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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
KNOLOGY HOLDINGS, INC.,
KNOLOGY OF PANAMA CITY, INC.,
BEACH CABLE, INC.
AND
L. XXXXXXX XXXXXX, XX.
DATED AS OF DECEMBER 5, 1997
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TABLE OF CONTENTS
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AGREEMENT AND PLAN OF MERGER........................................................................1
ARTICLE I THE MERGER...............................................................................1
SECTION 1.1. The Merger.............................................................................1
SECTION 1.2. Effective Time.........................................................................1
SECTION 1.3. Effect of the Merger...................................................................2
SECTION 1.4. Articles of Incorporation; Bylaws......................................................2
SECTION 1.5. Directors and Officers.................................................................2
SECTION 1.6. Closing................................................................................2
SECTION 1.7. Subsequent Actions.....................................................................3
SECTION 1.8. Tax and Accounting Treatment of the Merger.............................................3
ARTICLE II CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES......................................3
SECTION 2.1. Conversion of Securities...............................................................3
SECTION 2.2. Exchange of Certificates...............................................................7
SECTION 2.3. Subscriber Adjustments.................................................................7
SECTION 2.4. Stock Transfer Books...................................................................7
SECTION 2.5. Satisfaction of Indebtedness...........................................................7
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE STOCKHOLDER......................8
SECTION 3.1. Organization and Qualification.........................................................8
SECTION 3.2. Articles of Incorporation and Bylaws...................................................8
SECTION 3.3. Capitalization.........................................................................8
SECTION 3.4. Authority..............................................................................9
SECTION 3.5. No Conflict; Required Filings and Consents.............................................9
SECTION 3.6. Financial Statements..................................................................10
SECTION 3.7. Absence of Certain Changes or Events..................................................10
SECTION 3.8. Ownership and Condition of the Assets.................................................11
SECTION 3.9. System Agreements.....................................................................11
SECTION 3.10. Real Property........................................................................11
SECTION 3.11. Environmental Matters................................................................12
SECTION 3.12. Litigation...........................................................................13
SECTION 3.13. Compliance with Laws.................................................................14
SECTION 3.14. Copyright and Trademark..............................................................15
SECTION 3.15. Franchises...........................................................................16
SECTION 3.16. System Information...................................................................16
SECTION 3.17. Taxes and Assessments................................................................17
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SECTION 3.18. Employment Matters...................................................................17
SECTION 3.19. Transactions with Related Parties....................................................18
SECTION 3.20. Insurance............................................................................18
SECTION 3.21. Net Working Capital..................................................................19
SECTION 3.22. Brokers..............................................................................19
SECTION 3.23. Disclosure...........................................................................19
SECTION 3.24. Pooling of Interests.................................................................19
SECTION 3.25. Programming Contracts................................................................19
ARTICLE IV ADDITIONAL REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER...........................20
SECTION 4.1. Title to Company Common Stock.........................................................20
SECTION 4.2. Authority and Capacity................................................................20
SECTION 4.3. Absence of Violation..................................................................20
SECTION 4.4. Restrictions and Consents.............................................................20
SECTION 4.5. Binding Obligation....................................................................20
SECTION 4.6. No Registration Under the Securities Act..............................................21
SECTION 4.7. Acquisition for Investment............................................................21
SECTION 4.8. Evaluation of Merits and Risks of Investment..........................................21
ARTICLE V REPRESENTATIONS AND WARRANTIES OF ACQUIROR..............................................22
SECTION 5.1. Organization and Qualification........................................................22
SECTION 5.2. Certificate of Incorporation and Bylaws...............................................22
SECTION 5.3. Capitalization........................................................................22
SECTION 5.4. Authority.............................................................................23
SECTION 5.5. No Conflict; Required Filings and Consents............................................23
SECTION 5.6. Financial Statements..................................................................23
SECTION 5.7. Absence of Certain Changes or Events..................................................24
SECTION 5.8. Litigation............................................................................24
SECTION 5.9. Taxes and Assessments.................................................................25
SECTION 5.10. Brokers..............................................................................25
SECTION 5.11. Disclosure...........................................................................25
SECTION 5.12. Private Placement Memorandum.........................................................25
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF MERGER SUB...........................................26
SECTION 6.1. Organization and Qualification........................................................26
SECTION 6.2. Certificate of Incorporation and Bylaws...............................................26
SECTION 6.3. Authority.............................................................................26
SECTION 6.4. No Conflict; Required Filings and Consents............................................27
SECTION 6.5. Disclosure............................................................................27
ARTICLE VII COVENANTS.............................................................................28
SECTION 7.1. Affirmative Covenants of the Company..................................................28
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SECTION 7.2. Negative Covenants of the Company.....................................................28
ARTICLE VIII ADDITIONAL AGREEMENTS................................................................30
SECTION 8.1. Consents and Approvals; Filings and Notices...........................................30
SECTION 8.2. Access and Information................................................................30
SECTION 8.3. Confidentiality.......................................................................30
SECTION 8.4. Further Action; Reasonable Best Efforts...............................................31
SECTION 8.5. Public Announcements..................................................................31
SECTION 8.6. No Solicitation.......................................................................31
SECTION 8.7. Service Agreements....................................................................31
SECTION 8.8. Pooling Accounting....................................................................32
ARTICLE IX CLOSING CONDITIONS.....................................................................32
SECTION 9.1. Conditions to Obligations of Acquiror and Merger Sub..................................32
SECTION 9.2. Conditions to Obligations of the Company and the Stockholder..........................34
ARTICLE X TERMINATION, AMENDMENT AND WAIVER.......................................................35
SECTION 10.1. Termination..........................................................................35
SECTION 10.2. Effect of Termination................................................................35
SECTION 10.3. Amendment............................................................................36
SECTION 10.4. Waiver...............................................................................36
ARTICLE XI SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION; REMEDIES.................................36
SECTION 11.1. Survival of Representations..........................................................36
SECTION 11.2. Agreement of Stockholder to Indemnify................................................37
SECTION 11.3. Agreement of Acquiror to Indemnify...................................................37
SECTION 11.4. Conditions of Indemnification........................................................37
SECTION 11.5. No Recourse Against the Company......................................................39
SECTION 11.6. Remedies Cumulative..................................................................39
ARTICLE XII GENERAL PROVISIONS....................................................................39
SECTION 12.1. Notices..............................................................................39
SECTION 12.2. Certain Definitions..................................................................40
SECTION 12.3. Headings.............................................................................42
SECTION 12.4. Severability.........................................................................42
SECTION 12.5. Entire Agreement.....................................................................42
SECTION 12.6. Specific Performance.................................................................43
SECTION 12.7. Assignment...........................................................................43
SECTION 12.8. Third Party Beneficiaries............................................................43
SECTION 12.9. Governing Law........................................................................43
SECTION 12.10. Counterparts........................................................................43
SECTION 12.11. Fees and Expenses...................................................................44
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SCHEDULES
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Schedule 2.1 Proforma Calculation
Schedule 3.3 Indebtedness
Schedule 3.5 Company Consents
Schedule 3.8 Assets and Personal Property
Schedule 3.9 System Agreements
Schedule 3.10 Real Property Interests
Schedule 3.11 Environmental Permits and Licenses
Schedule 3.15 Franchises
Schedule 3.16 System Information
Schedule 3.18 Employment Matters
Schedule 3.19 Transactions with Related Parties
Schedule 5.3 Capitalization
Schedule 5.5 Acquiror Consents
Schedule 5.8 Litigation
Schedule 6.4 Merger Sub Consents
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EXHIBITS
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EXHIBIT A FORM OF PAYOFF LETTER
EXHIBIT B FORM OF NONCOMPETITION AGREEMENT
EXHIBIT C FORM OF LEGAL OPINION
EXHIBIT D FORM OF STOCKHOLDERS' AGREEMENT
EXHIBIT E FORM OF HEADEND LEASE
EXHIBIT F FORM OF SUBSCRIBERS CERTIFICATE
EXHIBIT G FORM OF BROKER'S CERTIFICATE
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Index of Defined Terms
Section
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Accounting Firm.......................................................... 2.1(c)(iii)
Acquiror................................................................. PREAMBLE
Acquiror Assets.......................................................... 12.2(a)
Acquiror Balance Sheet Date.............................................. 5.6
Acquiror Financing Transactions.......................................... 12.2.(b)
Acquiror Indemnified Persons............................................. 11.2
Acquiror Material Adverse Effect......................................... 12.2(c)
Acquiror Preferred Stock................................................. 2.1(a)
affiliate................................................................ 12.2(d)
Agreement................................................................ PREAMBLE
Articles of Merger....................................................... 1.2
Basic Rate............................................................... 2.1(b)(iv)
Basic Subscriber ....................................................... 2.1(b)(iv)
Basket Amount............................................................ 11.4(e)
Xxxx South............................................................... 3.20
Broker................................................................... 3.22
business day............................................................. 12.2(e)
Cable Act................................................................ 3.13(d)
CLI...................................................................... 3.13(b)
Closing.................................................................. 1.6
Closing Date............................................................. 1.6
Closing Indebtedness..................................................... 2.5
Code..................................................................... 1.8
Communications Act....................................................... 3.13(a)
Company.................................................................. PREAMBLE
Company Assets........................................................... 12.2(f)
Company Balance Sheet.................................................... 3.6
Company Common Stock..................................................... 2.1(a)
Company Material Adverse Effect.......................................... 12.2(g)
control, controlled by, under common control with........................ 12.2(h)
Delaware Law............................................................. PREAMBLE
Effective Time........................................................... 1.2
Encumbrances............................................................. 12.2(i)
Environmental Laws....................................................... 3.11(d)(i)
FCC...................................................................... 3.13(a)
FCC Licenses............................................................. 3.13(e)
Florida Law.............................................................. PREAMBLE
Franchise Agreements..................................................... 3.15(b)
Government Entity........................................................ 12.2(j)
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Section
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Hazardous Materials...................................................... 3.11(d)(ii)
Headend Lease............................................................ 9.1(i)
Headend Site............................................................. 3.10
Indemnified Party........................................................ 11.4(a)
Indemnifying Party....................................................... 11.4(a)
Laws..................................................................... 12.2(k)
Losses................................................................... 12.2(l)
Merger................................................................... 1.1
Merger Sub............................................................... PREAMBLE
New Hotel Account........................................................ 2.1(b)(iv)
New Subscriber........................................................... 2.1(b)(v)
person................................................................... 12.2(m)
Private Placement Memorandum............................................. 5.12
Programming Contracts ................................................... 3.25
Purchase Price........................................................... 2.1(a)
Qualified New Subscriber................................................. 2.1(c)(ii)
Rights of Way............................................................ 3.10
Securities Act........................................................... 4.6
Stockholder.............................................................. PREAMBLE
subsidiary............................................................... 12.2(n)
Surviving Corporation.................................................... 1.1
System................................................................... PREAMBLE
Target Subscriber Number................................................. 2.1(b)(i)
Taxes.................................................................... 12.2(o)
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is
entered into this 5th day of December, 1997, by and among KNOLOGY HOLDINGS,
INC., a Delaware corporation ("Acquiror"), KNOLOGY OF PANAMA CITY, INC., a
Delaware corporation and a wholly-owned subsidiary of Acquiror ("Merger Sub"),
BEACH CABLE, INC., a Florida corporation (the "Company") and L. XXXXXXX XXXXXX,
XX., the sole stockholder of the Company (the "Stockholder").
WHEREAS, the Company is the owner and operator of a cable
television system serving areas in and around Panama City Beach, Florida (the
"System"); and
WHEREAS, the parties hereto wish to provide that, upon the
terms and subject to the conditions of this Agreement and in accordance with the
Florida Business Corporation Act ("Florida Law") and the Delaware General
Corporation Law ("Delaware Law"), Merger Sub will merge with and into the
Company.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth in
this Agreement, the parties hereto agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1. THE MERGER.
Upon the terms and subject to the conditions set forth in this
Agreement, and in accordance with Florida Law and Delaware Law, at the Effective
Time (as defined in Section 1.2) Merger Sub shall be merged with and into the
Company (the "Merger"). As a result of the Merger, the separate corporate
existence of Merger Sub shall cease and the Company shall continue as the
surviving corporation of the Merger (sometimes referred to herein as the
"Surviving Corporation") and a wholly-owned subsidiary of Acquiror. The name of
the Surviving Corporation shall be "KNOLOGY of Panama City, Inc."
SECTION 1.2. EFFECTIVE TIME.
At the Closing (as defined in Section 1.6), the parties hereto
shall cause the Merger to be consummated by filing articles of merger (the
"Articles of
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Merger"), with the Florida Department of State and the Secretary of State of the
State of Delaware in such form as required by, and executed in accordance with
the relevant provisions of Florida Law and Delaware Law, respectively and in
such form as approved by the Company and Acquiror prior to such filings (the
date and time of the last to occur of such filings or such subsequent date or
time specified in the Articles of Merger being the "Effective Time").
SECTION 1.3. EFFECT OF THE MERGER.
At the Effective Time, the effect of the Merger shall be as
provided in the applicable provisions of Florida Law and Delaware Law. Without
limiting the generality of the foregoing, and subject thereto, at the Effective
Time, except as otherwise provided herein, all the property, rights, privileges,
powers and franchises of Merger Sub and the Company shall vest in the Surviving
Corporation, and all debts, liabilities and duties of Merger Sub and the Company
shall become the debts, liabilities and duties of the Surviving Corporation.
SECTION 1.4. ARTICLES OF INCORPORATION; BYLAWS.
At the Effective Time, (a) the articles of incorporation of
the Company, as in effect immediately prior to the Effective Time and as amended
by the Articles of Merger, shall be the articles of incorporation of the
Surviving Corporation, and (b) the bylaws of the Company, as in effect
immediately prior to the Effective Time, shall be the bylaws of the Surviving
Corporation.
SECTION 1.5. DIRECTORS AND OFFICERS.
The directors of Merger Sub (or such other or additional
individuals as Acquiror may designate prior to Closing) shall be the initial
directors of the Surviving Corporation, each to hold office in accordance with
the articles of incorporation and bylaws of the Surviving Corporation; and the
officers of Merger Sub (or such other or additional individuals as Acquiror may
designate prior to Closing) shall be the initial officers of the Surviving
Corporation, in each case until their respective successors are duly elected or
appointed and qualified.
SECTION 1.6. CLOSING.
Subject to the terms and conditions of this Agreement, the
closing of the Merger (the "Closing") will take place as promptly as practicable
after satisfaction of the latest to occur or, if permissible, waiver of the
conditions set forth in Article IX hereof (the "Closing Date"), at the offices
of Xxxxx & Xxxxxxx L.L.P., 0000 Xxxxxxxxxx Xxxxx, Xxxxx 0000, XxXxxx, Xxxxxxxx
00000, unless another date or place is agreed to in writing by the parties
hereto.
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SECTION 1.7. SUBSEQUENT ACTIONS.
If, at any time after the Effective Time, the Surviving
Corporation shall consider or be advised that any deeds, bills of sale,
assignments, assurances or any other actions or things are necessary or
desirable to continue in, vest, perfect or confirm of record or otherwise in the
Surviving Corporation its right, title or interest in, to or under any of the
rights, properties, privileges, franchises or assets of either of its
constituent corporations acquired or to be acquired by the Surviving Corporation
as a result of, or in connection with, the Merger or otherwise to carry out this
Agreement, the officers and directors of the Surviving Corporation shall be
directed and authorized to execute and deliver, in the name and on behalf of
either of such constituent corporations, all such deeds, bills of sale,
assignments and assurances and to take and do, in the name and on behalf of each
of such corporations or otherwise, all such other actions and things as may be
necessary or desirable to vest, perfect or confirm any and all right, title and
interest in, to and under such rights, properties, privileges, franchises or
assets in the Surviving Corporation or otherwise to carry out this Agreement.
SECTION 1.8. TAX AND ACCOUNTING TREATMENT OF THE MERGER.
The parties shall use reasonable efforts to qualify the Merger
as (a) tax-free reorganization under the provisions of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"), for federal income tax
purposes, and (b) a pooling of interests under generally accepted accounting
principles for accounting purposes.
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.1. CONVERSION OF SECURITIES.
At the Effective Time, by virtue of the Merger and without any
action on the part of the parties hereto or the holders of the following
securities:
(a) Company Common Stock. Subject to the adjustments set
forth in Section 2.1(b) and Section 2.1(c), all of the shares of common stock,
no par value per share, of the Company ("Company Common Stock"), issued and
outstanding immediately prior to the Effective Time (excluding any shares
described in Section 2.1(c)), shall be converted into that number of shares of
preferred stock, par value $.01 per share, of Acquiror ("Acquiror Preferred
Stock") equal to (i) the amount of SEVEN MILLION FIVE HUNDRED THOUSAND DOLLARS
($7,500,000), (A) increased or decreased by, as applicable, the adjustment based
on the number of
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Basic Subscribers and New Subscribers (each as defined below) pursuant to
Section 2.1(b) and Section 2.1(c) and (B) decreased by the amount of Closing
Indebtedness (as defined in Section 2.5) (the net amount determined pursuant to
this clause (i) being referred to as the ("Purchase Price")), divided by (ii)
One Thousand Five Hundred Dollars ($1,500). All shares of Company Common Stock
shall cease to be outstanding and shall automatically be canceled and retired
and shall cease to exist, and each certificate previously evidencing any such
shares shall thereafter represent only the right to receive the shares of
Acquiror Preferred Stock and the cash payable in lieu of fractional shares
pursuant to Section 2.1(f). The holders of certificates previously evidencing
such shares of Company Common Stock outstanding immediately prior to the
Effective Time shall cease to have any rights with respect to such shares of
Company Common Stock, except as otherwise provided herein.
(b) Adjustments to the Purchase Price. The Purchase Price
to be paid on the Closing Date shall be subject to the following adjustments:
(i) If the number of Basic Subscribers and New
Subscribers as of the Effective Time is less than four thousand four hundred
seventy-six (4,476) (the "Target Subscriber Number"), the Purchase Price shall
be reduced by an amount equal to One Thousand Five Hundred Dollars ($1,500),
multiplied by the difference between the Target Subscriber Number and the actual
number of Basic Subscribers and New Subscribers as of the Effective Time.
(ii) If the number of Basic Subscribers and New
Subscribers as of the Effective Time is greater than the Target Subscriber
Number, the Purchase Price shall be increased by an amount equal to One Thousand
Five Hundred Dollars ($1,500), multiplied by the difference between the actual
number of Basic Subscribers and New Subscribers as of the Effective Time and the
Target Subscriber Number.
(iii) For purposes of this Agreement, the term
"Basic Subscriber" shall mean each bona fide subscriber for basic service of the
System who (A) if connected prior to the date hereof has paid the full
connection fee, if any, in effect as of such connection date, or if connected on
or after the date hereof, has paid the full connection fee in effect on the date
hereof and (B) has made at least two (2) monthly payments at the basic service
rate for the service of the System and in each case, whose account is not more
than sixty (60) days delinquent from the first day of the month for which such
service was rendered. In computing the number of Basic Subscribers with respect
to all commercial or bulk billing accounts of the System (other than the New
Hotel Accounts described below), the number of Basic Subscribers for the System
will include the result obtained by dividing the aggregate of the gross xxxxxxxx
from such accounts from the provision of basic service (excluding any
installation or non-recurring charges) for the calendar month
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immediately preceding the Closing by the average standard monthly rate charged
to single-family households for basic service for the System (the "Basic Rate").
In computing the number of Basic Subscribers with respect to each New Hotel
Account (as defined below), the number of Basic Subscribers under such account
will include the result obtained by dividing the monthly bulk subscription
amount stated in the written subscription agreement for such account, divided by
the Basic Rate. "New Hotel Account" shall mean any third party commercial hotel
or motel, condominium or multiple unit residential account of the System covered
by a written subscription agreement reasonably acceptable to Buyer for which
Seller has not submitted its first invoice but for which Seller has completed
all installation work necessary to provide fiber optic cable television service
to such account in accordance with such agreement.
(iv) For purposes of this Agreement, the term
"New Subscriber" shall mean each bona fide subscriber for basic service of the
System who (A) if connected prior to the date hereof has paid the full
connection fee, if any, in effect as of such connection date, or if connected on
or after the date hereof, has paid the full connection fee in effect on the date
hereof and (B) has not made two (2) monthly payments at the basic service rate
for the service of the System and in each case, whose account is not more than
sixty (60) days delinquent from the first day of the month for which such
service was rendered.
(v) Schedule 2.1 contains a pro forma
calculation of the number of Basic Subscribers and the number of New Subscribers
as if the Closing occurred as of December 5, 1997. Schedule 2.1 is attached
hereto solely for the purpose of demonstrating by example the manner in which
the number of Basic Subscribers and the number of New Subscribers for
adjustments to the Purchase Price shall be calculated as of the Closing Date.
(c) Procedures for Final Adjustments to Purchase Price.
The Purchase Price, taking into account the adjustments pursuant to Section
2.1(b), will be determined finally in accordance with the following procedures:
(i) At least five (5) days prior to the Closing
Date, the Stockholder shall prepare and deliver to Acquiror a preliminary
certificate which shall set forth the Stockholder's good faith estimate of the
initial adjustments to the Purchase Price based on the number of Basic
Subscribers and New Subscribers to be made as of the Closing Date under Section
2.1(b), certified by the Stockholder to be true, complete and accurate. The
preliminary certificate shall contain all information reasonably necessary to
determine the initial adjustments to the Purchase Price to be made as of the
Closing Date under Section 2.1(b), and such other information as may be
reasonably requested by Acquiror.
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(ii) No earlier than ninety (90) days and no
later than one hundred and twenty (120) days after the Closing Date, Acquiror
will deliver to the Stockholder a certificate setting forth Acquiror's
determination of the final adjustments to the Purchase Price based on the number
of Basic Subscribers and the number of Qualified New Subscribers (as defined
below), certified by Acquiror to be true, complete and accurate. If the
Stockholder disputes the amount of the final adjustments to the Purchase Price
determined by Acquiror, the Stockholder shall deliver to Acquiror within twenty
(20) days after his receipt of Acquiror's certificate a certificate setting
forth his determination of the amount of the Purchase Price based on the number
of Basic Subscribers and the number of Qualified New Subscribers. If the
Stockholder notifies Acquiror of his acceptance of Acquiror's certificate, or if
the Stockholder fails to deliver his certificate within such twenty (20) day
period, Acquiror's determination of the Purchase Price shall be final,
conclusive and binding on the parties. For purposes of this Agreement, the term
"Qualified New Subscriber" shall mean a New Subscriber who has made at least two
(2) monthly payments at the basic service rate for the service of the System.
(iii) Acquiror and the Stockholder shall use good
faith efforts to resolve any dispute involving the adjustments to the Purchase
Price. If the parties are unable to resolve the dispute within fifteen (15) days
following the delivery of Acquiror's certificate pursuant to paragraph (ii)
above, the Stockholder or Acquiror may submit the dispute to a nationally
recognized independent public accounting firm (which has not performed any
service since January 1, 1991 for either the Stockholder or Acquiror or any of
their respective affiliates), to act as an arbitrator (the "Accounting Firm"),
in which event such party shall deliver to the other party notice thereof. All
determinations made by the Accounting Firm of the dispute shall be final and
binding on the parties, and a judgment may be entered thereon in any court of
competent jurisdiction. Any reasonable fees and expenses of the Accounting Firm
shall be split equally between Acquiror and the Stockholder.
(d) Treasury Stock. All shares of capital stock of the
Company held in the treasury of the Company immediately prior to the Effective
Time shall be canceled and extinguished without any conversion thereof and no
Acquiror Preferred Stock or other consideration shall be delivered or
deliverable in exchange therefor.
(e) Merger Sub Stock. Each share of common stock, par
value $.01 per share, of Merger Sub issued and outstanding immediately prior to
the Effective Time shall be converted into and exchanged for one (1) duly and
validly issued, fully paid and nonassessable share of common stock of the
Surviving Corporation.
(f) No Fractional Shares. No fraction of a share of
Acquiror Preferred Stock shall be issued in connection with the Merger. In lieu
of any such fractional share, the Stockholder shall have the right to receive an
amount in cash,
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without interest, determined by multiplying (i) One Thousand
Five Hundred Dollars ($1,500) by (ii) the fractional interest in Acquiror
Preferred Stock to which such holder would otherwise be entitled pursuant to
Section 2.1(a).
SECTION 2.2. EXCHANGE OF CERTIFICATES
At the Closing, the Stockholder shall deliver to Acquiror
certificates evidencing all of the outstanding shares of Company Common Stock as
of the Effective Time duly endorsed in blank or with duly executed stock powers
attached. In exchange therefor, Acquiror shall deliver to the Stockholder at
Closing a certificate evidencing the whole shares of Acquiror Preferred Stock
issuable pursuant to Section 2.1(a), and cash in an amount equal to the cash
payable in lieu of fractional shares pursuant to Section 2.1(f).
SECTION 2.3. SUBSCRIBER ADJUSTMENTS.
In the event that there is a difference in the adjustments to
the Purchase Price as initially determined and the Purchase Price as finally
determined pursuant to Section 2.1(c), the Stockholder shall deliver to Acquiror
the certificate evidencing the shares of Acquiror Preferred Stock issued to the
Stockholder at Closing, and Acquiror shall cancel such certificate, and issue a
new certificate to the Stockholder evidencing the number of shares of Acquiror
Preferred Stock to be issued to the Stockholder based upon the Purchase Price as
finally determined pursuant to Section 2.1(c). The parties acknowledge and agree
that the adjustment pursuant to this Section 2.3 may result in a decrease in the
Purchase Price paid on the Closing Date.
SECTION 2.4. STOCK TRANSFER BOOKS.
At the Effective Time, the stock transfer books of the Company
with respect to all shares of capital stock of the Company shall be closed and
no further registration of transfers of such shares of capital stock shall
thereafter be made on the records of the Company.
SECTION 2.5. SATISFACTION OF INDEBTEDNESS.
Immediately after the Effective Time, Acquiror shall cause to
be paid (a) all principal and accrued interest outstanding as of the Effective
Time under that certain promissory note dated July 1, 1994, payable to Hilton,
Inc. in the original principal amount of $3,000,000 and (b) certain additional
indebtedness payable to Hilton, Inc. in the approximate amount of $118,000
(collectively, the "Closing Indebtedness"). Payment of the Closing Indebtedness
shall be made in
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accordance with a written payoff letter from the holder of the Closing
Indebtedness in substantially the form attached hereto as Exhibit A.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE STOCKHOLDER
The Company and the Stockholder hereby jointly and severally
represent and warrant to Acquiror and Merger Sub as follows:
SECTION 3.1. ORGANIZATION AND QUALIFICATION.
The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Florida. The Company has the
requisite power and authority to own, lease and operate the System and the
Company Assets, to carry on its business as now being conducted and to perform
the terms of this Agreement and the transactions contemplated hereby. The
Company is duly qualified to conduct its business, and is in good standing, in
each jurisdiction in which the ownership or leasing of the Company Assets or the
nature of its activities in connection with the conduct of its business makes
such qualification necessary. The Company has no subsidiaries or any equity
interest or other investment in any person.
SECTION 3.2. ARTICLES OF INCORPORATION AND BYLAWS.
The Company has heretofore delivered to Acquiror a complete
and correct copy of the articles of incorporation and the bylaws of the Company,
each as amended to date. Such articles of incorporation and bylaws are in full
force and effect. The Company is not in violation of any of the provisions of
its articles of incorporation or bylaws or other organizational or governing
document.
SECTION 3.3. CAPITALIZATION.
(a) The authorized capital stock of the Company consists
of one million (1,000,000) shares of Company Common Stock, of which one hundred
(100) shares are issued and outstanding. All of the issued and outstanding
shares of Company Common Stock are owned beneficially and of record by the
Stockholder, free and clear of all Encumbrances. There are no options, warrants
or other rights, agreements, arrangements or commitments of any character
relating to the issued or unissued capital stock of the Company or obligating
the Company to issue or sell any shares of capital stock of, or other equity
interests in the Company, including any securities directly or indirectly
convertible into or exercisable or exchangeable
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17
for any capital stock or other equity securities of the Company. There are no
outstanding obligations of the Company to repurchase, redeem or otherwise
acquire any shares of its capital stock or make any investment (in the form of a
loan, capital contribution or otherwise) in any other person. All of the issued
and outstanding shares of Company Common Stock have been duly authorized and
validly issued in accordance with applicable laws and are fully paid and
nonassessable and not subject to preemptive rights. No shares of capital stock
of the Company have been reserved for any purpose.
(b) Except as set forth in Schedule 3.3, the Company has
no outstanding indebtedness for borrowed money and all such indebtedness is
prepayable in full, without premium or penalty, in accordance with its terms.
SECTION 3.4. AUTHORITY.
The execution and delivery of this Agreement by the Company
and the consummation by the Company of the transactions contemplated hereby have
been duly and validly authorized by all necessary corporate action and no other
corporate proceedings on the part of the Company are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby. This Agreement
has been duly executed and delivered by the Company and, assuming the due
authorization, execution and delivery by Acquiror and Merger Sub, constitutes a
legal, valid and binding obligation of the Company, enforceable in accordance
with its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws of general
applicability relating to or affecting creditors' rights generally and by the
application of general principles of equity.
SECTION 3.5. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Except as set forth in Schedule 3.5, the execution
and delivery of this Agreement by the Company do not, and the performance by the
Company of its obligations under this Agreement will not, (i) conflict with or
violate the articles of incorporation or bylaws of the Company, (ii) conflict
with or violate any Law applicable to the Company, the System or the Company
Assets, or (iii) result in any breach of or constitute a default (or an event
which with notice or lapse of time or both would become a default) under any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Company is a party or
by which the Company is bound or by which the System or any of the Company
Assets is subject.
(b) Except as set forth in Schedule 3.5, the execution
and delivery of this Agreement by the Company does not, and the performance of
this Agreement by the Company will not, require any consent, approval,
authorization or permit of, or filing with or notification to, any Government
Entity, except for the filing and
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recordation of appropriate merger documents as required by Florida Law and
Delaware Law.
SECTION 3.6. FINANCIAL STATEMENTS.
The Company has prepared and furnished to Acquiror (a) the
unaudited balance sheet of the Company as of the end of the fiscal year ending
December 31, 1996, and the unaudited statement of income and cash flows for such
fiscal year and (b) the unaudited balance sheet of the Company as of October 31,
1997, and the unaudited statement of income and cash flows for the ten months
then ended. The financial statements referred to in this Section 3.6 and the
financial statements of the Company provided to Acquiror pursuant to this
Agreement present fairly, in all material respects, the financial condition of
the Company as of the respective dates and the results of operations and cash
flows for the respective periods indicated and have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
(except that such unaudited statements do not contain all required footnotes and
are subject to normal recurring year-end adjustments). Except as reflected in
the unaudited balance sheet of the Company as of October 31, 1997 (the "Company
Balance Sheet Date"), the Company has no liabilities, contingent or absolute,
matured or unmatured, known or unknown, except for liabilities incurred in the
ordinary course of business since the Company Balance Sheet Date.
SECTION 3.7. ABSENCE OF CERTAIN CHANGES OR EVENTS.
Since the Company Balance Sheet Date, there has been no
Company Material Adverse Effect. Since the Company Balance Sheet Date, the
Company has conducted its business in the ordinary course, and the Company has
not (a) paid any dividend or distribution in respect of, or redeemed or
repurchased any of, its capital stock; (b) incurred loss of, or significant
injury to, any of the Company Assets, whether as the result of any natural
disaster, labor trouble, accident, other casualty, or otherwise; (c) incurred,
or become subject to, any obligation or liability (absolute or contingent,
matured or unmatured, known or unknown), except current liabilities incurred in
the ordinary course of business; (d) mortgaged, pledged or subjected to any
Encumbrance any of the Company Assets; (e) sold, exchanged, transferred or
otherwise disposed of any of the Company Assets except in the ordinary course of
business, or canceled any debts or claims; (f) written down the value of any
Company Assets or written off as uncollectible any accounts receivable of the
Company, except write downs and write offs in the ordinary course of business,
none of which, individually or in the aggregate, are material; (g) entered into
any transactions other than in the ordinary course of business; (h) made any
change in any method of accounting or accounting practice; or (i) made any
agreement to do any of the foregoing.
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SECTION 3.8. OWNERSHIP AND CONDITION OF THE ASSETS.
The Company is the sole and exclusive legal and equitable
owner of and has good and marketable title to the Company Assets and, except as
set forth in Schedule 3.8, such Company Assets are free and clear of all
Encumbrances. No person or Government Entity has an option to purchase, right of
first refusal or other similar right with respect to all or any part of the
Company Assets. Schedule 3.8 contains a complete description of all material
items of Personal Property. All of the Personal Property is in good working
order and repair, ordinary wear and tear excepted, and is suitable and adequate
for the uses for which it is intended or is being used.
SECTION 3.9. SYSTEM AGREEMENTS.
Other than agreements with individual subscribers to the
System which are all entered into pursuant to the standard form subscriber
agreement for the System, Schedule 3.9 lists all agreements to which the Company
is a party or by which the Company is bound, and the Company has delivered to
Acquiror true and correct copies of all such agreements. Each such agreement is
in full force and effect and constitutes a legal, valid and binding obligation
of, and is legally enforceable against, the respective parties thereto. All
necessary governmental approvals with respect thereto have been obtained, all
necessary filings or registrations therefor have been made, and there have been
no threatened cancellations thereof and are no outstanding disputes thereunder.
The Company has in all material respects performed all the obligations
thereunder required to be performed by the Company to date. No party is in
default in any material respect under any of the agreements described in
Schedule 3.9, and there has not occurred any event which (whether with or
without notice, lapse of time or the happening or occurrence of any other event)
would constitute such a default. Except for the Headend Lease (as defined in
Section 9.1), there are no leases or other agreements under which the Company is
lessee or lessor of any Company Asset, or holds, manages or operates any Company
Asset owned by any third party, or under which any Company Asset owned by the
Company is held, operated or managed by a third party.
SECTION 3.10. REAL PROPERTY.
Schedule 3.10 contains a list and brief description of all
leasehold interests in real estate, easements, rights to access and other
rights-of-way (a) for access to and use of headend and hub sites, (b) for
railroad and interstate highway crossing licenses and permits and (c) under, if
any, franchises, pole attachment agreements, and commercial and bulk billing
agreements (collectively, the "Rights-of-Way"). Except for the Rights-of-Way,
there are no other real property interests which are owned, leased, used or held
for use by the Company other than the office,
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tower and land comprising the headend site of the System (the "Headend Site")
which shall be leased to Acquiror by the Stockholder pursuant to Section 9.1(i).
The Rights-of-Way described in Schedule 3.10 and the Headend Site constitute all
real property interests necessary to conduct the business and operations of the
Company as now conducted. Except for the Rights-of-Way and the Headend Site, the
Company is not aware of any easement or other real property interest, that is
required, or that has been asserted by a Government Entity or other person to be
required, to conduct the business and operations of the Company. The Company has
delivered to Acquiror true and complete copies of all deeds, leases, easements,
rights-of-way and other instruments pertaining to the Rights-of-Way and the
Headend Site (including any and all amendments and other modifications of such
instruments). All Rights-of-Way and the Headend Site (including the improvements
thereon) (i) is in good condition and repair consistent with its present use,
(ii) is available to the Company for immediate use in the conduct of the
Company's business and operations, and (iii) complies in all material respects
with all applicable building or zoning codes and in the regulations of any
Government Entity having jurisdiction.
SECTION 3.11. ENVIRONMENTAL MATTERS.
(a) The Company has complied in all material respects and
is in material compliance with all Environmental Laws (as defined below). There
are no pending or, to the knowledge of the Company or the Stockholder,
threatened actions, suits, claims, legal proceedings or other proceedings based
on, and the Company has not directly or indirectly received any notice of any
complaint, order, directive, citation, notice of responsibility, notice of
potential responsibility, or information request from any Government Entity or
any other person arising out of or attributable to: (i) the current or past
presence at any part of the Rights-of-Way or Headend Site of Hazardous Materials
(as defined below) or any substances that pose a hazard to human health or an
impediment to working conditions; (ii) the current or past release or threatened
release into the environment from the Rights-of-Way or Headend Site (including,
without limitation, into any storm drain, sewer, septic system or publicly owned
treatment works) of any Hazardous Materials or any substances that pose a hazard
to human health or an impediment to working conditions; (iii) the off-site
disposal of Hazardous Materials originating on or from the Rights-of-Way or
Headend Site; (iv) any facility operations or procedures of the System which do
not conform to requirements of the Environmental Laws; or (v) any violation of
Environmental Laws at any part of the Rights-of-Way or Headend Site or otherwise
arising from the Company's activities involving Hazardous Materials.
(b) The Company has been duly issued, and currently has
and will maintain through the Effective Time, all permits, licenses,
certificates and approvals required to be maintained by the Company under any
Environmental
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Law with respect to the use or ownership of the Rights-of-Way or Headend Site by
the Company. A true and complete list of such permits, licenses, certificates
and approvals, all of which are valid and in full force and effect, is set out
in Schedule 3.11. Except in accordance with such permits, licenses, certificates
and approvals, there has been no discharge of any Hazardous Materials or any
other material regulated by such permits, licenses, certificates or approvals.
(c) To the knowledge of the Company and the Stockholder,
neither the Rights-of-Way nor the Headend Site contains any underground storage
tanks, or underground piping associated with such tanks, used currently or in
the past for Hazardous Materials.
(d) As used herein, these terms shall have the following
meanings:
(i) "Environmental Laws" means all applicable
foreign, federal, state and local laws (including the common law), rules,
requirements and regulations relating to pollution, the environment (including,
without limitation, ambient air, surface water, groundwater, land surface or
subsurface strata) or protection of human health as it relates to the
environment including, without limitation, laws and regulations relating to
releases of Hazardous Materials, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials or relating to management of asbestos in
buildings.
(ii) "Hazardous Materials" means wastes,
substances, or materials (whether solids, liquids or gases) that are deemed
hazardous, toxic, pollutants, or contaminants, including without limitation,
substances defined as "hazardous substances", "toxic substances", "radioactive
materials", or other similar designations in, or otherwise subject to regulation
under, any Environmental Laws.
SECTION 3.12. LITIGATION.
There is no action, suit, investigation, claim, arbitration or
litigation pending or, to the knowledge of the Company and the Stockholder,
threatened against or involving the Company, the Company Assets, the System or
the business and operations of the Company, at law or in equity, or before or by
any court, arbitrator or Government Entity. The Company is not operating under
or subject to any judgment, writ, order, injunction, award or decree of any
court, judge, justice or magistrate, including any bankruptcy court or judge, or
any order of or by any Government Entity.
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SECTION 3.13. COMPLIANCE WITH LAWS.
(a) No rate complaints applicable to the System have been
filed with the Federal Communications Commission (the "FCC") on Form 329 and
there have been no certification requests filed with the FCC on Form 328 by any
communities served by the System. The Company is authorized under all applicable
franchises and FCC rules, regulations and orders to distribute the transmissions
(whether television, satellite, radio or otherwise) of video programming or
other information that the Company makes available to subscribers of the System
and to utilize all carrier frequencies generated by the operations of the
System, and is licensed to operate all of the facilities required under
applicable Laws to be licensed, including, without limitation, any business
radio and any cable television relay service system being operated as part of
the System. No written requests have been issued with respect to the System
during the three (3) years preceding the date of this Agreement from the FCC,
the United States Copyright Office or any other person challenging or
questioning the right to operate the System or any FCC-licensed or registered
facility used in conjunction with the operation of the System, or challenging or
questioning the System's compulsory copyright license or any payments made
pursuant thereto. The Company's operation of the System, and of any FCC-licensed
or registered facility used in conjunction with the Company's operation of the
System, are in compliance in all material respects with the FCC's rules and
regulations and the provisions of the Communications Act of 1934, as amended
(the "Communications Act"). The Company has not violated any Laws or any duty or
obligation with regard to protecting the privacy rights of any past or present
subscribers of the System.
(b) All system tests and all Cumulative Leakage Index
("CLI") related tests required to be conducted under Laws applicable to the
System have been conducted in accordance with such Laws. The Company has (i)
maintained appropriate log books and other record keeping which accurately and
completely reflect in all material respects all results required under FCC rules
and regulations to be shown thereon; (ii) to the extent required by the rules
and regulations of the FCC, corrected any radiation leakage of the System
required to be corrected in connection with monitoring obligations under the
rules and regulations of the FCC, and (iii) otherwise complied in all material
respects with all applicable CLI rules and regulations in connection with the
operation of the System.
(c) All of the broadcast television signals carried by
the System are carried either pursuant to the must-carry requirements or
pursuant to executed retransmission consent agreements, except for
"superstations" that were "superstations" on May 1, 1991, and are distributed by
satellite carrier.
(d) The Company is in compliance in all material respects
with all Laws applicable to the business and operations of the Company. Without
limiting
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the foregoing, the Company's operation of the System has not violated in any
material respect and does not violate in any material respect Title VI of the
Communications Act, and all other provisions of the Cable Communications Policy
Act of 1984, and the Cable Television Consumer Protection and Competition Act of
1992, as such statutes may be amended from time to time (the "Cable Act"). The
Company has delivered to Acquiror complete and correct copies of all reports and
filings for the past three (3) years made or filed pursuant to the Cable Act,
the Communications Act or FCC rules or regulations with respect to the operation
of the System, including, without limitation, FCC Forms 159 (Remittance Advice),
159C, 393, 1200, 1205, 1210, 1215, 1220, 1225 and 1230, copies of correspondence
with any Government Entity relating to rate regulation or general or specific
rates charged to subscribers of the System including, without limitation, copies
of any requests for certification to regulate rates on FCC Form 328 or any
complaints on FCC Form 329 filed with the FCC with respect to rates charged to
subscribers and any documentation supporting an exemption from the rate
regulation provisions of the Cable Act. The Company has provided Acquiror with
true and complete copies of all requests for franchise renewal which have been
filed since 1992 with any Government Entity with respect to the System.
(e) Other than the Radio Station License (File Number
9404123586), there are no other licenses, permits and other authorizations
issued by the FCC to the Company (the "FCC Licenses") that are currently used in
the business and operations of the System.
SECTION 3.14. COPYRIGHT AND TRADEMARK.
The System is in compliance in all material respects with
Section 111 of the Copyright Act of 1976 and all rules of the United States
Copyright Office relative to the compulsory copyright license with respect to
the operation of the System. All notices, reports and statements of account
required to be filed, and all royalty fees and other amounts required to be
deposited, in each case with the United States Copyright Office, the Register of
Copyrights and the Copyright Royalty Tribunal, in connection with the ownership
and operation of the System have been duly filed or deposited, as the case may
be, and all such notices, reports and statements of account are accurate and
complete in all material respects. No other rights under any patents,
inventions, copyrights, trademarks, trade names, service marks or licenses are
required by the Company in connection with the operation of the System as it now
is conducted, and the Company does not have any knowledge nor has the Company
received any notice to the effect that any service relating to the business of
the System may infringe on any patent, invention, copyright, trademark, trade
name, service xxxx, license or other legally protectible right of another.
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SECTION 3.15 FRANCHISES.
(a) Schedule 3.15 contains a complete list and
description (including dates of expiration) of all franchises, together with all
amendments thereto, required to operate and carry on the cable television
business of the System. The Company is not a party to or has any interest in any
franchise other than those described on Schedule 3.15. Said franchises are valid
and in full force and effect, without restriction other than those contained
therein, and no notice of cancellation, default or dispute has been received by
or is known to the Company or the Stockholder. The Company is in compliance with
the requirements of each of said franchises in all material respects. There are
no requirements under the franchises or any of the other licenses compliance
with which would necessitate additional capital expenditures by the holders of
said franchises or licenses. Except as set forth in Schedule 3.15, the System is
the only cable television system presently serving the areas covered by such
franchises and, to the knowledge of the Company and the Stockholder, no other
cable television system is presently contemplated by any person in the area now
served by the System. No cable television franchises other than those listed on
Schedule 3.15 have been issued with respect to the areas served by the System.
(b) The Company has provided to Acquiror true and
complete copies of Resolution Number 92-7 of the City of Panama City Beach,
Florida, and License dated January 5, 1993, issued by the Board of County
Commissioners of Bay County, Florida (collectively, the "Franchise Agreements"),
which constitute all of the ordinances, agreements and documents, together with
all amendments and modifications thereto, authorizing or governing the
construction maintenance and operation of the System. Each of the Franchise
Agreements is in full force and effect, and constitutes a valid and binding
obligation of, and is legally enforceable in accordance with its terms against,
the parties thereto. Except as set forth in Schedule 3.15, the Company has
complied in all material respects with all provisions of the Franchise
Agreements and is not in default in any material respect thereunder, and there
has not occurred any event which (whether with or without notice, lapse of time,
or the happening or occurrence of any other event) would constitute a default.
SECTION 3.16. SYSTEM INFORMATION.
(a) Schedule 3.16 sets forth the following complete, true
and correct information in all material respects as of the date of this
Agreement with respect to the System: (i) a description of the basic and tier
services available from the System, the rates charged by the Company for each,
together with any other charges by the Company for services to subscribers; (ii)
rental payments under current real property and personal property lease
obligations; (iii) pole attachment rentals; (iv) personal property taxes payable
with respect to the Assets; (v) the
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signals carried on the System; (vi) approximate number of miles of activated
aerial and underground plant in the System and approximate number of dwelling
units passed; (vii) agreements with or commitments or obligations to subscribers
for free service or service with rates departing from the System's standard rate
schedule; (viii) listing and description of all performance bonds maintained by
the Company with respect to the System; (ix) the channel and megahertz capacity
of the System, the stations and programming services carried by the System, the
channel position of each such station and service, and all aeronautical
frequencies used by the System; (x) Federal Aviation Administration tower
clearances and approvals; and (xi) the number of Basic Subscribers.
(b) The System and the Company Assets meet the technical
standards of Part 76, Subpart K, of the rules and regulations of the FCC in all
material respects. Schedule 3.16 sets forth a complete, true and correct
description of the cable network system of the Company. The Company has provided
to Acquiror and its representatives access to the blue prints, schematics,
as-built drawings and engineering records maintained with respect to the System.
SECTION 3.17. TAXES AND ASSESSMENTS.
The Company has (i) duly and timely paid all Taxes which have
become due and payable by it (subject to the right of the Company to contest any
such Taxes); (ii) the Company has received no notice of, nor does the Company
have any knowledge of, any notice of deficiency or assessment or proposed
deficiency or assessment from any taxing Government Entity; and (iii) to the
Company's knowledge, there are no audits pending and there are no outstanding
agreements or waivers by the Company that extend the statutory period of
limitations applicable to any federal, state, local, or foreign tax returns or
Taxes.
SECTION 3.18. EMPLOYMENT MATTERS.
(a) Neither the Company nor any Employee Benefit Plan (as
such term is defined in ERISA) maintained by the Company or to which the Company
has or has had the obligation to contribute in respect of any Company employees
is in violation of any provisions of Law; no reportable event, within the
meaning of ERISA, Section 4043(c)(1), (2), (3), (5), (6), (7) or (10), has
occurred and is continuing with respect to any such Employee Benefit Plan and no
prohibited transaction, within the meaning of Title I of ERISA, has occurred
with respect to any such Employee Benefit Plan. No Employee Benefit Plan
maintained by the Company is a Multiemployer Plan (as such term is defined in
ERISA), is subject to Title IV of ERISA or provides post-retirement medical,
life insurance or other benefits except to the extent required to comply with
the health care continuation coverage requirements of ERISA and the Code.
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(b) There are no collective bargaining agreements
applicable to any Company employees and the Company has no duty to bargain with
any labor organization with respect to any such persons. There is not pending
any demand for recognition or any other request or demand from a labor
organization for representative status with respect to any persons employed by
the Company.
(c) Schedule 3.18 contains a true and complete list of
names, positions and rates of compensation of all employees of the Company. With
respect to any persons employed by the Company, the Company is in compliance
with all Laws respecting employment conditions and practices, has withheld all
amounts required by any applicable Laws to be withheld from wages or any Taxes
or penalties for failure to comply with any of the foregoing.
(d) With respect to any persons employed by the Company,
(i) the Company has not engaged in any unfair labor practice within the meaning
of the National Labor Relations Act and has not violated any legal requirement
prohibiting discrimination on the basis of race, color, national origin, sex,
religion, age, marital status, or handicap in its employment conditions or
practices; and (ii) there are no pending or, to the knowledge of the Company and
the Stockholder, threatened unfair labor practice charges or discrimination
complaints relating to race, color, national origin, sex, religion, age, marital
status, or handicap against the Company before any Government Entity nor, to the
knowledge of the Company and the Stockholder, does any basis therefor exist.
SECTION 3.19. TRANSACTIONS WITH RELATED PARTIES.
Except as set forth in Schedule 3.19, neither any present or
former officer, director, stockholder or person known by the Company or the
Stockholder to be an affiliate of the Company, nor any person known by the
Company or the Stockholder to be an affiliate of any such person, is currently a
party to any transaction or agreement with the Company, including, without
limitation, any agreement providing for the employment of, furnishing of
services by, rental of Company Assets from or to, or otherwise requiring
payments to, any such officer, director, stockholder or affiliate.
SECTION 3.20. INSURANCE.
The Company has made available to Acquiror copies of all
policies of title, property, fire, casualty, liability, life, workmen's
compensation, libel and slander, and other forms of insurance of any kind
relating to the Company Assets, the System or the business and operations of the
Company. All such policies: (a) are in full force and effect and enforceable;
and (b) are sufficient for compliance by the Company with all requirements of
applicable Law and of all licenses, franchises and other agreements to which the
Company is a party other than the
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License Agreement with Xxxx South Telecommunications, Inc. d/b/a Southern Xxxx
Telephone and Telegraph ("Xxxx South").
SECTION 3.21. NET WORKING CAPITAL.
The net working capital of the Company as calculated in
accordance with the unaudited balance sheet of the Company as of October 31,
1997 shall not be less than negative $185,000 as of the Closing Date.
SECTION 3.22. BROKERS.
Except for X.X. Xxxxx and United Telesystems, Inc. (the
"Broker") (whose compensation is solely the obligation of the Stockholder), no
broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Company or the
Stockholder.
SECTION 3.23. DISCLOSURE.
No representations or warranties by the Company or the
Stockholder in this Agreement and no statement or information contained in the
Schedules hereto or any certificate furnished or to be furnished by the Company
or the Stockholder to Acquiror pursuant to the provisions of this Agreement,
contains or will contain any untrue statement of a material fact or omits or
will omit to state any material fact necessary, in light of the circumstances
under which it was made, in order to make the statements herein or therein not
misleading.
SECTION 3.24. POOLING OF INTERESTS.
Neither the Company nor the Stockholder nor, to the knowledge
of the Company or the Stockholder, any of the directors or officers of the
Company has taken any action which would interfere with Acquiror's ability to
account for the Merger as a pooling of interests under generally accepted
accounting principles.
SECTION 3.25. PROGRAMMING CONTRACTS.
Other than any programming contract or similar agreement with
The Disney Channel (the "Disney Contract"), the Company has paid and is paying
the programming rate currently in effect on all of the programming contracts to
which the Company is a party (the "Programming Contracts").
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ARTICLE IV
ADDITIONAL REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER
In addition to the representations and warranties made by the
Stockholder in Article III hereof, the Stockholder hereby represents and
warrants to Acquiror and Merger Sub as follows:
SECTION 4.1. TITLE TO COMPANY COMMON STOCK.
The Stockholder is and as of the Effective Time will be the
sole legal, beneficial and record owner of all of the issued and outstanding
shares of capital stock of the Company.
SECTION 4.2. AUTHORITY AND CAPACITY.
The Stockholder has full legal right, capacity, power and
authority to execute and deliver this Agreement and all other documents,
instruments, certificates and agreements executed or to be executed by the
Stockholder pursuant hereto, and to consummate the transactions contemplated
hereby and thereby.
SECTION 4.3. ABSENCE OF VIOLATION.
The execution, delivery and performance by the Stockholder of
this Agreement and all other documents, instruments, certificates and agreements
contemplated hereby to which the Stockholder is a party, the fulfillment of and
the compliance with the respective terms and provisions hereof and thereof, and
the consummation of the transactions contemplated hereby and thereby, do not and
will not (a) conflict with, or violate any provision of, any Laws having
applicability to the Stockholder; or (b) conflict with, or result in any breach
of, or constitute a default under, any agreement to which the Stockholder is a
party.
SECTION 4.4. RESTRICTIONS AND CONSENTS.
There are no agreements, Laws or other restrictions of any
kind to which the Stockholder is party or subject that would prevent or restrict
the execution, delivery or performance of this Agreement by the Stockholder.
SECTION 4.5. BINDING OBLIGATION.
This Agreement constitutes, and each document, instrument,
certificate and agreement to be executed by the Stockholder pursuant hereto,
when
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executed and delivered in accordance with the provisions hereof, shall
constitute, a valid and binding obligation of the Stockholder, enforceable in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and other similar laws of
general applicability relating to or affecting creditors' rights generally and
by the application of general principles of equity.
SECTION 4.6. NO REGISTRATION UNDER THE SECURITIES ACT.
The Stockholder understands that the shares of Acquiror
Preferred Stock to be issued to the Stockholder under this Agreement have not
been and will not be registered under the Securities Act of 1933, as amended
(the "Securities Act"), in reliance upon exemptions contained in the Securities
Act or interpretations thereof, and cannot be offered for sale, sold or
otherwise transferred unless such shares of Acquiror Preferred Stock are so
registered or qualify for exemption from registration under the Securities Act.
SECTION 4.7. ACQUISITION FOR INVESTMENT.
The shares of Acquiror Preferred Stock being issued to the
Stockholder pursuant to this Agreement are being acquired by the Stockholder in
good faith solely for his own account, for investment and not with a view toward
resale or other distribution within the meaning of the Securities Act. Such
shares will not be offered for sale, sold or otherwise transferred by the
Stockholder without either registration or exemption from registration under the
Securities Act.
SECTION 4.8. EVALUATION OF MERITS AND RISKS OF INVESTMENT.
The Stockholder has such knowledge and experience in financial
and business matters that the Stockholder is capable of evaluating the merits
and risks of the Stockholder's investment in the shares of Acquiror Preferred
Stock being acquired hereunder. The Stockholder understands and is able to bear
any economic risks associated with such investment (including, without
limitation, the necessity of holding such shares for an indefinite period of
time, inasmuch as the shares have not been registered under the Securities Act).
The Stockholder is an "accredited investor", as that term is defined in
Regulation D promulgated under the Securities Act. The Stockholder confirms that
Acquiror has made available to the Stockholder and its representatives and
agents the opportunity to ask questions of the officers and management employees
of Acquiror about the business and financial condition of Acquiror as the
Stockholder has requested.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
Acquiror represents and warrants to the Company and the
Stockholder as follows:
SECTION 5.1. ORGANIZATION AND QUALIFICATION.
Acquiror is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware. Acquiror has the
requisite power and authority to own, lease and operate the Acquiror Assets, to
carry on its business as now being conducted and to perform the terms of this
Agreement and the transactions contemplated hereby. Acquiror is duly qualified
to conduct its business, and is in good standing, in each jurisdiction where the
ownership or leasing of the Acquiror Assets or the nature of its activities in
connection with the conduct of its business makes such qualification necessary.
SECTION 5.2. CERTIFICATE OF INCORPORATION AND BYLAWS.
Acquiror has heretofore delivered to the Company a complete
and correct copy of the certificate of incorporation and the bylaws of Acquiror,
each as amended to date. Such certificate of incorporation and bylaws are in
full force and effect. Acquiror is not in violation of any of the provisions of
its certificate of incorporation or bylaws or other organizational or governing
document.
SECTION 5.3. CAPITALIZATION.
The authorized capital stock of Acquiror consists of: (i) two
hundred thousand (200,000) shares of common stock, par value $.01 per share, of
which no shares are issued and outstanding; and (ii) one hundred thousand
(100,000) shares of Acquiror Preferred Stock, of which forty-seven thousand five
hundred (47,500) shares are issued and outstanding. Except as set forth in
Schedule 5.3, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character relating to the issued or unissued
capital stock of Acquiror or obligating Acquiror to issue or sell any shares of
capital stock of, or other equity interests in Acquiror, including any
securities directly or indirectly convertible into or exercisable or
exchangeable for any capital stock or other equity securities of Acquiror.
Except as set forth in Schedule 5.3, there are no outstanding obligations of
Acquiror to repurchase, redeem or otherwise acquire any shares of its capital
stock or make any investment (in the form of a loan, capital contribution or
otherwise) in any other person.
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SECTION 5.4. AUTHORITY.
The execution and delivery of this Agreement by Acquiror and
the consummation by Acquiror of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action and no other
corporate proceedings on the part of Acquiror are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby. This Agreement
has been duly executed and delivered by Acquiror and, assuming the due
authorization, execution and delivery by the Company and the Stockholder,
constitutes a legal, valid and binding obligation of Acquiror, enforceable in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and other similar laws of
general applicability relating to or affecting creditors' rights generally and
by the application of general principles of equity.
SECTION 5.5. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Except as set forth in Schedule 5.5, the execution
and delivery of this Agreement by Acquiror do not, and the performance by
Acquiror of its obligations under this Agreement will not, (i) conflict with or
violate the certificate of incorporation or bylaws of Acquiror, (ii) conflict
with or violate any Law applicable to Acquiror or the Acquiror Assets, or (iii)
result in any breach of or constitute a default under any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which Acquiror is a party or by which Acquiror is
bound, or by which any of the Acquiror Assets is subject.
(b) Except as set forth in Schedule 5.5, the execution
and delivery of this Agreement by Acquiror does not, and the performance of this
Agreement by Acquiror will not, require any consent, approval, authorization or
permit of, or filing with or notification to, any Government Entity, except for
the filing and recordation of appropriate merger documents as required by
Florida Law and Delaware Law.
SECTION 5.6. FINANCIAL STATEMENTS.
Acquiror has prepared and furnished to the Company (a) the
audited balance sheet of Acquiror as of the end of the fiscal year ending
December 31, 1996, and the audited statement of income and cash flows for such
fiscal year and (b) the unaudited balance sheet of Acquiror as of October 31,
1997, and the unaudited statement of income and cash flows for the nine months
then ended. The financial statements referred to in this Section 5.6 and the
financial statements of Acquiror provided to the Company pursuant to this
Agreement present fairly, in all material respects, the financial condition of
Acquiror as of the respective dates and the results of operations and cash flows
for the respective periods indicated and have been prepared in accordance with
generally accepted accounting principles applied
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on a consistent basis (except that such unaudited statements do not contain all
required footnotes and are subject to normal recurring year-end adjustments).
Except as reflected in the unaudited balance sheet of Acquiror as of October 31,
1997 (the "Acquiror Balance Sheet Date"), Acquiror has no liabilities,
contingent or absolute, matured or unmatured, known or unknown, except for
liabilities incurred in the ordinary course of business since the Acquiror
Balance Sheet Date that would not have an Acquiror Material Adverse Effect.
SECTION 5.7. ABSENCE OF CERTAIN CHANGES OR EVENTS.
Since the Acquiror Balance Sheet Date, there has been no
Acquiror Material Adverse Effect. Since the Acquiror Balance Sheet Date and
except for the Acquiror Financing Transactions, Acquiror has conducted its
business in the ordinary course, and Acquiror has not (a) paid any dividend or
distribution in respect of, or redeemed or repurchased any of, its capital
stock; (b) incurred loss of, or significant injury to, any of the Acquiror
Assets, whether as the result of any natural disaster, labor trouble, accident,
other casualty, or otherwise; (c) incurred, or become subject to, any obligation
or liability (absolute or contingent, matured or unmatured, known or unknown),
except current liabilities incurred in the ordinary course of business; (d)
mortgaged, pledged or subjected to any Encumbrance any of the Acquiror Assets;
(e) sold, exchanged, transferred or otherwise disposed of any of the Acquiror
Assets except in the ordinary course of business, or canceled any debts or
claims; (f) written down the value of any Acquiror Assets or written off as
uncollectible any accounts receivable of Acquiror, except write downs and write
offs in the ordinary course of business, none of which, individually or in the
aggregate, are material; (g) entered into any transactions other than in the
ordinary course of business; (h) made any change in any method of accounting or
accounting practice; or (i) made any agreement to do any of the foregoing.
SECTION 5.8. LITIGATION.
Except as set forth in Schedule 5.8, there is no action, suit,
investigation, claim, arbitration or litigation pending or, to the knowledge of
Acquiror, threatened against or involving Acquiror, the Acquiror Assets or the
business and operations of Acquiror, at law or in equity, or before or by any
court, arbitrator or Government Entity that would be reasonably likely to have
an Acquiror Material Adverse Effect. Acquiror is not operating under or subject
to any judgment, writ, order, injunction, award or decree of any court, judge,
justice or magistrate, including any bankruptcy court or judge, or any order of
or by any Government Entity that would be reasonably likely to have an Acquiror
Material Adverse Effect.
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SECTION 5.9. TAXES AND ASSESSMENTS.
Acquiror has (i) duly and timely paid all Taxes which have
become due and payable by it (subject to the right of Acquiror to contest any
such Taxes); (ii) Acquiror has received no notice of, nor does Acquiror have any
knowledge of, any notice of deficiency or assessment or proposed deficiency or
assessment from any taxing Government Entity that would be reasonably likely to
have an Acquiror Material Adverse Effect; and (iii) to Acquiror's knowledge,
there are no audits pending and there are no outstanding agreements or waivers
by Acquiror that extend the statutory period of limitations applicable to any
federal, state, local, or foreign tax returns or Taxes.
SECTION 5.10. BROKERS.
No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Acquiror.
SECTION 5.11. DISCLOSURE.
No representations or warranties by Acquiror in this Agreement
and no statement or information contained in the Schedules hereto or any
certificate furnished or to be furnished by Acquiror to the Company pursuant to
the provisions of this Agreement, contains or will contain any untrue statement
of a material fact or omits or will omit to state any material fact necessary,
in light of the circumstances under which it was made, in order to make the
statements herein or therein not misleading.
SECTION 5.12. PRIVATE PLACEMENT MEMORANDUM.
No statement or information contained in that certain Private
Placement Memorandum of Acquiror (the "Private Placement Memorandum") dated
October 3, 1997 (a copy of which has been provided to the Company and the
Stockholder), contains or will contain any untrue statement of a material fact
or omits or will omit to state any material fact necessary, in light of the
circumstances under which it was made, in order to make the statements herein or
therein not misleading. The Private Placement Memorandum discloses information
regarding (a) the cable television systems owned and operated by Acquiror,
including (i) a description of the services available from the cable television
systems, (ii) the number of subscribers to the cable television systems, (iii)
approximate number of miles of activated aerial and underground plant in the
cable television systems and approximate number of dwelling units passed, and
(iv) the channel and megahertz capacity of the cable television systems; (b) the
Acquiror Assets including (i) the
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ownership and good operating condition of the Acquiror Assets, and (ii) the
suitability of the Acquiror Assets for the business and operations of Acquiror;
(c) the real property interests which are owned, leased, used or held for use by
Acquiror in the business and operations of Acquiror as now conducted; (d) the
absence of any material breach or default by Acquiror of any agreements to which
Acquiror is a party or by which Acquiror is bound; (e) the business, operations
and conduct of Acquiror; and (f) the licenses, certificates, franchises,
permits, contracts and agreements of Acquiror necessary for the business and
operations of Acquiror, and the absence of any material breach or default by
Acquiror thereunder.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
OF MERGER SUB
Acquiror and Merger Sub jointly and severally represent and
warrant to the Company as follows:
SECTION 6.1. ORGANIZATION AND QUALIFICATION.
Merger Sub is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. Merger Sub was
formed solely for the purpose of engaging in the transactions contemplated by
this Agreement. As of the date of this Agreement, except for obligations or
liabilities incurred in connection with its incorporation or organization and
the transactions contemplated by this Agreement, Merger Sub has not incurred,
directly or indirectly, any obligations or liabilities or engaged in any
business activities of any type or kind whatsoever or entered into any
agreements or arrangements with any person.
SECTION 6.2. CERTIFICATE OF INCORPORATION AND BYLAWS.
Merger Sub has heretofore made available to the Company a
complete and correct copy of the certificate of incorporation and the bylaws of
Merger Sub, each as amended to date. Such certificate of incorporation and
bylaws are in full force and effect. Merger Sub is not in violation of any of
the provisions of its certificate of incorporation or bylaws or other
organizational or governing document.
SECTION 6.3. AUTHORITY.
Merger Sub has the necessary corporate power and authority to
enter into this Agreement, to perform its obligations hereunder and to
consummate the
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transactions contemplated hereby. The execution and delivery of this Agreement
by Merger Sub and the consummation by Merger Sub of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action and no other corporate proceedings on the part of Merger Sub
are necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
Merger Sub and, assuming the due authorization, execution and delivery by the
Company, the Stockholder and Acquiror, constitutes a legal, valid and binding
obligation of Merger Sub, enforceable in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws of general applicability relating to or
affecting creditors' rights generally and by the application of general
principles of equity.
SECTION 6.4. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Except as set forth in Schedule 6.4, the execution
and delivery of this Agreement by Merger Sub do not, and the performance by
Merger Sub of its obligations under this Agreement will not, (i) conflict with
or violate the certificate of incorporation or bylaws of Merger Sub, (ii)
conflict with or violate any Law applicable to Merger Sub or its assets and
properties, or (iii) result in any breach of or constitute a default under any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Merger Sub is a party or by
which Merger Sub is bound, or by which any of its properties or assets is
subject.
(b) Except as set forth in Schedule 6.4, the execution
and delivery of this Agreement by Merger Sub does not, and the performance of
this Agreement by Merger Sub will not, require any consent, approval,
authorization or permit of, or filing with or notification to, any Government
Entity, except for the filing and recordation of appropriate merger documents as
required by Florida Law and Delaware Law.
SECTION 6.5. DISCLOSURE.
No representations or warranties by Merger Sub in this
Agreement and no statement or information contained in the Schedules hereto or
any certificate furnished or to be furnished by Merger Sub to the Company
pursuant to the provisions of this Agreement, contains or will contain any
untrue statement of a material fact or omits or will omit to state any material
fact necessary, in light of the circumstances under which it was made, in order
to make the statements herein or therein not misleading.
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ARTICLE VII
COVENANTS
SECTION 7.1. AFFIRMATIVE COVENANTS OF THE COMPANY.
The Company and the Stockholder hereby covenant and agree
that, prior to the Effective Time, unless otherwise expressly contemplated by
this Agreement or consented to in writing by Acquiror, the Company shall (a)
operate its business in the usual and ordinary course consistent with past
practices and in accordance with applicable Laws; (b) preserve substantially
intact its business organization, maintain its rights and franchises, use its
best efforts to retain the services of its respective principal officers and key
employees and maintain its relationship with its respective suppliers,
contractors, distributors, customers and others having business relationships
with it; (c) maintain and keep its properties and assets in as good repair and
condition as at present, ordinary wear and tear excepted; and (d) keep in full
force and effect insurance comparable in amount and scope of coverage to that
currently maintained.
SECTION 7.2. NEGATIVE COVENANTS OF THE COMPANY.
Except as expressly contemplated by this Agreement or
otherwise consented to in writing by Acquiror, from the date hereof until the
Effective Time, the Company shall not, and the Stockholder shall cause the
Company not to, do any of the following:
(a) (i) increase the compensation payable to or to become
payable to any of its directors, officers or employees, except for increases in
salary, wages or bonuses payable or to become payable in the ordinary course of
business and consistent with past practice; (ii) grant any severance or
termination pay to, or enter into or modify any employment or severance
agreement with, any of its directors, officers or employees; or (iii) adopt or
amend any employee benefit plan or arrangement, except as may be required by
applicable Law;
(b) declare, set aside or pay any dividend on, or make
any other distribution in respect of, any of its capital stock;
(c) (i) redeem, repurchase or otherwise reacquire any
share of its capital stock or any securities or obligations convertible into or
exchangeable for any share of its capital stock, or any options, warrants or
conversion or other rights to acquire any shares of its capital stock or any
such securities or obligations; (ii) effect any reorganization or
recapitalization; or (iii) split, combine or reclassify any of its capital stock
or issue or authorize or propose the issuance of any other securities in respect
of, in lieu of, or in substitution for, shares of its capital stock;
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(d) (i) issue, deliver, award, grant or sell, or
authorize or propose the issuance, delivery, award, grant or sale (including the
grant of any Encumbrances) of, any shares of any class of its capital stock
(including shares held in treasury) or other equity securities, any securities
or obligations directly or indirectly convertible into or exercisable or
exchangeable for any such shares, or any rights, warrants or options to acquire,
any such shares or securities or any rights, warrants or options directly or
indirectly to acquire any such shares or securities; or (ii) amend or otherwise
modify the terms of any such securities, obligations, rights, warrants or
options in a manner inconsistent with the provisions of this Agreement or the
effect of which shall be to make such terms more favorable to the holders
thereof;
(e) acquire or agree to acquire, by merging or
consolidating with, by purchasing an equity interest in or a portion of the
assets of, or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof, or otherwise
acquire or agree to acquire any assets of any other person (other than the
purchase of inventory in the ordinary course of business and consistent with
past practice), or make or commit to make any capital expenditures other than
(i) capital expenditures in the ordinary course of business consistent with past
practice and (ii) capital costs described in Section 8.7;
(f) sell, lease, exchange, mortgage, pledge, transfer or
otherwise dispose of, or agree to sell, lease, exchange, mortgage, pledge,
transfer or otherwise dispose of, any of its assets except for dispositions of
inventory in the ordinary course of business and consistent with past practice
other than the Headend Lease described in Section 9.1(i);
(g) propose or adopt any amendments to its certificate of
incorporation or bylaws;
(h) (i) change any of its methods of accounting in effect
at January 1, 1997, or (ii) make or rescind any express or deemed election
relating to taxes, settle or compromise any claim, action, suit, litigation,
proceeding, arbitration, investigation, audit or controversy relating to taxes,
or change any of its methods of reporting income or deductions for federal
income tax purposes from those employed in the preparation of the federal income
tax returns for the taxable year ending December 31, 1997, except, in the case
of clause (i) or clause (ii), as may be required by law or generally accepted
accounting principles, consistently applied;
(i) (i) prepay, before the scheduled maturity thereof,
any of its long-term debt, or incur any obligation for borrowed money, whether
or not evidenced by a note, bond, debenture or similar instrument, other than
trade payables incurred in the ordinary course of business consistent with past
practices, or (ii) pay any portion of the Closing Indebtedness;
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(j) enter into or modify in any material respect any
agreement which, if in effect as of the date hereof, would have been required to
be disclosed on Schedule 3.10;
(k) take any action that would or could reasonably be
expected to result in any of its representations and warranties set forth in
this Agreement being untrue or in any of the conditions to the Merger set forth
in Article IX not being satisfied; or
(l) agree in writing or otherwise to do any of the
foregoing.
ARTICLE VIII
ADDITIONAL AGREEMENTS
SECTION 8.1. CONSENTS AND APPROVALS; FILINGS AND NOTICES.
The Company and the Stockholder shall use reasonable efforts
to as promptly as possible make all filings with, provide all notices to and
obtain all consents and approvals from third parties required to be obtained by
the Company in connection with the transactions contemplated hereunder,
including, without limitation, all filings with, notices to and consents and
approvals from the FCC, Government Entities and other persons.
SECTION 8.2. ACCESS AND INFORMATION.
From the date hereof to the Effective Time, the Company shall
afford to Acquiror and its officers, employees, accountants, consultants, legal
counsel, representatives of current and prospective sources of financing for the
Merger and other representatives of Acquiror full and complete access during
normal business hours to the properties, books, records, contracts, facilities,
premises, and equipment relating to the Company Assets, the System and the
Company (including without limitation, operating and financial information with
respect to the System) as Acquiror may reasonably request.
SECTION 8.3. CONFIDENTIALITY.
Each party shall hold in strict confidence all documents and
information concerning the other and its business and properties (except that
either party may disclose such documents and information to any Government
Entity reviewing the transactions contemplated hereby or as required in either
party's judgment pursuant to any legal requirement or in furtherance of the
transactions contemplated herein), and if the transaction contemplated hereby
should not be
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consummated, such confidence shall be maintained, and all such documents and
information (in whatever form) and copies thereof shall immediately thereafter
be destroyed, or returned to the party originally furnishing same.
SECTION 8.4. FURTHER ACTION; REASONABLE BEST EFFORTS.
Each of the parties shall use reasonable best efforts to take,
or cause to be taken, all appropriate action, and do, or cause to be done, all
things necessary, proper or advisable under applicable Laws or otherwise to
consummate and make effective the transactions contemplated by this Agreement as
promptly as practicable, including, without limitation, using its reasonable
best efforts to obtain all licenses, permits, consents, approvals,
authorizations, qualifications and orders of Government Entities and parties to
contracts with the Company and Acquiror as are necessary for the transactions
contemplated herein.
SECTION 8.5. PUBLIC ANNOUNCEMENTS.
Each of the Stockholders, Acquiror and the Company shall
consult with each other before issuing any press release or otherwise making any
public statements with respect to the Merger and shall not issue any such press
release or make any such public statement prior to such consultation, except as
may be required by Law or as disclosed in the Private Placement Memorandum.
SECTION 8.6. NO SOLICITATION.
During the term of this Agreement, neither the Company, the
Stockholder nor any of its affiliates or any person acting on behalf of such
party shall (a) solicit or favorably respond to indications of interest from, or
enter into negotiations with, any third party for any proposed merger,
consolidation, sale or acquisition of the Company, the Company Assets or any
capital stock of the Company or (b) furnish or cause to be furnished any
nonpublic information concerning the System to any person other than in the
ordinary course of business or pursuant to applicable Law and after prior
written notice to Acquiror.
SECTION 8.7. SERVICE AGREEMENTS.
The parties acknowledge and agree that the Stockholder is also
a twenty-five percent (25%) stockholder of Hilton, Inc., a corporation that owns
and operates several hotels in Bay County, Florida, and that these hotels are
currently under contract with both long distance and local telephone service
carriers. At the expiration of these contracts, the Stockholder and Acquiror
will use their respective best efforts to negotiate telephone service agreements
with such hotels, provided that such agreements are competitive in both price
and service.
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SECTION 8.8. POOLING ACCOUNTING.
Each of Acquiror, the Company and the Stockholder shall use
its best efforts to cause the transactions contemplated by this Agreement to be
accounted for as a pooling of interests in accordance with generally accepted
accounting principles, and each of the parties agrees that it will take no
action, and shall use its best efforts to cause its affiliates to take no
action, that would cause such accounting treatment not to be obtained.
ARTICLE IX
CLOSING CONDITIONS
SECTION 9.1. CONDITIONS TO OBLIGATIONS OF ACQUIROR AND MERGER SUB.
The obligations of Acquiror and Merger Sub to effect the
Merger and the other transactions contemplated in this Agreement are also
subject to the following conditions, any or all of which may be waived, in whole
or in part, to the extent permitted by applicable law:
(a) Representations and Warranties. The representations
and warranties of the Company and the Stockholder made in this Agreement shall
be true and correct in all material respects, on and as of the Effective Time
with the same effect as though such representations and warranties had been made
on and as of the Effective Time (provided that any representation or warranty
contained herein that is qualified by a materiality standard shall not be
further qualified hereby), except for representations and warranties that speak
as of a specific date or time other than the Effective Time (which need only be
true and correct in all material respects as of such date or time). Acquiror
shall have received a certificate of the Stockholder to that effect.
(b) Agreements and Covenants. The agreements and
covenants of the Company and the Stockholder required to be performed on or
before the Effective Time shall have been performed in all material respects.
Acquiror shall have received a certificate of the Stockholder to that effect.
(c) Legal Proceedings. No action or proceeding before any
Government Entity shall have been instituted or threatened (and not subsequently
settled, dismissed, or otherwise terminated) which is reasonably expected to
restrain, prohibit, enjoin or invalidate the Merger or other transactions
contemplated by this Agreement other than an action or proceeding instituted or
threatened by Acquiror or Merger Sub.
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(d) No Company Material Adverse Effect. Since the date of
this Agreement, no Company Material Adverse Effect shall have occurred and be
continuing.
(e) Required Consents. The Company shall have delivered
to Acquiror at or before Closing all consents or notices necessary to be
obtained or made by the Company in connection with the transactions contemplated
by this Agreement, including, without limitation, any required consents and
notices under the Franchise Agreements (including a certificate of completion
from the appropriate Government Entity).
(f) Noncompetition Agreement. The Stockholder shall have
executed and delivered to Acquiror at or before Closing a noncompetition
agreement in substantially the form attached hereto as Exhibit B providing,
among other things, that the Stockholder shall not compete with the business of
Acquiror or the Company for a period of three (3) years after the Effective
Time.
(g) Legal Opinion. Acquiror shall have received an
opinion from Hilton, Hilton, Xxxx & Xxxxxx, corporate counsel to the Company and
the Stockholder, in substantially the form attached hereto as Exhibit C.
(h) Stockholders Agreement. The Stockholder shall have
executed and delivered to Acquiror at or before Closing an agreement in
substantially the form attached hereto as Exhibit D pursuant to which the
Stockholder shall agree to be bound by the terms and conditions of Acquiror's
Stockholders' Agreement (a copy of which has been provided to the Stockholder).
(i) Headend Lease. The Stockholder shall have executed
and delivered to Acquiror at or before Closing a triple-net lease agreement in
substantially the form attached hereto as Exhibit E (the "Headend Lease")
pursuant to which, among other things, an affiliate of the Stockholder shall
agree to lease to Acquiror for a term of fifteen (15) years after the Effective
Time, the office, tower and land comprising the headend site of the System for
an aggregate rental of $5,146 per month, with the rental to be adjusted every
five (5) years by an amount equal to any increase in the Consumer Price Index.
(j) Certificate Regarding Number of Subscribers. The
Stockholder shall have executed and delivered to Acquiror at or before Closing a
certificate in substantially the form attached hereto as Exhibit F certifying as
to the number of Basic Subscribers and New Subscribers of the System as of the
Effective Time.
(k) Broker's Certificate. The Broker shall have executed
and delivered a certificate in substantially the form attached hereto as Exhibit
G certifying that the Broker shall have been paid by the Stockholder all fees
and other
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compensation due and payable to the Broker in connection with the consummation
of the transactions set forth herein.
(l) Other Closing Documents. The Stockholder and the
Company shall have executed and/or delivered to Acquiror such additional
documents, certificates, opinions and agreements as Acquiror may reasonably
request.
SECTION 9.2. CONDITIONS TO OBLIGATIONS OF THE COMPANY AND THE
STOCKHOLDER.
The obligations of the Company and the Stockholder to effect
the Merger and the other transactions contemplated in this Agreement are also
subject to the following conditions any or all of which may be waived, in whole
or in part, to the extent permitted by applicable law:
(a) Representations and Warranties. The representations
and warranties of Acquiror and Merger Sub made in this Agreement shall be true
and correct in all material respects, on and as of the Effective Time with the
same effect as though such representations and warranties had been made on and
as of the Effective Time (provided that any representation or warranty contained
herein that is qualified by a materiality standard shall not be further
qualified hereby), except for representations and warranties that speak as of a
specific date or time other than the Effective Time (which need only be true and
correct in all material respects as of such date or time). The Company shall
have received a certificate of the Chief Executive Officer or Chief Financial
Officer of Acquiror to that effect.
(b) Agreements and Covenants. The agreements and
covenants of Acquiror and Merger Sub required to be performed on or before the
Effective Time shall have been performed in all material respects. The Company
shall have received a certificate of the Chief Executive Officer or Chief
Financial Officer of Acquiror to that effect.
(c) Legal Proceedings. No action or proceeding before any
Government Entity shall have been instituted or threatened (and not subsequently
settled, dismissed, or otherwise terminated) which is reasonably expected to
restrain, prohibit, enjoin or invalidate the Merger or other transactions
contemplated by this Agreement other than an action or proceeding instituted or
threatened by the Company.
(d) Acquiror shall have delivered to the Stockholder at
or before Closing a copy of the resolutions of the directors of Acquiror,
certified as being correct and complete and then in full force and effect,
authorizing the appointment of the Stockholder to a seat on Acquiror's Board of
Directors for a period of one (1) year commencing on the Effective Time.
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ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
SECTION 10.1. TERMINATION.
This Agreement may be terminated at any time prior to the
Effective Time:
(a) by mutual written consent of Acquiror and the
Company;
(b) by Acquiror if the Company or the Stockholder shall
have breached any of its representations, warranties, covenants or agreements
contained in this Agreement, or any such representation or warranty shall have
become untrue, in any such case such that the conditions precedent to the
obligations of Acquiror to close specified in Section 9.2 will not be satisfied
and such breach has not been promptly cured within ten (10) days following
receipt by Acquiror of written notice of such breach;
(c) by the Company if Acquiror or Merger Sub shall have
breached any of its representations, warranties, covenants or agreements
contained in this Agreement, or any such representation or warranty shall have
become untrue, in any such case such that the conditions precedent to the
obligation of the Company to close specified in Section 9.3, will not be
satisfied and such breach has not been promptly cured within ten (10) days
following receipt by Acquiror of written notice of such breach;
(d) by either Acquiror or the Company if any decree,
permanent injunction, judgment, order or other action by any court of competent
jurisdiction or any Government Entity preventing or prohibiting consummation of
the Merger shall have become final and nonappealable; or
(e) by either Acquiror or the Company if the Effective
Time has not occurred on or prior to March 31, 1998 (unless such date shall be
extended by the mutual written consent of the parties); provided, that the right
to terminate this Agreement under this Section 10.1(e) shall not be available to
any party whose breach of representations, warranties, covenants or agreements
contained in this Agreement has been the cause of, or resulted in, the failure
of the Effective Time to occur by such date or the inability of such condition
to be satisfied.
SECTION 10.2. EFFECT OF TERMINATION.
If this Agreement is terminated pursuant to Section 10.1, this
Agreement shall forthwith become void and there shall be no liability or
obligation
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on the part of any party hereto, except that the provisions of Sections 8.3 and
12.11 shall not be extinguished but shall survive such termination, and nothing
herein shall relieve any party from liability for any breach hereof and each
party shall be entitled to any remedies at law or in equity for such breach.
SECTION 10.3. AMENDMENT.
This Agreement may not be amended except by an instrument in
writing signed by the parties hereto.
SECTION 10.4. WAIVER.
At any time prior to the Effective Time, the parties may (a)
extend the time for the performance of any of the obligations or other acts of
the other party, (b) waive any inaccuracies in the representations and
warranties contained in this Agreement or in any document delivered pursuant to
this Agreement and (c) waive compliance by the other party with any of the
agreements or conditions contained in this Agreement. Any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party.
ARTICLE XI
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION; REMEDIES
SECTION 11.1. SURVIVAL OF REPRESENTATIONS.
All representations, warranties, covenants, indemnities and
other agreements made by any party to this Agreement herein or pursuant hereto,
shall be deemed made on and as of the Effective Time as though such
representations, warranties, covenants, indemnities and other agreements were
made on and as of such date, and all such representations, warranties,
covenants, indemnities and other agreements shall survive the Effective Time and
any investigation, audit or inspection at any time made by or on behalf of any
party hereto, as follows: (a) unless otherwise specified below, representations
and warranties shall survive for a period of eighteen (18) months after the
Effective Time; (b) representations and warranties with respect to Taxes shall
survive until the expiration of the applicable statute of limitations; (c)
representations, warranties and covenants for matters relating to title to the
capital stock of the Company and the Company Assets shall continue in full force
and effect in perpetuity; and (d) the covenants and agreements in this Article
XI and the covenants and agreements which by their terms survive the Effective
Time shall continue in full force and effect until fully discharged.
Notwithstanding anything herein to the contrary, any representation, warranty,
covenant or agreement which is the subject of a claim which is asserted
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in writing prior to the expiration of the applicable period set forth above
shall survive with respect to such claim or dispute until the final resolution
thereof.
SECTION 11.2. AGREEMENT OF STOCKHOLDER TO INDEMNIFY.
Subject to the conditions and provisions of this Article XI,
the Stockholder hereby agree to indemnify, defend and hold harmless Acquiror and
its officers, directors, employees, agents and representatives (collectively,
the "Acquiror Indemnified Persons") from and against and in respect of all
Losses resulting from, imposed upon or incurred by the Acquiror Indemnified
Persons, directly or indirectly, by reason of or resulting from (a) any
misrepresentation or breach of any representation or warranty, or noncompliance
with any conditions or other agreements, given or made by the Stockholder or the
Company in this Agreement or in any document, certificate or agreement furnished
by or on behalf of any such party pursuant to this Agreement, (b) the business
or operations of the System prior to the Effective Time or (c) any amounts owed
to either The Disney Channel under the Disney Contract or to Xxxx South under
the License Agreement with Xxxx South which relate to the period prior to the
Closing. It shall be a condition to the right of any Acquiror Indemnified Person
to indemnification pursuant to this Section that such Acquiror Indemnified
Person shall assert a claim for such indemnification within the applicable
survival periods set forth in Section 11.1 hereof.
SECTION 11.3. AGREEMENT OF ACQUIROR TO INDEMNIFY.
Subject to the conditions and provisions of this Article XI,
Acquiror hereby agrees to indemnify, defend and hold harmless the Stockholder
from and against and in respect of all Losses resulting from, imposed upon or
incurred by the Stockholder, directly or indirectly, by reason of or resulting
from (a) any misrepresentation or breach of any representation or warranty, or
noncompliance with any conditions or other agreements, given or made by Acquiror
or Merger Sub in this Agreement or in any document, certificate or agreement
furnished by or on behalf of Acquiror or Merger Sub pursuant to this Agreement,
or (b) the business or operations of the Systems after the Effective Time. It
shall be a condition to the rights of the Stockholder to indemnification
pursuant to this Section that such party shall assert a claim for such
indemnification within the applicable survival periods set forth in Section 11.1
hereof.
SECTION 11.4. CONDITIONS OF INDEMNIFICATION.
The obligations and liabilities of the Stockholder and
Acquiror hereunder with respect to their respective indemnities pursuant to this
Article XI, resulting from any Third Party Claim shall be subject to the
following terms and conditions:
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(a) The party seeking indemnification (the "Indemnified
Party") must give the other party (the "Indemnifying Party"), notice of any
Third Party Claim which is asserted against, resulting to, imposed upon or
incurred by the Indemnified Party and which may give rise to liability of the
Indemnifying Party pursuant to this Article XI, stating (to the extent known or
reasonably anticipated) the nature and basis of such Third Party Claim and the
amount thereof; provided that the failure to give such notice shall not affect
the rights of the Indemnified Party hereunder except to the extent that the
Indemnifying Party shall have suffered actual material damage by reason of such
failure.
(b) Subject to Section 11.4(c) below, the Indemnifying
Party shall have the right to undertake, by counsel or other representatives of
its own choosing, the defense of such Third Party Claim at the Indemnifying
Party's risk and expense.
(c) In the event that (i) the Indemnifying Party shall
elect not to undertake such defense, (ii) within a reasonable time after notice
from the Indemnified Party of any such Third Party Claim, the Indemnifying Party
shall fail to undertake to defend such Third Party Claim, or (iii) there is a
reasonable probability that such Third Party Claim may materially and adversely
affect the Indemnified Party other than as a result of money damages or other
money payments, then the Indemnified Party (upon further written notice to the
Indemnifying Party) shall have the right to undertake the defense, compromise or
settlement of such Third Party Claim, by counsel or other representatives of its
own choosing, on behalf of and for the account and risk of the Indemnifying
Party. In the event that the Indemnified Party undertakes the defense of a Third
Party Claim under this Section 11.4(c), the Indemnifying Party shall pay to the
Indemnified Party, in addition to the other sums required to be paid hereunder,
the reasonable costs and expenses incurred by the Indemnified Party in
connection with such defense, compromise or settlement as and when such costs
and expenses are so incurred.
(d) Anything in this Section 11.4 to the contrary
notwithstanding, (i) the Indemnifying Party shall not, without the Indemnified
Party's written consent, settle or compromise such Third Party Claim or consent
to entry of any judgment which does not include as an unconditional term thereof
the giving by the claimant or the plaintiff to the Indemnified Party of a
release from all liability in respect of such Third Party Claim in form and
substance satisfactory to the Indemnified Party; (ii) in the event that the
Indemnifying Party undertakes defense of such Third Party Claim, the Indemnified
Party, by counsel or other representative of its own choosing and at its sole
cost and expense, shall have the right to participate in the defense, compromise
or settlement thereof and each party and its counsel and other representatives
shall cooperate with the other party and its counsel and representatives in
connection therewith; and (iii) in the event that
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the Indemnifying Party undertakes defense of such Third Party Claim, the
Indemnifying Party shall have an obligation to keep the Indemnified Party
informed of the status of the defense of such Third Party Claim and furnish the
Indemnified Party with all documents, instruments and information that the
Indemnified party shall reasonably request in connection therewith.
(e) Neither the Stockholder nor Acquiror shall be liable
to the other in respect of any indemnification hereunder except to the extent
that the aggregate amount of Losses, together with all other Losses of the party
to be indemnified under this Agreement, is (i) in excess of One Hundred Thousand
Dollars ($100,000) (the "Basket Amount"), except for indemnification for claims
made pursuant to Section 11.2(c) which shall not be subject to such Basket
Amount; provided, that once an indemnified party has incurred Losses in excess
of the Basket Amount, such indemnified party shall be indemnified for all Losses
without regard to the Basket Amount, and (ii) less than Seven Million Five
Hundred Thousand Dollars ($7,500,000).
SECTION 11.5. NO RECOURSE AGAINST THE COMPANY.
The Stockholder hereby irrevocably waives any and all right to
recourse against the Company with respect to any misrepresentation or breach of
any representation, warranty or indemnity, or noncompliance with any conditions
or covenants, given or made by the Stockholder or the Company in this Agreement
and any document, certificate and agreement entered into or delivered pursuant
hereto. The Stockholder shall not be entitled to contribution from, subrogation
to or recovery against the Company with respect to any liability of the
Stockholder or the Company that may arise under or pursuant to this Agreement or
the transactions contemplated hereby.
SECTION 11.6. REMEDIES CUMULATIVE.
The remedies provided herein shall be cumulative and shall not
preclude the assertion by the parties hereto of any other rights or the seeking
of any other remedies against the other, or their respective successors or
assigns.
ARTICLE XII
GENERAL PROVISIONS
SECTION 12.1. NOTICES.
All notices and other communications given or made pursuant
hereto shall be in writing and shall be deemed to have been duly given or made
as of the
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date delivered, mailed or transmitted, and shall be effective upon receipt, if
delivered personally, mailed by registered or certified mail (postage prepaid,
return receipt requested) to the parties at the following addresses (or at such
other address for a party as shall be specified by like changes of address) or
sent by electronic transmission to the telecopier number specified below:
(a) If to Acquiror and Merger Sub:
Knology Holdings, Inc.
000 Xxxx 0xx Xxxxxx
Xxxx Xxxxx, Xxxxxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxx
(b) If to the Company and the Stockholder:
Beach Cable, Inc.
0000 X.X. Xxxxxxx
000 Xxxxx
Xxxxxx Xxxx, Xxxxxxx 00000
Telecopier No.: (000) 000-0000
Attention: L. Xxxxxxx Xxxxxx, Xx.
SECTION 12.2. CERTAIN DEFINITIONS.
For purposes of this Agreement, the term:
(a) "Acquiror Assets" shall mean the assets, rights and
properties, whether owned, leased or licensed, real, personal or mixed, tangible
or intangible, that are used, useful or held for use in connection with the
business of Acquiror.
(b) "Acquiror Financing Transactions" shall mean the
transactions described in either the Private Placement Memorandum or that
certain Offering Memorandum of Acquiror dated October 16, 1997 (a copy of which
has been provided to the Company and the Stockholder).
(c) "Acquiror Material Adverse Effect" means any material
adverse effect on the Acquiror Assets or the business, operations or condition
(financial or otherwise) of Acquiror.
(d) "affiliate" means a person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, the first mentioned person.
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(e) "business day" shall mean any day other than a day on
which banks in the State of Georgia are authorized or obligated to be closed.
(f) "Company Assets" shall mean the assets, rights and
properties, whether owned, leased or licensed, real, personal or mixed, tangible
or intangible, that are used, useful or held for use in connection with the
business of the Company.
(g) "Company Material Adverse Effect" means any material
adverse effect on the System, the Company Assets or the business, operations or
condition (financial or otherwise) of the Company.
(h) "control" (including the terms "controlled by" and
"under common control with") means the possession, directly or indirectly or as
trustee or executor, of the power to direct or cause the direction of the
management or policies of a person, whether through the ownership of stock or as
trustee or executor, by contract or credit arrangement or otherwise.
(i) "Encumbrances" means mortgages, liens, pledges,
encumbrances, security interests, deeds of trust, options, encroachments,
reservations, orders, decrees, judgments, restrictions, charges, contract
rights, claims or equity of any kind.
(j) "Government Entity" means any United States or other
national, state, municipal or local government, domestic or foreign, any
subdivision, agency, entity, commission or authority thereof, or any
quasi-governmental or private body exercising any regulatory, taxing, importing
or other governmental or quasi-governmental authority.
(k) "Laws" means all foreign, federal, state and local
statues, laws, ordinances, regulations, rules, resolutions, orders,
determinations, writes, injunctions, awards (including, without limitation,
awards of any arbitrator), judgments and decrees applicable to the specified
persons or entities.
(l) "Losses" means all demands, losses, claims, actions
or causes of action, assessments, damages, liabilities, costs and expenses,
including, without limitation, interest, penalties and reasonable attorneys'
fees and disbursements.
(m) "person" means an individual, corporation,
partnership, association, trust, unincorporated organization, other entity or
group.
(n) "Personal Property" means all of the equipment,
plant, inventory, spare parts, supplies and other tangible personal property
which are owned, leased, used or held for use by the Company primarily in
connection with the business and operations of the System.
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(o) "subsidiary" means a corporation, partnership, joint
venture or other entity of which the Company owns, directly or indirectly, at
least 50% of the outstanding securities or other interests the holders of which
are generally entitled to vote for the election of the board of directors or
other governing body or otherwise exercise control of such entity.
(p) "Taxes" shall mean all federal, state, local and
foreign taxes (including, without limitation, income, profit, franchise, sales,
use, real property, personal property, ad valorem, excise, employment, social
security and wage withholding taxes) and installments of estimated taxes,
assessments, deficiencies, levies, imports, duties, license fees, registration
fees, withholdings or other similar charges of every kind, character or
description imposed by any governmental authorities, and any interest, penalties
or additions to tax imposed thereon or in connection therewith.
SECTION 12.3. HEADINGS.
The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
SECTION 12.4. SEVERABILITY.
If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of law or public policy, all
other conditions and provisions of this Agreement shall nevertheless remain in
full force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the extent possible.
SECTION 12.5. ENTIRE AGREEMENT.
This Agreement (together with the Exhibits, the Schedules and
the other documents delivered pursuant hereto) constitutes the entire agreement
of the parties and supersede all prior agreements and undertakings, both written
and oral, between the parties, or any of them, with respect to the subject
matter hereof and, except as otherwise expressly provided herein, are not
intended to confer upon any other person any rights or remedies hereunder.
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SECTION 12.6. SPECIFIC PERFORMANCE.
The transactions contemplated by this Agreement are unique.
Accordingly, each of the parties acknowledges and agrees that, in addition to
all other remedies to which it may be entitled, each of the parties hereto is
entitled to a decree of specific performance, provided such party is not in
material default hereunder.
SECTION 12.7. ASSIGNMENT.
Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written consent of the other
party; provided, however, that notwithstanding the foregoing, Acquiror and
Merger Sub shall have the right to assign, pledge and grant a security interest
in all of its right, title and interest in and to this Agreement to one or more
lenders, including without limitation First Union National Bank and a syndicate
of banks, to secure all payment and performance obligations that may exist from
time to time of Acquiror and/or one or more of its subsidiaries to such lenders,
without the prior written consent of the Company or the Stockholder. Subject to
the preceding sentence, this Agreement shall be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns.
SECTION 12.8. THIRD PARTY BENEFICIARIES.
This Agreement shall be binding upon and inure solely to the
benefit of each party hereto, and nothing in this Agreement, express or implied,
is intended to or shall confer upon any other person any right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement, except for
the Acquiror Indemnified Persons under Article XI hereof.
SECTION 12.9. GOVERNING LAW.
This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Georgia, regardless of the laws that
might otherwise govern under applicable principles of conflicts of law.
SECTION 12.10. COUNTERPARTS.
This Agreement may be executed and delivered in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed and delivered shall be deemed to be an original but all
of which taken together shall constitute one and the same agreement.
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SECTION 12.11. FEES AND EXPENSES.
Except as otherwise provided for in this Agreement, each party
hereto shall pay its own fees, costs and expenses incurred in connection with
this Agreement and in the preparation for and consummation of the transactions
provided for herein.
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IN WITNESS WHEREOF, the parties hereto have caused this
AGREEMENT AND PLAN OF MERGER to be executed and delivered as of the date first
written above.
KNOLOGY HOLDINGS, INC.
By: /s/ Xxxxx X. Xxxxxxxx, Xx.
----------------------------------------
Xxxxx X. Xxxxxxxx, Xx.
Vice President of Business Development
KNOLOGY OF PANAMA CITY, INC.
By: /s/ Xxxxx X. Xxxxxxxx, Xx.
----------------------------------------
Xxxxx X. Xxxxxxxx, Xx.
Assistant Secretary
BEACH CABLE, INC.
By: /s/ L. Xxxxxxx Xxxxxx, Xx.
----------------------------------------
L. Xxxxxxx Xxxxxx, Xx.
Chairman and Chief Executive Officer
/s/ L. Xxxxxxx Xxxxxx, Xx.
--------------------------------------------
L. Xxxxxxx Xxxxxx, Xx.
