EXHIBIT 99.1
ASSET PURCHASE AGREEMENT
dated as of
July 21, 1998
among
COMCAST CORPORATION,
IDS/XXXXX GROWTH PARTNERS 87-A, LTD.,
XXXXX CABLE CORPORATION,
XXXXX INTERCABLE, INC.
and
XXXXX INTERNATIONAL, LTD.
TABLE OF CONTENTS
Page
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ARTICLE 1
DEFINITIONS
Section 1.1. Definitions................................. 1
ARTICLE 2
PURCHASE AND SALE
Section 2.1. Purchase and Sale........................... 9
Section 2.2. Excluded Assets............................. 11
Section 2.3. Assumption of Liabilities................... 12
Section 2.4. Excluded Liabilities........................ 12
Section 2.5. Purchase Price.............................. 13
Section 2.6. Closing..................................... 15
Section 2.7. Allocation of Purchase Price................ 16
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER AND JCC
Section 3.1. Existence and Power; Affiliates............. 16
Section 3.2. Authorization............................... 16
Section 3.3. Governmental Authorization.................. 16
Section 3.4. Non-Contravention........................... 17
Section 3.5. Required Consents; Franchise Approvals...... 17
Section 3.6. Financial Statements........................ 17
Section 3.7. Absence of Certain Changes.................. 17
Section 3.8. Properties.................................. 19
Section 3.9. Sufficiency of and Title to the Assets...... 20
Section 3.10. No Undisclosed Liabilities.................. 20
Section 3.11. Litigation.................................. 21
Section 3.12. Material Contracts.......................... 21
Section 3.13. Affiliates.................................. 22
Section 3.14. Insurance Coverage.......................... 22
Section 3.15. Compliance.................................. 23
Section 3.16. Receivables................................. 23
Section 3.17. Intellectual Property....................... 23
Section 3.18. Finders' Fees............................... 23
Section 3.19. Environmental Compliance.................... 24
Section 3.20. Authorizations and CATV Instruments......... 24
Section 3.21. Technical Compliance........................ 25
Section 3.22. Additional FCC Matters...................... 26
Section 3.23. Federal Aviation Authority.................. 26
Section 3.24. Subscriber and Revenue Data................. 26
Section 3.25. Legality of Signal Carriage................. 27
Section 3.26. Certain System Information.................. 28
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Section 3.27. No Impediments to Business.................. 28
Section 3.28. Full Disclosure............................. 29
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF XXXXX
Section 4.1. Organization and Existence.................. 29
Section 4.2. Corporate Authorization..................... 29
Section 4.3. Governmental Authorization.................. 29
Section 4.4. Non-Contravention........................... 29
Section 4.5. Litigation.................................. 29
Section 4.6. Full Disclosure............................. 30
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF JCC
Section 5.1. Organization and Existence.................. 30
Section 5.2. Corporate Authorization..................... 30
Section 5.3. Governmental Authorization.................. 30
Section 5.4. Non-Contravention........................... 30
Section 5.5. Litigation.................................. 30
Section 5.6. Full Disclosure............................. 30
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF BUYER
Section 6.1. Organization and Existence.................. 31
Section 6.2. Corporate Authorization..................... 31
Section 6.3. Governmental Authorization.................. 31
Section 6.4. Non-Contravention........................... 31
Section 6.5. Finders' Fees............................... 31
Section 6.6. Litigation.................................. 31
Section 6.7. Full Disclosure............................. 31
ARTICLE 7
COVENANTS OF SELLER, JCC, XXXXX AND XXXXX INTERCABLE
Section 7.1. Conduct of the Business..................... 32
Section 7.2. Access to Information....................... 35
Section 7.3. Notices of Certain Events................... 35
Section 7.4. Noncompetition.............................. 35
Section 7.5. Use of Seller's Name........................ 36
Section 7.6. Capital Leases.............................. 37
Section 7.7. Consents; Estoppel Certificates............. 37
Section 7.8. Agreement to Consult........................ 37
Section 7.9 Transitional Billing Services............... 37
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Section 7.10. No Solicitation............................. 37
Section 7.11. SEC Filings................................. 38
Section 7.12. JCC Recommendation.......................... 39
Section 7.13. Vote of Partners of Seller.................. 39
Section 7.14. Schedules................................... 39
Section 7.15. Fees for Environmental Assessment........... 39
Section 7.16. City of Roseville Franchise................. 39
Section 7.17. Termination of Revolving Credit and Term
Loan Agreement and Security Interests....... 40
Section 7.18. Waiver of JCC Right of First Refusal........ 40
Section 7.19. Xxxxxxxx/Pacific #2 Agreement............... 40
Section 7.20. Pole Attachment Agreements.................. 40
Section 7.21. Assignment by Xxxxx Intercable.............. 40
Section 7.22. Maidu Center Payment........................ 40
Section 7.23. Easement.................................... 41
ARTICLE 8
COVENANTS OF BOTH PARTIES
Section 8.1. Best Efforts; Further Assurances............ 41
Section 8.2. Certain Filings............................. 41
Section 8.3. Public Announcements........................ 42
ARTICLE 9
TAX MATTERS
Section 9.1. Tax Definitions............................. 42
Section 9.2. Tax Representations......................... 43
Section 9.3. Tax Cooperation and Other Tax Matters....... 43
ARTICLE 10
EMPLOYEE BENEFITS
Section 10.1. Employee Benefits Definitions............... 45
Section 10.2. Employee Benefits Representations........... 45
Section 10.3. Employees and Offers of Employment.......... 47
Section 10.4. Seller's Employee Benefit Plans............. 48
Section 10.5. No Third Party Beneficiaries................ 49
ARTICLE 11
CONDITIONS TO CLOSING
Section 11.1. Conditions to the Obligations of Each Party. 50
Section 11.2. Conditions to Obligation of Buyer........... 50
Section 11.3. Conditions to Obligation of Seller.......... 52
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ARTICLE 12
SURVIVAL; INDEMNIFICATION
Section 12.1. Survival.................................... 53
Section 12.2. Indemnification............................. 53
Section 12.3. Conduct of Indemnification Proceedings...... 53
Section 12.4 Establishment of Losses..................... 54
Section 12.5 Payment of Losses........................... 55
Section 12.6 Limitation on Indemnity Claims.............. 55
ARTICLE 13
TERMINATION
Section 13.1. Termination................................. 55
Section 13.2. Effect of Termination....................... 56
Section 13.3. Break-Up Fee................................ 56
ARTICLE 14
MISCELLANEOUS
Section 14.1. Notices..................................... 56
Section 14.2. Amendments and Waivers...................... 57
Section 14.3. Expenses.................................... 57
Section 14.4. Successors and Assigns...................... 57
Section 14.5. Governing Law............................... 58
Section 14.6. Specific Performance; Remedies Cumulative... 58
Section 14.7. Counterparts; Effectiveness................. 58
Section 14.8. Entire Agreement; Third Party Beneficiaries. 58
Section 14.9. Captions.................................... 58
Exhibit A -- Guarantee
Exhibit B -- Form of Assumption and Assignment Agreement
Exhibit C -- Form of Xxxx of Sale
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SCHEDULES
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Schedule 2.2 Programming Agreements and
Retransmission Consent Agreements to
be Assumed; Excluded Assets
Schedule 2.5(b)(iv) Estimated Purchase Price Adjustments
Schedule 2.5(b)(v) Final Purchase Price Adjustments
Schedule 3.1 Affiliates of Seller
Schedule 3.5(a) Required Consents
Schedule 3.5(b) Franchise Approvals
Schedule 3.7 Absence of Certain Changes
Schedule 3.8(a) Real Property
Schedule 3.8(b) Personal Property
Schedule 3.8(d Liens
Schedule 3.10 Undisclosed Liabilities
Schedule 3.11 Litigation
Schedule 3.12(a) Material Contracts and Purchase Orders
Schedule 3.12(c) Bulk Billed Agreements
Schedule 3.13 Affiliates
Schedule 3.15 Compliance
Schedule 3.14 Insurance Coverage
Schedule 3.16 Accounts Receivable Aging
Schedule 3.18 Finders' Fees
Schedule 3.19 Environmental Compliance
Schedule 3.20 Authorizations and CATV Instruments
Schedule 3.22 Additional FCC Matters
Schedule 3.24(a) Subscriber Information and Revenue Data
Schedule 3.24(e) System Rates
Schedule 3.24(f) FCC Notices to Subscribers
Schedule 3.25 Legality of Signal Carriage
Schedule 3.26 Certain System Information
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Schedule 3.27 Impediments to Business
Schedule 9.2 State Tax Returns
Schedule 10.2(c) Employment, Severance and Similar
Agreements and Policies
Schedule 10.2(f) Transferred Employees - Retirement and
Severance Benefits
Schedule 10.2(g) Compliance with ERISA
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ASSET PURCHASE AGREEMENT
AGREEMENT dated as of July ___, 1998 among Comcast Corporation, a
Pennsylvania corporation ("BUYER"), IDS/Xxxxx Growth Partners 87-A, Ltd., a
Colorado limited partnership ("SELLER") and for purposes of Articles 3 and 5 and
Sections 7.4, 7.9, 7.10, 7.11, 7.12 and 7.13 hereof, Xxxxx Cable Corporation, a
Colorado corporation ("JCC") and for purposes of Article 4 and Sections 7.4 and
7.10 hereof, Xxxxx International, Ltd., a Colorado corporation ("XXXXX") and for
purposes of Sections 7.4, 7.10, 7.18 and 7.21 hereof, Xxxxx Intercable, Inc., a
Colorado corporation ("XXXXX INTERCABLE").
W I T N E S S E T H :
WHEREAS, Seller owns and operates the cable television business in and
around the Franchise Areas (as defined below) (the "SYSTEM");
WHEREAS, JCC controls Seller and desires to enter into this Agreement to
induce Buyer to acquire the System as provided herein;
WHEREAS, Seller desires to sell, and Buyer desires to purchase, on the
terms and subject to the conditions contained in this Agreement, substantially
all of the assets, rights, privileges, interests, business and properties owned,
leased, used, useful or held for the use by Seller in connection with the
System;
WHEREAS, JCC is a wholly owned subsidiary of Xxxxx Intercable, and Xxxxx
Intercable has determined that it is in its best interest to guarantee certain
obligations of Seller as provided herein and has executed and delivered to Buyer
that certain Guaranty of even date herewith and attached hereto as Exhibit A.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1. DEFINITIONS. (a) The following terms, as used herein, have
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the following meanings:
"AFFILIATE" means, with respect to any Person, any other Person directly
or indirectly controlling, controlled by, or under common control with such
other Person, with "control" for such purpose meaning the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting securities or
voting interests, by contract or
otherwise.
"AUTHORIZATIONS" means all Federal Authorizations and all Other
Authorizations.
"BASIC SUBSCRIBER" means as of any date and for each Franchise Area
served by the System, without duplication, the aggregate of all of the following
that are receiving Limited Basic Service provided by the System: (a) private
residential customer accounts that are billed by individual unit (regardless of
whether such accounts are in single family homes or in individually billed units
in apartment houses and other multi-unit buildings) (excluding "second connects"
or "additional outlets," as such terms are commonly understood in the CATV
industry), each of which shall be counted as one Basic Subscriber, and (b) all
commercial, bulk-billed and other accounts not billed by individual unit, such
as hotels, motels, apartment houses and multi-family homes, provided that the
number of "Basic Subscribers" serviced by each such account shall be deemed to
be an amount equal to the quotient of (x) the aggregate monthly revenue received
from the provision of Limited Basic Service or Tier One Service from such
accounts, in each case for the last calendar month (or, if applicable, the last
billing period) preceding the date of determination, divided by (y) the Monthly
Predominant Rate. Notwithstanding the foregoing, the term "Basic Subscriber"
shall not include any subscriber, whether a private residential, commercial or
bulk-billed subscriber, who:
(1) with respect to a private residential subscriber, is receiving the
Limited Basic Service or Tier One Service at less than the standard rate for the
applicable service as set forth on Schedule 3.24(e) (as such Schedule is updated
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as of the Closing Date), and with respect to commercial or bulk-billed
subscribers, is receiving the Limited Basic Service or Tier One Service at less
than the rates set forth in the applicable agreement to provide service to a
commercial subscriber or the applicable bulk-billed agreement, as appropriate;
(2) has not been receiving such service for at least sixty (60)
consecutive days immediately prior to the date of determination;
(3) has not paid for at least two (2) months' consecutive service at
standard rates as set forth on Schedule 3.24(e) for the period immediately
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preceding the date of determination (together with subscribers described in the
immediately preceding clause (2), "PROVISIONAL SUBSCRIBERS");
(4) is more than sixty (60) days delinquent from the date of billing on
any amount due to Seller (provided that a subscriber's account shall not be
considered delinquent as a result of unpaid amounts not exceeding $6.00); or
(5) is pending disconnection from the service provided by the System for
any reason.
"BUSINESS DAY" means any day other than a Saturday, Sunday or holiday on
which federal banks are or may elect to be closed.
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"CABLE ACT" means Title VI of the Communications Act of 1934, as amended,
including without limitation, by the Cable Communication Policy Act of 1984, the
Cable Television Consumer Protection and Competition Act of 1992 and the
Telecommunications Act of 1996, and the rules and regulations promulgated
thereunder.
"CABLE ACT NOTICES" means all written notices, written requests, written
inquiries or other written communications from the FCC or any Franchising
Authority relating to or requesting information from the System or requesting
that the System take certain actions, in accordance with the Cable Act.
"CABLE ACT ORDERS" means all written orders, written decisions, written
actions, written determinations or other written pronouncements of the FCC or
any Franchising Authority specifically with respect to the System, issued in
accordance with the Cable Act.
"CABLE ACT PETITIONS" means all petitions, motions, oppositions, notices
of appeal, applications or similar instruments filed or submitted by or to the
FCC or any Franchising Authority with respect to the System, in accordance with
the Cable Act.
"CABLE SERVICE" means (i) the one-way transmission to subscribers of
video programming or other programming service and (ii) subscriber interaction,
if any, which is required for the selection or use of such video programming or
other programming service.
"CATV INSTRUMENTS" means the instruments granting the Authorizations.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended from time to time and any rules or regulations
promulgated thereunder.
"CLOSING DATE" means the date of the Closing.
"COPYRIGHT ACT" means the Copyright Act of 1976, as amended.
"COURTESY SUBSCRIBER" means any Person (whether receiving service at a
residential, commercial or other location) receiving any service (other than
promotional services in the ordinary course of business) from the System for
free.
"CURRENT ASSETS" means (a) ninety-five percent (95%) of the face amount
of all accounts receivable included in the Assets (other than accounts
receivable related to advertising sales) that are 30 days or less past due from
the date of billing, (b) ninety percent (90%) of the face amount of all accounts
receivable included in the Assets (other than accounts receivable related to
advertising sales) that are between 31 and 60 days past due from the date of
billing; provided however, that, any such accounts receivable shall be excluded
from clause (a) and (b) above if (x) any portion of such accounts receivable is,
on the Closing Date, 61 days or more past due from the date of invoice
(provided, that late fees shall not be counted in determining whether an account
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receivable is 61 days or more past due, and provided, further that any such late
fees shall not be included in Current Assets) or (y) such accounts receivable
relate to Basic Subscribers whose accounts are inactive or whose service is
pending disconnection for nonpayment on the Closing Date), (c) ninety-five
percent (95%) of the face amount of all accounts receivable included in the
Assets that are related to advertising sales and that are 60 days or less past
due from the date of billing, (d) ninety percent (90%) of the face amount of all
accounts receivable included in the Assets that are related to advertising sales
and that are between 61 and 90 days past due from the date of billing, (e)
seventy-five percent (75%) of the face amount of all accounts receivable
included in the Assets that are related to advertising sales and that are
between 91 and 120 days past due from the date of billing; provided, however,
that any such accounts receivable shall be excluded from clause (c), (d) and (e)
above if any portion of such accounts receivable is, on the Closing Date, 121
days or more past due from the date of invoice (provided that late fees shall
not be counted in determining whether an account receivable is 121 days or more
past due, and provided further, that any such late fees shall not be included in
Current Assets), (f) the amount of all prepaid expenses on the Closing Date that
directly relate to the System to the extent the benefit of such prepaid expenses
can be realized by Buyer within twelve months after the Closing Date, and (g)
any other current asset of Seller as defined by GAAP (excluding any cash, cash
equivalents, marketable securities and supplies and inventory) directly related
to the System that shall directly benefit the Buyer within 12 months after the
Closing Date, other than (i) intercompany allocations and other payments of
overhead charges; (ii) prepaid taxes based in whole or in part on the income of
Seller or its Affiliates or the transactions contemplated by this Agreement;
(iii) prepaid wages, salaries, payroll taxes and expenses, benefits, perquisites
and other compensation related expenses other than for a Transferred Employee
for which Seller is not otherwise obligated to make such payments under the
terms of Article 10 of this Agreement; (iv) prepaid expenses relating to
supplies and inventory; and (v) prepaid insurance expenses.
"ENVIRONMENTAL LAWS" means (i) any and all federal, state and local
statutes, laws, judicial decisions, regulations, ordinances, rules, codes and
other governmental restrictions and (ii) all judgments, orders, decrees,
injunctions, permits, licenses and agreements relating to the Assets or the
System, in each case relating to the environment, the effect of the environment
on human health or to emissions, discharges or releases of pollutants,
contaminants, petroleum or petroleum products, chemicals or industrial, toxic,
radioactive or hazardous substances or wastes into the environment, including
without limitation, ambient air, surface water, ground water, or land, or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of pollutants, contaminants, petroleum
or petroleum products, chemicals or industrial, toxic, radioactive or hazardous
substances or wastes or the clean-up or other remediation thereof.
"ENVIRONMENTAL LIABILITIES" means any and all liabilities arising in
connection with or in any way relating to the System, the Assets or activities
or operations occurring or conducted at any of the Real Property (including,
without limitation, offsite disposal), whether vested or unvested, contingent or
fixed, actual or potential, known or unknown, which (i) arise under or relate to
Environmental Laws (including, without limitation, any matter disclosed or
required to be disclosed in Schedule 3.19) and (ii) relate to actions occurring
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or conditions existing on or prior to the Closing Date.
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"ENVIRONMENTAL PERMITS" means all permits, licenses, authorizations,
certificates and approvals of governmental authorities relating to or required
by Environmental Laws and necessary or proper for the System as currently
conducted.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
"FAA" means the Federal Aviation Administration.
"FCC" means the Federal Communications Commission.
"FEDERAL AUTHORIZATIONS" means all licenses, permits, certificates,
consents, clearances and other similar rights and approvals relating to the
System issued by or obtained from any branch of the Federal government,
including but not limited to, the FCC or the Copyright Office.
"FRANCHISE AREAS" mean those geographical areas set forth on Schedule
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3.20 in which Seller is authorized under one or more Authorizations to provide
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Cable Service to subscribers.
"FRANCHISING AUTHORITY" means each governmental unit listed on Schedule
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3.20 which has granted Seller an Authorization.
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"GAAP" means generally accepted accounting principles consistently
applied as in effect from time to time in the United States of America.
"GOVERNMENTAL AUTHORITY" means (i) the United States of America, (ii) any
state, commonwealth, territory or possession of the United States of America and
any political subdivision thereof (including counties, municipalities and the
like) and (iii) any agency, authority or instrumentality of any of the
foregoing, including any court, tribunal department, bureau, commission or
board.
"HAZARDOUS SUBSTANCES" means any pollutant, toxic, radioactive, corrosive
or otherwise hazardous substance, including petroleum, its derivatives, by-
products and other hydrocarbons, or any substance having any constituent
elements displaying any of the foregoing characteristics, regulated by or which
may form the basis for liability under Environmental Laws or that is regulated
or labeled as such pursuant to any Environmental Law.
"HOMES PASSED" means residential dwelling units, multiple dwelling
buildings, residential hotels and other commercial locations (including each
unit in a multiple dwelling building or complex, as one Home Passed and counting
each commercial location, including without limitation, hotels and motels, as
one Home Passed) to which Cable Service may be provided at a distance no greater
than approximately 200 feet from the System's
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existing distribution cable, and residential dwelling units, multiple dwelling
buildings, residential hotels and other commercial locations which are at a
distance greater than approximately 200 feet from the System's existing
distribution cable but which are premises of subscribers; provided that Homes
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Passed shall not include unoccupied residential lots.
"HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended.
"INTERIM BALANCE SHEET" means the balance sheet of Seller as of March 31,
1998, delivered to Buyer pursuant to Section 3.6.
"LEGAL REQUIREMENT" means any statute, ordinance, code, law, rule,
regulation, order or other requirement, standard or procedure enacted, adopted
or applied by any Governmental Authority, including judicial decisions applying
common law or interpreting any other Legal Requirement.
"LIEN" means, with respect to any property or asset, any mortgage, lien,
pledge, charge, security interest, legal or equitable claim of a third party, or
other encumbrance of any kind or defect in title in respect of such property or
asset. For the purposes of this Agreement, a Person shall be deemed to own
subject to a Lien any property or asset which it has acquired or holds subject
to the interest of a vendor or lessor under any conditional sale agreement,
capital lease or other title retention agreement relating to such property or
asset.
"LIMITED BASIC SERVICE" means any service tier which includes the
retransmission of local television broadcast signals, as defined in 47 U.S.C.
Section 522(3), plus any other programming currently offered by the System on
the lowest tier offered by the System (i.e. the tier to which all subscribers
are required to subscribe).
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the
business, assets, condition (financial or otherwise), results of operations or
prospects of the System taken as a whole.
"MONTHLY PREDOMINANT RATE" means the sum of the standard retail rates
charged to non-discounted subscribers receiving Limited Basic Service and Tier
One Service as of the date of determination. The Monthly Predominant Rate as of
the date of this Agreement is an amount equal to $27.25.
"MULTI-CHANNEL VIDEO SERVICE" means (i) the distribution by a single
provider to end users of two or more channels of video programming, by any
means, including but not limited to cable television, direct broadcast
satellite, master antenna television system, satellite master antenna television
system and multi-channel microwave distribution system; or (ii) providing
facilities for the distribution of such video programming.
"NET LIABILITIES" means the amount by which the Total Liabilities with
respect to the System, as of the Closing Date, are in excess of or are less
than, as the case may be, the Current Assets as of the Closing Date.
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"OTHER AUTHORIZATIONS" means all approvals, authorizations, consents,
easements (whether or not of record), franchises, leases, licenses,
qualifications, registrations and other similar rights relating to the System
obtained from any Governmental Authority, other than Federal Authorizations.
"PERMITTED LIENS" means any (i) Lien for current taxes and other
governmental charges and assessments which are not yet due and payable, (ii)
zoning law or ordinance or any similar Legal Requirement, (iii) right reserved
to any Governmental Authority to regulate affected property, (iv) in the case of
Leased Real Property, the rights of any lessor and any Lien granted by any
lessor, and (v) immaterial mechanics, materialmen's and similar liens, which do
not individually or in the aggregate adversely affect the value of any Real
Property or interfere with the right or ability to own, use, dispose of or
operate any of the Assets.
"PERSON" means an individual, corporation, limited liability company,
partnership, association, trust or other entity or organization, including any
Governmental Authority.
"PREMIUM PAY SERVICE" means any pay-per-channel, including but not
limited to, any one or more of HBO, Showtime, STARZ!, The Movie Channel, Disney,
Encore and Cinemax programming, provided that any pay-per-view programming is
excluded from the definition of Premium Pay Service.
"PROCEEDING" means any investigation, proceeding or other process by the
FCC or any other Governmental Authority that relates in whole or in part to
rates charged to subscribers.
"REGULATED ACTIVITY" means any generation, treatment, storage, recycling,
transportation or Release of any Hazardous Substance.
"RELEASE" means any discharge, emission or release, including a Release
as defined in CERCLA at 42 U.S.C. (S) 9601(22). The term "Released" has a
corresponding meaning.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"TIER ONE SERVICE" means those programming services set forth on Schedule
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3.24(e).
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"TOTAL LIABILITIES" means all subscriber deposits and advance payments
existing on the Closing Date and related to the System (including any interest
required to be paid thereon), any customary payments related to the System
required to be made by the Buyer after the Closing relating to the period on or
prior to Closing (including without limitation, property taxes, pole rental,
copyright fees, accrued vacation time for Transferred Employees, rent,
utilities, etc.), which payments benefit Seller, and any other liabilities or
obligations of Seller related to the System which Buyer agrees to assume
pursuant to this Agreement.
"TOTAL REVENUE FROM ALL SUBSCRIBERS" means all revenue (excluding any
revenue associated with franchise fees separately itemized on a subscriber's
xxxx, late fees and any other fees that are passed through to the subscriber)
billed by Seller to each of the subscribers of the System for the provision of
Limited Basic Service, Tier I Service and Premium Pay Service, for the three
month period immediately preceding the Closing Date.
(b) Each of the following terms is defined in the Section set forth
opposite such term:
Term Section
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626 Request 3.20
Active Employee 10.3
Additional Basic Subscribers 2.5
Assets 2.1
Assumed Liabilities 2.3
Bank Loan Documents 7.17
Basket Amount 12.6
Break-Up Fee 13.3
Buyer's List 10.3
City 7.1
Closing 2.6
Code 9.1
Colorado National Bank 7.17
Contracts 2.1
Cost of Service Election 7.1
County 7.1
Employee Plans 10.1
Environmental Assessment 11.2
ERISA 10.1
ERISA Affiliate 10.1
Excluded Assets 2.2
Excluded Liabilities 2.4
Franchise Approvals 3.5
HSR Filing 8.2
Indemnified Party 12.3
Indemnifying Party 12.3
Xxxxx Intercable Assets 7.21
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Leased Real Property 3.8
Loss 12.2
Maidu Center Payment 7.22
Material Contracts 3.12
Multiemployer Plan 10.1
Owned Real Property 3.8
PG&E 7.20
PG&E Acknowledgment 7.20
Personal Property 2.1
Post-Closing Tax Period 9.1
Pre-Closing Tax Period 9.1
Preliminary Proxy Statement 7.11
Prime Rate 2.5
Promotions 7.1
Proxy Statement 7.11
Purchase Price 2.5
Real Property 2.1
Required Consent 3.5
Roseville Telephone Company Acknowledgment 7.20
Xxxxxxxx 7.19
Subscriber/Revenue Adjustment 2.5
Superior Proposal 7.10
System recitals
Tax 9.1
Transferred Employees 10.3
Transitional Billing Services 7.9
(c) Unless otherwise specified herein, all accounting terms used
herein shall be interpreted, and all accounting determinations hereunder shall
be made, in accordance with GAAP.
ARTICLE 2
PURCHASE AND SALE
SECTION 2.1. PURCHASE AND SALE. Except as otherwise provided below,
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upon the terms and subject to the conditions of this Agreement, Buyer agrees to
purchase from Seller and Seller agrees to sell, transfer, assign and deliver, or
cause to be sold, transferred, assigned and delivered, to Buyer at Closing, free
and clear of all Liens other than Permitted Liens, all of the right, title and
interest in, to and under the assets, properties and business, of every kind and
description, wherever located, real, personal or mixed, tangible or intangible,
owned, held or used in the conduct of the System as the same shall exist on the
Closing Date, including without limitation, all assets shown on the Interim
Balance Sheet, other than current assets disposed of in the ordinary course of
business (all assets, rights, properties and claims acquired by Buyer pursuant
to this Agreement are collectively referred to as the "ASSETS"), and including,
without limitation, all right, title and interest in, to and under:
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(a) All Authorizations;
(b) All interests in real property, including without limitation,
all appurtenances, towers and fixtures located thereon, rights-of-way,
easements and other real property interests owned or leased by Seller
(collectively, the "REAL PROPERTY");
(c) All tangible personal property, including, without limitation,
all electronic devices, towers, satellite dishes, antenna, downleads, trunk
and distribution pedestals, grounding and pole hardware, cable system
plant, machinery, installed subscribers' devices (including, without
limitation, drop lines, converters, and encoders, transformers and
fittings), headends, origination, transmission and distribution systems and
equipment, maps, internal wiring, hardware, tools, inventory, spare parts,
motor vehicles, supplies, test and closed circuit devices, earth stations
and microwave equipment and systems and furniture, furnishings and office
equipment used in the System (collectively the "PERSONAL PROPERTY");
(d) All claims and rights of every kind arising out of or related
to all contracts, leases of real and personal property (both as lessor and
lessee), agreements, non-governmental licenses, orders for service to be
provided by the System and understandings in connection with the System and
to which Seller or any Affiliate of Seller is a party and which relate to
the System, including without limitation, all pole attachment and conduit
agreements, wire crossing agreements, subscriber agreements, retransmission
consent agreements and other agreements, written or oral, to which Seller
or any Affiliate of Seller is a party and which relate to the System,
except for those agreements that are Excluded Assets pursuant to Section
2.2 below (collectively, the "CONTRACTS");
(e) All business records of Seller regardless of the medium of
storage relating to the System, including without limitation, all
schematics, blueprints, working drawings, engineering data, engineering
drawings, reports, design information, specifications, maintenance manuals,
test procedures, current customer and subscriber lists, maps, reports,
plans, projections, statistics, promotional graphics, original art work,
mats, plates, negatives, advertising, marketing or related materials,
files, manuals and records, lists of all pending subscriber hook-ups,
disconnect and repair orders and supply orders, and all other technical,
accounting and financial information concerning the System;
(f) All deposits with respect to the Authorizations or with respect
to any bonding or surety arrangements;
(g) All rights, claims and causes of action against third parties,
including without limitation, any rights, claims and causes of action
arising under warranties from vendors and other third parties;
(h) All accounts receivable, notes receivable and prepaid expenses,
as well as insurance and indemnity claims with respect to the Assets;
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(i) All goodwill associated with the System and the Assets; and
(j) All other assets of whatever nature and wherever located, and
owned, used or held for use by the Seller or any Affiliate of Seller in
connection with the System.
Provided that, notwithstanding the foregoing, the Assets shall not include
any Excluded Assets.
SECTION 2.2. EXCLUDED ASSETS. The following assets and properties of
---------------
Seller (the "EXCLUDED ASSETS") shall be excluded from the Assets:
(a) all cash and cash equivalents on hand and in banks (other than any
deposits referred to in Section 2.1(f));
(b) all programming contracts (including but not limited to, the Great
American Country Affiliation Agreement, dated January 1, 1996 and the
Amended and Restated Mind Extension University Affiliate Agreement, dated
December 28, 1993) and retransmission consent agreements, other than any
such agreements listed on Schedule 2.2;
------------
(c) any books and records that Seller is required by law to retain, and
Seller's corporate books and records;
(d) all insurance policies, intercompany receivables with respect to
any Affiliate of Seller, letters of credit or similar items and any cash
surrender value in regard thereto;
(e) any claims, rights and interests in and to any refunds of federal,
state or local franchise, income or other taxes or fees for periods prior
to the Closing Date;
(f) Employee Plans;
(g) subscriber billing services agreements and related leased
equipment;
(h) that certain 1993 Dodge Intrepid used by the System's General
Manager;
(i) all trade marks, service marks, copyrights and trade names and all
rights associated therewith owned or used by Seller (subject to Buyer's
rights under Section 7.5);
(j) any Assets sold or otherwise disposed of in the ordinary course of
business and not in violation of any provisions of this Agreement during
the period from the date hereof until the Closing Date;
(k) the Advertising Sales Agreement, dated as of April 1, 1994, by and
between Seller and Bruich & Associates;
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(l) the Advertising Sales Agreement, dated as of April 1, 1998, by and
between Seller and Bruich & Associates;
(m) Agreement, dated July 7, 1997, by and between Seller and Flight
Trac, Inc.;
(n) Publications Order Agreement Customized Pay-Per-View Billstuffer,
dated May 15, 1995, by and between Seller and CableView Publications;
(o) Converter Metering Agreement, dated January 30, 1992, by and
between Seller and Xxxxxxx Media Research;
(p) Agreement, dated December 1, 1990, by and between Seller and
American Society of Composers, Authors and Publishers;
(q) Subscriber Agreement, dated January 1, 1996, by and among Xxxxx
Intercable, Seller and Audiocom;
(r) Agreement, dated March 1, 1991, by and between Seller and BMI; and
(s) Amended and Restated Xxxxx Infomercial Networks, Inc. Affiliate
Agreement, effective as of August 1, 1994.
SECTION 2.3. ASSUMPTION OF LIABILITIES. Upon the terms and subject to
-------------------------
the conditions of this Agreement, Buyer agrees, effective at the time of
Closing, to assume the following liabilities (the "ASSUMED LIABILITIES"):
(a) the obligations of Seller for subscriber deposits and subscriber
advance payments and any other obligations or liabilities set forth on
Schedule 2.5(b)(v), to the extent such obligations or liabilities are related
------------------
to the System and have been included as an adjustment to the Purchase Price
in accordance with the provisions of Section 2.5; and
(b) all obligations of Seller arising under all Contracts, not excluded
pursuant to Section 2.2, with respect to the period of time after the Closing
Date (other than liabilities or obligations attributable to any failure by
Seller to comply with the terms thereof).
Section 2.4. EXCLUDED LIABILITIES. Buyer is assuming only the Assumed
--------------------
Liabilities and is not assuming any other liability or obligation of Seller (or
any predecessor owner of all or part of its business and assets) of whatever
nature, whether presently in existence or arising hereafter, known or unknown,
contingent or otherwise. All such other liabilities and obligations shall be
retained by and remain obligations and liabilities of Seller or such
predecessor, as applicable (all such liabilities and obligations not being
assumed being herein referred to as the "EXCLUDED LIABILITIES"). The Excluded
Liabilities shall include, but not be limited to the following:
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(a) any liabilities or obligations for Taxes or any audits related
thereto (including, without limitation, sales and payroll taxes) arising
from or relating to (i) the Excluded Assets or any business of Seller, and
(ii) the Assets or the operation of the System attributable to or incurred
in the Pre-Closing Tax Period;
(b) any liabilities or obligations relating to employee benefits or
compensation arrangements existing on or prior to the Closing Date (except
for accrued vacation time for Transferred Employees), including, without
limitation, any liability or obligation arising from or relating to (i)
"sticking bonuses" or similar payments to induce Seller's employees to
remain in Seller's employ prior to Closing, (ii) severance payments, or
earned or accrued vacation for Seller's employees that are not Transferred
Employees, (iii) earned or accrued sick leave, (iv) short-term or long-term
disability benefits or (v) any liabilities or obligations under any of
Seller's employee benefit agreements, plans or other arrangements;
(c) any Environmental Liability;
(d) any liability or obligation relating to an Excluded Asset;
(e) any liability or obligation arising from any litigation, action,
suit, proceeding or investigation, actual or threatened, relating to any
act or omission occurring on or prior to the Closing Date;
(f) any liability or obligation relating to the System attributable to
or incurred during the period prior to the Closing, other than the Assumed
Liabilities;
(g) any liability resulting from any refund order, including without
limitation, FCC Order, DA 98-389 (March 2, 1998), relating to any period
prior to Closing; and
(h) any liabilities or obligations as to which Seller or any other
Person might assert that Buyer has transferee liability, other than the
Assumed Liabilities.
SECTION 2.5. PURCHASE PRICE. (a) In consideration of the sale and
--------------
transfer by Seller to Buyer of the Assets, Buyer shall, at the Closing, pay to
Seller an amount equal to Forty Million Dollars ($40,000,000), subject to
adjustment as provided in subsection (b) below (the "PURCHASE PRICE"). The
Purchase Price shall, subject to adjustment as provided in subsection (b) below,
be paid by wire transfer to an account of Seller with a bank in the United
States designated by Seller, by notice to Buyer, not later than two business
days prior to the date such payment is due (or if not so designated, then by
certified or official bank check payable to the order of Seller).
(b) At the Closing, the Purchase Price shall be adjusted as follows:
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(i) In the event the Seller's Current Assets as of the Closing Date
are in excess of the Seller's Total Liabilities as of the Closing Date, the
Purchase Price shall be increased by an amount equal to the Net
Liabilities.
(ii) In the event the Seller's Current Assets as of the Closing
Date are less than the Seller's Total Liabilities as of the Closing Date,
the Purchase Price shall be decreased by an amount equal to the Net
Liabilities.
(iii) The Purchase Price shall be decreased by, at Buyer's sole
discretion, either (A) $2,000 multiplied by the amount, if any, by which
the number of Basic Subscribers on the Closing Date is less than 20,000 or
(B) (x) the amount by which the Total Revenue From All Subscribers is less
than $1,815,600, if any, multiplied by (y) 22.031 (the "SUBSCRIBER/REVENUE
ADJUSTMENT").
(iv) The amount of the net adjustment to the Purchase Price
hereunder shall be estimated by Seller (after consultation with Buyer),
which shall prepare Schedule 2.5(b)(iv), to be delivered at least ten (10)
-------------------
days prior to the Closing Date, containing the estimated Purchase Price
adjustment indicating in detail the basis for its estimate. If the
adjustment to the Purchase Price provides for a net increase in the
Purchase Price, Buyer shall pay such net increase on the Closing Date. If
the adjustment to the Purchase Price provides for a net decrease in the
Purchase Price, Buyer shall reduce accordingly the amount of the Purchase
Price.
(v) (A) The amount of the final adjustment to the Purchase Price
hereunder, if any, shall initially be determined by Buyer, which shall
prepare Schedule 2.5(b)(v), to be delivered within ninety (90) days after
------------------
the Closing Date, containing the final Purchase Price adjustment and
setting forth in detail the calculation of such adjustment. Seller may
designate, at its sole expense, any qualified agent or certified public
accountant to review Buyer's work in preparing Schedule 2.5(b)(v).
------------------
(B) In computing the amount of the final adjustment to the
Purchase Price, in the event Buyer elects to adjust the Purchase Price in
accordance with Section 2.5(b)(iii)(A), all Provisional Subscribers as of
the Closing Date that satisfy the definition of a Basic Subscriber as of
the 60th day immediately following the Closing Date shall be referred to
herein as "ADDITIONAL BASIC SUBSCRIBERS". To the extent that the Purchase
Price was reduced on the Closing Date in accordance with Section
2.5(b)(iii)(A), the final adjustment to the Purchase Price shall reflect a
credit to the Seller in an amount equal to $2,000 for each Additional Basic
Subscriber; provided however, that in no event shall such credit exceed the
amount of the adjustment to the Purchase Price calculated in accordance
with Section 2.5(b)(iii)(A).
(C) Except for any item which is disputed in accordance with
subsection (vi) below, any adjusting payment required by Schedule 2.5(b)(v)
------------------
shall be made within fifteen (15) days after the submission thereof to
Seller.
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(vi) In the event Seller provides written notice to Buyer within ten
(10) days after submission of Schedule 2.5(b)(v) that it disagrees with the
------------------
final adjustment to the Purchase Price set forth therein, Buyer and Seller
shall have an additional thirty (30) days to mutually resolve the
disagreement. If a mutually satisfactory conclusion is not reached within
said thirty (30) day period, each of Buyer and Seller, respectively, at its
own cost, shall engage an independent accounting firm of national
reputation to provide an independent determination with respect to the
final adjustment to the Purchase Price set forth on Schedule 2.5(b)(v)
-------- ---------
within thirty (30) days after the initial thirty (30) day period. In the
event that such firms disagree with respect to such final adjustment, such
firms shall select a third independent accounting firm of national
reputation, and such third firm shall provide an independent determination
with respect to such final adjustment within thirty (30) days after such
firm is retained, and the determination of such third independent
accounting firm shall be deemed to be the final adjustment to the Purchase
Price. Buyer and Seller shall share equally in the cost of such third
independent accounting firm.
(vii) Any amount due to Seller or Buyer, as the case may be, as a
result of the final Purchase Price adjustment shall bear interest from the
Closing Date to the date of payment of the amount due at a rate equal to
the rate announced from time to time by Buyer's principal lender as its
prime rate (and the rate hereunder shall change each time such prime rate
changes) (the "PRIME RATE").
(viii) Any payment pursuant to this Section 2.5(b) shall be made by
wire transfer of immediately available funds to such account of Seller or
Buyer as may be designated by Seller or Buyer (as applicable).
SECTION 2.6. CLOSING. Subject to the provisions of Section 2.6(b), the
-------
closing (the "CLOSING") of the purchase and sale of the Assets and the
assumption of the Assumed Liabilities hereunder shall take place at the offices
of Buyer in Philadelphia, Pennsylvania on the last day of the month immediately
following the tenth day after the date on which all conditions to Closing have
been satisfied, or on such date as Buyer and Seller may otherwise mutually
agree. At the Closing:
(a) Buyer shall deliver to Seller the Purchase Price, adjusted in
accordance with Section 2.5(b);
(b) Seller shall enter into an Assignment and Assumption Agreement with
Buyer substantially in the form attached hereto as Exhibit B, and Seller shall
deliver to Buyer such warranty deeds, a Xxxx of Sale in the form attached hereto
as Exhibit C, endorsements, consents, assignments and other good and sufficient
instruments of conveyance and assignment as Buyer shall deem reasonably
necessary or appropriate to vest in Buyer all right, title and interest in, to
and under the Assets, subject only to Permitted Liens and Assumed Liabilities;
and
-15-
(c) Seller shall deliver all such further documents, instruments and
agreements as may be reasonably requested by Buyer or its counsel, in order to
more effectively transfer title to the Assets to Buyer, or to effectuate and
carry out any provision of this Agreement.
SECTION 2.7. ALLOCATION OF PURCHASE PRICE. The Purchase Price and
----------------------------
Assumed Liabilities shall be allocated among the Assets and the covenant not to
compete described in Section 7.4 hereof in accordance with the decision of an
appraisal firm to be mutually agreed upon by Buyer and Seller, as promptly as
possible following the Closing Date. The cost of such appraisal shall be shared
equally by Seller and Buyer. Buyer and Seller shall each file Tax returns
consistent with such allocation.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER AND JCC
Each of Seller and JCC represents and warrants to Buyer as of the date
hereof and as of the Closing Date that:
SECTION 3.1. EXISTENCE AND POWER; AFFILIATES. Seller is a limited
-------------------------------
partnership, validly existing and in good standing under the laws of the State
of Colorado, and has all partnership powers and all governmental licenses,
authorizations, permits, consents and approvals required to carry on its
business as now conducted. Seller is duly qualified to do business and is in
good standing in each jurisdiction where such qualification is necessary. Seller
has requisite partnership power and authority to own, lease and use the Assets
and to conduct the System's business as currently conducted. Seller is not a
participant in any joint venture or partnership with any other Person. Seller
does not own any equity interest in any other entity. Seller has heretofore
delivered to Buyer true and complete copies of the partnership agreement of
Seller as currently in effect. Seller has no Affiliates other than as set forth
on Schedule 3.1 that have any direct or indirect interest in either the Assets
------------
or the System.
SECTION 3.2. AUTHORIZATION. The execution, delivery and performance by
-------------
Seller of this Agreement are within Seller's powers and, subject to receipt of
the approval of the limited partners of Seller, have been duly authorized by all
necessary action on the part of Seller and its partners. This Agreement has been
duly and validly executed and delivered by Seller and constitutes a valid and
binding agreement of Seller, enforceable against Seller in accordance with its
terms.
SECTION 3.3. GOVERNMENTAL AUTHORIZATION. The execution, delivery and
--------------------------
performance by Seller of this Agreement require no action by or in respect of,
or filing with, any Governmental Authority other than (a) for filings required
under the Exchange Act, (b) compliance with any applicable requirements of the
HSR Act, and (c) as described in Section 3.5.
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SECTION 3.4. NON-CONTRAVENTION. The execution, delivery and performance
-----------------
by Seller of this Agreement do not and will not (a) violate or conflict with the
partnership agreement of Seller, (b) assuming compliance with the matters
referred to in Section 3.3, violate or conflict with any applicable Legal
Requirement applicable to Seller; (c) assuming the obtaining of all Required
Consents and Franchise Approvals, violate or conflict with, result in a breach
of, or constitute a default under or give rise to any right of termination,
cancellation, modification or acceleration of any right or obligation of Seller
or to a loss of any benefit relating to the System to which Seller is entitled
under any provision of any agreement, contract or other instrument (including
without limitation any Authorization) binding upon Seller or by which any of the
Assets is or may be bound or (d) result in the creation or imposition of any
Lien on any Asset.
SECTION 3.5. REQUIRED CONSENTS; FRANCHISE APPROVALS. (a) Schedule
-------------------------------------- --------
3.5(a) sets forth all franchises, licenses, authorizations, notices, approvals
------
and consents required pursuant to the Contracts or otherwise for (i) Seller to
transfer the Assets to Buyer free and clear of all Liens other than Permitted
Liens, and for (ii) Buyer to assume the Assets, assume and perform the Contracts
and the Authorizations and operate the System, except for Franchise Approvals
(each such consent, a "REQUIRED CONSENT" and together the "REQUIRED CONSENTS").
IDS Cable Corporation, a general partner of Seller, has previously given its
irrevocable consent to the consummation of the transactions contemplated by this
Agreement.
(b) Schedule 3.5(b) sets forth all franchises, licenses, authorizations,
---------------
approvals and consents (each, a "FRANCHISE APPROVAL" and together the "FRANCHISE
APPROVALS") required pursuant to the Authorizations or by any Governmental
Authority for (i) Seller to transfer the Assets and the System to Buyer free and
clear of all Liens other than Permitted Liens, (ii) Buyer to conduct the
business of the System and to own, lease, use and operate the Assets and (iii)
Buyer to assume the CATV Instruments.
SECTION 3.6. FINANCIAL STATEMENTS. The (a) audited financial statements
--------------------
of Seller for the year ended December 31, 1997, and (b) Interim Balance Sheet
and the related statements of income and cash flows of Seller for the three
month period ended March 31, 1998, are complete, true and accurate in all
material respects and fairly present, in accordance with GAAP, the financial
position of the Seller as of the dates thereof, and the results of its
operations and changes in financial position for the periods then ended (subject
to normal year-end adjustments, none of which will be material, in the case of
the unaudited interim financial statements).
SECTION 3.7. ABSENCE OF CERTAIN CHANGES. Except as set forth on
--------------------------
Schedule 3.7, since December 31, 1997, the business of the System has been
------------
conducted in the ordinary course consistent with past practice, and there has
not been:
(a) any material adverse change in the business, assets, condition
(financial or otherwise), or results of operations of the System, including
without limitation, as to the System's rate regulation position (provided
that, certification of a local franchising authority shall not, by itself,
constitute a material adverse change
-17-
in the business, assets, condition (financial or otherwise) or results of
operation of the System), other than (i) a change arising out of general
economic conditions in the United States, (ii) any change affecting the United
States cable industry as a whole, including any change arising from
legislation, litigation, rulemaking or regulation, any of which affects the
United States cable industry as a whole or (iii) competition caused by or
arising from any Multi-Channel Video Service providers who are currently
competing with, have the legal authorization, pursuant to a franchise or
license, to compete with, or have announced their intention to compete with
the Seller, and which are set forth on Schedule 3.27;
-------------
(b) any incurrence, assumption or guarantee by Seller of any indebtedness
for borrowed money with respect to the System other than in the ordinary
course of business and in amounts and on terms consistent with past practice,
but in any event not exceeding $5,000;
(c) any creation or other incurrence of any Lien on any Asset, other than
Permitted Liens and Liens which will be removed on or before the Closing Date;
(d) any damage, destruction or other casualty loss (whether or not
covered by insurance) affecting any Asset which has not been repaired or
replaced to Buyer's satisfication and which, individually or in the aggregate,
has resulted in a Material Adverse Effect;
(e) any contract, agreement, commitment or arrangement between Seller and
any party, other than in the ordinary course of business involving an
obligation or liability of Seller in an amount equal to or exceeding $5,000;
(f) any modification, amendment, cancellation, termination (or receipt of
notice of termination), forfeiture, failure to renew or encumbrance in any
manner (other than in the ordinary course of business consistent with past
practice or as is contemplated by this Agreement) of any of the Authorizations
or Contracts;
(g) any sale, assignment, lease or other transfer or disposition of any
of the Assets, other than in the ordinary course of business consistent with
past practice;
(h) any transaction or commitment made by Seller relating to the System
or any Asset (including the acquisition of any assets) or any relinquishment
by Seller of any Contract or other right, in either case, other than
transactions and commitments in the ordinary course of business consistent
with past practice and those contemplated by this Agreement;
(i) any change in any method of accounting or accounting practice by
Seller with respect to the business of the System except for any such change
after the date hereof required by reason of a concurrent change in GAAP or any
change in any of the assumptions underlying, or methods of calculating any bad
debt, contingency or other reserve;
(j) any change in compensation or other benefits payable to any such
employee of the System (whether or not pursuant to any severance or retirement
-18-
plans or policies), other than in the ordinary course of business consistent
with past practice;
(k) any labor dispute, other than routine individual grievances, or any
activity or proceeding by a labor union or representative thereof to organize
any employees of the System, or any lockouts, strikes, slowdowns, work
stoppages or threats thereof by or with respect to such employees;
(l) any change in any of Seller's subscriber policies (including without
limitation, subscriber acquisition and retention and disconnect policies),
billing rates or procedures related to the System, including its
billing/subscriber report systems (including, without limitation, any decrease
or increase in the Monthly Predominant Rate) or any material reduction of the
services provided to subscribers by the System; or
(m) any promotions, pricing discounts or other sales or marketing
incentives (whether relating to pricing or otherwise) made available to
subscribers or prospective subscribers for Cable Service.
SECTION 3.8. PROPERTIES. (a) Schedule 3.8(a) describes all of the Real
---------- ---------------
Property, which Seller owns (the "OWNED REAL PROPERTY"), leases or subleases
(the "LEASED REAL PROPERTY"), and which is used in connection with the System,
any surveys with respect thereto, and any Liens thereon, specifying in the case
of the Leased Real Property, the name of the lessor or sublessor, the lease term
and basic annual rent.
(b) Schedule 3.8(b) describes all Personal Property with a book or fair
---------------
market value in excess of $1,000 which Seller owns, leases or subleases, and any
Liens thereon, specifying in the case of leases or subleases, the name of the
lessor or sublessor, the lease term and basic annual rent.
(c) (i) Seller has good and marketable, indefeasible, fee simple title
to, or in the case of leased Assets, has valid leasehold interests in, all
Assets.
(ii) The Real Property includes all real property as is used or held
for use in connection with the conduct of the business and operations of
the System.
(iii) Subject to ordinary wear and tear, the buildings, structures
and equipment included in the Assets have no defects and are in good
operating condition and repair, and have been maintained and are suitable
for their present uses and, in the case of buildings and other structures
(including without limitation, the roofs thereof), are structurally sound.
(iv) The buildings and structures included in the Assets currently
have access to (1) public roads or valid perpetual easements over private
streets or private property for such ingress to and egress from all such
plants, buildings and structures and (2) water supply, storm and sanitary
sewer facilities, telephone, gas and electrical connections, fire
protection, drainage and other public utilities, as are necessary and
appropriate for the conduct of the System.
-19-
(v) None of the material structures on the Real Property encroaches
upon real property of another Person, and no structure of any other Person
encroaches upon any Real Property.
(vi) All Real Property is available for immediate use in the conduct
of the System.
(vii) The Owned Real Property and the Leased Real Property
comply in all material respects with all applicable building or zoning
codes and the regulations of any Governmental Authority having
jurisdiction.
(viii) No condemnation of any of the Owned Real Property has
occurred, is pending, or to the knowledge of Seller, is threatened.
(ix) To the Seller's knowledge, no condemnation of any of the
Leased Real Property has occurred or is threatened.
(d) Except as disclosed on Schedule 3.8(d), no Asset is subject to any
---------------
Lien, except Permitted Liens.
SECTION 3.9. SUFFICIENCY OF AND TITLE TO THE ASSETS. (a) The
--------------------------------------
Assets constitute all of the assets or property used or held for use in
connection with the operation of the System, except the Excluded Assets.
(b) Upon consummation of the transactions contemplated hereby, Buyer
will have acquired good and marketable title in and to, or a valid leasehold
interest in, each of the Assets, free and clear of all Liens, except for
Permitted Liens.
(c) The System constitutes a fully operational cable television
system with all material assets, properties, licenses, permits, consents,
certificates, operating rights, leases, easements, licenses, rights-of-way,
agreements, commitments and arrangements and all Authorizations and franchises
necessary to operate in accordance with Legal Requirements and maintain the
same.
SECTION 3.10. NO UNDISCLOSED LIABILITIES. There are no liabilities
--------------------------
of the Seller related to the System of any kind whatsoever, whether accrued,
contingent, absolute, determined, determinable or otherwise, and to the Seller's
knowledge after due investigation, there is no existing condition, situation or
set of circumstances which could reasonably be expected to result in such a
liability, other than liabilities set forth on Schedule 3.10 and on the Interim
-------------
Balance Sheet; and current liabilities, within the meaning of GAAP, entered into
in the ordinary course of business which, individually and in the aggregate, are
not material to the Business.
-20-
SECTION 3.11. LITIGATION. Except as set forth on Schedule 3.11,
---------- -------------
there is no action, suit, investigation or proceeding pending against, or to the
knowledge of Seller, threatened against or affecting Seller, the System or any
Asset before any arbitrator or any Governmental Authority. To Seller's
knowledge, there are no facts which could reasonably serve as the basis for any
material claim, action, suit or proceeding. No pending claim, if determined or
resolved adversely, would have a Material Adverse Effect or could terminate or
adversely change the terms and conditions of the System's rights with respect to
(a) pole attachment rights or rents, (b) subscriber rates or tariffs, (c) the
rearrangement, relocation or removal of cable, amplifiers, towers or other
property (including easements, rights of access and other such rights), (d)
carriage of signals presently carried on the System (except for notices to
blackout programming pursuant to FCC rules and regulations) or (e) the right to
operate the System pursuant to the Authorizations. There is no claim, action,
suit or proceeding pending against, or to Seller's knowledge, threatened against
Seller or any of its Affiliates, which in any manner challenges or seeks to
prevent, enjoin, alter or materially delay the transactions contemplated hereby.
SECTION 3.12 MATERIAL CONTRACTS. (a) Schedule 3.12(a) sets forth,
------------------ ----------------
with respect to the System, a true and complete list of: (i) all leases of Real
Property (both as lessor and lessee); (ii) all leases of Personal Property (both
as lessor and lessee); (iii) all agreements to provide service to multiple
dwelling units (including any such agreements which are pending execution),
whether on a bulk or direct xxxx basis; (iv) all agreements with or for the
benefit of any partner, officer or Affiliate of Seller or any partner or officer
of any such Affiliate; (v) all pole attachment and conduit use agreements; (vi)
all agreements between Seller and those broadcast stations with "must carry"
rights who have received carriage and all retransmission consent agreements;
(vii) all agreements between Seller and any Governmental Authority, other than
Authorizations, including rate regulation agreements and other agreements
containing provisions that prohibit or restrict regulation by any Governmental
Authority; (viii) any partnership or joint venture contracts or arrangements or
any other agreements involving a sharing of revenues or profits to which Seller
is a party or by which it is bound or which affects or relates to the Assets;
(ix) any contracts or agreements for the sale of any of the Assets or the grant
of any rights to purchase any of the Assets; (x) any agreement that limits the
freedom of Seller or any of its officers or employees to compete in any line of
business or with any Person or in any area or to own, operate, sell, transfer,
pledge or otherwise dispose of or encumber any Asset or which would so limit the
freedom of Buyer after the Closing Date; (xi) each note, guarantee or letter of
credit entered into or issued or to be issued, contingently or otherwise, by or
for the benefit of Seller, and all loan, security and other agreements relating
thereto; (xii) each Lien (other than Permitted Liens) relating to or affecting
any of the Assets; and (xiii) all other Contracts included in the Assets which:
(1) involve an annual payment in excess of Five Thousand Dollars ($5,000); (2)
could involve total payments by Seller in excess of Ten Thousand Dollars
($10,000); (3) do not terminate by their terms or are not cancelable by Seller
without penalty on no more than sixty (60) days, prior notice; or (4) are
otherwise material to the operation of the System (all such items under
subsections (i) - (xiii) are collectively referred to as the "MATERIAL
CONTRACTS"). Schedule 3.12(a) also sets forth a true and complete list of all of
----------------
the System's outstanding purchase orders for an amount in excess of $5,000
pending on the date
-21-
hereof. The aggregate amount of all unscheduled purchase orders does not exceed
$10,000. True and correct copies of the Material Contracts (other than the Bank
Loan Documents) and such scheduled purchase orders have been delivered or made
available to Buyer.
(b) Each Contract disclosed in any Schedule to this Agreement or
required to be disclosed pursuant to this Agreement is a valid and binding
agreement of Seller and each other party thereto and is in full force and
effect, and neither Seller, nor to the knowledge of Seller, any other party
thereto, is in default or breach under the terms of any such Contract, nor, to
the knowledge of Seller, has any event or circumstance occurred that, with
notice or lapse of time or both, would constitute any event of default
thereunder. Seller has no knowledge of any intention by any party to terminate
or amend any Contract or to refuse to renew the same upon expiration of its
term.
(c) Schedule 3.12(c) sets forth for each bulk-billed agreement
----------------
applicable to the System, as of the date of this Agreement, the names of the
parties thereto, the number of units served, the services provided (i.e. Limited
Basic Service, Tier One Service, HBO, Cinemax and other Premium Pay Services),
the current rate for Limited Basic Service, Tier One Service and Premium Pay
Service, the date of execution, the date of termination and whether consent is
required to transfer such agreement to Buyer.
SECTION 3.13. AFFILIATES. Except as set forth on Schedule 3.13, none
---------- -------------
of Seller's partners, employees, officers or Affiliates has any interest in any
of the Assets and neither Seller nor any of such Persons has any stock or other
ownership interest in any other Person which is a supplier to the System or
which provides Multi-Channel Video Service in any community contiguous with the
communities served by the System. For purposes of this Section, ownership of not
more than 10% of the common or preferred stock of any publicly held company
whose stock is listed on any recognized stock exchange or traded over-the-
counter shall not be deemed an ownership interest.
SECTION 3.14. INSURANCE COVERAGE. Seller has furnished to Buyer a
------------------
list of all insurance policies and fidelity bonds relating to the Assets and the
System and its employees, agents and contractors which are currently in force.
There is no claim by Seller pending under any of such policies or bonds as to
which coverage has been questioned, denied or disputed by the underwriters of
such policies or bonds or in respect of which such underwriters have reserved
their rights. All premiums payable under all such policies and bonds have been
timely paid and Seller has otherwise complied fully with the terms and
conditions of all such policies and bonds. Such policies and bonds are of the
type and in amounts customarily carried by persons conducting business similar
to the business of the System. Except as disclosed in Schedule 3.14, after the
-------------
Closing Seller shall continue to have coverage under such policies and bonds, or
equivalent policies and bonds, with respect to events occurring prior to
Closing.
-22-
SECTION 3.15. COMPLIANCE. Except as set forth on Schedule 3.15,
---------- -------------
Seller is in compliance in all material respects with (i) all Legal Requirements
of all Governmental Authorities having jurisdiction over the Assets, the System
or Seller and (ii) the terms and provisions of all Contracts and Authorizations.
Seller has received no notice claiming a violation by Seller or the System of
any Legal Requirement applicable to the Assets or the System and to Seller's
knowledge, there is no basis for any claim that such a violation exists. Neither
Seller nor any officer, partner, agent, employee or representative of Seller,
nor, to the knowledge of Seller, any of Seller's predecessors in title to any
portion of the System, or any other Person, has violated any Legal Requirement
in connection with procuring, obtaining, or maintaining any Authorization in any
respect so as to adversely affect the business of the System.
SECTION 3.16. RECEIVABLES. All accounts receivable, notes receivable
-----------
and other receivables included in the Assets were created in the ordinary course
of business consistent with past practice and are and, on the Closing Date, will
be, valid and genuine. The aging schedule of the accounts receivable of the
System, attached hereto as Schedule 3.16, was prepared in accordance with GAAP
-------------
and is true and correct as of the date of such Schedule.
SECTION 3.17. INTELLECTUAL PROPERTY. (a) Seller has not during the
---------------------
three years preceding the date of this Agreement been a defendant in any action,
suit, investigation or proceeding relating to, or otherwise been notified of,
any alleged claim or infringement of any patents, trademarks, service marks or
copyrights, and Seller has no knowledge of any other claim or infringement by
Seller.
(b) During the three-year period preceding the date the most
recent copyright reports were due, Seller has timely and accurately filed all
required copyright reports, notices, statements, supplemental statements, and
amendments and made all payments required in connection therewith, with the
United States Copyright Office, and will promptly deliver to Buyer copies
thereof, as well as correspondence with any Governmental Authorities relating
thereto. Seller and the System are in compliance with the Copyright Act.
Seller and the System are entitled to hold and do now hold the compulsory
copyright license described in Section 111 of the Copyright Act, which
compulsory copyright license is in full force and effect and has not been
revoked, canceled, encumbered or adversely affected in any manner. Seller is
aware of no facts and has not received any notice or other communication
asserting that the System is not in compliance with the Copyright Act.
SECTION 3.18 FINDERS' FEES. Except as set forth on Schedule 3.18,
------------- -------------
there is no investment banker, broker, finder or other intermediary which has
been retained by or is authorized to act on behalf of Seller or any of its
Affiliates who might be entitled to any fee or commission in connection with the
transactions contemplated by this Agreement. Any finders' fee paid to any person
or entity set forth on Schedule 3.18 shall be paid by Seller.
-------------
-23-
SECTION 3.19. ENVIRONMENTAL COMPLIANCE. (a) Except as disclosed on
------------------------
Schedule 3.19, the Seller is, to its knowledge, in compliance in all material
-------------
respects with all Environmental Laws and the System is and has been operated by
Seller, and to Seller's knowledge, all other Persons, in material compliance
with all Environmental Laws. Except as disclosed on Schedule 3.19:
-------------
(i) in connection with or relating to the Assets or the System, no
notice, notification, demand, request for information, citation, summons or
order has been received, no complaint has been served, no penalty has been
assessed and no investigation or review is pending or, to Seller's
knowledge, threatened by any governmental or other entity with respect to
any (A) alleged violation of any Environmental Law, (B) alleged failure to
have any Environmental Permit, (C) Regulated Activity or (D) Release of
Hazardous Substances;
(ii) neither Seller, nor to Seller's knowledge, any other Person, has
engaged in any Regulated Activity at, on or in connection with any Asset or
any Real Property;
(iii) neither Seller, nor to Seller's knowledge, any other Person,
has Released any Hazardous Substance (and no oral or written notification
of such Release has been made or filed) on or under any Real Property;
(iv) there are no Liens under Environmental Laws on any of the Owned
Real Property or the Assets and, to Seller's knowledge, no government
actions have been taken or, to Seller's knowledge, are in process which
could subject any of such Owned Real Property or Assets to such Liens. No
notices or restrictions relating to Hazardous Substances have been or are
required to be placed in any deed to any Owned Real Property; and
(v) there are no Environmental Permits that are nontransferable or
require consent, notification or other action to remain in full force and
effect following the consummation of the transactions contemplated hereby.
(b) There has been no written environmental study, audit, test, review or
other analysis conducted of which Seller has knowledge in relation to any Asset
or Real Property which has not been delivered to Buyer at least five days prior
to the date hereof.
SECTION 3.20. AUTHORIZATIONS AND CATV INSTRUMENTS. (a) Each
-----------------------------------
Authorization and CATV Instrument is valid, is in full force and effect, is not
in default and is in accordance with all applicable Legal Requirements
(including without limitation, FCC rules and regulations) and Seller is in
compliance therewith in all material respects. The System is serving only those
Franchise Areas and other areas set forth on Schedule 3.20. Except as set forth
-------------
in Schedule 3.20, Seller has not made any commitments to any Governmental
-------------
Authority that are not fully reflected in the Authorizations or CATV
Instruments. Except as set forth on Schedule 3.20, there are
-------------
-24-
no proposed increases in the fees and charges payable by Seller under any
provisions of the Authorizations or CATV Instruments or any other proposed
modifications to any of the Authorizations or CATV Instruments. Schedule 3.20
-------------
sets forth a true and complete list, including expiration dates, of each
Franchising Authority and all currently outstanding Authorizations and CATV
Instruments issued to Seller by the FCC with respect to Federal Authorizations
and each other Governmental Authority with respect to Other Authorizations,
including without limitation, all current licenses, franchises, ordinances,
permits, compliance certificates, any pending license or franchise application
and those Federal Authorizations relating to Business Radio Services and CARS,
and for the System's earth stations. All filings, reports and notices required
to be given or filed with the FCC and the Governmental Authorities granting any
license or Authorization in connection with the System, the operation of the
System and the carriage of all signals carried with respect thereto have been
duly given or filed, and all such notices and reports are accurate and complete
in all material respects. Seller has provided to Buyer true and complete copies
of all documents listed on Schedule 3.20, as well as all material correspondence
-------------
with any Governmental Authorities related thereto. The Authorizations and/or
CATV Instruments enable Seller to operate the System in accordance with all
Legal Requirements in the entire areas purportedly covered by the Authorizations
and/or CATV Instruments with respect to the System, whether or not Seller is
currently operating in any such area. To Seller's knowledge, after due inquiry,
there is no fact or matter that could constitute a basis for revocation,
suspension, termination or denial of the granting of a new Authorization upon
the expiration thereof, or diminishment or elimination of any rights under any
Authorization or CATV Instrument and no legal action, proceeding or
investigation is pending or, to the knowledge of Seller, threatened that could
result in any of the foregoing. No conditions or restrictions, except as stated
in the Authorizations or CATV Instruments, apply to the Authorizations or CATV
Instruments, other than such as may exist by virtue of any act of Congress or
the various Governmental Authorities or by regulations of any Federal regulatory
agency.
(b) Except as set forth on Schedule 3.20, for any Authorization which has
-------------
an unexpired term of less than three (3) years from the date hereof, a request
for renewal thereof has been filed under Section 626(a) of the Cable
Communication Policy Act of 1984, as amended (a "626 REQUEST"), with the proper
Governmental Authority, within thirty (30) to thirty-six (36) months prior to
the expiration date thereof, copies of which have been provided to Buyer.
SECTION 3.21. TECHNICAL COMPLIANCE. All aeronautical frequencies in use
--------------------
in the System have been properly registered with the FCC, and on the Closing
Date only aeronautical frequencies eligible under Part 76.612 of Title 47 of the
Code of Federal Regulations shall be in use. The System provides reception on
the channels set forth on the Information Sheet in compliance with the technical
guidelines set forth in Part 76, Subpart K of Title 47 of the Code of Federal
Regulations, and any additional standard for signal quality as set forth in the
Authorizations, the CATV Instruments and/or any other applicable Legal
Requirement. The System meets all Legal Requirements concerning signal leakage,
including without limitation, all signal leakage criteria prescribed by the FCC,
including without limitation, the signal leakage performance criteria specified
in Part 76.611 of Title 47 of the Code of Federal Regulations. The System
materially complies with all applicable grounding and
-25-
bonding requirements.
SECTION 3.22. ADDITIONAL FCC MATTERS. (a) Seller has provided all
----------------------
notices to subscribers and maintained all public files as required by FCC rules
and regulations. Seller has submitted all required equal employment opportunity
reports to the FCC, and the System has received equal employment opportunity
certification from the FCC for each year except as set forth on Schedule 3.22.
-------------
Seller is operating only those radio facilities for which appropriate
Authorizations have been obtained and are in effect, and Seller is meeting the
conditions of such Authorizations. Except as set forth on Schedule 3.22, as of
-------------
the date of this Agreement, the rates charged to customers of the System are not
subject to regulation by any Governmental Authority, including the local
Franchising Authority and/or the FCC. To the knowledge of Seller, the rates
charged by the System are allowable under the rules and regulations promulgated
by the FCC under the Cable Act as of the date of this Agreement and for the
twelve month period prior to the date of this Agreement, and any authoritative
interpretation thereof, whether or not such rates were subject to regulation by
any Governmental Authority. Except as set forth on Schedule 3.22, as of the date
-------------
of this Agreement, Seller has not filed any reports or forms with respect to the
rates of the System pursuant to the Cable Act. Seller has delivered to Buyer a
true and correct copy of an actual xxxx sent to a subscriber which provides an
itemization of all charges.
(b) Seller has provided syndicated exclusivity and network nonduplication
protection to stations that have requested such protection, and has followed all
FCC procedures, including but not limited to, those procedures applicable to
origination cablecasting, equal time and personal attack obligations, obscenity,
sponsorship identifications, sponsorship lists, and commercial leased access as
specified by FCC rules and regulations.
(c) Seller is aware of no facts and Seller has received no notice or
other communication from any Person indicating or alleging that Seller is not in
compliance in any material respect with all requirements of (i) the FCC rules
and regulations or the Cable Act, (ii) any Authorization, or that any
Authorization has been revoked, suspended, has expired, or is otherwise not in
full force and effect or (iii) any other applicable Legal Requirement.
SECTION 3.23. FEDERAL AVIATION ADMINISTRATION. Seller has obtained all
-------------------------------
necessary FAA approvals and waivers with respect to the System's towers. All
existing towers of the System are obstruction marked and lighted, to the extent
required by FAA rules and regulations, and otherwise comply with the rules and
regulations of the FAA. To the extent required by the rules and regulations of
the FAA, Seller has provided proper notice to the FAA prior to the construction
or alteration of radio towers used in the operation of the System.
SECTION 3.24. SUBSCRIBER AND REVENUE DATA.
---------------------------
(a) Schedule 3.24(a) sets forth a true and complete list as of March 31,
----------------
1998 of the number of: (i) Basic Subscribers; (ii) Courtesy Subscribers; (iii)
miles of underground and aerial plant; (iv) Homes Passed; and (v) Total Revenue
From All Subscribers.
-26-
(b) Seller has provided Buyer with a true and correct detailed breakdown
for the year ended December 31, 1997 and for each calendar month for the three
(3) month period ended March 31, 1998, of the source of System (i) expenses and
(ii) revenues (Limited Basic Service, Tier One Service, Premium Pay Service,
additional outlet, converters (remote) rental, late and other fees,
installation, advertising, shopping, guide, etc.).
(c) Seller has provided Buyer with a true and complete copy of the
System's subscriber reports for each calendar month for the twelve months ended
December 31, 1997 and for each calendar month for the three (3) month period
ended March 31, 1998.
(d) Using its billing service, the System bills subscribers monthly in
advance prior to the first day of each subscriber billing cycle for services to
be received during such billing cycle.
(e) Schedule 3.24(e) sets forth true and correct copies, as of the date
----------------
of this Agreement, of the rate schedules (excluding periodic promotional
activities in the normal course of business consistent with past practice or the
availability of a promotional opportunity from a Premium Pay Service provider)
for individual subscribers for the System, identifying the rates charged to each
type of subscriber for Limited Basic Service, Tier One Service and Premium Pay
Service, and all equipment and other charges. Schedule 3.24(e) also sets forth
----------------
the rates charged by the System for Leased Access Programming.
(f) Schedule 3.24(f) sets forth true and correct copies of all privacy
----------------
notices required by the FCC to be delivered by the System to any of its
subscribers since January 1, 1995 and true and correct copies of all notices and
other written correspondence, other than privacy notices, required by the FCC to
be delivered by the System to any of its subscribers since January 1, 1996.
SECTION 3.25. LEGALITY OF SIGNAL CARRIAGE. Schedule 3.25 sets forth a
--------------------------- -------------
true and complete list of all stations or signals carried or proposed to be
carried on the System, describes whether each station or signal is acquired by
microwave, satellite earth station or off-air reception or is locally
originated, identifies the channel on which the station is carried, identifies
which stations or signals are automated or alpha-numeric, identifies whether the
stations or signals are included in the Limited Basic Service or Tier One
Service, identifies which if any of such stations or signals are carried part-
time and describes the classification of each station or signal for copyright
purposes. The System is duly authorized to carry all stations or signals being
carried and is presently carrying all stations or signals required to be carried
and all signals are being carried in accordance with all rules and regulations
of the FCC and the United States Copyright Office. Timely notice was given in
accordance with the Cable Act and FCC rules and regulations to each commercial
and non-commercial station carried by the System who have "must carry" rights.
There are no broadcast stations that are entitled to carriage under the FCC
"must carry" rules which are not carried by the System, except as separately
listed on Schedule 3.25, which list specifies the exemption which provides the
-------------
basis for not carrying each such station. Schedule 3.25 also
-------------
-27-
indicates, as to each broadcast station that is entitled to carriage on the
System under FCC rules, whether the station has elected mandatory carriage or
retransmission consent, the date of such station's notice and whether such
station is considered a "low powered television station". As to each such
station which requested retransmission consent, a list of all correspondence in
connection with such negotiations that is in Seller's possession is set forth in
Schedule 3.25. A copy of each retransmission consent agreement entered into by
-------------
Seller, and of all written notices and correspondences sent or received by
Seller in connection with such mandatory carriage and retransmission consent
matters, has been provided to Buyer, and Seller has included in Schedule 3.25 a
-------------
description of each such retransmission consent agreement which is not written.
No notices or demands have otherwise been received by Seller challenging the
right of the System to carry any television or broadcast channel or radio
broadcast channel or other programming, or asserting an obligation of the System
to carry any television or radio broadcast channel or other programming not
carried by the System.
SECTION 3.26. CERTAIN SYSTEM INFORMATION.
--------------------------
(a) Schedule 3.26 sets forth for the System a true and correct
-------------
description of: (i) the approximate miles of underground cable system plant;
(ii) the approximate miles of aerial cable system plant; (iii) the channel
capacity; (iv) the number of addressable and non-addressable converters in
inventory; (v) the number of addressable and non-addressable converters in the
field; and (vi) the community identification numbers for the System.
(b) The System and the geographic areas in which Seller is entitled to
extend cable communications services under the Authorizations are not in areas
of "effective competition" as such term is defined in the Cable Act. Neither
the FCC nor any other Governmental Authority has concluded, and Seller has not
taken the position, that the System or the Authorizations are "small systems" as
contemplated by the Cable Act.
(c) A true and correct copy of an "as built" map of the System has been
provided or made available to Buyer. The System has been designed, constructed,
operated and maintained in all material respects in compliance with all
applicable regulatory codes, Authorizations and FCC and FAA rules and
regulations, and all equipment operates in all material respects within the
manufacturers' specifications, the System has been designed and constructed to
deliver a video and associated audio signal on each channel meeting the
technical standards for quality contained in the Authorizations and FCC rules
and regulations, and all aeronautical frequencies used in the operation of the
System are authorized for the entire service radii of the System, which radii
encompass all areas served by the System. The System is in compliance with Rule
76.610 of the FCC.
Section 3.27. NO IMPEDIMENTS TO BUSINESS. Except as disclosed in
--------------------------
Schedule 3.27, to Seller's knowledge after reasonable investigation, there is no
-------------
Multi-Channel Video Service in the communities or geographic areas served by the
System and Seller knows of no plans of any Person for the establishment of any
such television signal delivery system in the communities or geographic areas
served by the System. Except as disclosed in Schedule 3.27, no franchise to
-------------
permit any Multi-Channel Video
-28-
Service to be provided has been granted by a Governmental Authority in the
communities or geographic areas served by the System to any Person other than
Seller, and to Seller's knowledge, no application for any Multi-Channel Video
Service is pending.
SECTION 3.28 FULL DISCLOSURE. The statements made by each of Seller,
---------------
JCC and Xxxxx in this Agreement do not include or contain any untrue statement
of a fact, and do not omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF XXXXX
SECTION 4.1. ORGANIZATION AND EXISTENCE. Xxxxx is a corporation duly
--------------------------
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all corporate powers and all governmental
licenses, authorizations, permits, consents and approvals required to carry on
its business as now conducted.
SECTION 4.2. CORPORATE AUTHORIZATION. The execution, delivery and
-----------------------
performance by Xxxxx of this Agreement are within the corporate powers of Xxxxx
and have been duly authorized by all necessary corporate action on the part of
Xxxxx. This Agreement constitutes the valid and binding agreement of Xxxxx,
enforceable against it in accordance with its terms.
SECTION 4.3. GOVERNMENTAL AUTHORIZATION. The execution, delivery and
--------------------------
performance by Xxxxx of this Agreement require no action by or in respect of, or
filing with, any Governmental Authority other than (i) compliance with any
applicable requirements of the HSR Act (ii) the filing of FCC Form 394 in
connection with the transfer of the Authorizations.
SECTION 4.4. NON-CONTRAVENTION. The execution, delivery and performance
-----------------
by Xxxxx of this Agreement do not and will not (i) violate the certificate or
articles of incorporation or bylaws of Xxxxx, (ii) assuming compliance with the
matters referred to in Section 4.3, violate any applicable Legal Requirement or
(iii) violate any material agreement to which Xxxxx is a party..
SECTION 4.5. LITIGATION. There is no action, suit, investigation or
----------
proceeding pending against, or to the knowledge of Xxxxx, threatened against or
affecting, Xxxxx before any arbitrator or any Governmental Authority, which in
any manner challenges or seeks to prevent, enjoin, alter or materially delay the
transactions contemplated hereby.
-29-
SECTION 4.6 FULL DISCLOSURE. The statements made by Xxxxx in this
---------------
Agreement do not include or contain any untrue statement of a fact, and do not
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF JCC
SECTION 5.1. ORGANIZATION AND EXISTENCE. JCC is a corporation duly
--------------------------
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all corporate powers and all governmental
licenses, authorizations, permits, consents and approvals required to carry on
its business as now conducted.
SECTION 5.2. CORPORATE AUTHORIZATION. The execution, delivery and
-----------------------
performance by JCC of this Agreement are within the corporate powers of JCC and
have been duly authorized by all necessary corporate action on the part of JCC.
This Agreement constitutes the valid and binding agreement of JCC, enforceable
against it in accordance with its terms.
SECTION 5.3. GOVERNMENTAL AUTHORIZATION. The execution, delivery and
--------------------------
performance by JCC of this Agreement require no action by or in respect of, or
filing with, any Governmental Authority other than (i) compliance with any
applicable requirements of the HSR Act and (ii) the filing of FCC Form 394 in
connection with the transfer of the Authorizations.
SECTION 5.4. NON-CONTRAVENTION. The execution, delivery and performance
-----------------
by JCC of this Agreement do not and will not (i) violate the certificate or
articles of incorporation or bylaws of JCC, (ii) violate any covenants contained
in any loan documents or debt instruments of JCC or any of its subsidiaries,
(iii) violate any material agreement to which JCC is a party or (iv) assuming
compliance with the matters referred to in Section 5.3, violate any applicable
Legal Requirement.
SECTION 5.5. LITIGATION. There is no suit, investigation or proceeding
pending against, or to the knowledge of JCC, threatened against or affecting,
JCC before any arbitrator or any Governmental Authority, which in any manner
challenges or seeks to prevent, enjoin, alter or materially delay the
transactions contemplated hereby.
SECTION 5.6 FULL DISCLOSURE. The statements made by JCC in this
---------------
Agreement do not include or contain any untrue statement of a fact, and do not
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
-30-
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as of the date hereof and as of
the Closing Date that:
SECTION 6.1. ORGANIZATION AND EXISTENCE. Buyer is a corporation duly
--------------------------
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all corporate powers and all governmental
licenses, authorizations, permits, consents and approvals required to carry on
its business as now conducted.
SECTION 6.2. CORPORATE AUTHORIZATION. The execution, delivery and
-----------------------
performance by Buyer of this Agreement are within the corporate powers of Buyer
and have been duly authorized by all necessary corporate action on the part of
Buyer. This Agreement constitutes a valid and binding agreement of Buyer,
enforceable against it in accordance with its terms.
SECTION 6.3. GOVERNMENTAL AUTHORIZATION. The execution, delivery and
--------------------------
performance by Buyer of this Agreement require no action by or in respect of, or
filing with, any Governmental Authority other than (i) compliance with any
applicable requirements of the HSR Act and (ii) the filing of FCC Form 394 in
connection with the transfer of the Authorizations.
SECTION 6.4. NON-CONTRAVENTION. The execution, delivery and performance
-----------------
by Buyer of this Agreement do not and will not (i) violate the certificate of
incorporation or bylaws of Buyer, (ii) violate any material agreement to which
Buyer is a party or (iii) assuming compliance with the matters referred to in
Section 6.3, violate any applicable Legal Requirement.
SECTION 6.5. FINDERS' FEES. There is no investment banker, broker,
-------------
finder or other intermediary which has been retained by or is authorized to act
on behalf of Buyer or any of its Affiliates who might be entitled to any fee or
commission from Seller or any of its Affiliates upon consummation of the
transactions contemplated by this Agreement.
SECTION 6.6. LITIGATION. There is no action, suit, investigation or
----------
proceeding pending against, or to the knowledge of Buyer threatened against or
affecting, Buyer before any arbitrator or any Governmental Authority, which in
any manner challenges or seeks to prevent, enjoin, alter or materially delay the
transactions contemplated hereby.
SECTION 6.7 FULL DISCLOSURE. The statements made by Buyer in this
---------------
Agreement do not include or contain any untrue statement of a fact, and do not
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
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ARTICLE 7
COVENANTS OF SELLER, JCC, XXXXX AND XXXXX INTERCABLE
SECTION 7.1. CONDUCT OF THE BUSINESS. From the date hereof until the
-----------------------
Closing Date, Seller and JCC, as applicable, shall conduct the business of the
System solely in the ordinary course consistent with past practice (including
without limitation, with respect to subscriber acquisition and retention and
disconnect policies) and use reasonable efforts to preserve intact the business
organizations and relationships with third parties and to keep available the
services of the present employees of the System. Without limiting the generality
of the foregoing, from the date hereof until the Closing Date, with respect to
the System, Seller shall:
(a) deliver to Buyer, promptly after such statements become available
to Seller, correct and complete copies of unaudited monthly balance sheets,
income statements and operating reports for the System for each month between
the date of this Agreement and the Closing Date and copies of all filings made
by Seller with the SEC between the date of this Agreement and the Closing Date;
(b) not amend its partnership agreement;
(c) not issue, sell, deliver or agree to issue, sell or deliver (whether
through the issuance or granting of options, commitments, subscriptions, rights
to purchase or otherwise) any partnership interests;
(d) not acquire, sell, lease or dispose of any assets material to the
System, other than sales of inventory or equipment in the ordinary course of
business consistent with past practice and the disposition of damaged or
defective equipment or material in the normal course of business;
(e) not mortgage, pledge or subject to any Lien, any of the Assets,
except Liens in place as of the date of this Agreement;
(f) not increase the amount of any compensation payable to any individual
employee of Seller, unless such increase is limited to customary annual merit
increases not exceeding 7% of such employees previous base salary, and not
increase the amount of compensation payable to any employee of Seller, if such
increase would be inconsistent with past practices or would cause the aggregate
cash compensation payable to all employees to exceed by more than four percent
(4%) the cash compensation payable by Seller on an annualized basis as of March
31, 1998 (provided that this Section 7.1(f) shall not apply with respect to any
"sticking bonuses" paid by Seller to Seller's employees prior to Closing. The
amount of the sticking bonuses or the formula for the determination of such
sticking bonuses have been disclosed by Seller to Buyer prior to execution of
this Agreement.
(g) not declare, set aside or pay any distribution (whether in cash,
partnership interests or property or any combination thereof) in respect of its
partnership interests, or redeem or otherwise acquire any of its partnership
interests;
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(h) promptly notify Buyer if Seller shall learn of any event or
circumstance which may make or cause any representation or warranty given by it
to be or become untrue at or prior to Closing;
(i) not reveal, orally or in writing, to any party, other than Buyer and
its authorized agents, any of the business procedures and practices followed by
the System in the conduct of its business or any technology used in the
processing, evaluation or distribution of any of its products or services;
(j) maintain in full force and effect insurance coverage and fidelity
bonds substantially equivalent to that listed on Schedule 3.14;
-------------
(k) continue to maintain all of the business records of the System in
accordance with its past practice;
(l) pay all debts, liabilities and obligations of or relating to the
System as they become due, except for such debts or obligations which are
contested by Seller in good faith;
(m) maintain Seller's partnership existence and not merge or consolidate
with any other Person;
(n) comply, in all material respects, with all applicable Legal
Requirements (including, without limitation, regulations of Governmental
Authorities and ordinances relating to the System) and all Contracts;
(o) comply with, and use best efforts to maintain in full force and
effect, all Authorizations;
(p) maintain its facilities and assets in good working condition,
reasonable wear and tear excepted, and maintain commercially reasonable
inventory levels consistent with past practice, which shall include sufficient
quantities of amplifiers, line extenders, installation materials and converters
to operate and maintain the System in the ordinary course consistent with past
practice;
(q) not delete, substitute or add any programming service on the System
or enter into or amend any contract, agreement, commitment, license or
understanding therefor or change the channel alignment, retier or repackage the
cable television programming without Buyer's consent;
(r) not take any rate increases or make any election with respect to any
cost of service proceeding conducted in accordance with Section 76.922 of Title
47 of the Code of Federal Regulations or any similar proceeding (a "COST OF
SERVICE ELECTION"), without Buyer's prior written consent;
(s) replace subscriber drops that do not comply with the current
provisions of the National Electrical Safety Code in the ordinary course
consistent with past practice;
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(t) continue to implement its procedures for disconnection and
discontinuance of service to subscribers whose accounts are delinquent in
accordance with those in effect on the date of this Agreement;
(u) continue to give all customary notices to subscribers in the ordinary
course of business consistent with past practices;
(v) not enter into any retransmission consent or similar agreements or
amend any existing retransmission consent or similar agreements without the
prior written consent of Buyer;
(w) make capital expenditures in the ordinary course of business
consistent with past practice;
(x) except as set forth in Schedule 3.7, not borrow any money and not
------------
incur, guarantee or become subject to, or agree to incur, guarantee or become
subject to, any obligation or liability of another Person;
(y) use its reasonable efforts to retain the services of all of its
employees between the date hereof and the Closing Date;
(z) use commercially reasonable efforts to obtain franchise renewal
agreements with the City of Roseville (the "CITY") and unincorporated Placer
County (the "COUNTY"), on terms and conditions satisfactory to Buyer.
(aa) provide Buyer with a copy of all copyright returns to be filed by
Seller in connection with the System at least ten (10) days prior to filing such
returns;
(bb) not engage in any promotions, pricing discounts or other sales or
marketing incentives (whether relating to pricing or otherwise) (collectively,
"PROMOTIONS") or make such Promotions available to subscribers or prospective
subscribers for Cable Service; and
(cc) timely file all required 626 Requests with the proper Governmental
Authority in respect of any Authorizations expiring within 36 months after
Closing; provided, however, that Seller shall consult with Buyer prior to the
filing of any 626 Request and shall provide to Buyer a true, correct and
complete copy of any such 626 Request as filed promptly upon such filing.
Seller shall pursue all 626 Requests in consultation with Buyer.
Seller shall not (i) take or agree or commit to take any action that would make
any representation or warranty of Seller hereunder inaccurate in any respect at,
or as of any time prior to, the Closing Date or (ii) omit or agree or commit to
omit to take any action necessary to prevent any such representation or warranty
from being inaccurate in any respect at any such time.
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SECTION 7.2. ACCESS TO INFORMATION. From the date hereof until the
---------------------
Closing Date, Seller (a) shall give Buyer, its counsel, financial advisors,
auditors and other authorized representatives full access to the offices,
properties, books and records of Seller relating to the Assets and the System,
(b) shall furnish to Buyer, its counsel, financial advisors, auditors and other
authorized representatives such financial and operating data and other
information relating to the Assets or System as such Persons may reasonably
request and (c) shall instruct the employees, counsel and financial advisors of
Seller to cooperate with Buyer in its investigation of the System; provided that
--------
no investigation by Buyer or other information received by Buyer shall operate
as a waiver or otherwise affect any representation, warranty or agreement given
or made by Seller hereunder. Any investigation pursuant to this Section shall be
conducted during normal business hours and in such manner as not to interfere
unreasonably with the conduct of the business of the System.
SECTION 7.3. NOTICES OF CERTAIN EVENTS. Seller shall promptly notify
-------------------------
Buyer of:
(a) any notice or other communication from any Person alleging that
the consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement;
(b) any notice or other communication from any Governmental Authority
in connection with the transactions contemplated by this Agreement or
relating in any way to an alleged violation of any Legal Requirement
applicable to the System;
(c) any action, suit, claim, investigation or proceeding, commenced
or, to its knowledge threatened against, relating to or involving or
otherwise affecting Seller or the System that, if pending on the date of
this Agreement, would have been required to have been disclosed pursuant to
Section 3.11 or that relates to the consummation of the transactions
contemplated by this Agreement;
(d) the filing of any additional FCC Forms 328 (for certification) or
FCC Forms 329 (for rate complaints) with respect to the System, and any
notice of a change in status of any of the FCC certifications filed with
respect to the System or a change in the status of any complaint with
respect to the cable communications service rates charged to subscribers;
and
(e) any Cable Act Petitions, Cable Act Orders and Cable Act Notices
filed or received by Seller.
SECTION 7.4. NONCOMPETITION. (a) Each of Seller, JCC, Xxxxx and Xxxxx
--------------
Intercable agree that for a period of three years from the Closing Date, neither
they nor any Person in which they have an economic interest, shall:
(i) directly or indirectly engage in or be financially interested in
or otherwise connected with any business, except as set forth in
subparagraphs (A), (B) and (C) below, competitive with the multichannel
video delivery business in
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any area served by the System or any area in which Buyer or any of its
Affiliates conducts business and which is contiguous to any area served by
the System. This restrictive covenant shall not prohibit Seller, JCC, Xxxxx
or Xxxxx Intercable or any Person in which any of the foregoing have an
economic interest from (A) engaging in any programming service, including
without limitation, Knowledge TV, Great American Country, Product
Information Network, Xxxxx Radio Networks, Xxxxx Internet Channel,
Superaudio and AD/FX; (B) engaging in a national direct broadcast satellite
service in any area outside of the area served by the System or (C)
acquiring an equity interest of 10% or less in any company; provided that
such investment shall be a passive investment, and none of Seller, JCC,
Xxxxx or Xxxxx Intercable, or any entity in which any of the foregoing have
an economic interest, shall play a role in the management or operation of
such company.
(ii) solicit the performance of services by, any Transferred Employee
or any employee of the System to whom Buyer has made an offer of
employment.
(b) If any provision contained in this Section shall for any reason be
held invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provisions of this
Section, but this Section shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein. It is the intention of
the parties that if any of the restrictions or covenants contained herein is
held to cover a geographic area or to be for a length of time which is not
permitted by applicable law, or in any way construed to be too broad or to any
extent invalid, such provision shall not be construed to be null, void and of no
effect, but instead such provision shall be construed to the fullest extent so
that such provision would be valid or enforceable under applicable law, and it
is the parties' mutual intent that a court of competent jurisdiction shall
construe and interpret or reform this Section to provide for a covenant having
the maximum enforceable geographic area, time period and other provisions (not
greater than those contained herein) as shall be valid and enforceable under
such applicable law. Each of Seller, JCC, Xxxxx and Xxxxx Intercable
acknowledge that Buyer would be irreparably harmed by any breach of this Section
and that there would be no adequate remedy at law or in damages to compensate
Buyer for any such breach. Each of Seller, JCC, Xxxxx and Xxxxx Intercable
agree that Buyer shall be entitled to injunctive relief requiring specific
performance by Seller, JCC, Xxxxx and Xxxxx Intercable of this Section, and
Seller, JCC, Xxxxx and Xxxxx Intercable each consent to the entry thereof.
SECTION 7.5. USE OF SELLER'S NAME. For a period up to 90 days after the
--------------------
Closing Date, Buyer may continue to operate the System using Seller's d/b/a
names and its corporate name and all derivations and abbreviations of such names
and related marks, in order to effectively transfer title to all Assets and the
System to Buyer. Within 90 days after the Closing Date, Buyer shall discontinue
using and shall dispose of all items of stationery, business cards and
literature bearing such names or marks. Notwithstanding the foregoing, Buyer
will not be required to remove or discontinue using any such name or xxxx that
is affixed to converters or other items in or to be used in subscribers' homes
or properties, or as are used in a similar fashion making such removal or
discontinuation impracticable for Buyer.
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SECTION 7.6. CAPITAL LEASES. Seller shall pay the remaining balance of
--------------
any capital lease, if any, for any Personal Property and deliver the title to
such Personal Property free and clear of all Liens to the Buyer at the Closing.
SECTION 7.7. CONSENTS; ESTOPPEL CERTIFICATES. Seller shall use
-------------------------------
commercially reasonable efforts to obtain, as soon as possible and at its
expense, all the Required Consents and Franchise Approvals, in form and
substance reasonably satisfactory to Buyer. Seller shall notify Buyer in advance
of and give Buyer an opportunity to participate in all material contacts with,
and provide copies of all correspondence to or from, any Franchising Authorities
in connection with the Authorizations or other matters. Buyer shall cooperate
with Seller to obtain all Required Consents and Franchise Approvals, but Buyer
shall not be required to agree to any changes in, or the imposition of any
condition to the transfer to Buyer of, any Contract or Authorization as a
condition to obtaining any Required Consent or Franchise Approval. Seller also
shall use reasonable efforts to obtain, at its expense, such estoppel
certificates or similar documents from lessors and other Persons who are parties
to Contracts as Buyer may reasonably request.
SECTION 7.8. AGREEMENT TO CONSULT. For the six month period immediately
--------------------
following the Closing Date, upon the request of Buyer, Seller shall, and shall
use reasonable efforts to cause such of its employees, agents or representatives
as Buyer may reasonably request from time to time, without payment of additional
consideration, to consult with or advise Buyer or any of its Affiliates with
respect to the operation of the System, in order to effect a smooth transition
of ownership of the System.
SECTION 7.9. TRANSITIONAL BILLING SERVICES. JCC shall provide to
-----------------------------
Buyer, upon written request and at the cost of Buyer, subscriber billing
services ("TRANSITIONAL XXXXXXXX SERVICES") in connection with the System for a
period of up to 90 days following Closing to allow for conversion of existing
billing arrangements. Buyer shall notify Seller in writing at least 30 days
prior to Closing as to whether it desires Transitional Billing Services. The
amount to be paid by Buyer for Transitional Xxxxxxxx Services, if provided
hereunder, shall not exceed the actual cost to JCC of providing such
Transitional Billing Services.
SECTION 7.10. NO SOLICITATION. (a) From the date hereof, none of the
---------------
Seller, JCC, Xxxxx or Xxxxx Intercable, nor any of their respective Affiliates,
nor any of their respective officers, directors, representatives or agents
shall, directly or indirectly, encourage, solicit, initiate or, except as
otherwise provided in this Section 7.10(a), participate in any way in
discussions or negotiations with or provide any confidential information to, any
corporation, partnership, person or other entity or group (other than Buyer or
any Affiliate or associate of Buyer and their respective directors, officers,
employees, representatives and agents) concerning any merger of or business
combination with or involving Seller, the sale of any of the Assets, other than
in the ordinary course of business, consistent with past practice, including
without limitation, the System, the sale of the partnership interests of Seller
or similar transactions involving Seller; provided, however, that nothing
contained in this Section 7.10(a) shall prohibit Seller, JCC, Xxxxx or Xxxxx
Intercable from responding to any unsolicited proposal or
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inquiry solely by advising the person making such proposal or inquiry of the
terms of this Section 7.10(a). It is understood that any violation of the
restrictions set forth in this Section 7.10(a) by any officer, director,
employee, investment banker, attorney, advisor, representative or other agent of
Seller, JCC, Xxxxx or Xxxxx Intercable or any of their respective Affiliates
shall be deemed to be a breach of this Section 7.10(a) by Seller.
Notwithstanding the foregoing, nothing contained in this Section 7.10(a) shall
prevent JCC from furnishing non-public information to, or entering into
discussions or negotiations with, any Person in connection with an unsolicited
bona fide Superior Proposal with respect to Seller, the System or the Assets, if
and only to the extent that (i) JCC determines in good faith, based upon the
written opinion of outside counsel to JCC (a copy of which is delivered to
Buyer) that, failing to take such action would result in a breach of its
fiduciary duties under applicable law; and (ii) prior to furnishing non-public
information to, or entering into discussions or negotiations with, such Person,
Seller notifies Buyer thereof in writing and gives Buyer an opportunity to match
such Superior Proposal and (iii) prior to furnishing non-public information to
such Person, Seller receives from such Person an executed confidentiality
agreement on terms no less favorable to Seller than those contained in Seller's
confidentiality agreement with Buyer. For purposes of this Agreement, "SUPERIOR
PROPOSAL" means any bona fide, written, unsolicited offer or proposal relating
---- ----
to (A) a merger or other business combination involving Seller, or (B) the
acquisition in any manner of any significant equity interest in, or a
substantial portion of the Assets of Seller, in each case other than the
transactions contemplated by this Agreement.
(b) JCC shall not (i) withdraw or modify, or propose to withdraw or
modify, the adoption, approval or recommendation by JCC of this Agreement; or
(ii) approve or recommend, or propose to approve or recommend, any Superior
Proposal by any Person other than Buyer, unless (A) JCC determines in good
faith, based upon the written opinion of outside counsel to JCC, that failure to
take such action would result in a breach of its fiduciary duties under
applicable law and (B) such Superior Proposal is determined in good faith (based
upon a written opinion of an investment banking firm of national reputation) by
JCC to be more favorable to the limited partners of Seller than the transactions
provided for in this Agreement.
(c) Seller will promptly (and in no event later than three Business Days
after receipt of the relevant Superior Proposal), notify (which notice shall be
provided orally and in writing and shall identify the Person making the Superior
Proposal and set forth the material terms thereof) Buyer after receipt of any
Superior Proposal meeting the standard set forth in clause (i) of Section
7.10(a) and will keep Buyer fully informed of the status and details of any such
Superior Proposal. Seller shall give Buyer at least three days' advance notice
of any information to be supplied to, and at least five days' advance notice of
any agreement to be entered into with, any person making such Superior Proposal.
SECTION 7.11. SEC FILINGS. (a) JCC shall prepare and as soon as
-----------
practicable, and in any event within 30 days after the date of this Agreement,
file with the SEC a proxy statement (the "PRELIMINARY PROXY STATEMENT")
comprising preliminary proxy materials of the Seller under the Exchange Act with
respect to the transactions contemplated by this Agreement, and will thereafter
use its best efforts to respond to any comments of the SEC with respect thereto
and to cause a definitive
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proxy statement (including all supplements and amendments thereto, the "PROXY
STATEMENT") and proxy to be mailed to the partners of the Seller as promptly as
practicable.
(b) JCC will notify Buyer promptly of the receipt of any comments from
the SEC or its staff or any other government official and of any requests by the
SEC or its staff or any other government official for amendments or supplements
to the Preliminary Proxy Statement or for additional information.
SECTION 7.12. JCC RECOMMENDATION. Subject to Section 7.10(b), the Proxy
------------------
Statement shall include the affirmative recommendation of JCC that the partners
of Seller approve the transactions contemplated by this Agreement.
SECTION 7.13. VOTE OF PARTNERS OF SELLER. JCC shall take all action
--------------------------
necessary, in accordance with applicable law and its partnership agreement, to
conduct a vote of the partners of Seller as promptly as practicable to consider
the adoption and approval of this Agreement and the transactions contemplated
hereby. The partnership vote required shall be the vote required pursuant to the
partnership agreement of Seller. JCC (subject, in the case of a Superior
Proposal, to its fiduciary duty, as advised by written opinion of outside
counsel) shall, subject to compliance with applicable law, use commercially
reasonable efforts to solicit from the partners of Seller, proxies in favor of
adoption and approval of the transactions contemplated by this Agreement and to
take all other commercially reasonable action necessary to secure the vote of
such partners required to effect the transactions contemplated hereby. JCC
agrees to vote in favor of this Agreement and the transactions contemplated
hereby (subject, in the case of a Superior Proposal, to its fiduciary duty as
advised by written opinion of outside counsel).
SECTION 7.14. SCHEDULES. Five business days prior to the Closing Date,
---------
Seller shall deliver to Buyer new Schedules 3.12(a), 3.12(c), 3.16 and 3.24(a)
----------------- ------- ---- -------
to this Agreement that are amended or supplemented to update the information
contained therein in order to reflect any changes in the information contained
therein resulting from events occurring after the date hereof and prior to the
Closing Date.
SECTION 7.15. FEES FOR ENVIRONMENTAL ASSESSMENTS. Seller shall pay
----------------------------------
Buyer, on the earlier of the Closing Date or the date of termination of this
Agreement, one-half of Buyer's cost of conducting Environmental Assessments of
the Owned Real Property and the Leased Real Property.
SECTION 7.16. CITY OF ROSEVILLE FRANCHISE. Seller shall assign to
---------------------------
Buyer, the CATV Instruments and Authorizations associated with the City of
Roseville franchise, free and clear of all "demerits", under the demerit system
set forth in Ordinance No. 1822 of the Council of the City of Roseville.
SECTION 7.17. TERMINATION OF REVOLVING CREDIT AND TERM LOAN AGREEMENTS
--------------------------------------------------------
AND SECURITY INTERESTS. Seller shall, on or prior to the Closing Date,
----------------------
terminate the Revolving Credit Agreement, dated February 28, 1996, by and
between Seller and Colorado National Bank ("COLORADO NATIONAL BANK"), and all
amounts due
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thereunder shall be paid in full, and any related notes, security
agreements, mortgages or other agreements to which the Seller is a party shall
be terminated (collectively, the "BANK LOAN DOCUMENTS").
SECTION 7.18. WAIVER OF JCC RIGHT OF FIRST REFUSAL. Each of JCC, Xxxxx
------------------------------------
and Xxxxx Intercable hereby agree that upon execution of this Agreement, its
rights of first refusal under the Seller's Limited Partnership Agreement, with
respect to the purchase of property of Seller, shall immediately terminate,
including without limitation, any rights of first refusal that were granted in
favor of any affiliates of either JCC, Xxxxx or Xxxxx Intercable.
SECTION 7.19. XXXXXXXX/PACIFIC #2 AGREEMENT. Seller shall use
-----------------------------
commercially reasonable efforts to obtain an amendment to Section 5(c) of the
Cable Television Installation and Wiring Agreement, dated September 21, 1992, by
and between Seller and Xxxxxxxx/Pacific #2 ("XXXXXXXX") as follows:
Section 5(c) of the Cable Television Installation and Wiring Agreement is hereby
amended and restated in its entirety as follows:
(c) MATV Service. In the event Owner exercises the option referred
------------
to in Section 5(a) hereof, for a period of one year immediately following
such exercise, Operator shall connect the MATV to any Unit on the request
of Owner or any Unit occupant and shall provide off-air television signals
to such Unit at no charge to Owner or any Unit occupant.
SECTION 7.20. POLE ATTACHMENT AGREEMENTS. (a) Seller shall use
--------------------------
commercially reasonable efforts to obtain an acknowledgment from Roseville
Telephone Company that the pole attachment agreement by and between the Seller
and Roseville Telephone Company is in full force and effect and that the term of
such pole attachment agreement is for the term of the Seller's franchise to
provide Cable Service in the area covered by such pole attachment agreement,
including any renewal terms of such franchise (the "ROSEVILLE TELEPHONE COMPANY
ACKNOWLEDGMENT").
(b) Seller shall use commercially reasonable efforts to obtain an
acknowledgment from Pacific Gas and Electric Company ("PG&E") that the pole
attachment agreement by and between Seller and PG&E is in full force and effect
and that the term of such agreement has been extended for the term of Seller's
franchise to provide Cable Service in the area covered by such pole attachment
agreement, including any renewal terms of such franchise (the "PG&E
ACKNOWLEDGMENT").
SECTION 7.21. ASSIGNMENT BY XXXXX INTERCABLE. On or prior to the
------------------------------
Closing Date, Xxxxx Intercable shall assign, and Seller shall assume, all rights
and obligations of Xxxxx Intercable in any asset or contract included in the
Assets, including without limitation, the following contracts (the "XXXXX
INTERCABLE ASSETS"):
(a) Agreement, dated July 28, 1993, by and between Foothill Alarm
System, Inc. and Xxxxx Intercable;
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(b) Agreement, dated October 1, 1995, by and between Image Building
Maintenance Concept and Xxxxx Intercable;
(c) Agreement, dated August 7, 1989, by and between Xxxxx Intercable
and one or more of its affiliates and Sierra Joint Community College; and
(d) Easement and Right-of-Way, dated December 14, 1994, by and among
Xxxxxx X. Xxxxxxx and Xxxxxxx X. Xxxxxxx and Xxxxx Intercable, Xxxxx Spacelink
and/or one or more of their controlled affiliates.
SECTION 7.22. MAIDU CENTER PAYMENT. Seller shall make the $5,000
--------------------
payment required by Franchise Ordinance 1822, Section 31(e) for cablecasting
from the Maidu Center (the "MAIDU CENTER PAYMENT").
SECTION 7.23. EASEMENT. Seller shall use commercially reasonable
--------
efforts to obtain a written easement executed by Xxxx Xxxxxx for access to the
property located at 000 Xxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxx.
ARTICLE 8
COVENANTS OF BOTH PARTIES
Buyer and Seller agree that:
SECTION 8.1. BEST EFFORTS; FURTHER ASSURANCES. (a) Subject to the terms
--------------------------------
and conditions of this Agreement, Buyer and Seller will each use commercially
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary or desirable under applicable laws and
regulations to consummate the transactions contemplated by this Agreement.
Seller and Buyer each agree to execute and deliver such other documents,
certificates, agreements and other writings and to take such other actions as
may be necessary or desirable in order to consummate or implement expeditiously
the transactions contemplated by this Agreement and to vest in Buyer good and
marketable title to the Assets (whether before or after the Closing).
(b) Seller hereby constitutes and appoints, effective as of the Closing
Date, Buyer and its successors and assigns as the true and lawful attorney of
Seller with full power of substitution in the name of Buyer or in the name of
Seller, but for the benefit of Buyer (i) to collect for the account of Buyer any
of the Assets and (ii) to institute and prosecute all proceedings which Buyer
may in its sole discretion deem proper in order to assert or enforce any right,
title or interest in, to or under the Assets, and to defend or compromise any
and all actions, suits or proceedings in respect of the Assets. Buyer shall be
entitled to retain for its own account any amounts collected pursuant to the
foregoing powers, including any amounts payable as interest in respect thereof.
SECTION 8.2. CERTAIN FILINGS. Seller and Buyer shall cooperate with one
---------------
another (a) in determining whether any action by or in respect of, or filing
with, any
-41-
Governmental Authority is required, or any actions, consents, approvals or
waivers are required to be obtained from parties to any of the Contracts, in
connection with the consummation of the transactions contemplated by this
Agreement and (b) in taking such actions or making any such filings, furnishing
information required in connection therewith and seeking timely to obtain any
such actions, consents, approvals or waivers. Without limitation, Seller and
Buyer shall each make an appropriate filing of a Notification and Report Form
pursuant to the HSR Act (the "HSR FILING") no later than fifteen (15) Business
Days from the date hereof; and each such filing shall request early termination
of the waiting period imposed by the HSR Act. Notwithstanding the foregoing, (i)
in the event the Department of Justice or Federal Trade Commission make a second
request for information in connection with the HSR Filing, neither Buyer nor
Seller shall be obligated to comply with such second request, but rather may
terminate this Agreement in accordance with Section 13.1 and (ii) Buyer shall
not be required to agree to any consent decree or order in connection with any
objections of the Department of Justice or the Federal Trade Commission to the
transactions contemplated by this Agreement.
SECTION 8.3. PUBLIC ANNOUNCEMENTS. No party hereto shall make any
--------------------
public announcements or otherwise communicate with any news media with respect
to this Agreement or any of the transactions contemplated hereby without prior
consultation with the other parties as to the timing and content of any such
announcement; provided however, that nothing contained herein shall prevent any
party from promptly making all filings with Governmental Authorities as may, in
its judgment, be required or advisable in connection with the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby or as required by any Legal Requirement.
ARTICLE 9
TAX MATTERS
SECTION 9.1. TAX DEFINITIONS. The following terms, as used herein, have
---------------
the following meanings:
"CODE" means the Internal Revenue Code of 1986, as amended.
"POST-CLOSING TAX PERIOD" means any Tax period (or portion thereof)
ending after the Closing Date.
"PRE-CLOSING TAX PERIOD" means any Tax period (or portion thereof) ending
on or before the close of business on the Closing.
"TAX" means any net income, alternative or add-on minimum tax,
documentary stamp tax, escheat, gross income, gross receipts, sales, use, ad
valorem, transfer, franchise, capital, paid-up capital, profits, greenmail,
license, withholding on amounts paid to or by Seller or the System, payroll,
employment, excise, severance, stamp, occupation, premium, property,
environmental or windfall profit tax, custom duty or other tax, governmental fee
or other like assessment or charge of any kind whatsoever, together with any
interest or any penalty, addition to tax or additional
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amount imposed by any Governmental Authority (domestic or foreign) responsible
for the imposition of any such tax.
SECTION 9.2. TAX REPRESENTATIONS. Seller hereby represents and warrants
-------------------
to Buyer that:
(a) Seller has timely filed with the appropriate Governmental Authorities
all Tax Returns required to be filed by or on behalf of Seller.
(b) Seller has timely paid all Taxes payable by it for the Pre-Closing
Tax Period which are required to be paid on or prior to the Closing Date, the
non-payment of which could result in a Lien on any Asset, could otherwise
adversely affect the System or could result in Buyer or any Affiliate of Buyer
becoming liable or responsible therefor.
(c) Seller has established, in accordance with GAAP, adequate reserves
for the payment of, and will timely pay all Tax liabilities, assessments,
interest and penalties which arise from or with respect to the Assets or the
operation of the System and are incurred in or attributable to the Pre-Closing
Tax Period, the non-payment of which could result in a Lien on any Asset, could
otherwise adversely affect the System or could result in Buyer or any Affiliate
of Buyer becoming liable therefor.
(d) Seller has not received any written notice of audit, deficiency or
assessment with respect to any Tax, the nonpayment of which could result in a
Lien on any Asset, could otherwise adversely affect the System or could result
in Buyer or any Affiliate of Buyer becoming liable therefor.
(e) Schedule 9.2 sets forth the states with which Seller has filed any
------------
Tax return relating to the System.
SECTION 9.3. TAX COOPERATION AND OTHER TAX MATTERS. (a) Buyer and
-------------------------------------
Seller agree to furnish or cause to be furnished to each other, upon request, as
promptly as practicable, such information and assistance relating to the Assets
and the System as is reasonably necessary for the filing of all Tax returns, and
making of any election related to Taxes, the preparation for any audit by any
taxing authority, and the prosecution or defense of any claim, suit or
proceeding relating to any Tax return. Seller and Buyer shall cooperate with
each other in the conduct of any audit or other proceeding related to Taxes
involving the System for any Pre-Closing Tax Period.
(b) All real property taxes, personal property taxes and similar ad
--
valorem obligations levied with respect to the Assets for a taxable period which
-------
includes (but does not end on) the Closing Date shall be apportioned between
Seller and Buyer as of the Closing Date based on the number of days of such
taxable period included in the Pre-Closing Tax Period and the number of days of
such taxable period included in the Post-Closing Period. Seller shall be liable
for the proportionate amount of such taxes that is attributable to the Pre-
Closing Tax Period, and Buyer shall be liable for the proportionate amount of
such taxes that is attributable to the Post-Closing Tax Period. Within 90 days
after the Closing, Seller and Buyer shall present a statement to the other
setting forth the amount of reimbursement to which each is
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entitled under this Section 9.3(b) together with such supporting evidence as is
reasonably necessary to calculate the proration amount. The proration amount
shall be paid by the party owing it to the other within 15 days after delivery
of such statement to the extent that the amount has not been taken into account
as "Current Assets" or "Total Liabilities," as the case may be, in determining
the adjustments to the Purchase Price under Section 2.5(b). Thereafter, Seller
shall notify Buyer upon receipt of any xxxx for real or personal property taxes
relating to the Assets, part or all of which are attributable to the Post-
Closing Tax Period, and shall promptly deliver such xxxx to Buyer who shall pay
the same to the appropriate taxing authority, provided that if such xxxx covers
the Pre-Closing Tax Period, to the extent that the proportionate amount has not
been taken into account as "Total Liabilities" in determining the adjustments to
the Purchase Price under Section 2.5(b), Seller shall also remit to Buyer prior
to the due date of assessment, payment for the proportionate amount of such xxxx
that is attributable to the Pre-Closing Tax Period. Buyer shall notify Seller
upon receipt of any xxxx for real or personal property taxes relating to the
Assets, part or all of which are attributable to the Pre-Closing Tax Period, and
shall promptly deliver such xxxx to Seller who, to the extent that the amount
due under such xxxx has not been taken into account as "Total Liabilities" in
determining the adjustments to the Purchase Price under Section 2.5(b) and such
amount relates solely to the Pre-Closing Tax Period, shall pay the same to the
appropriate taxing authority, provided that if such xxxx covers the Pre-Closing
Tax Period and the Post-Closing Tax Period, to the extent that the porportionate
amount has not been taken into account as "Total Liabilities" in determining the
adjustments to the Purchase Price under Section 2.5(b), Seller shall remit to
Buyer prior to the due date of assessment, payment for the proportionate amount
of such xxxx that is attributable to the Pre-Closing Tax Period. In the event
that either Seller or Buyer shall thereafter make a payment for which it is
entitled to reimbursement under this Section 9.3(b), and to the extent that the
amount has not been taken into account as "Current Assets" or "Total
Liabilities," as the case may be, in determining the adjustments to the Purchase
Price under Section 2.5(b), the other party shall make such reimbursement
promptly but in no event later than 30 days after the presentation of a
statement setting forth the amount of reimbursement to which the presenting
party is entitled along with such supporting evidence as is reasonably necessary
to calculate the amount of reimbursement. Any payment required under this
Section and not made within ten (10) days of delivery of the statement shall
bear interest at the rate per annum determined, from time to time, under the
provisions of Section 6621(a)(2) of the Code for each day until paid.
(c) In the case of any Taxes (other than any real property taxes,
personal property taxes and similar ad valorem obligations) that are payable for
-- -------
a taxable period that includes (but does not end on) the Closing Date, the
amount of such Taxes attributable to the Pre-Closing Tax Period shall be deemed
equal to the amount which would be payable if the relevant taxable period ended
on the Closing Date.
(d) Any transfer, documentary stamp tax, sales, use or other Taxes
assessed upon or with respect to the transfer of the Assets to Buyer and any
recording or filing fees with respect thereto shall be the responsibility of
Seller.
(e) At the Closing, Seller shall deliver to Buyer a certificate as
required by Treasury regulations Section 1.1445 to the effect that Seller is not
a "foreign person" as defined in Section 1445 of the Code.
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(f) Seller shall not take or omit to take any action out of the ordinary
course of business or inconsistent with past practice if such action or omission
would have the effect of increasing the Tax liability relating to the System,
the Buyer, or any of Buyer's Affiliates.
ARTICLE 10
EMPLOYEE BENEFITS
SECTION 10.1. EMPLOYEE BENEFITS DEFINITIONS. The following terms, as
-----------------------------
used herein, having the following meanings:
"EMPLOYEE PLANS" means each "employee benefit plan", as such term is
defined in Section 3(3) of ERISA, which (i) is subject to any provision of
ERISA, (ii) is maintained, administered or contributed to by Seller or any of
its ERISA Affiliates (as defined below) and (iii) covers any employee of Seller
or any of its ERISA Affiliates.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA AFFILIATE" of any entity means any other entity which, together
with Seller, would be treated as a single employer under Section 414 of the
Code.
"MULTIEMPLOYER PLAN" means each Employee Plan that is a multiemployer
plan, as defined in Section 3(37) of ERISA.
SECTION 10.2. EMPLOYEE BENEFIT REPRESENTATIONS. Seller hereby
--------------------------------
represents and warrants to Buyer that:
(a) Neither Seller nor any ERISA Affiliate of Seller has ever been a
party to, contributed to, or been obligated to contribute to a Multiemployer
Plan. No Employee Plan is subject to Title IV of ERISA. Neither Seller nor any
of Seller's ERISA Affiliates has incurred any liability under Title IV of ERISA
that could become, after the Closing Date, an obligation of Buyer or any of its
Affiliates.
(b) Each Employee Plan which is intended to be qualified under Section
401(a) of the Code is so qualified and has been so qualified during the period
from its adoption to date, and each trust forming a part thereof is exempt from
tax pursuant to Section 501(a) of the Code.
(c) Schedule 10.2(c) includes a list of each employment, severance or
----------------
other similar contract, arrangement or policy (written or oral) and each plan or
arrangement (written or oral) providing for insurance coverage (including any
self-insured arrangements), workers' compensation, disability benefits,
supplemental unemployment benefits, vacation or sick benefits, retirement
benefits or for deferred compensation, profit-sharing, bonuses, stock options,
stock appreciation or other forms of incentive compensation or post-retirement
insurance, compensation or benefits which (i) is not an Employee Plan, (ii) is
entered into, maintained or contributed to, as the
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case may be, by Seller or any of its Affiliates and (iii) covers any U.S.
employee of the System. Such contracts, plans and arrangements as are described
above, copies or descriptions of all of which have been made available or
furnished previously to Buyer are hereinafter referred to collectively as the
"BENEFIT ARRANGEMENTS." Each Benefit Arrangement has been maintained in
substantial compliance with its terms and with the requirements prescribed by
any and all statutes, orders, rules and regulations which are applicable to such
Benefit Arrangement.
(d) With respect to the employees of the System, there are no employee
post-retirement medical or health plans in effect, except as required by Section
4980B of the Code.
(e) The Assets are not now nor will they after the passage of time be
subject to any Lien imposed under Code Section 412(n) by reason of the failure
of Seller or its Affiliates to make timely installments or other payments
required by Code Section 412.
(f) Except as set forth on Schedule 10.2(f), no Transferred Employee will
----------------
become entitled to any retirement, severance or similar benefit or enhanced
benefit solely as a result of the transactions contemplated hereby.
(g) Except as set forth on Schedule 10.2(g) attached hereto, each
----------------
Employee Plan complies and has been administered in all material respects in
accordance with the applicable provisions of ERISA and the Code, including,
without limitation, the satisfaction of all applicable reporting, disclosure,
fiduciary and tax qualification requirements under ERISA and the Code. All
statements and disclosures made on documents or forms filed or distributed
pursuant to the applicable reporting and disclosure requirements under ERISA and
the Code have been true and complete in all material respects and have been
filed or distributed timely. No excise tax liability has been incurred with
respect to any Employee Plan. Each Employee Plan is, and has been, operated and
administered in accordance with the appropriate written plan documents.
(h) All communications with respect to each Employee Plan by any person
having the requisite authority to make such communications, reflect and always
have reflected accurately the plan documents and operations of each such
Employee Plan. To the knowledge of Seller, there have been no written
statements or communications and no oral statements or communications made to
any employee of the System in any form by any Person (including, without
limitation, any officer, director or other employee) (having the requisite
authority to do so) of the Seller or its Affiliates) which provide for or could
be construed as a contract or promise by either Seller or any ERISA Affiliate to
provide for any pension, welfare or other insurance type benefits to any
employee of the System, whether before or after retirement, other than benefits
under the Employee Plans or Benefit Arrangements.
(i) Neither Seller nor any ERISA Affiliate has contributed to a non-
conforming group health plan (as that term is defined in Code section 5000(c))
or incurred any tax liability under Code section 5000(a).
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(j) Neither Seller nor any Affiliate shall make or cause to be made to
any employee of the System, and there has not been made to any former employee
of the System, any payment in the form of wages or other consideration pursuant
to any employment agreement or Benefit Plan that was (in the case of payments
made prior to Closing) or will (in the case of payments made after Closing),
constitute in the aggregate an "excess parachute payment" (within the meaning of
Section 280G(b) of the Code) as a consequence in whole or in part of this
Agreement, or thereafter, as a consequence of any change in the ownership or
effective control of the System or any change in the ownership of a substantial
portion of the System's assets.
(k) Seller or its ERISA Affiliates have made all payments and
contributions to all Employee Plans on a timely basis as required by the terms
of each such plan and any applicable law or regulation. All such payments and
contributions have been deducted fully by Seller or its Affiliates for federal
income tax purposes. Such deductions have not been challenged or disallowed by
any Governmental Authority and Seller has no reason to believe that such
deductions are not properly allowable. Seller and its ERISA Affiliates have
funded or will fund each Employee Plan in accordance with the terms of each such
plan and have paid all applicable premiums on any insurance contract funding any
Employee Plan or Benefit Arrangement.
SECTION 10.3. EMPLOYEES AND OFFERS OF EMPLOYMENT. (a) Buyer may, but
----------------------------------
shall have no obligation to, offer employment to any of the current employees of
the System pursuant to this Section 10.3(a). Not less than seventy-five (75)
days prior to the Closing Date, Seller shall provide to Buyer a list of all then
Active Employees of the System, showing then-current positions and rates of
compensation. Not less than forty-five (45) days prior to the Closing Date,
Buyer will notify Seller in writing which employees will be hired by Buyer or
its Affiliates ("BUYER'S LIST"). On the Closing Date, Buyer shall offer
employment to all Active Employees of the System on Buyer's List; provided, that
--------
Buyer may terminate at any time after the Closing Date the employment of any
employee who accepts such offer; and, provided further, that in the case of an
employee who is on short term disability leave, an authorized leave of absence
(including a leave of absence under the Family and Medical Leave Act), military
service or lay-off with recall rights as of the Closing Date, such offer of
employment shall be made as of the date that such leave, military service or
lay-off ends. For purposes of this Article 10, the term "ACTIVE EMPLOYEE" shall
also include any Person who, on the Closing Date, is actively employed by Seller
and who is on short-term disability leave, authorized leave of absence
(including a leave of absence under the Family and Medical Leave Act), military
service or lay-off with recall rights as of the Closing Date, but shall exclude
any other inactive or former employee including any Person who has been on long-
term disability leave or unauthorized leave of absence or who has terminated his
or her employment, retired or died on or before the Closing Date. Any such
offers shall be at such salary or wage and benefit levels and on such other
terms and conditions as Buyer shall in its sole discretion deem appropriate. The
employees who accept and report for work with Buyer on the day after Closing are
hereinafter collectively referred to as the "TRANSFERRED EMPLOYEES". Seller will
not take, and will cause each of its subsidiaries not to take, any action which
would impede, hinder, interfere or otherwise compete with Buyer's effort to hire
any
-47-
Transferred Employees. Buyer shall not assume responsibility for any
Transferred Employee until such employee commences employment with Buyer.
(b) With respect to each Transferred Employee:
(i) Buyer shall recognize, for purposes of eligibility to participate
in its "employee welfare benefit plans" (as that term is defined in ERISA
section 3(1)), the service of any Transferred Employee with Seller or its ERISA
Affiliates prior to the Closing Date.
(ii) Buyer shall recognize, for purposes of eligibility to
participate, early commencement of benefits, and vesting (but not for purposes
of benefit accrual) under its "employee pension benefit plans" (as that term is
defined in ERISA section 3(2)), the service of any Transferred Employee with
Seller or its ERISA Affiliates prior to the Closing Date.
(iii) Seller and Buyer agree that the responsibilities for payroll
taxes with respect to Transferred Employees shall be assigned under the
Alternative Procedure described in Section of 5 of Rev. Proc. 96-60.
SECTION 10.4. SELLER'S EMPLOYEE BENEFIT PLANS. (a) Seller shall retain
-------------------------------
all obligations and liabilities under the Employee Plans and Benefit
Arrangements. Accrued benefits or account balances of Transferred Employees
under the Seller's Employee Plans and Benefit Arrangements shall be fully vested
as of the Closing Date.
(b) With respect to the Transferred Employees (including any beneficiary
or dependent thereof), Seller shall retain (i) all liabilities and obligations
arising under any group life, accident, medical, dental or disability plan or
similar arrangement (whether or not insured) to the extent that such liability
or obligation relates to contributions or premiums accrued (whether or not
payable), or to claims incurred (whether or not reported), on or prior to the
Closing Date, (ii) all liabilities and obligations arising under any worker's
compensation arrangement to the extent such liability or obligation relates to
the period prior to the Closing Date, including liability for any retroactive
worker's compensation premiums attributable to such period and (iii) all other
liabilities and obligations arising under the Employee Plans and the Benefit
Arrangements to the extent any such liability or obligation relates to the
period prior to the Closing Date, including, without limitation, liabilities and
obligations in respect of accruals through the Closing Date under any bonus plan
or arrangement, any vacation plans, arrangements and policies.
(c) With respect to any Transferred Employee (including any beneficiary
or dependent thereof) who enters a hospital or is on short-term disability under
any Benefit Arrangement on or prior to the Closing Date and continues in a
hospital or on short-term disability after the Closing Date, Seller shall be
responsible for claims and expenses incurred both before and after the Closing
Date in connection with such Person, to the extent that such claims and expenses
are covered by a Benefit Arrangement, until such time, (if any) that, in the
case of a Transferred Employee, such Person commences full-time employment with
Buyer or one of its Affiliates and, in the case of any beneficiary or dependent
of a Transferred Employee, such Person's hospitalization has terminated.
Notwithstanding the foregoing, with respect to any
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medical expenses and other costs relating to pregnancies and maternity leave,
Seller shall be responsible for all claims (whether or not reported) and
expenses incurred during the period prior to and ending on the Closing Date.
(d) Seller shall be responsible, and Buyer shall have no responsibility,
for all severance obligations to all employees who do not become Transferred
Employees.
(e) Seller shall be responsible for satisfying obligations under Part 6
of Subtitle B of Title I of ERISA and Section 4980B of the Code, to provide
continuation coverage and notice of such coverage to employees of the System and
their eligible dependents who suffer a "qualifying event" on or prior to the
Closing Date. Such continuation coverage shall be identical to the coverage
provided to Seller's employees and their eligible dependents immediately prior
to the Closing Date. Seller will provide such coverage through: (i) the
maintenance of their existing group health insurance contracts; (ii) the
conversion of group coverage to individual policies; (iii) other available
commercial insurance arrangements; (iv) an arrangement funded by the general
assets of Seller; or (v) any combination of the above; provided, however, that
the cost charged to such employee and their eligible dependents for that
coverage shall not exeed the "applicable premium" (as that term is defined in
Section 604 of ERISA) that would have been charged for COBRA continuation
coverage by Seller immediately prior to the Closing Date. To the extent that
the cost of providing such coverage exceeds that applicable premium, Seller
shall bear any additional cost. Seller's obligations pursuant to this paragraph
shall continue for the full continuation period set forth in Section 602(2)(A)
of ERISA, without regard to the application of Section 602(2)(B) of ERISA.
(f) Seller shall be responsible for satisfying obligations under Part 7
of Subtitle B of Title I of ERISA and Section 9801 and 4980D of the Code, to
provide certifications of coverage to employees of the System and their eligible
dependents who become entitled to such certifications as a result of a
termination of coverage or employment occurring on or prior to the Closing Date.
SECTION 10.5. NO THIRD PARTY BENEFICIARIES. No provision of this
----------------------------
Article shall create any third party beneficiary or other rights in any employee
or former employee (including any beneficiary or dependent thereof) of Seller or
of any of its subsidiaries in respect of continued employment (or resumed
employment) with either Buyer or any of its Affiliates and no provision of this
Article 10 shall create any such rights in any such Persons in respect of any
benefits that may be provided, directly or indirectly, under any Employee Plan
or Benefit Arrangement or any plan or arrangement which may be established by
Buyer or any of its Affiliates. No provision of this Agreement shall constitute
a limitation on rights to amend, modify or terminate after the Closing Date any
such plans or arrangements of Buyer or any of its Affiliates.
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ARTICLE 11
CONDITIONS TO CLOSING
SECTION 11.1. CONDITIONS TO THE OBLIGATIONS OF EACH PARTY. The
-------------------------------------------
obligations of Buyer and Seller to consummate the Closing are subject to the
satisfaction or waiver of the following conditions:
(a) Any applicable waiting period under the HSR Act relating to the
transactions contemplated hereby shall have expired or been terminated.
(b) No provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit the consummation of the Closing.
(c) Buyer and Seller shall have received all Required Consents in
connection with the Material Contracts (other than for pole agreements) and all
Franchise Approvals, and no such Franchise Approval or Required Consent shall
have been revoked.
(d) The partners of Seller shall have voted to approve the transactions
contemplated by this Agreement in accordance with their respective partnership
agreements.
SECTION 11.2. CONDITIONS TO OBLIGATION OF BUYER. The obligation of
---------------------------------
Buyer to consummate the Closing is subject to the satisfaction or waiver of the
following further conditions:
(a)(i) Seller shall have performed in all material respects all of its
obligations hereunder required to be performed by it on or prior to the Closing
Date, (ii) the representations and warranties of Seller contained in this
Agreement and in any certificate or other writing delivered by Seller pursuant
hereto, shall have been true as of the date hereof and shall be true at and as
of the Closing Date in all material respects, as if made at and as of such date,
except for changes permitted or contemplated by this Agreement and insofar as
any representation or warranty is made specifically as of the date of this
Agreement or other specified earlier date, and (iii) Buyer shall have received a
certificate signed by an appropriate executive officer of Seller to the
foregoing effect.
(b) Buyer shall have received an opinion of Xxxxxxxxx Xxxxxx, Vice
President and General Counsel of Xxxxx Intercable and counsel to Seller, dated
the Closing Date, in form and substance reasonably satisfactory to Buyer.
(c) Buyer shall have received an opinion of Xxxx, Raywid & Xxxxxxxxx,
Seller's FCC counsel, dated the Closing Date, in form and substance reasonably
satisfactory to Buyer.
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(d) The System shall have as of the Closing Date, at least (i) 19,000
Basic Subscribers, (ii) 24,523 Homes Passed, and (iii) Total Revenue From All
Subscribers of at least $1,724,819. If Buyer shall waive the condition set
forth in this paragraph (d), Buyer shall nevertheless be entitled to the benefit
of the adjustments to the Purchase Price described in Article 2, including
without limitation to the full extent set forth in Section 2.5(b).
(e) There shall have been no material adverse change in the business,
assets, condition (financial or otherwise) or results of operations of the
business of the System, including without limitation, as to the System's rate
regulation position (provided that, certification of a local Franchising
Authority shall not, by itself, constitute a material adverse change in the
business, assets, condition (financial or otherwise) or results of operation of
the business of the System), other than (i) a change arising out of general
economic conditions in the United States, (ii) any change affecting the United
States cable industry as a whole, including any change arising from legislation,
litigation, rulemaking or regulation, any of which affects the United States
cable industry as a whole or (iii) competition caused by or arising from any
Multi-Channel Video Service providers who are currently competing with, have the
legal authorization, pursuant to a franchise or license, to compete with, or
have announced their intention to compete with the Seller, and which are set
forth on Schedule 3.27.
-------------
(f) Buyer shall have entered into, or received a valid assignment of, a
retransmission consent agreement with each broadcaster whose signal is carried
on the System at the Closing who did not make a so-called "must carry" election
under the Cable Act on terms and conditions reasonably acceptable to Buyer,
including without limitation, with respect to channel KTXL.
(g) Buyer shall have conducted an Environmental Assessment of the Owned
Real Property and the Leased Real Property, which audit will identify and
delineate, to the fullest extent possible, all Environmental Liabilities in
connection with such Owned Real Property and the Leased Real Property and which
Assessment shall be satisfactory to the Buyer in its reasonable discretion. For
purposes of this provision, an "ENVIRONMENTAL ASSESSMENT" means: (i) a Phase I
report in accordance with a scope of work provided by Buyer, and (ii) if
warranted by the facts discovered in the Phase I report, in Buyer's sole
discretion, a Phase II report in order to identify the existence and extent of
Hazardous Substances at the Owned Real Property and the Leased Real Property or
in buildings or other structures on such Owned Real Property and the Leased Real
Property. Such a Phase II report shall include, but shall not be limited to,
the physical sampling and analytical analysis necessary to determine the
existence and extent of particular types of contamination.
(h) No provision of any applicable law or regulation and no judgment,
injunction, order or decree shall restrain, prohibit or otherwise interfere with
the effective operation or enjoyment by Buyer of all or any material portion of
the Assets.
(i) No proceeding challenging this Agreement or the transactions
contemplated hereby or seeking to prohibit, alter, prevent or materially delay
the Closing shall have been instituted by any Person before any arbitrator or
Governmental Authority and be pending.
-51-
(j) Seller shall have obtained a franchise renewal agreement with each of
the City and the County, on terms and conditions reasonably satisfactory to
Buyer.
(k) Buyer shall have received evidence satisfactory to it that the Bank
Loan Documents have been terminated, and that any security interest granted and
any Financing Statements (or any amendments, modifications or continuations
thereof) issued in favor of either Colorado National Bank or PNC Bank (successor
by merger to Provident National Bank) in connection with the Bank Loan Documents
have been terminated.
(l) Buyer shall have entered into license agreements for pole attachments
with each of the parties (other than Seller) to the license agreements for pole
attachments listed on Schedule 3.12 or provided for or made alternative
-------------
arrangements reasonably acceptable to Buyer for use of such pole attachments
without violation of any Legal Requirement.
(m) The Xxxxx Intercable Assets shall have been transferred to Seller as
provided in Section 7.21 hereof.
(n) Seller shall provide Buyer with written evidence, reasonably
satisfactory to Buyer, that the Maidu Center Payment has been made.
SECTION 11.3. CONDITIONS TO OBLIGATION OF SELLER. The obligation of
----------------------------------
Seller to consummate the Closing is subject to the satisfaction or waiver of the
following further conditions:
(a) (i) Buyer shall have performed in all material respects all of its
obligations hereunder required to be performed by it at or prior to the Closing
Date, (ii) the representations and warranties of Buyer contained in this
Agreement and in any certificate or other writing delivered by Buyer pursuant
hereto, shall have been true as of the date hereof and shall be true at and as
of the Closing Date in all material respects, as if made at and as of such date
and (iii) Seller shall have received a certificate signed by an appropriate
executive officer of Buyer to the foregoing effect.
(b) The Subscriber/Revenue Adjustment shall not exceed the amount of
$2,000,000; provided however, that in the event the Subscriber/Revenue
Adjustment exceeds the amount of $2,000,000 and Buyer agrees to limit the amount
of the actual Subscriber/Revenue Adjustment to $2,000,000, then the condition
set forth in this Section 11.3(b) shall be deemed waived by Seller.
(c) Seller shall have received an opinion of the Deputy General Counsel
of Buyer, dated the Closing Date, in form and substance reasonably satisfactory
to Seller.
(d) No proceeding challenging this Agreement or the transactions
contemplated hereby or seeking to prohibit, alter, prevent or materially delay
the Closing shall have been instituted by any Person before any arbitrator or
Governmental Authority and be pending.
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ARTICLE 12
SURVIVAL; INDEMNIFICATION
SECTION 12.1. SURVIVAL. The representations and warranties of the
--------
parties hereto contained in this Agreement or in any certificate or other
writing delivered pursuant hereto or in connection herewith shall survive the
Closing until the eighteen month anniversary of the Closing Date, except that
the representations and warranties set forth in Sections 3.1, 3.2 and 3.9 shall
survive indefinitely and the representations and warranties set forth in Section
3.19 and Articles 9 and 10 shall survive until the later of the third
anniversary of the Closing Date or 60 days following the expiration of the
applicable statutory period of limitations (giving effect to any waiver,
mitigation or extension thereof). Notwithstanding the preceding sentence, any
representation or warranty in respect of which indemnity may be sought under
this Agreement shall survive the time at which it would otherwise terminate
pursuant to the preceding sentence, if notice of the inaccuracy or breach
thereof giving rise to such right to indemnity shall have been given to the
party against whom such indemnity may be sought prior to such time.
Section 12.2. INDEMNIFICATION. (a) Seller hereby indemnifies Buyer and
---------------
its Affiliates against and agrees to hold each of them harmless from any and all
damage, loss, liability and expense (including, without limitation, reasonable
expenses of investigation and reasonable attorneys' fees and expenses in
connection with any action, suit or proceeding) (collectively, "LOSS") incurred
or suffered by Buyer or any of its Affiliates arising out of:
(i) any misrepresentation or breach of warranty, covenant or
agreement made or to be performed by Seller pursuant to this Agreement;
(ii) any Excluded Liability or Excluded Asset, including without
limitation, the failure of Seller to perform any Excluded Liability or any
obligation or liability of Seller relating to the Excluded Assets; or
(iii) the failure of Seller to comply with any applicable bulk
sales laws.
(b) Buyer hereby indemnifies Seller and its Affiliates against and agrees
to hold each of them harmless from any and all Loss incurred or suffered by
Seller or any of its Affiliates arising out of:
(i) any misrepresentation or breach of warranty, covenant or
agreement made or to be performed by the Buyer pursuant to this Agreement;
or
(ii) the failure of Buyer to perform any Assumed Liability.
SECTION 12.3. CONDUCT OF INDEMNIFICATION PROCEEDINGS. In case any
--------------------------------------
proceeding or claim (including any governmental investigation) shall be
instituted or asserted involving any Person in respect of which indemnity may be
sought pursuant to Section 12.2, such Person (the "INDEMNIFIED PARTY") shall
promptly notify the Person
-53-
against whom such indemnity may be sought (the "INDEMNIFYING PARTY") in writing
and the Indemnifying Party, upon the request of the Indemnified Party, shall
retain counsel reasonably satisfactory to such Indemnified Party to represent
such Indemnified Party and any others the Indemnifying Party may designate in
such proceeding and shall pay the fees and disbursements of such counsel related
to such proceeding. In any such proceeding, any Indemnified Party shall have the
right to retain its own counsel, but the fees and expenses of such counsel shall
be at the expense of such Indemnified Party unless (i) the Indemnifying Party
and the Indemnified Party shall have mutually agreed to the retention of such
counsel or (ii) the named parties to any such proceeding (including any
impleaded parties) include both the Indemnified Party and the Indemnifying Party
and representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them. It is understood
that the Indemnifying Party shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the fees and
expenses of more than one separate firm of attorneys (in addition to any local
counsel) at any time for all such Indemnified Parties, and that all such fees
and expenses shall be reimbursed as they are incurred. In the case of any such
separate firm for the Indemnified Parties, such firm shall be designated in
writing by the Indemnified Parties. The Indemnifying Party shall not be liable
for any settlement of any proceeding effected without its written consent, but
if settled with such consent, or if there be a final judgment for the plaintiff,
the Indemnifying Party shall indemnify and hold harmless such Indemnified
Parties from and against any loss or liability (to the extent stated above) by
reason of such settlement or judgment.
SECTION 12.4. ESTABLISHMENT OF LOSSES.
-----------------------
(a) The Indemnifying Party and the Indemnified Party may agree in
writing, at any time, as to the existence and amount of a Loss, and upon
execution of such agreement, such Loss shall be deemed established.
(b) A Loss shall be deemed established pursuant to Section 12.3 upon the
earlier of (i) the resolution of said claim by the Indemnifying Party with the
claimant, or (ii) the termination of the defense by the Indemnifying Party
against such claimant or the failure of the Indemnifying Party to prosecute such
defense in good faith in a diligent manner. The Indemnified Party shall be
entitled to rely upon the opinion of its counsel as to the occurrence of either
of said events.
(c) In the event an Indemnified Party asserts the existence of any Loss,
the Indemnified Party shall provide prompt written notice to the Indemnifying
Party of the nature and amount of such Loss. If the Indemnifying Party, within
a period of ten (10) days after the giving of notice of such Loss, does not give
notice to the Indemnified Party that it contests such Loss, such assertion by
the Indemnified Party shall be deemed accepted and the amount of the Loss shall
be deemed established. In the event that an Indemnifying Party contests the
assertion of a Loss, then the contested assertion of such Loss shall be settled
by arbitration to be held in Sacramento, California, in accordance with the
rules of the American Arbitration Association then obtaining. The determination
of the arbitrator(s) shall be final, binding and conclusive upon all of the
parties hereto, and the amount of the Loss, if any, shall be deemed established.
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SECTION 12.5. PAYMENT OF LOSSES. The Indemnifying Party hereby agrees
-----------------
to pay the amount of established Losses to the Indemnified Party in cash, within
five (5) days after establishment thereof. Any amounts required to be paid but
not paid by the Indemnifying Party when due under this subsection shall bear
interest from the due date thereof until the date paid at a rate equal to the
lesser of (i) two percent (2%) over Prime Rate, or (ii) the highest legal rate
permitted by applicable law.
SECTION 12.6. LIMITATION ON INDEMNITY CLAIMS. Claims for
------------------------------
indemnification from Losses arising solely by reason of any misrepresentation or
breach or nonfulfillment of any representation, warranty or covenant shall not
be payable hereunder unless such claims exceed, on a cumulative basis, the sum
of $25,000 (the "BASKET AMOUNT") and in the event they exceed the Basket Amount,
shall be payable from the first dollar thereof. The relief to Seller from
claims as set forth in this Section shall not apply to Losses described in
Section 12.2(a)(ii) or (iii) or claims arising out of any violation of Section
7.4 of this Agreement.
ARTICLE 13
TERMINATION
SECTION 13.1. TERMINATION. This Agreement may be terminated at any time
-----------
prior to the Closing:
(a) by mutual written agreement of Seller and Buyer;
(b) by either Seller or Buyer if the Closing shall not have been
consummated on or before December 31, 1998;
(c) by the Seller (upon payment of any amount due pursuant to Section
13.3) or by Buyer if, pursuant to the partners' vote referred to in Section
7.13, the transactions contemplated hereby that require such approval shall fail
to be approved and adopted by the affirmative vote specified herein;
(d) by either Buyer or Seller if it has received any communication from
either the Department of Justice or Federal Trade Commission (such communication
to be confirmed to the Seller) indicating that either the Department of Justice
or Federal Trade Commission has authorized the institution of litigation
challenging the transactions contemplated by this Agreement under the U.S.
antitrust laws, which litigation will include a motion seeking an order or
injunction prohibiting the consummation of any of the transactions contemplated
by this Agreement.
(e) by either Buyer or Seller in the event the Department of Justice or
Federal Trade Commission makes a second request for information in connection
with the HSR Filing;
(f) by either Seller or Buyer if there shall be any law or regulation
that makes the consummation of the transactions contemplated hereby illegal or
otherwise
-55-
prohibited or if consummation of the transactions contemplated hereby would
violate any nonappealable final order, decree or judgment of any Governmental
Authority; or
The party desiring to terminate this Agreement pursuant to clauses (b),
(c), (d), (e) or (f) shall give notice of such termination to the other parties.
SECTION 13.2. EFFECT OF TERMINATION. If this Agreement is terminated as
---------------------
permitted by Section 13.1, such termination, subject to Section 13.3, shall be
without liability of either party (or any partner, officer, employee, agent,
consultant or representative of such party) to the other parties to this
Agreement; provided that if such termination shall result from the willful
--------
failure of either party to fulfill a condition to the performance of the
obligations of the other party, failure to perform a covenant of this Agreement
or breach by either party to this Agreement of any representation or warranty or
agreement contained herein, such party shall be fully liable for any and all
Losses incurred or suffered by the other party as a result of such failure or
breach. The provisions of Section 14.3 shall survive any termination hereof
pursuant to Section 13.1.
Section 13.3. BREAK-UP FEE. In order to induce Buyer to enter into the
------------
Agreement, Seller will agree that if (i) JCC fails to vote in favor of or fails
to recommend to each of the partners of Seller that they vote in favor of
consummating the transactions contemplated in this Agreement and the partners of
Seller fail to approve the transactions contemplated in this Agreement or (ii)
the partners of Seller fail to approve the transactions contemplated by this
Agreement as a result of a Superior Proposal, which Superior Proposal is
received on or after the date of the Agreement and prior to the vote of the
partners of Seller, to purchase the Assets and/or the System or any transaction
having a similar effect, Seller shall pay Buyer a break-up fee (the "BREAK-UP
FEE") in an amount equal to the greater of (A) five percent of the Purchase
Price or (B) five percent of the purchase price under the Superior Proposal. The
Break-Up Fee shall be paid in immediately available funds no later than five
business days after the termination of this Agreement.
ARTICLE 14
MISCELLANEOUS
SECTION 14.1. NOTICES. All notices, requests and other communications
-------
to any party hereunder shall be in writing (including facsimile transmission)
and shall be given,
if to Buyer, to:
Comcast Corporation
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Attention: General Counsel
Telecopy: (000) 000-0000
-56-
if to Seller, JCC, Xxxxx or Xxxxx Intercable to:
IDS/Xxxxx Growth Partners 87-A, Ltd.
c/x Xxxxx Intercable, Inc.
0000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: President
Telecopy: (000) 000-0000
with a copy to:
Legal Department
c/x Xxxxx Intercable, Inc.
0000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: General Counsel
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
All such notices, requests and other communications shall be deemed received on
the date of receipt by the recipient thereof if received prior to 5 p.m. in the
place of receipt and such day is a business day in the place of receipt.
Otherwise, any such notice, request or communication shall be deemed to have
been received on the next succeeding business day in the place of receipt.
SECTION 14.2. AMENDMENTS AND WAIVERS. (a) Any provision of this
----------------------
Agreement may be amended or waived if, but only if, such amendment or waiver is
in writing and is signed, in the case of an amendment, by each party to this
Agreement, or in the case of a waiver, by the party against whom the waiver is
to be effective.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 14.3. EXPENSES. Except as otherwise provided herein (including
--------
without limitation Article 13), costs and expenses incurred in connection with
this Agreement shall be paid by the party incurring such cost or expense. The
HSR Act filing fee will be paid one-half by Buyer and one-half by Seller.
SECTION 14.4. SUCCESSORS AND ASSIGNS. The provisions of this Agreement
----------------------
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided that no party may assign, delegate
--------
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of the other party hereto except that Buyer may, without the
consent of Seller, transfer or assign, in whole or from time to time in part,
the right to purchase all or a portion of the Assets, but no such transfer or
assignment will relieve Buyer of its obligations hereunder.
-57-
SECTION 14.5. GOVERNING LAW. This Agreement shall be governed by and
-------------
construed in accordance with the law of the State of Colorado (and United States
law, to the extent applicable), without regard to the conflicts of law rules of
such state.
SECTION 14.6. SPECIFIC PERFORMANCE; REMEDIES CUMULATIVE. (a) Seller
-----------------------------------------
recognizes that the Assets and the System cannot be readily obtained in the open
market and that Buyer will be irreparably injured if this Agreement is not
specifically enforced. Therefore, Buyer shall be entitled in such event, in
addition to bringing suit at law or equity for money or other damages, to obtain
specific performance of the terms of this Agreement. In any action to enforce
the provisions of this Agreement, Seller shall waive the defense that there is
an adequate remedy at law or equity and agree that Buyer shall have the right to
obtain specific performance of the terms of this Agreement.
(b) The remedies provided in this Agreement shall be cumulative and
shall not preclude the assertion by any party hereto of any other rights or the
seeking of any other remedies against the other party hereto.
SECTION 14.7. COUNTERPARTS; EFFECTIVENESS. This Agreement may be signed
---------------------------
in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received
a counterpart hereof signed by the other party hereto.
SECTION 14.8. ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES. This
-------------------------------------------
Agreement and the Exhibits attached hereto constitute the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
prior agreements and understandings, both written and oral, between the parties
with respect to the subject matter of this Agreement. No representation,
inducement, promise, understanding, condition or warranty not set forth herein
has been made or relied upon by either party hereto. Neither this Agreement nor
any provision hereof is intended to confer upon any Person other than the
parties hereto any rights or remedies hereunder.
SECTION 14.9. CAPTIONS. The captions herein are included for
--------
convenience of reference only and shall be ignored in the construction or
interpretation hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
-58-
COMCAST CORPORATION
By:____________________________
Title: Vice President
----------------------------------------
IDS/XXXXX GROWTH PARTNERS 87-A, LTD.
By: Xxxxx Cable Corporation,
managing general partner
By:____________________________
Title:__________________________
XXXXX INTERNATIONAL, LTD.
By:____________________________
Title:_________________________________________
XXXXX INTERCABLE, INC.
By:____________________________
Title:___________________________
-59-
EXHIBIT A
GUARANTY
--------
THIS GUARANTY, made as of this ____ day of _________, 1998 by Xxxxx
Intercable, Inc., a Colorado corporation (the "Guarantor"), with an address of
0000 Xxxx Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000.
WITNESSETH:
Xxxxx Cable Corporation ("JCC") is the general partner of IDS/Xxxxx Growth
Partners 87-A, Ltd., a Colorado limited partnership (the "Seller") and a wholly
owned subsidiary of the Guarantor. Each of the Seller, Xxxxx International,
Ltd. ("Xxxxx") and JCC now have and are expected to have various liabilities and
obligations to Comcast Corporation or its assignee (the "Company") under an
Asset Purchase Agreement dated as of the date hereof among the Company, the
Guarantor, the Seller, JCC and Xxxxx (the "Agreement"). Terms not otherwise
defined herein shall have the meaning set forth in the Agreement. All
liabilities and obligations of the Seller, JCC and Xxxxx to the Company under
the Agreement, both now existing and hereafter arising, are hereinafter referred
to collectively as the "Obligations." Guarantor will benefit from the
transactions pursuant to which the Obligations are incurred, and the Company
would be unwilling to enter into the Agreement without having received this
Guaranty.
NOW, THEREFORE, in consideration of the foregoing and intending to be legally
bound, Guarantor hereby agrees as follows:
1. Guarantor hereby unconditionally and irrevocably guarantees to the
Company the punctual payment and performance of all of the Obligations. Any sum
due by Guarantor under any provisions of this Guaranty shall thereafter bear
interest until paid at the rate which is two percent (2%) per annum in excess of
the Prime Rate or, if less, the highest rate permitted by applicable law.
2. Guarantor hereby, to the fullest extent permitted by law: waives notice
of acceptance of this Guaranty, waives presentment, demand, notice or protest of
any kind, waives giving of any notice of default or other notice to, or making
any demand on, anyone (including, without limitation, Company and Guarantor)
liable in any manner for the payment of any Obligations.
3. The obligations and agreements of Guarantor under this Guaranty are
primary, absolute, independent, irrevocable and unconditional. This is an
agreement of suretyship as well as of guaranty, and without being required to
proceed first against Seller, JCC or Xxxxx or any other person or entity, the
Company may proceed directly against Guarantor (without the necessity of joining
Seller, JCC or Xxxxx in any action brought against Guarantor) whenever Seller,
JCC or Xxxxx fails to make any payment when due relating to the Obligations or
fails to perform any Obligation now or hereafter owed to the Company. This
Guaranty shall remain in full force and effect until all Obligations have been
indefeasibly paid in full to the Company and performed and until all such sums
or other things of value received by the Company are not subject to rescission
or repayment upon the bankruptcy, insolvency or reorganization of Seller,
X-0
XXX or Xxxxx, as applicable, and if any such sums are rescinded or repaid, then,
to such extent, Seller, JCC or Xxxxx, as applicable, shall not, for the purposes
of this Guaranty, be deemed to have paid such amounts or things of value, and
Guarantor shall remain liable for the payment thereof.
4. The obligations of Guarantor under this Guaranty shall remain in full
force and effect, and shall not be negated or impaired, irrespective of (a) the
impossibility or the illegality of performance on the part of Seller, JCC or
Xxxxx of the Obligations, (b) any defense that may arise by reason of the
incapacity or lack of authority of Guarantor or the failure of the Company to
file or enforce a claim against the estate of Seller, JCC or Xxxxx, as
applicable, in any bankruptcy or other proceeding, (c) the involvement of
Seller, JCC or Xxxxx in any bankruptcy, reorganization, insolvency or any other
proceedings, or (d) any other circumstances, occurrence or condition, whether
similar or dissimilar to any of the foregoing, which might otherwise constitute
a legal or equitable defense, discharge or release of a guarantor or surety.
5. Guarantor represents and warrants that (a) Guarantor has the full power,
authority and legal right to enter into, execute and deliver this Guaranty; and
(b) this Guaranty is a valid and binding obligation of Guarantor, and is fully
enforceable against Guarantor in accordance with its terms. Guarantor
represents and warrants that the documents and reports which Guarantor has filed
pursuant to the requirements of the Securities Exchange Act of 1934, as amended
(the "Act"), and the rules and regulations promulgated thereunder conform in all
material respects to the requirements of the Act and such rules and regulations
and do not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading.
6. Any notice, demand, request or other communication which the Company may
desire to give to Guarantor with respect to this Guaranty shall be deemed
sufficient if in writing and mailed by certified or registered mail, postage
prepaid, addressed to Guarantor at the address of Guarantor set forth in the
heading of this Guaranty or such other address of which the Company has received
any notice pursuant to the provisions of this paragraph. No change of address
by Guarantor shall be effective as against the Company unless Guarantor shall
have advised the Company of the change of address by a written notice thereof
mailed to the Company by registered or certified mail, return receipt requested,
postage prepaid, and the Company shall have actually received such notice.
7. All rights and remedies of the Company under this Guaranty or law are
separate and cumulative, and the exercise of one shall not limit or prejudice
the exercise of any other such rights or remedies. The enumeration in this
Guaranty of any waivers or consents by Guarantor shall not be deemed exclusive
of any additional waivers or consents by Guarantor which may be deemed to exist
in law or equity. No delay or omission by the Company in exercising any such
right or remedy shall operate as a waiver thereof. No waiver of any rights and
remedies hereunder, and no modification or amendment of this Guaranty shall be
deemed made by the Company unless in writing and duly signed by the Company. Any
such written waiver shall apply only to the particular instance specified
therein and shall not impair the further exercise of such right or remedy or of
any other right or remedy of the Company, and no single or partial exercise of
any right or remedy under this Guaranty shall preclude any other or
A-2
further exercise thereof or any other right or remedy.
8. Guarantor will reimburse the Company, upon demand, for all reasonable
expenses incurred in connection with the collection and/or enforcement of this
Guaranty (including, without limitation, attorneys' fees) whether or not suit is
actually instituted.
9. This Guaranty shall be a continuing Guaranty and shall be binding upon
Guarantor, and Guarantor's successors and assigns, and shall inure to the
benefit of the Company and its successors and assigns. Notwithstanding the
foregoing, Guarantor may not assign any of its obligations under this Guaranty.
10. If any provision of this Guaranty is held to be invalid or unenforceable
by a court of competent jurisdiction, the other provisions of this Guaranty
shall remain in full force and effect and shall be liberally construed in favor
of the Company in order to effect the provisions of this Guaranty.
11. This Guaranty is being delivered in, and shall be governed by and
construed according to the laws of, the State of Colorado applicable to
contracts wholly performed within such jurisdiction.
12. Guarantor shall, from time to time upon request by the Company, execute,
acknowledge and deliver to the Company, promptly after such request and at no
expense to the Company, such other documents and instruments as the Company
shall request in order to effectuate the provisions of this Guaranty.
IN WITNESS WHEREOF, Guarantor has executed this Guaranty the day and year
first above written.
XXXXX INTERCABLE, INC.
By:_________________________
Name:
Title:
A-3
EXHIBIT B
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
KNOW ALL MEN BY THESE PRESENTS, that IDS/XXXXX GROWTH PARTNERS 87-A,
LTD., a Colorado limited partnership ("Assignor"), pursuant to that certain
Asset Purchase Agreement dated as of ___________ among COMCAST CORPORATION, a
Pennsylvania corporation ("Buyer"), Assignor, XXXXX INTERNATIONAL, LTD., a
Colorado corporation, XXXXX CABLE CORPORATION, a Colorado corporation, and XXXXX
INTERCABLE, INC., a Colorado corporation (the "Asset Purchase Agreement"), for
the consideration set forth in the Asset Purchase Agreement and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, has this day assigned and transferred and does hereby assign and
transfer to Sacramento Cable Television d/b/a Comcast Cablevision of Sacramento,
a California general partnership ("Assignee") an assignee of Buyer, effective
11:59 p.m. (local California time) on the date hereof, all of Assignor's right,
title and interest in, to and under the Authorizations and Contracts (as defined
in the Asset Purchase Agreement).
Assignee hereby accepts said assignment and hereby assumes and agrees to
perform, comply with and be bound by all terms, covenants and conditions of the
Authorizations and Contracts with respect to the period of time from and after
11:59 p.m. (local California time) on the date hereof, except for any such
terms, covenants or conditions which are Excluded Liabilities (as defined in the
Asset Purchase Agreement), in the same manner and with the same force and effect
as if Assignee had originally executed such documents.
Notwithstanding any other provisions of this Agreement to the contrary,
nothing contained herein shall in any way supersede, modify, replace, amend,
change, rescind, waive, exceed, expand, enlarge or in any way affect the
provisions, including the warranties, covenants, agreements, conditions,
representations or, in general any of the rights and remedies, and any of the
obligations and indemnifications of Seller or Buyer set forth in the Asset
Purchase Agreement. This Agreement is intended only to effect the assignment of
certain contracts and commitments and the assumption of certain liabilities
pursuant to the Asset Purchase Agreement and shall be governed entirely in
accordance with the terms and conditions of the Asset Purchase Agreement.
This Assignment and Assumption Agreement shall be constued in accordance
with and governed under the laws of the State of Colorado.
B-1
This Agreement may be signed in any number of counterparts, each of which
shall be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument. This Agreement shall become effective
when each party hereto shall have received a counterpart hereof signed by the
other party hereto.
IN WITNESS WHEREOF, Assignor and Assignee, intending to be legally bound
hereby, have caused this instrument to be executed and delivered this _____ day
of _____________, 1998.
IDS/XXXXX GROWTH PARTNERS 87-A, LTD.
By: XXXXX CABLE CORPORATION,
managing general partner
By:____________________________
Title:_________________________
SACRAMENTO CABLE TELEVISION
By: Comcast Cablevision of Sacramento, Inc.,
a general partner
By:_____________________________
Title:__________________________
B-2
EXHIBIT "C"
FORM OF XXXX OF SALE
--------------------
Pursuant to a certain Asset Purchase Agreement (the "ASSET PURCHASE
AGREEMENT"), dated _______, 1998, by and among IDS/Xxxxx Growth Partners 87-A,
Ltd., a Colorado limited partnership ("SELLER"), Comcast Corporation, a
Pennsylvania corporation and certain other related parties, this Xxxx of Sale is
made this ___ day of ________, 1998 by Seller. Capitalized words used but not
defined herein shall have the respective meanings ascribed to them in the Asset
Purchase Agreement.
WITNESSETH:
WHEREAS, pursuant to the Asset Purchase Agreement, Seller has agreed
to convey, assign, transfer and deliver to Comcast Cablevision of Sacramento, a
California general partnership ("Transferee"), an assignee of Buyer, and
Transferee has agreed to purchase and accept as of the date hereof, certain
assets relating to the System.
NOW, THEREFORE, Seller, for good and valuable consideration, receipt
of which is hereby acknowledged, and intending to be legally bound, does hereby
irrevocably sell, assign, convey, transfer, deliver and set over to Transferee,
all of Seller's right, title and interest in, to and under the Assets, but
excluding any Excluded Assets, including, but not limited to, the following:
(a) All Authorizations;
(b) All interests in real property, including without limitation, all
appurtenances, towers and fixtures located thereon, rights-of-way, easements and
other real property interests owned or leased by Seller;
(c) All tangible personal property, including, without limitation, all
electronic devices, towers, satellite dishes, antenna, downleads, trunk and
distribution pedestals, grounding and pole hardware, cable system plant,
machinery, installed subscribers' devices (including, without limitation, drop
lines, converters, and encoders, transformers and fittings), headends,
origination, transmission and distribution systems and equipment, maps, internal
wiring, hardware, tools, inventory, spare parts, motor vehicles, supplies, test
and closed circuit devices, earth stations and microwave equipment and systems
and furniture, furnishings and office equipment used in the System;
(d) All claims and rights of every kind arising out of or related to
all contracts, leases of real and personal property (both as lessor and lessee),
agreements, non-governmental licenses, orders for service to be provided by the
System and understandings in connection with the System and to which Seller or
any Affiliate of
C-1
Seller is a party, including without limitation, all pole attachment and conduit
agreements, wire crossing agreements, subscriber agreements, retransmission
consent agreements and other agreements, written or oral, to which Seller or any
Affiliate of Seller is a party and which relate to the System, except for those
agreements that are Excluded Assets;
(e) All business records of Seller regardless of the medium of
storage relating to the System, including without limitation, all schematics,
blueprints, working drawings, engineering data, engineering drawings, reports,
design information, specifications, maintenance manuals, test procedures,
current customer and subscriber lists, maps, reports, plans, projections,
statistics, promotional graphics, original art work, mats, plates, negatives,
advertising, marketing or related materials, files, manuals and records, lists
of all pending subscriber hook-ups, disconnect and repair orders and supply
orders, and all other technical, accounting and financial information concerning
the System;
(f) All deposits with respect to the Authorizations or with respect
to any bonding or surety arrangements;
(g) All rights, claims and causes or action against third parties,
including without limitation, any rights, claims and causes of action arising
under warranties from vendors and other third parties;
(h) All accounts receivable, notes receivable and prepaid expenses,
as well as insurance and indemnity claims with respect to the Assets;
(i) All goodwill associated with the System and the Assets; and
(j) All other assets of whatever nature and wherever located, and
owned, used or held for use by the Seller or any Affiliate of Seller in
connection with the System.
TO HAVE AND TO HOLD the same unto Transferee, its successors and
assigns forever; provided, however, that no Assets (1) which are incapable of
-------- -------
assignment or transfer, (2) which would become forfeitable by reason of a
transfer or assignment, or (3) which may not be transferred without the consent,
approval or waiver of a third party (including, without limitation, any
Governmental Entity) if such transfer or attempted transfer would constitute a
breach thereof or a violation of any law (any such asset being herein called a
"Nonassignable Asset"), shall pass by virtue of this instrument, but Seller,
either by itself or through an agent (which agent shall be Transferee, to the
extent it may lawfully so act), shall take, in Seller's own rights, title and
interest in, to and under any such Nonassignable Assets and Seller will
cooperate in any reasonable arrangement requested by Transferee to provide
Transferee with the benefits under such Nonassignable Assets as if such
Nonassignable Assets had been assigned to Transferee, including enforcement for
the benefit of Transferee, at Transferee's expense, of any and all rights of
Seller against any other party thereto; provided, however, that Seller will not
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be obligated to pay any consideration therefor or to incur any additional
liability or obligation in connection therewith or to remain secondarily liable
thereon.
C-2
Seller hereby irrevocably constitutes and appoints Transferee, to the
extent that it may lawfully do so, with full power of substitution for Seller,
and in its name, place and stead, but on behalf and for the benefit of
Transferee, to demand and enforce payment and performance of any and all
obligations, claims and demands of every conceivable kind included among the
Assets; to demand, receive and enjoy the Assets; to give receipts and releases
in respect to the same; to institute, prosecute, defend and compromise any and
all proceedings at law, in equity, or otherwise, which Transferee may deem
desirable in order to collect, assert, enforce, defend or enjoy the benefit of
any claim, demand, right, title or interest of every conceivable kind with
respect to the Assets; and to do any and all such acts and things in connection
therewith as Transferee shall deem desirable. Seller hereby declares that the
appointment of Transferee so made, and any and all powers so granted to it, are
coupled with an interest, shall be irrevocable by Seller, and shall survive its
dissolution or liquidation.
Notwithstanding any other provisions of this Xxxx of Sale to the
contrary, nothing contained herein shall in any way supersede, modify, replace,
amend, change, rescind, waive, exceed, expand, enlarge or in any way affect the
provisions, including the warranties, covenants, agreements, conditions,
representations or, in general any of the rights and remedies, and any of the
obligations and indemnification's of Seller or Buyer set forth in the Asset
Purchase Agreement, nor shall this Xxxx of Sale expand or enlarge any remedies
under the Asset Purchase Agreement including, without limitation, any limits on
indemnification specified therein. This Xxxx of Sale is intended only to effect
the purchase of the Assets pursuant to the Asset Purchase Agreement and shall be
governed entirely in accordance with the terms and conditions of the Asset
Purchase Agreement.
The agreements, obligations, assumptions and covenants of Buyer and
Seller under the Asset Purchase Agreement are not merged into this Xxxx of Sale
and shall, to the extent provided in the Asset Purchase Agreement, survive the
execution and delivery of this Xxxx of Sale, and the performance of the
consummation of all transactions provided for in the Asset Purchase Agreement.
This Xxxx of Sale shall be binding upon and enforceable against
Seller, its successors and permitted assigns.
This Xxxx of Sale shall be construed in accordance with and governed
under the laws of the State of Colorado.
IN WITNESS WHEREOF, Seller has duly executed this Xxxx of Sale, all as
of the date first above written.
IDS/XXXXX GROWTH PARTNERS
87-A, LTD.
By: XXXXX CABLE CORPORATION,
managing general partner
By:_______________________
Name:
Title:
C-3
