Exhibit #2
ASSET PURCHASE AGREEMENT
BY AND AMONG
GOLDEN SKY SYSTEMS, INC.
AND
HICKORY TECH CORPORATION
DATED AS OF
APRIL 29, 1997
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Agreement") is made and entered
into as of this 29th day of April, 1997, by and between Golden Sky Systems,
Inc., a Delaware corporation ("Buyer"), and Hickory Tech Corporation, a
Minnesota corporation ("Seller").
RECITALS
Seller is engaged in the business of providing DirecTV programming
services to subscribers within the Service Area (as such capitalized terms are
defined herein below), pursuant to that certain NRTC Member Agreement with the
National Rural Telecommunications Cooperative , and Buyer desires to purchase -
and Seller desires to sell - certain of Seller's business and assets, including
the NRTC Member Agreement,
used or held for use in its DirecTV business as conducted within the Service
Area.
In consideration of the above recitals and the mutual agreements
stated in this Agreement, the parties intending to be legally bound, agree as
follows:
SECTION 1. DEFINITIONS.
In addition to terms defined elsewhere in this Agreement, the
following capitalized terms, when used in this Agreement, will have the meanings
set forth below:
1.1 ASSETS. All properties, privileges, rights, interests and
claims, personal, tangible and intangible, of every type and description
(including, without limitation, Customer Accounts Receivable, Equipment,
Licenses, Intangibles, Inventory, and Seller Contracts), that are used, or held
for use, by Seller in the Relevant Business and in which Seller has any right,
title or interest to the extent the same are assignable by Seller (or in which
Seller hereafter acquires any right, title or interest before the Closing
Date), but excluding all Excluded Assets.
1.2. RELEVANT BUSINESS. The business of marketing and
distribution of NRTC/Xxxxxx DirecTV Services to customers (such term may be
used synonymously herein with the term subscribers) within the Service Area as
conducted by Seller on the date of this Agreement, and as more particularly
described on SCHEDULE 1.2.
1.3 BUSINESS DAY. Any day other than Saturday, Sunday or a day
on which banking institutions in New York, New York; Kansas City, Missouri; or
Mankato, Minnesota are required or authorized to be closed.
1.4 CLOSING DATE. The consummation of the transactions
contemplated by this Agreement, as described in Section 8, is referred to as the
Closing, and the date thereof is referred to as the Closing Date.
1.5 CUSTOMER ACCOUNTS RECEIVABLE. All of Sellers right, title
and interest to receive payment from subscribers for the DirecTV programming
services marketed and distributed in Seller's Service Area, as set forth on the
most recent NRTC Billing System Report 18B available prior to the Closing Date
under the column heading "Ending Gross A/R".
1.6 ENCUMBRANCE. Any lien, security interest, security
agreement, conditional sale or other title retention agreement, limitation,
pledge, option, assessment or other such charge, restrictive agreement,
restriction, encumbrance, adverse interest, restriction on transfer, or
exception to or defect in title or other ownership interest , other than the
Permitted Encumbrances described on SCHEDULE 1.6.
1.7 EQUIPMENT. All test equipment, office equipment, vehicles
and other tangible personal property owned, leased, used or held for use in the
operation of the Relevant Business (other than Inventory which is separately
defined herein), as described on SCHEDULE 1.7.
1.8 GOVERNMENTAL AUTHORITY. (i) The United States of America,
(ii) any state, commonwealth, territory or possession of the United States of
America and any political subdivision thereof (including counties,
municipalities and the like), (iii) any foreign (as to the United States of
America) sovereign entity and any political subdivision thereof, or (iv) any
agency, authority or instrumentality of any of the foregoing, including
any court, tribunal, department, bureau, commission or board.
1.9 INTANGIBLES. All intangible assets, including Seller
Contracts, subscriber lists, claims, (excluding the name "Direct Vision"), NRTC
files and records and goodwill, if any, owned, used or held for use in the
Relevant Business to the extent the same are assignable by Seller.
1.10 INVENTORY. All consumer DSS units intended for sale or
resale to the public including, without limitation, satellite dishes, receivers,
modems, block converters, fittings, self-install kits, installation supplies and
all other assets owned by Seller and intended for resale to the public.
SCHEDULE 1.10 lists the inventory available as of the date of this Agreement
and, once updated as required herein, as of the Closing Date.
1.11 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 judicial decisions applying
common law or interpreting any other Legal Requirement.
1.12 LICENSES. All franchises, approvals, authorizations,
permits, licenses, easements, registration, qualifications, leases, variances
and similar rights obtained from any Governmental Authority or other entity.
1.13 PERMITTED ENCUMBRANCES. The following Encumbrances: liens
for taxes, assessments not yet due and payable and payments pursuant to Seller's
Contracts which are not yet due and payable, provided that (i) Permitted
Encumbrances will not include any item which could materially adversely affect
the operation or the conduct of the Relevant Business and (ii) the
classification of any item as a Permitted Encumbrance will not affect any
liability Seller may have for such item, including, without limitation, pursuant
to any indemnity obligation under this Agreement.
1.14 PERSON. Any natural person, corporation, partnership,
trust, unincorporated organization, association, limited liability company,
Governmental Authority or other entity.
1.15 REQUIRED CONSENTS. "Required Consents" means all licenses,
authorizations, approvals and consents required under Seller Contracts or
otherwise for (a) Seller to transfer the Assets and the Relevant Business to
Buyer, (b) Buyer to conduct the Relevant Business and to own, lease, use and
operate the Assets at the places and in the manner in which the Relevant
Business is conducted as of the date of this Agreement and on the Closing Date,
(c) Buyer to assume and perform the Seller Contracts, and (d) Buyer to
collaterally assign the Assets to its lenders as security for Buyer's
indebtedness. Required Consents are listed on SCHEDULE 1.15.
1.16 SELLER CONTRACTS. All contracts and agreements, pertaining
to the ownership, operation and maintenance of the Assets or the Relevant
Business or used or held for use in the Relevant Business as described on
SCHEDULE 1.16, including, without limitation, Seller's NRTC Member Agreement for
Marketing and Distribution of DBS Services.
1.17 SERVICE AREA. Collectively, the counties within which
Seller operates the Relevant Business, which are the Minnesota counties of
LeSeuer, Nicollet, Waseca, Blue Earth, Watonwan, Xxxxx, and Faribault.
1.18 SERVICES. One or more tiers of NRTC/Xxxxxx DirecTV
Subscription Satellite
Programming sold by Seller in the Relevant Business to subscribers for which a
subscriber pays a fixed monthly fee and including pay per view events and ala
carte programming services.
1.19 OTHER DEFINITIONS. The following terms are defined in the
Sections indicated:
Term Section
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Action 11.4
Assumed Liabilities 4.1
Base Purchase Price 3.2
Buyer Damages 11.5
Buyer Deposit 3.1
Claiming Party 3.4.3
Dispute Adjustment Amount 3.4.3
Xxxxxxx Money Escrow Agreement 3.1
Escrow Agent 3.1
Final Adjustments Report 3.4.2
Financial Statements 5.9
Homes 5.14
Indemnified Party 11.4
Indemnifying Party 11.4
Preliminary Adjustments Report 3.4.1
Responsible Party 3.4.3
Seller Damages 11.6
Seller Deposit 3.2.2
Survival Period 11.1
SECTION 2. SALE OF ASSETS
2.1 PURCHASE AND SALE OF ASSETS. Subject to the terms and
conditions set forth in this Agreement, at the Closing Seller will sell to
Buyer, and Buyer will purchase from Seller, all of Seller's rights, title and
interest in, to and under the Assets.
SECTION 3. CONSIDERATION
3.1 BUYER DEPOSIT. Within five business days after execution of
this Agreement and subject to the terms of the "Xxxxxxx Money Escrow Agreement",
attached hereto as EXHIBIT A, Buyer will deliver to Commerce Bank, N.A. (the
"Escrow Agent") the amount of Six Hundred Thousand Dollars ($600,000) and
together with all interest earned thereon, shall be referred to herein as the
"Buyer Deposit". The Buyer Deposit shall be held by the Escrow Agent pursuant
to the Xxxxxxx Money Escrow Agreement, and subject to the following:
3.1.1 If the purchase of the Assets under this Agreement
is not consummated on or prior to July 15, 1997, as a result of a breach by
Buyer of any of its obligations under this Agreement, Seller shall be entitled
to the Buyer Deposit. The payment of the Buyer Deposit by the Escrow Agent to
Seller and Seller's receipt thereof, shall (i) be liquidated damages for any and
all defaults by Buyer of its obligations under this Agreement, (ii) be in full
settlement and release of any and all damages of any nature or kind that Seller
suffered or may allege to have suffered as a result of any such breach by
Buyer, and (iii) be Seller's sole and exclusive remedy in the event of any such
breach by Buyer.
3.1.2 If the purchase of the Assets under this Agreement
is not consummated for any reason other than as set forth in Section 3.1.1,
Seller shall not be entitled to any portion of the Buyer Deposit and, promptly
after the termination of this Agreement, the entire Buyer Deposit (together with
all interest earned thereon) shall be paid by the Xxxxxxx Money Escrow Agent to
Buyer.
3.2 BASE PURCHASE PRICE. Buyer will pay to Seller as
consideration for the Assets Seven Million Dollars ($7,000,000), (the "Base
Purchase Price"), to be paid at the Closing as set forth below, subject to
adjustment as provided in Sections 3.3 and 3.4, and Buyer will assume certain
obligations of Seller as provided in Section 4:
3.2.1 The Base Purchase Price or such amount as adjusted,
will be paid to Seller (or to such payees as Seller may designate) by one or
more wire transfers of immediately available funds, in such amounts and to such
Seller or payee accounts as shall be designated by Seller. Such designation
shall be made not less than five (5) business days prior to the Closing Date;
and
3.2.2 At the Closing, the Buyer Deposit (together with all
interest earned thereon) shall be released to Buyer, and Buyer shall deposit the
amount of One Hundred Forty Thousand Dollars ($140,000), which is part of the
Base Purchase Price, into a new escrow account with the Escrow Agent (the
"Seller Deposit") in accordance with the Indemnity Escrow Agreement,
substantially in the form and substance of EXHIBIT B, to be entered into on the
Closing Date by Seller, Buyer and the Indemnity Escrow Agent (the "Indemnity
Escrow Agreement").
3.3 ADJUSTMENTS TO BASE PURCHASE PRICE. The Base Purchase
Price will be adjusted as follows:
As an incentive to Seller to continue to market and grow the Relevant Business,
Buyer agrees to compensate Seller for each net additional subscriber added
between January 8, 1997 and the Closing Date. The number of subscribers shall
be determined by deducting the number of subscribers disclosed on the NRTC
Report 17 as of January 8, 1997, from the number of subscribers disclosed on the
same report dated most recent to the Closing Date. To qualify for the
additional amount, each such subscriber shall be active. The additional
compensation shall be paid according to the following schedule:
(i) Three Hundred Fifty Dollars ($350) for each net additional
subscriber to Economy Basic or Select Choice DirecTV
Programming packages
or
(ii) Five Hundred Dollars ($500) for each net additional
subscriber to Total Choice, Total Choice Gold, Total Choice
Silver, or Total Choice Platinum DirecTV programming
services.
3.3.2 Adjustments on a pro rata basis as of the Closing
Date will be made for all prepaid expenses (to the extent that such prepaid
expenses accrue to Buyer's benefit), prepaid income and Seller's Customer
Accounts Receivable. The adjustments made on a pro rata basis as of the
Closing Date will reflect the principle that, unless specified otherwise herein,
all expenses and income attributable to Seller's business for the period through
the Closing Date are for the account of Seller, and all expenses and income
attributable to the business for the period after the Closing Date are for the
account of Buyer, all in accordance with generally accepted accounting
principles.
3.3.3 Buyer will assume responsibility for honoring all
advance payments, credit balances and unearned revenues in amounts equal to the
amounts reflected in the most recent NRTC Billing systems Report 19A available
as of the Closing Date. Buyer will receive credit for these assumptions through
a reduction in the Base Purchase Price. Buyer will assume responsibility for
honoring amounts due national consumer electronics dealers for commissions for
programming services sold prior to the date of Closing, but not billed to the
Seller by the NRTC until after the Closing Date. There will be no reduction in
the Base Purchase Price for this assumption. Seller will maintain liability for
commissions earned and owed to the dealers it has direct commission arrangements
with for programming services sold up to the Closing Date.
3.3.4 The Base Purchase Price will be decreased by the
total amount of consideration paid to Seller for entering into the Non-
Competition Agreement described in Section 7.7.
3.3.5 The Base Purchase Price will be increased by the
total amount of Inventory reflected on the most current books and records of
Seller, or $75,000 whichever is less.
3.3.6 The Base Purchase Price will be increased an
additional $50,000 for the Seller's investment in customer accounts.
3.4 DETERMINATION OF ADJUSTMENTS. Preliminary and final
adjustments to the Base Purchase Price will be determined as follows:
3.4.1 At least five Business Days prior to the Closing
Date, Seller will deliver to Buyer a report (the "Preliminary Adjustments
Report"), certified as to completeness and accuracy by Seller, showing in detail
the preliminary determination of the adjustments referred to in Section 3.3,
which are calculated as of the Closing Date (or as of any other date agreed by
the parties) and any documents substantiating the adjustments proposed in the
Preliminary Adjustments Report. The Preliminary Adjustments Report will include
a schedule setting forth advance payments and deposits made to or by Seller, as
well as accounts receivable information relating to the Relevant Business
(showing sums due and their respective aging as of the Closing Date). Seller
also will furnish to Buyer its billing report for the most current period as of
the Closing Date. The net adjustment shown in the Preliminary Adjustments
Report will be reflected as an adjustment to the portion of the Base Purchase
Price payable at the Closing. The parties agree that adjustments will be
reconciled either forward or backward, as the case may be from the most recent
NRTC billing cycle reports.
3.4.2 Within 60 days after the Closing, Buyer will deliver
to Seller a report (the "Final Adjustments Report"), showing in detail the final
determination of all adjustments which were not calculated as of the Closing
Date and containing any corrections to the Preliminary Adjustments Report,
together with any
documents substantiating the adjustments proposed in the Final Adjustments
Report. Seller will provide Buyer with reasonable access to all records which
Seller has in its possession and which are necessary for Buyer to prepare the
Final Adjustments Report.
3.4.3 Within 30 days after receipt of the Final
Adjustments Report, Seller will give Buyer written notice of Seller's
objections, if any, to the Final Adjustments Report. If Seller makes any such
objection, the parties will agree on the amount, if any, which is not in dispute
within 30 days after Buyer's receipt of Seller's notice of objections to the
Final Adjustments Report. Any undisputed amount will serve as an adjustment to
the portion of the Base Purchase Price payable under Section 3.2.1. The
adjustment of the Base Purchase Price payable under 3.2.1, as so adjusted (but
excluding any amounts disputed), will be paid by Buyer to Seller, or paid by
Seller to Buyer, whichever the case may be, within 90 days after the Closing
Date or within three business days after agreement on the undisputed portion of
the Final Adjustments Report, if later. Any disputed amounts will be determined
within 120 days after the Closing Date by the accounting firm of Price
Waterhouse, Kansas City, Missouri office (or any other accounting firm
acceptable to both Buyer and Seller), whose determination (the "Final
Determination") will be conclusive. Seller and Buyer will equally share the
fees and expenses payable to such firm in connection with such determination.
The payment required after determination of all disputed amounts will be made by
the Responsible Party (the "Responsible Party") by wire transfer of immediately
available funds to the other party (the "Claiming Party") within three business
days after the date on which the Final Determination is issued.
3.5 ALLOCATION OF CONSIDERATION. The consideration payable by
Buyer under this Agreement will be allocated among the Assets as set forth in
SCHEDULE 3.5 hereto. Buyer and Seller agree to be bound by the allocation and
will not take any position inconsistent with such allocations and will file all
returns and reports with respect to the transactions contemplated by this
Agreement, including all federal, state and local tax returns, on the basis of
such allocations, including, without limitation, IRS Form 8594. The parties
agree that Schedule 3.5 shall be negotiated in good faith and finalized on or
prior to the Closing Date, unless otherwise mutually agreed.
SECTION 4. ASSUMED LIABILITIES AND EXCLUDED ASSETS.
4.1 ASSIGNMENT AND ASSUMPTION. Seller will assign, and Buyer
will assume and perform only the Assumed Liabilities, which are defined as: (a)
Seller's obligations to subscribers of the Relevant Business for (i) subscriber
deposits held by Seller as of the Closing Date and which are refundable, in the
amount for which Buyer received credit under Section 3.3.3 (ii) subscriber
advance payments held by Seller as of the Closing Date for services to be
rendered by the Relevant Business after the Closing Date, in the amount for
which Buyer received credit under Section 3.3.3 and (b) obligations after the
Closing Date under Seller Contracts and from Subscribers for lease or purchase
of subscriber equipment, and (c) the Assumed Liabilities set forth on SCHEDULE
4.1. Buyer does not, pursuant to this Agreement or otherwise, agree to perform,
pay, discharge or indemnify Seller against, or otherwise have any responsibility
for, any liabilities or obligations of Seller, fixed, contingent or otherwise,
relating to or arising out of the Seller's operation of the Relevant Business,
except as expressly set forth in this paragraph as an Assumed Liability. It is
expressly understood that the parties intend that the Buyer shall not be
considered a successor to Seller by reason of any theory of law or equity or
otherwise.
4.2 EXCLUDED ASSETS. The excluded assets (the "Excluded
Assets"), which will be retained by Seller, will consist of the following: (a)
all contracts, other than those listed on SCHEDULE 1.16; (b) all insurance
policies and rights and claims thereunder; (c) all bonds, letters of credit,
surety instruments and other similar items; (d) all cash and cash equivalents;
(e) all of Seller's rights under any agreement governing or evidencing an
obligation of Seller for borrowed money; (f) all of Seller's rights under any
contract, license, authorization, agreement or commitment other than those
listed on SCHEDULE 1.16 or those creating or evidencing Assumed Liabilities set
forth on SCHEDULE 4.1; (g) qualified patronage capital certificates and any
patronage dividends which may be due at Closing; (h) all of the assets described
on SCHEDULE 4.2; (i) all of Seller's assets used and/or useful in its core
operations, not used by Seller in the Relevant Business.
SECTION 5. 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:
5.1 ORGANIZATION AND QUALIFICATION. Seller is a corporation
duly organized, validly existing and in good standing under the laws of
Minnesota and has all requisite corporate power and authority to own, lease and
use the Assets as they are currently owned, leased and used and to conduct the
Relevant Business as it is currently conducted.
5.2 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. The
execution, delivery and performance by Seller of its obligations under, and the
consummation by Seller of the transactions contemplated by, this Agreement have
been duly authorized by all requisite action of Seller. This Agreement has been
duly executed and delivered by Seller and is the valid and binding obligation of
Seller, enforceable against Seller in accordance with its terms.
5.3 NO BREACH OR VIOLATION. Subject to obtaining the Required
Consents, all of which are listed on SCHEDULE 1.15, the execution, delivery and
performance of this Agreement by Seller will not, in any material way: (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 Seller
Contract or any other instrument evidencing any of the Assets or any instrument
or other agreement to which Seller is a party or by which Seller or any of its
assets is bound or affected.
5.4 ASSETS. Seller has exclusive, good and marketable title to
(or in the case of Assets that are leased, valid leasehold interests in) the
Assets claimed by Seller. The Assets are all of the Assets of Seller necessary
to conduct the Relevant Business substantially as it is being conducted on the
date of this Agreement and are free and clear of all Encumbrances of any kind or
nature, except (a) Permitted Encumbrances, (b) restrictions stated in the Seller
Contracts and (c) encumbrances disclosed on SCHEDULE 5.4 which will be removed
or otherwise released of record effective at or prior to the Closing, or for
which executed releases in form appropriate for filing by Buyer will be
delivered to Buyer at Closing. The Equipment and Inventory are in good and
operable condition and repair, ordinary wear and tear excepted, and are suitable
and adequate for continued use in the manner they are presently used.
5.5 REAL PROPERTY. There is no real property involved in this
transaction.
5.6 COMPLIANCE WITH LAWS.
5.6.1 The ownership and use of the Assets as they are
currently owned and used and in conduct of the Relevant 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 the
Relevant Business. Seller has not received notice claiming a violation by
Seller or the Relevant Business of any Legal Requirement applicable to Seller or
the Relevant Business as it is currently conducted and to the best of Seller's
knowledge there is no basis for any claim that such a violation exists.
5.7 PATENTS, TRADEMARKS AND COPYRIGHTS. Other than those listed
on SCHEDULE 5.7, Seller does not possess any patent, patent right, trademark or
copyright and there is no application pending with any Governmental Authority
for any of the foregoing.
5.8 FINANCIAL STATEMENTS. Seller will deliver to Buyer
correct and complete copies of its most recent annual report prior to Closing.
Since January 1, 1997 (i) the Relevant Business has been operated only in the
ordinary course (ii) Seller has not sold or disposed of any Relevant Business
assets other than in the ordinary course of business, and (iii) there has been
no material adverse change in, and no event has occurred which is likely,
individually or in the aggregate, to result in any material adverse change in,
the business, operations, assets, prospects or condition (financial or
otherwise) of the Relevant Business.
5.9 LEGAL PROCEEDINGS. Except as set forth on SCHEDULE 5.9,
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 threatened, involving or
affecting all or any part of the Assets or the Relevant Business.
5.10 TAX RETURNS; OTHER REPORTS. Seller has duly and timely
filed in proper form with the appropriate Governmental Authority all income,
franchise, sales, use, property, excise, payroll and other tax returns, and all
other reports (whether or not relating to taxes), required to be filed with
respect to the Relevant Business. All taxes, fees and assessments, including,
without limitation, any interest and penalties with respect thereto, of whatever
nature due and payable by Seller with respect to the Relevant Business have been
paid, except such amounts as are being contested diligently and in good faith
and are not in the aggregate material. 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 there are no tax
audits pending.
5.11 EMPLOYMENT MATTERS. Seller will provide Buyer a list of
names and positions of all employees engaged in the Relevant Business and a
description of their benefits.
Seller has paid to all employees employed in the Relevant Business all
compensation including salaries, commissions, bonuses, deferred compensation,
severance, insurance, pensions, profit sharing, vacation, sick pay and other
compensation or benefits to which they are entitled for period prior to Closing.
All claims of any employee against Seller arising or incurred on or prior to the
date of Closing, will remain the responsibility of Seller, whether or not the
respective employee is hired by Buyer on or after Closing.
The employee relations of Seller are good. Seller is in material
compliance with all federal and state laws respecting employment and employment
practices.
5.12 SUBSCRIBER COUNT Attached hereto as SCHEDULE 5.12 is the
most recent Performance
Indicator Report & Billing Report and Report 17 of NRTC preceding execution of
this Agreement disclosing the number of Seller's active subscribers and
Households in the Service Area.
5.13 SYSTEM DATA. SCHEDULE 1.2 sets forth Seller's rates for
satellite services, breakdown of the channel packages sold, and a general
description of marketing promotions and discounts offered to subscribers since
January 1, 1996 and those which may affect the Relevant Business after the
Closing Date.
5.14 DISCLOSURE. No representation or warranty by Seller in this
Agreement or in any Schedule or Exhibit to this Agreement, or any statement,
list or certificate furnished or to be furnished by Seller pursuant to this
Agreement, contains or will contain any untrue statement of material fact, or
omits or will omit any material fact which makes or would make the statements
contained therein misleading. Without limiting the generality of the foregoing,
the information set forth in SCHEDULE 1.2 concerning the Relevant Business is
accurate and complete in all material respects.
5.15 EXCLUSIVE RIGHTS. Mankato Citizens Telephone Company
currently holds the NRTC/Member Agreement for Marketing and Distribution of DBS
Services to provide DirecTV programming to homes in the Service Area, which
Buyer understands will be transferred to Seller prior to Closing and
subsequently transferred to Buyer at Closing. Such Agreement is in full force
and effect with no defaults thereunder.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF BUYER
To induce Seller to enter into this Agreement, Buyer represents and
warrants to Seller as of the date of this Agreement and as of the Closing, as
follows:
6.1 ORGANIZATION AND QUALIFICATION. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of Delaware 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.
6.2 AUTHORITY AND VALIDITY. Buyer has all requisite corporate
power and authority to execute and deliver, to perform its obligations under,
and to consummate the transactions contemplated by, this Agreement. 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 have been duly authorized by all requisite corporate action of Buyer
and this Agreement constitutes the valid and binding obligation of Buyer,
enforceable in accordance with its terms.
6.3 NO BREACH OR VIOLATION. Subject to obtaining the Required
Consents, all of which are listed on SCHEDULE 1.15, 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 or
modification of (iii) result in the acceleration of (or give any Person the
right to accelerate) the performance of Buyer under, or (iv) result in the
creation or imposition of any Encumbrance under, any instrument or other
agreement to which Buyer is a party or by which Buyer or any of its assets is
bound or affected, except for purposes of this clause (d) such violations,
conflicts, breaches, defaults, terminations, suspensions, modifications, and
accelerations as would
not, individually or in the aggregate have a material adverse effect on Buyer or
on the validity, binding effect or enforceability of this Agreement.
6.4 DISCLOSURE. No representation or warranty by Buyer in this
Agreement or Exhibit to this Agreement, or any statement or certificate
furnished or to be furnished by Buyer pursuant to this Agreement, contains or
will contain any untrue statement of material fact, or omits or will omit to
state a material fact required to be stated therein or necessary to make the
statements contained therein not misleading in light of the circumstances in
which made.
6.5 FINANCIAL ABILITY. Buyer has both the financial ability to
consummate the transaction contemplated hereby and the staffing and organization
necessary to serve the customer base of the Relevant Business.
6.6 BROKERS OR FINDERS. Buyer has retained Nations Media
Partners in connection with the transaction contemplated by this Agreement and
will be responsible for payment of their fee.
SECTION 7. ADDITIONAL COVENANTS.
7.1 ACCESS TO PREMISES AND RECORDS. Between the date of this
Agreement and the Closing Date, and upon not less than 48 hours' notice, Seller
will give Buyer and its representatives reasonable access at reasonable times
to all the premises and books and records of the Relevant Business which can be
isolated from Seller's other operations, and to all the Assets and will furnish
to Buyer and its representatives all information regarding the Relevant Business
and the Assets as Buyer may from time to time reasonably request. Seller agrees
it, its officers and employees will cooperate with and assist Buyer in its
reasonable requests for information.
7.2 CONTINUITY AND MAINTENANCE OF OPERATIONS; FINANCIAL
STATEMENTS. Except as Buyer may otherwise agree in writing, until the Closing:
7.2.1 Seller shall not, following the execution of this
agreement, operate the Relevant Business other than in the ordinary course
consistent with past practices and will not take any action that will
negatively impact the availability of services of its employees employed in
connection with the Relevant Business or the beneficial business relationships
with customers, suppliers or others having business dealings with the Seller
relating to the Relevant Business. Without limiting the generality of the
foregoing, Seller will maintain the Assets consistent with past practice, will
maintain insurance as in effect on the date of this Agreement and will 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 nor will it permit
any of its officers, directors, shareholders, agents or employees to, pay any of
the Seller's subscriber accounts receivable (other than for their own
residences) prior to the Closing Date. Seller will continue to implement its
procedures for disconnection and discontinuance of service to subscribers whose
accounts are delinquent in accordance with those in effect on the date of this
Agreement.
7.2.2 Seller agrees it will NOT: (a) make any business
decisions which could materially adversely affect the Relevant Business or the
Assets; (b) change the rates charged for Services from those listed on SCHEDULE
1.2, on or before the date of Closing unless nationally advertised by DirecTV or
unless it experiences a wholesale cost increase greater than ten percent (10%);
(c) sell, transfer or assign any of the Assets (other than in the ordinary
course of business) or permit the creation of any material Encumbrance on
any Asset; (d) permit the amendment or cancellation of any Seller Contract
which affects or is applicable to the Relevant Business; (e) enter into any
contract or commitment or incur any indebtedness or other liability or
obligation of any kind relating to or the Relevant Business involving an
expenditure in excess of $50,000, if such contract, commitment, indebtedness,
liability or obligation, by its terms, will survive the Closing; 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.
Seller will deliver to Buyer copies of its monthly NRTC reports as reasonably
requested by Buyer between execution of this Agreement and the Closing Date.
7.3 REQUIRED CONSENTS. As soon as practicable after execution of
this Agreement, the parties shall use their respective best efforts to obtain
any necessary consent, approval, authorization or order of, make any
registration or filing with or give notice to, any Governmental Authority or
Person as is required to be obtained, made or given by either party to
consummate the transactions contemplated by this Agreement, including without
limitation (i) consents required under the NRTC Member Agreement; and (ii) any
authorizations, consents, approvals, actions, filings or notices set forth in
SCHEDULE 1.15. In no event will Buyer be required to agree to any material
adverse changes in, or the imposition of any material adverse condition upon the
transfer to Buyer of any Seller Contract as a condition to obtaining any
Required Consent.
7.4 NO SHOPPING. Other than as required by law or in
furtherance of the consummation of this Agreement, neither Seller nor any agent
or representative of Seller 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 thereto, or (c) furnish any information to any Person
other than Buyer relating to, any direct or indirect acquisitions or purchase of
all or any portion of the Assets.
7.5 NOTIFICATION OF CERTAIN MATTERS. Each party hereto shall
promptly provide to the other, copies of material notices or correspondence from
the NRTC relating to the transaction contemplated by this Agreement. Each party
shall also promptly notify the other of any fact, event, circumstance or action
that, if known on the date of this Agreement, would have been required to be
disclosed to the other pursuant to this Agreement or cause the representations
or warranties under this Agreement not to be correct and/or complete. In
addition, either party shall give prompt written notice to the other of any
adverse development causing a breach of its representations and warranties in
this Agreement. No disclosure pursuant to this Section 7.5, however, shall be
deemed to amend or supplement this Agreement or to prevent or cure any
misrepresentation, breach of warranty, or breach of covenant.
7.6 TRANSFER TAXES. In the event that any Governmental
Authority or of any state, municipality, county or other subdivision thereof
shall at any time impose or otherwise require or demand payment by or from
either Seller or Buyer of any state or local sales, use, transfer, excise,
documentary or license taxes or fees or any other charge (including filing fees)
with respect to Seller's sale or transfer to Buyer of the Assets, Seller and
Buyer equally share the payment. Consistent with the foregoing, Buyer shall
deliver to Seller its Resale Certificate from the Minnesota Department of
Revenue, exempting the transfer of all inventory sold to Buyer from Minnesota
Sales Tax.
7.7 NON-COMPETITION AGREEMENT. At the Closing, the Seller will
sign and deliver to Buyer a Non-Competition Agreement substantially in the form
of EXHIBIT G-1. The consideration for such Non-competition Agreement shall be
allocated as part of the purchase price paid to Seller in accordance with
Section
3.5 above. The consideration for the Non-Competition Agreement is included as
an adjustment to the Base Purchase Price and shall be paid at Closing to Seller.
7.8 UPDATED SCHEDULES. Not less than five days prior to
Closing, Seller will deliver to Buyer revised copies of Schedules which shall
have been updated 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.
7.9 USE OF SELLER'S NAME. Buyer may continue to operate the
Relevant Business using Seller's trade names and all derivations and
abbreviations of such name and related marks for a period of 120 days after the
Closing Date, after which period Buyer shall cease all such usage. Buyer shall,
not later than the 120th day after the Closing Date, deliver to Seller written
affirmation that Buyer has ceased using all of Seller's trade names including
the name "Direct Vision"
7.10 SATISFACTION OF CONDITIONS. Each party will use its
reasonable good faith 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 9, provided that Buyer
will not be required to agree to any increase in the amount payable with respect
to, or any modification that makes more burdensome in any material respect, any
of the Assumed Liabilities.
7.11 CONFIDENTIALITY. No 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, 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 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.
7.12 DUTY OF GOOD FAITH AND FAIR DEALING. The parties agree to
act in good faith with regard to all matters that are the subject of this
Agreement, and neither will intentionally nor knowingly take any action or omit
to take any action at any time for the primary purpose of depriving the other
Party unfairly of any right or benefit that the other Party has at such time
under this Agreement.
7.13 Buyer agrees to cooperate with Seller by assisting Seller
with the acquisition of replacement property which is "like kind" to the
property Buyer is acquiring. Such acquisition is intended to qualify Seller for
like-kind treatment pursuant to Section 1031 of the Internal Revenue Code of
1986, as amended.
Seller and Buyer will execute an Exchange Agreement for the benefit
of the Seller at or before the closing of this transaction. The Exchange
Agreement shall specify the terms of affecting a like-kind exchange of
properties between Seller and Buyer.
Seller's proceeds will be held in a qualified escrow account,
pursuant to the terms of the Exchange Agreement in order to be used by the Buyer
or an Intermediary to acquire replacement properties to complete the exchange.
Buyer shall have no obligation for the exchange beyond the proceeds of the
escrow account.
7.14 OPPORTUNITY TO BID ON BILLING SERVICES. If, within two
years of the Closing Date Buyer determines to outsource its customer billing
service to a service provider other than NRTC, Buyer will notify Seller to allow
Seller to submit a bid to provide such services.
7.15 OPPORTUNITY TO BID ON THE RELEVANT BUSINESS. For a period
of two years after the Closing Date, if Buyer determines to sell the Relevant
Business either separately or in conjunction with other of its DBS assets, Buyer
will grant Seller an opportunity to make an offer to purchase such assets on the
same basis as any other Person. Buyer reserves the right, at its sole
discretion, to select the ultimate purchaser on whatever terms and conditions it
deems favorable.
7.16 As soon as practicable as determined by both Buyer and
Seller, Buyer agrees to discuss individually with Seller's employees the
opportunities for employment with Buyer and the wages and benefits which would
be offered to such employees. Seller agrees to make such employees reasonably
available for discussions with Buyer about employment after Closing. It is
Buyer's intent at the execution of this Agreement to maintain a local presence
in the Service Area, and for such time as it is economically feasible as
determined by Buyer. Buyer needs employees to establish and maintain such a
presence and would like to consider Seller's current employees for such
positions if such employees are individually willing to discuss the
possibilities of employment with Buyer.
SECTION 8. CLOSING.
Provided that all Required Consents are obtained no later than June 1,
1997, the Closing shall be made effective as of the June, 1997 NRTC cutoff date
and shall occur no later than seven days after the NRTC cutoff date. In the
event the Required Consents are not obtained on or prior to June 1, 1997, the
Closing shall be made effective as of the July, 1997 NRTC cutoff date but in no
event shall the Closing occur later than July 15, 1997. The Closing will be
held at the offices of Buyer in Kansas City, Missouri or at such other place as
Buyer and Seller may agree.
SECTION 9. CONDITIONS TO CLOSING.
9.1 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:
9.1.1 No action, suit or proceeding is pending or
threatened by or before any Governmental Authority and no Legal Requirement has
been enacted, promulgated or issued or deemed applicable to any of the
transactions contemplated by this Agreement by a Governmental Authority, which
would (a) prohibit Buyer's ownership of the Relevant Business or the Assets, (b)
compel Buyer to dispose of or hold separate all or a material portion of the
Relevant Business or the Assets as a result of any of the transactions
contemplated by this Agreement, or (c) prevent or make illegal the consummation
of any
transactions contemplated by this Agreement.
9.2 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 by Buyer, to the
extent permitted by applicable Legal Requirements, at or prior to the Closing
Date, of each of the following conditions:
9.2.1 All representations and warranties of Seller
contained in this Agreement are, if not specifically qualified by materiality,
true in all respects and, if so qualified,
are 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, except for
changes specifically permitted or contemplated by this Agreement.
9.2.2 Seller has performed and complied in all material
respects 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, including the payment of all outstanding taxes and NRTC invoices.
9.2.3 Seller has executed (or caused to be executed) and
delivered to Buyer each of the following items:
(a) an Xxxxxxx Money Escrow Agreement, substantially in the
form attached as EXHIBIT A;
(b) an Indemnity Escrow Agreement substantially in the form
attached as EXHIBIT B;
(c) a Xxxx of Sale substantially in the form attached as
EXHIBIT C;
(d) an Assignment and Assumption Agreement substantially in
the form attached as EXHIBIT D;
(e) Non-Competition Agreements signed by Seller
substantially in the form attached as EXHIBIT G;
(f) such other transfer instruments as Buyer may reasonably
deem necessary or advisable to transfer the Assets to
Buyer and to perfect Buyer's rights in the Assets.
9.2.4 Seller has delivered to Buyer 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.
9.2.5 No action, proceeding or investigation has been
instituted or threatened prior to Closing by or before any court or Governmental
Authority which would, if determined adversely to Buyer's interest, materially
impair the ability of Buyer to realize the benefits of the transactions
contemplated by this Agreement.
9.2.6 Seller has delivered releases, in form reasonably
satisfactory to Buyer, of all Encumbrances affecting any of the Assets (other
than Permitted Encumbrances).
9.2.7 Seller has delivered to Buyer: (a) a certificate,
dated the Closing Date, signed by Seller's President or Chief Financial Officer,
stating that to the best of his knowledge in his corporate capacity, the
conditions set forth in Sections 9.2.1 and 9.2.2 are satisfied; (b) a copy of
the resolutions of the board of directors of Seller authorizing the execution,
delivery and performance of this agreement by Seller, and a certificate of
Seller, dated as of the Closing, that such resolutions were duly adopted and are
in full force and effect as of the date of Closing; and (c) such other documents
as Buyer may reasonably request in connection with the transactions contemplated
by this Agreement.
9.2.8 Seller has not less than Ninety-three Thousand
Dollars ($93,000) in gross monthly revenue from the sale of DirecTV programming
services.
9.2.9 Buyer will receive the opinion of Xxxxxxx, Xxxx &
Xxxxxx, PLLP, counsel for Seller dated the Closing Date, in the form of
EXHIBIT F.
9.2.10 Buyer and Seller have negotiated and finalized the
allocation of the purchase price among the Assets as required by Section 3.5 of
this Agreement.
9.3 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 Legal Requirement, at or prior to the Closing
Date, of each of the following conditions:
9.3.1 Buyer has paid the Base Purchase Price required to
be paid at the Closing, as adjusted in accordance with this Agreement.
9.3.2 All representations and warranties of Buyer
contained in this Agreement are, if not specifically qualified by materiality,
true and correct in all respects and, if so qualified, are true and correct in
all material respects, in each case on and as of the Closing Date with the same
effect as if made on and as of the Closing Date, except for changes specifically
permitted or contemplated by this Agreement.
9.3.3 Buyer in all material respects has 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.
Buyer has executed and delivered to Seller each of the following items:
a. an Xxxxxxx Money Escrow Agreement,
substantially in the form attached as EXHIBIT
A:
b. an Indemnity Escrow Agreement, substantially in
the form attached as EXHIBIT B;
c. an Assignment and Assumption Agreement in the
form attached as EXHIBIT D;
d. such other transfer instruments as Seller may
reasonably deem necessary or advisable to
transfer the Assets to Buyer.
9.3.5 Buyer has delivered to Seller the following: (a) a
certificate, dated the Closing Date, signed by the chief executive officer of
Buyer, stating that to the best of his knowledge in his corporate capacity, the
conditions set forth in Sections 9.3.2 and 9.3.3 are satisfied; (b) a copy of
the resolutions of the board of directors of Buyer authorizing the execution,
delivery and performance of this agreement by Buyer, and a certificate of Buyer,
dated as of the Closing, that such resolutions were duly adopted and are in full
force and effect as of the date of Closing; and (c) such other documents as
Seller may reasonably request in connection with the transactions contemplated
by this Agreement.
9.3.6 Seller has received the opinion of Polsinelli,
White, Xxxxxxxx & Xxxxxxx, P.C.,, counsel for Buyer, or such other law firm,
which Buyer in its discretion chooses to use, dated the Closing Date, in the
form of EXHIBIT H.
9.3.7 Buyer has delivered to Seller a Resale Certificate
from the Minnesota Department of Revenue.
9.3.8 Buyer and Seller have negotiated and finalized the
allocation of the purchase price among the assets as required by Section 3.5 of
this Agreement.
9.3.9 No action, proceeding or investigation has been
instituted or threatened prior to Closing by or before any court or Governmental
authority which would, if determined adversely to Buyer's interest, materially
impair the ability of Seller to realize the benefits of the transactions
contemplated by this Agreement.
9.4 WAIVER OF CONDITIONS. Any party may waive any or all of
the conditions to its obligations under this Agreement.
SECTION 10. TERMINATION.
10.1 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:
(a) by the mutual written consent of Buyer and Seller;
(b) by Buyer or Seller, if the transactions contemplated by
this Agreement to take place at the Closing have not been
consummated on or before July 15, 1997, other than as
extended by mutual agreement of the parties unless such
failure is the result of not having obtained the Required
Consents to transfer the NRTC/Member Agreement for
Distribution of DirecTV services notwithstanding the good
faith efforts by either party to obtain the same. In the
event NRTC issues a written rejection of the application to
transfer Seller's Member Agreement to Buyer which
specifically states such rejection is
due to a determination by the NRTC that Buyer is
undercapitalized or is lacking in customer service
capabilities, Buyer agrees to forfeit to Seller $250,000 of
the Buyer Deposit. The remaining Buyer Deposit would then
be returned to Buyer. If, for any other reason, the Required
Consent to transfer the NRTC Member Agreement is not
forthcoming, either party may terminate this Agreement and
subject to the terms herein, have no further obligation to
the other, provided 100% of the Buyer Deposit is returned to
Buyer.
10.2 LIABILITIES IN EVENT OF TERMINATION. Subject to the
provisions of Section 3.1, 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.
10.3 PROCEDURE UPON TERMINATION. In the event of the termination
of this Agreement by Buyer or Seller pursuant to this Section 10, notice of such
termination will promptly be given by the terminating party to the other unless
otherwise provided in Section 10.1 (b), the liability of the parties following
termination shall be subject to Section 3.1.1.
SECTION 11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION.
11.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Seller in this Agreement and in the documents
and instruments to be delivered by Seller pursuant to this Agreement will
survive the Closing without limitation until the first anniversary of the
Closing Date, except that all such representations and warranties with respect
to any federal, state or local taxes or copyright matter will survive until the
expiration of the applicable statute of limitations (including any extensions)
for such federal, state or local taxes or copyright matter, respectively. 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
the Closing without limitation until the first anniversary of the Closing Date.
The periods of survival of the representations and warranties prescribed by this
Section 11.1 are referred to as the "Survival Period". The liabilities of the
parties under their respective representations and warranties will expire as of
the expiration of the applicable Survival Period; provided, however, that such
expiration will not include, extend or apply to any representation or warranty,
the breach of which has been asserted in written notice to the other party
before such expiration indicating the facts or conditions existing 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).
11.2 INDEMNIFICATION BY SELLER. 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:
(a) all losses, damages, liabilities, deficiencies or
obligations of or to Buyer resulting from or arising out of
(i) any breach of any then surviving representation or
warranty made by Seller in this Agreement, (ii) any breach
of any then surviving covenant, agreement or obligation of
Seller contained in this Agreement, (iii) any third party
claim with respect to any act or omission of Seller with
respect to Seller's operation of the Assets or Seller's
conduct of the Relevant Business, which act or omission
occurred prior to or on the Closing Date without regard to
whether such third party claim with respect to such act or
omission is asserted before or after the Closing Date, (iv)
any liability or
obligation of Seller not included in the Assumed
Liabilities, (v) any claim that the transactions
contemplated by this Agreement violate any bulk transfer or
fraudulent conveyance laws of any jurisdiction, (vi)
Seller's failure to deliver any Required Consent to Buyer,
and (vii) any claim relating in any manner to the operation
of the Relevant Business prior to and on the Closing Date.
(b) all claims, actions, suits, proceedings, demands,
judgments, assessments, fines, interest, penalties, costs
and expenses (including settlement costs and reasonable
legal, accounting, experts' and other fees, costs and
expenses) incident or relating to or resulting from any of
the foregoing.
Provided, however, that Seller's cumulative liability by reason of any of the
foregoing shall not exceed the sum of Two Million Five Hundred Thousand Dollars
($2,500,000), and Buyer expressly waives any and all claims against the Seller
to the full extent of such excess.
11.3 INDEMNIFICATION BY BUYER. Buyer will indemnify, defend
and hold harmless Seller 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:
(a) all losses, damages, liabilities, deficiencies or
obligations of or to Seller or any such other indemnified
Person resulting from or arising out of (i) any breach of
any representation or warranty made by Buyer in this
Agreement, (ii) the breach of any covenant, agreement or
obligation of Buyer contained in this Agreement or (iii) the
failure by Buyer to perform any of its obligations in
respect of the Assumed Liabilities; and (iv) any third party
claim with respect to any act or omission of Buyer with
respect to Buyer's operation of the Assets or Buyer's
conduct of the Relevant Business, which act or omission
occurred after the Closing Date; and
(b) all claims, actions, suits, proceedings, demands,
judgments, assessments, fines, interest, penalties, costs
and expenses (including, without limitation, settlement
costs and reasonable legal, accounting, experts' and other
fees, costs and expenses) incident or relating to or
resulting from any of the foregoing.
Provided, however, that Buyer's cumulative liability by reason of any of the
foregoing shall not exceed the sum of Two Million Five Hundred Thousand Dollars
($2,500,000), and Seller expressly waives any and all claims against Buyer to
the extent of such excess.
11.4 THIRD PARTY CLAIMS. Promptly (and in any event within 30
days) after the receipt by any party of notice of any claim, action, suit or
proceeding by any Person who is not a party to this Agreement (collectively, an
"Action"), which Action is subject to indemnification under this Agreement, such
party (the "Indemnified Party") will give reasonable written notice to the party
from whom indemnification is claimed (the "Indemnifying Party"). The
Indemnified Party will be entitled, at the sole expense and liability of the
Indemnifying Party, to exercise full control of the defense, compromise or
settlement of any such Action unless the Indemnifying Party, within a reasonable
time (and in any event within 30 days) after the giving of such notice by the
Indemnified Party, (a) admits in writing to the Indemnified Party the
Indemnifying Party's liability to the Indemnified Party for such Action under
the terms of this Section 11, (b) notifies the Indemnified Party in writing of
the Indemnifying Party's intention to assume such defense, (c) provides evidence
reasonably
satisfactory to the Indemnified Party of the Indemnifying Party's ability to pay
the amount, if any, for which the Indemnified Party may be liable as a result of
such Action, and (d) retains legal counsel reasonably satisfactory to the
Indemnified Party to conduct the defense of such Action. The other party will
cooperate with the party assuming the defense, compromise or settlement of any
such Action in accordance with this Agreement in any reasonable manner. The
Indemnified Party will have the right to employ separate counsel and to
participate in (but not control) the defense, compromise or settlement of the
Action, but the fees and expenses of such counsel will be at the expense of the
Indemnified Party unless (i) the Indemnifying Party has agreed to pay such fees
and expenses, (ii) any relief other than the payment of money damages is sought
against the Indemnified Party or (iii) the Indemnified Party will have been
advised by its counsel that there may be one or more defenses available to it
which are different from or additional to those available to the Indemnifying
Party, and in any such case that portion of the fees and expenses of such
separate counsel that are reasonably related to matters covered by the indemnity
provided in this Section 11 will be paid by the Indemnifying Party. No
Indemnified Party will settle or compromise any such Action for which it is
entitled to indemnification under this Agreement without prior written consent
of the Indemnifying Party, unless the Indemnifying Party has failed, after
reasonable notice, to undertake control of such Action in the manner provided in
this Section 11.4. No Indemnifying Party will settle or compromise any such
Action (A) in which any relief other than the payment of money damages is sought
against any Indemnified Party or (B) in the case of any Action relating to the
Indemnified Party's liability for any tax, if the effect of such settlement
would be an increase in the liability of the Indemnified Party for the payment
of any tax for any period beginning after the Closing Date, unless the
Indemnified Party consents in writing to such compromise or settlement.
11.5 LIMITATIONS ON INDEMNIFICATION - SELLER. Seller will not be
liable for indemnification arising under this Agreement for (a) any losses,
damages, liabilities, deficiencies or obligations of or to Buyer or any other
person entitled to indemnification from Seller or (b) any claims, actions,
suits, proceedings, demands, judgments, assessments, fines, interest, penalties,
costs and expenses (including settlement costs and reasonable legal, accounting,
experts' and other fees, costs and expenses) incident or relating to or
resulting from any of the foregoing (the items described in clauses (a) and (b)
collectively being referred to for purposes of this Section 11.5 as "Buyer
Damages"), unless and until the amount of Buyer Damages for which Seller would,
but for the provisions of this Section 11.5, be liable exceeds, on an aggregate
basis, the sum of $25,000 whereupon and whereafter Seller will be liable for all
Buyer Damages in excess of $25,000, but not to exceed $2,500,000, which will be
due and payable within 15 days after Seller's receipt of a statement therefor.
11.6 LIMITATIONS ON INDEMNIFICATION - BUYER. Except as provided
in Section 3.1, Buyer will not be liable for indemnification arising under this
Agreement for (a) any losses, damages, liabilities, deficiencies or obligations
of or to Seller or any other person entitled to indemnification from Buyer or
(b) any claims, actions, suits, proceedings, demands, judgments, assessments,
fines, interest, penalties, costs and expenses (including settlement costs and
reasonable legal, accounting, experts' and other fees, costs and expenses)
incident or relating to or resulting from any of the foregoing (the items
described in clauses (a) and (b) collectively being referred to for purposes of
this Section 11.6 as "Seller Damages") unless and until the amount of Seller
Damages for which Buyer would, but for the provisions of this Section 11.6, be
liable exceeds, on an aggregate basis, the sum of $25,000, whereupon and
whereafter Buyer will be liable for all such damages in excess of $25,000, but
not to exceed $2,500,000, which will be due and payable within 15 days after
Buyer's receipt of a statement therefor.
SECTION 12. MISCELLANEOUS
12.1 TRANSITION. Seller shall cooperate in good faith with Buyer
to assure a
smooth transition of the Assets and the operation of the Relevant Business after
Closing.
12.2 PARTIES OBLIGATED AND BENEFITED. Subject to the limitations
set forth below, this Agreement will be binding upon the parties and their
respective assigns and successors in interest and will inure solely to the
benefit of the parties and their respective assigns and successors in interest,
and no other Person will be entitled to any of the benefits conferred by this
Agreement. Without the prior written consent of the other parties, no party
will assign any of its rights under this Agreement or delegate any of its duties
under this Agreement, provided that Buyer may, without the consent of any other
party, (i) assign or delegate its rights or obligations under this Agreement to
any subsidiary thereof, and such assignee will be substituted for Buyer under
this Agreement as though it were the original party to this Agreement and Buyer
will be released from all obligations under this Agreement, and (ii) make a
collateral assignment of its rights hereunder to Buyer's or its assignee's
secured lenders.
12.3 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 (return receipt
requested), or delivered by commercial courier (e.g., United Parcel Service or
Federal Express) or, if receipt is confirmed, by telecopier:
To Buyer at: 000 Xxxx 00xx Xxxxxx, Xxxxx 000
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, President
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
With a copy (which will not constitute notice) transmitted
by telecopier to:
000 Xxxx 00xx Xxxxxx, Xxxxx 000
Xxxxxx Xxxx, XX 00000
Attention: Jo Xxxxx Xxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
To Seller at: 000 X. Xxxxxxx Xx.
X.X. Xxx 0000
Xxxxxxx , XX 00000
Attention: Xxxxxx X. Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
With a copy (which shall not constitute notice) transmitted
by telecopier to:
Xxxxxxx, Xxxx & Xxxxxx, PLLP
000 Xxxxx Xxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Any party may change the address to which notices are required to be sent by
giving notice of such change in the manner provided in this Section 12.3. 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, except that
any notice of a change of address will be effective only upon actual receipt.
12.4 ATTORNEYS' FEES. In the event of any action or suit based
upon or arising out of any alleged breach by any party of any representation,
warranty, covenant or agreement contained in this Agreement, the prevailing
party will be entitled to recover reasonable attorneys' fees and other costs of
such action or suit from the other party.
12.5 RIGHT TO SPECIFIC PERFORMANCE. The parties acknowledge that
the unique nature of the Assets to be purchased by Buyer pursuant to this
Agreement renders money damages an inadequate remedy for the breach by Seller or
Buyer of its obligations under this Agreement, and the parties agree that, in
the event of such breach, the parties will upon proper action instituted by it,
be entitled to a decree of specific performance of this Agreement.
12.6 WAIVER. This Agreement or any of its provisions may not be
waived except in writing. The failure of any party to enforce any right arising
under this Agreement on one or more occasions will not operate as a waiver of
that or any other right on that or any other occasion.
12.7 CAPTIONS. The article and section captions of this
Agreement are for convenience only and do not constitute a part of this
Agreement.
12.8 CHOICE OF LAW. THIS AGREEMENT AND THE RIGHTS OF THE PARTIES
UNDER IT WILL BE GOVERNED AND CONSTRUED IN ALL RESPECTS IN ACCORDANCE WITH THE
LAWS OF THE STATE OF MINNESOTA. THE APPROPRIATE JURISDICTION AND VENUE IN
CONNECTION WITH THE INTERPRETATION OF OR ANY DISPUTES CONCERNING THIS AGREEMENT
WILL BE IN THE DISTRICT COURT OF BLUE EARTH COUNTY, MINNESOTA, FIFTH JUDICIAL
DISTRICT.
12.9 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 world "include" and derivatives of that word
are used in this Agreement in an illustrative sense rather than a limiting
sense.
12.10 RIGHTS CUMULATIVE. All rights and remedies of each of the
parties under this Agreement will be cumulative, and the exercise of one or more
rights or remedies will not preclude the exercise of any other right or remedy
available under this Agreement or applicable law.
12.11 FURTHER ACTIONS. Seller and Buyer will execute and deliver
to the other, from time to time at or after the Closing, for no additional
consideration and at no additional cost to the requesting party, such further
assignments, certificates, instruments, records, or other documents, assurances
or things as may be
reasonably necessary to give full effect to this Agreement and to allow each
party fully to enjoy and exercise the rights accorded and acquired by it under
this Agreement.
12.12 TIME. Time is of the essence under this Agreement. If the
last day permitted for the giving of any notice or the performance of any act
required or permitted under this Agreement falls on a day which is not a
business day, the time for the giving of such notice or the performance of such
act will be extended to the next succeeding business day.
12.13 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original.
12.14 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) contains the entire agreement of the
parties and supersedes all prior oral or written agreements and understandings
with respect to the subject matter. This Agreement may not be amended or
modified except by a writing signed by the parties.
12.15 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.
12.16 LATE PAYMENTS. If either party fails to pay the other any
adjustment amounts when due under this agreement, such 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 Citibank, N.A. at its prime rate (the "Prime
Rate") plus 3%, adjusted as and when changes in the Prime Rate are made;
provided, however, that the interest and charges assessable under this paragraph
shall not be assessed as to any amount disputed in good faith.
12.17 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.
The parties have executed this Agreement as of the day and year first above
written.
SELLER:
HICKORY TECH CORPORATION
By:
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Xxxxxx X. Xxxxx
BUYER:
GOLDEN SKY SYSTEMS, INC.
By:
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Xxxxxx X. Xxxxx, President
