
of Basic Services and Expanded Basic Services by such System during the most
recent month ended prior to the date of calculation to commercial, bulk-billed
and other accounts not billed by individual unit (whether on a discounted or
undiscounted basis), but excluding xxxxxxxx in excess of a single month's
charges for any account, divided by (ii) the standard monthly combined rate
(without discount of any kind) charged to individually billed subscribers for
Basic Services and Expanded Basic Services in effect during such month, which
monthly rate will not be less than the rates specified in SCHEDULE 1. For
purposes of calculating the number of EBSs, there will be excluded all
individually
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billed accounts whose account is, and all xxxxxxxx to any commercial, bulk-
billed and other accounts not billed by individual unit that are, more than 60
days past due from the invoice date in the payment of any amount in excess of
$5.00.
1.13. ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
1.14. Expanded Basic Service. Any video programming provided over a
cable television system, regardless of service tier other than Basic Services
and video programming offered on a per channel or per program basis.
1.15. GAAP. Generally accepted accounting principles as in effect from
time to time in the United States of America, consistently applied.
1.16. Governmental Authority. (a) The United States of America, (b)
any State, commonwealth, territory or possession of the United States of
America and any political subdivision thereof (including counties,
municipalities and the like), (c) any foreign (as to the United States of
America) sovereign entity and any political subdivision thereof, or (d) any
agency, authority or instrumentality of any of the foregoing, including any
court, tribunal, department, bureau, commission or board.
1.17. Governmental Permits. All franchises, approvals, authorizations,
permits, licenses, easements, registrations, qualifications, leases, variances
and similar rights obtained from any Governmental Authority, including those
set forth on SCHEDULE 2.
1.18. Hazardous Substances. Any pollutant, contaminant, chemical,
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.
Section 2601 et seq., (d) any materials or substances designated as "hazardous
substances" pursuant to the Clean Water Act, 33 U.S.C. Section 1251 et seq.,
(e) "economic poison," as defined in the Federal Insecticide, Fungicide and
Rodenticide Act, 7 U.S.C. Section 135 et seq., (f) "chemical substance," "new
chemical substance" or "hazardous chemical substance or mixture" pursuant to
the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq., (g)
"hazardous substances" pursuant to the Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq. and (h)
"hazardous waste" pursuant to the Resource Conservation and Recovery Act, 42
U.S.C. Section 6901 et seq.
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1.19. Indemnified Liabilities. (A) The Partnership's obligations to
subscribers of the Business for the delivery of cable television service to
subscribers of the Business after the Closing Date; (B) liabilities and
obligations shown on the financial statements of the Partnership as of November
30, 1996; (C) liabilities and obligations of the Partnership arising in the
ordinary course since November 30, 1996 and not in violation of Seller's
obligations hereunder; and (D) obligations accruing and relating to periods
after the Closing Date under Governmental Permits listed on SCHEDULE 2 (to the
extent that such Governmental Permits are transferable) and Contracts listed on
SCHEDULE 3.
1.20. Indemnified Losses. Seller's Indemnified Losses and Buyer's
Indemnified Losses.
1.21. Intangibles. All intangible assets, including subscriber lists,
accounts receivable, claims, patents, copyrights and goodwill, if any, owned,
used or held for use in the Business.
1.22. Knowledge. The actual knowledge of a particular matter of
Xxxxxxx X. Xxxxxx or Xxxx Xxxxxx.
1.23. Legal Requirement. Any statute, ordinance, code, law, rule,
regulation, order or other requirement, standard or procedure enacted, adopted
or applied by any Governmental Authority, including common law.
1.24. Loan Agreement. Amended and Restated Loan Agreement dated July
30, 1993 (effective January 1, 1993) between the Partnership and Philips Credit
Company, which was subsequently assigned to Lazard Freres & Co. LLC ("Lazard")
on October 26, 1995.
1.25. Management Agreement. The Management Agreement, dated as of June
8, 1987, among the Partnership and the Partners.
1.26. Partnership Agreement. The Partnership Agreement of the
Partnership dated February 14, 1987, as amended by Amendment No. 1 dated June
8, 1987 among the Partners and Amendment No. 2 dated November 6, 1987, a copy
of which is attached hereto as Exhibit A.
1.27. Partnership Interests. As of the date of this Agreement, a
fifty percent general partnership interest in the Partnership, which represents
all of the partnership interests in the Partnership owned by Seller.
1.28. Partnership Note. The Promissory Note, dated June 8, 1987, from
the Partnership to Seller in the principal amount of $167,000.
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1.29. Pay TV. Premium programming services selected by and sold to
subscribers on an a la carte basis for monthly fees in addition to the fee for
Basic Services or Expanded Basic Services.
1.30. Permitted Encumbrances. The following Encumbrances: (a) liens
for taxes, assessments and governmental charges not yet due and payable; (b)
zoning laws and ordinances and similar Legal Requirements; (c) rights reserved
to any Governmental Authority to regulate the affected property; (d) as to Real
Property interests, any easements, rights-of-way, servitudes, permits,
restrictions and minor imperfections or irregularities in title which are
reflected in the public records and which do 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 title to such Real
Property; (e) all restrictions, liabilities and obligations under the
Partnership Agreement; (f) all liens, security interests, mortgages and other
security arrangements relating to the Assets which are held by Lazard in
connection with the Loan Agreement; (g) the following encumbrances: (i)
statutory liens of carriers, warehousemen, mechanics, materialmen and other
similar liens imposed by law that are incurred in the ordinary course; and (ii)
liens incurred in the ordinary course in connection with workers' compensation,
unemployment insurance and other types of social security; and those
encumbrances set forth in SCHEDULE 7 attached hereto; provided that
classification of any item as a Permitted Encumbrance will not affect any
liability Seller may have for such item, including pursuant to any indemnity
obligation under this Agreement.
1.31. Person. Any natural person, corporation, partnership, trust,
unincorporated organization, association, limited liability company,
Governmental Authority or other entity.
1.32. Pledge Agreement. The Partnership Pledge and Assignment
Agreement dated June 8, 1987 among the Partnership, the Partners and Philips
Credit Corporation, as assigned to Lazard on October 26, 1995.
1.33. Real Property. All Assets consisting of realty, including
appurtenances, improvements and fixtures located on such realty (including
cable plant), and any other interests in real property, including fee
interests, leasehold interests and easements, wire crossing permits, rights of
entry (except agreements related to multiple dwelling units) described on
SCHEDULE 6.
1.34. Required Consents. All franchises, licenses, authorizations,
approvals and consents required under Governmental Permits, Contracts or
otherwise for Buyer to acquire the Partnership Interests from Seller.
1.35. Service Area. The area in which the Partnership operates the
Business, specifically in and around Caguas, Gurabo, San Xxxxxxx, Humacao,
Juncos, Las Piedras
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and Yabucoa, Cayey, Cidra, Aibonito, Comerio, Barranquitas, Nararjito, Aguas
Buenas and Orocovis, Puerto Rico.
1.36. State. The fifty states of the United States and the
Commonwealth of Puerto Rico.
1.37. System. A complete cable television reception and distribution
system 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.
1.38. TCID Note. The note dated as of June 8, 1987, payable by Xxxxxx
to TCI Development Corp. in the principal amount of $83,000.
1.39. Third Party. Any Person other than Seller or Buyer and its
Affiliates.
1.40. Other Definitions. The following terms are defined in the
Sections indicated:
Term Section
---- -------
Action 10.4
Antitrust Division 6.4
Buyer's Indemnified Losses 10.3
Closing Date 1.11
Closing Incentive 6.17
XXXX 3.2.1
FCC 4.6
Financial Statements 4.12
FTC 6.4
Holdback Amount 3.1
Holdback Base 6.17
Holdback Incentive 6.17
HSR Act 6.4
Incentive Base 6.17
Incentive Plan 6.17
Indemnified Party 10.4
Indemnifying Party 10.4
Xxxxxx Recitals
Lazard 1.26
Loan Agreement Recitals
1992 Cable Act 4.10.4
Option Recitals
Other Partners Recitals
Partnership Recitals
PGC Recitals
Purchase Note 6.19
Purchase Price 3.1
REI Recitals
Rate Regulation Documents 4.10.4
Seller's Indemnified Losses 10.2
Taking 6.7.2
Transaction Documents 4.2
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2. SALE OF ASSETS.
2.1. Purchase and Sale of Partnership Interests. 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 Partnership Interests.
3. CONSIDERATION.
3.1. Purchase Price. Buyer shall pay to Seller for the Partnership
Interests an amount equal to Thirteen Million Dollars ($13,000,000) (the
"Purchase Price"), subject to adjustment as provided in Section 3.2. Such
consideration will be paid by wire transfer of immediately available funds in
consideration of the sale of the Partnership Interests to Buyer as follows: (a)
Twelve Million, Six Hundred and Nineteen Thousand Two Dollars ($12,619,002),
less 50% of the Closing Incentive as provided in Section 6.17 and less
principal and accrued interest due under the TCID Note, will be paid on the
Closing Date, and (b) Three Hundred Eighty Thousand Nine Hundred Ninety-Eight
Dollars ($380,998) (the "Holdback Amount"), subject to adjustment as provided
below and to Seller's obligation under Section 10.2, will be paid on the date
or dates prescribed by Section 3.2.
3.2. Adjustments to Purchase Price. The Holdback Amount, subject to
adjustment as provided below, shall be payable as follows:
3.2.1. After Closing, Buyer shall commence negotiations with
Centro Recaudaciones de Impuestos Municipiales ("XXXX") to determine the
Partnership's liability for property taxes for all periods prior to Closing and
shall pay the amount agreed upon with XXXX (the "Agreed Taxes"). If the amount
of Agreed Taxes exceeds $2,098,422 [amount of accrual], Buyer shall apply a
portion of the Holdback Amount equal to 50% of such excess ("Seller's Tax
Payment") to pay the Agreed Taxes. Within 10 Business Days after the Agreed
Taxes are paid, Buyer shall pay to Seller $201,561 less the Seller's Tax
Payment plus interest calculated pursuant to Section 3.2 less 50% of
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the Holdback Incentive due to Xxxx X. Xxxxxx and Xxxxxxxxx Xxxxx pursuant to
Section 6.17.
3.2.2. If from and after Closing any claim is made against the
Business for copyright royalties, interest or penalties for any copyright
period ending on or before the Closing Date (the "Pre-Closing Copyright Fees"),
Buyer shall apply a portion of the Holdback Amount equal to 50% of the Pre-
Closing Copyright Fees ("Seller's Copyright Fee") to pay the Pre-Closing
Copyright Fees.
3.2.3. On the first anniversary of the Closing Date, Buyer shall
pay to Seller the Holdback Amount less any amounts previously paid under
Section 3.2.1 (excluding interest paid under Section 3.2.1) and less the amount
of Seller's Copyright Fees, if any, plus interest calculated pursuant to
Section 3.2.4 and less 50% of the Holdback Incentive due to Xxxx X. Xxxxxx and
Xxxxxxxxx Xxxxx pursuant to Section 6.17.
3.2.4. The portions of the Holdback Amount paid to Seller
pursuant to Sections 3.2.1, 3.2.2 or 3.2.3 shall bear interest from and
including the Closing Date through the day prior to the date paid to Seller at
5% per annum.
4. REPRESENTATIONS AND WARRANTIES OF SELLER.
To induce Buyer to enter into this Agreement, Seller represents and
warrants to Buyer, as of the date of this Agreement and as of the Closing, as
follows:
4.1. Organization and Qualification. Seller is a corporation duly
organized, validly existing and in good standing under the laws of Delaware.
The Partnership is a general partnership duly organized and validly existing
under the laws of Connecticut and has all requisite partnership power and
authority to own, lease and use the Assets as they are currently owned, leased
and used and to conduct the Business as it is currently conducted. The
Partnership is duly qualified or licensed to do business and is in good
standing under the laws of Puerto Rico. Other than this Agreement, the Loan
Agreement and all security agreements and pledge agreements entered into
pursuant to the Loan Agreement, the Partnership Agreement, the Governmental
Permits, the Management Agreement, and the Contracts listed on Schedule 3,
there are no other agreements, commitments or understandings relating to the
ownership of the Partnership Interests or management, control or operation of
the Partnership. The Partnership has no subsidiaries and owns no capital stock
or other equity securities or interests of or in any other entity, partnership
or joint venture. Other than the Governmental Permits, the Loan Agreement and
all security agreements and pledge agreements entered into pursuant to the Loan
Agreement, the Partnership Interests are not subject to any Encumbrance. The
sole business of the Partnership is the operation and management of the
Systems, and it holds no assets or liabilities material to the Partnership
other than the assets and liabilities relating to the Systems as set forth on
the Schedules hereto. Neither Seller nor the Partnership is a participant in
any joint venture, partnership or similar arrangement with
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any other person or party with respect to the Systems or any part of the
Assets, other than the Partnership. The outstanding Partnership Interests of
the Partnership are held as follows:
Partner Percentage Interest
------- -------------------
Seller 50% general
Buyer 50% general
4.2. Authority and Validity. Seller 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 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. 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 authorized by all requisite
corporate action of Seller, including shareholder consent. This Agreement is,
and when executed and delivered by Seller the Transaction Documents will be,
the valid and binding obligation of Seller, enforceable against Seller in
accordance with its terms, except insofar as enforceability may be affected by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
now or hereafter in effect affecting creditors' rights generally or by
principles governing the availability of equitable remedies.
4.3. No Breach or Violation. Subject to obtaining the Required
Consents, all of which are listed on SCHEDULE 4, and the notification and
expiration or earlier termination of the waiting period under the HSR Act, the
execution, delivery and performance of this Agreement and the Transaction
Documents to which Seller is a party by Seller will not: (a) violate any
provision of the charter or bylaws of Seller; (b) violate any Legal
Requirement; (c) require any consent, approval or authorization of, or any
filing with or notice to, any Person; or (d) (i) violate, conflict with or
constitute a breach of or default under, (ii) permit or result in the
termination, suspension or modification of, (iii) result in the acceleration of
(or give any Person the right to accelerate) the performance of Seller under,
or (iv) result in the creation or imposition of any Encumbrance under any
Contract or any other instrument evidencing any of the Assets or any instrument
or other agreement to which Seller or the Partnership is a party or by which
Seller or the Partnership 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, Seller or the Partnership or on the ability of Seller to perform
its obligations under this Agreement or the Transaction Documents to which
Seller is a party.
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4.4 Partnership Interests. Seller is the record and beneficial owner
of a 50% Partnership Interest, free and clear of all Encumbrances, except for
(a) Permitted Encumbrances and (b) restrictions stated in the Governmental
Permits, with full power, right and authority to sell and deliver the
Partnership Interests pursuant to this Agreement. Upon the sale of the
Partnership Interests in accordance with this Agreement, Buyer will be the
record and beneficial owner of the Partnership Interests, free and clear of any
and all Encumbrances except for Permitted Encumbrances, restrictions stated in
the Governmental Permits and any Encumbrances created or permitted to exist by
Buyer. Except for the partnership interests in the Partnership held by Buyer
and Seller and the rights of the pledgee under the Pledge Agreements, there are
no other partnership interests or other equity securities of the Partnership
outstanding and there are no outstanding (i) securities convertible into or
exchangeable for any of the partnership interests of the Partnership; (ii)
options, warrants or other rights to purchase or subscribe to the partnership
interests of the Partnership; or (iii) commitments, agreements or
understandings of any kind relating to the issuance or repurchase by the
Partnership of any of the partnership interests of the Partnership, or any
convertible or exchangeable securities or any options, warrants or rights.
4.5. Assets. The Partnership 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 4.8 apply). The Assets are free and clear of all
Encumbrances of any kind or nature, except (a) Permitted Encumbrances and (b)
restrictions stated in the Governmental Permits. Except as set forth on
SCHEDULE 3, none of the Equipment is leased by the Partnership from any other
Person. The Assets are all the assets necessary to permit the Partnership to
conduct the Business after the date of this Agreement substantially as it is
being conducted on the date of this Agreement and in compliance with all Legal
Requirements and Contracts. All the Equipment is in good operating condition
and repair, ordinary wear and tear excepted and is suitable and adequate for
continued use in the manner in which it is presently used. To Seller's
Knowledge, no Third Party has been granted or has applied for a cable
television franchise in any area currently served by the Business.
4.6. Governmental Permits. Complete and correct copies of the
Governmental Permits, all of which are listed on SCHEDULE 2, have been
delivered by Seller to Buyer. The Governmental Permits are currently in full
force and effect and are issued and maintained in all material respects
according to all applicable Legal Requirements. There is no legal action,
governmental proceeding or investigation, pending or, to Seller's knowledge,
threatened, to terminate, suspend or modify any Governmental Permit. Except as
disclosed in Section 4.11 with respect to copyright filings, the Partnership is
in material compliance with the terms and conditions of all the Governmental
Permits and with other 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.
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4.7. Contracts. All written Contracts and, to Seller's Knowledge, all
oral Contracts, are described on SCHEDULE 3. Complete and correct copies of
all Contracts have been provided to Buyer. Except as set forth on SCHEDULE 3,
each written Contract is in full force and effect and constitutes the valid,
legal, binding and enforceable obligation of the Partnership and the
Partnership is not, and to Seller's knowledge, each other party thereto is not
in breach or default of any terms or conditions thereunder.
4.8. Real Property.
4.8.1. All the Assets consisting of Real Property interests are
described (including recordation data) on SCHEDULE 6. Except as otherwise
disclosed on SCHEDULE 6, the Partnership holds good, marketable and
indefeasible title in pleno dominio to the Real Property shown as being owned
by the Partnership on SCHEDULE 6 and the valid and enforceable right to use and
possess such Real Property, subject only to the Permitted Encumbrances. The
Partnership has valid and enforceable leasehold interests in Real Property
shown as being leased by the Partnership on SCHEDULE 6 and except as otherwise
set forth in SCHEDULE 6 such leasehold interests have been recorded in the
appropriate section of the Registry of Property of Puerto Rico in accordance
with applicable laws. With respect to other Real Property not owned or leased
by the Partnership, the Partnership has the valid and enforceable right to use
all other Real Property pursuant to the easements, licenses, rights-of-way or
other rights described on SCHEDULE 6, subject only to Permitted Encumbrances.
4.8.2. The documents delivered by Seller to Buyer as evidence of
each 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 the Partnership the right to occupy or use
any Real Property, except as described on SCHEDULE 6. The Partnership has
valid and enforceable easements, rights-of-way and other rights appurtenant to,
or which are necessary for the Partnership's current use of, any Real Property
and the Partnership has not received any notice with respect to the
termination, breach or impairment of any of those rights. Except for the
Americans With Disabilities Act, each parcel of Real Property, any improvements
constructed thereon and their current use conform to (a) all applicable Legal
Requirements, including zoning requirements, and (b) all restrictive covenants,
if any, or other Encumbrances affecting all or part of such parcel.
4.9. Environmental Matters.
4.9.1. The Real Property currently complies in all material
respects with and, to Seller's Knowledge, has previously been operated in all
material respects in compliance with, all Environmental Laws. Other than in
material compliance with Environmental Laws, the Partnership has not released,
stored, treated, handled, discharged or disposed of any Hazardous Substances
at, on, under, in or about, or in any
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other manner affecting, any Real Property, transported any Hazardous Substances
to or from any Real Property or discharged any Hazardous Substances from any
Real Property into any body of water, directly or indirectly, 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, no release of Hazardous Substances outside
the Real Property has entered or threatens to enter any Real Property, nor is
there any pending or threatened claim against the Partnership based on
Environmental Laws which arises from any condition of the land surrounding any
Real Property. No claim or investigation based on Environmental Laws which
relates to any Real Property or any operations on it (a) has been asserted or
conducted in the past or is currently pending against or with respect to the
Partnership or, to Seller's Knowledge, any other Person, or (b) to Seller's
Knowledge, is threatened or contemplated.
4.9.2. To Seller's Knowledge, (a) no 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. Except for septic tanks located at the Cayey and
Barranquitas head end sites, there are no incinerators, septic tanks or
cesspools on the Real Property and all waste is discharged into a public
sanitary sewer system.
4.9.3. Seller has provided Buyer with copies of (a) all studies,
reports, surveys or other materials in Seller's or the Partnership's possession
or to which, to Seller's Knowledge, Seller or the Partnership currently has
reasonable 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 or the Partnership's possession that were received from
any Governmental Authority having the power to administer or enforce any
Environmental Laws relating to current or past ownership, use or operation of
the Real Property or activities at the Real Property and (c) all materials in
Seller's or the Partnership's possession or to which, to Seller's Knowledge,
Seller or the Partnership currently has reasonable access relating to any
claim, allegation or action with respect to the Real Property by any private
third party under any Environmental Law. For the purposes of this 4.9.3, it is
understood and agreed that access does not include any information, document or
matter that may be obtained from a Government Authority or contractor thereof
or that may be obtained by purchase or payment of a fee.
4.10. Compliance with Law.
4.10.1. To Seller's Knowledge, the ownership, leasing and use of
the Assets as they are currently owned, leased and used and the conduct of the
Business as it is currently conducted do not violate any Legal Requirement,
which violation, individually or in the aggregate, would have a material
adverse effect on a System, the Business or the Partnership. Neither Seller
nor the Partnership has received any notice
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claiming a violation by Seller or the Partnership or the Business of any Legal
Requirement applicable to Seller, or the Business as it is currently conducted
and to Seller's Knowledge, there is no basis for any claim that such a
violation exists.
4.10.2. None of the cable television franchises of the Business
have expired or will expire within 36 months after the date of this Agreement.
4.10.3. Except as provided in SCHEDULE 8, to Seller's Knowledge,
the Partnership 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 Copyright Act of 1976
and the rules and regulations of the U.S. Copyright Office, the Register of
Copyrights and the Copyright Royalty Tribunal, the Communications Act of 1934,
the rules and regulations of the FCC, 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.
4.10.4. Notwithstanding the foregoing, the Partnership has used
all commercially reasonable efforts to comply 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 laws relate to the operation of the Business. Except as
provided in SCHEDULE 8, the Partnership has complied in all material respects
with the must carry and retransmission consent provisions of the 1992 Cable
Act. The Business is and has been since September 1, 1993 exempt from rate
regulation under rules and regulations promulgated under the 1992 Cable Act,
and any authoritative interpretation thereof. The Partnership has delivered to
Buyer complete copies of all FCC forms filed by the Partnership and
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
the Partnership with respect to any of the Systems (collectively, "Rate
Regulation Documents"). The Partnership 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, except for regulations
promulgated by the Public Service Commission of Puerto Rico, the Partnership
has not agreed with any Governmental Authority to establish customer service
standards that exceed the standards in the 1992 Cable Act.
4.11. Patents, Trademarks and Copyrights. Other than filings with the
Register of Copyrights due in June 1990 and due from and after December 31,
1991, the Partnership has timely and accurately made in all material respects
all requisite filings and payments with the Register of Copyrights and is
otherwise in compliance with all
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applicable rules and regulations of the Copyright Office. Seller has delivered
to Buyer complete and correct copies of all current reports and filings, and
all reports and filings for the past five years, made or filed pursuant to
copyright rules and regulations with respect to the Business. The Partnership
does not possess any patent, patent right, registered trademark or copyright
and 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. To Seller's Knowledge, the operation of the Business as
currently conducted does not violate or infringe upon the rights of any Person
in any copyright, trademark, service xxxx, patent, license, trade secret or the
like.
4.12. Financial Statements. Seller has delivered to Buyer correct and
complete copies of its (a) audited balance sheets and related statements of
income and cash flows for and as of the years ended December 31, 1994 and
December 31, 1995 and (b) the unaudited balance sheet of the Partnership as of
November 30, 1996, and the related unaudited statement of income for the eleven
month period then ended (collectively, the "Financial Statements"). Except as
disclosed on SCHEDULE 9, the Financial Statements were prepared in accordance
with GAAP applied on a consistent basis throughout the periods covered thereby
and fairly present the Partnership's financial position, results of operations
and changes in financial position as of the dates and for the periods
indicated, subject in the case of the unaudited Financial Statements only to
normal year-end adjustments (none of which will be material in amount) and the
omission of footnotes. Except as disclosed by, or reserved against in, its
most recent balance sheet included in the Financial Statements, the Partnership
did not have as of the date of such balance sheet any liability or obligation
(including liabilities or obligations to the Other Partners), which was or
would be material to the business, results of operations or financial condition
of the Partnership, nor to Seller's Knowledge does any aspect of the Business
form a basis for any claim by a third party which, if asserted, could result in
a liability not disclosed by or reserved against in such balance sheet. Since
the date of the most recent balance sheet included in the Financial Statements
(i) the Business has been operated only in the ordinary course, (ii) the
Partnership has not sold or disposed of any assets other than in the ordinary
course of business, and (iii) there has been no material adverse change in the
business, operations, assets or condition (financial or otherwise) of the
Business, other than changes affecting the cable television industry generally.
4.13. Legal Proceedings. Except as set forth on SCHEDULE 10, there is
no judgment or order outstanding, or any action, suit, complaint, proceeding or
investigation by or before any Governmental Authority or any arbitrator
pending, or to Seller's Knowledge, threatened, involving or affecting all or
any part of the Business or the Partnership which if adversely determined,
could materially and 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.
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4.14. Tax Returns; Other Reports. Except as disclosed on SCHEDULE 11,
the Partnership has duly and timely filed in proper form all income, gross
receipts, franchise, sales, use, property, excise, payroll, unclaimed property
and other tax returns and all other reports (whether or not relating to taxes)
required to be filed with the appropriate Governmental Authority. Except as
disclosed on SCHEDULE 11, all taxes, fees and assessments of whatever nature
currently due and payable by the Partnership have been paid, except such
amounts as are being contested diligently and in good faith and are not in the
aggregate material. Except as set forth on SCHEDULE 11, there are no
outstanding agreements or waivers extending the statutory period of limitations
applicable to any federal, State, local or foreign income tax return for any
period, and except as set forth on SCHEDULE 11, there are no tax audits
pending.
4.15. Employment Matters.
4.15.1 SCHEDULE 12 includes a complete and correct list of names
and positions of all employees of the Partnership engaged in the Business.
Upon request of Buyer, Seller will promptly provide Buyer with the current
hourly wages or monthly salaries and other compensation of each employee
identified on SCHEDULE 12. SCHEDULE 12 also lists each employee benefit plan
that the Partnership maintains or contributes to. No such employee benefit
plan (as defined in ERISA) is an "employee pension benefit plan" or
"multiemployer plan" (as those terms are defined in ERISA.) No prohibited
transaction, within the meaning of Title I of ERISA, has occurred with respect
to any such employee benefit plan. The Partnership has complied in all
respects with all Legal Requirements relating to the employment of labor,
including 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, minimum meal periods, collective
bargaining, unemployment compensation, worker's compensation, equal employment
opportunity, age and disability discrimination, immigration control and the
payment and withholding of taxes.
4.15.2. The Partnership is not a party to any contract with any
labor organization, and the Partnership has not recognized or agreed to
recognize and is not required to recognize any union or other collective
bargaining unit. No union or other collective bargaining unit been certified
as representing any of the Partnership's employees, nor has the Partnership
received any requests from any party for recognition as a representative of
employees for collective bargaining purposes except as set forth on SCHEDULE
12. To Seller's Knowledge, the Partnership's employees are not engaged in
organizing activity with respect to any labor organization. Except as
disclosed on SCHEDULE 12, the Partnership has no employment agreement of any
kind, oral or written, express or implied, that would require Buyer to employ
any Person after the Closing Date.
4.16. 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
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similar fee or commission in connection with the transactions contemplated by
this Agreement for which Buyer could be liable.
4.17. Disclosure. The information set forth in the Schedules concerning
the Business is accurate and complete in all material respects.
5. 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:
5.1. Organization and Qualification. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of Nevada and
has all requisite corporate power and authority to carry on its business as
currently conducted and to own, lease, use and operate its assets. Buyer is
duly qualified or licensed to do business and is in good standing under the
laws of each jurisdiction in which the character of the properties owned,
leased or operated by it or the nature of the activities conducted by it makes
such qualification necessary, except any such jurisdiction where the failure to
be so qualified or licensed and in good standing would not have a material
adverse effect on Buyer or on the validity, binding effect or enforceability of
this Agreement.
5.2. 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. 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 authorized by all requisite corporate action of Buyer,
and this Agreement is, and when executed and delivered by Buyer, the
Transaction Documents will be, the valid and binding obligations of Buyer,
enforceable in accordance with their terms, except insofar as enforceability
may be limited or affected by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter in effect affecting
creditors' rights generally or by principles governing the availability of
equitable remedies.
5.3. No Breach or Violation. Subject to obtaining the Required
Consents, and the notification and expiration or earlier termination of the
waiting period under the HSR Act, the execution, delivery and performance of
this Agreement by Buyer 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 any filing with or notice to, any Person; or
(d) (i) violate, conflict with or constitute a breach of or default under
(without regard to requirements of notice, passage of time or elections of any
Person), (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
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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 Buyer or on the validity, binding effect or
enforceability of this Agreement.
5.4. 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. ADDITIONAL COVENANTS.
6.1. Access to Premises and Records. Between the date of execution
and delivery of this Agreement and the Closing Date, Seller will give Buyer and
its representatives full access at reasonable times to all the premises and
books and records of the Business and to all the Assets and will furnish to
Buyer and its representatives all information regarding the Business and the
Assets as Buyer may from time to time reasonably request. Notwithstanding any
investigation that Buyer may conduct of the Business and the Assets, Buyer may
fully rely on Seller's representations, warranties, covenants and indemnities,
which will not be waived or affected by or as a result of such investigation.
6.2. Continuity and Maintenance of Operations; Financial Statements.
Except as Buyer may otherwise agree in writing, from and after the date hereof
until the Closing:
6.2.1. Seller will cause the Partnership to continue to operate
the Business in the ordinary course consistent with past practices (including
completing line extensions, placing conduit or cable in new developments and
fulfilling installation requests) and will use its best efforts to keep
available the services of the Partnership's employees employed in connection
with the Systems and to preserve any beneficial business relationships with
customers, suppliers and others having business dealings with the Partnership
relating to the Business. Without limiting the generality of the foregoing,
Seller will cause the Partnership to (a) maintain the Assets in good condition
and repair, (b) maintain adequate inventories of spare Equipment consistent
with past practices, (c) maintain insurance as in effect on the date of this
Agreement, and (d) keep all of its business books, records and files in the
ordinary course of business in accordance with past practices. Seller will not
itself, and will not permit the Partnership or any of the Partnership's or
Seller's officers, directors, partners, agents or employees to, pay any of the
Partnership's subscriber accounts receivable (other than for their own
residences) prior to the Closing Date except for monies received in payment
thereof from subscribers. Seller will cause the Partnership to 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.
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6.2.2. Seller will cause the Partnership to not, without the
prior written consent of Buyer: (a) change the rate charged for Basic
Services, Expanded Basic Services or Pay TV and will not add or delete any
program services except to the extent required under the 1992 Cable Act or any
other Legal Requirement provided however if the Partnership changes such rates
in order to so comply, Seller will provide Buyer with a copy of any FCC forms
(even if not filed with any Governmental Authority) that the Partnership used
to determine that the rates to which it was changing were allowable; (b) file
any election with respect to any cost of service proceeding conducted in
accordance with Part 76.922 of Title 47 of the Code of Federal Regulations or
any similar proceeding with respect to any of the Systems; (c) sell, transfer
or assign any of the Assets except in the ordinary course of business provided
such sale, transfer or assignment of Assets does not exceed $10,000 or permit
the creation of any Encumbrance (except Permitted Encumbrances) on any Asset;
(d) permit the amendment or cancellation of any of the Governmental Permits or
Contracts except as provided by this Agreement; (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 $10,000; or (f) take or omit to take any action that would cause Seller to
be in breach of any of its representations or warranties in this Agreement.
6.2.3. Seller will deliver to Buyer correct and complete copies
of all Rate Regulation Documents that become available at any time between the
date of this Agreement and the Closing. All financial statements so delivered
will be prepared in accordance with GAAP on a basis consistent with the
Financial Statements referred to in Section 4.12.
6.3. Required Consents
6.3.1. Seller will use its commercially reasonable efforts to
obtain, as soon as possible, all the Required Consents, in form and substance
satisfactory to Buyer. Buyer will cooperate with Seller to obtain all Required
Consents, but Buyer will not be required to agree to any changes in, or the
imposition of any condition to the transfer to Buyer of, any Contract or
Governmental Permit as a condition to obtaining any Required Consent. Seller
and Buyer shall share equally any out-of-pocket expenses incurred in securing
the Required Consents.
6.3.2. Seller shall use its commercially reasonable efforts to
obtain with respect to each lease of Real Property set forth on SCHEDULE 6, (i)
for each lease that has not been recorded in the Registry of Property of Puerto
Rico, execution of a public instrument suitable for recording in the Registry
of Property of Puerto Rico and sufficient after recording to constitute a valid
leasehold interest enforceable against third parties; (ii) for each lease that
has been recorded in the Registry of Property of Puerto Rico, a public
instrument sufficient to transfer such leasehold interest to Buyer and (iii)
estoppel certificates or similar documents in a form reasonably acceptable to
Buyer.
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6.3.3. Seller will execute on behalf of the Partnership 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.
6.4. HSR Notification. As soon as practicable after the execution of
this Agreement, but in any event no later than 40 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 shall request early termination of the waiting period imposed by
the HSR Act. The parties shall 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 shall 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 shall 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 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, 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, Buyer may terminate this Agreement. 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.
6.5. 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 Partnership Interests.
6.6. Notification of Certain Matters. Seller will promptly notify
Buyer of any fact, event, circumstance or action (a) which, if known on the
date of this Agreement, would have been required to be disclosed to Buyer
pursuant to this Agreement, or (b) the existence or occurrence of which would
cause any of Seller's representations or warranties under this Agreement not to
be correct and complete.
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6.7. Risk of Loss; Condemnation.
6.7.1. If any loss or damage to the Assets resulting from fire,
theft or other casualty is so substantial as to prevent normal operation of any
material portion of a System or the replacement or restoration of the lost or
damaged property within 20 days after the occurrence of the event resulting in
such loss or damage, Seller will immediately notify Buyer 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 acquisition of the Partnership Interests in accordance with
terms of this Agreement or (b) terminate this Agreement. If Buyer elects so to
terminate this Agreement, Buyer and Seller will be discharged of any and all
obligations hereunder. 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 will be delivered by
Seller or the Partnership to Buyer, or the rights to such proceeds will be
assigned by Seller or the Partnership to Buyer if not yet paid over to Seller
or the Partnership.
6.7.2. 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, Buyer or the Partnership that it intends to condemn all or any part of
the Assets (such event being called, in either case, a "Taking"), then Buyer
may terminate this Agreement. If Buyer does not elect to terminate this
Agreement, then (a) Buyer will have the sole right, in the name of Seller or
the Partnership, if Buyer so elects, to negotiate for, claim, contest and
receive all damages with respect to the Taking, (b) at the Closing, Seller will
assign, and will cause the Partnership to assign, to Buyer all of Seller's or
the Partnership's rights to all damages payable with respect to such Taking and
will pay to Buyer all damages previously paid to Seller or the Partnership with
respect to the Taking and (c) following the Closing, Seller will give, and will
cause the Partnership to give, Buyer such further assurances of such rights and
assignment with respect to the taking as Buyer may from time to time reasonably
request.
6.8. Lien and Judgment Searches. Buyer will obtain (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, municipality and/or section
of the Registry of Property of Puerto Rico where there exists tangible Assets
or where the Partnership Interests are deemed to be located, and in the State,
municipality and/or section of the Registry of Property of Puerto Rico where
Seller's and the Partnership'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,
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county, judicial district, or other applicable political subdivision where the
principal office or any material assets of Seller may be located or where the
Partnership Interests are deemed to be located, with respect to judgments,
orders, writs or decrees against or affecting Seller or any of the Assets.
Seller and Buyer shall share equally any out-of-pocket expenses incurred in
connection with obtaining the searches.
6.9. Transfer Taxes. Seller will be responsible for the payment of any
State or local sales, use, transfer, excise, documentary or license taxes or
fees or any other charge (including filing fees) imposed by any Governmental
Authority with respect to the transfer of any of the Partnership Interests
pursuant to this Agreement.
6.10. Noncompetition Agreement. At the Closing, Seller will, and
Seller will cause Xxxxxxx X. Xxxxxx to, sign and deliver to Buyer, a
Noncompetition Agreement in the form of EXHIBIT C.
6.11. Updated Schedules. Not less than five Business Days prior to
Closing, Seller will deliver to Buyer revised copies of SCHEDULES 1 THROUGH 12
which shall 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.
6.12. 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 liability of the
Partnership.
6.13. Employee Matters. Seller will cause the Partnership to not,
without the prior consent of Buyer, change the compensation or benefits of any
employees of the Business, except for raises granted in the ordinary course not
to exceed 5%.
6.14. Confidentiality. Neither party will issue any press release or
make any other public announcement regarding this Agreement or the transactions
contemplated hereby without the consent of the other party. Each party will
hold, and will cause its employees, consultants, advisors and agents to hold,
in confidence, the terms of this Agreement and any non-public information
concerning the other party obtained pursuant to this Agreement.
Notwithstanding the preceding provisions, a party may disclose such information
to the extent required by any Legal Requirement (including disclosure
requirements under federal and State securities laws), 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
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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. Each party's obligation to hold
information in confidence will be satisfied if it exercises the same care with
respect to such information as it would exercise to preserve the
confidentiality of its own similar information.
6.15. Buyer Cooperation. To the extent any matter covered by the
foregoing covenants is subject to approval of the Management Committee under
either the Partnership Agreement or the Management Agreement, either (i) Buyer
shall vote in favor of such matter, or (ii) if Buyer votes against the matter,
Seller shall not be liable to Buyer for breach of the applicable covenant.
6.16. Tax Returns. Seller, as the current managing general partner of
the Partnership, shall be responsible for, and shall timely prepare, all
federal and Puerto Rican tax returns for the Partnership or the Business for
periods ending on or prior to the Closing Date (the "Tax Returns"). Seller
shall deliver the Tax Returns and related detailed work papers to Buyer for
review within 120 days after Closing. Buyer shall cooperate with Seller in the
preparation of the Tax Returns and provide Seller access to the books and
records necessary to prepare the Tax Returns. Seller and Buyer shall share
equally the fees payable to any third party accountants or tax advisors
incurred in connection with preparing the Tax Returns.
6.17. Incentive Payments. Seller and Buyer shall cause the Partnership
to pay to Xxxx X. Xxxxxx and Xxxxxxxxx Xxxxx the amounts calculated pursuant to
this Section 6.17 in full satisfaction of all obligations of the Partnership
under the Partnership Management Incentive Plan dated January 1, 1988, as
amended (the "Incentive Plan") and their respective employment agreements.
6.17.1. The "Incentive Base" shall equal $26,000,000 less
$762,000 less all closing costs incurred by Buyer or Seller.
6.17.2. At Closing, Seller and Buyer shall cause the Partnership
to pay to Xxxxxx 1.25% of the Incentive Base and to Xxxxx .625% of the
Incentive Base (collectively, the "Closing Incentive") in exchange for
executing a general release and termination of the Incentive Plan and their
respective employment agreements with the Partnership. The Closing Incentive
shall be funded 50% by Seller and 50% by Buyer. Seller's portion of the
Closing Incentive shall be deducted from the Purchase Price and Buyer shall
fund its portion at Closing.
6.17.3. In addition, simultaneously with any payments made to
Seller pursuant to Section 3.2, Buyer shall pay to Xxxxxx 1.25% of the
"Holdback Base" and to Xxxxx .625% of the "Holdback Base" (collectively, the
"Holdback Incentive"). The "Holdback Base" equals two times all amounts
(including interest) paid to Seller pursuant Section 3.2. The Holdback
Incentive shall be funded 50% by Seller and 50% by Buyer.
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Seller's portion of the Holdback Incentive shall be deducted from the amounts
paid to Seller under Section 3.2.
6.18. Phase I Reports. Prior to Closing, Seller and Buyer shall cause
the Partnership to secure Phase I Environmental Site Assessment Reports for all
Real Property owned by the Partnership and all Real Property leased by the
Partnership and used as headend sites. Seller and Buyer shall share the cost
of such reports equally.
6.19. Promissory Notes. Seller and Buyer acknowledge and agree that
the Partnership Note and the Promissory Note from Xxxxxxx X. Xxxxxx to TCI
Development Corporation in the principal amount of $167,000 (the "Purchase
Note") were previously paid and discharged. Prior to Closing, Xxxxxx shall
deliver to Buyer the original Partnership Note marked "Cancelled" and Buyer
shall deliver to Seller an affidavit of lost note and cancellation with respect
to the Purchase Note.
7. CLOSING.
The Closing will be held on a date mutually agreed upon by Buyer and
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 office located at 0000 XXX Xxxxxxx, Xxxxxxxxx, Xxxxxxxx 00000,
or will be conducted by mail or at such place and time as Buyer and Seller may
agree.
8. CONDITIONS TO CLOSING.
8.1. Conditions to the Obligations of Buyer and Seller. The
obligations of each party to consummate the transactions contemplated by this
Agreement to take place at the Closing are subject to the satisfaction or
waiver, to the extent permitted by applicable Legal Requirements, at or prior
to the Closing Date of each of the following conditions:
8.1.1. All filings required under the HSR Act shall have been
made and the applicable waiting period shall have 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. No action, suit or proceeding shall be pending or
threatened by or before any Governmental Authority and no Legal Requirement
shall have 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)
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prohibit Buyer's ownership of the Partnership Interests or the Partnership's
operation of all or a material portion of any System, the Business or the
Assets, (b) compel Buyer to dispose of or hold separate all or a material
portion of the Partnership Interests or compel the Partnership to 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 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 to take place at
the Closing are subject to the satisfaction or waiver, to the extent permitted
by applicable Legal Requirements, at or prior to the Closing Date, of each of
the following conditions:
8.2.1. All representations and warranties of Seller contained in
this Agreement shall be, if specifically qualified by materiality, true in all
respects and, if not so qualified, shall be true 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.
8.2.2. Seller in all material respects shall have performed and
complied with each obligation, agreement, covenant and condition required by
this Agreement to be performed or complied with by Seller at or prior to the
Closing.
8.2.3. Seller shall have executed (or caused to be executed) and
delivered to Buyer each of the following items:
(a) Counterparts of the Assignment and Assumption of
Partnership Interests in the form of EXHIBIT B (the "Partnership Interests
Assignment"), executed by Seller;
(b) a deed of lease for each lease described in clause (i) of
Section 6.3.2 and a deed of assignment of lease for each lease described in
clause (ii) of Section 6.3.2, in each case in favor of Buyer or its designee;
(c) a Noncompetition Agreement signed by Seller and Xxxxxxx
X. Xxxxxx in the form attached as EXHIBIT C;
(d) 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 D;
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(e) a Termination Agreement signed by Seller relating to the
termination of the Management Agreement and all other arrangements among the
Partnership, Seller, Buyer or any of their respective Affiliates (the
"Termination Agreement"), substantially in the form attached hereto as EXHIBIT
E; and
(f) such other transfer instruments as Buyer may deem
reasonably necessary or advisable to transfer the Partnership Interests to
Buyer and to perfect Buyer's rights in the Partnership Interests;
8.2.4. Seller shall have delivered to Buyer: (a) evidence, in
form and substance satisfactory to Buyer, that all of the Required Consents
have been obtained or given and are in full force and effect; and (b) to the
extent obtained, the estoppel certificates or similar documents described in
Section 6.3.1.
8.2.5. Seller shall have used funds other than that of the
Partnership to exercise the Option so that it holds a 50% general partnership
interest in the Partnership.
8.2.6. Buyer shall have received the opinion of Xxxx X. Xxxxxx,
Esq., counsel for Seller, dated the Closing Date, in the form set forth in
EXHIBIT F.
8.2.7. Seller shall have delivered releases, in form
satisfactory to Buyer, of all Encumbrances affecting the Partnership Interests
(other than Permitted Encumbrances) and a certificate of no taxes due with
respect to Seller and the Partnership issued by appropriate State and municipal
taxing authorities and a certificate of taxes due issued by XXXX as of a date
no earlier than 10 days prior to the Closing.
8.2.8. The original Partnership Note marked "Cancelled" shall be
delivered to Buyer.
8.2.9. The TCID Note shall be paid in full, including interest
and terminated.
8.2.10. The Systems shall be serving at least 26,100 EBSs.
8.2.11. Seller shall have delivered to Buyer: (a) a certificate,
dated the Closing Date, signed by Seller's chief executive officer and chief
financial officer, stating that to their knowledge, the conditions set forth in
Sections 8.2.1 and 8.2.2 are satisfied; and (b) such other documents as Buyer
may reasonably request in connection with the transactions contemplated by this
Agreement.
8.2.12. Seller shall have caused the Partnership to file
copyright filings and pay all corresponding fees for the last seven copyright
periods.
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8.2.13. The Partnership shall have paid to Xxxx X. Xxxxxx and to
Xxxxxxxxx Xxxxx the Closing Incentive and Xxxxxx and Xxxxx shall have delivered
a release and termination of the Incentive Plan and their respective employment
agreements with the Partnership.
8.3. Conditions to Obligations of Seller. The obligations of Seller
to consummate the transactions contemplated by this Agreement to take place at
the Closing are subject to the satisfaction or waiver by Seller, to the extent
permitted by applicable law, at or prior to the Closing Date, of each of the
following conditions:
8.3.1. Buyer shall have paid the portion of the Purchase Price
required to be paid at the Closing, as adjusted in accordance with this
Agreement.
8.3.2. All representations and warranties of Buyer contained in
this Agreement shall be, if specifically qualified by materiality, true and
correct in all respects and, if not so qualified, shall be 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.
8.3.3. Buyer in all material respects shall have performed and
complied with each obligation, agreement, covenant and condition required by
this Agreement to be performed or complied with by Buyer at or prior to the
Closing.
8.3.4. Buyer shall have executed and delivered to Seller each of
the following items: (a) the Partnership Interests Assignment; and (b) the
Termination Agreement.
8.3.5. Buyer shall have delivered to Seller the following: (a)
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
8.3.2 and 8.3.3, are satisfied; and (b) such other documents as Seller may
reasonably request in connection with the transactions contemplated by this
Agreement.
8.3.6. Seller shall have received the opinion of Xxxxxxx X.
Xxxxx, counsel for Buyer, dated the date of Closing, in the form of EXHIBIT G.
8.3.7. The Partnership shall have paid to Xxxx X. Xxxxxx and to
Xxxxxxxxx Xxxxx the Closing Incentive and Xxxxxx and Xxxxx shall have delivered
a release and termination of the Incentive Plan and their respective employment
agreements with the Partnership.
8.3.8. Buyer shall have delivered to Seller an affidavit of lost
note and cancellation with respect to the Purchase Note.
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8.4. Waiver of Conditions. Any party may waive in writing any or all
of the conditions to its obligations under this Agreement.
9. TERMINATION.
9.1. Events of Termination. This Agreement may be terminated and the
transactions contemplated by this Agreement may be abandoned at any time prior
to the Closing:
9.1.1. by the mutual written consent of Buyer and Seller;
9.1.2. by either party, if the transactions contemplated by this
Agreement to take place at the Closing have not been consummated by June 30,
1997, for any reason other than (i) a breach or default by such party in the
performance of any of its obligations under this Agreement or (ii) the failure
of any representation or warranty of such party to be accurate;
9.1.3. by Buyer under the conditions described in Section 6.4 or
Section 6.7; or
9.1.4. by Buyer, within 30 days after the date of the Agreement
if the results and findings of Buyer's investigation of Seller, the
Partnership, the Business and the Assets are not satisfactory in Buyer's sole
discretion.
9.2. Liabilities in Event of Termination. The termination of this
Agreement will in no way limit any obligation or liability of any party based
on or arising from a breach or default by such party with respect to any of its
representations, warranties, covenants or agreements contained in this
Agreement, except that Buyer will have no liability in any event upon exercise
of its right to terminate pursuant to Section 9.1.3 or 9.1.4.
9.3. Procedure Upon Termination. In the event of the termination of
this Agreement by Buyer or Seller pursuant to this Section 9, notice of such
termination will promptly be given by the terminating party to the other.
10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION.
10.1. Survival of Representations and Warranties. The representations
and warranties of Seller in this Agreement and in the documents and instruments
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
(subject to Section 10.7.3) until 60 days after the expiration of the
applicable statute of limitations (including any extensions) for such
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federal, State or local taxes, rates, Environmental Law, ERISA, employment
matters or copyright matters, respectively and (b) the representation and
warranties as to ownership of the Partnership Interests in Section 4.4, the
Assets in Section 4.5, and Real Property set forth in Section 4.8 will survive
the Closing and will continue in full force and effect until the dates set
forth in Section 10.7.3. The representations and warranties of Buyer in this
Agreement and in the documents and instruments to be delivered by Buyer
pursuant to this Agreement will survive until the first anniversary of the
Closing Date. The covenants and agreements of the parties in this Agreement and
in the other documents and instruments to be delivered by Seller or Buyer
pursuant to this Agreement that by their terms require a party to take or
refrain from taking any action after Closing will survive the Closing and will
continue in full force and effect until the dates set forth in Section 10.7.3.
The period of survival of the representations, warranties, covenants and
agreements prescribed by this Section 10.1 is referred to as the "Survival
Period." The liabilities of the parties under their respective
representations, warranties, covenants and agreements 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, warranty,
covenant or agreement, the breach of which has been asserted by Buyer or Seller
by 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).
10.2. Indemnification by Seller. If a claim is made by Buyer within the
applicable Survival Period, Seller will indemnify, defend and hold harmless
Buyer and its shareholders and its and their respective Affiliates, and the
shareholders, directors, officers, employees, agents, successors and assigns of
any of such Persons, from and against (collectively, "Seller's Indemnified
Losses"):
10.2.1. all losses, damages, liabilities, deficiencies or
obligations of or to Buyer or any such other indemnified Person resulting from
or arising out of (a) any breach of any representation or warranty made by
Seller in this Agreement, (b) any breach of any covenant, agreement or
obligation of Seller contained in this Agreement, (c) any act or omission of
the Partnership 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 such matter is asserted
before or after the Closing Date, including any matter described on SCHEDULES 8
AND 10, (d) any liability or obligation not included in the Indemnified
Liabilities, (e) any claim that the transactions contemplated by this Agreement
violate the Worker Adjustment and Retraining Notification Act, as amended, or
any similar State or local law, (f) 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), (g) any rate refund
ordered by any Governmental Authority for periods prior to the Closing Date,
(h) any amounts due and
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unpaid by the Partnership to any taxing authority with respect to taxes for all
years ending prior to the Closing Date, (i) any liability not previously
disclosed to Buyer, or (j) any claim that the transactions contemplated by this
Agreement violate fraudulent conveyance laws of any jurisdiction; and
10.2.2. 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 10.2.1(a) and
under one or more of clauses 10.2.1(b) through 10.2.1(j), Buyer's rights to
pursue its claim under clauses 10.2.1(b) through 10.2.1(j), as applicable, will
exist (subject to Section 10.7.3) notwithstanding the expiration of the
Survival Period applicable to such claim under clause 10.2.1(a).
10.3. Indemnification by Buyer. If a claim is made by Seller within
the applicable Survival Period, Buyer will indemnify, defend and hold harmless
Seller and Seller's shareholders, directors, officers, employees, agents,
successors and assigns, from and against (collectively, "Buyer's Indemnified
Losses"):
10.3.1. all losses, damages, liabilities, deficiencies or
obligations of or to Seller or any such other indemnified Person resulting from
or arising out of (a) any breach of any representation or warranty made by
Buyer in this Agreement, (b) the breach of any covenant, agreement or
obligation of Buyer contained in this Agreement or (c) the failure by Buyer to
perform any of its obligations in respect of the Indemnified Liabilities; and
10.3.2. 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 10.3.1(a) and
under one or more of clauses (b) or (c) of this Section 10.3, Seller's rights
to pursue its claim under clauses 10.3.1(b) or 10.3.1(c), as applicable, will
exist (subject to Section 10.7.3) notwithstanding the expiration of the
Survival period applicable to such claim under clause 10.3.1(a).
10.4. 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
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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 10,
(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 10 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 10.4. 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.
10.5. Limitations on Indemnification-Seller. Seller will only be liable
for fifty percent of any Seller's Indemnified Losses. Notwithstanding the
foregoing, Seller will be liable for one hundred percent of any Seller's
Indemnified Losses subject to Seller's indemnification obligations relating to
Seller's representations and warranties set forth in Sections 4.1 through 4.4,
4.16 and 4.17; Section 10.2.1(b); and Section 10.2.1(j).
10.6. Floor on Indemnification. An indemnifying party's obligation to
pay Indemnified Losses shall only arise to the extent that the Indemnified
Losses attributable to that party exceed $25,000 in the aggregate (the
"Floor"). Once the Indemnified Losses exceed $25,000, the indemnifying party
shall be liable for all Indemnified Losses,
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subject to Sections 10.5 and 10.7, including the Indemnified Losses
constituting the Floor. With respect to Seller, the Floor shall be determined
after applying Section 10.5. The Floor shall not apply to a Seller's
Indemnified Loss relating to a breach of Section 4.4.
10.7. Caps on Indemnification. Seller's and Buyer's respective
indemnity obligations shall in no event exceed the following amounts:
ALL INDEMNIFIED LOSSES, EXCEPT THOSE ARISING UNDER SECTIONS
4.4, 4.14, 6.14 OR 10.2.1(h) OR THE NONCOMPETITION AGREEMENT--
Year 1 after Closing $4,000,000
Year 2 after Closing 2,500,000
Year 3 after Closing 1,000,000
INDEMNIFIED LOSSES ARISING UNDER SECTIONS 4.4 OR 6.14 OR THE
NONCOMPETITION AGREEMENT--no cap
INDEMNIFIED LOSSES ARISING UNDER SECTIONS 4.14 OR 10.2.1(h)
("TAX LOSSES") --$3,000,000
10.7.1. With respect to Seller, the caps shall be determined
after applying Section 10.5.
10.7.2. The caps shall be applied based upon the earlier of when
the indemnified party gives notice to the indemnifying party of the claim or
when the indemnifying party knew or should have known of the claim.
10.7.3. The parties' respective obligations under this Article 10
shall terminate on the date three years after the Closing Date except for (i)
Indemnified Losses with respect to which the indemnified party delivered
written notice to the other party within the three year period setting forth
the claim with reasonable particularity, (ii) Tax Losses with respect to which
a Governmental Authority commenced an audit or other proceeding within the
three year period, or (iii) Seller's Indemnified Losses relating to a breach of
Section 4.4.
10.8. Release. The Purchase Price shall be deemed full compensation to
Seller for all claims of any nature against Buyer or the Partnership,
including without limitation, under the Management Agreement or the Consulting
Agreement or the Partnership Note.
10.9. Limitation on Remedies. Each party to this Agreement will have
as the sole and exclusive remedy resulting from the breach of any
representation, warranty or covenant by the other party to this Agreement a
claim for indemnification under this Article 10.
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11. MISCELLANEOUS.
11.1. Parties Obligated and Benefited. Subject to the limitations set
forth below, this Agreement will be binding upon the parties and their
respective assigns and successors in interest and will inure solely to the
benefit of the parties and their respective assigns and successors in interest,
and no other Person will be entitled to any of the benefits conferred by this
Agreement. Without the prior written consent of the other parties, neither
Seller nor Buyer may assign any of its rights under this Agreement or delegate
any of its duties under this Agreement, except that Buyer may assign this
Agreement to an Affiliate.
11.2. 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 sent by first class, prepaid, registered or certified mail, or sent by
courier or, if receipt is confirmed, by telecopier:
To Buyer at: TCID of Puerto Rico, Inc.
0000 XXX Xxxxxxx
Xxxxxxxxx Xxxxxxxx 00000
Attention: Senior Vice President - Cable
Telecopy: 000-000-0000
With a copy similarly addressed to the attention of the Legal Department:
To Seller at: Xxxxxx Communications Corp.
#00 Xxxxxxx Xxxx Xxxxx
Xxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Telecopy: 000-000-0000
With a copy to:
Xxxx Xxxxxx, Esq.
00000 Xxx Xxxxxxxx Xxxx.
Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telecopy: 000-000-0000
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All notices will be deemed to have been received on the date of delivery or on
the third Business Day after mailing in accordance with this Section.
11.3. 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.
11.4. Right to Specific Performance. The Partnership acknowledges that
the unique nature of the Partnership Interests to be purchased by Buyer
pursuant to this Agreement renders money damages an inadequate remedy for the
breach by Seller of its obligation to consummate the transactions provided
under this Agreement, and Seller agrees that in the event of such breach, Buyer
will upon proper action instituted by it, be entitled to a decree of specific
performance of this Agreement.
11.5. 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.
11.6. Captions. The article and section captions of this Agreement are
for convenience only and do not constitute a part of this Agreement.
11.7. 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.
11.8. 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.
11.9. 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.
11.10. Further Actions. The Partnership 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
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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.
11.11 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.
11.12. 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
3%, adjusted as and when changes in the Prime Rate are made.
11.13. Counterparts. This Agreement may be executed in counterparts,
each of which will be deemed an original.
11.14. 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.
11.15. 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 benefited by such provision or any other
provisions of this Agreement.
11.16. 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.
11.17 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.
11.18 Buy/Sell Provisions. Buyer and Seller expressly agree that this
Agreement is a negotiated arrangement between the parties and is not intended
to be governed by or to implement Section 9.6 of the Partnership Agreement.
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The parties have executed this Agreement as of the day and year first above
written.
SELLER:
XXXXXX COMMUNICATIONS CORP.
By:
---------------------------------
Xxxxxxx X. Xxxxxx
President
BUYER:
TCID OF PUERTO RICO, INC.
By:
---------------------------------
Xxxx X. Xxxxxx
President
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AMENDMENT NO. 1 TO THE PARTNERSHIP INTEREST PURCHASE AGREEMENT
Amendment No. 1 (the "Amendment") dated February 28, 1997 by and between TCID
of Puerto Rico, Inc. ("Buyer") and Xxxxxx Communications Corp. ("Seller").
RECITALS
Buyer and Seller entered into the Partnership Interest Purchase Agreement dated
as of January 10, 1997 (the "Agreement").
The parties wish to amend the Agreement as provided herein.
AGREEMENT
In consideration of the above recitals and the mutual agreements set forth in
this Amendment, the parties agree as follows:
1. TCID Note.
Section 1.38 of the Agreement is hereby amended in its entirety to read as
follows:
1.38 TCID Note. The note dated as of June 8, 1987, payable by Xxxxxx
to TCI Development Corp. in the principal amount of $83,000. The
outstanding balance of principal and interest under the TCID Note
is $223,176.36 as of January 31, 1997. The outstanding balance of
principal and interest under the TCID Note will be $228,890.44 as
of April 1, 1997. The TCID Note will continue to accrue interest
until paid in full at the rate of $64.75 per day from April 2,
1997 through June 8, 1997 and at the rate of $66.42 from June 9,
1997 through September 8, 1997 and thereafter as provided in the
TCID Note.
2. Purchase Price.
Section 3.1 of the Agreement is hereby amended in its entirety to read as
follows:
3.1 Purchase Price. Buyer shall pay to Seller for the Partnership
Interests an amount equal to Twelve Million Seven Hundred Thousand
Dollars ($12,700,000) (the "Purchase Price"), subject to
adjustment as provided in Section 3.2. Such consideration will be
paid by wire transfer of immediately available funds in
consideration of the sale of the Partnership Interests to Buyer as
follows:
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(a) Twelve Million Three Hundred Nineteen Thousand Two Dollars
($12,319,002), less 50% of the Closing Incentive as provided
in Section 6.17 and less principal and accrued interest due
under the TCID Note, will be paid on the Closing Date, and
(b) Three Hundred Eighty Thousand Nine Hundred Ninety-Eight
Dollars ($380,998) (the "Holdback Amount"), subject to
adjustment as provided below and to Seller's obligation under
Section 10.2, will be paid by Buyer to Seller on the date or
dates prescribed by Section 3.2.
3. Property Taxes.
Section 3.2.1 of the Agreement is hereby amended in its entirety to read as
follows:
3.2.1 After the date of this Agreement, Xxxx X. Xxxxxx and any
other persons designated by him and approved by the
Partnership, shall commence negotiations on behalf of the
Partnership with Centro Recaudaciones de Impuestos
Municipiales ("XXXX") to determine the Partnership's
liability for property taxes for all periods prior to
Closing. (The amount of property taxes for all periods
through December 31, 1996, net of discounts for prompt
payment made at or after the Closing Date, agreed to by the
Partnership and XXXX is referred to as the "Agreed Taxes.")
Buyer shall pay the Agreed Taxes at or after Closing. If
the amount of Agreed Taxes exceeds $2,098,422 [amount of
accrual], Buyer shall apply a portion of the Holdback Amount
equal to 50% of such excess ("Seller's Tax Payment") to pay
the Agreed Taxes. If the amount of the Agreed Taxes is less
than $2,098,422, Buyer shall pay to Seller an amount equal
to 50% of the positive difference between the Agreed Taxes
and $2,098,422 ("Seller's Tax Benefit"). Within 10 Business
Days after XXXX has agreed upon the amount of the Agreed
Taxes (but in no event prior to Closing), Buyer shall pay to
Seller $201,561 either less the Seller's Tax Payment or plus
the Seller's Tax Benefit, plus interest calculated pursuant
to Section 3.2.4 less 50% of the Holdback Incentive due to
Xxxx X. Xxxxxx and Xxxxxxxxx Xxxxx pursuant to Section 6.17.
4. Interest.
Section 3.2.4 is hereby amended in its entirety to read as follows:
3.2.4 The portions of the Holdback Amount paid to Seller pursuant
to Sections 3.2.1, 3.2.2 or 3.2.3 shall bear interest from
and including the Closing Date through the day prior to the
date paid to Seller at 5% per annum. No interest shall be
payable on Seller's Tax Benefit.
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3.2.5 Buyer agrees that there shall be no further reductions in
the Purchase Price based upon balance sheet items contained
in the November 30, 1996 financial statements of the
Partnership beyond those specifically provided in Section
3.2, and that Buyer is acquiring the Partnership Interests
subject to all liabilities shown on the balance sheet
included in such financial statements.
5. Headend Lease.
Section 6.3.1 is hereby amended in its entirety to read as follows:
6.3.1 Seller will use its commercially reasonable efforts to
obtain, as soon as possible, all the Required Consents, in
form and substance satisfactory to Buyer. Buyer will
cooperate with Seller to obtain all Required Consents, but
Buyer will not be required to agree to any changes in, or
the imposition of any condition to the transfer to Buyer of,
any Contract or Governmental Permit as a condition to
obtaining any Required Consent. Seller and Buyer shall
share equally any out-of-pocket expenses incurred in
securing the Required Consents. Notwithstanding the
foregoing, Buyer shall be solely responsible for the payment
of any increase in rent under the lease of the Caguas
headend site described in Schedule 6, page 2, Item 1 as
agreed to between Buyer and the landlord.
6. Plant Condition.
Buyer has performed an initial review of the aerial and underground plant
associated with the System. Buyer hereby waives all claims, if any,
against Seller with respect to the quality of the plant and agrees to take
the plant "as is" at Closing.
7. Copyright Fees.
Article 6 is hereby amended to add the following new section:
6.20 Copyright Fees.
At Closing, Buyer shall advance to the Partnership funds to pay,
at Closing, the copyright fees and interest due by the Partnership
for the last seven copyright periods (collectively, the "Copyright
Fees"). At Closing, Seller shall cause the Partnership to file
all copyright filings for the last seven copyright periods and pay
all Copyright Fees advanced by Buyer. The amount of Copyright
Fees (including interest through January 15, 1997) equals
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$695,023. The Copyright Fees shall continue to accrue interest at
the promulgated rate until paid.
8. Article 8 is hereby amended by deleting Section 8.2.12 in its entirety.
9. Incentive Payments.
Section 6.17.1 is hereby amended in its entirety to read as follows:
6.17.1 The "Incentive Base" shall equal $25,400,000 less $762,000
less all closing costs incurred by Buyer or Seller.
10. Except as amended hereby, the Agreement shall continue unmodified and
unamended and in full force and effect.
The parties have executed this Agreement as of the day and year set forth
above.
SELLER:
XXXXXX COMMUNICATIONS CORP.
By:
---------------------------------
Xxxxxxx X. Xxxxxx
President
BUYER:
TCID OF PUERTO RICO, INC.
By:
---------------------------------
Xxxxxxx X. Xxxxxxxxx
Vice President
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