EXHIBIT 10.11
STOCK PURCHASE AGREEMENT
AMONG
CENTENNIAL CARIBBEAN HOLDING CORP., as Seller,
CENTENNIAL CELLULAR OPERATING CO. LLC, as Guarantor,
AND
PUERTO RICO CABLE ACQUISITION COMPANY INC., as Buyer
Dated as of September 6, 2004
TABLE OF CONTENTS
PAGE
1. Definitions.............................................................................................1
(a) Defined Terms..................................................................................1
(b) Other Definitional and Interpretive Matters....................................................9
2. Purchase and Sale of Company Shares....................................................................10
(a) Purchase and Sale.............................................................................10
(b) Purchase Price................................................................................10
(c) Payment of Purchase Price at the Closing......................................................10
(d) The Closing...................................................................................10
(e) Deliveries at the Closing.....................................................................11
(f) Working Capital...............................................................................11
(g) Capital Expenditures..........................................................................13
3. Representations and Warranties of the Seller...........................................................14
(a) Organization..................................................................................14
(b) Capitalization................................................................................14
(c) Authorization of Transaction; Conflicts; Consents of Third Parties............................15
(d) Brokers' Fees.................................................................................16
(e) Subsidiaries..................................................................................16
(f) Financial Statements; Absence of Certain Changes; No Undisclosed Liabilities..................16
(g) Legal Compliance..............................................................................17
(h) Tax Matters...................................................................................21
(i) Assets........................................................................................23
(j) Intellectual Property.........................................................................24
(k) Contracts.....................................................................................25
(l) Franchises....................................................................................26
(m) Litigation....................................................................................27
(n) Certain Business Relationships with Affiliates................................................27
(o) System Information............................................................................27
(p) System and Signal Carriage....................................................................28
(q) Environmental Matters.........................................................................28
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(r) Employees.....................................................................................29
(s) Employee Benefits.............................................................................30
(t) Corporate Records.............................................................................30
4. Representations and Warranties of the Buyer............................................................30
(a) Organization..................................................................................31
(b) Authorization of Transaction..................................................................31
(c) Brokers' Fees.................................................................................31
(d) Financing.....................................................................................31
(e) Litigation....................................................................................32
(f) No Disqualification...........................................................................32
(g) Investment Purpose............................................................................32
(h) Tax Treatment.................................................................................32
5. Pre-Closing Covenants..................................................................................32
(a) General.......................................................................................32
(b) Notices and Consents..........................................................................33
(c) Operation of Business.........................................................................33
(d) Full Access...................................................................................35
(e) Notice of Developments........................................................................36
(f) Exclusivity...................................................................................36
(g) Liens; Intercompany Debt......................................................................36
(h) Excluded Assets, Etc..........................................................................37
(i) Financing.....................................................................................37
(j) Environmental Access..........................................................................37
(k) Financial Information.........................................................................37
6. Post-Closing Covenants.................................................................................38
(a) General.......................................................................................38
(b) Access to Books and Records...................................................................38
(c) Employees and Employee Benefits...............................................................38
(d) Tax Matters...................................................................................39
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(e) Notice of Disqualification....................................................................43
(f) Use of Name and Logos.........................................................................44
(g) Non-Solicit and Confidentiality...............................................................44
7. Conditions to Obligation to Close......................................................................45
(a) Conditions to Obligation of the Buyer.........................................................45
(b) Conditions to Obligation of the Seller........................................................47
8. Indemnification........................................................................................48
(a) The Seller's Indemnification Obligations......................................................48
(b) The Buyer's Indemnification Obligations.......................................................49
(c) Indemnification Procedure.....................................................................49
(d) Direct Claims.................................................................................50
(e) Failure to Give Timely Notice.................................................................51
(f) Reduction of Adverse Consequences.............................................................51
(g) Limitations on Indemnities....................................................................51
(h) Survival......................................................................................52
(i) Exclusivity...................................................................................52
9. Termination............................................................................................52
(a) Termination of Agreement......................................................................52
(b) Effect of Termination.........................................................................53
10. Miscellaneous..........................................................................................53
(a) Press Releases and Public Announcements.......................................................53
(b) No Third-Party Beneficiaries..................................................................54
(c) Entire Agreement..............................................................................54
(d) Succession and Assignment.....................................................................54
(e) Counterparts..................................................................................54
(f) Headings......................................................................................54
(g) Notices.......................................................................................54
(h) Governing Law; Forum Selection; Consent to Jurisdiction.......................................55
(i) Amendments and Waivers........................................................................56
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(j) Severability..................................................................................56
(k) Expenses......................................................................................57
(l) Limitations on Representations and Warranties.................................................57
(m) Construction..................................................................................57
(n) Non-Recourse..................................................................................57
Exhibit A -- Transition Services Agreement
Exhibit B-1 -- Form of Opinion of General Counsel to the Seller
Exhibit B-2 -- Form of Opinion of FCC Counsel to the Seller
Exhibit B-3 -- Form of Opinion of Puerto Rico Counsel to the Seller
Exhibit C -- Form of Opinion of Counsel to the Buyer
Exhibit D -- Seller Parent Guaranty
Exhibit E -- Draft Financial Statements
Exhibit F -- Affiliate Agreements
Schedule 1 -- Excluded Assets
Schedule 2(g) -- Capital Expenditures
Schedule 3 -- Working Capital as of July 31, 2004
Schedule 4(d)(i) -- Financing Commitment
Schedule 4(d)(ii) -- Equity Commitment
Schedule 5(c) -- Operations
Schedule 5(c)(ix) -- Permits
Schedule 5(g) -- Continuing Affiliate Agreements
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Schedule 5(h) -- Litigation
Schedule 6(c)(i) -- List of Retention Payments
Schedule 6(g) -- Scheduled Employees
Schedule 7(a)(xix) -- Assigned Contracts
Schedule 8(a)(iv) -- List of Certain Matters
Disclosure Schedule
v
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (this "Agreement") entered into as of
September 6, 2004, by and among PUERTO RICO CABLE ACQUISITION COMPANY INC., a
Puerto Rican corporation (the "Buyer"), CENTENNIAL CARIBBEAN HOLDING CORP., a
Delaware corporation (the "Seller"), for the limited purpose of the guaranty set
forth herein only, CENTENNIAL CELLULAR OPERATING CO. LLC, a Delaware limited
liability company ("Guarantor"), and, for the limited purposes of Section
6(d)(x), Centennial Communications Corp., a Delaware corporation ("Centennial").
The Seller owns all of the outstanding capital stock of Centennial
Puerto Rico Cable TV Corp., a Delaware corporation (the "Company").
The Company owns and operates cable television systems which serve
areas in and around the Puerto Rico municipalities of Ponce, Yauco, Adjuntas,
Coamo, Guayanilla, Jayuya, Xxxxx Diaz, Penuelas, Santa Xxxxxx, Villalba,
Guayama, Xxxxxx, Maunabo, Patillas, Xxxxxxx, Mayaguez, Cabo Rojo, San German,
Lajas, Hormigueros, Guanica, Sabana Grande, Maricao, Anasco, Rincon, Las Marias,
Aguadilla, Aguada, Quebradillas, Moca and Isabela.
The Buyer desires to purchase from the Seller, and the Seller desires
to sell to the Buyer, all of the outstanding capital stock of the Company in
exchange for the consideration set forth herein, upon the terms and conditions
set forth in this Agreement.
Now, therefore, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows.
1. Definitions.
(a) Defined Terms. The following terms shall have the
following meanings:
"Accounting Periods" has the meaning set forth in Section 3(g).
"Accounting Principles" means the Company's accounting policies and
procedures, determined in accordance with GAAP, applied on a consistent basis;
provided that to the extent there is any inconsistency between the Company's
historical accounting policies and procedures and GAAP, GAAP shall control.
"Acquisition Transaction" means any merger, consolidation, or other
business combination involving the Company or the acquisition of all or any
amount of the assets or the capital stock of the Company other than as permitted
or contemplated by this Agreement.
"Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, liabilities,
obligations, Taxes, liens, losses, expenses, and fees, including court costs and
reasonable attorneys' fees and expenses.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Affiliated Group" means any affiliated group within the meaning of
Section 1504(a) of the Code or any similar group defined under a similar
provision of Law.
"Agreement" has the meaning set forth in the preface.
"Ancillary Documents" means the other documents, agreements,
certificates and instruments to be executed, delivered and performed by the
Parties in connection with the transactions contemplated by this Agreement
"Antitrust Division" has the meaning set forth in Section 5(b).
"ARPE" has the meaning set forth in Section 3(g).
"Basic Cable" means the cable television service described as "Studio
One" or a higher level of cable service in Section 3(o) of the Disclosure
Schedule.
"Budgeted Capital Expenditures" has the meaning set forth in Section
2(g).
"Business Day" means any day other than a Saturday, Sunday, or other
day on which banking institutions in the State of New York are authorized by law
to close.
"Buyer" has the meaning set forth in the preface.
"Buyer Indemnified Parties" means the Buyer and its Affiliates
(including the Company following the Closing) and their respective officers,
directors, managers, shareholders, members, partners, employees, agents,
Affiliates, attorneys and representatives. Notwithstanding the foregoing, Buyer
Indemnified Parties shall not include the Buyer or its Affiliates (including the
Company) from and after a Change of Control with respect to the Buyer or any
such Affiliate (including the Company) or any successors of the Buyer and its
Affiliates (including the Company), except for the limited purpose of the
indemnification provided pursuant to Section 6(d) of this Agreement and Section
8(a)(i) of this Agreement (with respect to a breach of the representations and
warranties set forth in Section 3(b)).
"Buyer's Accountants" means KPMG LLP.
"Buyer's Environmental Assessments" has the meaning set forth in
Section 5(j).
"Buyer's Savings Plans" has the meaning set forth in Section 6(c).
"Buyer's Subscriber Adjustment" has the meaning set forth in Section
2(f).
"Buyer's Working Capital Amount" has the meaning set forth in Section
2(f).
"Capital Expenditures" has the meaning set forth in Section 2(g).
"Capital Expenditure Deficit" has the meaning set forth in Section
2(g).
"Centennial" has the meaning set forth in the Preface.
"Centennial Marketing Materials" has the meaning set forth in Section
6(f).
"Centennial Marks" has the meaning set forth in Section 6(f).
"Change of Control" means, as of any date of determination with respect
to any of the Buyer, its Affiliates and the Company after the Closing, that HMTF
Fund V Cayman L.P. or its Affiliates shall no longer control the Buyer, any such
Affiliate or the Company after the Closing, as the case may be. For purposes
hereof, "control" means the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise..
"CLI" has the meaning set forth in Section 3(g).
"Closing" means the closing of the transactions contemplated by this
Agreement.
"Closing Date" has the meaning set forth in Section 2(d).
"Closing Statement" has the meaning set forth in Section 2(f).
"Closing Statement Dispute Notice" has the meaning set forth in Section
2(f).
"Code" means the Internal Revenue Code of 1986, as amended.
"Commercially Reasonable Efforts" means the diligent, reasonable, and
good faith efforts of the obligated Person to endeavor to consummate the
transactions contemplated herein and to accomplish the applicable objective,
which efforts shall not require such Person to (i) expend funds or incur
liabilities, other than expenditures and liabilities which would ordinarily be
made or incurred in connection with such objective (including filing and similar
fees, reasonable legal fees and expenses, and other commercially reasonable fees
and expenses) or which the obligated Person is obligated to pay or incur under
this Agreement, or (ii) act in a manner that would be contrary to normal
commercial practices of similarly-situated companies to accomplish the
objective. Notwithstanding the foregoing, (x) the fact that the objective is or
is not actually accomplished shall not by itself indicate that the obligated
Person did or did not in fact utilize Commercially Reasonable Efforts in
attempting to accomplish the objective; and (y) nothing contained herein shall
change any express obligations or agreements of the Parties hereunder.
"Communications Act" means the Communications Act of 1934, as amended,
codified at 47 U.S.C.Sections 151 et. seq., including the Cable
CommunicaTions Policy Act of 1984, Pub. L. No. 98-549, the Cable Television
Consumer Protection and Competition Act of 1992, Pub. L. No. 102-385, and the
Telecommunications Act of 1996, Pub. L. No. 104-104, or any successor Law, and
the rules, regulations and written policies of the FCC promulgated thereunder,
and as amended and in effect from time to time.
"Company" has the meaning set forth in the preface.
"Company Employees" has the meaning set forth in Section 3(r).
"Company Plans" has the meaning set forth in Section 3(s).
"Company Share" means a share of the Common Stock, par value $0.01 per
share, of the Company.
"Confidential Information" has the meaning set forth in Section 6(g).
"Confidentiality Agreement" has the meaning set forth in Section 5(d).
"Contract" means any written contract, agreement, or lease and any oral
agreement, including any amendments, modifications or supplements thereto.
"Copyright Act" means the Copyright Act of 1976, as amended.
"Copyright Office" means the United States Copyright Office, its
designee, or any successor thereto.
"Current Assets" shall be determined in accordance with the Accounting
Principles and shall include, but not be limited to, cash, accounts receivable
less a reserve for uncollectible accounts receivable, and prepaid expenses.
Notwithstanding the foregoing sentence, Current Assets shall exclude, for the
purposes of determining the Working Capital set forth in Section 2(f): (i)
amounts due to the Company from Seller, Guarantor or Affiliates of Seller and
Guarantor; (ii) amounts due to the Company from employees of Seller, Guarantor
or Affiliates of Seller (other than the Company) and Guarantor; (iii) deferred
tax assets; and (iv) prepaid property and vehicle insurance.
"Current Liabilities" shall be determined in accordance with the
Accounting Principles and shall include, but not be limited to, accounts
payable, accrued liabilities, subscriber advance xxxxxxxx, subscriber deposits.
Notwithstanding the foregoing sentence, Current Liabilities shall exclude, for
the purposes of determining the Working Capital set forth in Section 2(f): (i)
the Company's reserve for amounts in respect of programming as set forth on
Schedule 8(a)(iv), which at July 31, 2004 amounted to $912,000 and at the date
hereof amounted to $861,464.18, (ii) the Company's reserve for certain property
taxes for the years 2002 and prior, which at July 31, 2004 amounted to $204,000;
(iii) any liability for the retention, transaction or similar bonuses arising on
or prior to the Closing Date for Company Employees as well as those identified
on Schedule 6(c)(i) attached hereto which the Company shall pay immediately
prior to the Closing pursuant to Section 6(c), provided that such amounts reduce
the cash balance at Closing; (iv) amounts due from the Company to Seller,
Guarantor or Affiliates of Seller which the Company shall pay immediately prior
to the Closing pursuant to Section 2(h); (v) any accrual for liabilities in
respect of deferred launch fees received from programmers and deferred signing
bonuses related to service agreements, as illustrated in Schedule 3 attached
hereto, which at July 31, 2004 amounted to $877,000; and (vi) deferred tax
liabilities. Notwithstanding anything to the contrary contained herein or in
Schedule 3 attached hereto, the amounts accrued for "legal" and
"accounting/auditing" for purposes of determining the Current Liabilities shall
be the actual amounts owed by the Company in respect of such items as of 12:01
a.m. on the Closing Date.
"Defense Counsel" has the meaning set forth in Section 8(c).
"Defense Notice" has the meaning set forth in Section 8(c).
"Direct Claim" has the meaning set forth in Section 8(d).
"Disclosure Schedule" has the meaning set forth in Section 3.
"Employee Benefit Plan" means any (i) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan, (ii) qualified defined contribution retirement plan or arrangement
which is an Employee Pension Benefit Plan, (iii) qualified defined benefit
retirement plan or arrangement which is an Employee Pension Benefit Plan
(including any Multiemployer Plan), or (iv) Employee Welfare Benefit Plan.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA
Section 3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA
Section 3(1).
"Enforceability Exceptions" means the exceptions or limitations to the
enforceability of contracts or agreements under bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights and remedies
generally, and subject, as to enforceability, to general principles of equity,
including principles of commercial reasonableness, good faith and fair dealing
(regardless of whether enforcement is sought in a proceeding at law or in
equity).
"Environmental Laws" means any Laws pertaining to land use, air, soil,
surface water, groundwater (including the protection, cleanup, removal,
remediation or damage thereof), the handling, storage, treatment or disposal of
waste, including hazardous waste, and the handling, storage, manufacture,
treatment or transportation of hazardous materials, or to the protection of the
environment, public health and safety, occupational health and safety or worker
health and safety, natural resources or any other environmental matter,
including the following laws as amended and as in effect at the relevant time
(including, but not limited to, the following statutes, any regulations
promulgated pursuant to any of them, any permits, licenses or authorizations
issued thereunder, any state or regional analogues thereto and any permits,
licenses or authorizations issued thereunder, any state or regional analogues
thereto and any permits or regulations issued thereunder): (A) Clean Air Act (42
U.S.C.Section 7401, et seq.); (B) Clean Water Act (33 U.S.C.Section 1251, et
seq.); (C) Resource Conservation and Recovery Act (42 U.S. C.Section 6901, et
seq.); (D) Comprehensive Environmental Response, Compensation and Liability Act
(42 U.S.C.SeCtion 9601, et seq.); (E) Safe Drinking Water Act (42 U.S.C. 300f,
et seq.); (F) the Hazardous Materials Transportation Act; (G) the Federal
Insecticide, Fungicide and Rodenticide Act and (H) Toxic Substances Control Act
(15 U.S.C.Section 2601, et seq.) and any similar Laws of the Commonwealth of
Puerto Rico.
"Equity Commitment" has the meaning set forth in Section 4(d)
"Equity Contribution" has the meaning set forth in Section 4(d)
"Equivalent Basic Subscribers" as of any date means the sum of (i) the
number of residential non-seasonal subscribers for Basic Cable of the Systems
who are not more than 90 days past due from the invoice date (or, if more than
90 days past due, who owe less than $10.00) and (ii) the result obtained by
dividing (A) the aggregate of the gross monthly billing
(excluding any charges for premium service, pay-per-view programming, internet
access, franchise fees, fees charged by the FCC, Taxes, installation,
connection, relocation, and disconnection fees and miscellaneous rental charges
for equipment such as remote control devices and converters) from the bulk
subscribers (e.g., hotels, motels and other subscribers who pay for cable
service at bulk rates) whose accounts as of such date are not more than 90 days
past due from the invoice date (or, if more than 90 days past due, who owe less
than $10.00) by (B) the monthly service charge in effect in the Systems as of
such date for the relevant level of service offered to such bulk subscribers;
provided, that Equivalent Basic Subscribers shall exclude any subscriber who,
prior to the Closing Date, has properly requested that his cable television
service be disconnected and any subscribers which are provided cable service
without a monthly Basic Cable service charge or for which the Basic Cable
service charge has been waived on a regular basis.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Estimated Subscriber Adjustment" has the meaning set forth in Section
2(f)
"Estimated Working Capital Amount" has the meaning set forth in Section
2(f).
"Excluded Assets" means the assets and properties of the Company
described on Schedule 1.
"FAA" means the Federal Aviation Administration.
"FCC" means the Federal Communications Commission.
"Final Order" means an action by the Telecommunications Regulatory
Board or the FCC, as applicable, as to which (i) no request for stay by the
Telecommunications Regulatory Board or the FCC, as applicable, of the action is
pending, no such stay is in effect, and, if any deadline for filing any such
request is designated by statute or regulation, such deadline has passed; (ii)
no petition for rehearing or reconsideration of the action is pending before the
Telecommunications Regulatory Board or the FCC, as applicable, and the time for
filing any such petition is passed; (iii) the Telecommunications Regulatory
Board or the FCC, as applicable, does not have the action under reconsideration
on its own motion and the time for such reconsideration has passed; and (iv) no
appeal to a court or request for stay by a court or the Telecommunications
Regulatory Board or the FCC, as applicable, is pending or in effect and, if any
deadline for filing any such appeal or request is designated by statute or rule,
it has passed.
"Final Subscriber Adjustment" has the meaning set forth in Section
2(f).
"Final Working Capital Amount" has the meaning set forth in Section
2(f).
"Financial Statements" has the meaning set forth in Section 3(f).
"Financing" has the meaning set forth in Section 4(d)
"Financing Commitment" has the meaning set forth in Section 4(d)
"Fixed Purchase Price" has the meaning set forth in Section 2(b).
"Franchises" means all franchises issued by the Telecommunications
Regulatory Board or by the Public Services Commission of Puerto Rico that are
necessary or required to operate a cable television system and provide cable
television services in the geographic areas served by the Systems.
"FTC" has the meaning set forth in Section 5(b).
"Further Use Right" has the meaning set forth in Section 6(f).
"GAAP" means United States generally accepted accounting principles as
in effect from time to time, consistently applied.
"Governmental Entity" means any federal, state, Commonwealth of Puerto
Rico, municipal, local, or other governmental authority or administrative
agency, domestic or foreign, including, without limitation, the
Telecommunications Regulatory Board and the FCC.
"Guarantor" has the meaning set forth in the preface.
"Xxxx-Xxxxx-Xxxxxx Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
"Hazardous Substances" means any material, substance, waste or compound
regulated, characterized or otherwise classified under Environmental Laws as
hazardous, toxic, a pollutant, contaminants or words of similar meaning or
effect, including, without limitation, petroleum or any refined product or
fraction or derivative thereof, asbestos, or polychlorinated biphenyls.
"Indemnified Party" has the meaning set forth in Section 8(c).
"Indemnifying Party" has the meaning set forth in Section 8(c).
"Knowledge" means (i) with respect to the Seller and the Company, the
actual knowledge, without independent investigation, of Xxxxx Xxxxxxxxx, Xxxxx
Xxxx, Xxxxxx Xxxxxxxxx, Xxxxxxx Xxxxxxx, Xxxx Xxxx, Xxxxx Xxxx, Xxxxxxx Xxxxxxx,
Xxxxxx Xxxxxxxxx, Xxxxxx Xxxxx, Xxxxxx Xxxxxxx, Xxxx Xxxxxxx, Xxxxxx Xxxxx,
Xxxxxxx Xxxxxxxx, Xxxxxxx Xxxxx, Xxxxxx Xxxxxx, Xxxxx Xxxxxxxx-Xxxxxx, Xxxxxx
Xxxxxx Serbia, Xxxxx Xxxxxx Xxxxxxxx and Xxxx Xxxx, and (ii) with respect to the
Buyer, the actual knowledge, without independent investigation, of Xxxx
Xxxxxxxx, Xxxxx Xxxxx and Xxxx Xxxxxxx.
"Law 80" means Law 80 of May 30, 1976 of Puerto Rico, as amended and in
effect from time to time.
"Law 213" means Law 213 of September 12, 1996 of Puerto Rico, known as
the "Puerto Rico Telecommunications Act," as amended and in effect from time to
time.
"Laws" means all laws, statutes, regulations, codes, ordinances, rules,
permits, orders, writs, injunctions, decrees and rulings of, adopted,
promulgated or handed down by, any
Governmental Entity, including any judgment, writ, order, injunction, award,
decree or similar act of any court, judge, justice, magistrate or similar
Governmental Entity.
"Leased Real Property" has the meaning set forth in the definition of
Real Property.
"Legal Restrictions" means restrictions arising under the securities
laws, Title VI of the Communications Act, and all other provisions of the Cable
Communications Policy Act of 1984, the Cable Television Consumer Protection and
Competition Act of 1992, and the provisions of the Telecommunications Act of
1996 amending Title VI of the Communications Act, in each case, as amended and
in effect from time to time.
"Licenses" means the material licenses, permits, registrations and
authorizations (other than the Franchises) granted by or pending before any
Governmental Entity in connection with the operation of the Systems.
"Limited Changes" has the meaning set forth in Section 5(b).
"Material Adverse Effect" means any change, effect, event, occurrence
or state of facts that has or would reasonably be expected to have or result in
a material adverse effect on the business, assets, properties, condition
(financial or otherwise) or results of operations of the Company taken as a
whole.
"Material Contracts" has the meaning set forth in Section 3(k).
"Multiemployer Plan" has the meaning set forth in ERISA Section 3(37).
"Necessary Consents" has the meaning set forth in Section 3(c).
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice.
"Original Use Right" has the meaning set forth in Section 6(f).
"Owned Real Property" has the meaning set for in the definition of Real
Property.
"Parties" means, collectively, the Buyer and the Seller.
"Permitted Liens" means (a) liens for current Taxes not yet due and
payable or which are being contested in good faith by appropriate proceedings
provided an appropriate reserve is established therefor on the books of the
Company in accordance with GAAP; (b) rights of any Governmental Entity to
regulate the affected property; (c) as to the Company's leased assets, statutory
interests of the lessors thereof and interests set forth in the applicable
lease; (d) inchoate materialmen's, mechanics', workmen's repairmen's or other
like liens arising in the Ordinary Course of Business that are not material to
the business, operations and financial condition of the property so encumbered
and that do not result from a breach, default or violation by the Company of any
Contract or Law; (e) any Security Interests to be released at or prior to the
Closing; (f) as to any parcel of Real Property, all matters of record
(excluding, however, any mortgage, deed to secure debt, deed of trust, security
agreement, judgment lien or statutory claim
of lien or any other title exception or defect that is monetary in nature, other
than those in favor of the Buyer) and any other easement, encroachment,
encumbrance or other condition that does not adversely affect in any material
respect, either individually or in the aggregate, the use of such Real Property
as currently used by the Company in the Ordinary Course of Business or render
title thereto uninsurable; (g) zoning laws and ordinances and similar
governmental regulations (none of which interfere in any material respect with
the operation of the Systems as currently conducted); (h) purchase money liens
securing rental payments under capital lease arrangements previously disclosed
to Buyer; and (i) vehicle leases.
"Person" means any individual, partnership, corporation, association,
joint stock company, trust, joint venture, unincorporated organization, or
Governmental Entity.
"PRIRC" has the meaning set forth in Section 3(s).
"PRPB" has the meaning set forth in Section 3(g).
"Pro Rata Amount" has the meaning set forth in Section 2(g).
"Purchase Price" has the meaning set forth in Section 2(b).
"Real Property" means all interests in real property, including all
improvements thereon, owned by the Company in fee simple ("Owned Real Property")
or leased by the Company ("Leased Real Property"), in each case, including
easements, rights-of-way and similar authorizations.
"Required Consents" means the Necessary Consents marked with an
asterisk in Section 3(c)(iii) of the Disclosure Schedule.
"Required Governmental Approvals" has the meaning set forth in Section
3(c).
"Resolution Notice" has the meaning set forth in Section 2(f).
"Section 338(h)(10) Election" has the meaning set forth in Section
6(d).
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Security Interest" means any mortgage, deed of trust, pledge, lien,
encumbrance, charge, claim, option, right of first refusal, easement, servitude,
proxy, voting trust or agreement, transfer restriction under any shareholder or
similar agreement.
"Seller" has the meaning set forth in the preface.
"Seller Indemnified Parties" means the Seller and its Affiliates and
their respective officers, directors, managers, shareholders, members, partners,
employees and agents.
"Seller's Accountants" means Deloitte & Touche LLP.
"Seller's Savings Plan" has the meaning set forth in Section 6(c).
"Straddle Period" means any taxable period that begins on or before the
Closing Date and ends after the Closing Date.
"Subsidiary" means any Person with respect to which a specified Person
(or a Subsidiary thereof) owns a majority of the common stock or has the power
to vote or direct the voting of sufficient securities to elect a majority of the
directors or Person performing similar functions.
"Subscriber Adjustment" means the amount, if the number of Equivalent
Basic Subscribers as of the Closing Date is less than 71,000, equal to the
product of (a) $2,142, multiplied by (b) the difference between 71,000 and the
number of Equivalent Basic Subscribers as of the Closing Date; provided,
however, that if the number of Equivalent Basic Subscribers as of the Closing
date is 71,000 or greater, the Subscriber Adjustment shall be zero.
"Surviving Representation" means a representation (i) of Seller set
forth in Section 3(a), Section 3(b), Section 3(c)(i), Section 3(d), Section
3(e), Section 3(h) or Section 3(q) or (ii) of the Buyer set forth in Section
4(a), Section 4(b)(i), Section 4(c), Section 4(g) and Section 4(h).
"Systems" means the cable television systems owned by the Company which
serve the areas in and around the Puerto Rico municipalities of Ponce, Yauco,
Adjuntas, Coamo, Guayanilla, Jayuya, Xxxxx Diaz, Penuelas, Santa Xxxxxx,
Villalba, Guayama, Xxxxxx, Maunabo, Patillas, Xxxxxxx, Mayaguez, Cabo Rojo, San
German, Lajas, Hormigueros, Guanica, Sabana Grande, Maricao, Anasco, Rincon, Las
Marias, Aguadilla, Aguada, Quebradillas, Moca and Isabela.
"Tax" means any federal, state, Commonwealth of Puerto Rico, municipal,
local, or foreign tax, fee, levy, duty, tariff, impost or other charges,
including any interest, penalty, or addition thereto, whether disputed or not,
imposed by a Governmental Entity, and any liability in respect of any of the
foregoing items payable by reason of contract, assumption, transferee liability,
operation of law, Treasury Regulation Section 1.1502-6(a) (or any predecessor or
successor thereof or any analogous or similar provision under Law) or otherwise,
but excluding franchise fees, FCC payments and fees and copyright payments and
fees.
"Tax Proceeding" has the meaning set forth in Section 6(d).
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, required or permitted to be submitted to a Governmental
Entity.
"Telecommunications Regulatory Board" means the Junta Reglamentadora de
Telecomunicaciones de Puerto Rico.
"Third Party Claims" means actions, suits, claims or legal,
administrative, arbitration, mediation, governmental or other proceedings, or
investigations, other than any brought by a Party to this Agreement or an
Affiliate of a Party to this Agreement.
"Threshold Amount" means an amount equal to $600,000.
"Transition Services Agreement" means the Transition Services
Agreement, to be entered into at the Closing between the Buyer, the Company,
Centennial Puerto Rico Operations Corp., a Delaware corporation, and certain of
their Affiliates in the form attached hereto as Exhibit A hereto.
"Unaffiliated Firm" has the meaning set forth in Section 2(f).
"Upset Date" has the meaning set forth in Section 9(a).
"Working Capital" means the difference (which may be a positive or a
negative number) between the Company's Current Assets as of 12:01 a.m. on the
Closing Date, minus the Company's Current Liabilities as of 12:01 a.m. on the
Closing Date.
(b) Other Definitional and Interpretive Matters. Unless otherwise
expressly provided herein, the following rules of interpretation shall
apply to this Agreement:
(i) When calculating the period of time before which, within
which, or following which any act is to be done or step taken pursuant
to this Agreement, the date that is the reference date in calculating
such period shall be excluded. If the last day of such period is not a
Business Day, the period in question shall end on the next succeeding
Business Day.
(ii) Any reference in this Agreement to gender shall include
all genders, and words imparting the singular number only shall include
the plural and vice versa.
(iii) All references in this Agreement to any "Section" are to
the corresponding Section of this Agreement unless otherwise specified.
(iv) Words such as "herein," "hereinafter," "hereof," and
"hereunder" refer to this Agreement as a whole and not merely to a
subdivision in which such words appear unless the context otherwise
requires.
(v) The word "including" or any variation thereof means
"including, without limitation" and shall not be construed to limit any
general statement that it follows to the specific or similar items or
matters immediately following it.
(vi) The Schedules and Exhibits attached to this Agreement
shall be construed with and as an integral part of this Agreement to
the same extent as if the same had been set forth verbatim herein.
(vii) All dollar amounts are in and shall be paid in United
States dollars.
2. Purchase and Sale of Company Shares.
(a) Purchase and Sale. On and subject to the terms and conditions of
this Agreement, at the Closing, the Buyer agrees to purchase and acquire
from the Seller, and the Seller agrees to sell, convey, assign, transfer
and deliver to the Buyer, free and clear of
all Security Interests, all of the Company Shares, subject to any
applicable Legal Restrictions.
(b) Purchase Price. The aggregate consideration for the Company
Shares to be purchased and acquired by the Buyer hereunder to be paid by
the Buyer to the Seller pursuant to this Agreement shall equal the sum of
(i) One Hundred Fifty-Five Million Dollars ($155,000,000) (the "Fixed
Purchase Price"), and (ii) the amount of Working Capital (which may be a
negative number), less (iii) the Capital Expenditure Deficit, if any, and
less (iv) the Subscriber Adjustment, if any (the amount obtained pursuant
to the foregoing clauses (i) through (iv), the "Purchase Price"), which
shall be paid as provided in Section 2(c) and Section 2(f)(v).
(c) Payment of Purchase Price at the Closing. At the Closing, the
Buyer shall deliver, by wire transfer of immediately available funds to an
account or accounts specified by the Seller, an amount equal to the Fixed
Purchase Price, plus the Estimated Working Capital Amount (which may be a
negative number), minus the Capital Expenditure Deficit, and minus the
Subscriber Adjustment, if any.
(d) The Closing. The Closing shall take place at the offices of
Weil, Gotshal and Xxxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
commencing at 9:00 a.m. local time on the third Business Day following the
satisfaction or waiver of the last of the conditions set forth in Section
7(a) and Section 7(b) (other than conditions that by their nature are to
be satisfied at Closing) or such other time or place as the Buyer and the
Seller may mutually determine (the "Closing Date"). Notwithstanding
anything to the contrary contained in this Section 2(d), if the conditions
set forth in Section 7(a) and Section 7(b) (other than conditions that by
their nature are to be satisfied at Closing) are satisfied or waived by
the Party entitled to the benefits thereof on or before the Upset Date,
but the date scheduled for Closing pursuant to this Section 2(d) is after
the Upset Date, the Upset Date shall be extended until one (1) Business
Day after the date so scheduled for Closing.
(e) Deliveries at the Closing. At the Closing, (i) the Seller will
deliver to the Buyer the certificates representing all of the Company
Shares and the various certificates, instruments, and documents referred
to in Section 7(a), (ii) the Buyer will deliver to the Seller the various
certificates, instruments, and documents referred to in Section 7(b), and
(iii) the Buyer will deliver to the Seller the consideration specified in
Section 2(c).
(f) Working Capital, Capital Expenditure Deficit and Subscriber
Adjustment.
(i) Not less than three (3) Business Days prior to the
anticipated Closing Date, the Seller shall deliver to the Buyer a
statement setting forth the Seller's good faith estimate of the Working
Capital (the "Estimated Working Capital Amount") and the Subscriber
Adjustment (the "Estimated Subscriber Adjustment"), if any, together
with reasonably detailed supporting documentation for such estimates
(which, for purposes of the Subscriber Adjustment, shall be the
standard monthly billing report for subscribers received or produced by
the Company in the Ordinary Course of Business) and the Capital
Expenditure Deficit, if any, together with reasonably detailed
supporting documentation for such Capital Expenditure Deficit
calculation and the related Capital
Expenditures. If the Buyer disputes any amounts relating to the Working
Capital, Capital Expenditure Deficit or Subscriber Adjustment set forth
in such statement, the Buyer and the Seller shall use Commercially
Reasonable Efforts to attempt in good faith to resolve such dispute
prior to the Closing, and the Estimated Working Capital Amount, the
Capital Expenditure Deficit and the Estimated Subscriber Adjustment as
determined by the Seller and, if applicable, modified by agreement of
the Buyer and Seller prior to the Closing, shall be used for purposes
of determining the payment to be made by the Buyer at Closing pursuant
to Section 2(c) (provided, however, that if the Buyer and the Seller
are unable to resolve any such dispute prior to the Closing, the
Estimated Working Capital Amount, the Capital Expenditure Deficit and
the Estimated Subscriber Adjustment as determined by the Seller and set
forth in the statement delivered pursuant to this Section 2(f) shall be
used for purposes of determining the payment to be made by the Buyer at
Closing pursuant to Section 2(c), absent manifest error). For
illustrative purposes only, Schedule 3 attached hereto sets forth the
calculation of the Working Capital assuming that the Closing had been
consummated on July 31, 2004.
(ii) Within 90 days after the Closing Date, the Buyer shall
deliver to the Seller a statement setting forth the Buyer's good faith
determination of the Working Capital (the "Buyer's Working Capital
Amount") and the Subscriber Adjustment, if any (the "Buyer's Subscriber
Adjustment"), together with reasonably detailed supporting
documentation for such determination (which, for purposes of the
Subscriber Adjustment, shall be the standard monthly billing report for
subscribers received or produced by the Company in the Ordinary Course
of Business) (the "Closing Statement").
(iii) The Seller may, by notice given to the Buyer within 30
days after delivery of the Closing Statement, dispute the Buyer's
Working Capital Amount and the Buyer's Subscriber Adjustment (the
"Closing Statement Dispute Notice"). Such Closing Statement Dispute
Notice shall set forth in reasonable detail the Seller's objections to
the Buyer's Working Capital Amount and the Buyer's Subscriber
Adjustment and the Seller's reasons therefor and the Seller shall be
deemed to have agreed with all other items contained in the Closing
Statement. If the Seller does not deliver such a Closing Statement
Dispute Notice to the Buyer within 30 days after delivery of the
Closing Statement, the Closing Statement, and the Buyer's Working
Capital Amount and the Buyer's Subscriber Adjustment as set forth
therein, shall be final and binding on the Buyer and the Seller. If the
Seller delivers such a Closing Statement Dispute Notice, from the date
of delivery of such Closing Statement Dispute Notice until the 30th day
after the date of delivery of the Closing Statement, the Buyer and the
Seller shall use their respective Commercially Reasonable Efforts to
attempt in good faith to resolve the dispute identified in the Closing
Statement Dispute Notice. From the date of delivery of such Closing
Statement Dispute Notice until the 30th day after the date of delivery
of the Closing Statement Dispute Notice, the Buyer and Buyer's
Accountants shall use their respective Commercially Reasonable Efforts
to cooperate with the Seller and Seller's Accountants and provide
reasonable access to work papers of Buyer's Accountants to the extent
reasonably necessary to the Closing Statement. The Buyer shall provide
to the Seller and its representatives, including, without limitation,
the Seller's Accountants, access at all reasonable times to the Buyer,
the Systems and their books and records to the extent reasonably
necessary for the purposes of preparing the Closing Statement
Dispute Notice and resolving any disputes relating to the Closing
Statement and the Closing Statement Dispute Notice.
(iv) If the Seller has timely delivered a Closing Statement
Dispute Notice pursuant to Section 2(f)(iii), and the Buyer and the
Seller do not reach written agreement as to the Working Capital or the
Subscriber Adjustment, if any, as applicable, prior to the 30th day
after the date of delivery of the Closing Statement Dispute Notice,
then either the Seller or the Buyer may by notice to the other (the
"Resolution Notice") submit to Ernst & Young LLP (the "Unaffiliated
Firm") for determination, in accordance with this Section 2(f), the
amount of the Working Capital or the Subscriber Adjustment, as
applicable. Notwithstanding the foregoing, if the aggregate difference
between the proposed amounts of Working Capital and the proposed
amounts of Subscriber Adjustment is less than $100,000, the Working
Capital and the Subscriber Adjustment shall be the average of the
proposed amounts of the Working Capital and the Subscriber Adjustment,
respectively, and the Parties will not instruct the Unaffiliated Firm
to render any decision. The following shall apply with respect to the
use of the Unaffiliated Firm:
(A) Within 15 days after the delivery of the
Resolution Notice, the Buyer and the Seller shall each propose an
amount of Working Capital or Subscriber Adjustment, as
applicable, to the Unaffiliated Firm, together with the reasons
therefor, in writing. The Working Capital or the Subscriber
Adjustment, as applicable, proposed by the Buyer shall not differ
from the Buyer's Working Capital Amount or the Buyer's Subscriber
Adjustment, as applicable, other than for changes agreed to in
writing by the Seller, and the Working Capital or the Subscriber
Adjustment, as applicable, proposed by the Seller shall not
differ from the Seller's proposed amount of Working Capital or
Subscriber Adjustment, as applicable, set forth in the Closing
Statement Dispute Notice, other than for those changes agreed to
in writing by the Buyer. Each of the Buyer and the Seller shall
furnish to the Unaffiliated Firm such workpapers and other
documents and information under its control or available to it
and its Affiliates as the Unaffiliated Firm may request for the
purposes of determining the Working Capital or Subscriber
Adjustment, as applicable.
(B) The amount determined by the Unaffiliated Firm
(acting as an expert and not as an arbitrator) shall not be
higher than the higher of the proposed amount of Working Capital
or Subscriber Adjustment, as applicable, or lower than the lower
of the proposed amounts of Working Capital or Subscriber
Adjustment, as applicable, and shall thereupon be the Working
Capital or Subscriber Adjustment, as applicable. The Parties will
instruct the Unaffiliated Firm to render its decision no later
than 30 days after the submission to the Unaffiliated Firm under
Section 2(f)(iv)(A).
(C) At any time after the determination of the
Working Capital or Subscriber Adjustment, as applicable, has been
submitted to the Unaffiliated Firm, the Buyer and the Seller may
agree on the Working Capital or Subscriber Adjustment, as
applicable, and direct the Unaffiliated Firm to not render any
decision.
Any determination of the Working Capital or Subscriber Adjustment, as
applicable, in accordance with Section 2(f)(iv), whether by agreement between
the Buyer and the Seller, by operation of the second sentence of Section
2(f)(iv), or by the Unaffiliated Firm, shall be conclusive and binding on all
Parties. The Working Capital determined as set forth in the preceding sentence
is hereinafter referred to as the "Final Working Capital Amount," and the
Subscriber Adjustment determined as set forth in the preceding sentence is
hereafter referred to as the "Final Subscriber Adjustment."
(v) Subject to Section 8(g)(v), promptly, but in any event not
more than five Business Days, after the later of the determination of
the Final Working Capital Amount and the Final Subscriber Adjustment,
if any, (A) if the Final Working Capital Amount is less than the
Estimated Working Capital Amount, the Seller shall pay the absolute
value of the difference between such amounts to the Buyer, (B) if the
Final Working Capital Amount is greater than the Estimated Working
Capital Amount, the Buyer shall pay the difference between such amounts
to the Seller, (C) if the Final Subscriber Adjustment is less than the
Estimated Subscriber Adjustment, Buyer shall pay the absolute value of
the difference between such amounts to the Seller, and (D) if the Final
Subscriber Adjustment is greater than the Estimated Subscriber
Adjustment, the Seller shall pay the difference between such amounts to
the Buyer, in all cases together with simple interest at the rate of 6%
per annum, for the period from the Closing Date to and through the date
of payment. All payments made under this Section 2(f)(v) shall be made
by wire transfer of immediately available funds to the account of the
Party entitled to payment notified to the Party making such payment.
(vi) The fees and expenses of the Unaffiliated Firm for its
services and expenses under this Section 2(f) shall be shared and paid
one-half by the Buyer and one-half by the Seller.
(vii) Nothing herein shall be construed to authorize or permit
the Unaffiliated Firm to arbitrate or determine any question or matter
whatever under or in connection with this Agreement except the specific
items in dispute between the Parties with respect to the amount of the
Working Capital and the Subscriber Adjustment to be determined in
accordance with the provisions of this Agreement or require the
Unaffiliated Firm to follow the rules of the American Arbitration
Association or any other body in making such determination.
(g) Capital Expenditures. Set forth on Schedule 2(g) is a true and
correct copy of the amounts the Company has budgeted for capital
expenditures or capital additions or betterments ("Capital Expenditures")
for its fiscal year June 1, 2004 through May 31, 2005 (such budgeted
Capital Expenditures for such fiscal year, the "Budgeted Capital
Expenditures") set forth on a fiscal quarterly basis, including a
breakdown of the amounts thereof by category or purpose of such Capital
Expenditures. Not less than three (3) Business Days prior to the
anticipated Closing Date, the Seller shall deliver to the Buyer a
statement setting forth the Capital Expenditures made by the Company
during the period from June 1, 2004 through the anticipated Closing Date,
together with reasonably detailed supporting documentation for such
expenditures. For purposes of calculating the Capital
Expenditure Deficit, if any, the aggregate amount set forth in Schedule
2(g) shall be multiplied by a fraction, the numerator of which shall be
the number of days from June 1, 2004 to the Closing Date, and the
denominator of which shall be 365 (the resulting amount, the "Pro-Rata
Amount"). If the aggregate amount expended by the Company during the
period from June 1, 2004 through the anticipated Closing Date, as set
forth on Seller's statement, is less than the Pro-Rata Amount, such
difference shall be the "Capital Expenditure Deficit." If, in the good
faith judgment of the Seller, after consultation with the Buyer, the
Seller determines to change or modify the purpose or category of any
Capital Expenditure from the proposed category or purpose set forth on
Schedule 2(g), the Seller may so change or modify the category or purpose
of such Capital Expenditure. Notwithstanding anything to the contrary
contained herein, a Capital Expenditure Deficit shall be reduced by the
amount of liabilities, if any, for Capital Expenditures included in the
calculation of Working Capital.
(h) Settlement of Intercompany Amounts. From and after the date of
this Agreement through the Closing Date, Seller agrees to cause all
intercompany receivables and intercompany payables of the Company, in each
case as determined in accordance with GAAP, to be treated in the following
manner:
(A) During the period prior to the Closing, the Company
shall be permitted to net intercompany receivables and payables against
each other; provided that such receivables and payables constitute
Current Assets and Current Liabilities, respectively.
(B) At Closing, Seller may, at its option, cause the
Company to cancel all intercompany receivables of the Company from its
Affiliates without payment of any cash to the Company. With respect to
intercompany payables of the Company outstanding at the Closing, Seller
shall settle such amounts at Closing in cash.
3. Representations and Warranties of the Seller
The Seller represents and warrants to the Buyer as follows, except as
set forth in the disclosure schedule delivered by the Seller to the Buyer on the
date of this Agreement (the "Disclosure Schedule"):
(a) Organization.
(i) The Seller is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware.
The Seller is duly authorized to conduct business and is in good
standing under the laws of each jurisdiction where such qualification
is required, except where the lack of such qualification would not be
reasonably likely to have a Material Adverse Effect. The Seller has all
requisite corporate power and authority to carry on the businesses in
which it is engaged and to own and use the properties owned and used by
it, and to execute, deliver and perform this Agreement and the
Ancillary Documents to which it is a party.
(ii) The Company is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware.
The Company is duly authorized to conduct its business and is in good
standing under the laws of each jurisdiction where such qualification
is required, except where the lack of such qualification would not be
reasonably likely to have a Material Adverse Effect. The Company has
all requisite corporate power and authority to carry on the businesses
in which it is engaged and to own and use the properties owned and used
by it.
(b) Capitalization. The authorized capital stock of the Company
consists of 1,000 Company Shares, of which 1,000 Company Shares are issued
and outstanding and no Company Shares are held in treasury. All of the
issued and outstanding Company Shares have been duly authorized, are
validly issued, fully paid, and nonassessable, and are held, beneficially
and of record, by the Seller, free and clear of any restrictions on
transfer and Security Interests, except for the security interest
described in Section 3(b) of the Disclosure Schedule which will be
released at or prior to Closing, but subject to the Legal Restrictions.
There are no outstanding or authorized options, warrants, purchase rights,
subscription rights, conversion rights, call rights, exchange rights, or
other Contracts of any nature that could require the Company to issue,
sell, or otherwise cause to become outstanding any of the Company's
capital stock (including upon exchange or conversion) other than the 1,000
Company Shares held by the Seller. There are no outstanding or authorized
stock appreciation, phantom stock, profit participation, or similar rights
with respect to the Company. The Seller is not a party to any option,
warrant, purchase right, or other Contract that could require the Seller
to sell, transfer, or otherwise dispose of any capital stock of the
Company (other than this Agreement). The Seller is not a party to any
voting trust, proxy, or other agreement or understanding with respect to
the voting of any capital stock of the Company. The sale, conveyance,
assignment, transfer and delivery of the Company Shares as provided in
this Agreement will convey to Buyer good and valid title to such Company
Shares, free and clear of any and all Security Interests, subject to the
Legal Restrictions.
(c) Authorization of Transaction; Conflicts; Consents of Third
Parties.
(i) The Seller has all requisite corporate power and authority
to execute and deliver this Agreement and the Ancillary Documents to
which it is a party and to perform its obligations hereunder and
thereunder. All necessary corporate proceedings of the Seller have been
duly taken to authorize the execution, delivery, and performance by the
Seller of this Agreement and the Ancillary Documents to which it is a
party. This Agreement and the Ancillary Documents to which it is a
party have been duly authorized, executed, and delivered by the Seller
and constitute the valid and legally binding obligations of the Seller,
enforceable against the Seller in accordance with their respective
terms, except as such enforceability may be limited by the
Enforceability Exceptions.
(ii) Except as described in Section 3(c)(ii) of the Disclosure
Schedule (the "Required Governmental Approvals"), neither the Seller
nor the Company is required to obtain any consent, authorization,
approval, order, license, certificate, or permit of or from, or make
any declaration or filing with, or notification to, any Governmental
Entity on the part of the Company or the Seller in connection with (i)
the execution, delivery
and performance of this Agreement or the Ancillary Documents to which
it is a party or (ii) the continuing validity and effectiveness
immediately following Closing of any Material Contract, License or
permit or Contract which is material to the business of the Seller.
(iii) Neither the execution and the delivery of this Agreement
or the Ancillary Documents, nor the consummation of the transactions
contemplated hereby or thereby, will:
(A) if the Required Governmental Approvals are obtained,
violate or result in a breach in any material respect of any Law to
which the Seller or the Company is subject;
(B) violate or result in a breach of any provision of the
Certificate of Incorporation or Bylaws of the Seller or the Company;
(C) violate any order of any Governmental Entity
applicable to the Company or any of its assets or properties;
(D) result in the creation of any Security Interest upon
any of the assets of the Company, except for any Permitted Lien, or
(E) provided the consents, authorizations or approvals
listed in Section 3(c)(iii) of the Disclosure Schedule (the "Necessary
Consents") are obtained, conflict with, result in a breach of,
constitute a default (with or without notice of lapse of time, or both)
under, result in the acceleration of the rights of any party under, or
create in any party the right to terminate, modify, cancel, or lose any
material benefit under, or give rise to any obligation of the Company
to make a payment under any Material Contract, License, Franchise or
any material contract to which the Seller is a party.
Notwithstanding the foregoing, the Seller makes no representation or
warranty regarding any of the foregoing that may result from the specific legal
or regulatory status of Buyer or its Affiliates or as a result of any other
facts that specifically relate to the business or activities in which Buyer or
its Affiliates is or proposes to be engaged, other than the cable television
business.
(d) Brokers' Fees. The Seller has no liability or obligation to pay
any fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement for which the Company could
become liable or obligated, other than Xxxxxx Capital Corporation, all of
whose fees and expenses in connection with the transactions contemplated
hereby will be paid by Seller or an Affiliate of Seller (other than the
Company).
(e) Subsidiaries. The Company does not, directly or indirectly, own
any capital stock or other equity interest in any other Person.
(f) Financial Statements; Absence of Certain Changes; No Undisclosed
Liabilities. The Seller has made available to the Buyer or its
representatives copies of the following financial statements (collectively
the "Financial Statements"): (i) audited balance sheets and statements of
income, changes in stockholders' equity, and cash flows of the Company as
of, and for its fiscal years ended, May 31, 2003 and 2002, (ii) an
unaudited balance sheet and statement of income, of the Company as of, and
for the calendar months ended, June 30, 2004 and July 31, 2004 and (iii)
drafts of the audited balance sheet and statements of income, changes in
stockholders' equity, and cash flows of the Company as of, and for its
fiscal year ended, May 31, 2004; provided, however, that the
representation set forth in this Section 3(f) shall extend to the final
audited financial statements for the fiscal year ended May 31, 2004 in
lieu of the draft of such financial statements upon Buyer's acceptance or
deemed acceptance of such financial statements pursuant to Section
7(a)(xxi). The Financial Statements (including the notes thereto) have
been prepared in accordance with GAAP applied on a consistent basis
throughout the periods covered thereby and present fairly in all material
respects the financial condition of the Company as of such dates and the
results of operations, changes in stockholders' equity and cash flows of
the Company for such periods, except, in the case of the Financial
Statements identified in clause (iii) of the preceding sentence, as set
forth in Section 3(f) of the Disclosure Schedule, and except that the
unaudited Financial Statements identified in clause (ii) of the preceding
sentence are subject to normal year-end adjustments and do not contain
footnotes, and the line item "System Cash Flow" in the income statement
included therein has not been prepared in accordance with GAAP.
Except as set forth on Section 3(f) of the Disclosure Schedule, since May
31, 2004 through the date of this Agreement: (i) no event, change or
circumstance has occurred with respect to the Company which has had or could
reasonably be expected to have a Material Adverse Effect; (ii) the Company has
operated in the Ordinary Course of Business; (iii) there has not been any
damage, destruction or loss, whether or not covered by insurance, with respect
to the property and assets of the Company having a replacement cost of more than
$500,000 for any single loss or $1.0 million for all such losses; (iv) there has
not been any declaration, setting aside or payment of any dividend or other
distribution in respect of any shares of Company Stock or any repurchase,
redemption or other acquisition by the Company of any outstanding shares of
capital stock or other securities of, or other ownership interest in, the
Company; (v) the Company has not awarded or paid any bonuses to employees of the
Company with respect to the fiscal year ended May 31, 2004, except to the extent
accrued on the balance sheet as of May 31, 2004 included in the Financial
Statements or entered into any employment (other than an oral agreement
terminable without penalty on no more than 30 days notice), deferred
compensation, severance or similar agreement (nor amended any such agreement),
or agreed to increase the compensation payable or to become payable by it to any
of the Company's directors, officers, employees, agents or representatives
except for annual increases and merit increases in the Ordinary Course of
Business or agreed to increase in any material respect the coverage or benefits
available under any severance pay, termination pay, vacation pay, company
awards, salary continuation for disability, sick leave, deferred compensation,
bonus or other incentive compensation, insurance, pension or other employee
benefit plan, payment or arrangement made to, for or with such directors,
officers, employees, agents or representatives of the Company, except as
required pursuant to the terms thereof or applicable Law or where such increase
in coverage or benefits was provided uniformly to substantially all employees of
Centennial and its
Subsidiaries, including Company Employees; (vi) there has not been any change by
the Company in accounting or Tax reporting principles, methods or policies,
except as required by applicable Law or except any such change relating to
United States federal income Taxes that would not continue to apply to the
Company after the Closing; (vii) the Company has not made or rescinded any
election relating to Taxes, other than elections for United States federal
income Tax purposes that would not continue to apply to the Company after the
Closing, or settled or compromised any claim relating to Taxes; (viii) the
Company has not entered into any transaction or Contract or conducted its
business other than in the Ordinary Course of Business; (ix) the Company has not
failed to pay and discharge current liabilities other than in the Ordinary
Course of Business; (x) the Company has not made any loans, advances or capital
contributions to, or investments in, any Person or paid any fees or expenses to
any director, officer, partner, stockholder or Affiliate of the Company except
for compensation in the Ordinary Course of Business and the advancement of
expenses in the Ordinary Course of Business; (xi) the Company has not mortgaged,
pledged or subjected to any Security Interest any of its assets, other than
Permitted Liens, or acquired any assets or sold, assigned, transferred,
conveyed, leased or otherwise disposed of any assets of the Company, except for
assets acquired or sold, assigned, transferred, conveyed, leased or otherwise
disposed of in the Ordinary Course of Business; (xii) the Company has not
discharged or satisfied any Security Interest, or paid any obligation or
liability (fixed or contingent), except in the Ordinary Course of Business or
which, if not in the Ordinary Course of Business, in the aggregate, would not be
material to the Company taken as a whole; (xiii) the Company has not canceled or
compromised any material debt or claim or amended, canceled, terminated,
relinquished, waived or released any Material Contract except in the Ordinary
Course of Business and which, in the aggregate, would not be material to the
Company, taken as a whole; (xiv) the Company has not made or committed to make
any capital expenditures in excess of $500,000 for any single capital
expenditure or $2.0 million in the aggregate, other than Budgeted Capital
Expenditures; (xv) the Company has not issued, created, incurred, assumed or
guaranteed any indebtedness in an amount in excess of $500,000 in the aggregate;
(xvi) the Company has not instituted or settled any legal proceedings which,
individually or in the aggregate, would be material to the Company taken as a
whole; and (xvii) neither the Seller nor the Company has agreed, committed,
arranged or entered into any understanding to do anything set forth in this
Section 3(f).
The Company does not have any indebtedness, liability or obligation of
a type required by GAAP to be reflected or reserved against in the most recent
balance sheet of the Company included in the Financial Statements, other than
indebtedness, liabilities and obligations that were (i) fully reflected or
reserved against in such balance sheet or (ii) immaterial to the Company and
incurred in the Ordinary Course of Business or (iii) incurred in accordance with
Section 5(c).
(g) Legal Compliance.
(i) Except for any such noncompliance which has been remedied,
the Company is in compliance in all material respects with all
applicable Laws including, without limitation, the Communications
Act, Law 213 and the rules, orders and policies of the
Telecommunications Regulatory Board and is operating the Systems in
all material respects in accordance with its Licenses and
Franchises. The Company has not received
any notice of or been charged with the violation of any Laws. To the
Knowledge of the Seller, the Company is not under investigation with
respect to the violation of any Laws.
(ii) Section 3(l) of the Disclosure Schedule sets forth a list
of all Licenses which are required for the operation of the business
of the Company as presently conducted. The Licenses listed on
Section 3(l) of the Disclosure Schedule have been issued in the name
of the Company and there are no other Licenses required to operate
the Systems in the geographic areas served by the Systems in
substantially the same manner as the Company is operating the
Systems and providing cable television service on the Systems. The
Company is not in default or violation, and no event has occurred
which, with notice or the lapse of time or both, would constitute a
default or violation, in any material respect of any term, condition
or provision of any License to which it is a party, to which its
business is subject or by which its assets or properties are bound.
The Licenses are in full force and effect and are not subject to any
condition except conditions applicable to such Licenses generally,
or as otherwise disclosed on the face of the Licenses. The Seller
has no Knowledge of any reason why any Licenses would not be renewed
in the ordinary course.
(iii) Except as described in Section 3(g)(iii) of the
Disclosure Schedule, the Company is permitted, in all material
respects, under the Franchises and the Communications Act and any
other applicable Law to utilize and to distribute to customers of
the Systems all carrier frequencies generated by the operations of
the Systems, and is licensed by the FCC to operate all of its radio
facilities required by Law to be licensed by the FCC, including any
business radio and any cable television relay service system being
operated as part of the Systems and, where required, has registered
with the FCC any earth stations being operated as part of the
Systems. The Franchises listed on Section 3(l) of the Disclosure
Schedule have been issued in the name of the Company or a
predecessor in interest of the Company, and with respect to which
the Company is now the valid holder, and there are no other
franchises or other similar authorizations issued or issuable by a
Governmental Entity (other than the Licenses) that are necessary or
required to operate a cable television system in the geographic
areas served by the Systems.
(iv) Except as described in Section 3(g)(iv) of the Disclosure
Schedule, the Company has (A) conducted in all material respects all
required FCC system performance, technical and Cumulative Leakage
Index ("CLI") tests applicable to the Systems, (B) maintained in all
material respects required FCC log books and other record keeping
with respect to such tests which reflect in all material respects
all results required to be shown thereon, (C) to the extent required
by the rules and regulations of the FCC, corrected in all material
respects any signal leakage of the Systems required to be corrected,
and (D) otherwise complied in all material respects with all
applicable FCC system performance, technical and CLI rules and
regulations.
(v) Except as described in Section 3(g)(v) of the Disclosure
Schedule, the Company has made all filings required to be made by it
to the FCC pursuant to the Communications Act and such filings were
accurate and complete in all material respects when filed.
(vi) The Systems are being operated in compliance in all
material respects with the rules and regulations of the FAA, the
Puerto Rico Planning Board (the "PRPB") and the Puerto Rico
Regulations & Permits Administration (the "ARPE"). Without limiting
the generality of the foregoing (A) the existing towers of the
Systems are registered in all material respects to the extent
required by Law and have been operated and maintained, in each case,
in all material respects, including but not limited to, with respect
to obstruction marking and lighting in accordance with the rules and
regulations of the FAA, FCC, PRPB and ARPE, and are in compliance in
all material respects with all other rules and regulations of the
FAA and FCC or such requirements are inapplicable, and (B) without,
material exceptions, any required authorizations, including Hazard
to Air Navigation determinations, for such towers have been issued
by and pursuant to the rules and regulations of the FAA; provided,
however, that with respect to all towers of the Systems with respect
to which the Company is a lessee or on which the Company leases
space, the foregoing representations and warranties are made solely
with respect to the business and operations of the Company (but not
with respect to the business or operations of any other Person
owning or using such towers).
(vii) All statements of account and other documents and
instruments required under the Copyright Act with respect to the
operation of the Systems for all accounting periods through the last
accounting period for which the filing deadline has passed
(collectively, the "Accounting Periods") have been recorded or
deposited with the Copyright Office and all royalty fees,
supplemental royalties and other sums required under the Copyright
Act with respect to the operation of the Systems for the Accounting
Periods have been paid to the Copyright Office. The Company is
otherwise in compliance in all material respects with the
requirements of the compulsory copyright license described in
Section 111 of the Copyright Act and with all applicable rules and
regulations of the Copyright Office, except in each case as
described in Section 3(j) of the Disclosure Schedule. The Company
has not received any material inquiry from the Copyright Office
questioning or challenging any of the statements of account or
related royalty payments filed by the Company for the Accounting
Periods.
(viii) True and correct copies of all filings submitted to the
Copyright Office, since July 1, 2001, including, without limitation,
all statements of account and proof of payment of all royalty fees
and supplemental royalties, have been made available to the Buyer or
its representatives. The Seller has made available to the Buyer or
its representatives true and correct copies of all reports and
filings made or filed by the Company pursuant to FCC rules and
regulations from the later of five years prior to the date of this
Agreement or the date on which Seller acquired indirect ownership of
the Systems.
(ix) The Company has not received any written notice from the
FCC alleging any current or unresolved violation of the FCC's rules
or regulations, except in each case as set forth Section 3(g)(ix) of
the Disclosure Schedule. The Company has not received written notice
or, to the Seller's Knowledge, other notice, of any complaint or
pending proceeding at the FCC concerning the operations of the
Systems. There is no notice of violation, order of forfeiture,
complaint or proceeding or, to the Seller's Knowledge, investigation
pending before the FCC or, to the Knowledge of the Seller or the
Company,
threatened, concerning the operation of the Systems or relating to
the Company. There is no action pending or, to the Knowledge of
Seller or the Company, threatened by or before the FCC which, if
determined adversely to the Company would result in the revocation,
cancellation, rescission or material and adverse modification of any
of the Licenses issued by the FCC. No material fees with respect to
the Licenses are past due.
(x) True, correct and complete copies of all material
documentation concerning the Company's handling of personally
identifiable information about subscribers, including any privacy
policies and practices, consents and third party transfer
agreements, or the forms thereof, have been made available to Buyer
or its representatives. The Company has, without material exception,
provided all required subscriber privacy notices to new subscribers
of the Systems at the time of entering into an agreement to provide
service to a subscriber and to all subscribers of the Systems on an
annual basis, has made Commercially Reasonable Efforts to prevent
unauthorized access to personally identifiable information of
subscribers, has not used any Systems to collect and has not
disclosed personally identifiable information concerning any
subscriber except as expressly permitted by Law, has provided each
subscriber with access to all personally identifiable information
regarding that subscriber kept and maintained by the Company and
provided subscribers reasonable opportunity to correct any error in
such information, has destroyed all personally identifiable
information if such information is no longer necessary for the
purpose for which it was collected and has provided all customer
notices, in each case, in all material respects as required by
applicable Law, including, without limitation, by the Communications
Act, including customer complaint resolution, availability of basic
service, and equipment compatibility notices, and is in compliance,
in all material respects, with all applicable privacy laws. The
Company has not received written notice or, to the Seller's
Knowledge, other notice of any request, complaint, investigation,
inquiry or claim relating to its handling of personally identifiable
information about subscribers.
(xi) Except as set forth in Section 3(g)(xi) of the Disclosure
Schedule, the Company is in compliance in all material respects with
the must carry and retransmission consent provisions of the
Communications Act. Except as set forth in Section 3(g)(xi) of the
Disclosure Schedule, the Company has the legal right and authority,
in all material respects, including all necessary authorizations and
licenses from the FCC and the relevant stations, to carry and to
continue to carry and use all signals now being carried by the
Systems. Each such signal is being carried either pursuant to the
must carry requirements of the Communications Act, pursuant to a
retransmission consent agreement in full force and effect or
pursuant to a legal exception to such requirements, and each such
signal is positioned in all material respects as required by
applicable Law. The Company has not received any written, or to the
Seller's Knowledge, other notice from, nor to the Seller's or the
Company's Knowledge is any action threatened by, any local broadcast
station alleging a violation by the Company of the Communications
Act, including, but not limited to, broadcast signal carriage
requirements or the terms of any Contract, including, but not
limited to retransmission consent agreements.
(xii) The FCC has determined that the Systems are subject to
"effective competition" within the meaning of Section 623 of the
Communications Act. To the
Knowledge of the Seller and the Company, there has been no action by
the Telecommunications Regulatory Board or the FCC to seek
modification of the FCC's "effective competition" determination.
(xiii) There is no pending written assertion or claim against
the Company or, to the Knowledge of the Seller, any assertion or
claim threatened, that its operations pursuant to any pole
attachment Contract have been improperly conducted or maintained.
(xiv) To the Seller's Knowledge, no fact or circumstance
exists relating to the qualifications of the Company that (A) could
reasonably be expected to prevent or delay the Telecommunications
Regulatory Board or the FCC from granting the Required Governmental
Approvals or (B) would otherwise disqualify the Company as the owner
or operator of the Systems.
(h) Tax Matters.
(i) All income and other material Tax Returns of or with
respect to the Company (or the Affiliated Group of which the Company
is or was a member) that were required to be filed have been duly
and timely filed, and all such Tax Returns, to the extent they
relate to the Company (or the portion thereof that relates to the
Company), are true, correct and complete in all material respects.
All income and other material Taxes payable by or with respect to
the Company (or the Affiliated Group of which the Company is or was
a member to the extent such Taxes relate to the Company) have been
fully and timely paid. With respect to any period for which Tax
Returns have not yet been filed or for which Taxes are not yet due
or owing, the Company has made accruals for such Taxes in accordance
with GAAP in the Financial Statements and its books and records. All
required estimated Tax payments sufficient to avoid any underpayment
penalties have been made by or with respect to the Company.
(ii) Section 3(h) of the Disclosure Schedule lists all income
and other material Tax Returns filed with respect to the Company for
taxable periods ended on or after May 31, 2000, indicates those such
Tax Returns that have been audited, and indicates those such Tax
Returns that currently are the subject of audit. The Seller has made
available to the Buyer or its representatives complete copies of the
relevant portions of all income and other material Tax Returns of,
examination reports relating to, and statements of deficiencies
assessed against or agreed to by the Company since May 31, 2000.
(iii) The Company has not waived any statute of limitations in
respect of Taxes or agreed to, or become a party to, any extension
of time with respect to a Tax assessment or deficiency relating to
the Company or any Affiliated Group of which the Company is or was a
member, which statute of limitations or extension of time has not
since expired.
(iv) The Company has been a member of the Affiliated Group of
which Centennial is the common parent for purposes of filing a
consolidated federal income Tax Return since the Company's inception
on or about March 2, 2000, and the Company does not have any
liability for Taxes of any Person under Treasury Regulation Section
1.1502-6 (or any comparable provision of state, local or foreign
Law) (other than as a member of
such group). For purposes of Taxes other than U.S. federal income
Tax, the Company has not been a member of any Affiliated Group for
which a consolidated, combined, unitary or affiliated Tax Return has
been filed.
(v) All deficiencies asserted or assessments made as a result
of any examinations by any Governmental Entity of the Tax Returns
of, including or with respect to the Company, have been fully paid,
and there are no audits or investigations of the Company or any
Affiliated Group of which the Company is or was a member by any
taxing authority in progress. The Company has not received any
notice from any taxing authority that it intends to conduct such an
audit or investigation. No issue has been raised by a taxing
authority in any prior examination of or relating to the Company
which, by application of the same or similar principles, would
reasonably be expected to result in a proposed deficiency or affect
the Tax treatment of the Company for any subsequent taxable period.
(vi) The Company has complied in all material respects with
all applicable Laws relating to the payment and withholding of Taxes
and has duly and timely withheld and paid over to the appropriate
taxing authorities all amounts required to be so withheld and paid
over under all applicable Laws.
(vii) There is no contract, agreement, plan or arrangement
covering any person that, individually or collectively, could give
rise to the payment of any amount that would not be deductible by
the Buyer or any of its Affiliates (including the Company) by reason
of Section 280G of the Code or that would give rise to Tax under
Section 4999 of the Code.
(viii) There are no liens for Taxes upon the assets of the
Company.
(ix) The Company has not executed or entered into any
agreement with, or obtained any consents or clearances from, any
Governmental Entity, or has been subject to any ruling guidance
specific to the Company that would be binding on the Buyer or any of
its Affiliates (including the Company) for any taxable period ending
after the Closing Date.
(x) Neither the Company nor any other Person on the Company's
behalf has (i) agreed, is required (as a result of any action taken
prior to Closing) or has any application pending to make any
adjustment pursuant to Section 481(a) of the Code or any similar
provision of Law or has received notice that any Governmental Entity
has proposed any such adjustment, (ii) executed or entered into a
closing agreement pursuant to Section 7121 of the Code or any
similar provision of Law or (iii) granted to any Person any power of
attorney that is currently in force with respect to any Tax matter.
(xi) None of the property owned by the Company is (i) property
required to be treated as being owned by another Person pursuant to
the provisions of Section 168(f)(8) of the Internal Revenue Code of
1954, as amended and in effect immediately prior to the enactment of
the Tax Reform Act of 1986, (ii) "tax-exempt use property" within
the meaning of Section 168(h)(1) of the Code, (iii) "tax-exempt bond
financed property"
within the meaning of Section 168(g) of the Code, (iv) "limited use
property" within the meaning of Rev. Proc. 2001-28, or (v) subject
to Section 168(g)(1)(A) of the Code.
(xii) The Company is not a party to or bound by any written
tax sharing, allocation, indemnity or similar agreement pursuant to
which the Buyer or any of its Affiliates (including the Company)
will have any obligation to make any payments after the Closing.
(xiii) The Company has not constituted either a "distributing
corporation" or a "controlled corporation" (within the meaning of
Section 355(a)(1)(A) of the Code) in a distribution of stock
qualifying for tax-free treatment under Section 355 of the Code (A)
in the two (2) years prior to the date of this Agreement or (B) in a
distribution which would constitute part of a "plan" or "series of
related transactions" (within the meaning of Section 355(e) of the
Code) in conjunction with the transactions contemplated by this
Agreement.
(xiv) There is no taxable income of the Company that will be
required under applicable Law to be reported by the Buyer or any of
its Affiliates (including the Company) for a taxable period
beginning after the Closing Date which taxable income was realized
(and reflects economic income) arising prior to the Closing Date.
(xv) The Company has not engaged in any "intercompany
transaction" in respect of which gain was and continues to be
deferred pursuant to Treasury Regulation Section 1.1502-13 or any
analogous or similar provision of Law.
(xvi) The Company is a member of a "selling consolidated
group" within the meaning of Treasury Regulation Section
1.338(h)(10)-1(b)(2), Centennial is eligible to make the Section
338(h)(10) Election with respect to the Company, and neither Seller
nor any of its Affiliates knows of any facts or circumstances that
should reasonably be expected to prevent the transactions
contemplated hereunder from qualifying as a "qualified stock
purchase" within the meaning of Section 338(d)(3) of the Code.
(xvii) The Company is not and has never been, or treated as
having been, engaged in a trade or business or a permanent
establishment in any jurisdiction other than the United States or
the Commonwealth of Puerto Rico, and except as set forth in Section
3(h) of the Disclosure Schedule, the Company has never been and is
not subject to taxation (including any withholding tax) in any
jurisdiction other than the United States or the Commonwealth of
Puerto Rico.
(xviii) The Seller has not taken any action which would result
in the loss, earlier termination, or diminution of any reduction in
Taxes, Tax holiday, special Tax status or treatment, or any increase
in applicable Tax rates, that exist with respect to the Company.
(xix) The Company does not own any "U.S. real property
interests" within the meaning of Section 897(c) of the Code.
(i) Assets.
(i) Section 3(i)(i) of the Disclosure Schedule lists, as of
the date of this Agreement, the street address or other location
information for all Owned Real Property, other than easements,
rights of entry, rights-of-way and similar authorizations. The
Company has good and marketable title (and such title is recorded,
or pending recordation) to each parcel of Owned Real Property listed
on such schedule, free and clear of any Security Interest (other
than the Security Interests described in Section 3(i)(i) of the
Disclosure Schedule, all of which will be discharged and released of
record or discharged, if not recorded, at or prior to Closing and
Permitted Liens). The Company is not party to any leases, subleases,
licenses, concessions, or other Contracts granting to any party or
parties the right of use or occupancy of any portion of any such
parcel of Owned Real Property, except for those listed on Section
3(i)(i) of the Disclosure Schedule. The Company has delivered or
otherwise made available to Buyer true, correct and complete copies
of all deeds, title reports, exception documents and related
documents and information and surveys for the Owned Real Property in
the Company's possession.
(ii) Section 3(i)(ii) of the Disclosure Schedule lists, as of
the date of this Agreement, by street address or other location
information, all Leased Real Property leased or subleased to the
Company, as lessee or sublessee, as the case may be. The Company has
delivered or otherwise made available to Buyer true, correct and
complete copies of all title reports, surveys, leases, subleases,
and related documents and information pertaining to Leased Real
Property in the Company's possession. The Company has a valid and
enforceable leasehold interest under each of the leases for the
Leased Real Property, subject to the Enforceability Exceptions.
(iii) The Owned Real Property and Leased Real Property
constitute all interests in real property currently used in or
currently held for use in connection with the business of the
Company and which are necessary for the continued operation of the
business of the Company as the business is currently conducted. The
Company owns, leases or has the right to use in the Ordinary Course
of Business all easements, rights of entry and rights-of-way which
are material to the business and operations of the Company. All of
the Owned Real Property and Leased Real Property, buildings,
fixtures and improvements thereon owned or leased by the Company are
in good operating condition and repair (subject to normal wear and
tear). Except as otherwise set forth in Section 3(i)(iii) of the
Disclosure Schedule, there does not exist any actual or, to the
Knowledge of Seller or the Company, threatened condemnation or
eminent domain proceedings that affect any Owned Real Property or
Leased Real Property or any part thereof, and the Seller has not
received any written notice, or, to the Knowledge of Seller, oral
notice, of the intention of any Governmental Entity or other Person
to take or use all or any part thereof.
(iv) The Company has good title to, or a valid leasehold
interest in, all material tangible personal property, except as set
forth on Section 3(i)(iv) of the Disclosure Schedule, that it uses
regularly in the conduct of its business, free and clear of all
Security Interests except for (x) the Security Interests described
in Section 3(i)(iv) of the Disclosure Schedule, all of which
Security Interests will be released or discharged at or prior to
Closing and (y) Permitted Liens. All items of the Company's tangible
personal
property which, individually or in the aggregate, are material to
the operation of the business of the Company, are in good operating
condition and repair, ordinary wear and tear excepted. The Company
has title to, or a leasehold interest in, all material assets used
in or necessary to operate the business of the Company as currently
conducted.
(v) Notwithstanding anything to the contrary contained in this
Agreement, no representation or warranty is being made as to the
title to, or the sufficiency or condition of, the internal wiring,
house drops and unrecorded dwelling unit easements, rights of entry
or rights of way held or used by the Company; provided, however,
that any such failures of title, taken as a whole, are not
materially adverse to the business and operations of the Company.
(j) Intellectual Property. The Company has in all material respects
the valid right to carry, transmit, or otherwise furnish to customers all
programming networks or services currently carried, transmitted, or
furnished in connection with the operation of the Systems and, at the time
of transmission, had in all material respects the right to carry,
transmit, or otherwise furnish to customers all programming networks or
services heretofore carried, transmitted, or furnished in connection with
the operation of the Systems. Except as set forth in Section 3(j) of the
Disclosure Schedule, the Company owns or has the right to use, in each
case, in all material respects, all intellectual property owned or used by
it in connection with the operation of the Systems, including patents,
trademarks, trade names, service marks, service names, logos, trade
secrets, copyrights, and licenses, except with respect to rights to the
performance, exhibition, or carriage of any music on the Systems except
for rights to the performance, exhibition and carriage of music issued by
music rights organizations such as BMI, SESAC or ASCAP (with respect to
which Seller makes no representation or warranty). All such intellectual
property material to the operation of the Systems is identified or
described in Section 3(j) of the Disclosure Schedule (excluding any "off
the shelf" or other standard computer software). Except as set forth in
Section 3(j) of the Disclosure Schedule, the Company is not required,
obligated, or under any liability whatsoever to make any payments by way
of royalties, fees or otherwise to any owner, licensor of, or other
claimant to such material intellectual property, or other third party in
connection with the operation of the business of the Company as currently
conducted. Except as set forth in Section 3(j) of the Disclosure Schedule,
the Company has not received any notice of infringement of any patent,
trademark, trade name, service xxxx, service name, logo, trade secret or
copyright or any written instrument which challenges or questions its
right to carry, transmit, or furnish any programming or works to customers
or to utilize any other intellectual property in connection with the
operation of the Systems. To the Knowledge of the Seller, no Person is
infringing, violating, misusing or misappropriating any material
intellectual property of the Company, and no such claims have been made
against any Person by the Company. There are no orders to which the
Company is a party or by which the Company is bound which restrict, in any
material respect, the rights to use any of the Intellectual Property. No
present or former employee has any right, title or interest, directly or
indirectly, in whole or in part, in any material intellectual property
owned or used by the Company.
(k) Contracts. Section 3(k) of the Disclosure Schedule lists, as of
the date of this Agreement:
(i) all programming and retransmission consent Contracts to
which the Company is party and, to the extent any such Contracts are
oral arrangements, a list of the current programming fees being paid
pursuant to such oral arrangements and any other material terms of
such arrangements;
(ii) all pole attachment Contracts to which the Company is a
party;
(iii) all employment, severance (other than the requirements
of Law 80), retention, change of control or similar Contracts to
which the Company is a party, other than any which can be terminated
by the Company on 30 or fewer days notice without penalty;
(iv) all leases and subleases for Leased Real Property;
(v) Contracts with Seller or any current or former officer,
director, stockholder or Affiliate of the Company other than any
which can be terminated by the Company on 30 or fewer days notice
without cost or penalty;
(vi) Contracts with any labor union or association
representing any employee of the Company;
(vii) Contracts for the sale of any assets of the Company
other than in the Ordinary Course of Business;
(viii) Contracts for joint ventures, strategic alliances or
partnerships;
(ix) Contracts containing covenants of the Company not to
compete in any line of business or with any Person in any
geographical area or covenants of any other Person not to compete
with the Company in any line of business or in any geographical
area;
(x) Contracts relating to the acquisition by the Company of
any operating business or the capital stock of any other Person
since September 15, 2000;
(xi) Contracts relating to the incurrence, assumption or
guarantee of any indebtedness or imposing a Security Interest on any
of its assets;
(xii) Contracts under which the Company has made advances or
loans to any other Person, except advancement of reimbursable
ordinary and necessary business expenses made to directors, officers
and employees of the Company in the Ordinary Course of Business;
(xiii) Outstanding agreements of guaranty, surety or
indemnification by the Company (other than provisions for
indemnification contained in agreements entered into in the Ordinary
Course of Business (other than for indebtedness for borrowed
money));
(xiv) any other Contract to which the Company is a party, the
performance of which will require payments to or by the Company of
more than $200,000 in any twelve (12) month period; and
(xv) Contracts that are otherwise material to the Company
(collectively, together with any Contracts entered into by the Company after the
date hereof and prior to the Closing which would have otherwise been listed in
Section 3(k) of the Disclosure Schedule if such Contracts had been entered into
on the date of this Agreement, and all written and oral amendments,
modifications or supplements to any such Contracts, the "Material Contracts");
provided, however, that "Material Contracts" shall specifically exclude all
subscription agreements or other contracts with customers for cable, data,
telephony or related services (including, without limitation, all multiple
dwelling unit agreements and Contracts with bulk subscribers), conduit
agreements, construction contracts and Contracts terminable at will without
penalty. The Seller has made available to the Buyer or its representatives a
true, correct and complete copy of each Material Contract, together with all
amendments, modifications or supplements thereto, other than any Material
Contract which is an oral Contract. Except as specifically identified in Section
3(k) of the Disclosure Schedule, each Material Contract is in full force and
effect and is valid and enforceable against the Company, except as such
enforceability may be limited by the Enforceability Exceptions and, to the
Knowledge of the Seller, each other party thereto. Except as specifically set
forth in Section 3(k) of the Disclosure Schedule, the Company is not in default
in any material respect under any Material Contract nor, to the Knowledge of
Seller or the Company, is any other party to any Material Contract in default in
any material respect thereunder, and no event has occurred that with the lapse
of time or the giving of notice, or both, would constitute a default in any
material respect thereunder. No party to any Material Contract has exercised any
termination rights with respect thereto.
(l) Franchises. Section 3(l) of the Disclosure Schedule lists (i)
all of the Franchises and the termination date of each such Franchise and
(ii) all of the Licenses issued in the name of the Company and the
termination date of each such License. The Telecommunications Regulatory
Board is the relevant franchising authority with respect to each
Franchise. The Seller has made available to the Buyer or its
representatives a true, correct and complete copy of each of the
Franchises. Each such Franchise is in full force and effect and is valid,
binding, and enforceable in accordance with its terms. The Company is in
compliance, in all material respects, with the terms of the Franchises,
and there has not occurred any material default by the Company under any
of the Franchises. Except as contemplated by this Agreement or as set
forth in Section 3(l) of the Disclosure Schedule, the Company has no
Franchise or License applications pending before any Governmental Entity,
other than applications not material to the Systems. The Company has not
received, nor has the Company received written notice that it will
receive, from the Telecommunications Regulatory Board a preliminary
assessment that a Franchise should not be renewed as provided in Section
626(c)(1) of the Communications Act. The Company has not received any
written notice of, and to the Knowledge of the Seller and the Company, the
Telecommunications Regulatory Board has not commenced, a proceeding to
revoke or suspend a Franchise or otherwise charge the Company with a
violation of a Franchise. Except as set forth in Section 3(l) of the
Disclosure Schedule, (A) no Person is currently engaging in, or to the
Knowledge of the Seller or the Company, is currently threatening to engage
in, any overbuild of any of the Systems, (B) to the Knowledge of the
Seller or the Company, there is no currently effective grant by any
Governmental Entity of a franchise to any Person other than the Company to
operate or maintain a cable television system in any of the geographic
areas covered by the Franchises, (C) to the Knowledge of
the Seller or the Company, no Governmental Entity is considering or
contemplating any such grant, (D) to the Knowledge of the Seller or the
Company, no application by any Person other than the Company is currently
pending before any Governmental Entity to operate or maintain a cable
television service in any of the geographic areas covered by the
Franchises and (E) no Governmental Entity has any rights to purchase or
acquire any interest in the Systems or a portion thereof, other than
rights of condemnation or eminent domain afforded by Law.
(m) Litigation. Except as set forth in Section 3(m) of the
Disclosure Schedule, the Company is not (i) subject to any outstanding
injunction, judgment, order, decree, ruling or charge, except for any
order, decree or ruling as may affect the cable television industry
(national or regional) generally to the extent the Company is not named as
a party therein or thereto, or (ii) party to any action, suit, proceeding,
hearing, or investigation of, in, or before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign
jurisdiction nor, to the Knowledge of Seller or the Company, is any such
action, suit, proceeding, hearing, or investigation threatened, except
routine collection matters and ordinary course matters expected to be
covered by insurance policies maintained by the Company, subject to
applicable deductibles.
(n) Certain Business Relationships with Affiliates. Except as set
forth in Section 3(n) of the Disclosure Schedule, no Affiliate of the
Company or any of their respective directors, officers, partners,
stockholders or Affiliates of any such Person is currently or has been
party to any material business arrangement or relationship with the
Company within the 12 months prior to the date of this Agreement, is a
participant in any material transaction to which the Company is a party,
and no Affiliate of the Company owns any material asset, tangible or
intangible, which is used in the business of the Company. Each Contract or
arrangement between the Company, on the one hand, and any Affiliate of the
Company or any of their respective directors, officers, partners,
stockholders or Affiliates of any such Person, on the other hand, is on
commercially reasonable terms no more favorable to such Affiliate,
director, officer or employee than what any third party negotiating on an
arms-length basis would expect.
(o) System Information. Section 3(o) of the Disclosure Schedule sets
forth (as of a date as may be specified in Section 3(o) of the Disclosure
Schedule):
(i) the approximate number of linear miles of energized cable
plant, including a detailed break-out of the percentage of cable
plant miles by bandwidth capability (megahertz) and the percentage
of cable plant that has been upgraded to two-way cable (reporting
out trunk and cable plant) of the Systems;
(ii) a general description of Basic Cable services, premium or
pay services, tier services, pay-per-view services, a-xx-xxxxx
services, and high-speed data services available from the Systems
and the rates charged by the Company for such services;
(iii) the approximate number of Equivalent Basic Subscribers
as of the date indicated in such section of the Disclosure Schedule,
the approximate number of digital subscribers as of the date
indicated in such section of the Disclosure Schedule, and the
approximate number of non-delinquent subscribers to each pay or
premium service as of the date indicated in such section of the
Disclosure Schedule, each tier service, each a xx-xxxxx service, and
each high-speed data service of the Systems;
(iv) the stations and signals carried by the Systems and the
channel position of each such signal and station;
(v) the channel capacity and programming line-ups of the
Systems;
(vi) the rates and charges for installation, converter
equipment, and monitor services charged by the Company;
(vii) the latest proof of performance tests for the Systems;
and
(viii) to the Knowledge of Seller, the approximate number of
homes passed for the Systems.
(p) System and Signal Carriage.
(i) The Systems provide cable television service for the
cities and surrounding communities set forth in the definition of
"Systems."
(ii) Except as set forth in Section 3(p) of the Disclosure
Schedule, no written notices or demands have been received by the
Company from the FCC or any other Person claiming to have a claim or
objection challenging the right of the Company to carry or deliver
any signal now carried or delivered by the Company. No
administrative or judicial proceeding against the Company involving
the right to carry and deliver such signals has been commenced and,
to the Knowledge of the Seller, no such proceeding against the
Company has been threatened, except for proceedings affecting the
cable television industry generally.
(q) Environmental Matters.
(i) The Company has obtained and currently maintains all
permits, licenses, registrations, and other approvals and has made
all reports and notifications required under any Environmental Laws
in connection with the Systems, and is (and has been for the past
five years) in compliance with all applicable Environmental Laws and
permits required under any Environmental Law, except in each case
for such matters as are set forth in Section 3(q) of the Disclosure
Schedule or as would not be reasonably likely to result in the
Company incurring material liabilities under Environmental Laws. The
Company has not received any notice of nor, to the Knowledge of the
Seller, is the Company the subject of any action, cause of action,
claim, investigation, demand, or notice by any Person alleging
liability under or non-compliance with any Environmental Law, except
in each case for such matters as are set forth in Section 3(q) of
the Disclosure Schedule or as would not be reasonably likely to
result in the Company incurring material liabilities under
Environmental Laws.
(ii) The Company is not subject to any pending or, to the
Knowledge of the Company, any threatened claims, actions,
proceedings, investigations allegations, assertions or notices
alleging noncompliance with or potential liability under any
Environmental Laws except in each case as set forth in Section 3(q)
of the Disclosure Schedule or as would not reasonably be likely to
result in the Company incurring material liabilities under
Environmental Laws.
(iii) Except in each case as set forth in Section 3(q) of the
Disclosure Schedule, to the Seller's Knowledge, there are no facts
relating to the Company, any real property currently or formerly
owned, operated or leased by the Company or any property to which
the Company arranged for the disposal or treatment of Hazardous
Substances, including, but not limited to the release of Hazardous
Substances, that could reasonably be expected to result in the
Company incurring material liabilities under Environmental Laws.
(iv) The Company has provided Buyer with copies of all
material environmental, health and safety assessments,
investigations, audits or documentation related to the Company or
any property currently or formerly owned, operated or leased by the
Company, including, but not limited to, any Phase I Environmental
Assessments, Phase II Environmental Assessments, UST closure reports
and asbestos surveys, to the extent in the possession, custody or
control of the Company.
(r) Employees.
(i) There are no collective bargaining agreements applicable
to any employees of the Company ("Company Employees") and the
Company has no duty to bargain with any labor organization with
respect to any such Person. Except as set forth in Section 3(r) of
the Disclosure Schedule, there are no pending unfair labor practice
charges against the Company, nor is there, to the Knowledge of the
Seller, any demand for recognition or any other request or demand
from a labor organization for representative status with respect to
any Company Employees, nor is any such activity threatened.
(ii) Section 3(r) of the Disclosure Schedule sets forth a true
and complete list as of the date specified therein, of the names,
titles, hire dates, rates of compensation, and 2003 Christmas
bonuses paid, of all of the current employees of the Company.
Section 3(r) of the Disclosure Schedule also sets forth the
aggregate accrued vacation and sick time of each Company Employee as
of a recent specified date.
(s) Employee Benefits.
(i) The Company does not currently, and has not since January
1, 2001, sponsored any Employee Benefit Plan which is maintained for
or on behalf of current or former Company Employees.
(ii) All of the current Employee Benefit Plans that offer
benefits to any current or former Company Employee ("Company Plans")
are listed in Section 3(s) of the Disclosure Schedule. None of the
Company Plans are subject to Title IV of ERISA.
None of the Company Plans are Multiemployer Plans. Each Company Plan
is now operated in accordance with the requirements of all
applicable Law, including ERISA, the Code and the Puerto Rico
Internal Revenue Code of 1994, as amended ("PRIRC"), except where
the failure to be so operated would not be reasonably likely to have
a Material Adverse Effect. No action is pending or, to the knowledge
of the Seller, threatened with respect to any Company Plan (other
than claims for benefits in the ordinary course), except as would
not be reasonably likely to have a Material Adverse Effect. All
contributions required to be made under the terms of any Company
Plans have been timely made.
(iii) Except as set forth in Section 3(s) of the Disclosure
Schedule, neither the execution or delivery of this Agreement nor
the consummation of the transactions contemplated hereby will result
in any payment becoming due or the acceleration of the time of
payment or the vesting of any rights with respect to any former or
current Company Employee's compensation or benefits.
(t) Corporate Records.
(i) The Seller has delivered to Buyer true, correct and
complete copies of the certificate of incorporation and by-laws of
the Company.
(ii) The minute books of the Company previously made available
to Buyer contain true, correct and complete records of all meetings
and accurately reflect all other corporate action of the
stockholders and board of directors (including committees thereof)
of the Company. The stock certificate books and stock transfer
ledgers of the Company previously made available to Buyer are true,
correct and complete. To the Seller's Knowledge, all stock transfer
taxes levied or payable with respect to all transfers of shares of
the Company prior to the date hereof have been paid and appropriate
transfer tax stamps affixed.
(u) Accounts Receivable. All accounts receivable of the Company have
arisen from bona fide transactions in the Ordinary Course of Business.
4. Representations and Warranties of the Buyer.
The Buyer represents and warrants to the Seller as follows:
(a) Organization. The Buyer is a corporation duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation.
(b) Authorization of Transaction.
(i) The Buyer has all requisite corporate power and authority
to execute and deliver this Agreement and the Ancillary Documents to
which it is a party and to perform its obligations hereunder and
thereunder. All necessary corporate proceedings of the Buyer have
been duly taken to authorize the execution, delivery, and
performance by the Buyer of this Agreement and the Ancillary
Documents to which it is a party. This Agreement has been, and each
Ancillary Documents to which it is a party will be at or
prior to the Closing, executed, and delivered by the Buyer and this
Agreement constitutes, and each Ancillary Documents to which it is a
party will constitute the valid and legally binding obligations of
the Buyer, enforceable against the Buyer in accordance with their
respective terms, except as such enforceability may be limited by
the Enforceability Exception.
(ii) Except for the Required Governmental Approvals, the Buyer
is not required to obtain any consent, authorization, approval,
order, license, certificate, or permit of or from, or make any
declaration or filing with, any Governmental Entity or other Person
for the execution, delivery, and performance of this Agreement by
the Buyer.
(iii) Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated
hereby, will
(A) if the Required Governmental Approvals are obtained
or made violate or result in a breach of any Law to which the
Buyer is subject;
(B) violate or result in a breach of any provision of
the certificate of incorporation or bylaws (or similar
organizational documents) of the Buyer; or
(C) conflict with, result in a breach of, constitute a
default under, result in the acceleration of the rights of any
party under, or create in any party the right to terminate,
modify, or cancel any material Contract to which the Buyer is
a party or by which it is bound or to which any of its assets
are subject.
(c) Brokers' Fees. The Buyer has no liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement for which the Seller or
the Company could become liable or obligated.
(d) Financing. Schedule 4(d)(i) sets forth a complete and correct
copy of an executed and binding commitment letter and related term sheets
from Toronto Dominion (Texas) Inc. and TD Securities (USA) Inc.
(collectively, the "TD Commitment") for the financing (the "Financing") to
be used, or replaced by any replacement commitment letter or definitive
documentation that provides for at least the same amount of bank financing
as the TD Commitment as originally issued, funding conditions no less
favorable to Buyer than those included in the TD Commitment as originally
issued and other terms and conditions the aggregate effect of which is not
materially less favorable to Buyer in comparison to those contained in the
TD Commitment as originally issued (the "Replacement Commitment", and,
together with the TD Commitment, the "Financing Commitment") to be used,
in connection with the transactions contemplated hereby. Schedule 4(d)(ii)
sets forth a complete and correct copy of an executed and binding equity
commitment letter from HMTF Fund V Cayman, L.P. (the "Equity Commitment")
for the equity contribution to Buyer in connection with the transactions
contemplated hereby (the "Equity Contribution"). Upon satisfaction of the
terms and conditions of the Financing Commitment and the Equity
Commitment, the amount provided for in the Financing, together with the
Equity Contribution, will provide sufficient funds for the Buyer to
consummate the transactions contemplated by this Agreement. The Buyer is
not aware of any facts or circumstances which would reasonably be expected
to prevent the consummation of the Financing and the Equity Contribution
in accordance with the terms of the Financing Commitment and the Equity
Commitment, respectively.
(e) Litigation. The Buyer is not (i) subject to any outstanding
injunction, judgment, order, decree, ruling, or charge or (ii) party to
any action, suit, proceeding, hearing, or investigation of, in, or before
any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction, except where such injunction,
judgment, order, decree, ruling, charge, action, suit, proceeding,
hearing, or investigation would not be reasonably likely to have a
material adverse effect on the ability of the Buyer to consummate the
transactions contemplated by this Agreement or the consummation of the
transactions contemplated by this Agreement.
(f) No Disqualification. Subject to obtaining the Required
Governmental Approvals, the Buyer is and as of the Closing will be legally
qualified under the Communications Act to perform its obligations
hereunder and be the transferee of control of the Licenses and to own and
operate the Systems. To the Knowledge of the Buyer, there are no facts
that relate to the qualifications of the Buyer which would, under present
Law, disqualify the Buyer with respect to the consummation of the
transactions contemplated hereby or that would be reasonably likely to
prevent the Parties from obtaining any Required Governmental Approval or
which would prevent the Telecommunications Regulatory Board's consenting
to the change of control affecting the Franchises and the FCC's consenting
to the transfer of control affecting the Licenses issued by the FCC in
connection with the consummation of the transactions contemplated by this
Agreement.
(g) Investment Purpose. The Buyer is acquiring the Company Shares to
be acquired pursuant to this Agreement for investment for its own account
and not with a view to the sale or distribution of any part thereof within
the meaning of the Securities Act. The Buyer understands that the Company
Shares have not been registered under the Securities Act and cannot be
resold unless subsequently registered under the Securities Act or an
exemption from such registration is available.
(h) Tax Treatment. The Buyer is eligible to make the Section
338(h)(10) Election with respect to the Company and neither the Buyer nor
any of its Affiliates knows of any facts or circumstances that should
reasonably be expected to prevent the transactions contemplated hereunder
from qualifying as a "qualified stock purchase" within the meaning of
Section 338(d)(3) of the Code.
5. Pre-Closing Covenants.
From the execution of this Agreement until the Closing:
(a) General. Without limiting any of the express obligations of the
Parties hereunder, each of the Parties will use its Commercially
Reasonable Efforts to take all actions and to do all things necessary to
consummate and make effective the transactions
contemplated by this Agreement (including satisfaction, but not waiver, of
the closing conditions set forth in Section 7) as expeditiously as
practicable.
(b) Notices and Consents. Each of the Parties will, and the Seller
will cause the Company to, give any notices or make any filings required
in connection with, and use its Commercially Reasonable Efforts to obtain,
the Required Governmental Approvals and Necessary Consents. Without
limiting the generality of the foregoing:
(i) as promptly as practicable (but in no event more than 20
days) after the date of this Agreement, each of the Parties will
file (and will cause any of their necessary Affiliates to file) any
Notification and Report Forms and related material that it or he may
be required to file with the Federal Trade Commission (the "FTC")
and the Antitrust Division of the United States Department of
Justice (the "Antitrust Division") under the Xxxx-Xxxxx-Xxxxxx Act,
will use and cause such Affiliates to use its and their Commercially
Reasonable Efforts to obtain expiration or early termination of the
applicable waiting period, and will and will cause such Affiliates
to make any further filings pursuant thereto that may be necessary
in connection therewith;
(ii) as promptly as practicable (but in no event more than 20
days) after the date of this Agreement, the Seller will cause the
Company to file a complete Form 394 and a Request for Transfer of
Control with respect to each of the Franchises with the
Telecommunications Regulatory Board and the Buyer will provide all
information and documentation regarding its organization,
operations, management, ownership and business as are required to be
included therein; and
(iii) as promptly as practicable (but in no event more than 20
days) after the date of this Agreement, the Parties shall file
applications with the FCC for consent to the change of control of
the Licenses issued by the FCC (other than the earth station and
business radio Licenses issued by the FCC, as to which such
applications shall be filed at the appropriate time), as
contemplated by this Agreement.
Each of the Parties will cooperate with the other in obtaining all
Required Governmental Approvals and Necessary Consents, and the Seller
will cause the Company to cooperate with the Parties in obtaining all
Required Governmental Approvals and Necessary Consents. Notwithstanding
anything to the contrary contained in this Agreement, in the case of a
Franchise or License, the Buyer shall only be obligated to accept, and
agrees that the Company may accept, changes to such Franchise or License
in connection with obtaining the Required Governmental Approvals or any
conditions in connection with obtaining the Required Governmental
Approvals that do not increase the obligations of the Company or the Buyer
in any material respect, or reduce the rights of the Company or the Buyer
in any material respect, under the related Franchise or License to which
they relate (the "Limited Changes"). Notwithstanding anything to the
contrary contained in this Agreement, the Buyer shall be obligated to
accept, and agrees that the Company may accept, changes to Contracts in
connection with obtaining the Necessary Consents provided that such
changes have no adverse economic impact on the Contract, the Company or
the operation of the business and any such changes shall be considered
"Limited Changes" for purposes of this Agreement. Notwithstanding anything
contained herein to the contrary, if there is a change or condition
imposed that is solely monetary in nature and that does
not constitute a Limited Change, Seller may, but shall not be obligated
to, make a payment to the Company at Closing, as reasonably agreed by
Buyer, that compensates the Company for such change or condition, in which
case, such change or condition shall be considered a Limited Change for
purposes hereof. Notwithstanding anything to the contrary contained in
this Agreement, neither the Buyer, the Seller, nor any of their respective
Affiliates shall be required (i) to hold separate (including by trust or
otherwise) or divest of any of their respective businesses or assets, (ii)
to agree to any limitation on the operation or conduct of their respective
businesses or (iii) to waive any of the conditions set forth in Section 7
of this Agreement. Notwithstanding anything to the contrary contained
herein, neither the Buyer nor Seller shall have any liability for a
failure to obtain any Required Governmental Approval or Necessary Consent
that satisfies the foregoing requirements as long as the Buyer or the
Seller, as the case may be, complies with its obligations set forth in
this Section 5(b).
(c) Operation of Business. Prior to the Closing, except as
required in order to comply with the terms of the Agreement or
otherwise permitted by this Agreement, required by applicable Law or
contemplated in Section 5(c) of the Disclosure Schedule, without the
prior written consent of Buyer, which consent shall not be
unreasonably withheld or delayed, the Seller (i) agrees to cause the
Company to operate the Company in the Ordinary Course of Business;
(ii) will not engage in, and will not permit the Company to engage
in, any practice, take any action, or enter into any transaction
which is (A) material to the financial condition of the Company and
(B) outside the Ordinary Course of Business; (iii) will cause the
Company to use its Commercially Reasonable Efforts to preserve its
current business, operations, organization and goodwill in all
material respects, including preserving existing relationships with
Persons having business with the Company (including, without
limitation, customers and suppliers); (iv) agrees to cause the
Company to use its Commercially Reasonable Efforts to continue to
employ its key employees in the Ordinary Course of Business and
consistent with its past practices; (v) shall maintain (A) other
than as a result of a force majeure event, all of the assets and
properties of the Company in their current condition, ordinary wear
and tear excepted and (B) insurance upon all of the properties and
assets of the Company in such amounts and of such kinds comparable
to that in effect on the date of this Agreement; (vi) shall (A)
maintain the books, accounts and records of the Company in the
Ordinary Course of Business, (B) continue to collect accounts
receivable and pay accounts payable utilizing historically customary
procedures and working capital practices and without discounting or
accelerating payment of such accounts other than in the Ordinary
Course of Business, and (C) comply in all material respects with all
Franchises, Licenses and Contracts; (vii) shall comply in all
material respects with all applicable Laws; (viii) will not take any
action which would adversely affect the ability of the parties to
consummate the transactions contemplated by this Agreement or to
make the Section 338(h)(10) Election and (ix) shall cause the
Company to (A) continue to prosecute its request for the permits
marked with an asterisk on Schedule 5(c)(ix), (B) apply for the
permits marked with a double asterisk on Schedule 5(c)(ix) no later
than 60 days after the date hereof and (C) use its Commercially
Reasonable Efforts to obtain each of the permits set forth on
Schedule 5(c)(ix).
Except as otherwise expressly provided in this Agreement,
contemplated in Section 5(c) of the Disclosure Schedule or with the prior
written consent of Buyer, which consent shall not be unreasonably withheld
or delayed, the Seller shall not, and shall not permit the Company to: (i)
declare, set aside, make or pay any dividend or other distribution in
respect of the capital stock of the Company or repurchase, redeem or
otherwise acquire any outstanding shares of the capital stock or other
securities of, or other ownership interests in, the Company; (ii)
transfer, issue, sell or dispose of any shares of capital stock or other
securities of the Company or grant options, warrants, calls or other
rights to purchase or otherwise acquire shares of the capital stock or
other securities of the Company; (iii) effect any recapitalization,
reclassification, stock split or like change in the capitalization of the
Company; (iv) amend the certificate of incorporation or by-laws of the
Company; (v) (A) materially increase the annual level of compensation of
any employee of the Company, except for annual increases and merit
increases in the Ordinary Course of Business, (B) grant any new bonus or
benefit to any employee, director or consultant of the Company, other than
such bonuses or benefits for which the Company will not be responsible
after the Closing, (C) increase the coverage or benefits available under
any (or create any new) severance pay, termination pay, vacation pay,
company awards, salary continuation for disability, sick leave, deferred
compensation, bonus or other incentive compensation, insurance, pension or
other employee benefit plan or arrangement made to, for, or with any of
the directors, officers, employees, agents or representatives of the
Company or otherwise modify or amend or terminate any such plan or
arrangement that will be binding on the Company after the Closing, except
for any such increase, creation, modification, amendment or termination
required by the terms of any such benefit plan or arrangement or
applicable Law or that applies uniformly to substantially all employees of
Centennial and its Subsidiaries, including Company Employees or (D) enter
into any employment, deferred compensation, severance, consulting,
non-competition or similar agreement (or amend any such agreement) to
which the Company is a party or involving a director, officer or employee
of the Company in his or her capacity as a director, officer or employee
of the Company that will be binding on the Company after the Closing
(other than oral employment or consulting agreements terminable without
penalty on no more thirty days notice); (vi) incur or assume any
indebtedness in an amount in excess of $500,000 in the aggregate that
would not be a Current Liability of the Company; (vii) permit, allow or
suffer to be encumbered by any Security Interest, except for Permitted
Liens, any of the properties or assets (whether tangible or intangible) of
the Company; (viii) except in the Ordinary Course of Business which shall
not, in any event, include the sale of broken or defective set tops and
modems acquire any material properties or assets or sell, assign, license,
transfer, convey, lease or otherwise dispose of any of the material
properties or assets of the Company, including, without limitation, the
sale of the Company's inventory of set tops and modems (it being
understood and agreed that such inventory will be used by the Company in
the Ordinary Course of Business); (ix) enter into or agree to enter into
any merger or consolidation with, any corporation or other entity, and not
engage in any new business or invest in, make a loan, advance or capital
contribution to, or otherwise acquire the securities of any other Person;
(x) cancel or compromise any debt or claim or waive or release any right
under any Material Contract of the Company except in the Ordinary Course
of Business; (xi) except for Budgeted Capital Expenditures, enter into any
commitment for capital expenditures of the Company in excess of $500,000
for any individual commitment and $2 million for all commitments in the
aggregate; (xii) introduce any material change with respect to the
operation of the Company, including any material change in the types,
nature, composition or quality of its products or services, or, other than
in the Ordinary Course of Business, make any change in product
specifications or prices or terms of distributions of such products;
(xiii) permit the Company to enter into any transaction or to enter into,
modify or renew any Contract which by reason of its
size, nature or otherwise is not in the Ordinary Course of Business;
provided that such Contract, as so modified or renewed, does not result in
a material economic change to such Contract and, provided further that any
new Contract does not contain terms that are materially different from
those contained in similar Contracts existing as of the date of this
Agreement; (xiv) except for transfers of cash pursuant to normal cash
management practices in the Ordinary Course of Business, permit the
Company to make any investments in or loans to, or pay any fees or
expenses to, or enter into or modify any Contract with any Affiliate of
the Company, or any director, officer or employee of the Company; (xv)
make a change in its accounting or Tax reporting principles, methods or
policies, except as required by applicable Law or except any such change
relating to United States federal income taxes that would not continue to
apply to the Company after the Closing; (xvi) make or rescind any election
relating to Taxes, other than any election for United States federal
income tax purposes that would not continue to apply to the Company after
the Closing, or settle or compromise any claim or proceeding relating to
Taxes; (xvii) enter into any Contract, understanding or commitment that
restrains, restricts, limits or impedes the ability of the Company to
compete with or conduct any business or line of business in any geographic
area; (xviii) voluntarily terminate, amend, restate, supplement or waive
any rights under any Material Contract, License or Franchise, other than
in the Ordinary Course of Business; provided that any such voluntary
termination, amendment, restatement, supplement or waiver does not result
in a material economic change to such Material Contract, License or
Franchise; (xix) with respect to any oral Contract, enter into a written
Contract to replace such oral Contract or modify or amend the terms of
such oral Contract in any manner that results in a material economic
change to such oral Contract; and (xx) agree to do anything prohibited by
this Section 5(c) or anything which would make any of the representations
and warranties of the Seller in this Agreement or the Ancillary Documents
untrue or incorrect in any material respect.
(d) Full Access. The Seller will permit, and the Seller will
cause the Company to permit, the Buyer and its representatives to
have full access, at all reasonable times and upon reasonable
notice, and in a manner so as not to interfere with the normal
business operations of the Seller and the Company, to all premises,
properties, personnel, books, records (including tax records),
Contracts, and documents of, or pertaining to, the Company;
provided, that all such access shall be, at the option of the
Seller, with a representative of the Seller present. The Buyer will
treat and hold as such any Confidential Information it receives from
the Seller or the Company in the course of the reviews contemplated
by this Section 5(d) or otherwise, will not use any of the
Confidential Information except in connection with the consummation
of the transactions contemplated by this Agreement, will comply in
all respects with the terms of the Confidentiality Agreement entered
into prior to the date hereof between the Buyer or one of its
Affiliates and Centennial in connection with the transactions
contemplated hereby (the "Confidentiality Agreement"), and, if this
Agreement is terminated for any reason, will return to the Seller or
the Company, as applicable, or destroy all tangible embodiments (and
all copies) of the Confidential Information which are in its
possession and otherwise continue to comply with the terms of the
Confidentiality Agreement. No investigation by Buyer prior to or
after the date of this Agreement shall diminish or obviate any of
the representations, warranties, covenants or agreements of the
Seller contained in this Agreement or any Ancillary Documents to
which Seller is a party.
(e) Notice of Developments. Each Party will, as soon as practicable,
advise the other of any fact or occurrence or any pending or threatened
occurrence of which any such Party obtains Knowledge and which if existing
and known at the date of this Agreement would have been required to be set
forth or disclosed in or pursuant to this Agreement, which (if existing and
known at any time prior to or at the Closing) would make the performance by
any Party of a covenant contained in this Agreement impossible, or which (if
existing and known at the time of the Closing) would cause a condition to
any Party's obligations under this Agreement not to be fully satisfied. The
Buyer shall notify Seller in writing as promptly as reasonably practicable
if the Buyer obtains Knowledge of any facts which would make the
representation and warranty of the Buyer contained in Section 4(f)
inaccurate.
(f) Exclusivity. The Seller shall (and shall cause the Company and its
directors, officers, employees, representatives and agents to) immediately
cease and cause to be terminated any existing discussions or negotiations
with any Persons (other than Buyer and its Affiliates and their respective
agents and representatives) conducted heretofore with respect to any
Acquisition Transaction. The Seller will not, and will not permit the
Company or any of its directors, officers, employees, representatives or
agents, to directly or indirectly, solicit, initiate, facilitate, or
knowingly encourage (including by way of furnishing or disclosing non-public
information) any inquiries or the making of any proposal with respect to any
Acquisition Transaction or negotiate or otherwise facilitate, encourage,
solicit, initiate or engage in discussions, negotiations or submissions of
proposals or offers with any Person with respect to any Acquisition
Transaction, enter into any written agreement, arrangement, or understanding
requiring it to abandon, terminate, or fail to consummate the transactions
contemplated by this Agreement or otherwise cooperate in any way with or
assist or participate in, facilitate or encourage, any effort or attempt by
any other Person to do or seek any of the foregoing. The Seller shall
immediately advise the Buyer in writing of the receipt of any written
inquiries or proposals or requests for non-public information related to an
Acquisition Transaction and shall disclose to the Buyer the material terms
of any such proposal or offer.
(g) Liens; Intercompany Debt. The Seller shall take all necessary
actions, to cause the termination and release on or prior to the Closing
Date of the Security Interests referred to in Sections 3(i)(i) and 3(i)(iv)
of the Disclosure Schedule as to be so released. At or prior to Closing, the
Seller shall take all such actions reasonably necessary such that the
Company shall have no obligation with respect to any accounts payable of the
Company to the Seller or any Affiliate of the Seller or guarantees or
sureties made by the Company in favor of the Seller or any Affiliate of the
Seller, nor any rights with respect to any accounts receivable of the
Company from the Seller or any Affiliate of the Seller. Except as set forth
on Schedule 5(g), all agreements and arrangements between and among any of
the Company, on the one hand, and the Seller or any of its Affiliates (other
than the Company), on the other hand, shall be terminated in their entirety
effective as of the Closing by the parties and shall be deemed voided,
cancelled and discharged in their entirety and Seller shall provide the
Buyer copies of an agreement pursuant to which such agreements and
arrangements shall have been terminated effective as of or prior to the
Closing evidence of such terminations to Buyer at Closing.
(h) Excluded Assets, Etc. Notwithstanding anything to the contrary
contained herein, the Buyer agrees that the Company may assign each of the
Excluded Assets to the Seller or an Affiliate of the Seller, any of their
respective designees or any other Person prior to the Closing; provided that
such assignments, either individually or in the aggregate, do not result in
any adverse Tax consequences to the Company unless Buyer has consented in
writing. Notwithstanding anything to the contrary contained herein, the
Company shall assign each of the actions, suits, proceedings and litigation
identified on Schedule 5(h) and all of the Company's rights, obligations and
liabilities relating thereto to the Seller or an Affiliate of the Seller
prior to the Closing (and the Seller shall, or shall cause such Affiliate
to, assume such obligations and liabilities) and, after the Closing, the
Company shall cooperate with the Seller, its Affiliates and their respective
insurers in all commercially reasonable respects with respect to the
prosecution, defense and settlement of such actions, suits, proceedings and
litigation, including, without limitation, by making files, records,
documents and personnel of the Company available to the Seller, such
Affiliates and such insurers and their respective counsel.
(i) Financing. Buyer shall use its Commercially Reasonable Efforts to
obtain and effectuate the Financing contemplated by the Financing Commitment
and Equity Commitment on substantially the terms set forth therein,
including, without limitation, with respect to the Financing Commitment,
accepting changes to the pricing, fees, expenses, interest rate or other
terms thereof solely on the terms provided therein and, in all cases,
subject to the limitations thereon set forth therein, and to keep the
Financing Commitment and the Equity Commitment effective in accordance with
their respective terms. Buyer shall not amend, or agree to amend, the
Financing Commitment in any material respect that would adversely affect the
consummation of the transactions contemplated by this Agreement, without the
consent of Seller, which consent shall not be unreasonably withheld or
delayed. Buyer agrees to notify Seller promptly if, at any time prior to the
Closing Date the Financing Commitment or the Equity Commitment shall expire
or be terminated for any reason. Buyer shall notify Seller as promptly as
practicable of material developments relating to the Financing and the
Equity Contribution and shall provide Buyer with copies of the initial
drafts of the definitive documentation for the Financing, and, upon request
by Seller, Buyer shall provide Seller with information as to the status of
the Financing and the Equity Contribution. Buyer will use its Commercially
Reasonable Efforts to provide any other drafts or executed copies of
definitive documentation to the extent reasonably requested by Seller;
provided that, in Buyer's reasonable opinion, the provision of such drafts
does not interfere with Buyer's negotiation and timely implementation of the
Financing. If the Financing Commitment is terminated for any reason prior to
the Closing Date, Buyer shall use Commercially Reasonable Efforts to obtain,
and, if so obtained, will provide Seller with a copy of, a new financing
commitment that provides for at least the same amount of bank financing as
the Financing Commitment as originally issued, funding conditions not less
favorable to Buyer than those included in the Financing Commitment as
originally issued and other terms and conditions the aggregate effect of
which is not materially less favorable to Buyer in comparison to those
contained in the Financing Commitment as originally issued, and the
representations contained in the last two sentences of Section 4(d) and the
provisions of this Section 5(i) shall apply with respect thereto.
(j) Environmental Access. The Seller shall cause the Company to permit
the Buyer and Buyer's environmental consultant, to conduct such
investigations (including investigations known as "Phase I" and "Phase II"
environmental Site Assessments, except that a Phase II environmental site
assessment shall not be conducted without the Seller's consent which shall
not be unreasonably withheld or delayed) of the environmental conditions of
any real property owned, operated or leased by or for the Company and the
operations conducted thereat (subject to any limitations contained in any
agreements governing the Company's occupancy and use of any Real Property
which is not Owned Real Property) as Buyer, in its sole discretion, shall
deem necessary or prudent, such investigations to be conducted during normal
business hours and not to unreasonably interfere with the Company's business
("Buyer's Environmental Assessments"). Buyer's Environmental Assessment
shall be conducted by a qualified environmental consulting firm, possessing
reasonable levels of insurance (evidence of which shall be provided to
Seller upon request), in compliance with applicable Laws, at the expense of
Buyer, and Buyer shall provide Seller with a copy of all preliminary and
final Buyer's Environmental Assessments.
(k) Financial Information. Within 15 days following the end of each
calendar month following the date hereof until the Closing Date, Seller
shall deliver to the Buyer (i) a true and correct copy of the unaudited
balance sheet and statement of income of the Company as of, and for the
calendar month then ended, prepared consistently with the Accounting
Principles (provided that such balance sheet and statement of income shall
be subject to normal year-end adjustments and shall not contain footnotes
and the line item "System Cash Flow" included therein, if any, shall not
have been prepared in accordance with GAAP); and (ii) a schedule of the
amount and purpose of the cash capital expenditures made by the Company
during such calendar month, as well as subscriber counts and such other
monthly reports of operating statistics regarding the Systems as the Company
prepares for management in the Ordinary Course of Business.
6. Post-Closing Covenants.
Following the Closing:
(a) General. Subject to the terms and conditions of this Agreement,
each Party will take such further action (including the execution and
delivery of such further instruments and documents) as the other Party
reasonably may request to carry out the purposes of this Agreement, all at
the sole cost and expense of the requesting Party (unless the requesting
Party is entitled to indemnification therefor under Section 8).
(b) Access to Books and Records. For a period of seven years after the
Closing Date, each Party will, and will cause its Affiliates to, permit the
other Party and its Affiliates, during reasonable business hours and upon
reasonable notice, to review any books, records, or other documents of the
Company for any reasonable and necessary purpose reasonably related to the
interest of such requesting Party and its Affiliates in the Company, and
shall permit the requesting Party and its Affiliates, at their cost and
expense, to make copies of specific portions of any such books, records, or
other materials relevant to the purpose for which such review is conducted;
provided, that all such access shall be, at
the option of the providing Party, with representatives of the providing
Party present. If either Party or the Company chooses to dispose of any such
books, records, or other materials during such seven year period, the
disposing Party shall notify the other Party sufficiently in advance so that
the other Party may review and copy any such records to be disposed of.
(c) Employees and Employee Benefits.
(i) Effective as of and following the Closing for the lesser of (A)
a period of 12 months and (B) the Company's next scheduled salary review
in the Ordinary Course of Business following the Closing Date, each
Company Employee shall continue, for so long as such Company Employee may
be employed by the Company in the sole and absolute discretion of the
Company following the Closing, to receive a base salary or hourly wage no
less than that in effect immediately prior to the Closing Date and after
such period, questions of salary and hourly wage shall be determined by
Buyer in its sole discretion. During the 12 month period following the
Closing Date, such Company Employee shall receive benefits under employee
benefit plans (excluding equity plans and other incentive compensation)
that are substantially similar, in the aggregate, to the benefits provided
under the Company Plans set forth on Section 3(s) of the Disclosure
Schedule to such employees immediately prior to the Closing Date. The
Buyer agrees that if the Company terminates any of the Company Employees,
at any time after Closing, it will be liable for severance benefits for
such employee in accordance with its severance policy at such time and
applicable Law, including, without limitation, liability for any severance
payments under Law 80 applicable to Company Employees. In providing
benefits to the Company Employees, for purposes of vesting, eligibility
for participation and seniority, but not for purposes of benefit accrual
under any defined benefit retirement plan or retiree medical plan, the
Buyer shall cause each Company Employee to receive past service credit for
such employee's service with (i) the Seller, (ii) any Affiliate of the
Seller, and (iii) any predecessor employer, to the extent that service
with the predecessor is credited under any comparable Company Plan as of
the Closing Date. The Company shall pay, immediately prior to the Closing,
and be responsible for, the retention, transaction or similar bonuses
arising on or prior to the Closing Date for Company Employees as well as
those identified on Schedule 6(c)(i) attached hereto. The bonuses
described in the preceding sentence shall not be included in the
determination of Current Liabilities for purposes of the calculation of
Working Capital to the extent they are paid by the Company on or prior to
the Closing Date. The Seller shall indemnify Buyer for any payments
becoming due or liabilities arising under any Company Plan with respect to
the employment or termination of employment of any Company Employee prior
to the Closing Date and for any liability arising under Title IV of ERISA
by reason of the Company's membership in a controlled group under Section
414(b), (c), (m) or (o) of the Code.
(ii) Health Plan Coverage. On and after the Closing Date, the Buyer
shall offer group health plan coverage to each Company Employee (and to
the spouse and dependents of each such employee) on terms and conditions
substantially comparable to those generally applicable prior to the
Closing Date. For purposes of providing such coverage, the Buyer shall
waive all preexisting condition waiting periods and limitations for each
Company Employee (and for the spouse and dependents of each such Company
Employee) covered by a Company Plan that is a group health care plan
immediately prior to the Closing Date (to the extent that such waiting
periods and limitations
did not apply to such Company Employee, spouse or dependent immediately
prior to the Closing Date) and shall provide such health care coverage
effective as of the Closing Date without the application of any
eligibility period for coverage except to the extent an eligibility period
applied immediately prior to the Closing Date. In addition, the Buyer
shall credit all payments made by a Company Employee (and the spouse and
dependents of such Company Employee) toward deductible, out-of-pocket and
co-payment obligation limits under the applicable Company Plan for the
plan year which includes the Closing Date, as if such payments had been
made for similar purposes under the health care plans offered to the
Company Employees (and their spouses and dependents) on and after the
Closing Date during the plan year which includes the Closing Date. .
(iii) Savings Plan Transfer. As of the Closing Date, the Seller
shall, or shall cause any of its Affiliates to, fully vest all current
Company Employees in the Centennial PR Operations Corporation Retirement
Investment Plan ("Seller's Savings Plan"). As soon as practicable (but in
no event later than 120 days after the Closing Date), the Buyer shall
establish, or shall cause the Company to establish, a defined contribution
pension plan ("Buyer's Savings Plan") intended to be qualified under
Section 401(a) of the Code, if applicable, and Sections 1165(a) and
1165(e) of the PRIRC for the benefit of Company Employees (and
beneficiaries thereof) who have an account balance under the Seller's
Savings Plan at the Closing Date. As soon as practicable following the
Closing Date, but in no event later than 120 days thereafter, the Seller
shall cause, or cause its Affiliates to cause, a transfer of the account
balances, valued as of the date of transfer, of Company Employees from
Seller's Saving Plan and related trust to Buyer's Savings Plan and related
trust, and the Buyer shall cause Buyer's Savings Plan and related trust to
accept such transfer of assets and assume liability for the amount
transferred. As a precondition to this transfer of account balances,
Seller shall, or shall cause one of its Affiliates to, request in writing
of the Puerto Rico Department of Treasury ("PRDT") that PRDT either (i)
amend the favorable determination letter it issued with respect to the
Seller's Savings Plan dated August 24, 2004 to specifically reference the
Company as a participating employer under such Seller's Savings the Plan,
(ii) specifically acknowledge in a separate writing that the Company is an
Employer covered by the terms of said letter, or (iii) specifically
acknowledge in a separate writing that the letter is broad enough to cover
the Company's participation in the Seller's Savings Plan without any such
specific reference. Such transfer of assets shall be in cash and loan
notes unless the parties otherwise agree in writing. Unless the Seller and
Buyer agree otherwise in writing, the transfer shall occur as of the last
Business Day of a month.
Prior to the date of such transfer, and as a precondition thereto,
the Buyer shall deliver to Seller evidence that the Buyer's Savings Plan (i) has
been submitted to the Internal Revenue Service, if applicable, and the Puerto
Rico Department of the Treasury for a determination that Buyer's Savings Plan is
qualified under the Code, if applicable, and under the PRIRC, respectively and
(ii) contains the terms and provisions necessary to preserve Code Section
411(d)(6) protected benefits, if applicable, and any counterpart provisions of
ERISA or the PRIRC, if applicable. Subsequent to the transfer of assets to
Buyer's Savings Plan, neither
Seller or Seller's Savings Plan shall retain any obligation or liability with
respect to the account balance transferred hereunder, and neither the Buyer nor
Buyer's Savings Plan shall have any obligation or liability with respect to any
accounts under Seller's Savings Plan other than those liabilities with respect
to the account balances transferred hereunder.
Effective as of the date of the transfer, the Buyer shall indemnify and
hold harmless the Seller and Seller's Savings Plan from and against any
liability or expense, including, but not limited to, the payment of attorneys'
fees, which the Seller or Seller's Savings Plan may incur in connection with any
actions or claim brought against Seller, Seller's Savings Plan and their
officers, fiduciaries or agents with respect to the payment of any benefits
attributable to the account balances transferred to the Buyer's Savings Plan
hereunder, but only to the extent that such liability or expense arises after
the date of the transfer of the account balances to the Buyer's Savings Plan and
is the result of any action or omission of the Buyer or a fiduciary of Buyer's
Savings Plan.
This Section 6(c) shall operate exclusively for the benefit of the parties
to this Agreement and not for the benefit of any other Person, including,
without limitation, any current, former or retired Company Employee or spouse or
dependents of such Persons.
(d) Tax Matters.
(i) The Seller shall be responsible for, and shall defend,
reimburse, indemnify, and hold harmless the Buyer Indemnified Parties
against and in respect of, all Adverse Consequences that may be incurred
by or imposed on any Buyer Indemnified Party that result from, relate to,
or arise out of: (A) all Taxes of the Company for any taxable period
ending on or prior to the Closing Date, and (B) with respect to any
Straddle Period, all Taxes of the Company allocable to the portion of such
period ending on the Closing Date, (C) all Taxes imposed on any member of
an Affiliated Group of which the Company is or was a member on or prior to
the Closing Date by reason of the liability of the Company pursuant to
Treasury Regulation Section 1.1502-6(a) (or any predecessor or successor
thereof or any analogous or similar provision under state, local or
foreign Law), (D) any income Taxes resulting from, arising out of or based
on the Section 338(h)(10) Election, and (E) the Seller's failure to
perform any covenant contained in this Agreement or any Ancillary Document
with respect to Taxes, other than, in the case of each of subsections (A)
through (E) above, the amount of Tax actually taken into account as, and
increasing, current liabilities in calculating the Working Capital
adjustment (excluding any provisions for deferred Taxes established to
reflect differences between the treatment of items for accounting and
income tax purposes) and any Taxes resulting from any action taken after
the Closing on the Closing Date without the Seller's consent, not
contemplated herein and not in the Ordinary Course of Business.
(ii) The Buyer shall be responsible for, and shall defend,
reimburse, indemnify, and hold harmless the Seller Indemnified Parties
against and in respect of, all Adverse Consequences that may be incurred
by or imposed on any Seller Indemnified Party that result from, relate to,
or arise out of: (A) all Taxes of the Company for any taxable period
beginning after the Closing Date, (B) with respect to any Straddle Period,
all Taxes of the Company allocable to the post-Closing Date portion of
such period
pursuant to Section 6(d)(iii), (C) all Taxes taken into account as current
liabilities in calculating the Working Capital adjustment (excluding any
provision for deferred Taxes established to reflect differences between
the treatment of items for accounting and tax purposes), (D) any Taxes
resulting from any action taken after the Closing on the Closing Date
without the Seller's consent, not contemplated herein and not in the
Ordinary Course of Business, and (E) the Buyer's failure to perform any
covenant contained in this Agreement or any Ancillary Document with
respect to Taxes.
(iii) The Seller and the Buyer shall, unless prohibited by
applicable Law, close the taxable period of the Company as of the close of
business on the Closing Date. If applicable Law does not permit the
Company to close its taxable year on the Closing Date or in the case of
Taxes payable with respect to any Straddle Period, the amount of such
Taxes allocable to the portion of such Straddle Period ending on the
Closing Date shall (A) in the case of any Taxes based upon or related to
income or gross receipts, be deemed equal to the amount which would be
payable if the relevant taxable period ended on the Closing Date, and (B)
in the case of any Taxes other than Taxes based upon or related to income
or gross receipts, be deemed to be the amount of such Taxes for the entire
Straddle Period multiplied by a fraction the numerator of which is the
number of days in the portion of the Straddle Period ending on the Closing
Date and the denominator of which is the number of days in the entire
Straddle Period. Any allocation of income or deductions required to
determine any Taxes relating to a Straddle Period shall be taken into
account as though the relevant taxable period ended on the Closing Date
and by means of a closing of the books and records of the Company as of
the close of the Closing Date; provided that exemptions, allowances or
deductions that are calculated on an annual basis (including, but not
limited to, depreciation and amortization deductions) shall be allocated
between the period ending on the Closing Date and the period after the
Closing Date in proportion to the number of days in each such period. All
determinations necessary to give effect to the foregoing allocations shall
be made in a manner consistent with the past practice of the Company.
(iv) The Seller shall be responsible for the preparation and timely
filing of: (A) all Tax Returns of the Company that are required to be
filed (with regard to extensions) on or prior to the Closing Date, and (B)
all Tax Returns of the Company that are filed on a consolidated, combined
or unitary basis with the Seller or any Affiliate of the Seller for any
taxable period ending on or prior to the Closing Date, including the
federal income Tax Return for the taxable period of the Company ending on
the Closing Date and included in the consolidated federal income Tax
Return of the Centennial Affiliated Group.
(v) The Buyer shall be responsible for the preparation and timely
filing of all Tax Returns of the Company not referred to in Section
6(d)(iv)(B) above that are required to be filed after the Closing Date;
provided, however, that in preparing any Tax Returns of the Company for
any taxable period beginning before the Closing Date (including Tax
Returns for any Straddle Period to the extent they relate to Taxes for
which the Seller is responsible hereunder), the Buyer shall provide the
Seller with drafts of such Tax Returns (together with any relevant back-up
information) for review by the Seller and consultation between Buyer and
Seller at least 20 days prior to filing. All Tax Returns
for any taxable period (or portion thereof) beginning on or prior to the
Closing Date shall be prepared and filed in a manner consistent with the
past practice of the Company except as may be necessary to make and
reflect the Section 338(h)(10) Election. The Seller and the Buyer shall
attempt in good faith to resolve any disagreements regarding such Tax
Returns prior to the due date for filing. In the event that the Seller and
the Buyer are unable to resolve any dispute with respect to such Tax
Returns at least ten (10) days prior to the due date for filing, such
dispute shall be resolved pursuant to Section 6(d)(xi), which resolution
shall be binding on the parties.
(vi) The Seller shall have the right to control any audit,
litigation or other proceeding with respect to Taxes (a "Tax Proceeding")
involving the Company to the extent it relates exclusively to Taxes for
which the Seller is responsible pursuant to this Agreement, and the Buyer
shall have the right to control any Tax Proceeding involving the Company
to the extent it relates exclusively to Taxes for which the Buyer is
responsible pursuant to this Agreement; provided, however, that neither
party shall settle, compromise or abandon such proceeding without the
consent of the other party, which consent shall not be unreasonably
withheld, if such settlement, compromise or abandonment would adversely
affect such other party. Any other Tax Proceeding involving the Company
shall be controlled by the Buyer; provided, however, that the Buyer shall
not settle, compromise or abandon such proceeding without the consent of
the Seller, which consent shall not be unreasonably withheld, if such
settlement, compromise or abandonment would require the Seller to make any
payments or otherwise adversely affect the Seller, and the Seller shall
have the right to participate in such proceeding at its own expense. Each
of the Seller and the Buyer shall deliver to the other party, as the case
may be, any notice received from any Governmental Entity relating to Taxes
with respect to which such other party is or may be liable pursuant to
this Agreement; provided, however, that the failure of any party to give
the other party notice as provided herein shall not relieve such other
party of its obligations under this Section 6(d) except to the extent that
such other party is materially adversely affected or damaged thereby.
(vii) The Seller shall be entitled to any refunds or credits of any
Taxes for which it is responsible (other than, in the case of any Tax
described in any of subsections (A) through (E) of Section 6(d)(i), the
amount of Tax refunds or credits actually taken into account as, and
increasing, current assets in calculating the Working Capital adjustment)
pursuant to Section 6(d)(i) (including any interest in respect thereof),
and the Buyer shall be entitled to any refunds or credits of any other
Taxes of the Company (including any interest in respect thereof). The
Buyer or the Seller, as the case may be, shall cause the amount of any
refunds or credits of Taxes (including interest) to which the Seller or
the Buyer, as the case may be, is entitled under this Section 6(d)(vii),
but which are received by or credited to the Company or the Seller, as the
case may be, after the Closing Date, to be paid to the Seller or the
Buyer, as the case may be, within five (5) Business Days following such
receipt or crediting.
(viii) The Buyer agrees that it shall not amend any Tax Return of
the Company for any taxable period beginning before the Closing Date
without the prior written consent of the Seller, which consent shall not
be unreasonably withheld. In addition,
each party at the request of the other party, shall, or shall cause the
Company to, cooperate with such other party in seeking any Tax refunds or
credits described in Section 6(d)(vii).
(ix) The Buyer and the Seller shall cooperate fully, as and to the
extent reasonably requested by the other party, in connection with the
filing of any Tax Returns pursuant to this Section 6(d) and any Tax
Proceeding involving the Company. Such cooperation shall include the
retention and (upon the other party's request) the provision of records
and information which are reasonably relevant to any such Tax Return or
Tax Proceeding and making employees available on a mutually convenient
basis to provide additional information and explanation of any material
provided hereunder. Such cooperation shall also include the provision by
the Seller or the Buyer, as the case may be, to the other party any
reasonably requested power of attorney with respect to Tax Returns or Tax
Proceedings involving the Company in order to carry out the agreements set
forth in this Section 6(d). The Seller and the Buyer further agree (A) to
retain all books and records with respect to Tax matters pertinent to the
Company relating to any taxable period beginning before the Closing Date
until the expiration of the statute of limitations (and, to the extent
notified by the Buyer or the Seller, any extensions thereof) of the
respective taxable periods, and to abide by all record retention
agreements entered into with any Governmental Entity, and (B) to give the
other party reasonable written notice prior to transferring, destroying or
discarding any such books and records, and, if the other party so
requests, the Seller or the Buyer, as the case may be, shall allow the
other party within reasonable time to take possession of such books and
records to the extent they would otherwise be destroyed or discarded.
(x) The Seller and Centennial and the Buyer shall, or shall cause
their respective Affiliates to, join together to make a timely and
irrevocable election under Section 338(h)(10) of the Code (the "Section
338(h)(10) Election"), with respect to the purchase and sale of the stock
of the Company hereunder. In connection with the making of such Section
338(h)(10) Election: (A) the Seller and Centennial and the Buyer shall
report the transactions contemplated by this Agreement consistent with
such election and shall take no position contrary thereto, and (B) the
Seller and the Buyer shall, or shall cause their respective Affiliates to,
cooperate in promptly preparing, executing, and timely filing all forms,
returns, reports and other documents required to be filed, including IRS
Form 8023 (or any successor form). As soon as practicable following the
Closing, the Seller and the Buyer shall negotiate in good faith to reach
agreement regarding the allocation of the Purchase Price, as adjusted,
among the assets of the Company in accordance with the requirements of
Section 338 of the Code and the applicable Treasury Regulations
promulgated thereunder; provided, however, that if the Seller and the
Buyer have not reached agreement on such allocation by the 90th day after
the Closing Date, then such allocation shall be made in accordance with
the appraisal of a recognized appraisal firm chosen and retained by mutual
agreement of the Seller and the Buyer, the fees and expenses of which
shall be paid one-half by the Seller and one-half by the Buyer. The Seller
and the Buyer shall reflect such allocation in all applicable income Tax
Returns filed by any of them, and neither the Seller nor the Buyer shall,
or shall cause their respective Affiliates to, take a position before any
Governmental Entity or otherwise (including in any Tax Return)
inconsistent with such allocation. The Buyer
shall not take, and after the Closing shall not cause or permit the
Company to take, any action which would adversely affect the ability of
the parties to make the Section 338(h)(10) Election.
(xi) Except as otherwise provided, any dispute as to any Tax matter
covered by this Section 6(d) shall be resolved by the Unaffiliated Firm.
The fees and expenses of the Unaffiliated Firm shall be borne equally by
the Seller, on the one hand, and the Buyer, on the other. If any dispute
with respect to a Tax Return is not resolved prior to the due date of such
Tax Return, such Tax Return shall be filed in the manner which the party
responsible for preparing such Tax Return deems correct; provided,
however, that upon the final resolution of such dispute, the Seller and
the Buyer, as the case may be, shall promptly reimburse the other as
needed to conform to the resolution of such dispute by the Unaffiliated
Firm.
(xii) Any Tax allocation, indemnity, or similar agreement or
arrangement between the Seller and its Affiliates, on the one hand, and
the Company, on the other hand, shall be terminated on or prior to the
Closing Date and shall have no further effect for any taxable year
(whether the current year, a future year or past year).
(xiii) The Seller and the Buyer agree to treat any indemnity payment
made pursuant to this Section 6(d) or Section 8 as an adjustment to the
Purchase Price for federal, state, local and foreign income Tax purposes.
(xiv) The provisions set forth in this Section 6(d): (A) shall
survive the Closing hereunder until sixty days after the expiration of the
applicable statute of limitations (including any valid extensions thereof,
whether automatic or permissive), (B) shall not be subject to any of the
limitations on indemnification set forth in Section 8(g) of this Agreement
and (C) the indemnification provided for in this Section 6(d) shall be the
sole remedy for any claim in respect of any Taxes described in clauses (A)
through (E) of Section 6(d)(i) and in clauses (A) through (E) of Section
6(d)(ii), and in the event of a conflict between the provisions of this
Section 6(d), on the one hand, and the provisions of Section 8 hereof, on
the other, the provisions of this Section 6(d) shall control. For the
avoidance of doubt, any claim arising out of or relating to a breach of a
representation or warranty contained in Section 3(h) that is not otherwise
covered in this Section 6(d) shall be governed exclusively by the
provisions of Section 8, and not by this Section 6(d). Notwithstanding
anything to the contrary contained in this Agreement, nothing contained in
this Agreement shall prohibit the Buyer or the Seller from otherwise
seeking injunctive relief (including specific performance) in connection
with a breach of Buyer's or Seller's respective obligations to make the
Section 338(h)(10) Election.
(e) Notice of Disqualification. The Buyer shall promptly notify the
Seller in writing if the Buyer becomes aware of any facts which would, under
present law and present rules, regulations and policies of the applicable
Governmental Entities, disqualify the Buyer with respect to the consummation
of the transactions contemplated by this Agreement, including, without
limitation, the change of control affecting the Licenses and the Material
Contracts in connection with the consummation of the transactions
contemplated by this Agreement or that would prevent the Telecommunications
Regulatory
Board's consenting to the change of control affecting the Franchises in
connection with the consummation of the transactions contemplated by this
Agreement.
(f) Use of Name and Logos.
(i) The Buyer shall remove, following the Closing, all of the
trademarks, trade names, service marks, service names, logos and similar
proprietary rights of the Seller, including, without limitation, any of
the foregoing that include the name "CENTENNIAL" or any variant thereof
(collectively, the "Centennial Marks") from the Company's assets to the
extent incorporated therein or thereon including the Company's vehicles,
marketing and promotional materials, retail outlets and advertising
(collectively, the "Centennial Marketing Materials"); provided, that
Seller hereby grants the Company a non-exclusive, revocable license to use
such Centennial Marks without charge for transitional purposes for a
period of six (6) months following the Closing, subject to the terms and
conditions set forth herein (the "Original Use Right"). Notwithstanding
the foregoing, Seller shall grant the Company a non-exclusive, revocable
license to continue to use the Centennial Marks for an additional three
(3) months following the expiration of the six (6) month anniversary of
the Closing Date, subject to the terms and conditions set forth herein
(the "Further Use Right") if (A) after using its Commercially Reasonable
Efforts, the Company has not removed the Centennial Marks from all the
Centennial Marketing Materials and the Company still needs to use the
Centennial Marks for transitional purposes and the Company is otherwise in
compliance with the provisions of this Section 6(f), and (B) Buyer
provides a written request to Seller at least twenty (20) days prior to
the expiration of the Original Use Right detailing the reasons why Buyer
needs to continue to use the Centennial Marks after the six (6) month
anniversary of the Closing.
(ii) Seller may revoke the Original Use Right and the Further Use
Right upon a breach by the Company of any of the provisions of this
Section 6(f), in the event that Company fails to cure such breach within
ten (10) days of receiving notice of such alleged breach from Seller. In
connection with the Company`s use of the Centennial Marks pursuant to the
Original Use Right and the Further Use Right, Buyer agrees with Seller as
follows: (v) the Centennial Marks indicate to the public that the services
bearing the Centennial Marks are of commercially consistent, high quality
standards, and Buyer shall maintain such a consistent level of quality,
which level of quality shall not be inferior to the level of quality
established by the services provided by Seller and its Affiliates as of
the Closing Date, so as to enhance the value and goodwill of the business
associated with and symbolized by the Centennial Marks; (w) Seller shall
not, and shall cause the Company not to, falsely imply or suggest any
connection between the business and operations of the Company and the
business and operations of Seller and its Affiliates; (x) upon request by
Seller, Buyer shall provide Seller with specimens of the Company's use of
the Centennial Marks for Seller's inspection; (y) the Company shall use
appropriate notification of the trademark rights or registration on all
visual displays of the Centennial Marks, including use of the encircled
"R" symbol, and/or the letters TM or SM, as appropriate; and (z) Buyer
shall cause the Company not to use any of the Centennial Marks in a way
which reflects negatively on Seller or any of its Affiliates in respect of
their remaining businesses or the Centennial Marks. Without limiting the
foregoing, the Buyer agrees to change the name of the Company to a name
which does not include any of the Centennial Marks, within six (6) months
after the Closing. In no event shall the Company have any right to use the
Centennial Marks after the nine (9) month anniversary of the Closing Date.
(iii) Notwithstanding anything to the contrary contained in this
Agreement, Buyer acknowledges that the Centennial Marks are of unique and
special value to Seller and its Affiliates and any damage to the
Centennial brand will cause Seller and its Affiliates irreparable harm.
Buyer and Seller agree that the covenants and undertakings contained in
this Section 6(f) relate to matters which are of special, unique and
extraordinary character and a violation of any of the terms of this
Section 6(f) will cause irreparable injury to Seller and its Affiliates,
the amount of which will be impossible to estimate or determine and which
cannot be adequately compensated. Therefore, Seller shall be entitled to
an injunction, restraining order or other equitable relief from any court
of competent jurisdiction in the event of any breach of this Section 6(f)
by Buyer. The rights and remedies provided by this Section 6(f) are
cumulative and in addition to any other rights and remedies which Buyer
may have hereunder or at law or in equity.
(iv) Notwithstanding anything to the contrary contained in this
Agreement if the Company ceases all use of the Centennial Marks on or
before the six (6) month anniversary of the Closing Date and terminates
the Original Use Right and the Further Use Right by such six month
anniversary, then Seller shall pay to Buyer, no later than fifteen (15)
days after receipt by Seller of notice from Buyer that the Company has
ceased such use and terminated the Original Use Right and the Further Use
Right, an amount equal to$438,000. Notwithstanding anything to the
contrary contained in this Agreement if the Company ceases all use of the
Centennial Marks after the six (6) month anniversary of the Closing Date,
but on or before the nine (9) month anniversary of the Closing Date and
terminates the Original Use Right and the Further Use Right after such six
month anniversary but on or before such nine month anniversary, then
Seller shall pay to Buyer, no later than fifteen (15) days after receipt
by Seller of notice from Buyer that the Company has ceased such use and
terminated the Original Use Right and the Further Use Right, an amount
equal to the difference between (I) $438,000, and (II) the product of
$4,866.67, multiplied by the number of days between the six (6) month
anniversary of the Closing Date and the date on which the Company ceases
all use of the Centennial Marks and terminates the Original Use Right and
the Further Use Right. All payments to be made by Seller to Buyer pursuant
to this Section 6(f)(iv) shall be made by wire transfer of immediately
available funds to the account of Buyer notified by Buyer to Seller.
(v) Notwithstanding anything to the contrary contained herein, the
Original Use Right and the Further Use Right shall terminate upon a Change
of Control of the Company after the Closing, and the Original Use Right
and the Further Use Right may not be transferred or assigned by the
Company to any other Person.
(g) Non-Solicit and Confidentiality.
(i) For a period of eighteen (18) calendar months from and after the
Closing Date, the Seller shall not, and shall cause its Affiliates not to,
directly or indirectly cause, solicit, induce or encourage any employees
of the Company who are or become employees of Buyer or its Affiliates and
are employees of Buyer or its Affiliates at the time of such causation,
solicitation, inducement or encouragement, to leave such employment or
hire, employ or otherwise engage any such individual who is an employee of
Buyer or its Affiliates at the time of such hiring, employment or other
engagement; provided, however, that this Section 6(g)(i) shall not
prohibit any advertisement or general solicitation (or hiring as a result
thereof) that is not specifically targeted at such persons.
Notwithstanding the foregoing, in no event shall the Seller, and the
Seller shall cause its Affiliates not to, for a period of nine months (or
such shorter period as set forth on Schedule 6(g)) from the Closing Date,
employ any of the individuals listed on Schedule 6(g), except that such
limitation shall not apply with respect to a particular individual to the
extent (x) such individual is not employed by the Company at Closing as a
result of the Buyer and such individual failing to come to mutually
agreeable terms regarding such individual's employment with the Company;
provided, that Seller and its Affiliates did not otherwise violate the
provisions of this Section 6(g)(i) with respect to such individual; (y)
such individual is involuntarily terminated by the Company on or after the
Closing Date; or (z) Buyer otherwise consents to the Seller or any of its
Affiliates hiring such individual.
(ii) For a period of two (2) years from and after the Closing Date,
the Seller shall not and shall cause its Affiliates not to, directly or
indirectly, disclose, reveal, divulge or communicate to any Person other
than Buyer and its Affiliates and Buyer's and its Affiliates' authorized
officers, directors, employees, accountants, attorneys, financial advisors
and representatives of Buyer or, subject to the proviso set forth herein,
use or otherwise exploit for its own benefit or for the benefit of any
Person other than Buyer, its Affiliates and their respective officers,
directors, employees, accountants, attorneys, financial advisors and other
representatives, any Confidential Information (as defined below). The
Seller shall not have any obligation to keep confidential (or cause the
Company or its officers, directors or Affiliates to keep confidential) any
Confidential Information if and to the extent disclosure thereof is
specifically required by Law; provided, however, that in the event
disclosure is required by applicable Law, the Seller shall, to the extent
reasonably possible, provide Buyer with prompt notice of such requirement
prior to making any disclosure so that Buyer may seek an appropriate
protective order. For purposes of this Agreement, "Confidential
Information" shall be limited to (x) the subscriber lists of the Company
and all other confidential and proprietary information about the Company's
current and former subscribers, (y) any confidential and proprietary
information with respect to the Company's overall network configuration
and infrastructure, including, without limitation, the locations of homes
capable of receiving high speed data service from the Company, the
Company's current and planned product offerings and the Company's plans to
expand its network to reach additional homes, and (z) the names of the
Company's employees and information with respect to the Company's salary
structure and the Company's benefit plans for employees. "Confidential
Information" does not include, and there shall be no obligation
hereunder with respect to, information that (A) is generally available to
the public on the date of this Agreement, (B) becomes generally available
to the public other than as a result of a disclosure not otherwise
permissible thereunder, (C) is or becomes available to the Seller or its
Affiliates from a source that is not known to be bound by a
confidentiality agreement or (D) is independently developed by Seller or
its Affiliates without the use of Confidential Information. The Buyer
acknowledges that the Seller and its Affiliates are in businesses that
may, now or in the future, be in competition with the Company, and the
Buyer agrees that this Agreement in no way limits or restricts the
Seller's and its Affiliates' right or ability to conduct any business.
(iii) The covenants and undertakings contained in this Section 6(g)
relate to matters which are of a special, unique and extraordinary
character and a violation of any of the terms of this Section 6(g) will
cause irreparable injury to the parties, the amount of which will be
impossible to estimate or determine and which cannot be adequately
compensated. Therefore, Buyer will be entitled to an injunction,
restraining order or other equitable relief from any court of competent
jurisdiction in the event of any breach of this Section 6(g). The rights
and remedies provided by this Section 6(g) are cumulative and in addition
to any other rights and remedies which Buyer may have hereunder or at law
or in equity.
7. Conditions to Obligation to Close.
(a) Conditions to Obligation of the Buyer. The obligations of the
Buyer to consummate the transactions to be performed by it at the Closing
are subject to satisfaction of the following conditions:
(i) all representations and warranties of the Seller in this
Agreement shall be true and correct when made, except for those
representations and warranties which are expressly stated to be made
solely as of the date of this Agreement or another specified date, which
shall be true and correct solely as of the date of this Agreement or such
other specified date; provided, however, that the condition set forth in
this Section 7(a)(i) shall be deemed satisfied solely for purposes of
determining Buyer's obligation to close the transactions contemplated by
this Agreement and not for any other purpose, including, without
limitation, modifying or limiting Buyer's rights to indemnification under
Sections 6(d) and 8(a)(i), so long as the failure of such representations
and warranties to be so true and correct, individually or taken together,
would not reasonably be expected to result in a Material Adverse Effect;
provided, further, that the representations and warranties of the Seller
set forth in Section 3(b) shall be true and correct in all respects
without regard to the foregoing Material Adverse Effect qualification. For
purposes of this Section 7(a)(i), the Parties acknowledge and agree that
to the extent that the Company suffers any Adverse Consequences where the
amount of loss from such Adverse Consequences exceeds 10% of the Fixed
Purchase Price, a Material Adverse Effect shall be deemed to have
occurred;
(ii) the Seller shall have performed and complied in all material
respects with all of its covenants hereunder to be performed or complied
with by it prior to or at the Closing;
(iii) since the date of this Agreement, there shall not have been or
occurred any event, change, occurrence or circumstance that has had or
could reasonably be expected to have a Material Adverse Effect;
(iv) the Seller shall have delivered to the Buyer a certificate of
an executive officer of the Seller to the effect that each of the
conditions specified in Sections 7(a)(i) and 7(a)(ii) is satisfied;
(v) no judicial, administrative or arbitral actions, suits,
proceedings (public or private) or claims or proceedings by or before a
Governmental Entity shall have been instituted or threatened or claim or
demand made against the Seller or the Company or Buyer seeking to restrain
or prohibit or to obtain substantial damages with respect to the
consummation of the transactions contemplated hereby, and there shall not
be in effect any order, injunction, judgment, decree, ruling, writ,
assessment or arbitration award of a Governmental Entity of competent
jurisdiction restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated hereby; provided, however,
that the Buyer shall not be entitled to rely on the failure of this
condition to be satisfied if such action, suit, proceeding, claim, demand,
order, injunction, judgment, decree, ruling, writ, assessment or
arbitration award was instituted by Buyer or an Affiliate of Buyer.
(vi) all applicable waiting periods (and any extensions thereof)
under the Xxxx-Xxxxx-Xxxxxx Act shall have expired or otherwise been
terminated without the FTC or the Antitrust Division, as applicable,
taking any action which has not been terminated or resolved;
(vii) the consents of the Telecommunications Regulatory Board and,
with respect to the cable television relay service system Licenses and
business radio Licenses issued by the FCC to the Company, the FCC to the
transactions contemplated hereby shall have become Final Orders without
the imposition of any change or condition to the related Franchises or
Licenses, other than Limited Changes, by the Telecommunications Regulatory
Board or the FCC;
(viii) the Required Governmental Approvals (other than pursuant to
the Xxxx-Xxxxx-Xxxxxx Act, which shall be governed by Section 7(a)(vi)
above, and the consents of the Telecommunications Regulatory Board and the
FCC, which shall be obtained in accordance with Section 7(a)(vii) above)
and the Required Consents shall have been obtained without any change or
condition to the related Contracts and Licenses, other than Limited
Changes;
(ix) the Seller shall have delivered a duly executed
counterpart to the Transition Services Agreement;
(x) the Buyer shall have received opinions in form and substance
substantially as set forth in Exhibits X-0, X-0, and B-3 from the Seller's
general counsel, FCC counsel, and Puerto Rico counsel, respectively, in
each case addressed to the Buyer and dated as of the Closing Date;
(xi) the Seller shall have delivered to the Buyer certificates
representing all the Company Shares, together with stock powers executed
by the Seller in blank;
(xii) the Buyer shall have received written resignations from
all officers and directors of the Company;
(xiii) the lenders under the Financing Commitment shall be ready,
willing and able to lend to the Buyer the funds contemplated by the
Financing Commitment; provided, however, that the Buyer shall not be
entitled to rely on the failure of this condition to be satisfied if this
condition is not satisfied solely as a result of a failure of HMTF Fund V
Cayman, L. P. or its Affiliates to make the Equity Contribution after all
conditions to its obligations to make such Equity Contribution are
satisfied (excluding solely the availability of funds under the Financing
Commitment if not available due to the unavailability of the Equity
Contribution) or if Buyer shall have not complied with its covenants and
agreements contained in Section 5(i);
(xiv) Seller shall have provided Buyer with an affidavit of
non-foreign status that complies with Section 1445 of the Code;
(xv) the Company shall have in excess of 69,000 Equivalent Basic
Subscribers as evidenced by the standard monthly billing report for
subscribers received or produced by the Company in the Ordinary Course of
Business;
(xvi) Seller shall have delivered, or caused to be delivered, to
Buyer certificates of good standing as of a recent date with respect to
the Company issued by the Secretary of State of the State of Delaware and
for each state in which the Company is qualified to do business as a
foreign corporation;
(xvii) Seller shall have delivered to Buyer a certificate of an
executive officer of Seller certifying to true and correct copies of the
certificate of incorporation and the by-laws of the Company and certifying
to a true and correct copy of the resolutions of Seller approving the
transactions contemplated by this Agreement and that such resolutions are
in full force and effect;
(xviii) Guarantor shall have delivered a duly executed counterpart
to the guaranty attached hereto as Exhibit D;
(xix) Seller shall have delivered evidence to Buyer that the
Contracts set forth on Schedule 7(a)(xix) shall have been assigned to the
Company;
(xx) Seller shall deliver, or cause to be delivered to Buyer duly
executed counterparts to the (A) Amended and Restated Co-Location and
Lease Agreement, (B) Amended and Restated Fiber Optic Trunk Service
Agreement, (C) Amended and Restated Centix-Dedicated Internet Bandwidth
Transit for ISP's, and (D) Amended and Restated Antenna Site Agreement,
each in the forms attached hereto as Exhibit F;
(xxi) Seller shall have delivered to Buyer the final signed audited
financial statements of the Company for the fiscal year ended May 31,
2004, and such financial
statements shall not be materially different, as determined by Buyer in
its reasonable discretion, from the financial statements attached hereto
as Exhibit E; provided, however, that if Buyer does not notify Seller that
such signed audited financial statements are materially different from the
financial statements attached hereto as Exhibit E within seven (7) days
after receipt thereof, this condition shall be deemed to have been
satisfied as of end of such seventh (7th) day and Buyer shall not be
entitled to rely on a failure of this condition to be satisfied.
(xxii) Seller shall have delivered to Buyer a copy of the
information that the Company has delivered to the Telecommunications
Regulatory Board pursuant to the Resolution and Order of the
Telecommunications Regulatory Board issued to the Company on or about
August 25, 2004, together with evidence reasonably satisfactory to Buyer
that such information has been delivered to the Telecommunications
Regulatory Board in compliance with such Resolution and Order.
(xxiii) Seller shall have delivered, or caused to be delivered, to
Buyer such other documents as Buyer shall reasonably request.
The Buyer may waive any condition specified in this Section 7(a) if it
executes a writing so stating at or prior to the Closing.
(b) Conditions to Obligation of the Seller. The obligations of the
Seller to consummate the transactions to be performed by it at the Closing
are subject to satisfaction of the following conditions:
(i) all representations and warranties of the Buyer in this
Agreement shall be true and correct in all material respects when made and
as of the Closing as though such representations and warranties were then
made except for those representations and warranties which are expressly
stated to be made solely as of the date of this Agreement or another
specified date which shall be true and correct in all material respects
solely as of the date of this Agreement or such other specified date, as
applicable;
(ii) the Buyer shall have performed and complied in all material
respects with all of its covenants to be performed or complied with by it
prior to or at the Closing;
(iii) the Buyer shall have delivered to the Seller a certificate of
an executive officer of the Buyer to the effect that each of the
conditions specified in Sections 7(b)(i) and 7(b)(ii) is satisfied in all
respects;
(iv) No judicial, administrative or arbitral actions, suits,
proceedings (public or private) or claims or proceedings by or before a
Governmental Entity shall have been instituted or threatened or claim or
demand made against the Seller or the Company or Buyer seeking to restrain
or prohibit or obtain substantial damages with respect to the consummation
of the transactions contemplated hereby, and there shall not be in effect
any order, injunction, judgment, decree, ruling, writ, assessment or
arbitration award of a Governmental Entity of competent jurisdiction
restraining, enjoining or otherwise prohibiting the consummation of the
transactions contemplated hereby; provided however, that the Seller shall
not be entitled to rely on the failure of this condition to be
satisfied if such action, suit, proceeding, claim, demand, order,
injunction, judgment, decree, ruling, writ, assessment or arbitration
award was instituted by Seller or an Affiliate of Seller;
(v) all applicable waiting periods (and any extensions thereof)
under the Xxxx-Xxxxx-Xxxxxx Act shall have expired or otherwise been
terminated without the FTC or the Antitrust Division, as applicable,
having taken any action which has not been terminated or resolved;
(vi) the consents of the Telecommunications Regulatory Board and,
with respect to the cable television relay service system Licenses and
business radio Licenses issued by the FCC to the Company, the FCC to the
transactions contemplated hereby shall have become Final Orders without
the imposition of any conditions which are materially adverse to the
Seller and its Affiliates;
(vii) the Seller shall have received all Required Governmental
Approvals (other than pursuant to the Xxxx-Xxxxx-Xxxxxx Act, which shall
be governed by Section 7(b)(v) above, and the consents of the
Telecommunications Regulatory Board and the FCC, which shall be obtained
in accordance with Section 7(b)(vi) above) and Required Consents without
the imposition of any conditions which are materially adverse to the
Seller and its Affiliates;
(viii) the Buyer shall have delivered a duly executed counterpart to
the Transition Services Agreement;
(ix) the Seller shall have received from counsel to the Buyer an
opinion in form and substance substantially as set forth in Exhibit C
attached hereto, addressed to the Seller, and dated as of the Closing
Date;
(x) the Seller shall have received the Purchase Price as provided in
Section 2(c);
(xi) the Company shall have in excess of 69,000 Equivalent Basic
Subscribers as evidenced by the standard monthly billing report for
subscribers received or produced by the Company in the Ordinary Course of
Business; and
(xii) Buyer shall have delivered, or caused to be delivered, to
Seller such other documents as Seller shall reasonably request.
The Seller may waive any condition specified in this Section 7(b) if it
executes a writing so stating at or prior to the Closing.
8. Indemnification.
(a) The Seller's Indemnification Obligations. Subject to the
provisions of this Section 8, after the Closing, the Seller agrees to
defend, reimburse, indemnify, and hold harmless the Buyer Indemnified
Parties against and in respect of all Adverse Consequences
that may be incurred by or imposed on any Buyer Indemnified Party that
result from, relate to, or arise out of:
(i) any breach of a representation or warranty made by the
Seller in this Agreement;
(ii) any breach by the Seller of any of its covenants or agreements
in this Agreement or any Ancillary Document (other than a covenant or
agreement relating to Taxes and set forth in Section 6(d) the
indemnification for which shall be solely and exclusively governed by
Section 6(d));
(iii) any Excluded Assets or any litigation matter set forth
on Schedule 5(h); and
(iv) each of the matters identified on Schedule 8(a)(iv).
(b) The Buyer's Indemnification Obligations. Subject to the provisions
of this Section 8, after the Closing, the Buyer agrees to defend, reimburse,
indemnify, and hold harmless the Seller Indemnified Parties against and in
respect of any Adverse Consequences that may be incurred or suffered by or
imposed on any Seller Indemnified Party, that result from, or relate to, or
arise out of:
(i) any breach of a representation or warranty made by the Buyer in
this Agreement; and
(ii) any breach by the Buyer of any of its covenants or agreements
in this Agreement or any Ancillary Document (other than a covenant or
agreement relating to Taxes and set forth in Section 6(d) the
indemnification for which shall be solely and exclusively governed by
Section 6(d)).
(c) Indemnification Procedure.
(i) If, subsequent to the Closing, any Person entitled to
indemnification under this Agreement (an "Indemnified Party") asserts a
claim for indemnification for or receives notice of the assertion or
commencement of any Third Party Claim as to which such Indemnified Party
intends to seek indemnification under this Agreement, such Indemnified
Party shall give reasonably prompt written notice of such claim to the
Party from whom indemnification is to be sought (an "Indemnifying Party"),
together with a statement of any available information regarding such
claim. The Indemnifying Party shall have the right, upon written notice to
the Indemnified Party (the "Defense Notice") within 15 days after receipt
from the Indemnified Party of notice of such claim, by which notice the
Indemnifying Party shall specify the counsel it will appoint to defend
such claim ("Defense Counsel"), to conduct at its expense the defense
against such Third Party Claim in its own name, or if necessary in the
name of the Indemnified Party; provided, however, that the Indemnified
Party shall have the right to approve the Defense Counsel, which approval
shall not be unreasonably withheld or delayed. The parties hereto agree to
cooperate fully with each other in connection with the defense,
negotiation or settlement of any Third Party Claim. If the Indemnifying
Party delivers a Defense Notice
to the Indemnified Party, the Indemnified Party will cooperate with and
make available to the Indemnifying Party such assistance and materials as
may be reasonably requested by the Indemnifying Party, all at the expense
of the Indemnifying Party.
(ii) If the Indemnifying Party shall fail to give a Defense Notice,
it shall be deemed to have elected not to conduct the defense of the
subject Third Party Claim, and in such event the Indemnified Party shall
have the right to conduct such defense in good faith. If the Indemnified
Party defends any Third Party Claim, then the Indemnifying Party shall
reimburse the Indemnified Party for the costs and expenses of defending
such Third Party Claim upon submission of periodic bills. If the
Indemnifying Party elects to conduct the defense of the subject Third
Party Claim, the Indemnified Party may participate, at his or its own
expense, in the defense of such Third Party Claim; provided, however, that
such Indemnified Party shall be entitled to participate in any such
defense with separate counsel at the expense of the Indemnifying Party if
(i) so requested by the Indemnifying Party to participate or (ii) in the
reasonable opinion of counsel to the Indemnified Party, a conflict or
potential conflict exists between the Indemnified Party and the
Indemnifying Party that would make such separate representation advisable;
and provided, further, that the Indemnifying Party shall not be required
to pay for more than one counsel for all Indemnified Parties in connection
with any Third Party Claim.
(iii) Regardless of which Party defends a Third Party Claim (other
than a Third Party Claim relating to Taxes the procedures for which shall
be solely and exclusively governed by Section 6(d)), the other Party shall
have the right at its expense to participate in the defense of such Third
Party Claim, assisted by counsel of its own choosing. The Indemnified
Party shall not compromise, settle, default on, or admit liability with
respect to a Third Party Claim without the prior written consent of the
Indemnifying Party, which consent shall not be unreasonably withheld or
delayed, and, if the Indemnified Party settles, compromises, defaults on,
or admits liability with respect to a Third Party Claim except in
compliance with the foregoing, the Indemnified Party will be liable for
all costs, expenses, settlement amounts, or other Adverse Consequences
paid or incurred in connection therewith and the Indemnifying Party shall
have no obligation to indemnify the Indemnified Party with respect
thereto. The Indemnifying Party shall not compromise or settle a Third
Party Claim (other than a Third Party Claim relating to Taxes the
procedures for which shall be solely and exclusively governed by Section
6(d)) without the consent of the Indemnified Party, which consent shall
not be unreasonably withheld or delayed, unless such compromise or
settlement includes as a term thereof an unconditional release of the
Indemnified Party and such compromise or release does not impose any
material non-monetary obligations on the Indemnified Party (and all
monetary obligations are subject to the indemnification provisions of this
Agreement) in which case the consent of the Indemnified Party shall not be
required.
(iv) After any final decision, judgment or award shall have been
rendered by a Governmental Entity of competent jurisdiction and the
expiration of the time in which to appeal therefrom, or a settlement shall
have been consummated, or the Indemnified Party and the Indemnifying Party
shall have arrived at a mutually binding agreement with respect to a Third
Party Claim hereunder, the Indemnified Party shall deliver to the
Indemnifying Party notice of any sums due and owing by the Indemnifying
Party
pursuant to this Agreement with respect to such matter and the
Indemnifying Party shall be required to pay all of the sums so due and
owing to the Indemnified Party by wire transfer of immediately available
funds within ten (10) Business Days after the date of such notice.
(d) Direct Claims. It is the intent of the Parties that all direct
claims by an Indemnified Party against a Party not arising out of Third
Party Claims shall be subject to and benefit from the terms of this Section
8. Any claim under this Section 8 by an Indemnified Party for
indemnification other than indemnification against a Third Party Claim (a
"Direct Claim") will be asserted by giving the Indemnifying Party reasonably
prompt written notice thereof, and the Indemnifying Party will have a period
of 20 days within which to satisfy such Direct Claim. If the Indemnifying
Party does not so respond within such 20 day period, the Indemnifying Party
will be deemed to have rejected such claim, in which event the Indemnified
Party will be free to pursue such remedies as may be available to the
Indemnified Party under this Section 8.
(e) Failure to Give Timely Notice. A failure by an Indemnified Party
to give timely, complete, or accurate notice as provided in Section 8(c) or
8(d) shall not affect the rights or obligations of either Party hereunder
except to the extent that, as a result of such failure, any Party entitled
to receive such notice was deprived of its right to recover any payment
under its applicable insurance coverage or was otherwise materially
adversely affected or damaged as a result of such failure to give timely,
complete, and accurate notice.
(f) Reduction of Adverse Consequences. The Parties shall use their
Commercially Reasonable Efforts to collect the proceeds of any insurance
that would have the effect of reducing any Adverse Consequences (in which
case such proceeds shall reduce such Adverse Consequences). To the extent
any Adverse Consequences of an Indemnified Party are reduced by receipt of
payment under insurance policies or from third parties not affiliated with
the Indemnified Party, such payments (net of the expenses of the recovery
thereof) shall be credited against such Adverse Consequences and, if
indemnification payments shall have been received prior to the collection of
such proceeds, the Indemnified Party shall remit to the Indemnifying Party
the amount of such proceeds (net of the cost of collection thereof) to the
extent of indemnification payments received in respect of such Adverse
Consequences.
(g) Limitations on Indemnities.
(i) The Seller shall not have any liability pursuant to Section
8(a)(i) unless and until the aggregate amount of all Adverse Consequences
subject to this Section 8(g)(i) exceeds the Threshold Amount, and then the
Seller shall have liability only for the amount of such Adverse
Consequences in excess of the Threshold Amount; provided, that this
Section 8(g)(i) shall not apply to a breach of any representation or
warranty contained in Section 3(a) (Organization), Section 3(b)
(Capitalization), Section 3(c)(i) (Authorization of Transaction), Section
3(d) (Brokers' Fees), or Section 3(e) (Subsidiaries).
(ii) The Buyer shall not have any liability pursuant to Section
8(b)(i) unless the aggregate amount of all Adverse Consequences subject to
this Section 8(g)(ii) exceeds the Threshold Amount, and then the Buyer
shall have liability only for the amount of such Adverse Consequences in
excess of the Threshold Amount; provided, that this Section 8(g)(ii) shall
not apply to a breach of any representation or warranty contained in
Section 4(a) (Organization), Section 4(b)(i) (Authorization of
Transaction), Section 4(c) (Brokers' Fees) or Section 4(g) (Investment
Purpose).
(iii) The Seller's aggregate liability under Section 8(a)(i) shall
be limited in the aggregate to 10% of the Purchase Price; provided, that
this Section 8(g)(iii) shall not apply to a breach of any representation
or warranty contained in Section 3(a) (Organization), Section 3(b)
(Capitalization), Section 3(c)(i) (Authorization of Transaction), Section
3(d) (Brokers' Fees) or Section 3(e) (Subsidiaries). Without limiting the
other limitations on the indemnification responsibilities of Seller set
forth herein, in no event shall the aggregate liability of the Seller for
indemnity under this Section 8 exceed the amount of the Purchase Price.
(iv) For purposes of calculating Adverse Consequences hereunder (but
not for purposes of determining whether any particular representation,
warranty or covenant contained herein has been breached), any materiality
or Material Adverse Effect qualifications in the representations,
warranties, covenants and agreements shall be ignored.
(v) To the extent that a Party has a payment obligation to the other
Party for indemnification pursuant to this Section 8, such obligated Party
shall have the right to offset such payment obligations against amounts
owed, if any, by such other Party to the obligated Party under Section
2(f)(v).
(vi) Subject to Section 8(i), in no event shall any Party be liable
under this Section 8 for punitive, treble, exemplary or other damages that
are not actual damages in accordance with Law; provided, however, that,
subject to any limitations on indemnification set forth in this Agreement,
to the extent a Third Party Claim includes such punitive, treble,
exemplary or other damages that are not actual damages in accordance with
Law and are otherwise indemnifiable under this Section 8, such punitive,
treble, exemplary or other damages shall be included in determining such
Party's Adverse Consequences relating to such third party claim.
(h) Survival. All representations, warranties, covenants, and
agreements contained in this Agreement shall survive the execution and
delivery of this Agreement and the Closing hereunder; provided, that, except
as provided in the next sentence, the representations and warranties shall
expire on, and any claim for indemnification with respect thereto must be
brought before, the date which is fifteen (15) months after the Closing
Date; provided, further, that notwithstanding the foregoing, each covenant
or agreement contained in this Agreement to be performed after the Closing
shall survive until the expiration of the applicable statutes of
limitations. Notwithstanding the foregoing, claims for indemnification with
respect to a breach of a Surviving Representation may be brought at any time
until 60 days after the expiration of the applicable statutes of
limitations, except for the Surviving Representations set forth in Section
3(q) (Environmental Matters), which shall expire five years after the
Closing Date, and the Surviving Representations set forth in Sections 3(b)
(Capitalization) and 3(c)(i) (Authorization of Transaction), which shall
survive indefinitely.
(i) Exclusivity. After the Closing, the indemnification provided by
this Section 8 shall be the sole and exclusive remedy for the Buyer for any
claim (whether such claim is framed in tort, contract or otherwise) arising
out of a breach of any representations, warranty, covenant or other
agreement herein (other than the covenants of Seller relating to Taxes
provided for in Section 6(d), the indemnification for which shall be solely
and exclusively governed by Section 6(d)) or otherwise arising out of or in
connection with the transactions contemplated by this Agreement (other than
the Transition Services Agreement) or the operations of the Company;
provided, that this Section 8(i) shall not prohibit (i) injunctive relief
(including specific performance) if available under applicable Law or (ii)
any other remedy available at law or in equity for any fraud committed or
made by the Seller in connection with the transactions contemplated by this
Agreement.
(j) Interest. Seller shall pay the Buyer Indemnified Parties interest
at the rate of three percent (3%) per annum on any amounts due to third
parties in respect of the indemnification provided by Section 8(a)(iv) from
the Closing Date through the date of any such payment.
9. Termination.
(a) Termination of Agreement. This Agreement may, by written
notice given prior to or at the Closing, be terminated as follows:
(i) By (A) the Seller (if the Seller is not in breach or default of
its representations, warranties or covenants hereunder in a manner which
would cause the conditions to Closing set forth in Section 7(a)(i) or
Section 7(a)(ii) not to be satisfied) if the Buyer breaches in any
material respect any of its covenants contained herein and such breach
remains uncured 30 days after the date of written notice from the Seller
to the Buyer of such breach, or (B) the Buyer (if the Buyer is not in
breach or default of its representations, warranties or covenants
hereunder in a manner which would cause the conditions to Closing set
forth in Section 7(b)(i) or Section 7(b)(ii) not to be satisfied) if the
Seller breaches in any material respect any of its covenants contained
herein and such breach remains uncured 30 days after the date of written
notice from the Buyer to the Seller of such breach;
(ii) by mutual consent of the Buyer and the Seller; or
(iii) by either the Buyer or the Seller, if the Closing has not
taken place by the date which is eight (8) months from the date of this
Agreement (the "Upset Date"); provided that a Party may not terminate this
Agreement pursuant to this Section 9(a)(iii) if the failure of the Closing
to have taken place on or before such date is attributable to the failure
of the Party seeking to terminate to comply in any material respect with
its obligations hereunder.
(iv) by the Seller or Buyer if there shall be in effect a final
nonappealable order, injunction, judgment, decree, ruling, writ,
assessment or arbitration award of a Governmental Body of competent
jurisdiction restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated hereby; it being agreed that
the parties hereto shall promptly appeal any adverse determination which
is not nonappealable (and use Commercially Reasonable Efforts to pursue
such appeal with reasonable diligence);
(b) Effect of Termination. Upon any termination of this Agreement
pursuant to Section 9(a), this Agreement shall terminate and the
transactions contemplated hereby shall be abandoned without further action
by any of the Parties hereto; provided that the provisions of this Section
9, the second sentence of Section 5(d) and Section 10 and the
Confidentiality Agreement shall survive such termination. If this Agreement
is terminated as provided herein, none of the Parties hereto shall have any
further obligation or liability to the other Parties hereto, except as set
forth in the preceding sentence and the following sentence. Notwithstanding
anything to the contrary contained herein, neither Seller nor Buyer shall
have any liability for any breach of this Agreement prior to the effective
date of a termination, other than for an intentional breach.
10. Miscellaneous.
(a) Press Releases and Public Announcements. No Party shall issue any
press release or make any public announcement relating to the subject matter
of this Agreement prior to the Closing without the prior written approval of
the other Party which approval shall not be unreasonably withheld or
delayed; provided, however, that (i) immediately following the execution
hereof, the Parties will jointly issue a press release announcing their
entry into of this Agreement, (ii) any Party may make any public disclosure
it believes in good faith is required by applicable Law or any listing or
trading agreement or the rules and regulations of any securities exchange or
automated securities quotation system concerning its publicly-traded
securities (in which case the disclosing Party will, to the extent permitted
by applicable Law, any such listing or trading agreement, rules or
regulations, use its Commercially Reasonable Efforts to advise the other
Party prior to making the disclosure) and (iii) the Seller may disclose
information about this Agreement and the transactions contemplated hereby in
the ordinary course in connection with its investor relations practices.
(b) No Third-Party Beneficiaries. Except as provided in Section 8,
this Agreement shall not confer any rights or remedies upon any Person other
than the Parties and their respective successors and permitted assigns.
(c) Entire Agreement. This Agreement, the Schedules and Exhibits
hereto and the Disclosure Schedule, the Ancillary Documents and all
documents and certificates to be delivered pursuant hereto collectively
constitutes the entire agreement among the Parties with respect to the
subject matter of this Agreement and supersede any prior negotiations,
understandings, agreements, or representations by or among the Parties,
written or oral, to the extent they relate in any way to the subject matter
hereof.
(d) Succession and Assignment. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement
or any of its rights, interests, or obligations hereunder without the prior
written approval of the other Party hereto. Notwithstanding the foregoing,
the Buyer may, without the approval of any other Party to this Agreement,
but with prior notice to Seller, assign this Agreement and any or all rights
or obligations hereunder (including, without limitation, Buyer's rights to
purchase the Company Shares and Buyer's rights to seek indemnification
hereunder) to any Affiliate of Buyer and may make a collateral assignment of
this Agreement to any Person from which it has borrowed money, in each case,
as long as the following conditions are satisfied: (i) the representations
and warranties of the Buyer contained in this Agreement are true and correct
with respect to such assignee as of the date of such assignment, (ii) the
assignee is otherwise able to comply with the covenants and agreements of
Buyer set forth in this Agreement and satisfy the conditions to Seller's
obligation to close set forth in Sections 7(b)(i), 7(b)(ii), 7(b)(iii),
7(b)(viii) and 7(b)(ix); and (iii) such assignment does not hinder or delay
the consummation of the transactions contemplated by this Agreement. Upon
any such permitted assignment, the references in this Agreement to Buyer
shall refer to such assignee unless the context otherwise requires.
(e) Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, each of
which shall be deemed an original but all of which together will constitute
one and the same instrument.
(f) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if it is
sent: (a) by registered or certified mail, return receipt requested, postage
prepaid, (b) by facsimile or e-mail (with receipt personally confirmed by
telephone), (c) by personal delivery, or (d) by commercial delivery service,
and, in each case, addressed to the intended recipient as set forth below:
If to the Seller:
c/o Centennial Communications Corp.
0000 Xxxxx 000, Xxxx. X
Xxxx, XX 00000
Attention: General Counsel
Facsimile: (000) 000-0000
E-Mail: xxxxx@xxxxxxxxxxxxxx.xxx
Copy to:
Dow, Xxxxxx & Xxxxxxxxx, PLLC
0000 Xxx Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
E-mail: xxxxxxx@xxxxxxxxx.xxx
If to the Buyer:
c/o Hicks, Muse, Xxxx & Xxxxx Incorporated
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxxxxx
Facsimile: 000-000-0000
E-mail: xxxxxxxxx@xxxx.xxx
Copy to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxx, Esq.
Facsimile: (000) 000-0000
Email: xxxxxx@xxxx.xxx
Such notice shall be deemed received for purposes of this Agreement on the date
of delivery as set forth in the return receipt or records of the delivery
service in the case of notice sent by registered or certified mail or by
commercial delivery service, respectively, or the date of personal delivery in
the case of notice sent by personal delivery or the date of telephone
confirmation in the case of notice sent by facsimile or e-mail. Any Party may
send any notice, request, demand, claim, or other communication hereunder to the
intended recipient at the address set forth above using any other means
(including personal delivery, expedited courier, messenger service, telecopy,
telex, ordinary mail, or electronic mail), but no such notice, request, demand,
claim, or other communication shall be deemed to have been duly given unless and
until it actually is received by the intended recipient. Any Party may change
the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other Parties notice
in the manner herein set forth.
(h) Governing Law; Forum Selection; Consent to Jurisdiction.
(i) This Agreement shall be governed by and construed in accordance
with the domestic laws of the State of New York without giving effect to
any choice or conflict of law provision or rule (whether of the State of
New York or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of New York.
(ii) ANY LITIGATION IN CONNECTION WITH OR IN ANY WAY RELATED TO THIS
AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN), ACTIONS OR INACTIONS OF THE BUYER OR THE
SELLER WILL BE BROUGHT AND
MAINTAINED IN THE COURTS OF THE STATE OF NEW YORK LOCATED IN NEW YORK
COUNTY OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK. EACH OF THE BUYER AND THE SELLER HEREBY EXPRESSLY AND
IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW
YORK LOCATED IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY SUCH
LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY
FINAL AND NON-APPEALABLE JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH
LITIGATION. EACH OF THE BUYER AND THE SELLER FURTHER IRREVOCABLY CONSENTS
TO THE SERVICE OF PROCESS BY REGISTERED OR CERTIFIED MAIL, POSTAGE
PREPAID, OR BY PERSONAL SERVICE WITHIN OR OUTSIDE THE STATE OF NEW YORK.
EACH OF THE BUYER AND THE SELLER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR
HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT
IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION
HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT THE BUYER OR
THE SELLER HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF
ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE,
ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE)
WITH RESPECT TO ITSELF OR ITS PROPERTY, THEN EACH OF THE BUYER AND THE
SELLER HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF THIS
AGREEMENT.
(i) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by
the Buyer and the Seller. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any such prior or
subsequent occurrence.
(j) Severability. If any provision of this Agreement or the
application thereof to any Person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the
application of such provision to other Persons or circumstances shall not be
affected thereby and shall be enforced to the greatest extent permitted by
law so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
Party. Upon such determination that any term or other provision is invalid
or unenforceable, the Parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the Parties as closely
as possible in an acceptable manner to the end that the transactions
contemplated hereby are fulfilled to the greatest extent possible.
(k) Expenses. Each of the Buyer and the Seller will bear its own costs
and expenses (including legal fees and expenses) incurred in connection with
this Agreement
and the transactions contemplated hereby; provided, however, that the Buyer
will pay any fees and charges of any Governmental Entities in connection
with the Xxxx-Xxxxx-Xxxxxx Act and any fees to be paid to the FCC and the
Telecommunications Regulatory Board. All use, sales, transfer and other
similar transaction Taxes imposed in connection with the transactions
contemplated by this Agreement (other than any Taxes on income or gains that
the Seller may realize (which shall be paid by the Seller) or that the Buyer
may realize (which shall be paid by the Buyer)) shall be paid one-half by
the Buyer and one-half by the Seller. For the avoidance of doubt, in no
event shall the Company, pay or be obligated to pay any of the transaction
costs and expenses incurred in connection with the negotiation, execution,
delivery and Closing of this Agreement and the transactions contemplated
hereby, other than costs and expenses which reduce the Company's cash
balance and costs and expenses included in the determination of Current
Liabilities for purposes of calculating Working Capital pursuant to Section
2(f).
(l) Limitations on Representations and Warranties. Except as expressly
set forth in this Agreement, the Seller makes no representation or warranty,
express or implied, at Law or in equity, in respect of the Company or any of
its assets, properties, liabilities or operations, including any
representations as to projections, budgets, or estimates of future results,
or as to information in documents made available to the Buyer or its
representatives.
(m) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. If an ambiguity or question of
intent or interpretation arises, this Agreement shall be construed as if
drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any
of the provisions of this Agreement.
(n) Non-Recourse. Except with respect to the guaranty attached hereto
as Exhibit D, no past, present or future director, officer, employee,
incorporator, member, partner, stockholder, Affiliate, agent, attorney or
representative of either party hereto or any Affiliate thereof shall have
any liability for any obligations or liabilities of such party under this
Agreement or for any claim based on, in respect of, or by reason of, the
transactions contemplated hereby.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on as
of the date first above written.
PUERTO RICO CABLE ACQUISITION COMPANY
INC.
By: /s/ XXXXX XXXXX
--------------------------------------
Name: Xxxxx Xxxxx
Title: Vice President and Assistant Secretary
CENTENNIAL CARIBBEAN HOLDING CORP.
By: /s/ XXXXXXX X. SMALL
--------------------------------------
Name: Xxxxxxx X. Small
Title: Chief Executive Officer
For purposes of Section 6(d)(x) only,
CENTENNIAL COMMUNICATIONS CORP.
By: /s/ XXXXXXX X. SMALL
--------------------------------------
Name: Xxxxxxx X. Small
Title: Chief Executive Officer
