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EXHIBIT 10.9(a)
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ASSET PURCHASE AGREEMENT
DATED AS OF OCTOBER 5, 1996
BY AND AMONG
DIGITAL TELEVISION SERVICES OF SOUTH CAROLINA I, LP,
PEE XXX XXXXXXXXXX, INC.
AND
PEE DEE ELECTRIC COOPERATIVE, INC.
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LIST OF SCHEDULES
Schedule 1.1 Fixed Assets
Schedule 1.2 NRTC/Member Agreement
Schedule 1.3 NRTC/Retail Agreement
Schedule 1.4 Other Assumed Agreements
Schedule 2.1(a) Assignment and Assumption Agreement
Schedule 2.1(b) Xxxx of Sale
Schedule 4.2(c) Promissory Note
Schedule 4.2(d) Security Agreement
Schedule 4.2(e) Collateral Assignment
Schedule 4.4 Allocation of Purchase Price
Schedule 5.2(c) Consent of Sellers
Schedule 5.3(a) Liens
Schedule 5.4 Fixed Assets Needing Repairs
Schedule 5.5(e) Suspended DBS Services
Schedule 5.5(f) Customers and Suppliers
Schedule 5.9 Changes or Events
Schedule 5.10 Licenses and Permits
Schedule 6.2(b) Consent of Purchaser
[Schedules have been omitted and will be furnished upon request]
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of this 5th day of October, 1996, by and among Digital Television
Services of South Carolina I, LP, a Georgia limited partnership ("Purchaser"),
Pee Xxx Xxxxxxxxxx, Inc., a South Carolina corporation ("Electricom"), and Pee
Dee Electric Cooperative, Inc., a South Carolina cooperative association ("Pee
Dee") (Pee Dee and Electricom are hereinafter collectively referred to as
"Sellers").
RECITALS
1. Pee Dee entered into a NRTC/Member Agreement with the NRTC pursuant
to which it operates through its wholly-owned subsidiary, Electricom, the
National Rural Telecommunications Cooperative's System No. 0001 (the "System")
for the exclusive distribution of DBS Services offered by DirecTv, Inc.
("DirecTv") (the "Business") in the geographical areas covered by Chesterfield,
Darlington, Xxxxxx, Xxxxxxxx, Xxx, Xxxxxx and Marlboro Counties, South Carolina
(the "Locations").
2. Purchaser desires to acquire from Sellers, and Sellers desire to
sell to Purchaser all of Sellers' rights under the NRTC/Member Agreement and the
NRTC/Retail Agreement relating to the Locations, any residual rights of Sellers
as members or affiliates of the NRTC to distribute DBS Services in the Locations
after the termination of the NRTC Agreements and certain of the assets used in
the Business, subject to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, and for other good and valuable consideration, the
receipt and legal sufficiency of which is hereby acknowledged, each of the
Sellers and Purchaser hereby agree as follows:
ARTICLE I
DEFINITIONS
The terms defined in this Article shall have the following respective
meanings for all purposes of this Agreement, and the following definitions are
equally applicable to both the singular and plural forms of the terms defined:
"Accounts Payable" shall mean all accounts payable of Sellers to the
NRTC as of the Closing Date relating to the Business; including, without
limitation, accounts payable to the NRTC with respect to wholesale bills,
equipment and other services.
"Accounts Receivable" shall mean all of the accounts receivable of
Sellers as of the Closing Date for all Customers which are listed on Report 19A
(Accounts Receivable Summary) of the NRTC Central Billing Systems Reports.
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"Cable Programming" shall have the meaning ascribed to such term in the
NRTC/Member Agreement.
"Cash" shall mean all cash in Electricom's bank accounts at Huntington
Bank as of the Closing Date, as determined in accordance with GAAP.
"Closing" shall mean the consummation and effectuation of the
transactions contemplated herein pursuant to the terms and conditions of this
Agreement and shall be held at 10:00 a.m. at the offices of Xxxxxx Xxxxxxx Xxxxx
& Scarborough, L.L.P., 000 Xxxx Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxx, Xxxxx
Xxxxxxxx, 00000 (i) at Purchaser's election, on (a) the last business day of the
month in which all of the conditions precedent set forth in Articles VIII and IX
herein have been satisfied or waived, or (b) the calendar day of such month on
which NRTC's accounting period closes, or (ii) such other date or at such other
time or place (including via mail overnight courier or facsimile transmission)
as the parties may mutually agree upon in writing. The Closing shall be as
effective as of the close of business on the Closing Date.
"Closing Date" shall mean the date on which the Closing actually
occurs.
"Closing Payment" shall mean the payments due Sellers pursuant to
Sections 4.2(a) and (b) hereof.
"Commercial Establishment" shall have the meaning ascribed to such term
in the NRTC/Member Agreement.
"Committed Member Residence" shall have the meaning ascribed to such
term in the NRTC/Member Agreement.
"Current Assets" shall mean Cash, Accounts Receivable, Inventory and
Prepaid Expenses of Sellers which will be acquired by Purchaser at Closing.
"Current Liabilities" shall mean Accounts Payables and Unearned Revenue
of Sellers which will be assumed by Purchaser at Closing.
"Customers" shall mean those Persons, including Subscribers, which have
purchased DBS Services, or entered into a binding agreement to purchase DBS
Services, and related services, from Sellers at any time during the five (5)
year period immediately preceding the Closing Date.
"DBS Services" shall have the meaning ascribed to such term in the
NRTC/Member Agreement.
"DirecTv" shall mean DirecTv, Inc., a California corporation which is a
subsidiary of HCG.
"Excluded Assets" shall mean the PDSC Stock, Patronage Capital and the
TVRO Assets.
"Fixed Assets" shall mean the equipment and other tangible assets,
including, without limitation, any MTE terminals and demonstration units owned
by Sellers and used or useable
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in connection with the Business, which equipment and tangible assets are listed
on Schedule 1.1 attached hereto.
"Franchise" shall mean any residual rights of Sellers as members or
affiliates of the NRTC to distribute DBS Services in the Locations after the
termination of the NRTC Agreements.
"GAAP" shall mean generally accepted accounting principles consistently
applied.
"HCG" shall mean Xxxxxx Communications Galaxy, Inc.
"HCG Agreement" shall mean the agreement and all amendments which the
NRTC has entered into with HCG in which the NRTC has obtained the rights to
distribute through its members and affiliates certain DBS Services to rural
America.
"Inventory" shall mean any DSS(TM) subscriber equipment of Sellers as
of the Closing Date, which Inventory shall be valued at the lower of each item's
original cost or fair market value.
"Lien" shall mean with respect to any property or asset, any mortgage,
lien, pledge, charge, security interest, encumbrance, claim, escrow, right of
first refusal, indenture, easement, license or other adverse claim or
restriction of any kind in respect of such property or asset. For purposes of
this Agreement, any restriction or limitation with respect to a security or
other ownership interest (including any restriction on the right to vote, sell
or otherwise dispose of such security or ownership interest) shall constitute a
"Lien" thereon. For the purposes of this Agreement, a Person shall be deemed to
own subject to a Lien any property or asset which it has acquired or holds
subject to the interest of a vendor or lessor under any conditional sale
relating to such property or asset.
"Management Agreement" shall mean a Management Agreement mutually
acceptable to Purchaser and Electricom which provides for Electricom to perform
certain managerial functions for Purchaser during the three (3) months
immediately following the Closing Date.
"Non-Select Services" shall have the meaning ascribed to such term in
the NRTC/Member Agreement.
"NRTC" shall mean the National Rural Telecommunications Cooperative, a
District of Columbia corporation.
"NRTC Agreements" shall mean the NRTC/Member Agreement, the NRTC/Retail
Agreement and any Other Assumed Agreements.
"NRTC/Member Agreement" shall mean the NRTC/Member Agreement for
Marketing and Distribution of DBS Services dated July 24, 1992 by and between
the NRTC and Pee Dee, as amended as of March 22, 1994, together with all
schedules and exhibits thereto, a copy of which is attached hereto as Schedule
1.2.
"NRTC/Retail Agreement" shall mean the NRTC/Member DBS Product Retail
Agreement dated August 3, 1993 by and between the NRTC and Electricom, as
amended from
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time to time, together with all schedules and exhibits thereto, a copy of which
is attached hereto as Schedule 1.3.
"Other Assumed Agreements" shall mean the contracts and agreements, if
any, set forth on Schedule 1.4, including any contracts and agreements with
DirecTv, copies of which are attached to such Schedule.
"Patronage Capital" shall mean the amount of patronage capital credited
to the Sellers' accounts at the NRTC for the period through the Closing Date
pursuant to Article XII of the NRTC Bylaws, as amended.
"PDSC" shall mean Pee Dee Service Corporation, a South Carolina
corporation which is a wholly owned subsidiary of Electricom.
"PDSC Stock" shall mean the eighty (80) shares of stock of PDSC, par
value of $25 per share, which is owned by Electricom.
"Person" shall mean an individual, corporation, partnership, limited
liability company, association, trust, unincorporated organization, joint
venture or other entity or organization including a government, political
subdivision or agency or instrumentality thereof.
"Prepaid Expenses" shall mean all prepaid property taxes, prepaid
supplies, advances, deposits, deferred charges and other prepaid expenses (other
than prepaid insurance) shown on Sellers' books and records as of the Closing
Date relating to the Business which Prepaid Expenses can be credited to
Purchaser's account after the Closing Date, as determined in accordance with
GAAP.
"Programming" shall mean Cable Programming and any programming provided
by DirecTv pursuant to the NRTC Agreements.
"Purchase Price" shall mean the amount set forth in Section 4.1 herein.
"Purchased Assets" shall mean the (i) NRTC Agreements, (ii) Franchise,
(iii) Current Assets, (iv) contracts and accounts with Customers, (v) Fixed
Assets, (vi) Records, and (vii) all other assets of Sellers, whether tangible or
intangible, used in connection with the Business, excepting only the Excluded
Assets.
"Records" shall mean all files, books and records relating to the
provisions of DBS Services by Sellers, including, without limitation, Customer
and prospective customer lists, computer programs, tapes and electronic data
processing software, accounting journals and ledgers, accounts receivable
records, and copies of all NRTC reports, correspondence and other documents
relating to the NRTC Agreements and Other Assumed Agreements and compliance
therewith.
"Subscriber" as of any date shall mean a Customer who, at a minimum,
(i) is an active subscriber subscribing to a package of basic services, (ii) on
the last day of the calendar month prior to such date, whose account is not more
than sixty (60) days past due from the date payment is due, (iii) who is not an
employee or agent of the service provider or charged a fee
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that is nominal (e.g., demonstration unit) or substantially below the service
provider's published rates, and (iv) who has not given notice of intent to
discontinue service.
"Termination Date" shall mean January 30, 1997.
"TVRO Assets" shall mean all assets of Electricom which relate to the
provision of C-band programming and equipment services through low-power C-band
satellite dishes.
"Unearned Revenue" shall mean all unearned revenue, advance payments
and deposits associated with Customer credit balances of Sellers as of the
Closing Date which are listed on Report 17 (Unearned Revenue Report) of the NRTC
Central Billing System Reports.
"1995 Memorandum" shall mean the 1995 Revised Equipment Baseline
Program Restructuring Memorandum of Understanding dated July 13, 1995 between
Pee Dee and the NRTC and all related correspondence and agreements between Pee
Dee and the NRTC related to the subject matter thereof.
ARTICLE II
SALE AND PURCHASE OF THE ASSETS
2.1. SALE AND PURCHASE OF ASSETS. Subject to the terms and conditions
of this Agreement, Sellers shall sell, transfer, assign and convey the Purchased
Assets to Purchaser, and Purchaser shall purchase, acquire and accept from
Sellers all of Sellers' right, title and interest in and to the Purchased
Assets, free and clear of any and all Liens, on the Closing Date for the
consideration set forth in this Agreement. The sale, transfer, assignment and
conveyance of the Purchased Assets shall be made by the execution and delivery
at Closing of (i) an Assignment and Assumption Agreement substantially in the
form attached hereto as Schedule 2.1(a) (the "Assignment") and (ii) a xxxx of
sale substantially in the form attached hereto as Schedule 2.1(b) (the "Xxxx of
Sale").
ARTICLE III
ASSUMPTION OF LIABILITIES/EXPRESS EXCLUSIONS
3.1. LIABILITIES OF SELLERS. As of the Closing Date, Purchaser shall
assume and agree to pay, perform and otherwise discharge all obligations of
Sellers with respect to the following:
(a) the NRTC Agreements to the extent the obligations therein
arise out of the provision of DBS Services to Customers and accrue on or after
the Closing Date; and
(b) all Current Liabilities as of the Closing Date.
Anything in this Agreement to the contrary notwithstanding,
except for the liabilities specifically set forth in this Section 3.1, Purchaser
shall not assume or be deemed to have assumed under this Agreement, by reason of
the transactions contemplated by this Agreement, or otherwise, any other trade
or other accounts payable, accrued expenses, debts, liabilities, obligations or
commitments of Sellers of any nature whatsoever, known or unknown,
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and the execution, delivery and performance of this Agreement shall not render
Purchaser liable for any such debt, liability, obligation or commitment.
By way of example and not as an exhaustive list, the following
liabilities and obligations of Sellers are expressly not assumed by Purchaser,
pursuant to this Agreement or otherwise:
A. any liabilities or obligations of Sellers under or with
respect to any employment agreement or any pension, profit-sharing, retirement,
disability or other benefit plan entered into or established by Sellers with or
for the benefit of any employee of either of the Sellers;
B. any liabilities or obligations of any kind arising out of
incidents, occurrences, actions or failures to act by or pertaining to Sellers,
which occurred prior to the Closing Date, including, without limitation,
liabilities or obligations arising from (i) the distribution, sale or provision
of any services of Sellers, or (ii) any failure or alleged failure to comply
with any federal, state or local law, rule or regulation applicable to either of
the Sellers or the Business; and
C. any liabilities or obligations of any kind arising out of
the 1995 Memorandum.
Purchaser agrees to promptly notify Sellers of any claims which Purchaser
obtains knowledge of which arise out of or result from liabilities of Sellers
not assumed by Purchaser pursuant to this Agreement.
ARTICLE IV
PURCHASE PRICE; PAYMENT OF PURCHASE PRICE
4.1. PURCHASE PRICE. The purchase price for the Purchased Assets (the
"Purchase Price") shall be Nine Million Three Hundred Thousand Dollars
($9,300,000), subject to adjustment as provided in Section 4.3 herein.
4.2. PAYMENT OF PURCHASE PRICE. On the Closing Date, Purchaser shall
pay the Purchase Price to Sellers as follows:
(a) The sum of One Million Seven Hundred Fifty-Seven Thousand
Four Hundred Thirty-Eight Dollars ($1,757,438), subject to adjustment as
provided for in Section 4.3(a) hereof, by certified or cashier's check, or by
wire transfer of immediately available funds to an account or accounts designed
in writing by Pee Dee.
(b) The sum of Two Million One Hundred Forty-Two Thousand Five
Hundred Sixty-Two Dollars ($2,142,562), subject to adjustment as provided for in
Section 4.3 herein, by certified or cashier's check, or by wire transfer of
immediately available funds to an account or accounts designated in writing by
Electricom.
(c) the sum of Five Million Four Hundred Thousand Dollars
($5,400,000) by the delivery of a Promissory Note substantially in the form
attached hereto as Schedule 4.2(c)
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(the "Note"), less any adjustments and reductions as provided in Section 4.3
herein. The Note will be secured by all of the assets of Purchaser pursuant to
the Security Agreement substantially in the form attached hereto as Schedule
4.2(d) (the "Security Agreement").
(d) Purchaser shall use its best efforts to obtain a
collateral assignment of the NRTC Agreements, in the form attached hereto as
Schedule 4.2(e) as security for the Note (the "Collateral Assignment").
4.3. ADJUSTMENT TO PURCHASE PRICE.
(a) The Closing Payment shall be (i) increased by (a) the
parties' good faith estimate of the Current Assets of Sellers and (b) $233.75
for each new Subscriber acquired by Sellers during the period from November 1,
1996 through the Closing Date and (ii) decreased by the parties' good faith
estimate of the Current Liabilities of Sellers as of the Closing Date (the
"Closing Adjustment"), which adjustment shall be subject to final adjustment as
provided for in paragraph (c) below. The Closing Adjustment shall not reflect
any deduction for the Bad Debt Reserve, as defined below.
(b) No later than ninety (90) days after the Closing Date, or
within three (3) days after receipt of the necessary accounting data from the
NRTC Central Billing System, whichever is later, Sellers shall make and deliver
to Purchaser a balance sheet reflecting the Current Assets and Current
Liabilities of Sellers as of the Closing Date (the "Closing Date Balance
Sheet"), prepared on a basis consistent with this Agreement. For purposes of the
Closing Adjustment and the Final Closing Adjustment, the amount of Accounts
Receivable of Sellers to be included in the Closing Date Balance Sheet shall
include only Accounts Receivable of Subscribers as reflected on Report 18A
(Subscriber Accounts Receivable Aging by Account) of the NRTC Central Billing
System Reports less a reserve for Accounts Receivable which are not collectible
as determined in accordance with GAAP (the "Bad Debt Reserve"). In addition, the
Closing Date Balance Sheet and the Final Closing Adjustment shall not include as
a Current Asset any DSS(TM) subscriber equipment leased by Sellers to any of
their Customers. Sellers shall make available to Purchaser their Records so
Purchaser may verify the original cost of the Inventory. Except as set forth in
this Section 4.3(b), no other assets or liabilities shall be included in the
Closing Date Balance Sheet. Sellers shall make available to Purchaser such
documentation, back-up, invoices, and books and records of Sellers as Purchaser
may reasonably request.
(c) Sellers and Purchaser shall negotiate in good faith to
reconcile any discrepancies which may arise in connection with the determination
of the Closing Date Balance Sheet. If Sellers and Purchaser are unable to
reconcile such determination, Purchaser shall have fifteen (15) days from
presentment of the Closing Date Balance Sheet by Sellers to notify Sellers if
Purchaser wishes to have Sellers' determination examined. If Purchaser elects to
have Sellers' determination examined, it shall be submitted to the determination
in Charlotte, North Carolina, by the Certified Public Accounting firm of Xxxxxx
Xxxxxxxx & Co. (or any other independent Certified Public Accounting firm
mutually acceptable to Sellers and Purchaser), the cost of such examination to
be paid fifty percent (50%) by Sellers and fifty percent (50%) by Purchaser;
provided the fees of such firm shall not exceed $10,000. The results of such
examination shall be made available to Sellers and Purchaser. The determination
by Sellers shall be final and binding on the parties unless Purchaser elects to
have an examination as provided herein, in
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which case the results of the examination shall be made within thirty (30) days
of such referral, and shall be final and binding on the parties (the "Final
Closing Adjustment").
(d) To the extent the Final Closing Adjustment is less than
the Closing Adjustment, Electricom shall pay (i) the difference in cash to
Purchaser within five (5) days after the final determination; or (ii) in the
event of nonpayment, Purchaser may exercise its Right of Offset pursuant to
Section 10.5 hereof. In the event the Final Closing Adjustment is greater than
the Closing Adjustment, Purchaser shall pay such excess in cash to Electricom
within five (5) days after the final determination. If, following any payment
pursuant to this Section 4.3(d), an error (in billing or reporting by NRTC or
otherwise) is thereafter discovered which would have affected the Final Closing
Adjustment, the party in whose favor the error was made shall immediately pay in
cash the amount of such error to the other party.
(e) The parties hereto acknowledge and agree that Sellers
shall be entitled to all commissions due from USSB, Home Shopping Network,
DirecTv and others for periods prior to the Closing Date (the "Commissions"). In
the event Purchaser receives a check for such Commissions or a credit for such
amounts, Purchaser agrees to remit to Sellers such Commissions. Notwithstanding
anything contained herein to the contrary, Sellers shall not be entitled to any
Commissions payable with regard to periods after the Closing Date; it being
acknowledged and agreed that such Commissions are a part of the Purchased Assets
to be acquired by Purchaser pursuant to this Agreement.
4.4. ALLOCATION OF PURCHASE PRICE. The parties have agreed, after
arms-length negotiations, to allocate the Purchase Price among the Purchased
Assets on the basis set forth on Schedule 4.4 to be delivered at the Closing,
and the parties shall make all federal, state and local tax filings consistent
therewith.
ARTICLE V
SELLERS' REPRESENTATIONS AND WARRANTIES
To induce Purchaser to enter into this Agreement and to consummate the
transactions contemplated hereby, each of the Sellers, jointly and severally,
represents and warrants to Purchaser as follows:
5.1. ORGANIZATION. Each of the Sellers is a corporation duly organized,
validly existing and in good standing under the laws of the State of South
Carolina, with all requisite power and authority to own and operate the Business
as it is now conducted and to own the Purchased Assets in the places where the
Business is now conducted and where the Purchased Assets are now owned or
operated.
5.2. AUTHORITY.
(a) Electricom has full power and authority to execute,
deliver and perform this Agreement and all agreements and transactions
contemplated hereby. The execution, delivery and performance of this Agreement
and all transactions contemplated hereby have been duly authorized by Electricom
and no other action or proceeding on the part of any other party is necessary to
authorize this Agreement or to consummate the transactions contemplated hereby.
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This Agreement has been duly and validly executed and delivered by Electricom,
and constitutes, and each of the other agreements to be executed by Electricom
pursuant to the terms hereof will constitute upon execution and delivery, a
legal, valid and binding obligation of Electricom enforceable in accordance with
its terms.
(b) As of the Closing Date, Pee Dee will have full power and
authority to execute, deliver and perform this Agreement and all agreements and
transactions contemplated hereby. The execution, delivery and performance of
this Agreement and all transactions contemplated hereby will be duly authorized
by Pee Dee and no other action or proceeding on the part of any other party will
be necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by Pee Dee, and constitutes, and each of the other agreements to be
executed by Pee Dee pursuant to the terms hereof will constitute upon execution
and delivery, a legal, valid and binding obligation of Pee Dee enforceable in
accordance with its terms.
(c) Except for the NRTC, DirecTv and the other Persons set
forth on Schedule 5.2(c) attached hereto, the execution, delivery and
performance of this Agreement or any document related hereto by Sellers and the
consummation by Sellers of all of the transactions contemplated hereby or
thereby will not (with or without the giving of notice or the lapse of time or
both) (i) violate or require any consent or approval under any applicable
provision of any judgement, order, writ, injunction, decree, rule, regulation or
law; (ii) require any consent under, conflict with, result in termination of,
accelerate the performance required by, result in a breach of, constitute a
default under or otherwise violate the terms of any agreements, instruments or
other obligations to which either of the Sellers is a party or by which they or
any of the Purchased Assets may be bound or affected; (iii) require any consent
or approval by, notice to or registration with any governmental authority or any
other Person; (iv) conflict with or violate any provision of either of the
Seller's organization documents; or (v) result in the creation of a Lien upon
any of the Purchased Assets howsoever arising.
5.3. TITLE TO THE PURCHASED ASSETS.
(a) Sellers have good and marketable title to all of the
Purchased Assets, free and clear of all Liens except those Liens disclosed on
Schedule 5.3(a) attached hereto.
(b) Immediately following the Closing, Purchaser shall have
sufficient title in and to the Purchased Assets to operate and conduct the
Business in the same fashion as Sellers were conducting the Business in the
ordinary course prior to the Closing Date.
5.4. CONDITION OF FIXED ASSETS. All of the Fixed Assets set forth on
Schedule 1.1 are in good operating condition, in a state of good maintenance and
repair, and are adequate and suitable for the purposes which are presently being
used. All appropriate repair and maintenance of the Fixed Assets has been
performed on a current basis and in accordance with generally accepted industry
standards. Except as set forth on Schedule 5.4 attached hereto, none of the
Fixed Assets are in need of any repairs which are outside the ordinary course of
maintenance and repairs routinely performed by Sellers in the past, and no
currently needed repairs are reasonably likely to cost, either singularly or in
the aggregate with respect to all Fixed Assets, in excess of Five Thousand
Dollars ($5,000).
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5.5. NRTC MEMBERSHIP; DBS DISTRIBUTION RIGHTS.
(a) Attached hereto as Schedules 1.2, 1.3 and 1.4, are true
and complete copies of each of the NRTC/Member Agreement, the NRTC/Retail
Agreement, and the Other Assumed Agreements, if any, respectively, together with
all amendments, schedules and exhibits thereto.
(b) Sellers have paid all sums to NRTC or DirecTv as
appropriate, required under the NRTC/Member Agreement such that Sellers are
entitled to the Marketing Revenues. Sellers have the right to receive from NRTC,
on a pro rata basis, all other net revenues received by NRTC from DirecTv in
connection with the Programming which are directly attributable to the Committed
Member Residences or the Commercial Establishments in the Locations.
(c) Each of the Sellers is in full compliance in all material
respects with any and all membership, affiliation, licensing or other
requirements or arrangements as may have been established by NRTC, DirecTv, if
any, pursuant to the NRTC Agreements, or otherwise.
(d) Neither of the Sellers is in breach of the NRTC
Agreements, nor have either of the Sellers failed to perform any material
obligation under the NRTC Agreements. Neither of the Sellers have received
notice of any such breach or non-performance at any time of such NRTC
Agreements. To the best of Sellers' knowledge, no other party to any of the NRTC
Agreements, is in default thereunder or has failed to perform any material
obligation thereunder.
(e) Except as disclosed on Schedule 5.5(e) attached hereto,
none of the DBS Services distributed by Sellers have been suspended at any time
since inception.
(f) Schedule 5.5(f) attached hereto (as supplemented by
applicable NRTC reports) sets forth a complete list of names and addresses of
all Customers and Subscribers of Sellers, identified as Committed Member
Residence and Commercial Establishment for the five (5) year period immediately
preceding the date hereof. Schedule 5.5(f) includes the number of months such
Customer has been a Customer and whether such Customer's account is past due.
Schedule 5.5(f) will be updated not more than three (3) days prior to the
Closing Date, if available. Sellers have maintained full and complete
information regarding the location of each Customer's descrambler.
5.6. INVENTORY. The Inventory shall be usable in the ordinary course of
business and shall comply in all respects with industry standards of quality and
marketability. The Inventory will not, as of the Closing Date, include any items
below standard quality or obsolete. The Inventory shall consist solely of
undamaged, original units in original, sealed cartons, located at either
Seller's principal place of business. Sellers own all of the Inventory free and
clear of any and all Liens and has full power and authority to transfer the
Inventory to Purchaser.
5.7. ACCOUNTS RECEIVABLE. The Accounts Receivable represent arms'
length transactions with Customers made in the ordinary course of business and
none of the Accounts Receivable are subject to any counterclaim or setoff.
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5.8. PREPAID EXPENSES. Each of the Prepaid Expenses is reasonable in
amount, was incurred and paid in the ordinary course of business and can be
utilized in the Business after the Closing Date.
5.9. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
Schedule 5.9 attached hereto, since December 31, 1995, to the best of Sellers'
knowledge, there has not been and through the Closing Date there will not be:
(a) any change in the position, financial or otherwise,
assets, liabilities, earnings, book value, Business, operations or prospects of
Sellers which is materially adverse, singularly or in the aggregate;
(b) any obligation or liability incurred by Sellers (whether
absolute, accrued, contingent or otherwise and whether due or to become due)
other than obligations or liabilities incurred in the ordinary course of
business and consistent with past practices;
(c) any termination or waiver of any rights of Sellers of
material value to the Business or to Sellers;
(d) any damage, destruction or loss, whether or not covered by
insurance, adversely affecting the Business or the Purchased Assets;
(e) the adoption of any statute, rule, regulation or order
which adversely affects the Business or the Purchased Assets;
(f) any sale, transfer or other disposition of any of the
Purchased Assets to any party, except for dispositions of surplus or used
equipment or other dispositions in the ordinary course of business; or
(g) any agreement to do any of the foregoing.
5.10. LICENSES AND PERMITS. Attached hereto in Schedule 5.10 is a list
of all federal, state, local and foreign permits, certificates, licenses,
approvals and other authorizations necessary in the conduct of the Business. All
such licenses and permits of Sellers are in full force and effect, and no
violations are or have been recorded in respect thereof, and no proceeding is
pending or threatened to revoke or limit any thereof. Each of the Sellers and
the conduct of the Business is in compliance with all applicable laws, statutes,
ordinances, rules, regulations and order of any federal, foreign, state or local
government and any other government department or agency, and in any judgment,
decision, decree or order of any court of governmental agency, department or
authority.
5.11. TAX MATTERS.
(a) Each of the Sellers has timely filed all federal, state,
local and foreign tax returns and tax reports required to be filed with respect
to the Business with the appropriate governmental agency in all jurisdictions in
which such returns and reports are required to be filed. All such returns and
reports are true, correct and complete, and all amounts shown as owing on them
have been paid, including all interest, penalties, deficiencies and assessments
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heretofore levied or assessed against either of the Sellers. Each of the Sellers
has duly withheld, collected and timely paid over, or holds for such payment, to
the proper governmental authorities all taxes required to be withheld or
collected by it. There is no agreement for extension of time of assessment or
payment of any taxes of Sellers. No waiver of any statute of limitations has
been executed by Sellers for any tax year which remains open or unsettled. To
the best knowledge, information and belief of Sellers, there is no examination
or audit pending by the Internal Revenue Service or by any state or local taxing
authority with respect to the tax matters of Sellers. There is no liability for
taxes or any tax deficiency or the existence of any basis from which liability
for taxes or tax deficiency, including interest and penalties, might be asserted
against either of the Sellers for any period in excess of the applicable reserve
for taxes, if any, and neither of the Sellers has any knowledge of any such
liability or deficiency or the existence of any basis therefor.
(b) All federal, state, local and foreign income, profits,
franchise, sales, use, occupation, property, excise and other taxes (including
interest and penalties), if any, payable by Sellers or relating to or chargeable
against the Purchased Assets or chargeable against Sellers' revenue or income
have been fully paid or are not past due and are fully disclosed and accrued on
the books and records of Sellers and the proper amount of reserves exist for the
payment thereof.
5.12. DISCLOSURES. No representation or warranty made by Sellers, or
either of them, in this Agreement, and no statement made in any Schedule,
exhibit, certificate or other writing delivered or to be delivered in connection
with the transactions contemplated hereby contains or will contain any untrue
statement of a material fact, or omits or will omit any statement of a material
fact necessary to make the statements contained herein or therein not
misleading.
5.13. LITIGATION. There are no actions, suits, proceedings, orders,
investigations or claims pending or, to the best of Sellers' knowledge, any
threats against or affecting Sellers, the Purchased Assets or the Business, at
law or in equity, before any court, arbitration panel, tribunal or governmental
department, commission, board, bureau, agency or instrumentality.
ARTICLE VI
PURCHASER'S REPRESENTATIONS AND WARRANTIES
To induce Sellers to enter into this Agreement and to consummate the
transactions contemplated hereby, Purchaser represents and warrants to Sellers
as follows:
6.1. ORGANIZATION. Purchaser is a limited partnership duly organized,
validly existing and in good standing under the laws of the State of Georgia,
with all requisite power to own and operate its business as it is now conducted.
As of the Closing Date, Purchaser shall have the right to transact business as a
foreign limited partnership in the State of South Carolina.
6.2. AUTHORITY.
(a) Purchaser has full power and authority to execute,
deliver, and perform this Agreement. The execution, delivery and performance of
this Agreement and all transactions contemplated hereby have been duly
authorized by Purchaser and no other action or proceeding
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on the part of any other party is necessary to authorize this Agreement or to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by Purchaser, and constitutes, and each of
the other agreements to be executed pursuant to the terms hereof upon execution
and delivery will constitute, a legal, valid and binding obligation of
Purchaser, enforceable in accordance with its terms.
(b) Except for the NRTC, DirecTv and the other Persons set
forth on Schedule 6.2(b) attached hereto, the execution, delivery and
performance of this Agreement or any other document related hereto by Purchaser
and the consummation by Purchaser of all of the transactions contemplated hereby
or thereby will not (with or without the giving of notice or the lapse of time
or both) (i) violate or require any consent or approval under any applicable
provision of any judgment, order, writ, injunction, decree, rule, regulation or
law; (ii) require any consent under, conflict with, result in the termination
of, accelerate the performance required by, result in the breach of, constitute
a default under or otherwise violate the terms of any agreements, instruments or
other obligations to which Purchaser is a party; (iii) require any consent or
approval by, notice to or registration with any governmental authority or any
other Person; or (iv) violate any provision of Purchaser's certificate of
limited partnership or limited partnership agreement.
6.3. DISCLOSURES. No representation or warranty made by Purchaser in
this Agreement, and no statement made in any Schedule, exhibit, certificate or
other writing delivered or to be delivered in connection with the transactions
contemplated hereby contains or will contain any untrue statement of a material
fact, or omits or will omit any statement of a material fact necessary to make
the statements contained herein or therein not misleading.
ARTICLE VII
COVENANTS
7.1. CONDUCT OF THE BUSINESS PRIOR TO CLOSING DATE. From the date
hereof through and until the Closing Date, unless performance of the following
obligations is waived by Purchaser (in its sole discretion) in advance and in
writing, Sellers shall:
(a) consult with Purchaser on a regular basis with respect to
all decisions which might adversely affect the Business or the Purchased Assets;
(b) not modify, amend, alter or terminate any of the NRTC
Agreements, or waive any default or breach thereunder;
(c) comply in all material respects with the NRTC Agreements,
use their best efforts to cure any default or breach thereunder, and promptly
notify Purchaser upon receipt of notice of any default or breach thereunder;
(d) maintain their Records in accordance with prior practice,
maintain the Purchased Assets and the inventory in their present condition,
ordinary wear and tear excepted, consistent with past practice, and otherwise
use their best efforts to operate the Business as currently operated and in the
ordinary course in accordance with practices during the twelve (12) months
preceding the date of this Agreement;
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(e) not sell, transfer, dispose or permit a Lien, directly or
indirectly, on any of the Purchased Assets or inventory, except for sales or
dispositions of inventory in the ordinary course of business;
(f) use their best efforts to preserve intact the current
business organization and relationships with employees, suppliers, advertisers,
Customers and other Persons having dealings with Sellers with respect to the
Business;
(g) operate the Business in all material respects in
accordance with the NRTC Agreements, comply in all material respects with all
laws, rules and regulations applicable to it, including the regulations and
policies of the NRTC and DirecTv;
(h) provide to Purchaser, concurrently with filing, sending or
receipt thereof, copies of all reports to and other filings and correspondence
with the NRTC and DirecTv;
(i) provide to Purchaser, promptly upon receipt thereof by
Sellers, a copy of (i) any notice of the revocation, suspension or limitation of
the rights under, or of any proceeding for the revocation, suspension, or
limitation of the rights under, any of the NRTC Agreements, and (ii) copies of
all protests, complaints, challenges or other documents submitted to or filed
with the NRTC or DirecTv by third parties concerning the Business and, promptly
upon the filing or making thereof, copies of Sellers' responses thereto; and
(j) notify Purchaser in writing immediately upon learning of
the institution or threat of any action against either of the Sellers in any
court, or any action against either of the Sellers before any governmental
agency, and notify Purchaser in writing promptly upon receipt of any
administrative or court order relating to the Business. Without limiting the
generality of the foregoing, neither of the Sellers shall take any of the
actions (over which Sellers can exercise control) listed in Section 5.9 herein.
7.2. ACCESS.
(a) Prior to the Closing, Purchaser may, through its
employees, agents and representatives, make or cause to be made such
investigation of Sellers, their Records and the Business as Purchaser deems
necessary or advisable and shall have full access to the auditors and attorneys
of Sellers. Sellers shall permit Purchaser and its employees, agents and
representatives, on reasonable notice, to have access to their premises,
personnel and Records relating solely to the Business. Sellers shall cooperate
to provide access to their Customers, suppliers, lenders and such other parties
as Purchaser may reasonably request. Sellers shall, and shall cause their
officers, attorneys and accountants to, furnish Purchaser with such financial
and operating data and other information as Purchaser from time to time shall
reasonably request, including, but not limited to, Sellers' balance sheets for
the Business as of December 31, 1995 and June 30, 1996. No investigation by
Purchaser shall in any way affect or otherwise diminish the representations,
warranties and covenants of Sellers hereunder.
(b) Purchaser will hold, and will cause its authorized
representatives (including its investors and lending institutions) to hold, in
strict confidence, unless compelled to disclose by judicial or administrative
process or official request or by other requirements of law, all documents and
information concerning Sellers and the Business furnished to Purchaser in
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connection with the transactions contemplated by this Agreement (except to the
extent that such information can be shown to have been (i) previously known by
Purchaser, (ii) in the public domain through no fault of Purchaser, or (iii)
later lawfully acquired by Purchaser from other sources) and will not release or
disclose such information to any other Person, except its auditors, attorneys,
financial advisors and other consultants and advisors and lending institutions
(including banks) in connection with this Agreement, it being understood that
such Persons shall be informed by such party of the confidential nature of such
information and shall be directed by such party and shall have agreed to treat
such information as confidential. In the event that the transactions
contemplated herein are not consummated for any reason, Purchaser will promptly
return to Sellers all copies of any Schedules, statements, documents or other
written information obtained in connection herewith, without retaining any
copies or summaries thereof, and shall maintain such confidence except to the
extent such information comes into the public domain through no fault of
Purchaser.
7.3. CONSENT OF PEE DEE. Pee Dee shall use its best efforts to obtain
as soon as practicable after the date hereof the approval of the Board of
Directors of Pee Dee with respect to the transactions contemplated hereby.
7.4. CONSENT OF NRTC, DIRECTV AND OTHERS. Within five (5) business days
after the date of this Agreement, Purchaser shall cause its counsel to prepare
and deliver to Sellers' counsel (i) a request for the consent of the NRTC and
DirecTv to the transfer of the NRTC Agreements, (ii) a request for the consent
of the NRTC and DirecTv to the Collateral Assignment, (iii) a request of the
NRTC to provide to the members and affiliates of the NRTC who are providing DBS
Services under agreements with the NRTC a written summary of the HCG Agreement
(the "HCG Agreement Summary"), (iv) a request of the NRTC to confirm that, in
the event the NRTC exercises its right to acquire DBS Services from successor
satellites launched by HCG, (a) those NRTC members and affiliates who at the
time of such exercise are providing DBS Services pursuant to agreements then in
effect with the NRTC would be afforded the right to continue to provide DBS
Services to the specific residences listed or the specific geographic areas
described in such members' or such affiliates' agreement as then in effect
immediately prior to the expiration thereof in accordance with its terms, and
(b) such right will be afforded on a non-discriminatory basis as between such
members and affiliates, and (v) such other requests for consent that Purchaser
determines may be necessary or appropriate to consummate the transactions
contemplated hereby. After review by Sellers' counsel, but in any event within
ten (10) business days after the date of this Agreement, Sellers and Purchaser
shall join in and deliver the requests for such consents, and they will each
diligently take all steps necessary or desirable to obtain such consents. The
failure of any of the parties to timely file or diligently seek the consents, or
to cooperate fully with any of the other parties with respect thereto, shall be
deemed a material breach of this Agreement. Purchaser acknowledges and agrees
that Sellers cannot ensure or otherwise guarantee that the NRTC will provide the
HCG Agreement Summary referred to in clause (iii) above or the confirmation of
the NRTC referred to in clause (iv) above.
7.5. PUBLIC ANNOUNCEMENTS; CONFIDENTIALITY. Sellers and Purchaser shall
mutually agree in advance as to timing, form and content before issuing any
press release or otherwise making any public statements with respect to the
transactions contemplated hereby and shall not issue any press release or make
any public statement prior to reaching mutual agreement, except as may be
required by law. In the event that prior to the Closing Date either party is
required
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by law to make a statement with respect to the transactions contemplated herein,
such party shall notify the other party in writing as to the timing, form and
content of such statements. Sellers and Purchaser agree to maintain the
confidentiality of this Agreement and the terms hereof and any information
exchanged by the parties in connection with the consummation of the transaction
contemplated hereby.
7.6. BEST EFFORTS. Subject to the terms and conditions herein provided,
Sellers and Purchaser agree to use their best efforts to take, execute,
acknowledge and deliver, or cause to be taken, executed, acknowledged and
delivered, all actions, deeds, assignments, documents, instruments, transfers,
conveyances, discharges, releases, assurances and consents, and to do, or cause
to be done, all things necessary, proper or advisable under this Agreement and
all applicable laws and regulations to consummate, confirm, perfect, evidence
and otherwise make effective the transactions contemplated by this Agreement,
including actions necessary to obtain all requisite assignments of agreements
and contracts, and to fulfill the requirements of Articles VIII and IX hereof on
or prior to the Closing Date.
7.7. EXCLUSIVE DEALING. During the period from the date of this
Agreement to the Closing Date, Sellers will refrain, and will cause all of their
agents and employees to refrain, from taking, directly or indirectly, any action
to encourage, initiate, solicit or continue any discussions or negotiations
with, or any other offers from, any other Person concerning a merger, sale of
substantial stock or any similar transaction concerning Sellers which would
affect the Business, or the sale of the Purchased Assets or any portion thereof.
7.8. MANAGEMENT AGREEMENT. Purchaser and Sellers will negotiate in good
faith to agree upon the Management Agreement.
7.9. RECORDS. Purchaser shall make available to Sellers, such
documentation, back-up, invoices, NRTC reports and other books and records
relating to the Business during the ninety (90) day period after the Closing
Date and thereafter as Sellers may reasonably request.
7.10 RATES. Purchaser covenants and agrees that it shall not increase
prices to Subscribers existing as of the Closing Date with respect to DirecTv
programming packages (i.e. Total Choice, Economy Choice and Choice) during the
six (6) month period following the Closing Date unless such increase is
necessary to maintain Purchaser's gross margin of at least 52% on these
packages.
ARTICLE VIII
CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATIONS
Purchaser's obligations to perform this Agreement and consummate the
transactions contemplated hereby is subject to the satisfaction (or waiver by
Purchaser), on or before the Closing Date, of each of the following conditions
precedent:
8.1. TRUTH OF REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of Sellers, or either of them, contained in this
Agreement, and all representations and warranties set forth in any Schedule or
exhibit attached hereto, shall have been true, complete
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and correct when made and as of the Closing Date, without the necessity of any
material amendment or modification, with the same force and effect as if made as
of the Closing Date.
8.2. PERFORMANCE. Each of the agreements, obligations, conditions and
covenants to be performed or complied with by Sellers, or either of them, on or
before the Closing Date pursuant to the terms hereof shall have been duly
performed or complied with on or before the Closing Date.
8.3. NO MATERIAL ADVERSE CHANGE. Prior to the Closing Date and except
as otherwise permitted by this Agreement, there shall not have occurred any
material adverse change in the financial condition, Business, assets, results of
operations or prospects of Sellers or the Purchased Assets.
8.4. NO LITIGATION THREATENED. No action, suit or other proceeding
shall be pending before any court, tribunal or governmental authority seeking or
threatening to restrain or prohibit the consummation of the transactions
contemplated by this Agreement, or seeking to obtain substantial damages in
respect thereof, or involving a claim, the consummation of which would result in
the violation of any law, decree or regulation of any governmental authority
having appropriate jurisdiction.
8.5. CONSENTS. All authorizations and approvals of or consents of, or
filings with, any governmental authority or other Person required to be obtained
or made by Sellers in connection with the Closing including, without limitation,
NRTC and DirecTv consent as provided for in Section 7.4 herein, shall have been
duly obtained by Sellers and shall be in full force and effect without
conditions which are materially adverse to Purchaser.
8.6. SUBSCRIBERS. On the Closing Date, Sellers shall have at least
3,568 Subscribers.
8.7. REVIEW OF SELLERS. Purchaser shall have completed its due
diligence investigation covering (i) the Business as provided for in Section 7.2
herein, (ii) the terms and provisions of the HCG Agreement as reflected in the
HCG Agreement Summary, and (iii) the rights Purchaser will be afforded to
provide DBS Services to the Locations after the expiration of the NRTC/Member
Agreement, and no fact or circumstance shall have come to the attention of
Purchaser as a result of such investigation which in the exercise of Purchaser's
reasonable judgement materially and adversely affects the business, prospects or
financial condition of the Business, including the prospects of the Business
after the expiration of the NRTC Agreements.
8.8. CLOSING OF SANTEE ELECTRIC COOPERATIVE, INC. ACQUISITION. An
affiliate of Purchaser shall have purchased from Santee Electric Cooperative,
Inc. NRTC System No. 0409.
8.9. MANAGEMENT AGREEMENT. Purchaser and Sellers shall have entered
into the Management Agreement.
8.10. SELLERS' CLOSING DELIVERIES. Sellers shall have delivered to
Purchaser the following at Closing:
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(a) the Assignment, the Xxxx of Sale and other instruments of
transfer to effectively assign, transfer and convey good and marketable title to
the Purchased Assets as Purchaser shall reasonably request, in form and
substance reasonably satisfactory to Purchaser;
(b) all Records or copies of the Records which Purchaser may
reasonably request.
(c) a certified copy of Resolutions of the Board of Directors
of each of the Sellers and each of the Seller's shareholders authorizing the
execution, delivery and performance of this Agreement;
(d) a certificate of good standing of each of the Sellers from
the Secretary of State of South Carolina;
(e) evidence satisfactory to Purchaser that all Liens
described on Schedule 5.3(a) herein have been removed or otherwise addressed to
Purchaser's satisfaction;
(f) a list of the Accounts Receivable from all Customers
(Reports 18A and 19A) and a list of the Unearned Revenue (Report 17) each as of
the NRTC billing period ending immediately prior to the Closing Date;
(g) a certificate signed by each of the Seller's presidents,
dated the Closing Date, to the effect that the conditions set forth in this
Article VIII have been satisfied;
(h) an opinion of Xxxxxx X. Xxxxx, Xx., counsel to Sellers, in
form and substance reasonably acceptable to Purchaser;
(i) a certificate signed by each of the Seller's presidents,
dated the Closing Date, regarding the transfer of each of the Seller's accounts
at Huntington Bank;
(j) the Management Agreement executed by Sellers; and
(k) such other documents and instruments as may be reasonably
requested and satisfactory to Purchaser and its counsel in connection with
Sellers' satisfaction of each of their obligations hereunder.
ARTICLE IX
CONDITIONS PRECEDENT TO SELLERS' OBLIGATIONS
Sellers' obligation to perform this Agreement and consummate the
transactions contemplated hereby is subject to the satisfaction (or waiver by
Sellers), on or before the Closing Date, of each of the following conditions
precedent:
9.1. TRUTH OF REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of Purchaser contained in this Agreement, and all
representations and warranties set forth in any Schedule or exhibit attached
hereto, shall have been true, complete and correct when
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made and as of the Closing Date, without the necessity of any material amendment
or modification, with the same force and effect as if made as of the Closing
Date.
9.2. PERFORMANCE. Each of the agreements, obligations, conditions and
covenants to be performed or complied with by Purchaser on or before the Closing
Date pursuant to the terms hereof shall have been duly performed or complied
with on or before the Closing Date.
9.3. NO LITIGATION THREATENED. No action, suit or other proceeding
shall be pending before any court, tribunal or governmental authority seeking or
threatening to restrain or prohibit the consummation of the transactions
contemplated by this Agreement, or seeking to obtain substantial damages in
respect thereof, or involving a claim, the consummation of which would result in
the violation of any law, decree or regulation of any governmental authority
having appropriate jurisdiction.
9.4. CONSENTS. All authorizations and approvals of or consents of, or
filings with, any governmental authority or other Person required to be obtained
or made by Purchaser in connection with the Closing (including, without
limitation, NRTC consent as provided for in Section 7.4 herein) shall have been
duly obtained by Purchaser and shall be in full force and effect without
conditions which are materially adverse to Sellers.
9.5 MANAGEMENT AGREEMENT. Purchaser and Sellers shall have entered into
the Management Agreement.
9.6. PURCHASER'S CLOSING DELIVERIES. Purchaser shall have delivered to
Sellers the following at Closing:
(a) the Closing Payment;
(b) the Note and the Security Agreement duly executed by
Purchaser;
(c) the Collateral Assignment executed and delivered by
Purchaser and consented to by the NRTC and DirecTv;
(d) a certified copy of Resolutions of the general partner of
Purchaser authorizing the execution, delivery and performance of this Agreement;
(e) a certificate signed by Purchaser's general partner, dated
the Closing Date, to the effect that the conditions set forth in this Article IX
have been satisfied;
(f) an opinion of Xxxxxx Xxxxxxx Xxxxx & Xxxxxxxxxxx, L.L.P.,
counsel to Purchaser, in form and substance reasonably acceptable to Sellers;
(g) a certificate signed by Purchaser's general partner, dated
the Closing Date, regarding the transfer of each of the Seller's accounts at
Huntington Bank;
(h) the Management Agreement executed by Purchaser; and
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(i) such other documents and instruments as may be reasonably
requested and satisfactory to Sellers and its counsel in connection with
Purchaser's satisfaction of each of its obligations hereunder.
ARTICLE X
SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION
10.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made by any party to this Agreement or pursuant hereto shall
survive the Closing of the transactions hereunder. The representations and
warranties hereunder shall not be affected or diminished by any investigation at
any time by or on behalf of the party for whose benefit such representations and
warranties were made. All statements contained herein or in any Schedule,
exhibit, certificate, list or other document delivered pursuant hereto or in
connection with the transactions contemplated hereby shall be deemed to be
representations and warranties.
10.2. INDEMNIFICATION OF PURCHASER. Each of the Sellers, jointly and
severally, and its representatives, successors, heirs and assigns shall
indemnify, reimburse and hold Purchaser and each of its partners, subsidiaries,
affiliates, successors, assigns and agents harmless from, against, for and in
respect of any and all damages, losses, settlement payments, obligations,
liabilities, claims, demands, actions or causes of action, judgments,
encumbrances, costs and expenses (including reasonable attorneys' fees)
(collectively, the "Indemnifiable Damages") relating to, resulting from or
arising out of (i) any misrepresentation, untruth, inaccuracy, breach or
nonfulfillment of any representation, warranty, agreement or covenant of either
of the Sellers contained in or made in connection with this Agreement or in any
Schedule, exhibit, certificate or other document delivered pursuant hereto, (ii)
the failure of either of the Sellers to pay, perform or discharge promptly when
due any of their obligations, liabilities and debts except as provided under
this Agreement, (iii) any liability or obligation relating to the operation of
the Business prior to the Closing Date, (iv) any breach or default prior to the
Closing Date by either of the Sellers under any of the NRTC Agreements, (v) any
state or local sales, use, excise, personal property or similar tax liability
(including penalties and interest) of either of the Sellers, (vi) the 1995
Memorandum, and (vii) any other liabilities, obligations or claims, whether
absolute or contingent, known or unknown, matured or unmatured and not expressly
assumed by Purchaser hereunder.
10.3. INDEMNIFICATION OF SELLERS. Subject the limitations hereinafter
set forth, Purchaser shall indemnify, reimburse and hold Sellers and each of
their shareholders, subsidiaries, affiliates, officers and directors harmless
from, against, for and in respect of any and all Indemnifiable Damages relating
to, resulting from or arising out of (i) any misrepresentation, untruth,
inaccuracy, breach or nonfulfillment of any representation, warranty, agreement
or covenant of Purchaser contained in or made in connection with this Agreement
or in any Schedule, exhibit, certificate or other document delivered pursuant
hereto, (ii) the failure of Purchaser to pay, perform or discharge promptly when
due (a) its obligations set forth in Section 4.2 herein, or (b) the Current
Liabilities, (iii) the assertion against Sellers of any liability or obligation
relating to Purchaser's operation of the Business after the Closing Date, and
(iv) any breach or default after the Closing Date by Purchaser under the NRTC
Agreements.
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10.4. RIGHT TO CONTEST.
(a) If any party entitled to indemnification hereunder (the
"Indemnified Party") receives notice or has knowledge of any claim for which it
believes the other party hereto is obligated to provide indemnification pursuant
to Sections 10.2 or 10.3 herein (the "Indemnifying Party"), the Indemnified
Party shall notify the Indemnifying Party in writing of such claim within twenty
(20) days of its receipt of same (the "Indemnification Claim"). The
Indemnification Claim shall set forth a brief description of the facts giving
rise to such a claim and the amount (or reasonable estimate) of the
Indemnifiable Damages suffered or which may be suffered by the Indemnified
Party. The Indemnified Party shall, at the expense of the Indemnifying Party,
provide all information regarding the contest or defense of the claim and
cooperate fully with the Indemnifying Party in the conduct of any such contest
or defense. Before being required to make any payment pursuant to Sections 10.2
or 10.3 herein, the Indemnifying Party may, at its own expense, elect to
undertake and control the defense of, and take all necessary steps properly to
contest any claim in respect thereof involving third parties or to prosecute
such claim to conclusion or settlement satisfactory to the Indemnified Party. If
the Indemnifying Party makes the foregoing election, then the Indemnified Party
shall have the right to participate, at its own expense, in all proceedings but
shall not admit any liability, settle, compromise, pay or discharge the claim
without the prior written consent of the Indemnifying Party. If the Indemnifying
Party does not make such election, it shall be obligated to pay the costs of
defending or prosecuting such claim and shall be bound by whatever result is
obtained by the Indemnified Party respecting such claim.
(b) Except as herein expressly provided, the remedies provided
in this Article X shall be cumulative and shall not preclude assertion by any
party of any other rights or the seeking of any other remedies against any other
party hereto.
10.5. PURCHASER'S RIGHT OF OFFSET. Purchaser shall have the right, at
its sole discretion, to offset, on a dollar-for-dollar basis, against any and
all amounts due Electricom pursuant to the Note any amounts due to Purchaser
from Sellers pursuant to this Agreement, including, without limitation,
Indemnifiable Damages due pursuant to Section 10.2, adjustments pursuant to
Section 4.3(d) and any other amounts due from either of the Sellers pursuant to
any other provision hereof (the "Right of Offset"). Before exercising its Right
of Offset, Purchaser shall provide written notice of its intent to exercise such
right.
10.6. SELLERS' RIGHT OF OFFSET. Sellers shall have the right, at their
sole discretion, to offset, on a dollar-for-dollar basis, against any and all
amounts due Purchaser pursuant to the transactions contemplated by this
Agreement any amounts due to Sellers from Purchaser pursuant to this Agreement,
including, without limitation, Indemnifiable Damages due pursuant to Section
10.3, adjustments pursuant to Section 4.3(d) and any other amounts due from
Purchaser pursuant to any other provision hereof. Before exercising such right
of offset, Sellers shall provide written notice of their intent to exercise such
right.
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ARTICLE XI
MISCELLANEOUS
11.1. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given, upon
personal delivery, upon receipted delivery by overnight courier, charges prepaid
or charged to the sender's account if delivery is confirmed by the delivery
service, upon receipt of a confirmed transmission if by facsimile transmission,
or three (3) days after mailing if mailed by certified or registered mail,
postage prepaid, return receipt requested, as follows (or at such other address
for a party as shall be specified by like notice; provided that notice of a
change of address shall be effective only upon receipt thereof):
To Purchaser: Digital Television Services of
South Carolina I, LP
Building C-200
000 Xxxxxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, Xx.
with a copy to: C. Xxxx Xxxxx, Esq.
Xxxxxx Xxxxxxx Xxxxx & Scarborough, L.L.P.
NationsBank Corporate Center, Suite 3350
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
To Sellers: Pee Xxx Xxxxxxxxxx, Inc.
Xxxx Xxxxxx Xxx 000, XxXxxx Xxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxx, Xx.
Pee Dee Electric Cooperative, Inc.
Xxxx Xxxxxx Xxx 000, XxXxxx Xxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxx, Xx.
with a copy to: Xxxxxx X. Xxxxx, Xx., Esq.
000 Xxxxx Xxxxxx Xxxxxx
Post Xxxxxx Xxx 000
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
11.2. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute one and the same
agreement.
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11.3. GOVERNING LAW. This Agreement shall be governed by and
interpreted, construed and enforced in accordance with the laws of the State of
South Carolina, without regard to the choice of law provisions thereof.
11.4. WAIVERS. No provisions of this Agreement may be waived except by
an instrument in writing signed by the party sought to be bound. No failure or
delay by any party in exercising any right or remedy hereunder shall operate as
a waiver thereof, and a waiver of a particular right or remedy on one occasion
shall not be deemed a waiver of any other right or remedy or of the same right
or remedy or a waiver on any future occasion.
11.5. SEVERABILITY. The invalidity or unenforceability of any term or
provision of this Agreement shall not affect the other provisions hereof, and
this Agreement shall be construed in all respects as if such invalid or
unenforceable provision were omitted.
11.6. SECTION AND ARTICLE HEADING REFERENCES. The Section and Article
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.
11.7. SUCCESSORS AND ASSIGNS; ASSIGNMENT. This Agreement shall be
binding upon, inure to the benefit of, and be enforceable by, the respective
successors and permitted assigns, if any, of the parties hereto. Except as
otherwise expressly provided herein, nothing expressed or implied herein is
intended or shall be construed to confer upon or give any Person, other than the
parties hereto, any right or remedy hereunder or by reason hereof. This
Agreement may not be assigned by Purchaser (except to a party which, directly or
indirectly is controlled by, controls or is under common control with,
Purchaser) or Sellers without the prior written consent of the other party.
11.8. ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the Schedules
attached hereto constitute the entire agreement and understanding of the parties
in respect of the transactions contemplated hereby and supersede all prior
correspondence, conversations, agreements, arrangements, understandings and
other writings. No promises, covenants or representations of any character or
nature other than those expressly stated herein have been made to induce either
party to enter into this Agreement. This Agreement may be amended or modified
only by a written instrument signed by Purchaser and Sellers.
11.9. EXPENSES. Each of the parties hereto shall pay its own expenses
incurred in connection with the negotiation and consummation of this Agreement,
including the charges of its respective attorneys, accountants and other
representatives. Purchaser shall pay up to Five Hundred Dollars ($500) of any
transfer fee due the NRTC in connection with the transfer of the NRTC Agreements
and any out of pocket fees and expenses of the NRTC due in connection therewith.
11.10. KNOWLEDGE OF SELLERS. Where any representation or warranty
contained in this Agreement is expressly qualified by reference to knowledge,
Sellers confirm that they have made or caused to be made due and diligent
inquiry as to the matters that are the subject of such representations and
warranties.
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11.11. FACSIMILE SIGNATURES. Facsimile signatures shall be considered
original signatures for purposes of execution and enforcement of the rights
delineated in this Agreement.
11.12. SCHEDULES. The Schedules referred to in this Agreement are
attached hereto, made a part hereof and incorporated herein by this reference.
11.13. TERMINATION OF AGREEMENT.
(a) Notwithstanding any other provision herein contained to the
contrary, this Agreement may be terminated at any time prior to the Closing Date
by (i) the mutual written consent of Sellers, (ii) either party upon written
notice to the other party if the Closing has not occurred on or before the
Termination Date, (iii) Sellers if the covenants and conditions set forth in
Articles VII and IX required to be complied with or performed by Purchaser have
not been complied with or performed by Purchaser and such noncompliance and
nonperformance shall not have been cured or eliminated (or by its nature cannot
be cured or eliminated) by Purchaser on or before the sixtieth (60th) day
following written notice thereof from Sellers; provided that Sellers have not
defaulted in any material respect with respect to any of its obligations
hereunder, (iv) Purchaser if the covenants and conditions set forth in Articles
VII and VIII (other than Section 8.7) required to be complied with and performed
by Sellers have not been complied with or performed by Sellers and such
noncompliance and nonperformance shall not have been cured or eliminated (or by
its nature cannot be cured or eliminated) by Sellers on or before the sixtieth
(60th) day following written notice thereof from Purchaser; provided that
Purchaser shall not have defaulted in any material respect with respect to any
of its obligations hereunder, or (v) Purchaser if the conditions set forth in
Section 8.7 required to be complied with and performed by Sellers have not been
complied with or performed by Sellers on or prior to December 31, 1996; provided
that Purchaser shall not have defaulted in any material respect with respect to
any of its obligations hereunder.
(b) In the event of termination pursuant to this Section 11.13, written
notice thereof shall be given to the other party and this Agreement shall
terminate immediately. In the event of such termination pursuant to Section
11.13(a)(i) or (ii), no party hereto (or any of their respective directors,
officers or partners) shall have any liability or further obligation to the
other party to this Agreement.
(c) In the event of termination pursuant to Section 11.13(a)(iii),
Sellers shall be entitled to recover from Purchaser all damages, losses, costs
and expenses (including reasonable attorneys' fees) provided by law.
(d) In the event of termination pursuant to Section 11.13(a)(iv),
Purchaser shall be entitled to recover from Sellers all damages, losses, costs
and expenses (including reasonable attorneys' fees) provided by law.
(e) In the event of termination pursuant to Section 11.13(a)(v),
Purchaser recognizes that Sellers would be damaged, the extent to which is
extremely difficult and impractical to ascertain. The parties, therefore, agree
that if this Agreement is terminated pursuant to Section 11.13(a)(v), Sellers
shall be entitled to the sum equal to Sellers' actual costs and expenses
(including attorneys' fees) incurred in connection with the transactions
contemplated by this Agreement, but in no event shall such sum exceed $100,000.
The parties agree that this sum
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shall constitute liquidated damages and shall be in lieu of any and all other
relief to which Sellers might otherwise be entitled due to Purchaser's failure
to consummate, or Purchaser's default under, this Agreement.
11.14. POWER OF ATTORNEY. Each of the Sellers hereby irrevocably
appoints Purchaser, and all agents, officers, and employees designated by
Purchaser, as its true and lawful attorney-in-fact and duly authorized agent for
the period from and after the Closing Date to:
(i) open each of the Seller's mail and endorse and collect any
checks, notes, drafts or any other items payable to either of the
Sellers from Subscribers or otherwise issued in connection with the
Business, and deposit same to the account of Purchaser in any
depository institution;
(ii) sign receipts and other papers necessary for the
collection of any and all amounts due from Subscribers;
(iii) notify Subscribers that the accounts have been assigned
to Purchaser; and
(iv) direct such Subscribers to make all payments due from
them directly to Purchaser.
Purchaser shall furnish Sellers with a copy of any notice issued pursuant to
Sections 11.14(iii) or (iv) above and each of the Sellers hereby agrees that any
such notice shall be sent on Sellers' stationary, in which event Sellers shall
co-sign such notice with Purchaser, all at Purchaser's sole cost and expense.
SELLERS DO HEREBY RATIFY AND CONFIRM ALL THINGS DONE BY PURCHASER
WITHIN THE SCOPE OF THE AUTHORITY HEREIN GIVEN AS FULLY AND TO THE
SAME EXTENT AS IF DONE BY SELLERS PERSONALLY.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
PURCHASER:
Digital Television Services of South Carolina I, LP
By: Columbia DBS Management, LLC
Its: General Partner
By:
---------------------------------------
Xxxxxxx X. Xxxxxxxx, Xx., President and
Manager
ELECTRICOM:
Pee Xxx Xxxxxxxxxx, Inc.
By:
---------------------------------------
Xxxxxx X. Xxxxxxxx, Xx., President
PEE DEE:
Pee Dee Electric Cooperative, Inc.
By:
---------------------------------------
Xxxxxx X. Xxxxxxxx, Xx., Executive Vice
President and General Manager
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