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EXHIBIT 2.1
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SECURITIES PURCHASE AGREEMENT
AMONG
CLASSIC CABLE, INC.
XXXXXX GROUP, INC.
AND
THE SELLERS NAMED HEREIN
DATED AS OF MAY 11, 1999
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
1.1 Definitions....................................................... 2
ARTICLE II
SALE OF SECURITIES AND CLOSING
2.1 Purchase and Sale of Securities................................... 2
2.2 Purchase Price.................................................... 3
2.3 Adjustment to Aggregate Purchase Price............................ 3
2.4 Closing........................................................... 6
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
3.1 Organization...................................................... 7
3.2 Authority, Execution and Validity................................. 8
3.3 No Conflicts or Violations........................................ 8
3.4 Consents.......................................................... 9
3.5 Title to Securities............................................... 9
3.6 Litigation........................................................ 9
3.7 Partnership....................................................... 10
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
4.1 Organization of the Xxxxxx Companies.............................. 12
4.2 Authority, Execution and Validity................................. 12
4.3 Capital Stock..................................................... 13
4.4 No Conflicts or Violations........................................ 14
4.5 Consents.......................................................... 14
4.6 Company Financial Statements...................................... 14
4.7 Absence of Certain Changes........................................ 15
4.8 No Undisclosed Liabilities........................................ 16
4.9 Litigation........................................................ 16
4.10 System Franchises................................................. 17
4.11 Pole Attachment Agreements........................................ 18
4.12 Real Property..................................................... 18
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4.13 Other Material Contracts.......................................... 20
4.14 Compliance with Laws.............................................. 21
4.15 Assets............................................................ 22
4.16 Restoration....................................................... 22
4.17 Patents, Trademarks and Copyrights................................ 23
4.18 Year 2000......................................................... 23
4.19 Systems Information............................................... 23
4.20 Environmental Matters............................................. 24
4.21 Employee Benefits................................................. 25
4.22 Employee Matters.................................................. 28
4.23 Taxes............................................................. 28
4.24 Insurance......................................................... 30
4.25 Bonds............................................................. 30
4.26 Organic Documents................................................. 30
4.27 Brokers........................................................... 30
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
5.1 Organization...................................................... 31
5.2 Authority......................................................... 31
5.3 No Conflicts or Violations........................................ 32
5.4 Consents.......................................................... 32
5.5 Litigation........................................................ 32
5.6 Purchase for Investment........................................... 32
5.7 Sufficient Funds.................................................. 33
5.8 Brokers........................................................... 33
ARTICLE VI
COVENANTS OF THE SELLERS AND THE COMPANY
6.1 Consents.......................................................... 34
6.2 HSR Act Filings................................................... 34
6.3 Licenses.......................................................... 34
6.4 Access by Purchaser............................................... 35
6.5 Conduct of Business............................................... 35
6.6 Monthly Financial Statements...................................... 37
6.7 Bank Accounts..................................................... 37
6.8 Employee Listing.................................................. 37
6.9 Lien and Judgment Searches........................................ 37
6.10 No Amendments..................................................... 38
6.11 No Issuance of Securities......................................... 38
6.12 No Dividends...................................................... 38
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6.13 Notification and Supplements to Schedules......................... 38
ARTICLE VII
COVENANTS OF PURCHASER
7.1 Deposit........................................................... 39
7.2 Consents.......................................................... 39
7.3 HSR Act Filings................................................... 39
7.4 Licenses.......................................................... 40
7.5 WARN Act.......................................................... 40
7.6 Financing......................................................... 40
7.7 Assistance and Information........................................ 40
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF PURCHASER
8.1 Representations and Warranties.................................... 41
8.2 Performance....................................................... 41
8.3 Officer's Certificates............................................ 41
8.4 No Injunction..................................................... 41
8.5 HSR Act and Required Consents..................................... 42
8.6 Legal Opinion..................................................... 42
8.7 FCC Legal Opinion................................................. 42
8.8 Indemnity Escrow Agreement........................................ 42
8.9 Noncompete Agreement.............................................. 42
8.10 Resignations...................................................... 42
8.11 Financial Performance............................................. 43
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF THE SELLERS
9.1 Representations and Warranties.................................... 43
9.2 Performance....................................................... 43
9.3 Officer's Certificates............................................ 43
9.4 No Injunction..................................................... 43
9.5 HSR Act and Required Consents..................................... 44
9.6 Legal Opinion..................................................... 44
9.7 Indemnity Escrow Agreement........................................ 44
9.8 Company Financing................................................. 44
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ARTICLE X
INDEMNIFICATION AND SURVIVAL OF PROVISIONS
10.1 Indemnification by Sellers........................................ 44
10.2 Indemnification by Purchaser...................................... 45
10.3 Notice and Resolution of Claims................................... 46
10.4 Limits on Indemnification......................................... 47
10.5 Indemnity Payments................................................ 48
10.6 Payment........................................................... 48
10.7 Other Indemnitees................................................. 49
10.8 Survival.......................................................... 49
ARTICLE XI
TERMINATION
11.1 Termination....................................................... 49
11.2 Effect of Termination............................................. 50
ARTICLE XII
MISCELLANEOUS
12.1 Tax............................................................... 51
12.2 Sellers Committee................................................. 52
12.3 Notices........................................................... 53
12.4 Entire Agreement.................................................. 55
12.5 Expenses.......................................................... 55
12.6 Public Announcements.............................................. 55
12.7 Confidentiality................................................... 56
12.8 No Negotiation.................................................... 57
12.9 Amendments........................................................ 57
12.10 Assignment........................................................ 57
12.11 Further Assurances................................................ 57
12.12 Governing Law..................................................... 57
12.13 Counterparts...................................................... 58
12.14 Dispute Resolution................................................ 58
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EXHIBITS
A - Definitions
B - Form of Indemnity Escrow Agreement
C - Form of Deposit Escrow Agreement
D - Form of Noncompete Agreement
E - Company Special Counsel Legal Opinions
F - Company FCC Counsel Legal Opinions
G - Purchaser Counsel Legal Opinions
SELLERS AND COMPANY SCHEDULES
2.2 - Sellers' Pro Rata Shares
2.3 - Life Insurance Policies
3.4 - Sellers' Consents
3.5 - Title to Securities
4.1 - Organization of Xxxxxx Companies
4.3(a) - Capital Stock
4.3(b) - Equity Interests
4.5 - Governmental Consents
4.7 - Certain Material Changes
4.8 - Undisclosed Liabilities
4.9 - Litigation
4.10 - System Franchises
4.11 - Pole Attachment Agreements
4.12 - Real Property
4.13 - Other Material Contracts
4.14 - FCC Licenses
4.15 - Assets and Asset Dispositions
4.17 - Trade Names and Trademarks
4.19(a) - Systems Information
4.19(c) - Overbuilds
4.20 - Environmental Matters
4.21(a) - Employee Benefit Plans
4.21(b) - Extension of Coverage
4.23(a) - Exceptions to Tax Returns
4.23(b) - Tax Return Extensions
4.23(c) - Audits
4.24 - Insurance
4.25 - Bonds
6.5(c) - 1999 Capital Expenditure Budget
8.5 - Required Consents
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PURCHASER SCHEDULES
5.4 - Purchaser Consents
5.7 - Financing Commitments
5.8 - Brokers and Advisors
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SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement is made and entered into as of this
11th day of May, 1999 by and among Classic Cable, Inc., a Delaware corporation
("Purchaser"), Xxxxxx Group, Inc., a Delaware corporation (the "Company"),
Xxxxxxxx X. Xxxxxx, a resident of the State of Texas ("X. Xxxxxx"), Xxxxxx X.
Xxxxxx, a resident of the State of Texas ("X. Xxxxxx"), Communities Foundation
of Texas, Inc., a Texas not for profit corporation ("Communities Foundation"),
Leadership Network, Inc., a Texas not for profit corporation ("Leadership
Network"), Xxxxxx Foundation, Inc., a Texas not for profit corporation ("Buford
Foundation"), Xxxxxxx X. Xxxxx, Xx., a resident of the State of Texas ("Hooks"),
Xxxxxx X. Xxxxxx, a resident of the State of Texas ("Xxxxxx"), Xxxxxx X. Xxxxx,
III, a resident of the State of Texas ("Xxxxx"), and Xxxxxxxxx Xxx Xxxxxxxx, a
resident of the State of Texas ("Xxxxxxxx"). Each of X. Xxxxxx, X. Xxxxxx,
Communities Foundation, Leadership Network, Xxxxxx Foundation, Hooks, Martin,
Xxxxx and Xxxxxxxx are individually referred to as a "Seller" and collectively
referred to as the "Sellers."
PRELIMINARY STATEMENTS
WHEREAS, the Company, through its subsidiaries, owns and operates cable
television systems (the "Systems") which provide cable television services to
subscribers in suburban markets and rural markets in the States of Texas,
Arkansas, Louisiana and Missouri and to correctional facilities throughout the
United States;
WHEREAS, X. Xxxxxx, X. Xxxxxx, Communities Foundation, Leadership
Network, Xxxxxx Foundation and Xxxxxx Television Partnership, a Texas general
partnership (the "Partnership"), collectively own all the issued and outstanding
shares of the Company's common stock, $1.00 par value (the "Company Common
Stock");
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WHEREAS, X. Xxxxxx, X. Xxxxxx, Hooks, Martin, Xxxxx and Xxxxxxxx
collectively own all the issued and outstanding partnership interests of the
Partnership (collectively, the "Partnership Interests");
WHEREAS, upon the terms and subject to the conditions set forth herein,
X. Xxxxxx, X. Xxxxxx, Communities Foundation, Leadership Network and Xxxxxx
Foundation severally desire to sell, assign, transfer and convey to Purchaser,
and Purchaser desires to purchase and acquire from such Sellers, all of the
shares of Company Common Stock owned directly by such Sellers (collectively, the
"Shares");
WHEREAS, upon the terms and subject to the conditions set forth herein,
X. Xxxxxx, X. Xxxxxx, Hooks, Martin, Seal and Xxxxxxxx severally desire to sell,
assign, transfer and convey to Purchaser, and Purchaser desires to purchase and
acquire from such Sellers, all of the Partnership Interests owned directly by
such Sellers;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. The capitalized terms used in this Agreement will have
the meanings ascribed to them in Exhibit A hereto.
ARTICLE II
SALE OF SECURITIES AND CLOSING
2.1 Purchase and Sale of Securities. Subject to the terms and
conditions, and in reliance upon the representations and warranties set forth in
this Agreement, on the Closing Date,
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the Sellers agree to sell to Purchaser, and Purchaser agrees to purchase from
the Sellers, the Shares and the Partnership Interests (collectively, the
"Securities").
2.2 Purchase Price. The aggregate purchase price payable by Purchaser
for the Securities (the "Aggregate Purchase Price") shall be an amount equal to
the difference of $300,000,000 minus the amount of Senior Debt (as such purchase
price may be adjusted by the Purchase Price Adjustment Amount in accordance with
Section 2.3), $15,000,000 of which shall be deposited into an escrow account
pursuant to the Indemnity Escrow Agreement, and the balance of which shall be
payable to the Sellers in immediately available funds in accordance with each
Seller's Pro Rata Share. Each Seller's Pro Rata Share is set forth on Schedule
2.2.
2.3 Adjustment to Aggregate Purchase Price.
(a) The Aggregate Purchase Price will be increased or
decreased, as the case may be, by each of the following:
(i) the Aggregate Purchase Price will be increased on
a dollar for dollar basis by an amount equal to the sum of
cash and cash equivalent balances and the net cash surrender
value of the life insurance policies set forth on Schedule 2.3
(to the extent realizable immediately following the Closing)
as of the Closing Date;
(ii) if Working Capital as of the Closing Date is
greater than zero (0), the Aggregate Purchase Price will be
increased on a dollar for dollar basis by an amount equal to
such excess;
(iii) if Working Capital as of the Closing Date is
less than zero (0), the Aggregate Purchase Price will be
decreased on a dollar for dollar basis by an amount equal to
such difference; and
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(iv) if the number of Basic Subscribers as of the
Closing Date is less than 171,000, the Aggregate Purchase
Price will be decreased on a dollar for dollar basis by an
amount equal to the product of (A) $1,754, times (B) the
difference of 171,000 minus the actual number of Basic
Subscribers as of the Closing Date.
Any adjustment to the Aggregate Purchase Price determined under this
Section 2.3(a) is herein referred to as the "Purchase Price Adjustment
Amount."
(b) The amount of Senior Debt, Working Capital and the cash
balances and cash surrender value of life insurance policies of the
Xxxxxx Companies and any Purchase Price Adjustment Amount resulting
therefrom will be determined from the consolidated balance sheet of the
Xxxxxx Companies as of the Closing Date (the "Closing Balance Sheet").
The Closing Balance Sheet will be prepared by Purchaser in accordance
with GAAP on a consistent basis with the March Balance Sheet. The
number of Basic Subscribers as of the Closing Date and any Purchase
Price Adjustment Amount resulting therefrom will be determined from the
books and records of the Xxxxxx Companies and will be prepared on a
consistent basis with past practice.
(c) At least five (5) Business Days prior to the Closing, the
Sellers and the Company will furnish Purchaser with an estimated
Closing Balance Sheet, the amount of Senior Debt, the number of Basic
Subscribers and a good faith estimated calculation of the Purchase
Price Adjustment Amount (the "Preliminary Purchase Price Adjustment
Amount"), each of which will be in reasonable detail and accompanied by
such other financial information and methods of calculation as may be
reasonably necessary for Purchaser to evaluate the accuracy thereof.
The Aggregate Purchase Price payable to the Sellers at Closing will be
adjusted by the Preliminary Purchase Price Adjustment Amount.
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(d) Within forty-five (45) days after the Closing, Purchaser
and the Company will furnish the Sellers with the Closing Balance
Sheet, the number of Basic Subscribers as of the Closing Date and the
calculation of the Purchase Price Adjustment Amount, each of which will
be in reasonable detail and accompanied by such other financial
information and methods of calculation as may be reasonably necessary
for the Sellers to evaluate the accuracy thereof. The Sellers shall
have a period of ten (10) Business Days after receipt of Purchaser's
calculation of the Purchase Price Adjustment Amount to notify Purchaser
of their election to accept or reject (and in the case of a rejection,
there shall be included in such notice the reasons for such rejection
in reasonable detail) the calculation of the Purchase Price Adjustment
Amount. In the event no notice is received by Purchaser during such ten
(10) Business Day period, the calculation of the Purchase Price
Adjustment Amount shall be deemed accepted by the Sellers and final and
binding on the parties hereto.
(e) In the event the Sellers shall timely reject the
calculation of the Purchase Price Adjustment Amount, Purchaser and the
Sellers will promptly (and in any event within twenty (20) days
following the date upon which the Sellers shall reject the calculation
of the Purchase Price Adjustment Amount) attempt to make a joint
determination of the Purchase Price Adjustment Amount. If the Sellers
and Purchaser are able to jointly determine the Purchase Price
Adjustment Amount, any required adjustment to the Aggregate Purchase
Price resulting therefrom will be made immediately after such
determination and will be final and binding on the parties hereto. In
the event the Sellers and Purchaser are unable to agree upon the final
determination of the calculation of the Purchase Price Adjustment
Amount as herein provided within such twenty (20) day period,
resolution of the issues in dispute shall be made within fifteen (15)
days thereafter by one of the five largest national accounting firms,
which accounting firm shall be jointly selected by the parties, or if
the parties are unable to agree upon an accounting firm, selected by
lot (the "Independent Firm") and such determination of the disputed
issues by the Independent Firm shall be final and binding on all the
parties hereto. The Independent Firm will allocate its costs and
expenses in
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reviewing the issues in dispute to the Sellers and Purchaser based on
the percentage determined by dividing (A) that portion of the contested
amount not awarded to such party, by (B) the amount actually contested
by the parties. For example, if Purchaser claims that the Working
Capital should be $1,000 lower, and the Sellers contest only $500 of
the amount claimed by Purchaser, and if the dispute is ultimately
resolved by the Independent Firm by lowering the Working Capital by
$300, the costs and expenses of the Independent Firm will be allocated
60% (i.e., 300/500) to the Sellers and 40% (i.e., 200/500) to
Purchaser.
(f) If the Aggregate Purchase Price calculated based on the
Purchase Price Adjustment Amount is greater than the Aggregate Purchase
Price calculated based on the Preliminary Purchase Price Adjustment
Amount, Purchaser will pay the Sellers their Pro Rata Share of such
difference. If the Aggregate Purchase Price calculated based on the
Purchase Price Adjustment Amount is less than the Aggregate Purchase
Price calculated based on the Preliminary Purchase Price Adjustment
Amount, the Sellers will pay their Pro Rata Share of such difference to
Purchaser. If any payment is required by this clause (f), such payment
will be paid by wire transfer of immediately available funds within
three (3) Business Days after resolution of the amount due to such
account as is specified by the party receiving payment.
2.4 Closing.
(a) The Closing will take place at the offices of Xxxxxx &
Xxxx, L.L.P., 0000 Xxxx Xxxxxx, Xxxxxx, Xxxxx 00000 (or such other
location as the Parties may agree), at 10:00 a.m. local time, on the
Closing Date.
(b) At the Closing, Purchaser will (i) pay each Seller its Pro
Rata Share of the Aggregate Purchase Price payable to the Sellers on
the Closing Date (as determined in accordance with Section 2.3(c)) by
wire transfer of immediately available funds to such accounts as the
Sellers specify to Purchaser pursuant to a letter of direction
delivered to
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Purchaser not less than two (2) Business Days prior to the Closing
Date, (ii) pay, or cause to be paid, in full all Senior Bank Debt by
wire transfer of immediately available funds pursuant to a payoff and
release letter delivered to Purchaser not less than two (2) Business
Days prior to the Closing Date, (iii) pay $15,000,000 by wire transfer
of immediately available funds into an escrow account pursuant to the
Indemnity Escrow Agreement, and (iii) deliver to each of the Sellers
and the Company the documents and instruments required to be delivered
by Purchaser on the Closing Date under the terms of this Agreement and
such other documents as any Seller or the Company reasonably requests
for the consummation of the transactions contemplated by this
Agreement.
(c) At the Closing, (i) the Sellers will deliver, or cause to
be delivered, to Purchaser (A) certificates representing all the shares
of Company Common Stock issued and outstanding on the Closing Date
(including the Shares) duly endorsed or accompanied by duly executed
blank stock powers, (B) assignments of general partnership interests
for the transfer of the Partnership Interests to Purchaser, and (C)
such other documents and instruments required to be delivered by the
Sellers on the Closing Date under the terms of this Agreement or as
otherwise reasonably requested by Purchaser for the consummation of the
transactions contemplated by this Agreement, and (ii) the Company will
deliver to Purchaser the documents and instruments required to be
delivered by the Company on the Closing Date under the terms of this
Agreement and such other documents as Purchaser reasonably requests for
the consummation of the transactions contemplated by this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Except as set forth in the Schedules to this Agreement delivered by the
Sellers and the Company to Purchaser concurrently with the execution and
delivery of this Agreement, the Sellers, severally as to such Seller alone and
not jointly, hereby represent and warrant to Purchaser as follows:
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3.1 Organization. Each Corporate Seller is a corporation duly
organized, validly existing and in good standing under the Laws of its state of
incorporation and has full power and authority to enter into this Agreement and
the other Company Documents to which it is a party, and to perform its
obligations hereunder and thereunder. Each Individual Seller has full power and
authority to enter into this Agreement and the other Company Documents to which
he or she, as applicable, is a party, and to perform his or her, as applicable,
obligations hereunder and thereunder.
3.2 Authority, Execution and Validity. The execution and delivery of
this Agreement and the other Company Documents to which it is a party by each
Corporate Seller and the performance by such Seller of its obligations hereunder
and thereunder have been duly and validly authorized by all necessary action on
the part of such Seller. This Agreement has been duly executed and delivered by
each Seller and (assuming that this Agreement is a legal, valid, and binding
obligation of each other Party hereto) constitutes a legal, valid, and binding
obligation of such Seller, enforceable against such Seller in accordance with
its terms, and upon execution and delivery, the other Company Documents to which
it is a party (assuming that such Company Documents are legal, valid and binding
obligations of each other party thereto) will constitute legal, valid and
binding obligations of such Seller, enforceable against such Seller in
accordance with their terms, except, in each of the foregoing instances, to the
extent that (a) enforcement may be limited by or subject to any bankruptcy,
insolvency, reorganization, moratorium, or similar Laws now or hereafter in
effect relating to or limiting creditors' rights generally, and (b) the remedy
of specific performance and injunctive and other forms of equitable relief are
subject to certain equitable defenses and to the discretion of the court or
other similar Person before which any proceeding therefor may be brought.
3.3 No Conflicts or Violations. Subject to obtaining the Consents
contemplated by Section 3.4, the execution and delivery of this Agreement and
the other Company Documents to which it is a party by each Seller do not, and
the performance by such Seller of its obligations hereunder and thereunder will
not: (a) conflict with or violate in any material respect any term or
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provision of any material Law or any material writ, judgment, decree, or
injunction applicable to such Seller or by which any of its properties is bound
or subject; (b) conflict with or result in a violation or breach of any of the
provisions of any partnership agreement, charter, bylaws or other organizational
documents of such Seller; or (c) result in a material breach of, or constitute a
material default under, any material Contract to which such Seller is a party or
by which any of its properties is bound or subject.
3.4 Consents. The execution and delivery by each Seller of this
Agreement and the other Company Documents to which it is a party do not, and
consummation of the transactions contemplated hereby and thereby will not,
require such Seller to obtain any Consent from any Person except for (a) the
Consents set forth on Schedule 3.4 and (b) such Consents the failure of which to
be made or obtained could not reasonably be expected to (i) materially and
adversely effect the validity or enforceability of this Agreement or any other
Company Document, (ii) materially and adversely effect the ability of such
Seller to perform its obligations under this Agreement or under any other
Company Document, or (iii) have a Company Material Adverse Effect.
3.5 Title to Securities. Except as set forth on Schedule 3.5, each
Seller owns, beneficially and of record and free and clear of any Lien, all of
the Shares and Partnership Interests set forth opposite such Seller's name on
Schedule 3.5. All of the shares of capital stock of the Company and partnership
interests of the Partnership directly or indirectly owned, beneficially and of
record, by such Seller is identified on Schedule 3.5. Upon the sale of the
Securities to Purchaser at the Closing, Purchaser will acquire the legal and
beneficial interest in all of the Securities owned by such Seller free and clear
of any Lien, except for any Liens created by Purchaser.
3.6 Litigation. There is no Action pending, or to the Knowledge of such
Seller, threatened, against such Seller at law or in equity, in, before, or by
any Person, except such Actions that, if adversely determined, could not
reasonably be expected to have a material adverse effect on the validity or
enforceability of this Agreement or any other Company
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Document or on the ability of such Seller to perform its obligations under this
Agreement or any other Company Document.
3.7 Partnership. The Individual Sellers, jointly hereby represent and
warrant to Purchaser as follows:
(a) The Partnership is a general partnership duly organized
and validly existing under the Laws of its jurisdiction of
organization. The Partnership Interests have been duly authorized and
validly issued and have not been issued in violation of any securities
laws, preemptive or similar rights created by statute or the general
partnership agreement of the Partnership. The Partnership Interests are
the only issued and outstanding partnership interests of the
Partnership. There are no outstanding securities, rights (preemptive or
other), subscriptions, calls, warrants, options, commitments or other
agreements (except for this Agreement) that give any Person the right
to purchase or otherwise receive or be issued any partnership interests
in the Partnership or any security convertible into or exchangeable for
any such partnership interests. Except for the Partnership's general
partnership agreement, there are no voting trusts, proxies or other
agreements or understandings to which any Individual Seller is a party
or by which any Individual Seller is bound with respect to the voting
of any Partnership Interests.
(b) The Partnership has no assets or properties of any kind,
nature, character or description, whether tangible, intangible,
personal, real or mixed, other than the shares of Company Common Stock
owned directly by the Partnership as set forth on Schedule 4.3(a). The
Partnership owns, beneficially and of record, such shares of Company
Common Stock free and clear of any Lien. Except as set forth in the
general partnership agreement of the Partnership, the Partnership has
no liabilities or obligations of any nature (whether accrued,
unaccrued, absolute, fixed, contingent or otherwise) and is not a party
to any contract or other agreement. The Partnership has been operated
in compliance with all Laws. The execution and delivery by the
Individual Sellers of this Agreement and the other Company Documents to
which they are a party do not, and the
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performance of the Individual Sellers' obligations hereunder and
thereunder will not, conflict or violate the partnership agreement of
the Partnership or conflict with or violate any Law applicable to the
Partnership. The Individual Sellers have made available to Purchaser a
true, correct and complete copy of the partnership agreement of the
Partnership.
(c) There are no Actions (including Actions with respect to
Taxes) pending, or to the Knowledge of the Individual Sellers,
threatened, against the Partnership or any of its shares of Company
Common Stock, at Law or in equity, in, before, or by any Person,
including Governmental Authorities. The Partnership is not subject to
any order of, consent decree, settlement agreement or other similar
agreement with, or to the Knowledge of the Individual Sellers,
continuing investigation by, any Governmental Authority, or any
judgment, order, writ, injunction, decree or award of any Governmental
Authority or arbitrator, including, without limitation,
cease-and-desist or other orders.
(d) Any Tax Returns of or with respect to any Tax which is
required to be filed on or before the Closing Date by or with respect
to the Partnership have been or will be duly and timely filed, and all
items of income, gain, loss, deduction and credit or other items
required to be included in any such Tax Return have been or will be so
included and all information provided in each such Tax Return is or
will be true, correct and complete. Any Taxes which have become or will
become due and payable under any such Tax Return have been or will be
timely paid in full. Any final Tax Return of the Partnership required
to be filed as a result of the sale of the Partnership Interests to
Purchaser will be made by the Individual Sellers.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Schedules to this Agreement delivered by the
Sellers and the Company to Purchaser concurrently with the execution of this
Agreement, the Company hereby represents and warrants to Purchaser as follows:
4.1 Organization of the Xxxxxx Companies. Each of the Xxxxxx Companies
is a corporation duly organized, validly existing, and in good standing under
the Laws of the jurisdiction set forth opposite such entity's name in Schedule
4.1. Each of the Xxxxxx Companies is duly qualified or admitted to do business
and is in good standing in all jurisdictions in which the ownership, use, or
leasing of its Assets or the conduct or nature of its business makes such
qualification or admission necessary, except where the failure to be so
qualified or admitted and in good standing does not and will not have a Company
Material Adverse Effect.
4.2 Authority, Execution and Validity. The execution and delivery of
this Agreement and the other Company Documents to which it is a party by the
Company and the performance by the Company of its obligations hereunder and
thereunder have been duly and validly authorized by all necessary action on the
part of the Company. This Agreement has been duly and validly executed and
delivered by the Company and (assuming that this Agreement is a legal, valid,
and binding obligation of each other Party hereto) constitutes a legal, valid,
and binding obligation of the Company, enforceable against the Company in
accordance with its terms, and upon execution and delivery, the other Company
Documents to which it is a party (assuming that such Company Documents are
legal, valid and binding obligations of each other party thereto) will
constitute legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, except, in each of the
foregoing instances, to the extent that (a) enforcement may be limited by or
subject to any bankruptcy, insolvency, reorganization, moratorium, or similar
Laws now or hereafter in effect relating to or limiting creditors' rights
generally and (b) the remedy of specific performance and injunctive and other
forms of equitable
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relief are subject to certain equitable defenses and to the discretion of the
court or other similar Person before which any proceeding therefor may be
brought.
4.3 Capital Stock.
(a) Schedule 4.3(a) contains a true and complete list of the
authorized, issued, and outstanding capital stock of each of the Xxxxxx
Companies. The issued and outstanding shares of capital stock of each
Xxxxxx Company have been duly authorized and validly issued, are fully
paid and nonassessable, and have not been issued in violation of any
securities laws, preemptive or similar rights created by statute, the
charter or bylaws of any Xxxxxx Company or any agreement to which any
Xxxxxx Company is a party or bound. The issued and outstanding capital
stock of the Xxxxxx Companies are owned beneficially and of record as
disclosed in Schedule 4.3(a), and except as set forth in Schedule
4.3(a), are not subject to any Liens. There are no outstanding
securities, rights (preemptive or other), subscriptions, calls,
warrants, options, commitments or other agreements (except for this
Agreement) that give any Person the right to purchase or otherwise
receive or be issued any shares of capital stock of any Xxxxxx Company
or any security convertible into or exchangeable for any shares of
capital stock of any Xxxxxx Company. Except as set forth in Schedule
4.3(a), there are no voting trusts, proxies or other agreements or
understandings to which any Xxxxxx Company is a party or by which any
Xxxxxx Company is bound with respect to the voting of any shares of
capital stock of any Xxxxxx Company.
(b) Except as described on Schedule 4.3(b), there are no
obligations, contingent or otherwise, of any Xxxxxx Company to (i)
repurchase, redeem or otherwise acquire any of its shares of capital
stock or (ii) provide material funds to, or make any material
investment in (in the form of a loan, capital contribution or
otherwise), or provide any guarantee with respect to the obligations
of, any other person, other than advances to subsidiaries in the normal
course of business. Except as described in Schedule 4.3(b), no Xxxxxx
Company (x) directly or indirectly owns, (y) has agreed to
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00
xxxxxxxx xx xxxxxxxxx xxxxxxx xx (x) holds any interest convertible
into or exchangeable or exercisable for, any capital stock (or
equivalent equity interest) of any corporation, partnership, joint
venture or other business association or entity.
4.4 No Conflicts or Violations. Subject to obtaining the Consents
contemplated by Section 4.5, the execution and delivery by the Company of this
Agreement and the other Company Documents to which it is a party do not, and the
performance of the Company's obligations hereunder and thereunder will not: (a)
conflict with or violate in any material respect any term or provision of any
material Law or any material writ, judgment, decree, or injunction applicable to
any of the Xxxxxx Companies or by which any of their properties are bound or
subject; (b) conflict with or result in a violation or breach of any of the
provisions of the charter or bylaws of any of the Xxxxxx Companies; (c) result
in the creation of any Lien upon any of the Assets, except for any Liens created
by Purchase; or (d) result in a material breach of, or constitute a material
default under, any System Franchise, Pole Attachment Agreement, Material Real
Property Lease or Material Contract to which any Xxxxxx Company is a party.
4.5 Consents. The execution and delivery of this Agreement and the
other Company Documents by the Xxxxxx Companies do not, and consummation of the
transactions contemplated hereby and thereby will not, require any Xxxxxx
Company to obtain any Consent from any Person, except for (a) the filing of a
premerger notification and report form under the HSR Act; (b) the Consents set
forth on Schedule 4.5; and (c) such Consents the failure of which to be made or
obtained could not reasonably be expected to (i) materially and adversely effect
the validity or enforceability of this Agreement or any other Company Document,
(ii) materially and adversely effect the ability of any Xxxxxx Company to
perform its obligations under this Agreement or under any other Company
Document, or (iii) have a Company Material Adverse Effect.
4.6 Company Financial Statements.
(a) The Company has previously delivered or made available to
Purchaser true and complete copies of the following: (i) the audited
consolidated balance sheets of
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the Company and its consolidated Subsidiaries as of December 31, 1994,
December 31, 1995, December 31, 1996, December 31, 1997 and December
31, 1998, and the related audited statements of operations,
stockholders' equity, and cash flows of the Company and its
consolidated Subsidiaries for each of the years then ended, together
with the notes related thereto and the reports thereon of KPMG Peat
Marwick LLP; and (ii) the Company prepared unaudited consolidated
balance sheets of the Company and its consolidated Subsidiaries as of
March 31, 1998 and March 31, 1999, and the related unaudited statements
of operation, stockholders' equity, and cash flows of the Company and
its consolidated Subsidiaries for the three (3) month periods then
ended.
(b) Except as otherwise noted therein and subject to year-end
and audit adjustments in the case of the unaudited financial
statements, the Company Financial Statements were prepared in
accordance with GAAP applied on a consistent basis throughout the
periods involved (except to the extent required by changes in GAAP and
as may be indicated in the notes thereto) and present fairly in all
material respects the financial position of the Company and its
consolidated Subsidiaries as of the respective dates thereof and the
related results of operations, stockholders' equity, and cash flows of
the Company and its consolidated Subsidiaries as of and for the
respective dates and periods covered thereby. Except as otherwise noted
therein and subject to year-end and audit adjustments, the Monthly
Financial Statements will be prepared in accordance with GAAP applied
on a basis consistent with the Company Financial Statements and will
present fairly in all material respects the financial position of the
Company and its consolidated Subsidiaries as of the respective dates
thereof and the results of operations of the Company and its
consolidated Subsidiaries as of and for the respective dates and
periods covered thereby. The Company Financial Statements have been,
and the Monthly Financials will be, prepared from the books, records
and accounts of the Company, which accurately and fairly reflect in all
material respects the transactions therein described.
4.7 Absence of Certain Changes. Except (a) as disclosed in the Company
Financial Statements, (b) as set forth on Schedule 4.7 or (c) for changes
resulting from events or conditions
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which effect the cable industry generally, since December 31, 1998 the Xxxxxx
Companies have conducted their business only in the ordinary course and since
such date there has not been (i) any material damage, destruction or loss
(whether or not covered by insurance) with respect to any material Assets of any
Xxxxxx Company; (ii) any change by any Xxxxxx Company in its accounting methods,
principles or practices; (iii) any declaration, setting aside or payment of any
dividends or distributions in respect of shares of the capital stock of any
Xxxxxx Company, or any redemption, purchase or other acquisition by any Xxxxxx
Company of any of its securities; (iv) any increase in the benefits under, or
the establishment or amendment of, any Employee Benefit Plans; (v) any increase
in the compensation payable or to become payable to directors, officers or key
employees of any Xxxxxx Company, except for annual increases in salaries or
wages and bonuses in the ordinary course of business; (vi) any revaluation by
any Xxxxxx Company of any of its Assets, including the writing down or off of
Assets, other than in the ordinary course of business; (vii) any entry by any
Xxxxxx Company into any commitment or transaction material to the Xxxxxx
Companies, taken as a whole; (viii) any material increase in the amount of
Senior Debt; (ix) any amendment to the charter or bylaws of any Xxxxxx Company;
or (x) any event or circumstance that has had or could reasonably be expected to
have a Company Material Adverse Effect.
4.8 No Undisclosed Liabilities. Except (a) as reflected in the March
Balance Sheet, (b) as contemplated by this Agreement, (c) for current
liabilities and obligations incurred since March 31, 1999 in the ordinary course
of business, and (d) as set forth on Schedule 4.8, no Xxxxxx Company has any
material liabilities or obligations of any nature (whether accrued, unaccrued,
absolute, fixed, contingent or otherwise).
4.9 Litigation. Except as set forth on Schedule 4.9, there are no
material Actions pending, or to the Knowledge of the Company, threatened,
against any Xxxxxx Company, or any of their respective Assets, at Law or in
equity, in, before, or by any Person, including any Governmental Authorities.
Except as set forth on Schedule 4.9 or on the other Schedules attached hereto,
no Xxxxxx Company is subject to any material continuing order of, consent
decree, settlement agreement or other similar written agreement with, or, to the
Knowledge of the
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Company, continuing investigation by, any Governmental Authority, or any
judgment, order, writ, injunction, decree or award of any Governmental Authority
or arbitrator, including, without limitation, cease-and-desist or other orders.
4.10 System Franchises.
(a) Set forth on Schedule 4.10 is a list of all of the
existing governmental authorizations for franchises to operate the
Systems (collectively, the "System Franchises") presently held by any
Xxxxxx Company, and the Governmental Authority which has granted each
System Franchise. Each of the System Franchises expires on the dates
set forth on Schedule 4.10. True, complete and correct copies of the
System Franchises have been made available by the Company to Purchaser.
(b) Each Xxxxxx Company (i) has complied in all material
respects with the terms and conditions of the System Franchises to
which it is a party and the applicable requirements of Governmental
Authorities relating to the System Franchises (including any
requirements for notifications, filing, reporting, posting and
maintenance of logs and records), and (ii) has not done or performed
any act which would invalidate or impair in any material respect its
rights under, or give to the granting authority the right to terminate
any System Franchise. Except as set forth on Schedule 4.10, there is no
pending, or to the Knowledge of the Company, threatened assertion or
claim that operations by any Xxxxxx Company pursuant to any System
Franchise have been improperly conducted or maintained in any material
respect. Except as set forth on Schedule 4.10, there is no Action
pending, or to the Knowledge of the Company, threatened, to terminate,
suspend or modify in any material respect any System Franchise. Except
as set forth on Schedule 4.10, all construction of distribution plant
or other capital improvements required by any of the System Franchises
has been completed in all material respects in accordance with the
terms of such System Franchise.
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4.11 Pole Attachment Agreements.
(a) Set forth on Schedule 4.11 is a list of all of the pole
attachment authorizations and agreements (collectively, the "Pole
Attachment Agreements") presently held by any Xxxxxx Company and the
public utility, municipality or other authority which has granted each
Pole Attachment Agreement. True, complete and correct copies of each
Pole Attachment Agreement have been made available by the Company to
Purchaser.
(b) Each Xxxxxx Company (i) has complied in all material
respects with the terms and conditions of the Pole Attachment
Agreements to which it is a party and the applicable requirements of
Governmental Authorities relating to the Pole Attachment Agreements
(including any requirements for notifications, filing, reporting,
posting and maintenance of logs and records), and (ii) has not done or
performed any act which would invalidate or impair in any material
respect its rights under the Pole Attachment Agreements. Except as set
forth on Schedule 4.11, there is no pending assertion or claim that
operations by any Xxxxxx Company pursuant to any Pole Attachment
Agreement have been improperly conducted or maintained in any material
respect, and no Xxxxxx Company has received written notice threatening
any such assertion or claim. Except as set forth on Schedule 4.11,
there is no Action pending to terminate, suspend or modify in any
material respect any Pole Attachment Agreement, and no Xxxxxx Company
has received written notice threatening any such Action.
4.12 Real Property.
(a) Set forth on Schedule 4.12 is a list of (i) all of the
head-end site agreements, Material Leases for real property and all
material rights-of-way presently held by any Xxxxxx Company
(collectively, the "Material Real Property Leases "), and (ii) all real
property owned by the Xxxxxx Companies (collectively, the "Real
Property"). The number of towers located on the Real Property with
heights (x) equal to or less than
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100 feet, (y) more than 100 feet but equal to or less than 200 feet and
(z) more than 200 feet are also listed on Schedule 4.12. True, correct
and complete copies of all Material Real Property Leases and to the
extent in the possession of any Xxxxxx Company, Real Property deeds,
title policies, title commitments, abstracts and surveys, have been
made available by the Company to Purchaser.
(b) Each Xxxxxx Company has good leasehold interests in and
rights-of-way in the real property subject to the Material Real
Property Leases, subject to the terms of such leases. Each Xxxxxx
Company (i) has complied in all material respects with the terms and
conditions of the Material Real Property Leases to which it is a party
and the applicable requirements of Governmental Authorities relating to
the Material Real Property Leases (including any requirements for
notifications, filing, reporting, posting and maintenance of logs and
records) and has not done or performed any act which would invalidate
or impair in any material respect its rights under the Material Real
Property Leases. Except as set forth on Schedule 4.12, there is no
pending assertion or claim that operations pursuant to any Material
Real Property Lease have been improperly conducted or maintained in any
material respect, and no Xxxxxx Company has received written notice
threatening any such assertion or claim. Except as set forth on
Schedule 4.12, there is no Action pending to terminate, suspend or
modify in any material respect any Material Lease Agreement, and no
Xxxxxx Company has received written notice threatening any such Action.
(c) Except to the extent any failure to conform would not
constitute or cause a material adverse effect on any Xxxxxx Company,
each parcel of Real Property, any improvements constructed thereon and
the Xxxxxx Companies' current use of such Real Property conform with
(i) applicable Laws, including zoning and the Americans with
Disabilities Act, and (ii) restrictive covenants (if any) or other
Liens affecting all or part of such parcel.
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4.13 Other Material Contracts.
(a) Except for the System Franchises, the Pole Attachment
Agreements and the Material Real Property Leases, Schedule 4.13 sets
forth all of the Contracts to which any Xxxxxx Company is a party or by
which any of its Assets are bound that are material to such Xxxxxx
Company (collectively, the "Material Contracts"), including, but not
limited to, (i) programming agreements; (ii) Contracts pertaining to
the borrowing of money; (iii) Contracts creating guaranties; (iv)
Contracts relating to any single capital expenditure in excess of
$50,000; (v) Contracts for the purchase or sale of real property, any
business or line of business or for any merger or consolidation; (vi)
joint venture or partnership agreements; (vii) Material Leases; (viii)
employment agreements; (ix) contracts (whether written or oral) with
Affiliates (which contracts are identified on Schedule 4.13); and (x)
Contracts that individually require by their respective terms after the
date hereof the payment or receipt of more than $25,000 during any
12-month period or $50,000 in the aggregate. True, correct and complete
copies of all Material Contracts have been made available by the
Company to Purchaser.
(b) Each Xxxxxx Company has complied in all material respects
with all of the terms and conditions of the Material Contracts to which
it is a party and has not done or performed any act which would
invalidate or impair in any material respect its rights under any
Material Contract. Except as set forth on Schedule 4.13, there is no
pending assertion or claim that any Xxxxxx Company has breached,
violated or defaulted under any Material Contract, and no Xxxxxx
Company has received written notice threatening any such assertion or
claim. Except as set forth on Schedule 4.13, there is no Action pending
to terminate, suspend or modify in any material respect any Material
Contract, and no Xxxxxx Company has received written notice threatening
any such Action. All employment agreements and stock options (if any)
of any Xxxxxx Company will be terminated on or before the Closing.
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4.14 Compliance With Laws.
(a) The Cable Business is being conducted and the Systems are
being operated in compliance with all Laws, including under the
Communications Act, the Copyright Act and all rules and regulations of
the FAA and the FCC, except to the extent that a failure to so comply
could not reasonably be expected to have a material adverse effect on
any Xxxxxx Company. The Xxxxxx Companies hold all material Licenses
necessary for the operation of the Systems as currently operated, each
of which is listed on Schedule 4.14. True, correct and complete copies
of all Licenses listed on Schedule 4.14 have been made available by the
Company to Purchaser.
(b) Each Xxxxxx Company has complied in all material respects
with all of the terms and conditions of its Licenses and has not done
or performed any act which would invalidate or impair in any material
respect its rights under such Licenses. Except as set forth on Schedule
4.14, there is no pending, or to the Knowledge of the Company,
threatened, assertion or claim that operations pursuant to any License
have been improperly conducted or maintained in any material respect.
Except as set forth on Schedule 4.14, there is no Action pending to
terminate suspend or modify in any material respect any License, and no
Xxxxxx Company has received written notice threatening any such Action.
(c) Without limiting the generality of the foregoing, except
as set forth on Schedule 4.14, (a) the Xxxxxx Companies have made all
material filings required to be made with the FCC (including cable
television registration statements, annual reports and aeronautical
frequency usage notices); (b) the Xxxxxx Companies have provided all
material notices to System subscribers and have maintained in all
material respects all public files required by federal law and the
rules and regulations of the FCC; (c) the Xxxxxx Companies are, and
since 1996 have been, certified as in compliance with the FCC's equal
employment opportunity rules; (d) each System is in compliance in all
material respects with all must carry requirements and has received all
necessary
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retransmission Consents; (e) no System subscriber rates are regulated
by any Governmental Authority; (f) each System is in compliance in all
material respects with all customer service standards; and (g) each
System is in compliance in all material respects with all signal
leakage criteria prescribed by the FCC. The Company has made available
to Purchaser all reports and filings made or filed by any Xxxxxx
Company pursuant to federal law or FCC rules and regulations during
the past 24 months and all written notices received by any Xxxxxx
Company during the last 24 months alleging non-compliance by any Xxxxxx
Company with the Communications Act, the rules and regulations of the
FCC, or local franchise requirements. A request for renewal has been
timely filed under Section 626(a) of the Cable Communications Policy
Act of 1984 with the proper Governmental Authority with respect to all
System Franchises expiring within 36 months after the date of this
Agreement.
4.15 Assets. Except as set forth on Schedule 4.15 and Assets disposed
of in the ordinary course of business after March 31, 1999 (which are not
material individually or in the aggregate), each of the Xxxxxx Companies has
good and indefeasible title to, or an adequate leasehold interest in, its Assets
(including the Real Property) reflected on the March Balance Sheet. Such Assets
are in reasonable operating condition and repair, ordinary wear and tear
excepted, and are sufficient to conduct the Cable Business and operate the
Systems as currently conducted and operated. Except as set forth on Schedule
4.15, the Assets that are owned by the Xxxxxx Companies are owned free of Liens
other than Permitted Liens. Set forth on Schedule 4.15 is a list of all vehicles
(including vehicle registration numbers) and material equipment at the head-end
sites and a description of the line equipment owned by the Xxxxxx Companies as
of February 28, 1999.
4.16 Restoration. No material restoration, repaving, repair or other
work (outside of ordinary maintenance) is required to be made by any Xxxxxx
Company to any street, sidewalk or abutting or adjacent area pursuant to the
requirements of any ordinance, code, permit, easement or Contract relating to
the installation, construction or operation of the Systems.
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4.17 Patents, Trademarks and Copyrights. There are no registered
patents, trademarks, service marks, trade names or copyrights, or applications
for or licenses (to or from any Xxxxxx Company) with respect to any of the
foregoing, that (a) is owned by any Xxxxxx Company, or with respect to which any
Xxxxxx Company has any rights, or (b) is used, whether directly or indirectly,
by any Xxxxxx Company, except for the trade names and trademarks set forth on
Schedule 4.17 and licenses respecting program material and obligations under the
Copyright Act applicable to cable television systems generally. There is no
pending assertion or claim that any Xxxxxx Company is violating or infringing
upon the rights of any Person in any copyright, trademark, service xxxx, patent,
license, trade secret or the like, and no Xxxxxx Company has received written
notice threatening any such assertion or claim. The Company has made available
to Purchaser true and complete copies of all reports and filings made or filed
pursuant to copyright rules and regulations with respect to the Cable Business
for the most current applicable period.
4.18 Year 2000. The Xxxxxx Companies have (a) completed a review and
assessment of all areas within the Cable Business and the Systems that could
reasonably be expected to be adversely affected by the "Year 2000 Problem" (that
is, the risk that computer applications used by the Cable Business may be unable
to recognize and perform properly date-sensitive functions involving certain
dates prior to and any date after December 31, 1999), (b) developed a plan for
addressing the Year 2000 Problem on a timely basis, which plan has been made
available to Purchaser, and (c) to date, implemented that plan. All of the
Xxxxxx Companies' computer applications that are material to the Cable Business
and the Systems will on a timely basis be able to perform properly
date-sensitive functions for all dates before and after January 1, 2000, except
to the extent that a failure to do so could not reasonably be expected to have a
Company Material Adverse Effect.
4.19 Systems Information.
(a) Schedule 4.19(a) sets forth a description of the following
information relating to the Cable Business as of March 31, 1999: (i)
the number of Basic Subscribers
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served by the Systems; (ii) the channel capacity for each System
(including breakdown of channels utilized and channels available);
(iii) a description of basic, optional or tier services available from
the Systems and the rates charged for each; (iv) the channel line-up
for each System; (v) the cities, town, townships, villages, boroughs
and counties served by each System, (vi) basic penetration, (vii) pay
penetration and (viii) the date and amount of the last rate increase
for System service.
(b) There are no obligations or liabilities to subscribers or
to other users of the Systems which are material to the Cable Business,
except (i) with respect to deposits made by such subscribers or such
users; and (ii) the obligation to supply services to subscribers in the
ordinary course of business.
(c) Except as set forth on Schedule 4.19(c), as of the date
hereof there is no overbuild (including "wireless cable") of the
Systems nor to the Knowledge of the Company, any overbuild pending.
(d) As of the Closing Date, based solely on the Company's
review of its existing records, the Systems (i) will pass no fewer than
315,000 homes, and (ii) will consist of no less than 10,300 miles of
coaxial cable plant.
4.20 Environmental Matters.
(a) Except as described in Schedule 4.20, (i) the Xxxxxx
Companies are in compliance in all material respects with all
applicable Environmental Laws; (ii) no Xxxxxx Company has received any
written notices, demand letters or requests for information from any
Governmental Authority or other Person indicating that it may be in
violation of, or liable under, any Environmental Law; (iii) no reports
have been filed by any Xxxxxx Company with any Governmental Authority
concerning the release of any Hazardous Substance or the threatened or
actual violation of any Environmental Law; (iv) no material amount of
any Hazardous Substance has been disposed of, released or
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transported by any Xxxxxx Company in violation of any applicable
Environmental Law; (v) no Xxxxxx Company is subject to any material
liabilities or expenditures relating to any suit, settlement, court
order, administrative order, regulatory requirement, judgment or claim
asserted or arising under any Environmental Law, (vi) no underground
storage tanks are currently or to the Knowledge of the Company, have
been located on any Real Property, (vii) to the Knowledge of the
Company, no Real Property has been used at any time as a gasoline
service station or any other facility for storing, pumping, dispensing
or producing gasoline or any other petroleum products or wastes; and
(viii) there are no incinerators, septic tanks or cesspools on any Real
Property and all waste from the Real Property is discharged into a
public sanitary sewer system.
(b) The Company has made available to Purchaser true, complete
and correct copies of (i) all studies, reports, surveys or other
materials in the Company's possession relating to the presence or
alleged presence of Hazardous Substances at, on or affecting the Real
Property, (ii) all notices or other materials in the Company's
possession that were received from any Governmental Authority having
the power to administer or enforce any Environmental Laws relating to
current or past ownership, use or operation of the Real Property or
activities at the Real Property, and (iii) all materials in the
Company's possession relating to any claim, allegation or action by any
private third party under any Environmental Law.
4.21 Employee Benefits.
(a) Set forth in Schedule 4.21(a) is a list of all Employee
Benefit Plans. With respect to each Employee Benefit Plan, the Company
has made available to Purchaser true, correct and complete copies of
(i) the plan documents and summary plan description; (ii) the most
recent determination letter received from the Internal Revenue Service;
(iii) the annual reports required to be filed for the two most recent
plan years of each such Employee Benefit Plan; (iv) all related trust
agreements, insurance contracts or other funding agreements which
implement such Employee Benefit Plan; (v) all
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summaries of any Employee Benefit Plans for which a summary plan
description is not required furnished or made available generally to
employees; and (vi) all other material documents, records or other
materials related thereto reasonably requested by Purchaser in writing.
(b) Except as set forth on Schedule 4.21(b) and to the extent
of coverage required under Code section 4980B, no representations have
been made to any current or former employee or officer of any Xxxxxx
Company promising or guaranteeing any coverage under any employee
welfare plan for any period of time beyond the end of the current plan
year. Neither the sale of the Securities to Purchaser nor the
consummation of the transactions contemplated by this Agreement will
accelerate the time of payment or vesting, or increase the amount of
compensation payable by any Xxxxxx Company (including amounts due under
any Employee Benefit Plans) due to any current or former employee,
officer, consultant, stockholder or director of any Xxxxxx Company.
(c) There are no agreements which will or may provide payments
to any officer, employee, director, stockholder, consultant or highly
compensated individual which will be "parachute payments" under Code
section 280G that are nondeductible to any Xxxxxx Company or subject to
tax under Code section 4999 for which any Xxxxxx Company would have
withholding liability.
(d) Each Employee Benefit Plan which purports to satisfy the
requirements of Code section 401(a) is qualified in form and operation
under Code section 401(a) and each trust agreement, annuity contract or
other funding arrangement for each such Employee Benefit Plan is exempt
from federal income tax under Code section 501(a). No event has
occurred or circumstances exist that will or could give rise to
disqualification or loss of tax-exempt status of any such Employee
Benefit Plan or related trust agreement, annuity contract or other
funding arrangement. Each such Employee Benefit Plan has received a
favorable determination letter from the Internal Revenue Service, and
all such determination letters remain in effect and have not been
revoked.
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(e) (i) No Employee Benefit Plan is a single employer plan
that is subject to Part 3 of Title I of ERISA or Title IV of ERISA;
(ii) each Employee Benefit Plan has been operated in all material
respects in compliance with its terms, ERISA, the Code and all other
applicable Laws; (iii) none of the Employee Benefit Plans is a
"multiple employer plan" or "multi-employer plan" (as described or
defined in ERISA or the Code), and no Xxxxxx Company has ever
contributed or been required to contribute to any such plan; and (iv)
there are no material unfunded liabilities existing under any Employee
Benefit Plans, and each Employee Benefit Plan could be terminated as of
the Closing Date without any liability to any Xxxxxx Company.
(f) Other than routine claims for benefits, there are no
Actions or claims pending or, to the Knowledge of the Company,
threatened against, or with respect to, any of the Employee Benefit
Plans or their assets. The Xxxxxx Companies have made, or will make,
all required contributions that are due and payable under each Employee
Benefit Plan for all periods prior to the Closing Date.
(g) An estimate of the liabilities of the Xxxxxx Companies for
providing retiree life and medical benefits coverage to active and
retired employees of the Xxxxxx Companies has been made and is
reflected on the appropriate balance sheet and books and records of the
Xxxxxx Companies according to Statement of Financial Accounting
Standards No. 106. No welfare plans are self-insured multiple employer
welfare arrangements as such term is defined in ERISA section 3(40).
(h) None of the Xxxxxx Companies has any material liability
with respect to any transaction which relates to any Employee Benefit
Plan and which is in violation of ERISA sections 404 or 406 or
constitutes a "prohibited transaction," as defined in Code section
4975(c)(1), and for which no exemption exists under ERISA section 408
or Code section 4975(c)(2) or (d). None of the Xxxxxx Companies has
participated in a material
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35
violation of Part 4 of Title I, Subtitle B of ERISA by any plan
fiduciary of any Employee Benefit Plan or has any unpaid civil penalty
under ERISA section 502(1).
4.22 Employee Matters. There are no material labor strikes, disputes,
slow downs, work stoppages or other labor troubles or grievances pending or to
the Knowledge of the Company, threatened against any Xxxxxx Company. No Xxxxxx
Company is a party to any collective bargaining agreement or other labor union
contract and to the Knowledge of the Company, there is no organizing effort or
representation question pending. The Xxxxxx Companies are in compliance in all
material respects with all applicable Laws respecting employment, employment
practices, wages and hours.
4.23 Taxes.
(a) Except as set forth on Schedule 4.23(a), (i) all Tax
Returns of or with respect to any Tax which is required to be filed on
or before the Closing Date by or with respect to any Xxxxxx Company
have been or will be duly and timely filed, (ii) all items of income,
gain, loss, deduction and credit or other items required to be included
in each such Tax Return have been or will be so included and all
information provided in each such Tax Return is true, correct and
complete in all material respects, (iii) all Taxes which have become or
will become due and payable prior to Closing with respect to the period
covered by each such Tax Return have been or will be timely paid in
full, and (iv) all withholding Tax requirements imposed on or with
respect to any Xxxxxx Company have been or will be satisfied in all
material respects.
(b) Except as set forth on Schedule 4.23(b), there is not in
force any extension of time with respect to the due date for the filing
of any Tax Return of or with respect to any Xxxxxx Company or any
waiver or agreement for any extension of time for the assessment,
collection or payment of any Tax of or with respect to any Xxxxxx
Company.
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(c) There are no pending audits, actions, proceedings,
investigations, disputes or claims with respect to or against any
Xxxxxx Company for or with respect to any Taxes, and no assessment,
deficiency or adjustment has been assessed or proposed with respect to
any Tax Return of or with respect to any Xxxxxx Company, other than
those set forth on Schedule 4.23(c).
(d) There is no written Tax allocation or sharing agreement
with any Xxxxxx Company.
(e) Except for statutory Liens for current Taxes not yet due,
no Liens for Taxes exist upon the Assets of any Xxxxxx Company.
(f) None of the property of any Xxxxxx Company is held in an
arrangement for which partnership Tax Returns are being filed, and no
Xxxxxx Company owns any interest in any controlled foreign corporation
(as defined in section 957 of the Code), passive foreign investment
company (as defined in section 1296 of the Code) or other entity the
income of which is required to be included in the income of any Xxxxxx
Company.
(g) No Xxxxxx Company has made an election under section
341(f) of the Code.
(h) No Xxxxxx Company has ever been a member of an affiliated
group of corporations (as defined in Section 1504(a) of the Code),
other than an affiliated group of which the Company is the parent.
(i) No Xxxxxx Company is or has ever been subject to Taxes in
any jurisdiction outside the United States.
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(j) True, correct and complete copies of all federal and state
Tax Returns for the Xxxxxx Companies for the last five years have been
made available to Purchaser.
4.24 Insurance. Set forth on Schedule 4.24 is a list of all liability,
property, workers compensation, directors and officers liability, and other
similar insurance Contracts that insure the Cable Business or the affairs of the
Xxxxxx Companies or affect or relate to the ownership, use, or operations of any
of the Systems. All such Contracts are in full force and effect as of the date
of this Agreement. No notice of cancellation or termination by the issuer of any
current insurance policy prior to the date of expiration of the policy has been
received by the Company.
4.25 Bonds. Set forth on Schedule 4.25 is a list for each Xxxxxx
Company of all bonds, bond amounts and Contracts for which each bond was issued.
4.26 Organic Documents. The Company has delivered or made available to
Purchaser true and complete copies of the charter and bylaws of each Xxxxxx
Company, in each case as in effect on the date hereof. No Xxxxxx Company is in
violation of any provisions of its charter or bylaws.
4.27 Brokers. Except for Xxxxxxx & Associates, L.P. and Xxxxxxxxx,
Lufkin & Xxxxxxxx Securities Corporation, no investment banker, broker, finder
or other Person is entitled to any brokerage, finder's, financial advisory or
other fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Company or the
Sellers. The fees and commissions of Xxxxxxx & Associates, L.P. and Xxxxxxxxx,
Xxxxxx & Xxxxxxxx Securities Corporation will be paid on or about the Closing
Date by the Sellers from the proceeds of the Aggregate Purchase Price.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Except as set forth in the Schedules to this Agreement delivered by
Purchaser to the Sellers and the Company concurrently with the execution of this
Agreement, Purchaser hereby represents and warrants to the Sellers and the
Company as follows:
5.1 Organization. Purchaser is a corporation duly organized, validly
existing, and in good standing under the Laws of Delaware and has full corporate
power and authority to enter into this Agreement and the other Purchaser
Documents and to perform its obligations hereunder and thereunder.
5.2 Authority. The execution and delivery of this Agreement and the
other Purchaser Documents by Purchaser and the performance by Purchaser of its
obligations hereunder and thereunder have been duly and validly authorized by
all necessary corporate action on the part of Purchaser. This Agreement has been
duly executed and delivered by Purchaser and (assuming that this Agreement
constitutes a legal, valid, and binding obligation of the other Parties hereto)
constitutes a legal, valid, and binding obligation of Purchaser, enforceable
against Purchaser in accordance with its terms, and upon execution and delivery,
the other Purchaser Documents (assuming that such Purchaser Documents are legal,
valid and binding obligations of each other party thereto) will constitute
legal, valid and binding obligations of Purchaser, enforceable against Purchaser
in accordance with their terms, except, in each of the foregoing instances, to
the extent that (a) enforcement may be limited by or subject to any bankruptcy,
insolvency, reorganization, moratorium, or similar Laws now or hereafter in
effect relating to or limiting creditors' rights generally and (b) the remedy of
specific performance and injunctive and other forms of equitable relief are
subject to certain equitable defenses and to the discretion of the court or
other similar Person before which any proceeding therefor may be brought.
5.3 No Conflicts or Violations. Subject to obtaining the Consents
contemplated by Section 5.4, the execution and delivery of this Agreement and
the other Purchaser Documents by
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Purchaser do not, and the performance by Purchaser of its obligations hereunder
and thereunder will not: (a) conflict with or violate in any material respect
any term or provision of any material Law or any material writ, judgment,
decree, or injunction applicable to Purchaser or by which any of its properties
are bound or subject; (b) conflict with or result in a violation or breach of
any of the provisions of the charter or bylaws of Purchaser; or (c) result in a
material breach of, or constitute a material default under, any material
Contract to which Purchaser is a party or by which any of its properties is
bound or subject.
5.4 Consents. The execution and delivery of this Agreement and the
other Purchaser Documents by the Purchaser do not, and consummation of the
transactions contemplated hereby and thereby will not, require Purchaser to
obtain any Consent except for: (a) the filing of a notification and report form
under the HSR Act; (b) the Consents set forth on Schedule 5.4 and (c) such
Consents the failure of which to be made or obtained could not reasonably be
expected to (i) materially and adversely effect the validity or enforceability
of this Agreement or any other Purchaser Document, (ii) materially and adversely
effect the ability of Purchaser to perform its obligations under this Agreement
or under any other Purchaser Document or (iii) have a Company Material Adverse
Effect.
5.5 Litigation. There is no Action pending, or, to the Knowledge of
Purchaser, threatened in writing, against Purchaser or any of its Affiliates, at
law or in equity, in, before, or by any Person, except such Actions that, if
adversely determined, could not reasonably be expected to have a material
adverse effect on the validity or enforceability of this Agreement or any other
Purchaser Document or on the ability of Purchaser to perform its obligations
under this Agreement or any other Purchaser Document.
5.6 Purchase for Investment. The Securities will be acquired by
Purchaser for its own account for the purpose of investment and not with a view
to or for sale in connection with any distribution thereof within the meaning of
the Securities Act of 1933, as amended. Purchaser will refrain from transferring
or otherwise disposing of any of the Securities, or any interest
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therein, in such manner as to violate any registration provision of applicable
federal and state securities Laws.
5.7 Sufficient Funds. As of the date of this Agreement, Purchaser (a)
has access to sufficient funds, or has obtained commitment letters or "highly
confident" letters from responsible investors or financial institutions to
enable it to obtain such funds, as are needed to pay the Aggregate Purchase
Price, refinance the Senior Bank Debt and otherwise discharge its obligations
under this Agreement (collectively, the "Financing"), and (b) has no reason to
believe that any conditions to the Financing will not be satisfied or that the
Financing will not be available on a timely basis for the transactions
contemplated by this Agreement. Purchaser will maintain the Financing until the
Closing. Fully executed copies of all commitment letters and "highly confident"
letters relating to the Financing are attached as Schedule 5.7.
5.8 Brokers. Except as set forth on Schedule 5.8, no Person is or will
become entitled to receive any brokerage or finder's fee, financial advisory fee
or other similar payment for the transactions contemplated by this Agreement by
virtue of having been engaged by or acted on behalf of Purchaser. The fees and
commissions owed to any Person set forth on Schedule 5.8 will be paid by
Purchaser.
ARTICLE VI
COVENANTS OF THE SELLERS AND THE COMPANY
Each Seller and the Company covenants and agrees with Purchaser that,
at all times from the date hereof until the earlier of the Closing or the
termination of this Agreement in accordance with Article XI, it will comply, and
the Company will cause the other Xxxxxx Companies to comply, with all covenants
and provisions of this Article VI, except to the extent (i) Purchaser may
otherwise consent in writing (which consent will not be unreasonably withheld or
delayed), (ii) otherwise required by applicable Law, or (iii) otherwise required
or permitted by this Agreement.
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6.1 Consents. The Sellers and the Company will take, and the Company
will cause each of the other Xxxxxx Companies to take, all commercially
reasonable steps necessary or desirable, and proceed diligently and in good
faith and use commercially reasonable efforts, to obtain, as promptly as
practicable, all Consents required of the Sellers or the Xxxxxx Companies to
consummate the transactions contemplated hereby, which required Consents will be
in form and substance reasonably satisfactory to Purchaser; provided, however,
no Seller or Xxxxxx Company will have any obligation to amend, or cause to be
amended any System Franchise, Pole Attachment Agreement, Material Real Property
Lease or Material Contract, or to make, or cause to be made, any payment to
obtain any such required Consent. The Sellers and the Company will, and the
Company will cause the other Xxxxxx Companies to, (a) provide such information
and communications to such Persons providing such Consents as such Persons may
reasonably request and (b) upon request, cooperate with Purchaser in obtaining,
as promptly as practicable, all Consents required of Purchaser to consummate the
transactions contemplated hereby. Upon the request of Purchaser, the Sellers and
the Company will, and the Company will cause the other Xxxxxx Companies to,
cooperate with Purchaser and its consultants and advisors (at Purchaser's cost
and expense) in obtaining accountant's comfort letters, reviewing the Company
Financial Statements and Monthly Financial Statements and consummating the
Financing.
6.2 HSR Act Filings. The Company will (a) take all actions necessary to
make the filings required of it or its Affiliates under the HSR Act with respect
to the transactions contemplated by this Agreement within ten (10) Business Days
from the date of this Agreement, (b) comply with any request for additional
information received by the Company or its Affiliates from the Federal Trade
Commission or the Antitrust Division of the Department of Justice pursuant to
the HSR Act, (c) cooperate with Purchaser in connection with Purchaser's filings
under the HSR Act, and (d) request early termination of the applicable waiting
period.
6.3 Licenses. The Company and the Sellers will take commercially
reasonable steps necessary or desirable, and proceed diligently and in good
faith, to complete and submit any application that may be required for the
consent and approval of the appropriate Governmental Authority to the transfer
of the ownership and operation of any Licenses to Purchaser.
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6.4 Access by Purchaser. The Company will provide, and will cause the
other Xxxxxx Companies to provide, Purchaser and its representatives and agents
with reasonable access, upon reasonable prior notice and during normal business
hours, to all facilities, officers, employees, agents, Assets, and books and
records of the Xxxxxx Companies as Purchaser or such representatives and agents
may reasonably request; provided, however, that Purchaser and its
representatives and agents will take all action deemed reasonably necessary by
the Company to schedule Purchaser's access through an officer of the Company
designated by the Company and in such a manner as to avoid disrupting the normal
business and operations of the Xxxxxx Companies.
6.5 Conduct of Business. Except as otherwise expressly permitted in
this Agreement, the Company will, and will cause the other Xxxxxx Companies to:
(a) conduct the Cable Business and operate the Systems only in
the ordinary course;
(b) use good faith efforts to preserve the Cable Business and
the Systems intact and to preserve the goodwill of the Cable Business
and Persons having material business relations with the Cable Business;
(c) continue to construct line extensions required by the
System Franchises in the ordinary course of business and make capital
expenditures to the Systems substantially in accordance with past
practice and the 1999 capital expenditure budget set forth on Schedule
6.5(c);
(d) keep all of its books, records and files in the ordinary
course of business consistent with past practice, and pay, consistent
with past practice, all of its accounts payable and other debts,
liabilities and obligations relating to the Cable Business and the
Systems;
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(e) continue to implement its procedures for connection,
disconnection and discontinuance of service of subscribers of the
Systems whose accounts are delinquent in accordance with past practice;
(f) not implement any extraordinary promotions or discounts
the terms of which are materially inconsistent with past practice;
(g) use good faith efforts not to permit a material amendment
or cancellation of any System Franchise, Pole Attachment Agreement,
Material Real Property Lease, Material Contract or License which would
be materially adverse to any Xxxxxx Company;
(h) report and write off accounts receivable of the Cable
Business in accordance with past practice;
(i) use good faith efforts to maintain the service quality of
the Cable Business at a level materially consistent with past practice;
(j) file with the FCC all reports with respect to the Cable
Business required to be filed under applicable FCC rules and
regulations and otherwise comply in all material respects with the FCC
Licenses and all other Laws;
(k) other than in the ordinary course of business, not enter
into any Contract the performance of which will not be completed by the
Closing Date and involving an expenditure in excess of $50,000; or
(l) knowingly take or omit to take any action that would cause
the Company to be in breach of any of its representations, warranties
or covenants in this Agreement.
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6.6 Monthly Financial Statements. Within thirty (30) days of the date
thereof, the Company will deliver to Purchaser true and complete copies of the
Company prepared unaudited consolidating and consolidated balance sheets of the
Company and its consolidated Subsidiaries as of the last day of each month
(beginning with April 30, 1999) and the related unaudited statements of
operation of the Company and its consolidated Subsidiaries for each month then
ended.
6.7 Bank Accounts. Within five (5) Business Days from the date of this
Agreement, the Company will provide Purchaser with a complete list of all names
and locations of all banks, trust companies, savings and loan associations and
other financial institutions at which any Xxxxxx Company maintains safe deposit
boxes, lock boxes or bank accounts, and the names of all persons authorized to
draw thereon, make withdrawals therefrom, or have access thereto.
6.8 Employee Listing. Within five (5) Business Days from the date of
this Agreement, the Company will provide Purchaser with a complete list of all
employees of the Xxxxxx Companies, including date of employment, current title
and compensation.
6.9 Lien and Judgment Searches. The Company will order, not more than
ten (10) Business Days after the date hereof, (a) lien searches conducted by a
professional search company of records in the offices of the secretaries of
state in each state, and county clerks in each county, where there exists
tangible Assets, and in the state and county where the Company's principal
office is located, and (b) searches of the dockets of the clerk of each federal
and state court sitting in the city, county or other applicable political
subdivision where the principal office of each Xxxxxx Company is located, with
respect to judgments, orders, writs or decrees against or affecting any Xxxxxx
Company or any of the Assets. Promptly after receipt, the Company will deliver
the results of such searches, including copies of all financing statements or
similar notices or filings (and any continuation statements) discovered by such
search company, to Purchaser.
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6.10 No Amendments. The Sellers and the Company will cause each of the
Xxxxxx Companies to refrain from amending its charter or bylaws and from taking
any action with respect to any such amendment.
6.11 No Issuance of Securities. The Company will, and will cause each
of the other Xxxxxx Companies to, refrain from authorizing or issuing any shares
of such entity's capital stock or other equity securities or granting any
option, warrant, or right calling for the authorization or issuance of any such
shares.
6.12 No Dividends. The Company will, and will cause each of the other
Xxxxxx Companies to, refrain from declaring or paying any dividend or other
distribution in respect of its capital stock and from directly or indirectly
redeeming or purchasing any of its capital stock or any interest in or right to
acquire any such stock.
6.13 Notification and Supplements to Schedules. The Company will notify
Purchaser in writing, if after the date hereof the Company becomes aware of any
fact, event, condition or circumstance that causes any of the Sellers' or the
Company's representations or warranties in this Agreement to be inaccurate. The
Company may supplement the Schedules to this Agreement to account for any such
event or change. If the Company gives written notice to Purchaser of any
proposed supplement to the Schedules to this Agreement and Purchaser fails to
deliver a written objection to such proposed supplement within five (5) Business
Days of the Company's notice, Purchaser will be deemed to have consented to such
proposed supplement.
ARTICLE VII
COVENANTS OF PURCHASER
Purchaser covenants and agrees with the Company and the Sellers that,
at all times before the earlier of the Closing or the termination of this
Agreement in accordance with Article XI hereof, Purchaser will comply with all
covenants and provisions of this Article VII, except to the extent (i) the
Company may otherwise consent in writing (which consent will not be
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unreasonably withheld or delayed), (ii) otherwise required by applicable Law, or
(iii) otherwise required or permitted by this Agreement.
7.1 Deposit. To secure Purchaser's obligations under this Agreement,
within three (3) Business Days from the date of this Agreement, Purchaser will
deposit either (a) an irrevocable letter of credit payable for the amount of
$5,000,000 or (b) the amount of $5,000,000 in immediately available funds (the
"Deposit") into an escrow account pursuant to the Deposit Escrow Agreement.
7.2 Consents. Purchaser will take all commercially reasonable steps
necessary or desirable, and proceed diligently and in good faith, to obtain, as
promptly as practicable, all Consents required of Purchaser to consummate the
transactions contemplated hereby, which required Consents will be in form and
substance reasonably satisfactory to the Company. Purchaser will (a) provide
such information and communications to such Persons providing such Consents as
such Persons may reasonably request, and (b) upon request, cooperate with the
Company in obtaining, as promptly as practicable, all Consents required of the
Company to consummate the transactions contemplated hereby, including, without
limitation, any required Consents related to the System Franchises; provided,
however, Purchaser will have no obligation to agree to any material and adverse
amendment to any System Franchise, Pole Attachment Agreement, Material Real
Property Lease or Material Contract, or to make any payment to obtain any such
required Consent.
7.3 HSR Act Filings. Purchaser will (a) take all actions necessary to
make the filings required of Purchaser or its Affiliates under the HSR Act with
respect to the transactions contemplated by this Agreement within ten (10)
Business Days from the date of this Agreement, (b) comply with any request for
additional information received by Purchaser or its Affiliates from the Federal
Trade Commission or the Antitrust Division of the Department of Justice pursuant
to the HSR Act, (c) cooperate with the Company in connection with the Company's
filings under the HSR Act, and (d) request early termination of the applicable
waiting period.
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7.4 Licenses. Purchaser will take commercially reasonable steps
necessary or desirable, and proceed diligently and in good faith, to cooperate
with the Company and the Sellers, as they may request, to complete and submit
any application that may be required for the consent and approval of the
appropriate Governmental Authority to the transfer of the ownership and
operation of any License to Purchaser.
7.5 WARN Act. From and after the Closing Date, Purchaser may, but will
have no obligation to, cause the Xxxxxx Companies to maintain employment of
their current employees; provided, however, Purchaser will, and will cause the
Xxxxxx Companies to, comply with all applicable provisions of the WARN Act and
any similar state or local Law. Prior to the Closing Date, no Xxxxxx Company
will have any obligation or responsibility to comply with any such provisions,
and Purchaser will indemnify and hold the Sellers harmless with respect to any
claims incurred or arising under the WARN Act or similar state or local Laws
with respect to the Xxxxxx Companies or any of their employees.
7.6 Financing. Purchaser will, and will cause its Affiliates to, timely
and faithfully perform all obligations on their part to be performed under the
Financing and will restrain, and will cause its Affiliates to restrain, from
taking any action, or omitting to take any action, which would constitute or
result in a breach thereunder or otherwise result in termination thereof.
Purchaser will promptly deliver written notice to the Company of the occurrence
of any of the following: (a) the Financing is terminated, or any condition
precedent to the continued effectiveness thereof is not timely satisfied, or (b)
if Purchaser learns of facts or circumstances that would make it more likely
than not the Financing will be terminated, or a condition precedent to the
continued effectiveness thereof will not be timely satisfied.
7.7 Assistance and Information. After the Closing, and without further
consideration, Purchaser will, and will cause the Xxxxxx Companies to, make
available to the Sellers and their representatives all data and information
reasonably requested by the Sellers to assist the Sellers in their review of the
Closing Balance Sheet, the number of Basic Subscribers as of the Closing
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and the Purchase Price Adjustment Amount and Purchaser will, and will cause the
Xxxxxx Companies to, assist and cooperate fully with the Sellers in connection
therewith.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF PURCHASER
The obligations of Purchaser under this Agreement are subject to the
fulfillment, at or before the Closing, of each of the following conditions (all
or any of which may be waived in whole or in part by Purchaser).
8.1 Representations and Warranties. The representations and warranties
made by the Company and the Sellers in this Agreement and in the certificates
delivered by the Company and the Sellers pursuant to this Agreement shall be
true in all material respects as of the date hereof and shall be true in all
material respects on and as of the Closing Date as if made on and as of the
Closing Date (except as to any representation or warranty that specifically
relates to an earlier date, in which case such representation or warranty shall
be true in all material respects as of such earlier date).
8.2 Performance. The Company and the Sellers shall have performed and
complied in all material respects with all agreements, covenants, obligations,
and conditions required by this Agreement to be so performed or complied with by
the Company and the Sellers at or before the Closing.
8.3 Officer's Certificates. Each of the Company and the Sellers shall
have delivered to Purchaser a certificate, dated the Closing Date, certifying as
to the fulfillment by such Person of the conditions (or portions thereof)
applicable to it set forth in Sections 8.1, 8.2, and 8.5.
8.4 No Injunction. There shall not be in effect on the Closing Date any
writ, judgment, injunction, decree, or similar order of any Governmental
Authority restraining,
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enjoining, or otherwise preventing consummation of any of the transactions
contemplated by this Agreement.
8.5 HSR Act and Required Consents. All waiting periods applicable to
this Agreement and the transactions contemplated hereby under the HSR Act shall
have expired or been terminated, and all material required Consents set forth on
Schedule 8.5 shall have been obtained.
8.6 Legal Opinion. Purchaser shall have received an opinion from Xxxxxx
& Xxxx, L.L.P., special counsel to the Sellers and the Company, in form and
substance reasonably satisfactory to Purchaser and its counsel, covering the
matters set forth in Exhibit E. Such opinion may be based upon certificates of
officers of the Xxxxxx Companies, the Sellers and Governmental Authorities and
upon opinions of local counsel to the extent customary.
8.7 FCC Legal Opinion. Purchaser shall have received an opinion from
Xxxx, Raywid & Xxxxxxxxx, FCC counsel to the Company, in form and substance
reasonably satisfactory to Purchaser and its counsel, covering the matters set
forth in Exhibit F. Such opinion may be based upon certificates of officers of
the Xxxxxx Companies, the Sellers and Governmental Authorities and upon opinions
of local counsel to the extent customary.
8.8 Indemnity Escrow Agreement. The Sellers and the escrow agent named
therein shall have executed and delivered to Purchaser the Indemnity Escrow
Agreement.
8.9 Noncompete Agreement. Each of X. Xxxxxx, X. Xxxxxx and Hooks shall
have executed and delivered to Purchaser the Noncompete Agreement.
8.10 Resignations. The Company will deliver signed resignations,
effective as of the Closing, from all officers and members of the Board of
Directors of each Xxxxxx Company as may be specified by Buyer in writing within
five (5) Business Days after the date of this Agreement.
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8.11 Financial Performance. As of the Closing Date, the Xxxxxx
Companies on a consolidated basis will have (a) no less than 169,000 Basic
Subscribers, (b) Annualized EBITDA of no less than $30,500,000, and (c)
Annualized Revenue of no less than $77,000,000.
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF THE SELLERS
The obligations of the Sellers under this Agreement are subject to the
fulfillment, at or before the Closing, of each of the following conditions (all
or any of which may be waived in whole or in part by the Company and the
Sellers).
9.1 Representations and Warranties. The representations and warranties
made by Purchaser in this Agreement and in the certificates delivered by
Purchaser pursuant to this Agreement shall be true in all material respects as
of the date hereof and shall be true in all material respects on and as of the
Closing Date as if made on and as of the Closing Date (except as to any
representation or warranty that specifically relates to an earlier date, in
which case such representation or warranty shall be true in all material
respects as of such earlier date).
9.2 Performance. Purchaser shall have performed and complied in all
material respects with all agreements, covenants, obligations, and conditions
required by this Agreement to be so performed or complied with by Purchaser at
or before the Closing.
9.3 Officer's Certificates. Purchaser shall have delivered to the
Sellers a certificate, dated the Closing Date, certifying as to the fulfillment
by Purchaser of the conditions set forth in Sections 9.1, 9.2 and 9.5 hereof.
9.4 No Injunction. There shall not be in effect on the Closing Date any
writ, judgment, injunction, decree, or similar order of any Governmental
Authority restraining,
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enjoining, or otherwise preventing consummation of any of the transactions
contemplated by this Agreement.
9.5 HSR Act and Required Consents. All waiting periods applicable to
this Agreement and the transactions contemplated hereby under the HSR Act shall
have expired or been terminated, and all material required Consents set forth on
Schedule 8.5 shall have been obtained.
9.6 Legal Opinion. The Sellers and the Company shall have received an
opinion from Xxxxxxxx, Xxxxxxxx & Xxxxxx, P.C., in form and substance reasonably
satisfactory to the Sellers and the Company and their counsel, covering the
matters set forth in Exhibit G. Such opinion may be based on certificates of
officers of Purchaser and Governmental Authorities and upon opinions of local
counsel to the extent customary.
9.7 Indemnity Escrow Agreement. Purchaser and the escrow agent named
therein shall have executed and delivered to the Sellers the Indemnity Escrow
Agreement.
9.8 Company Financing. At the Closing, Purchaser shall pay, or cause to
be paid, in full all of the Senior Bank Debt and shall obtain releases of the
security interest on the Shares held by the holders of the Senior Bank Debt.
ARTICLE X
INDEMNIFICATION AND SURVIVAL OF PROVISIONS
10.1 Indemnification by Sellers. Subject to the other provisions of
this Article X from and after the Closing, the Sellers, severally as to such
Seller alone and not jointly, will indemnify and hold Purchaser, its Affiliates
and its respective employees, representatives, officers, directors and agents
(the "Purchaser Parties") harmless from and against any and all Damages suffered
by any Purchaser Party arising out of:
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(a) the breach of any representation or warranty made by such
Seller in this Agreement or in any other Company Document required to
be executed and delivered by such Seller at the Closing pursuant to
this Agreement;
(b) the breach of any representation or warranty made by the
Company in this Agreement or in any other Company Document required to
be executed and delivered by the Company at the Closing pursuant to
this Agreement;
(c) the failure of such Seller to perform any covenant,
agreement or obligation by such Seller contained in this Agreement or
in any other Company Document at or prior to the Closing; and
(d) the failure of the Company to perform any covenant,
agreement or obligation by the Company contained in this Agreement or
in any other Company Document at or prior to the Closing.
10.2 Indemnification by Purchaser. Subject to the other provisions of
this Article X from and after the Closing, Purchaser will indemnify and hold the
Sellers and their respective employees, representatives, officers, directors and
agents (the "Seller Parties") harmless from and against any Damages suffered by
any Seller Party arising out of:
(a) the breach of any representation or warranty made by
Purchaser in this Agreement or in any other Purchaser Document required
to be executed and delivered by Purchaser at the Closing pursuant to
this Agreement; and
(b) the failure of Purchaser to perform any covenant,
agreement or obligation by Purchaser contained in this Agreement or in
any other Purchaser Document at or prior to Closing.
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10.3 Notice and Resolution of Claims.
(a) After obtaining knowledge of any claim that it may have
pursuant to this Article X, any Purchaser Party entitled to
indemnification pursuant to this Article X will promptly give written
notice to the Sellers, and any Seller Party entitled to indemnification
pursuant to this Article X will promptly give written notice to
Purchaser. Such notice will set forth in reasonable detail the claim
and the basis for indemnification.
(b) If such claim for indemnity arises from a claim or Action
involving a third party (a "Third-Party Claim"), the Indemnified Party
will permit the Indemnifying Party to assume its defense. If the
Indemnifying Party assumes the defense of such Third-Party Claim, it
will take all steps necessary to investigate, defend or settle such
Action and will, subject to Section 10.4, hold the Indemnified Party
harmless from and against any and all Damages caused by or arising out
of any settlement approved by the Indemnifying Party or any judgment in
connection with such Third-Party Claim. Without the written consent of
the Indemnified Party, the Indemnifying Party will not consent to entry
of any judgment or enter into any settlement that does not include an
unconditional and complete release of the Indemnified Party by the
claimant or plaintiff making the Third-Party Claim. The Indemnified
Party may participate in such defense or settlement through its own
counsel, but at its own expense. Failure by the Indemnifying Party to
notify the Indemnified Party of its election to assume the defense of
any Third-Party Claim within thirty (30) days after its receipt of
notice thereof pursuant to Section 10.3(a) will be deemed a waiver by
the Indemnifying Party of its right to assume the defense of such
Third-Party Claim. In such event, the Indemnified Party may defend, at
the expense of the Indemnifying Party, against such Third-Party Claim
in any manner it deems appropriate and may settle such Third-Party
Claim or consent to the entry of any judgment with respect thereto,
provided that it acts reasonably and in good faith.
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10.4 Limits on Indemnification. Notwithstanding any other provisions in
this Agreement to the contrary:
(a) The Sellers will be liable to the Purchaser Parties for
Damages that are indemnifiable pursuant to Section 10.1 only to the
extent and in the amount that the aggregate amount of Damages that are
indemnifiable pursuant to Section 10.1 to all Purchaser Parties exceeds
$500,000, except for Damages otherwise covered by Section 10.4(d). The
Purchaser and as applicable, the Company, will be liable to the Seller
Parties for Damages that are indemnifiable pursuant to Section 10.2
only to the extent and in the amount that the aggregate amount of
Damages that are indemnifiable pursuant to Section 10.2 to all Seller
Parties exceeds $500,000.
(b) The total aggregate liability of the Sellers for all
claims for Damages that may arise under Section 10.1, excluding Damages
otherwise covered by Section 10.4(d), will not exceed $15,000,000. The
total aggregate liability of Purchaser for all claims for Damages that
may arise under Section 10.2 will not exceed $15,000,000.
(c) No Seller will have any liability for Damages under any
circumstances for any claim with respect to this Agreement in an
aggregate amount in excess of the portion of the Aggregate Purchase
Price received by such Seller in cash, except for Damages otherwise
covered by Section 10.4(d).
(d) The Individual Sellers (but not the Corporate Sellers)
will be liable to the Purchaser Parties for all Damages that arise from
a breach of Section 3.7, and the limitations set forth in Section
10.4(a), Section 10.4(b) and Section 10.4(c) will not be applicable to
any such claim against the Individual Sellers for Damages arising from
a breach of Section 3.7.
(e) Each Seller will have liability only for Damages for any
claim arising under Section 10.1(b) or 10.1(d) equal to its Pro Rata
Share of such Damages. Each
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Seller will have liability only for Damages for any claim arising under
Section 10.1(a) or 10.1(c) resulting from the breach or failure
committed either directly or indirectly by such Seller.
(f) No Party will have any obligation to indemnify any Seller
Party or Purchaser Party for (a) any Consequential Damages or (b) any
other Damages that are (i) recovered by the Indemnified Party from any
third party (including insurers, but net of premium increases) or (ii)
offset by Tax savings realized on account of such Damages by the
Indemnified Party or any of its Affiliates.
(g) Except for claims arising as a result of fraud or other
intentional misconduct, the indemnification provisions of this Article
X sets forth the exclusive remedy under this Agreement for Damages
owing from Sellers to the Purchaser Parties and from Purchaser to the
Seller Parties. Each of the Parties hereby waives, to the fullest
extent it may lawfully do so, any other rights, causes of action, or
remedies or Damages that it might assert against the other in
connection with this Agreement and the transaction contemplated hereby,
whether under statutory or common Law, any Environmental Law, or
securities, trade regulation, or other Law.
10.5 Indemnity Payments. All payments made pursuant to this Article X
(other than interest payments) will be treated by the Parties on all Tax Returns
as an adjustment to the Aggregate Purchase Price.
10.6 Payment.
(a) Upon final determination by the Parties, an arbitrator or
a court of competent jurisdiction that a Party is entitled to
indemnification under this Article X, subject to clause (b) below, the
Indemnifying Party will promptly pay or reimburse, as appropriate, the
Indemnified Party for any Damages to which it is entitled to be
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indemnified hereunder. Neither Party will permit any exercise of any
right of set-off against the other Party until such final determination
is made.
(b) Any payment owing by the Sellers to any Purchaser Party
for Damages may be made from the funds held in escrow pursuant to the
Indemnity Escrow Agreement in accordance with the terms and conditions
thereof. On the sixth month anniversary of the Closing Date, an amount
equal to fifty percent (50%) of the balance of the funds held in escrow
on such date pursuant to the Indemnity Escrow Agreement shall be
distributed to the Sellers (each receiving its Pro Rata Share of such
distribution), and on the Release Date, the remaining portion of such
escrowed funds shall be distributed to the Sellers (each receiving its
Pro Rata Share of such distribution). Notwithstanding the foregoing, in
the event there is one or more claims for indemnification against the
Sellers pursuant to this Article X which is outstanding or has not been
finally settled or resolved (each such claim an "Unresolved Claim") on
the sixth month anniversary of the Closing Date or the Release Date, as
applicable, an amount equal to the amount of such Unresolved Claims
shall remain in escrow pursuant to the Indemnity Escrow Agreement;
provided, however, that any amounts withheld with respect to Unresolved
Claims that are not applied to such Unresolved Claims shall immediately
upon resolution thereof, be disbursed to the Sellers.
10.7 Other Indemnitees. Purchaser will cause the Purchaser Parties, and
the Sellers will cause the Seller Parties, to comply with the provisions and to
abide by the limitations set forth in this Article X.
10.8 Survival. The covenants and agreements of the Parties set forth in
this Agreement that require performance after the Closing will survive the
Closing and will remain in effect until performed or expressly waived in
writing. All representations and warranties made herein or in any certificates
provided for herein will expire and be of no further force and effect after the
Release Date; provided, however, the foregoing survival limitation will not
apply to the representations and warranties set forth in Sections 4.20 and 4.23
which will survive until sixty (60) days after the expiration of the applicable
statute of limitations (including any extensions).
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The Parties acknowledge that this contractual term of limitations is reasonable
and necessary to provide conclusion to the Parties' obligations under this
Agreement.
ARTICLE XI
TERMINATION
11.1 Termination. This Agreement may be terminated, and the
transactions contemplated hereby may be abandoned:
(a) by mutual written consent of the Sellers and Purchaser;
(b) by Purchaser if (i) the conditions to Purchaser's
obligation to close set forth in Article VIII have not been met by the
Company and the Sellers, or waived by Purchaser, on or before July 31,
1999, and (ii) the failure of such conditions to be met is not the
result of a material breach of any provision of this Agreement by
Purchaser; provided, that, in such instance, Purchaser may, in its sole
and absolute discretion, extend such date to a later date, but in no
event later than September 30, 1999;
(c) by the Sellers if (i) the conditions to the Sellers'
obligation to close set forth in Article IX have not been met by
Purchaser, or waived by the Sellers, on or before July 31, 1999, and
(ii) the failure of such conditions to be met is not the result of a
material breach of any provision of this Agreement by the Company or
the Sellers; provided, that, in such instance, the Sellers may, in
their sole and absolute discretion, extend such date to a later date
but in no event later than September 30, 1999;
(d) by the Sellers at any time after Purchaser breaches its
covenant set forth in Section 7.1; or
(e) by either Purchaser or the Sellers if the Closing has not
occurred before October 1, 1999.
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11.2 Effect of Termination.
(a) If this Agreement is validly terminated pursuant to
Section 11.1 by Purchaser or the Sellers, as applicable, giving notice
thereof to the other Parties, this Agreement will forthwith become null
and void, except that the provisions of this Section 11.2 and Sections
12.2, 12.5, 12.6, 12.7 and 12.14 will continue to apply following any
such termination and except as provided in Section 11.2(b), no Party
will be relieved of any liability for Damages that such Party may have
to any other Party hereto by reason of such Party's breach of this
Agreement (or any representation, warranty, covenant, or agreement
included in this Agreement).
(b) If this Agreement is validly terminated by the Sellers in
accordance with Section 11.1(c) or Section 11.1(d), the Sellers shall
be entitled to the Deposit as liquidated Damages and their sole and
exclusive remedy for breach of this Agreement by Purchaser, other than
for any willful breach by Purchaser. Purchaser shall be entitled to the
Deposit if this Agreement is validly terminated in accordance with
Section 11.1(a), 11.1(b) or 11.1(e).
ARTICLE XII
MISCELLANEOUS
12.1 Tax. The Company and the Sellers will properly prepare, or cause
to be properly prepared, and file or cause to be filed, all Tax Returns of or
which include the Partnership, the Company or any other Xxxxxx Company required
to be filed on or prior to the Closing Date (determined with regard to
extensions). Purchaser will be responsible for preparing and filing all Tax
Returns required to be filed by or on behalf of the Company and the other Xxxxxx
Companies after the Closing Date.
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12.2 Sellers Committee.
(a) The Sellers Committee will become effective as of the
Closing Date and will continue in existence until all of its duties
under this Agreement are discharged. The Sellers Committee will have
full and irrevocable power and authority to act for and in the name of
and as agent for the Sellers after the Closing to do the following: (a)
accept and give notices and other communications relating to this
Agreement and the other Company Documents; (b) execute any instrument
or document that the Sellers Committee determines is necessary or
desirable in the exercise of its authority under this Agreement; (c)
act on behalf of the Sellers in connection with all matters relating to
this Agreement and the other Company Documents and the transactions
contemplated hereby and thereby; and (d) make claims for indemnity on
behalf of any Sellers and make any determinations and exercise any
powers of an Indemnifying Party or Indemnified Party on behalf of the
Sellers.
(b) The Sellers Committee may rely on any document believed by
it to be genuine and to have been signed or presented by the proper
Person. The Sellers Committee need not investigate any fact or matter
stated in such document. The Sellers Committee may act through its
attorneys and agents and will not be responsible for the misconduct or
negligence of any agent appointed with due care. The Sellers Committee
and its members will not be liable for any action they take or omit to
take in good faith that they believe to be authorized or within their
rights or powers. The Sellers Committee may consult with counsel and
the advice or opinion of such counsel as to matters of law will be sole
and complete authorization and protection in respect of any action
taken, omitted, or suffered by it under this Agreement or under any
other Company Documents in good faith and in accordance with the advice
or opinion of such counsel.
(c) At any meetings of the Sellers Committee, two members will
constitute a quorum. Any action to be taken by the Sellers Committee
may be taken by a majority of its members present at a meeting of the
Sellers Committee (a quorum being present)
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including any meeting held by means of conference telephone or similar
communications equipment by means of which all persons participating in
the meeting can hear each other, or by written consents of all members
of the Sellers Committee.
(d) If a member of the Sellers Committee resigns, dies or
becomes incapacitated, the remaining members of the Sellers Committee
will appoint a successor member, notwithstanding the absence of a
quorum.
12.3 Notices. Any notice or other communication given pursuant to this
Agreement must be in writing and delivered personally, sent by telefacsimile or
other similar facsimile transmission, delivered by overnight express, or sent by
registered or certified mail, postage prepaid, as follows:
(a) If to the Company:
Xxxxxx Group, Inc.
0000 Xxxxxx Xxxx
Xxxxxxxx X
Xxxxx, Xxxxx 00000
Attention: Xxx Xxxxxxxx
Facsimile number: (000) 000-0000
with a copy to:
Xxxxxx & Xxxx, L.L.P.
0000 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxxxxx
Facsimile number: (000) 000-0000
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(b) If to the Sellers or the Sellers Committee:
0000 Xxxxxx Xxxx
Xxxxxxxx X
Xxxxx, Xxxxx 00000
Attention: Xxx Xxxxxxxx
Facsimile number: (000) 000-0000
with a copy to:
Xxxxxx & Xxxx, L.L.P.
0000 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxxxxx
Facsimile number: (000) 000-0000
(c) If to Purchaser:
Classic Cable, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attention: J. Xxxxxxx Xxxxxxx
Facsimile number: (000) 000-0000
with a copy to:
Xxxxxxxx Xxxxxxxx & Xxxxxx, P.C.
000 Xxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esquire
Facsimile number: (000) 000-0000
All notices and other communications required or permitted under this Agreement
that are addressed as provided in this Section 12.3 will (i) if delivered
personally or by overnight express, be deemed given upon delivery; (ii) if
delivered by telefacsimile or similar facsimile transmission, be deemed given
when electronically confirmed; and (iii) if sent by registered or certified
mail, be deemed given when received. Any party from time to time may change its
address for the purpose of notices to that party by giving a similar notice
specifying a new address, but no such notice will be deemed to have been given
until it is actually received by the party sought to be charged with the
contents thereof.
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12.4 Entire Agreement. This Agreement supersedes all prior discussions
and agreements between the parties with respect to the subject matter of this
Agreement, and this Agreement contains the sole and entire agreement between the
parties hereto with respect to the subject matter hereof.
12.5 Expenses. Purchaser, on one hand, and the Sellers, on the other
hand, will each be responsible for and pay one-half of (i) all sales, transfer,
deed, duties, stamp, notary public and other similar Taxes and fees applicable
to the transactions contemplated by this Agreement, (ii) the filing fee required
by the HSR Act, and (iii) the cost and expense of the lien and judgment searches
described in Section 6.8. Except as otherwise expressly provided in this
Agreement, the Sellers will pay their own costs and expenses and the Company's
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby, and Purchaser will pay its own costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby.
12.6 Public Announcements. At all times at or before the Closing, the
Company and the Sellers, on one hand, and Purchaser, on the other hand, will
each consult with the other before issuing or making any reports, statements, or
releases to the public with respect to this Agreement or the transactions
contemplated hereby and will use good faith efforts to agree on the text of a
joint public report, statement, or release and will obtain the other Party's
approval of the text of any public report, statement or release to be made
solely on behalf of a Party, which approval will not be unreasonably withheld or
delayed. If the Company and Purchaser are unable to agree on or approve any such
public report, statement, or release and such report, statement, or release is,
in the opinion of legal counsel to a Party, required by Law to discharge such
Party's disclosure obligations, then such Party may make or issue the legally
required report, statement, or release, to the required recipient.
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12.7 Confidentiality.
(a) From the date hereof until the third anniversary of the
later to occur of the Closing Date or the termination of this Agreement
pursuant to Article XI hereof, each of Purchaser, the Company, and the
Sellers will refrain, and will cause its respective officers,
directors, employees, agents, and other representatives to refrain,
from disclosing to any other Person any confidential documents or
confidential information concerning any other party hereto acquired by
it in connection with this Agreement or concerning the transactions
contemplated hereby unless (i) such disclosure is compelled by judicial
or administrative process or by other requirements of Law (including,
without limitation, in connection with obtaining necessary insurance
regulatory approvals) and notice of such disclosure is furnished to
such other party hereto; (ii) any party hereto deems it advisable (upon
advice of such party's legal counsel) to disclose any such documents or
information in connection with the requirements of any securities Law;
or (iii) such documents or information can be shown to have been (A)
previously available to the party hereto receiving such documents or
information on a non-confidential basis, provided that the source of
such information was not known by such party, after reasonable
investigation, to be bound by any obligation of confidentiality to the
Company with respect to such material, (B) generally available to the
public through no fault of such receiving party, or (C) later acquired
by such receiving party on a non-confidential basis, provided that the
source of such information was not known by such party, after
reasonable investigation, to be bound by any obligation of
confidentiality to the Company with respect to such material.
(b) The parties hereto acknowledge and agree that (i) a breach
of any of the terms or provisions of this Section 12.7 would cause
irreparable damage to the non-breaching party for which adequate remedy
at Law is not available; and (ii) the non-breaching party will be
entitled as a matter of right to obtain, without posting any bond
whatsoever, an injunction, restraining order, or other equitable relief
to restrain any threatened or further breach of this Section 12.7,
which right will not be exclusive but
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will be cumulative and in addition to any other rights and remedies
available at Law or in equity.
12.8 No Negotiation. Until such time, if any, that this Agreement is
terminated in accordance with Section 11.1, the Sellers and the Company will not
directly or indirectly solicit, initiate or encourage proposals or conduct
negotiations relating to any transaction concerning the sale of the Securities
or any similar transaction.
12.9 Amendments. This Agreement hall not be modified except by written
instrument signed by duly authorized representatives of each Party.
12.10 Assignment. No Party may assign any of its rights under this
Agreement without the prior consent of the other Parties, which consent will not
be unreasonably withheld or delayed. Subject to the preceding sentence, this
Agreement will apply to, be binding in all respect upon, and inure to the
benefit of the successors and permitted assigns of the Parties. Nothing
expressed or referred to in this Agreement will be construed to give any Person
other than the Parties any legal or equitable right, remedy, or claim under or
with respect to this Agreement or any provision of this Agreement. This
Agreement and all of its provisions and conditions are for the sole and
exclusive benefit of the Parties and their successors and assigns.
12.11 Further Assurances. Each Party agrees that upon the reasonable
request of any other Party it will use good faith efforts (a) to furnish such
further information, (b) to execute and deliver such other documents, and (c) to
perform such other acts, for the purpose of carrying out the intent of this
Agreement and the documents referred to in this Agreement.
12.12 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT TO ANY
CONFLICTS OF LAW RULE OR PRINCIPLE THAT MIGHT REQUIRE THE APPLICATION OF THE
LAWS OF ANOTHER JURISDICTION.
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12.13 Counterparts. This Agreement may be executed in multiple
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
12.14 Dispute Resolution.
(a) In the event that a Party believes a controversy, claim or
dispute has arisen out of or relates to this Agreement, or the
performance, breach, validity, interpretation or enforcement of this
Agreement (other than pursuant to Section 2.3(e)), it will notify the
other Parties in accordance with Section 12.3 and provide reasonable
detail as to the reasons for such determination. After such notice has
been given, the appropriate Parties will meet and negotiate in good
faith to resolve the dispute. No arbitration for the resolution of the
dispute may be commenced until the earlier of (i) twenty (20) days
following the date upon which such notice has been given, and (ii) the
appropriate Parties conclude in good faith that amicable resolution of
the dispute through continued negotiation does not appear likely.
(b) To the extent that the Parties are unable to resolve their
disputes or controversies arising out of or relating to this Agreement,
or the performance, breach, validity, interpretation or enforcement of
this Agreement, through discussion and negotiation, all such disputes
and controversies will be resolved by binding arbitration in accordance
with Title 9 of the United States Code (the Federal Arbitration Act)
and the Commercial Arbitration Rules of the America Arbitration
Association (the "AAA"), and judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof.
After such time that arbitration may be commenced in accordance with
clause (a) above, a Party may initiate arbitration by sending written
notice of its intention to arbitrate to the other Parties and to the
AAA office located in Dallas, Texas. Such written notice will contain a
description of the dispute and the remedy sought. The
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arbitration will be conducted at the offices of the AAA in Dallas,
Texas before a panel of three (3) arbitrators, with each Party
selecting one (1) arbitrator and the third arbitrator being jointly
selected by the Parties. In the event the Parties have not mutually
agreed on an acceptable third arbitrator within thirty (30) days after
the demand for arbitration is filed, the third arbitrator shall be
appointed in the manner provided by Section 13 of the Commercial
Arbitration Rules of the AAA. The decision of the arbitrators will be
final and binding on the Parties and their successors and assignees.
The Parties intend that this agreement to arbitrate be irrevocable.
(c) The Parties shall use their commercially reasonable
efforts to cooperate with each other in causing the arbitration to be
held in as efficient and expeditious a manner as practicable, including
but not limited to, providing such documents and making available such
of their personnel as the arbitrators may request, so that the decision
may be reached timely. The arbitrators shall take into account the
Parties' stated goal of expedited proceedings in determining whether to
authorize discovery and, if so, the scope of permissible discovery and
other hearing and pre-hearing procedures. Each of the Parties agrees to
submit to the jurisdiction of the arbitrators.
(d) Notwithstanding the foregoing, in advance of the
institution of any arbitration proceeding, but in aid thereof, an
application may be filed for order or orders to be entered by any court
of competent jurisdiction (i) invoking the jurisdiction of the court
over the controversy in rem, by attachment, garnishment, sequestration,
or (ii) seeking to restrain or enjoin the destruction of the subject
matter of the controversy or any essential part thereof, or the
destruction or alteration of books, records, documents, or evidence
needed for the arbitration proceeding. No such judicial proceeding by a
Party shall be deemed a waiver of the Party's right to arbitrate.
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
PURCHASER:
CLASSIC CABLE, INC.
By: /s/ J. Xxxxxxx Xxxxxxx
------------------------------
Name: J. Xxxxxxx Xxxxxxx
Title: Chief Executive Officer
COMPANY:
XXXXXX GROUP, INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
SELLERS:
/s/ Xxxxxxxx X. Xxxxxx
---------------------------------
Xxxxxxxx X. Xxxxxx
/s/ Xxxxxx X. Xxxxxx
---------------------------------
Xxxxxx X. Xxxxxx
/s/ Xxxxxxx X. Xxxxx, Xx.
---------------------------------
Xxxxxxx X. Xxxxx, Xx.
/s/ Xxxxxx X. Xxxxxx
---------------------------------
Xxxxxx X. Xxxxxx
/s/ Xxxxxx X. Xxxxx, III
---------------------------------
Xxxxxx X. Xxxxx, III
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/s/ Xxxxxxxxx Xxx Xxxxxxxx
---------------------------------
Xxxxxxxxx Xxx Xxxxxxxx
COMMUNITIES FOUNDATION
OF TEXAS, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
LEADERSHIP NETWORK, INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
XXXXXX FOUNDATION, INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
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SPOUSES' CONSENT
Xxxxx Xxxxxx, the spouse of Xxxxxx X. Xxxxxx has reviewed this
Agreement and agrees that her community interest, if any, in the Shares and the
Partnership Interests held by Xxxxxx X. Xxxxxx shall be bound by the terms
hereof.
/s/ Xxxxx Xxxxxx
---------------------------------
Xxxxx Xxxxxx
Xxxxxx X. Xxxxxx, the spouse of Xxxxxx X. Xxxxxx has reviewed this
Agreement and agrees that her community interest, if any, in the Partnership
Interests held by Xxxxxx X. Xxxxxx shall be bound by the terms hereof.
/s/ Xxxxxx X. Xxxxxx
---------------------------------
Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxx, the spouse of Xxxxxx X. Xxxxx, III has reviewed this
Agreement and agrees that her community interest, if any, in the Partnership
Interests held by Xxxxxx X. Xxxxx, III shall be bound by the terms hereof.
/s/ Xxxxxx X. Xxxxx
---------------------------------
Xxxxxx X. Xxxxx
Xxxxxxx X. Xxxxxxxx, the spouse of Xxxxxxxxx Xxx Xxxxxxxx has reviewed
this Agreement and agrees that his community interest, if any, in the
Partnership Interests held by Xxxxxxxxx Xxx Xxxxxxxx shall be bound by the terms
hereof.
/s/ Xxxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxxx X. Xxxxxxxx
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EXHIBIT A
DEFINITIONS
The capitalized terms used in this Agreement will have the following
meanings:
"Action" shall mean any action, suit, arbitration, inquiry, proceeding
or investigation by or before any Governmental Authority or arbitrator.
"Affiliate" shall mean any Person that directly, or indirectly through
one or more intermediaries, controls, is controlled by, or is under common
control with the Person specified.
"Aggregate Purchase Price" shall have the meaning given such term in
Section 2.2 of this Agreement.
"Agreement" shall mean this Securities Purchase Agreement, together
with the Exhibits and Schedules attached hereto.
"Annualized EBITDA" shall mean at any date of determination, the sum of
(a) net income derived from Annualized Revenue, plus (b) interest expense
deducted in arriving at such net income, plus (c) federal, state and local
income taxes deducted in arriving at such net income, plus (d) depreciation,
amortization and other non-cash charges deducted in arriving at such net income,
plus (e) transaction expenses associated with the sale of the Xxxxxx Companies,
as computed and calculated in accordance with GAAP and on a basis consistent
with the Company Financial Statements.
"Annualized Revenue" shall mean at any date of determination, the
product of (a) all income of the Xxxxxx Companies on a consolidated basis for
the three (3) most recent consecutive completed months derived from: (i) the
delivery of analog and digital video programming to subscribers and other end
users, including basic, premium, pay-per-view and audio services; (ii) the
installation and connection of service; (iii) the assessment of late fees
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71
and other administrative charges; (iv) the sale of advertising and leased
access; (v) the rental of tower space; (vi) the provision of Internet access and
other data services; (vii) shopping and other programming network commissions,
but excluding programming network launch and other marketing support; (viii) the
sale, rental or lease of equipment, and (ix) franchise fees and guides, times
(b) four (4).
"Assets" shall mean all assets or properties of every kind, nature,
character, and description, including all tangible, intangible, personal, real
or mixed, of the Xxxxxx Companies.
"Basic Subscriber" shall mean as of any date of determination, without
duplication, the sum of all of the following which are receiving basic cable
television service provided by the Systems: (a) private residential customer
accounts that are billed by individual unit, regardless of whether such accounts
are in single family homes or in individually billed units in apartment houses
and other multi-unit buildings, (excluding Nonstandard Charges) each of which
shall be counted as one "Basic Subscriber"; and (b) all commercial, bulk-billed
and other accounts not billed by individual unit, such as correctional
facilities, hotels, motels, apartment houses and multi-family homes; provided,
that, the number of "Basic Subscribers" serviced by each such account shall be
deemed to be an amount equal to the quotient of (x) the aggregate monthly basic
cable television service revenue and expanded basic cable television service
revenue (without duplication) derived by the Systems from such accounts
(excluding any Nonstandard Charges), in each case for the last calendar month
preceding the date of such determination, divided by (y) the sum of the Basic
Subscriber Rate and the Expanded Basic Rate (without duplication) in each case
in effect on the date of such determination. Notwithstanding the foregoing, the
term "Basic Subscriber" will not include any commercial, residential or other
subscriber (i) who has not paid all billed deposit and installation charges (due
in connection with such subscriber's obtaining basic television services from a
System) and the full non-discounted Basic Subscriber Rate for such System for at
least one (1) full month, (ii) whose account as of the Closing Date is more than
two (2) months past due from the date on which any part of such account was
first due (unless, if more than two (2) months past due, the excess amount so
past due is no more than $10.00 (excluding late charges)), (iii) whose service
is pending disconnection for any reason, or
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(iv) who comes within the definition of Basic Subscriber because its account (or
any part thereof) has been compromised or written off other than in the ordinary
course of business consistent with past practices for reasons such as service
interruptions and waiver of late charges.
"Basic Subscriber Rate" shall mean the aggregate monthly fees and
charges for the provision of basic cable television services provided by the
Systems and excluding any Nonstandard Charges, copyright fees, franchise fees
and regulatory fees charged to customers served by the Systems, as of the end of
the last full month prior to the date of determination.
"Xxxxxx Companies" shall mean collectively, the Company, Friendship
Cable of Texas, Inc., Xxxxxx Television, Inc., Correctional Cable TV, Inc.,
Friendship Cable of Arkansas, Inc. and Callcom 24, Inc., each a Texas
corporation, and Xxxxxx Television, Inc. of Ft. Xxxxx, an Arkansas corporation.
"Xxxxxx Foundation" shall have the meaning given such term in the
introductory paragraph of this Agreement.
"Business Day" shall mean any day other than a Saturday, Sunday, or
other day on which banking institutions in New York, New York or Tyler, Texas
shall be permitted or required by Law or executive order to be closed.
"Cable Business" shall mean the cable television business and other
income-generating business conducted by the Xxxxxx Companies through the
Systems.
"Closing" shall mean the closing of the transactions contemplated by
this Agreement as provided in Section 2.3 hereof.
"Closing Balance Sheet" shall have the meaning given such term in
Section 2.3(b).
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"Closing Date" shall mean July 31, 1999, or such later date as extended
by Purchaser or the Stockholders in accordance with Section 11.1, but in no
event later than September 30, 1999, unless the Parties otherwise agree in
writing.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Communications Act" shall mean the Communications Act of 1934, as
amended, including, but not limited to, by the Cable Communications Policy Act
of 1984, the Cable Television Consumer Protection and Competition Act of 1992
and the Telecommunications Act of 1996, and the rules and regulations of the FCC
promulgated thereunder.
"Communities Foundation" shall have the meaning given such term in the
introductory paragraph to this Agreement.
"Company" shall have the meaning given such term in the introductory
paragraph to this Agreement.
"Company Common Stock" shall mean the meaning given such term in the
Preliminary Statements to this Agreement.
"Company Documents" shall mean this Agreement, the Indemnity Escrow
Agreement, the Noncompete Agreement and any other agreement, document or
instrument executed and delivered by the Company or any Seller on the Closing
Date in connection with the consummation of the transactions contemplated by
this Agreement.
"Company Financial Statements" shall mean the financial statements and
related documents described in subsections (a) of Section 4.6.
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"Company Material Adverse Effect" shall mean any change or effect that
could reasonably be expected to be materially adverse to the conduct of the
Cable Business, the operation of the Systems, or the financial condition of the
Xxxxxx Companies taken, as a whole.
"Consent" shall mean a consent, approval, authorization, waiver,
clearance from or notification to any Person, including any Governmental
Authority.
"Consequential Damages" shall mean Damages arising out of any
interruption of business, loss of profits, loss of use of facilities, claims of
customers, loss of goodwill or other indirect Damages.
"Contract" shall mean any written agreement, lease, sublease,
promissory note, evidence of indebtedness, or other contract.
"Copyright Act" shall mean Section III of Title 17 of U.S. Code, as
amended, and all rules and regulations promulgated thereunder, as amended.
"Corporate Seller" shall mean each Seller that is a corporation.
"Damages" shall mean any and all monetary damages, liabilities, fines,
fees, penalties, interest obligations, deficiencies, losses, costs, and expenses
(including, without limitation, reasonable fees and expenses of attorneys,
accountants, actuaries, and other experts).
"Deposit" shall have the meaning given such term in Section 7.1.
"Deposit Escrow Agreement" shall mean the Deposit Escrow Agreement
substantially in the form of Exhibit C to this Agreement.
"Employee Benefit Plans" shall mean "employee benefit plans" as defined
in Section 3(3) of ERISA, stock bonus, stock ownership, stock option, stock
purchase, stock appreciation rights,
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phantom stock, and other stock plans (whether qualified or nonqualified), and
all other pension, welfare, severance, retirement, deferred compensation, group
insurance, profit sharing, life, health, disability, accident (including,
without limitation, any "voluntary employees' beneficiary association" as
defined in Code section 501(c)(9) providing for the same or other benefits),
thrift, day care, legal services, leave of absence, layoff, and supplemental or
excess benefit plans, in each case existing on or before the Closing Date which
any of the Xxxxxx Companies maintains or sponsors and which cover some or all of
the present or former officers, directors, employees, agents, consultants, or
other similar representatives providing services to or for any of the Xxxxxx
Companies; provided, however, that such term shall not include (a) routine
employment policies and procedures developed and applied in the ordinary course
of business, including without limitation sick leave, vacation, and holiday
policies, and (b) directors and officers liability insurance.
"Environmental Law" shall mean the Federal Water Pollution Control Act,
the Clean Air Act, the Toxic Substances Control Act, the Solid Waste Disposal
Act, the Comprehensive Environmental Response Compensation and Liability Act of
1980, the Emergency Planning and Community Right-To-Know Act and the Safe
Drinking Water Act, and the rules and regulations thereunder promulgated in
final form prior to the date hereof as interpreted in accordance with public
announcements made prior to the date hereof.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended (including, without limitation, any successor act), and the rules and
regulations promulgated thereunder.
"Expanded Basic Rate" shall mean as of any date of determination, the
monthly fees and charges for the provision of "expanded basic service" (as such
term is customarily used in the cable television industry) and excluding any
Nonstandard Charges, copyright fees, franchise fees and regulatory fees charged
to customers served by the Systems, as of the end of the last full month.
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"FCC" shall mean the Federal Communications Commission, or any
successor agency.
"Financing" shall have the meaning given such term in Section 5.7.
"X. Xxxxxx" shall have the meaning given such term in the introductory
paragraph to this Agreement.
"GAAP" shall mean generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board.
"Governmental Authority" shall mean any federal, state or local
government, any of its subdivisions, agencies, authorities, commissions, boards
or bureaus, any federal, state or local court or tribunal and any arbitrator.
"Hazardous Substance" shall mean any substance listed, defined,
designated or classified as hazardous, toxic, radioactive or dangerous, or
otherwise regulated, under any Environmental Law. Hazardous Substance includes
any substance to which exposure is regulated by any Governmental Authority or
any Environmental Law, including without limitation any toxic waste, pollutant,
contaminant, hazardous substance, toxic substance, hazardous waste, special
waste, industrial substance or petroleum or any derivative or by-product
thereof, radon, radioactive material, asbestos or asbestos containing material.
"Hooks" shall have the meaning given such term in the introductory
paragraph of this Agreement.
"HSR Act" shall mean Section 7A of the Xxxxxxx Act (Title II of the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Acts of 1976), as amended (including,
without limitation, any successor act), and the rules and regulations
promulgated thereunder.
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"Indemnified Party" means each Person entitled to indemnification
pursuant to Article X.
"Indemnifying Party" means each Person who has a duty of
indemnification pursuant to Article X.
"Indemnity Escrow Agreement" shall mean the Indemnity Escrow Agreement
substantially in the form of Exhibit B to this Agreement.
"Individual Seller" shall mean each Seller who is a natural person.
"IRS" shall mean the United States Internal Revenue Service.
"Knowledge" shall mean, with respect to any entity, actual knowledge of
any of the executive officers or directors of the entity specified.
"Law" shall mean all laws, statutes, ordinances, codes, regulations,
orders, technical or other written standard, writs, rulings, judgments,
directives, injunctions and decrees of any executive office, legislature or
Governmental Authority.
"Leadership Network" shall have the meaning given such term in the
introductory paragraph of this Agreement.
"Licenses" shall mean any license, sublicense, permit, authorization or
registration obtained from any Governmental Authority in connection with the
operation of a Person's business, excluding authorizations for franchises.
"Lien" shall mean any mortgage, pledge, assessment, security interest,
lien, levy, charge, or other encumbrance of any kind, or any conditional sales
Contract, title retention Contract, or other Contract to give any of the
foregoing.
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"March Balance Sheet" shall mean the balance sheet of the Xxxxxx
Companies dated as of March 31, 1999 that is included in the Company Financial
Statements.
"Xxxxxx" shall have the meaning given such term in the introductory
paragraph of this Agreement.
"Material Contracts" shall have the meaning given such term in Section
4.13(a).
"Material Leases" shall mean any lease or sublease of real or personal
property of any Xxxxxx Company involving a term of more than 12 months and
rental obligations exceeding $12,000 per year.
"Material Real Property Leases" shall have the meaning given such term
in Section 4.12(a).
"Xxxxxxxx" shall have the meaning given such term in the introductory
paragraph of this Agreement.
"Monthly Financial Statements" shall mean the financial statements
described in Section 6.6.
"Noncompete Agreement" shall mean the Noncompete Agreement
substantially in the form of Exhibit D to this Agreement.
"Nonstandard Charges" shall mean any charges for Taxes, second
connects, additional outlets, installation fees, deposits and other
non-recurring items and any charges for the rental of converters, remote control
devices and other live charges for equipment.
"Partnership" shall have the meaning given such term in the Preliminary
Statements.
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"Partnership Interests" shall have the meaning given such term in the
Preliminary Statements.
"Party" shall mean each of Purchaser, the Company and each Seller.
"Permitted Lien" shall mean any (a) mechanic's carrier's, workmen's,
repairmen's, or other similar Lien arising or incurred in the ordinary course of
business, (b) Liens for Taxes, assessments, and other governmental charges that
are not due and payable or that may hereafter be paid without penalty or that
are being contested in good faith, (c) zoning laws and ordinances and similar
legal requirements, (d) rights reserved to any Governmental Authority to
regulate the affected property and (e) easements, rights-of-way, and other
imperfections of title or other encumbrances that do not individually or in the
aggregate have a Company Material Adverse Effect.
"Person" shall mean any natural person, corporation, general
partnership, limited partnership, proprietorship, trust, union, association,
court, tribunal, agency, government, department, commission, self-regulatory
organization arbitrator, board, bureau, instrumentality, or other entity,
enterprise, authority, or business organization.
"Pole Attachment Agreements" shall have the meaning given such term in
Section 4.11(a).
"Preliminary Purchase Price Adjustment Amount" shall have the meaning
given such term in Section 2.3(c).
"Pro Rata Share" shall mean with respect to any Seller, the portion of
the Aggregate Purchase Price to which such Seller is entitled expressed as a
percentage of the total Aggregate Purchase Price.
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"Purchase Price Adjustment Amount" shall have the meaning given such
term in Section 2.3(a).
"Purchaser" shall have the meaning given such term in the introductory
paragraph to this Agreement.
"Purchaser Documents" shall mean this Agreement, the Indemnity Escrow
Agreement, the Noncompete Agreement and any other agreement, document or
instrument executed and delivered by Purchaser on the Closing Date in connection
with the consummation of the transactions contemplated by this Agreement.
"Purchaser Parties" shall have the meaning given such term in Section
10.1.
"X. Xxxxxx" shall have the meaning given such term in the introductory
paragraph of this Agreement.
"Real Property" shall have the meaning given such term in Section
4.12(a).
"Release Date" shall mean the date that is eighteen (18) months from
the Closing Date.
"Xxxxx" shall have the meaning given such term in the introductory
paragraph of this Agreement.
"Securities" shall have the meaning given such term in Section 2.1.
"Seller" shall have the meaning given such term in the introductory
paragraph to this Agreement.
"Seller Parties" shall have the meaning given such term in Section
10.2.
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"Sellers Committee" shall mean a committee comprised of three (3)
individuals appointed by the Sellers on or before the Closing Date.
"Senior Bank Debt" shall mean the aggregate of the outstanding
principal, accrued interest, fees and expenses payable by the Company under that
certain Credit Agreement, dated as of September 30, 1994, as amended, among the
Company, the First National Bank of Chicago, as Agent and the other lending
institutions party thereto.
"Senior Debt" shall mean collectively, the Senior Bank Debt, any
capitalized lease obligations of the Xxxxxx Companies and any other long term
indebtedness for borrowed money evidenced by bonds, debentures, notes or similar
instruments of the Xxxxxx Companies.
"Shares" shall have the meaning given such term in the Preliminary
Statements to this Agreement.
"Subsidiary" shall mean, with respect to any Person, any entity in
which such Person owns (directly or indirectly) more than 50% of such entity's
voting securities.
"System Franchises" shall have the meaning given such term in Section
4.10(a).
"Systems" shall have the meaning set forth in the Preliminary
Statements.
"Taxes" shall mean all taxes, charges, levies, or other similar
assessments or liabilities, including (a) income, phase III, gross receipts, ad
valorem, premium, excise, real property, personal property, sales, use,
transfer, withholding, employment, payroll, and franchise taxes imposed by the
United States of America, or by any state, local, or foreign government, or any
subdivision, agency, or other similar Person of the United States or any such
government; and (b) any interest, fines, penalties, assessments, or additions to
taxes resulting from, attributable to, or incurred in connection with any Tax or
any contest, dispute, or refund thereof.
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"Tax Returns" shall mean any report, return, or statement required to
be supplied to a taxing authority in connection with Taxes, including without
limitation any information return.
"Third Party Claim" shall have the meaning given such terms in Section
10.3(b).
"Unresolved Claim" shall have the meaning given such term in Section
10.6(b).
"WARN Act" shall mean the Worker Adjustment and Retraining Notification
Act of 1988.
"Working Capital" shall mean an amount equal to the difference of (a)
the consolidated current assets (excluding cash and cash equivalents) of the
Xxxxxx Companies, less (b) the consolidated current liabilities (excluding the
current portion of Senior Debt) of the Xxxxxx Companies, all as set forth on the
Closing Balance Sheet.
Unless the context of this Agreement otherwise requires, (a) words of
any gender are deemed to include the other gender; (b) words using the singular
or plural number also include the plural or singular number, respectively; (c)
the terms "hereof," "herein," "hereby," "hereto," and derivative or similar
words refer to this entire Agreement; (d) the terms "Article" or "Section" refer
to the specified Article or Section of this Agreement; (e) the term "including"
and other forms of such term, with respect to any matter or thing, means
"including but not limited to" such matter or thing; and (f) all references to
"dollars" or "$" refer to currency of the United States of America.
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