EXHIBIT 10.32
AGREEMENT FOR PURCHASE AND SALE
THIS AGREEMENT, dated this 7th day of February, 2000, is by and among
Xxxxxx X. Xxxxxxxxx and Xxxxx X. Xxxxxxxxx (husband and wife), Xxxxxx Xxxxxxxxx
and Xxxxxxxx Xxxxxxxxx (husband and wife), Xxxx X. Xxxxxxxxx, and Xxxxxx (Xxxx)
Xxxxxx and Xxxxx Xxxxxx (husband and wife) (together the "Shareholders"),
Multimedia Development Corporation, a New Mexico corporation ("MDC") and New
West Resources, Inc., a Texas corporation ("Purchaser").
RECITALS
A. The Shareholders together own all of the issued and outstanding
shares of stock of MDC, and desire to sell such stock to Purchaser in accordance
with and subject to the terms and conditions set forth in this Agreement.
B. Purchaser desires to purchase said stock from the Shareholders, in
accordance with and subject to the terms and conditions set forth in this
Agreement.
C. Both the Shareholders and Purchaser recognize that prior approval of
the FCC is required before the transactions contemplated herein can be
consummated.
NOW THEREFORE, in consideration of the mutual covenants contained
herein, the Shareholders, MDC and Purchaser enter into this Agreement.
AGREEMENT
1. DEFINITIONS. As used in this Agreement, the following terms shall
have the meanings set forth below:
"AAA" means the American Arbitration Association.
"ASSERTED CLAIMS" means all Claims by Purchaser that Purchaser asserts
are payable from the Post-Closing Escrow Account.
"BTA" means Basic Trading Area, which is defined as the geographic
areas by which MDS stations are licensed. ETA boundaries are based on the Rand
XxXxxxx 1992 Commercial Atlas and Marketing Guide, 123rd edition, pp. 36-39.
"BTA RIGHTS" means the BTA authorizations issued by the FCC listed on
Schedule 6(d) to this Agreement.
"XXXX XXXXXXX MONEY" is defined in paragraph 5(a) of this Agreement.
"CASH PORTION" is (A) Twelve Million Five Hundred Thousand Dollars
($12,500,000) reduced by (B) the liabilities of MDC that will not be paid in
cash at Closing that are not Permitted Liabilities or Special Liabilities.
Copyright royalty fees, the collection of which is barred by an applicable
statute of limitations, does not constitute a liability.
"CARS" means Cable Antenna Relay Service.
"CLAIMS" is defined in paragraph 5(c) of this Agreement.
"CLOSING" means the closing of the transactions contemplated under this
Agreement.
"CLOSING DATE" means the date on which Closing occurs.
"CLOSING ESCROW ACCOUNT" is defined in paragraph 5(a) of this
Agreement.
"CLOSING FUNDS" is defined in paragraph 5(b) of this Agreement.
"CONDITIONS PRECEDENT" means conditions to Closing specified in
paragraph 11 of this Agreement.
"CONFIDENTIAL INFORMATION" means information that the disclosing party
has not disclosed generally to the public, including, without limitation,
business plans, financial information, products, services, methods, costs,
implementation processes and services, sources of supply, strategic marketing
plans, customer lists, leases and contracts, sales, profits, prices, pricing
models, pricing policies and strategies, personnel, business relationships,
product information, and information systems. Confidential Information does not
include information that was already known to the Other Party prior to
commencement of negotiations with respect to the Letter of Intent, as
established by the Other Party's records; information that becomes generally
available to the public other than as a result of a breach of the Other Party's
confidentiality obligations under paragraph 15 of this Agreement or information
that is furnished to the Other Party by a third party who is lawfully in
possession of such information and who lawfully conveys that information.
"CORPORATE ASSETS" means all assets in which MDC has any right, title
or interest as of the Closing Date, except for the Excluded Assets.
"DIRECT CLAIM" means a Claim that Purchaser asserts is payable from the
Post-Closing Escrow Account that is not based on a Third Party Claim.
"DIRECT CLAIMS NOTICE" is defined in paragraph 18(d) of this Agreement.
"DUE DILIGENCE PERIOD" means a period expiring fifteen (15) days
following the Execution Date.
"XXXXXXX MONEY" is defined in paragraph 5(a) of this Agreement.
"ELECTION PERIOD" is defined in paragraph 18(a) of this Agreement.
-2-
"ENVIRONMENTAL LAWS" means any federal, state and local statutes, laws,
regulations, ordinances, rules, judgments, orders, decrees, codes, plans,
injunctions, permits, concessions, grants, franchises, licenses, agreements and
governmental restrictions now in effect and relating to human health, the
environment or to emissions, discharges or releases of pollutants, contaminants,
Hazardous Substances or wastes into the environment or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, Hazardous Substances or
wastes or the clean-up or other remediation thereof.
"ENVIRONMENTAL LIABILITIES" means all liabilities, whether vested or
unvested, contingent or fixed, actual or potential, which arise under or are
associated with Environmental Laws and relate to actions occurring or conditions
existing prior to the Execution Date.
"ESCROW AGENT" is defined in paragraph 5(a) of this Agreement.
"EXCLUDED ASSETS" is defined in paragraph 4 of this Agreement
"EXECUTION DATE" means the date of execution of this Agreement by the
last party who signs this Agreement, as conclusively determined by the dates
noted in connection with each signature.
"FCC" means the Federal Communications Commission.
"FINAL ORDER" means an FCC action or order relating to approval of the
transfer of control of the FCC licenses and authorizations held by MDC for which
the time for filing a request for administrative or judicial review of the
action, or for the FCC to review such action on its own motion, shall have
expired without any such filing, or motion, having been made; or, in the event
of such filing or motion, it shall have been disposed of favorably to the FCC's
grant of its consent to the transfer, and the time for seeking further review of
the FCC's action consenting to the transfer shall have expired without any
request for such further review having been filed.
"HAZARDOUS SUBSTANCES" means any toxic, radioactive, caustic or
otherwise hazardous material.
"INTERIM BALANCE SHEET" is defined in paragraph 6(m) of this Agreement.
"ITFS" means Instructional Television Fixed Service.
"LETTER OF INTENT" means the letter of intent between MDC and
Purchaser, dated November 11, 1999, and executed and delivered on November 17,
1999.
"MATERIAL ADVERSE CHANGE" means a change that materially impairs the
ability of MDC to carry on its business. A Material Adverse Change would not
include a continuing deterioration of MDC's subscriber base, or a continuing
increase in MDC's churn rate.
-3-
"MDC" means Multimedia Development Corporation, a New Mexico
corporation.
"MDC's FINANCIAL STATEMENTS" is defined in paragraph 6(m) of this
Agreement.
"MDS" means Multipoint Distribution Service.
"NEWCO" means a newly formed entity owned by the Shareholders.
"NORWEST BANK" means Norwest Bank Minnesota National Association.
"NOTICE DEADLINE" is defined in paragraph 8(b) of this Agreement.
"OTHER PARTY" when used in reference to MDC means the Shareholders and
Purchaser; when used in reference to Purchaser means the Shareholders and MDC;
and when used in reference to the Shareholders means MDC and the Purchaser.
"OUTSIDE CLOSING DATE" is defined in paragraph 11 of this Agreement.
"PARTNERSHIP" means Rio Grande Wireless Cable Television Company, a New
Mexico general partnership, whose partners are MDC and People's Choice TV of
Albuquerque, Inc.
"PARTNERSHIP AGREEMENT" means the partnership agreement for the
Partnership.
"PCTV" means People's Choice TV of Albuquerque, Inc.
"PERMITTED LIABILITIES" are those liabilities that are (i) accounts
payable that are thirty (30) days or less past due; plus (ii) the indebtedness
of MDC to the FCC with respect to the BTA Rights; plus (iii) utilities that
first become due after Closing, even if attributable to a pre-Closing period,
and personal property tax liability for the calendar years ending after December
1999; plus (iv) the amount of the small business bidding credit given to MDC in
connection with the BTAs, in the event that MDC no longer is eligible for the
credit after Closing; plus (v) customer deposits; plus (vi) obligations of MDC
or the Partnership to be performed on or after the Closing Date; under the
contracts and leases listed on Schedule 6(f) to this Agreement; under a real
estate loan from Norwest Bank of New Mexico secured by a mortgage on certain
property in Las Cruces (referenced on Schedule 6(p) to this Agreement); under
three vehicle loans form First Security Bank secured by a lien on three vehicles
(referenced on Schedule 6(p) to this Agreement); under contracts and leases
entered into after the Execution Date in the ordinary course of business,
consistent with past practice; and under contracts and leases entered into in
the ordinary course of business that do not adversely effect the value of MDC or
its Stock in a material respect.
"POST-CLOSING ESCROW ACCOUNT" is defined in paragraph 5(b) of this
Agreement.
"PURCHASE PRICE" is defined in paragraph 3 of this Agreement, as set
forth in the first paragraph of this Agreement.
-4-
"PURCHASER" means New West Resources, Inc., a Texas corporation.
"REGULATED ACTIVITY" means any generation, treatment, storage,
recycling, transportation, disposal or release of any Hazardous Substances.
"SECURITIES ACTS" means the Securities Act of 1933, the New Mexico
Securities Act or any other state securities laws.
"SHAREHOLDERS" means the shareholders who, together, own all of the
issued and outstanding stock of MDC, as set forth in the first paragraph of this
Agreement.
"SPECIAL LIABILITIES" means MDC's liabilities to providers of
programming, for personal property taxes or under channel leases that are
attributable to programming provided, personal property owned, or lease payments
due in any calendar year ending on or prior to December 31, 1998.
"SPECIAL LIABILITIES ESCROW ACCOUNT" is defined in paragraph 5(d).
"STATIONS" means the MDS, ITFS and CARS stations for which MDC either
holds an FCC license, or with respect to which MDC leases excess airtime channel
capacity or operates pursuant to a management agreement.
"STOCK" means all of the issued and outstanding shares of stock in MDC.
"THIRD PARTY CLAIM" means any Asserted Claim based on a claim asserted
against MDC by a third party.
"THIRD PARTY CLAIM NOTICE" is defined in paragraph 18(a) of this
Agreement.
2. SALE OF STOCK. For the consideration and subject to the terms and
conditions set forth in this Agreement, the Shareholders agree to sell to
Purchaser, and Purchaser agrees to purchase from the Shareholders, the Stock.
3. PURCHASE PRICE. The purchase price for the Stock (the "PURCHASE
PRICE") shall be the balance remaining after (A) the sum of Twelve Million Five
Hundred Thousand Dollars ($12,500,000) is reduced by (B) the amount required to
pay or otherwise discharge all of the liabilities of MDC at Closing other than
Permitted Liabilities (it being understood that copyright royalty fees, the
collection of which is barred by an applicable statute of limitations, does not
constitute a liability).
4. EXCLUDED ASSETS. All of the following assets of MDC (the "Excluded
Assets") are excluded from the assets that Purchaser will acquire the right to
control by purchasing the Stock or that MDC will own after Closing:
-5-
(a) Prior to Closing, MDC may transfer its cable television
systems operating in and around the communities of Estancia and Mountainair, New
Mexico, consisting of franchises, certain equipment, and other assets used to
operate those systems, for nominal consideration to Newco, or to an independent
third party or parties, to be designated by MDC; PROVIDED that the proceeds of
any such transfer to an independent third party that occurs prior to Closing
shall be applied exclusively to the working capital needs of MDC prior to
Closing and/or to the discharge of liabilities of MDC that are not included in
Permitted Liabilities; and FURTHER PROVIDED that in the event Newco transfers
such assets after Closing, the proceeds of any such transfer shall be deposited
in the Special Liabilities Escrow Account if and to the extent the amount of the
then outstanding Special Liabilities exceeds the amount then on deposit in the
Special Liabilities Escrow Account.
(b) Purchaser acknowledges that MDC has represented to it that
Xxxxxx Xxxxxxxxx, Xxxxx Xxxxxxxxx and Xxxx Xxxxxxxxx purchased with their own
funds, and own, certain assets used by MDC, consisting of a fax machine in Las
Cruces, and a fax machine, a scanner, a large screen monitor, four HP and one
Canon printers, four laptop computers, certain furniture once belonging to
Xxxxxx Xxxxxxxxx'x father, a desktop computer, and two 5-drawer letter sized
filing cabinets. Xxxxxx Xxxxxxxxx, Xxxxx Xxxxxxxxx and Xxxx Xxxxxxxxx may remove
these assets from MDC's premises at or prior to Closing, after Purchaser has had
an opportunity to review, copy and backup any software, information or data
contained thereon.
5. CLOSING FUNDS, PAYMENT OF THE PURCHASE PRICE AND ESCROWS.
(a) On the Execution Date, Purchaser shall deposit $200,000.00
as xxxxxxx money in escrow with US Bank National Association. The account into
which such funds are deposited is the "CLOSING ESCROW ACCOUNT." On or before the
date that is fourteen days after the Execution Date, Purchaser shall, as
additional xxxxxxx money, deposit an additional $300,000 in escrow with the
Escrow Agent, or (in lieu of cash) shall cause to be issued an appropriate
irrevocable standby letter of credit in such amount, issued by a national bank,
and in a form reasonably acceptable to the Shareholders. The initial deposit of
$200,000, and the additional $300,000 of xxxxxxx money to the extent made in
cash, are referred to collectively as the "XXXX XXXXXXX MONEY." The total
$500,000 that NWR is to provide as xxxxxxx money is hereafter called the
"XXXXXXX MONEY." Disbursement of the Xxxx Xxxxxxx Money out of escrow shall be
made as provided in paragraphs 5(b) and 17 below. MDC and Purchaser shall
execute a Closing Escrow Agreement substantially in the form attached as Exhibit
"A" hereto.
(b) On the Closing Date, Purchaser shall deposit into the
Closing Escrow Account by wire transfer in immediately available funds, for
application at Closing in accordance with this Agreement, an additional amount
so that, together with the Xxxx Xxxxxxx Money, the total of the funds deposited
in the Closing Escrow Account is not less than the amount of the Cash Portion
(the "CLOSING FUNDS"). The Closing Funds will be disbursed by the Escrow Agent
and applied at Closing as follows: (i) first, to pay closing costs and broker
commissions payable by MDC to Xxxxxxx and Associates; (ii) second, to Norwest
Bank in an amount equal to the total outstanding indebtedness of MDC to Norwest
Bank as of the Closing Date; (iii) third, $500,000.00 shall be paid into a
separate escrow account established at Closing (the "POST-
-6-
CLOSING ESCROW ACCOUNT"); (iv) fourth, the amount of the outstanding Special
Liabilities as of the Closing Date shall be paid into a separate Special
Liabilities Escrow Account if the Shareholders exercise their option to
establish such an account as provided in paragraph 5(d), (v) fifth, the
remaining amount to Xxxxxx Xxxxxxxxx, Xxxxx Xxxxxxxxx and Xxxx Xxxxxxxxx, in
proportion to the amounts owed by MDC to each of them, against appropriate
instruments of release reciting that receipt of such payments, together with
any additional payment made pursuant to paragraphs 5(c) and 5(d) after
Closing, constitutes full satisfaction of all obligations listed on Schedule
6(x) hereto, which the Shareholders hereby agree are owed by MDC and will
constitute all of the obligations and liabilities of MDC to any Shareholder
as of the Closing Date; and (vi) sixth, any remaining amount to the
Shareholders in proportion to the amounts of their Stock. The Shareholders
executing this Agreement hereby agree that the payments to Xxxxxx Xxxxxxxxx,
Xxxxx Xxxxxxxxx and Xxxx Xxxxxxxxx for the obligations as set forth in
subpart (v) above are appropriate. The Shareholders hereby indemnify and hold
Purchaser harmless from and against any and all claims that may arise as a
result of the payment of the Purchase Price as set forth herein, such
indemnification to include reimbursement to Purchaser for all attorneys' fees
and costs incurred by Purchaser arising out of litigation involving the
payment of the Purchase Price among the Shareholders as set forth above.
(c) The amount to be paid by Purchaser at Closing into the
Post-Closing Escrow Account under paragraph 5(b)(iii) shall be held by the
Escrow Agent, pursuant to a Post-Closing Escrow Agreement substantially in the
form attached hereto as Exhibit "B," as collateral to support payment for
damages incurred by Purchaser arising from breach of any representations,
warranties and indemnities to be given by MDC and the Shareholders to Purchaser
under this Agreement. Claims by Purchaser against MDC or any Shareholder arising
under or out of such representations, warranties and indemnities, or otherwise
arising out of this Agreement (collectively the "CLAIMS") shall be limited to
the amount in the Closing Escrow Account, except this liability limitation shall
not apply to any Claims by Purchaser (i) against a Shareholder asserting that
such Shareholder committed actual fraud against Purchaser, or (ii) any Claim
against a Shareholder based on any liabilities and claims, contingent,
threatened or otherwise, other than Permitted Liabilities, of which that
Shareholder had actual knowledge at the time of Closing but failed to disclose
to Purchaser. Except for any such Claims of actual fraud and such Claims
relating to known undisclosed liabilities, Purchaser's sole recourse with
respect to any Claims shall be against the Post-Closing Escrow Account and shall
not constitute a personal liability of any of the Shareholders. If and to the
extent that any portion of the Post-Closing Escrow Account has not been applied
in payment of damages incurred by Purchaser, the balance remaining shall be
disbursed first, to Xxxxxx Xxxxxxxxx, Xxxxx Xxxxxxxxx and Xxxx Xxxxxxxxx, to the
extent he or she has not received payment in full from the Closing Escrow
Account or the Special Liabilities Escrow Account of the indebtedness or other
obligations listed on Schedule 6(x) to this Agreement, in the amount owed by MDC
to him or her at Closing, and then to the Shareholders, in proportion to the
amount of their Stock, as follows: (i) ninety (90) days after Closing, 50% of
the principal balance in the Post-Closing Escrow Account shall be disbursed,
less the amount of any Claims asserted by Purchaser in a Third Party Claims
Notice or Direct Claims Notice given by that date that have not been paid; and
(ii) one hundred eighty (180) days after Closing, the remaining balance in the
Post-Closing Escrow Account shall be disbursed, less the amount of any Claims
asserted by Purchaser in a Third Party Claims Notice or
-7-
Direct Claims Notice given by that date that have not been paid or otherwise
resolved in accordance with paragraph 18. In the case of Claims asserted by
Purchaser in a Third-Party Claims Notice or by a Direct Claim, which have not
been paid or otherwise resolved within 180 days of Closing, the balance in
the Post-Closing Escrow Account that is not disbursed as a result of such
claims shall be held in the Post-Closing Escrow Account until the Third Party
Claim or Direct Claim (as applicable) is fully satisfied or otherwise
discharged. The administration of, and the processing of Claims payable from,
the Post-Closing Escrow Account is governed by paragraph 18 below and the
escrow agreement for the Post-Closing Escrow Account.
(d) A portion of the Cash Portion equal to the amount of the
outstanding Special Liabilities as of Closing shall be deposited at Closing into
a separate escrow account, pursuant to a Special Liabilities Escrow Agreement
substantially in the form attached hereto as Exhibit "C", securing payment of
the Special Liabilities (the "SPECIAL LIABILITIES ESCROW ACCOUNT"), which shall
be listed on Schedule 13(i). The funds in the Special Liabilities Escrow Account
will be released and disbursed in the manner specified in paragraph 19. The
purpose of the procedure described in paragraph 19 is to give the Shareholders
an opportunity to negotiate the amount to be paid in satisfaction of the Special
Liabilities or to benefit from the discharge of any Special Liabilities for
which a claim has not been made prior to the expiration of the applicable
statute of limitations.
(e) Any amounts in the Special Liabilities Escrow Account to
be disbursed to the Shareholders in accordance with paragraph 19(c) shall be
disbursed (i) first, the first $150,000 to be disbursed shall be disbursed to
Xxxx Xxxxxxxxx to be used by him to the extent needed to pay, or to reimburse,
costs and expenses incurred or to be incurred by Xxxx Xxxxxxxxx (or his
successor), and reasonable compensation to him, for acting as attorney in fact
for the Shareholders, as provided in paragraph 20(m); (ii) second, the remaining
amount to Xxxxxx Xxxxxxxxx, Xxxxx Xxxxxxxxx and Xxxx Xxxxxxxxx, to the extent he
or she has not received payment in full from the Closing Escrow Account or the
Post-Closing Escrow Account of the indebtedness or other obligations listed on
Schedule 6(x) to this Agreement, in the amount owed by MDC to him or her at
Closing, and (iii) third, any remaining amount to the Shareholders, in
proportion to the amount of their Stock. The administration of, and the
processing of Special Liabilities payable from, the Special Liabilities Escrow
Account is governed by paragraph 19 below. Any surplus remaining in the $150,000
disbursed to Xxxx Xxxxxxxxx after all such costs and expenses and reasonable
compensation is paid or reimbursed shall be distributed by him in the manner
specified in subsections (ii) and (iii) above.
6. REPRESENTATIONS AND WARRANTIES OF MDC AND THE SHAREHOLDERS. MDC and
the Shareholders represent and warrant to Purchaser that the following, unless
otherwise stated below, are true on the Execution Date and shall be true on the
Closing Date:
(a) CAPITALIZATION AND SHAREHOLDER LOANS. The authorized
capital stock of MDC consists of 500,000 shares of common voting stock, of which
3,723 shares are issued and outstanding. As of the Execution Date, the issued
and outstanding Stock is registered in the names of the following persons in the
following amounts:
-8-
Percentage
Shareholder Shares Held Ownership
----------- ----------- ----------
Xxxxxx X. Xxxxxxxxx 2,755 74.00
and Xxxxx X. Xxxxxxxxx
Xxxxxx Xxxxxxxxx and 805 21.62
Xxxxxxxx Xxxxxxxxx
Xxxx X. Xxxxxxxxx 101 2.71
Xxxxxx (Xxxx) Xxxxxx 62 1.67
and Xxxxx Xxxxxx
The above amounts are subject to a possible downward adjustment in the amount
held by Xxxxxx X. Xxxxxxxxx and Xxxxx Xxxxxxxxx, not to exceed 50 shares, and a
corresponding increase in the amount of Stock held by the other shareholders.
None of the Shareholders will transfer such Stock except to another of the
Shareholders listed above. All of such outstanding Stock has been validly issued
by MDC and is fully paid and nonassessable. The issuance and sale of all of such
Stock has been in full compliance with all applicable federal and state
securities laws. MDC has no other authorized securities. There are no
subscriptions, options, warrants, call rights, conversion or exchange rights, or
other arrangements relating to the issuance and sale by MDC of any of its stock
or relating to any sale or transfer of any of the Stock which could cause the
dilution of the shares of Stock being purchased by Purchaser pursuant to this
Agreement. MDC does not own any securities, directly or indirectly, in any other
corporation. MDC has no subsidiaries.
(b) NO VIOLATION OF LAWS. Except as disclosed on Schedule 6(b)
to this Agreement (which shall be updated as of ten days prior to Closing), as
of the Closing Date, to the best of MDC's and the Shareholders' knowledge
neither MDC nor the Partnership is in material violation of, or under
investigation with respect to, and neither has been charged with or given
notice of a material violation of, any applicable law, statute, order, rule,
or regulation of any federal, state or local governmental authority or agency.
(c) LITIGATION. Except as disclosed on Schedule 6(c) to this
Agreement (which shall be updated as of ten days prior to Closing), as of the
Closing Date: (i) MDC is not subject to any judgment, award, injunction, rule,
order or decree in which relief is sought that would prevent, delay or make
illegal the transactions contemplated under this Agreement; (ii) to the best of
MDC's and the Shareholders' knowledge, there are no actions, lawsuits, audits,
investigations, claims or proceedings pending against MDC or the Corporate
Assets that, individually or in the aggregate, could reasonably be expected to
affect materially and adversely MDC; and (iii) to the best of MDC's and the
Shareholders' knowledge, there are no actions, lawsuits, audits, investigations,
claims or proceedings threatened against MDC, involving, affecting or relating
to MDC or the Corporate Assets that, individually or in the aggregate, could
reasonably be expected to affect MDC materially and adversely.
-9-
(d) FCC STATIONS. As of Closing, MDC shall hold licenses for,
or lease channel capacity on, or operate pursuant to a management agreement,
Stations listed on Schedule 6(d) to this Agreement, and MDC shall hold the BTA
Rights as listed on Schedule 6(d) to this Agreement. In addition, except as set
forth on Schedule 6(d) to this Agreement, as of Closing MDC or the Partnership
shall hold licenses for, lease channel capacity on, or control the MDS, ITFS and
CARS stations used by the Partnership serving the Albuquerque, New Mexico market
as set forth on Schedule 6(d) to this Agreement. As of Closing, MDC shall lease
channel capacity on the Stations serving the Tucumcari, New Mexico market,
except to the extent the leases relating to those stations have been terminated
prior to Closing. Each of the Stations, and the BTA Rights, are listed on
Schedule 6(d) to this Agreement.
(e) OPERATION IN ACCORDANCE WITH FCC LICENSES AND
AUTHORIZATIONS. As of Closing, except as set out on Schedule 6(e) to this
Agreement, all of the Stations associated with wireless cable television systems
then being operated by MDC or the Partnership will be operating at the
geographic locations and at the power levels specified in the FCC licenses for
each such Station or pursuant to special temporary authority issued by the FCC.
Except as set out on Schedule 6(e) to this Agreement, to the best of MDC's and
the Shareholders' knowledge, MDC has filed all reports necessary and required to
be filed with the FCC. Any and all monetary forfeitures issued by the FCC
against MDC, after all appeals have been exhausted, will have been paid by
Closing, or will be paid at Closing as a liability in reduction of the Cash
Portion. If any such forfeiture has been issued by the FCC that is on appeal at
Closing, at the option of MDC, it either will be paid at Closing as a liability
in reduction of the Cash Portion or it shall be treated as part of the Special
Liabilities in accordance with paragraph 5.
(f) LEASES AND CONTRACTS. All leases and contracts to which
MDC or the Partnership is a party, as of the Closing Date, are identified on
Schedule 6(f) to this Agreement, including but not limited to programmer
contracts, leases of MDS or ITFS channel capacity, any employment contracts,
building leases, equipment leases, and tower leases, except for contracts and
leases entered into after the Execution Date in the ordinary course of business,
consistent with past practice. Except as set forth on Schedule 6(f) to this
Agreement, to the best of MDC's and the Shareholders' knowledge, MDC and the
Partnership, as of the Execution Date, in all material respects have performed
and are not in default in their respective obligations under all such contracts
and leases. Schedule 6(f) shall be updated as of ten days prior to Closing.
There are no contracts between MDC or the Partnership, on the one hand, and any
labor unions, on the other, and there are no commitments by MDC or the
Partnership for any capital expenditures.
(g) NO VIOLATION RESULTING FROM SALE OF STOCK. The sale of the
Stock to Purchaser will not violate or result in a breach of any provision or
result in the termination of, or constitute a default or right of termination
under, or permit the acceleration of any obligation under, any material
contract, lease or mortgage to which MDC is a party, PROVIDED all necessary
consents to the transactions contemplated by this Agreement are obtained, and
FURTHER PROVIDED that this representation and warranty shall not be understood
to extend to the effect of such sale on the rights of the parties under the
Partnership Agreement or to any acceleration of liability relating to the BTA
Rights.
-10-
(h) NO LIENS. The Corporate Assets (including FCC licenses and
BTA Rights) will upon consummation of the sale of the Stock at Closing be free
and clear of all liens and encumbrances, except the lien in favor of the FCC
with respect to the BTA Rights, and any liens and encumbrances set forth on
Schedule 6(h) to this Agreement.
(i) THIRD PARTY APPROVALS. Except as disclosed on Schedule
6(i) to this Agreement, the transfer of the Stock to Purchaser shall not require
the consent or approval of any federal, state or local governmental authority or
agency, or any party to a material contract or lease to which MDC is a party.
(j) BROKERS. Except for a commission payable to Xxxxxxx and
Associates, no commission will be payable as a result of the Stock sale to any
broker retained by MDC or any Shareholder.
(k) CORPORATE ORGANIZATION. MDC is duly organized, validly
existing and in good standing under the laws of the State of New Mexico, and has
all required corporate power and authority to own, operate and lease its
properties and to carry on its business. MDC conducts business exclusively in
the State of New Mexico. MDC has previously provided Purchaser with a complete
set of MDC's articles of incorporation and bylaws, including all amendments. The
minute books and stock record books of MDC have been made available to Purchaser
and will be delivered to Purchaser at Closing. Such books contain all of MDC's
minutes and stock records.
(l) PARTNERSHIP ORGANIZATION. The Partnership is a duly
organized and validly existing general partnership organized under the laws of
the State of New Mexico. Except as described in Schedule 6(l) to this Agreement,
the Partnership has all required power and authority to own, operate and lease
its properties and to carry on its business. The Partnership conducts business
exclusively in the State of New Mexico.
(m) FINANCIAL STATEMENTS/NO UNDISCLOSED LIABILITIES. MDC has
previously delivered to Purchaser (i) its reviewed financial statement as at and
for the fiscal year ended December 31, 1998 and (ii) its interim balance sheet
(the "INTERIM BALANCE SHEET") and statement of income and cash flow for the
period from the end of MDC's last fiscal year until November 30, 1999
(collectively "MDC'S FINANCIAL STATEMENTS"). MDC's Financial Statements have
been prepared from the books and records of MDC. The books of account of MDC
have been made available to Purchaser and will be delivered to Purchaser at
Closing. To the best of MDC's and the Shareholders' knowledge, such books are
complete in all material respects. To the best of MDC's and the Shareholders'
knowledge, MDC has no liabilities or obligations of any nature (known or
unknown, absolute, accrued, contingent or otherwise) that are not fully
reflected, reserved against or disclosed in the Interim Balance Sheet, except
liabilities and obligations incurred since the date thereof in the ordinary
course of business and consistent with past practices.
(n) LIABILITIES AND OBLIGATIONS PENDING CLOSING. Except for
any borrowings from its principal lender, Norwest Bank, and debt associated with
the BTA Rights, MDC will not
-11-
incur any new liabilities or obligations prior to Closing, other than
liabilities or obligations incurred in the ordinary course of its business,
and consistent with its past practice. To the extent consistent with MDC's
fiduciary duties as managing partner, the Partnership will not incur any new
liabilities or obligations prior to Closing, other than liabilities or
obligations incurred in the ordinary course of its business, and consistent
with its past practice.
(o) AUTHORITY TO DO BUSINESS. Except as described on Schedule
6(o) to this Agreement, MDC or the Partnership possesses all governmental
authorizations, including licenses, permits, approvals, registrations and other
rights of every kind and character necessary under law for MDC and the
Partnership to construct, operate, maintain and use the Corporate Assets and the
Partnership assets, respectively; and to the best of MDC's and the Shareholders'
knowledge, MDC is in compliance in all material respects with the terms of all
of these authorizations (excluding FCC licenses, as FCC compliance, construction
and operational representations and warranties are covered by paragraph 6(e)).
None of the authorizations (including FCC licenses) has been or is threatened to
be revoked, cancelled, suspended or materially or adversary modified. Except as
described on Schedule 6(o) to this Agreement, to the best of MDC's and the
Shareholders' knowledge, as of the Execution Date, neither MDC nor the
Partnership has infringed and is not infringing, and has not engaged and is not
engaging in the unauthorized use or misappropriation of, any trade secrets,
copyrights or patents of any other persons or entities, and there are no such
actual or threatened claims or assertions against MDC or the Partnership.
(p) TITLE TO AND CONDITION OF ASSETS. Except as set forth on
Schedule 6(p) to this Agreement: (i) MDC and the Partnership each has good and
marketable title to the personal and intangible property that MDC and the
Partnership purports to own and all such personal property is free and clear of
all liens, claims, and security interests; (ii) MDC has valid and binding
leases, easements and other similar agreements for the part of the Corporate
Assets that consist of tangible personal property and real estate interests that
MDC uses but does not own; and (iii) to the best of MDC's and the Shareholders'
knowledge, MDC is not in default, nor has MDC received as of the Execution Date
a notice of alleged default, under any such lease, easement or agreement as to
which a default would materially detract from the value of the property subject
to the lease, easement or agreement, or would interfere with the use of such
property. The tangible personal property included in the Corporate Assets has
been made available for inspection by Purchaser, and to the best of MDC's and
the Shareholders' knowledge. except as set forth on Schedule 6(p) to this
Agreement. is in operating condition as of the Execution Date. All personal
property and intangible property that MDC or the Partnership owns as of the
Execution Date, or in which either of them has any interest, having a
replacement cost of $1,000 or more per item as of the Execution Date, is listed
on Schedule 6(p) to this Agreement.
(q) ENVIRONMENTAL MATTERS. To the best of MDC's and the
Shareholders' knowledge, no written notice, notification, demand, request for
information, citation, summons, complaint or order has been received, no
complaint has been filed, no penalty has been assessed and no investigation or
review is pending or has been threatened by a governmental authority or other
person with respect to any alleged violation by MDC of any Environmental Laws,
or the
-12-
alleged failure by MDC to have any environmental permit, certificate,
license, approval, registration or authorization required in connection with
the operation of a wireless cable system operated by MDC or in connection
with any Regulated Activity conducted by MDC. To the best of MDC's and the
Shareholders' knowledge, MDC has no material Environmental Liabilities and
there has been no release of Hazardous Substances into the environment by MDC
or with respect to any of its properties which has had, or would reasonably
be expected to have, a material adverse effect on MDC.
(r) PARTNERSHIP INTEREST. MDC owns a 73% general partnership
interest in the Partnership. Prior to Sprint's acquisition of PCTV or an
affiliated entity, PCTV owned the other 27% general partnership interest in the
Partnership. As of the Execution Date, MDC has received no notice relating to
any transfer of ownership of PCTV's general partnership interest, or to the
effect of Sprint's acquisition of PCTV or an affiliated entity, if any, on the
Partnership.
(s) EMPLOYEE CONTRACTS AND BENEFITS. Prior to Closing, neither
MDC nor the Partnership will have made any wage or salary increases except in
the ordinary course of business. This provision shall not preclude MDC from
giving bonuses to its employees who remain employed by MDC until Closing, other
than employees who are also Shareholders, officers or directors of MDC, on such
terms and conditions as MDC in its sole discretion determines; PROVIDED THAT (x)
the aggregate amount of the bonuses shall not exceed $250,000, (y) the agreement
under which MDC commits to give the bonuses will provide that the employees
shall remain at-will employees in accordance with the policies set forth in
MDC's employee handbook, and (z) no liability on the part of MDC for such
bonuses shall remain after Closing. Except as set forth on Schedule 6(s) to this
Agreement, neither MDC nor the Partnership has any contracts with any of their
respective employees, or any pension, profit sharing, deferred compensation, or
other retirement plans, or any medical, health, or disability plans or
insurance. MDC will not enter into any contracts with any of its employees or
any prospective employees prior to Closing that will continue after Closing or
that contain any obligations to be performed after Closing.
(t) TAXES. Except for personal property tax reporting, MDC has
filed all federal, state and local tax returns required to be filed by it.
Except for personal property taxes, MDC has paid all taxes that are due and
payable pursuant to such returns. Except for an audit of MDC's 1995 federal
income tax return, as of the Execution Date neither the Internal Revenue Service
nor any state or local taxing authorities has audited any such tax returns, and
there are no outstanding agreements by MDC with respect to such returns or
waivers extending the statutory period of limitation applicable to any tax
returns. To the best of MDC's and the Shareholders' knowledge, MDC has withheld
proper and accurate amounts from its employees' compensation in compliance with
applicable withholding requirements.
(u) AUTHORITY TO SELL THE STOCK. MDC will use its reasonable,
best efforts to obtain all consents and approvals for the sale of the Stock to
Purchaser that are a condition to Closing, unless waived by Purchaser
(reasonable, best efforts does not include giving third parties additional
compensation or materially modifying agreements).
-13-
(v) FAA DETERMINATIONS OF NO HAZARD TO AIR NAVIGATION. As of
Closing, all necessary FAA determinations of no hazard to air navigation for all
MDC facilities on towers presently employed in connection with MDC's operating
wireless cable systems will have been obtained.
(w) SHAREHOLDER DIVIDENDS. From the date of execution of the
Letter of Intent until Closing, neither MDC nor the Partnership will pay any
dividends or make any distributions to any of the Shareholders.
(x) INDEBTEDNESS TO SHAREHOLDERS. Each of the transactions
giving rise to the indebtedness or other obligations of MDC to the Shareholders
to be paid at Closing was duly authorized by all necessary corporate action, or
are hereby ratified by the Shareholders in all respects, and are valid
obligations of MDC. The execution, delivery and performance of this Agreement,
including the application of the Cash Portion in accordance with paragraph 5,
has been duly authorized by all necessary corporate action of MDC and is hereby
approved by the Shareholders. The indebtedness of MDC to the Shareholders, to be
paid at Closing in accordance with paragraph 5(b) above, is summarized on
Schedule 6(x) to the Agreement.
7. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser represents
and warrants to MDC and the Shareholders that the following are true on the
Execution Date of this Agreement and shall be true on the Closing Date:
(a) DUE ORGANIZATION. Purchaser is a corporation duly
organized and validly existing and in good standing under the laws of the State
of Texas, with all requisite corporate power and authority to own, operate and
lease its properties and carry on its business now being conducted.
(b) AUTHORITY. Purchaser has full corporate power and
authority to execute and deliver this Agreement and to consummate the purchase
of the Stock. This Agreement will constitute a valid and binding obligation of
Purchaser enforceable against it in accordance with its terms.
(c) QUALIFICATION TO HOLD LICENSES. Purchaser is qualified to
hold FCC licenses.
(d) NO VIOLATION. Neither the execution of this Agreement nor
the consummation of Purchaser's purchase of the Stock will (i) violate or result
in a breach of any provision or result in the termination of, or constitute a
default or right of termination under, or permit the acceleration of any
obligation under, any material contract, lease or mortgage to which Purchaser is
a party or to which it is bound; or (ii) require any approval of any third
party, including but not limited to any approval of any federal, state or local
governmental authority, except for FCC approval of the transfer of control of
the FCC licenses and authorizations held by MDC from the Shareholders to
Purchaser.
-14-
8. DUE DILIGENCE PERIOD.
(a) Prior to the expiration of the Due Diligence Period,
Purchaser shall have completed its due diligence investigation satisfactory to
Purchaser with respect to MDC's assets and business, MDC's contracts,
agreements, books, records and documents relating to its assets and business,
and the Stock. Purchaser may terminate this Agreement prior to the expiration of
the Due Diligence Period and receive a full refund of all Xxxxxxx Money paid if
(i) Purchaser discovers anything after execution of this Agreement and prior to
the expiration of the Due Diligence Period that, in Purchaser's opinion, would
have a material adverse affect on the value of MDC's business or assets or the
value of the Stock, and (ii) Purchaser gives written notice of the same to MDC
prior to the expiration of the Due Diligence Period, and MDC fails to cure the
deficiency within thirty days of receipt of such notice. Within 10 days after
notice to Purchaser of such cure, Purchaser will respond to Seller regarding
whether all cured objections are satisfactory to Purchaser. If Purchaser fails
to respond timely, the deficiency will be deemed to be waived. Upon termination
of this Agreement pursuant to this paragraph 8(a), neither party shall have any
liability to the other.
(b) Purchaser by executing this Agreement gives notice to MDC
that the arrangement between MDC and PCTV is acceptable to Purchaser.
9. COOPERATION. Upon the terms and subject to the conditions set out in
this Agreement, MDC and Purchaser each shall use all reasonable best efforts to
take, or cause to be taken, all appropriate action, and to do, or cause to be
done, all things necessary, proper or advisable under law to obtain all
financing, consents, approvals, authorizations and orders that are required to
consummate the transactions contemplated by this Agreement, including all
consents, approvals, authorizations, and orders from the FCC that are necessary
for the consummation of the transactions contemplated by this Agreement. Without
limitation to the foregoing, within fifteen (15) days after the Execution Date,
the parties shall file with the FCC applications seeking authorization for the
transfer of control to Purchaser of the FCC licenses and authorizations held by
MDC. The parties shall cooperate with each other and shall use reasonable best
efforts to prosecute such applications with diligence and shall diligently
oppose any objections to such applications to the end that each application, as
soon as practicable, shall be granted by the FCC and such grants shall no longer
be subject to any further administrative or judicial review. Prior to Closing
Purchaser shall communicate and coordinate in advance with Xxxx Xxxxxxxxx or
Xxxx Xxxxxxxx all of Purchaser's requests to inspect or obtain copies of MDC's
documents, or to speak with any employees of MDC, and Purchaser shall conduct
such inspections and communications in a manner that does not interfere with the
operation of MDC's business.
10. COVENANTS.
(a) COVENANTS OF THE SHAREHOLDERS. Between the Execution Date
and the Closing Date, the Shareholders shall cause MDC, except as otherwise
specifically consented to in writing by Purchaser, to conduct the operations
of the business in of MDC in the ordinary course.
-15-
(b) COVENANTS OF PURCHASER. Purchaser acknowledges that Cap
Rock Electric Cooperative, Inc. has agreed for the benefit of MDC to assist
Purchaser, by providing a guarantee if necessary for Purchaser to obtain
financing to close the transactions contemplated by this Agreement. Purchaser
shall use its reasonable best efforts to obtain a written commitment for
financing of not less than $12,500,000 on or prior to April 1, 2000 that is
reasonably acceptable to MDC as provided in paragraph 17(b). To the extent
Purchaser cannot obtain such a commitment without using a guaranty from its
parent, Cap Rock Electric Cooperative, Inc., Purchaser will seek such financing
by using a guaranty from Cap Rock Electric Cooperative, Inc.
11. CONDITIONS TO CLOSING.
(a) Purchaser's obligations to close shall be subject to
satisfaction of each of the following Conditions Precedent, unless waived by
Purchaser: (i) the Shareholders' representations in this Agreement are true in
all material respects; (ii) all material governmental consents or approvals
required for the sale of the Stock, and all consents or approvals of third
parties that are required under the terms of material contracts and leases upon
the sale of the Stock shall have been granted; (iii) Norwest Bank will release
its liens against the assets of MDC, and the Stock, at Closing in exchange for
payment in full of all obligations owed by MDC to Norwest Bank; the Stock shall
be free and clear of all liens and security interests; and except as otherwise
provided in this Agreement the assets of MDC shall be free and clear of all
liens and security interests; (iv) there shall have occurred no Material Adverse
Change of MDC between the expiration of the period covered by the Interim
Balance Sheet and Closing, other than changes of a general economic nature,
matters affecting the wireless cable industry generally, or matters arising
from legislation, rulemaking or regulations; (v) delivery of an opinion
letter from MDC's counsel, a specimen form of which is attached to this
Agreement as Exhibit "D," with the qualifications and exceptions set out in
Exhibit "D" or as otherwise reasonable and appropriate for this type of
transaction; (vi) Xxxxxx X. Xxxxxxxxx, Xxxxx Xxxxxxxxx and Xxxx Xxxxxxxxx
shall have executed and delivered to Purchaser at Closing non-competition
agreements, in the form attached hereto as Exhibit "E," prohibiting them,
without Purchaser's prior written consent, for a period of five (5) years
following Closing, from engaging directly or indirectly, whether as an
employee, owner, partner, agent, shareholder, director or otherwise, in any
business offering wireless cable services for video, telephone, computer data
or Internet access, or any such services provided over an MMDS or other
broadband wireless system in the New Mexico markets where MDC engages in
business or holds FCC licenses on the Closing Date: provided that this
Agreement does not preclude any of the Mickelsons from purchasing stock,
bonds or other securities in any company traded on a nationally recognized
stock exchange; (vii) this Agreement has not been terminated in accordance
with the terms of paragraphs 8 and 17(a) or paragraph 17(b) or paragraph
17(c); and (viii) the Outside Closing Date has not yet occurred (this
Condition Precedent is satisfied until the Outside Closing Date occurs).
(b) MDC's and the Shareholders' obligations to close shall be
subject to satisfaction of each of the following Conditions Precedent, unless
waived by MDC: (i) Purchaser's representations in this Agreement are true in all
material respects; (ii) all material governmental consents or approvals required
for the purchase of the Stock shall have been granted; and all consents or
approvals of third parties that are required under the terms of
-16-
material contracts and leases upon the purchase of the Stock, shall have been
granted or waived by Purchaser; (iii) Purchaser shall have received all
necessary approvals (corporate or otherwise) for the purchase of the Stock
pursuant to this Agreement; (iv) delivery of an opinion letter from
Purchaser's counsel, a specimen form of which is attached to this Agreement
as Exhibit "F," with the qualifications and exceptions set out in Exhibit "F"
or as otherwise reasonable and appropriate for this type of transaction; (v)
the Outside Closing Date has not yet occurred (this Condition Precedent is
satisfied until the Outside Closing Date occurs), and (vi) this Agreement has
not been terminated in accordance with the terms of paragraphs 8 and 17(a) or
paragraph 17(b) or paragraph 17(c).
12. CLOSING. Closing shall take place in Albuquerque, New Mexico within
two weeks from the date that FCC approval of the transfer of control of the FCC
licenses for the Stations from the Shareholders to Purchaser has become a Final
Order or on such later date that all Conditions Precedent have occurred or been
waived. However, in no event shall Closing be held later than August 1, 2000,
unless MDC and Purchaser mutually agree to extend such date (the "OUTSIDE
CLOSING DATE").
13. CLOSING DELIVERIES OF THE SHAREHOLDERS AND MDC. After Closing,
Purchaser as owner of all of the Stock shall have full access to the plants,
properties, and books and records, contracts and leases, licenses and
authorizations of MDC, except the Shareholders may retain and keep confidential
from MDC and Purchaser any documents and information within the scope of the
attorney-client, work product or similar privileges that inure to MDC relating
to the negotiation or preparation of the Letter of Intent or this Agreement, or
otherwise relating to the sale of the Stock. On the Closing Date, the
Shareholders or MDC shall deliver the following documents and instruments to
Purchaser, each of which shall be in a form reasonably acceptable to Purchaser:
(a) STOCK CERTIFICATES. The Shareholders shall deliver to
Purchaser certificates evidencing all of the Stock, duly endorsed for transfer
to Purchaser.
(b) FCC APPROVAL. MDC shall deliver to Purchaser evidence that
the FCC has approved the transfer of control of the FCC licenses held by MDC
from the Shareholders to Purchaser.
(c) CONSENTS OF THIRD PARTIES UNDER CONTRACTS AND LEASES. MDC
shall deliver to Purchaser written consents of parties to material contracts and
leases to which MDC as of the Closing Date is a party, if such consents are
required under the terms of the contracts and leases upon the sale of the Stock,
unless the obtaining of any such consents is waived by Purchaser.
(d) LIEN RELEASES. MDC shall deliver to Purchaser evidence
that there are no liens against any of the Corporate Assets, in the form of a
UCC lien search report on MDC conducted at the office of the Secretary of State
for the State of New Mexico, and a UCC fixture filing, tax lien and judgment
lien search report conducted at the offices of the Clerk of Bernalillo County,
New Mexico, both dated within ten days prior to the Closing Date, which reports
disclose no liens of record except the lien in favor of the FCC with respect to
the BTA Rights,
-17-
any liens and encumbrances set forth on Schedule 6(h) to this Agreement, and
any liens for which lien releases are delivered to Purchaser at Closing.
(e) SECRETARY'S CERTIFICATE. MDC shall deliver to Purchaser a
secretary's certificate of MDC certifying that Board of Directors' resolutions
authorizing the execution of this Agreement and the consummation of the
transactions contemplated hereunder have been adopted and are in full force and
effect, and verifying the incumbency of the officers of MDC. Such resolutions
shall be restated in or attached to the secretary's certificate.
(f) GOOD STANDING CERTIFICATE. MDC shall deliver to Purchaser a
good standing certificate for MDC issued by the Public Regulatory Commission of
the State of New Mexico and dated within ninety days prior to Closing.
(g) OPINION OF COUNSEL. MDC shall deliver to Purchaser an
opinion of MDC's counsel in the form attached hereto as Exhibit "D."
(h) RESIGNATIONS OF DIRECTORS AND OFFICERS. MDC shall deliver
to Purchaser written resignations of all of the directors and officers of MDC,
effective upon Closing, which shall be deemed accepted by MDC immediately. The
vacancies created by such resignations shall be filled by persons designated by
Purchaser.
(i) SPECIAL LIABILITIES. MDC shall deliver to Purchaser a new
Schedule 13(i) certifying the amount of Special Liabilities outstanding as of
the Closing Date, and (i) in the case of programming and channel lease Special
Liabilities, scheduling the dates that are six years after the programming in
question was provided, or the lease payments in question were due, for which
payment has not been made (which is when the application statute of limitations
with respect to the liability will expire), and (ii) in the case of personal
property tax Special Liabilities, scheduling the dates that are ten years after
the end of the relevant tax year for which payment has not been made (which is
when the application statute of limitations with respect to the liability will
expire). Schedule 13(i) is further described in paragraph 19(a) of this
Agreement.
(j) CORPORATE NOTEBOOK. The Shareholders shall deliver the
minute books and other corporate records.
(k) OTHER DOCUMENTS. MDC shall deliver to Purchaser such other
documents, instruments, and considerations as are required under this Agreement
or to consummate the transactions contemplated under this Agreement, or as may
be reasonably requested by Purchaser, including but not limited to the escrow
agreements for the Post-Closing Escrow Account and Special Liabilities Escrow
Account executed by the Shareholders as contemplated by this Agreement.
14. CLOSING DELIVERIES OF PURCHASER. Purchaser shall prepare and
deliver the following instruments and consideration to the Shareholders on the
Closing Date:
(a) CLOSING FUNDS. The Closing Funds, as provided in paragraph
5, in
-18-
immediately available funds.
(b) OPINION OF COUNSEL. An opinion of Purchaser's counsel in
the form attached hereto as Exhibit "F."
(c) SECRETARY'S CERTIFICATE. Secretary's certificates of
Purchaser certifying that Board of Directors' resolutions authorizing the
execution of this Agreement and the consummation of the transactions
contemplated hereunder have been adopted and are in full force and effect, and
verifying the incumbency of the officers of Purchaser. Such resolutions shall be
restated in or attached to the secretary's certificate.
(d) OTHER DOCUMENTS. Such other documents, instruments, and
considerations as are required under this Agreement or to consummate the
transactions contemplated under this Agreement, or as may be reasonably
requested by the Shareholders or MDC, including but not limited to Post-Closing
Escrow Account and Special Liabilities Escrow Account executed by Purchaser as
contemplated by this Agreement.
15. CONFIDENTIALITY.
(a) MDC, the Shareholders and Purchaser acknowledge that they
will have access to Confidential Information of the Other Party. MDC, the
Shareholders and Purchaser each agree for a period of two (2) years each will
treat all of the Other Party's Confidential Information as confidential, and
shall not disclose the same or permit it to be disclosed to any person (except
as authorized herein, as required by law, or with the prior written consent of
the Other Party), and shall not use the Confidential Information for any purpose
other than as expressly authorized herein or by the Disclosing Party in writing.
MDC and Purchaser shall maintain adequate security procedures to prevent the
theft or loss of any of the Confidential Information, and in the event of loss
or inability to account for any of the Confidential Information, shall
immediately notify the Other Party and shall indemnify the Other Party with
respect to the same. MDC and Purchaser may disclose the Confidential Information
only to their respective employees, attorneys, and accountants with a need to
know the same in connection with the performance of due diligence or the
exercise of any rights under this Agreement. MDC and Purchaser shall have an
acknowledgment signed by their respective employees who have access to any of
the Confidential Information that they will be bound by and will comply with
these confidentiality provisions. Purchaser hereby consents to MDC's disclosure
of Purchaser's Confidential Information to Norwest Bank Minnesota, N.A. and
Xxxxx Xxxxxxxxx. If MDC or Purchaser receive any request or demand, by subpoena,
request for production, or otherwise, to disclose any part of the Confidential
Information, the party receiving the request will immediately notify the Other
Party in writing, will cooperate with the Other Party to permit the Other Party
to object to the document production, and will not disclose any Confidential
Information except to the extent required to do so by order of any court or
governmental or administrative body. If this Agreement is terminated prior to
Closing, Purchaser shall return to MDC all copies of all documents Purchaser
obtained from MDC. The confidentiality provisions set out in this paragraph 15
shall survive Closing, and shall remain in full force and effect if Closing does
not occur.
-19-
16. THIRD PARTY COMMUNICATIONS.
(a) Prior to Closing, neither Purchaser, nor anyone on
Purchaser's behalf, shall meet or communicate with any of the parties to any of
the contracts and leases to which MDC or the Partnership is a party, without
MDC's prior written consent and MDC's approval of the communication, or MDC's
participation in any meeting or communication, as appropriate.
(b) Prior to Closing, neither Purchaser, nor anyone on
Purchaser's behalf, shall meet or communicate with any person holding a claim
against MDC that is a Special Liability, without MDC's prior written consent and
MDC's approval of the communication. After Closing, until a Special Liability is
satisfied in full or otherwise discharged, neither Purchaser nor MDC, nor anyone
on Purchaser's or MDC's behalf, shall meet or communicate with any person
holding a claim against MDC that is a Special Liability, in regard to such
Special Liability, without the Shareholders' prior written consent and the
Shareholders' approval of the communication. If, after Closing, Purchaser or MDC
is contacted directly by any person holding a claim against MDC that is a
Special Liability, Purchaser and MDC shall refer such person to Xxxx X.
Xxxxxxxxx (or his successor attorney in fact under paragraph 19).
17. TERMINATION PRIOR TO CLOSING.
(a) Purchaser may terminate this Agreement prior to the
expiration of the Due Diligence Period in accordance with paragraph 8(a) and
receive a full refund of all Xxxxxxx Money paid, in which event neither party
shall have any liability to the other.
(b) MDC may terminate this Agreement if Purchaser shall have
failed for any reason to obtain written, executed commitments for financing of
not less than $12,500,000 by April 1, 2000 or within such longer period to which
MDC may in its sole discretion agree in writing; provided that any such
commitments obtained by Purchaser must be from reputable lender(s) and/or
investor(s) with the financial ability immediately to perform under the
commitments (as reasonably determined by MDC) and must be conditioned only upon
Closing, releases of liens against MDC's assets (other than liens described on
Schedule 6(h)), and the execution of documents already approved as to form by
the lender(s) or investor(s) and Purchaser. Purchaser shall promptly furnish any
information requested by MDC to evaluate any financing commitment, and shall
permit MDC to communicate with the financing sources to verify the financing.
MDC shall not be required to take risks with respect to whether any funding
source will be capable of performing under its financing commitment. In
addition, MDC may terminate this Agreement if Purchaser has notified MDC prior
to April 1, 2000 that Purchaser has determined it will not be able to obtain
financing as necessary to consummate the sale of the Stock pursuant to this
Agreement.
(c) MDC may terminate this Agreement if any consents or
approvals of a third party that are required under the terms of a material
contract or lease upon the sale of the Stock cannot be obtained, and Purchaser
does not waive such consent or approval within fifteen (15) days after MDC gives
Purchaser written notice that such consent cannot be obtained.
-20-
(d) Purchaser shall be entitled to a full refund of the
Xxxxxxx Money, which shall be its exclusive remedy, and neither party shall have
any liability to the other, if (i) Purchaser elects to terminate this Agreement
for failure of any of the Conditions Precedent to Purchaser's obligation to
close, or pursuant to paragraph 17(a); or (ii) MDC elects to terminate this
Agreement pursuant to paragraph 17(c); or (iii) MDC elects to terminate this
Agreement pursuant paragraph 17(b), provided NWR has complied with its
obligations under paragraph 10(b).
(e) If Purchaser fails to purchase the Stock pursuant to this
Agreement in breach of its obligations hereunder, or otherwise materially
breaches any of its obligations under this Agreement, or if Purchaser notifies
MDC after April 1, 2000 that Purchaser has determined it will not be able to
obtain financing as necessary to consummate the sale of the Stock pursuant to
this Agreement, then MDC and the Shareholders may terminate this Agreement, and,
as their exclusive remedy against Purchaser, shall be entitled either (i) to
direct the Escrow Agent, in accordance with the escrow instructions to be given
in accordance with paragraph 5(a), to pay the entire balance of the Xxxxxxx
Money to MDC in accordance with the directions of the Shareholders or (ii) if
the Xxxx Xxxxxxx Money is less than $500,000, to take the action authorized in
clause (i) and, in addition, MDC shall be entitled to draw on the irrevocable
letter of credit either by presenting an appropriate demand upon the issuer, or
directing the Escrow Agent to do so, and in either case in accordance with the
terms of the letter of credit. If Purchaser disputes MDC's entitlement to the
Xxxxxxx Money, the Escrow Agent shall continue to hold the Xxxxxxx Money and the
irrevocable letter of credit shall remain in effect and available to be drawn
upon, until the dispute is resolved by agreement of the parties or by
arbitration as set forth in paragraph 20(n).
(f) If, prior to Closing, MDC materially breaches any of its
obligations under this Agreement, Purchaser may either (i) waive the breach and
close; or (ii) Purchaser may terminate this Agreement if MDC fails to cure such
breach within thirty (30) days after receipt of written notice of default from
Purchaser. If Purchaser shall elect to terminate this Agreement, Purchaser shall
be entitled as its exclusive remedy against MDC and the Shareholders to
Purchaser's actual damages, not to exceed $250,000, excluding any lost profits
or other consequential damages even if MDC and the Shareholders have been
advised of the possibility of such damages.
18. CLAIMS PAYABLE FROM THE POST-CLOSING ESCROW ACCOUNT. All Asserted
Claims shall be made and resolved as follows:
(a) THIRD PARTY NOTIFICATION. Purchaser and MDC shall notify
the Shareholders and the escrow agent under the Post-Closing Escrow Agreement of
any Third Party Claim, within ten (10) days of receiving notice of such Third
Party Claim, describing in reasonable detail the amount of and alleged basis for
the Third Party Claim, with a copy of all documents in MDC's or Purchaser's
possession relating to such Third Party Claim and any pleadings or other
documents served on MDC by the third party (the "THIRD PARTY CLAIM NOTICE").
Within thirty (30) days after receipt of any Third Party Claim Notice (the
"ELECTION
-21-
PERIOD"), the Shareholders shall notify MDC, the Purchaser and the
escrow agent (i) whether the Shareholders dispute payment of the Third Party
Claim from the Post-Closing Escrow Account, and (ii) whether the Shareholders
desire, at the Shareholders' sole cost and expense, to defend MDC against any
such Third Party Claim.
(b) DEFENSE OF THIRD PARTY CLAIM BY THE SHAREHOLDERS. The provisions
in this subparagraph (b) apply only if the aggregate amount specified by the
claimant(s) of all Asserted Claims for which a Third Party Claim Notice or
Direct Claim Notice has been given does not exceed the amount in the
Post-Closing Escrow Account: If the Shareholders (acting through the Agent)
notify MDC and Purchaser within the Election Period that the Shareholders
dispute that the potential liability to Purchaser based on a Third Party
Claim is payable from the Post-Closing Escrow Account, or that the
Shareholders elect to assume the defense of the Third Party Claim, then the
Shareholders shall have the right to negotiate a resolution of or defend such
Third Party Claim by all appropriate proceedings (the cost and expense of
which shall be payable from the Post-Closing Escrow Account), which
proceedings shall be prosecuted diligently by the Shareholders to a final
conclusion or settled at the discretion of the Shareholders in accordance
with this paragraph 18(b). The Shareholders shall have full control of such
defense and proceedings, including any compromise or settlement thereof. MDC
is hereby authorized during the Election Period, but prior to receipt of
notice that the Shareholders elect to assume the defense of the Third Party
Claim, to file any motion, answer, or other pleading that MDC reasonably
shall deem necessary to file during such period to protect MDC's interests
that is not unnecessarily prejudicial to the Shareholders (the cost and
expense of which shall be payable from the Post-Closing Escrow Account). If
requested by the Shareholders, MDC and Purchaser shall cooperate in defending
against any Third Party Claim which the Shareholders elect to contest (the
cost and expense of which shall be payable from the Post-Closing Escrow
Account), including, without limitation, the making of a related counterclaim
against the person asserting the Third Party Claim or any cross-complaint
against any person. Notwithstanding anything in this paragraph 18(b) to the
contrary, the Shareholders shall not, without the written consent of MDC, (x)
settle or compromise any action, suit or proceeding or consent to the entry
of any judgment which does not include the delivery by the claimant or
plaintiff to MDC of a written release of MDC from all liability in respect of
such action, suit or proceeding or (y) settle or compromise any action, suit
or proceeding in any manner that may materially and adversely affect MDC.
(c) DEFENSE OF THIRD PARTY CLAIM BY MDC. If the aggregate amount
specified by the claimant(s) of all Asserted Claims for which a Third Party
Claim Notice or Direct Claim Notice has been given exceeds the amount in the
Post-Closing Escrow Account, or if the Shareholders fail to notify MDC,
Purchaser and the Escrow Agent within the Election Period that the Shareholders
elect to defend MDC pursuant to paragraph 18(a), or if the Shareholders elect to
defend MDC pursuant to paragraph 18(a) but fail to diligently defend against or
settle the Third Party Claim, then MDC shall have the right to defend the Third
Party Claim by all appropriate proceedings (the cost and expense of which shall
be payable from the Post-Closing Escrow Account), which proceedings shall be
diligently defended by MDC to a final nonappealable order of a court of
competent jurisdiction or settled. MDC shall have full control of such defense
and proceedings; PROVIDED, HOWEVER, that MDC may not enter into, without the
Shareholders' written
-22-
consent, which shall not be unreasonably withheld, any compromise or
settlement of such Third Party Claim. Notwithstanding the foregoing, if the
Shareholders have given a written notice to Purchaser, MDC and the escrow
agent to the effect that the Shareholders dispute that the Third Party Claim
is payable from the Post-Closing Escrow Account, then (i) if such dispute is
resolved in favor of the Shareholders by final, nonappealable order of a
court of competent jurisdiction (including an order on an arbitrator's
decision), the cost and expense of MDC's defense shall be borne by MDC and
shall not be payable from the Post-Closing Escrow Account and (ii) if such
dispute is resolved in favor of MDC by final, nonappealable order of a court
of competent jurisdiction (including an order on an arbitrator's decision),
the cost and expense of MDC's defense shall be payable from the Post-Closing
Escrow Account.
(d) DIRECT CLAIMS. If Purchaser should have a Direct Claim,
Purchaser shall transmit to the Shareholders a written notice (the "DIRECT CLAIM
NOTICE") describing in reasonable detail the nature of the Direct Claim,
specifying the amount of damages attributable to such Direct Claim and how
Purchaser calculated the damages, and the nature and basis of Purchaser's
request for payment of the Direct Claim from the Post-Closing Escrow Account
under this Agreement. If the Shareholders do not notify Purchaser in writing
within forty-five (45) days from its receipt of the Direct Claim Notice that the
Shareholders dispute such Direct Claim, the Direct Claim specified by Purchaser
in the Direct Claim Notice shall be deemed payable from the Post-Closing Escrow
Account. If the Shareholders have timely disputed such Direct Claim, as provided
above, such dispute shall be determined in accordance with paragraph 20(n) of
this Agreement.
(e) PAYMENT FROM POST-CLOSING ESCROW ACCOUNT. Payments of all
amounts to be paid from the Post-Closing Escrow Account pursuant to paragraph
5(c) above shall be made as set forth in the Post-Closing Escrow Agreement.
(f) POST-CLOSING ESCROW AGREEMENT CONTROLS. In the event of any
conflict between the Post-Closing Escrow Agreement and this Agreement, the
Post-Closing Escrow Agreement shall control.
19. SPECIAL LIABILITIES PAYABLE FROM THE SPECIAL LIABILITIES ESCROW
ACCOUNT.
(a) MDC shall not have any recourse against the Shareholders
after Closing with respect to the Special Liabilities, except to the Special
Liabilities Escrow Account as provided in this Agreement. After Closing, the
Shareholders shall have (i) in the case of programming and excess airtime
capacity channel lease Special Liabilities, until the applicable statute of
limitations expires six years after the programming in question was provided or
the lease payments in question were due, for which payment has not been made,
and (ii) in the case of personal property tax Special Liabilities, until the
applicable statute of limitations expires on the date that is ten years after
the end of the relevant tax year for which the taxes were not paid, to negotiate
on behalf of MDC amounts to be paid in settlement or compromise of such
programming, channel lease and personal property tax Special Liabilities. Any
Special Liabilities not paid in full at the expiration of the period in which
the Shareholders are required to negotiate on behalf of MDC amounts to be paid
in settlement or compromise of such Special Liabilities (as
-23-
summarized on Schedule 13(i)), and for which the holder of the claim has not
filed suit, shall be deemed fully discharged as barred by the applicable
statute of limitations. No funds will be disbursed from the Special
Liabilities Escrow account to Shareholders except as provided in paragraph
19(c).
(b) Funds shall be disbursed from the Special Liabilities
Escrow Account to satisfy Special Liabilities as negotiated by the Shareholders.
If a creditor asserts a claim against MDC that is a Special Liability, the
procedures specified in paragraph 18 applicable to Third Party Claims shall
apply; except that "Special Liabilities Escrow Account" is substituted for
"Post-Closing Escrow Account" with respect to Third Party Claims that are
Special Liabilities. If a monetary forfeiture has been issued against MDC by the
FCC that is on appeal at Closing, which is not paid at Closing, such forfeiture
shall be a Special Liability and shall be paid from the Special Liabilities
Escrow Account only when the Shareholders determine not to pursue any further
appeals.
(c) At the end of each calendar quarter after Closing, any
amount remaining in the Special Liabilities Escrow Account in excess of the
amount of Special Liabilities that have not been paid in full or fully
discharged, shall be paid in the manner provided in paragraph 5(e). In no event
will money be disbursed from the Special Liabilities Escrow Account and paid to
the Shareholders if such payments would reduce the remaining amount in the
Special Liabilities Escrow Account to an amount that is less than the amount of
Special Liabilities that have not been paid in full or fully discharged. The
Special Liabilities Escrow Agreement sets out more fully the agreement of the
parties with respect to disbursement of funds from the Special Liabilities
Escrow Account.
(d) In the event of any conflict between the Special
Liabilities Escrow Agreement and this Agreement, the Special Liabilities Escrow
Agreement shall control.
20. MISCELLANEOUS PROVISIONS.
(a) NON-WAIVER. The failure by any party at any time to
require performance of any provision of this Agreement, or to enforce a time
deadline, shall not affect its right later to require such performance or to
strictly enforce all other time deadlines. No waiver in any one or more
instances shall be deemed to be a further or continuing waiver of any such
condition or breach in other instances or a waiver of any other condition or of
the breach of any other term, covenant, representation, or warranty.
(b) NOTICES. All notices, requests, demands, or other
communications required or permitted by this Agreement shall be in writing and
effective when received, and delivery shall be made personally or by registered
or certified mail, return receipt requested, postage prepaid, or overnight
courier or confirmed facsimile transmission, addressed as follows:
-24-
IF TO THE SHAREHOLDERS: Xxxx Xxxxxxxxx
X.X. Xxx 00000
Xxxxxxxxxxx, XX 00000
(Agent for the Shareholders)
With a copy to: Jacobvitz, Xxxxx & Xxxxxx P.C.
000 Xxxxxxxxx X.X., Xxxxx 000
Xxxxxxxxxxx, XX 00000
(Counsel for MDC)
IF TO MDC: Multimedia Development Corporation
0000 Xxxxxxxxxx Xxxx XX, Xxxxx 000
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxx
With a copy to: Jacobvitz, Xxxxx & Xxxxxx P.C.
000 Xxxxxxxxx X.X., Xxxxx 000
Xxxxxxxxxxx, XX 00000
(Counsel for MDC)
IF TO PURCHASER: New West Resources, Inc.
000 Xxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxxx
With a copy to: Xxxxxx X. Xxxx
Law Offices of Xxxxxx X. Xxxx PC
000 X. Xxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
or to such other addresses as may be specified pursuant to notice given by
either party in accordance with the provisions of this paragraph.
(c) COUNTERPARTS. This Agreement may be executed
simultaneously in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
(d) HEADINGS. The headings of the paragraphs of this Agreement
are inserted for convenience only and shall not constitute a part of this
Agreement.
(e) ENTIRE AGREEMENT. This Agreement represents the entire
agreement between the parties. Purchaser acknowledges that it is relying solely
on the representations and warranties in this Agreement, and its own due
diligence. Except for the letter from Cap Rock Electric Cooperative, Inc. to MDC
dated November 15, 1999, no prior oral or written agreements shall be binding
and this Agreement supersedes all prior agreements and understandings between
-25-
the parties with respect to the subject matter of this Agreement. NWR
acknowledges that the letter from Cap Rock Electric Cooperative, Inc. to MDC
dated November 15, 1999 was a material inducement to the Shareholders to enter
into this Agreement. This Agreement may be amended, modified, or supplemented
only by mutual written consent of the parties hereto. If assignment is
permitted, this Agreement shall be binding upon the successors, assigns, and
transferees of the parties.
(f) ATTORNEY'S FEES. Each party is entitled to recover its
reasonable attorney fees, costs, and expenses incurred by reason of enforcing
its rights under this Agreement.
(g) COSTS AND EXPENSES. MDC shall be solely responsible for
fees or commissions due to Xxxxxxx and Associates. Purchaser shall be solely
responsible for any fees or commissions due to any broker retained by it. Except
as may otherwise be expressly provided in this Agreement, each party shall pay
all of its expenses, including attorney and other professional fees, in
connection with the negotiation of this Agreement, the performance of their
respective obligations under this Agreement, and the consummation of the
transactions contemplated under this Agreement.
(h) DEADLINES FALLING ON WEEKENDS AND HOLIDAYS. If any time
periods, deadlines, or dates contained or identified in this Agreement expire,
fall on, or come due on a Saturday, Sunday, or legal holiday, then such time
period, deadline, or date shall be deemed to be the nearest day thereafter that
is not a Saturday, Sunday, or legal holiday.
(i) PRESS RELEASE. None of the parties will issue any press
release or make any other public announcement concerning this Agreement or the
transactions contemplated hereby without the consent of the other, except
disclosures required by law.
(j) ACCESS TO DOCUMENTS AFTER THE CLOSING. Prior to the
Closing Date, MDC has been a subchapter S corporation. For a period of at least
four (4) years after the Closing Date, Purchaser shall maintain in its
possession and intact all books and records of MDC relating to the ownership,
use, occupancy, or operation of the Corporate Assets that may be relevant in an
audit by any taxing authority with respect to the federal or state income tax
liabilities of the Shareholders attributable to the operation of MDC prior to
Closing. After the Closing Date, the Shareholders shall have access during
normal business hours to inspect and copy all such records, upon reasonable
request therefor, if and to the extent relevant to any tax liabilities of
Shareholders arising from MDC's operations prior to Closing. Before any of the
books, records, and files of MDC are disposed of relating to operations within
the four year period prior to Closing, notice to such effect shall be given to
the Shareholders who shall have an opportunity at their own cost and expense, to
remove, within thirty (30) days after the date of such notice, and to retain,
all or any part of such books, records and files.
(k) CERTAIN DISCLOSURES. In executing this Agreement, the
Purchaser acknowledges that it has received and carefully reviewed the
information provided by MDC and the Shareholders, including the information
referred to in paragraph 6 and the Schedules attached to this Agreement. The
Purchaser understands that the original issuance and sale of the Stock
-26-
was not registered under the Securities Acts because MDC relied upon the
availability of exemptions from the registration requirements of the
Securities Acts, including exemptions which provide for issuance of
securities in transactions not involving a public offering. To assure the
continued availability of such exemptions, the Purchaser represents and
warrants to, and covenants with, MDC and the Shareholders that it is
acquiring the Stock for its own account, for investment and not with a view
to the resale or distribution thereof, and that it has requested and received
all information which it considers to be relevant to a decision to purchase
the Stock.
(l) NOTICE REGARDING REPRESENTATION AND WARRANTIES. MDC, the
Shareholders and Purchaser shall promptly inform the Other Party upon receiving
any knowledge that any representation or warranty of the Other Party contained
in this Agreement is not true and correct in any material respect.
(m) XXXX X. XXXXXXXXX AS ATTORNEY IN FACT FOR THE SHAREHOLDERS.
(i) The Shareholders hereby irrevocably appoint Xxxx
X. Xxxxxxxxx as their agent and attorney in fact (and Xxxxxx X. Xxxxxxxxx if
Xxxx X. Xxxxxxxxx should become unwilling or unable to so act) to make and
implement decisions on behalf of the Shareholders with respect to any consents
or notices that the Shareholders are required or permitted to give under this
Agreement; negotiating and reaching any compromises or other agreements with
respect to satisfaction or discharge of Special Liabilities pursuant to this
Agreement or waiving such right(s); determining whether the Special Liabilities
Escrow Account shall be established from the Cash Portion; exercising or waiving
the rights of the Shareholders under paragraphs 18 and 19 of this Agreement
(including the control of any litigation as contemplated by such paragraphs);
executing on their behalf the escrow agreements for the Post-Closing Escrow
Account and Special Liabilities Escrow Account; designating the escrow agent(s)
to serve in connection with the Post-Closing Escrow Account and Special
Liabilities Escrow Account; and giving escrow instructions on behalf of the
Shareholders to any escrow agent as provided in this Agreement. Notwithstanding
the above, Xxxx X. Xxxxxxxxx shall have no authority to take any action or enter
into any undertaking on behalf of any Shareholder other than himself, which
imposes a personal liability or obligation on such other Shareholder. The
Shareholders agree that Xxxx Xxxxxxxxx shall be entitled to pay, or to
reimbursement of, any out of pocket costs, including attorney's fees and costs
(and gross receipts tax thereon), incurred in connection with Xxxx Xxxxxxxxx'x
actions on behalf of the Shareholders as provided in this subparagraph (i). The
Shareholders agree that such payment or reimbursement may be made from the first
$150,000 of funds to be disbursed from the Special Liabilities Escrow Account.
(ii) Purchaser shall have the right to rely on Xxxx
X. Xxxxxxxxx'x authority to act on behalf of the Shareholders as provided in
subparagraph (m)(i) above.
(iii) The Shareholders agree that Xxxx X. Xxxxxxxxx
shall have broad discretion to exercise his good faith judgment with respect to
the decisions he makes and actions he takes on behalf of the Shareholders in
accordance with subparagraph (m)(i) above, and he shall have no liability to any
of the other Shareholders arising out of or relating to such actions and
decisions so long as he acts in good faith, whether or not the other
Shareholders would have
-27-
made the same decisions or believe more funds could have been recovered from
the closing escrows.
(n) ARBITRATION.
(i) SUBMISSION TO ARBITRATION. Any issue,
controversy, or claim arising out of or relating to this Agreement or its
alleged breach that is not resolved by mutual agreement of the parties, shall
be resolved exclusively by final and binding arbitration by a panel of three
arbitrators in Albuquerque, New Mexico, in accordance with the commercial
arbitration rules of the AAA, and judgment on the award rendered by the panel
may be entered by any court having jurisdiction thereof. The arbitrators
shall be selected in accordance with the commercial arbitration rules of the
AAA then prevailing, except as follows: (1) the AAA shall provide a list of
seven and a list of eight proposed arbitrators to the parties, (2) the list
of seven proposed arbitrators shall consist entirely of attorneys licensed to
practice law in the State of New Mexico, with at least fifteen years of
experience each in the private practice of law, (3) the parties shall then
eliminate six of the designated names on the list of seven proposed
arbitrators by alternately striking one, and the person whose name remains
shall serve as one of the arbitrators, (4) the parties concurrently shall
eliminate six of the designated names on the list of eight proposed
arbitrators by alternately striking one, and the two persons whose names
remain shall serve as the other two arbitrators, (5) the party demanding the
arbitration shall make the first strike on the list of seven proposed
arbitrators, and the other party shall make the first strike on the list of
eight proposed arbitrators, and (6) if either party submits an affidavit to
the AAA setting out the factual basis under which such party claims there is
a genuine need to expedite the selection of arbitrators, the AAA shall impose
short deadlines for alternate strikes designed to expedite the selection
process. The arbitrators shall conduct the arbitration proceedings by giving
considerable weight to any genuine need for an expedited resolution of the
issues submitted to arbitration. MDC and NWR shall share equally the cost of
the arbitrators.
(ii) Notwithstanding the above, prior to Closing,
either party may seek injunctive relief in any court of competent jurisdiction
in Albuquerque, New Mexico. After Closing, all issues, controversies, and claims
arising out of or relating to this Agreement or its alleged breach that are not
resolved by mutual agreement of the parties, shall be resolved exclusively by
final and binding arbitration as provided above.
(o) ASSIGNMENT. None of the parties may sell or assign their
respective rights or interests under this Agreement, or delegate their
respective duties under this Agreement without the prior written consent of the
other parties in their sole discretion.
(p) SURVIVAL. The representations and warranties in this
Agreement shall not survive beyond the 180-day period specified in paragraph
5(c) relating to the Post-Closing Escrow Account, except with respect to Third
Party Claims and Direct Claims for which a Third Party Claim Notice or Direct
Claim Notice was given prior to the expiration of such 180-day period.
(p) OTHER. This Agreement and the legal relations between the
parties hereto
-28-
shall be governed by and construed in accordance with the laws of the State
of New Mexico. Time is of the essence of this Agreement. All time deadlines
in this Agreement may be strictly enforced. References in this Agreement to
the extension of any time by which something is to occur, either by mutual
consent of the parties or in the discretion of one the parties, does not
modify any rights of either party to strictly enforce the times specified in
this Agreement.
IN WITNESS WHEREOF, the Shareholders, MDC and Purchaser have executed
this Agreement as of the date first above written.
PURCHASER: MDC:
MULTIMEDIA DEVELOPMENT NEW
WEST RESOURCES, INC., CORPORATION, a New
a Texas corporation Mexico corporation
By: /s/ Xxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------- -----------------------------
Xxxx X. Xxxxxx Xxxxxx X. Xxxxxxxxx
Its Vice President Its President
Date signed: 2-8-00 Date signed: 7 Feb 00
THE SHAREHOLDERS:
/s/ Xxxxxx X. Xxxxxxxxx /s/ Xxxxxx Xxxxxxxxx
---------------------------- -----------------------------
XXXXXX X. XXXXXXXXX XXXXXX XXXXXXXXX
Date signed: 7 Feb 00 Date signed: February 7, 2000
/s/ Xxxxx X. Xxxxxxxxx /s/ Xxxxxxxx Xxxxxxxxx
---------------------------- ----------------------------
XXXXX X. XXXXXXXXX XXXXXXXX XXXXXXXXX
Date signed: 2-7-2000 Date signed: February 7, 2000
/s/ Xxxxxx Xxxxxx /s/ Xxxx X. Xxxxxxxxx
---------------------------- ----------------------------
XXXXXX (XXXX) XXXXXX XXXX X. XXXXXXXXX
Date signed: 2/8/00 Date signed: 2/7/00
/s/ Xxxxx Xxxxxx
----------------------------
XXXXX XXXXXX
Date signed: 2-8-00
-29-
LIST OF EXHIBITS
Exhibit A Closing Escrow Agreement
Exhibit B Post-Closing Escrow Agreement
Exhibit C Special Liabilities Escrow Agreement
Exhibit D Opinion Letter from MDC's counsel
Exhibit E Noncompetition Agreement
Exhibit F Opinion Letter from Purchaser's counsel
LIST OF SCHEDULES
All Schedules
Schedule 6(b) NO VIOLATION OF LAWS.
Schedule 6(c) LITIGATION.
Schedule 6(d) FCC STATIONS.
Schedule 6(e) OPERATION IN ACCORDANCE WITH FCC LICENSES AND AUTHORIZATIONS.
Schedule 6(f) LEASES AND CONTRACTS.
Schedule 6(h) LIENS.
Schedule 6(i) THIRD PARTY APPROVALS.
Schedule 6(l) PARTNERSHIP ORGANIZATION.
Schedule 6(o) AUTHORITY TO DO BUSINESS.
Schedule 6(p) TITLE TO AND CONDITION OF ASSETS.
Schedule 6(s) EMPLOYEE CONTRACTS AND BENEFITS.
Schedule 6(x) INDEBTEDNESS OF MDC TO THE SHAREHOLDERS TO BE PAID AT CLOSING.
Schedule 13(i) SPECIAL LIABILITIES OUTSTANDING AS OF THE CLOSING DATE.
-30-
ESCROW AGREEMENT FOR CLOSING ESCROW ACCOUNT
This Escrow Agreement (this "Agreement") is made as of February 7,
2000, by and among Xxxxxx X. Xxxxxxxxx and Xxxxx X. Xxxxxxxxx (husband and
wife), Xxxxxx Xxxxxxxxx and Xxxxxxxx Xxxxxxxxx (husband and wife), Xxxx X.
Xxxxxxxxx, and Xxxxxx (Xxxx) Xxxxxx and Xxxxx Xxxxxx (husband and wife) (the
"Shareholders"), New West Resources, Inc., a Texas corporation (the
"Purchaser"), Multimedia Development Corporation, a New Mexico corporation
("MDC") and US Bank National Association, (the "Escrow Agent").
A. Pursuant to the Agreement for Sale and Purchase (the "Purchase
Agreement") dated as of February 7, 2000 between and among the Shareholders, MDC
and the Purchaser, the Purchaser has agreed to purchase all of the issued and
outstanding Stock of MDC from the Shareholders for cash. Capitalized terms used
herein without definition shall have the meanings set forth in the Purchase
Agreement.
B. The Purchase Agreement requires the establishment of a Closing
Escrow Account with respect to the Closing Funds, as defined in the Purchase
Agreement.
C. Escrow Agent is willing to hold, invest, administer and distribute
the funds in the Closing Escrow Account in accordance with the terms of this
Agreement.
Now, therefore, in consideration of the mutual promises made in this
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
ARTICLE 1 - ESCROW FUND
1.1 APPOINTMENT AND ACCEPTANCE OF ESCROW AGENT. Shareholders and Purchaser
hereby appoint Escrow Agent as escrow agent for the purposes and upon
the terms and conditions set forth in this Agreement. Escrow Agent
hereby accepts such appointment and agrees to act as escrow agent under
this Agreement and to hold, invest and dispose of any funds received by
it under this Agreement in accordance with the terms and conditions set
forth in this Agreement.
1.2 RECEIPT OF XXXXXXX MONEY. Escrow Agent hereby acknowledges receipt of
cash in the amount of $200,000 (such sum, together with such other sums
delivered to the Escrow Agent pursuant to this Escrow Agreement,
including the investments thereof and the cash income earned thereon,
is hereafter called the "Closing Escrow Fund"). On or before the date
that is fourteen (14) days after the Execution Date, Purchaser shall
deposit an additional $300,000 in the Closing Escrow Fund, or, in lieu
of a cash deposit, shall cause an irrevocable letter of credit to be
issued by a national bank, in a form reasonably acceptable to the Agent
(acting on behalf of the Shareholders), with the only requirement for
drawing to be presentation by the Escrow Agent of a sight draft, and
deposited with the Escrow Agent. The initial deposit
EXHIBIT "A"
of $200,000, and the additional $300,000 of xxxxxxx money to the extent
made in cash, are referred to collectively as the "Xxxx Xxxxxxx Money."
The total $500,000 that Purchaser is to provide as xxxxxxx money is
hereafter referred to as the "Xxxxxxx Money."
1.3 RECEIPT OF CLOSING FUNDS. On the Closing Date, the Purchaser shall
deposit into the Closing Escrow Fund by wire transfer in immediately
available funds an additional amount so that, together with the Xxxx
Xxxxxxx Money, the total of the funds deposited in the Closing Escrow
Account is not less than the amount of the Cash Portion) (the Xxxx
Xxxxxxx Money and such additional deposit shall be referred to as the
"Closing Funds"). If Purchaser has previously caused to be issued a
letter of credit pursuant to paragraph 1.2 of this Agreement, Purchaser
may either (a) substitute cash for the letter of credit or (b) notify
Escrow Agent in writing to draw on such letter of credit.
1.4 INVESTMENT AND DISTRIBUTION OF ESCROW FUND. Escrow Agent shall retain
the Closing Escrow Fund subject to the terms and conditions of this
Agreement, and is empowered and directed, upon receipt of written
instructions signed by Xxxx X. Xxxxxxxxx, as agent for the
Shareholders, or any successor agent and attorney in fact for the
Shareholders as provided in the Purchase Agreement (the "Agent"), to
invest and reinvest such sum in such certificates of deposit,
obligations of the United States of America or other investment grade
debt securities (marketable debt securities having a Standard and Poors
Rating of at least BBB) as the Agent shall direct. In the absence of
investment instructions from the Agent, the Closing Escrow Fund shall
be invested in United States treasury bills maturing not more than 90
days after purchase. Escrow Agent shall sell or redeem any or all of
such investments from time to time to pay in cash any amount to be paid
pursuant to Article 2 of this Agreement. All amounts and investments
comprising the Closing Escrow Fund shall be registered in the name of
the Escrow Agent, as escrow agent for the Shareholders and the
Purchaser.
1.5 INCOME EARNED ON CLOSING ESCROW FUND. Income earned on the Closing
Escrow Fund shall be deposited in the Closing Escrow Account. If the
Xxxxxxx Money is to be disbursed to MDC pursuant to paragraph 17 of the
Purchase Agreement, income earned on the Closing Escrow Funds shall be
paid to MDC together with the principal on which the income was earned.
If the Xxxxxxx Money is to be disbursed to Purchaser pursuant to
paragraph 17 of the Purchase Agreement, income earned on the Xxxxxxx
Money shall be paid to Purchaser together with the principal on which
the income was earned. If Closing occurs, income earned on the Closing
Escrow Fund shall be part of the Closing Escrow Fund. Purchaser shall
be responsible for filing all necessary tax returns for any interest or
income paid or attributed to it hereunder and shall pay any taxes
thereon.
1.6 NO LIENS ON ESCROWED FUNDS. During the term of this Agreement, each of
Shareholders and Purchaser agree to keep the Closing Escrowed Funds
free and clear of all liens, claims, encumbrances, levies, garnishments
or other attachments arising with respect to it.
ARTICLE 2 - DISBURSEMENT AND RELEASE OF ESCROW
-2-
2.1 TERMINATION PRIOR TO CLOSING. Pursuant to paragraph 17 of the Purchase
Agreement, MDC or the Purchaser may terminate the Purchase Agreement
prior to Closing under certain enumerated terms and conditions. If any
party elects to terminate the Purchase Agreement prior to Closing, such
party shall send a notice to the Escrow Agent substantially in the form
of Exhibit A hereto setting forth the grounds for such termination and
the requested disposition of the Xxxxxxx Money deposited in the Closing
Escrow Fund. The Escrow Agent promptly shall forward a copy of such
notice to each of the non-notifying parties (with any such notice to
Shareholders forwarded to Agent). Upon expiration of ten (10) business
days after forwarding such notice to the non-notifying parties, Escrow
Agent shall pay the notifying party the amount of the Xxxxxxx Money
(including delivery of the letter of credit, if any, to the notifying
party) unless the Escrow Agent has received from either non-notifying
party a written notice that such party in good faith disputes the
grounds for termination and/or the proposed disposition of the Xxxxxxx
Money (a "Dispute Notice"). The Dispute Notice shall set forth in
reasonable detail the basis of the disputing party's position that the
grounds for termination are not valid or the proposed disposition of
the Xxxxxxx Money is not in accordance with the terms of the Purchase
Agreement.
2.2 RESOLUTION OF DISPUTE NOTICE. Following receipt of a Dispute Notice,
Escrow Agent shall not be required to release the Xxxxxxx Money except
(a) upon a joint written direction of Agent (on behalf of the
Shareholders), MDC and Purchaser or (b) upon an order or judgment of a
court of competent jurisdiction with respect to disputes relating to
the Purchase Agreement.
ARTICLE 3 - PAYMENT OF PURCHASE PRICE
3.1 On the Closing Date, Escrow Agent shall disburse the Closing Funds as
follows:
(1) First, to pay closing costs and broker commissions payable by MDC
to Xxxxxxx and Associates;
(2) Second, payment to Norwest Bank Minnesota, N.A. ("Norwest Bank")
until the total outstanding indebtedness of MDC to Norwest Bank as of the
Closing Date, as set forth on a written notice from Norwest Bank delivered to
the Escrow Agent and approved in writing by Agent, has been paid;
(3) Third, to fund the Post-Closing Escrow Account until such escrow
has been funded in the total amount of $500,000 from any available source;
(4) Fourth, the amount of Special Liabilities, as specified in a
writing executed by Agent and Purchaser, shall be paid into a separate Special
Liabilities Escrow Account;
(5) Fifth, the total amount owed by MDC to Xxxxxx Xxxxxxxxx, Xxxxx
Xxxxxxxxx and Xxxx Xxxxxxxxx, pursuant to a sworn affidavit from Agent and
against appropriate instruments of release reciting the receipt of such
payments, shall be paid to Agent for Agent's distribution in proportion to the
amounts of indebtedness owed by MDC to each of the Shareholders; and
-3-
(6) Sixth, any remaining amount shall be paid to the Agent on behalf of
the Shareholders for distribution by the Agent on a pro rata basis in proportion
to their Stock ownership as provided in the Purchase Agreement.
ARTICLE 4 - ESCROW AGENT
4.1 COMPENSATION. All fees of Escrow Agent, as provided on Exhibit B
attached hereto, and all reasonable expenses, disbursements and
advances incurred or paid by the Escrow Agent (including, without
limitation, reasonable attorneys' fees) shall be payable one half from
the Closing Escrow Fund from time to time and one half from Purchaser.
4.2 LEGAL COUNSEL. Escrow Agent may employ such legal counsel and other
experts as it may deem necessary to retain for advice in connection
with its obligations under this Agreement, may rely upon the advice of
such counsel or experts, and shall be reimbursed for the reasonable
expense of such counsel or experts, the expense of which shall be borne
one-half by MDC and one-half by Purchaser, to be paid from the Closing
Escrow Fund either at Closing or at the time of termination prior to
Closing.
4.3 RESIGNATION. Escrow Agent may resign from its duties hereunder at any
time by giving written notice of such resignation to Purchaser, MDC and
Shareholders (by forwarding the notice to Agent) specifying a date (not
less than thirty (30) days after giving of such notice) when such
resignation shall take effect; provided, in any event, such resignation
shall not be effective until the successor to Escrow Agent has been
appointed and accepted the Closing Escrow Fund. Promptly after such
notice, a successor escrow agent shall be appointed by mutual agreement
of Agent (on behalf of the Shareholders), MDC and Purchaser, such
successor escrow agent to become Escrow Agent hereunder upon the
resignation date specified in such notice. Escrow Agent shall continue
to serve until its successor accepts and receives the Closing Escrow
Fund.
4.4 LIABILITY. Escrow Agent undertakes to perform only such duties as are
specifically set forth in this Agreement. Escrow Agent acting in good
faith shall not be liable for any mistake of fact or error in judgment
by it or for any act or omission by it of any kind unless caused by
willful misconduct or gross negligence, and shall be entitled to rely
conclusively upon (i) any written notice. instrument or signature
believed by it to be genuine and to have been signed or presented by
the proper party or parties duly authorized to do so, and (ii) the
advice of counsel retained by it.
4.5 CONTROVERSIES. If any controversy arises between or among Shareholders,
MDC and/or Purchaser, or with any third person with respect to the
subject matter of this Agreement, Escrow Agent shall not be required to
determine the same or take any action with respect thereto, but may
await the final resolution of any such controversy, anything in the
instructions delivered by the parties hereto to the contrary
notwithstanding, and in such event Escrow Agent shall not be liable for
interest or damage; provided that with respect to any
-4-
controversy between among Shareholders, MDC and/or Purchaser, Escrow
Agent shall, at all times, have full right and authority to pay over
and disburse the Closing Escrow Fund in accordance with the joint
written instructions signed by Agent (on behalf of the Shareholders),
MDC and Purchaser.
4.6 DISCHARGE OF ESCROW AGENT. Escrow Agent agrees that Agent (on behalf of
the Shareholders) and Purchaser may, by mutual written agreement at any
time, remove Escrow Agent as escrow agent under this Agreement, and
substitute any bank or trust company therefor, in which event, upon
receipt of such written notice thereof, payment of any accrued but
unpaid fees, and reimbursement of Escrow Agent's other fees and
expenses from the Closing Escrow Fund in accordance with paragraph 4.1
of this Agreement, Escrow Agent shall account for and deliver to such
substituted escrow agent the Escrow Fund held by it, and Escrow Agent
shall thereafter be discharged from liability under this Agreement.
4.7 TERM. This Agreement will terminate upon the transfer of all of the
Closing Escrow Fund by Escrow Agent pursuant to the terms of this
Agreement.
ARTICLE 5 - MISCELLANEOUS
5.1 NOTICES. Any notices or other communication require to be sent or given
under this Agreement by any of the parties shall in every case be in
writing and shall be deemed properly served if (a) delivered
personally, (b) sent by registered or certified mail, (c) delivered by
a recognized overnight courier service, or (d) sent by facsimile
transmission to the parties at the addresses as set forth below at such
other addresses as may be furnished in writing.
If to the Shareholders: Xxxx Xxxxxxxxx
X.X. Xxx 00000
Xxxxxxxxxxx, XX 00000
(Agent for the Shareholders)
With a copy to: Jacobvitz, Xxxxx & Xxxxxx P.C.
000 Xxxxxxxxx X.X., Xxxxx 000
Xxxxxxxxxxx, XX 00000
(Counsel for MDC)
If to MDC: Multimedia Development Corporation
0000 Xxxxxxxxxx Xxxx XX, Xxxxx 000
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxx
-5-
With a copy to: Jacobvitz, Xxxxx & Xxxxxx P.C.
000 Xxxxxxxxx X.X., Xxxxx 000
Xxxxxxxxxxx, XX 00000
(Counsel for MDC)
If to Purchaser: New West Resources, Inc.
000 Xxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxxx
With a copy to: Xxxxxx X. Xxxx
Law Offices of Xxxxxx X. Xxxx PC
000 X. Xxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
If to Escrow Agent: US Bank
Corporate Trust Services
000 00xx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attention: Xxxx Xxxxx
Any party may send any notice hereunder to the intended recipient at
the address or facsimile number set forth above using any other means
(including messenger service, ordinary mail or electronic mail), but no
such notice, request, demand, claim or other communication shall be
deemed to have been duly given unless in writing and until it actually
is received by the intended recipient. Any party may change the address
or facsimile number to which notices, requests, demands, claims or
other communications hereunder are to be delivered by giving the other
parties notice in the manner set forth in this Agreement.
5.2 EXPENSES. Except as otherwise provided in this Agreement, each party
shall be responsible for its own costs and expenses with respect to
matters involving this Agreement.
5.3 HEADINGS. The article, section or paragraph headings contained in this
Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of the Agreement. All pronouns shall
be deemed to refer to the masculine, feminine, neuter, singular or
plural, as the identity of the persons, firm or corporation may require
in the context thereof
5.4 SEVERABILITY. If any provision of this Agreement is determined by a
court to be invalid or unenforceable, such determination shall not
affect any other provision, each of which shall be construed and
enforced as if such invalid or unenforceable portion were not contained
herein. Such invalidity or unenforceability shall not affect any valid
an enforceable application thereof, and each such provision shall be
deemed to be effective, in the manner and to the fullest extent
permitted by law.
-6-
5.5 CONSTRUCTION AND EXCLUSIVE JURISDICTION. This Agreement, and the rights
and duties of the parties hereto, shall be determined in accordance
with the laws of the State of New Mexico. The parties to this Agreement
agree that any dispute arising under this Agreement shall be resolved
in the manner set forth in the Purchase Agreement, or to the extent not
governed by the Purchase Agreement, in a proceeding in state or federal
court in the State of New Mexico. The parties hereby consent to the
exclusive jurisdiction of such courts to decide any such dispute
arising under or relating to this Agreement.
5.6. MULTIPLE COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of
which together shall constitute but one and the same instrument.
5.7 AMENDMENT AND WAIVERS. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successor and
assigns. No amendment, supplement, modification or waiver of this
Agreement shall be binding unless executed in writing by the Agent,
MDC, Purchaser and the Escrow Agent. No waiver of any provisions of
this Agreement shall be deemed or shall constitute a waiver of any
other provision hereof (whether or not similar), nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided.
5.8 ATTORNEY'S FEES. In the event of dispute between or among Shareholders,
MDC and/or Purchaser regarding the distribution of the Closing Escrow
Fund, upon the issuance of a final, non-appealable order or judgment by
a court of competent jurisdiction, the prevailing party's legal fees
and related expenses shall be paid by the non-prevailing party or
parties. The determination of which party is the "prevailing" party
shall be made by the court issuing such final, non-appealable order or
judgment.
IN WITNESS WHEREOF, the parties hereunto have signed this Agreement as
of the date first above written.
---------------------------
XXXXXX X. XXXXXXXXX
---------------------------
XXXXX X. XXXXXXXXX
---------------------------
XXXXXX XXXXXXXXX
---------------------------
XXXXXXXX XXXXXXXXX
-7-
---------------------------
XXXX XXXXXXXXX
---------------------------
XXXXXX (XXXX) XXXXXX
---------------------------
XXXXX XXXXXX
NEW WEST RESOURCES, INC.
By:
------------------------
Xxxx X. Xxxxxx
Its Vice President
MULTIMEDIA DEVELOPMENT
CORPORATION
By:
------------------------
Xxxxxx X. Xxxxxxxxx
Its President
US BANK NATIONAL ASSOCIATION
By:
------------------------
Print name:
Print title:
-8-
EXHIBIT A
TERMINATION NOTICE
To: US Bank National Association., as Escrow Agent
Re: Escrow Agreement for Closing Escrow Account (the "Escrow Agreement")
dated December ____ , 1999, by and among Xxxxxx X. Xxxxxxxxx and Xxxxx
X. Xxxxxxxxx (husband and wife), Xxxxxx Xxxxxxxxx and Xxxxxxxx
Xxxxxxxxx (husband and wife), Xxxx X. Xxxxxxxxx, and Xxxxxx (Xxxx)
Xxxxxx and Xxxxx Xxxxxx (husband and wife) (the "Shareholders"), New
West Resources, Inc., a Texas corporation (the "Purchaser"), Multimedia
Development Corporation, a New Mexico corporation ("MDC") and US Bank
National Association.. (the "Escrow Agent").
This notice is given pursuant to Section 2.1 of the Escrow Agreement.
The undersigned in good faith acknowledges and agrees that the Purchase
Agreement (as defined in the Escrow Agreement) is hereby terminated in
accordance with Section 17( ) thereof by reason of the following:
The undersigned further acknowledges and agrees that the undersigned
has no further rights under the Purchase Agreement against any of the other
parties to the Purchase Agreement. The undersigned directs the Escrow Agent to
pay the Xxxxxxx Money (as defined in the Escrow Agreement) pursuant to the
Purchase Agreement as follows:
Dated
-------------------------- ----------------------------
[By
-------------------------
Its ]
-------------------------
EXHIBIT "A"
EXHIBIT B
ESCROW FEES
Setup fees 500.00
Administration fees 1,750.00
---------
TOTAL $2,250.00
=========
ESCROW AGREEMENT FOR POST-CLOSING ESCROW ACCOUNT
This Escrow Agreement (this "Agreement") is made as of February 7,
2000, by and among Xxxxxx X. Xxxxxxxxx and Xxxxx X. Xxxxxxxxx (husband and
wife), Xxxxxx Xxxxxxxxx and Xxxxxxxx Xxxxxxxxx (husband and wife), Xxxx X.
Xxxxxxxxx, and Xxxxxx (Xxxx) Xxxxxx and Xxxxx Xxxxxx (husband and wife) (the
"Shareholders"), New West Resources, Inc., a Texas corporation (the
"Purchaser"), Multimedia Development Corporation, a New Mexico corporation
("MDC") and ___________________.(the "Escrow Agent").
A. Pursuant to the Agreement for Sale and Purchase (the "Purchase
Agreement") dated as of February 7, 2000 between and among the Shareholders, MDC
and the Purchaser, the Purchaser has agreed to purchase all of the issued and
outstanding Stock of MDC from the Shareholders for cash. Capitalized terms used
herein without definition shall have the meanings set forth in the Purchase
Agreement..
B. The Purchase Agreement requires the establishment of a Post-Closing
Escrow Account as collateral to support damages incurred by Purchaser arising
from breach of any representations, warranties and indemnities given by MDC and
Shareholders to Purchaser under the Purchase Agreement.
C. Escrow Agent is willing to hold, invest, administer and distribute
funds in the Post Closing Escrow Account in accordance with the terms of this
Agreement.
Now, therefore, in consideration of the mutual promises made in this
Agreement, and in consideration of other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
ARTICLE 1 - ESCROW FUND
1.1 APPOINTMENT AND ACCEPTANCE OF ESCROW AGENT. Shareholders and Purchaser
hereby appoint Escrow Agent as escrow agent for the purposes and upon
the terms and conditions set forth in this Agreement. Escrow Agent
hereby accepts such appointment and agrees to act as escrow agent under
this Agreement and to hold, invest and dispose of any funds received by
it under this Agreement in accordance with the terms and conditions set
forth in this Agreement.
1.2 RECEIPT OF ESCROW FUND. Escrow Agent hereby acknowledges receipt of
cash in the amount of $500,000 (such sum, including the investments
thereof and the cash income earned thereon, is hereafter called the
"Post-Closing Escrow Fund").
1.3 INVESTMENT AND DISTRIBUTION OF ESCROW FUND. Escrow Agent shall retain
the Post-Closing Escrow Fund subject to the terms and conditions of
this Agreement, and is empowered and directed, upon receipt of written
instructions signed by Xxxx X. Xxxxxxxxx, as agent for the
EXHIBIT "B"
Shareholders, or any successor agent and attorney in fact for the
Shareholders as provided in the Purchase Agreement (the "Agent"), to
invest and reinvest such sum in such certificates of deposit,
obligations of the United States of America or other investment grade
debt securities (marketable debt securities having a Standard and Poors
Rating of at least BBB) as the Agent shall direct. In the absence of
investment instructions from the Agent, the Post-Closing Escrow Fund
shall be invested in United States treasury bills maturing not more
than 90 days after purchase. Escrow Agent shall sell or redeem any or
all of such investments from time to time to pay in cash any amount to
be paid pursuant to Article 2 of this Agreement. All amounts and
investments comprising the Post-Closing Escrow Fund shall be registered
in the name of the Escrow Agent, as escrow agent for the Shareholders
and the Purchaser.
1.4 INCOME EARNED ON POST-CLOSING ESCROW FUND. Income earned on the
Post-Closing Escrow Fund shall be paid to Agent on behalf of the
Shareholders as of the first day of each month. Shareholders shall be
responsible for filing all necessary tax returns for any interest or
income paid or attributed to it hereunder and shall pay any taxes
thereon.
1.5 NO LIENS ON ESCROWED FUNDS. During the term of this Agreement, each of
Shareholders and Purchaser agree to keep the Post-Closing Escrow Funds
free and clear of all liens, claims, encumbrances, levies, garnishments
or other attachments arising with respect to it.
ARTICLE 2 - DISBURSEMENT AND RELEASE OF ESCROW
2.1 CLAIMS PAYABLE FROM THE POST-CLOSING ESCROW ACCOUNT
(a) THIRD PARTY NOTIFICATION. Purchaser and MDC shall notify the
Shareholders (by forwarding the notice to Agent) and the
Escrow Agent of any Third Party Claim (as defined in the
Purchase Agreement), within ten (10) days of receiving written
notice of such Third Party Claim, describing in reasonable
detail the amount of and alleged basis for the Third Party
Claim, with a copy of all documents in Purchaser's possession
relating to such Third Party Claim and any pleadings or other
documents served on MDC by the third party (the "Third Party
Claim Notice"). Within thirty (30) days after receipt of any
Third Party Claim Notice (the "Election Period"), the
Shareholders (acting through Agent) shall notify MDC,
Purchaser and the Escrow Agent (i) whether the Shareholders
dispute payment of the Third Party Claim from the Post-Closing
Escrow Account, and (ii) whether the Shareholders desire, at
the Shareholders' sole cost and expense, to defend MDC against
any such Third Party Claim.
(b) DEFENSE OF THIRD PARTY CLAIM BY THE SHAREHOLDERS. The
provisions in this subparagraph (b) apply only if the
aggregate amount specified by the claimant(s) of all Asserted
Claims for which a Third Party Claim Notice or Direct Claim
Notice has been given does not exceed the amount in the
Post-Closing Escrow Account. If the Shareholders (acting
through Agent) notify Purchaser and MDC within the Election
Period that the Shareholders dispute that the potential
liability to Purchaser based on
-2-
a Third Party Claim is payable from the Post-Closing
Escrow Account, or that the Shareholders elect to assume
the defense of the Third Party Claim, then the
Shareholders shall have the right to negotiate a
resolution of or defend such Third Party Claim by all
appropriate proceedings (the cost and expense of which
shall be payable from the Post-Closing Escrow Account),
which proceedings shall be prosecuted diligently by the
Shareholders to a final conclusion or settled at the
discretion of the Shareholders in accordance with this
paragraph 2.1(b). The Shareholders shall have full
control of such defense and proceedings, including any
compromise or settlement thereof. MDC is hereby authorized
during the Election Period, but prior to receipt of
written notice that the Shareholders elect to assume the
defense of the Third Party Claim, to file any motion,
answer, or other pleading that MDC reasonably shall deem
necessary to file during such period to protect MDC's
interests that is not unnecessarily prejudicial to the
Shareholders (the cost and expense of which shall be
payable from the Post-Closing Escrow Account). If
requested by the Shareholders, MDC and Purchaser shall
cooperate in defending against any Third Party Claim which
the Shareholders elect to contest (the cost and expense of
which shall be payable from the Post-Closing Escrow
Account), including, without limitation, the making of a
related counterclaim against the person asserting the
Third Party Claim or any cross-complaint against any
person. Notwithstanding anything in this paragraph 2.l(b)
to the contrary, the Shareholders shall not, without the
written consent of MDC, (x) settle or compromise any
action, suit or proceeding or consent to the entry of any
judgment which does not include the delivery by the
claimant or plaintiff to MDC of a written release of MDC
from all liability in respect of such action, suit or
proceeding or (y) settle or compromise any action, suit or
proceeding in any manner that may materially and adversely
affect MDC.
(c) DEFENSE OF THIRD PARTY CLAIM BY MDC. If the aggregate amount
specified by the claimant(s) of all Asserted Claims for which
a Third Party Claim Notice or Direct Claim Notice has been
given exceeds the amount in the Post-Closing Escrow Account,
or if the Shareholders fail to notify MDC, the Purchaser and
the Escrow Agent within the Election Period that the
Shareholders elect to defend MDC pursuant to paragraph 2.1(a),
or if the Shareholders elect to defend MDC pursuant to
paragraph 2.1(a) but fail to diligently defend against or
settle the Third Party Claim, then MDC shall have the right to
defend the Third Party Claim by all appropriate proceedings
(the cost and expense of which shall be payable from the
Post-Closing Escrow Account), which proceedings shall be
diligently defended by MDC to a final nonappealable order of a
court of competent jurisdiction or settled, MDC shall have
full control of such defense and proceedings; PROVIDED,
HOWEVER, that MDC may not enter into, without the
Shareholders' written consent, which shall not be unreasonably
withheld, any compromise or settlement of such Third Party
Claim. Notwithstanding the foregoing, if the Shareholders have
given a written notice to Purchaser, MDC and the Escrow Agent
to the effect that the Shareholders dispute that the Third
Party Claim is payable from the Post-Closing Escrow Account,
then (i)
-3-
if such dispute is resolved in favor of the Shareholders
by final, nonappealable order of a court of competent
jurisdiction (including an order on an arbitrator's
decision), the cost and expense of MDC's defense shall be
borne by MDC and shall not be payable from the Post-Closing
Escrow Account and (ii) if such dispute is resolved in favor
of MDC by final, nonappealable order of a court of competent
jurisdiction (including an order on an arbitrator's decision),
the cost and expense of MDC's defense shall be payable from
the Post-Closing Escrow Account.
(d) DIRECT CLAIMS. If Purchaser should have a Direct Claim,
Purchaser shall transmit to the Shareholders (by forwarding it
to Agent) and the Escrow Agent a written notice (the "Direct
Claim Notice") describing in reasonable detail the nature of
the Direct Claim, specifying the amount of damages
attributable to such Direct Claim and how Purchaser calculated
the damages, and the nature and basis of Purchaser's request
for payment of the Direct Claim from the Post-Closing Escrow
Account under this Agreement. If the Shareholders do not
notify Purchaser and the Escrow Agent in writing within forty
five (45) days from its receipt of the Direct Claim Notice
that the Shareholders dispute such Direct Claim, the Direct
Claim specified by Purchaser in the Direct Claim Notice shall
be deemed payable from the Post-Closing Escrow Account. If the
Shareholders (acting through the Agent) have timely disputed
such Direct Claim, as provided above, such dispute shall be
determined in accordance with paragraph 20(n) of the Purchase
Agreement.
(e) PAYMENT FROM POST-CLOSING ESCROW ACCOUNT. Payments of all
amounts to be paid from the Post-Closing Escrow Account
pursuant to this paragraph and paragraph 5(c) of the Purchase
Agreement, shall be made by the Escrow Agent in accordance
with a written notice to Escrow Agent and within thirty (30)
days after Escrow Agent's receipt of such notice, as follows:
(i) upon written notice by Purchaser to the Escrow Agent
(which Escrow Agent shall promptly forward to Agent) of the
Shareholders' failure to timely respond to a Direct Claim
Notice or Third Party Claim Notice, specifying the amount to
be disbursed and to whom as a result of such failure to
respond, if Escrow Agent does not receive a written objection
from Agent within ten (10) business days after Escrow Agent
forwarded such notice to Agent; (ii) upon written notice to
the Escrow Agent by Agent or Purchaser (which Escrow Agent
shall promptly forward to the party that did not give such
notice (the "Other Party") of resolution of any Asserted Claim
by agreement of the Shareholders (acting through the Agent)
and Purchaser, specifying the amount to be disbursed and to
whom as a result of such agreement, if Escrow Agent does not
receive a written objection from the Other Party within ten
(10) business days after Escrow Agent forwarded such notice to
the Other Party, (iii) upon written notice to the Escrow Agent
by Agent or Purchaser (which Escrow Agent shall promptly
forward to the Other Party) of the expiration of the period
for appeal of a final adjudication of any dispute as to
whether or in what amount, the Claim is payable from the
Post-Closing Escrow Account, specifying the amount to be
disbursed and to whom as a result of such dispute resolution,
if Escrow Agent does not receive a written objection from
-4-
the Other Party within ten business (10) days after Escrow
Agent forwarded such notice to the Other Party; (iv) upon
written notice by Agent or Purchaser (which Escrow Agent shall
promptly forward to Other Party) with respect to a Claim based
on a Third Party Claim of the settlement of the Third Party
Claim, or the expiration of the period for appeal of a final
adjudication of such Third Party Claim, specifying the amount
to be disbursed and to whom as a result of such settlement or
expiration of the appeal period, if Escrow Agent does not
receive a written objection from the Other Party within ten
business (10) days after Escrow Agent forwarded such notice to
the Other Party; (vi) upon written notice by Agent (which
Escrow Agent shall promptly forward to Purchaser of the amount
to be disbursed to Agent under paragraph 5(c) of the Purchase
Agreement, if Escrow Agent does not receive a written
objection from the Purchaser within ten business (10) days
after Escrow Agent forwarded such notice to Purchaser; or
(vii) upon written notice to the Escrow Agent by the Agent
and Purchaser directing the disbursement of funds from the
Post-Closing Escrow Account. Any notice objecting to
disbursement of funds from the Post-Closing Escrow Account
shall state in reasonable detail the grounds for the objection
2.2 DISBURSEMENT OF BALANCE OF POST-CLOSING ESCROW ACCOUNT. If and to the
extent that any portion of the Post-Closing Escrow Account has not been
applied in payment of damages incurred by Purchaser, the balance
remaining shall be disbursed by the Escrow Agent first to Agent, on
behalf of Xxxxxx Xxxxxxxxx, Xxxxx Xxxxxxxxx and Xxxx Xxxxxxxxx, to the
extent he or she has not received payment in full from the Closing
Escrow Account or the Special Liabilities Escrow Account of the
indebtedness or other obligations listed on Schedule 6(x) to the
Purchase Agreement, in the amount owed by MDC to him or her at Closing
(pursuant to an affidavit of such party), and then to Agent on behalf
of the Shareholders, in proportion to the amount of their Stock
immediately prior to Closing, as follows:
(a) ninety (90) days after Closing, 50% of the remaining
principal balance of the Post-Closing Escrow Account,
less the amount of any Claims asserted by Purchaser
in a Third Party Claims Notice or Direct Claims
Notice given to the Escrow Agent by that date that
have not been paid, shall be disbursed by the Escrow
Agent; and
(b) one hundred eighty (180) days after Closing, the
remaining balance in the Post-Closing Escrow Account,
less the amount of any Claims asserted by Purchaser
in a Third party Claims Notice or Direct Claims
Notice given to the Escrow Agent by that date that
have not been paid or otherwise resolved in
accordance with Paragraph 2.1 of this Agreement,
shall be disbursed by the Escrow Agent; and
(c) In the case of Claims asserted by Purchaser in a
Third Party Claims Notice given by that date that
have not been paid or otherwise resolved within 180
days of Closing, the balance of the Post-Closing
Escrow Account that is not
-5-
disbursed as a result of such claims shall be held in
the Post-Closing Escrow Account until the Third Party
Claim or Direct Claim (as applicable) is fully
satisfied or otherwise discharged pursuant to
Paragraph 2.1 above.
ARTICLE 3 - ESCROW AGENT
3.1 COMPENSATION. All fees of Escrow Agent, as provided on Exhibit A
attached hereto, and all reasonable expenses, disbursements and
advances incurred or paid by the Escrow Agent (including, without
limitation, reasonable attorneys' fees) shall be payable one half by
Shareholders to be paid from the Post-Closing Escrow Fund from time to
time, and one-half by Purchaser.
3.2 LEGAL COUNSEL. Escrow Agent may employ such legal counsel and other
experts as it may deem necessary to retain for advice in connection
with its obligations under this Agreement, may relay upon the advice of
such counsel or experts, and shall be reimbursed for the reasonable
expense of such counsel or experts payable one-half by Shareholders to
be paid from the Post-Closing Escrow Fund from time to time and
one-half by Purchaser.
3.3 RESIGNATION. Escrow Agent may resign from its duties under this
Agreement at any time by giving written notice of such resignation to
Purchaser, MDC and Shareholders (by forwarding notice to the Agent)
specifying a date (not less than thirty (30) days after giving of such
notice) when such resignation shall take effect; provided, in any
event, such resignation shall not be effective until the successor to
Escrow Agent has been appointed and accepted the Post-Closing Escrow
Fund. Promptly after such notice, a successor escrow agent shall be
appointed by mutual agreement of Shareholders (acting through the
Agent), MDC and Purchaser, such successor escrow agent to become Escrow
Agent under this Agreement upon the resignation date specified in such
notice. Escrow Agent shall continue to serve until its successor
accepts and receives the Post-Closing Escrow Fund.
3.4 LIABILITY. Escrow Agent undertakes to perform only such duties as are
specifically set forth herein. Escrow Agent acting or refraining from
acting in good faith shall not be liable for any mistake of fact or
error in judgment by it or for any act or omission by it of any kind
unless caused by willful misconduct or gross negligence, and shall be
entitled to rely conclusively upon (i) any written notice, instrument
or signature believed by it to be genuine and to have been signed or
presented by the proper party or parties duly authorized to do so, and
(ii) the advice of counsel retained by it.
3.5 CONTROVERSIES. If any controversy arises among Shareholders, MDC or
Purchaser, or with any third person with respect to the subject matter
of this Agreement, Escrow Agent shall not be required to determine the
same or take any action with respect thereto, but may await the final
resolution of any such controversy, anything in the instructions
delivered by the parties hereto to the contrary notwithstanding, and in
such event it shall not be liable for interest or damage; provided that
with respect to any controversy among Shareholders, MDC or Purchaser,
Escrow Agent shall, at all times, have full right and authority to pay
over and
-6-
disburse the Post-Closing Escrow Fund in accordance with the
joint written instructions signed by Agent, MDC and Purchaser.
3.6 DISCHARGE OF ESCROW AGENT. Escrow Agent agrees that Shareholders
(acting through the Agent) and Purchaser may, by mutual written
agreement at any time, remove Escrow Agent as escrow agent under this
Agreement, and substitute any bank or trust company therefor, in which
event, upon receipt of such written notice thereof, payment of any
accrued but unpaid fees, and reimbursement of Escrow Agent's other fees
and expenses from the Post Closing Escrow Fund in accordance with
paragraph 4.1 hereof, Escrow Agent shall account for and deliver to
such substituted escrow agent the Escrow Fund held by it, and Escrow
Agent shall thereafter be discharged from liability under this
Agreement.
3.7 TERM. This Agreement will terminate upon the transfer of all of the
Post-Closing Escrow Fund by Escrow Agent pursuant hereto.
ARTICLE 4 - MISCELLANEOUS
4.1 NOTICES. Any notices or other communication require to be sent or given
under this Agreement by any of the parties shall in every case be in
writing and shall be deemed properly served if (a) delivered
personally, (b) sent by registered or certified mail, (c) delivered by
a recognized overnight courier service, or (d) sent by facsimile
transmission to the parties at the addresses as set forth below at such
other addresses as may be furnished in writing.
If to Shareholders: Xxxx Xxxxxxxxx
X.X. Xxx 00000
Xxxxxxxxxxx, XX 00000
With a copy to: Jacobvitz, Xxxxx & Xxxxxx P.C.
000 Xxxxxxxxx X.X., Xxxxx 000
Xxxxxxxxxxx, XX 00000
(Counsel for Agent)
If to MDC: Multimedia Development Corporation
000 Xxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxxx
With a copy to: Xxxxxx X. Xxxx
Law Offices of Xxxxxx X. Xxxx PC
000 X. Xxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
-7-
If to Purchaser: New West Resources, Inc.
000 Xxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxxx
With a copy to: Xxxxxx X. Xxxx
Law Offices of Xxxxxx X. Xxxx PC
000 X. Xxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
If to Escrow Agent:
---------------------------------
---------------------------------
---------------------------------
Attention:
----------------------
Any party may send any notice under this Agreement to the intended
recipient at the address or facsimile number set forth above using any
other means (including personal delivery, messenger service, ordinary
mail or electronic mail), but no such notice, request, demand, claim or
other communication shall be deemed to have been duly given unless and
until it actually is received by the intended recipient. Any party may
change the address or facsimile number to which notices, requests,
demands, claims or other communications under this Agreement are to be
delivered by giving the other parties notice in the manner set forth in
this Agreement.
4.2 EXPENSES. Except as otherwise provided in this Agreement, each party
shall be responsible for its own costs and expenses with respect to
matters involving this Agreement.
4.3 HEADINGS. The section, paragraph and article headings contained in this
Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of the Agreement. All pronouns shall
be deemed to refer to the masculine, feminine, neuter, singular or
plural, as the identity of the persons, firm or corporation may require
in the context thereof.
4.4 SEVERABILITY. If any provision of this Agreement is determined by a
court to be invalid or unenforceable, such determination shall not
affect any other provision, each of which shall be construed and
enforced as if such invalid or unenforceable portion were not contained
herein. Such invalidity or unenforceability shall not affect any valid
an enforceable application thereof, and each such provision shall be
deemed to be effective, in the manner and to the fullest extent
permitted by law.
4.5 CONSTRUCTION AND EXCLUSIVE JURISDICTION. This Agreement, and the rights
and duties of the parties hereto shall be determined, in accordance
with the laws of the State of New Mexico. The parties to this Agreement
agree that any dispute arising under this Agreement shall be
-8-
resolved in the manner set forth in the Purchase Agreement, or to the
extent not governed by the Purchase Agreement, in a proceeding in state
or federal court in the State of New Mexico. The parties hereby consent
to the exclusive jurisdiction of such courts to decide any dispute
arising under or relating to this Agreement.
4.6. MULTIPLE COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of
which together shall constitute but one and the same instrument.
4.7 AMENDMENT AND WAIVERS. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successor and
assigns. No amendment, supplement, modification or waiver of this
Agreement shall be binding unless executed in writing by the Agent,
MDC, Purchaser and the Escrow Agent. No waiver of any provisions of
this Agreement shall be deemed or shall constitute a waiver of any
other provision hereof (whether or not similar), nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided.
4.8 ATTORNEYS' FEES. In the event of dispute between or among Shareholders,
MDC and/or Purchaser regarding the distribution of the Post-Closing
Escrow Fund, upon the issuance of a final, non-appealable order or
judgement by a court of competent jurisdiction, the prevailing party's
legal fees and related expenses shall be paid by the non-prevailing
party or parties. The determination of which party is the "prevailing"
party shall be made by the court issuing such final, non-appealable
order or judgment.
IN WITNESS WHEREOF, the parties hereunto have signed this Agreement as
of the date first above written.
---------------------------
XXXXXX X. XXXXXXXXX
---------------------------
XXXXX X. XXXXXXXXX
---------------------------
XXXXXX XXXXXXXXX
---------------------------
XXXXXXXX XXXXXXXXX
-9-
---------------------------
XXXXXX (XXXX) XXXXXX
---------------------------
XXXXX XXXXXX
NEW WEST RESOURCES, INC.
By:
------------------------
Xxxx X. Xxxxxx
Its Vice President
MULTIMEDIA DEVELOPMENT
CORPORATION
By:
------------------------
Xxxxxx X. Xxxxxxxxx
Its President
---------------------------
By:
Its
-------------------------
-10-
EXHIBIT A
ESCROW FEES
ESCROW AGREEMENT FOR SPECIAL LIABILITIES ESCROW ACCOUNT
This Escrow Agreement (this "Agreement") is made as of February 7,
2000, by and among Xxxxxx X. Xxxxxxxxx and Xxxxx X. Xxxxxxxxx (husband and
wife), Xxxxxx Xxxxxxxxx and Xxxxxxxx Xxxxxxxxx (husband and wife), Xxxx X.
Xxxxxxxxx, and Xxxxxx (Xxxx) Xxxxxx and Xxxxx Xxxxxx (husband and wife) (the
"Shareholders"), New West Resources, Inc., a Texas corporation (the
"Purchaser"), Multimedia Development Corporation, a New Mexico corporation
("MDC") and ________________.(the "Escrow Agent").
A. Pursuant to the Agreement for Sale and Purchase (the "Purchase
Agreement") dated as of February 7, 2000 between and among the Shareholders, MDC
and the Purchaser, the Purchaser has agreed to purchase all of the issued and
outstanding stock of MDC from the Shareholders for cash. Capitalized terms used
herein without definition shall have the meanings set forth in the Purchase
Agreement.
B. The Purchase Agreement requires the establishment of a Special
Liabilities Escrow Account with respect to the amount of the outstanding Special
Liabilities (as defined in the Purchase Agreement) outstanding as of Closing.
C. Escrow Agent is willing to hold, invest, administer and distribute
such funds in accordance with the terms of this Agreement.
Now, therefore, in consideration of the mutual promises made in this
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
ARTICLE 1 - ESCROW FUND
1.1 APPOINTMENT AND ACCEPTANCE OF ESCROW AGENT. Shareholders and Purchaser
hereby appoint Escrow Agent as escrow agent for the purposes and upon
the terms and conditions set forth in this Agreement. Escrow Agent
hereby accepts such appointment and agrees to act as escrow agent under
this Agreement and to hold, invest and dispose of any funds received by
it under this Agreement in accordance with the terms and conditions set
forth in this Agreement.
1.2 RECEIPT OF ESCROW FUND. Escrow Agent hereby acknowledges receipt of
cash in the amount of $_________ (such sum, including the investments
thereof and the cash income earned thereon, is hereafter called the
"Special Liabilities Escrow Fund").
1.3 INVESTMENT AND DISTRIBUTION OF ESCROW FUND. Escrow Agent shall retain
the Special Liabilities Escrow Fund subject to the terms and conditions
of this Agreement, and is empowered and directed, upon receipt of
written instructions signed by Xxxx X. Xxxxxxxxx, as agent and attorney
in fact for the Shareholders, or any successor agent and attorney in
fact
EXHIBIT "C"
for the Shareholders as provided in the Purchase Agreement (the
"Agent"), to invest and reinvest such sum in such certificates of
deposit, obligations of the United States of America or other
investment grade debt securities (marketable debt securities having a
Standard and Poors Rating of at least BBB) as the Agent shall direct.
In the absence of investment instructions from the Agent, the Special
Liabilities Escrow Fund shall be invested in United States treasury
bills maturing not more than 90 days after purchase. Escrow Agent shall
sell or redeem any or all of such investments from time to time to pay
in cash any amount to be paid pursuant to Article 2 of this Agreement.
All amounts and investments comprising the Special Liabilities Escrow
Fund shall be registered in the name of the Escrow Agent, as escrow
agent for the Shareholders and the Purchaser.
1.4 INCOME EARNED ON SPECIAL LIABILITIES ESCROW FUND. Income earned on the
Special Liabilities Escrow Fund shall be paid to Agent on behalf of the
Shareholders as of the first day of each calendar month. Shareholders
shall be responsible for filing all necessary tax returns for any
interest or income paid or attributed to it hereunder and shall pay any
taxes thereon.
1.5 NO LIENS ON ESCROWED FUNDS. During the term of this Agreement, each of
Shareholders and Purchaser agree to keep the Special Liabilities Escrow
Funds free and clear of all liens, claims, encumbrances, levies,
garnishments or other attachments arising with respect to it.
ARTICLE 2 - DISBURSEMENT AND RELEASE OF ESCROW
2.1 SPECIAL LIABILITIES PAYABLE FROM THE SPECIAL LIABILITIES ESCROW
ACCOUNT.
(a) SPECIAL LIABILITIES. The Special Liabilities will be set forth
on Schedule 13(i) to the Purchase Agreement and will be
attached as Exhibit A hereto, and are subdivided thereon into
four types of potential claims: (i) Programming Liabilities,
(ii) Excess Airtime Capacity Channel Lease Liabilities, (iii)
Personal Property Tax Liabilities, and (iv) any and all
monetary forfeitures issued by the FCC against MDC that is on
appeal at Closing, and is treated as part of the Special
Liabilities in accordance with paragraph 6(e) of the Purchase
Agreement ("FCC Monetary Forfeitures"). In the case of
Programming Liabilities and Excess Airtime Capacity Channel
Lease Liabilities, until six years after the programming in
question was provided or the lease payments in question were
due, for which payment has not been made, and (ii) in the case
of Personal Property Tax Liabilities, until the date that is
ten years after the end of the relevant tax year for which the
taxes were not paid, the Shareholders by and through the Agent
shall have the exclusive right to negotiate on behalf of MDC
amounts to be paid, if any, in settlement or compromise of the
Special Liabilities. In the case of FCC Monetary Forfeitures,
the Shareholders by and through the Agent shall have the
exclusive right to direct the appeal and negotiate on behalf
of MDC amounts to be paid, if any, in settlement or
compromise. Any Special Liabilities not paid in full at the
expiration of the period in which the Shareholders have the
exclusive right to negotiate on behalf of MDC, and for which
the holder of the claim has not filed suit (whether or not any
settlement or compromise has been
-2-
reached) shall be deemed fully discharged and the portion of
the Special Liabilities Escrow Account with respect thereto
shall be deemed payable as set forth in Paragraph 2.2 below.
(b) THIRD PARTY NOTIFICATION. MDC shall notify the Shareholders
(by forwarding the notice to Agent) and the Escrow Agent of
the initiation any legal proceeding by a party against MDC for
payment of a Special Liability (a "Special Liabilities Claim")
within ten (10) days of receiving written notice of such
proceeding, with copies of any pleadings or other documents
served on MDC by the third party (the "Special Liabilities
Claim Notice"). Within thirty (30) days after receipt of any
Special Liabilities Claim Notice (the "Election Period"), the
Shareholders, by and through the Agent, shall notify
Purchaser, MDC and the Escrow Agent (i) whether the
Shareholders dispute payment of the Special Liabilities Claim
from the Special Liabilities Escrow Account, and (ii) whether
the Shareholders desire, at the Shareholders' sole cost and
expense, to defend MDC against any such Special Liabilities
Claim.
(c) DEFENSE OF THIRD PARTY CLAIM BY THE SHAREHOLDERS. If the
Shareholders (acting through the Agent) notify Purchaser and
MDC within the Election Period that the Shareholders dispute
that the potential liability to MDC based on a Special
Liabilities Claim is payable from the Special Liabilities
Escrow Account, or that the Shareholders elect to assume the
defense of the Special Liabilities Claim, then the
Shareholders acting by and through the Agent shall have the
exclusive right to negotiate a resolution of or defend such
Special Liabilities Claim by all appropriate proceedings (the
cost and expense of which shall be payable from the Special
Liabilities Escrow Account), which proceedings shall be
prosecuted diligently by the Shareholders to a final
conclusion or settled at the discretion of the Shareholders in
accordance with this paragraph 2.1(c). The Shareholders shall
have exclusive control of such defense and proceedings,
including any compromise or settlement thereof. MDC is hereby
authorized during the Election Period, but prior to receipt of
written notice that the Shareholders elect to assume the
defense of the Special Liabilities Claim, to file any motion,
answer, or other pleading that MDC reasonably shall deem
necessary to file during such period to protect MDC's
interests that is not unnecessarily prejudicial to the
Shareholders (the cost and expense of which shall be payable
from the Special Liabilities Escrow Account). If requested by
the Shareholders (acting through Agent), MDC and Purchaser
shall cooperate in defending against any Special Liabilities
Claim which the Shareholders elect to contest (the cost and
expense of which shall be payable from the Special Liabilities
Escrow Account), including, without limitation, the making of
a related counterclaim against the person asserting the
Special Liabilities Claim or any cross-complaint against any
person. Notwithstanding anything in this paragraph 2.1(c) to
the contrary, the Shareholders shall not, without the written
consent of MDC, (x) settle or compromise any action, suit or
proceeding or consent to the entry of any judgment which does
not include the delivery by the claimant or plaintiff to MDC
of a written
-3-
release of MDC from all liability in respect of such
action, suit or proceeding or (y) settle or compromise
any action, suit or proceeding in any manner that may
materially and adversely affect MDC.
(d) DEFENSE OF SPECIAL LIABILITIES CLAIM BY PURCHASER. If the
Shareholders fail to notify Purchaser, MDC and the Escrow
Agent within the Election Period that the Shareholders elect
to defend MDC pursuant to paragraph 2.1(b), or if the
Shareholders elect to defend MDC pursuant to paragraph 2.1(b)
but fail to diligently defend against or settle the Special
Liabilities Claim, then MDC shall have the right to defend the
Special Liabilities Claim by all appropriate proceedings (the
cost and expense of which shall be payable from the Special
Liabilities Escrow Account), which proceedings shall be
diligently defended by MDC to a final nonappealable order of a
court of competent jurisdiction or settled. MDC shall have
full control of such defense and proceedings; PROVIDED,
HOWEVER, that MDC may not enter into, without the
Shareholders' written consent, which shall not be unreasonably
withheld, any compromise or settlement of such Special
Liabilities Claim.
(e) PAYMENT FROM SPECIAL LIABILITIES ESCROW ACCOUNT. Payments of
all amounts to be paid from the Special Liabilities Escrow
Account pursuant to this paragraph and the Purchase Agreement,
shall be made by the Escrow Agent in accordance with a written
notice to Escrow Agent and within thirty (30) days after
Escrow Agent's receipt of such notice, as follows: (i) upon
written notice by Purchaser to the Escrow Agent (which Escrow
Agent shall promptly forward to Agent) of the Shareholders'
failure to timely respond to a Special Liabilities Claim
Notice, specifying the amount to be disbursed and to whom as a
result of such failure to respond, if Escrow Agent does not
receive a written objection from Agent within ten (10)
business days after Escrow Agent forwarded such notice to
Agent; (ii) upon written notice to the Escrow Agent by Agent
or Purchaser (which Escrow Agent shall promptly forward to the
party that did not give such notice (the "Other Party")) of
resolution of the Special Liabilities Claim by agreement of
the Shareholders or MDC and the special liabilities claimant,
specifying the amount to be disbursed and to whom as a result
of such agreement, if Escrow Agent does not receive a written
objection from the Other Party within ten (10) business days
after Escrow Agent forwarded such notice to the Other Party;
(iii) upon written notice to the Escrow Agent by the Agent or
Purchaser (which Escrow Agent shall promptly forward to the
Other Party) of the expiration of the period for appeal of a
final adjudication of any dispute as to whether or in what
amount the Special Liabilities Claim is payable from the
Special Liabilities Escrow Account, specifying the amount to
be disbursed and to whom as a result of such dispute
resolution, if Escrow Agent does not receive a written
objection from the Other Party within ten (10) business days
after Escrow Agent forwarded such notice to the Other Party;
(iv) upon written notice to the Escrow Agent by the Agent or
Purchaser (which Escrow Agent shall promptly forward to the
Other Party) of the settlement of the Special Liabilities
Claim, or the expiration of the period for appeal of a final
adjudication of such Special Liabilities Claim, specifying the
amount to be
-4-
disbursed and to whom as a result of such settlement or
expiration of the appeal period, if Escrow Agent does
not receive a written objection from the Other Party
within ten (10) business days after Escrow Agent forwarded
such notice to the Other Party; (v) with respect to a Special
Liabilities Claim that has been fully discharged by expiration
of the time periods specified in paragraph 19(a) of the
Purchase Agreement, upon written notice to the Escrow Agent by
the Agent of the expiration of such period (which Escrow Agent
shall promptly forward to Purchaser), specifying the amount to
be disbursed and to whom as a result of such expiration of the
period, if Escrow Agent does not receive a written objection
from the Purchaser within ten business (10) days after Escrow
Agent forwarded such notice to the Purchaser; and (vi) upon
written notice to the Escrow Agent by the Agent and MDC
directing the disbursement of funds from the Special
Liabilities Claim. Purchaser shall not be obligated to give
such instructions to the Escrow Agent to make a disbursement
to Agent, and shall be entitled to object to any such
disbursement, if any disbursements from the Special
Liabilities Escrow Account to be paid to the Shareholders
would reduce the remaining amount in the Special Liabilities
Escrow Account to an amount that is less than the amount of
Special Liabilities that have not been paid in full or fully
discharged. Any notice objecting to disbursement of funds from
the Special Liabilities Escrow Account shall state in
reasonable detail the grounds for the objection.
2.2 DISBURSEMENT OF BALANCE OF SPECIAL LIABILITIES ESCROW ACCOUNT. At the
end of each calendar quarter after Closing, any amount remaining in the
Special Liabilities Escrow Account in excess of the remaining amount of
Special Liabilities that have not been paid in full or fully
discharged, as set forth on a schedule provided to Escrow Agent and
Purchaser at the end of each calendar quarter by Agent showing in
detail (i) the amount of remaining Special Liabilities as of the
beginning of such calendar quarter, (ii) the amount of Special
Liabilities paid or settled in full during such calendar quarter, and
(iii) the amount of Special Liabilities discharged by reason of the
passage of the applicable period as set forth in Paragraph 2.1(a)
above, shall be paid by the Escrow Agent as follows:
(a) An amount requested in writing by Agent to pay, or to
reimburse, costs and expenses incurred by Agent (or his
successor) acting as attorney in fact for the Shareholders,
not to exceed $100,000 per calendar year;
(b) Second, the remaining amount to Agent on behalf of Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxxx and Xxxx Xxxxxxxxx, to the extent
he or she has not received payment in full from the Closing
Escrow Account or the Post-Closing Escrow Account of the
indebtedness or other obligations listed on Schedule 6(x) to
the Purchase Agreement, in the amount owed by MDC to him or
her at Closing (pursuant to an affidavit of Agent);
(c) Third, any remaining amount to Agent on behalf of the
Shareholders in proportion to the amount of their stock
immediately prior to Closing.
-5-
ARTICLE 3 - ESCROW AGENT
3.1 COMPENSATION. All fees of Escrow Agent, as provided on Exhibit B
attached hereto, and all reasonable expenses, disbursements and
advances incurred or paid by the Escrow Agent (including, without
limitation, reasonable attorneys' fees) shall be payable one half by
Shareholders, to be paid from the Special Liabilities Escrow Fund from
time to time, and one-half by Purchaser.
3.2 LEGAL COUNSEL. Escrow Agent may employ such legal counsel and other
experts as it may deem necessary to retain for advice in connection
with its obligations under this Agreement, may relay upon the advice of
such counsel or experts, and shall be reimbursed for the reasonable
expense of such counsel or experts payable one-half by the Shareholders
to be paid from the Special Liabilities Escrow Fund from time to time
and one-half by Purchaser.
3.3 RESIGNATION. Escrow Agent may resign from its duties under this
Agreement at any time by giving written notice of such resignation to
Purchaser, MDC and Shareholders specifying a date (not less than thirty
(30) days after giving of such notice) when such resignation shall take
effect; provided, in any event, such resignation shall not be effective
until the successor to Escrow Agent has been appointed and accepted the
Special Liabilities Escrow Fund. Promptly after such notice, a
successor escrow agent shall be appointed by mutual agreement of
Shareholders, MDC and Purchaser, such successor escrow agent to become
Escrow Agent under this Agreement upon the resignation date specified
in such notice. Escrow Agent shall continue to serve until its
successor accepts and receives the Special Liabilities Escrow Fund.
3.4 LIABILITY. Escrow Agent undertakes to perform only such duties as are
specifically set forth herein. Escrow Agent acting or refraining from
acting in good faith shall not be liable for any mistake of fact or
error in judgment by it or for any act or omission by it of any kind
unless caused by willful misconduct or gross negligence, and shall be
entitled to rely conclusively upon (i) any written notice, instrument
or signature believed by it to be genuine and to have been signed or
presented by the proper party or parties duly authorized to do so, and
(ii) the advice of counsel retained by it.
3.5 CONTROVERSIES. If any controversy arises between or among Shareholders,
MDC and/or Purchaser, or with any third person with respect to the
subject matter of this Agreement, Escrow Agent shall not be required to
determine the same or take any action with respect thereto, but may
await the final resolution of any such controversy, anything in the
instructions delivered by the parties hereto to the contrary
notwithstanding, and in such event it shall not be liable for interest
or damage; provided that with respect to any controversy among
Shareholders, MDC or Purchaser, Escrow Agent shall, at all times, have
full right and authority to pay over and disburse the Special
Liabilities Escrow Fund in accordance with the joint written
instructions signed by Agent, MDC and Purchaser.
-6-
3.6 DISCHARGE OF ESCROW AGENT. Escrow Agent agrees that Shareholders and
Purchaser may, by mutual agreement at any time, remove Escrow Agent as
escrow agent under this Agreement, and substitute any bank or trust
company therefor, in which event, upon receipt of written notice
thereof, payment of any accrued but unpaid fees, and reimbursement of
Escrow Agent's other fees and expenses from the Special Liabilities
Escrow Fund in accordance with Section 4.1 hereof, Escrow Agent shall
account for and deliver to such substituted escrow agent the Escrow
Fund held by it, and Escrow Agent shall thereafter be discharged from
liability under this Agreement.
3.7 TERM. This Agreement will terminate upon the transfer of all of the
Special Liabilities Escrow Fund by Escrow Agent pursuant hereto.
ARTICLE 4 - MISCELLANEOUS
4.1 NOTICES. Any notices or other communication require to be sent or given
under this Agreement by any of the parties shall in every case be in
writing and shall be deemed properly served if (a) delivered
personally, (b) sent by registered or certified mail, (c) delivered by
a recognized overnight courier service, or (d) sent by facsimile
transmission to the parties at the addresses as set forth below at such
other addresses as may be furnished in writing.
If to Shareholders: Xxxx Xxxxxxxxx
X.X. Xxx 00000
Xxxxxxxxxxx, XX 00000
With a copy to: Jacobvitz, Xxxxx & Xxxxxx P.C.
000 Xxxxxxxxx X.X., Xxxxx 000
Xxxxxxxxxxx, XX 00000
(Counsel for Agent)
If to MDC: Multimedia Development Corporation
000 Xxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxxx
With a copy to: Xxxxxx X. Xxxx
Law Offices of Xxxxxx X. Xxxx PC
000 X. Xxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
If to Purchaser: New West Resources, Inc.
000 Xxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxxx
-7-
With a copy to: Xxxxxx X. Xxxx
Law Offices of Xxxxxx X. Xxxx PC
000 X. Xxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
If to Escrow Agent:
------------------------
------------------------
------------------------
------------------------
Any party may send any notice under this Agreement to the intended
recipient at the address or facsimile number set forth above using any
other means (including personal delivery, messenger service, ordinary
mail or electronic mail), but no such notice, request, demand, claim or
other communication shall be deemed to have been duly given unless and
until it actually is received by the intended recipient. Any party may
change the address or facsimile number to which notices, requests,
demands, claims or other communications under this Agreement are to be
delivered by giving the other parties notice in the manner set forth in
this Agreement.
4.2 EXPENSES. Except as otherwise provided in this Agreement, each party
shall be responsible for its own costs and expenses with respect to
matters involving this Agreement.
4.3 HEADINGS. The section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of the Agreement. All pronouns shall be deemed to refer
to the masculine, feminine, neuter, singular or plural, as the identity
of the persons, firm or corporation may require in the context thereof
4.4 SEVERABILITY. If any provision of this Agreement is determined by a
court to be invalid or unenforceable, such determination shall not
affect any other provision, each of which shall be construed and
enforced as if such invalid or unenforceable portion were not contained
herein. Such invalidity or unenforceability shall not affect any valid
an enforceable application thereof, and each such provision shall be
deemed to be effective, in the manner and to the fullest extent
permitted by law.
4.5 CONSTRUCTION AND EXCLUSIVE JURISDICTION. This Agreement, and the rights
and duties of the parties hereto determined, in accordance with the
laws of the State of New Mexico. The parties to this Agreement agree
that any dispute arising under this Agreement shall be resolved in the
manner set forth in the Purchase Agreement, or to the extent not
governed by the Purchase Agreement, in a proceeding in state or federal
court in the State of New Mexico. The parties hereby consent to the
exclusive jurisdiction of such courts to decide any disputes arising
out of or relating to this Agreement.
4.6. MULTIPLE COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each
-8-
of which shall be deemed an original but all of which together shall
constitute but one and the same instrument.
4.7 AMENDMENT AND WAIVERS. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successor and
assigns. No amendment, supplement, modification or waiver of this
Agreement shall be binding unless executed in writing by the Agent,
MDC, Purchaser and the Escrow Agent. No waiver of any provisions of
this Agreement shall be deemed or shall constitute a waiver of any
other provision hereof (whether or not similar), nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided.
4.8 ATTORNEYS' FEES. In the event of dispute between or among Shareholders,
MDC and Purchaser regarding the distribution of the Special Liabilities
Escrow Fund, upon the issuance of a final, non-appealable order or
judgment by a court of competent jurisdiction, the prevailing party's
legal fees and related expenses shall be paid by the non-prevailing
party or parties. The determination of which party is the "prevailing"
party shall be made by the court issuing such final, non-appealable
order or judgment.
IN WITNESS WHEREOF, the parties hereunto have signed this Agreement as
of the date first above written.
---------------------------
XXXXXX X. XXXXXXXXX
---------------------------
XXXXX X. XXXXXXXXX
---------------------------
XXXXXX XXXXXXXXX
---------------------------
XXXXXXXX XXXXXXXXX
---------------------------
XXXXXX (XXXX) XXXXXX
---------------------------
XXXXX XXXXXX
-9-
NEW WEST RESOURCES, INC.
By:
------------------------
Xxxx X. Xxxxxx
Its Vice President
MULTIMEDIA DEVELOPMENT
CORPORATION
By:
Its
------------------------
---------------------------
By:
Its
------------------------
-10-
EXHIBIT A
SPECIAL LIABILITIES SCHEDULE
-11-
EXHIBIT B
ESCROW FEES
-12-
[Insert date]
New West Resources, Inc.
[insert addressee]
Re: Purchase and Sale of Stock of Multimedia Development Corporation
----------------------------------------------------------------
Ladies and Gentlemen:
We have acted as counsel to Multimedia Development Corporation, a New
Mexico corporation ("MDC") in connection with the Agreement for Purchase and
Sale dated __________, 2000 among Xxxxxx X. Xxxxxxxxx and Xxxxx X. Xxxxxxxxx
(husband and wife), Xxxxxx Xxxxxxxxx and Xxxxxxxx Xxxxxxxxx (husband and wife),
Xxxx X. Xxxxxxxxx, and Xxxxxx (Xxxx) Xxxxxx and Xxxxx Xxxxxx (husband and wife)
(together the "Shareholders"), MDC, and New West Resources, Inc., a Texas
corporation ("Purchaser") (the "Agreement"). This opinion is being furnished to
you pursuant to paragraph 11(a)(v) of the Agreement. Unless otherwise defined
herein, capitalized terms used herein shall have the meanings assigned to such
terms in the Agreement.
For the purposes of the opinions expressed herein we have reviewed
copies of the following documents:
1. The Agreement.
2. Closing Escrow Agreement, Post-Closing Escrow Agreement and
Special Liabilities Escrow Agreement (in the forms attached to
the Agreement) (together the "Escrow Agreements");
3. Noncompetition Agreement (in the form attached to the
Agreement);
4. The Articles of Incorporation of MDC with amendments thereto
(the "Articles of Incorporation"), as certified by the
Secretary of State of the State of New Mexico on May 22, 1998,
and as certified by the Secretary of MDC on March ____, 2000
as being complete, accurate, and in effect, which consist of;
(a) A certified copy of the Articles of Incorporation of
MDC, filed with the State Corporation Commission of
New Mexico on April 14, 1988;
(b) A certified copy of the Articles of Amendment of MDC,
filed with the State Corporation Commission of New
Mexico on January 26, 1989;
EXHIBIT "D"
New West Resources, Inc.
Insert date
Page 2
(c) A certified copy of the Articles of Merger (relating
to a merger of MDC and Southwest Media Associates,
Inc.) filed with the State Corporation Commission of
New Mexico on November 13, 1991; and
(d) A certified copy of the Articles of Merger (relating
to a merger of MDC and Direct Television of New
Mexico, Inc.) filed with the State Corporation
Commission of New Mexico on September 7, 1994;
5. Bylaws of MDC (the "Bylaws"), dated April 26, 1988, as
certified by the Secretary of MDC on _______, 2000 as being
complete, accurate, and in effect;
6. A certificate of good standing and compliance issued by the
New Mexico Public Regulatory Commission on _______, 2000;
7. Certain resolutions of the board of directors of MDC adopted
by a unanimous written consent dated _________ 2000, as
certified by the Secretary of MDC on ________, 2000 as being
complete, accurate, and in effect, relating to the
authorization for MDC to execute, deliver, and perform its
obligations under the Transaction Documents (as defined
below);
8. Certain resolutions of the shareholders of MDC adopted at a
special shareholders' meeting held on ___, 2000, as certified
by the Secretary of MDC on _______ 2000, as being complete,
accurate, and in effect, relating to the authorization of MDC
to execute, deliver, and perform its obligations under the
Transaction Documents;
9. A certificate of the President of MDC, dated ___, 2000, as to
certain facts relating to MDC, a copy of which is enclosed;
and
10. A certificate of the Secretary of MDC, dated ______, 2000, as
to certain facts relating to MDC, a copy of which is enclosed.
The Agreement, Escrow Agreements, and Noncompetition Agreement are sometimes
referred to in this opinion collectively as the "Transaction Documents."
We have not, except as specifically identified above, made any
independent review or investigation of factual or other matters, including the
organization, existence, good standing, or assets of MDC, or with respect to the
business or affairs of MDC. We
New West Resources, Inc.
Insert date
Page 3
have assumed that no other facts or matters exist that would affect the
opinions expressed in this letter.
In our examination of the Agreement and the above described
certificates, documents, and agreements, we have assumed the genuiness all
signatures, the legal capacity of all natural persons, the accuracy and
completeness of all documents submitted to us, the authenticity of all original
documents, and the conformity to authentic original documents of all documents
submitted to us as copies (including telecopies). We also have assumed the
accuracy, completeness and authenticity of the above-described certificates (of
public officials, governmental agencies and departments, corporate officers, and
individuals) on which we are relying, and have made no independent
investigations thereof. In rendering the following opinions, we have relied as
to factual matters, without independent investigation, upon the accuracy of the
representations, warranties, and certifications made by MDC and the Shareholders
in or pursuant to the Transaction Documents and in the officers' certificates
identified in paragraphs 9 and 10 above.
For purposes of this opinion letter, we have assumed, without any
independent investigation on our part, that: (i) Purchaser has all requisite
power and authority under all applicable laws, regulations, and governing
documents to execute, deliver, and perform its obligations under the Transaction
Documents; (ii) Purchaser has duly authorized, executed, and delivered the
Transaction Documents to which it is a party and the consideration to be
delivered by it; (iii) Purchaser is validly existing and in good standing in all
necessary jurisdictions; (iv) the Transaction Documents to which Purchaser is a
party constitute valid and binding obligations of Purchaser, enforceable against
Purchaser in accordance with the terms of each of the Transaction Documents; (v)
there has been no material mistake of fact or misunderstanding, and there has
been no fraud, misrepresentation, duress, or undue influence in connection with
the negotiation, execution, or delivery of any of the Transaction Documents or
any of the documents to be delivered at Closing pursuant to paragraphs 13 and 14
of the Agreement (the "Closing Documents"), and there are no oral or written
agreements or understandings that modify, amend, or vary, or purport to modify,
amend or vary, any of the terms of the Transaction Documents or Closing
Documents; (vi) Purchaser has complied fully with all of its obligations under
the Transaction Documents and Closing Documents, and there are no claims or
causes of action by MDC or any of the Shareholders against Purchaser; (vii) all
Transaction Documents and Closing Documents have been fully executed and
delivered in the forms submitted to us; and (viii) there is full compliance with
any applicable securities laws.
Based upon and subject to the foregoing, and to the qualifications and
limitations set forth below, we are of the opinion that:
New West Resources, Inc.
Insert date
Page 4
1. MDC was incorporated, and is validly existing under the laws
of the State of New Mexico. MDC has the corporate power and
corporate authority under its Articles of Incorporation and
the general corporation law of the State of New Mexico to own
and lease its assets and to transact the business in which it
is currently engaged.
2. MDC has the corporate power and corporate authority under its
Articles of Incorporation and the general corporation law of
the State of New Mexico to execute and deliver the Transaction
Documents to which it is a party and to perform its
obligations thereunder. The execution, delivery, and
performance as of the date hereof by MDC of the Transaction
Documents have been duly authorized by all necessary corporate
action of MDC.
3. When duly executed and delivered on behalf of MDC, and
assuming the applicability of New Mexico law, each of the
Transaction Documents to which MDC is a party will constitute
a valid and binding obligation of MDC, enforceable in
accordance with its terms.
4. When duly executed and delivered by all of the Shareholders,
and assuming the applicability of New Mexico law, each of the
Transaction Documents to which the Shareholders are parties
will constitute a valid and binding obligation of the
Shareholders, enforceable in accordance with its terms.
QUALIFICATIONS AND EXCEPTIONS. In addition to any assumptions and
limitations set forth above, this opinion letter and all opinions rendered
herein are subject to the following qualifications and exceptions, regardless of
whether the opinions refer to such qualifications and exceptions:
(a) We are admitted to practice law in New Mexico. The opinions set
forth in this letter are limited to the laws of the State of New Mexico and to
requirements imposed under the laws or regulations of the State of New Mexico or
any political subdivision thereof.
(b) Enforceability of the Transaction Documents and the Closing
Documents may be limited by: (1) implied covenants in any contract, including
but not limited to an implied covenant of good faith and fair dealing and duties
to act in good faith and in a commercially reasonable manner; (2) the
application of judicial discretion, and application of principles of equity
(including equitable defenses) and public policy, (3) materiality, waiver and
course of performance or conduct; (4) rules of law and equity governing
remedies; (5) applicable bankruptcy, insolvency, reorganization, receivership,
arrangement, moratorium, assignment for the benefit of creditors, fraudulent
conveyance or transfer, preferential transfer, and similar laws relating to or
affecting the rights and remedies of creditors generally; and (6) any ambiguity
in the documents.
New West Resources, Inc.
Insert date
Page 5
(c) We render no opinion regarding any consents, approvals; filings,
applications, or notices required under any contracts, agreements, leases, lien
documents, easements or other encumbrances to which MDC is a party or by which
it or any of its assets is bound. Further, we render no opinion as to whether
any consents, approvals, filings, applications, or notices are required with
respect to the transfer of any FCC or other licenses, permits, franchises,
leases, certificates, or other such grants of rights or convenience, granted or
issued by any governmental unit.
(d) Our opinions are given as of the date hereof, and we assume no
obligation to update or supplement our opinions in response to subsequent
changes in the law or future events or circumstances affecting the transactions
contemplated under the Agreement and the Closing Documents.
The foregoing opinion is for the exclusive reliance of Purchaser and
may not be relied upon or quoted by anyone else for any purpose whatsoever, nor
may copies be delivered to any other person, or filed with any government agency
or corporation, without our prior written consent. The opinion is limited to the
matters expressly stated in this letter, and no opinion is implied or may be
inferred beyond the matters expressly stated in this letter.
Very truly yours,
NONCOMPETITION AGREEMENT
In consideration of the Agreement for Purchase and Sale dated as of
February 7, 2000 (the "Agreement for Purchase and Sale") among Xxxxxx X.
Xxxxxxxxx and Xxxxx X. Xxxxxxxxx (husband and wife), Xxxxxx Xxxxxxxxx and
Xxxxxxxx Xxxxxxxxx (husband and wife), Thor L. Xxxxxxxxx, Xxxxxx (Xxxx) Xxxxxx
and Xxxxx Xxxxxx (husband and wife), (together the "Shareholders"), Multimedia
Development Corporation, a New Mexico corporation ("MDC") and New West Resources
Inc., a Texas corporation ("Purchaser"), and the transactions contemplated
thereby, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Xxxxxx X. Xxxxxxxxx, Xxxxx
Xxxxxxxxx and Xxxx Xxxxxxxxx (together the "Mickelsons") agree as follows:
The Mickelsons understand and agree that the noncompetition covenants
made by them under this Agreement is a material part of the consideration that
induced Purchaser to purchase the Stock of MDC pursuant to the Agreement for
Purchase and Sale.
The Mickelsons agree that for a period of five years from and after the
Closing Date (as that term is defined in the Agreement for Purchase and Sale),
none of the Mickelsons shall, without MDC's prior written consent, engage,
directly or indirectly, whether as an employee, owner, partner, agent,
shareholder, director or otherwise, in any business offering wireless cable
services for video, telephone, computer data or Internet access, or any such
services provided over an MMDS or other broadband wireless system in the New
Mexico markets where MDC engages in business or holds FCC licenses on the
Closing Date; provided that this Agreement does not preclude any of the
Mickelsons from purchasing stock, bonds or other securities in any company
traded on a nationally recognized stock exchange. The New Mexico markets where
MDC engages in business or holds FCC licenses on the Closing Date are listed on
Exhibit "A" hereto.
The Mickelsons acknowledge and agree that this Noncompetition Agreement
is necessary for the protection of the legitimate business interests of MDC, and
that the scope of this Noncompetition Agreement in time, geography and types and
limits of activities is reasonable. The Mickelsons further agree that the remedy
at law for a breach of this Noncompetition Agreement will be inadequate, and
that MDC shall be entitled to specific performance and/or injunctive relief for
such a breach. MDC and the Mickelsons agree that in the event of litigation
arising out of the terms of this Noncompetition Agreement, the prevailing party
shall be entitled to reimbursement of its reasonable attorneys fees.
This Noncompetition Agreement shall be governed, construed and
interpreted under the laws of the State of New Mexico.
No failure or delay by MDC in exercising any of its rights or remedies
hereunder, and no course of dealing between MDC and the Mickelsons, shall
operate as a waiver of
EXHIBIT "E"
any such right or remedy. No waiver of any default on any one occasion shall
constitute a waiver of any subsequent or other default. No amendment or
modification of this Noncompetition Agreement shall be binding unless in
writing executed by MDC and the Mickelsons. This Noncompetition Agreement and
the Agreement for Purchase and Sale contain the entire agreement between the
parties with respect to the subject matter hereof, and supersede all prior
negotiations or agreements between MDC and the Mickelsons with respect to the
subject matter hereof. This Noncompetition Agreement shall inure to the
benefit of Purchaser and its successors and assigns, and shall be binding on
the Mickelsons.
This Noncompetition Agreement is conditioned on the closing of the sale
of the Stock to NWR pursuant to the Agreement for Purchase and Sale, and shall
be of no force or effect unless and until such closing has occurred.
IN WITNESS WHEREOF, the parties have executed this Noncompetition
Agreement as of the date first written above.
------------------------ MULTIMEDIA DEVELOPMENT
XXXXXX X. XXXXXXXXX CORPORATION, a New Mexico
corporation
------------------------
XXXXX XXXXXXXXX By:
------------------------------
------------------------ Title:
XXXX XXXXXXXXX ---------------------------
-2-
LAW OFFICES OF XXXXXX X. XXXX, P.C.
000 X. XXXXXX XXXXXX
XXXXXXX, XXXXX 00000
(000) 000-0000
FAX (000) 000-0000
E-Mail: xxxxx0@xxxxxxx.xxx
__________,2000
Multimedia Development Corporation
0000 Xxxxxxxxxx X.X., Xxxxx 000
Xxxxxxxxxxx, Xxx Xxxxxx 00000
Re: Purchase and Sale of Stock of Multimedia Development Corporation
----------------------------------------------------------------
Ladies and Gentlemen:
We have acted as counsel to New West Resources, Inc., a Texas
corporation ("NWR") in connection with the Agreement for Purchase and Sale dated
__________, 2000 among Xxxxxx X. Xxxxxxxxx and Xxxxx X. Xxxxxxxxx (husband and
wife), Xxxxxx Xxxxxxxxx and Xxxxxxxx Xxxxxxxxx (husband and wife), Xxxx X.
Xxxxxxxxx, and Xxxxxx (Xxxx) Xxxxxx and Xxxxx Xxxxxx (husband and wife)
(together the "Shareholders"), NWR, and Multimedia Development Corporation
("MDC"), a New Mexico corporation (the "Agreement"). This opinion is being
furnished to you pursuant to paragraph 11(a)(v) of the Agreement. Unless
otherwise defined herein, capitalized terms used herein shall have the meanings
assigned to such terms in the Agreement.
For the purposes of the opinions expressed herein we have reviewed
copies of the following documents:
1. The Agreement.
2. Closing Escrow Agreement, Post-Closing Escrow Agreement and
Special Liabilities Escrow Agreement (in the forms attached to
the Agreement) (together the "Escrow Agreements");
3. Noncompetition Agreement (in the form attached
to the Agreement);
4. The Articles of Incorporation of NWR with amendments thereto
(the "Articles of Incorporation"), as certified by the
Secretary of the State of Texas on ____________, 2000.
5. Bylaws of NWR (the "Bylaws"), dated March 26,
1991;
EXHIBIT "F"
Multimedia Development Corporation
February 4, 2000
Page 2
6. Minutes and resolutions of the Board of Directors of NWR, as
certified by the Secretary of NWR, as being complete and
accurate, and in effect, relating to the authorization for NWR
to execute, deliver and perform its obligations under the
Transaction Documents (as defined below);
7. A Certificate of Good Standing and Compliance as issued by the
Secretary of State of the State of Texas on ______________,
2000; and
8. A Certificate of Incumbency of the officers of New West
Resources.
The Agreement, Escrow Agreements, and Noncompetition Agreement are
sometimes referred to in this opinion collectively as the "Transaction
Documents."
We have not, except as specifically identified above, made any
independent review or investigation of factual or other matters, including the
organization, existence, good standing, or assets of NWR, or with respect to the
business or affairs of NWR. We have assumed that no other facts or matters exist
that would affect the opinions expressed in this letter.
In our examination of the Agreement and the above described
certificates, documents, and agreements, we have assumed the genuineness of all
signatures, the legal capacity of all natural persons, the accuracy and
completeness of all documents submitted to us, the authenticity of all original
documents, and the conformity to authentic original documents of all documents
submitted to us as copies (including telecopies). We also have assumed the
accuracy, completeness and authenticity of the above described certificates (of
public officials, governmental agencies and departments, corporate officers, and
individuals) on which we are relying, and have made no independent
investigations thereof. In rendering the following opinions, we have relied as
to factual matters, without independent investigation, upon the accuracy of the
representations, warranties, and certifications made by NWR in or pursuant to
the Transaction Documents.
For purposes of this opinion letter, we have assumed, without any
independent investigation on our part, that: (i) MDC and the Shareholders have
all requisite power and authority under all applicable laws, regulations, and
governing documents to execute, deliver, and perform its obligations under the
Transaction Documents; (ii) MDC and the Shareholders have duly authorized,
executed, and delivered the Transaction Documents to which it is a party and the
consideration to be delivered by it; (iii) MDC and the Shareholders are validly
existing and in good standing in all necessary jurisdictions; (iv) the
Transaction Documents to which MDC and the Shareholders are a party constitute
valid and binding obligations of MDC and the Shareholders, enforceable against
MDC and the Shareholders in accordance with the terms of each of the Transaction
Documents; (v) there has been no material mistake of fact or misunderstanding,
and there has been no fraud, misrepresentation, duress, or undue influence in
connection with the negotiation, execution, or
Multimedia Development Corporation
February 4, 2000
Page 3
delivery of any of the Transaction Documents or any of the documents to be
delivered at Closing pursuant to paragraphs 13 and 14 of the Agreement (the
"Closing Documents"), and there are no oral or written agreements or
understandings that modify, amend, or vary, or purport to modify, amend or
vary, any of the terms of the Transaction Documents or Closing Documents;
(vi) MDC and the Shareholders have complied fully with all of its obligations
under the Transaction Documents and Closing Documents, and there are no
claims or causes of action by NWR against MDC or any of the Shareholders;
(vii) all Transaction Documents and Closing Documents have been fully
executed and delivered in the forms submitted to us; and (viii) there is full
compliance with any applicable securities laws.
Based upon and subject to the foregoing, and to the qualifications and
limitations set forth below, we are of the opinion that:
1. NWR was incorporated, and is validly existing under the laws
of the State of Texas. NWR has the corporate power and
corporate authority under its Articles of Incorporation and
the general corporation laws of the State of Texas to own and
lease its assets and to transact the business in which it is
currently engaged.
2. NWR has the corporate power and corporate authority under its
Articles of Incorporation and the general corporation laws of
the State of Texas to execute and deliver the Transaction
Documents to which it is a party and to perform its
obligations thereunder. The execution, delivery, and
performance as of the date hereof by NWR of the Transaction
Documents have been duly authorized by all necessary corporate
action of NWR.
3. When duly executed and delivered on behalf of NWR, and
assuming the applicability of Texas law, each of the
Transaction Documents to which NWR is a party will constitute
a valid and binding obligation of NWR, enforceable in
accordance with its terms.
4. When duly executed and delivered by NWR, each of the
Transaction Documents to which NWR is a party will constitute
a valid and binding obligation of NWR, enforceable in
accordance with its terms.
QUALIFICATIONS AND EXCEPTIONS. In addition to any assumptions and
limitations set forth above, this opinion letter and all opinions rendered
herein are subject to the following qualifications and exceptions, regardless of
whether the opinions refer to such qualifications and exceptions:
(a) We are admitted to practice law in Texas. The opinions set forth in
this letter are limited to the laws of the State of Texas and to requirements
imposed under the laws or regulations of the State of Texas or any political
subdivision thereof.
Multimedia Development Corporation
February 4, 2000
Page 4
(b) Enforceability of the Transaction Documents and the Closing
Documents may be limited by: (1) implied covenants in any contract, including
but not limited to an implied covenant of good faith and fair dealing and duties
to act in good faith and in a commercially reasonable manner; (2) the
application of judicial discretion, and application of principles of equity
(including equitable defenses) and public policy, (3) materiality, waiver and
course of performance or conduct; (4) rules of law and equity governing
remedies; (5) applicable bankruptcy, insolvency, reorganization, receivership,
arrangement, moratorium, assignment for the benefit of creditors, fraudulent
conveyance or transfer, preferential transfer, and similar laws relating to or
affecting the rights and remedies of creditors generally; and (6) any ambiguity
in the documents.
(c) We render no opinion regarding any consents, approvals, filings,
applications, or notices required under any contracts, agreements, leases, lien
documents, easements or other encumbrances to which NWR is a party or by which
it or any of its assets is bound. Further, we render no opinion as to whether
any consents, approvals, filings, applications, or notices are required with
respect to the transfer of any FCC or other licenses, permits, franchises,
leases, certificates, or other such grants of rights or convenience, granted or
issued by any governmental unit.
(d) Our opinions are given as of the date hereof, and we assume no
obligation to update or supplement our opinions in response to subsequent
changes in the law or future events or circumstances affecting the transactions
contemplated under the Agreement and the Closing Documents.
The foregoing opinion is for the exclusive reliance of MDC and the
Shareholders and may not be relied upon or quoted by anyone else for any purpose
whatsoever, nor may copies be delivered to any other person, or filed with any
government agency or corporation, without our prior written consent. The opinion
is limited to the matters expressly stated in this letter, and no opinion is
implied or may be inferred beyond the matters expressly stated in this letter.
Sincerely,
Xxxxxx Xxxx
RL:lm
All Schedules
-------------
to
Agreement for Purchase and Sale ("Agreement")
dated
February 7, 2000
between
New West Resources ("Purchaser")
and
Multimedia Development Corporation ("MDC")
The following provisions apply to, and by this reference are
incorporated into, each of the Schedules to the Agreement:
Any disclosure made on any schedule to the Agreement that is applicable
to the subject matter of any representation and warranty that references another
schedule, is deemed to be a part of such other schedule. For example, a
disclosure on Schedule 6(l) relating to contacts and leases utilized by the
Partnership also is deemed to be a part of Schedules 6(f) and 6(p).
No representation or warranty is made, and no disclosures are included,
regarding the Excluded Assets, as that term is defined in the Agreement.
1 of 1
