EXHIBIT 2.1
================================================================================
ASSET PURCHASE AND SALE AGREEMENT
BY AND BETWEEN
BOOTH AMERICAN COMPANY, Seller
AND
MEDIACOM CALIFORNIA LLC, Buyer
DATED AS OF MAY 23, 1996
================================================================================
TABLE OF CONTENTS
-----------------
ARTICLE I
DEFINITIONS........................................................... 1
ARTICLE II
SALE AND PURCHASE OF ASSETS........................................... 7
2.1 Sale and Purchase of Assets............................... 7
2.2 Assumption of Liabilities................................. 8
2.3 Payment of Purchase Price................................. 8
2.4 Purchase Price Adjustments................................ 9
2.5 Expenses; Sales and Transfer Taxes........................ 10
2.6 Brokerage................................................. 10
2.7 Allocation of Purchase Price.............................. 11
ARTICLE III
CLOSING DATE; CERTAIN TRANSACTIONS
TO BE EFFECTED AT CLOSING............................................. 11
3.1 Closing Date.............................................. 11
3.2 Certain Transactions to be Effected at Closing............ 11
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER.............................. 13
4.1 Organization and Qualification............................ 13
4.2 Business of Seller........................................ 13
4.3 Authority and Validity.................................... 13
4.4 Consents and Approvals: No Violation...................... 14
4.5 Title..................................................... 15
4.6 Real Property............................................. 15
4.7 Financial Statements; Operating Budget.................... 16
4.8 Legal Proceedings......................................... 17
4.9 Certain Employment and Employee Benefit Matters........... 17
4.10 Characteristics of the System............................. 18
4.11 Finders; Brokers and Advisors............................. 19
4.12 Tax Matters............................................... 19
4.13 Equipment................................................. 20
4.14 Governmental Permits; Contracts........................... 20
4.15 Insurance................................................. 21
4.16 Hazardous Substances and Environmental Matters............ 22
4.17 Accounts Receivable....................................... 22
4.18 System Compliance......................................... 23
4.19 Intangibles............................................... 25
4.20 No Other Consents......................................... 25
4.21 No Undisclosed Liabilities................................ 25
4.22 Liabilities to Subscribers................................ 25
4.23 Restoration............................................... 26
4.24 Condition and Transfer of Tangible Property............... 26
4.25 Inventory................................................. 26
4.26 Overbuilds................................................ 26
4.27 Certain Programming Arrangements and Relationships........ 26
4.28 Disclosure................................................ 27
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER............................... 27
5.1 Organization and Qualification............................ 27
5.2 Authority and Validity.................................... 27
5.3 No Breach or Violation.................................... 28
5.4 Litigation................................................ 29
5.5 Finders; Brokers and Advisors............................. 29
ARTICLE VI
ADDITIONAL COVENANTS.................................................. 29
6.1 Access to Premises and Records............................ 29
6.2 Continuity and Maintenance of Operations.................. 30
6.3 Employee Matters.......................................... 32
6.4 Consents.................................................. 33
6.5 HSR Notification.......................................... 34
6.6 Notification of Certain Matters........................... 34
6.7 Risk of Loss; Condemnation................................ 34
6.8 Adverse Changes........................................... 35
6.9 No Solicitation........................................... 35
6.10 Forms 394................................................. 36
6.11 Phase I Study............................................. 36
6.12 Monthly Financial Statements.............................. 37
6.13 Confidentiality........................................... 37
6.14 Covenant Not to Compete................................... 38
6.15 Public Announcements...................................... 38
6.16 Unauthorized Use of Channels.............................. 39
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER.......................... 39
7.1 HSR Act................................................... 39
7.2 Governmental or Legal Action.............................. 39
7.3 Accuracy of Representations and Warranties................ 40
7.4 Performance of Agreements................................. 40
7.5 No Material Adverse Change................................ 40
7.6 Consents.................................................. 40
7.7 Transfer Documents........................................ 40
7.8 Opinions of Counsel....................................... 40
7.9 Mediacom Equity Investment................................ 40
7.10 Discharge of Liens........................................ 40
7.11 The System................................................ 40
7.12 Material Adverse Change................................... 41
7.13 Additional Documents and Acts............................. 41
7.14 Certificates.............................................. 41
7.15 CARS License Modification................................. 41
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER......................... 41
8.1 HSR Act................................................... 41
8.2 Governmental or Legal Actions............................. 42
8.3 Accuracy of Representations and Warranties................ 42
8.4 Performance of Agreements................................. 42
8.5 Opinions of Buyer's Counsel............................... 42
8.6 Additional Documents and Acts............................. 42
8.7 Certificates.............................................. 42
ARTICLE IX
INDEMNITY............................................................. 42
9.1 Seller's Indemnity........................................ 42
9.2 Buyer's Indemnity......................................... 44
9.3 Remedies Cumulative; Right to Offset...................... 45
ARTICLE X
LIABILITY IN THE EVENT OF A BREACH.................................... 45
10.1 Default by Buyer.......................................... 45
10.2 Default by Seller......................................... 46
ARTICLE XI
NOTICES............................................................... 46
ARTICLE XII
MISCELLANEOUS......................................................... 47
12.1 Entire Agreement.......................................... 47
12.2 Successors and Assigns.................................... 47
12.3 Arbitration............................................... 47
12.4 Captions.................................................. 48
12.5 Counterparts.............................................. 48
12.6 Governing Law............................................. 48
CONTENTS OF OMITTED EXHIBITS
----------------------------
Exhibit A Escrow Agreement
Exhibit B Senior Subordinated Loan Agreement
Exhibit C Subscription Agreement
Exhibit D Confidentiality and Non-Compete Agreements
Exhibit E Opinion of Xxxxxxxx Xxxxxx Xxxxxxxx and Xxxx
Exhibit F Opinion of Dow Xxxxxx & Xxxxxxxxx
Exhibit G Opinion of Xxxxxxxxx Xxxxxx Xxxxxxxx Xxxxxx & Xxxxxx, P.C.
CONTENTS OF OMITTED SCHEDULES
-----------------------------
Schedule 1.1 Franchise Areas
Schedule 2.1 Excluded Assets
Schedule 4.4 Consents and Approvals: No Violation
Schedule 4.5A Title Encumbrances
Schedule 4.6 Real Property
Schedule 4.8 Legal Proceedings
Schedule 4.9 Certain Employment and Employee Benefit Matters
Schedule 4.10 Characteristics of the System
Schedule 4.12 Tax Matters
Schedule 4.13 Equipment
Schedule 4.14 (i) Governmental Permits
Schedule 4.14 (ii) Contracts
Schedule 4.15 Insurance
Schedule 4.18 Exceptions to System Compliance
Schedule 4.19 Intangibles
Schedule 4.20 Consents
Schedule 4.21 No Undisclosed Liabilities
Schedule 4.26 Overbuilds
Schedule 4.27 Certain Programming Arrangements and Relationships
Schedule 6.12 Monthly Financial Statements
Registrants agree to furnish supplementally a copy of such Exhibits and
Schedules to the Commission upon request.
ASSET PURCHASE AND SALE AGREEMENT
This ASSET PURCHASE AND SALE AGREEMENT (the "Agreement") is made and entered
into this 23rd day of May, 1996, by and between BOOTH AMERICAN COMPANY, a
Michigan corporation ("Seller"), and MEDIACOM CALIFORNIA LLC, a Delaware limited
liability company ("Buyer").
R E C I T A L S:
1. Seller owns and operates a System (as hereinafter defined) in the
Cities of Kernville, Xxxxxxx Heights, Lake Isabella, Bodfish, Onyx, Xxxxxx-
Xxxxx Valley, Belle Vista, Mt. Mesa-Squirrel Valley and South Lake of Xxxx
County, California.
2. Seller desires to sell, and Buyer desires to purchase, the assets,
property, interests, rights and privileges owned or used by Seller which
comprise the System and Buyer desires to purchase and assume the same on the
terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the promises and the respective
agreements hereinafter set forth, the parties agree as follows:
ARTICLE I
DEFINITIONS
"Accounts Receivable" shall mean, as of the Closing Date, Basic
-------------------
Subscriber and Bulk Subscriber accounts receivable of Seller, determined in
accordance with GAAP, representing amounts owed to Seller in connection with its
operation of the System in the ordinary course of business.
"Affiliate" shall mean, with respect to any Person, any other Person
---------
controlling, controlled by or under common control with such Person, with
"control" for such purpose meaning the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities or voting interests,
by contract or otherwise.
"Assets" shall mean all properties, privileges, rights, interests and
------
claims, real and personal, tangible and intangible and mixed, of every type and
description that are owned, leased, used or held for use in the Business in
which Seller has any right, title or interest or in which Seller acquires any
right, title or interest on or before the Closing Date, including but not
limited
to Accounts Receivable, Governmental Permits, Intangibles, Contracts, Equipment,
and Real Property, but excluding any Excluded Assets and any Assets disposed of
by Seller as permitted by this Agreement.
"Basic Subscribers" shall mean accounts in a single residential
-----------------
household (excluding "second connections," as such term is commonly understood
in the cable television industry, any account duplication and any account which
has a disconnect request pending at or which has had service terminated as of
the applicable determination date) that are subscribing for at least the lowest
level of basic or limited basic cable television services provided by the
System. Notwithstanding anything herein to the contrary, "Basic Subscribers"
shall not include any subscriber (i) who has not paid all billed charges,
including deposit and installation charges (due in connection with such
subscriber's initially obtaining cable television service from the System), for
at least sixty days prior to the applicable determination date, (ii) whose
account as of the applicable determination date is more than sixty days past due
from the date on which any part of such account was first due, (iii) who has
been obtained as a subscriber by offers made, promotions conducted or discounts
given outside the ordinary course of business or (iv) who comes within the
definition of Basic Subscriber because its account (or any part thereof) has
been compromised or written off, other than in the ordinary course of business
consistent with past practices for reasons such as service interruptions and
waiver of late charges but not for the purpose of making a person qualify as a
Basic Subscriber.
"Bulk Subscriber" shall mean each bulk subscriber (as such term is
---------------
commonly understood in the cable television industry, such as trailer parks,
apartments, hotels, motels or other multiple dwelling units and commercial
subscribers) of the System.
"Bulk Units" shall mean with respect to each Bulk Subscriber, the
----------
number of units of each such Bulk Subscriber receiving at least the lowest level
of basic or limited basic cable television service provided by the System
(excluding "second connections", as such term is commonly understood in the
cable television industry, and any account duplication); provided, that Bulk
Units shall not include any units of any Bulk Subscriber if such Bulk Subscriber
(i) is a Basic Subscriber pursuant to the "Basic Subscriber" definition; (ii)
has given notice on or before the Closing Date of its intention to terminate
service completely or who has had its service terminated by Seller on or before
the Closing Date; or (iii) is or would be excluded from the definition of "Basic
Subscribers" pursuant to clauses (i) - (iv) thereof.
"Business" shall mean the cable television business conducted by
--------
Seller through the System in the Franchise Areas.
- 2 -
"Business Day" shall mean any day other than Saturday, Sunday or a day
------------
on which banking institutions in New York, New York are required or authorized
to be closed.
"Closing" shall mean the consummation of the transactions contemplated
-------
by this Agreement, as described in Article III.
"Closing Adjustments" shall have the meaning set forth in Section
-------------------
2.4A.
"Closing Date" shall have the meaning set forth in Section 3.1.
------------
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Communications Act" shall mean the Communications Act of 1934, as
------------------
amended, and the rules and regulations thereunder as from time to time in
effect.
"Confidential Parties" shall have the meaning set forth in Section
--------------------
6.14.
"Consents" shall mean any registration or filing with, consent or
--------
approval of, notice to, or action by any Person or Governmental Authority
required to permit the transfer of the Assets to Buyer or to permit Seller to
perform any of its other obligations under this Agreement, as set forth on
Schedule 4.20.
--------------
"Contracts" shall mean all contracts, agreements and leases (other
---------
than those that are Governmental Permits or Excluded Assets), to which Seller is
a party and that pertain to the ownership, operation or maintenance of the
Assets or the Business. Each such Contract which involves payments by or to
Seller of $10,000 or more during any twelve-month period or which are not
terminable upon thirty (30) days or less notice by or to Seller without penalty
or premium are set forth on Schedule 4.14 (ii), provided, however, that all the
------------------ -------- -------
programming contracts of the System are set forth therein.
"Copyright Act" shall mean the Copyright Revision Act of 1976, as
-------------
amended.
"Cut-Off Date" shall mean the applicable determination date used by
------------
Seller to determine the number of Basic Subscribers in the applicable month,
which date normally occurs around the twenty-fifth (25th) day of the month.
"Encumbrance" shall mean any mortgage, lien, security interest,
-----------
security agreement, conditional sale or other title retention agreement, lease,
consignment or bailment given for security purposes, limitation, pledge, option,
charge, assessment,
- 3 -
restrictive agreement, restriction, encumbrance, adverse interest, trust,
constructive trust, attachment, claim, restriction on transfer or any exception
to or defect in title or other ownership interest (including but not limited to
reservations, rights of way, possibilities of reverter, encroachments,
easements, rights of entry, restrictive covenants, leases and licenses).
"Equipment" shall mean all electronic devices, trunk and distribution
---------
coaxial and optical fiber cable, amplifiers, power supplies, conduit, vaults and
pedestals, grounding and pole hardware, subscribers' devices (including
converters, encoders, transformers behind television sets and fittings), headend
hardware (including origination, earth stations, transmission and distribution
systems), test equipment, vehicles and all other tangible personal property
owned, used or held for use by Seller in connection with the Business, and
including but not limited to the items described on Schedule 4.13.
--------------
"Escrow Agent" shall be The Chase Manhattan Bank (National
------------
Association).
"Escrow Agreement" shall mean the Escrow Agreement among Buyer, Seller
----------------
and Escrow Agent, substantially in the form annexed hereto as Exhibit A.
----------
"ERISA" shall mean The Employee Retirement Income Security Act of
-----
1974, as amended.
"Excluded Assets" shall have the meaning set forth in Section 2.1.
---------------
"FCC" shall mean the Federal Communications Commission.
---
"Forms 394" shall have the meaning set forth in Section 6.10.
---------
"Four Month Basic Subscribers Average" shall mean the number obtained
------------------------------------
by dividing (a) the sum of the number of Basic Subscribers as of the Cut-Off
Date for each of the four calendar months immediately preceding the Closing Date
by (b) four. If the Closing Date occurs on or after the Cut-Off Date of the
month in which the Closing occurs, the number calculated in (a) above shall be
determined by calculating the sum of (i) the number of Basic Subscribers as of
the Cut-Off Date for each of the three calendar months immediately preceding the
Closing Date and (ii) the number of Basic Subscribers as of the Cut-Off Date of
the month in which the Closing Date occurs.
"Franchise Area" shall mean that area in which Seller is authorized
--------------
under one or more Governmental Permits issued by the applicable franchising or
licensing authorities to provide cable television service to subscribers located
in such area through the
- 4 -
ownership and operation of the System, as set forth on Schedule 1.1.
------------
"GAAP" shall mean generally accepted accounting principles as in
----
effect in the United States of America.
"Governmental Authority" shall mean any of the following: (a) the
----------------------
United States of America; (b) any state, commonwealth, territory or possession
of the United States of America and any political subdivision thereof (including
counties, municipalities and the like); and (c) any agency, authority or
instrumentality of any of the foregoing, including any court, tribunal,
department, bureau, commission or board.
"Governmental Permits" shall mean all franchises, authorizations,
---------------------
permits, licenses, easements, registrations, leases, variances and similar
rights obtained from any Governmental Authority which authorize or are required
in connection with the operation of the Business, as set forth on Schedule
--------
4.14(i).
------
"HSR Act" shall have the meaning set forth in Section 6.5.
-------
"Information" shall have the meaning set forth in Section 6.13.
-----------
"Intangibles" shall mean all general intangibles, including but not
-----------
limited to subscriber lists, claims (excluding any claims relating to Excluded
Assets), patents, copyrights and goodwill, if any, owned, used or held for use
by Seller in connection with the Business, other than Contracts and Governmental
Permits.
"Legal Requirement" shall mean any statute, ordinance, code, law,
-----------------
rule, regulation, order or other requirement, standard or procedure enacted,
adopted or applied by any Governmental Authority, including but not limited to
judicial decisions applying common law or interpreting any other Legal
Requirement.
"Monthly Financial Statements" shall have the meaning set forth in
----------------------------
Section 6.12.
"1995 Financial Statements" shall have the meaning set forth in
-------------------------
Section 4.7A.
"Permitted Encumbrances" shall mean the following: (a) liens for
----------------------
taxes, assessments and governmental charges not yet due and payable; (b) zoning
laws and ordinances and similar Legal Requirements; (c) rights reserved to any
Governmental Authority to regulate the affected property; (d) as to leased Real
Property, interests of lessors and Encumbrances affecting the interests of the
lessors; (e) the Encumbrances imposed by the Governmental
- 5 -
Permits listed on Schedule 4.14(i); (f) the other Encumbrances listed on
---------------
Schedule 4.5A; and (g) other Encumbrances which do not, individually or in the
-------------
aggregate, have a material adverse effect on the title, use, operation or value
of the System or any material Asset.
"Person" shall mean any natural person, corporation, partnership,
------
trust, unincorporated organization, association, limited liability company,
Governmental Authority or other entity.
"Post-Closing Adjustments" shall have the meaning set forth in Section
------------------------
2.4B.
"Preliminary Title Reports" shall mean a commitment for an ALTA
-------------------------
1987/1992 owner's policy for title insurance with respect to the real estate
owned by Seller and its Affiliates which will be conveyed to Buyer pursuant to
the terms of this Agreement, committing such title company to insure good and
marketable title to said land, free and clear of all Encumbrances (other than
Permitted Encumbrances).
"Purchase Price" shall mean the sum to be paid by Buyer for the Assets
--------------
in the amount of Eleven Million Fifty Thousand Dollars ($11,050,000), as
adjusted in accordance with the terms hereof.
"Rate Regulation Rules" shall mean the FCC rules currently in effect
-----------------------
implementing the cable television rate regulation provisions of the
Communications Act.
"Real Property" shall mean all Assets consisting of interests in real
-------------
property (including but not limited to, to the extent applicable, improvements,
fixtures and appurtenances), including both fee and leasehold interests, as set
forth on Schedule 4.6.
-------------
"Required Consents" shall mean the Consents designated as such on
-----------------
Schedule 4.20 by an "R."
-------------
"Senior Subordinated Loan Agreement" shall mean the Senior
----------------------------------
Subordinated Loan Agreement, dated the Closing Date, between Buyer and Seller,
in the form annexed hereto as Exhibit B.
----------
"Senior Subordinated Note" shall mean the Senior Subordinated Note,
--------------------------
dated the Closing Date, issued by Buyer to Seller in the original principal
amount of $2,800,000 in the form of Exhibit A to the Senior Subordinated Loan
---------
Agreement.
"Study" shall mean a Phase I environmental study of all the land
-----
leased by Seller and its Affiliates under the leases which will be transferred
to Buyer pursuant to this Agreement.
- 6 -
"Subscriber Adjustment" shall have the meaning set forth in Section
---------------------
2.4A.
"Subscription Agreement" shall mean the agreement whereby Seller shall
----------------------
invest $1,000,000 in Mediacom LLC in consideration for a ten percent (10%)
membership interest therein, in the form annexed hereto as Exhibit C.
----------
"System" shall mean the cable television reception and distribution
------
systems operated in the conduct of the Business, consisting of one or more
headends, subscriber drops and associated electronic and other equipment which
are, or are capable of being, operated as an independent system without
interconnection with other systems, and which provide cable television service
to the respective Franchise Area set forth on Schedule 1.1.
-------------
"Tax Return" shall mean any return, report, information return or
----------
other document (including any related or supporting information) filed or
required to be filed with any taxing authority in connection with the
determination, assessment, collection, administration or imposition of any
Taxes.
"Taxes" shall mean all taxes, charges, fees, liens, levies, charges,
-----
imposts, duties, withholdings or other assessments, including, without
limitation, income, withholding, capital, excise, employment, occupancy,
property, ad valorem, sales, transfer, recording, documentary, registration,
motor vehicle, franchise, use and gross receipts taxes, imposed by the United
States or any state, county, local or foreign government or any subdivision
thereof. Such term shall also include any interest, penalties, fines or
additions attributable to such assessments.
"Taxing Authority" shall mean any Federal, state, local or foreign
----------------
governmental body or political subdivision with the power to impose Taxes.
"Transaction Documents" shall mean this Agreement, the Senior
---------------------
Subordinated Loan Agreement, the Senior Subordinated Note, the Subscription
Agreement and each other instrument, document, certificate and agreement
required or contemplated to be executed and delivered hereunder and thereunder.
"WARN Act" shall mean the Worker Adjustment and Retraining
---------
Notification Act.
ARTICLE II
SALE AND PURCHASE OF ASSETS
2.1 Sale and Purchase of Assets. Subject to the terms and conditions
---------------------------
hereof, on the Closing Date, Seller agrees to sell, transfer, convey, assign and
deliver to Buyer, and Buyer agrees to
- 7 -
purchase, good title, free and clear of Encumbrances (other than Permitted
Encumbrances), to the Assets, in consideration of the payment by Buyer to the
Seller of the Purchase Price. Notwithstanding the foregoing, the Assets shall
exclude the assets set forth on Schedule 2.1 (the "Excluded Assets").
------------
2.2 Assumption of Liabilities. Upon the terms and subject to the
-------------------------
conditions of this Agreement, from and after the Closing Date, Buyer shall
assume and pay, perform and discharge, and indemnify and hold Seller harmless
from and against, the following liabilities, obligations and commitments of
Seller relating to the System, contingent or otherwise, asserted or unasserted,
matured or unmatured, and no others:
A. Obligations to operate and maintain the System to Persons entitled
to receive such service from the System, to the extent so entitled, if at all,
under applicable franchises, ordinances, leases and agreements disclosed herein.
B. All of Seller's obligations and commitments arising on and after
the Closing Date under the Contracts and Governmental Permits, it being
understood that obligations for the period prior to the Closing Date shall be
the obligation of Seller and adjusted on and after the Closing Date pursuant to
Section 2.4.
Anything herein to the contrary notwithstanding, there is excluded
from the assumed obligations, and Seller hereby agrees to retain and discharge
and to indemnify and hold harmless Buyer from and against, any and all
liabilities of Seller not expressly assumed by Buyer pursuant to the terms
hereof, including, without limitation, all obligations pursuant to lease
agreements with respect to any of the Equipment, all obligations of Seller
arising prior to the Closing Date, obligations of Seller arising either before
or after the Closing Date with respect to matters either unrelated to the
System, or related to the System and not delivered or disclosed to Buyer in the
Transaction Documents, and indebtedness for money borrowed and obligations to
Seller's stockholders, partners, officers, directors, attorneys and accountants,
and obligations of Seller for Taxes.
2.3 Payment of Purchase Price. The Purchase Price to be paid for the
-------------------------
Assets shall, subject to the terms and conditions contained herein, be paid by
Buyer as follows:
A. On the Closing Date, the sum of Eight Million Two Hundred Fifty
Thousand Dollars ($8,250,000) plus or minus any amount as necessary to reflect
the Closing Adjustments pursuant to Section 2.4, shall be payable to Seller by
wire transfer in clearinghouse funds available and credited to the account of
Seller pursuant to the wire instructions to be delivered by Seller to Buyer no
later than three (3) Business Days prior to the Closing Date; and
- 8 -
B. On the Closing Date, there shall be delivered to Seller the Senior
Subordinated Note.
2.4 Purchase Price Adjustments. The Purchase Price to be paid pursuant
--------------------------
to Section 2.3A hereof shall be adjusted and the charges identified below
relating to the operation of the System shall be apportioned so that Seller and
Buyer shall bear responsibility and be entitled to benefit as set forth in this
Agreement. Operation of the System until 11:59 p.m. of the day immediately
preceding the Closing Date shall be for the account of Seller and thereafter for
the account of Buyer. All revenues (including, but not limited to, subscriber
prepayments) and all expenses of the System shall be prorated as of the Closing
Date and adjusted as provided herein.
A. At Closing. No later than fifteen (15) calendar days prior to the
----------
Closing Date, Seller shall deliver to Buyer Seller's certificate estimated as of
the Closing Date ("Closing Adjustments") setting forth the Four Month Basic
Subscribers Average, and the number of Bulk Units and all adjustments proposed
to be made at the Closing as of the Closing Date. The Closing Adjustments shall
include, without limitation, the Subscriber Adjustment, prepaid subscriptions,
rents, franchise fees, utilities, service contracts, vehicle and other lease
payments and other prepaid and periodic obligations with respect to the Assets
purchased hereunder. Prior to Closing, Seller shall provide Buyer or Buyer's
representative with copies of all books and records as Buyer may reasonably
request for purposes of verifying the Closing Adjustments and shall meet with
Buyer's accountants and other representatives, but without limiting Seller's
obligations hereunder to certify all the Closing Adjustments.
At the Closing, all adjustments will be made on the basis of
Seller's certificate, provided Buyer has not given notice to Seller that, in
Buyer's opinion, the proposed adjustments are materially incorrect. If Buyer
gives notice that in its opinion, the proposed adjustments are materially
incorrect, and if the parties have not been able to resolve the matter prior to
the Closing Date, any disputed amounts shall be paid by the party to be charged
with a disputed adjustment, into escrow, and shall be held by the Escrow Agent
in accordance with the Escrow Agreement until the matter is resolved.
The Purchase Price shall be reduced by an amount equal to the sum
of (a) $1,650 multiplied by the number by which the Four Month Basic Subscribers
Average is less than 6,430 and (b) $750 multiplied by the number by which the
number of Bulk Units is less than 390 at the Closing Date (the "Subscriber
Adjustment").
B. Post-Closing Adjustment. As soon as practicable following the
-----------------------
Closing Date, and in any event within one hundred twenty (120) days thereafter,
or at such other time as the parties
- 9 -
mutually agree, Buyer shall deliver to Seller Buyer's certificate setting forth
as of the Closing Date ("Post-Closing Adjustments") the Four Month Basic
Subscribers Average, the number of Bulk Units, and all Post-Closing Adjustments
for amounts due on account of Seller and charges and other obligations payable
on account of Seller. Buyer shall deliver to Seller or Seller's representatives
copies of all books and records as Seller may reasonably request for purposes of
verifying such adjustments. Buyer's certificate shall be final and conclusive
unless objected to by Seller in writing within thirty (30) days after delivery.
Seller and Buyer shall attempt jointly to reach agreement as to the amount of
the Closing Adjustments within sixty (60) days after receipt by Buyer of such
written objection by Seller, which agreement, if achieved, shall be binding upon
both parties to this Agreement and not subject to dispute or review. If Seller
and Buyer cannot reach agreement as to the amount of the Closing Adjustments
within such sixty (60) day period, Seller and Buyer agree to submit promptly any
disputed adjustment to Ernst & Young. All fees and expenses of Ernst & Young
pursuant to this Section shall be paid one-half by Buyer and one-half by Seller.
Any amounts due Buyer or Seller for Post-Closing Adjustments shall be paid by
the party owing such amount (or, to the extent disputed amounts are held by the
Escrow Agent, shall be paid by the Escrow Agent pursuant to joint written
instructions of Buyer and Seller in accordance with such final resolution) not
later than five (5) Business Days after such amounts shall have become final and
conclusive.
2.5 Expenses; Sales and Transfer Taxes. Whether or not the
----------------------------------
transactions contemplated by this Agreement shall be consummated, Seller and
Buyer shall pay their own expenses (including, without limitation, attorneys and
accountants fees and disbursements) incident to this Agreement and the
transactions contemplated hereby. Notwithstanding the foregoing, Seller shall
bear and pay all transfer, sales, purchase, use or similar taxes arising out of
the transactions contemplated by this Agreement and any filing or recording or
similar fees payable in connection with any instruments contained herein.
2.6 Brokerage. The parties acknowledge that Xxxxxx Capital
---------
Corporation acted as a broker in this transaction and will be compensated by
Seller pursuant to a separate agreement between Seller and Xxxxxx Capital
Corporation. Other than as set forth in the preceding sentence, each party
hereto represents and warrants to the other party hereto that it has not
incurred any obligation or liability, contingent or otherwise, for brokerage or
finders' fees or agents' commissions or other like payment in connection with
this Agreement or the transactions contemplated hereby, and each party hereto
agrees to indemnify and hold the other party hereto harmless against and in
respect to any such obligation or liability based in an way on any agreement,
arrangement or understanding claimed to have been made by such party with any
third party.
- 10 -
2.7 Allocation of Purchase Price. The Purchase Price shall be
----------------------------
allocated among the assets as determined by Xxxx Xxxxx Associates, Inc. prior to
the Closing. All fees and expenses of Xxxx Xxxxx Associates, Inc. shall be paid
by Buyer.
ARTICLE III
CLOSING DATE;
CERTAIN TRANSACTIONS TO BE EFFECTED AT CLOSING
3.1 Closing Date.
------------
A. The Closing shall occur at 10:00 A.M. eastern standard time on
July 31, 1996, or such earlier or later date (the "Closing Date") established in
accordance with this Agreement, at the offices of Xxxxxxxxx Xxxxxx Xxxxxxxx
Xxxxxx & Xxxxxx, P.C., 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
B. If at any time prior to the scheduled Closing Date, all of the
conditions contained in Articles VII and VIII have been met or waived, Buyer may
give notice to Seller of the Closing. Such notice shall state a date and time,
not less than ten Business Days from the date of such notice, for the Closing to
occur.
C. If on July 31, 1996, all of the conditions contained in Articles
VII and VIII have not been met or waived, then the Closing shall be deferred
until all such conditions have been met or waived but not to a date later than
September 15, 1996. Upon the last of the conditions being so met or waived,
Seller or Buyer may give notice to the other of the Closing, which notice shall
state a date and time, not less than ten business days from the date of such
notice, for the Closing to occur. The parties will use their best efforts to
close on, or as close as possible after, a Cut-Off Date.
3.2 Certain Transactions to be Effected at Closing.
----------------------------------------------
Subject in each case to the terms and conditions contained in this Agreement,
the following steps shall be taken concurrently at the Closing, except as
otherwise expressly stated:
A. Seller shall execute and/or deliver, or cause to be executed
and/or delivered, to Buyer the following:
(i) Seller's certificate setting forth the Four Month Basic
Subscribers Average and computation thereof, and the number of Bulk Units as of
the Closing Date;
(ii) The favorable opinions dated as of the Closing Date as set forth
in Section 7.8 hereof;
(iii) All such instruments and documents including instruments of
conveyance and do such other acts and things as
- 11 -
Buyer may reasonably request in order to convey good and marketable title to,
and possession of, the Assets, free and clear of any Encumbrances, excepting
only the Permitted Encumbrances, and otherwise effectuate the transactions
contemplated by this Agreement;
(iv) Seller's Certificate as to the fulfillment of the conditions set
forth in Sections 7.2, 7.3, 7.4, 7.5 and 7.10;
(v) A counterpart to the Escrow Agreement, if applicable;
(vi) A wire transfer to Mediacom LLC of one million dollars
($1,000,000) in consideration for a 10% membership interest in Mediacom LLC;
(vii) A counterpart to the Subscription Agreement;
(viii) A counterpart to the Senior Subordinated Loan Agreement;
(ix) Executed Confidentiality and Non-Compete Agreements from Xxxxx
X. Xxxxx, XX and Xxxx X. Xxxxx, XX;
(x) A certificate as of a recent date from the appropriate office of
the state of organization of Seller as to the good standing of Seller;
(xi) Resolutions of the Board of Directors of Seller duly authorizing
the execution, delivery and performance of this Agreement; and
(xii) Such further instruments and documents and do such other acts
and things as Buyer may reasonably request in order to effectuate the
transactions contemplated by this Agreement.
B. Buyer shall execute and/or deliver, or cause to be executed
and/or delivered, to Seller the following:
(i) By wire transfer, the cash portion of the Purchase Price after
adjustments, less any amount deposited into escrow pursuant to Section 2.4A;
(ii) The Senior Subordinated Note;
(iii) By wire transfer to the Escrow Agent, the amount, if any,
deposited into escrow pursuant to Section 2.4A;
(iv) A counterpart to the Escrow Agreement, if applicable;
(v) A counterpart to the Subscription Agreement;
- 12 -
(vi) A counterpart to the Senior Subordinated Loan Agreement;
(vii) The favorable opinion dated as of the Closing Date as set forth
in Section 8.5 hereof;
(viii) Buyer's certificate as to the fulfillment of the conditions set
forth in Sections 8.2, 8.3 and 8.4;
(ix) Resolutions of a manager of Buyer duly authorizing the
execution, delivery and performance of this Agreement and evidence of such
manager's authority to act on behalf of Buyer; and
(x) Such further instruments and documents and do such other acts
and things as Seller may reasonably request in order to effectuate the
transactions contemplated by this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer, which representations
and warranties, together with all other representations and warranties of Seller
in this Agreement, shall be true and correct as of the Closing Date as if
expressly restated on said date, and shall survive the Closing Date:
4.1 Organization and Qualification. Seller is a corporation, duly
------------------------------
organized, validly existing and in good standing under the laws of the State of
Michigan. Seller has all requisite power and authority to own, lease and use the
Assets as they are currently owned, leased and used and to conduct the Business
as it is currently conducted. Seller is duly qualified or licensed to do
business and is in good standing under the laws of each jurisdiction where the
Assets owned by Seller are located and the Business of Seller is conducted,
except any such jurisdiction where the failure to be so qualified or licensed
and in good standing would not have a material adverse effect on any of the
Assets, the System or the Business, on the validity, binding effect or
enforceability of this Agreement and each other Transaction Document to which
Seller is a party, or on the ability of Seller to perform its obligations under
this Agreement and each other Transaction Document to which it is a party.
4.2 Business of Seller. Seller has not conducted the Business
------------------
through, and none of the Assets are held or owned by, any subsidiary, Affiliate
or other entities.
4.3 Authority and Validity. Seller has full corporate power and
----------------------
authority to execute and deliver this Agreement and each other Transaction
Document to which it is a party and to consummate the transactions contemplated
by this Agreement and each other
-13-
Transaction Document to which it is a party. The execution and delivery of this
Agreement and each other Transaction Document to which Seller is a party and the
consummation by Seller of the transactions contemplated by this Agreement and
each other Transaction Document to which it is a party have been duly and
validly authorized by all necessary action on the part of Seller. This Agreement
has been, and each of the other Transaction Documents to which Seller is a party
will be on or prior to the Closing, duly and validly executed and delivered by
Seller, and this Agreement and each of the other Transaction Documents to which
Seller is a party constitute and will constitute on or prior to the Closing, a
valid and binding obligation of Seller, enforceable against Seller in accordance
with their respective terms.
4.4 Consents and Approvals: No Violation.
-------------------------------------
A. Except for (i) the Consents and (ii) filings, waivers, approvals,
actions, authorizations, qualifications and consents which, if not made or
obtained, would not, individually or in the aggregate, have a material adverse
effect on the Assets, the System, the Business, Seller's ability to perform its
obligations under this Agreement or the other Transaction Documents to which it
is a party or, to the best of Seller's knowledge, Buyer's ability to conduct the
Business after the Closing in substantially the same manner in which it is
currently conducted by Seller, no consent, waiver, approval, action or
authorization of, or filing, registration or qualification with, any
Governmental Authority is required to be made or obtained by Seller in
connection with the execution, delivery and performance of this Agreement or the
other Transaction Documents to which it is a party.
B. Except for the Consents and filings covered by the exceptions in
clauses (i) and (ii) of Section 4.4A and as set forth on Schedule 4.4, the
------------
execution, delivery and performance by Seller of this Agreement and each other
Transaction Document to which it is a party do not and will not: (i) violate or
conflict with any provision of Seller's articles of incorporation or by-laws;
(ii) violate any Legal Requirement; or (iii) (A) violate, conflict with, or
constitute a breach of or default under (without regard to requirements of
notice, passage of time or elections of any Person), (B) permit or result in the
termination, suspension or modification of, (C) result in the acceleration of
(or give any Person the right to accelerate) the performance of Seller under, or
(D) result in the creation or imposition of any Encumbrance under, any Contract
or any other instrument evidencing any of the Assets or any instrument or other
agreement to which Seller is a party or by which Seller or any of the Assets is
bound or affected, except such violations, conflicts, breaches, defaults,
terminations, suspensions, modifications, and accelerations referenced in
clauses (ii) and (iii) above which would not, individually or in the aggregate,
have a material adverse effect on the Assets, the System, the Business, or
Seller's ability to perform its
- 14 -
obligations under this Agreement or the other Transaction Documents to which it
is a party or, to the best of Seller's knowledge, Buyer's ability to conduct the
Business after the Closing in substantially the same manner in which it is
currently conducted by Seller.
4.5 Title.
-----
A. At Closing, Seller will transfer the Assets to Buyer, free and
clear of any Encumbrances, except Permitted Encumbrances. Except as set forth on
Schedule 4.5A, Seller has not signed any Uniform Commercial Code financing
-------------
statement or any security agreement or mortgage or similar agreement authorizing
any Person to file any financing statement or claim any security interest or
lien with respect to any of the Assets. Except as set forth on Schedule 4.5A,
--------------
Seller owns all tangible personal properties which are necessary to permit the
operation of the System by Buyer in substantially the same manner as currently
operated and all such properties are included within the Assets free and clear
of all Encumbrances.
B. Seller has no properties or assets used or held for use in the
Business that are not included in the Assets, other than the Excluded Assets;
and (ii) except for the Excluded Assets, the Assets to be transferred to Buyer
at the Closing include all Equipment, Contracts, Governmental Permits and other
property and assets necessary for the conduct of the Business in the ordinary
course of business in substantially the same manner as conducted prior to the
Closing Date.
4.6 Real Property. Schedule 4.6 sets forth a list and description of
------------- ------------
all Real Property owned, leased, occupied or used by Seller in the Business, and
is true, complete and accurate in all material respects. No Real Property used
in connection with the Business is owned by Seller or any of its Affiliates.
Seller is holding, or shall hold at Closing, the leasehold interests to all Real
Property, including Real Property hereafter acquired, in each case free and
clear of any Encumbrances, except for Permitted Encumbrances. At the Closing,
Seller shall have and shall transfer to Buyer its leasehold interests in and to
all the Real Property free and clear of any and all Encumbrances (except for
Permitted Encumbrances). There are no pending or, to the best of Seller's
knowledge, threatened, any condemnation actions or special assessments or any
pending proceedings for changes in the zoning with respect to such Real Property
or any part thereof and Seller has not received any notice of the desire of any
public authority or other entity to take or use any Real Property or any part
thereof. All structures on the Real Property are structurally sound and in good
operating condition and repair (reasonable wear and tear excepted). Each parcel
of Real Property has access (either direct or by an easement included among the
Assets) to all public roads, utilities, and other services necessary for the
operation of
- 15 -
the relevant System with respect to such parcel. Seller has complied with, or
otherwise resolved to the satisfaction of the relevant Government Authority, all
notices or orders to correct violations of Legal Requirements issued by any
Governmental Authority having jurisdiction against or affecting any of the Real
Property. All leases and subleases pursuant to which any of the Real Property is
occupied or used are set forth on Schedule 4.6 and such leases and subleases are
------------
valid, subsisting, binding and enforceable in accordance with their respective
terms and there are no existing material defaults thereunder or events that with
notice or lapse of time or both would constitute defaults thereunder. Seller has
not nor, to the best of Seller's knowledge, has any other party to any contract,
lease or sublease relating to any Real Property given or received notice of
termination, and, to the best of Seller's knowledge, subject to the receipt of
any necessary Consents, the consummation of the transactions contemplated by
this Agreement will not result in any such termination. Seller is not nor will
it be, as a result of the transactions contemplated by this Agreement, with the
giving of notice or the passage of time or both, in material breach of any
provision of any contract, lease or sublease relating to any Real Property. All
easements, rights-of-way and other rights which are necessary for Seller's
current use of any Real Property are valid and in full force and effect, and
Seller has not received any notice with respect to the termination or breach of
any of such easements, rights-of-way or other similar rights.
4.7 Financial Statements; Operating Budget.
--------------------------------------
A. Seller has delivered to Buyer correct and complete copies of the
System's balance sheet and related statements of operations, income, changes in
financial position and statements of cash flows for the year ended December 31,
1995 including the detail supporting such financial statements (collectively,
the "1995 Financial Statements") and a letter from Price Waterhouse, independent
auditors for Seller, certifying that the Financial Statements have been prepared
in accordance with GAAP. The 1995 Financial Statements (i) have been prepared in
accordance with the books and records of Seller and (ii) fairly present the
financial condition and the results of operations and cash flows of the System
as of and for the period ended on such date, all in conformity with GAAP
consistently applied throughout such period, with no material difference between
such financial statements and the financial records maintained by Seller. Seller
has delivered to Buyer correct and complete copies of all filings made to
Governmental Authorities with respect to the System.
B. Since December 31, 1995, (i) the Business has been operated only
in the ordinary course; (ii) there has been no material adverse change in, and
no event has occurred which, so far as reasonably can be foreseen, is likely,
individually or in the aggregate, to result in any material adverse change in
the
- 16 -
business, operations, prospects, financial condition, or results of operations
of the Business, other than changes affecting the United States economy in
general or the cable television industry in general; (iii) there has been no
sale, assignment or transfer of any material assets or properties related to the
System, or any theft, damage, removal of property, destruction or casualty loss
which might be expected to materially adversely affect the Business or the
System; (iv) there has been no amendment or termination of any Governmental
Permit or any Contract material to the conduct of the Business; (v) there has
been no waiver or release of any material right or claim against any third party
relating to the Business; (vi) there has been no material labor dispute or union
activity with respect to or by Seller's employees which affects the operation of
the System; and (vii) there has been no agreement by Seller to take any of the
actions described in the preceding clauses (i) through (vi), except as
contemplated by this Agreement.
C. The 1996 operating budget relating to the Business which has been
delivered to Buyer was prepared in good faith in accordance with past practice
and is predicated upon the assumptions set forth therein, which assumptions are
consistent with prior budgeting practices and are reasonable in all material
respects.
4.8 Legal Proceedings. Except as set forth on Schedule 4.8 and any
----------------- ------------
proceedings affecting the cable television industry in general, there is no
judgment or order outstanding, or any action, suit, arbitration, proceeding,
controversy or investigation by or before any Governmental Authority or any
arbitrator pending, or to the best of Seller's knowledge, threatened, involving
or affecting the System, the Assets or the Business, which, if adversely
determined, would have a material adverse effect on the System, the Assets or
the Business or would materially impair the ability of Seller to perform its
obligations under this Agreement or the other Transaction Documents to which it
is a party. Seller is not in default or violation, and no event or condition
exists which, with notice or lapse of time or both, could become or result in a
default under or a violation of, any judgment or order of any Governmental
Authority.
4.9 Certain Employment and Employee Benefit Matters. Seller has no,
-----------------------------------------------
and no action or event has occurred that would cause Seller to have any,
liabilities under ERISA or similar laws with respect to employee benefit plans
of Seller regarding employees of the Business. There are no unions representing
employees of the System and no labor disputes pending between Seller and any of
its employees who work primarily in the operation of the System. Seller has
complied in all respects with all laws relating to the employment of labor,
including any provisions thereof relating to wages, hours, collective bargaining
and the payment of social security and other taxes, and Seller is not liable for
any arrearages of wages or any taxes or penalties for failure to comply
- 17 -
with any of the foregoing. Schedule 4.9 sets forth the names, job descriptions
------------
and present annual rates of compensation, including the length of time such
employee has been with the Seller, whether such employee is full-time or part-
time, any bonus or other direct or indirect compensation and employee benefits,
of all personnel whose work is performed wholly or substantially for the System,
and any employment agreements, commitments, arrangements or understandings,
written or oral, affecting such personnel.
4.10 Characteristics of the System.
-----------------------------
A. The System includes not more than 150 miles of energized cable
plant, of which not more than 18 miles are of underground construction, and
include at least 7,400 homes passed by energized cable. There are no pending
written complaints filed by Subscribers or other users of the System with any
Governmental Authority, other than such complaints as are received from time to
time in the ordinary course of business.
B. Schedule 4.10 sets forth accurately and completely the following
-------------
information as of April 1, 1996 with respect to the System:
(i) a description of the System's physical plant, including
with reasonable detail, headend trunk line and feeder cable, antenna structures
(including coordinates), transmitting and receiving equipment and capacity and
other electronic equipment;
(ii) an inventory of equipment and supplies on hand, including
without limitation converters, accurate and complete in all material respects;
(iii) without duplication, the approximate number of Basic
Subscribers and Bulk Units;
(iv) a listing of all communities included within the Franchise
Areas;
(v) basic, pay, audio and ancillary services offered, all
rates charged currently and for the prior three (3) years for each such service
or package or tier of services and the number of subscribers to each such
service or package or tier of services paying each such rate and all benchmark
rates for the System;
(vi) all broadcast and nonbroadcast programming carried by the
System, the channel capacity of the System, the station or signals carried, with
a breakdown as to each signal as between satellite and off-air reception,
current channel and frequencies utilized (including system radius and designated
coordinates reported to the FCC);
- 18 -
(vii) installation charges, where applicable;
(viii) a description in reasonable detail of all present marketing
programs, policies and practices, Seller's past practices with respect to
marketing programs, policies and practices, which are expected to be implemented
prior to the Closing Date and all rate increases proposed to be implemented
(including dates of implementation) prior to the Closing Date;
(ix) a description of all present customer service policies,
practices and procedures;
(x) all FCC licenses and registrations, including, but not
limited to, business radios, earth stations and microwave;
(xi) a description of all repair, manufacturing, assembly and
equipment enhancement activities engaged in by Seller;
(xii) all retransmission consent agreements and must-carry
requests required in the operation of the System; and
(xiii) detailed maps of the System.
4.11 Finders; Brokers and Advisors. Except for the engagement of
-----------------------------
Xxxxxx Capital Corporation, with respect to which Seller shall have sole
responsibility for the payment of all amounts owed, Seller has not employed any
financial advisor, broker or finder or incurred any liability for any financial
advisory, brokerage, finder's or similar fee or commission in connection with
the transactions contemplated by this Agreement and Seller is not aware of any
claim or basis for any claim for payment of, or any unpaid liability to any
Person for any fees or commissions or like payments with respect to the
negotiations leading to this Agreement or the consummation of any of the
transactions contemplated by this Agreement.
4.12 Tax Matters.
-----------
A. Seller has as of the date hereof, and will have as of the
Closing Date, timely filed in proper form all Tax Returns and all other reports
that reasonably may affect Buyer's rights to and ownership of the Assets, the
System or the Business that are required to be filed as of the date hereof, or
which are required to be filed on or before the Closing Date, as the case may
be, and all such Tax Returns were prepared in good faith and are accurate and
complete in all material respects, and, to the best of Seller's knowledge, there
is no basis for assessment of any addition to any Taxes shown thereon. Except as
set forth on Schedule 4.12, all Taxes due or payable by Seller on or before the
-------------
date hereof or the Closing Date, as the case may be, the non-payment of which
could result in a lien upon the Assets, the System or the Business (including
any Taxes, liabilities or amounts owing resulting from
- 19 -
liability of Seller as the transferee of the assets of, or successor to, any
other corporation or entity or resulting by reason of Seller having been a
member of any group of corporations filing a consolidated, combined or unitary
Tax Return) have been or will be timely paid, except to the extent any such
Taxes (as set forth as of the date hereof on Schedule 4.12) are being contested
-------------
in good faith by appropriate proceedings by Seller and for which adequate
reserves for any disputed amounts shall have been established in accordance with
GAAP. Except as set forth on Schedule 4.12, as of the date hereof, there has
-------------
been no Tax examination, audit, proceeding or investigation of Seller, or with
respect to the Assets, the System or the Business, by any relevant Taxing
Authority, and Seller does not have any outstanding Tax deficiency or
assessment. Except as set forth on Schedule 4.12, there are no pending or, to
-------------
the best of Seller's knowledge, threatened actions, audits, examinations,
proceedings or investigations by any relevant Taxing Authority with respect to
Seller, the Assets, the System or the Business. There is no outstanding request
for an extension of time within which to pay any Taxes with respect to Seller,
the Assets, the System or the Business. There has been no waiver or extension of
any applicable statute of limitations for the assessment or collection of any
Taxes with respect to Seller, the Assets, the System or the Business. Seller has
withheld and paid in a timely manner to all relevant Taxing Authorities all
payments for withholding Taxes, unemployment insurance and other amounts
required to be withheld and paid. All Taxes of or with respect to Seller, the
Assets, the System and the Business relating to the period prior to the Closing
shall be the responsibility of Seller.
4.13 Equipment. Schedule 4.13 contains a list of all Equipment used
--------- -------------
or held for use by Seller in the operation of the Business. Except as set forth
on Schedule 4.13, the Equipment, whether or not set forth on Schedule 4.13 or
------------- -------------
hereafter acquired, is and will be at Closing in good operating condition and
repair (reasonable wear and tear excepted) and fit for the purpose it is being
used. All leases (including capital leases) pursuant to which any Equipment is
used are set forth on Schedule 4.13 and such leases shall be paid in full prior
-------------
to the Closing. At Closing, all Equipment subject to a lease on the date hereof
shall be transferred to Buyer free and clear of such leases and Buyer shall
assume no obligations under any such lease agreements.
4.14 Governmental Permits; Contracts.
-------------------------------
A. Schedule 4.14(i) contains a complete list of all Governmental
----------------
Permits and Schedule 4.14 (ii) contains a complete list of all Contracts. Each
------------------
Governmental Permit and Contract, including those that are entered into after
the date hereof, is in full force and effect, binding and enforceable in
accordance with its terms, and is valid under and complies in all material
respects with all applicable Legal Requirements. Except as set forth on Schedule
--------
- 20 -
4.14(i), Seller is the authorized legal holder of all Governmental Permits.
-------
Except as set forth on Schedule 4.14(i) and 4.14(ii), neither Seller nor to the
--------------- --------
best of Seller's knowledge, any other party to any Governmental Permit or
Contract is in default thereunder or has given or received notice of
termination, cancellation, dispute or default or, to the best of Seller's
knowledge, has taken any action inconsistent with the continuance of any
Governmental Permit or Contract. Except for Contracts shown as oral contracts
and described in all material respects on Schedule 4.14 (ii), correct and
------------------
complete copies of each Governmental Permit and Contract have been delivered to
Buyer and its representatives, and with respect to those Governmental Permits
and Contracts executed after the date hereof, copies will be made available to
Buyer promptly following such execution and in any event prior to the Closing
Date. Except as set forth in Schedule 4.20, none of the Contracts require Buyer
-------------
to assume, or Seller to cause Buyer to assume, such Contract as a condition to
the transfer of the Assets and the System to Buyer.
B. Except as disclosed on Schedule 4.14(i), no approval,
-----------------
application, filing, registration, consent or other action of any Governmental
Authority is required to enable Seller to take advantage of the rights and
privileges intended to be conferred by any Governmental Permits, except for
approvals, applications, filings, registrations, consents or other actions that
(if not made or obtained) could not have a material adverse effect on Seller or
the Business. Seller has not received any notice from the granting Governmental
Authority with respect to any breach of any covenant under, or any default with
respect to, any Governmental Permits, which default has not been cured.
4.15 Insurance. Seller has in force policies of insurance with
---------
respect to the Assets and the Business and all bonds required to be obtained by
Seller with respect to the Business, including without limitation all bonds
required by Governmental Permits and Contracts, as set forth on Schedule 4.15.
-------------
All insurance policies are adequate, in accordance with prevailing cable
industry practices, to insure fully, less standard deductibles, against all
risks to which Seller and the Assets are exposed in the operation and conduct of
the Business. At no period of time did Seller lack any such insurance coverage.
Schedule 4.15 is true, complete and accurate and the insurance policies and
-------------
bonds referred to therein are in full force and effect (free from any right of
termination on the part of the insurance carriers or bonding agencies), and
Seller has received no notice of non-renewal or cancellation of such insurance
policies or bonds. Seller will maintain such insurance policies and bonds in
full force and effect up to and including the Closing Date, and will furnish
Buyer evidence thereof. All claims, if any, made against Seller which are
covered by insurance are listed on Schedule 4.8 and are being defended by the
------------
insurers. To the best of Seller's knowledge, there
- 21 -
is no basis upon which any insurance carriers may disclaim coverage under any of
the insurance policies referred to on Schedule 4.15.
-------------
4.16 Hazardous Substances and Environmental Matters. (i) The Real
----------------------------------------------
Property is free of all asbestos-containing building materials susceptible to
becoming airborne if not disturbed; (ii) no quantity in any amount required to
be reported under any Legal Requirement (hereinafter "Reportable Quantity") of
any Hazardous Substance (as defined below) into, on, over or under the Real
Property which remains in, on, over or under the Real Property, except for such
substances that are in such amounts which are not of a Reportable Quantity under
any applicable environmental laws, or are of the type typically found in
commercial cleaning products, standard office supplies or other materials in
amounts generally used or produced by businesses similar to the Business; (iii)
no Reportable Quantity under applicable Legal Requirements of any Hazardous
Substance has been released into, on, over or under the Real Property unless
same shall have been cleaned up, removed or otherwise remediated in accordance
with Legal Requirements; (iv) Seller is, and has been, in compliance with all
Legal Requirements relating to the environment with respect to the Assets and
the operation of the Business and the System; and (v) Seller has not received
any notice from any Governmental Authority indicating that the Real Property or
any real property adjacent thereto has been or may be placed on any federal or
state "Superfund" or "Superlien" list. For these purposes, the term "Hazardous
Substances" includes any substance heretofore or hereafter designated as
"hazardous" or "toxic," including, without limitation, petroleum and petroleum
related substances, or having characteristics identified as "hazardous" or
"toxic" under any Legal Requirement including, without limitation, the
Comprehensive Environmental Response Compensation and Liability Act of 1980, 42
U.S.C. Section 9601, et seq., the Resource Conservation and Recovery Act, 42
-- ---
U.S.C. Section 6901, et seq., the Federal Water Pollution Control Act, 33 U.S.C.
-- ---
Section 1247, et seq., the Clean Air Act, 42 U.S.C. Section 2001, et seq., and
-- --- -- ---
the Community Right to Know Act, 42 U.S.C. Section 11001, et seq., all as
-- ---
amended.
4.17 Accounts Receivable. The Accounts Receivable have not been
-------------------
assigned to or for the benefit of any other Person. The Accounts Receivable
reflected in the 1995 Financial Statements and Monthly Financial Statements and
all Accounts Receivable arising after the dates thereof up to and including the
Closing Date (to the extent not heretofore or theretofore collected) arose and
will arise from bona fide transactions in the ordinary course of business and,
other than Accounts Receivable which are more than 60 days past due from the
date of billing, the Accounts Receivable are, and will be, fully collectible.
- 22 -
4.18 System Compliance.
-----------------
A. Seller's operation of the System is in material compliance with
all applicable Legal Requirements, including without limitation, the
Communications Act, the Copyright Act, and the rules and regulations of the FCC
and the United States Copyright Office, including, without limitation, rules and
laws governing system registration, use of aeronautical frequencies and signal
carriage, equal employment opportunity, cumulative leakage index testing and
reporting, signal leakage, and subscriber privacy, except to the extent that the
failure to so comply with any of the foregoing could not (either individually or
in the aggregate) reasonably be expected to have a material adverse effect on
the Assets, the System or the Business. Without limiting the generality of the
foregoing except to the extent that the failure to comply with any of the
following could not (either individually or in the aggregate) reasonably be
expected to have a material adverse effect on the Assets, the System or the
Business and except as set forth in Schedule 4.18 hereto:
-------------
(i) the Franchise Area has been registered with the FCC;
(ii) all of the annual performance tests on the System required
under the rules and regulations of the FCC have been performed and the results
of such tests demonstrate satisfactory compliance with the applicable
requirements being tested in all material respects;
(iii) the System currently meets or exceeds the applicable
technical standards set forth in the rules and regulations of the FCC,
including, without limitation, the leakage limits contained in 47 C.F.R. Section
76.605 (a) (11);
(iv) the System is being operated in compliance with the
provisions of 47 C.F.R. Sections 76.610 through 76.619 (mid-band and super-band
signal carriage), including 47 C.F.R. Section 76.611 (compliance with the
cumulative signal leakage index) to the extent applicable;
(v) the System is presently being operated in compliance with
such authorizations (and all required certificates, permits and clearances from
governmental agencies, including the Federal Aviation Administration, with
respect to all towers, earth stations, business radios and frequencies utilized
and carried by the System have been obtained); and
(vi) all notices to subscribers of the System required by the
rules and regulations of the FCC have been provided.
- 23 -
B. All notices, statements of account, supplements and other
documents required under Section 111 of the Copyright Act and under the rules of
the Copyright Office with respect to the carriage of off-air signals by the
System have been duly filed, and the proper amount of copyright fees have been
paid on a timely basis, and the System qualifies for the compulsory license
under Section 111 of the Copyright Act, except to the extent that the failure to
so file or pay could not (either individually or in the aggregate) reasonably be
expected to have a material adverse effect on the Assets, the System or the
Business.
C. The carriage of all television station signals (other than
satellite super stations) by the System is permitted by valid retransmission
consent agreements or by must-carry elections by broadcasters.
D. Seller is in compliance with its obligations with regard to
protecting the privacy rights of any past or present customers of the System
except to the extent that the failure to so comply could not (either
individually or in the aggregate) reasonably be expected to have a material
adverse effect on the Assets, the System or the Business.
E. The Assets are adequate and sufficient for all of the current
operations of the System.
F. To Seller's knowledge, the System is not subject to effective
competition as of the date hereof.
G. No Governmental Authority has notified Seller of its application
to be certified to regulate basic service rates with respect to the System as
provided in 47 C.F.R. Section 76.910.
H. No Governmental Authority has notified Seller that it has been
certified to regulate basic service rates and has adopted regulations required
to commence such regulation with respect to the System as provided in 47 C.F.R.
Section 76.910(c) (2).
I. Except to the extent that a Governmental Authority regulates rates
pursuant to the Rate Regulation Rules, Seller is not aware of any reason that
the Seller cannot continue to charge its current programming rates in connection
with the Seller's operation of the System in compliance with the Communications
Act and the Rate Regulation Rules.
J. To Seller's knowledge, no reduction of rates or refunds to
subscribers is required thereunder as of the date hereof.
K. Seller is in compliance with its obligations under 47 C.F.R. Part
17 concerning the construction, marking and lighting
- 24 -
of antenna structures used by Seller in connection with the operation of the
System, except to the extent that the failure to so comply could not (either
individually or in the aggregate) reasonably be expected to have a material
adverse effect on the Assets, the System or the Business.
4.19 Intangibles. Except as set forth on Schedule 4.19, Seller owns
----------- -------------
or possesses royalty free licenses or other rights to use all Intangibles
necessary to the operation of the Business as presently conducted without any
material conflict with, or material infringement of, the rights of others. There
is no claim pending or, to the best of Seller's knowledge, threatened with
respect to any such Intangibles. Schedule 4.19 contains a true, correct and
-------------
complete list of all Intangibles which are material to the operation of the
System.
4.20 No Other Consents. Seller has obtained and is in compliance with
-----------------
all consents, approvals, authorizations, waivers, orders, licenses,
certificates, permits and franchises from, and has made all filings with, any
Governmental Authority and other Persons required for the operation of the
System as presently operated, all of which are in full force and effect and
enforceable in accordance with their respective terms and comply with all
applicable Legal Requirements, except for such failures which do not or could
not, individually or in the aggregate, be expected to have a material adverse
effect on the System or the Business. Except as set forth on Schedule 4.20, no
-------------
consent, authorization, approval, waiver, order, license, certificate or permit
of or from or declaration or filing with any Governmental Authority or other
Person is necessary to preclude any cancellation, suspension, termination or
reformation of any Governmental Permit or Contract, other than such consents,
authorizations, approvals, waivers, orders, licenses, certificates or permits
which do not or could not, individually or in the aggregate, have a material
adverse effect on the System or the Business.
4.21 No Undisclosed Liabilities. Except as and to the extent set
--------------------------
forth on Schedule 4.21, Seller does not have any liability or obligation (direct
-------------
or indirect, absolute, fixed, contingent or otherwise) arising out of the Assets
or conduct of the Business which was not reflected or reserved on the 1995
Financial Statements or Monthly Financial Statements, and Seller has not
incurred any such liability or obligation since the last day of the last Monthly
Financial Statement, other than in the ordinary course of business.
4.22 Liabilities to Subscribers. There are no obligations or
--------------------------
liabilities to subscribers of the System except with respect to (i) prepayments
or deposits made by such subscribers as set forth in the 1995 Financial
Statement or Monthly Financial Statements or, since the last day of the Monthly
Financial Statements incurred in the ordinary course of business consistent
- 25 -
with past practices and (ii) the obligation to supply services to subscribers in
the ordinary course of business in accordance with and pursuant to the terms of
the Governmental Permits.
4.23 Restoration. Other than property having an aggregate value of
-----------
less than $25,000, no property of any Person has been damaged, destroyed,
disturbed or removed in the process of construction or maintenance of the
System, which has not been, or will not be, prior to the Closing, repaired,
restored or replaced, and as to which an adequate reserve has not been
established by Seller.
4.24 Condition and Transfer of Tangible Property. The tangible
-------------------------------------------
personal property of Seller has been installed, operated and maintained in all
respects in accordance with the requirements of (i) all applicable Governmental
Permits and Contracts and (ii) technical standards and Legal Requirements of any
Governmental Authority or regulatory authorities, other than such requirements
which would not, individually or in the aggregate, have a material adverse
effect on the Assets, the Business or, to the best of Seller's knowledge,
Buyer's ability to operate and maintain the tangible personal property after the
Closing in substantially the same manner in which it is currently operated and
maintained by Seller. The System is or shall be at Closing capable of delivering
in the ordinary course of business to all subscribers, cable television services
(including a visual transmission) in compliance with all applicable Governmental
Permit requirements. At the Closing, Seller shall have and shall transfer to
Buyer good title to all tangible property included as part of the Assets.
4.25 Inventory. Seller has, and at the Closing will have, an
---------
inventory of spare parts and other materials relating to the System of the type
and nature and maintained at a level consistent with past practices and
otherwise in accordance with cable system industry practices.
4.26 Overbuilds. Except as set forth in Schedule 4.26, (I) no
---------- -------------
construction programs have been undertaken, or to Seller's knowledge, are
proposed or threatened to be undertaken, by any municipality or other cable
television, multichannel multipoint distribution systems or multipoint
distribution system provider or operator in any Franchise Area served by the
System; and (ii) no franchise or other application or request of any Person is
pending or to Seller's knowledge, threatened or proposed which relates to, or
which could materially adversely affect the System. Except as set forth on
Schedule 4.26, Seller is not, nor is an Affiliate of Seller, a party to any
-------------
agreement restricting the ability of a third party to operate cable television
systems in the Franchise Areas.
4.27 Certain Programming Arrangements and Relationships. Except as
--------------------------------------------------
set forth on Schedule 4.27, Seller is not a party to any programming contract
-------------
with any Person providing for any exclusive
- 26 -
arrangement with respect to the provision of programming to the Business. Except
as set forth on Schedule 4.27, neither Seller nor any of its Affiliates has any
-------------
affiliation with (other than on a third party basis), equity interest in, profit
participation in, contractual right to acquire any such interest or
participation, or any other relationship with any Person that provides
programming to the System. Seller has not entered into any arrangement with any
community groups or similar third parties restricting or limiting the types of
programming which may be shown on the System.
4.28 Disclosure. No representation or warranty by Seller contained in
----------
this Agreement (including the exhibits and schedules hereto), and no statement
contained in any document, certificate or other instrument furnished to Buyer by
or on behalf of Seller (excluding drafts of any thereof) pursuant hereto
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary in order to make the statements
contained herein or therein not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows, which
representations and warranties, together with all other representations and
warranties of Buyer in this Agreement, shall be true and correct as of the
Closing Date as if expressly restated on said date, and shall survive the
Closing Date:
5.1 Organization and Qualification. Buyer is a limited liability
------------------------------
company duly formed under the Limited Liability Company Act of the State of
Delaware, and is validly existing and in good standing under the laws of the
State of Delaware. Buyer has all requisite power and authority to carry on its
business as currently conducted and to own, lease, use and operate its assets.
Buyer is duly qualified or licensed to do business and is in good standing under
the laws of each jurisdiction where the assets owned by it are located and its
business is conducted, except any such jurisdiction where the failure to be so
qualified or licensed and in good standing would not have a material adverse
effect on its assets or its business, or on the validity, binding effect or
enforceability of this Agreement and each other Transaction Document to which
Buyer is a party, or on the ability of Buyer to perform its obligations under
this Agreement and each other Transaction Document to which it is a party.
5.2 Authority and Validity. Buyer has full power and authority to
----------------------
execute and deliver this Agreement and each other Transaction Document to which
it is a party and to consummate the transactions contemplated by this Agreement
and each other Transaction Document to which it is a party. The execution and
delivery of this Agreement and each other Transaction Document to
- 27 -
which Buyer is a party and the consummation by Buyer of the transactions
contemplated by this Agreement and each other Transaction Document to which it
is a party have been duly and validly authorized by all necessary action on the
part of Buyer. This Agreement has been, and each of the other Transaction
Documents to which Buyer is a party will be on or prior to the Closing, duly and
validly executed and delivered by Buyer, and this Agreement and each of the
other Transaction Documents to which Buyer is a party constitutes and will
constitute on or prior to the Closing, a valid and binding obligation of Buyer,
enforceable against Buyer in accordance with their respective terms.
5.3 No Breach or Violation.
----------------------
A. Except for (i) any consents that will be obtained or waived on or
prior to the Closing Date, (ii) filings and consents which, if not made or
obtained, would not have a material adverse effect on Buyer's ability to perform
its obligations under this Agreement and the other Transaction Documents to
which Buyer is a party and (iii) any Required Consents to the transfer to Buyer
of any of the Governmental Permits, no consent, waiver, approval or
authorization of, or filing, registration or qualification with, any
Governmental Authority is required to be made or obtained by Buyer in connection
with the execution, delivery and performance of this Agreement or the other
Transaction Documents to which it is a party.
B. Except with respect to any consents or filings covered by the
exceptions in clauses (i) - (iii) of Section 5.3A, the execution, delivery and
performance by Buyer of this Agreement and the other Transaction Documents to
which it is a party do not and will not: (i) violate or conflict with any
provision of Buyer's operating agreement or articles of organization; (ii)
violate any Legal Requirement; or (iii) (A) violate, conflict with or constitute
a breach of or default under (without regard to requirements of notice, passage
of time or elections of any Person), (B) permit or result in the termination,
suspension or modification of, (C) result in the acceleration of (or give any -
Person the right to accelerate) the performance of Buyer under, or (D) result in
the creation or imposition of any Encumbrance under, any material contract,
agreement, arrangement, commitment or plan to which Buyer is a party or by which
Buyer or any of its assets is bound or affected, except such violations,
conflicts, breaches, defaults, terminations, suspensions, modifications, and
accelerations as would not, individually or in the aggregate, have a material
adverse effect on Buyer's ability to perform its obligations under this
Agreement or the other Transaction Documents to which it is a party.
- 28 -
5.4 Litigation.
----------
A. There are no claims, actions, suits, proceedings or investigations
pending or, to the best of Buyer's knowledge, threatened, in any court or before
any Governmental Agency, or before any arbitrator, by or against or affecting or
relating to Buyer or any of its Affiliates which, if adversely determined, would
restrain or enjoin the consummation of the transactions contemplated by this
Agreement and the other Transaction Documents to which Buyer is a party or
declare unlawful the transactions or events contemplated by this Agreement and
the other Transaction Documents to which Buyer is a party or cause any of such
transactions to be rescinded.
B. There are no judgments, injunctions, orders or other judicial or
administrative mandates outstanding against or affecting Buyer or any of its
Affiliates which would hinder or delay the consummation of the transactions
contemplated by this Agreement or the other Transaction Documents to which Buyer
is a party.
5.5 Finders; Brokers and Advisors. Buyer has not employed any
-----------------------------
financial advisor, broker or finder or incurred any liability for any financial
advisory, brokerage, finder's or similar fee or commission in connection with
the transactions contemplated by this Agreement and Buyer is not aware of any
claim or basis for any claim for payment of, or any unpaid liability to any
Person for any fees or commissions or like payments with respect to the
negotiations leading to this Agreement or the consummation of any of the
transactions contemplated by this Agreement, except with respect to the
obligations of Seller referred to in Section 2.6.
ARTICLE VI
ADDITIONAL COVENANTS
6.1 Access to Premises and Records. Between the date of execution and
------------------------------
delivery of this Agreement and the Closing Date, Seller will give Buyer and its
representatives, during normal business hours and with reasonable prior notice,
access to the books and records, contracts and commitments of the Business and
to the Assets and will furnish to Buyer and its representatives such information
regarding the Business and the Assets as Buyer may from time to time reasonably
request. Without limiting the generality of the foregoing, Buyer shall have
access to all documents and information and reasonable access to books, records
and employees necessary to permit Buyer to verify, to its reasonable
satisfaction, the representations and warranties of the Seller contained herein,
including without limitation that (i) all offset frequencies relating to the
System are in place, and (ii) the System is otherwise in compliance with all
applicable Legal
- 29 -
Requirements, in each case to the extent represented and warranted in Section
4.18, and Buyer shall be permitted to conduct (if it so desires) a signal
leakage xxxxxxx and follow up and such other tests as Buyer shall deem necessary
to verify the foregoing. Seller shall give Buyer prompt written notice of (i)
any material adverse change in the condition of any of the Assets or the System
or any material change in any of the information contained in the
representations and warranties of Seller or information otherwise furnished to
Buyer which occurs after the date hereof and (ii) any claim, action,
investigation or proceeding threatened in writing or initiated relating to any
rate then being charged by Seller for any service provided by the System or the
carriage of or failure to carry any television broadcast signal. During such
period, Seller shall consult with Buyer and keep Buyer fully informed at all
times regarding any hearings or developments relating to any such claim, action,
investigation or proceeding. No such furnishing of information to Buyer and no
investigation by Buyer shall affect Buyer's right to rely on, or Seller's
liability with respect to, any representation or warranty made in this
Agreement.
6.2 Continuity and Maintenance of Operations. Except as specifically
----------------------------------------
permitted or required by this Agreement or by any Legal Requirement, Seller
shall:
A. Operate the Business in the ordinary course consistent with past
practices, including without limitation, its billing, promotional and marketing
practices and use commercially reasonable efforts to preserve any beneficial
business relationships with customers, suppliers, employees, Governmental
Authorities and others having business dealings with Seller relating to the
Business;
B. Maintain the Assets, including the plant and Equipment related
thereto, in good operating condition (normal wear and tear excepted), and
implement any capital expenditures required in connection with such maintenance;
C. Maintain all bonds and casualty and liability insurance relating
to the System as in effect on the date of this Agreement;
D. Keep all of its business books, records and files relating to the
System in the ordinary course of business in accordance with past practices, and
pay, consistent with past practices, all accounts payable and other debts,
liabilities and obligations relating to the System;
E. Continue to implement its procedures for disconnection and
discontinuance of service to System subscribers whose accounts are delinquent in
accordance with those in effect on the date of this Agreement;
- 30 -
F. Not sell, transfer or assign any Assets other than on an arms-
length basis in the ordinary course of business consistent with past practices;
G. Not permit the amendment or cancellation of any of the
Governmental Permits, Contracts or any other contract or agreement (other than
those constituting Excluded Assets) which, individually or in the aggregate,
materially adversely effects the System or the Business, provided, that Seller
shall satisfy all outstanding obligations under all personal property (including
vehicle) lease arrangements so that all such Assets shall be free and clear of
all Encumbrances at Closing;
H. Not enter into any contracts or commitments for the acquisition of
goods or services relating to the System or the Business, the performance of
which will not be completed by the Closing Date or involving an expenditure
individually in excess of $10,000 or expenditures in the aggregate in excess of
$30,000;
I. Not take or omit to take any action that would cause Seller to be
in breach of any of its representations or warranties in this Agreement;
J. Maintain inventories for the Business of equipment, cable and
supplies at normal levels consistent with past practice and good industry
standards;
K. Not increase the compensation or change any benefits available to
employees of Seller who work in the Business except as required pursuant to
existing written agreements or except in the ordinary course of business
consistent with past practice;
L. Report and write off Accounts Receivable in accordance with past
practices;
M. Withhold and pay when due all Taxes relating to employees of the
Business, the Assets, the Business and/or the System;
N. Not create, assume or permit to exist any Encumbrance (other than
Permitted Encumbrances) on any of the Assets, other than those Encumbrances
existing on the date hereof;
0. Maintain service quality of the System at a level at least
consistent with past practices;
P. File with the FCC all reports required to be filed under
applicable FCC rules and regulations, and otherwise comply with all Legal
Requirements with respect to the System;
- 31 -
Q. Not implement any new marketing program, policy or practice, or
implement any rate change, retiering or repackaging; and
R. Effect and facilitate the transition of the operation of the
System from Seller to Buyer as contemplated by this Agreement.
6.3 Employee Matters.
----------------
A. Except for those employees who are parties to employment
agreements with Seller that Buyer agrees to assume pursuant to Section 2.2B, the
employment of other employees of the Business will terminate on the Closing
Date. Buyer agrees to consider applications for employment from all current
employees of the Business. Nothing in this statement of intent shall be
construed to create any third party beneficiary rights in favor of any person
not a party to this Agreement or to constitute an offer of employment,
employment agreement or condition of employment for any of the employees of the
Business.
B. Seller shall retain liability for all workers' compensation claims
made by employees of the Business and the System filed on or before the Closing
Date. Seller shall also retain liability for all workers' compensation claims
filed by such employees after the Closing Date to the extent that such claims
relate to any compensable injuries incurred prior to the Closing Date.
C. Buyer shall not assume or have any liability under any agreement
with any individual related to such individual's employment in the Business at
or prior to the Closing Date or bonus, incentive or other employee benefit plans
maintained by Seller, including, without limitation, phantom stock plans, stock
incentive plans, opportunity pay plans, long term cash and incentive
compensation plans, covering persons employed by or who at any time prior to the
Closing Date were employed in the Business. Seller shall take such actions as
are necessary to ensure the preservation and delivery of all benefits accrued
through the Closing Date, whether payable presently or at some future date, to
employees of the Business in respect of any such bonus or incentive plans.
Seller shall be responsible for and shall pay all amounts payable to all of its
employees in connection with the termination of employment of any such employee
on or before the Closing Date in connection with the transactions contemplated
hereby, or otherwise, and also shall be responsible for all health insurance,
vacation pay and other benefits payable to such employees. Notwithstanding
anything contained herein to the contrary, Seller shall be responsible for
providing all the employee benefit plans in effect prior to the Closing Date to
the employees of the Business for thirty days after the Closing Date.
- 32 -
D. Seller shall be responsible for compliance with the notice and
continuation coverage requirements of Section 4980B of the Code that arise with
respect to the former employees of Seller and the Affected Employees (as defined
in ERISA), on account of the transactions contemplated by this Agreement, if
any.
E. Seller's long term disability plan shall be responsible for
payment of any and all covered benefits payable with respect to employment on or
before the Closing Date and for thirty days thereafter, regardless of whether
payment is required to be made after the Closing Date, for: (i) any individual
who is currently receiving such benefits as of the Closing Date, (ii) any
individual who becomes disabled prior to the Closing Date and who remains
disabled for the length of any qualifying disability period, and (iii) any
individual described in (i) and (ii) above whose disability ceases after the
Closing Date and who subsequently becomes disabled prior to the expiration of
ninety (90) days of active employment with Buyer, where such subsequent
disability is a continuation of such prior disability for which benefits were
due under Seller's or the System's welfare plan.
F. Except as otherwise provided in this Agreement, Seller shall
retain, and Buyer shall not assume, any liabilities or obligations of Seller or
any of its Affiliates to Employees with respect to claims incurred and
employment prior to the Closing Date.
G. Seller shall give all notices required to be given under the WARN
Act by any party related to or as a result of the transactions contemplated by
this Agreement, and shall indemnify and hold Buyer harmless for any liability
resulting from the failure of Seller and each System to do so. On the Closing
Date, seller shall deliver to Buyer a written description of any "employment
loss," as defined in the WARN Act, which occurs at any time within the ninety
(90) days prior to the Closing Date. For purposes of the WARN Act and this
Section 6.3, "Closing Date" shall mean the "effective date" of the transactions
contemplated by this Agreement, as defined in the WARN Act.
H. Buyer agrees that, solely for purposes of its vacation policies,
Buyer shall credit Seller's employees with prior periods of service at the
System, as indicated on Schedule 4.9.
------------
6.4 Consents.
--------
A. Seller will use commercially reasonable efforts to obtain, at its
own cost and expense as soon as practicable, the Consents, in form and substance
reasonably satisfactory to Buyer; provided that "commercially reasonable
efforts" for this purpose shall not require Seller to undertake extraordinary or
unreasonable measures to obtain such approvals and consents, including, without
limitation, the initiation or prosecution of legal proceedings or
- 33 -
the payment of fees in excess of normal and usual filing and processing fees.
Seller and Buyer will use commercially reasonable efforts to obtain, as soon as
practicable, the Consents of Governmental Authorities; provided, that
"commercially reasonable efforts" for this purpose shall not require Buyer to
agree to any change in any Contract or Governmental Permit as a condition to
obtaining any Consent, the effect of which is to make such Contract or
Governmental Permit more burdensome to Buyer, or otherwise to undertake
extraordinary or unreasonable measures to obtain such approvals and consents,
including, without limitation, the initiation or prosecution of legal
proceedings or the payment of fees in excess of normal and usual filing and
processing fees.
B. Following the Closing, Buyer will deliver promptly to the
Governmental Authorities for those Governmental Permits transferred at Closing
all bonds, letters of credit, indemnity agreements, or certificates of deposit
required by such Governmental Authorities and will use its commercially
reasonable efforts to cooperate with Seller to obtain a release by such
Governmental Authorities of Seller's bonds, letters of credit, indemnity
agreements, and certificates of deposit.
6.5 HSR Notification. As soon as practicable after the execution of
----------------
this Agreement and if required by applicable Legal Requirements, Seller and
Buyer will each complete and file, or cause to be completed and filed, any
notification and report required to be filed under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR Act"). Each of the
parties will take any additional action that may be necessary, proper or
advisable, will cooperate to prevent inconsistencies between their respective
filings and will furnish to each other such necessary information and reasonable
assistance as the other may reasonably request in connection with its
preparation of necessary filings or submissions under the HSR Act. Buyer and
Seller shall use commercially reasonable efforts (including the filing of a
request for early termination) to obtain the early termination of the waiting
period under the HSR Act. The HSR Act filing fee shall be paid equally by the
parties.
6.6 Notification of Certain Matters. Each party will promptly notify
-------------------------------
the other of any fact, event, circumstance or action the existence or occurrence
of which would cause any of such party's representations or warranties under
this Agreement not to be true and correct in any material respect.
6.7 Risk of Loss; Condemnation.
--------------------------
A. Seller will bear the risk of any loss or damage to the Assets
resulting from fire, theft or other casualty at all times prior to the Closing.
If any such loss or damage is so substantial as to prevent normal operation of
any portion of the System within five days after the occurrence of the event
resulting
- 34 -
in such loss or damage, Seller shall immediately notify Buyer of that fact and
Buyer, at any time within ten days after receipt of such notice, may elect by
written notice to Seller either (i) to waive such defect and proceed toward
consummation of the acquisition of the Assets in accordance with this Agreement
or (ii) to terminate this Agreement. If Buyer elects to consummate the
acquisition of the Assets notwithstanding such loss or damage and does so, there
will be no adjustment in the aggregate consideration to be paid for the Assets
under Article II on account of such loss or damage but all insurance proceeds
paid or payable as a result of the occurrence of the event causing such loss or
damage will be delivered by Seller to Buyer at the Closing or the rights to such
proceeds will be assigned by Seller to Buyer at the Closing if not yet paid over
to Seller.
B. If, prior to the Closing, any portion of the System is taken or
condemned as a result of the exercise of the power of eminent domain, or if a
Governmental Authority having such power informs Seller or Buyer that it intends
to condemn any portion of the System (such event being referred to herein, in
either case, as a "Taking"), then Buyer may terminate this Agreement. If Buyer
does not so elect to terminate this Agreement then (i) if the Closing occurs,
Buyer shall have the sole right, in the name of Seller, if Buyer so elects, to
negotiate for, claim, contest and (if the Closing occurs) receive all damages
with respect to the Taking, (ii) Seller shall be relieved of its obligation to
convey to Buyer the Asset or interests that are the subject of the Taking and
(iii) at the Closing Seller shall assign to Buyer all of Seller's rights
(including the right to receive payment of damages) with respect to such Taking
and shall pay to Buyer all damages previously paid to Seller with respect to the
Taking.
6.8 Adverse Changes. Seller shall promptly notify Buyer in writing of
---------------
any materially adverse developments affecting the Assets, the Business or the
System which, to the best of Seller's knowledge, shall have occurred during the
period from the date hereof through the Closing Date, including, without
limitation, (a) any damage, destruction, loss (whether or not covered by
insurance) or other event materially affecting any of the Assets, the System or
the Business, (b) any notice of violation, forfeiture or complaint under any
Governmental Permits, or (c) anything which, if not corrected prior to the
Closing Date, will prevent Seller from fulfilling any condition to Closing
described herein.
6.9 No Solicitation. Between the date of this Agreement and the
---------------
Closing Date, Seller shall not, and shall cause its officers, directors,
employees, agents and representatives (including, without limitation, Xxxxxx
Capital Corporation, any investment banker, attorney or accountant retained by
Seller) not to, initiate, solicit or encourage, directly or indirectly, any
inquiries or the making of any proposal with respect to the Business, engage in
any negotiations concerning, or provide to any
- 35 -
other Person any information or data relating to the Business, the System, the
Assets, or Seller for the purposes of, or have any discussions with any Person
relating to, or otherwise cooperate in any way with or assist or participate in,
facilitate or encourage, any inquiries or the making of any proposal which
constitutes, or may reasonably be expected to lead to, any effort or attempt by
any other Person to seek or effect a sale of all or substantially all of the
Assets, the System or the Business.
6.10 Forms 394. If not previously submitted, on or prior to the
---------
expiration of the fifteenth (15th) day after the date of this Agreement, Seller
and Buyer shall, each at its own expense, prepare and file properly prepared
Applications for Franchise Authority Consent to Assignment or Transfer of
Control or Cable Television Franchise FCC 394 ("Forms 394") with the local
Government Authorities that have issued franchises to Seller, and shall file
with all additional information required by such franchises or applicable local
Legal Requirements or that the Governmental Authorities deem necessary or
appropriate in connection with their consideration of the request of Seller or
Buyer that such authority approve of the transfer of the Franchises to Buyer.
6.11 Phase I Study. Within twenty (20) days after the execution of
-------------
this Agreement, Seller shall, at its sole expense, commission a qualified
engineering firm to conduct the Study in accordance with ASTM Standard 1527-94.
Within three (3) business days of receipt of the report of the completed Study,
Seller shall promptly deliver the report of the Study to Buyer. Buyer shall hold
the information about the Study and any related information or documentation in
confidence in accordance with the provisions of Section 6.13. If Buyer notifies
Seller in writing within thirty (30) Business Days from the date Buyer receives
the report of the Study that the Study discloses the existence of any breach, or
any facts which could be expected to result in a breach, of the representations
of Seller contained in Section 4.16, Seller shall promptly commence further
investigation and/or remedial action to cure the condition at its expense prior
to the Closing; provided that Seller shall not be obligated to spend more than
$100,000 in the aggregate in its attempt to cure all such conditions. Seller
shall notify Buyer within seven (7) days after its receipt of such written
notice from Buyer if Seller determines that it is or will be unable to cure such
conditions for $100,000 or less. If Seller exercises the right not to cure such
conditions because the aggregate cost would exceed $100,000, Buyer may elect (i)
to terminate this Agreement with no cost or obligation on the part of Seller or
(ii) to waive such obligations, in which event Buyer shall receive a credit at
the Closing in the amount, if any, by which $100,000 exceeds the aggregate
amount paid by Seller to third parties in connection with curing such conditions
and assume all liabilities and obligations in connection with such conditions
and hold harmless and indemnify Seller from same in accordance with
- 36 -
this Agreement, notwithstanding any provisions, including any representations
and warranties of Seller, of this Agreement to the contrary and Seller shall
have no liability under this Agreement or otherwise to Buyer related to or
arising from such conditions.
6.12 Monthly Financial Statements. Between the date of execution and
----------------------------
delivery of this Agreement and the Closing Date, Seller shall deliver to Buyer
within thirty (30) days after the end of each calendar month, unaudited
financial reports ("Monthly Financial Statements") in the form customarily
prepared by Seller as set forth in Schedule 6.12 with respect to the System and
-------------
other reports with respect to the System (including, without limitation, capital
expenditures to the System, reports setting forth the revenue and cash flow of
the System for each month and year-to-date, subscriber information for Basic
Subscribers and Bulk Units, disconnect requests, miles of plant, homes passed
and such other information as Buyer may reasonably request which is in the form
customarily prepared by Seller, beginning as soon as practicable after the date
of this Agreement). Such financial statements and monthly operating statements
shall present fairly and accurately the financial condition and results of
operations of Seller and the System for the period then ended and as of such
dates and be prepared in accordance with GAAP consistently applied through the
periods specified subject to normal year end adjustments.
6.13 Confidentiality. Each party shall maintain the confidentiality
---------------
of all documents or other information or data of the other party, whether
written or oral, and furnished to such party, its employees, agents, lenders,
accountants, representatives, advisors or consultants ("Confidential Parties")
in the course of the negotiation of this Agreement or in connection with the
transactions contemplated by this Agreement (the "Information"). Each party will
hold and use all reasonable efforts to cause its respective Confidential Parties
to hold in strict confidence all of the Information, and will not, without the
prior written consent of the other party, (i) use the Information for any
purpose other than in connection with the transactions contemplated by this
Agreement or in any proceeding, litigation or arbitration in respect thereof; or
(ii) release or disclose any Information to any other person, except to such
foregoing persons. Notwithstanding the foregoing, the following will not
constitute a part of the Information for the purposes of this Section:
(i) information that a party can show was known by it or any of its
respective Confidential Parties prior to the disclosure thereof by the other
party;
(ii) information that is or becomes generally available to the public
other than as a result of a disclosure directly or indirectly by the party or
any of its respective confidential Parties in breach of this Section 6.13;
- 37 -
(iii) information that is independently developed by such party
or any of its respective Confidential Parties; or
(iv) information that is or becomes available to such party on
a non-confidential basis from a source other than the other party or any of its
respective Confidential Parties, provided that such source is not known by the
party receiving the Information to be bound by any obligation or confidentiality
in relation thereto.
6.14 Covenant Not to Compete. For purposes of this Section 6.14 only,
-----------------------
the term "Seller" shall include all corporations, firms and entities controlled
by Seller. Seller shall cause Xxxx X. Xxxxx, XX and Xxxxx X. Xxxxx, XX, and
shall use its best efforts, at no cost or penalty to Seller, to cause Xxxxx
Xxxxxx, to execute the Confidentiality and Non-Compete Agreements in the form
attached hereto as Exhibit D.
---------
A. Seller covenants and agrees that for a period of five years after
Closing (or such period as allowed by law if less than five years), Seller
(alone or in any combination therewith) will not be involved with either the
cable television, media or telecommunications business within a 50-mile radius
of the Franchise Areas. Notwithstanding anything contained herein, neither (i)
the ownership of securities of any company that is not controlled by any Seller
nor (ii) any involvement by Seller in Mediacom LLC or any Affiliate thereof
shall constitute a violation of this covenant.
B. Seller agrees that in the event that it commits a breach or
threatens to commit a breach of any of the provisions of this Section 6.14,
Buyer shall have the right and remedy to have the provisions of this Section
6.14 specifically enforced by any court having jurisdiction, it being
acknowledged and agreed that any such breach could cause immediate irreparable
injury to Buyer and that money damages would not provide an adequate remedy at
law for any such breach or threatened breach. Such right and remedy shall be in
addition to, and not in lieu of, any other rights and remedies including damages
available to Buyer at law or in equity.
C. If any of the provisions of or covenants contained in this
Section 6.14 are hereafter construed to be wholly or to any extent invalid or
unenforceable in any jurisdiction, the same shall be deemed automatically
modified to the minimum extent necessary to make such provision or covenant
enforceable, and the same shall not affect the remainder of the provisions to
the extent not invalid or unenforceable in such jurisdiction or the
enforceability thereof without limitation in any other jurisdiction.
6.15 Public Announcements. Prior to the Closing Date, all notices to
--------------------
third parties and other publicity relating to the transaction contemplated by
this Agreement shall be jointly planned
- 38 -
and agreed to by Seller and Buyer unless otherwise required by law; provided,
--------
however, that Seller may, from time to time advise its shareholders and lenders
-------
and Buyer may, from time to time, advise its member and lenders, with respect to
this Agreement and the transactions contemplated by this Agreement without the
consent of the other. Seller shall not unreasonably refuse requests by Buyer,
once approval of the Governmental Authorities to the transfer of the franchises
is granted, to insert in invoices to Seller's subscribers, at Buyer's expense,
subscriber educational material concerning the transaction contemplated by this
Agreement.
6.16 Unauthorized Use of Channels. Seller shall take all actions
----------------------------
necessary to correct the System's pre-Closing unauthorized use of microwave
channels inconsistent with its CARS License (dated October 26, 1993; file no.
CAR-43763-02; call sign WBQ-804) including payment of actual out-of-pocket costs
incurred in connection therewith. Out-of-pocket costs shall include any
penalties imposed by the FCC, but shall exclude costs arising from any
consequential, exemplary or other punitive damages, or any other damages.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
The obligations of Buyer under this Agreement are subject to the
satisfaction at or prior to the Closing of each of the following conditions, any
one or more of which may be waived by Buyer, in its sole direction.
7.1 HSR Act. If required under applicable Legal Requirements, all
-------
filings required under the HSR Act shall have bean made and the applicable
waiting period shall have expired or been earlier terminated without the receipt
of any objection or the commencement or threat of any litigation by a
Governmental Authority of competent jurisdiction to restrain the consummation of
the transactions contemplated by this Agreement.
7.2 Governmental or Legal Action. No action, suit or proceeding shall
----------------------------
be pending or threatened by any Governmental Authority or other Person and no
Legal Requirement shall have been enacted, promulgated or issued or deemed
applicable to any of the transactions contemplated by this Agreement by any
Governmental Authority or other Person that would (a) prohibit Buyer' s
ownership or operation of the System, the Business or the Assets or require
Buyer to divest itself of the System or any of the Assets after the Closing
Date, (b) result in the imposition of material damages against Buyer or any of
its Affiliates in connection with the consummation of the transactions
contemplated by this Agreement or (c) prevent or make illegal the consummation
of the transactions contemplated by this Agreement.
- 39 -
7.3 Accuracy of Representations and Warranties. The representations
------------------------------------------
and warranties of Seller contained in this Agreement shall be true and correct
in all material respects as of the date of this Agreement and as of the Closing
Date, with the same effect as though made on and as of the Closing Date.
7.4 Performance of Agreements. Seller shall have performed in all
-------------------------
material respects all obligations and agreements and complied or caused to be
complied with all covenants and conditions required by this Agreement to be
performed or complied with by it at or prior to the Closing Date.
7.5 No Material Adverse Change. During the period from the date of
--------------------------
this Agreement through and including the Closing Date, there shall not have
occurred any material adverse change in the business, prospects, assets,
financial condition or operations of the System, other than any change arising
out of matters of a general economic nature or matters affecting the cable
television industry (national or regional) generally, and Seller shall not have
sustained any material loss or damage to the Assets or the System, whether or
not insured, that materially affects its ability to conduct the Business in a
manner consistent with past practice.
7.6 Consents. Seller shall have delivered to Buyer evidence, in form
--------
and substance reasonably satisfactory to Buyer, that all the Required Consents
have been obtained or given.
7.7 Transfer Documents. Seller shall have delivered to Buyer
------------------
customary bills of sale, general warranty deeds, assignments and other
instruments of transfer sufficient to convey good and marketable title to the
Assets in accordance with the terms of this Agreement and otherwise in form and
substance satisfactory to Buyer and its counsel.
7.8 Opinions of Counsel. Buyer shall have received the opinions of
-------------------
(a) Xxxxxxxx Xxxxxx Xxxxxxxx and Xxxx, counsel for Seller, dated the Closing
Date, substantially in the form of Exhibit E attached hereto and (b) Dow Xxxxxx
---------
& Xxxxxxxxx, FCC counsel for Seller, dated the Closing Date, substantially in
the form of Exhibit F attached hereto.
---------
7.9 Mediacom Equity Investment. Seller shall have completed its one
--------------------------
million dollar ($1,000,000) equity investment in Mediacom LLC to the
satisfaction of Buyer.
7.10 Discharge of Liens. Seller shall have secured the termination or
------------------
removal of all Encumbrances of any nature on the Assets, other than Permitted
Encumbrances.
7.11 The System. Seller shall have upgraded the cable plant of the
----------
System, including all drop materials, to 450 MHz bandwidth capacity in
compliance with any applicable Legal
- 40 -
Requirements and shall ensure that each Basic Subscriber and Bulk Unit will have
the capacity to receive all programming services capable of being delivered by
the System without additional capital costs to Buyer (other than costs for
converter equipment to upgrade a basic tier-only Subscriber to the expanded
tier, or to offer Pay-Per-View events).
7.12 Material Adverse Change. Financial institutions providing
-----------------------
financing to Buyer to consummate the transactions contemplated by this Agreement
shall not have exercised the Material Adverse Change clause under the financing
commitment letters provided to Buyer.
7.13 Additional Documents and Acts. Seller shall have delivered or
-----------------------------
caused to be delivered to Buyer all other documents required to be delivered
pursuant to this Agreement and done or caused to be done all other acts or
things reasonably requested by Buyer to evidence compliance with the conditions
set forth in this Article VII.
7.14 Certificates. Seller shall have furnished Buyer with such other
------------
certificates of Seller and others, dated as of the Closing Date, to evidence
compliance with the conditions set forth in this Article VII, as may be
reasonably requested by Buyer.
7.15 CARS License Modification. Seller shall have received
-------------------------
modification of its CARS License from the FCC and satisfied all its obligations
in connection therewith; provided that if such obligations are not satisfied
prior to the Closing Date but Seller shall have complied to the extent
reasonably possible to satisfy its covenant set forth in Section 6.16, Seller
shall not be deemed to be in breach of Section 6.16 for purposes of Section
10.2.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligations of Seller under the Agreement are subject to the
satisfaction, at or prior to the Closing Date, of each of the following
conditions, any one or more of which may be waived by Seller, in its sole
discretion.
8.1 HSR Act. If required under applicable Legal Requirements, all
-------
filings required under the HSR Act shall have been made and the applicable
waiting period shall have expired or been earlier terminated without the receipt
of any objection or the commencement or threat of any litigation by a
Governmental Authority of competent jurisdiction to restrain the consummation of
the transactions contemplated by this Agreement.
- 41 -
8.2 Governmental or Legal Actions. No action, suit or proceeding
-----------------------------
shall be pending or threatened by any Governmental Authority and no Legal
Requirement shall have been enacted, promulgated or issued or deemed applicable
to any of the transactions contemplated by this Agreement by any Governmental
Authority that would (a) prohibit Buyer's ownership or operation of the System,
the Business or the Assets, (b) result in the imposition of material damages
against Seller in connection with the consummation of the transactions
contemplated by this Agreement or (c) prevent or make illegal the consummation
of the transactions contemplated by this Agreement.
8.3 Accuracy of Representations and Warranties. The representations
------------------------------------------
and warranties of Buyer contained in this Agreement shall be true and correct in
all material respects as of the date of this Agreement and as of the Closing
Date, with the same effect as though made on and as of the Closing Date.
8.4 Performance of Agreements. Buyer shall have performed in all
---------------------------
material respects all obligations and agreements and complied or caused to be
completed with all covenants and conditions required by this Agreement to be
performed or complied with by Buyer at or prior to the Closing Date.
8.5 Opinions of Buyer's Counsel. Seller shall have received the
---------------------------
opinion of Xxxxxxxxx Xxxxxx Xxxxxxxx Xxxxxx & Xxxxxx, P.C., counsel for Buyer,
dated the Closing Date, substantially in the form of Exhibit G attached hereto.
---------
8.6 Additional Documents and Acts. Buyer shall have delivered or
-----------------------------
caused to be delivered to Seller all other documents required to be delivered
pursuant to this Agreement and done all other acts or things reasonably
requested by Seller to evidence compliance with the conditions set forth in this
Article VIII.
8.7 Certificates. Buyer shall have furnished Seller with such other
------------
certificates of Buyer and others, dated as of the Closing Date, to evidence
compliance with the conditions set forth in this Article VIII, as may be
reasonably requested by Seller.
ARTICLE IX
INDEMNITY
9.1 Seller's Indemnity.
------------------
A. Seller agrees to indemnify and hold Buyer harmless from, against
and in respect of, and shall on demand reimburse Buyer for:
(i) any and all loss, liability or damage resulting from any
untrue representation, breach of warranty or
- 42 -
nonfulfillment of any covenant or agreement by Seller contained in any
Transaction Document to which it is a party;
(ii) any and all obligations of Seller not specifically assumed
by Buyer pursuant to the terms of this Agreement, including any and all
liabilities arising with respect to the System, Assets and Contracts or
other agreements assumed by Buyer and relating to events which occurred
prior to the Closing Date, except to the extent adjusted in favor of Buyer
pursuant to Section 2.4;
(iii) any claims made by creditors with respect to non-
compliance with any bulk sales law relating to this Agreement and the
transactions contemplated hereby; and
(iv) any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including without limitation,
legal fees and expenses, incident to any of the foregoing or incurred in
investigating or attempting to avoid the same or to oppose the imposition
thereof, or in enforcing this indemnity.
B. If any claim covered by the foregoing indemnity is asserted
against Buyer by a third party, Buyer shall promptly give the Seller notice
thereof and give Seller an opportunity to defend the same with counsel of
Seller's choice at Seller's expense. Buyer shall provide reasonable cooperation
in connection with such defense. In the event that Seller desires to compromise
or settle any such claim, Buyer shall have the right to consent to such
settlement or compromise; provided, however, that if such compromise or
settlement is for money damages only and will include a full release and
discharge of Buyer, and Buyer withholds its consent to such compromise or
settlement, Buyer and Seller agree that (1) Seller's liability shall be limited
to the amount of the proposed settlement and Seller shall thereupon be relieved
of any further liability with respect to such claim, and (2) from and after such
date, Buyer will undertake all legal costs and expenses in connection with any
such claim and shall indemnify Seller from any further liability or obligation
to such third party in connection with such claim in excess of the amount of the
proposed settlement. If Seller fails to defend any claim within a reasonable
time, Buyer shall be entitled to assume the defense thereof, and Seller shall be
liable to Buyer for its expenses reasonably incurred, including attorney's fees
and payment of any settlement amount or judgment.
C. Notwithstanding anything in this Agreement to the contrary,
(i) Seller shall not be required to indemnify or otherwise be
liable to Buyer for any claim unless the losses, liabilities, damages,
costs and expenses of Buyer arising from
- 43 -
all such claims exceeds $25,000 (other than with respect to any claims
based on a breach of the representation set forth in Section 4.23, which
claims may be made notwithstanding, and shall not be counted toward, the
basket amount). If the losses, liabilities, damages, costs and expenses of
Buyer arising from all such claims exceeds $25,000, Seller shall be
required to indemnify Buyer for the full amount of all such claims, subject
to the other limitations in this Agreement;
(ii) Seller shall not be required to indemnify or otherwise be
liable to Buyer for any claim to the extent that the losses, liabilities,
damages, costs and expenses of Buyer arising from all such claims exceed in
the aggregate $2,500, 000;
(iii) Seller shall not be required to indemnify or otherwise be
liable to Buyer for any claim hereunder unless notice of such claim is
given to Seller: (a) with respect to any claims based on a breach of the
representations and warranties set forth in the first sentence of Section
4.5, and Sections 4.9 and 4.16, within six (6) years after the Closing
Date; (b) with respect to any claims based on a breach of the
representations and warranties set forth in Section 4.12, prior to the
expiration of the applicable statute of limitations relating to the subject
matter of such representation and warranty; (c) with respect to any claims
arising out of fraudulent conduct involving intentional misrepresentation
on behalf of Seller and any claims by third parties against Buyer, within
eighteen months after the Closing Date; and (d) with respect to all other
claims, within one year after the Closing Date.
9.2 Buyer's Indemnity.
------------------
A. Buyer agrees to indemnify and hold Seller harmless from, against
and in respect of, and shall on demand reimburse Seller for:
(i) any and all loss, liability or damage resulting from any
untrue representation, breach of warranty or nonfulfillment of any covenant
or agreement by Buyer contained in any Transaction Document delivered to
Seller hereunder;
(ii) any and all obligations of Seller assumed by Buyer
pursuant to the terms of this Agreement including any and all liabilities
arising under contracts or agreements assumed by Buyer and relating to
events which occurred after the date of Closing, except to the extent
adjusted in favor of Seller pursuant to Section 2.4; and
(iii) any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses,
- 44 -
including without limitation, legal fees and expenses, incident to any of
the foregoing or incurred in investigating or attempting to avoid the same
or to oppose the imposition thereof, or in enforcing this indemnity.
B. If any claim covered by the foregoing indemnity is asserted
against Seller by a third party, Seller shall promptly give the Buyer notice
thereof and give Buyer an opportunity to defend the same with counsel of Buyer's
choice at Buyer's expense. Seller shall provide reasonable cooperation in
connection with such defense. In the event that Buyer desires to compromise or
settle any such claim, Seller shall have the right to consent to such settlement
or compromise; provided, however, that if such compromise or settlement is for
money damages only and will include a full release and discharge of Seller, and
Seller withholds its consent to such compromise or settlement, Seller and Buyer
agree that (1) Buyer's liability shall be limited to the amount of the proposed
settlement and Buyer shall thereupon be relieved of any further liability with
respect to such claim, and (2) from and after such date, Seller will undertake
all legal costs and expenses in connection with any such claim and shall
indemnify Buyer from any further liability or obligation to such third party in
connection with such claim in excess of the amount of the proposed settlement.
If Buyer fails to defend any claim within a reasonable time, Seller shall be
entitled to assume the defense thereof, and Buyer shall be liable to Seller for
its expenses reasonably incurred, including attorney's fees and payment of any
settlement amount or judgment.
9.3 Remedies Cumulative; Right to Offset. The remedies provided in
------------------------------------
this Article IX shall be cumulative and shall not preclude assertion by any
party hereto of any other rights or the seeking of any other remedies against
the other party as specifically set forth in this Agreement. Without limiting
any remedy otherwise available to Buyer under this Agreement, Buyer shall be
entitled, but shall not be obligated, to offset any amounts due to Seller under
the Senior Subordinated Note against any amounts due to Buyer under this
Agreement. Amounts offset by Buyer pursuant hereto shall reduce the outstanding
balance due under the Senior Subordinated Note.
ARTICLE X
LIABILITY IN THE EVENT OF A BREACH
10.1 Default by Buyer. If Buyer shall default in the performance of its
----------------
obligations under this Agreement in any material respect or if, as a result of
Buyer's breach of its obligations pursuant to this Agreement, the conditions
precedent to Seller's obligation to close specified in Section 8 (other than
Sections 8.1 and 8.2) are not satisfied, and Seller shall not then be in default
in the performance of its obligations hereunder in any material
- 45 -
respect, Seller shall be entitled, as its sole remedy, to terminate this
Agreement by written notice to Buyer and to receive the sum of $1,000,000, as
liquidated damages, in which event Seller and Buyer shall be discharged from all
further liability under this Agreement upon payment of such liquidated damages
to Seller. Seller and Buyer agree in advance that actual damages would be
difficult to ascertain and that the amount of such liquidated damages is a fair
and equitable amount to reimburse Seller for damages sustained due to such
default by Buyer of this Agreement.
10.2 Default by Seller. If Seller shall default in the performance of its
-----------------
obligations under this Agreement in any material respect or if, as a result of
Seller's breach of its obligations pursuant to this Agreement, the conditions
precedent to Buyer's obligation to close specified in Section 7 (other than
Sections 7.1 and 7.2 and, for the avoidance of doubt, except to the extent
caused solely by Seller's breach of this Agreement, Sections 7.5 and 7.12) are
not satisfied, and Buyer shall not then be in default in the performance of its
obligations hereunder in any material respect, Buyer shall be entitled, at
Buyer's sole option, either:
A. to require Seller to consummate and specifically perform the sale
in accordance with the terms of this Agreement, if necessary through injunction
or other court order or process, and to recover any costs and expenses incurred
by Buyer in connection therewith; or
B. to terminate this Agreement by written notice to Seller, and to
recover actual out-of-pocket damages, not including consequential, punitive or
exemplary damages, or any other damages.
ARTICLE XI
NOTICES
Any notices or other communications to the Seller or the Buyer, shall
be sent by certified or registered mail, return receipt requested, or by
telecopier with report of delivery, to the addresses set forth below, or to such
other address as Seller or Buyer may designate, from time to time, by written
notice to the other:
To Buyer: Mediacom California LLC
00 Xxxxxxx Xxx
Xxxxx 000X
Xxxxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
- 46 -
with a copy to: Xxxxxx X. Xxxxxxxx, Esq.
Xxxxxxxxx Xxxxxx Xxxxxxxx
Xxxxxx & Xxxxxx, P.C.
000 Xxxxx Xxxxxx - 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
To Buyer: Booth American Company
000 Xxxx Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: President
Facsimile: (000) 000-0000
with a copy to: Xxxxx Xxxxxx, Esq.
Xxxxxxxx Xxxxxx Xxxxxxxx and Xxxx
0000 Xxxxx Xxxxxxxx Xxxxxxxx
Xxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
ARTICLE XII
MISCELLANEOUS
12.1 Entire Agreement. This writing constitutes the entire agreement
----------------
of the parties with respect to the subject matter hereof and may not be
modified, amended or terminated, except by a written agreement specifically
referring to this Agreement signed by Buyer and Seller. No waiver of any breach
or default hereunder shall be considered valid unless in writing and signed by
the party giving such waiver, and no such waiver shall be deemed a waiver of any
subsequent breach or default of the same or similar nature.
12.2 Successors and Assigns. This Agreement and all of the provisions
----------------------
hereof shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns. Neither the Agreement nor any
of the rights, interests or obligations hereunder shall be assigned, by
operation of law or otherwise, by any party hereto without the prior written
consent of the other party, provided, that Buyer may assign this Agreement to
any parent or Affiliate of Buyer without the prior written consent of Seller, as
long as Buyer remains liable hereunder. Nothing in this Agreement, express or
implied, is intended to confer upon any person other than the parties hereto and
their respective successors and permitted assigns, any rights, remedies or
obligations under or by reason of this Agreement.
12.3 Arbitration. Except for claims for injunctive relief under
-----------
Sections 6.13, 6.14 and l0.2.A, claims for damages pursuant to Section 10.1 or
l0.2.B and third-party claims by one party against the other in any action or
proceeding commenced by unaffiliated persons or firms, all claims, disputes and
differences hereunder shall be determined by arbitration under the rules then
- 47 -
obtaining of the American Arbitration Association in New York City. If $50,000
or more is at issue, the matter shall be heard by a panel of three arbitrators.
In such case, Seller and Buyer shall each designate one disinterested
arbitrator, and the two arbitrators so designated shall select the third
arbitrator. Buyer and Seller agree that in any dispute submitted for arbitration
in connection herewith, the "non-prevailing" party shall pay all fees and
expenses of the arbitration proceedings incurred by the "prevailing" party if
the amount of the award granted to the "prevailing" party is $100,000 or more in
excess of the award, if any, granted to the "non-prevailing" party.
12.4 Captions. The paragraph headings contained therein are for the
--------
purposes of convenience only and are not intended to define or limit the
contents of said paragraphs.
12.5 Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which taken together, shall be deemed one original.
12.6 Governing Law. This Agreement shall be governed and construed in
-------------
accordance with the laws of the State of New York, without regard to conflict of
law provisions in such state.
[Remainder of page intentionally left blank;
Signatures to follow]
- 48 -
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
SELLER:
BOOTH AMERICAN COMPANY
By: /s/ Xxxxx X. Xxxxx, XX
----------------------------------
Name: Xxxxx X. Xxxxx, XX
-----------------------------
Title: President & CFO
----------------------------
BUYER:
MEDIACOM CALIFORNIA LLC
By: Mediacom LLC, a Manager
-------------------------------------
Xxxxx X. Xxxxxxxx, Manager
- 49 -
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
SELLER:
BOOTH AMERICAN COMPANY
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
BUYER:
MEDIACOM CALIFORNIA LLC
By: Mediacom LLC, a Manager
/s/ Xxxxx X. Xxxxxxxx
----------------------------------
Xxxxx X. Xxxxxxxx, Manager
- 49 -
